LabRev - Golangco Case Doctrines (2021) (Aseniero, Bacolod, Bonsato, Medina, - Sy)

LABOR LAW REVIEW
Case Index
Atty. Golangco
PART I
LABOR RELATIONS
Module 1
REVIEW OF EMPLOYER-EMPLOYEE RELATIONSHIP
1. Javier v. Fly Ace Corporation

G.R. NO. 192558, February 15, 2012
No particular form of evidence is required to prove the existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted. The rule of thumb remains: the onus
probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. Whoever
claims entitlement to the benefits provided by law should establish his or her right thereto x x x.
2. Southeast International Rattan, Inc v. Coming

G.R. NO. 126297, February 11, 2008
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-
fold test, to wit:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee’s conduct, or the so-called "control test."
In resolving the issue of whether such relationship exists in a given case, substantial evidence – that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion – is sufficient. Although
no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant
evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence.
The Court reiterated that in Tan v. Lagrama, the fact that a worker was not reported as an employee to the SSS is
not conclusive proof of the absence of employer-employee relationship. Otherwise, an employer would be rewarded
for his failure or even neglect to perform his obligation. For a payroll to be utilized to disprove the employment of a
person, it must contain a true and complete list of the employee.
3. Tenazas v. R. Villegas Taxi Transportation

GR NO. 192998, April 2, 2014
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence
to prove the relationship may be admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence
of employee status. "[T]he burden of proof rests upon the party who asserts the affirmative of an issue."
4. Sagun v. ANZ Global

GR NO. 220399, August 22, 2016
An employment contract, like any other contract, is perfected at the moment the parties come to agree upon its
terms and conditions, and thereafter, concur in the essential elements thereof. In this relation, the contracting parties
may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order or public policy.
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labrev case index (A.Y. 2020 – 2021) | atty. golangco | aseniero bacolod bonsato medina sy
Accordingly, petitioner's employment with ANZ depended on the outcome of his background check, which partakes
of the nature of a suspensive condition, and hence, renders the obligation of the would-be employer, i.e., ANZ in
this case, conditional. While a contract may be perfected in the manner of operation described above, the efficacy
of the obligations created thereby may be held in suspense pending the fulfillment of particular conditions agreed
upon. In other words, a perfected contract may exist, although the obligations arising therefrom if premised upon a
suspensive condition would yet to be put into effect. Thus, until and unless petitioner complied with the satisfactory
background check, there exists no obligation on the part of ANZ to recognize and fully accord him the rights under
the employment contract.
5. LVN Pictures v. Philippine Musicians Guild

110 Phil. 725, January 28, 1961
To determine whether a person who performs work for another is the latter's employee or an independent contractor,
the National Labor Relations relies on 'the right to control' test. Under this control test, an employer-employee
relationship exist where the person for whom the services are performed reserves the right to control not only the
end to be achieved, but also the manner and means to be used in reaching the end (United Insurance Company,
108, NLRB No. 115). Notwithstanding that the employees are called independent contractors', the Board will hold
them to be employees under the Act where the extent of the employer's control over them indicates that the
relationship is in reality one of employment.
The right of control of the film company over the musicians is shown (1) by calling the musicians through 'call slips'
in 'the name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing
transportation and meals to musicians; and (4) by supervising and directing in detail, through the motion picture
director, the performance of the musicians before the camera, in order to suit the music they are playing to the
picture which is being flashed on the screen.
6. Paguio Transport, Corp. v. NLRC

GR NO. 119500, August 28, 1998
Boundary system is that of employer-employee and not of lessor-lessee. Under the “boundary system” the drivers
do not receive fixed wages; all the excess in the amount of boundary was considered his income but it is not
sufficient to withdraw the relationship between them from that of employer and employee. In the lease of chattels[,]
the lessor loses complete control over the chattel leased . . . . In the case of jeepney owners/operators and jeepney
drivers, the former exercise supervision and control over the latter.
7. Teng v. Pahagac
GR NO. 169704, November 17, 2010
As a policy, the Labor Code prohibits labor-only contracting:
Art. 106. Contractor or Subcontractor
xxx
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer.
Section 5 of the DO No. 18-02,[46] which implements Article 106 of the Labor Code, provides:
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 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.
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A finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee
relationship exists between Teng and the respondent workers. As regular employees, the respondent workers are
entitled to all the benefits and rights appurtenant to regular employment.
8. Dy Keh Beng v. International Labor and Marine Union of the Philippines

GR NO. L-32245, May 25, 1979
An employer-employee relationship exists, using the control test, exists “where the person for whom the services
are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching
such end.” It should be borne in mind that the control test calls merely for the existence of the right to control the
manner of doing the work, not the actual exercise of the right.
“Circumstances must be construed to determine indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. x x x and units of work are in establishments like respondent (sic)
just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot
construe payment by the piece where work is done in such an establishment as to put the worker completely at
liberality to turn him out and take in another at pleasure.” Lastly, the court noted the judicial notice in previous case
of ‘pakyaw’ system as generally practiced in our country, is, in fact, a labor contract between employers and
employees, between capitalists, and laborers.
9. Insular Life Assurance Company v. NLRC and Basiao

GR NO. 84484, November 15, 1989
It should x x x be obvious that not every form of control that the hiring party reserves to himself over the conduct of
the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control
or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the second, which address both the result and
the means used to achieve it.
The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the
business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations
between insurer and insured but also to the internal affairs of the insurance company. Rules and regulations
governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits.
None of these really invades the agent’s contractual prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.
10. Tongko v. Manulife

GR NO. 167622, November 7, 2009
If the specific rules and regulations that are enforced against insurance agents or managers are such that would
directly affect the mean and methods by which such agents or managers would achieve the objectives set by the
insurance company, they are employees of the insurance company.
NB: Motion for Reconsideration (June 29, 2010)

The business of insurance is a highly regulated commercial activity in the country, in terms particularly of who can
be in the insurance business, who can act for and in behalf of an insurer, and how these parties shall conduct
themselves in the insurance business. Thus, under the Insurance Code, the agent must, as a matter of qualification,
be licensed and must also act within the parameters of the authority granted under the license and under the
contract with the principal. Rules regarding the desired results (e.g., the required volume to continue to qualify as a
company agent, rules to check on the parameters on the authority given to the agent, and rules to ensure that
industry, legal and ethical rules are followed) are built-in elements of control specific to an insurance agency and
should not and cannot be read as elements of control that attend an employment relationship governed by the Labor
Code.
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The employer controls the employee both in the results and in the means and manner of achieving this result. The
principal in an agency relationship, on the other hand, also has the prerogative to exercise control over the agent
in undertaking the assigned task based on the parameters outlined in the pertinent laws. With particular relevance
to the present case is the provision that "In the execution of the agency, the agent shall act in accordance with the
instructions of the principal." This provision is pertinent for purposes of the necessary control that the principal
exercises over the agent in undertaking the assigned task, and is an area where the instructions can intrude into
the labor law concept of control so that minute consideration of the facts is necessary. The provisions of the
Insurance Code cannot be disregarded as this Code expressly envisions a principal-agent relationship between the
insurance company and the insurance agent in the sale of insurance to the public. For this reason, we can take
judicial notice that as a matter of Insurance Code-based business practice, an agency relationship prevails in the
insurance industry for the purpose of selling insurance.
NB: Motion for Reconsideration (January 25, 2011)

The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the company’s
insurance products, his collection activities and his delivery of the insurance contract or policy. All these, read
without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over
its agents. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are,
in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an
insurance agent must observe and undertake. They do not reach the level of control into the means and manner of
doing an assigned task that invariably characterizes an employment relationship as defined by labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature of dictating the means and methods to be employed in
attaining the result. Manulife’s codes of conduct, likewise, do not necessarily intrude into the insurance agents’
means and manner of conducting their sales.
11. AFP Mutual Benefit Association v. NLRC

GR NO. 102199, January 28, 1997
The significant factor in determining the relationship of the parties is the presence or absence of supervisory
authority to control the method and the details of performance of the service being rendered, and the degree to
which the principal may intervene to exercise such control. The presence of such power of control is indicative of
an employment relationship, while absence thereof is indicative of independent contractorship. In other words, the
test to determine the existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his own methods and without being subject to the control of
the employer except only as to the result of the work.
The fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered
as control in labor jurisprudence. Thus, the exclusivity restriction clearly springs from a regulation issued by the
Insurance Commission, and not from an intention by petitioner to establish control over the method and manner by
which private respondent shall accomplish his work. This feature is not meant to change the nature of the
relationship between the parties, nor does it necessarily imbue such relationship with the quality of control
envisioned by the law for there to arise an employer-employee relationship.
12. Encyclopaedia Brittanica v. NLRC

GR NO. 87098, November 4, 1996
It should be noted that in petitioner’s business of selling encyclopedias and books, the marketing of these products
was done through dealership agreements. The sales operations were primarily conducted by independent
authorized agents who did not receive regular compensations but only commissions based on the sales of the
products. These independent agents hired their own sales representatives, financed their own office expenses,
and maintained their own staff. Thus, there was a need for the petitioner to issue memoranda to private respondent
so that the latter would be apprised of the company policies and procedures. Nevertheless, agents were free to
conduct and promote their sales operations. The periodic reports to the petitioner by the agents were but necessary
to update the company of the latter’s performance and business income.
Control of employee’s conduct is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under this, an employer-employee relationship exists
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where the person for whom the services are performed reserves the right to control not only the end to be achieved,
but also the manner and means to be used in reaching that end. The fact that petitioner issued memoranda to
private respondent and to other division sales managers did not prove that petitioner had actual control over them.
The different memoranda were merely guidelines on company policies which the sales managers follow and impose
on their respective agents.
13. HSY Marketing v. Villastique

GR NO. 219569, August 17, 2016
The Court had already exposed the practice of setting up "distributors" or "dealers" which are, in reality, dummy
companies that allow the mother company to avoid employer-employee relations and, consequently, shield the
latter from liability from employee claims in case of illegal dismissal, closure, unfair labor practices, and the like. For
failure to present evidence to rebut the allegation that the respondent is indeed an employee of the petitioner, it
cannot be allowed to evade liability as the employer of respondent. The Court has already held that company drivers
who are under the control and supervision of management officers — like respondent herein — are regular
employees entitled to benefits including service incentive leave pay.
14. Coca-Cola Bottlers Phils., Inc. v. Climaco

GR NO. 14688, February 5, 2007
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-
fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most
important element.
The Comprehensive Medical Plan which contains the respondent‘s objectives, duties and obligations, does not tell
respondent “how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of petitioner company, in each case.” It provided guidelines merely to ensure that the end result was
achieved, but did not control the means and methods by which respondent performed his assigned tasks.
15. Corporal v. NLRC

GR NO. 129315, October 2, 2000
An independent contractor is one who undertakes "job contracting", i.e., a person who (a) carries on an independent
business and undertakes the contract work on his own account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in all matters connected with
the performance of the work except as to the results thereof, and (b) has substantial capital or investment in the
form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of
the business.
In determining the employer-employee relationship using the control test, the power to control refers to the existence
of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the employer has the right to wield that
power.
Juxtaposing this provision vis--vis the facts of this case, we are convinced that petitioners are not "independent
contractors". They did not carry on an independent business. Neither did they undertake cutting hair and manicuring
nails, on their own as their responsibility, and in their own manner and method. More importantly, the petitioners,
individually or collectively, did not have a substantial capital or investment in the form of tools, equipment, work
premises and other materials which are necessary in the conduct of the business of the respondent company. What
the petitioners owned were only combs, scissors, razors, nail cutters, nail polishes, the nippers - nothing else. By
no standard can these be considered substantial capital necessary to operate a barber shop.
16. Maraguinot v. NLRC GR NO. 120969 January 22, 1998

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied
to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the
same time enables the workers to attain the status of regular employees.
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Once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article
280 of the Labor Code and jurisprudence.
19. Calamba Medical Center v. NLRC

GR NO. 176484, November 25, 2008
Under the "control test," an employment relationship exists between a physician and a hospital if the hospital
controls both the means and the details of the process by which the physician is to accomplish his task. Where a
person who works for another does so more or less at his own pleasure and is not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element
of control is absent. For control test to apply, it is not essential for the employer to actually supervise the performance
of duties of the employee, it being enough that it has the right to wield the power. As priorly stated, private
respondents maintained specific work-schedules, as determined by petitioner through its medical director, which
consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain
of administrative sanctions. That petitioner exercised control over respondents gains light from the undisputed fact
that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies.
Under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-employee
relationship exists between the resident physicians and the training hospitals, unless there is a training agreement
between them, and the training program is duly accredited or approved by the appropriate government agency.
18. Jardin v. NLRC

GR NO. 119268, February 23, 2000
In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on
one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of
lessor-lessee. In the lease of chattels, the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case
of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The
management of the business is in the owner’s hands. The owner as holder of the certificate of public convenience
must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as
regards its operation.
The fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay
to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and
employee. The Court have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi
owners/operators and taxi drivers. Here, petitioner are considered employees of the private respondent as taxi
drivers perform activities which are usually necessary or desirable in the usual business or trade of their employer.
19. Sonza v. ABSCBN

GR NO. 138051, June 10, 2004
The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well
– the less control the hirer exercises, the more likely the worker is considered an independent contractor.
Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.
This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control
the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less
control the hirer exercises, the more likely the worker is considered an independent contractor
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The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee
relationship under labor laws. Not every performance of services for a fee creates an employer-employee
relationship. To hold that every person who renders services to another for a fee is an employee - to give meaning
to the security of tenure clause - will lead to absurd results. An individual like an artist or talent has a right to render
his services without any one controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as
employees. If radio and television program hosts can render their services only as employees, the station owners
and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to
freedom of the press.
20. Begino v. ABSCBN

GR NO. 199166, April 20, 2015
Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and
condition embodied therein, petitioners are regular employees of ABS-CBN because they perform functions
necessary and essential to ABS-CBN’s business. Respondents’ repeated hiring of petitioners for its long-running
news program positively indicates that the latter were ABS-CBN’s regular employees. Exclusivity Clause and
Prohibitions in talent contracts are indicative of control by the employer if it does not concern well-known television
and radio personality who can legitimately be considered as talent and compensated as such.
21. Orozco v. CA
GR NO. 155207, August 13, 2008
The newspaper’s power to approve or reject publication of any specific article she wrote for her column cannot be
the control contemplated in the "control test," as it is but logical that one who commissions another to do a piece of
work should have the right to accept or reject the product. The important factor to consider in the "control test" is
still the element of control over how the work itself is done, not just the end result thereof. Where a person who
works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite
hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof,
no employer-employee relationship exists.
22. TAPE, Inc. v. Servana

GR NO. 167648, January 28, 2008
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of
employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means
and method by which the work is to be accomplished.
Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor carries on a
distinct and independent business and undertakes to perform the job, work or service on its own account and under
its own responsibility according to its own manner and method, and free from the control and direction of the
principal in all matters connected with the performance of the work except as to the results thereof. TAPE failed to
establish that respondent is an independent contractor.
In classifying independent contractors, Policy Instruction No. 40 defines program employees as—
x x x those whose skills, talents or services are engaged by the station for a particular or specific program
or undertaking and who are not required to observe normal working hours such that on some days they
work for less than eight (8) hours and on other days beyond the normal work hours observed by station
employees and are allowed to enter into employment contracts with other persons, stations, advertising
agencies or sponsoring companies. The engagement of program employees, including those hired by
advertising or sponsoring companies, shall be under a written contract specifying, among other things, the
nature of the work to be performed, rates of pay and the programs in which they will work. The contract
shall be duly registered by the station with the Broadcast Media Council within three (3) days from its
consummation.
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23. Francisco v. NLRC
GR NO. 170087, August 31, 2006
When the control test is not sufficient to give a complete picture of the relationship between the parties, two-tiered
test must be applied. It involves: (1) the putative employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the
activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This
is especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and responsibilities
given to the worker over the period of the latter's employment.
The determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the employers business;
(2) the extent of the workers investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise;
(6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business.
24. WPP Marketing v. Galera

GR NO. 169207, March 25, 2010
Corporate officers are given such character either by the Corporation Code or by the corporation’s by-laws. An
appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare)
during a special meeting of WPP’s Board of Directors is an appointment to a non-existent corporate office.
Therefore, respondent is an employee and the Labor Arbiter and the NLRC have jurisdiction over the present case.
25. Matling Industrial v. Coros

GR NO. 157802, October 13, 2010
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers
enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other
Offices without amending first the corporate By-laws. However, the Board may create appointive positions other
than the positions of corporate Officers, but the persons occupying such positions are not considered as corporate
officers within the meaning of Section 25 of the Corporation Code.
In this case, Coros was appointed VP for Finance and Administration not because of the election of Matling’s Board
of Directors. Matling’s By-Laws did not list his position as Vice President for Finance and Administration as one of
the corporate offices, nor was it created by the corporation’s board of directors. Coros is not a corporate officer, but
an employee of Matling.
26. Malcaba v. Prohealth Pharma Philippines GR NO. 209085 June 6, 2018

Under Section 25 of the Corporation Code, the President of a corporation is considered a corporate officer. The
dismissal of a corporate officer is considered an intra-corporate dispute, not a labor dispute. In Matling Industrial v.
Coros, the Court stated that jurisdiction over intra-corporate disputes involving the illegal dismissal of corporate
officers was with the Regional Trial Court, not with the Labor Arbiter. The mere designation as a high-ranking
employee, however, is not enough to consider one as a corporate officer. The clear weight of jurisprudence clarifies
that to be considered a corporate officer, first, the office must be created by the charter of the corporation, and
second, the officer must be elected by the board of directors or by the stockholders. Respondent corporation's By-
Laws creates the office of the President. That foundational document also states that the President is elected by
the Board of Directors. Finding that petitioner Malcaba is the President of respondent corporation and a corporate
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officer, any issue on his alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the National Labor
Relations Commission. Their adjudication on his money claims is void for lack of jurisdiction.
27. Republic v. Asiapro Cooperative GR NO. 172101 November 23, 2007

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide
that there shall be no employer-employee relationship between the respondent cooperative and its owners-
members. This Court, however, cannot give the said provision force and effect. In determining the existence of an
employer-employee relationship, the four cardinal elements are considered, the most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish.
In ruling in this case that there is an employer-employee relationship, the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract, when the terms and surrounding
circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by
what the parties say it should be. Jurisprudence, furthermore, will show that it recognized that an owner-member of
a cooperative can be its own employee. A cooperative can be likened to a corporation with a personality separate
and distinct from its owners-members. Consequently, an owner-member of a cooperative can be an employee of
the latter and an employer-employee relationship can exist between them.
28. Locsin v. PLDT G.R. No. 185251 October 2, 2009

The power of control has been explained as the right to control not only the end to be achieved but also the means
to be used in reaching such end. With the conclusion that respondent directed petitioners to remain at their posts
and continue with their duties, it is clear that respondent exercised the power of control over them; thus, the
existence of an employer-employee relationship.
29. Professional Services v. CA

G.R. No. 126297, February 11, 2008
Hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within
the hospital premises. The applicant for "consultant" required to submit:
1. proof of completion of residency;
2. their educational qualifications;
3. generally, evidence of accreditation by the appropriate board (diplomate);
4. evidence of fellowship in most cases, and
5. references.
After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-
pathological conferences, rounds and patient audits. In addition to these, the physician’s performance as a specialist
is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback
from patients, nurses, interns and residents. Hence, private hospitals hire, fire and exercise real control over their
attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the patient’s condition, the control exercised, the hiring,
and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with
the exception of the payment of wages.
30. Dumpit-Murillo v. CA
G.R. No. 164652, June 8, 2007
The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and
compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular
employment status. The duties of Dumpit-Murillo as enumerated in her employment contract indicate that ABC had
control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of her
wages. ABC also had the power to dismiss.
31. Bernarte v. PBA

G.R. No. 192084, September 14, 2011
The contractual stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle and
make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of
the professional basketball league. As correctly observed by the Court of Appeals, how could a skilled referee
9
perform his job without blowing a whistle and making calls? x x x [H]ow can the PBA control the performance of
work of a referee without controlling his acts of blowing the whistle and making calls?
Once in the playing court, the referees exercise their own independent judgment, based on the rules of the game,
as to when and how a call or decision is to be made. The referees decide whether an infraction was committed, and
the PBA cannot overrule them once the decision is made on the playing court. The referees are the only, absolute,
and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which
calls to make or not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees. The very nature of petitioners job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
32. Chavez v. NLRC

G.R. No. 146530, January 17, 2005
Of the four elements of the employer-employee relationship, the control test is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under its own responsibility according to its own manner
and method, free from the control and direction of the principal in all matters connected with the performance of the
work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom
from the control and supervision of his principal, an employee is subject to the employers power to control the
means and methods by which the employees work is to be performed and accomplished.
Chavez is an employee because: 1) undeniably, it was the respondents who engaged the services of the petitioner
without the intervention of a third party; 2) the respondents power to dismiss the petitioner was inherent in the fact
that they engaged the services of the petitioner as truck driver. They exercised this power by terminating the
petitioners services albeit in the guise of severance of contractual relation due allegedly to the latter’s breach of his
contractual obligation, and 3) That the petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the existence or absence of employer-employee
relationship.
33. Felix v. Buenaseda

G.R. No. 109704, January 17, 1995
A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes
training and temporary status. It is the step taken by a physician right after post-graduate internship (and after
hurdling the Medical Licensure Examinations) prior to his recognition as a specialist or sub-specialist in a given
field.
34. Autobus Transport v. Bautista

G.R. No. 156367, May 16, 2005
Bautista cannot be considered as field personnel because the definition of field personnel is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the employee’s
performance is unsupervised by the employer.
Along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who
board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical,
and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They
too, must be at specific place as specified time, as they generally observe prompt departure and arrival from their
point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function
is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated
proper time. Bautista, was therefore under constant supervision while in the performance of this work.
35. David v. Macasio

G.R. No. 195466, July 2, 2014
Engagement in “pakyaw” or task basis does not characterize the relationship between the parties whether
employment or independent contractorship. It only determines the manner of calculation of the wages due to the
employee which, is in this case, is the quantity or quality of work done. The totality of the surrounding circumstances
of the present case sufficiently points to an employer-employee relationship existing between David and Macasio.
10
36. Chevron Phils. v. Galit
G.R. No. 186114, October 7, 2015
As to whether or not SJS is an independent contractor, jurisprudence has invariably ruled that an independent
contractor carries on an independent business and undertakes the contract work on his own account, under his
own responsibility, according to his own manner and method, and free from the control and direction of his employer
or principal in all matters connected with the performance of the work except as to the results thereof. There was
no evidence to show that SJS and its employees were ever subject to the control of petitioner. On the contrary, as
shown above, SJS possessed the right to control its employees' manner and means of performing their work,
including herein respondent Galit.
In addition, it would bear to point out that contrary to the ruling of the CA, the work performed by Galit, which is the
"scooping of slop of oil water separator," has no direct relation to petitioner's business, which is the importation,
refining and manufacture of petroleum products.
37. Weslayan University v. Maglaya

G.R. No. 212774, January 23, 2017
The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers
of a corporation, and they are usually designated as the officers of the corporation. However, other officers are
sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under
the by-laws of a corporation to create additional offices as may be necessary.
This Court expounded that an "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders, while an "employee" usually occupies no office and generally is employed not by action
of the directors or stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.
It is apparent from the By-laws of WUP that the president was one of the officers of the corporation, and was an
honorary member of the Board. He was appointed by the Board and not by a managing officer of the corporation.
We held that one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of
said corporation and not a mere employee. The alleged "appointment" of Maglaya instead of "election" as provided
by the by-laws neither convert the president of university as a mere employee, nor amend its nature as a corporate
officer.
38. Nestle Phils. v. Puedan

GR No. 220617, January 30, 2017
A closer examination of the Distributorship Agreement reveals that the relationship of NPI and ODSI is not that of a
principal and a contractor (regardless of whether labor-only or independent), but that of a seller and a buyer/re-
seller. As stipulated in the Distributorship Agreement, NPI agreed to sell its products to ODSI at discounted prices,
which in turn will be re-sold to identified customers, ensuring in the process the integrity and quality of the said
products based on the standards agreed upon by the parties. As aptly explained by NPI, the goods it manufactures
are distributed to the market through various distributors, e.g., ODSI, that in turn, re-sell the same to designated
outlets through its own employees such as the respondents. Therefore, the reselling activities allegedly performed
by the respondents properly pertain to ODSI, whose principal business consists of the "buying, selling, distributing,
and marketing goods and commodities of every kind" and "[entering] into all kinds of contracts for the acquisition of
such goods [and commodities]."
Thus, contrary to the CA's findings, the aforementioned stipulations in the Distributorship Agreement hardly
demonstrate control on the part of NPI over the means and methods by which ODSI performs its business, nor were
they intended to dictate how ODSI shall conduct its business as a distributor.
Thus, the foregoing circumstances show that ODSI was not a labor- only contractor of NPI; hence, the latter cannot
be deemed the true employer of respondents. As a consequence, NPI cannot be held jointly and severally liable to
ODSI's monetary obligations towards respondents.
11
39. Valenzuela v. Alexandra Mining Ventures
G.R. No. 222419, October 5, 2016
The labor tribunals and the CA were all in accord that Valenzuela was an employee of AMOVI as evidenced by the
identification card and payslips stating the company as his employer. Moreover, the CA held that, utilizing the four-
fold test of employer-employee relationship, the result would show that Valenzuela was under the control of AMOVI.
It ruled thus:
It was [AMOVI] which hired [Valenzuela] in January 2008, and which issued an identification card showing that
[Valenzuela] was an employee. [Valenzuela] was likewise included in the payroll of [AMOVI], although it was claimed
that it was merely "for convenience." We do not see what kind of convenience is afforded to [AMOVI]. The power
to discipline and to dismiss is also present, and it was exercised by [Cesar] as President of [AMOVI] which
incidentally is a family corporation. Finally, the control test is likewise satisfied. [Valenzuela] had no choice as to
who his passengers would be. He was a company driver who was required to render service to the President of the
Corporation, including his nuclear family. It was them who controlled and dictated the manner by which he performed
his job.
REASONABLE CAUSAL CONNECTION RULE
40. San Miguel Corporation v. Ectuban

GR NO. 127639 December 3, 1999
The demarcation line between the jurisdiction of regular courts and labor courts over cases involving workers and
their employers has always been the subject of dispute. We have recognized that not all claims involving such
groups of litigants can be resolved solely by our labor courts. However, we have also admonished that the present
trend is to refer worker-employer controversies to labor courts, unless unmistakably provided by the law to be
otherwise. Because of this trend, jurisprudence has developed the "reasonable causal connection rule." Under this
rule, if there is a reasonable causal connection between the claim asserted and the employer-employee relations,
then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that
have jurisdiction.
With regard to claims for damages under Art. 217(4) of the Labor Code, jurisprudence has evolved the rule that
claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable
causal connection with any of the claims provided for in that article. Only if there is such a connection with the other
claims can the claim for the damages be considered as arising from employer-employee relations.
The damages incurred by respondents as a result of the alleged fraudulent retrenchment program and the allegedly
defective “contract of termination” are merely the civil aspect of the injury brought about by their illegal dismissal.
The civil ramifications of their actual claim cannot alter the reality that it is primordially a labor matter and, as such,
is cognizable by labor courts.
41. Kawachi v. Del Quero

GR NO. 163768 March 27, 2007
Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations - in other words, the Labor Arbiter
has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.
The Court cited the case of San Miguel Corporation v. Etcuban, developed the "reasonable causal connection rule."
Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular
courts that have jurisdiction.
Where the employer-employee relationship is merely incidental and the cause of action proceeds from a different
source of obligation, the Court has not hesitated to uphold the jurisdiction of the regular courts. Where the damages
claimed for were based on tort, malicious prosecution, or breach of contract, as when the claimant seeks to recover
a debt from a former employee or seeks liquidated damages in the enforcement of a prior employment contract, the
jurisdiction of regular courts was upheld. The allegations in private respondent's complaint unmistakably relate to
the manner of her alleged illegal dismissal. In the instant case, the NLRC has jurisdiction over private respondent's
complaint for illegal dismissal and damages arising therefrom.
12
42. Eviota v. CA
GR NO. 152121 July 29, 2003
Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter only if there is a “reasonable causal connection” between the claim asserted and
employee-employer relation. Absent such a link, the complaint will be cognizable by the regular courts of justice.
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.
The jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited to disputes arising
from an employer-employee relationship which can only be resolved by reference to the Labor Code of the
Philippines, other labor laws or their collective bargaining agreements. The fact that the private respondent was the
erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his
employment is merely incidental. In fact, the petitioner had already been replaced by the private respondent before
the action was filed against the petitioner.
In this case, jurisdiction over the controversy belongs to the civil courts. The action was for breach of a contractual
obligation, intrinsically a civil dispute; while seemingly the cause of action arose from employer-employee relations,
the employers claim for damages is grounded on wanton failure and refusal without just cause to report to duty
coupled with the averment that the employee maliciously and with bad faith violated the terms and conditions of the
contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor
Code of the Philippines and brought it within the purview of the Civil Law.
43. Indophil Textile Mills v. Adviento

GR NO. 171212 August 4, 2014
The "reasonable causal connection rule," wherein if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts; and in the
absence thereof, it is the regular courts that have jurisdiction. Such distinction is apt since it cannot be presumed
that money claims of workers which do not arise out of or in connection with their employer-employee relationship,
and which would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an
exclusive basis.
Indeed, jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the Labor Code, to
be cognizable by the LA, must have a reasonable causal connection with any of the claims provided for in that
article. Only if there is such a connection with the other claims can a claim for damages be considered as arising
from employer-employee relations.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the acts
complained of appear to constitute matters involving employee-employer relations since respondent used to be the
Civil Engineer of petitioner. However, it should be stressed that respondent’s claim for damages is specifically
grounded on petitioner’s gross negligence to provide a safe, healthy and workable environment for its employees
−a case of quasi-delict. A perusal of the complaint would reveal that the subject matter is one of claim for damages
arising from quasi-delict, which is within the ambit of the regular court's jurisdiction.
ARTICLE 219
Labor Dispute, Definition
44. Citibank, N. A. v. CA
GR NO. 108961, November 27, 1998
Article 212, paragraph l of the Labor Code provides the definition of a "labor dispute". It "includes any controversy
or matter concerning terms or 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 the disputants stand in the proximate relation of employer and employee."
13
If at all, the dispute between Citibank and El Toro security agency is one regarding the termination or non-renewal
of the contract of services. This is a civil dispute. El Toro was an independent contractor. Thus, no employer-
employee relationship existed between Citibank and the security guard members of the union in the security agency
who were assigned to secure the bank's premises and property. Hence, there was no labor dispute and no right to
strike against the bank. In this case, it was the security agency El Toro that recruited, hired and assigned the
watchmen to their place of work. It was the security agency that was answerable to Citibank for the conduct of its
guards.
45. PAL v. NLRC

GR NO. 120567, March 20, 1998
Article 218 of the Labor Code empowers the NLRC-
"(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to
require the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor
of such party; x x x."
Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of the NLRC, pertinently
provides as follows:
"Section 1. Injunction in Ordinary Labor Dispute.-A preliminary injunction or a restraining order may be
granted by the Commission through its divisions pursuant to the provisions of paragraph (e) of Article 218
of the Labor Code, as amended, x x x”
The foregoing ancillary power may be exercised by the Labor Arbiters only as an incident to the cases pending
before them in order to preserve the rights of the parties during the pendency of the case, but excluding labor
disputes involving strikes or lockout. From the foregoing provisions of law, the power of the NLRC to issue an
injunctive writ originates from "any labor dispute" upon application by a party thereof, which application if not granted
"may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party."
Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute
between the contending parties before the labor arbiter.
46. San Miguel Corporation Employees Union v. Bersamira

GR NO. 87700, June 13, 1990
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "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 the disputants
stand in the proximate relation of employer and employee." A labor dispute can nevertheless exist "regardless of
whether the disputants stand in the proximate relationship of employer and employee" (Article 212 [1], Labor Code,
supra) provided the controversy concerns, among others, the terms and conditions of employment or a "change" or
"arrangement" thereof (ibid). The existence of a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee, provided the controversy concerns,
among others, terms and conditions of employment, or a change or arrangement thereof.
As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. The claim of SanMig
that the action below is for damages under Articles 19, 20 and 21 of the Civil Code would not suffice to keep the
case within the jurisdictional boundaries of regular Courts. That claim for damages is interwoven with a labor dispute
existing between the parties and would have to be ventilated before the administrative machinery established for
the expeditious settlement of those disputes.
Managerial Employee, Definition
47. Penaranda v. Baganga Plywood Corporation

G.R. No. 159577, May 3, 2006
The Implementing Rules define members of a managerial staff as those with the ff. responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of the
employer;
(2) Customarily and regularly exercise discretion and independent judgment;
14
(3)
(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of
the management of the establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not
directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above."
Article 224
Jurisdiction of Labor Arbiter
48. Pondoc v. NLRC GR NO. 116347 October 3, 1996

Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to issue writs
of injunction, while Rule XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy
in ordinary labor disputes. The foregoing ancillary power may be exercised by the Labor Arbiters only as an incident
to the cases pending before them in order to preserve the rights of the parties during the pendency of the case, but
excluding labor disputes involving strike or lockout. Under paragraph (b), Art. 217 of the Labor Code, the NLRC has
exclusive appellate jurisdiction over all cases decided by the Labor Arbiters. This simply means that the NLRC does
not have original jurisdiction over the cases enumerated in paragraph (a) and that if a claim does not fall within the
exclusive original jurisdiction of the Labor Arbiter, the NLRC cannot have appellate jurisdiction thereon.
The conclusion is inevitable that the NLRC was without jurisdiction, either original or appellate, to receive evidence
on the alleged indebtedness, render judgment thereon, and direct that its award be set-off against the final judgment
of the Labor Arbiter. As correctly pointed out by the Solicitor General, there is a complete want of evidence that the
indebtedness asserted by the private respondent against Andres Pondoc arose out of or was incurred in connection
with the employer-employee relationship between them. The Labor Arbiter did not then have jurisdiction over the
claim as under paragraph (a) of Article 217 of the Labor Code
49. Villamaria v. CA and Bustamante GR NO. 165881 April 19, 2006

Under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created between
petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish the
employer-employee relationship of the parties extant before the execution of said deed.
In the cases provided in Article 217 of the Labor Code, an employer-employee relationship is an indispensable
jurisdictional requisite. The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited
to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor
Code, other labor statutes or their collective bargaining agreement. Not every dispute between an employer and
employee involves matters that only the Labor Arbiter and the NLRC can resolve in the exercise of their adjudicatory
or quasi-judicial powers. Actions between employers and employees where the employer-employee relationship is
merely incidental is within the exclusive original jurisdiction of the regular courts. When the principal relief is to be
granted under labor legislation or a collective bargaining agreement, the case falls within the exclusive jurisdiction
of the Labor Arbiter and the NLRC even though a claim for damages might be asserted as an incident to such claim.
40. Allan Mendoza v. Manila Water Employees Union

GR NO. 201595, January 25, 2016
While it is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the BLR under
Article 226 of the Labor Code, petitioner’s charge of unfair labor practices falls within the original and exclusive
jurisdiction of the Labor Arbiters, pursuant to Article 217 of the Labor Code. Where the facts show that respondent
is guilty of unfair labor practices under Article 249 (a) and (b) – that is, violation of petitioner’s right to self-
organization, unlawful discrimination, and illegal termination of his union membership – which case falls within the
original and exclusive jurisdiction of the Labor Arbiters, in accordance with Article 217 of the Labor Code.
51. Atlas Farms v. NLRC

GR NO. 142244, November 18, 2002
Where the dispute is just in the interpretation, implementation or enforcement stage, it may be referred to the
grievance machinery set up in the CBA, or brought to voluntary arbitration. But, where there was already actual
15
termination, with alleged violation of the employees’ rights, it is already cognizable by the labor arbiter. Given the
fact of dismissal, it can be said that the cases were effectively removed from the jurisdiction of the voluntary
arbitrator, thus placing them within the jurisdiction of the labor arbiter.
Only disputes involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators. In these termination cases of private respondents, the union had no participation, it having failed to
object to the dismissal of the employees concerned by the petitioner.
52. Negros Metal v. Lamayo

GR NO. 186557, August 25, 2010
Under Art. 217, it is clear that a labor arbiter has original and exclusive jurisdiction over termination disputes. On
the other hand, under Article 261, a voluntary arbitrator has original and exclusive jurisdiction over grievances
arising from the interpretation or enforcement of company policies. As a general rule then, termination disputes
should be brought before a labor arbiter, except when the parties, under Art. 262, unmistakably express that they
agree to submit the same to voluntary arbitration. Where the CBA provision on grievance machinery does not
expressly state that termination disputes are included in the ambit of what may be brought before the company’s
grievance machinery, the original and exclusive jurisdiction of the Labor Arbiter over termination disputes is not
removed.
53. Vivero v. CA
GR NO. 138938, October 24, 2000
Where the question to be resolved necessarily springs from the primary issue of whether there was a valid
termination, and proper interpretation and implementation of the CBA provisions comes into play only because the
grievance procedure provided for in the CBA was not observed after he sought his Union’s assistance in contesting
his termination, there would be no reason to invoke the need to interpret and implement the CBA provisions properly.
The instant case then is a termination dispute falling under the original and exclusive jurisdiction of the Labor Arbiter
A quick perusal of the pertinent provision of the CBA show:

“x x x The Master shall refer the case/dispute upon reaching port and if not satisfactorily settled, the case/dispute may be
referred to the grievance machinery or procedure hereinafter provided.”
The use of the word “may” in the provision shows that the import of the CBA and the intention of the parties was to
reserve the right to submit the illegal termination dispute to the jurisdiction of the Labor Arbiter rather than a
Voluntary Arbitrator.
54. University of Immaculate Conception v. NLRC

GR NO. 181146, January 26, 2011
Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and
exclusive jurisdiction of the Labor Arbiter. The exception lies in:
Art. 262. Jurisdiction over other labor disputes. – The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks.
Hence, when gleaned from the transcript of stenographic notes of the administrative hearing shows that the parties
clearly agreed to resort to voluntary arbitration, the Labor Arbiter should have immediately disposed of the complaint
and referred the same to the voluntary arbitrator.
55. Austria v. NLRC

GR NO. 124382, August 16, 1992
Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to
include religious corporations in its coverage. Article 278 of the Labor Code on post-employment states that "the
provisions of this Title shall apply to all establishments or undertakings, whether for profit or not." Obviously, the
cited article does not make any exception in favor of a religious corporation. This is made more evident by the fact
that the Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of
Employment and Retirement, categorically includes religious institutions in the coverage of the law.
16
56. Reyes v. RTC Makati, Zenith Insurance Corporation
GR NO. 165744, August 11, 2008
To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the
branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur:
(a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or partnership relations between
any or all of the parties and the corporation, partnership, or association of which they are stockholders, members
or associates; between any or all of them and the corporation, partnership, or association of which they are
stockholders, members, or associates, respectively; and between such corporation, partnership, or association and
the State insofar as it concerns their individual franchises.
The second element requires that the dispute among the parties be intrinsically connected with the regulation of the
corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case
does not involve an intra-corporate controversy.
57. Locsin v. Nissan Lease Philippines

GR NO. 185567, October 20, 2010
Re: officer v. employee
An "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On
the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors
or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to
such employee.
Re: jurisdiction over issues on corporate officer’s dismissal

A corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy which arises between a
stockholder and a corporation. Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A)
provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC):
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and
decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:
xxxx
c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial
courts the SEC’s jurisdiction over all cases listed in Section 5 of PD 902-A.
58. Wesleyan University v. Maglaya

GR NO. 212774, January 23, 2017
"Corporate officers" in the context of Presidential Decree No. 902-A are those officers of the corporation who are
given that character by the Corporation Code or by the corporation's by-laws. There are three specific officers whom
a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the
treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may
be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The
number of corporate officers is thus limited by law and by the corporation's by-laws.
The creation of the position is under the corporation's charter or by-laws, and that the election of the officer is by
the directors or stockholders must concur in order for an individual to be considered a corporate officer, as against
an ordinary employee or officer. It is only when the officer claiming to have been illegally dismissed is classified as
such corporate officer that the issue is deemed an intra-corporate dispute which falls within the jurisdiction of the
trial courts.
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59. Cacho v. Balagtas
GR NO. 202974, February 17, 2018
Two-tier test must be employed to determine whether an intra-corporate controversy exists in the present case, viz.:
(a) the relationship test, and (b) the nature of the controversy test.
A dispute is considered an intra-corporate controversy under the relationship test when the relationship between or
among the disagreeing parties is any one of the following: (a) between the corporation, partnership, or association
and the public; (b) between the corporation, partnership, or association and its stockholders, partners, members, or
officers; (c) between the corporation, partnership, or association and the State as far as its franchise, permit or
license to operate is concerned; and (d) among the stockholders, partners, or associates themselves.
Under the nature of the controversy test, the disagreement must not only be rooted in the existence of an intra-
corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and obligations
under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.
All told, the issue in the present case is an intra-corporate controversy, a matter outside the Labor Arbiter's
jurisdiction.
60. Paredes v. Feed the Children Philippines

GR NO. 184397, September 9, 2015
The money claims within the original and exclusive jurisdiction of labor arbiters are those which have some
reasonable causal connection with the employer-employee relationship. By the designating clause "arising from the
employer-employee relations," Article 217 applies with equal force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the claim arises from or is necessarily connected with the fact
of termination, and should be entered as a counterclaim in the illegal dismissal case.
This claim is distinguished from cases of actions for damages where the employer-employee relationship is merely
incidental and the cause of action proceeds from a different source of obligation. Thus, the regular courts have
jurisdiction where the damages claimed for were based on: tort, malicious prosecution, or breach of contract, as
when the claimant seeks to recover a debt from a former employee or seeks liquidated damages in the enforcement
of a prior employment contract. The fact that the transaction happened at the time they were employer and
employee did not negate the civil jurisdiction of trial court. Hence, it is erroneous for the LA and the CA to rule on
such claim arising from a different source of obligation and where the employer-employee relationship was merely
incidental, moreso when the claim does not arise from or is necessarily connected with the fact of termination.
61. Lunzaga v. Albar Shipping

GR NO. 200476, April 18, 2012
A review of the records of the case reveals that the main issue in the complaint before the Labor Arbiter was whether
the heirs of Romeo are entitled to receive his death benefits from Albar. Clearly, the Labor Arbiter has jurisdiction
over this issue and the case itself, involving as it does a claim arising from an employer-employee relationship. And
while the Labor Arbiter has no jurisdiction to determine who among the alleged heirs is entitled to receive Romeo's
death benefits, it should have made a ruling holding Albar liable for the claim.
Re: Relaxation of Rules in Appeal: Considering that the issue on whether the heirs of Romeo are entitled to receive
his death benefits from Albar Shipping properly falls under the jurisdiction of the LA, the NLRC and the CA should
have had relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate
their cases on the merits. This is in line with the time honored principle that cases should be decided only after
giving all parties the chance to argue their causes and defenses. Technicality and procedural imperfections should
thus not serve as bases of decisions. In that way, the ends of justice would be better served. For indeed, the general
objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing
always in mind that procedure is not to hinder but to promote the administration of justice.
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62. Santos v. Servier Philippines
GR NO. 166377, November 28, 2008
Re: claim for illegal deduction due to alleged tax deductions on retirement benefits
It is noteworthy that petitioner demanded the completion of her retirement benefits, including the amount withheld
by respondent for taxation purposes. The issue of deduction for tax purposes is intertwined with the main issue of
whether or not petitioner's benefits have been fully given her. It is, therefore, a money claim arising from the
employer-employee relationship, which clearly falls within the jurisdiction of the Labor Arbiter and the NLRC.
63. World’s Best Gas v. Vital

The RTC's ruling on Vital's claim of P845,000.00 and P250,000.00 in unpaid salaries and separation pay is, thus,
null and void. RTC's adjudication of the first cause of action was improper since the same is one which arose from
Vital and WBGI's employer-employee relations, involving an amount exceeding P5,000.00, hence, belonging to the
jurisdiction of the labor arbiters pursuant to Article 217 of the Labor Code.
Having no subject matter jurisdiction to resolve claims arising from employer-employee relations, the RTC's ruling
on unpaid salaries and separation pay is, thus, null and void, and therefore, cannot perpetuate even if affirmed on
appeal. However, since the dismissal is grounded on lack of jurisdiction, then the same should be considered as a
dismissal without prejudice. Hence, claimant may re-file the same claim, including those related thereto (e.g., moral
and exemplary damages, and attorney's fees) before the proper labor tribunal.
64. Halaguena v. PAL

GR NO. 172013, October 2, 2009
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. The jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes, or their collective bargaining agreement.
In this case, The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application
of the Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of
Discrimination Against Women and the power to apply and interpret the constitution and CEDAW is within the
jurisdiction of trial courts, a court of general jurisdiction.
65. Pepsi Cola v. Gal-lang

A complaint for damages for malicious prosecution filed by employees has its jurisdiction belonging with the regular
courts. The complaint did not arise from such relations and in fact could have arisen independently of an
employment relationship between the parties. No such relationship or any unfair labor practice is asserted. What
the employees are alleging is that the petitioners acted with bad faith when they filed the criminal complaint which
the Municipal Trial Court said was intended "to harass the poor employees" and the dismissal of which was affirmed
by the Provincial Prosecutor "for lack of evidence to establish even a slightest probability that all the respondents
herein have committed the crime imputed against them." This is a matter which the labor arbiter has no competence
to resolve as the applicable law is not the Labor Code but the Revised Penal Code.
66. Banez v. Valdevilla

GR NO. 128024, May 9, 2000
Presently, and as amended by R.A. 6715, the jurisdiction of Labor Arbiters and the NLRC in Article 217 is
comprehensive enough to include claims for all forms of damages "arising from the employer-employee relations".
The Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed
by the Civil Code.
By the designating clause "arising from the employer-employee relations", Article 217 should apply with equal force
to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the illegal
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dismissal case. This is, of course, to distinguish from cases of actions for damages where the employer-employee
relationship is merely incidental and the cause of action proceeds from a different source of obligation.
67. Milan v. NLRC

GR NO. 202961 February 4, 2015
Claims arising from an employer-employee relationship are not limited to claims by an employee. Employers may
also have claims against the employee, which arise from the same relationship. Article 217 should apply with equal
force to the claim of an employer for actual damages against its dismissed employee, where the basis for the claim
arises from or is necessarily connected with the fact of termination, and should be entered as a counterclaim in the
illegal dismissal case. As a general rule, therefore, a claim only needs to be sufficiently connected to the labor issue
raised and must arise from an employer-employee relationship for the labor tribunals to have jurisdiction.
Respondent Solid Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners
were merely allowed to possess and use it out of respondent Solid Mills’ liberality. The employer may, therefore,
demand the property at will. Thus, the return of the property’s possession became an obligation or liability on the
part of the employees when the employer-employee relationship ceased.
68. Amecos Innovations v. Lopez

GR NO. 178055, July 2, 2014
Article 217(a)(4) of the Labor Code is applicable, between petitioner and respondent.. Said provision bestows upon
the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee
relations. The observation that the matter of SSS contributions necessarily flowed from the employer-employee
relationship between the parties – shared by the lower courts and the CA – is correct; thus, petitioners’ claims
should have been referred to the labor tribunals. In this connection, it is noteworthy to state that “the Labor Arbiter
has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.”
69. PAL v. Airline Philots Association of the Philippines

GR NO. 200088, February 26, 2018
To determine whether a claim for damages under paragraph 4 of Article 217 is properly cognizable by the labor
arbiter, jurisprudence has evolved the "reasonable connection rule" which essentially states that the claim for
damages must have reasonable causal connection with any of the claims provided for in that article. A money claim
by a worker against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is
a "reasonable causal connection" between the claim asserted and employee-employer relations. Only if there is
such a connection with the other claims can the claim for damages be considered as arising from employer-
employee relations.
The SOLE assumed jurisdiction over the labor dispute between PAL and the respondents on 23 December 1997.
In this regard, it is settled that the authority of the SOLE to assume jurisdiction over a labor dispute causing or likely
to cause a strike or lockout in an industry indispensable to the national interest includes and extends to all questions
and controversies arising therefrom. When the SOLE assumed jurisdiction over the labor dispute, the claim for
damages was deemed included therein.
70. Dai-ichi Electronics Manufacturing Corporation v. Villarama

G.R. No. 112940, November 21, 1994
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by
the Labor Arbiter, must have a reasonable causal connection with any of the claims provided for in that article. Only
if there is such a connection with the other claims can the claim for damages be considered as arising from
employer-employee relations.
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to recover damages agreed
upon in the contract as redress for private respondent's breach of his contractual obligation to its "damage and
prejudice.” Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to
the regular courts. More so when we consider that the stipulation refers to the post-employment relations of the
parties.
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71. People’s Broadcasting (Bombo Radyo Phils., Inc.) v. SOLE
GR NO. 179652, March 6, 2012
Under Art. 128(b) of the Labor Code, as amended by RA 7730, 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 determination of the existence of an employer-employee relationship by the DOLE must be respected. No
limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee
relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power
was primarily held by the NLRC. The law did not say that the DOLE would first seek the NLRC’s determination of
the existence of an employer-employee relationship, or that should the existence of the employer-employee
relationship be disputed, the DOLE would refer the matter to the NLRC. 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.
Summary of rules:
1. 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;
2. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC;
3. 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.
4. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction
is properly with the DOLE.
5. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the
Rules of Court.
72. Ex-Bataan Veterans Security Agency v. Secretary of Labor

GR NO. 152396, November 20, 2007
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and
decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do
not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code. However, if the
labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional
Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC.
In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present:
1) that the employer contests the findings of the labor regulations officer and raises issues thereon;
2) that in order to resolve such issues, there is a need to examine evidentiary matters; and
3) that such matters are not verifiable in the normal course of inspection.
If the case does not fall under the exception clause, the Regional Director may validly assume jurisdiction over
money claims because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code even if
the claims exceeded P5,000.
73. Meteoro v. Creative Creatures

GR NO. 171275, July 13, 2009
The visitorial and enforcement powers of the Secretary, exercised through his representatives, encompass
compliance with all labor standards laws and other labor legislation, regardless of the amount of the claims filed by
workers. This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of
employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the
"exception clause," provides an instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case. Under prevailing jurisprudence, the so-called "exception clause" has the
following elements, all of which must concur:
1) that the employer contests the findings of the labor regulations officer and raises issues thereon;
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2) that in order to resolve such issues, there is a need to examine evidentiary matters; and
3) that such matters are not verifiable in the normal course of inspection.
In such case, the Regional Director shall refer the matter to the Labor Arbiter.
74. Okol v. Slimmers World

G.R. No. 160146, December 11, 2009
Section 25 of the Corporation Code enumerates corporate officers as the president, secretary, treasurer and such
other officers as may be provided for in the by-laws. In Tabang v. NLRC, we held that an "office" is created by the
charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, an
"employee" usually occupies no office and generally is employed not by action of the directors or stockholders but
by the managing officer of the corporation who also determines the compensation to be paid to such employee.
From the documents submitted by respondents, petitioner was a director and officer of Slimmers World. The
charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by
petitioner against respondents fall squarely within the ambit of intra-corporate disputes. In a number of cases, we
have held that a corporate officer's dismissal is always a corporate act, or an intra-corporate controversy which
arises between a stockholder and a corporation. The question of remuneration involving a stockholder and officer,
not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and
management and is a corporate controversy in contemplation of the Corporation Code.
NB: Okol is “Vice President” in Slimmers World before being dismissed; explicitly included in By-laws
75. Santiago v. CF Sharp Crew Management

GR NO. 162419, July 10, 2007
Section 10 of R.A. No. 8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary
and other forms of damages.
The jurisdiction of labor arbiters is not limited to claims arising from employer-employee relationships. Despite the
absence of an employer-employee relationship between petitioner and respondent, the Court rules that the NLRC
has jurisdiction over petitioner’s complaint.
76. IPAMS v. De Vera

GR NO. 205703, March 7, 2016
For a foreign law to govern an employment contract the following requisites must be met:
1) That it is expressly stipulated in the overseas employment contract that a specific foreign law shall
govern;
2) That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on
evidence;
3) That the foreign law stipulated in the overseas employment contract must not be contrary to law, morals,
good customs, public order, or public policy of the Philippines; and
4) That the overseas employment contract must be processed through the POEA.
Absence thereof, the foreign law will not be applicable as it will be against our fundamental and statutory laws.
77. Ace Navigation v. Fernandez

GR NO. 197309, October 10, 2012
The State’s labor relations policy laid down in the Constitution and fleshed out in the enabling statute, the Labor
Code (Art. 260, 261 and 262) and the POEA-SEC provide that the voluntary arbitrator or panel of voluntary
arbitrators has original and exclusive jurisdiction over Fernandez’s disability claim. Where there is unequivocal or
unmistakable language in the agreement which mandatorily requires the parties to submit to the grievance
procedure any dispute or cause of action they may have against each other, it unmistakably reflects the parties’
agreement to submit any unresolved dispute at the grievance resolution stage to mandatory voluntary arbitration. It
22
is settled that when the parties have validly agreed on a procedure for resolving grievances and to submit a dispute
to voluntary arbitration then that procedure should be strictly observed.
POEA-SEC, which governs the employment of Filipino seafarers, provides in its Sec. 29 on Dispute Settlement
Procedures, provides:
In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement
shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit
the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC),
pursuant to Republic Act (RA) 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to
the original and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators. If there is no provision
as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary
arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment.
78. Heirs Dulay v. Aboitiz

A careful reading of this RA 8042 would readily show that there is no specific provision thereunder which provides
for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA.
Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in general, of "claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages."
With respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective
bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel
of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute
to either the NLRC or to voluntary arbitration.
79. LRTA v. Alvarez

GR NO. 188047, November 28, 2016
In LRTA v. Mendoza, which have the same facts, issue, and claims as in this case, the Court upheld the jurisdiction
of the labor tribunals over LRTA, citing PNB v. Pabalan, stating that: “By engaging in a particular business thru the
instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render
the corporation subject to the rules of law governing private corporations.” LRTA must submit itself to the provisions
governing private corporations, including the Labor Code, for having conducted business through a private
corporation. Therefore, the jurisdiction of the Labor Arbiter shall be upheld.
80. GSIS v. NLRC

GR NO. 180045, November 17, 2010
The declared policy of the State in Section 39 of the GSIS Charter granting GSIS an exemption from tax, lien,
attachment, levy, execution, and other legal processes should be read together with the grant of power to the GSIS
to invest its "excess funds" under Section 36 of the same Act. Under Section 36, the GSIS is granted the ancillary
power to invest in business and other ventures for the benefit of the employees, by using its excess funds for
investment purposes. In the exercise of such function and power, the GSIS is allowed to assume a character similar
to a private corporation. Thus, it may sue and be sued, as also, explicitly granted by its charter.
81. Duty Free Philippines v. Mojica

GR NO. 166365, September 30, 2005
Civil Service Authorities has jurisdiction in controversies involving the terms of employment, and other related
issues, of the Civil Service official and employees. Civil Service Commission shall hear and decide administrative
cases instituted by or brought before it directly or on appeal, including contested appointments, and review decisions
and actions of its offices and of the agencies attached to it.
DFP was created under Executive Order (EO) No. 46 primarily to augment the service facilities for tourists and to
generate foreign exchange and revenue for the government. DFP is under the exclusive authority of the PTA, a
corporate body attached to the Department of Tourism, it follows that its officials and employees are likewise subject
to the Civil Service rules and regulations.
23
GR NO. 169207, March 25, 2010
The law and the rules are consistent in stating that the employment permit must be acquired prior to employment.
The Labor Code states: "Any alien seeking admission to the Philippines for employment purposes and any domestic
or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment
permit from the Department of Labor." Section 4, Rule XIV, Book 1 of the Implementing Rules and Regulations
provides:
Employment permit required for entry. — No alien seeking employment, whether as a resident or non-resident, may enter
the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-
working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly
approved employment permit.
When there is violation of the said provision, the alien employee cannot come to this Court with unclean hands. To
grant such is to sanction the violation of the Philippine labor laws requiring aliens to secure work permits before
their employment.
83. Pakistan International Airlines v. Ople

The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations
to the subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and private
respondents. We have already pointed out that the relationship is much affected with public interest and that the
otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some
other law to govern their relationship.
Neither may petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue
for the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant circumstances
of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the
one hand, and the relationship between the parties, upon the other: the contract was not only executed in the
Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and
respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing
business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe.
All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the resolution
of contractual disputes between the parties. Under these circumstances, paragraph 10 of the employment
agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them
by Philippine law.
Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on
the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the
applicable provisions of Philippine law.
84. PNB v. Cabansag

GR NO. 157010, June 21, 2005
Based on Article 217 of the Labor Code and Section 10 of RA 8042, labor arbiters clearly have original and exclusive
jurisdiction over claims arising from employer-employee relations, including termination disputes involving all
workers, among whom are overseas Filipino workers (OFW). Securing an employment pass in the foreign country
to work does not automatically mean that the non-citizen is thereby bound by local laws only, as averred by
petitioner. It does not at all imply a waiver of one's national laws on labor. Absent any clear and convincing evidence
to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country.
As held by the Court in Royal Crown Internationale v. NLRC, "whether employed locally or overseas, all Filipino
workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary
notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to
labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers.”
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85. Manila Hotel v. NLRC
GR NO. 120077, October 13, 2000
Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it
chooses to do so provided:
1) that the Philippine court is one to which the parties may conveniently resort to;
2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and
3) that the Philippine court has or is likely to have power to enforce its decision.
When the Court held that the requisites to warrant application of forum non-conveniens is present, this is not to say
that Philippine courts and agencies have no power to solve controversies involving foreign employers. Neither are
we saying that we do not have power over an employment contract executed in a foreign country. If the worker were
an "overseas contract worker", a Philippine forum, specifically the POEA, not the NLRC, would protect him. In this
case, the NLRC is a very inconvenient forum for his redress; the only link the Philippines has in this case is that
Santos is a Filipino.
86. Saudi Arabian Airlines v. Rebesencio

GR NO. 198587, January 14, 2015
Contractual choice of law is not determinative of jurisdiction. Stipulating on the laws of a given jurisdiction as the
governing law of a contract does not preclude the exercise of jurisdiction by tribunals elsewhere. The reverse is
equally true: The assumption of jurisdiction by tribunals does not ipso facto mean that it cannot apply and rule on
the basis of the parties' stipulation.
Under the doctrine of forum non conveniens, "a court, in conflicts of law cases, may refuse impositions on its
jurisdiction where it is not the most 'convenient' or available forum and the parties are not precluded from seeking
remedies elsewhere." Consistent with the principle of comity, a tribunal's desistance in exercising jurisdiction on
account of forum non conveniens is a deferential gesture to the tribunals of another sovereign. It is a measure that
prevents the former's having to interfere in affairs which are better and more competently addressed by the latter.
Forum non conveniens finds no application and does not operate to divest Philippine tribunals of jurisdiction and to
require the application of foreign law. Forum non conveniens relates to forum, not to the choice of governing law.
That forum non conveniens may ultimately result in the application of foreign law is merely an incident of its
application.
87. Continental Micronesia v. Basso

G.R. No. 178382-83, September 23, 2015
The Court ruled that the labor tribunals had jurisdiction over the parties and the subject matter of the case. The
employment contract of Basso was replete with references to US laws, and that it originated from and was returned
to the US, do not automatically preclude our labor tribunals from exercising jurisdiction to hear and try this case.
Where the facts establish the existence of foreign elements, the case presents a conflicts-of-laws issue. Under the
doctrine of forum non conveniens, a Philippine court in a conflict-of-laws case may assume jurisdiction if it chooses
to do so, provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may
conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and
the facts; and (3) that the Philippine Court has or is likely to have power to enforce its decision. All these requisites
are present here.
88. Perpetual Help Credit Cooperative v. Faburada

GR NO. 12194, October 8, 2001
The Labor Arbiter has exclusive and original jurisdiction over disputes between cooperatives and its employees.
The pertinent provisions (Art. 121, Cooperative Code of the Philippines on procedures on how cooperative disputes
are to be resolved); and Sec. 8, Cooperative Development Authority Law on mediation and conciliation before filing
of appropriate action before the proper courts apply to members, officers and directors of the cooperative involved
in disputes within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner PHCCI and even if they are, the dispute
is about payment of wages, overtime pay, rest day and termination of employment. Under Art. 217 of the Labor
25
Code, these disputes are within the original and exclusive jurisdiction of the Labor Arbiter. Further bolstering the
point is that there is an employer-employee relationship, as determined through the four-fold test.
89. 7K Corporation v. Albarico

GR NO. 182295, June 26, 2013
Although the general rule under the Labor Code gives the labor arbiter exclusive and original jurisdiction over
termination disputes as provided for in Art. 217, it also recognizes exceptions. One of the exceptions is provided in
Article 262 of the Labor Code. In San Jose v. NLRC, the Court said:
The phrase “Except as otherwise provided under this Code” refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those
arising from the interpretation or enforcement of company procedure/policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary arbitrator as may be provided in said
agreement.
B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators,
upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining deadlocks.
The labor disputes referred to in the same Article 262 [of the Labor Code] can include all those disputes mentioned
in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction.” From the above discussion, it is
clear that voluntary arbitrators may, by agreement of the parties, assume jurisdiction over a termination dispute
such as the present case, contrary to the assertion of petitioner that they may not.
In ruling that VA assumed jurisdiction in deciding the issue of the legality of dismissal of Albarico, the circumstances
of the case lead to no other conclusion that the claim for separation pay was premised on his allegation of illegal
dismissal. Then, VA properly assumed jurisdiction over the issue of the legality of his dismissal. To think otherwise
would lead to absurdity, because the voluntary arbitrator would then be deciding that issue in a vacuum. The
arbitrator would have no basis whatsoever for saying that respondent was entitled to separation pay or not if the
issue of the legality of Albarico’s dismissal was not resolved first.
90. San Miguel v. Semillano

GR NO. 164257, July 5, 2010
The existence of an independent and permissible contractor relationship is generally established by the following
criteria: whether or not the contractor is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece
of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing
and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools,
appliances, materials, and labor; and the mode, manner and terms of payment. Despite the fact that the service
contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so.
Upon finding that there is a labor-only contracting, and the respondents are employers of the principal, the argument
that the respondent is a member of the cooperative-contractor necessarily fails; then the LA has jurisdiction over
the matter.
91. Ellao v. Batangas I Electric Cooperative

GR NO. 209166, July 9, 2018
Complaints for illegal dismissal filed by a cooperative officer constitute an intra-cooperative controversy, jurisdiction
over which belongs to the RTCs.
A cooperative, as defined under PD 269 refers to a “corporation organized under RA 6038.” Even without choosing
to convert and register as a stock corporation before the SEC, electric cooperatives already enjoy powers and
corporate existence akin to a corporation. As a rule, the illegal dismissal of an officer or other employee of a private
employer is properly cognizable by the labor arbiter pursuant to Article 217 (a) 2 of the Labor Code, as amended.
By way of exception, where the complaint for illegal dismissal involves a corporate officer, the controversy falls
26
under the jurisdiction of the SEC (now RTC), because the controversy arises out of intra-corporate or partnership
relations.
92. Comscentre Phils., Inc., v. Rocio

G.R. No. 222212, January 22, 2020
Art. 224. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise provided under this Code,
the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:
xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
xxx
In Bañez v. Valdevilla, the Court elucidated that the jurisdiction of labor tribunals is comprehensive enough to include
claims for all forms of damages “arising from the employer-employee relations.” Thus, the Court decreed therein
that labor tribunals have jurisdiction to award not only the reliefs provided by labor laws, but also damages governed
by the Civil Code.
When respondent informed petitioners of her intention to resign merely five (5) months after she got hired, they
reminded respondent of her obligation to pay the “employment bond” of Eighty Thousand Pesos (P80,000.00) as
indemnity for the expenses the company incurred in her training as Network Engineer.
It is clear that petitioners’ claim for payment is inseparably intertwined with the parties’ employer-employee
relationship. For it was respondent’s act of prematurely severing her employment with the company which gave rise
to the latter’s cause of action for payment of “employment bond.” As aptly found by the NLRC, petitioners’ claim
was “an offshoot of the resignation of [respondent] and the complications arising therefrom and which eventually
led to the filing of the case before the Labor Arbiter.” Verily, petitioners’ claim falls within the original and exclusive
jurisdiction of the labor tribunals.
93. Gemudiano v. NAESS Shipping

G.R. No. 223825, January 20, 2020
The employer-employee relationship is deemed to have arisen as of the agreed effectivity date of employment.
Condition in the addendum does not operate as commencement of relations, but only performance thereof. The
determination of propriety of petitioner’s non-deployment involves the interpretation and application of labor laws,
which are within the expertise of labor tribunals.
94. Pasay City Alliance Church v. Benito

G.R. No. 226908, November 28, 2019
There is no question among the parties in this case that our constitutionally protected policy is non-interference by
the State in matters that are purely ecclesiastical. It is also settled that religious associations can be employers for
whom religious ministers often perform dual roles. They not only minister to the spiritual needs of their members in
most instances, but also take on administrative functions in their organizations.
In Austria v. NLRC, an ecclesiastical affair is one that concerns doctrine, creed, or form [of] worship of the church,
or the adoption and enforcement within a religious association of needful laws and regulations for the government
of the membership, and the power of excluding from such associations those deemed unworthy of membership.
Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and
relate to matters of faith, religious doctrines, worship and governance of the congregation. To be concrete, examples
of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication,
ordinations of religious ministers, administration of sacraments and other activities x x x attached [with] religious
significance.
27
Termination of a religious minister's engagement at a local church due to administrative lapses, when it relates to
the perceived effectivity of a minister as a charismatic leader of a congregation, is a prerogative best left to the
church affected by such choice. If a religious association enacts guidelines that reserve the right to transfer or
reassign its licensed ministers according to what it deems best for a particular congregation, ministry or undertaking
in pursuit of its mission, then the State cannot validly interfere.
95. Zonio v. 88 Aces Maritime Services

G.R. No. 239052, October 16, 2019
A simple reading of the foregoing shows that a contract between an employer and a seafarer ceases upon its
completion, when the seafarer signs off from the vessel and arrives at the point of hire. In this case, while
Apolinario's six-month contract may have ended as early as August 2010, he nonetheless was able to sign off from
MV Algosaibi 42 and arrive at the point of hire only on April 11, 2012.
Section 30 of the 2000 POEA-SEC provides for the prescriptive period for filing claims arising from the contract:
Sec. 30. PRESCRIPTION OF ACTION.-
All claims arising from this Contract shall be made within three (3) years from the date the cause of action arises
otherwise the same shall be barred.
It is well-settled that a seafarer's cause of action arises upon his disembarkation from the vessel. As Apolinario's
disembarkation from Algosaibi was on April 11, 2012, he had three years from the date, or until April 11, 2015, to
make a claim for disability benefits. Records show that Apolinario had requested for a SENA before the NLRC as
early as March 25, 2015.
ARTICLE 225
96. PAL v. NLRC

GR NO. 120567, March 20, 1998
Generally, injunction is a preservative remedy for the protection of one's substantive rights or interest. It is not a
cause of action in itself but merely a provisional remedy, an adjunct to a main suit. The essential conditions for
granting such temporary injunctive relief are:
a) that the complaint alleges facts which appear to be sufficient to constitute a proper basis for injunction
and
b) that on the entire showing from the contending parties, the injunction is reasonably necessary to protect
the legal rights of the plaintiff pending the litigation.
Article 218 of the Labor Code empowers the NLRC “[t]o enjoin or restrain any actual or threatened commission of
any or all prohibited or unlawful acts or to require the performance of a particular act in any labor dispute which, if
not restrained or performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any
decision in favor of such party; . . ."
Sec. 1, Rule XI of the New Rules of Procedure of the NLRC, pertinently provides as follows: A preliminary injunction
may be granted when it is established on the bases of the sworn allegations in the petition that the acts complained
of, involving or arising from any labor dispute before the Commission, which, if not restrained or performed forthwith,
may cause grave or irreparable damage to any party or render ineffectual any decision in favor of such party and
that it may be exercised by the Labor Arbiter only as an incident to the cases pending before them in order to
preserve the rights of the parties during the pendency of the case, but excluding labor disputes involving strikes or
lockout.
Taking into account the foregoing definitions, it is an essential requirement that there must first be a labor dispute
between the contending parties before the labor arbiter. Article 218(e) then of the Labor Code does not provide
blanket authority to the NLRC or any of its divisions to issue writs of injunction, considering that Section 1 of Rule
XI of the New Rules of Procedure of the NLRC makes injunction only an ancillary remedy in ordinary labor disputes."
NLRC has only exclusive appellate jurisdiction over all cases decided by the labor arbiters in their exclusive and
original jurisdiction; and NLRC can only issue injunction in labor disputes before it.
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97. Landbank of the Philippines v. Listana
G.R. No. 152611, August 5, 2008
Rule 71, Section 12 of the 1997 Rules of Civil Procedure, referring to indirect contempt against quasi-judicial entities,
provides:
Sec. 12. Contempt against quasi-judicial entities. Unless otherwise provided by law, this Rule shall apply to contempt
committed against persons, entities, bodies or agencies exercising quasi-judicial functions, or shall have suppletory
effect to such rules as they may have adopted pursuant to authority granted to them by law to punish for contempt. The
Regional Trial Court of the place wherein the contempt has been committed shall have jurisdiction over such charges
as may be filed therefore.
Evidently, quasi-judicial agencies that have the power to cite persons for indirect contempt pursuant to Rule 71 of
the Rules of Court can only do so by initiating them in the proper Regional Trial Court. It is not within their jurisdiction
and competence to decide the indirect contempt cases. These matters are still within the province of the Regional
Trial Courts. In the present case, the indirect contempt charge was filed, not with the Regional Trial Court, but with
the PARAD, and it was the PARAD that cited Mr. Lorayes with indirect contempt.
98. Robosa v. NLRC

GR NO. 176085, February 8, 2012
Under Article 218 of the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt,
directly or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt
consists of either imprisonment or fine, the degree or amount depends on whether the contempt is against the
Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal
with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings
before the trial court. This mode is to be observed only when there is no law granting them contempt powers. As is
clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction
to hold the offending party or parties in direct or indirect contempt.
Contempt is still a criminal proceeding in which acquittal, for instance, is a bar to a second prosecution. The
distinction is for the purpose only of determining the character of punishment to be administered. Dismissal of a
contempt charge then is not appealable.
99. Jolo’s Kiddie v. Caballa

G.R. NO. 230682, November 29, 2017
In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings and conclusions are not
supported by substantial evidence, which refers to that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
100. Frondozo v. Meralco

G.R. No. 178379. August 22, 2017
There are instances when writs of execution may be assailed. They are:
1) the writ of execution varies the judgment;
2) there has been a change in the situation of the parties making execution inequitable or unjust;
3) execution is sought to be enforced against property exempt from execution;
4) it appears that the controversy has been submitted to the jThe perfection of an appeal is a mandatory
requirement, which cannot be trifled as a mere technicality to suit the interest of a partyudgment of the
court;
5) the terms of the judgment are not clear enough and there remains room for interpretation thereof; or
6) it appears that the writ of execution has been improvidently issued, or that it is defective in substance, or
issued against the wrong party, or that the judgment debt has been paid or otherwise satisfied, or the writ
was issued without authority.
101. Bisig Manggagawa sa Concrete Aggregates v. NLRC

G.R. No. 105090, September 16, 1993
The issuance of an ex parte temporary restraining order in a labor dispute is not per se prohibited. Its issuance,
however, should be characterized by care and caution for the law requires that it be clearly justified by
29
considerations of extreme necessity, i.e., when the commission of unlawful acts is causing substantial and
irreparable injury to company properties and the company is, for the moment, bereft of an adequate remedy at law.
This is as it ought to be, for imprudently issued temporary restraining orders can break the back of employees
engaged in a legal strike.
The substantive and procedural requirements under Art. 218(e) of the Labor Code must be strictly complied with
before a temporary or permanent injunction can issue in a labor dispute, viz:
1) That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained
but no injunction or temporary restraining order shall be issued on account of any threat, prohibited or unlawful act,
except against the person or persons, association or organization making the threat or committing the prohibited or
unlawful act or actually authorizing or ratifying the same after actual knowledge thereof;
2) That substantial and irreparable injury to complainants property will follow;
3) That as to each item of relief to be granted, greater injury will be inflicted upon complainant by the denial of relief
than will be inflicted upon defendants by the granting of relief
4) complainant has no adequate remedy at law; and
5) That the public officers charged with the duty to protect complainants property are unable or unwilling to furnish
adequate protection.
Such hearing shall be held after due and personal notice thereof has been served, in such manner as the Commission
shall direct, to all known persons against whom relief is sought, and also to the Chief Executive and other public officials
of the province or city within which the unlawful have been threatened or committed charged with the duty to protect
complainant's property x x x”
ARTICLE 227
101. Meralco v. Gala

GR NO. 1911288, March 7, 2012
It is the spirit and intention of labor legislation that the NLRC and the labor arbiters shall use every reasonable
means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or
procedure, provided due process is duly observed. In keeping with this policy and in the interest of substantial
justice, we deem it proper to give due course to the petition, especially in view of the conflict between the findings
of the labor arbiter, on the one hand, and the NLRC and the CA, on the other. As we said in S.S. Ventures
International, Inc. v. S.S. Ventures Labor Union, the application of technical rules of procedure in labor cases may
be relaxed to serve the demands of substantial justice.
102. Nationwide Security and Allied Services v. CA

G.R. No. 155844, July 14, 2008
Failure to perfect an appeal renders the decision final and executory. The right to appeal is a statutory right and one
who seeks to avail of the right must comply with the statute or the rules. The rules, particularly the requirements for
perfecting an appeal within the reglementary period specified in the law, must be strictly followed as they are
considered indispensable interdictions against needless delays and for the orderly discharge of judicial business. It
is only in highly meritorious cases that this Court will opt not to strictly apply the rules and thus prevent a grave
injustice from being done.
The exception does not obtain here. Thus, we are in agreement that the decision of the Labor Arbiter already
became final and executory because petitioner failed to file the appeal within 10 calendar days from receipt of the
decision.
103. Diamond Taxi v. Llamas

G.R. No. 190724, March 12, 2014
Under Article 221 (now Article 227) of the Labor Code, "the Commission and its members and the Labor Arbiters
shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without
regard to technicalities of law or procedure, all in the interest of due process." Consistently, we have emphasized
that "rules of procedure are mere tools designed to facilitate the attainment of justice. A strict and rigid application
which would result in technicalities that tend to frustrate rather than promote substantial justice should not be
allowed x x x. No procedural rule is sacrosanct if such shall result in subverting justice." Ultimately, what should
30
guide judicial action is that a party is given the fullest opportunity to establish the merits of his action or defense
rather than for him to lose life, honor, or property on mere technicalities.
Ordinarily, the infirmity in Llamas’ appeal would have been fatal and would have justified an end to the case. A
careful consideration of the circumstances of the case, however, convinces us that the NLRC should, indeed, have
given due course to Llamas’ appeal despite the initial absence of the required certificate. We note that in his motion
for reconsideration of the NLRC’s May 30, 2006 resolution, Llamas attached the required certificate of non-forum
shopping.
104. Sara Lee v. Macatlang

G.R. NO. 180147, January 14, 2015
The 10% requirement pertains to the reasonable amount which the NLRC would accept as the minimum of the
bond that should accompany the motion to reduce bond in order to suspend the period to perfect an appeal under
the NLRC rules. The 10% is based on the judgment award and should in no case be construed as the minimum
amount of bond to be posted in order to perfect appeal.
The NLRC retains its authority and duty to resolve the motion 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."
Should the NLRC, after considering the motion’s merit, determine that a greater amount or the full amount of the
bond needs to be posted by the appellant, then the party shall comply accordingly. The appellant shall be given a
period of 10 days from notice of the NLRC order within which to perfect the appeal by posting the required appeal
bond.
The underlying purpose of the appeal bond is to ensure that the employer has properties on which he or she can
execute upon in the event of a final, providential award. Thus, non-payment or woefully insufficient payment of the
appeal bond by the employer frustrates these ends.
105. Dela Rosa Liner v. Borela

GR NO. 207286, July 29, 2015
As the CA aptly cited, the elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such
that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata
in the action under consideration.
Under the circumstances of the case before us, sufficient basis exists for the NLRC's and CA's conclusions that
there is no identity of causes of action between the respondents' two complaints against the petitioners. The first
complaint involved illegal dismissal/suspension, unfair labor practice with prayer for damages and attorney's fees;
while the second complaint (the subject of the present appeal) involves claims for labor standards benefits — the
petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of respondents' sick and vacation
leave pays, 13th-month pay, service incentive leave benefit, overtime pay, and night shift differential.
106. Magsaysay Maritime v. De Jesus

GR No. 203943, August 30, 2017
While the general rule is that a valid compromise agreement has the power to render a pending case moot and
academic, being a contract, the parties may opt to modify the legal effects of their compromise agreement to prevent
the pending case from becoming moot. A conditional settlement of a judgement award may be treated as a
compromise agreement and a judgement on the merits of the case if it turns out to be highly prejudicial to one of
the parties.
ARTICLE 229
107. Toyota Alabang v. Games

GR NO. 206612, August 17, 2005
Article 223 of the Labor Code and Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state thus:
In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash
deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.
31
Evidently, the above rules do not limit the appeal bond requirement only to certain kinds of rulings of the LA. Rather,
these rules generally state that in case the ruling of the LA involves a monetary award, an employer's appeal may
be perfected only upon the posting of a bond. Therefore, absent any qualifying terms, so long as the decision of the
LA involves a monetary award, as in this case, that ruling can only be appealed after the employer posts a bond. If
to construe otherwise, then an aggrieved party may simply seek the quashal of a writ of execution, instead of going
through the normal modes of appeal, to altogether avoid paying for an appeal bond.
Re: Finality of judgement

Jurisprudence dictates that a final and executory decision of the LA can no longer be reversed or modified. After
all, just as a losing party has the right to file an appeal within the prescribed period, so does the winning party have
the correlative right to enjoy the finality of the resolution of the case.
108. GBMLT Manpower v. Malinao

GR NO. 189262, July 6, 2015
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 The requirement of an appeal bond is
further emphasized in Section 6, Rule VI of the 2011 NLRC Rules of Procedure. This provision clarifies that
damages and attorney's fees awarded by the labor arbiter shall not be included in the computation of the bond to
be posted.
In several pronouncements, this Court has adopted a particular understanding of the word "only" in the phrase "an
appeal by the employer may be perfected only upon the posting of a cash or surety bond." It has regarded the
phrase as the legislative's unequivocal declaration that the posting of a cash or surety bond is the exclusive means
by which an employer's appeal from a labor arbiter's decision may be perfected. Jurisprudence dictates that the
appeal bond requirement for judgments involving monetary awards may be relaxed in meritorious cases, as in
instances when a liberal interpretation would serve the desired objective of resolving controversies on the merits.
In this case, the Court noted that its payment of the appeal bond through the issuance of a check was not even an
issue before the NLRC. The latter had given due course to petitioner's appeal without any indication of having found
any defect in the appeal bond posted. Hence, the appeal has been perfected by virtue of its compliance with the
appeal bond requirement.
109. Orozco v. CA
GR NO. 155207, April 29, 2005
As a rule, compliance with the requirements for the perfection of an appeal within the reglementary period is
mandatory and jurisdictional. However, in National Federation of Labor Unions v. Ladrido as well as in several other
cases, the Court postulated that "private respondents cannot be expected to post such appeal bond equivalent to
the amount of the monetary award when the amount thereof was not included in the decision of the labor arbiter."
The computation of the amount awarded to petitioner not having been clearly stated in the decision of the labor
arbiter, private respondents had no basis for determining the amount of the bond to be posted. While the posting of
a cash or surety bond is jurisdictional and is a condition sine qua non to the perfection of an appeal, there is a
plethora of jurisprudence recognizing exceptional instances wherein the Court relaxed the bond requirement as a
condition for posting the appeal.
110. Lepanto Consolidated Mining v. Icao

GR NO. 196047, January 15, 2014
Instead of posting a cash or surety bond, Petitioner filed a Consolidated Motion praying that the cash bond it had
previously posted in another labor case be released and applied to the present one. Under the Rule VI, Section 6
of the 2005 NLRC Rules, "a cash or surety bond shall be valid and effective from the date of deposit or posting,
until the case is finally decided, resolved or terminated, or the award satisfied." Hence, it is clear that a bond is
encumbered and bound to a case only for as long as:
1) the case has not been finally decided, resolved or terminated; or
2) the award has not been satisfied. Therefore, once the appeal is finally decided and no award needs to be
satisfied, the bond is automatically released.
Since the money is now unencumbered, the employer who posted it should now have unrestricted access to the
cash which he may now use as he pleases as appeal bond in another case, for instance. This is what petitioner
32
simply did. when the law does not clearly provide a rule or norm for the tribunal to follow in deciding a question
submitted, but leaves to the tribunal the discretion to determine the case in one way or another, the judge must
decide the question in conformity with justice, reason and equity, in view of the circumstances of the case. There is
substantial compliance with the mandatory requirements of posting an appeal bond.
111. Forever Security v. Flores

The requirement of a cash or surety bond for the perfection of an appeal from the Labor Arbiter's monetary award
is not only mandatory but jurisdictional as well, and noncompliance therewith is fatal and has the effect of rendering
the award final and executory. The logical purpose of an appeal bond is to insure, during the period of appeal,
against any occurrence that would defeat or diminish recovery under the judgment if subsequently affirmed; it also
validates and justifies, at least prima facie, an interpretation that would limit the amount of the bond to the aggregate
of the sums awarded other than in the concept of moral and exemplary damages.
112. UERM Memorial Medical Center v. NLRC

GR NO. 110419, March 3, 1997
The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting
of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a
cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected.
However, it is the current policy is not to strictly follow technical rules but rather to take into account the spirit and
intention of the Labor Code. In the case at bar, the real property bond posted by petitioners sufficiently protects the
interests of private respondents should they finally prevail.
113. Manila Mining Co. v. Amor

GR NO. 182800 April 20, 2015
Section 6, Rule VI of the NLRC Rules of Procedure provides that no motion to reduce bond shall be entertained
except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary
award. The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph
shall not stop the running of the period to perfect an appeal.
Respondent correctly called attention to the fact that the check submitted by petitioner was dishonored upon
presentment for payment, thereby rendering the tender thereof ineffectual. Having filed its motion and memorandum
on the very last day of the reglementary period for appeal, moreover, petitioner had no one but itself to blame for
failing to post the full amount pending the NLRC’s action on its motion for reduction of the appeal bond.
114. Banahaw Broadcasting v. Pacana

GR NO. 171673 May 30, 2011
Re: requirement to a GOCC to post appeal bond
As a general rule, the government and all the attached agencies with no legal personality distinct from the former
are exempt from posting appeal bonds, whereas government-owned and controlled corporations (GOCCs) are not
similarly exempted. When the State litigates, it is not required to put up an appeal bond because it is presumed to
be always solvent. This exemption, however, does not, as a general rule, apply to GOCCs for the reason that the
latter has a personality distinct from its shareholders. Thus, while a GOCC’s majority stockholder, the State, will
always be presumed solvent, the presumption does not necessarily extend to the GOCC itself.
However, when a GOCC becomes a "government machinery to carry out a declared government policy,” it becomes
similarly situated as its majority stockholder as there is the assurance that the government will necessarily fund its
primary functions. Thus, a GOCC that is sued in relation to its governmental functions may be, under appropriate
circumstances, exempted from the payment of appeal fees. Here, petitioner was organized as a private corporation,
sequestered in the 1980’s and the ownership of which was subsequently transferred to the government. Its primary
function is to engage in commercial radio and television broadcasting, a purely commercial or proprietary one and
not governmental. As such, BBC cannot be deemed entitled to an exemption from the posting of an appeal bond.
Re: Motion for Recomputation
33
The posting of the appeal bond within the period provided by law is not merely mandatory but jurisdictional. The
failure on the part of BBC to perfect the appeal thus had the effect of rendering the judgment final and executory.
Neither was there an interruption of the period to perfect the appeal when BBC filed (1) its Motion for the
Recomputation of the Monetary Award in order to reduce the appeal bond, and (2) its Motion for Reconsideration
of the denial of the same. In the case at bar, BBC already took a risk when it filed its Motion for the Recomputation
of the Monetary Award without posting the bond itself.
115. McBurnie v. Ganzon

GR NO. 178034 October 17, 2013
The Court must give utmost regard to the legislative and administrative intent to strictly require the employer to post
a cash or surety bond securing the full amount of the monetary award within the 10-day reglementary period.
However, there are two conditions where a bond may be reduced upon motion by the employer:
1) the motion to reduce the bond shall be based on meritorious grounds; and
2) a reasonable amount in relation to monetary award is posted by the appellant.
Guidelines that are applicable in the reduction of appeal bonds were also explained in Nicol v. Footjoy Industrial
Corporation.
The bond requirement in appeals involving monetary awards has been and may be relaxed in meritorious cases,
including instances in which:
1) there was substantial compliance with the Rules;
2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond;
3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits; or
4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during
the reglementary period.
The filing of a motion to reduce bond, coupled with compliance with the two conditions shall suffice to suspend the
running of the period to perfect an appeal from the labor arbiter’s decision to the NLRC. For purposes of determining
a “meritorious ground”, the NLRC is not precluded from receiving evidence, or making a preliminary determination
of the merits of the appellant’s contentions. It is discretionary for the court to accept the merit of the grounds. What
constitutes a “reasonable amount” of the bond shall be based primarily on the merits of the motion and the main
appeal.
To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance to
seek a reduction of the appeal bond are effectively carried out, without however defeating the benefits of the bond
requirement in favor of a winning litigant, all motions to reduce bond that are to be filed with the NLRC shall be
accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary award that is subject of
the appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant motion is pending resolution by the Commission. The foregoing shall not be misconstrued to unduly hinder
the NLRC exercise of its discretion, given that the percentage of bond that is set by this guideline shall be merely
provisional. The NLRC retains its authority and duty to resolve the motion 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
115. Sara Lee Philippines v. Macatlang

GR NO. 180147 January 14, 2015
The 10% requirement pertains to the reasonable amount which the NLRC would accept as the minimum of the
bond that should accompany the motion to reduce bond in order to suspend the period to perfect an appeal under
the NLRC rules. The 10% is based on the judgment award and should in no case be construed as the minimum
amount of bond to be posted in order to perfect appeal.
The NLRC retains its authority and duty to resolve the motion 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."
Should the NLRC, after considering the motion’s merit, determine that a greater amount or the full amount of the
bond needs to be posted by the appellant, then the party shall comply accordingly. The appellant shall be given a
34
period of 10 days from notice of the NLRC order within which to perfect the appeal by posting the required appeal
bond.
116. AFP General Insurance Corporation v. Molina

GR NO. 151133 June 30, 2008
The instant case pertains to a surety bond; thus, the applicable provision of the Insurance Code is Section 177,
which specifically governs suretyship. It provides that a surety bond, once accepted by the obligee becomes valid
and enforceable, irrespective of whether or not the premium has been paid by the obligor. The bond is both valid
and enforceable.
When petitioner surety company cancelled the surety bond because Radon Security failed to pay the premiums, it
gave due notice to the latter but not to the NLRC. By its failure to give notice to the NLRC, AFPGIC failed to
acknowledge that the NLRC had jurisdiction not only over the appealed case, but also over the appeal bond. This
oversight amounts to disrespect and contempt for a quasi-judicial agency tasked by law with resolving labor
disputes. Until the surety is formally discharged, it remains subject to the jurisdiction of the NLRC.
117. Islriz Trading v. Capada

GR No. 16501 January 21, 2011
Employees are entitled to their accrued salaries during the period between the Labor Arbiter's order of reinstatement
pending appeal and the resolution of the NLRC overturning that of the Labor Arbiter. Even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the wages
of the employee during the period of appeal until reversal by a higher court or tribunal.
It likewise settled the view that the LA's order of reinstatement is immediately executory and the employer has to
either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate
them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee's
salaries. The two-fold test in determining whether an employee is barred from recovering his accrued wages, to wit:
(1) there must be actual delay or that the order of reinstatement pending appeal was not executed prior to
its reversal; and
(2) the delay must not be due to the employer's unjustified act or omission.
If the delay is due to the employer's unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the LA's Decision.
118. FSFI v. NLRC

GR NO. 153859, December 11, 2003
The Labor Code provides a ten (10)-day period from receipt of the decision of the Arbiter for the filing of an appeal
together with an appeal bond if the decision involves a monetary award in favor of the employees, viz:
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. . .
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.
The NLRC Rules of Procedure likewise require the appeal and the appeal bond to be filed within the ten (10)-day
reglementary period. A mere notice of appeal without complying with the other requisite aforestated shall not stop
the running of the period for perfecting an appeal. We have consistently ruled that payment of the appeal bond is a
jurisdictional requisite for the perfection of an appeal to the NLRC. It is only in rare instances that the court relaxes
the rule upon a showing of substantial compliance with it and to prevent patent injustice.
119. Buenaobra v. Lim King Guan

GR No. 150147, January 20, 2004
It is true that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory
but jurisdictional, and failure to perfect an appeal has the effect of making the judgment final and executory.
However, technicality should not be allowed to stand in the way of equitably and completely resolving the rights and
obligations of the parties.
35
The provision of Article 223 of the Labor Code requiring the posting of bond on appeals involving monetary awards
must be given liberal interpretation in line with the desired objective of resolving controversies on the merits. If only
to achieve substantial justice, strict observance of the reglementary periods may be relaxed if warranted. The NLRC,
Third Division could not be said to have abused its discretion in requiring the posting of bond after it denied private
respondents’ motion to be exempted therefrom. It is only fair and just that respondent FUJI be afforded the
opportunity to be heard on appeal before the NLRC, specially in the light of labor arbiter Pati’s later decision holding
FUJI jointly and severally liable with UNIX in the payment of the monetary awards adjudged by labor arbiter de Vera
against UNIX.
NB: This is a case of piercing of corporate veil between FUJI and UNIX
120. Bergonio v. South East Asian Airlines

GR No. 195227 April 21, 2014
The LA's order for the reinstatement of an employee found illegally dismissed is immediately executory even during
pendency of the employer's appeal from the decision. Under this provision, the employer must reinstate the
employee — either by physically admitting him under the conditions prevailing prior to his dismissal, and paying his
wages; or, at the employer's option, merely reinstating the employee in the payroll until the decision is reversed by
the higher court. Failure of the employer to comply with the reinstatement order, by exercising the options rendered
in the alternative, renders him liable to pay the employee’s salaries.
Hence, as a general rule, an employee may still recover the accrued wages up to and despite the reversal by the
higher tribunal. As an exception, an employee may be barred from collecting the accrued wages if shown that the
delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. To determine
whether an employee is thus barred, two tests must be satisfied: (1) actual delay; and (2) the delay must not be due
to the employer’s unjustified act or omission.
121. Loon v. Power Master, Inc.

GR NO. 189404, December 11, 2013
The issue of the appeal bond’s validity may be raised for the first time on appeal since its proper filing is a
jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the employers
from using an appeal to delay or evade the employees' just and lawful claims. It is intended to assure the workers
that they will receive the money judgment in their favor upon the dismissal of the employer’s appeal.
In labor cases, strict adherence to the technical rules of procedure is not required. Time and again, we have allowed
evidence to be submitted for the first time on appeal with the NLRC in the interest of substantial justice. Thus, we
have consistently supported the rule that labor officials should use all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to technicalities of law or procedure, in the interest of due
process.
Why the respondents’ photocopied and computerized copies of documentary evidence were not presented at the
earliest opportunity is a serious question that lends credence to the petitioners’ claim that the respondents fabricated
the evidence for purposes of appeal. While we generally admit in evidence and give probative value to photocopied
documents in administrative proceedings, allegations of forgery and fabrication should prompt the adverse party to
present the original documents for inspection.
122. Waterfront Cebu v. Ledesma

GR No. 197556, March 25, 2015
A reading of the rulings leads to the simple conclusion that the case of Laguna Metts Corporation involves a strict
application of the general rule that petitions for certiorari must be filed strictly within sixty (60) days from notice of
judgment or from the order denying a motion for reconsideration. Domdom case, on the other hand, relaxed the
rule and allowed an extension of the sixty (60)-day period subject to the Court’s sound discretion. In relaxing the
rules and allowing an extension, Thenamaris Philippines, Inc. v. Court of Appeals reiterated the necessity for the
party invoking liberality to advance a reasonable or meritorious explanation for the failure to file the petition for
certiorari within the 60-day period.
36
The relaxation of procedural rules may be allowed only when there are exceptional circumstances to justify the
same. There should be an effort on the part of the party invoking liberality to advance a reasonable or meritorious
explanation for his/her failure to comply with the rules. Moreover, those who seek exemption from the application
of a procedural rule have the burden of proving the existence of exceptionally meritorious reason warranting such
departure.
123. Balite v. SSS Ventures

GR NO. 195109, February 4, 2015
The statutory and regulatory provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must
be perfected within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a
judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required
appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a
memorandum of appeal.
In McBurnie v. Ganzon, we harmonized the provision on appeal that its procedures are fairly applied to both the
petitioner and the respondent, assuring by such application that neither one or the other party is unfairly favored.
We pronounced that the posting of a cash or surety bond in an amount equivalent to 10% of the monetary award
pending resolution of the motion to reduce appeal bond shall be deemed sufficient to perfect an appeal.
The rule We set in McBurnie was clarified by the Court in Sara Lee Philippines v. Ermilinda Macatlang. Considering
the peculiar circumstances in Sara Lee, We determined what is the reasonable amount of appeal bond. We
underscored the fact that the amount of 10% of the award is not a permissible bond but is only such amount that
shall be deemed reasonable in the meantime that the appellant’s motion is pending resolution by the Commission.
The actual reasonable amount yet to be determined is necessarily a bigger amount.
124. Turk’s Shawarma v. Pajaron

GR NO. 207156, January 16, 2017
"It is clear from both the Labor Code and the NLRC Rules of Procedure that there is legislative and administrative
intent to strictly apply the appeal bond requirement, and the Court should give utmost regard to this intention." The
posting of cash or surety bond is therefore mandatory and jurisdictional; failure to comply with this requirement
renders the decision of the Labor Arbiter final and executory. This indispensable requisite for the perfection of an
appeal "is to assure the workers that if they finally prevail in the case[,] the monetary award will be given to them
upon the dismissal of the employer's appeal [and] is further meant to discourage employers from using the appeal
to delay or evade payment of their obligations to the employees."
However, the Court, in special and justified circumstances, has relaxed the requirement of posting a supersedeas
bond for the perfection of an appeal on technical considerations to give way to equity and justice. Thus, under
Section 6 of Rule VI of the 2005 NLRC Revised Rules of Procedure, the reduction of the appeal bond is allowed,
subject to the following conditions: (1) the motion to reduce the bond shall be based on meritorious grounds; and
(2) a reasonable amount in relation to the monetary award is posted by the appellant. Compliance with these two
conditions will stop the running of the period to perfect an appeal.
In the case at bar, petitioners filed a Motion to Reduce Bond together with their Notice of Appeal and posted a cash
bond of P15,000.00 within the 10-day reglementary period to appeal. The CA correctly found that the NLRC did not
commit grave abuse of discretion in denying petitioners' motion to reduce bond as such motion was not predicated
on meritorious and reasonable grounds and the amount tendered is not reasonable in relation to the award. The
NLRC correctly held that the supposed ground cited in the motion is not well-taken tor there was no evidence to
prove Zeñarosa's claim that the payment of the full amount of the award would greatly affect his business due to
financial setbacks.
Reinstatement of LA’s Decision
125. Pioneer Texturizing Corp. v. NLRC

GR No. 118651 October 16, 1997
The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
37
certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order.
Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or separated employee
insofar as the reinstatement aspect is concerned, shall be immediately executory, even pending appeal. The
employer shall reinstate the employee concerned either by: (a) actually admitting him back to work under the same
terms and conditions prevailing prior to his dismissal or separation; or (b) at the option of the employer, merely
reinstating him in the payroll.
126. Roquero v. PAL

GR No. 164856 January 20, 2009
The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite
the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter
to implement the order of reinstatement.
Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court. On the other hand, if the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received
for he is entitled to such, more so if he actually rendered services during the period.
127. Air Philippines Corporation v. Zamora

G.R. No. 148247, August 7, 2006
the higher court.
The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of
the LA, the order of reinstatement embodied therein was already the subject of an alias writ of execution even
pending appeal. Although petitioner did not comply with this writ of execution, its intransigence made it liable
nonetheless to the salaries of respondent pending appeal. There is logic in this reasoning of the NLRC.
In Aris (Phil.) Inc. v. National Labor Relations Commission, we held: “Then, by and pursuant to the same power
(police power), the State may authorize an immediate implementation, pending appeal, of a decision reinstating a
dismissed or separated employee since that saving act is designed to stop, although temporarily since the appeal
may be decided in favor of the appellant, a continuing threat or danger to the survival or even the life of the dismissed
or separated employee and his family.”
128. Lansangan v. Amkor Technology Philippines

G.R. No. 177026, January 30, 2009
In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement petitioners are not entitled to full backwages as their dismissal was
not found to be illegal. Agabon v. NLRC so states ''payment of backwages and other benefits is justified only if the
employee was unjustly dismissed.”
129. Genuino v. NLRC

GR NO. 132732, December 4, 2007
“If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid,
then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries
s/he received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under existing laws, collective bargaining agreement
provisions, and company practices. However, if the employee was reinstated to work during the pendency of the
38
appeal (actual reinstatement), then the employee is entitled to the compensation received for actual services
rendered without need of refund.”
130. Garcia v. PAL

GR NO. 164856, January 20, 2009
While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of
the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is
similarly in a judicially monitored state of being resuscitated in order to survive.
PAL, during the period material to the case, was effectively deprived of the alternative choices under Article 223 of
the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of
management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no
need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the
utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may
decide otherwise, not to mention the subsistence of the injunction on claims.
NB: PAL was under the state of receivership at the time
131. Mt. Carmel College v. Resuena

GR NO. 173076, October 10, 2007
An order for reinstatement must be specifically declared and cannot be presumed; like back wages, it is a separate
and distinct relief given to an illegally dismissed employee. There being no specific order for reinstatement and the
order being for complainant’s separation, there can be no basis for the award of salaries/back wages during the
pendency of appeal.
An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided
are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, AND backwages.
The backwages due respondents must be computed from the time they were unjustly dismissed until their actual
reinstatement to their former position or upon petitioners payment of separation pay to them if reinstatement is no
longer feasible.
132. Buenviaje v. CA
G.R. No. 147806, November 12, 2002
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement provided herein.
The law mandates the employer to either admit the dismissed employee back to work under the same terms and
conditions prevailing prior to his dismissal or to reinstate him in the payroll to abate further loss of income on the
part of the employee during the pendency of the appeal. But we cannot stretch the language of the law as to give
the employer the right to remove an employee who fails to immediately comply with the reinstatement order,
especially when there is reasonable explanation for the failure.
133. Pfizer v. Velasco

GR No. 177467, March 9, 2011
the higher court. An award by the Labor Arbiter for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray the executory nature of a reinstatement order or award.
39
An employee entitled to reinstatement 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. It is
established in jurisprudence that reinstatement means restoration to a state or condition from which one had been
removed or separated. It presupposes that the previous position from which one had been removed still exists, or
that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied
by the employee.
134. Wenphil v. Abing

G.R. No. 207983, April 7, 2014
The period for computing the backwages due to the respondents during the period of appeal should end on the
date that a higher court reversed the labor arbitration ruling of illegal dismissal. In this case, the higher court that
first reversed the NLRC’s ruling was not the SC but rather the CA. In this light, the CA was correct when it found
that that the period of computation should end on Aug. 27, 2003. The date when the SC’s decision became final
and executory need not matter as the rule in Roquero, Garcia and Pfizer merely referred to the date of reversal, not
the date of the ultimate finality of such reversal.
The parties’ compromise agreement simply provided that Wenphil’s obligation to pay the respondents’ backwages
shall end the moment the NLRC modifies, amends or reverses the illegal dismissal decision of LA Bartolabac. On
its face, there is nothing invalid with such stipulation. Indeed, had the NLRC reversed the LA, the obligation to pay
backwages would have stopped. Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to reinstate and pay the dismissed employee’s wages during the period of
appeal until reversal by the higher court.
135. Smart Communications v. Solidum

GR NO. 197763, December 7, 2015
The NLRC has the power and authority to promulgate rules of procedure under Article 218(a) of the Labor Code.
As such, it can suspend the rules if it finds that the interests of justice will be better served if the strict compliance
with the rules should be relaxed. In short, a substantial compliance may be allowed by the NLRC especially in this
case where the party which submitted the bond is a multibillion company which can easily pay whatever monetary
award may be adjudged against it. Even if there is no proof of security deposit or collateral, the surety bond issued
by an accredited company is adequate to answer for the liability if any to be incurred by Smart.
136. Manila Doctors College v. Olores

GR No. 225044 October 3, 2016
In this case, petitioners contend that that they should not be faulted for failing to enforce the December 8, 2010
Decision of LA Amansec which had given respondent the option to receive separation pay in lieu of reinstatement
for the reason that it was respondent who failed to choose either relief. However, as above-discussed, the
reinstatement aspect of the LA's Decision is immediately executory and, hence, the active duty to reinstate the
employee - either actually or in payroll - devolves upon no other than the employer, even pending appeal.Thus,
while herein respondent may have been given an alternative option to instead receive separation pay in lieu of
reinstatement, there is no denying that, based on the provisions of the Labor Code and as attributed in
jurisprudence, it is his employer who should have first discharged its duty to reinstate him.
ARTICLE 230
137. Sy v. Fairland Knitcraft

GR NO. 182915 December 12, 2011
Article 224 contemplates the furnishing of copies of final decisions, orders or awards both to the parties and their
counsel in connection with the execution of such final decisions, orders or awards. However, for the purpose of
computing the period for filing an appeal from the NLRC to the CA, same shall be counted from receipt of the
decision, order or award by the counsel of record pursuant to the established rule that notice to counsel is notice to
party. Therefore, the reckoning period for their finality is likewise the counsel's date of receipt thereof, if a party is
represented by counsel. Hence, the date of receipt referred to in Sec. 14, Rule VII of the then in force New Rules
of Procedure of the NLRC which provides that decisions, resolutions or orders of the NLRC shall become executory
after 10 calendar days from receipt of the same, refers to the date of receipt by counsel.
40
138. IBM Nestle v. Nestle Phils
G.R. NO. 19675, September 23, 2015
It is wrong for petitioners' counsel to argue that since the NLRC Decision approving the parties' compromise
agreement was immediately executory, there was no need to file a motion for execution. It is settled that when a
compromise agreement is given judicial approval, it becomes more than a contract binding upon the parties.6
Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect
of a judgment. It is immediately executory and not appealable, except for vices of consent or forgery. The non-
fulfillment of its terms and conditions justifies the issuance of a writ of execution; in such an instance, execution
becomes a ministerial duty of the court. Stated differently, a decision on a compromise agreement is final and
executory. Such agreement has the force of law and is conclusive between the parties. It transcends its identity as
a mere contract binding only upon the parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules.
It is clear from the above law and rules that a judgment may be executed on motion within five years from the date
of its entry or from the date it becomes final and executory. After the lapse of such time, and before it is barred by
the statute of limitations, a judgment may be enforced by action. If the prevailing party fails to have the decision
enforced by a mere motion after the lapse of five years from the date of its entry (or from the date it becomes final
and executory), the said judgment is reduced to a mere right of action in favor of the person whom it favors and
must be enforced, as are all ordinary actions, by the institution of a complaint in a regular form.
139. Yupangco Cotton Mills v. CA

GR NO. 126322 January 16, 2002
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. Thus, a third party may avail himself of the following
alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the denial to the NLRC.
The remedies above mentioned are cumulative and may be resorted to by a third-party claimant independent of or
separately from and without need of availing of the others. If a third-party claimant opted to file a proper action to
vindicate his claim of ownership, he must institute an action, distinct and separate from that in which the judgment
is being enforced, with the court of competent jurisdiction even before or without need of filing a claim in the court
which issued the writ, the latter not being a condition sine qua non for the former.
140. Ando v. Campo

GR NO. 184007 February 16, 2011
Re: jurisdiction over third party claims
Regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the
enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers and tribunals of the
Department of Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is obnoxious
to the orderly administration of justice. The subject matter of petitioner's complaint is the execution of the NLRC
decision. Execution is an essential part of the proceedings before the NLRC. Jurisdiction, once acquired, continues
until the case is finally terminated, and there can be no end to the controversy without the full and proper
implementation of the commission's directives.
ART. 254. INJUNCTION PROHIBITED. - No temporary or permanent injunction or restraining order in any case involving
or growing out of labor disputes shall be issued by any court or other entity, except as otherwise provided in Articles 218
and 264 of this Code.
Re: extent of execution of judgement

The power of the NLRC to execute its judgment extends only to properties unquestionably belonging to the judgment
debtor alone. Thus, a sheriff has no authority to attach the property of any person except that of the judgment
debtor.
41
141. PAL v. Bichara
A judgment should be implemented according to the terms of its dispositive portion is a long and well-established
rule. As such, where the writ of execution is not in harmony with and exceeds the judgment which gives it life, the
writ has pro tanto no validity.
A companion to this rule is the principle of immutability of final judgments, which states that a final judgment may
no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct
what is perceived to be an erroneous conclusion of fact or law and regardless of what court renders it. Any attempt
to insert, change or add matters not clearly contemplated in the dispositive portion violates the rule on immutability
of judgments. But like any other rule, this principle has exceptions, namely: (1) the correction of clerical errors; (2)
the so-called nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and (4) whenever
circumstances transpire after the finality of the decision rendering its execution unjust and inequitable.
PAL's supervening retrenchment of its employees, which included Bichara, in July 1998, and his compulsory
retirement in July 2005, however, prevent the enforcement of the reinstatement of Bichara to the position of flight
purser under the June 16, 1997 Decision. Nonetheless, since this Decision had already settled the illegality of
Bichara's demotion with finality, this Court finds that Bichara should, instead, be awarded the salary differential of a
flight purser from a flight steward from the time of his illegal demotion on March 21, 1994 up until the time he was
retrenched in July 1998.
142. Guillermo v. Uson GR No. 198967 March 7, 2016

In the earlier labor cases of Claparols v. Court of Industrial Relations and A.C. Ransom Labor Union-CCLU v. NLRC,
persons who were not originally impleaded in the case were, even during execution, held to be solidarily liable with
the employer corporation for the latter’s unpaid obligations to complainant-employees. These included a newly-
formed corporation which was considered a mere conduit or alter ego of the originally impleaded corporation, and/or
the officers or stockholders of the latter corporation. Liability attached, especially to the responsible officers, even
after final judgment and during execution, when there was a failure to collect from the employer corporation the
judgment debt awarded to its workers.
The common thread running among the cases, is that the veil of corporate fiction can be pierced, and responsible
corporate directors and officers or even a separate but related corporation, may be impleaded and held answerable
solidarily in a labor case, even after final judgment and on execution, so long as it is established that such persons
have deliberately used the corporate vehicle to unjustly evade the judgment obligation, or have resorted to fraud,
bad faith or malice in doing so. When the shield of a separate corporate identity is used to commit wrongdoing and
opprobriously elude responsibility, the courts and the legal authorities in a labor case have not hesitated to step in
and shatter the said shield and deny the usual protections to the offending party, even after final judgment. The key
element is the presence of fraud, malice or bad faith.
143. Dutch Movers v. Lequin GR No. 210032 April 25, 2017

A corporation has a separate and distinct personality from its stockholders, and from other corporations it may be
connected with. However, such personality may be disregarded, or the veil of corporate fiction may be pierced
attaching personal liability against responsible person if the corporation's personality "is used to defeat public
convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor laws x x x."
Also, piercing the veil of corporate fiction is allowed where a corporation is a mere alter ego or a conduit of a person,
or another corporation.
Here, the veil of corporate fiction must be pierced and accordingly, petitioners should be held personally liable for
judgment awards because the peculiarity of the situation shows that they controlled DMI; they actively participated
in its operation such that DMI existed not as a separate entity but only as business conduit of petitioners. Petitioners
controlled DMI by making it appear to have no mind of its own, and used DMI as shield in evading legal liabilities,
including payment of the judgment awards in favor of respondents.
42
Piercing the veil of corporate fiction is allowed, and responsible persons may be impleaded, and be held solidarily
liable even after final judgment and on execution, provided that such persons deliberately used the corporate vehicle
to unjustly evade the judgment obligation, or resorted to fraud, bad faith, or malice in evading their obligation.
144. Genuino Agro-Industrial v. Romano

GR NO. 204782, September 18, 2019
It is an elementary and fundamental principle of corporation law that a corporation is an artificial being invested by
law with a personality separate and distinct from its stockholders and from other corporations to which it may be
connected. However, the corporate mask may be lifted and the corporate veil may be pierced when a corporation
is just but the alter ego of a person or of another corporation. Moreover, piercing the corporate veil may also be
resorted to by the courts or quasi-judicial bodies when "[the separate personality of a corporation] is used as a
means to perpetrate fraud or an illegal act, or as a vehicle for the evasion of an existing obligation, the circumvention
of statutes, or to confuse legitimate issues." Furthermore, the veil of corporate fiction may also be pierced as when
the same is made as a shield to confuse legitimate issues. Once the veil of corporate fiction is pierced, the separate
but related corporation becomes solidarity liable in labor cases.
Thus, for purposes of determining whether to pierce Genuino Ice's separate corporate personality and hold it
solidarily liable with the petitioner to pay the monetary claims due to the respondents, the following factual
circumstances have to be considered: (1) Petitioner and its supposed affiliate Genuino Ice have the same address,
sets of officers, and representative to this suit; (2) The Calamba City ice plant where respondents used to work
appears to be owned and operated by both the petitioner and Genuino Ice; (3) Genuino Ice, after being sued for
illegal dismissal before the Labor Arbiter, claimed that the respondents were actually employees of its affiliate
company, which is the petitioner; (4) Genuino Ice, despite claiming that employer, manifested during the
proceedings that it is willing to re-hire the respondents; (5) Respondents impleaded petitioner in the proceedings
before the Labor Arbiter; (6) Genuino Ice filed all the pleadings in the proceedings before the Labor Arbiter while
the petitioner stood idly by despite having been already impleaded by the respondents; (7) The Labor Arbiter found
the petitioner jointly liable with Vicar for illegally dismissing the respondents; (8) Petitioner, after the Labor Arbiter
handed its verdict, filed the appeal before the NLRC with Genuino Ice posting its appeal bond; (9) Genuino Ice, by
virtue of the surety bond it posted, acknowledged its obligation to pay the monetary claims awarded to the
respondents on account of the December 29, 2006 Decision of the Labor Arbiter, should the same not be reversed
on appeal, despite the fact that the one adjudged liable therein was not Genuino Ice but the petitioner; (10)
Respondents tried to collect from the appeal bond that was posted by Genuino Ice (and which the petitioner had
previously assured was sufficient) but failed to do so due to the opposition of Genuino Ice where it invoked its
separate corporate personality; and (11) Petitioner insists before this Court that, since the Labor Arbiter's Decision
adjudged it liable to pay the respondents' monetary claims, its affiliate, Genuino Ice, cannot be declared as solidarily
liable to pay the same claims for lack of factual and legal basis.
145. Carag v. NLRC

GR NO. 147590, April 2, 2007
To hold a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad
faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed.
Neither does bad faith arise automatically just because a corporation fails to comply with the notice requirement of
labor laws on company closure or dismissal of employees. The failure to give notice is not an unlawful act because
the law does not define such failure as unlawful. Such failure to give notice is a violation of procedural due process
but does not amount to an unlawful or criminal act. Such procedural defect is called illegal dismissal because it fails
to comply with mandatory procedural requirements, but it is not illegal in the sense that it constitutes an unlawful or
criminal act.
For a wrongdoing to make a director personally liable for debts of the corporation, the wrongdoing approved or
assented to by the director must be a patently unlawful act. Mere failure to comply with the notice requirement of
labor laws on company closure or dismissal of employees does not amount to a patently unlawful act. Patently
unlawful acts are those declared unlawful by law which imposes penalties for commission of such unlawful acts.
There must be a law declaring the act unlawful and penalizing the act.
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146. Roca v. Dabuyan
GR NO. 215281, March 5, 2018
All throughout the proceedings, petitioner has insisted that he was not the employer of respondents; that he did not
hire the respondents, nor pay their salaries nor exercise supervision or control over them, nor did he have the power
to terminate their services. In support of his claim, he attached copies of a lease agreement - a Contract of Lease
of a Building - executed by him and Oceanic Tours and Travel Agency (Oceanic) represented by Ewayan through
his attorney--in-fact Marilou Buenafe.
Thus, it would appear from the facts on record and the evidence that petitioner's building was an existing hotel
called the "RAF Mansion Hotel", which Oceanic agreed to continue to operate under the same name. There is no
connection between petitioner and Oceanic oilier than through the lease agreement executed by them; they are not
partners in the operation of RAF Mansion Hotel. It just so happens that Oceanic decided to continue operating the
hotel using the original name - "RAF Mansion Hotel".
The only claim respondents have in resorting to implead petitioner as a co- respondent in the labor case is the fact
that he is the owner of the entire building called "RAF Mansion Hotel" which happens to be the very same name of
the hotel which Ewayan and Oceanic continued to adopt, for reasons not evident in the pleadings. It must be noted
as well that when they originally filed the labor case, respondents did not include petitioner as respondent therein.
It was only later on that they moved to amend their complaint, impleading petitioner and thus amending the title of
the case to "x x x, Complainants, versus RAF Mansion Hotel Old Management and New Management/Victoriano
Ewayan and Rolando De Roca, Respondents." As correctly observed by petitioner, such belated attempt to implead
him in the labor case must be seen as an afterthought. Thus, to allow respondents to recover their monetary claims
from petitioner would necessarily result in their unjust enrichment.
147. Fernandez v. Newfieldstaff Solution

GR NO. 201979, July 10, 2013
There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of
the obligation so requires.
"A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations
incurred by them, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation
they represent. True, solidary liability may at times be incurred but only when exceptional circumstances warrant
such as, generally, in the following cases:
1. When directors and trustees or, in appropriate cases, the officers of a corporation -
(a) vote for or assent to patently unlawful acts of the corporation;
(b) act in bad faith or with gross negligence in directing the corporate affairs;
xxxx
In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the corporation
for the termination of employment of employees done with malice or in bad faith."
Bad faith does not connote bad judgment or negligence; It Imports dishonest purpose or some moral obliquity and
conscious doing of wrong; it means breach of a known duty through some motive or interest or ill will; it partakes of
the nature of fraud. To sustain such a finding, there should be evidence on record that an officer or director acted
maliciously or in bad faith in terminating the employee.
Reliefs against judgments/decisions rendered by the Commission
Petition for Certiorari under Rule 65
148. St. Martin Funeral Homes v. NLRC

GR No. 130866 September 16, 1998
The Supreme Court stated: Our mode of judicial review over decisions of the NLRC has for some time now been
understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of course, a special original
44
action limited to the resolution of jurisdictional issues, that is, lack or excess of jurisdiction and, in almost all cases
that have been brought to us, grave abuse of discretion amounting to lack of jurisdiction.
It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants exclusive appellate jurisdiction
to the Court of Appeals over all final adjudications of the Regional Trial Courts and the quasi-judicial agencies
generally or specifically referred to therein except, among others, "those falling within the appellate jurisdiction of
the Supreme Court in accordance with . . . the Labor Code of the Philippines under Presidential Decree No. 442,
as amended, . . . ." This would necessarily contradict what has been ruled and said all along that appeal does not
lie from decisions of the NLRC. Yet, under such excepting clause literally construed, the appeal from the NLRC
cannot be brought to the Court of Appeals, but to this Court by necessary implication.
Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the
Supreme Court are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should hence forth be initially filed in the Court of Appeals in strict observance of
the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.
149. Veloso v. China Airlines

GR No. 104302 July 14, 1999
It is settled that certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the
ordinary course of law against acts of public respondent. In this case, the plain and adequate remedy expressly
provided by law is a motion for reconsideration of the impugned resolution, to be made under oath and filed within
ten (10) days from receipt of the questioned resolution of the NLRC, a procedure which is jurisdictional.
This precipitate filing of petition for certiorari under Rule 65 without first moving for reconsideration of the assailed
resolution warrants the outright dismissal of this case. As we have consistently held in numerous cases, a motion
for reconsideration is indispensable, for it affords the NLRC an opportunity to rectify errors or mistakes it might have
committed before resort to the courts can be had. It is settled that certiorari will lie only if there is no appeal or any
other plain, speedy and adequate remedy in the ordinary course of law against acts of public respondent.
Appeal of the CA decision to Supreme Court under Rule 45
150. Hanjin Engineering v. CA

GR No. 165910 April 10, 2006
The aggrieved party is proscribed from assailing a decision or final order of the CA via Rule 65 because such
recourse is proper only if the party has no plain, speedy and adequate remedy in the course of law. In this case,
petitioners have an adequate remedy, namely, a Petition for Review on Certiorari under Rule 45 of the Rules of
Court. It must be stressed that the remedies of appeal under Rule 45 and an original action for certiorari under Rule
65 are mutually exclusive.
The general rule is that questions or findings of facts in the lower court, board or tribunal, and the probative weight
and sufficiency of the evidence upon which the said findings were based are not reviewable by certiorari under Rule
65 of the Revised Rules of Court. However, the sufficiency of the evidence may be inquired into in order to determine
whether jurisdictional facts were or were not proved or whether the lower court had exceeded its jurisdiction.
151. Stanfilco v. Tequillo

GR No. 209735 July 17, 2019
The Court's power to decide Rule 45 petitions in labor cases is not unlimited. The remedy from an adverse decision
or final order of the NLRC is to file a petition for certiorari before the CA on the ground that the former tribunal acted
with grave abuse of discretion in arriving at its determination of the case. It follows then that, in labor cases, the
Court enquires into the legal correctness of the CA's determination of the presence or absence of grave abuse of
discretion in the NLRC decision. Rule 45 petitions in labor cases ultimately concern whether the NLRC's decision
is tainted with grave abuse of discretion, and not whether said decision is correct on the merits.
45
ARTICLE 232
152. Bayer Employees Union v. Bayer

GR NO. 162943, December 6, 2010
An intra-union dispute refers to any conflict between and among union members, including grievances arising from
any violation of the rights and conditions of membership, violation of or disagreement over any provision of the
union's constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2,
Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as
inter/intra-union disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
Section 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members or by another labor organization;
(b) conduct of election of union and workers' association officers/nullification of election of union and workers' association
officers;
(c) audit/accounts examination of union or workers' association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of union and workers' association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or workers' association constitution and by-laws
(k) disagreements over chartering or registration of labor organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers' association membership;
(m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining
-
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers' association.
Section 2. Coverage. - Other related labor relations disputes shall include any conflict between a labor union and the
employer or any individual, entity or group that is not a labor organization or workers' association. This includes: (1)
cancellation of registration of unions and workers' associations; and (2) a petition for interpleader.
It is clear from the foregoing that the issues raised by petitioners do not fall under any of the aforementioned
circumstances constituting an intra-union dispute. More importantly, the petitioners do not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio group (REUBP) which is the true set of union officers.
Instead, the issue raised pertained only to the validity of the acts of management in light of the fact that it still has
an existing CBA with EUBP.
153. Montano v. Verceles GR No. 168583 July 26, 2010

The matter of venue becomes problematic when the intra‐union dispute involves a federation, because the
geographical presence of a federation may encompass more than one administrative region. Pursuant to its
authority under Article 226, this Bureau exercises original jurisdiction over intra‐union disputes involving federations.
It is well‐settled that FFW, having local unions all over the country, operates in more than one administrative region.
Therefore, this Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of or
disagreement over any provision of its constitution and by‐laws.
154. Diokno v. Cacdac GR No. 168475 July 4, 2007

As defined, an intra-union conflict refer to a conflict within or inside a labor union, while inter-union controversy or
dispute is one occurring or carried on between and among unions. More specifically, an intra-union dispute is
defined under Sec. (z), Rule I of the Rules Implementing Rule V of the Labor Code, viz:
(z) "Intra-Union Dispute" refers to any conflict between and among union members, and includes all disputes or
grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union,
46
including cases arising from chartering or affiliation of labor organizations or from any violation of the rights and
conditions of union membership provided for in the Code.
The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves a
dispute within or inside FLAMES, a labor union. Despite the allegations that Daya, et. al. sought help from non-
members, it does not detract from the real character of the controversy. It remains as one which involves the
grievance over the constitution and by-laws of a union, and it is a controversy involving members of the union.
Moreover, the non-members of the union who were alleged to have aided private respondents Daya, et al., are not
parties in the case.
155. La Tondena Workers Union v. SOLE GR No. 96821 December 9, 1994

Union accounts examiners of the Bureau" mentioned in Rule 1, sec. 1(ff) of the implementing rules as having the
power to audit the books of accounts of unions are actually officials of the BLR because the word "Bureau" is defined
in Rule 1, sec. 1(b) of the same rules as the Bureau of Labor Relations.
The delegation of authority to union accounts examiners in Rule 1, sec. 1(ff) is not exclusive. By indorsing the case
to the BLR, the Secretary of Labor and Employment must be presumed to have authorized the BLR to act on his
behalf. Independently of any delegation, the BLR had power of its own to conduct the examination of accounts in
this case as provided by Book IV, Title VII, Chapter 4, sec. 16 of the Administrative Code of 1987:
... It shall also set policies, standards, and procedure relating to collective bargaining agreements, and the
examination of financial records of accounts of labor organizations to determine compliance with relevant
laws.
The Labor Code (Art 226), as amended by RA 6715, likewise authorizes the BLR to decide intra-union disputes.
This includes the examinations of accounts. Conflicts affecting labor-management relations are apart from intra-
union conflicts, as is apparent from the text of Art. 226.
156. Abbot Laboratories v. Abbot Laboratories Employees Union GR No. 131374

The appellate jurisdiction of the Secretary of Labor and Employment is limited only to a review of cancellation
proceedings decided by the Bureau of Labor Relations in the exercise of its exclusive and original jurisdiction. The
Secretary of Labor and Employment has no jurisdiction over decisions of the Bureau of Labor Relations rendered
in the exercise of its appellate power to review the decision of the Regional Director in a petition to cancel the
union's certificate of registration, said decisions being final and unappealable.
The decisions of the BLR brought before it on appeal (appellate jurisdiction) is FINAL and UNAPPEALABLE. Hence,
CA has no jurisdiction over an appeal from the decision of the BLR in its appellate jurisdiction. Nevertheless, BLR’s
decision may be brought to the CA via Rule 65 petition but must be within the 60 day period.
157. Takata Corporation v. BLR GR No. 196276 June 4, 2014

Since Paralegal Officer Mole's appeal filed with the BLR was not specifically authorized by respondent, such appeal
is considered to have not been filed at all. It has been held that "if a complaint is filed for and in behalf of the plaintiff
who is not authorized to do so, the complaint is not deemed filed. An unauthorized complaint does not produce any
legal effect.”
ARTICLE 233
158. Magbanua v. Uy GR No. 161003 May 6, 2005

A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their
differences and thus avoid or put an end to a lawsuit. They adjust their difficulties in the manner they have agreed
upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the danger of
losing. Verily, the compromise may be either extrajudicial (to prevent litigation) or judicial (to end a litigation).
47
Rights may be waived through a compromise agreement, notwithstanding a final judgment that has already settled
the rights of the contracting parties. To be binding, the compromise must be shown to have been voluntarily, freely
and intelligently executed by the parties, who had full knowledge of the judgment. Furthermore, it must not be
contrary to law, morals, good customs and public policy. The Court is tasked to determine the legality of a
compromise agreement after final judgment, not the prudence of entering into one. The validity of the agreement is
determined by compliance with the requisites and principles of contracts, not by when it was entered into. A
compromise of a final judgment operates as a novation of the judgment obligation, upon compliance with either
requisite.
When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the parties.
Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect
of a judgment. It is immediately executory and not appealable, except for vices of consent or forgery. There is no
justification to disallow a compromise agreement, solely because it was entered into after final judgment. The validity
of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was
entered into.
The presence or the absence of counsel when a waiver is executed does not determine its validity. There is no law
requiring the presence of a counsel to validate a waiver. The test is whether it was executed voluntarily, freely and
intelligently; and whether the consideration for it was credible and reasonable.
159. Philippine Transmarine Carriers v. Pelagio GR No. 211302 August 12, 2015
A valid compromise agreement may render a pending case moot and academic. However, the parties may opt to
put therein clauses, conditions, and the like that would prevent a pending case from becoming moot and academic
- such as when the execution of such agreement is without prejudice to the final disposition of the said case. After
all, a compromise agreement is still a contract by nature, and as such, the parties are free to insert clauses to modify
its legal effects, so long as such modifications are not contrary to law, morals, good customs, public order, or public
policy.
In this case, while this document may be properly deemed as a compromise agreement, it is conditional in nature,
considering that it is without prejudice to the certiorari proceedings pending before the CA, i.e., it obliges Pelagio to
return the aforesaid proceeds to petitioners should the CA ultimately rule in the latter's favor. The Court ruled that
since the agreement in that case was fair to the parties in that it provided available remedies to both parties, the
certiorari petition was not rendered moot despite the employer's satisfaction of the judgment award, as the
respondent had obliged himself to return the payment if the petition would be granted.
160. Magsaysay Maritime v. De Jesus GR No. 203943 August 30, 2017

While the general rule is that a valid compromise agreement has the power to render a pending case moot and
academic, being a contract, the parties may opt to modify the legal effects of their compromise agreement to prevent
the pending case from becoming moot. A conditional settlement of a judgement award may be treated as a
compromise agreement and a judgement on the merits of the case if it turns out to be highly prejudicial to one of
the parties.
161. Arellano v. Powertech Corporation GR No. 150861 January 22, 2008

Collusion is a species of fraud. Art. 227 of the Labor Code empowers the NLRC to void a compromise agreement
for fraud. The powers of an agent may be circumscribed either:
a. by putting a clause in the SPA providing a minimum amount upon which the agent may compromise on
behalf of the principal; or
b. by providing that some acts of the agent are conditional and subject to the approval of the principal.
162. Philippine Journalist, Inc. v. NLRC

The nature of a compromise is spelled out in Article 2028 of the New Civil Code: it is "a contract whereby the parties,
by making reciprocal concessions, avoid litigation or put an end to one already commenced." Parties to a
48
compromise are motivated by "the hope of gaining, balanced by the dangers of losing." It contemplates mutual
concessions and mutual gains to avoid the expenses of litigation, or, when litigation has already begun, to end it
because of the uncertainty of the result.
Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the
parties, in conformity with the basic policy of the State "to promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor
or industrial disputes." Thus, contrary to the allegation of petitioners, the execution and subsequent approval by the
NLRC of the agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual,
nor rendered it "moot and academic." The agreement becomes part of the judgment of the court or tribunal, and as
a logical consequence, there is an implicit waiver of the right to appeal.
In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the settlement
itself and gave specific individual consent. It must be remembered that a compromise agreement is also a contract;
it requires the consent of the parties, and it is only then that the agreement may be considered as voluntarily entered
into.
163. Periquet v. NLRC

GR No. 91298 June 22, 1990
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. As in this case.
164. Aujero v. Philippine Communications Satellite Corporation

GR No. 193484, January 18, 2012
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible
person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of
what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
151. Carolina’s Lace Shoppe v. Maquilan

GR No. 219419 April 10, 2019
Resignation letters which are in the nature of a quitclaim, lopsidedly worded to free the employer from liabilities
reveal the absence of voluntariness.
ARTICLE 238
152. Colegio de San Juan de Letran v. Association of Employees and Faculty Union
GR NO. 141471, September 18, 2000
If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition
for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the expiry
date of such agreement. No petition for certification election for any representation issue may be filed after the lapse
of the sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a
new CBA shall have been validly executed. Hence, the contract bar rule still applies.
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Management has the prerogative to discipline its employees for insubordination. But when the exercise of such
management right tends to interfere with the employees' right to self-organization, it amounts to union-busting and
is therefore a prohibited act.
Module 2
ARTICLE 240
153. Mariwasa Siam Ceramics, Inc. v. SOLE

GR NO. 183317, December 21, 2009
In case the applicant is an independent union, the names of all its members comprising at least twenty percent
(20%) of all the employees in the bargaining unit where it seeks to operate is one of the requirements of registration
of a labor organization.
It is worthy to note, however, that the affidavit does not mention the identity of the people who allegedly forced and
deceived the affiant into joining the union, much less the circumstances that constituted such force and deceit.
Indeed, not only was this allegation couched in very general terms and sweeping in nature, but more importantly, it
was not supported by any evidence whatsoever. In the instant case, the affidavits of recantation were executed
after the identities of the union members became public, i.e., after the union filed a petition for certification election
on May 23, 2005, since the names of the members were attached to the petition. The purported withdrawal of
support for the registration of the union was made after the documents were submitted to the DOLE, Region IV-A.
The logical conclusion, therefore, following jurisprudence, is that the employees were not totally free from the
employer’s pressure, and so the voluntariness of the employees’ execution of the affidavits becomes suspect.
154. Electromat Manufacturing v. Lagunzad

GR NO. 172699, July 27, 2011
Undoubtedly, the intent of the law in imposing lesser requirements in the case of a branch or local of a registered
federation or national union is to encourage the affiliation of a local union with a federation or national union in order
to increase the local unions bargaining powers respecting terms and conditions of labor. D.O. 40-03 represents an
expression of the governments implementing policy on trade unionism. It builds upon the old rules by further
simplifying the requirements for the establishment of locals or chapters. As in D.O. 9, we see nothing contrary to
the law or the Constitution in the adoption by the Secretary of Labor and Employment of D.O. 40-03 as this
department order is consistent with the intent of the government to encourage the affiliation of a local union with a
federation or national union to enhance the locals bargaining power. If changes were made at all, these were those
made to recognize the distinctions made in the law itself between federations and their local chapters, and
independent unions; local chapters seemingly have lesser requirements because they and their members are
deemed to be direct members of the federation to which they are affiliated, which federations are the ones subject
to the strict registration requirements of the law.
155. Eagle Ridge Golf and Country Club v. CA

GR NO. 178989, March 18, 2010
Eagle Ridge assails the inclusion of the additional four members allegedly for not complying with what it termed as
"the sine qua non requirements" for union member applications under the Union’s constitution and by-laws,
specifically Sec. 2 of Art. IV. We are not persuaded.
Any seeming infirmity in the application and admission of union membership, most especially in cases of
independent labor unions, must be viewed in favor of valid membership. The right of employees to self-organization
and membership in a union must not be trammeled by undue difficulties. In this case, when the Union said that the
four employee-applicants had been admitted as union members, it is enough to establish the fact of admission of
the four that they had duly signified such desire by accomplishing the membership form. The fact, as pointed out
by Eagle Ridge, that the Union, owing to its scant membership, had not yet fully organized its different committees
evidently shows the direct and valid acceptance of the four employee applicants rather than deter their admission—
as erroneously asserted by Eagle Ridge.
50
We have in precedent cases said that the employees' withdrawal from a labor union made before the filing of the
petition for certification election is presumed voluntary, while withdrawal after the filing of such petition is
considered to be involuntary and does not affect the same. Now then, if a withdrawal from union membership
done after a petition for certification election has been filed does not vitiate such petition, is it not but logical to
assume that such withdrawal cannot work to nullify the registration of the union?
156. Tagaytay Highlands v. Tagaytay Highlands Employees Union-PGTWO

GR NO. 142000, January 22, 2003
After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack. It
may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book IV
of the "Rules to Implement the Labor Code." The grounds for cancellation of union registration are provided for
under Article 239 of the Labor Code. The inclusion in a union of disqualified employees is not among the grounds
for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 139 of above-quoted Article 239 of the Labor Code. THEU, having
been validly issued a certificate of registration, should be considered to have already acquired juridical personality
which may not be assailed collaterally. As for petitioner's allegation that some of the signatures in the petition for
certification election were obtained through fraud, false statement and misrepresentation, the proper procedure is,
as reflected above, for it to file a petition for cancellation of the certificate of registration, and not to intervene in a
petition for certification election.
157. SS Ventures International v. SS Ventures Labor Union

G.R. No. 161690, July 23, 2008
The right to form, join, or assist a union is specifically protected by Art. XIII, Section 3 of the Constitution and such
right, according to Art. III, Sec. 8 of the Constitution and Art. 246 of the Labor Code, shall not be abridged. Once
registered with the DOLE, a union is considered a legitimate labor organization endowed with the right and privileges
granted by law to such organization. While a certificate of registration confers a union with legitimacy with the
concomitant right to participate in or ask for certification election in a bargaining unit, the registration may be
cancelled or the union may be decertified as the bargaining unit, in which case the union is divested of the status
of a legitimate labor organization. Among the grounds for cancellation is the commission of any of the acts
enumerated in Art. 239(a) of the Labor Code, such as fraud and misrepresentation in connection with the adoption
or ratification of the union’s constitution and like.
To decertify a union, it is not enough to show that the union includes ineligible employees in its membership. It must
also be shown that there was misrepresentation, false statement, or fraud in connection with the application for
registration and the supporting documents, such as the adoption or ratification of the constitution and by-laws or
amendments thereto and the minutes of ratification of the constitution or by-laws, among other documents.
ARTICLE 245-248
158. Heritage Hotel Manila v. NUWHRAIN GR No. 178296 January 12, 2011
Jurisdiction remained with the BLR despite the BLR Director's inhibition. When the DOLE Secretary resolved the
appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not
himself perform. She did so pursuant to her power of supervision and control over the BLR. The DOLE Secretary,
as the person exercising the power of supervision and control over the BLR, has the authority to directly exercise
the quasi-judicial function entrusted by law to the BLR Director.
Re: grounds for cancellation of registration

It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance
with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the
cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact compliance
with reporting requirements. Yet there is more at stake in this case than merely monitoring union activities and
requiring periodic documentation thereof. Failure to comply with the above requirements shall not be a ground for
cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty.
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159. Republic v. Kawashima Textile
GR NO. 160352 July 23, 2008
When the issue of the effect of mingling was brought to the fore in Toyota,48 the Court, citing Article 245 of the
Labor Code, as amended by R.A. No. 6715, held:
“Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees
is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one,
an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights
of a legitimate labor organization, including the right to file a petition for certification election for the purpose of
collective bargaining. x x x”
Then came Tagaytay Highlands Int’l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the
Court abandoned the view in Toyota and Dunlop and reverted to its pronouncement in Lopez that while there is a
prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor
Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been
registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the
grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false
statement or fraud under Article 239 of the Labor Code.
Re: Role of employer in petition for certification election

Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification
election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the employer. The choice of their
representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein;
it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even
a mere allegation that some employees participating in a petition for certification election are actually managerial
employees will lend an employer legal personality to block the certification election. The employer's only right in the
proceeding is to be notified or informed thereof.
ARTICLE 250
160. Del Pilar Academy v. Del Pilar Academy Union GR NO. 170112 April 30, 2008
The collection of agency fees in an amount equivalent to union dues and fees, from employees who are not union
members, is recognized by Article 248(e). Employees of an appropriate CBU who are not members of the
recognized collective bargaining agent may be assessed reasonable fees equivalent to the dues and other fees
paid by the recognized collective bargaining agent, if such non-union members accept the benefits under the
collective bargaining agreement.
No requirement of written authorization from the non-union employees is needed to effect a valid check off. Article
248(e) makes it explicit that Article 241, paragraph (o), requiring written authorization is inapplicable to non-union
members, especially in this case where the non-union employees receive several benefits under the CBA. The
employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction of agency
fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the union's right to agency
fees is neither contractual nor statutory, but quasi-contractual, deriving from the established principle that non-union
employees may not unjustly enrich themselves by benefiting from employment conditions negotiated by the
bargaining union.
52
161. Marino, Jr. v. Gamilla
GR NO. 149763, July 7, 2009
A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper
bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from
the latter's wages and remits them directly to the Union.
General rule is that attorney’s fees, negotiation fees, and other similar charges may only be collected from union
funds, not from the amounts that pertain to individual union members. As an exception, special assessments or
other extraordinary fees may be levied upon or checked off from any amount due an employee for as long as there
is proper authorization by the employee.
The Court finds that, in the instant case, the P42 million economic benefits package granted by UST did not
constitute union funds from whence the P4.2 million could have been validly deducted as attorney’s fees. The P42
million economic benefits package was not intended for the USTFU coffers, but for all the members of the bargaining
unit USTFU represented, whether members or non-members of the union.
162. Ergonomic Systems v. Enaje

GR No. 195163 December 13, 2017
The Federation could not demand the dismissal from employment of the union officers on the basis of the union
security clause found in the CBA between ESPI and the local union. Only the local union may invoke the union
security clause in the CBA.
Even assuming that the union officers were disloyal to the Federation and committed acts inimical to its interest,
such circumstance did not give the Federation the prerogative to demand the union officers' dismissal pursuant to
the union security clause which, in the first place, only the union may rightfully invoke. Certainly, it does not give the
Federation the privilege to act independently of the local union. At most, what the Federation could do is to refuse
to recognize the local union as its affiliate and revoke the charter certificate it issued to the latter. In fact, even if the
local union itself disaffiliated from the Federation, the latter still has no right to demand the dismissal from
employment of the union officers and members because concomitant to the union's prerogative to affiliate with a
federation is its right to disaffiliate therefrom.
ARTICLE 251
163. Heritage Hotel Manila v. NUWHRAIN

GR NO. 178296, January 12, 2011
It is undisputed that appellee failed to submit its annual financial reports and list of individual members in
accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead
to the cancellation of union registration. Article 239 recognizes the regulatory authority of the State to exact
compliance with reporting requirements. Yet there is more at stake in this case than merely monitoring union
activities and requiring periodic documentation thereof.
The more substantive considerations involve the constitutionally guaranteed freedom of association and right of
workers to self-organization. Also involved is the public policy to promote free trade unionism and collective
bargaining as instruments of industrial peace and democracy.1avvphi1 An overly stringent interpretation of the
statute governing cancellation of union registration without regard to surrounding circumstances cannot be
allowed. Otherwise, it would lead to an unconstitutional application of the statute and emasculation of public policy
objectives. Worse, it can render nugatory the protection to labor and social justice clauses that pervades the
Constitution and the Labor Code.
Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable
for this Office to order the cancellation of the union and penalize the entire union membership on the basis of the
negligence of its officers.
53
164. Abaria v. NLRC
GR NO. 154113, December 7, 2011
Art. 248 (g) of the Labor Code, as amended, makes it an unfair labor practice for an employer “[t]o violate the duty
to bargain collectively” as prescribed by the Code. The applicable provision in this case is Art. 253 which provides:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. – When there
is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party
shall terminate nor modify such agreement during its lifetime. However, either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by
the parties.
Records of the NCMB and DOLE confirmed that NAMA-MCCH-NFL had not registered as a labor organization,
having submitted only its charter certificate as an affiliate or local chapter of NFL. Not being a legitimate labor
organization, NAMA-MCCH-NFL is not entitled to those rights granted to a legitimate labor organization under Art.
242, specifically:
(a) To act as the representative of its members for the purpose of collective bargaining;
(b) To be certified as the exclusive representative of all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining;
NAMA-MCCH-NFL is not the labor organization certified or designated by the majority of the rankand- file hospital
employees to represent them in the CBA negotiations but the NFL, as evidenced by CBAs concluded in 1987,
1991 and 1994. While it is true that a local union has the right to disaffiliate from the national federation, NAMA-
MCCH-NFL has not done so as there was no any effort on its part to comply with the legal requisites for a valid
disaffiliation, Nava and her group simply demanded that MCCHI directly negotiate with the local union which has
not even registered as one. In any case, NAMA-MCCH-NFL at the time of submission of said proposals was not a
duly registered labor organization; hence it cannot legally represent MCCHI’s rank-and-file employees for
purposes of collective bargaining. Hence, NAMA-MCCH-NFL cannot demand from MCCHI the right to bargain
collectively in their behalf. Hence, MCCHI’s refusal to bargain then with NAMA-MCCH-NFL cannot be considered
an unfair labor practice to justify the staging of the strike
165. Peninsula Employees Union v. Esquivel

GR No. 218454 December 1, 2016
The recognized collective bargaining union which successfully negotiated the CBA with the employer is given the
right to collect a reasonable fee called "agency fee" from non-union members who are employees of the appropriate
bargaining unit, in an amount equivalent to the dues and other fees paid by union members, in case they accept
the benefits under the CBA. Case law interpreting Article 250 (n) and (o), mandates the submission of 3
documentary requisites in order to justify a valid levy of increased union dues. These are:
1) an authorization by a written resolution of the majority of all the members at the general membership
meeting duly called for the purpose;
2) the secretary's record of the minutes of the meeting, which shall include the list of all members present,
the votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees;
and
3) individual written authorizations for check-off duly signed by the employees concerned
166. Ergonomic Systems v. Enaje

G.R. No. 195163, December 13, 2017
Even assuming that the union officers were disloyal to the Federation and committed acts inimical to its interest,
such circumstance did not give the Federation the prerogative to demand the union officers' dismissal pursuant to
the union security clause which, in the first place, only the union may rightfully invoke. Certainly, it does not give the
Federation the privilege to act independently of the local union. At most, what the Federation could do is to refuse
to recognize the local union as its affiliate and revoke the charter certificate it issued to the latter. In fact, even if the
local union itself disaffiliated from the Federation, the latter still has no right to demand the dismissal from
employment of the union officers and members because concomitant to the union's prerogative to affiliate with a
federation is its right to disaffiliate therefrom.
54
Nature of CBA
167. Wesleyan University v. Wesleyan University Faculty and Staff Association

GR NO. 181806, March 12, 2014
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate labor
organization concerning the terms and conditions of employment. Like any other contract, it has the force of law
between the parties and, thus, should be complied with in good faith. Unilateral changes or suspensions in the
implementation of the provisions of the CBA, therefore, cannot be allowed without the consent of both parties.
When the provision of the CBA is clear, leaving no doubt on the intention of the parties, the literal meaning of the
stipulation shall govern. However, if there is doubt in its interpretation, it should be resolved in favor of labor, as
this is mandated by no less than the Constitution.
ARTICLE 253
168. Samahan ng Manggagawa sa Hanjin Shipyard v. BLR

GR NO. 211145 October 14, 2015
As Article 246 (now 252) of the Labor Code provides, the right to self-organization includes the right to form, join or
assist labor organizations fer the purpose of collective bargaining through representatives of their own choosing
and to engage in lawful concerted activities for the same purpose for their mutual aid and protection. This is in line
with the policy of the State to foster the free and voluntary organization of a strong and united labor
movement as well as to make sure that workers participate in policy and decision-making processes affecting their
rights, duties and welfare.
The right to form a union or association or to self-organization comprehends two notions, to wit:
(a) the liberty or freedom, that is, the absence of restraint which guarantees that the employee may act for
himself without being prevented by law; and
(b) the power, by virtue of which an employee may, as he pleases, join or refrain from joining an association.
In view of the revered right of every worker to self-organization, the law expressly allows and even encourages the
formation of labor organizations.
A labor organization is defined as "any union or association of employees which exists in whole or in part for the
purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment."
Labor organization has two broad rights: (1) to bargain collectively and (2) to deal with the employer concerning
terms and conditions of employment. A union refers to any labor organization in the private sector organized for
collective bargaining and for other legitimate purpose, while a workers' association is an organization of workers
formed for the mutual aid and protection of its members or for any legitimate purpose other than collective
bargaining.
The existence of employer-employee relationship is not mandatory in the formation of workers' association. What
the law simply requires is that the members of the workers' association, at the very least, share the same interest.
The very definition of a workers' association speaks of "mutual aid and protection." The Court agrees with
Samahan's argument that the right to form a workers' association is not exclusive to ambulant, intermittent and
itinerant workers. The option to form or join a union or a workers' association lies with the workers themselves,
and whether they have definite employers or not.
169. United Pepsi-Cola Supervisory Union v. Laguesma

GR NO. 122226 March 25, 1998
The term "manager" generally refers to "anyone who is responsible for subordinates and other organizational
resources." As a class, managers constitute three levels of a pyramid:
1. FIRST-LINE MANAGERS — The lowest level in an organization at which individuals are responsible for
the work of others is called first-line or first-level management. First-line managers direct operating
employees only; they do not supervise other managers.
55
2. MIDDLE MANAGERS — The term middle management can refer to more than one level in an
organization. Middle managers direct the activities of other managers and sometimes also those of
operating employees. Middle managers' principal responsibilities are to direct the activities that implement
their organizations' policies and to balance the demands of their superiors with the capacities of their
subordinates.
3. TOP MANAGERS — Composed of a comparatively small group of executives, top management is
responsible for the overall management of the organization. It establishes operating policies and guides the
organization's interactions with its environment.
Unlike supervisors who basically merely direct operating employees in line with set tasks assigned to them, route
managers are responsible for the success of the company's main line of business through management of their
respective sales teams. Such management necessarily involves the planning, direction, operation and evaluation
of their individual teams and areas which the work of supervisors does not entail. The route managers cannot thus
possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the simple
direction or supervision of operating employees to accomplish objectives set by those above them.
The guarantee of organizational right in Art. III, Section 8 infringed by a ban against managerial employees forming
a union. The right guaranteed in Art. III, Section 8 is subject to the condition that its exercise should be for purposes
"not contrary to law." In the case of Art. 245, there is a rational basis for prohibiting managerial employees from
forming or joining labor organizations: The rationale for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with a Union, the latter might not be assured of their loyalty
to the Union in view of evident conflict of interests. The Union can also become company- dominated with the
presence of managerial employees in Union membership.
170. Metrolab v. Confesor

GR NO. 108855 February 28, 1996
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by
reason of their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees
and hence, are likewise privy to sensitive and highly confidential records.
The rationale behind the exclusion of confidential employees from the bargaining unit of the rank and file employees
and their disqualification to join any labor organization was succinctly discussed in Philips Industrial Development
v. NLRC:
“This rationale holds true also for confidential employees such as accounting personnel, radio and telegraph
operators, who having access to confidential information, may become the source of undue advantage. Said
employees may act as a spy or spies of either party to a collective bargaining agreement. This is specially true in
the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the
establishment. To allow the confidential employees to join the existing Union of the rank-and-file would be in
violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their
functions/positions are expressly excluded.”
The dangers sought to be prevented, particularly the threat of conflict of, interest and espionage, are not eliminated
by non-membership of Metrolab's executive secretaries or confidential employees in the Union. Forming part of the
bargaining unit, the executive secretaries stand to benefit from any agreement executed between the Union and
Metrolab. Such a scenario, thus, gives rise to a potential conflict between personal interests and their duty as
confidential employees to act for and in behalf of Metrolab. They do not have to be union members to affect or
influence either side.
56
171. San Miguel Foods v. San Miguel Corporation Supervisors and Exempt Union
GR NO. 146206 August 1, 2011
A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and
protection of the employer's property. Confidential employees, such as accounting personnel, should be excluded
from the bargaining unit, as their access to confidential information may become the source of undue advantage.
However, such fact does not apply to the position of Payroll Master and the whole gamut of employees who, as
perceived by petitioner, has access to salary and compensation data. The CA correctly held that the position of
Payroll Master does not involve dealing with confidential labor relations information in the course of the performance
of his functions. Since the nature of his work does not pertain to company rules and regulations and confidential
labor relations, it follows that he cannot be excluded from the subject bargaining unit.
ARTICLE 255
172. Samahang Manggagawa sa Charter Chemical v. Charter Chemical

GR NO. 168717, March 16, 2011
The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as
a legitimate labor organization.
The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are
not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory
employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it
of its status as a legitimate labor organization.
Re: standing of employer in certicifaction proceedings:

“Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification
election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the employer. The choice of their
representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein;
it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even
a mere allegation that some employees participating in a petition for certification election are actually managerial
employees will lend an employer legal personality to block the certification election. The employer's only right in the
proceeding is to be notified or informed thereof.”
173. Cathay Pacific Steel Corporation v. CA

GR NO. 164561, August 30, 2006
Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial
actions, if the exercise of such authority is not merely routinary or clerical in nature but requires the use of
independent judgment; whereas managerial employees are those who are vested with powers or prerogatives to
lay down and execute management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or
discipline employees.
In this case, being a supervisory employee of CAPASCO, Tamondong cannot be prohibited from joining or
participating in the union activities.
Supervisory v. Managerial
Article 212(m) of the Labor Code, as amended, differentiates supervisory employees from managerial
employees, to wit:
1. Supervisory employees are those who, in the interest of the employer, effectively recommend such
managerial actions, if the exercise of such authority is not merely routinary or clerical in nature but requires
the use of independent judgment;
2. Managerial employees are those who are vested with powers or prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or discipline
employees.
57
174. AIM v. AIM Faculty Association
GR No. 207971, January 23, 2017
In Holy Child Catholic School v. Hon. Sto. Tomas, this Court declared that "[i]n case of alleged inclusion of
disqualified employees in a union, the proper procedure for an employer like petitioner is to directly file a petition for
cancellation of the union's certificate of registration due to misrepresentation, false statement or fraud under the
circumstances enumerated in Article 239 of the Labor Code, as amended."
On the basis of the ruling in the above-cited case, it can be said that petitioner was correct in filing a petition for
cancellation of respondent's certificate of registration. Petitioner's sole ground for seeking cancellation of
respondent's certificate of registration - that its members are managerial employees and for this reason, its
registration is thus a patent nullity for being an absolute violation of Article 245 of the Labor Code which declares
that managerial employees are ineligible to join any labor organization --- is, in a sense, an accusation that
respondent is guilty of misrepresentation for registering under the claim that its members are not managerial
employees.
Article 212 of the Labor Code defines managerial employees as:

ART. 212. Definitions.
Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are
those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.'
There are, therefore, two kinds of managerial employees under Art. 212 of the Labor Code. Those who 'lay down
management policies', such as the Board of Trustees, and those who 'execute management policies and/or hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees'.
ARTICLE 256
175. Holy Child Catholic School v. Sto. Tomas

GR NO. 179146 July 23, 2013
In Tagaytay Highlands International Golf Club, Inc. v. Tagaytay International Highlands Employees Union - PTGWO,
the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a
legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership
cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling
was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code.
Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules. When a similar issue
confronted this Court close to three years later, the above ruling was substantially quoted in Samahang
Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (SMCC-
Super) v. Charter Chemical and Coating Corporation. In unequivocal terms, We reiterated that the alleged inclusion
of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees
does not divest it of its status as a legitimate labor organization. Following the doctrine laid down in Kawashima and
SMCC-Super, it must be stressed that petitioner cannot collaterally attack the legitimacy of private respondent by
praying for the dismissal of the petition for certification election.
ARTICLE 258-260
176. T&H Shopfitters Corporation v. T&H Shopfitters Union

GR NO. 191714, February 26, 2014
The test of whether an employer has interfered with and coerced employees in the exercise of their right to self
organization, that is, whether the employer has engaged in conduct which, it may reasonably be said, tends to
interfere with the free exercise of employees' rights; and that it is not necessary that there be direct evidence that
any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable
inference that anti-union conduct of the employer does have an adverse effect on self-organization and collective
bargaining.
58
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion
of union members, before the scheduled certification election; 2) the active campaign by the sales officer of
petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after
the field trip to the polling center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5)
assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members, all reek of interference on the part of petitioners. Indubitably, the various acts
of petitioners, taken together, reasonably support an inference that, indeed, such were all orchestrated to restrict
respondents’ free exercise of their right to self–organization. The Court is of the considered view that petitioners’
undisputed actions prior and immediately before the scheduled certification election, while seemingly innocuous,
unduly meddled in the affairs of its employees in selecting their exclusive bargaining representative.
177. Ren Transport v. NLRC

GR NO. 188020, June 27, 2016
Violation of the duty to bargain collectively is an unfair labor practice under Article 258(g) of the Labor Code. Ren
Transport had a duty to bargain collectively with SMART. Under Article 263 in relation to Article 267 of the Labor
Code, it is during the freedom period — or the last 60 days before the expiration of the CBA — when another union
may challenge the majority status of the bargaining agent through the filing of a petition for a certification election.
If there is no such petition filed during the freedom period, then the employer "shall continue to recognize the majority
status of the incumbent bargaining agent where no petition for certification election is filed."
Interference with the employees' right to self-organization is considered an unfair labor practice under Article 258
(a) of the Labor Code. In this case, the labor arbiter found that the failure to remit the union dues to SMART and
the voluntary recognition of RTEA were clear indications of interference with the employees' right to self-
organization.
178. Digital Telecommunication Phils. v. Digitel Employees Union

GR NO. 184903, October 10, 2012
Dismissal constitutes an unfair labor practice under Article 248(c) of the Labor Code which refers to contracting out
services or functions being performed by union members when such will interfere with, restrain or coerce employees
in the exercise of their rights to self-organization.
Bad faith was manifested by the timing of the closure of Digiserv and the rehiring of some employees to Interactive
Technology Solutions, Inc. (I-tech), a corporate arm of Digitel. The timing of the creation of I-tech is dubious. It was
incorporated while the labor dispute within Digitel was pending. I-tech’s primary purpose was to provide call
center/customer contact service, the same service provided by Digiserv. It conducts its business inside the Digitel
office. The former head of Digiserv is also an officer of I-tech. Thus, when Digiserv was closed down, some of the
employees presumably non-union members were rehired by I-tech. Thus, the closure of Digiserv pending the
existence of an assumption order coupled with the creation of a new corporation performing similar functions as
Digiserv leaves no iota of doubt that the target of the closure are the union member-employees. These factual
circumstances prove that Digitel terminated the services of the affected employees to defeat their security of tenure.
179. General Santos Coca-Cola Plant Free Workers Union v. Coca-Cola Bottlers
GR No. 178647, February 13, 2009
The company’s action to contract-out the services and functions performed by Union members did not constitute
unfair labor practice as this was not directed at the members right to self-organization.
ART. 248. UNFAIR LABOR PRACTICE OF EMPLOYERS. It shall be unlawful for an employer to commit any of the
following unfair labor practices:
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain or coerce employees in the exercise of their right to self-organization;
Unfair labor practice refers to acts that violate the workers right to organize. The prohibited acts are related to the
workers right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair,
are not unfair labor practices.
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180. UST Faculty Union v. UST
GR No. 180892, April 7, 2009
Article 248. Unfair labor practices of employers.––It shall be unlawful for an employer to commit any of the
following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
xxxx
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
organization, including the giving of financial or other support to it or its organizers or supporters.
The general principle is that one who makes an allegation has the burden of proving it. While there are exceptions
to this general rule, in the case of ULP, the alleging party has the burden of proving such ULP. Such principle finds
justification in the fact that ULP is punishable with both civil and/or criminal sanctions In order to show that the
employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Substantial
evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.
In no way can the contents of the memorandum be interpreted to mean that faculty members were required to
attend the convocation. Not one coercive term was used in the memorandum to show that the faculty club members
were compelled to attend such convocation. And the phrase "we are allowing them to hold a convocation" negates
any idea that the UST would participate in the proceedings.
181. Philippine Skylanders v. NLRC

G.R. No. 127374, January 31, 2002
The right of a local union to disaffiliate from its mother federation is not a novel thesis unillumined by case law. In
the landmark case of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc. we upheld the right of local
unions to separate from their mother federation on the ground that as separate and voluntary associations, local
unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to
the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining
power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times
when without succor and support local unions may find it hard, unaided by other support groups, to secure justice
for themselves.
182. Tropical Hut Employees Union v. Tropical Hut

GR NO. L-43495, January 20, 1990
The right of a local union to disaffiliate from its mother federation is well-settled. A local union, being a separate and
voluntary association, is free to serve the interest of all its members including the freedom to disaffiliate when
circumstances warrant. This right is consistent with the constitutional guarantee of freedom of association
183. Purefoods v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-File

GR NO. 150896, August 28, 2008
It is crystal clear that the closure of the Sto. Tomas farm was made in bad faith. Badges of bad faith are evident
from the following acts of the petitioner: it unjustifiably refused to recognize the STFWU's and the other unions'
affiliation with PULO; it concluded a new CBA with another union in another farm during the agreed indefinite
suspension of the collective bargaining negotiations; it surreptitiously transferred and continued its business in a
less hostile environment; and it suddenly terminated the STFWU members, but retained and brought the non-
members to the Malvar farm. Petitioner presented no evidence to support the contention that it was incurring losses
or that the subject farm's lease agreement was pre-terminated. Ineluctably, the closure of the Sto. Tomas farm
circumvented the labor organization's right to collective bargaining and violated the members' right to security of
tenure.
184. DLSU v. DLSUEA

GR NO. 177283, April 7, 2009
The 19 March 2001 Decision of DOLE-NCR Regional Director should not be construed as an automatic termination
of the incumbent officers’ tenure of office. As duly-elected officers of the DLSUEA, their leadership is not deemed
terminated by the expiration of their terms of office, for they shall continue their functions and enjoy the rights and
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privileges pertaining to their respective positions in a hold-over capacity, until their successors shall have been
elected and qualified.
It bears noting that at the time petitioners’ questioned moves were adopted, a valid and existing CBA had been
entered between the parties. It thus behooved petitioners to observe the terms and conditions thereof bearing on
union dues and representation. It is axiomatic in labor relations that a CBA entered into by a legitimate labor
organization and an employer becomes the law between the parties, compliance with which is mandated by express
policy of the law.
185. MSMG-UWP v. Ramos

G.R. No. 113907, February 28, 2000
While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union
security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should
not be done hastily and summarily thereby eroding the employees right to due process, self-organization and
security of tenure. The enforcement of union security clauses is authorized by law provided such enforcement is
not characterized by arbitrariness, and always with due process. Even on the assumption that the federation had
valid grounds to expell the union officers, due process requires that these union officers be accorded a separate
hearing by respondent company.
Union security clauses in collective bargaining agreements, if freely and voluntarily entered into, are valid and
binding. Corrolarily, dismissals pursuant to union security clauses are valid and legal subject only to the requirement
of due process, that is, notice and hearing prior to dismissal. Thus, the dismissal of an employee by the company
pursuant to a labor unions demand in accordance with a union security agreement does not constitute unfair labor
practice.
186. Alabang Country Club, Inc. v. NLRC

G.R. No. 170287, February 14, 2008
In terminating the employment of an employee by enforcing the union security clause, the employer needs only to
determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement
of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to
expel the employee from the union. These requisites constitute just cause for terminating an employee based on
the CBA's union security provision.
187. Standard Chartered Bank Employees Union v. Confesor

GR No. 114974, June 16, 2004
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes, restrains or
coerces employees in the exercise of their right to self-organization or the right to form association. The right to self-
organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to exclude from its
panel of negotiators a representative of the Union, and if it can be inferred that the employer adopted the said act
to yield adverse effects on the free exercise to right to self-organization or on the right to collective bargaining of
the employees, ULP under Article 248(a) in connection with Article 243 of the Labor Code is committed.
Duty to Bargain Collectively

Surface bargaining is defined as "going through the motions of negotiating" without any legal intent to reach an
agreement. The resolution of surface bargaining allegations never presents an easy issue. The determination of
whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom,
a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the
challenged party’s conduct both at and away from the bargaining table. It involves the question of whether an
employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.
Admittedly, the parties were not able to agree and reached a deadlock. However, it is herein emphasized that the
duty to bargain "does not compel either party to agree to a proposal or require the making of a concession." Hence,
the parties’ failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
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188. General Milling Corporation v. CA
G.R. No. 146728, February 11, 2004
The law mandates that the representation provision of a CBA should last for five years. The relation between labor
and management should be undisturbed until the last 60 days of the fifth year. Hence, it is indisputable that when
the union requested for a renegotiation of the economic terms of the CBA on November 29, 1991, it was still the
certified collective bargaining agent of the workers, because it was seeking said renegotiation within five (5) years
from the date of effectivity of the CBA on December 1, 1988. The unions proposal was also submitted within the
prescribed 3-year period from the date of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with the union. For refusing to send a
counter-proposal to the union and to bargain anew on the economic terms of the CBA, the company committed an
unfair labor practice under Article 248 of the Labor Code.
189. Hacienda Fatima v. NFSW Food and General Trade

GR NO. 149440, January 28, 2003
The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:
"Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the
promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to
come in, and the dismissal of union officials and members, one cannot but conclude that respondents did
not want a union in their haciendaa clear interference in the right of the workers to self-organization."
190. St. John Colleges v. John Academy Faculty and Employees Union
GR No. 167892, October 27, 2006
Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for
assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and classes resumed.
After the SOLE assumed jurisdiction, it required the parties to submit their respective position papers. However,
instead of filing its position paper, SJCI closed its high school, allegedly because of the "irreconcilable differences
between the school management and the Academy’s Union particularly the safety of our students and the financial
aspect of the ongoing CBA negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the
SOLE contending that it had become moot because of the closure. Nevertheless, a year after said closure, SJCI
reopened its high school and did not rehire the previously terminated employees.
Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties’ agreement
to refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision
of the SOLE; and to circumvent the Union’s right to collective bargaining and its members’ right to security of tenure.
By admitting that the closure was due to irreconcilable differences between the Union and school management,
specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the
bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the
Labor Code abhors and punishes as unfair labor practice since the net effect is to defeat the Union’s right to
collective bargaining.
191. Central Azucarera de Bais EU v. Central Azucarera de Bais

GR No. 186605, November 17, 2010
For a charge of unfair labor practice to prosper, it must be shown that CAB was motivated by ill will, bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and, of
course, that social humiliation, wounded feelings or grave anxiety resulted in suspending negotiations with CABEU-
NFL. Notably, CAB believed that CABEU-NFL was no longer the representative of the workers. It just wanted to
foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by
negotiating and concluding in good faith a CBA with CABELA. Such actions of CAB are nowhere tantamount to
anti-unionism, the evil sought to be punished in cases of unfair labor practices.
192. Union of Filipro Employees v. Nestle Philippines

GR NO. 158930 March 3, 2008
An employer’s steadfast insistence to exclude a particular substantive provision is no different from a bargaining
representative’s perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence
on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith. It is but
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natural that at negotiations, management and labor adopt positions or make demands and offer proposals and
counter-proposals. On account of the importance of the economic issue proposed by UFE-DFA-KMU, Nestle could
have refused to bargain with the former – but it did not. And the management’s firm stand against the issue of the
Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to the point of
stalemate.
193. Malayang Manggagawa ng Stayfast Phils., Inc. v. NLRC

G.R. No. 155306, August 28, 2013
The Supreme Court affirmed the decision of the Labor Arbiter which ruled that, while union may file a notice of strike
on behalf of its members, petitioner failed to cite any instance of discrimination or harassment when it filed its notice
of strike and the incidents mentioned as discriminatory occurred after the filing of the said notice. Moreover,
assuming the strike was legal at the beginning, it became illegal when petitioner committed acts prohibited under
Article 264(e) of the Labor Code, such as acts of violence, coercion and intimidation and obstruction of the free
ingress to and egress from respondent company’s premises. Also, petitioner was supposed to have made a self-
imposed prohibition to stage a strike when it submitted its labor dispute with respondent company for compulsory
arbitration. Yet, petitioner continued with its strike. Besides, union filed no new notice of strike that could have
supported its charges of discriminatory acts and unfair labor practice. Moreover, no evidence was presented to
establish such charges.
194. Employee of Bayer Philippines v. Bayer Phils

The acts of the company constituted an unfair labor practice. When an employer proceeds to negotiate with a
splinter union despite the existence of its valid CBA with the duly certified and exclusive bargaining agent, the former
indubitably abandons its recognition of the latter and terminates the entire CBA.
195. Sonedco Workers Free Labor Union (SWOFLU) v. Universal Robina

G.R. No. 220383, October 5, 2016
An employer who refuses to bargain with the union and tries to restrict its bargaining power is guilty of unfair labor
practice. In determining whether an employer has not bargained in good faith, the totality of all the acts of the
employer at the time of negotiations must be taken into account.
When petitioners held a conference on May 26, 2003, respondent refused to attend.57 Because respondent failed
to appear in the conference, petitioners wrote their demands in a letter sometime in July 2003. The letter included,
among others, a wage increase of P50.00/day from September 2003 to 2006.58 Instead of explaining its non-
attendance to the conference or making a counter-offer, respondent replied on August 15, 2003 acknowledging the
receipt and contents of the July 2003 letter but invoking the 2002 Collective Bargaining Agreement as an excuse
not to answer petitioners' demands to negotiate. This is contrary to Article 261 of the Labor Code, which requires
the other party to reply within 10 days from receipt of the written demand. This was not respondent's only violation
of Article 261. Respondent likewise failed to reply to the collective bargaining agreement proposal sent by petitioners
on August 21, 2007. The September 22, 2007 letter, sent with the agreement proposal, also went unheeded.
196. PEU v. Esquivel

G.R. No. 218454, December 1, 2016
The recognized collective bargaining union which successfully negotiated the CBA with the employer is given the
right to collect a reasonable fee called "agency fee" from non-union members who are employees of the appropriate
bargaining unit, in an amount equivalent to the dues and other fees paid by union members, in case they accept
the benefits under the CBA. Case law interpreting Article 250 (n) and (o), mandates the submission of 3
documentary requisites in order to justify a valid levy of increased union dues. These are:
1) an authorization by a written resolution of the majority of all the members at the general membership
meeting duly called for the purpose;
2) the secretary's record of the minutes of the meeting, which shall include the list of all members present, the
votes cast, the purpose of the special assessment or fees and the recipient of such assessment or fees;
and
3) individual written authorizations for check-off duly signed by the employees concerned
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In the present case, however, PEU-NUWHRAIN failed to show compliance with the foregoing requirements.
Corollarily, no individual check-off authorizations can proceed therefrom, and the submission of the November 2008
check-off authorizations becomes inconsequential.
Module 3
ARTICLE 263 (252)
197. UFE-DFA-KMU v. Nestle Phils. Inc.

March 3, 2008
As we have said, there is no per se test of good faith in bargaining. Good faith or bad faith is an inference to be
drawn from the facts. For a charge of unfair labor practice to prosper, it must be shown that Nestlé was motivated
by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs,
or public policy, and, of course, that social humiliation, wounded feelings, or grave anxiety resulted . . ." in
disclaiming unilateral grants as proper subjects in their collective bargaining negotiations. While the law makes it
an obligation for the employer and the employees to bargain collectively with each other, such compulsion does not
include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both
parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground
of agreement.
In the case at bar, Nestle never refused to bargain collectively with UFE-DFAKMU. The corporation simply wanted
to exclude the Retirement Plan from the issues to be taken up during CBA negotiations, on the postulation that such
was in the nature of a unilaterally granted benefit. It is but natural that at negotiations, management and labor adopt
positions or make demands and offer proposals and counter-proposals. The management's firm stand against the
issue of the Retirement Plan did not mean that it was bargaining in bad faith. It had a right to insist on its position to
the point of stalemate.
198. UST Faculty Union v. UST

April 7, 2009
It is not the duty or obligation of respondents to inquire into the validity of the election of the Gamilla Group. Such
issue is properly an intra-union controversy subject to the jurisdiction of the med-arbiter of the DOLE. Respondents
could not have been expected to stop dealing with the Gamilla Group on the mere accusation of the Mariño Group
that the former was not validly elected into office.
The subsequent ruling of this Court in G.R. No. 131235 that the Gamilla Group was not validly elected into office
cannot support petitioner's allegation of ULP. Had respondents dealt with the Gamilla Group after our ruling in G.R.
No. 131235 had become final and executory, it would have been a different story. As the CA ruled correctly, until
the validity of the election of the Gamilla Group is resolved with finality, respondents could not be faulted for
negotiating with said group.
199.General Milling Corporation v. CA

G.R. No. 146728, February 11, 2004
Refusal to make a counter-proposal to the union's proposal for CBA negotiation is an indication of its bad faith.
Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively. Failing to comply with the mandatory obligation to submit a reply to
the union's proposals, employer violated its duty to bargain collectively, making it liable for unfair labor practice.
200. Kiok Loy v. NLRC

GR NO. L-54334, January 22, 1986
Collective bargaining which is defined as negotiations towards a collective agreement, is one of the democratic
frameworks under the New Labor Code, designed to stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union
and is characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code makes it an unfair
labor practice for an employer. The mechanics of collective bargaining is set in motion only when the following
jurisdictional preconditions are present, namely:
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1) possession of the status of majority representation of the employees' representative in accordance with
any of the means of selection or designation provided for by the Labor Code;
2) proof of majority representation; and
3) a demand to bargain under Article 251, par. (a) of the New Labor Code all of which preconditions are
undisputedly present in the instant case.
A Company's refusal to make counter proposal if considered in relation to the entire bargaining process, may
indicate bad faith and this is especially true where the Union's request for a counter proposal is left unanswered.
201. Colegio de San Juan de Letran v. Association of Employees and Faculty Union
GR NO. 141471, September 18, 2000
If a collective bargaining agreement has been duly registered in accordance with Article 231 of the Code, a petition
for certification election or a motion for intervention can only be entertained within sixty (60) days prior to the expiry
date of such agreement. No petition for certification election for any representation issue may be filed after the lapse
of the sixty-day freedom period. The old CBA is extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the same as continuing in force and effect until a
new CBA shall have been validly executed. Hence, the contract bar rule still applies.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure to make a timely reply to the
proposals presented by the latter. More than a month after the proposals were submitted by the union, petitioner
still had not made any counter-proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that the Board of Trustees had
not yet convened to discuss the matter as its excuse for failing to file its reply. This is a clear violation of Article 250
of the Labor Code governing the procedure in collective bargaining.
202. PAL v. PALEA

March 12, 2008
PAL should give the 13th month pay to its employees regularized after 30 April 1988. The 1986-1989 CBA of the
parties herein will instantly reveal that Art. I, Sec. 3 of said agreement made its provision applicable to all employees
in the bargaining unit, without distinguishing between regular and non-regular employees. All employees of PAL
are entitled to the same benefit as they are within the same collective bargaining unit and the entitlement to such
benefit spills over to even non-union members.
It is a well-settled doctrine that the benefits of a CBA extend to the laborers and employees in the collective
bargaining unit, including those who do not belong to the chosen bargaining labor organization. Otherwise, it would
be a clear case of discrimination.
203. FVC Labor Union v. SANAMA-FVC-SIGLO

November 27, 2009
By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter not for the workplace parties to agree upon. In other words,
despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment,
the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty
(60) days prior to the expiration of the CBA’s first five years.
The negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO’s exclusive bargaining
representation status which remained effective only for five years ending on the original expiry date of January 30,
2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition
for certification election.
ARTICLE 265 (253-A)
204. FVC Labor Union v. SANAMA-FVC-SIGLO

November 27, 2009
By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter not for the workplace parties to agree upon. In other words,
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despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment,
the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty
(60) days prior to the expiration of the CBA’s first five years.
The negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO’s exclusive bargaining
representation status which remained effective only for five years ending on the original expiry date of January 30,
2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition
for certification election.
205. SMCEU-PTGWO v. Confesor

September 19, 1996
Article 253-A states that the CBA has a term of five (5) years instead of three years, before the amendment of the
law as far as the representation aspect is concerned. All other provisions of the CBA shall be negotiated not later
than three (3) years after its execution. The "representation aspect" refers to the identity and majority status of the
union that negotiated the CBA as the exclusive bargaining representative of the appropriate bargaining unit
concerned. "All other provisions" simply refers to the rest of the CBA, economic as well as non- economic provisions,
except representation.
206. HBILU v. HSBC

February 28, 2018
Although jurisprudence recognizes the validity of the exercise by an employer of its management prerogative and
will ordinarily not interfere with such, this prerogative is not absolute and is subject to limitations imposed by law,
collective bargaining agreement, and general principles of fair play and justice. A collective bargaining agreement
or CBA is the negotiated contract between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties
in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided
these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy
of the law.
207. Manila Electric, Co. v. Quisumbing

GR NO. 127598, February 2000
In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the agreement of the parties.
On the other hand, the law is silent as to the retroactivity of a CBA arbitral award or that granted not by virtue of the
mutual agreement of the parties but by intervention of the government.
Despite the silence of the law, the Court rules herein that CBA arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such time agreed upon by both employer and the employees or their
union. Absent such an agreement as to retroactivity, the award shall retroact to the first day after the six-month
period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the
Secretary's determination of the date of retroactivity as part of his discretionary powers over arbitral awards shall
control.
It is true that an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties
because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes
jurisdiction. However, the arbitral award can be considered as an approximation of a collective bargaining
agreement which would otherwise have been entered into by the parties. The terms or periods set forth in Article
253-A pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to an arbitral
award by the Secretary considering the absence of an applicable law.
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ARTICLE 267 (255)
208. International School Alliance of Educators v. Quisumbing

June 1, 2000
A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body
of employees, consistent with equity to the employer indicate to be the best suited to serve the reciprocal rights and
duties of the parties under the collective bargaining provisions of the law."
The factors in determining the appropriate collective bargaining unit are:

(1) The will of the employees (Globe Doctrine);
(2) Affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity
of compensation and working conditions (Substantial Mutual Interests Rule);
(3) Prior collective bargaining history; and
(4) Similarity of employment status.
The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination
which will best assure to all employees the exercise of their collective bargaining rights. Although foreign-hires
perform similar functions under the same working conditions as the local-hires, foreign- hires are accorded certain
benefits not granted to local-hires. To include foreign-hires in a bargaining unit with local-hires would not assure
either group the exercise of their respective collective bargaining rights.
209. NAFTU v. Mainit Lumber Development Company Workers Union,

December 21, 1990
While the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate
bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The basic test of an
asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure
to all employees the exercise of their collective bargaining rights. Otherwise stated: the test of grouping is community
or mutuality of interests.
Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging Division.
Their functions mesh with one another. One group needs the other in the same way that the company needs them
both. There may be difference as to the nature of their individual assignments but the distinctions are not enough
to warrant the formation of a separate bargaining unit.
ARTICLE 268 (256)
210. Picop Resources Inc. v. Dequilla et al.

December 7, 2011
An existing CBA cannot constitute a bar to a filing of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await the creation of a new agreement will
not apply.
211. NUWHRAIN-Manila Pavillon Hotel Chapter v. SOLE

GR NO. 181531, July 31, 2009
Probationary employees have the right to vote in a certification election. The votes of the six probationary employees
should have been counted. As Airtime Specialists, Inc. v. Ferrer-Calleja holds: In a certification election, all rank
and file employees in the appropriate bargaining unit, whether probationary or permanent, are entitled to vote. This
principle is clearly stated in Art. 255 of the Labor Code which states that the labor organization designated or
selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of
the employees in such unit for purposes of collective bargaining.
In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or
permanent are entitled to vote. The period of reckoning in determining who shall be included in the list of eligible
voters is, in cases where a timely appeal has been filed from the Order of the Med-Arbiter, the date when the Order
of the Secretary of Labor and Employment, whether affirming or denying the appeal, becomes final and executory.
67
The conduct of a certification election has a two-fold objective: to determine the appropriate bargaining unit and to
ascertain the majority representation of the bargaining representative, if the employees desire to be represented at
all by anyone.
212. Coca Cola Bottlers v. Ilocos Professional and Technical Employees Union
September 9, 2015
Under 268 of the Labor Code, the labor union receiving the majority of the valid votes cast shall be the exclusive
bargaining agent of all the workers in the unit. In this case, the union garnered 14 out of the 16 votes cast. Therefore,
IPTEU is the sole and exclusive bargaining agent of the 22 rank-and-file employees.
Access to vital labor information is the imperative consideration of a confidential employee. An employee must
assist or act in a confidential capacity and obtain confidential information relating to labor relations policies.
Exposure to internal business operations of the company is not per se a ground for the exclusion in the bargaining
unit.
ARTICLES 273-274 (260-261)
213. Santuyo et. al. v. Remerco Garmets Manufacturing Inc.

March 22, 2010 (in relation to 217)
With regard to the question of jurisdiction over the subject matter, Article 217(c) of the Labor Code provides: Cases
arising from the interpretation or implementation of collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring
the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. Moreover,
Article 260 of the Labor Code clarifies that such disputes must be referred first to the grievance machinery and, if
unresolved within seven days, they shall automatically be referred to voluntary arbitration.
The issue in this case is not a simple case of illegal dismissal but a labor dispute involving the implementation of
the CBA. Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the LA should have referred
first the labor dispute involving the implementation of the CBA to the grievance machinery provided therein and, if
unresolved within 7 days, it shall automatically be referred to voluntary arbitration. Because the labor arbiter clearly
did not have jurisdiction over the subject matter, his decision was void.
214. Teng v. Pahagac

GR No. 169714, Nov. 17, 2010
On March 21, 1989, Republic Act No. 6715 took effect, amending, among others, Article 263 of the Labor Code
which was originally worded as:
Art. 263 x x x Voluntary arbitration awards or decisions shall be final, unappealable, and executory.
As amended, Article 263 is now Article 262-A, which states:
Art. 262-A. x x x [T]he award or decision x x x shall contain the facts and the law on which it is based. It
shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision
by the parties.
Notably, Article 262-A deleted the word "unappealable" from Article 263. The deliberate selection of the language
in the amendatory act differing from that of the original act indicates that the legislature intended a change in the
law, and the court should endeavor to give effect to such intent. We recognized the intent of the change of
phraseology in Imperial Textile Mills, Inc. v. Sampang, where we ruled that: It is true that the present rule [Art. 262-
A] makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the
award or decision by the parties. Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on
the basis of a motion for reconsideration duly filed during that period.
215. Samahan ng mga Mangagawa sa Hyatt (SAMASAH-NUWHRAIN) v. Magsalin

GR No. 164939, June 6, 2011
The decision or award of the voluntary arbitrator or panel of arbitrators should is appealable to the CA, in line with
the procedure outlined in Revised Administrative Circular No. 1-95 (now in Rule 43 of the 1997 Rules of Civil
Procedure), just like those of the quasi-judicial agencies, boards and commissions enumerated therein, and
68
consistent with the original purpose to provide a uniform procedure for the appellate review of adjudications of all
quasi-judicial entities. Hence, upon receipt of the VA's Resolution denying petitioners motion for reconsideration,
petitioner should have filed with the CA, within the 15-day reglementary period, a petition for review, not a petition
for certiorari.
216. Baronda v. CA, October 14, 2015

The timely filing of an MR or of an Appeal forestalls the finality of the decision or award of the VA but the
reinstatement aspect of said decision remains executory regardless of the filing of such MR or Appeal. The
immediate reinstatement of the employee pending appeal has been introduced by Section 12 of RA No. 6751 which
amended Article 223 of the Labor Code.
217. NYK-FIL Ship Management v. Dabu

September 13, 2017
We ruled that Article 276 of the Labor Code allows the appeal of decisions rendered by Voluntary Arbitrators. Statute
provides that the Voluntary Arbitrator's decision "shall be final and executory after ten (10) calendar days from
receipt of the copy of the award or decision by the parties." Being provided in the statute, this 10-day period must
be complied with; otherwise, no appellate court will have jurisdiction over the appeal. This absurd situation occurs
when the decision is appealed on the 11th to 15th day from receipt as allowed under the Rules, but which decision,
under the law, has already become final and executory.
The rule, therefore, is that a Voluntary Arbitrator's award or decision shall be appealed before the Court of Appeals
within 10 days from receipt of the award or decision. Should the aggrieved party choose to file a motion for
reconsideration with the Voluntary Arbitrator, the motion must be filed within the same 10-day period since a motion
for reconsideration is filed "within the period for taking an appeal."
218. Guagua National Colleges v. CA, August 28, 2018

There is a need for an express stipulation in the CBA that unfair labor practices should be resolved in the ultimate
by the voluntary arbitrator or panel of voluntary arbitrators since the same fall within a special class of disputes that
are generally within the exclusive original jurisdiction of the Labor Arbiter by express provision of the law. Absent
such express stipulation, the phrase 'all disputes' or "any other matter or dispute" for that matter, should be
construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators.
219. Octavio v. PLDT, February 27, 2013

Indisputably, the present controversy involves the determination of an employee's salary increases as provided in
the CBAs. When Octavio's claim for salary increases was referred to the Union-Management Grievance Committee,
the clear intention of the parties was to resolve their differences on the proper interpretation and implementation of
the pertinent provisions of the CBAs. And in accordance with the procedure prescribed therein, the said committee
made up of representatives of both the union and the management convened. Unfortunately, it failed to reach an
agreement. Octavio's recourse pursuant to the CBA was to elevate his grievance to the Board of Arbitrators for final
decision. Instead, nine months later, Octavio filed a Complaint before the NLRC.
It is settled that "when parties have validly agreed on a procedure for resolving grievances and to submit a dispute
to voluntary arbitration then that procedure should be strictly observed." Moreover, we have held time and again
that "before a party is allowed to seek the intervention of the court, it is a precondition that he should have availed
of all the means of administrative processes afforded him. " By failing to question the Committee Resolution through
the proper procedure prescribed in the CBA, that is, by raising the same before a Board of Arbitrators, Octavio is
deemed to have waived his right to question the same. Clearly, he departed from the grievance procedure mandated
in the CBA and denied the Board of Arbitrators the opportunity to pass upon a matter over which it has jurisdiction.
Hence, and as correctly held by the CA, Octavio's failure to assail the validity and enforceability of the Committee
Resolution makes the same binding upon him. On this score alone, Octavio's recourse to the labor tribunals below,
as well as to the CA, and, finally, to this Court, must therefore fail.
ARTICLES 278-279 (263-264)
220. Abaria v. NLRC, December 7, 2011

Considering their persistence in holding picketing activities despite the declaration that their union was not duly
registered as a legitimate labor organization, and their filing of the notice of strike and conducting a strike vote
69
notwithstanding that their union has no legal personality to negotiate with MCCHI for collective bargaining purposes,
there is no question that NAMA-MCCH-NFL officers knowingly participated in the illegal strike.
221. YSS Employees Union v. YSS Laboratories Inc., December 4, 2009

Art. 263. Strikes, picketing, and lockouts. (g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and
Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for
compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption
or certification, all striking or locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same terms and conditions prevailing before the
strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law
enforcement agencies to ensure compliance with this provision as well as with such orders as he may issue to
enforce the same.
It should be noted that the primary reason why the strike was conducted in the first place was to protest the
implementation of the retrenchment program, which clearly discriminated against union officers and members. YSS
Laboratories’ vigorous insistence on the exclusion of the retrenched employees from the coverage of the return-to-
work order seriously impairs the authority of the Secretary of Labor to forestall a labor dispute that he deems inimical
to the national economy. Accordingly, when the Secretary of Labor directed YSS Laboratories to accept all the
striking workers back to work, the Secretary did not exceed his jurisdiction, or gravely abuse the same.
222. NUWHRAIN-APL-IUF Dusit Hotel Nikko Chapter v. CA,

GR NO. 163942, November 11, 2008
Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute."
In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, we cited
the various categories of an illegal strike, to wit:
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz.:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing
governmental
functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the
requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair
labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of
non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order
issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration
clause.
The Union's violation of the Hotel's Grooming Standards was clearly a deliberate and concerted action to undermine
the authority of and to embarrass the Hotel and was, therefore, not a protected action. The decision to violate the
company rule on grooming was designed and calculated to place the Hotel management on its heels and to force
it to agree to the Union's proposals. The Union's action to have their officers and members' heads shaved was
manifestly calculated to antagonize and embarrass the Hotel management and in doing so effectively disrupted the
operations of the Hotel and violated their duty to bargain collectively in good faith.
70
223. Jackbilt Industries Inc., v. Jackbilt Employees Workers Union-NAFLU-KMU,
March 20, 2009
The principle of conclusiveness of judgment, embodied in Section 47(c), Rule 39 of the Rules of Court, holds that
the parties to a case are bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein.
Article 264(e) of the Labor Code prohibits any person engaged in picketing from obstructing the free ingress to and
egress from the employers premises. Since respondent was found in the decision of the NLRC to have prevented
the free entry into and exit of vehicles from petitioners compound, respondents officers and employees clearly
committed illegal acts in the course of the strike.
The use of unlawful means in the course of a strike renders such strike illegal. Therefore, pursuant to the principle
of conclusiveness of judgment, the strike was ipso facto illegal. The filing of a petition to declare the strike illegal
was thus unnecessary.
224. APAP v. PAL,

GR No. 168382, June 6, 2011
True, the dispositive portion of the DOLE Resolution does not specifically enumerate the names of those who
actually participated in the strike but only mentions that those strikers who failed to heed the return-to-work order
are deemed to have lost their employment. This omission, however, cannot prevent an effective execution of the
decision. Any ambiguity may be clarified by reference primarily to the body of the decision or supplementary to the
pleadings previously filed in the case, as in this case. A review of the records reveals that in NCMB NCR NS 12-
514-97, the DOLE Secretary declared the ALPAP officers and members to have lost their employment status based
on either of two grounds, viz: their participation in the illegal strike on June 5, 1998 or their defiance of the return-
to-work order of the DOLE Secretary. The records of the case unveil the names of each of these returning pilots.
225. Olisa et. al. v. Escario Et. al. VCMC v. Yballe,

GR No. 160302, January 15, 2014
We stress that the law makes a distinction between union members and union officers. A worker merely participating
in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike
that he may be declared to have lost employment status. In contrast, a union officer may be terminated from
employment for knowingly participating in an illegal strike or participates in the commission of illegal acts during a
strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as
having lost his employment. It possesses the right and prerogative to terminate the union officers from service.
With respect to backwages, the principle of a "fair day’s wage for a fair day’s labor" remains as the basic factor in
determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. x x x In Philippine Marine Officers’ Guild v. Compañia Maritima, as
affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed
that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at
bar.
The alternative relief for union members who were dismissed for having participated in an illegal strike is the
payment of separation pay in lieu of reinstatement under the following circumstances: (a) when reinstatement can
no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b)
reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does
not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers’ continued
employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between
the employer and employee.
226. Tabangao Shell Refinery Employees Association v. Pilipinas Shell

GR NO. 170007, April 7, 2014.
The power of the Secretary of Labor and Employment to assume jurisdiction over this dispute includes and extends
to all questions and controversies arising from the said dispute, such as, but not limited to the union's allegation of
bad faith bargaining. It also includes and extends to the various unresolved provisions of the new CBA such as
71
compensation, particularly the matter of annual wage increase or yearly lump sum payment in lieu of such wage
increase, whether or not there was deadlock in the negotiations.| As there is already an existing controversy on the
matter of wage increase, the Secretary of Labor and Employment need not wait for a deadlock in the negotiations
to take cognizance of the matter. That is the significance of the power of the Secretary of Labor and Employment
under Article 263 (g) of the Labor Code to assume jurisdiction over a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest.
227. Asia Brewery Inc. v. TPMA, September 18, 2013.

In cases of compulsory arbitration before the Secretary of labor pursuant to Article 263(g) of the labor Code, the
financial statements of the employer must be properly audited by an external and independent auditor in order to
be admissible in evidence for purposes of determining the proper wage award.
Thus, we rule that the Secretary of Labor gravely abused her discretion when she relied on the unaudited financial
statements of petitioner corporation in determining the wage award because such evidence is self-serving and
inadmissible. Not only did this violate the December 19, 2003 Order 28 of the Secretary of Labor herself to petitioner
corporation to submit its complete audited financial statements, but this may have resulted to a wage award that is
based on an inaccurate and biased picture of petitioner corporation's capacity to pay — one of the more significant
factors in making a wage award.
228. Escario Et. al. v NLRC

GR NO. 160302
Conformably with the long honored principle of a fair days wage for a fair days labor, employees dismissed for
joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue
of their being merely members of the striking union who did not commit any illegal act during the strike.
Article 279 provides: By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly
done, that is, the employer dismisses the employee without observing due process, either substantive or procedural.
Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee
as provided under Article 278 (termination by employer), or Article 283 (closure of establishment and reduction of
personnel), or Article 284 (disease as ground for termination), all of the Labor Code; while procedural due process
demands compliance with the twin-notice requirement.
In contrast, Art. 264. Prohibited activities. (a) xxx Any worker whose employment has been terminated as a
consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who
knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status; Provided, That mere
participation of a worker in a lawful strike.
229. University of San Augustin Employees Union v. CA

GR No. 169632, March 28, 2006
Art. 263 of LC, “such assumption or certification of the SOLE shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out employees shall immediately return to work
and the employer shall immediately resume operations and readmit all workers under the same terms and
conditions prevailing before the strike or lockout.” The phrase "immediately return to work" indicates an almost
instantaneous or automatic compliance for a striker to return to work once an AJO has been duly served.
230. Phil Diamond Hotel and Resort Inc. v. Manila Diamond Hotel Employees Union
GR NO. 158075, June 30, 2006
Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which are
injurious to the rights to property renders a strike illegal. And so is picketing or the obstruction to the free use of
property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence, and
coercion as to constitute nuisance
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231. Solidbank v. Gamier
GR NO. 159640November 15, 2010
It must be stressed that the concerted action of the respondents was not limited to the protest rally in front of the
DOLE Office on April 3, 2000. Respondent Union had also picketed the Head Office and Paseo de Roxas Branch.
About 712 employees, including those in the provincial branches, boycotted and absented themselves from work
in a concerted fashion for three continuous days that virtually paralyzed the employer’s banking operations.
Considering that these mass actions stemmed from a bargaining deadlock and an order of assumption of jurisdiction
had already been issued by the Secretary of Labor to avert an impending strike, there is no doubt that the concerted
work abandonment/boycott was the result of a labor dispute.
Moreover, it is explicit from the directive of the Secretary in his January 18, 2000 Order that the Union and its
members shall refrain from committing "any and all acts that might exacerbate the situation," which certainly
includes concerted actions. For all intents and purposes, therefore, the respondents staged a strike ultimately aimed
at realizing their economic demands. Whether such pressure was directed against the petitioners or the Secretary
of Labor, or both, is of no moment. All the elements of strike are evident in the Union-instigated mass actions.
Liability
The law grants the employer the option of declaring a union officer who participated in an illegal strike as having
lost his employment. It possesses the right and prerogative to terminate the union officers from service. However,
a worker merely participating in an illegal strike may not be terminated from employment. It is only when he commits
illegal acts during a strike that he may be declared to have lost employment status. We have held that the
responsibility of union officers, as main players in an illegal strike, is greater than that of the members and, therefore,
limiting the penalty of dismissal only for the former for participation in an illegal strike is in order. Hence, with respect
to respondents who are union officers, the validity of their termination by petitioners cannot be questioned.
For the rest of the individual respondents who are union members, the rule is that an ordinary striking worker cannot
be terminated for mere participation in an illegal strike. There must be proof that he or she committed illegal acts
during a strike. In all cases, the striker must be identified. But proof beyond reasonable doubt is not required.
Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty
of dismissal, may suffice. Liability for prohibited acts is to be determined on an individual basis.
232. C Alcantara & Sons v. CA

GR NO. 155109, September 29, 2010 and March 2012
1. The Union staged an illegal strike. A strike may be regarded as invalid although the labor union has complied
with the strict requirements for staging one as provided in Article 263 of the Labor Code when the same is held
contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the CBA
between the parties contained a "no strike, no lockout" provision that enjoined both the Union and the Company
from resorting to the use of economic weapons available to them under the law and to instead take recourse to
voluntary arbitration in settling their disputes. No law or public policy prohibits the Union and the Company from
mutually waiving the strike and lockout maces available to them to give way to voluntary arbitration. Indeed, no less
than the 1987 Constitution recognizes in Section 3, Article XIII, preferential use of voluntary means to settle
disputes.
2. Union members committed illegal acts. Since the Union’s strike has been declared illegal, the Union officers can,
in accordance with law be terminated from employment for their actions. This includes the shop stewards. They
cannot be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such
and placed them in positions of leadership and power over the men in their respective work units.
As regards the rank and file Union members, Article 264 of the Labor Code provides that termination from
employment is not warranted by the mere fact that a union member has taken part in an illegal strike. It must be
shown that such a union member, clearly identified, performed an illegal act or acts during the strike. The mere fact
that the criminal complaints against the terminated Union members were subsequently dismissed for one reason
or another does not extinguish their liability under the Labor Code.
73
March 14, 2012 Decision re: separation pay
As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled
to separation pay because lawbreakers should not benefit from their illegal acts. The rule, however, is subject to
exceptions. Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have
knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike.
Thus, the Court deletes the award of separation pay as a form of financial assistance.
233. Sukhothai Cuisine and Restaurant v. CA

GR No. 150438, July 17, 2006
Once jurisdiction over the labor dispute has been properly acquired by competent authority, that jurisdiction should
not be interfered with by the application of the coercive processes of a strike.
Under Art. 264, No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Secretary or after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout. At the time the strike was staged, voluntary
arbitration between the parties was ongoing by virtue of the Submission Agreement. The issue to be resolved under
those proceedings pertained to the very same issues stated in the Notice of Strike, which is the commission of ULP,
such as acts of harassment, fault-finding, and union busting through coercion and interference with union affairs.
Strikes staged in violation of agreements providing for arbitration are illegal, since these agreements must be strictly
adhered to and respected if their ends are to be achieved in case of alleged union busting, the three remaining
requirements — notice, strike vote, and seven-day report period — cannot be dispensed with.
234. Biflex v. Filflex

GR NO. 155679 December 19, 2006
Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended sympathy strike. It affects
numerous employers including those who do not have a dispute with their employees regarding their terms and
conditions of employment. Employees who have no labor dispute with their employer but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage. Even if
petitioners’ joining the welga ng bayan were considered merely as an exercise of their freedom of expression,
freedom of assembly or freedom to petition the government for redress of grievances, the exercise of such rights is
not absolute. For the protection of other significant state interests such as the "right of enterprises to reasonable
returns on investments, and to expansion and growth" enshrined in the 1987 Constitution must also be considered,
otherwise, oppression or self-destruction of capital in order to promote the interests of labor would be sanctioned.
There being no showing that petitioners notified respondents of their intention, or that they were allowed by
respondents, to join the welga ng bayan, their work stoppage is beyond legal protection.
235. Sta. Rosa Coca Cola Plant Employee’s Union v. Coca-cola Bottlers Phils. Inc.,
512 SCRA 437
Strike as a temporary stoppage of work by the concerted action of employees as a result of an industrial or labor
dispute and it encompasses not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs,
attempts to damage, destroy or sabotage plant equipment and facilities, and similar activities. While, Picketing
involves merely the marching to and fro at the premises of the employer, usually accompanied by the display of
placards and other signs making known the facts involved in a labor dispute.
The bare fact that petitioners were given a Mayor’s permit is not conclusive evidence that their action/activity did
not amount to a strike. What is definitive of whether the action staged by petitioners is a strike and not merely a
picket is the totality of the circumstances surrounding the situation.
236. Manila Hotel Employee’ Association v. Manila Hotel Corporation

GR NO. 154591, March 5, 2007
The Court has consistently ruled in a long line of cases spanning several decades that once the SOLE assumes
jurisdiction over a labor dispute, such jurisdiction should not be interfered with by the application of the coercive
processes of a strike or lockout. Defiance of the assumption order or a return-to work order by a striking employee,
whether a union officer or a member, is an illegal act and, therefore, a valid ground for loss of employment status.
74
The Court reiterated the rule that a return-to-work order is immediately executory notwithstanding the filing of a
motion for reconsideration. It must be strictly complied with even during the pendency of any petition questioning
its validity. Returning to work in this situation is not a matter of option or voluntariness but of obligation. The worker
must return to his job together with his co-workers so the operations of the company can be resumed and it can
continue serving the public and promoting its interest.
237. G&S Transport Corporation v. Infante

533 SCRA 289
Article 264 of the Labor Code, in providing for the consequences of an illegal strike, makes a distinction between
union officers and members who participated therein. Thus, knowingly participating in an illegal strike is a valid
ground for termination of employment of a union officer. The law, however, treats differently mere union members.
Mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members.
There must be proof that he committed illegal acts during the strike and the striker who participated in the
commission of illegal act must be identified. Proof beyond reasonable doubt is not required. Substantial evidence
available under the attendant circumstances, which may justify the imposition of the penalty of dismissal, may
suffice.
238. Steel Corporation of the Phils. v. SCP Employees Union National Federation of Labor Unions
551 SCRA 595
The strike undertaken by the officers of respondent union is patently illegal for the following reasons: (1) it is a union-
recognition-strike which is not sanctioned by labor laws; (2) it was undertaken after the dispute had been certified
for compulsory arbitration; and (3) it was in violation of the Secretarys return-to-work order.
It bears stressing that the law makes a distinction between union members and union officers. A worker merely
participating in an illegal strike may not be terminated from employment. It is only when he commits illegal acts
during a strike that he may be declared to have lost employment status. For knowingly participating in an illegal
strike or participating in the commission of illegal acts during a strike, the law provides that a union officer may be
terminated from employment. The law grants the employer the option of declaring a union officer who participated
in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union
officers from service. Otherwise, the workers will simply refuse to return to their work and cause a standstill in the
company operations while retaining the positions they refuse to discharge and preventing management from filling
up their positions.
The powers granted to the Secretary under Article 263(g) of the Labor Code have been characterized as an exercise
of the police power of the State, aimed at promoting the public good. When the Secretary exercises these powers,
he is granted "great breadth of discretion" to find a solution to a labor dispute. The most obvious of these powers is
the automatic enjoining of an impending strike or lockout or its lifting if one has already taken place.
The moment the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable to
national interest, such assumption shall have the effect of automatically enjoining the intended or impending strike.
It was not even necessary for the Secretary of Labor to issue another order directing a return to work.
239. Chris Garments Corporation v. Sto. Tomas

GR No. 167246, January 12, 2009
It is settled that the filing of MR is a prerequisite to the filing of a special civil action for certiorari to give the lower
court the opportunity to correct itself. This rule, however, admits of exceptions, such as when the MR would be
useless under the circumstances. Furthermore, under DO 04-03 series of 2013, the decision of the Secretary shall
be final and executory after 10 days from receipt thereof by the parties and it shall not be subject to an MR. Clearly,
petitioner availed of the proper remedy since the DO expressly prohibits the filing of an MR. Such motion becomes
dispensable and not at all necessary.
240. University of Immaculate Concepcion v. Sec of Labor

September 14, 2006.
It is settled that the filing of a motion for reconsideration is a prerequisite to the filing of a special civil action for
certiorari to give the lower court the opportunity to correct itself. This rule, however, admits of exceptions, such as
when a motion for reconsideration would be useless under the circumstances.
75
Under Department Order No. 40-03, Series of 2003, the decision of the Secretary of Labor and Employment shall
be final and executory after ten days from receipt thereof by the parties and that it shall not be subject of a motion
for reconsideration.
241. Ramirez v. Polyson Industries,

GR NO. 207898 October 19, 2016
Jurisprudence defines a slowdown as follows:
x x x a "strike on the installment plan;" as a willful reduction in the rate of work by concerted action of workers for
the purpose of restricting the output of the employer, in relation to a labor dispute; as an activity by which workers,
without a complete stoppage of work, retard production or their performance of duties and functions to compel
management to grant their demands. The Court also agrees that such a slowdown is generally condemned as inherently
illicit and unjustifiable, because while the employees "continue to work and remain at their positions and accept the
wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own
volition or refuse openly or secretly, to the employer's damage, to do other work;" in other words, they "work on their
own terms.
The essence of this kind of strike is that the workers do not quit their work but simply reduce the rate of work in
order to restrict the output or delay the production of the employer. It has been held that while a cessation of work
by the concerted action of a large number of employees may more easily accomplish the object of the work stoppage
than if it is by one person, there is, in fact no fundamental difference in the principle involved as far as the number
of persons involved is concerned, and thus, if the act is the same, and the purpose to be accomplished is the same,
there is a strike, whether one or more than one have ceased to work.
Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination
of his employment, even if a replacement had been hired by the employer during such lawful strike.
242. Bigg’s v. Boncacas,

GR No. 200487, March 6, 2019
In a strike grounded on unfair labor practice, the following are the requirements: (1) the strike may be declared by
the duly certified bargaining agent or legitimate labor organization; (2) the conduct of the strike vote in accordance
with the notice and reportorial requirements to the NCMB and subject to the seven-day waiting period; (3) notice of
strike filed with the NCMB and copy furnished to the employer, subject to the 15-day cooling-off period. In cases of
union busting, the 15-day cooling-off period shall not apply.
Only a certified or duly recognized bargaining representative may declare a strike in case of a bargaining deadlock.
However, in cases of unfair labor practices, the strike may be declared by any legitimate labor organization.
In both instances, the union must conduct a "strike vote" which requires that the actual strike is approved by majority
of the total union membership in the bargaining unit concerned. The union is required to notify the regional branch
of the NCMB of the conduct of the strike vote at least 24 hours before the conduct of the voting. Thereafter, the
union must furnish the NCMB with the results of the voting at least seven days before the intended strike or
lockout. This seven-day period has been referred to as the "seven-day strike ban" or "seven-day waiting period.
ARTICLE 290 (275)
ARTICLE 292 (B) (277 (B))
243. St. Lukes Medical Center Inc. v. Notario,

GR No. 152166, October 20, 2010
Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and habitual
neglect by the employee of his duties. Neglect of duty, to be a ground for dismissal, must be both gross and habitual.
Gross negligence connotes want of care in the performance of ones duties. Habitual neglect implies repeated failure
to perform ones duties for a period of time, depending upon the circumstances. A single or isolated act of negligence
does not constitute a just cause for the dismissal of the employee.
76
To effectuate a valid dismissal from employment by the employer, the Labor Code has set twin requirements,
namely: (1) the dismissal must be for any of the causes provided in Article 282 of the Labor Code; and (2) the
employee must be given an opportunity to be heard and defend himself. This first requisite is referred to as the
substantive aspect, while the second is deemed as the procedural aspect.
A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Under the
prevailing circumstances, respondent exercised his best judgment in monitoring the CCTV cameras so as to ensure
the security within the hospital premises. Verily, assuming arguendo that respondent was negligent, although this
Court finds otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that
cannot be categorized as habitual and, hence, not a just cause for his dismissal.
244. Aliling v. World Express Corp.

GR No. 185829, April 25, 2012
Employees must be reminded that while probationary employees do not enjoy permanent status, they enjoy the
constitutional protection of security of tenure. They can only be terminated for cause or when they otherwise fail to
meet the reasonable standards made known to them by the employer at the time of their engagement.
The Labor Code and the IRR specifically requires the employer to inform the probationary employee of such
reasonable standards at the time of his engagement, not at any time later; else, the latter shall be considered a
regular employee. WWWEC has failed to prove that an agreement as regards thereto has been reached. Clearly
then, there were actually no performance standards to speak of. And lest it be overlooked, Aliling was assigned to
GX trucking sales, an activity entirely different to the Seafreight Sales he was originally hired and trained for. Thus,
at the time of his engagement, the standards relative to his assignment with GX sales could not have plausibly been
communicated to him as he was under Seafreight Sales.
ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services
of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee
at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a
regular employee.
Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code
Sec. 6. Probationary employment. – There is probationary employment where the employee, upon his engagement, is
made to undergo a trial period where the employee determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:

xxxx
(d) In all cases of probationary employment, the employer shall make known to the employee the standards under
which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the
employee at that time, he shall be deemed a regular employee.
255. Perez v. PT&T

GR No. 152048, April 9, 2009
Article 277 (b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given
"ample opportunity to be heard and to defend himself." Thus, the opportunity to be heard afforded by law to the
employee is qualified by the word "ample" which ordinarily means "considerably more than adequate or sufficient."
In this regard, the phrase "ample opportunity to be heard" can be reasonably interpreted as extensive enough to
cover actual hearing or conference. To this extent, Section 2 (d), Rule I of the Implementing Rules of Book VI of the
Labor Code is in conformity with Article 277 (b).
A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and
that the evidence should be taken into account in the adjudication of the controversy. To be heard does not mean
verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations,
77
submissions or pleadings. Therefore, while the phrase ample opportunity to be heard may in fact include an actual
hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing,
although preferred, is not absolutely necessary to satisfy the employees right to be heard.
256. Distribution and Control Products Inc. v. Santos

July 10, 2017
As to whether or not respondent was afforded procedural due process, the settled rule is that in termination
proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The
employer must furnish the employee with two written notices before the termination of employment can be effected:
(1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the
second informs the employee of the employer's decision to dismiss him. The requirement of a hearing is complied
with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.
257. Agabon v, NLRC,

GR No. 158693, November 17, 2004
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee
two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on
authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived:

The dismissal is for a just cause Due process was observed The dismissal is undoubtedly valid
under Article 282 of the Labor and the employer will not suffer any
Code, for an authorized cause liability.
under Article 283, or for health
reasons under Article 284
the dismissal is without just or Due process was observed Dismissal is illegal; Article 279
authorized cause mandates that the employee is
entitled to reinstatement without
loss of seniority rights and other
privileges and full backwages,
inclusive of allowances, and other
benefits or their monetary
equivalent computed from the time
the compensation was not paid up
to the time of actual reinstatement.
The dismissal is without just and No due process Same as second situation
authorized case
Dismissal was with just or No due process The dismissal should be upheld.
authorized cause While the procedural infirmity
cannot be cured, it should not
invalidate the dismissal. However,
the employer should be held liable
for non-compliance with the
procedural requirements of due
process.
Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid
and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of
dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as
amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by
78
Department Order Nos. 9 and 10. Constitutional due process protects the individual from the government and
assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the
Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after
notice and hearing.
The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of
indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of
the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00.
258. King of Kings Transport v. Mamac,

GR No. 166208, June 29, 2007
Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of
termination of employment under the Labor Code; and second, procedural––the manner of dismissal. the following
should be considered in terminating the services of employees:
1) The first written notice to be served on the employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their defense. This should be construed
as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity
to study the accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint.
Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the grounds under Art.
282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable
settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of their
employment.
Respondent was not issued a written notice charging him of committing an infraction. A verbal appraisal of the
charges against an employee does not comply with the first notice requirement.
259. Puncia v. Toyota Shaw,

GR No. 214399, June 28, 2016
Puncia's repeated failure to perform his duties - i.e., reaching his monthly sales quota - for such a period of time
falls under the concept of gross inefficiency. In this regard, case law instructs that "gross inefficiency" is analogous
to "gross neglect of duty," a just cause of dismissal under Article 297 of the Labor Code, for both involve specific
acts of omission on the part of the employee resulting in damage to the employer or to his business.
79
A closer look at the records reveals that in the Notice to Explain, Puncia was being made to explain why no
disciplinary action should be imposed upon him for repeatedly failing to reach his monthly sales quota, which act,
as already adverted to earlier, constitutes gross inefficiency. On the other hand, a reading of the Notice of
Termination shows that Puncia was dismissed not for the ground stated in the Notice to Explain, but for gross
insubordination on account of his non-appearance in the scheduled October 17, 2011 hearing without justifiable
reason. In other words, while Toyota afforded Puncia the opportunity to refute the charge of gross inefficiency
against him, the latter was completely deprived of the same when he was dismissed for gross insubordination — a
completely different ground from what was stated in the Notice to Explain. As such, Puncia's right to procedural due
process was violated.
Hence, considering that Toyota had dismissed Puncia for a just cause, albeit failed to comply with the proper
procedural requirements, the former should pay the latter nominal damages in the amount of P30,000.00 in
accordance with recent jurisprudence
260. Jaka Food Processing v. Pacot,

GR No. 151378, March 28, 2005
Where the ground for respondent’s dismissal is one of the authorized causes enumerated under Article 283 of the
Labor Code i.e., retrenchment, and it is likewise established that the employer failed to comply with the notice
requirement under the same Article, it is deemed proper to fix the indemnity at P50,000.00.
If the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise
of his management prerogative. This is in comparison with the Agabon case where the employer was required to
pay the dismissed employees based on a just cause under Article 282 the amount of P30,000 representing nominal
damages.
The dismissed employees are not entitled to separation pay when the closure of business or cessation of operations
is due to serious business losses or financial reverses duly proved.
Where the dismissal is for a cause, the lack of statutory due process should not nullify the dismissal, or render it
illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights.
261. Abbot Laboratories v. Alcaraz,

GR No. 192571, July 23, 2013
Contractual due process
A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary
employment, aside from just or authorized causes of termination, an additional ground is provided under Article 296
of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular
employee in accordance with the reasonable standards made known by the employer to the employee at the time
of the engagement.
Despite the existence of a sufficient ground to terminate Alcaraz's employment and Abbott's compliance with the
Labor Code termination procedure, it is readily apparent that Abbott breached its contractual obligation to Alcaraz
when it failed to abide by its own procedure in evaluating the performance of a probationary employee. Once an
employer establishes an express personnel policy and the employee continues to work while the policy remains in
effect, the policy is deemed an implied contract for so long as it remains in effect. If the employer unilaterally changes
the policy, the terms of the implied contract are also thereby changed.
80
D.O. NO. 147 -15
ARTICLE 294 (279)
262. Agabon v. NLRC,

November 17, 2004
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.
263. Jaka Food Processing Corp. v. Pacot,

March 28, 2005
As a rule, in all cases of business closure or cessation of operation or undertaking of the employer, the affected
employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social
economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of
business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which
case, the right of affected employees to separation pay is lost for obvious reasons.
264. Culili v. Eastern Telecommunications Phils.

Feb 9, 2011
There is redundancy when the service capability of the workforce is greater than what is reasonably required to
meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by
any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular
product line or service activity previously manufactured or undertaken by the enterprise.
265. Serrano v. Gallant Maritime

GR No. 167614, March 24, 2009
Section 3, Article 13 of the Constitution does not directly bestow on the working class any actual enforceable right,
but merely clothes it with the status of a sector for whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to protect the welfare of the working class.
266. Yap v. Thenamaris Ship’s Management

GR No. 179532, May 30,2011
Re: for OFW re RA 8042 as amended by RA 10022
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 R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers
(OFWs) to equal protection of the laws.
Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental
purpose; hence, the same violates not just therein petitioners right to equal protection, but also his right to
substantive due process under Section 1, Article III of the Constitution. Consequently, petitioner therein was
accorded his salaries for the entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
81
267. Bank of Lucbao v. Manabat
GR No. 188722, Feb 1, 2012
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. Employees who are illegally dismissed are
entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from
the time their actual compensation was withheld from them up to the time of their actual reinstatement. If
reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up
to the finality of the decision
268. St. Mary’s Academy v. Palacio et. al.

GR No. 164913, September 8, 2010 (Eg./ Limited backwages)
It is incumbent upon this Court to afford full protection to labor. Thus, while we take cognizance of the employers’
right to protect its interest, the same should be exercised in a manner which does not infringe on the workers right
to security of tenure. Under the policy of social justice, the law bends over backward to accommodate the interests
of the working class on the humane justification that those with less privilege in life should have more in law. To
reiterate, this Court will not hesitate to defend respondents’ right to security of tenure. The premature dismissal from
the service of respondents is unwarranted.
269. Toyota Motor Phils. Corp. Workers Association v. NLRC,

GR No. 158786, October 19, 2007
The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor
Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right to
termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however, is
entitled to whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective
bargaining agreement with the employer or voluntary employer policy or practice or under the Labor Code and other
existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to receive
from the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits granted
by the CBA provisions and voluntary management policy or practice, the entitlement of the dismissed employees
to the benefits depends on the stipulations of the CBA or the company rules and policies.
Considering that the dismissal of the employees was due to their participation in the illegal strikes as well as violation
of the Code of Conduct of the company, the same constitutes serious misconduct. A serious misconduct is a
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. Based on existing jurisprudence, the award
of separation pay to the Union officials and members in the instant petitions cannot be sustained.
270. Bristol Myers Squibb Inc. v. Haban,

GR No. 167449, December 17, 2008
While the State can regulate the right of an employer to select and discharge his employees, an employer cannot
be compelled to continue the employment of an employee in whom there has been a legitimate loss of trust and
confidence.
There are two requisites for a valid dismissal by the employer on the ground of breach of trust
and confidence under Article 297(c)(new numbering); namely:
1) The employee concerned must be one holding a position of trust and confidence.
Two classes:
(a) MANAGERIAL EMPLOYEES
They are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer suspend, lay-off, recall, discharge,
assign or discipline employees or effectively recommend such managerial
actions.
(b) CASHIERS, AUDITORS, PROPERTY CUSTODIANS, ETC
82
They are defined as those who in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property.
2) There must be an act that would justify the loss of trust and confidence.
Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of
trust and founded on clearly established facts. The basis for the dismissal must be clearly and
convincingly established but proof beyond reasonable doubt is not necessary.
271. Yrasuegui v. PAL,

GR No. 168081, October 17, 2008
Requisites for Bona Fide Occupational Qualification (BFOQ):
(1) the employment qualification is reasonably related to the essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.
The prescribed weight of PAL is a continuing BFOQ. On board an aircraft, the body weight and size of a cabin
attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and
narrow aisles and exit doors. It would d be absurd to require airline companies to reconfigure the aircraft in order
to widen the aisles and exit doors just to accommodate overweight cabin attendants like ARMANDO. Thus, the
failure to maintain such weight is a valid ground for dismissal under the “analogous cases” of Article 297(e) of the
Labor Code (new numbering).
As a rule, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language
of Article 294 of the Labor Code (new numbering) that "[a]n employee who is unjustly dismissed from work shall be
entitled to x x x”. Exceptionally, it is granted to a legally dismissed employee as an act "social justice," or based on
"equity." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not
reflect on the moral character of the employee.
272. Dreamland Hotel Resort v. Johnson,

GR No. 191455, March 12, 2014
(separation pay and strained relations)
Even the most reasonable employee would consider quitting his job after working for three months and receiving
only an insignificant fraction of his salaries. There was, therefore, not an abandonment of employment nor a
resignation in the real sense, but a constructive dismissal, which is defined as an involuntary resignation resorted
to when continued employment is rendered impossible, unreasonable or unlikely.
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other hand, it releases the employer
from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.
273. Manila Water v. Del Rosario,

GR No. 188747, January 29, 2014 (separation pay)
As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282
of the Labor Code is not entitled to a separation pay. In exceptional cases, however, the Court has granted
separation pay to a legally dismissed employee as an act of "social justice" or on "equitable grounds."
In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the
moral character of the employee.
274. Nacar v. Gallery Frames,

GR No. 189871, August 13, 2013 (interest rate)
The backwages/separation pay shall be computed from the date of illegal dismissal until the date of the decision of
the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the day when the appellate
court’s decision shall become final.
83
In the absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal
interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments shall no longer
be twelve percent (12%) per annum - as reflected in the case of Eastern Shipping Lines40 and Subsection X305.1
of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S. and 4303P.1 of the Manual of Regulations
for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 - but will now be six percent
(6%) per annum effective July 1, 2013. It should be noted, nonetheless, that the new rate could only be applied
prospectively and not retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply
only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate
of interest when applicable.
275. Bani Rural Bank Inc. v. De Guzman et. al.,

GR No. 170904, November 13, 2013 ( computation)
The computation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in
that:
First, when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as amended,
compute the backwages from the time of dismissal until the employee’s reinstatement. The computation of
backwages (and similar benefits considered part of the backwages) can even continue beyond the decision of the
labor arbiter or NLRC and ends only when the employee is actually reinstated.
Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed)
or reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed),
backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a
supervening event that makes the award of reinstatement no longer possible (as in the case), backwages is
computed from the time of dismissal until the finality of the decision ordering separation pay.
276. Lara’s Gift & Decors v. Midtown Industrial Sales,

GR No. 225433, August 28, 2019
The rates of interest stated in the guidelines on the imposition of interests, as laid down in the landmark case
of Eastern Shipping Lines, Inc. v. Court of Appeals have already been modified in Bangko Sentral ng
Pilipinas Monetary Board (BSP-MB) Circular No. 799, Series of 2013, which reduced the rate of legal interest from
twelve percent (12%) per annum to six percent (6%) per annum.
Clearly, under the law and jurisprudence, the prevailing legal interest prescribed by the Bangko Sentral ng
Pilipinas applies, in the absence of stipulated interest, on the following: (1) loans; (2) forbearance of any money,
goods or credits; and (3) judgments in litigations involving loans or forbearance of money, goods or credits.
If the rate of interest is stipulated, such stipulated interest shall apply and not the legal interest, provided the
stipulated interest is not excessive and unconscionable. The stipulated interest shall be applied until full payment
of the obligation because that is the law between the parties. The legal interest only applies in the absence of
stipulated interest. Moreover, there should be no compounding of interest, whether stipulated or legal, unless
compounding is expressly agreed upon in writing by the parties or mandated by law or regulation.
277. Session Delights v. CA,

February 8, 2010
(backwages in relation to immutability of judgment)
The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the
computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of
immutability of final judgments.
84
278. United Coconut Chemicals v. Valmores,
July 12, 2017
(inclusions in backwages, employer liability in illegal dismissal done in relation to a union security clause)
The base figure in the determination of full backwages is fixed at the salary rate received by the employee at the
time he was illegally dismissed. The award shall include the benefits and allowances regularly received by the
employee as of the time of the illegal dismissal, as well as those granted under the Collective Bargaining Agreement
(CBA), if any.
279. Universal Robina Corp. v. Castillo,

July 10, 2013.
The leading case of Philippine Long Distance Telephone Co. v. NLRC, 164 SCRA 671 (1988), enunciated the ruling
that separation pay “as a measure of social justice” is allowed in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character. The case of Toyota
Motor Phils. Corp. Workers Association (TMPCWA) v. NLRC, 537 SCRA 171 (2007), expanded the doctrine laid
down in PLDT by adding dismissals other than those under Art. 282 of the Labor Code, like willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer
or his family which would preclude award of separation pay. As the rule now stands, the award of separation pay is
authorized in the situations dealt with in Articles 283 (298) and 284 (299) of the Labor Code, but not in terminations
of employment based on instances enumerated in Article 282 (297).
280. Baptista v. Villanueva,

GR No. 194709, July 31, 2013
The essence of due process is simply to be heard, or as applied to administrative proceedings, an opportunity to
explain one’s side, or an opportunity to seek a reconsideration of the action or ruling complained of. It cannot be
denied that petitioners were properly notified of the charges filed against them and were equally afforded the
opportunity to present their side. Mere absence of a one-on-one confrontation between the petitioners and their
complainants does not automatically affect the validity of the proceedings before the Committee. Not all cases
necessitate a trial-type hearing.
282. BPI Employees Union Davao City v. BPI

GR No. 174912, July 24, 2013.
It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business judgment or
management prerogative. Absent proof that the management acted in a malicious or arbitrary manner, the Court
will not interfere with the exercise of judgment by an employer.
It is incomprehensible how the “reduction of positions in the collective bargaining unit” interferes with the
employees’ right to self-organization because the employees themselves were neither transferred nor dismissed
from the service. As the NLRC clearly stated:
In the case at hand, the union has not presented even an iota of evidence that
petitioner bank has started to terminate certain employees, members of the union. In
fact, what appears is that the Bank has exerted utmost diligence, care and effort to see
to it that no union member has been terminated. In the process of the consolidation or
merger of the two banks which resulted in increased diversification of functions, some
of these non-banking functions were merely transferred to the BOMC without affecting
the union membership.
283. Integrated Microelectronics v. Pionella,

GR No. 200222, August 28, 2013.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if reinstatement
is not viable) and payment of full backwages. In certain cases, however, the Court has carved out an exception to
the foregoing rule and thereby ordered the reinstatement of the employee without backwages on account of the
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following: (a) the fact that dismissal of the employee would be too harsh of a penalty; and (b) that the employer was
in good faith in terminating the employee.
284. Golden Ace Builders v. Talde,

GR No. 187200, May 5, 2010.
The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is
granted where reinstatement is no longer advisable because of strained relations between the employee and the
employer. Backwages represent compensation that should have been earned but were not collected because of
the unjust dismissal. The basis for computing backwages is usually the length of the employee’s service while that
for separation pay is the actual period when the employee was unlawfully prevented from working.
285. Metroguards Security Agency Corp. v. Hilongo,

GR No. 215630, March 9, 2015
The re-computation of the consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the
computation of monetary consequences of this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.
286. Maersk-Filipinas Crewing Inc. v. Avestruz,

GR No. 207010, February 18, 2015
(OFW)
It is well-settled that the burden of proving that the termination of an employee was for a just or authorized cause
lies with the employer. If the employer fails to meet this burden, the conclusion would be that the dismissal was
unjustified and, therefore, illegal. In order to discharge this burden, the employer must present substantial evidence,
which is defined as that amount of relevant evidence which a reasonable mind might accept as adequate to justify
a conclusion, and not based on mere surmises or conjectures.
Insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two
requisites: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and
must pertain to the duties which he had been engaged to discharge
An erring seaman is given a written notice of the charge against him and is afforded an opportunity to explain or
defend himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be
furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew
or vessel that the required notices are dispensed with; but just the same, a complete report should be sent to the
manning agency, supported by substantial evidence of the findings.
287. Villena v. Batangas II Electric,

GR No. 205735, February 4, 2015.
Verily, the Court is not unaware of its rulings wherein it pronounced that retirement pay and separation pay are not
mutually exclusive (unless there is a specific prohibition in the collective bargaining agreement or retirement plan
against the payment of both benefits).
288. Sangwoo Phils. v. Sangwoo Philippines Employees Union,

GR No. 173154, December 9, 2013
Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it must
give a one (1) month prior written notice to the employee and to the DOLE. In this relation, case law instructs that it
is the personal right of the employee to be personally informed of his proposed dismissal as well as the reasons
therefor; and such requirement of notice is not a mere technicality or formality which the employer may dispense
with.
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To this end, jurisprudence states that an employer's act of posting notices to this effect in conspicuous areas in the
workplace is not enough. Verily, for something as significant as the involuntary loss of one's employment, nothing
less than an individually-addressed notice of dismissal supplied to each worker is proper.
Based on existing jurisprudence, an employer which has a valid cause for dismissing its employee but conducts the
dismissal with procedural infirmity is liable to pay the employee nominal damages in the amount of P30,000.00 if
the ground for dismissal is a just cause, or the amount of P50,000.00 if the ground for dismissal is an authorized
cause. However, case law exhorts that in instances where the payment of such damages becomes impossible,
unjust, or too burdensome, modification becomes necessary in order to harmonize the disposition with the prevailing
circumstances.
Thus, in the case of Industrial Timber Corporation v. Ababon, 480 SCRA 181 (2006), (Industrial Timber), the Court
reduced the amount of nominal damages awarded to employees from P50,000.00 to P10,000.00 since the
authorized cause of termination was the employer’s closure or cessation of business which was done in good faith
and due to circumstances beyond the employer’s control.
289. Papertech v. Katando,

GR No. 236020, January 8, 2020
(doctrine of strained relations)
Although Ktaando does not occupy a position of trust and confidence as a machine operator, the circumstances
call for the application of the doctrine of strained relations. It is true that litigation between the parties per se should
not bar the reinstatement of an employee. Katando and Papertech have been in conflict since 2008, or for 11 years
now. The length of time from the occurrence of the incident to its resolution and the demonstrated litigiousness of
the parties showed that their relationship is strained. Papertech has not even appealed the ruling of the LA and it
even promised compliance with the judgment. Clearly, Papertech does not want Katando back as an employee.
290. Olympia Housing v. Lapastora,

GR No. 187691, January 13, 2016
(reinstatement no longer possible due to closure; grant of backwages and separation pay to run up to date of
closure)
Considering the impossibility of Lapastora’s reinstatement, the payment of separation pay, in lieu thereof, is proper.
The amount of separation pay to be given to Lapastora must be computed from March 1995, the time he
commenced employment with OHI, until the time when the company ceased operations in October 2000. As a twin
relief, Lapastora is likewise entitled to the payment of backwages, computed from the time he was unjustly
dismissed, or from February 24, 2000 until October 1, 2000 when his reinstatement was rendered impossible without
fault on his part.
291. Claudia’s Kitchen v. Tanguin

GR No. 221096 June 28, 2017
Separation pay is warranted when the cause for termination is not attributable to the employee's fault, such as those
provided in Articles 298 and 299 of the Labor Code, as well as in cases of illegal dismissal where reinstatement is
no longer feasible. On the other hand, an employee dismissed for any of the just causes enumerated under Article
297 of the same Code, being causes attributable to the employee's fault, is not, as a general rule, entitled to
separation pay. The non-grant of such right to separation pay is premised on the reason that an erring employee
should not benefit from their wrongful acts.
In sum, separation pay is only awarded to a dismissed employee in the following instances:
1) in case of closure of establishment under Article 298 [formerly Article 283] of the Labor Code;
2) in case of termination due to disease or sickness under Article 299 [formerly Article 284] of the Labor Code;
3) as a measure of social justice in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character;
4) where the dismissed employee's position is no longer available;
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5) when the continued relationship between the employer and the employee is no longer viable due to the strained
relations between them;or
6) when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the
best interest of the parties involved.
In all of these cases, the grant of separation pay presupposes that the employee to whom it was given was
dismissed from employment, whether legally or illegally. In fine, as a general rule, separation pay in lieu of
reinstatement could not be awarded to an employee whose employment was not terminated by his employer.
Module 4
ARTICLE 295 (280)
291. Lynvil Fishing Enterprises Inc. v. Ariola

GR No. 181974, February 1, 2012
Jurisprudence, laid two conditions for the validity of a fixed-contract agreement between the employer and
employee: First, the fixed period of employment was knowingly and voluntarily agreed upon by the parties without
any force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or Second, it satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
Textually, the provision that: "NA ako ay sumasang-ayon na maglingkod at gumawa ng mga Gawain sang-ayon sa
patakarang "por viaje" na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan
ng lantsa sa Navotas, Metro Manila" is for a fixed period of employment. In the context, however, of the facts that:
(1) the respondents were doing tasks necessarily to Lynvil’s fishing business with positions ranging from captain of
the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and
(3) this arrangement continued for more than ten years, the clear intention is to go around the security of tenure of
the respondents as regular employees. And respondents are so by the express provisions of the second paragraph
of Article 280.
292. Sonza v. ABS CBN Broadcasting Corp

GR No. 138051, June 10, 2004
independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee. In any event, the method of selecting and engaging SONZA does not
conclusively determine his status. We must consider all the circumstances of the relationship, with the control test
being the most important element.
293. Consolidated Broadcasting Systems Inc. v. Oberio

GR No. 168424, June 8, 2007
The test to determine whether employment is regular or not is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the employer—also, if the employee
has been performing the job for at least one year, even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business.
However, petitioner merely relied on its contention that respondents were piece rate contractors who were paid by
results. Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary contract specifying
the nature of the work to be performed, rates of pay, and the programs in which they will work. Moreover, project or
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contractual employees are required to be apprised of the project they will undertake under a written contract. This
was not complied with by the petitioner, justifying the reasonable conclusion that no such contracts exist and that
respondents were in fact regular employees.
294. Orozco v. CA,

GR No. 155207, August 13, 2008
Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.
Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative
of the power of control. Logically, the line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to be employed in attaining
it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The
first, which aim only to promote the result, create no employer-employee relationship unlike the second, which
address both the result and the means used to achieve it.
The newspaper’s power to approve or reject publication of any specific article a columnist writes for her column
cannot be the control contemplated in the “control test,” as it is but logical that one who commissions another to do
a piece of work should have the right to accept or reject the product; A regular reporter is not as independent in
doing his or her work for the newspaper. Aside from the control test, this Court has also used the economic reality
test. The economic realities prevailing within the activity or between the parties are examined, taking into
is especially appropriate when, as in this case, there is no written agreement or contract on which to base the
relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships
for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer.
295. William Uy Construction Corp. v. Trinidad,

GR No. 183250, March 10, 2010
The test for distinguishing a “project employee” from a “regular employee” is whether or not he has been assigned
to carry out a “specific project or understanding,” with the duration and scope of his engagement specified at the
time his service is contracted. The test for distinguishing a “project employee” from a “regular employee” is whether
or not he has been assigned to carry out a “specific project or understanding,” with the duration and scope of his
engagement specified at the time his service is contracted. The repeated and successive rehiring of project
employees do not qualify them as regular employees.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary
basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be
fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding
for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies
have no control over the decisions and resources of project proponents or owners. There is no construction
company that does not wish it has such control but the reality, understood by construction workers, is that work
depended on decisions and developments over which construction companies have no say.
296. DM Consunji Inc. v. Jamin

April 18, 2012
Once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same
usual business or trade of the employer, then the employee must be deemed a regular employee.
297. Aro et. al. v. NLRC

GR No. 174792, March 7, 2012
The Court markedly stressed the importance of the employees’ knowing consent to being engaged as project
employees when it clarified that “there is no question that stipulation on employment contract providing for a fixed
period of employment such as “project-to-project” contract is valid provided the period was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the
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employee and absent any other circumstances vitiating his consent. By the nature of the contract alone, it is clear
that petitioners’ employment was to carry out a specific project.
298. Universal Robina Sugar Milling Corp v. Acibo et. al.

GR No. 186439, January 15, 2014
To exclude the asserted “seasonal” employee from those classified as regular employees, the employer must show
that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he had been
employed for the duration of the season. Hence, when the “seasonal” workers are continuously and repeatedly
hired to perform the same tasks or activities for several seasons or even after the cessation of the season, this
length of time may likewise serve as badge of regular employment. In fact, even though denominated as “seasonal
workers,” if these workers are called to work from time to time and are only temporarily laid off during the off-season,
the law does not consider them separated from the service during the off-season period. The law simply considers
these seasonal workers on leave until re-employed.
299. GMA Network Inc. v. Pabriga,

GR No. 176419, November 27, 2013
In order to safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees from
attaining the status of regular employees, employers claiming that their workers are project employees should not
only prove that the duration and scope of the employment was specified at the time they were engaged, but also
that there was indeed a project. As discussed above, the project could either be (1) a particular job or undertaking
that is within the regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a particular job or undertaking that is not
within the regular business of the corporation.
300. Pasos v. PNCC

GR No. 192394, July 3, 2013.
The principal test used to determine whether employees are project employees is whether or not the employees
were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the
time the employees were engaged for that project.
In the case at bar, petitioner worked continuously for more than two years after the supposed three-month
duration of his project employment for the NAIA II Project. While his appointment for said project allowed such
extension since it specifically provided that in case his "services are still needed beyond the validity of the
contract, the Company shall extend his services," there was no subsequent contract or appointment that specified
a particular duration for the extension. While for first three months, petitioner can be considered a project
employee of PNCC, his employment thereafter, when his services were extended without any specification of as
to the duration, made him a regular employee of PNCC.
301. Gapayao v. Fulo,

GR No. 193493, June 13, 2013
Jurisprudence has identified the three types of employees mentioned in the provision: (1) regular employees or
those who have been engaged to perform activities that are usually necessary or desirable in the usual business
or trade of the employer; (2) project employees or those whose employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of their engagement, or
those whose work or service is seasonal in nature and is performed for the duration of the season; and (3) casual
employees or those who are neither regular nor project employees.
The primary standard, therefore, of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its
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performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity exists.
302. Millennium Erectors Corp. v. Magallanes,

GR No. 184362, November 15, 2010
A project employee is one whose “employment has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the duration of the season.”
303. Caparoso et. al. v. CA,
GR No. 155505, February 15, 2007
Under Article 280 of the Labor Code, a regular employee is (1) one who is engaged to perform activities are
necessary or desirable in the usual trade or business of the employer, or (2) a casual employee who has rendered
at least one year of service, whether continuous or broken, with respect to the activity in which he is employed.
However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade
or business of the employer, it does not preclude the fixing of employment for a definite period.
However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade or
business of the employer, it does not preclude the fixing of employment for a definite period the criteria under which
fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus: 1. The fixed
period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or
improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his
consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter.
304. Spouses Lim v. Legaspi Hope Christian School et. al.,

GR No. 172818, March 31, 2009
For a private school teacher to acquire permanent status in employment, the following requisites must concur:
(1) the teacher is a full-time teacher;
(2) the teacher must have rendered three consecutive years of service; and
(3) such service must have been satisfactory.
The burden is on petitioners to prove their affirmative allegation that they are permanent teaching personnel.
However, there is not enough evidence on record to show that their total working day is devoted to the school.
There is no showing of what the regular work schedule of a regular teacher in respondent school is. What is clear
in the records is that Evelyn and Alwyn spent two hours and four hours, respectively, but not the entire working
day, at the respondent school. They do not meet requirement c of Section 45 of the Manual. Hence, we sustain
the findings of the Court of Appeals that the petitioners are part-time teachers. Being part-time teachers, in
accordance with University of Sto. Tomas v. NLRC, they cannot acquire permanent status.
305. DM Consunji v. Gobres et. al,

GR No. 169170, August 8, 2010
If the termination is brought about by the completion of the contract or phase thereof, no prior notice is required.
Prior or advance notice of termination is not part of procedural due process if the termination is brought about by
the completion of the contract or phase thereof for which the employee was engaged.
306. Mercado et. al. v. Ama Computer College,

GR No. 183572, April 13, 2010
On the matter of probationary period, Section 92 of these regulations provides: Section 92. Probationary Period.—
Subject in all instances to compliance with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the
tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate
courses are offered on a trimester basis.
91
If the school were to apply the probationary standards (as in fact it says it did in the present case), these
standards must not only be reasonable but must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in
addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract. The details of this finding of just cause must be communicated to the affected teachers as a
matter of due process.
307. Brent School v. Zamora

GR No. L-48494, February 5, 1990
"Where a contract specifies the period of its duration, it terminates on the expiration of such period." The entire
purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting
with the concept of regular employment as defined therein should be construed to refer to the substantive evil that
the Code itself has singled out: agreements entered into precisely to circumvent security of tenure.
It should have no application to instances where a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter.
The decisive determinant in term employment is not the nature of the activities performed by the employee, but the
“day certain” agreed upon by the parties for the commencement and termination of their employment relationship.
Stipulations in employment contracts providing for “term employment” or “fixed period employment” are valid when
the period where agreed upon knowingly, and voluntarily by the parties without force, duress or improper pressure
exerted on the employee; and when such stipulations were not designed to circumvent the laws on security of
tenure.
308. Pure Foods Corporation v. NLRC

GR No. 122653, December 12, 1997
Brent also laid down the criteria under which term employment cannot be said to be in circumvention of the law on
security of tenure: 1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or 2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised by the former or the latter.
Cannery workers are never on equal terms with their employers. Almost always, they agree to any terms of an
employment contract just to get employed considering that it is difficult to find work given their ordinary
qualifications. Their freedom to contract is empty and hollow because theirs is the freedom to starve if they refuse
to work as casual or contractual workers. Indeed, to the unemployed, security of tenure has no value. It could not
then be said that petitioner and private respondents "dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.
309. Leyte Geothermal Power Progressive Employees Union v. PNOC

GR No. 170351, March 30, 2011
The litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment
involving a specific undertaking which completion or termination has been determined at the time of the particular
employee’s engagement.
By entering into such a contract, an employee is deemed to understand that his employment is coterminous with
the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial
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notice that project employees engaged for manual services or those for special skills like those of carpenters or
masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment
on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in
favor of only one party thereto. The employer’s interest is equally important as that of the employee[s’] for theirs is
the interest that propels economic activity.
310. Salazar v. NLRC

GR NO. 109210, April 17, 1996
A project employee is not entitled to separation pay—his services are deemed coterminous with the project.
311. Fonterra Brands Phil v. Lagardo,

GR No. 205300, March 18, 2015
Fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature
seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties
by free choice have assigned a specific date of termination.
Hence, not all fixed-term employees are project employees, although it would seem that all project employees are
at the same time fixed-term employees. In any event, what is interesting here is that we now have precedent for
considering trade merchandising representatives hired for a specific project, such as the promotion of certain
products, as fixed-term employees whose contracts, once expired, their employer can refuse to renew as a matter
of managerial prerogative.
312. Basan v. Coca Cola Bottles,

GR No. 174365, February 4, 2015.
Simply stated, regular employees are classified into: (1) regular employees by nature of work; and (2) regular
employees by years of service. The former refers to those employees who perform a particular activity which is
necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while
the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least
a year.
Indeed, the “pernicious practice” of engaging employees for a fixed period short of the six-month probationary period
of employment, and again, on a day-to-day basis thereafter, mocks the law.
313. Convoy Marketing Corp. v. Albia,

October 7, 2015.
The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract
and providing therein that the employee is an independent contractor when the facts clearly show otherwise. The
test of independent contractorship is whether one claiming to be an independent contractor has contracted to do
the work according to his own methods and without being subject to the control of the employer, except only as to
the results of the work.
(Fixed-term) The fact that the service rendered by the employees is usually necessary and desirable in the business
operations of the employer will not impair the validity of such contracts. For, the decisive determinant in the term
employment is not the activities that the employee is called to perform, but the day certain agreed upon by the
parties for the commencement and termination of their employment relationship
314. Jamias v. NLRC,

March 9, 2016
In Brent School, Inc. v. Zamora, 181 SCRA 702 (1990), we explained that the clause referring to written contracts
should be construed to refer to agreements entered into for the purpose of circumventing the security of tenure.
Obviously, Article 280 does not preclude an agreement providing for a fixed term of employment knowingly and
voluntarily executed by the parties.
93
The test to determine whether a particular employee is engaged as a project or regular employee is whether or not
the employee is assigned to carry out a specific project or undertaking, the duration or scope of which was specified
at the time of his engagement. There must be a determination of, or a clear agreement on, the completion or
termination of the project at the time the employee is engaged. Otherwise put, the fixed period of employment must
be knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or it must satisfactorily
appear that the employer and employee dealt with each other on more or less equal terms with no moral dominance
whatsoever being exercised by the former on the latter.
315. Gadia v. Sykes Asia,

January 28, 2015
A project employee is assigned to a project which begins and ends at determined or determinable times. Unlike
regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the services
of employees who are hired as “project[-based] employees” may be lawfully terminated at the completion of the
project.
According to jurisprudence, the principal test for determining whether particular employees are properly
characterised as “project[-based] employees” as distinguished from “regular employees,” is whether or not the
employees were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were
specified at the time they were engaged for that project.
The project could either be (1) a particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the
company; or (2) a particular job or undertaking that is not within the regular business of the corporation. In order to
safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees from attaining
a regular status, employers claiming that their workers are project[-based] employees should not only prove that
the duration and scope of the employment was specified at the time they were engaged, but also, that there was
indeed a project
316. Innodata Knowledge Services v. Inting,

December 6, 2017
The employment status of a person is defined and prescribed by law and not by what the parties say it should be.
Equally important to consider is that a contract of employment is impressed with public interest such that labor
contracts must yield to the common good.
Project employment contracts, which fix the employment for a specific project or undertaking, are valid under the
law. By entering into such a contract, an employee is deemed to understand that his employment is coterminous
with the project.
But project employment and fixed-term employment are not the same. While the former requires a particular project,
the duration of a fixed-term employment agreed upon by the parties may be any day certain, which is understood
to be “that which must necessarily come although it may not be known when.” The decisive determinant in fixed-
term employment is not the activity that the employee is called upon to perform but the day certain agreed upon by
the parties for the commencement and termination of the employment relationship.
317. Pacific Metal Corp v. Edgar Allan Tamayo

December 5, 2019
For while the appropriate evidence showing that a person is a project employee pertains to the employment contract
specifying the project and its duration; the existence of such contract is not always conclusive of the nature of one’s
employment.
94
That once a project or work pool employee has been: 1) continuously, as opposed to intermittently, rehired by the
same employer for the same tasks or nature of tasks; and 2) these tasks are vital, necessary, and indispensable to
the usual business or trade of the employer, then the employee must be deemed a regular employee.
318. Claret School of QC v. Sinday,

October 9, 2019
This Court has held that our ruling in Brent is the exception rather than the general rule, and a fixed-term
employment is recognized as valid only under certain circumstances, particularly when a fixed-term is an essential
and natural appurtenance., such as overseas employment contracts and officers in educational institutions.
There is no genuine freedom to contract when a fixed-term employment is used as a vehicle to exploit the economic
disadvantage of workers like respondent. Plain wage earners should not be faulted for tolerating jobs they
desperately need. Brent recognized the validity of fixed-term employments only within the context that employers
and employees are on an equal footing
Moreover, the freedom to contract under the Civil Code should be narrowly interpreted when applied to labor
contracts, since these contracts are imbued with public interest. The Civil Code itself recognized that labor contracts
should not be treated as ordinary civil contracts. The absence of a contract evidencing the fixed-term employment
militates against petitioner's claims. As this Court held in Brent, the decisive determinant in fixed-term employments
is "the day certain agreed upon by the parties for the commencement and termination of their employment
relationship.
319. Paz v. Northern Tobacco Redrying Co.

GR NO. 199554 February 18, 2015
In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served
the company for many years, some for over 20 years, performing services necessary and indispensable to
LUTORCO’s business, serve as badges of regular employment. Moreover, the fact that petitioners do not work
continuously for one whole year but only for the duration of the tobacco 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 are merely considered on leave until reemployed.
320. Kimberly Independent Labor Union v. Drilon

GR NO. 77629 May 9, 1990
While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers
and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping
with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on
the day immediately after the end of his first year of service. To rule otherwise, and to instead make their
regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to
impose a burden on the employee which is not sanctioned by law.
The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular
employee with respect to the activity in which he is employed. The law does not provide the qualification that the
employee must first be issued a regular appointment or must first be formally declared as such before he can
acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn.
321. Philippine Geothermal, Inc. v. NLRC

GR NO. 82643-67 August 30, 1990
This Court classified the two kinds of regular employees, as: 1) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer; and 2) those who have rendered
at least one (1) year of service, whether continuous or broken with respect to the activity in which they are employed.
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Assuming therefore, that an employee could properly be regarded as a casual (as distinguished from a regular
employee) he becomes entitled to be regarded as a regular employee of the employer as soon as he has completed
one year of service. Under the circumstances, employers may not terminate the service of a regular employee
except for a just cause or when authorized under the Labor Code. It is not difficult to see that to uphold the
contractual arrangement between the employer and the employee would in effect be to permit employers to avoid
the necessity of hiring regular or permanent employees indefinitely on a temporary or casual status, thus to deny
them security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such result.
322. Samonte v. La Salle Greenhills,

February 10, 2016
A fixed-term employment is allowable under the Labor Code only if the term was voluntarily and knowingly entered
into by the parties who must have dealt with each other on equal terms not one exercising moral dominance over
the other.
A fixed-term contract is an employment contract, the repeated renewals of which make for a regular employment.
Management Prerogative
323. St. Luke’s Medical Center v. Sanchez,

GR No. 212054, March 11, 2015
The right of an employer to regulate all aspects of employment, aptly called "management prerogative," gives
employers the right to prescribe reasonable rules and regulations necessary or proper for the conduct of its business
or concern, to provide certain disciplinary measures to implement said rules and to assure that the same would be
complied with. Courts often decline to interfere in legitimate business decisions of employers and labor laws
discourage interference in employers' judgment concerning the conduct of their business.
Among the employer's management prerogatives is the right to prescribe reasonable rules and regulations
necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to implement
said rules and to assure that the same would be complied with. At the same time, the employee has the corollary
duty to obey all reasonable rules, orders, and instructions of the employer; and willful or intentional disobedience
thereto, as a general rule, justifies termination of the contract of service and the dismissal of the employee (Article
296).
324.Philippine Span Asia Carriers v. Pelayo

GR No. 212003 February 28, 2018
An employer who conducts investigations following the discovery of misdeeds by its employees is not being abusive
when it seeks information from an employee involved in the workflow which occasioned the misdeed. Basic diligence
impels an employer to cover all bases and inquire from employees who, by their inclusion in that workflow, may
have participated in the misdeed or may have information that can lead to the perpetrator's identification and the
employer's adoption of appropriate responsive measures. An employee's involvement in such an investigation will
naturally entail difficulty. This difficulty does not mean that the employer is creating an inhospitable employment
atmosphere so as to ease out the employee involved in the investigation.
While adopted with a view "to give maximum aid and protection to labor," labor laws are not to be applied in a
manner that undermines valid exercise of management prerogative. Disciplining employees does not only entail the
demarcation of permissible and impermissible conduct through company rules and regulations, and the imposition
of appropriate sanctions. It also involves intervening mechanisms "to assure that [employers' rules] would be
complied with." These mechanisms include the conduct of investigations to address employee wrongdoing. While
due process, both substantive and procedural, is imperative in the discipline of employees, our laws do not go so
far as to mandate the minutiae of how employers must actually investigate employees' wrongdoings. Employers
are free to adopt different mechanisms such as interviews, written statements, or probes by specially designated
panels of officers.
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Not every inconvenience, disruption, difficulty, or disadvantage that an employee must endure sustains a finding of
constructive dismissal." It is an employer's right to investigate acts of wrongdoing by employees. Employees
involved in such investigations cannot ipso facto claim that employers are out to get them. Their involvement in
investigations will naturally entail some inconvenience, stress, and difficulty. However, even if they might be
burdened - and, in some cases, rather heavily so - it does not necessarily mean that an employer has embarked
on their constructive dismissal.
325. Zuellig Freight and Cargo System v. NLRC,

GR No. 157900, July 22, 2013.
The mere change in the corporate name is not considered under the law as the creation of a new corporation;
hence, the renamed corporation remains liable for the illegal dismissal of its employee separated under that guise.
Zeta and petitioner remained one and the same corporation. The change of name did not give petitioner the license
to terminate employees of Zeta like San Miguel without just or authorized cause. The situation was not similar to
that of an enterprise buying the business of another company where the purchasing company had no obligation to
rehire terminated employees of the latter. Petitioner, despite its new name, was the mere continuation of Zeta’s
corporate being, and still held the obligation to honor all of Zeta’s obligations, one of which was to respect San
Miguel’s security of tenure. The dismissal of San Miguel from employment on the pretext that petitioner, being a
different corporation, had no obligation to accept him as its employee, was illegal and ineffectual.
326. Peckson v. Robinsons Supermarket Corp.,

GR No. 198534, July 3, 2013
It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications,
aptitudes, and competence, to move them around in the various areas of its business operations in order to
ascertain where they will function with maximum benefit to the company. An employee’s right to security of tenure
does not give him such a vested right in his position as would deprive the company of its prerogative to change
his assignment or transfer him where he will be most useful.
As a privilege inherent in the employer's right to control and manage its enterprise effectively, its freedom to conduct
its business operations to achieve its purpose cannot be denied. There are limits to the exercise of managerial
prerogative to transfer personnel, and on the employer is laid the burden to show that the same is without grave
abuse of discretion, bearing in mind the basic elements of justice and fair play. Indeed, management prerogative
may not be used as a subterfuge by the employer to rid himself of an undesirable worker.
327. Gatbonton v. NLRC

GR No. 146779, January 23, 2006
Preventive suspension is a disciplinary measure for the protection of the company’s property pending investigation
of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker
concerned under preventive suspension if his continued employment poses a serious and imminent threat to the
life or property of the employer or of his co-workers. However, when it is determined that there is no sufficient basis
to justify an employee’s preventive suspension, the latter is entitled to the payment of salaries during the time of
preventive suspension.
328. Automatic Appliances v. Deguidez,

December 4, 2019
The management enjoys the discretion to assign and transfer employees to other work stations. The transfer is
valid inasmuch as it does not involve a demotion in rank or diminution in pay or benefits, and was carried out in
good faith and justified by business exigencies.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a
movement from one position to another of equivalent rank, level or salary without break in the service or a lateral
movement from one position to another of equivalent rank or salary; (b) the employer has the inherent right to
transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where
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it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient
cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee
329. Telus International Philippines v. De Guzman,

December 4, 2019
This Court cannot likewise subscribe to the argument of the company that placing De Guzman on “floating status”
was perfectly acceptable under the labor laws. Telus compared De Guzman’s circumstances to that of security
guards on “off detail” and insists that the call center industry is on all fours with that of a security agency or bus
companies to their drivers wherein placing the employees on floating status without salaries or financial benefit for
an indefinite time is a valid recourse so long as it does not exceed six months.
Contrary to the stance of Telus, the floating status principle does not find application in the instant case. While it
may be argued that the nature of the call center business is such that it is subject to seasonal peaks and troughs
because of client pullouts, changes in clients’ requirements and demands, and a myriad other factors, still, the
necessity to transfer De Guzman to another practice/account does not depend on Telus third party-client/contracts.
When the controversy arose, Telus had several clients in its roster to which it can easily assign De Guzman as
quality analyst without any hindrance. As earlier admitted by Telus, profiling interviews were not a condition
precedent to the transfer.
This situation applies not only in security services but also in other industries. Relevantly, it has been held that “in
all cases however, the temporary lay-off wherein the employees cease to work should not exceed six months, in
consonance with Article 301 of the Labor Code. After six months, the employees should either be recalled to work
or permanently retrenched following the requirements of the law. Otherwise, the employees are considered as
constructively dismissed from work and the agency can be held liable for such dismissal.
330. Puncia v. Toyota Shaw,

GR No. 214399, June 28, 2016
In Aliling v. Feliciano, the Court held that an employer is entitled to impose productivity standards for its employees,
and the latter's non-compliance therewith can lead to his termination from work, viz.:
The practice of a company in laying off workers because they failed to make the work quota has been recognized
in this jurisdiction. . . . . In the case at bar, the petitioners' failure to meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment.
Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may
constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work
quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory
results.
In the case at bar, the petitioners’ failure to meet the sales quota assigned to each of them constitute a just cause
of their dismissal, regardless of the permanent or probationary status of their employment. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing
to complete the same within the allotted reasonable period, or by producing unsatisfactory results.
In this regard, case law instructs that “gross inefficiency” is analogous to “gross neglect of duty,” a just cause of
dismissal under Article 297 of the Labor Code, for both involve specific acts of omission on the part of the employee
resulting in damage to the employer or to his business.
331. Duncan Association of Detailman - PTGWO v. Glaxo Wellcome

GR NO. 162994
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the
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interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against
the possibility that a competitor company will gain access to its secrets and procedures. Indeed, while our laws
endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that
every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights
which are also entitled to respect and enforcement in the interest of fair play.
As correctly put by the appellate court: “the policy being questioned is not a policy against marriage. An employee
of the company remains free to marry anyone of his or her choosing. The policy is not aimed at restricting a personal
prerogative that belongs only to the individual. However, an employee’s personal decision does not detract the
employer from exercising management prerogatives to ensure maximum profit and business success . . .”
332. Tiu v. Platinum Plans,

GR No. 163512, February 28, 2007
A non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable
limitations as to time, trade, and place. In this case, the non-involvement clause has a time limit: two years from the
time petitioner’s employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner
from engaging in any pre-need business akin to respondent’s. More significantly, since petitioner was the Senior
Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean
operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business.
To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable
especially in a highly competitive marketing environment. In sum, we find the non-involvement clause not contrary
to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent.
333. The Phil. Geothermal Inc v. Unocal Phil,

September 28, 2016
Thus, this Court ruled that the surviving corporation automatically assumes the employment contracts of the
absorbed corporation. The absorbed corporation’s employees are not impliedly dismissed, but become part of the
manpower complement of the surviving corporation.
Although the absorbed employees are retained as employees of the merged corporation, the employer retains the
right to terminate their employment for a just or authorized cause. Likewise, the employees are not precluded from
severing their employment through resignation or retirement.
334. SME Bank v. Peregrin De Guzman

GR No. 184517, October 8, 2013
Security of tenure is a constitutionally guaranteed right. Employees may not be terminated from their regular
employment except for just or authorized causes under the Labor Code and other pertinent laws. A mere change
in the equity composition of a corporation is neither a just nor an authorized cause that would legally permit the
dismissal of the corporation’s employees en masse.
Article 296 (formerly Article 281)
335. Tamson’s Enterprises Inc.et. al. v. CA,

G.R. No. 192881 November 16, 2011
There is probationary employment where the employee upon his engagement is made to undergo a trial
period during which the employer determines his fitness to qualify for regular employment based on reasonable
standards made known to him at the time of engagement. The probationary employment is intended to afford the
employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether
he will become an efficient and productive employee. While the employer observes the fitness, propriety and
efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the
other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for
permanent employment. Thus, the word probationary, as used to describe the period of employment, implies the
purpose of the term or period, not its length.
99
It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional
protection of security of tenure. This means they may only be terminated for a just cause or when they otherwise
fail to qualify as regular employees in accordance with reasonable standards made known to them by the employer
at the time of their engagement.
336. Hacienda Primera Development Corporation v. Villegas,

G.R. No. 186243, April 11, 2011
Due process dictates that a probationary employee be apprised beforehand of the condition of his employment and
of the terms of advancement therein, otherwise he is deemed to have been hired from day one as a regular
employee.
It can be gleaned from the provisions of law and jurisprudential pronouncement that there are two grounds to legally
terminate a probationary employee. It may be done either: a) for a just cause; or b) when the employee fails to
qualify as a regular employee in accordance with reasonable standards made known by the employer to the
employee at the start of the employment.
337. Universidad De Sta. Isabel v. Sambajon,

GR No. 1963280, April 2, 2014
The probationary employment of teachers in private schools is not governed purely by the Labor Code. The
Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of
Regulations for Private Schools. Section 92. Probationary Period. – Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic personnel shall not be more than three
(3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive
regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.
338. Univac Development v. Soriano,

GR No. 182072, June 19, 2013.
It is primordial that at the start of the probationary period, the standards for regularization be made known to the
probationary employee. In this case, as held by the CA, petitioner failed to present adequate evidence to
substantiate its claim that respondent was apprised of said standards.
Indeed, the power of the employer to terminate a probationary employee is subject to three limitations, namely: (1)
it must be exercised in accordance with the specific requirements of the contract; (2) the dissatisfaction on the part
of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law; and (3) there
must be no unlawful discrimination in the dismissal.
Pursuant to well-settled doctrine, petitioner’s failure to specify the reasonable standards by which respondent’s
alleged poor performance was evaluated as well as to prove that such standards were made known to him at the
start of his employment, makes respondent a regular employee. In other words, because of this omission on the
part of petitioner, respondent is deemed to have been hired from day one as a regular employee.
339. Abbott Laboratories v. Alcaraz,

GR No. 192571, July 23, 2013.
The employer is made to comply with two (2) requirements when dealing with a probationary employee:
first, the employer must communicate the regularization standards to the probationary employee; and second, the
employer must make such communication at the time of the probationary employee’s engagement. If the employer
fails to comply with either, the employee is deemed as a regular and not a probationary employee.
It is not the probationary employee’s job description but the adequate performance of his duties and responsibilities
which constitutes the inherent and implied standard for regularization. If the probationary employee had been fully
apprised by his employer of these duties and responsibilities, then basic knowledge and common sense dictate that
100
he must adequately perform the same, else he fails to pass the probationary trial and may therefore be subject to
termination.
“Adequate performance” is hinged on the qualitative assessment of the employee’s work; by its nature, this largely
rests on the reasonable exercise of the employer’s management prerogative. In the ultimate analysis, the
communication of performance standards should be perceived within the context of the nature of the probationary
employee’s duties and responsibilities.
An employer is deemed to have made known the standards that would qualify a probationary employee to be a
regular employee when it has exerted reasonable efforts to apprise the employee of what he is expected to do or
accomplish during the trial period of probation.
The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of maids, cooks,
drivers, or messengers. Also, in Aberdeen Court, Inc. v. Agustin, it has been held that the rule on notifying a
probationary employee of the standards of regularization should not be used to exculpate an employee who acts in
a manner contrary to basic knowledge and common sense in regard to which there is no need to spell out a policy
or standard to be met. In the same light, an employee’s failure to perform the duties and responsibilities which have
been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-regularization.
Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and Abbott’s
compliance with the Labor Code termination procedure, it is readily apparent that Abbott breached its contractual
obligation to Alcaraz when it failed to abide by its own procedure in evaluating the performance of a probationary
employee.
340. Colegio de Santisimo Rosario v. Rojo,

GR No. 170388, September 4, 2013.
Section 93 of the 1992 Manual which provides: Regular or Permanent Status. - Those who have served the
probationary period shall be made regular or permanent. Full-time teachers who have satisfactorily completed their
probationary period shall be considered regular or permanent.
The above provision clearly provides that full-time teachers become regular or permanent employees once they
have satisfactorily completed the probationary period of three school years. The use of the term satisfactorily
necessarily connotes the requirement for schools to set reasonable standards to be followed
by teachers on probationary employment the same must have also been communicated to the teachers at the start
of the probationary period, or at the very least, at the start of the period when they were to be applied.
341. Phil. Daily Inquirer v. Magtibay,

G.R. No. 164532, July 24, 2007
It is on record that Magtibay committed obstinate infractions of company rules and regulations, which in
turn constitute sufficient manifestations of his inadequacy to meet reasonable employment norms. All employees,
be they regular or probationary, are expected to comply with company-imposed rules and regulations, else why
establish them in the first place. Probationary employees unwilling to abide by such rules have no right to expect,
much less demand, permanent employment.
342. Alcira v. NLRC,

G.R. No. 149859, June 9, 2004
The computation of the 6-month probationary period is reckoned from the date of appointment up to the same
calendar date of the 6th month following.
Apprising the employee that he will be subjected to a performance evaluation on a particular date after his hiring is
substantial compliance with the legal requirement of making known to the probationary employee the standards
that would qualify the employee for regular employment. Here, Middleby substantially notified Alciras of the
standards to qualify as a regular employee when it apprised him, at the start of his employment, that it would
evaluate his supervisory skills after five months.
101
343. Mercado v. Ama Computer College
GR No. 183572, April 13, 2010
The probationary status of teaching personnel are not governed purely by the Labor Code. The Labor Code is
supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private
Schools. It is important to note that in a situation where the probationary status overlaps with “a fixed term contract
not specifically used for the fixed term it offers,” Article 281 (now 296) should assume primacy and the fixed period
character of the contract must give way.
344. Oyster Plaza Hotel v. Melivo,

G.R. No. 217455, October 5, 2016
Probation is the period during which the employer may determine if the employee is qualified for possible inclusion
in the regular force. The employer has the right or is at liberty to choose who will be hired and who will be denied
employment. In that sense, it is within the exercise of the right to select his employees that the employer may set
or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him
permanently. An employee allowed to work beyond the probationary period is deemed a regular employee.
ARTICLE 297 (FORMERLY ARTICLE 282)
1. Serious Misconduct
355. Imasen Philippine Corporation v. Alcon,

G.R. No. 194884, 22 October 2014
Sexual intercourse inside company premises and during work hours
Misconduct is defined as an improper or wrong conduct. It is a transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. For misconduct or improper behavior to be a just cause for dismissal, the following elements must
concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing
that the employee has become unfit to continue working for the employer; 32 and (c) it must have been performed
with wrongful intent.
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of purely
private relations. Whether aroused by lust or inflamed by sincere affection, sexual acts should be carried out at such
place, time and circumstance that, by the generally accepted norms of conduct, will not offend public decency nor
disturb the generally held or accepted social morals. Under these parameters, sexual acts between two consenting
adults do not have a place in the work environment. The incident culminated in the dismissal of respondents based
on serious misconduct.
356. Northwest Airlines v. Del Rosario,

G.R. No. 157633, 10 September 2014
Fight as serious misconduct
The Court has observed that the term fight was considered to be different from the term argument. In People v.
Asto, for instance, the Court characterized fight as not just a merely verbal tussle but a physical combat between
two opposing parties.
In the eyes of the NLRC, Del Rosario and Gamboa were arguing but not fighting. The understanding of fight as one
that required physical combat was absent during the incident. Moreover, even assuming arguendo that the incident
was the kind of fight prohibited by Northwest's Rules of Conduct, the same could not be considered as of such
seriousness as to warrant Del Rosario's dismissal from the service. The gravity of the fight, which was not more
than a verbal argument between them, was not enough to tarnish or diminish Northwest's public image.
102
357. Citibank v. NLRC,
G.R. No. 159302, 6 February 2008
Attitude problem as serious misconduct
When an employee, despite repeated warnings from the employer, obstinately refuses to curtail a bellicose
inclination such that it erodes the morale of co-employees, the same may be a ground for dismissal for serious
misconduct.
These performance appraisals, however, did not merely show that respondent was not able to meet performance
targets. More relevantly, they also consistently noted significant behavioral and attitudinal problems in respondent.
She was found to be very argumentative; she had difficulty working with others; she was hard to deal with; and she
never ceased being the subject of complaints from co-workers. Less tangible but none the less real, are the common
concerns raised by her peers and supervisor, on the stress and tension created when Rose is around. The
conscious effort to ‘get out of her way’ and avoid conflict, hinders productivity and efficiency and has adversely
affected the morale of the entire unit.
It bears noting that petitioner cited Cathedral School of Technology in its Comment/Reply to Complainant-
Appellant’s Appeal Memorandum precisely to show that its dismissal of complainant on the ground of "gross
inefficiency and unreasonable behavior" was correctly upheld by the labor arbiter.
358. Mirant Philippines v. Caro,

G.R. No. 181490, 23 April 2014
Refusal to undergo drug test not necessarily serious misconduct
While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is recognized as a valid
exercise of its management prerogative as an employer, such exercise is not absolute and unbridled. Managerial
prerogatives are subject to limitations provided by law, collective bargaining agreements, and the general principles
of fair play and justice. In the exercise of its management prerogative, an employer must therefore ensure that the
policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and
the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the
infraction. The Anti-Drugs Policy of Mirant fell short of these requirements.
First. The policy was not clear on what constitutes "unjustified refusal" when the subject drug policy prescribed that
an employee’s "unjustified refusal" to submit to a random drug test shall be punishable by the penalty of termination
for the first offense. To be sure, the term "unjustified refusal" could not possibly cover all forms of "refusal" as the
employee’s resistance, to be punishable by termination, must be "unjustified." To the mind of the Court, it is on this
area where petitioner corporation had fallen short of making it clear to its employees – as well as to management –
as to what types of acts would fall under the purview of "unjustified refusal."
359. Nacague v. Sulpicio Lines,

G.R. No. 172589, 9 August 2010
Required proof for dismissal for use of drugs, drug use as serious misconduct
Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers.
Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the confirmatory
test.
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio
Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny
Nacague's allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to
determine if Nacague was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the
screening test with a confirmatory test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using
illegal drugs amounting to serious misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show
that it had a valid and legal cause for terminating Nacague's employment. When the alleged valid cause for the
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termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal
dismissal.
360. Leus v. St. Scholastica’s College,

G.R. No. 187226, 28 January 2015
Secular morality as basis for determining whether there is serious miscounduct
The fact of the petitioner's pregnancy out of wedlock, without more, is not enough to characterize the petitioner's
conduct as disgraceful or immoral. There must be substantial evidence to establish that pre-marital sexual relations
and, consequently, pregnancy out of wedlock, are indeed considered disgraceful or immoral.
That the petitioner was employed by a Catholic educational institution per se does not absolutely determine whether
her pregnancy out of wedlock is disgraceful or immoral. There is still a necessity to determine whether the
petitioner's pregnancy out of wedlock is considered disgraceful or immoral in accordance with the prevailing norms
of conduct. Public and secular morality should determine the prevailing norms of conduct, not religious morality.
Accordingly, when the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to public and secular
morality; it refers to those conducts which are proscribed because they are detrimental to conditions upon which
depend the existence and progress of human society.
361. Cadiz v. Brent Hosptial,

February 24, 2016
When immorality is relied upon by an employer as a ground for dismissal from service, it must have clearly defined
the same in the terms and conditions of employment. The dictionary definition of immorality, or more particularly
“fornication” as any form of illicit relation does not hold water. Jurisprudence has already set the standard of morality
with which an act should be gauged — it is public and secular, not religious.
362. Sterling Paper Products v. KMM-Katipunan,

August 2, 2017
Invectives
To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements must
concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing
that the employee has become unfit to continue working for the employer; and (c) it must have been performed with
wrongful intent.
Sterling argues that Esponga's utterance of foul and abusive language against his supervisor, demonstrating a dirty
finger, and defiance to perform his duties undeniably constitute serious misconduct. It is well-settled in jurisprudence
that accusatory and inflammatory language used by an employee towards his employer or superior can be a ground
for dismissal or termination.
Esponga's assailed conduct was related to his work. Vinoya did not prohibit him from taking a nap. She merely
reminded him that he could not do so on the sheeter machine for safety reasons. Esponga's acts reflect an
unwillingness to comply with reasonable management directives. It must be noted that Esponga committed all the
acts in front of his co-employees, which evidently showed that he intended to disrespect and humiliate his
supervisor.
363. Maribago Resort v. Dual,

July 20, 2010
Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a rule this Court
leans over backwards to help workers and employees continue with their employment or to mitigate the penalties
imposed on them, acts of dishonesty in the handling of company property, petitioner’s income in this case, are a
different matter.
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364. Benitez v. Santa Fe Moving and Relocation Services
April 20, 2015.
Here, the company acted swiftly, and decisively in Benitez's case because of the gravity and high visibility of his
offense, which not only constituted a frontal verbal, and nearly physical (the attempted beer bottle throwing), assault
against Kurangil. Needless to say, Benitez's outburst also caused grave embarrassment for the audience who
witnessed the incident, including company officials whom he likewise maligned, as well as company clients and
guests. His display of insolent and disrespectful behavior, in utter disregard of the time and place of its occurrence,
had very much to do with his work. He set a bad example as a union officer and as a crew leader of a vital division
of the company.
365. Domingo v. Rayala

GR No. 155831, February 18, 2008
The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related sexual
harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or training-related sexual
harassment is committed by an employer, manager, supervisor, agent of the employer, teacher, instructor,
professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another
in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or requirement for submission is accepted by the object of said
Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or
continued employment of said individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in
limiting, segregating or classifying the employee which in a way would discriminate, deprive or
diminish employment opportunities or otherwise adversely affect said employee;
(2) The above acts would impair the employees rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for the
employee.
It is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical oral or
written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing
Domingos shoulders, running his fingers across her neck and tickling her ear, having inappropriate conversations
with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements
with unmistakable sexual overtones all these acts of Rayala resound with deafening clarity the unspoken request
for a sexual favor.
366. The Coca-Cola Export Corporation v. Gacayan,

December 15, 2010
In Nokom v. National Labor Relations Commission, this Court set the guidelines for the application of the doctrine
of loss of confidence:
(a) Loss of confidence should not be simulated;
(b) It should not be used as a subterfuge for causes which are improper, illegal or unjustified;
(c) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
(d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
In the instant case, the basis for terminating the employment of respondent was for gross violation of the companys
rules and regulations, as specified in the termination letter. Evidently, no mention was made regarding petitioners
alleged loss of trust and confidence in respondent.
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367. Holcim Philippines v. Obra
GR No. 220998, August 8, 2016
There is no question that the employer has the inherent right to discipline, including that of dismissing its employees
for just causes. This right is, however, subject to reasonable regulation by the State in the exercise of its police
power. Accordingly, the finding that an employee violated company rules and regulations is subject to scrutiny by
the Court to determine if the dismissal is justified and, if so, whether the penalty imposed is commensurate to the
gravity of his offense.
Time and again, the Court has held that infractions committed by an employee should merit only the corresponding
penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission
imputed to the employee.
368. Waterfront Cebu City Casino Hotel v. Ledesma,

GR No. 197556, March 25, 2015
Notably, Ledesma never refuted, at the administrative investigation level at Waterfront, and even at the proceedings
before the LA, NLRC, and the CA, the allegations leveled against him by Rosanna Lofranco that, after deluding her
to perform a massage on him, Ledesma exhibited to her his penis and requested that he be masturbated while
inside the conference room of the hotel. If not for the position of Ledesma as a House Detective, he will not have
access to the conference room nor will he know that the premises is not monitored through a closed-circuit
television, thus giving him the untrammeled opportunity to accomplish his lewd design on the unsuspecting victim.
Such acts of Ledesma constituted misconduct or improper behavior which is a just cause for his dismissal.
369. Naguit v. San Miguel,

June 22, 2015
The settled rule is that fighting within company premises is a valid ground for the dismissal of an employee.
Moreover, the act of assaulting another employee is a serious misconduct which justifies the termination of
employment. Also, the Court agrees with respondent’s contention that if petitioner’s long years of service would be
regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to cleanse its rank of all undesirable.
2. Gross insubordination/Willful disobedience
370. Coffee Bean and Tea Leaf v. Arenas,

G.R. No. 208908, 11 March 2015
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employee’s
assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge.
Tested against these standards, it is clear that Arenas’ alleged infractions do not amount to such a wrongful and
perverse attitude. Though Arenas may have admitted these wrongdoings, these do not amount to a wanton
disregard of CBTL’s company policies. As Arenas mentioned in his written explanation, he was on a scheduled
break when he was caught eating at CBTL’s al fresco dining area. During that time, the other service crews were
the one in charge of manning the counter.
371. Lores Realty Enterprises v. Pacia,

G.R. No. 171189, 9 March 2011
The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed
conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated
must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge. Pacia’s initial reluctance to prepare the checks, however, which was seemingly an act of
disrespect and defiance, was for honest and well intentioned reasons.
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372. ePacific Global Contact Center v. Cabansay,
G.R. No. 167345, 23 November 2007
refusal to comply withlawful order
Willful disobedience or insubordination necessitates the concurrence of at least two requisites: (1) the employee's
assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he
had been engaged to discharge. A breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must
rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the
employee would eternally remain at the mercy of the employer.
While respondent Cabansay was a managerial employee, a Senior Training Manager entrusted with the delicate
matter of molding the minds and characters of call center agents and team leaders, and clothed with discretion to
determine what was in the best interest of the company, her managerial discretion was not without limits. Its
parameters were contained the moment her discretion was exercised and then opposed by the immediate superior
officer/employer for being against the policies and welfare of the company. Hence, any action in pursuit of the
discretion thus opposed ceased to be discretionary and could be considered as willful disobedience.
Indeed, by refusing to postpone the presentation and implementation of the new training process, respondent
intentionally, knowingly and purposely, without justifiable excuse, breached the trust and confidence reposed in her
by her employer.
373. Tongko v. The Manufacturer’s Life Insurance Co. Inc.,

November 7, 2008
(willful disobedience)
it failed to cite a single iota of evidence to support its claims. Manulife did not even point out which order or rule that
Tongko disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that
would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged
"laggard performance," without substantiating such claim, and equated the same to disobedience and neglect of
duty.
374. Pharmacia and Upjohn Inc. v. Albayda Jr.,

August 23, 2010
(refusal to be transferred)
Court has long stated that the objection to the transfer being grounded solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of
transfer. Such being the case, respondent cannot adamantly refuse to abide by the order of transfer without
exposing himself to the risk of being dismissed. Hence, his dismissal was for just cause in accordance with Article
282(a) of the Labor Code.
Moreover, the allegation of complainant that respondent’s family’s income will be affected because his wife who is
doing business in Bacolod City and earns P50,000.00, if true, should not be taken in consideration of his transfer.
What is contemplated here is the diminution of the salary of the complainant but not his wife. Besides, even if
complainant may accept his new assignment in Cagayan de Oro or in Metro Manila, his wife may still continue to
do her business in Bacolod City. Anyway, Bacolod City and Manila is just one (1) hour travel by plane.
375. St. Luke’s Medical Center v. Sanchez,

GR No. 212054 Date: March 11, 2015
Among the employer’s management prerogatives is the right to prescribe reasonable rules and regulations
necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to implement
said rules and to assure that the same would be complied with. At the same time, the employee has the corollary
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duty to obey all reasonable rules, orders, and instructions of the employer; and willful or intentional disobedience
thereto, as a general rule, justifies termination of the contract of service and the dismissal of the employee.
3. Gross and habitual neglect
376. St. Luke’s Medical Center v. Notario,

G.R. No. 152166, 20 October 2010
(negligence must not only be gross but habitual, single act does not suffice)
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of
care in the performance of one’s duties. Habitual neglect implies repeated failure to perform ones duties for a period
of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause
for the dismissal of the employee.
When the tapes of video camera recorder (VCR) no. 3 covering the subject period were reviewed, it was found out
that the cameras failed to record any incident of theft at the subject room. Respondent exercised his best judgment
in monitoring the CCTV cameras so as to ensure the security within the hospital premises. Verily, assuming
arguendo that respondent was negligent, although this Court finds otherwise, the lapse or inaction could only be
regarded as a single or isolated act of negligence that cannot be categorized as habitual.
377. LBC Express v. Mateo,

G.R. No. 168215, 9 June 2009
(single act of negligence leading to loss of substantial amount justified dismissal)
Gross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is
a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar
as other persons may be affected. An employer cannot legally be compelled to continue with the employment of a
person admittedly guilty of gross negligence in the performance of his duties. This holds true specially if the
employee's continued tenure is patently inimical to the employer's interest. What happened was not a simple case
of oversight and could not be attributed to a simple lapse of judgment.
Although Mateo's infraction was not habitual, we must take into account the substantial amount lost. In this case,
LBC lost a motorcycle with a book value of P46,000 which by any means could not be considered a trivial amount.
Mateo was entrusted with a great responsibility to take care of and protect company property and his gross
negligence should not allow him to walk away from that incident as if nothing happened and, worse, to be rewarded
with backwages to boot.
378. Mansion Printing Center v. Bitara,

G.R. No. 168120, 15 January 2012
(habitual tardiness and absenteeism as grounds for dismissal, totality of infractions)
As found by the NLRC: the imputed absence and tardiness of the complainant are documented. He faltered on his
attendance 38 times of the 66 working days. His last absences on 11, 13, 14, 15 and 16 March 2000 were
undertaken without even notice/permission from management. These attendance delinquencies may be
characterized as habitual and are sufficient justifications to terminate the complainant's employment.
Petitioners have repeatedly called the attention of respondent concerning his habitual tardiness. Also in connection
with a similar infraction, respondent even wrote petitioner a letter dated 29 November 1999 where he admitted that
his tardiness has affected the delivery schedules of the company, offered an apology, and undertook to henceforth
report for duty on time. Despite this undertaking, he continued to either absent himself from work or report late
during the first quarter of 2000. These attendance delinquencies may be characterized as habitual and are sufficient
justifications to terminate the complainant’s employment. Clearly, even in the absence of a written company rule
defining gross and habitual neglect of duties, respondent’s omissions qualify as such warranting his dismissal from
the service.
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379. Cavite Apparel v. Marquez,
G.R. No. 172044, 6 February 2013
(Four absences over six month period, not gross and habitual neglect, dismissal not commensurate to the infraction)
There simply cannot be a case of gross and habitual neglect of duty against Michelle. Even assuming that she failed
to present a medical certificate for her sick leave on May 8, 2000, the records are bereft of any indication that apart
from the four occasions when she did not report for work, Michelle had been cited for any infraction since she started
her employment with the company in 1994. Four absences in her six years of service, to our mind, cannot be
considered gross and habitual neglect of duty, especially so since the absences were spread out over a six-month
period.
380. Manarpiis v. Texan Philippines,

G.R. No. 197011, 28 January 2015
(Requisites for abandonment)
The court laid down the two elements which must concur for a valid abandonment:
(1) the failure to report to work or absence without valid or justifiable reason, and
(2) a clear intention to sever the employer-employee relationship, with the second element as the more
determinative factor being manifested by some overt acts.
Abandonment as a just ground for dismissal requires the deliberate, unjustified refusal of the employee to perform
his employment responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to
abandonment. Furthermore, it is well-settled that the filing by an employee of a complaint for illegal dismissal with
a prayer for reinstatement is proof enough of his desire to return to work, thus, negating the employer’s charge of
abandonment. An employee who takes steps to protest his dismissal cannot logically be said to have abandoned
his work.
381. School of Holy Spirit of Quezon City v. Taguiam,

GR No. 116556, July 14, 2008
(gross and habitual neglect)
Notably, respondent’s negligence, although gross, was not habitual. In view of the considerable resultant damage,
however, we are in agreement that the cause is sufficient to dismiss respondent. Indeed, the sufficiency of the
evidence as well as the resultant damage to the employer should be considered in the dismissal of the employee.
In this case, the damage went as far as claiming the life of a child.
Otherwise stated, the GENERAL RULE is that the neglect must be both gross and habitual. Hence, a single or
isolated act of negligence does not constitute a just cause for the dismissal of the employee. However, as an
EXCEPTION, when the neglect was so substantial to cause considerable damage to the employer, it does not
need to be habitual.
4. Fraud
382. Philippine Airlines v. NLRC,

G.R. No. 126805, 16 March 2000
(Fraud need not lead to actual loss to justify dismissal)
In the case at bar, there is substantial evidence showing that private respondent had direct involvement in the illegal
pooling of baggage. Obviously, private respondent's act is inexcusable as it constitutes a serious offense under
petitioner's Code of Discipline. The fact that petitioner failed to show it suffered losses in revenue as a consequence
of private respondent's questioned act is immaterial. That private respondent attempted to deprive petitioner of its
lawful revenue is already tantamount to fraud against the company, which warrants dismissal from the service. . It
must be stressed that actual defraudation is not necessary in order that an employee may be held liable under the
aforequoted rule.
5. Loss of confidence/Breach of trust
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383. Sta. Ana v. Manila Jockey Club,
G.R. No. 208459, 15 February 2017
(requisites for breach of trust)
In this regard, to legally dismiss an employee on the ground of loss of trust, the employer must establish that a) the
employee occupied a position of trust and confidence, or has been routinely charged with the care and custody of
the employer's money or property; b) the employee committed a willful breach of trust based on clearly established
facts; and, c) such loss of trust relates to the employee's performance of duties. In fine, there must be actual breach
of duty on the part of the employee to justify his or her dismissal on the ground of loss of trust and confidence.
It is a cardinal rule that loss of trust and confidence should be genuine, and not simulated; it must arise from
dishonest or deceitful conduct, and must not be arbitrarily asserted in the face of overwhelming contrary evidence.
While proof beyond reasonable doubt is not required, loss of trust must have some basis or such reasonable ground
for one to believe that the employee committed the infraction, and the latter's participation makes him or her totally
unworthy of the trust demanded by the position. Here, MJCI failed to prove that Sta. Ana committed willful breach
of its trust. Particularly, it failed to establish that Sta. Ana used its employee for her personal business during office
hours, and used its money, without authority, to lend money to another. Hence, to dismiss her on the ground of loss
of trust and confidence is unwarranted.
384. Hormillosa v. Coca-Cola Bottlers Philippines,

G.R. No. 198699, 9 October 2013
(Non managerial employees)
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must
be one holding a position of trust and confidence. There are two (2) classes of positions of trust. The first class
consists of managerial employees. They are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions. The second class consists of cashiers, auditors, property
custodians, etc. They are defined as those who in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property.
The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust
and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly
established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond
reasonable doubt is not necessary. Ordinary breach will not suffice; it must be willful.
Hormillosa, being a route salesman, falls under the second class. By selling soft drink products and collecting
payments for the same, he was considered an employee who regularly handled significant amounts of money and
property in the normal and routine exercise of his functions. Clearly, Hormillosa occupies a position of trust. As
correctly pointed out by the CA, there was a high degree of trust and confidence reposed on him and when this
confidence was breached, the employer was justified in taking the appropriate disciplinary action.
385. Manese v. Jollibee Foods Corporation,

G.R. No. 170454, 11 October 2012
(Managerial employee)
The mere existence of a basis for the loss of trust and confidence justifies the dismissal of the managerial employee
because when an employee accepts a promotion to a managerial position or to an office requiring full trust and
confidence, such employee gives up some of the rigid guaranties available to ordinary workers.
Proof beyond reasonable doubt is not required provided there is a valid reason for the loss of trust and confidence,
such as when the employer has a reasonable ground to believe that the managerial employee concerned is
responsible for the purported misconduct and the nature of his participation renders him unworthy of the trust and
confidence demanded by his position.
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386. Grand Asian Shipping Lines Inc., v. Galvez,
January 29, 2014
(loss of trust)
The employer has broader discretion in dismissing managerial employees on the ground of loss of trust and
confidence than those occupying ordinary ranks. While plain accusations are not sufficient to justify the dismissal
of rank and file employees, the mere existence of a basis for believing that managerial employees have breached
the trust reposed on them by their employer would suffice to justify their dismissal.
387. Bluer than blue Joint Ventures Co. v. Esteban,

April 7, 2014
(how to determine if employees job is imbued with trust and confidence)
Loss of trust and confidence is premised on the fact that the employee concerned holds a position of responsibility,
trust and confidence. The employee must be invested with confidence on delicate matters, such as the custody,
handling, care and protection of the employer’s property and funds. Loss of trust and confidence to be a valid cause
for dismissal must be work related such as would show the employee concerned to be unfit to continue working for
the employer and it must be based on a willful breach of trust and founded on clearly established facts.
With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of
involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient.
388. Concepcion v. Minex Import Corporation,

January 24, 2012
(loss of trust and confidence, criminal prosecution not a requisite for validity of dismissal)
The employer may validly dismiss for loss of trust and confidence an employee who commits an act of fraud
prejudicial to the interest of the employer. Neither a criminal prosecution nor a conviction beyond reasonable doubt
for the crime is a requisite for the validity of the dismissal.
389. Manila Jockey Club v. Trajano,

June 26, 2013.
To dismiss an employee based on speculation as to the damage the employer could have suffered would be an
injustice. The loss of confidence should not be simulated in order to justify what would otherwise be, under the
provisions of law, an illegal dismissal. It should not be used as a subterfuge for causes which are illegal, improper
and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.
6. Commission of a crime
390. Reno Foods v. Nagkakaisang Lakas ng Manggagawa,

G.R. No. 164016, 15 March 2010
(acquittal does not invalidate dismissal for commission of a crime)
Criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employee’s
acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude
a determination in a labor case that he is guilty of acts inimical to the employer’s interests. Criminal cases require
proof beyond reasonable doubt while labor disputes require only substantial evidence, which means such relevant
evidence as a reasonable mind might accept as adequate to justify a conclusion.
391. Lynvil Fishing Enterprises v. Ariola,

G.R. No. 181974, 1 February 2012
(findings in preliminary investigation not binding upon labor tribunals)
Whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor tribunal. Lynvil
cannot argue that since the Office of the Prosecutor found probable cause for theft the LA must follow the finding
as a valid reason for the termination of respondents’ employment. The proof required for purposes that differ from
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one and the other are likewise different. Nonetheless, even without reliance on the prosecutor’s finding, there was
valid cause for respondents’ dismissal.
7. Other analogous causes
392. John Hancock Life Insurance v. Davis,

G.R. No. 169549, 3 September 2008
(Theft of co-worker’s property is analogous to serious misconduct)
Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to
another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those
enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee. A
cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee’s moral
depravity. Theft committed by an employee against a person other than his employer, if proven by substantial
evidence, is a cause analogous to serious misconduct.
393. Yrasuegui v. PAL, October 17, 2008

Requisites for Bona Fide Occupational Qualification (BFOQ):
(1) the employment qualification is reasonably related to the essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.
The prescribed weight of PAL is a continuing BFOQ. On board an aircraft, the body weight and size of a cabin
attendant are important factors to consider in case of emergency. Thus, the failure to maintain such weight is a valid
ground for dismissal under the “analogous cases” of Article 297(e).
394. Son et al. v. UST,

April 18, 2018
(other causes)
And while they were given ample time and opportunity to satisfy the requirements by obtaining their respective
master's degrees, they failed in the endeavor. Petitioners knew this - that they cannot continue to teach for failure
to secure their master's degrees - and needed no reminding of this fact; "those who are seeking to be educators
are presumed to know these mandated qualifications." Thus, all those who fail to meet the criteria under the 1992
Manual cannot legally attain the status of permanent full-time faculty members, even if they have completed three
years of satisfactory service. In the light of the failure of Manaois to satisfy the academic requirements for the
position, she may only be considered as a part-time instructor pursuant to Section 45 of the 1992 Manual.
Abandonment
395. Mallo v. Southeast Asian College,

October 14, 2015
As defined under established jurisprudence, abandonment is the deliberate and unjustified refusal of an employee
to resume his employment. It constitutes neglect of duty and is a just cause for termination of employment under
paragraph (b) of Article 282 [now Article 296] of the Labor Code.
To constitute abandonment, however, there must be a clear and deliberate intent to discontinue one's employment
without any intention of returning. In this regard, two elements must concur: (1) failure to report for work or absence
without valid or justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with the
second element as the more determinative factor and being manifested by some overt acts. Otherwise stated,
absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want
to work anymore.
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396. Manarpiis v. Texas Phils,
January 28, 2015
Abandonment as a just ground for dismissal requires the deliberate, unjustified refusal of the employee to perform
his employment responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to
abandonment. Abandonment in this case was a trumped up charge, apparently to make it appear that petitioner
was not yet terminated when she filed the illegal dismissal complaint and to give a semblance of truth to the belated
investigation against the petitioner. Petitioner did not abandon her work but was told not to report for work anymore
after being served a written notice of termination of company closure on July 27, 2000 and turning over company
properties to respondent Rialubin-Tan.
Module 5
ARTICLE 298 (FORMERLY ARTICLE 283)
1. Redundancy
397. Arabit v. Jardine Pacific,

G.R. No. 181719, 21 April 2014
(Distinction between redundancy and retrenchment; Guidelines for valid redundancy)
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business,
or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination of employment
initiated by the employer through no fault of the employee’s and without prejudice to the latter, resorted to by
management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation.
In Asian Alcohol Corp. v. NLRC, the Court set guidelines for redundancy to be characterized as validly undertaken
by the employer:
(1) written notice served on both the employees and the Department of Labor and Employment at least one
month prior to the intended date of retrenchment;
(2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher;
(3) good faith in abolishing the redundant positions; and
(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished.
In Golden Thread Knitting Industries, Inc. v. NLRC, this Court laid down the principle that the employer must use
fair and reasonable criteria in the selection of employees who will be dismissed from employment due to
redundancy. Such fair and reasonable criteria may include the following, but are not limited to:
(a) less preferred status (e.g., temporary employee);
(b) efficiency; and
(c) seniority.
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398. Shimizu Philippines v. Callanta,
G.R. No. 165923, 29 September 2010
(Guidelines for valid redundancy; purpose of notice to DOLE; nominal damages for non-compliance)
As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid
exercise of management prerogative subject to the strict requirements set by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are
not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at
least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2 month
pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees' right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, . . . efficiency, seniority, physical fitness, age, and financial hardship
for certain workers.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause
of termination. Non-compliance with this rule clearly violates the employee's right to statutory due process. to be
consistent with our ruling in Jaka Food Processing Corporation v. Pacot, the indemnity in the form of nominal
damages should be fixed in the amount of P50,000.00.
Petitioner was able to prove that it incurred substantial business losses, that it offered to pay respondent his
separation pay, that the retrenchment scheme was arrived at in good faith, and lastly, that the criteria or standard
used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and
reasonableness. Respondent's argument that he was singled out for termination as allegedly shown in petitioner's
monthly termination report for the month of July 1997 filed with the DOLE does not persuade this Court. Standing
alone, this document is not proof of the total number of retrenched employees or that respondent was the only one
retrenched.
399. SPI Technologies Inc. v. Mapua,

April 7, 2014
(redundancy)
To prove that Villanueva's functions are redundant, SPI submitted an Inter-Office Memorandum and affidavit. The
memorandum however made no mention that the position of the Corporate Development Manager or any other
position would be abolished or deemed redundant but only enumerated the various functions of a Corporate
Development Manager being performed by other SPI employees. This is not enough evidence to support the
company’s redundancy program.
400. Culili v. Eastern Telecommunication Philippines,

February 9, 2011
(redundancy)
This Court has been consistent in holding that the determination of whether or not an employees services are still
needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business
judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.
The following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/
proposal on the viability of the newly created positions, job description and the approval by the management of the
restructuring.
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401. Asufrin v. San Miguel Corporation,
March 10, 2004
(redundancy)
However, it is not enough for a company to merely declare that it has become over-manned. It must produce
adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy. It
bears stressing that whether it be by redundancy or retrenchment or any of the other authorized causes, no
employee may be dismissed without observance of the fundamentals of good faith.
402. Ocean East Agency Corp v. Lopez,

October 14, 2015
(redundancy)
Even if a business is doing well, an employer can still validly dismiss an employee from the service due to
redundancy if that employee's position has already become in excess of what the employer's enterprise requires.
However, in this case, petitioners were able to establish through Ocean East's Quality Procedures Manual that
Lopez' position as a Documentation Officer was redundant because its duties and functions were similar to those
of the Documentation Clerks in its operations department. However, they failed to prove by substantial evidence
their observance of the fair and reasonable criteria of seniority and efficiency in ascertaining the redundancy of the
position of Documentation Officer, as well as good faith on their part in abolishing such position.
Retrenchment
403. Asian Alcohol Corporation v. NLRC,

G.R. No. 131108, 25 March 1999
(Requirements for valid retrenchment, Proof required, includes prevention of losses)
The right of management to dismiss workers during periods of business recession and to install labor saving devices
to prevent losses is governed by Art. 283 of the Labor Code, as amended. Under this provision, retrenchment and
redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the
business. In exercising its right, however, management must faithfully comply with the substantive and procedural
requirements laid down by law and jurisprudence. The requirements for valid retrenchment which must be proved
by clear and convincing evidence are:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at
least 1/2 month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the employees' right to security of tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular
or managerial employees),efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.
Employer must show that the business losses cannot be abated in the near future. The condition of business losses
is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well
as annual income tax returns. It is our ruling that financial statements must be prepared and signed by independent
auditors. Unless duly audited, they can be assailed as self-serving documents. It should be observed that Article
283 of the Labor Code uses the phrase "retrenchment to prevent losses." In its ordinary connotation, this phrase
means that retrenchment must be undertaken by the employer before losses are actually sustained.
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404. FASAP v. Philippine Airlines,
G.R. No. 178083, 13 March 2018
(AFS not absolute requirement for valid retrenchment; judicial notice of company undergoing corporate
rehabilitation)
The Court emphasized that the presentation of the audited financial statements should not the sole means by which
to establish the employer's serious financial losses. The presentation of audited financial statements, although
convenient in proving the unilateral claim of financial losses, is not required for all cases of retrenchment. The
evidence required for each case of retrenchment really depends on the particular circumstances obtaining.
In the case, FASAP’s express recognition of PAL’s grave financial situation meant that such situation no longer
needed to be proved, the same having become a judicial admission in the context of the issues between the parties.
As a rule, indeed, admissions made by parties in the pleadings, or in the course of the trial or other proceedings in
the same case are conclusive, and do not require further evidence to prove them. By FASAP’s admission of PAL’s
severe financial woes, PAL was relieved of its burden to prove its dire financial condition to justify the retrenchment.
Thusly, PAL should not be taken to task for the non-submission of its audited financial statements in the early part
of the proceedings inasmuch as the non-submission had been rendered irrelevant. Furthermore, the July 22, 2008
decision recognized that PAL underwent corporate rehabilitation. Indeed, that a company undergoes rehabilitation
sufficiently indicates its fragile financial condition. After having been placed under corporate rehabilitation and its
rehabilitation plan having been approved by the SEC on June 23, 2008, PAL’s dire financial predicament could not
be doubted.
In short, to require a distressed corporation placed under rehabilitation or receivership to still submit its audited
financial statements may become unnecessary or superfluous.
405. Sebuguero v. NLRC,

G.R. No. 115394, 27 September 1995
(Temporary Lay-off and Art. 301 by analogous application)
Article 283 of the Labor code speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case
here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the
requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off. To
remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that
employees may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation
of a business or undertaking may be suspended thereby suspending the employment of the employees concerned.
The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months.
After six months, the employees should either be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and
the employer would thus be liable for such dismissal.
To determine, therefore, whether the petitioners were validly retrenched or were illegally dismissed, we must
determine whether there was compliance with the law regarding a valid retrenchment at anytime within the six
month-period that they were temporarily laid-off.
Under the aforequoted Article 283 of the Labor Code, there are three basic requisites for a valid retrenchment:
(1) the retrenchment is necessary to prevent losses and such losses are proven;
(2) written notice to the employees and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment; and
(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year
of service, whichever is higher.
The lack of written notice to the petitioners and to the DOLE does not, however, make the petitioners' retrenchment
illegal such that they are entitled to the payment of back wages and separation pay in lieu of reinstatement as they
contend. Their retrenchment, for not having been effected with the required notices, is merely defective. In those
cases where we found the retrenchment to be illegal and ordered the employees' reinstatement and the payment
of back wages, the validity of the cause for retrenchment, that is the existence of imminent or actual serious or
substantial losses, was not proven. But here, such a cause is present as found by both the Labor Arbiter and the
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NLRC. There is only a violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the
retrenchment of the petitioners.
406. Blue Eagle v. Naval,

April 19, 2016
(retrenchment)
Retrenchment is one of the authorized causes for termination of employment which the law accords an employer
who is not making good in its operations in order to cut back on expenses for salaries and wages by laying off some
employees. The purpose of retrenchment is to save a financially ailing business establishment from eventually
collapsing. The requirements for a valid retrenchment were laid down in Asian Alcohol Corporation v. National Labor
Relations Commission:
The requirements for valid retrenchment which must be proved by clear and convincing evidence are:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at
least 1/2 month pay for every year of service, whichever is higher;
(4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the employees' right to security of tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular
or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.
407. La Consolacion College v. Pascua,

March 14, 2018
(retrenchment)
Retrenchment is normally resorted to by management during periods of business reverses and economic difficulties
occasioned by such events as recession, industrial depression, or seasonal fluctuations. It is an act of the employer
of reducing the work force because of losses in the operation of the enterprise, lack of work, or considerable
reduction on the volume of business. Retrenchment is, in many ways, a measure of last resort when other less
drastic means have been tried and found to be inadequate.
While a legitimate business option, retrenchment may only be exercised in compliance with substantive and
procedural requisites.
As to the substantive requisites, an employer must first show "that the retrenchment is reasonably necessary and
likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the
employer. Second, an employer must also show "that [it] exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of
tenure." Third, an employer must demonstrate "that [it] used fair and reasonable criteria in ascertaining who would
be dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary,
casual, regular or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.”
Procedurally, employers must serve a "written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment." Likewise, they must pay "the retrenched
employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of service,
whichever is higher."
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Closure of business
408. Sangwoo Philippines v. Sangwoo Philippines Employees Union,

G.R. No. 173154, 9 December 2013
(Closure due to serious business losses no separation pay, posting of notices not compliant with procedural due
process, reduced nominal damages)
Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business
operations and/or an actual locking-up of the doors of establishment, usually due to financial losses. Closure of
business, as an authorized cause for termination of employment, aims to prevent further financial drain upon an
employer who cannot pay anymore his employees since business has already stopped. In such a case, the
employer is generally required to give separation benefits to its employees, unless the closure is due to serious
business losses.
In this case, the LA, NLRC, and the CA all consistently found that SPI indeed suffered from serious business losses
which resulted in its permanent shutdown and accordingly, held the company’s closure to be valid. Perforce, without
any cogent reason to deviate from the findings on the validity of SPI’s closure, the Court thus holds that SPI is not
obliged to give separation benefits to the minority employees pursuant to Article 297 of the Labor Code.
Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it must
give a one (1) month prior written notice to the employee and to the DOLE. In this relation, case law instructs that it
is the personal right of the employee to be personally informed of his proposed dismissal as well as the reasons
therefor; and such requirement of notice is not a mere technicality or formality which the employer may dispense
with.32 Since the purpose of previous notice is to, among others, give the employee some time to prepare for the
eventual loss of his job,33 the employer has the positive duty to inform each and every employee of their impending
termination of employment. To this end, jurisprudence states that an employer’s act of posting notices to this effect
in conspicuous areas in the workplace is not enough. Verily, for something as significant as the involuntary loss of
one’s employment, nothing less than an individually-addressed notice of dismissal supplied to each worker is
proper.
SPI was required to serve written notices of termination to its employees, which it, however, failed to do. It is well
to stress that while SPI had a valid ground to terminate its employees, i.e., closure of business, its failure to comply
with the proper procedure for termination renders it liable to pay the employee nominal damages for such omission.
In this case, considering that SPI closed down its operations due to serious business losses and that said closure
appears to have been done in good faith, the Court – similar to the case of Industrial Timber – deems it just to
reduce the amount of nominal damages to be awarded to each of the minority employees from P50,000.00 to
P10,000.00.
409. Navotas Shipyard v. Montallana,

G.R. No. 190053, 24 March 2014
(Temporary closure ripening to closure due to serious business losses, nominal damages)
The petitioners undertook a temporary shutdown. In fact, the company notified the DOLE of the shutdown and filed
an Establishment Termination Report containing the names of the affected employees. The petitioners expected
the company to recover before the end of the six-month shutdown period, but unfortunately, no recovery took place.
Thus, the shutdown became permanent. According to the petitioners, they gave the company’s employees their
separation pay. Under the circumstances, we cannot say that the company’s employees were illegally dismissed;
rather, they lost their employment because the company ceased operations after failing to recover from their
financial reverses.
Pursuant to existing jurisprudence, if the dismissal is by virtue of a just or authorized cause, but without due process,
the dismissed workers are entitled to an indemnity in the form of nominal damages. In the present case, the
evidence on hand substantially shows that the company closed down due to serious business reverses, an
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authorized cause for termination of employment. The failure to notify the respondents in writing of the closure of the
company will not invalidate the termination of their employment, but the company has to pay them nominal damages
for the violation of their right to procedural due process. This amount is addressed to the sound discretion of the
court, taking into account the relevant circumstances, as the Court explained in Agabon v. NLRC.
410. Veterans Federation of the Phils. v. Montenegro,

November 29, 2017
(closure)
One of the authorized causes for dismissal recognized under the Labor Code is the bona fide cessation of business
or operations by the employer. Article 298 of the Labor Code explicitly sanctions terminations due to the employer's
cessation of business or operations-as long as the cessation is bona fide or is not made "for the purpose of
circumventing the [employees' right to security of tenure].”
To unmask the true intent of an employer when effecting a closure of business, it is important to consider not only
the measures adopted by the employer prior to the purported closure but also the actions taken by the latter after the
fact. For, as can be seen from the examples in the cited cases, the employer's subsequent acts of suddenly reviving
a business it had just closed or surreptitiously continuing with its operation after announcing a shutdown are telltale
badges that the employer had no real intent to cease its business or operations and only seeks an excuse to
terminate employees capriciously.
411. PNCC Skyway Corp. v. Secretary of Labor,

February 6, 2017
(closure)
Procedurally, Article 298 (formerly, Article 283) of the Labor Code, as amended provides for three (3) requirements
to properly effectuate termination on the ground of closure or cessation of business operations. These are: (a)
service of a written notice to the employees and to the DOLE at least one (1) month before the intended date of
termination; (b) the cessation of business must be bona fide in character; and (c) payment to the employees of
termination pay amounting to one (1) month pay or at least one-half month pay for every year of service, whichever
is higher. Case law has settled that an employer who terminates an employee for a valid cause but does so through
invalid procedure is liable to pay the latter nominal damages.
In the instant case, while both the SOLE and the appellate court found the closure of PSC's business operation to
be bona fide, the required notices were, however, served on the employees and the DOLE only three (3) days
before the closure of the company.
The required written notice under Article 283 of the Labor Code is to inform the employees of the specific date of
termination or closure of business operations, and must be served upon them at least one (1) month before the
date of effectivity to give them sufficient time to make the necessary arrangements. The purpose of this requirement
is to give employees time to prepare for the eventual loss of their jobs, as well as to give DOLE the opportunity to
ascertain the veracity of the alleged cause of termination. Thus, considering that the notices of termination were
given merely three (3) days before the cessation of the PSC's operation, it defeats the very purpose of the required
notice and the mandate of Article 283 of the Labor Code. Neither the payment of employees' salaries for the said
one- month period nor the employees' alleged actual knowledge of the ASTOA is sufficient to replace the formal
and written notice required by the law.
412. Penafrancia Tours and Travel Transport v. Sarmiento,

October 20, 2010
(Closure)
Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business
operations and/or an actual locking-up of the doors of the establishment, usually due to financial losses. Closure of
business, as an authorized cause for termination of employment, aims to prevent further financial drain upon an
employer who can no longer pay his employees since business has already stopped.
On this ground, petitioner terminated the employment of respondents. However, what petitioner apparently made
was a transfer of ownership. It is true that, as invoked by petitioner, in Manlimos, et al. v. NLRC, et al., we held that
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a change of ownership in a business concern is not proscribed by law. Lest petitioner forget, however, we also held
therein that the sale or disposition must be motivated by good faith as a condition for exemption from liability. Thus,
where the charge of ownership is done in bad faith, or is used to defeat the rights of labor, the successor-employer
is deemed to have absorbed the employees and is held liable for the transgressions of his or her predecessor.
In this case, there is no successor-employer because there was no actual change of ownership. The Court sustained
the uniform factual finding of both the NLRC and the CA that no actual sale transpired and, as such, there is no
closure or cessation of business that can serve as an authorized cause for the dismissal of respondents.
ARTICLE 299 (formerly Article 284)
413. Sy et. al. v. CA,

February 27, 2003
Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease. However,
in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing
Rules of the Labor Code requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment unless there is a certification by competent public health
authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six
(6) months even with proper medical treatment. If the disease or ailment can be cured within the period,
the employer shall not terminate the employee but shall ask the employee to take a leave. The employer
shall reinstate such employee to his former position immediately upon the restoration of his normal health.
As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, the requirement for a medical certificate
under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public
policy in the protection of labor.
414. Union Motors Corp v. NLRC,

December 9, 2004
While it is true that the petitioner had objected to the veracity of the medical certificates because of lack of
notarization, it has been said that verification of documents is not necessary in order that the said documents could
be considered as substantial evidence. The medical certificates were properly signed by the physicians; hence,
they bear all the earmarks of regularity in their issuance and are entitled to full probative weight.
415. Villaruel v. Yeo Han Guan,

June 1, 2011
Under Article 284 of the Labor Code, an employer may terminate the services of an employee who has been found
to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health
as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (½) month salary for every year of service whichever is greater, a fraction of at least six
months being considered as one (1) whole year.
A plain reading of the above-quoted provision clearly presupposes that it is the employer who terminates the
services of the employee found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation
where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, 14 Rule
1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the
services of the employee unless there is a certification by a competent public health authority that the disease is of
such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment.
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416. Deoferio v. Intel Technology Philippines,
June 18, 2014
The present case involves termination due to disease — an authorized cause for dismissal under Article 284 of the
Labor Code. As substantive requirements, the Labor Code and its IRR require the presence of the following
elements:
(1) An employer has been found to be suffering from any disease.

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of his
co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a stage that it
cannot be cured within a period of six months even with proper medical treatment.
With respect to the first and second elements, the Court liberally construed the phrase "prejudicial to his health as
well as to the health of his co-employees" to mean "prejudicial to his health or to the health of his co-employees".
We did not limit the scope of this phrase to contagious diseases for the reason that this phrase is preceded by the
phrase "any disease" under Article 284 of the Labor Code. Consistent with this construction, we applied this
provision in resolving illegal dismissal cases due to non-contagious diseases such as stroke, heart attack,
osteoarthritis, and eye cataract, among others.
The third element substantiates the contention that the employee has indeed been suffering from a disease that:
(1) is prejudicial to his health as well as to the health of his co-employees; and (2) cannot be cured within a period
of six months even with proper medical treatment. Without the medical certificate, there can be no authorized cause
for the employee's dismissal. The absence of this element thus renders the dismissal void and illegal. Simply stated,
this requirement is not merely a procedural requirement, but a substantive one. The certification from a competent
public health authority is precisely the substantial evidence required by law to prove the existence of the disease
itself, its non-curability within a period of six months even with proper medical treatment, and the prejudice that it
would cause to the health of the sick employee and to those of his co-employees.
417. Malig-on v. Equitable General Services Inc.,

June 29, 2010
The rule in termination cases is that the employer bears the burden of proving that he dismissed his employee for
a just cause. And, when the employer claims that the employee resigned from work, the burden is on the employer
to prove that he did so willingly. Whether that is the case would largely depend on the circumstances surrounding
such alleged resignation. Those circumstances must be consistent with the employee’s intent to give up work.
The company evidently placed Malig-on on floating status after being relieved as janitress in a client’s workplace.
But, as the Court has repeatedly ruled, such act of "off-detailing" Malig-on was not the equivalent of dismissal so
long as her floating status did not continue beyond a reasonable time. But, when it ran up to more than six months,
the company may be considered to have constructively dismissed her from work, that is, as of August 16, 2002.
Thus, her purported resignation on October 15, 2002 could not have been legally possible.
418. Chang Kai Shek College v. Torres,
April 2, 2014.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons
cannot be sacrificed for the favor of employment, and opts to leave rather than stay employed. It is a formal
pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act
of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in fact,
intended to sever his or her employment.
121
Before the Investigating Committee could formalize respondent’s dismissal, respondent handwrote a letter
requesting that the penalty be lowered from dismissal to suspension in exchange for respondent’s resignation at
the end of the school year.
Given the indications of voluntary resignation, the Court ruled that there is no constructive dismissal in this case.
There is constructive dismissal when there is cessation of work, because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not,
constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his
continued employment. There was here no discrimination committed by petitioners. While respondent did not tender
her resignation wholeheartedly, circumstances of her own making did not give her any other option. With due
process, she was found to have committed the grave offense of leaking test questions. Dismissal from employment
was the justified equivalent penalty. Having realized that, she asked for, and was granted, not just a deferred
imposition of, but also an acceptable cover for the penalty.
419. Opinaldo v. Ravina,
October 16, 2013.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. To constitute
abandonment of work, two elements must concur: (1) the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and, (2) there must have been a clear intention on the part of
the employee to sever the employer-employee relationship manifested by some overt act. None of these elements
is present in the case at bar. As succinctly stated by the NLRC:
From respondents’ own admission in their position paper, it is clear that they prevented petitioner’s
continued employment with them unless the latter presents a medical certificate that he is physically and
mentally fit for work x x x.
xxxx
Moreover, if it was really true that complainant abandoned his work, then why have not respondents sent
him a notice to report back for work? It is evident then that respondents found an excuse to decline
complainant’s continued stay with them on the pretext that he has to submit first a medical certificate before
he could be allowed to resume employment.
420. Willi Hahn Enterprises v. Maghuyop,

December 17, 2004
The failure of petitioner to pursue the termination proceedings against respondent and to make her pay for the
shortage incurred did not cast doubt on the voluntary nature of her resignation. A decision to give a graceful exit to
an employee rather than to file an action for redress is perfectly within the discretion of an employer. It is not
uncommon that an employee is permitted to resign to save face after the exposure of her malfeasance. Under the
circumstances, the failure of petitioner to file action against the respondent should be considered as an act of
compassion for one who used to be a trusted employee and a close member of the household.
The rule that the filing of a complaint for illegal dismissal is inconsistent with resignation, is not applicable to the
instant case. The filing of an illegal dismissal case by respondent was evidently a mere afterthought. It was filed not
because she wanted to return to work but to claim separation pay and backwages.
421. Skippers United Pacific et. al. v. Doza et. al.,

February 8, 2012
Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving
written notice on the employer at least one (1) month in advance." Given that provision, the law contemplates the
requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the
employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC bore
conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the
document. In 22 January 1998, De Gracia, et al. were not even employed yet by the foreign principal. For these
reasons, the dismissal of De Gracia, et al. was illegal.
122
422. Morales v. Harbour Centre Port Terminal Inc.,
January 25, 2012
Constructive dismissal exists where there is cessation of work because "continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay"and other
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not,
constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his
continued employment. In cases of a transfer of an employee, the rule is settled that the employer is charged with
the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business
necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive
dismissal.
423. SHS Perforated Material Inc. v. Diaz,

October 13, 2010There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to
forego his continued employment. It exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.
What made it impossible, unreasonable or unlikely for respondent to continue working for SHS was the unlawful
withholding of his salary. For said reason, he was forced to resign. What is significant is that the respondent
prepared and served his resignation letter right after he was informed that his salary was being withheld. It would
be absurd to require respondent to tolerate the unlawful withholding of his salary for a longer period before his
employment can be considered as so impossible, unreasonable or unlikely as to constitute constructive dismissal.
Even granting that the withholding of respondents salary on November 30, 2005, would not constitute an unlawful
act, the continued refusal to release his salary after the payroll period was clearly unlawful.
It is worthy to note that in his resignation letter, respondent cited petitioners "illegal and unfair labor practice” as
his cause for resignation. As correctly noted by the CA, respondent lost no time in submitting his resignation letter
and eventually filing a complaint for illegal dismissal just a few days after his salary was withheld. These
circumstances are inconsistent with voluntary resignation and bolster the finding of constructive dismissal.
424. San Miguel Properties Phils. v. Gucaban,

July 18, 2011
Resignation - the formal pronouncement or relinquishment of a position or office - is the voluntary act of an employee
who is in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and he has then no other choice but to disassociate himself from employment. The intent to relinquish must
concur with the overt act of relinquishment; hence, the acts of the employee before and after the alleged resignation
must be considered in determining whether he in fact intended to terminate his employment. In illegal dismissal
cases, fundamental is the rule that when an employer interposes the defense of resignation, on him necessarily
rests the burden to prove that the employee indeed voluntarily resigned. Guided by these principles, we agree with
the Court of Appeals that with the availing evidence, SMPI was unable to discharge this burden.
It is not difficult to see that, shortly prior to and at the time of Gucaban's alleged resignation, there was actually no
genuine corporate restructuring plan in place as yet. In other words, although the company might have been
suffering from losses due to market decline as alleged, there was still no concrete plan for a corporate reorganization
at the time Gonzalez presented to Gucaban the seemingly last available alternative options of voluntary resignation
and termination by abolition of her office. Certainly, inasmuch as the necessity of corporate reorganization generally
lies within the exclusive prerogative of management, Gucaban at that point had no facility to ascertain the truth
behind it, and neither was she in a position to question it right then and there. Indeed, she could not have chosen
to file for resignation had SMPI not broached to her the possibility of her being terminated from service on account
of the supposed reorganization.
123
425. BMG Records Phils. Inc. v. Aparecio,
September 5, 2007
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself
from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the
office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining
whether in fact, he or she intended to sever from his or her employment.
Once an employee resigns and his resignation is accepted, he no longer has any right to the job. If the employee
later changes his mind, he must ask for approval of the withdrawal of his resignation from his employer, as if he
were re-applying for the job. It will then be up to the employer to determine whether or not his service would be
continued. If the employer accepts said withdrawal, the employee retains his job. If the employer does not, the
employee cannot claim illegal dismissal for the employer has the right to determine who his employees will be. The
mere fact that the withdrawal was not accepted does not constitute illegal dismissal, the acceptance of the
withdrawal of the resignation being the employer's sole prerogative.
426. Tatel v. JLFP Investigations,

February 25, 2015
The Court is convinced that Tatel was constructively, not actually, dismissed after having been placed on "floating
status" for more than six (6) months. In Superstar Security Agency, Inc. and/or Col. Andrada v. NLRC, the Court
ruled that placing an employee on temporary "off-detail" is not equivalent to dismissal provided that such temporary
inactivity should continue only for a period of six (6) months. In security agency parlance, being placed "off-detail"
or on "floating status" means "waiting to be posted.” In Salvaloza v. NLRC, the Court further explained the nature
of the "floating status," to wit:
Temporary "off-detail" or "floating status" is the period of time when security guards are in between
assignments or when they are made to wait after being relieved from a previous post until they are
transferred to a new one. It takes place when the security agency's clients decide not to renew their
contracts with the agency, resulting in a situation where the available posts under its existing contracts are
less than the number of guards in its roster. It also happens in instances where contracts for security
services stipulate that the client may request the agency for the replacement of the guards assigned to it
even for want of cause, such that the replaced security guard may be placed on temporary "off-detail" if
there are no available posts under the agency's existing contracts. During such time, the security guard
does not receive any salary or any financial assistance provided by law. It does not constitute a dismissal,
as the assignments primarily depend on the contracts entered into by the security agencies with third
parties, so long as such status does not continue beyond a reasonable time. When such a "floating status"
lasts for more than six (6) months, the employee may be considered to have been constructively dismissed.
Relative thereto, constructive dismissal exists when an act of clear discrimination, insensibility, or disdain, on the
part of the employer has become so unbearable as to leave an employee with no choice but to forego continued
employment, or when there is cessation of work because continued employment is rendered impossible,
unreasonable, or unlikely, as an offer involving a demotion in rank and a diminution in pay.
Constructive Dismissal
427. Paredes v. Feed the Children Phils.,

September 9, 2015
Case law holds that constructive dismissal occurs when there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or
when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. The test
is whether a reasonable person in the employee's position would have felt compelled to give up his position under
the circumstances.
124
In this case, petitioner cannot be deemed constructively dismissed. She failed to present clear and positive evidence
that respondent FTCP, through its Board of Trustees, committed acts of discrimination, insensibility, or disdain
towards her which rendered her continued employment unbearable or forced her to terminate her employment from
the respondent. As settled, bare allegations of constructive dismissal, when uncorroborated by the evidence on
record, cannot be given credence.
428. Silvertex Weaving Corp. v. Campo,

March 16, 2016
In illegal dismissal cases, fundamental is the rule that when an employer interposes the defense of resignation, on
him necessarily rests the burden to prove that the employee indeed voluntarily resigned.
429. Divine World College of Laoag v. Mina,

April 13, 2016
Constructive dismissal is a dismissal in disguise. There is cessation of work in constructive dismissal because
‘“continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank
or a diminution in pay’ and other benefits.” To be considered as such, an act must be a display of utter discrimination
or insensibility on the part of the employer so intense that it becomes unbearable for the employee to continue with
his employment. The law recognizes and resolves this situation in favor of employees in order to protect their rights
and interests from the coercive acts of the employer.
In this case, Mina’s transfer clearly amounted to a constructive dismissal. For almost 22 years, he was a high school
teacher enjoying a permanent status in DWCL’s high school department. In 2002, he was appointed as an associate
professor at the college department but shortly thereafter, or on June 1, 2003, he was appointed as a college
laboratory custodian, which is a clear relegation from his previous position. Not only that. He was also divested of
his teaching load. His appointment even became contractual in nature and was subject to automatic termination
after one year “without any further notification.” Aside from this, Mina was the only one among the high school
teachers transferred to the college department who was divested of teaching load. More importantly, DWCL failed
to show any reason for Mina’s transfer and that it was not unreasonable, inconvenient, or prejudicial to him.
430. Pascua v. Bank Wise Inc.,

January 31, 2018
In situations where special qualifications are required for employment, such as a Master's degree or experience as
a corporate executive, prospective employees are at a better position to bargain or make demands from the
employer. Employees with special qualifications would be on equal footing with their employers, and thus, would
need a lesser degree of protection from the State than an ordinary rank-and-file worker.
Pascua, as the Head of Marketing would have been in possession of the special qualifications needed for his post.
He would have supervised several employees in his long years in service and might have even processed their
resignation letters. He would have been completely aware of the implications of signing a categorically worded
resignation letter. If he did not intend to resign, he would not have submitted a resignation letter. He would have
continued writing letters to Bankwise signifying his continued refusal to resign.
Pascua's resignation letter, however, was unconditional. It contained no reservations that it was premised on his
subsequent claim for severance pay and other benefits. His resignation was also accepted by his employers. In this
instance, Pascua is not considered to have been constructively dismissed.
Pascua's third letter likewise indicates that he has already accepted the consequences of his voluntary resignation
but that it would be subject to the payment of severance pay. However, his claim for severance pay cannot be
granted. An employee who voluntarily resigns is not entitled to separation pay unless it was previously stipulated in
the employment contract or has become established company policy or practice. There is nothing in Pascua's
Contract of Employment that states that he would be receiving any monetary compensation if he resigns. He has
also not shown that the payment of separation pay upon resignation is an established policy or practice of Bankwise
since his third letter indicated that he was unaware of any such policy:
125
431. Cokia Industries v. Beatriz Bug-os,
November 27, 2019
(constructive dismissal)
The Supreme Court held that constructive dismissal exists if an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee that it foreclose any choice by him/her except
to forego his/her continued employment. The test for determining whether an employee is constructively dismissed
is whether a reasonable person in the employee’s position would feel compelled to give up his/her employment
under the prevailing circumstances.
For the Supreme Court, Bug-os’ resignation merely two days after she was given the memorandum indicates an
incredulous amount of time to claim that she was subjected to so much harassment that it made working for CIHMI
unbearable. While there is no fixed period for constructive dismissal, the period from the time she was asked to
explain the irregularities discovered until she resigned simply does not lend credibility to her claim that she was
constructively dismissed.
432. Kondo v. Toyota,

September 11, 2019
Constructive dismissal exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. It also exists
when continued employment has become so unbearable because of acts of clear discrimination, insensibility or
disdain by the employer, that the employee has no choice but to resign. What is essential is that there is a lack of
"voluntariness in the employee's separation from employment."
Petitioner claimed that he was forced to resign. Hence, it is incumbent upon him to prove that his resignation was
involuntary and that it was actually a case of constructive dismissal, with clear, positive and convincing evidence.
This he failed to do.
433. SKM Article Craft Corporation v. Bauca,

November 27, 2013
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a business or undertaking for a
period not exceeding six months shall not terminate employment. As a general rule, a complaint for illegal dismissal
filed prior to the lapse of said six months is generally considered as prematurely filed. In this case, however, Bauca,
et al. were already considered illegally dismissed since SKM failed to recall them after 6 months, when its bona fide
suspension of operations lapsed.
Under Article 286 of the Labor Code, the employment will not be deemed terminated if the bona fide suspension of
operations does not exceed six months. But if the suspension of operations exceeds six months, the employment
will be considered terminated.
By the same token and applying said rule by analogy, if the employee was forced to remain without work or
assignment for a period exceeding six months, then he is in effect constructively dismissed. Bauca, et al. were
illegally dismissed since they were not recalled 6 months after the bona fide suspension of SKM’s operations.
434. Emeritus Security and Maintenance Systems Inv. v. Dailig,

April 2, 2014.
The temporary inactivity or "floating status" of security guards should continue only for six months. Otherwise, the
security agency concerned could be liable for constructive dismissal. The failure of petitioner to give respondent a
work assignment beyond the reasonable six-month period makes it liable for constructive dismissal.
126
435. Nippon Housing Phil. Inc. et. al v. Leynes,
August 3, 2011
The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22
February 2002 or immediately upon being placed on floating status as a consequence of NHPI hiring of a new
Property Manager for the Project. The filing of an illegal dismissal suit is premature where an employee is merely
placed on floating status.
The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not
continue beyond a reasonable time and that it is only when such a "floating status" lasts for more than six months
that the employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed
prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as
prematurely filed
436. Mayon Hotel and Restaurant et. al. v. Adana et. al.
May 16, 2005
Article 286 of the Labor Code is clear — there is termination of employment when an otherwise bona fide suspension
of work exceeds six (6) months.
Petitioners' arguments respect their lack of candor and the blatant attempt to use technicalities to muddle the issues
and defeat the lawful claims of their employees. First, petitioners admit that since April 1997, when hotel operations
were suspended due to the termination of the lease of the old premises, respondents Loveres, Macandog, Llarena,
Nicerio and Guades have not been permitted to work. Second, even after six months of what should have been just
a temporary lay-off, the same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even
found that as of the time when he rendered his Joint Decision on July 2000 — or more than three (3) years after
the supposed "temporary lay-off," the employment of all of the respondents with petitioners had ceased,
notwithstanding that the new premises had been completed and the same operated as a hotel with bar and
restaurant. This is clearly dismissal — or the permanent severance or complete separation of the worker from the
service on the initiative of the employer regardless of the reasons therefor.
While the closure of the hotel operations in April of 1997 may have been temporary, we hold that the evidence on
record belie any claim of petitioners that the lay-off of respondents on that same date was merely temporary. On
the contrary, we find substantial evidence that petitioners intended the termination to be permanent.
437. ICT Marketing v. Sales,

September 9, 2015
There is no basis to place her on "floating status" in the first place since petitioner continued to hire new CSRs/TSRs
during the period, as shown by its paid advertisements and placements in leading newspapers seeking to hire new
CSRs/TSRs and employees. True enough, the placing of an employee on "floating status" presupposes, among
others, that there is less work than there are employees; but if petitioner continued to hire new CSRs/TSRs, then
surely there is a surplus of work available for its existing employees: there is no need at all to place respondent on
floating status. If any, respondent - with her experience, knowledge, familiarity with the workings of the company,
and achievements -should be the first to be given work or posted with new clients/accounts, and not new hires who
have no experience working for petitioner or who have no related experience at all. Once more, experience,
common sense, and logic go against the position of petitioner.
The CA could not be more correct in its pronouncement that placing an employee on floating status presents dire
consequences for him or her, occasioned by the withholding of wages and benefits while he or she is not reinstated.
To restate what the appellate court cited, "[d]ue to the grim economic consequences to the employee, the employer
should bear the burden of proving that there are no posts available to which the employee temporarily out of work
can be assigned." However, petitioner has failed miserably in this regard.
127
438. Carique v. Phil. Scout Veterans Security and Investigation Agency,
September 16, 2015
(Rotation)
Contracts for security services may stipulate that the clients may request the agency for the replacement of the
guard/s assigned to it even for want of cause; and that such replaced security guard/s could be placed on temporary
“off-detail” or “floating status” which is the period of time when such security guard/s are in between assignments
or when they are made to wait after being relieved from a previous post until they are transferred to a new one.
Placing petitioner on floating or off-detail status for not more than six months is not prohibited by law and did not
amount to dismissal.
439. Daaboy v. Coca-Cola, August 19, 2013.

Separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason
for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation
pay, or financial assistance, or whatever other name it is called, on the ground of social justice.
440. Pinero v. NLRC,

August 20, 2004
The Court notes that petitioner Piñero turned 60 years old and retired on March 1, 1996 after 29 years of service,
rendering his dismissal from service moot and academic. However, in view of the propriety of his termination as a
consequence of the illegal strike, he is no longer entitled to payment of retirement benefits because he lost his
employment status effective as of the date of the decision of the Labor Arbiter – October 28, 1994.
An employee who is dismissed for cause is generally not entitled to any financial assistance. Equity considerations,
however, provide an exception. Equity has been defined as justice outside law, being ethical rather than jural and
belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction
of positive law, for equity finds no room for application where there is law.
Under the circumstances, social and compassionate justice dictate that petitioner Piñero be awarded financial
assistance equivalent to one-half (1/2) month's pay for every year of service computed from his date of employment
up to October 28, 1994 when he was declared to have lost his employment status. Indeed, equities of this case
should be accorded due weight because labor law determinations are not only secundum rationem but
also secundum caritatem.
441. Sta. Catalina College v. NLRC,

November 19, 2003
Gratuity pay x x x is paid to the beneficiary for the past services or favor rendered purely out of the generosity of
the giver or grantor. Gratuity, therefore, is not intended to pay a worker for actual services rendered or for actual
performance. It is a money benefit or bounty given to the worker, the purpose of which is to reward employees who
have rendered satisfactory service to the company.
Retirement benefits, on the other hand, are intended to help the employee enjoy the remaining years of his life,
releasing him from the burden of worrying for his financial support, and are a form of reward for his loyalty to the
employer.
In Hilarias case, her retirement pay as computed by petitioners amounts to P59,038.35, P28,853.09 of which had
already been given to her under the PERAA. Since the computed amount of her retirement pay is much lower than
that provided under the law, she is entitled to receive the difference between the actual amount of her retirement
benefits as required by law and that provided for under the PERAA. Although she did not appeal from the NLRC
128
decision awarding her P85,287.72, this Court awards the entire amount of the retirement benefits to which she is
rightfully entitled under the law.
Section 3.3, Rule II of the Rules Implementing R.A. 7641 provides:

3.3 Where both the employer and the employee contribute to a retirement fund in accordance with an
individual or collective agreement or other applicable employment contract, the employers total contribution
thereto shall not be less than the total retirement benefits to which the employee would have been entitled
had there been no such retirement fund. In case the employers contribution is less than the retirement
benefits provided under this Rule, the employer shall pay the difference.
442. Pantranco North Express Inc. v. NLRC,

July 24, 1996
Article 287, as amended by the Retirement Pay Law, provides that an employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable employment contract. This
provision makes clear the intention of spirit of the law to give employers and employees a free hand to determine
and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees
after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such
CBA. The law presumes that employees know what they want and what is good for them absent any showing that
fraud or intimidation was employed to secure their consent thereto.
Being a product of negotiation, the CBA between Pantranco and the union intended the provision on compulsory
retirement to be beneficial to the employees-union members, including Suñiga. When Suñiga ratified the CBA with
the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot
be said that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case.
443. R and E Transport v. Latag,

February 13, 2004
Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for
instance, was wangled from an unsuspecting or a gullible person; or where the agreement or settlement was
unconscionable on its face. A quitclaim is ineffective in barring recovery of the full measure of a worker’s rights,
and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which the
consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a workers legitimate claim.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the boundary or
fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be
the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos
(P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service
equals P105,000. Compared with this amount, the P38,850 he received, which represented just over one third of
what was legally due him, was unconscionable.
444. Serrano v. Severino Santos Transit,

August 9, 2010
Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if
petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its
implementing rules. As thus correctly ruled by the Labor Arbiter, petitioner's retirement pay should include the cash
equivalent of the 5-day SIL and 1/12 of the 13th month pay.
For purposes, however, of applying the law on SIL, as well as on retirement, the Court notes that there is a difference
between drivers paid under the "boundary system" and conductors who are paid on commission basis.
In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the "boundary" or fee
they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain percentage
of the bus' earnings for the day.
It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its coverage of workers who are paid on
a purely commission basis is only with respect to field personnel.
129
445. Obusan v. PNB,
July 26, 2010
Under Article 287 of the Labor Code, the retirement age is primarily determined by the existing agreement or
employment contract. Absent such an agreement, the retirement age shall be fixed by law. The above-cited law
mandates that the compulsory retirement age is at 65 years, while the minimum age for optional retirement is set
at 60 years. Moreover, Article 287 of the Labor Code, as amended, applies only to a situation where (1) there is no
CBA or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a
collective bargaining agreement or other applicable employment contract providing for retirement benefits for an
employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the absurd
situation where an employee, deserving to receive retirement benefits, is denied them through the nefarious scheme
of employers to deprive employees of the benefits due them under existing labor laws. The rationale for the second
situation is to prevent private contracts from derogating from the public law.
Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age
of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language,
the Labor Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided
that the employees retirement benefits under any CBA and other agreements shall not be less than those provided
therein. By this yardstick, the PNB-RRP complies.
446. Kimberly Clark Phils. v. Dimayuga,

September 18, 2009
It is settled that entitlement of employees to retirement benefits must specifically be granted under existing laws, a
collective bargaining agreement or employment contract, or an established employer policy. No law or collective
bargaining agreement or other applicable contract, or an established company policy was existing during
respondents employment entitling them to the P200,000 lump-sum retirement pay. Petitioner was not thus obliged
to grant them such pay.
447. Magdadaro v. PNB,

July 17, 2009.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.
Retirement is provided for under Article 287 of the Labor Code, as amended by Republic Act No. 7641, or is
determined by an existing agreement between the employer and the employee.
Petitioner voluntarily availed of the SSIP. He accomplished the application form and submitted it to the PAIRD. He
only questioned the approval of his retirement on a date earlier than his preferred retirement date.
The SSIP provides:

7. Management shall have the discretion and prerogative in approving the applications filed under the
Plan, as well as in setting the effectivity dates for separation within the implementation period of
the Plan.
It is clear that it is within respondent's prerogative to set the date of effectivity of retirement and it may not be
necessarily what is stated in the application. We see no grave abuse of discretion on the part of respondent in the
exercise of this management prerogative. The exercise of management prerogative is valid provided it is not
performed in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite.
448. Laya v. CA,

January 10, 2018.
An employee in the private sector who did not expressly agree to the terms of an early retirement plan cannot be
separated from the service before he reaches the age of 65 years. The employer who retires the employee
prematurely is guilty of illegal dismissal and is liable to pay his backwages and to reinstate him without loss of
seniority and other benefits, unless the employee has meanwhile reached the mandatory retirement age under the
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Labor Code, in which case he is entitled to separation pay pursuant to the terms of the plan, with legal interest on
the backwages and separation pay reckoned from the finality of the decision.
The Court ruled that under Art. 287 (Now Art. 302) of the Labor Code employers and employees may agree to fix
the retirement age for the latter, and to embody their agreement in either their collective bargaining agreements
(CBAs) or their employment contracts. Retirement plans allowing employers to retire employees who have not yet
reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of
security of tenure, provided that the retirement benefits are not lower than those prescribed by law. However, it
ruled that the CA erred in finding that petitioner’s acceptance of his employment carried with it the agreement with
the retirement plan (embodied as one of the terms of petitioner’s appointment), the mere mention of the retirement
plan in the letter of appointment did not sufficiently inform the petitioner of the contents or details of the retirement
program. To construe from the petitioner's acceptance of his appointment that he had acquiesced to be retired
earlier than the compulsory age of 65 years would, therefore, not be warranted. This is because retirement should
be the result of the bilateral act of both the employer and the employee based on their voluntary agreement that the
employee agrees to sever his employment upon reaching a certain age.
Furthermore, the Court disagrees with the view tendered by Justice Leonen to the effect that the petitioner, because
of his legal expertise and educational attainment, could not now validly claim that he was not informed of the
provisions of the retirement program. The pertinent rule on retirement plans does not presume consent or
acquiescence from the high educational attainment or legal knowledge of the employee. In fact, the rule provides
that the acquiescence by the employee cannot be lightly inferred from his acceptance of employment.
449. Tolentino v. PAL,

January 24, 2018
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.
It is clear, therefore, Tolentino had not retired from PAL – it was not a result of a voluntary agreement. Tolentino
lost his employment status because of his own actions.
Tolentino is not entitled to any of the retirement benefits under the PAL-ALPAP Retirement Plan. He had not
completed even one year of his new employment with PAL. The Rules and Regulations of the PAL-ALPAP
Retirement Plan provide that the member-pilot must have completed at least five years of continuous service with
PAL to be entitled to the resignation benefit. His resignation in July 1999, which was only about a year from when
he was rehired by the company, did not qualify him for such resignation benefit.
450. Dela Salle Araneta University v. Bernardo,

February 13, 2017
As a part-time employee with fixed-term employment, Bernardo is entitled to retirement benefits.
Republic Act No. 7641 states that "any employee may be retired upon reaching the retirement age x x x;" and "[i]n
case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other agreements." The Implementing Rules provide
that Republic Act No. 7641 applies to "all employees in the private sector, regardless of their position, designation
or status and irrespective of the method by which their wages are paid, except to those specifically exempted x x
x." And Secretary Quisumbing's Labor Advisory further clarifies that the employees covered by Republic Act No.
7641 shall "include part-time employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another." The only exemptions specifically identified by Republic Act No. 7641
and its Implementing Rules are: (1) employees of the National Government and its political subdivisions, including
government-owned and/or controlled corporations, if they are covered by the Civil Service Law and its regulations;
and (2) employees of retail, service and agricultural establishments or operations regularly employing not more than
10 employees.
Re: cause of action when working beyond the compulsory retirement age
Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years old, we cannot
simply overlook the fact that DLS-AU had repeatedly extended Bernardo's employment even when he already
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reached 65 years old. DLS-AU still knowingly offered Bernardo, and Bernardo willingly accepted, contracts of
employment to teach for semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously
engaging his services even beyond his retirement age, Bernardo deemed himself still employed and deferred his
claim for retirement benefits, under the impression that he could avail himself of the same upon the actual
termination of his employment. DLS-AU, in this case, not only kept its silence that Bernardo had already reached
the compulsory retirement age of 65 years old, but even continuously offered him contracts of employment for the
next 10 years. It should not be allowed to escape its obligation to pay Bernardo's retirement benefits by putting
entirely the blame for the deferred claim on Bernardo's shoulders.
451. UDMC v. Bernadas,

December 13, 2017
An employee who has already qualified for optional retirement but dies before the option to retire could be exercised
is entitled to his or her optional retirement benefits, which may be claimed by the qualified employee's beneficiaries
on his or her behalf.
452. PAL v. Hassaram,

June 5, 2017
The retirement benefits under Art. 287 is applicable only to a situation where (l) there is no CBA or other applicable
employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable
employment contract providing for retirement benefits for an employee, but it is below the requirement set by law.
Having established that Hassaram has already received benefits under PAL retirement’s program, with said benefits
being greater than those afforded under Art. 287, he may no longer claim the benefits under the said provision of
the Labor Code.
453. Santo v. University of Cebu,

August 28, 2019
Respondent's Faculty Manual provides for two (2) types of retirements: 1) Optional Retirement; and 2) Compulsory
Retirement. To be entitled to optional retirement benefits, an employee must have rendered service for at least
fifteen (15) years or must have reached fifty-five (55) years of age. To be entitled to compulsory retirement benefits,
an employee ri1ust have rendered at least twenty (20) years of service or must have reached sixty (60) years of
age, whichever comes first. The Faculty Manual further provides that the compulsory retirement benefit shall be in
an amount equal to that which is required by law or that granted by the PAG-IBIG and the PERAA Retirement Plan,
whichever is higher. For optional retirement benefit however, it shall be equivalent to fifteen (15) days per year of
service.
Now, comparing the optional retirement benefits under the two (2) retirement schemes, it is apparent that fifteen
(15) days' worth of salary for every year of service provided under respondent's Faculty Manual is much less than
22.5 days' worth of salary for every year of service provided under Article 287 of the Labor Code. Obviously, it is
more beneficial for petitioner if Article 287's retirement plan will be applied in the computation of' her retirement
benefits.
454. Padillo v. Rural Bank of Nabunturan,

January 21, 2013
(disqualified from retirement benefits due to failure to reach optional retirement age; grant of financial assistance)
In the absence of any applicable contract or any evolved company policy, Padillo should have met the age and
tenure requirements set forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided
therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for
twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement given that he was
only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due under the Philam Life
Plan, petitioners claim for retirement benefits must be denied.
Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an increased
amount. With a veritable understanding that the award of financial assistance is usually the final refuge of the
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laborer, considering as well the supervening length of time which had sadly overtaken the point of Padillo’s death
an employee who had devoted twenty-nine (29) years of dedicated service to the Bank the Court, in light of the
dictates of social justice, holds that the CAs financial assistance award should be increased from P50,000.00
to P75,000.00, still exclusive of the P100,000.00 benefit receivable by the petitioners under the Philam Life Plan
which remains undisputed.
455. PLDT v. Pingol,

September 10, 2008
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant
to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus,
the general law on prescription applies. Article 1150 of the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special provision which
ordains otherwise, shall be counted from the day they may be brought.
The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1,
2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance
technician. Respondent Pingol cited the same date of dismissal in his complaint before the LA. As, thus, correctly
ruled by the LA, the complaint filed had already prescribed.
456. Serrano v. CA,

August 15, 2001
ARTICLE 291. Money claims. All money claims arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three years from the time the cause of action accrued, otherwise they
shall be forever barred." Petitioner repeatedly demanded payment from respondent Maersk but similar to the
actuations of Baliwag Transit in the above cited case, respondent Maersk warded off these demands by saying that
it would look into the matter until years passed by. In October 1993, Serrano finally demanded in writing payment
of the unsent money orders. Then and only then was the claim categorically denied by respondent A.P. Moller in its
letter dated November 22, 1993. Petitioner's cause of action accrued only upon respondent A.P. Moller's definite
denial of his claim in November 1993. Having filed his action five (5) months thereafter or in April 1994, we hold that
it was filed within the three-year (3) prescriptive period provided in Article 291 of the Labor Code.
457. IBC v. Panganiban,

February 6, 2007
Article 291 of the Labor Code which provides that "all money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred."
The prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the
creditor, and (c) a written acknowledgment of the debt by the debtor. On this point, the Court ruled that although
the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been
commenced at all.
Hence, while the filing of the Civil Case could have interrupted the running of the three-year prescriptive period, its
consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the prescriptive period
within which to file his money claim, leaving respondent in exactly the same position as though no civil case had
been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of the
Civil Case, respondent's cause of action had already prescribed on September 2, 1991, three years after his
cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal
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dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been
barred by prescription.
458. Accessories Specialist v. Albanza,

July 23, 2008
In light of these circumstances, we can apply the principle of promissory estoppel, which is a recognized exception
to the three-year prescriptive period enunciated in Article 291 of the Labor Code.
Promissory estoppel may arise from the making of a promise, even though without consideration, if it was intended
that the promise should be relied upon, as in fact it was relied upon, and if a refusal to enforce it would virtually
sanction the perpetration of fraud or would result in other injustice. Promissory estoppel presupposes the existence
of a promise on the part of one against whom estoppel is claimed. The promise must be plain and unambiguous
and sufficiently specific so that the court can understand the obligation assumed and enforce the promise according
to its terms.
It further stated that in order to make out a claim of promissory estoppel, a party bears the burden of establishing
the following elements: (1) a promise was reasonably expected to induce action or forbearance; (2) such promise
did, in fact, induce such action or forbearance; and (3) the party suffered detriment as a result.
The Supreme Court then ruled that all the requisites of promissory estoppel are present in the case. Jones relied
on the promise of ASI that he would be paid as soon as the claims of all the rank-and-file employees had been paid.
If not for this promise that he had held on to until the time of his death, there’s no reason why he would delay filing
the complaint before the LA. Great injustice will be committed if the court will brush aside the employees claims on
a mere technicality, especially when it was petitioner’s own action that prevented respondent from interposing the
claims within the required period.
459. Autobus Transport System v. Bautista,

May 16, 2007
In cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being
claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to
the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only
be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3)
years before the filing of the complaint.
In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its
monetary equivalent if not exhausted at the end of the year. Furthermore, if the employee entitled to service
incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to
the commutation of his accrued service incentive leave. Correspondingly, it can be conscientiously deduced that
the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but
instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and
opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the
time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that
the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled
to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination of the employees services, as the case may be.
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation
until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service
incentive leave pay at the time of his dismissal. Therefore, the prescriptive period with respect to his claim for service
incentive leave pay only commenced from the time the employer failed to compensate his accumulated service
incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month
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from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by
Article 291 of the Labor Code.
460. Montero v. Times Transport,

March 16, 2015
Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated
upon an injury to the rights of the plaintiff, as contemplated under Article 1146 of the New Civil Code, which must
be brought within four years.
However, the Court had already ruled that the prescriptive period continues even after the withdrawal of the case
as though no action has been filed at all. The applicability of Article 1155 of the Civil Code in labor cases was upheld
in the case of Intercontinental Broadcasting Corporation v. Panganiban where the Court held that "although the
commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been
commenced at all."
461. Callanta v. Carnation Phils.,

October 28, 1986
The period of prescription mentioned under Article 281, now Article 292, of the Labor Code, refers to and "is limited
to money claims, and other cases of injury to rights of a workingman being governed by the Civil Code." Accordingly,
a dismissed employee, who sought reinstatement, had four [4] years within which to file her complaint for the injury
to her rights as provided under Article 1146 of the Civil Code.
In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years, one [1]
month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is well within the
four [4]-year prescriptive period under Article 1146 of the New Civil Code.
Callanta’s complaint for illegal dismissal had not yet prescribed. Although illegal dismissal is a violation of the Labor
Code, it is not the "offense" contemplated in Article 290. Article 290 refers to illegal acts penalized under the Labor
Code, including committing any of the prohibited activities during strikes or lockouts, unfair labor practices, and
illegal recruitment activities. The three-year prescriptive period under Article 290, therefore, does not apply to
complaints for illegal dismissal.
Instead, "by way of supplement," Article 1146 of the Civil Code of the Philippines governs complaints for illegal
dismissal. Under Article 1146, an action based upon an injury to the rights of a plaintiff must be filed within four
years.
This four-year prescriptive period applies to claims for backwages, not the three-year prescriptive period under
Article 291 of the Labor Code. A claim for backwages, according to this court, may be a money claim "by reason of
its practical effect." Legally, however, an award of backwages "is merely one of the reliefs which an illegally
dismissed employee prays the labor arbiter and the NLRC to render inh is favor as a consequence of the unlawful
act committed by the employer." Though it results "in the enrichment of the individual [illegally dismissed], the award
of backwages is not in redress of a private right, but, rather, is in the nature of a command upon the employer to
make public reparation for his violation of the Labor Code."
Actions for damages due to illegal dismissal are likewise actions "upon an injury to the rights of the plaintiff." Article
1146 of the Civil Code of the Philippines, therefore, governs these actions.
Callanta filed his complaint for illegal dismissal with claims for backwages and damages three years, one month,
and five days from his termination. Thus, this court ruled that Callanta filed his claims for backwages and damages
well within the four-year prescriptive period.
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462. Arriola v. Pilipino Star Ngayon,
August 13, 2014
Arriola’s claims for unpaid salaries have prescribed. Arriola filed his complaint three years and one day from the
time he was allegedly dismissed and deprived of his salaries. Since a claim for unpaid salaries arises from employer-
employee relations, Article 291 of the Labor Code applies. Arriola’s claim for unpaid salaries was filed beyond the
three-year prescriptive period.
However, we find that Arriola’s claims for backwages, damages, and attorney’s fees arising from his claim of illegal
dismissal have not yet prescribed when he filed his complaint with the Regional Arbitration Branch for the National
Capital Region ofthe National Labor Relations Commission. As discussed, the prescriptive period for filing an illegal
dismissal complaint is four years from the time the cause of action accrued. Since an award of backwages is merely
consequent to a declaration of illegal dismissal, a claim for backwages likewise prescribes in four years.
The four-year prescriptive period under Article 1146 also applies to actions for damages due to illegal dismissal
since such actions are based on an injury to the rights of the person dismissed. In this case, Arriola filed his
complaint three years and one day from his alleged illegal dismissal. He, therefore, filed his claims for backwages,
actual, moral and exemplary damages, and attorney’s fees well within the four-year prescriptive period.
463. Caladin v. POEA,

December 5, 1994
Article 156 of the Amiri Decree No. 23 of 1976 provides:
"A claim arising out of a contract of employment shall not be actionable after the lapse of one year from the
date of the expiry of the contract"
As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of
process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum.
This is true even if the action is based upon a foreign substantive law. "If by the laws of the state or country where
the cause of action arose, the action is barred, it is also barred in the Philippines Islands."
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LABOR LAW REVIEW
Case Index
Atty. Golangco
PART II
LABOR STANDARDS
Module 6
RECRUITMENT AND PLACEMENT OF OFWS
1. People v. Chua
G.R. No. 184058, March 10, 2010
For illegal recruitment in large scale to prosper, the prosecution has to prove three essential elements, to wit:
1. Accused undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34
of the Labor Code;
2. The accused did not have the license or the authority to lawfully engage in the recruitment and placement
of workers; and
3. The accused committed such illegal activity against three or more persons individually or as a group.
A person convicted of illegal recruitment may, in addition, be convicted of Estafa as penalized under Article 315,
paragraph 2(a) of the Revised Penal Code, held that the elements thereof were sufficiently established, viz:
(a) that appellant deceived the complainants by assuring them of employment in Taiwan provided they pay
the required placement fee;
(b) that relying on such representation, the complainants paid appellant the amount demanded;
(c) that her representation turned out to be false because she failed to deploy them as promised; and
(d) that the complainants suffered damages when they failed to be reimbursed the amounts they paid.
Illegal Recruitment v. Estafa

Illegal recruitment is malum prohibitum, while estafa is malum in se. In the first, the criminal intent of the accused
is not necessary for conviction. In the second, such an intent is imperative. Estafa under Article 315, paragraph 2,
of the Revised Penal Code, is committed by any person who defrauds another by using 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 fraud.
2. People v. Gallo
G.R. No. 187730, June 29, 2010
To commit syndicated illegal recruitment, three elements must be established:

1. The offender undertakes either any activity within the meaning of recruitment and placement defined
under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code;
2. He has no valid license or authority required by law to enable one to lawfully engage in recruitment and
placement of workers; and
3. The illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating
with one another.
When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or
more persons individually or as a group, it is considered an offense involving economic sabotage.
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3. Yap v. Thenemaris Ships Management
GR No. 179532, May 30, 2011
While this case was pending, the Court 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 R.A. No. 8042* in the case
of Serrano v. Gallant Maritime Services, Inc. on March 24, 2009 for being violative of the rights of Overseas Filipino
Workers (OFWs) to equal protection of the laws.
The Court concludes that the subject clause contains a suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of
OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens
it with a peculiar disadvantage.
Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental
purpose; hence, the same violates not just therein petitioners right to equal protection, but also his right to
substantive due process under Section 1, Article III of the Constitution. Consequently, petitioner therein was
accorded his salaries for the entire unexpired period of nine months and 23 days of his employment contract,
pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.
* In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.
Serrano v. Gallant Maritime

A closer examination shows that the subject clause has invidious impact on:
a. OFWs with contracts of less than one year vis-a-vis with employment contracts of more than one year;
b. Among OFWs with employment contracts of more than one year.
c. Local workers vis-a-vis OFWs
Examination on the related jurisprudence regarding the matter that applied the rule prior to RA 8042 shows that
regardless of the contract periods, the computation of monetary benefits in case of dismissal is subjected to a
uniform rule in computation: basic salaries multiplied by the entire unexpired portion of the employment contracts.
The enactment of RA 9042 introduced a differentiated rule of computation of the money claims, singling out those
whose contracts have an unexpired portion of one year or more and subjecting them to disadvantage by limiting
the same for 3 months for every year or for unexpired portion thereof, whichever is less. As to the second category,
it greatly prejudices those whose contracts are for more than one year, owing to the award of “for the unexpired
term or for 3 months for every year of the unexpired term, whichever is less”, as those whose contracts are less
than one year, is entitled to the unexpired portion of the term, while those whose contract is more than one year, is
only entitled to 3 months only. As for the third category, prior to the enactment of RA 8042, OFW and local workers
with fixed-term employment illegally discharged were treated alike in terms of computation, entitled for the unexpired
term of their contracts. But RA 8042 differently treated those OFWs with more than one year contracts, for they are
entitled to only months per year of their unexpired portion.
4. People v. Judge Panis

G.R. No. L-58674-77, July 11, 1990
The proviso “That any person or entity which, in any manner, offers or promises for a fee employment to two or
more persons shall be deemed engaged in recruitment and placement” found in Article 13(b) of the Labor Code
merely creates a presumption that an 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. " It
does not require that there be at least two victims before the activity is to be considered as illegal recruitment.
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers.
Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and placement even if only
one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected
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in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be
deemed" create that presumption.
5. Trans Action Overseas Corporation v. DOLE Secretary

GR No. 109583, September 5, 1997
In view of the Court's disposition in the case of People v. Diaz, we rule that the power to suspend or cancel any
license or authority to recruit employees for overseas employment is concurrently vested with the POEA and the
Secretary of Labor.
The POEA Revised Rules on the Schedule of Penalties was issued pursuant to Article 34 of the Labor Code, as
amended. The same merely amplified and particularized the various violations of the rules and regulations of the
POEA and clarified and specified the penalties therefore. The questioned schedule of penalties contains only a
listing of offenses. It does not prescribe additional rules and regulations governing overseas employment but only
detailed the administrative sanctions imposable by this Office for some enumerated prohibited acts. Under the
circumstances, the license of the respondent agency was cancelled on the authority of Article 35 of the Labor Code,
as amended, and not pursuant to the 1987 POEA Revised Rules on Schedule of Penalties.
6. Republic v. Principalia Management

GR No. 167639, April 19, 2006
For all intents and purposes, POEA can determine whether the licensee has complied with the requirements. In this
instance, the trial court observed that the Order of Suspension dated March 15, 2004 was pending appeal with the
DOLE Secretary. Thus, until such time that the appeal is resolved with finality by the DOLE, Principalia has a clear
and convincing right to operate as a recruitment agency.
The writ of preliminary prohibitory injunction will lie against the order of suspension on the ground that POEA would
have no authority to exercise its regulatory functions over Principalia because the matter had already been brought
to the jurisdiction of the DOLE. Principalia has been granted the license to recruit and process documents for
Filipinos interested to work abroad. Thus, POEAs action of suspending Principalia’s license before final adjudication
by the DOLE would be premature and would amount to a violation of the latter’s right to recruit and deploy workers.
7. Datuman v. First Cosmopolitan Manpower

GR No. 156029, November 14, 2008
The signing of the "substitute" contracts with the foreign employer/principal before the expiration of the POEA-
approved contract and any continuation of petitioner's employment beyond the original one-year term, against the
will of petitioner, are continuing breaches of the original POEA-approved contract.
RA 8042 explicitly prohibits the substitution or alteration to the prejudice of the worker of employment contracts
already approved and verified by the Department of Labor and Employment (DOLE) from the time of actual signing
thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE.
Hence, in the present case, the diminution in the salary of petitioner x x x is void for violating the POEA-approved
contract which set the minimum standards, terms, and conditions of her employment. Consequently, the solidary
liability of respondent with petitioners foreign employer for petitioners money claims continues although she was
forced to sign another contract in Bahrain.
Re: Prescription
The claims for underpaid salaries have not prescribed. Article 291 of the Labor Code provides that all money claims
arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three years
from the time that cause of action accrued; otherwise, they shall be forever barred. The right to claim unpaid salaries
(or in this case, unpaid salary differentials) accrue as they fall due. To determine for which months petitioners right
to claim salary differentials has not prescribed, we must count three years prior to the filing of the complaint.
139
8. Stolt-Nielsen Transportation Grop v. Medequillo
G.R. No. 177498, January 18, 2012
Under the POEA Standard Employment Contract, employment shall commence “upon the actual departure of the
seafarer from the airport or seaport in the port of hire.” Thus, even if by the standard contract employment
commences only “upon actual departure of the seafarer”, this does not mean that the seafarer has no remedy in
case of non-deployment without any valid reason. Even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the
breach of which may give rise to a cause of action against the erring party.
The absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean
that the seafarer is precluded from claiming the same. Section 10 of Republic Act No. 8042 (Migrant Workers Act)
provides for money claims by reason of a contract involving Filipino workers for overseas deployment. Applying the
rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved.
9. People v. Dela Piedra

GR No. 121777, January 24, 2011
Illegal recruitment is committed when two elements concur. First, the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of workers. Second, he or she
undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13 (b), or
any prohibited practices enumerated under Article 34 of the Labor Code. In case of illegal recruitment in large scale,
a third element is added: that the accused commits said acts against three or more persons, individually or as a
group.
10. Estate od Nelson Dulay v. Aboitiz Jebsen Maritime

GR No. 172642, June 13, 2012
Disputes involving claims of Filipino seafarers wherein the parties are covered by a CBA should be submitted to the
jurisdiction of a voluntary arbitrator or panel of arbitrators. Only in the absence of a CBA that parties may opt to
submit the dispute to either the NLRC or to voluntary arbitration.
It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this
special law would readily show that there is no specific provision thereunder which provides for jurisdiction over
disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042
speaks, in general, of claims arising out of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages. On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary
arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining
agreements. The instant case involves a situation where the special statute (R.A. 8042) refers to a subject in
general, which the general statute (Labor Code) treats in particular. In the present case, the basic issue raised by
Merridy Jane in her complaint filed with the NLRC is which provision of the subject CBA applies insofar as death
benefits due to the heirs of Nelson are concerned.
Rule 7, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by R.A. No. 10022, states that: “For OFWs with collective bargaining agreements,
the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code.”
Likewise, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels, promulgated by the POEA provides that: “In cases of claims and disputes
arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or
dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators.”
140
11. Santiago v. CF Sharp Crew Management
GR No. 162419, July 10, 2007
A distinction must be made between the perfection of the employment contract and the commencement of the
employer-employee relationship. The perfection of the contract in this case coincided with the date of execution
thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the
terms and conditions therein. The commencement of the employer-employee relationship would have taken place
had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee
relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and
obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had
happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.
While the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer
can simply prevent a seafarer from being deployed without a valid reason. Respondents act of preventing petitioner
from departing the port of Manila and boarding MSV Seaspread constitutes a breach of contract, giving rise to
petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner
and must answer for the actual damages he suffered.
Re: seafarers and their status of employment
In Millares v. National Labor Relations Commission, “seafarers are considered contractual employees and cannot
be considered as regular employees under the Labor Code. Their employment is governed by the contracts they
sign every time they are rehired and their employment is terminated when the contract expires. The exigencies of
their work necessitates that they be employed on a contractual basis.”
12. Sameer Overseas Placement Agency, Inc. v. Cabiles

GR No. 170139, August 5, 2014
Re: Security of tenure

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect
to the rights of overseas Filipino workers, we follow the principle of lex loci contractus. In Triple Eight Integrated
Services, Inc. v. NLRC, SC noted that: “the rule that lex loci contractus (the law of the place where the contract is
made) governs in this jurisdiction. There is no question that the contract of employment in this case was perfected
here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting
labor apply in this case.
Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the
forum’s public policy. Herein the Philippines, employment agreements are more than contractual in nature. The
public policy in Article XIII, Section 3 of the Constitution which guarantees the special protection of workers should
be borne in mind because to allow foreign employers to determine for and by themselves whether an overseas
contract worker may be dismissed would encourage illegal or arbitrary pretermination of employment contracts.” By
our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause under Article 282
of the Labor Code and after compliance with procedural due process requirements.
Re: entitlement of salary; liabilities

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section
shall be joint and several. Such provision shall be incorporated in the contract for overseas employment and shall
be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency,
as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If
the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case
may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims
and damages. Such liabilities shall continue during the entire period or duration of the employment contract and
shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said
contract.
141
The re-enactment of the last paragraph of Sec. 10 of R.A. No. 8042 did not erase its unconstitutionality. Joy then is
entitled to her salary for the unexpired portion of her contract.
Re: Interest rates on reimbursement of placement fees

A central bank circular on interest rates cannot repeal a positive provision R.A. No. 8042, as regards interest rates
on certain pecuniary awards granted to illegally dismissed OFWs. The Bangko Sentral ng Pilipinas Circular No. 799
of June 21, 2013 revised the interest rate for loan or forbearance from 12% to 6% in the absence of stipulation.
However, it is not applicable when there is a law that states otherwise.
Section 10 of Republic Act No. 8042 provides that unlawfully terminated overseas workers are entitled to the
reimbursement of his or her placement fee with an interest of 12% per annum. Such has the effect of removing
awards for reimbursement of placement fees from Circular No. 799’s coverage.
13. IPAMS v. Arriola

GR No. 205703, March 7, 2016
The general rule is that Philippine laws apply even to overseas employment contracts. This rule is rooted in the
constitutional provision of Section 3, Article XIII that the State shall afford full protection to labor, whether local or
overseas. Hence, even if the OFW has his employment abroad, it does not strip him of his rights to security of
tenure, humane conditions of work and a living wage under our Constitution.
As an exception, the parties may agree that a foreign law shall govern the employment contract. A synthesis of the
existing laws and jurisprudence reveals that this exception is subject to the following requisites:
1. That it is expressly stipulated in the overseas employment contract that a specific foreign law shall
govern;
2. That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on
evidence;
3. That the foreign law stipulated in the overseas employment contract must not be contrary to law, morals,
good customs, public order, or public policy of the Philippines; and
4. That the overseas employment contract must be processed through the POEA.
The Court is of the view that these four (4) requisites must be complied with before the employer could invoke the
applicability of a foreign law to an overseas employment contract.
14. Sunace International Management v. NLRC

GR No. 161757, January 25, 2006
The theory of imputed knowledge ascribes the knowledge of the agent to the principal not the other way around.
Also, the agency between a foreign principal and its local recruitment agent is revoked if the foreign principal directly
manages the business (hiring of employee) entrusted to the local recruitment agent, dealing directly with third
persons.
Here, there is 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 cannot be held solidarily liable for any of Divina’s
claims arising from the 2-year employment extension. Furthermore, Sunace correctly points out, there was an
implied revocation of its agency relationship with its foreign principal when, after the termination of the original
employment contract, the foreign principal directly negotiated with Divina and entered into a new and separate
employment contract in Taiwan.
15. Maersk Pilipinas v. Avestruz

GR No. 207010, February 18, 2015
An erring seaman is given a written notice of the charge against him and is afforded an opportunity to explain or
defend himself. Should sanctions be imposed, then a written notice of penalty and the reasons for it shall be
furnished the erring seafarer. It is only in the exceptional case of clear and existing danger to the safety of the crew
or vessel that the required notices are dispensed with; but just the same, a complete report should be sent to the
manning agency, supported by substantial evidence of the findings.
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Section 10. Money claims. – x x x
x x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, or any unauthorized deductions from the migrant worker’s salary, the worker shall be entitled to the full
reimbursement of his placement fee and the deductions made with interest at twelve percent (12%) per annum,
plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the
unexpired term, whichever is less.
16. Gagui v. Dejero

GR No. 196036, October 23, 2013
The liability of the principal/employer and the recruitment/placement agency for any and all claims under Section
10, RA 8042 shall be joint and several. This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement
agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners
as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the
aforesaid claims and damages.
But as held in the case of Sto. Tomas v. Salac, "But the Court has already held, pending adjudication of this case,
that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with
their company, there must be a finding that they were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities..." Hence, for petitioner to be found jointly and solidarily
liable, there must be a separate finding that she was remiss in directing the affairs of the agency, resulting in the
illegal dismissal of respondents.
17. AMCOW v. GCC Approved Medical Centers Association

GR No. 207132, December 6, 2016
The prohibition against the referral decking system* under Section 16, RA No. 10022, is a valid exercise of police
power. The State's police power is vast and plenary and the operation of a business, especially one that is imbued
with public interest (such as healthcare services), falls within the scope of governmental exercise of police power
through regulation.
RA No. 10022 expressly reflects the declared State policies to "uphold the dignity of its citizens whether in the
country or overseas, in general, and Filipino migrant workers," and to "afford full protection to labor, local and
overseas, organized and unorganized, and promote full employment and equality of employment opportunities for
all. Towards this end, the State shall provide adequate and timely social, economic and legal services to Filipino
migrant workers." The prohibition against the referral decking system in Section 16 of RA No. 10022 is an expression
and implementation of these state policies.
The guarantee under Section 16 for OFWs to be given the option to choose a quality healthcare service provider
as expressed in Section 16 (c) of RA No. 10022 is guaranteed by the prohibition against the decking practice and
against monopoly practices in OFW health examinations.
Section 16 likewise requires employers to accept health examinations from any DOH-accredited health facility; a
refusal could lead to their temporary disqualification under pertinent rules to be formulated by the Philippine
Overseas Employment Authority (POEA).97 These rules are part of the larger legal framework to ensure the
Overseas Filipino Workers' (OFW) access to quality healthcare services, and to curb existing practices that limit
their choices to specific clinics and facilities.
* requires an overseas Filipino worker to go first to an office for registration and then farmed out to a medical clinic located elsewhere
18. Gargallo v. DOHLE Seafront Crewing

GR No. 215551, August 17, 2016
Section 10 of RA 8042, as amended, expressly provides for joint and solidary liability of corporate directors and
officers with the recruitment/placement agency for all money claims or damages that may be awarded to OFWs.
143
While a corporate director, trustee, or officer who entered into contracts in behalf of the corporation generally, cannot
be held personally liable for the liabilities of the latter, in deference to the separate and distinct legal personality of
a corporation from the persons composing it, personal liability of such corporate director, trustee, or officer, along
(although not necessarily) with the corporation, may validly attach when he is made by a specific provision of law
personally answerable for his corporate action.
Applicable laws form part of, and are read into, contracts without need for any express reference thereto; more so,
when it pertains to a labor contract which is imbued with public interest. Each contract thus contains not only what
was explicitly stipulated therein, but also the statutory provisions that have any bearing on the matter."
As applied herein, Section 10 of RA 8042, as amended, and the pertinent POEA Rules are deemed incorporated
in petitioner's employment contract with respondents. These provisions are in line with the State's policy of affording
protection to labor and alleviating the workers' plight, and are meant to assure OFWs immediate and sufficient
payment of what is due them. Thus, as the law provides, corporate directors and officers are themselves solidarily
liable with the recruitment/placement agency for all money claims or damages that may be awarded to OFWs.
19. Princess Talent Center v. Masagca

GR No. 191310, April 11, 2018
Dismissal from employment has two facets: first, the legality of the act of dismissal, which constitutes substantive
due process; and, second, the legality of the manner of dismissal, which constitutes procedural due process. The
burden of proof rests upon the employer to show that the disciplinary action was made for lawful cause or that the
termination of employment was valid. When in doubt, the case should be resolved in favor of labor pursuant to the
social justice policy of our labor laws and the 1987 Constitution. The Constitutional guarantee of security of tenure
extends to Filipino overseas contract workers (Sameer Overseas Placement Agency, Inc. v. Cabiles). Since
respondent’s Employment Contract was executed in the Philippines, Philippine Constitution and Labor Laws
governed her employment with petitioners and SAENCO. An employee’s right to security of tenure, protected by
the Constitution and statutes, means that no employee shall be dismissed unless there are just or authorized causes
and only after compliance with procedural and substantive due process.
Second paragraph of Section 10 of RA 8042 is plain and clear, the joint and several liability of the principal/employer,
recruitment/placement agency, and the corporate officers of the latter, for the money claims and damages of an
overseas Filipino worker is absolute and without qualification.
20. David v. Marquez

GR No. 209859, June 5, 2017
Venue in criminal cases is an essential element of jurisdiction. It is a fundamental rule that for jurisdiction to be
acquired by courts in criminal cases, the offense should have been committed or any one of its essential ingredients
took place within the territorial jurisdiction of the court. Territorial jurisdiction in criminal cases is the territory where
the court has jurisdiction to take cognizance or to try the offense allegedly committed therein by the accused.
At the risk of being repetitive, Sec. 9 of RA 8042, however, fixed an alternative venue from that provided in Section
15(a) of the Rules of Criminal Procedure, i.e., a criminal action arising from illegal recruitment may also be filed
where the offended party actually resides at the time of the commission of the offense and that the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of other courts.
21. Powerhouse Staff Builders International v. Rey

GR No. 190203, November 7, 2016
In Serrano, the Court declared unconstitutional the clause in Section 10 of R.A. No. 8042 limiting the wages that
could be recovered by an illegally dismissed overseas worker to three months. The Court held that the clause "or
for three (3) months for every year of the unexpired term, whichever is less" (subject clause) is both a violation of
the due process and equal protection clauses of the Constitution. In 2010, upon promulgation of Republic Act No.
10022, the subject clause was reinstated. Presented with the unique situation that the law passed incorporated the
exact clause already declared unconstitutional, without any perceived substantial change in the circumstances, in
144
Sameer, we, once again, declared the reinstated clause unconstitutional, this time as provided in Section 7 of R.A.
No. 10022.
The terms of Section 10 of R.A. No. 8042 clearly states the solidary liability of the principal and the recruitment
agency to the employees and this liability shall not be affected by any substitution, amendment or modification for
the entire duration of the employment contract. In this case, even if there was transfer of accreditation by Catcher
from Powerhouse to JEJ, Powerhouse's liability to respondent employees remained intact because respondent
employees are not privy to such contract, and in their overseas employment contract approved by POEA,
Powerhouse is the recruitment agency of Catcher. To relieve Powerhouse from liability arising from the approved
overseas employment contract is to change the contract without the consent from the other contracting party,
respondent employees in this case.
By providing that the liability of the foreign employer may be "enforced to the full extent" against the local agent, the
overseas worker is assured of immediate and sufficient payment of what is due them. Corollarily, the provision on
joint and several liability in R.A. No. 8042 shifts the burden of going after the foreign employer from the overseas
worker to the local employment agency. However, the local agency that is held to answer for the overseas worker's
money claims is not left without remedy. The law does not preclude it from going after the foreign employer for
reimbursement of whatever payment it has made to the employee to answer for the money claims against the
foreign employer.
ART. 57; MAGNA CARTA FOR DISABLED PERSONS
22. Century Canning Corp. v. CA

GR No. 152894, August 17, 2007
The Labor Code defines an apprentice as a worker who is covered by a written apprenticeship agreement with an
employer. Republic Act No. 7796 emphasizes TESDAs approval of the apprenticeship program as a pre-requisite
for the hiring of apprentices.
The TESDAs approval of the employers apprenticeship program is required before the employer is allowed to hire
apprentices. Prior approval from the TESDA is necessary to ensure that only employers in the highly technical
industries may employ apprentices and only in apprenticeable occupations. Thus, under RA 7796, employers can
only hire apprentices for apprenticeable occupations which must be officially endorsed by a tripartite body and
approved for apprenticeship by the TESDA. This is to ensure the protection of apprentices and to obviate possible
abuses by prospective employers who may want to take advantage of the lower wage rates for apprentices and
circumvent the right of the employees to be secure in their employment.
This is further emphasized by Department Order No. 68-04, which provides the guidelines in the implementation of
the Apprenticeship and Employment Program of the government, specifically states that no enterprise shall be
allowed to hire apprentices unless its apprenticeship program is registered and approved by TESDA.
Since Palad is not considered an apprentice because their apprenticeship agreement was enforced before the
TESDAs approval of petitioners apprenticeship program, Palad is deemed a regular employee performing the job
of a fish cleaner.
23. Bernardo v. NLRC

GR No. 122917, July 12, 1999
The Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same
terms and conditions of employment as a qualified able-bodied person.
The fact that the employees were qualified disabled persons removes the employment contracts from the ambit of
Article 80 and since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus
covered by Article 280 of the Labor Code, which provides:
ART. 280. 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
145
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 services
to be performed is seasonal in nature and the employment is for the duration of the season.
As regular employees, the 27 petitioners whose contracts were renewed beyond the initial 6 months are entitled to
security of tenure; that is, their services may be terminated only for a just or authorized cause.
Module 7
EMPLOYER-EMPLOYEE RELATIONSHIP
24. Javier v. Fly Ace Corporation

G.R. NO. 192558, February 15, 2012
No particular form of evidence is required to prove the existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted. The rule of thumb remains: the onus
probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. Whoever
claims entitlement to the benefits provided by law should establish his or her right thereto x x x.
25. Southeast International Rattan, Inc v. Coming

G.R. NO. 126297, February 11, 2008
To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-
fold test, to wit:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee’s conduct, or the so-called "control test."
In resolving the issue of whether such relationship exists in a given case, substantial evidence – that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion – is sufficient. Although
no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant
evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence.
The Court reiterated that in Tan v. Lagrama, the fact that a worker was not reported as an employee to the SSS is
not conclusive proof of the absence of employer-employee relationship. Otherwise, an employer would be rewarded
for his failure or even neglect to perform his obligation. For a payroll to be utilized to disprove the employment of a
person, it must contain a true and complete list of the employee.
26. Tenazas v. R. Villegas Taxi Transportation

GR NO. 192998, April 2, 2014
There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence
to prove the relationship may be admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence
of employee status. "[T]he burden of proof rests upon the party who asserts the affirmative of an issue."
27. Sagun v. ANZ Global

GR NO. 220399, August 22, 2016
An employment contract, like any other contract, is perfected at the moment the parties come to agree upon its
terms and conditions, and thereafter, concur in the essential elements thereof. In this relation, the contracting parties
may establish such stipulations, clauses, terms, and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order or public policy.
Accordingly, petitioner's employment with ANZ depended on the outcome of his background check, which partakes
of the nature of a suspensive condition, and hence, renders the obligation of the would-be employer, i.e., ANZ in
146
this case, conditional. While a contract may be perfected in the manner of operation described above, the efficacy
of the obligations created thereby may be held in suspense pending the fulfillment of particular conditions agreed
upon. In other words, a perfected contract may exist, although the obligations arising therefrom if premised upon a
suspensive condition would yet to be put into effect. Thus, until and unless petitioner complied with the satisfactory
background check, there exists no obligation on the part of ANZ to recognize and fully accord him the rights under
the employment contract.
28. LVN Pictures v. Philippine Musicians Guild

110 Phil. 725, January 28, 1961
To determine whether a person who performs work for another is the latter's employee or an independent contractor,
the National Labor Relations relies on 'the right to control' test. Under this control test, an employer-employee
relationship exist where the person for whom the services are performed reserves the right to control not only the
end to be achieved, but also the manner and means to be used in reaching the end (United Insurance Company,
108, NLRB No. 115). Notwithstanding that the employees are called independent contractors', the Board will hold
them to be employees under the Act where the extent of the employer's control over them indicates that the
relationship is in reality one of employment.
The right of control of the film company over the musicians is shown (1) by calling the musicians through 'call slips'
in 'the name of the company; (2) by arranging schedules in its studio for recording sessions; (3) by furnishing
transportation and meals to musicians; and (4) by supervising and directing in detail, through the motion picture
director, the performance of the musicians before the camera, in order to suit the music they are playing to the
picture which is being flashed on the screen.
29. Paguio Transport, Corp. v. NLRC

GR NO. 119500, August 28, 1998
Boundary system is that of employer-employee and not of lessor-lessee. Under the “boundary system” the drivers
do not receive fixed wages; all the excess in the amount of boundary was considered his income but it is not
sufficient to withdraw the relationship between them from that of employer and employee. In the lease of chattels[,]
the lessor loses complete control over the chattel leased . . . . In the case of jeepney owners/operators and jeepney
drivers, the former exercise supervision and control over the latter.
30. Teng v. Pahagac

GR NO. 169704, November 17, 2010
As a policy, the Labor Code prohibits labor-only contracting:
Art. 106. Contractor or Subcontractor
xxx
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such persons are performing activities which are directly
related to the principal business of such employer.
Section 5 of the DO No. 18-02,[46] which implements Article 106 of the Labor Code, provides:
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 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.
A finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee
relationship exists between Teng and the respondent workers. As regular employees, the respondent workers are
entitled to all the benefits and rights appurtenant to regular employment.
147
31. Dy Keh Beng v. International Labor and Marine Union of the Philippines
GR NO. L-32245, May 25, 1979
An employer-employee relationship exists, using the control test, exists “where the person for whom the services
are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching
such end.” It should be borne in mind that the control test calls merely for the existence of the right to control the
manner of doing the work, not the actual exercise of the right.
“Circumstances must be construed to determine indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. x x x and units of work are in establishments like respondent (sic)
just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot
construe payment by the piece where work is done in such an establishment as to put the worker completely at
liberality to turn him out and take in another at pleasure.” Lastly, the court noted the judicial notice in previous case
of ‘pakyaw’ system as generally practiced in our country, is, in fact, a labor contract between employers and
employees, between capitalists, and laborers.
32. Insular Life Assurance Company v. NLRC and Basiao

GR NO. 84484, November 15, 1989
It should x x x be obvious that not every form of control that the hiring party reserves to himself over the conduct of
the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining it, and those that control
or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to
promote the result, create no employer-employee relationship unlike the second, which address both the result and
the means used to achieve it.
The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the
business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations
between insurer and insured but also to the internal affairs of the insurance company. Rules and regulations
governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits.
None of these really invades the agent’s contractual prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.
33. Tongko v. Manulife

GR NO. 167622, November 7, 2009
If the specific rules and regulations that are enforced against insurance agents or managers are such that would
directly affect the mean and methods by which such agents or managers would achieve the objectives set by the
insurance company, they are employees of the insurance company.
NB: Motion for Reconsideration (June 29, 2010)

The business of insurance is a highly regulated commercial activity in the country, in terms particularly of who can
be in the insurance business, who can act for and in behalf of an insurer, and how these parties shall conduct
themselves in the insurance business. Thus, under the Insurance Code, the agent must, as a matter of qualification,
be licensed and must also act within the parameters of the authority granted under the license and under the
contract with the principal. Rules regarding the desired results (e.g., the required volume to continue to qualify as a
company agent, rules to check on the parameters on the authority given to the agent, and rules to ensure that
industry, legal and ethical rules are followed) are built-in elements of control specific to an insurance agency and
should not and cannot be read as elements of control that attend an employment relationship governed by the Labor
Code.
The employer controls the employee both in the results and in the means and manner of achieving this result. The
principal in an agency relationship, on the other hand, also has the prerogative to exercise control over the agent
in undertaking the assigned task based on the parameters outlined in the pertinent laws. With particular relevance
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to the present case is the provision that "In the execution of the agency, the agent shall act in accordance with the
instructions of the principal." This provision is pertinent for purposes of the necessary control that the principal
exercises over the agent in undertaking the assigned task, and is an area where the instructions can intrude into
the labor law concept of control so that minute consideration of the facts is necessary. The provisions of the
Insurance Code cannot be disregarded as this Code expressly envisions a principal-agent relationship between the
insurance company and the insurance agent in the sale of insurance to the public. For this reason, we can take
judicial notice that as a matter of Insurance Code-based business practice, an agency relationship prevails in the
insurance industry for the purpose of selling insurance.
NB: Motion for Reconsideration (January 25, 2011)

The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the company’s
insurance products, his collection activities and his delivery of the insurance contract or policy. All these, read
without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over
its agents. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are,
in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an
insurance agent must observe and undertake. They do not reach the level of control into the means and manner of
doing an assigned task that invariably characterizes an employment relationship as defined by labor law.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature of dictating the means and methods to be employed in
attaining the result. Manulife’s codes of conduct, likewise, do not necessarily intrude into the insurance agents’
means and manner of conducting their sales.
34. AFP Mutual Benefit Association v. NLRC

GR NO. 102199, January 28, 1997
The significant factor in determining the relationship of the parties is the presence or absence of supervisory
authority to control the method and the details of performance of the service being rendered, and the degree to
which the principal may intervene to exercise such control. The presence of such power of control is indicative of
an employment relationship, while absence thereof is indicative of independent contractorship. In other words, the
test to determine the existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his own methods and without being subject to the control of
the employer except only as to the result of the work.
The fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered
as control in labor jurisprudence. Thus, the exclusivity restriction clearly springs from a regulation issued by the
Insurance Commission, and not from an intention by petitioner to establish control over the method and manner by
which private respondent shall accomplish his work. This feature is not meant to change the nature of the
relationship between the parties, nor does it necessarily imbue such relationship with the quality of control
envisioned by the law for there to arise an employer-employee relationship.
35. Encyclopaedia Brittanica v. NLRC

GR NO. 87098, November 4, 1996
It should be noted that in petitioner’s business of selling encyclopedias and books, the marketing of these products
was done through dealership agreements. The sales operations were primarily conducted by independent
authorized agents who did not receive regular compensations but only commissions based on the sales of the
products. These independent agents hired their own sales representatives, financed their own office expenses,
and maintained their own staff. Thus, there was a need for the petitioner to issue memoranda to private respondent
so that the latter would be apprised of the company policies and procedures. Nevertheless, agents were free to
conduct and promote their sales operations. The periodic reports to the petitioner by the agents were but necessary
to update the company of the latter’s performance and business income.
Control of employee’s conduct is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under this, an employer-employee relationship exists
where the person for whom the services are performed reserves the right to control not only the end to be achieved,
but also the manner and means to be used in reaching that end. The fact that petitioner issued memoranda to
private respondent and to other division sales managers did not prove that petitioner had actual control over them.
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The different memoranda were merely guidelines on company policies which the sales managers follow and impose
on their respective agents.
36. HSY Marketing v. Villastique

GR NO. 219569, August 17, 2016
The Court had already exposed the practice of setting up "distributors" or "dealers" which are, in reality, dummy
companies that allow the mother company to avoid employer-employee relations and, consequently, shield the
latter from liability from employee claims in case of illegal dismissal, closure, unfair labor practices, and the like. For
failure to present evidence to rebut the allegation that the respondent is indeed an employee of the petitioner, it
cannot be allowed to evade liability as the employer of respondent. The Court has already held that company drivers
who are under the control and supervision of management officers — like respondent herein — are regular
employees entitled to benefits including service incentive leave pay.
37. Coca-Cola Bottlers Phils., Inc. v. Climaco

GR NO. 14688, February 5, 2007
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-
fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most
important element.
The Comprehensive Medical Plan which contains the respondent‘s objectives, duties and obligations, does not tell
respondent “how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients,
employees of petitioner company, in each case.” It provided guidelines merely to ensure that the end result was
achieved, but did not control the means and methods by which respondent performed his assigned tasks.
38. Corporal v. NLRC

GR NO. 129315, October 2, 2000
An independent contractor is one who undertakes "job contracting", i.e., a person who (a) carries on an independent
business and undertakes the contract work on his own account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in all matters connected with
the performance of the work except as to the results thereof, and (b) has substantial capital or investment in the
form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of
the business.
In determining the employer-employee relationship using the control test, the power to control refers to the existence
of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the employer has the right to wield that
power.
Juxtaposing this provision vis--vis the facts of this case, we are convinced that petitioners are not "independent
contractors". They did not carry on an independent business. Neither did they undertake cutting hair and manicuring
nails, on their own as their responsibility, and in their own manner and method. More importantly, the petitioners,
individually or collectively, did not have a substantial capital or investment in the form of tools, equipment, work
premises and other materials which are necessary in the conduct of the business of the respondent company. What
the petitioners owned were only combs, scissors, razors, nail cutters, nail polishes, the nippers - nothing else. By
no standard can these be considered substantial capital necessary to operate a barber shop.
39. Maraguinot v. NLRC GR NO. 120969 January 22, 1998

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other
employment during temporary breaks in the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied
to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the
employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the
same time enables the workers to attain the status of regular employees.
Once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same
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usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article
280 of the Labor Code and jurisprudence.
40. Calamba Medical Center v. NLRC

GR NO. 176484, November 25, 2008
Under the "control test," an employment relationship exists between a physician and a hospital if the hospital
controls both the means and the details of the process by which the physician is to accomplish his task. Where a
person who works for another does so more or less at his own pleasure and is not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element
of control is absent. For control test to apply, it is not essential for the employer to actually supervise the performance
of duties of the employee, it being enough that it has the right to wield the power. As priorly stated, private
respondents maintained specific work-schedules, as determined by petitioner through its medical director, which
consisted of 24-hour shifts totaling forty-eight hours each week and which were strictly to be observed under pain
of administrative sanctions. That petitioner exercised control over respondents gains light from the undisputed fact
that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies.
Under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-employee
relationship exists between the resident physicians and the training hospitals, unless there is a training agreement
between them, and the training program is duly accredited or approved by the appropriate government agency.
41. Jardin v. NLRC

GR NO. 119268, February 23, 2000
In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on
one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of
lessor-lessee. In the lease of chattels, the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case
of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The
management of the business is in the owner’s hands. The owner as holder of the certificate of public convenience
must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as
regards its operation.
The fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay
to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and
employee. The Court have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi
owners/operators and taxi drivers. Here, petitioner are considered employees of the private respondent as taxi
drivers perform activities which are usually necessary or desirable in the usual business or trade of their employer.
42. Sonza v. ABSCBN

GR NO. 138051, June 10, 2004
The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well
– the less control the hirer exercises, the more likely the worker is considered an independent contractor.
independent contractual relationship.
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.
This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control
the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less
control the hirer exercises, the more likely the worker is considered an independent contractor
The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee
relationship under labor laws. Not every performance of services for a fee creates an employer-employee
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relationship. To hold that every person who renders services to another for a fee is an employee - to give meaning
to the security of tenure clause - will lead to absurd results. An individual like an artist or talent has a right to render
his services without any one controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as
employees. If radio and television program hosts can render their services only as employees, the station owners
and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to
freedom of the press.
43. Begino v. ABSCBN

GR NO. 199166, April 20, 2015
Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and
condition embodied therein, petitioners are regular employees of ABS-CBN because they perform functions
necessary and essential to ABS-CBN’s business. Respondents’ repeated hiring of petitioners for its long-running
news program positively indicates that the latter were ABS-CBN’s regular employees. Exclusivity Clause and
Prohibitions in talent contracts are indicative of control by the employer if it does not concern well-known television
and radio personality who can legitimately be considered as talent and compensated as such.
44. Orozco v. CA
GR NO. 155207, August 13, 2008
The newspaper’s power to approve or reject publication of any specific article she wrote for her column cannot be
the control contemplated in the "control test," as it is but logical that one who commissions another to do a piece of
work should have the right to accept or reject the product. The important factor to consider in the "control test" is
still the element of control over how the work itself is done, not just the end result thereof. Where a person who
works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite
hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof,
no employer-employee relationship exists.
45. TAPE, Inc. v. Servana

GR NO. 167648, January 28, 2008
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of
employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means
and method by which the work is to be accomplished.
Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor carries on a
distinct and independent business and undertakes to perform the job, work or service on its own account and under
its own responsibility according to its own manner and method, and free from the control and direction of the
principal in all matters connected with the performance of the work except as to the results thereof. TAPE failed to
establish that respondent is an independent contractor.
In classifying independent contractors, Policy Instruction No. 40 defines program employees as—
x x x those whose skills, talents or services are engaged by the station for a particular or specific program
or undertaking and who are not required to observe normal working hours such that on some days they
work for less than eight (8) hours and on other days beyond the normal work hours observed by station
employees and are allowed to enter into employment contracts with other persons, stations, advertising
agencies or sponsoring companies. The engagement of program employees, including those hired by
advertising or sponsoring companies, shall be under a written contract specifying, among other things, the
nature of the work to be performed, rates of pay and the programs in which they will work. The contract
shall be duly registered by the station with the Broadcast Media Council within three (3) days from its
consummation.
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46. Francisco v. NLRC
GR NO. 170087, August 31, 2006
When the control test is not sufficient to give a complete picture of the relationship between the parties, two-tiered
test must be applied. It involves: (1) the putative employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the
activity or relationship. This two-tiered test would provide us with a framework of analysis, which would take into
is especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and responsibilities
given to the worker over the period of the latter's employment.
The determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as:
(1) the extent to which the services performed are an integral part of the employers business;
(2) the extent of the workers investment in equipment and facilities;
(3) the nature and degree of control exercised by the employer;
(4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise;
(6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business.

GR NO. 169207, March 25, 2010
Corporate officers are given such character either by the Corporation Code or by the corporation’s by-laws. An
appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare)
during a special meeting of WPP’s Board of Directors is an appointment to a non-existent corporate office.
Therefore, respondent is an employee and the Labor Arbiter and the NLRC have jurisdiction over the present case.
48. Matling Industrial v. Coros

GR NO. 157802, October 13, 2010
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers
enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other
Offices without amending first the corporate By-laws. However, the Board may create appointive positions other
than the positions of corporate Officers, but the persons occupying such positions are not considered as corporate
officers within the meaning of Section 25 of the Corporation Code.
In this case, Coros was appointed VP for Finance and Administration not because of the election of Matling’s Board
of Directors. Matling’s By-Laws did not list his position as Vice President for Finance and Administration as one of
the corporate offices, nor was it created by the corporation’s board of directors. Coros is not a corporate officer, but
an employee of Matling.
49. Malcaba v. Prohealth Pharma Philippines GR NO. 209085 June 6, 2018

Under Section 25 of the Corporation Code, the President of a corporation is considered a corporate officer. The
dismissal of a corporate officer is considered an intra-corporate dispute, not a labor dispute. In Matling Industrial v.
Coros, the Court stated that jurisdiction over intra-corporate disputes involving the illegal dismissal of corporate
officers was with the Regional Trial Court, not with the Labor Arbiter. The mere designation as a high-ranking
employee, however, is not enough to consider one as a corporate officer. The clear weight of jurisprudence clarifies
that to be considered a corporate officer, first, the office must be created by the charter of the corporation, and
second, the officer must be elected by the board of directors or by the stockholders. Respondent corporation's By-
Laws creates the office of the President. That foundational document also states that the President is elected by
the Board of Directors. Finding that petitioner Malcaba is the President of respondent corporation and a corporate
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officer, any issue on his alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the National Labor
Relations Commission. Their adjudication on his money claims is void for lack of jurisdiction.
50. Republic v. Asiapro Cooperative GR NO. 172101 November 23, 2007

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide
that there shall be no employer-employee relationship between the respondent cooperative and its owners-
members. This Court, however, cannot give the said provision force and effect. In determining the existence of an
employer-employee relationship, the four cardinal elements are considered, the most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish.
In ruling in this case that there is an employer-employee relationship, the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in a contract, when the terms and surrounding
circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by
what the parties say it should be. Jurisprudence, furthermore, will show that it recognized that an owner-member of
a cooperative can be its own employee. A cooperative can be likened to a corporation with a personality separate
and distinct from its owners-members. Consequently, an owner-member of a cooperative can be an employee of
the latter and an employer-employee relationship can exist between them.
51. Locsin v. PLDT G.R. No. 185251 October 2, 2009

The power of control has been explained as the right to control not only the end to be achieved but also the means
to be used in reaching such end. With the conclusion that respondent directed petitioners to remain at their posts
and continue with their duties, it is clear that respondent exercised the power of control over them; thus, the
existence of an employer-employee relationship.
52. Professional Services v. CA

G.R. No. 126297, February 11, 2008
Hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within
the hospital premises. The applicant for "consultant" required to submit:
1. proof of completion of residency;
2. their educational qualifications;
3. generally, evidence of accreditation by the appropriate board (diplomate);
4. evidence of fellowship in most cases, and
5. references.
After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-
pathological conferences, rounds and patient audits. In addition to these, the physician’s performance as a specialist
is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback
from patients, nurses, interns and residents. Hence, private hospitals hire, fire and exercise real control over their
attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the patient’s condition, the control exercised, the hiring,
and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with
the exception of the payment of wages.
53. Dumpit-Murillo v. CA
G.R. No. 164652, June 8, 2007
The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and
compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular
employment status. The duties of Dumpit-Murillo as enumerated in her employment contract indicate that ABC had
control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of her
wages. ABC also had the power to dismiss.
54. Bernarte v. PBA

G.R. No. 192084, September 14, 2011
The contractual stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle and
make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of
the professional basketball league. As correctly observed by the Court of Appeals, how could a skilled referee
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perform his job without blowing a whistle and making calls? x x x [H]ow can the PBA control the performance of
work of a referee without controlling his acts of blowing the whistle and making calls?
Once in the playing court, the referees exercise their own independent judgment, based on the rules of the game,
as to when and how a call or decision is to be made. The referees decide whether an infraction was committed, and
the PBA cannot overrule them once the decision is made on the playing court. The referees are the only, absolute,
and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which
calls to make or not to make and cannot control the referee when he blows the whistle because such authority
exclusively belongs to the referees. The very nature of petitioners job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
55. Chavez v. NLRC

G.R. No. 146530, January 17, 2005
Of the four elements of the employer-employee relationship, the control test is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under its own responsibility according to its own manner
and method, free from the control and direction of the principal in all matters connected with the performance of the
work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom
from the control and supervision of his principal, an employee is subject to the employers power to control the
means and methods by which the employees work is to be performed and accomplished.
Chavez is an employee because: 1) undeniably, it was the respondents who engaged the services of the petitioner
without the intervention of a third party; 2) the respondents power to dismiss the petitioner was inherent in the fact
that they engaged the services of the petitioner as truck driver. They exercised this power by terminating the
petitioners services albeit in the guise of severance of contractual relation due allegedly to the latter’s breach of his
contractual obligation, and 3) That the petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the existence or absence of employer-employee
relationship.
56. Felix v. Buenaseda

G.R. No. 109704, January 17, 1995
A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes
training and temporary status. It is the step taken by a physician right after post-graduate internship (and after
hurdling the Medical Licensure Examinations) prior to his recognition as a specialist or sub-specialist in a given
field.

G.R. No. 156367, May 16, 2005
Bautista cannot be considered as field personnel because the definition of field personnel is not merely concerned
with the location where the employee regularly performs his duties but also with the fact that the employee’s
performance is unsupervised by the employer.
Along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who
board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical,
and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They
too, must be at specific place as specified time, as they generally observe prompt departure and arrival from their
point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function
is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated
proper time. Bautista, was therefore under constant supervision while in the performance of this work.
58. David v. Macasio

G.R. No. 195466, July 2, 2014
Engagement in “pakyaw” or task basis does not characterize the relationship between the parties whether
employment or independent contractorship. It only determines the manner of calculation of the wages due to the
employee which, is in this case, is the quantity or quality of work done. The totality of the surrounding circumstances
of the present case sufficiently points to an employer-employee relationship existing between David and Macasio.
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59. Chevron Phils. v. Galit
G.R. No. 186114, October 7, 2015
As to whether or not SJS is an independent contractor, jurisprudence has invariably ruled that an independent
contractor carries on an independent business and undertakes the contract work on his own account, under his
own responsibility, according to his own manner and method, and free from the control and direction of his employer
or principal in all matters connected with the performance of the work except as to the results thereof. There was
no evidence to show that SJS and its employees were ever subject to the control of petitioner. On the contrary, as
shown above, SJS possessed the right to control its employees' manner and means of performing their work,
including herein respondent Galit.
In addition, it would bear to point out that contrary to the ruling of the CA, the work performed by Galit, which is the
"scooping of slop of oil water separator," has no direct relation to petitioner's business, which is the importation,
refining and manufacture of petroleum products.
60. Weslayan University v. Maglaya

G.R. No. 212774, January 23, 2017
The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers
of a corporation, and they are usually designated as the officers of the corporation. However, other officers are
sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under
the by-laws of a corporation to create additional offices as may be necessary.
This Court expounded that an "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders, while an "employee" usually occupies no office and generally is employed not by action
of the directors or stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.
It is apparent from the By-laws of WUP that the president was one of the officers of the corporation, and was an
honorary member of the Board. He was appointed by the Board and not by a managing officer of the corporation.
We held that one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of
said corporation and not a mere employee. The alleged "appointment" of Maglaya instead of "election" as provided
by the by-laws neither convert the president of university as a mere employee, nor amend its nature as a corporate
officer.
61. Nestle Phils. v. Puedan

GR No. 220617, January 30, 2017
A closer examination of the Distributorship Agreement reveals that the relationship of NPI and ODSI is not that of a
principal and a contractor (regardless of whether labor-only or independent), but that of a seller and a buyer/re-
seller. As stipulated in the Distributorship Agreement, NPI agreed to sell its products to ODSI at discounted prices,
which in turn will be re-sold to identified customers, ensuring in the process the integrity and quality of the said
products based on the standards agreed upon by the parties. As aptly explained by NPI, the goods it manufactures
are distributed to the market through various distributors, e.g., ODSI, that in turn, re-sell the same to designated
outlets through its own employees such as the respondents. Therefore, the reselling activities allegedly performed
by the respondents properly pertain to ODSI, whose principal business consists of the "buying, selling, distributing,
and marketing goods and commodities of every kind" and "[entering] into all kinds of contracts for the acquisition of
such goods [and commodities]."
Thus, contrary to the CA's findings, the aforementioned stipulations in the Distributorship Agreement hardly
demonstrate control on the part of NPI over the means and methods by which ODSI performs its business, nor were
they intended to dictate how ODSI shall conduct its business as a distributor.
Thus, the foregoing circumstances show that ODSI was not a labor- only contractor of NPI; hence, the latter cannot
be deemed the true employer of respondents. As a consequence, NPI cannot be held jointly and severally liable to
ODSI's monetary obligations towards respondents.
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62. Valenzuela v. Alexandra Mining Ventures
G.R. No. 222419, October 5, 2016
The labor tribunals and the CA were all in accord that Valenzuela was an employee of AMOVI as evidenced by the
identification card and payslips stating the company as his employer. Moreover, the CA held that, utilizing the four-
fold test of employer-employee relationship, the result would show that Valenzuela was under the control of AMOVI.
It ruled thus:
It was [AMOVI] which hired [Valenzuela] in January 2008, and which issued an identification card showing that
[Valenzuela] was an employee. [Valenzuela] was likewise included in the payroll of [AMOVI], although it was claimed
that it was merely "for convenience." We do not see what kind of convenience is afforded to [AMOVI]. The power
to discipline and to dismiss is also present, and it was exercised by [Cesar] as President of [AMOVI] which
incidentally is a family corporation. Finally, the control test is likewise satisfied. [Valenzuela] had no choice as to
who his passengers would be. He was a company driver who was required to render service to the President of the
Corporation, including his nuclear family. It was them who controlled and dictated the manner by which he performed
his job.
REASONABLE CAUSAL CONNECTION RULE
63. San Miguel Corporation v. Ectuban

GR NO. 127639 December 3, 1999
The demarcation line between the jurisdiction of regular courts and labor courts over cases involving workers and
their employers has always been the subject of dispute. We have recognized that not all claims involving such
groups of litigants can be resolved solely by our labor courts. However, we have also admonished that the present
trend is to refer worker-employer controversies to labor courts, unless unmistakably provided by the law to be
otherwise. Because of this trend, jurisprudence has developed the "reasonable causal connection rule." Under this
rule, if there is a reasonable causal connection between the claim asserted and the employer-employee relations,
then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that
have jurisdiction.
With regard to claims for damages under Art. 217(4) of the Labor Code, jurisprudence has evolved the rule that
claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable
causal connection with any of the claims provided for in that article. Only if there is such a connection with the other
claims can the claim for the damages be considered as arising from employer-employee relations.
The damages incurred by respondents as a result of the alleged fraudulent retrenchment program and the allegedly
defective “contract of termination” are merely the civil aspect of the injury brought about by their illegal dismissal.
The civil ramifications of their actual claim cannot alter the reality that it is primordially a labor matter and, as such,
is cognizable by labor courts.
64. Kawachi v. Del Quero

GR NO. 163768 March 27, 2007
Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations - in other words, the Labor Arbiter
has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.
The Court cited the case of San Miguel Corporation v. Etcuban, developed the "reasonable causal connection rule."
Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular
courts that have jurisdiction.
Where the employer-employee relationship is merely incidental and the cause of action proceeds from a different
source of obligation, the Court has not hesitated to uphold the jurisdiction of the regular courts. Where the damages
claimed for were based on tort, malicious prosecution, or breach of contract, as when the claimant seeks to recover
a debt from a former employee or seeks liquidated damages in the enforcement of a prior employment contract, the
jurisdiction of regular courts was upheld. The allegations in private respondent's complaint unmistakably relate to
the manner of her alleged illegal dismissal. In the instant case, the NLRC has jurisdiction over private respondent's
complaint for illegal dismissal and damages arising therefrom.
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65. Eviota v. CA
GR NO. 152121 July 29, 2003
jurisdiction of the labor arbiter. A money claim by a worker against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter only if there is a “reasonable causal connection” between the claim asserted and
employee-employer relation. Absent such a link, the complaint will be cognizable by the regular courts of justice.
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.
The jurisdiction of the Labor Arbiter under Article 217 of the Labor Code, as amended, is limited to disputes arising
from an employer-employee relationship which can only be resolved by reference to the Labor Code of the
Philippines, other labor laws or their collective bargaining agreements. The fact that the private respondent was the
erstwhile employer of the petitioner under an existing employment contract before the latter abandoned his
employment is merely incidental. In fact, the petitioner had already been replaced by the private respondent before
the action was filed against the petitioner.
In this case, jurisdiction over the controversy belongs to the civil courts. The action was for breach of a contractual
obligation, intrinsically a civil dispute; while seemingly the cause of action arose from employer-employee relations,
the employers claim for damages is grounded on wanton failure and refusal without just cause to report to duty
coupled with the averment that the employee maliciously and with bad faith violated the terms and conditions of the
contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor
Code of the Philippines and brought it within the purview of the Civil Law.
66. Indophil Textile Mills v. Adviento

GR NO. 171212 August 4, 2014
The "reasonable causal connection rule," wherein if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case is within the jurisdiction of the labor courts; and in the
absence thereof, it is the regular courts that have jurisdiction. Such distinction is apt since it cannot be presumed
that money claims of workers which do not arise out of or in connection with their employer-employee relationship,
and which would therefore fall within the general jurisdiction of the regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor Arbiters on an
exclusive basis.
Indeed, jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the Labor Code, to
be cognizable by the LA, must have a reasonable causal connection with any of the claims provided for in that
article. Only if there is such a connection with the other claims can a claim for damages be considered as arising
from employer-employee relations.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the acts
complained of appear to constitute matters involving employee-employer relations since respondent used to be the
Civil Engineer of petitioner. However, it should be stressed that respondent’s claim for damages is specifically
grounded on petitioner’s gross negligence to provide a safe, healthy and workable environment for its employees
−a case of quasi-delict. A perusal of the complaint would reveal that the subject matter is one of claim for damages
arising from quasi-delict, which is within the ambit of the regular court's jurisdiction.
Module 8
CONDITIONS OF EMPLOYMENT

GR No. 156367, May 16, 2005
The grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor
Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing
Rules, Service Incentive Leave shall not apply to employees classified as field personnel. The phrase other
employees whose performance is unsupervised by the employer must not be understood as a separate
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classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those whose actual
hours of work in the field cannot be determined with reasonable certainty.
Module 9
ARTICLE 97
68. Songco v. NLRC

L-50999, March 23, 1990
In computing the basis for separation pay of a dismissed employee, allowances should be included in the monthly
salary. This has been settled in the case of Santos v. NLRC, et al. (GR No. 76721. September 21, 1987) where the
SC ruled that “in the computation of backwages and separation pay, account must be taken not only of the basic
salary but also of her transportation and emergency living allowances.”
Commission is the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor,
broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to
the Principal. The nature of the work of a salesman and the reason for such tyoe of remuneration for services
rendered demonstrate clearly that commissions are part of petitioners’ wage or salary. In computation of separation
pay based on commissions, what should be taken into account is the average commissions earned during their last
year of employment. Article 97(f) by itself is explicit that commission is included in the definition of the term “wage”.
The law speaks in clear and categorical language, there is no room for interpretation or construction.
69. Millares v. NLRC

GR No. 122827, March 29, 1999
In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. The Sec. of Labor
may from time to time fix in appropriate issuances the “fair and reasonable value of board, lodging and other facilities
customarily furnished by an employer to his employees.
The allowances are not to be included in the computation of wage for purposes of paying separation pay. The
receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary
because the nature of the grant is a factor worth considering. The subject allowances were temporarily, not regularly,
received by petitioners. Petitioners’ continuous enjoyment of the disputed allowances was based on contingencies
the occurrence of which wrote finis to such enjoyment. For housing allowance, the same is discontinued once a
vacancy occurs in the company-provided housing accommodations.
Transportation allowance is given only to employees who have personal cars in the form of advances for actual
transportation expenses subject to liquidation. Bislig allowance is- once the officer is transferred outside Bislig, the
allowance stops. The Staff/Managers allowance may fall under “lodging” but the transportation and Bislig
allowances are not embraced in “facilities” on the main consideration that they are granted as well as the
Staff/Manager’s allowance for respondent PICOP’s benefit and convenience, i.e. to insure that petitioners render
quality performance. In determining whether a privilege is a facility, the criterion is not so much its kind but its
purpose.
70. SLL International Cables Specialist v. NLRC

GR No. 172161, March 2, 2011
The benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or
ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is
a facility.
Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and
snacks to his employees provided that the subsidy shall not be less that 30% of the fair and reasonable value of
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such facilities. In such cases, the employer may deduct from the wages of the employees not more than 70% of the
value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization
of the employees concerned. Before the value of facilities can be deducted from the employees’ wages, the following
requisites must all be present:
1. Proof must be shown that such facilities are customarily furnished by the trade;
2. The provision of deductible facilities must be voluntarily accepted in writing by the employee.
3. Facilities must be charged at reasonable value.
Mere availment is not sufficient to allow deductions from employees’ wages.
13TH MONTH PAY
71. Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union

GR No. 188949, July 26, 2010
The 13th-month pay mandated by P.D. No. 851 represents an additional income based on wage but not part of the
wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.
All rank-and-file employees, regardless of their designation or employment status and irrespective of the method
by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month
during the calendar year. If the employee worked for only a portion of the year, the 13th-month pay is computed pro
rata.
The term basic salary of an employee for the purpose of computing the 13th-month pay was interpreted to include
all remuneration or earnings paid by the employer for services rendered, but does not include allowances and
monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of
unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living
allowances. However, these salary-related benefits should be included as part of the basic salary in the computation
of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as
part of the basic salary of the employees.
ARTICLE 100
72. American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.
GR No. 155059, April 29, 2005
Article 100 of the Labor Code provides:

Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits
being enjoyed at the time of promulgation of this Code.
It is critical that a determination must be first made on whether the benefits/entitlements are in the nature of a bonus
or not, and assuming they are so, whether they are demandable and enforceable obligations. In the case of
Producers Bank of the Philippines v. NLRC we have characterized what a bonus is, viz:
A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the
success of the employers business and made possible the realization of profits. It is an act of generosity
granted by an enlightened employer to spur the employee to greater efforts for the success of the business
and realization of bigger profits. The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable
and enforceable obligation, except when it is made part of the wage, salary or compensation of the
employee.
For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the
parties, or it must have had a fixed amount and had been a long and regular practice on the part of the employer.
The additional 35% premium pay for work done during selected days of the Holy Week and Christmas season, the
holding of Christmas parties with raffle, and the cash incentives given together with the service awards are all in
excess of what the law requires each employer to give its employees. Since they are above what is strictly due to
the members of petitioner-union, the granting of the same was a management prerogative, which, whenever
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management sees necessary, may be withdrawn, unless they have been made a part of the wage or salary or
compensation of the employees.
73. TSPIC Corporation v. TSPIC Employees Union (FFW)

GR No. 163419, February 13, 2008
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees.
There is diminution of benefits when it is shown that:
(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful or difficult question of law;
and
(4) the diminution or discontinuance is done unilaterally by the employer.
As correctly pointed out by TSPIC, the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit may
be withdrawn without violating the prohibition against non-diminution of benefits.
74. Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association

GR No. 180866, March 2, 2010
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have
been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is
integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation
in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity
on the part of the petitioner but a contractual obligation it has undertaken.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is
settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.
75. Eastern Telecom Phils. v. Eastern Telecoms Employees Union

GR No. 185665, February 8, 2012
As a general rule, he grant of a bonus is basically a management prerogative which cannot be forced upon the
employer.
Exceptions:
1. A bonus becomes a demandable or enforceable obligation when it is made part of the wage or salary or
compensation of the employee.
TEST: If it is additional compensation which the employer promised and agreed to give without any
conditions imposed for its payment, such as success of business or greater production or output, then it is
part of the wage.But if it is paid only if profits are realized or if a certain level of productivity is achieved, it
cannot be considered part of the wage. Where it is not payable to all but only to some employees and only
when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize
therefore, not a part of the wage (Metro Transit Organization, Inc. v. National Labor Relations Commission).
2. A bonus may be granted on equitable consideration when the giving of such bonus has been the company’s long
and regular practice.
TEST: To be considered a "regular practice," however, the giving of the bonus should have been done over
a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of
this rule on long practice requires an indubitable showing that the employer agreed to continue giving the
benefits knowing fully well that said employees are not covered by the law requiring payment thereof
(Philippine Appliance Corporation v. Court of Appeals).
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75. Kondo v. Toyota Boshoku
GR No. 201396, September 11, 2019
There is diminution of benefits when it is shown that:

(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful or difficult question of law;
and
(4) the diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, it must be shown by substantial evidence that the giving of the
benefit is done over a long time, and that it has been made consistently and deliberately. There must be an
indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees
are not covered by any provision of the law or agreement requiring the grant thereof. In sum, the benefit must be
characterized by regularity and voluntary and deliberate intent of the employer to grant the benefit over a
considerable period of time. The burden of proving that the benefit has ripen into practice rests in the employee.
In this case, the record shows that these benefits were granted by Toyota’s former President specifically to Kondo
at the time he was hired, in a verbal agreement. As such, the grant of the benefits may be viewed more as an
accommodation given to Kondo.
Re: Constructive Dismissal

Constructive dismissal exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. It also exists
when continued employment has become so unbearable because of acts of clear discrimination, insensibility, or
disdain by the employer, that the employee has no choice but to resign. What is essential is that there is a lack of
“voluntariness in the employee’s separation from employment.”
The primary and immediate cause for Kondo’s claim of constructive dismissal is the withdrawal of his assigned car
and driver, which Kondo claimed as an essential requisite of his continued employment. He failed to prove that his
resignation (as he claims he was forced to resign) was involuntary with clear, positive, and convincing evidence. To
place matters in perspective, what Kondo essentially alleges is diminution of benefits. It just so happened that the
benefit allegedly unreasonably withdrawn was the means used by him to report for work.
ARTICLE 106
76. GSIS v. NLRC

GR No. 180045, November 17, 2010
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with the
LC, 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.
GSIS is jointly and severally liable with DNS Security with respect to respondents’ claims. When GSIS contracted
DNL Security’s services, it became an indirect employer of respondents, pursuant to Article 107 of LC. After DNL
Security failed to pay respondents the correct wages and other monetary benefits, GSIS, as principal, became
jointly and severally liable, as provided in Articles 106 and 109 of LC.
77. Aliviado v. Proctor and Gamble

GR No. 160506, June 6, 2011
Article 106 defines labor-only contracting, viz:

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
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and placed by such person are performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.
On the same vein, Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by
Department Order No. 18-02, pertinently provides:
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
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) [T]he contractor does not exercise the right to control over the performance of the work of the contractual
employee.
Therefore, the control test is merely one of the factors to consider.
It was already established that SAPS has no substantial capitalization and it was performing merchandising and
promotional activities which are directly related to P&G's business. Since SAPS met one of the requirements, it was
enough basis for SC to hold that it is a labor-only contractor. Consequently, its principal, P&G, is considered the
employer of its employees. A finding that a contractor is a labor-only contractor, as opposed to permissible job
contracting, is equivalent to declaring that there is an employer-employee relationship between the principal and
the employees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the
principal, the real employer.
78. Mandaue Galleon Trade Inc. v. Andales

GR No. 159668, March 7, 2008
Based on Article 106 of the Labor Code and Sections 5 and 7 of the Implementing Rules, labor-only contracting
exists when the following criteria are present: (1) where the contractor or subcontractor supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among other things; and the workers recruited and placed by the contractor or subcontractor are
performing activities which are directly related to the principal business of such employer; or (2) where the contractor
does not exercise the right to control the performance of the work of the contractual employee.
First, respondents work as weavers, grinders, sanders and finishers is directly related to MGTI's principal business
of rattan furniture manufacturing. Where the employees are tasked to undertake activities usually desirable or
necessary in the usual business of the employer, the contractor is considered as a labor-only contractor and such
employees are considered as regular employees of the employer. Second, MGTI was unable to present any proof
that its contractors had substantial capital. There was no evidence pertaining to the contractors' capitalization; nor
to their investment in tools, equipment or implements actually used in the performance or completion of the job,
work, or service that they were contracted to render.
79. Spic n’ Span Services Corporation v. Paje

GR No. 174084, August 25, 2010
To be legitimate, contracting or subcontracting must satisfy the following requirements: 1) The contractor or
subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on
its own account and under its own responsibility; 2) the contractor or subcontractor has substantial capital or
investment; and 3) the agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of right to self-
organization, security of tenure, and social and welfare benefit.
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80. Alaska Milk Corporation v. Paez
G.R. No. 237277, November 27, 2019
DOLE requires contractors to register themselves with the DOLE Regional Office in which they operate, so as to
monitor their compliance with the law’s guiding principles. Failure to comply with the registration requirement
gives rise to a presumption that the contractor is engaged in labor-only contracting.
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No.
18-02, pertinently provides:
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
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) [T]he contractor does not exercise the right to control over the performance of the work of the contractual
employee.
Unlike the registration requirement, which only serves to raise a disputable presumption of job contracting; the
possession of substantial capital or investments is indispensable in proving a contractor’s legitimacy. Apropos, D.O.
No. 18-A provides a concrete numerical threshold for determining substantial capital. Under Section 3(l) thereof,
the capitalization requirement is met by corporations, partnerships, and cooperatives that have at least P3,000,000
in paid-up capital stocks/shares.
ARTICLE 110
81. DBP v. NLRC

GR NO. 108031, March 1, 1995
Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the
Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided.
The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker
in a better position than the State which could only assert its own prior preference in case of a judicial proceeding.
Art. 110, which was amended by R.A. 6715 effective 21 March 1989, now reads:
Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's
business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any
provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before
the claims of the Government and other creditors may be paid.
Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also
other monetary claims to which even claims of the Government must be deemed subordinate.
ARTICLE 111
82. Hoegh Fleet Services v. Turallo

GR No. 230481, July 26, 2017
Article 111 of the Labor Code indeed provides that the culpable party may be assessed attorney's fees equivalent
to 10 percent of the amount of wages recovered. It also provides that it shall be unlawful for any person to demand
or accept, in any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed 10
percent of the amount of wages recovered. Section 8, Rule VIII, Book III of the Implementing Rules of the Labor
Code sustains the same and states that attorney's fees shall not exceed 10 percent of the amount awarded. A
closer reading of these provisions, however, would lead us to the conclusion that the 10 percent only serves as the
maximum of the award that may be granted. Relevantly, We have ruled in the case of Taganas v. National Labor
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Relations Commission that Article 111 does not even prevent the NLRC from fixing an amount lower than the ten
percent ceiling prescribed by the article when the circumstances warrant it. With that, the Court is not tied to award
10 percent attorney's fees to the winning party.
The extraordinary concept of attorney's fees is the one contemplated in Article 111 of the Labor Code. This is
awarded by the court to the successful party to be paid by the losing party as indemnity for damages sustained by
the former in prosecuting, through counsel, his cause in court.
83. Gutierrez v. Nawras Manpower Services, Inc.

GR No. 234296, November 27, 2019
In Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water Co., Inc., this
Court differentiated the ordinary and extraordinary concepts of attorney's fees. Attorney's fees under the
extraordinary concept refer to those awarded by the Court to the losing party. These may be awarded in specific
instances enumerated under Article 2208 of the Civil Code. Under paragraph 7 of Article 2208, attorney's fees may
be recovered "[i]n actions for recovery of wages x x x."
In actions for recovery of wages, such as the instant case, a specific provision under the Labor Code governs.
Article 111 (a) of the Labor Code provides:
Art. 111. Attorney's Fees. - (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney's
fees equivalent to ten percent of the amount of wages recovered.
xxxx
We construed Article 111 of the Labor Code as an exception to the general rule of strict construction in the award
of attorney's fees. In Kaisahan, We held that "[a]lthough an express finding of facts and law is still necessary to
prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith
when it withheld wages." The findings of fact required to prove entitlement to attorney's fees in labor cases refer to
the unjustified withholding of lawful wages.
Here, it is undisputed that petitioner was not paid lawful wages corresponding to the unexpired portion of the
contract. Therefore, petitioner is entitled to attorney's fees.
ARTICLE 113
84. SHS Perforated Materials, Inc. v. Diaz

GR No. 185814, October 13, 2010
Management prerogative refers to the right of an employer to regulate all aspects of employment, such
as the freedom to prescribe work assignments, working methods, processes to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall
of work. Although management prerogative refers to the right to regulate all aspects of employment, it
cannot be understood to include the right to temporarily withhold salary/wages without the consent of the
employee. To sanction such an interpretation would be contrary to Article 116 of the Labor Code, which
provides:
ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages
by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent.
Any withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
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(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
As correctly pointed out by the LA, absent a showing that the withholding of complainants wages falls
under the exceptions provided in Article 113, the withholding thereof is thus unlawful.
Module 10
ARTICLE 118
85. Panaligan v. Phyvita Enterprises Corporation

GR No. 202086, June 21, 2017
Taking into consideration the fact that the DOLE-NCR conducted an inspection of the respondent's premises on
April 13, 2005 as a result of the labor complaint filed by PANALIGAN, et al., on April 4, 2005 and PANALIGAN, et
al., were implicated in the alleged January 25, 2005 theft incident only thereafter, a reasonable inference can be
made that PANALIGAN, et al.'s, termination of employment may have been indeed a retaliatory measure designed
to coerce them into withdrawing their complaint for underpayment of wages and nonpayment of other labor standard
benefits. Such an act is proscribed by Article 118 of the Labor Code which states:
Art. 118. Retaliatory Measures - It shall be unlawful for an employer to refuse to pay or reduce the wages and benefits,
discharge or in any manner discriminate against any employee who has filed any complaint or instituted any proceeding
under this title or has testified or is about to testify in such proceedings.
ARTICLE 124
86. P.I. Manufacturing v. P.I. Manufacturing Supervisors and Foreman Association

G.R. No. 167217, February 4, 2008
R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines wage distortion as: a situation
where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases
of differentiation.
The President signed into law Republic Act (R.A.) No. 6640 providing, among others, an increase in the statutory
minimum wage and salary rates of employees and workers in the private sector. Section 2 provides:
SEC. 2. The statutory minimum wage rates of workers and employees in the private sector, whether agricultural or non-
agricultural, shall be increased by ten pesos (P10.00) per day, except non-agricultural workers and employees outside
Metro Manila who shall receive an increase of eleven pesos (P11.00) per day: Provided, That those already receiving
above the minimum wage up to one hundred pesos (P100.00) shall receive an increase of ten pesos (P10.00) per day.
In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of R.A.
No. 6640. Significantly, the 1987 CBA wage increases almost doubled that of the P10.00 increase under R.A. No.
6640. Clearly, the gap between the wage rates of the supervisors and those of the foremen was inevitably re-
established. It continued to broaden through the years. Despite the wage distortion, the same were cured or
remedied when respondent PIMASUFA entered into the 1987 CBA with petitioner after the effectivity of R.A. No.
6640.
87. Bankard Employees Union – Workers Alliance Trade Unions v. NLRC

G.R. No. 140689, February 17, 2004
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT), amending, among others, Article 124 of
the Labor Code on June 9, 1989, the term wage distortion was explicitly defined as a situation where an increase
in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to effectively obliterate the
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distinctions embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation.
Prubankers Association v. Prudential Bank and Trust Company laid down the four elements of wage distortion, to
wit:
(1.) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
(4) The existence of the distortion in the same region of the country.
To determine the existence of wage distortion, the historical classification of the employees prior to the wage
increase must be established. Likewise, it must be shown that as between the different classification of employees,
there exists a historical gap or difference.
Article 124. Standards/Criteria for Minimum Wage Fixing.

xxx
Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional
Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate
to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.
ARTICLE 128
88. People’s Broadcasting Service v. SOLE

G.R. No. 179652, May 8, 2009
Firstly, the provisions of Art. 128(b) provides that the visitorial and enforcement power of the DOLE comes into
play only “in cases when the relationship of employer-employee still exists”. Its objective is to give effect to the
labor standard provision of this Code and other labor legislation. And to give effect to the labor standard laws, and
to confer entitlement thereto to an employee, there must be an EE-ER relationship. The clause then signifies that
the EE-ER relationship must have been existed before the emergence of the controversy. Necessarily, the
DOLE’s power does not apply when:
1) The EE-ER relationship has ceased; and
- has to be refered to NLRC as it has jurisdiction in view of termination of the EE-ER relationship.
where no relationship has ever existed.
2) NLRC has jurisdiction in view of the absence of the relationship between the evidentiary parties from
the start.
However, it may be assumed that DOLE, in the exercise of its visitorial and enforcement power somehow has to
make such determination. This prerogatival determination, however, cannot be coextensive with the visitorial and
enforcement power itself. Such determination is merely preliminary, incidental, and collateral to the DOLE’s
primary function of enforcing labor standards provisions. But, after all, the clause “in cases where the relationship
of EE-ER still exists” in Art. 128(b) means that the determination of EE-ER relationship remains to be lodged with
the NLRC.
Re: March 6, 2012 Resolution

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 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.
The findings of the DOLE, at this point as it excludes the jurisdiction of the NLRC upon them taking cognizance, is
not beyond question of judicial review. It is, through Rule 65 for petition for certiorari.
Summary of rules:
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1. 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;
2. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the
NLRC;
3. 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.
4. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the
jurisdiction is properly with the DOLE.
5. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule
65 of the Rules of Court.
89. Yanson v. Secretary of Labor

GR No. 159026, February 11, 2008
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article
may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed
from.
For its perfection, the appeal was subject to the requirements prescribed under Article 128 of the Labor Code,
as amended by Republic Act No. 7730, viz.:
Art. 128. Visitorial and Enforcement Power. - x x x (b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to
the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly
authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings of the labor employment and enforcement officer and raises
issues supported by documentary proofs which were not considered in the course of inspection.
90. Balladares v. Peak Ventures Corporation

GR No. 161794, June 16, 2009
The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor
standard laws can be exercised even when the individual claim exceeds P5,000. However, if the labor standards
case is covered by the exception clause in Article 128 (b) of the Labor Code, then the Regional Director will have
to endorse the case to the appropriate Arbitration Branch of the NLRC.
In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present:
(a) that the employer contests the findings of the labor regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to examine evidentiary matters; and
(c) that such matters are not verifiable in the normal course of inspection.
The rules also provide that the employer shall raise such objections during the hearing of the case or at any time
after receipt of the notice of inspection results.
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91. Allied Investigation Bureau v. Secretary of Labor
GR No. 122006, November 24, 1999
While it is true that under Articles 129 and 217of the Labor Code, the Labor Arbiter has jurisdiction to hear and
decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do
not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized
representatives. Said powers are defined and set forth in Art. 128 of the Labor Code.
Art. 128. Visitorial and Enforcement Power

xxx
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety
engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which
were not considered in the course of inspection.
An order issued by the duly authorized representatives of the Secretary of Labor and Employment under this article
may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed
from.
92. Urbanes v. Secretary of Labor

GR No. 122791, February 19, 2003
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 its complaint, private respondent is not
seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of
petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil
law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the
application of labor laws, reference to the labor code was only for the determination of the solidary liability of the
petitioner to the respondent where no employer-employee relation exists.
ARTICLE 134
93. Zialcita v. PAL

RO 4-3-398-76, February 20, 1977
Although Article 132 enjoins the Secretary of Labor to establish standards that will ensure the safety and health of
women employees and in appropriate cases shall by regulation require employers to determine appropriate
minimum standards for termination in special occupations, such as those of flight attendants, it is logical to presume
that, in the absence of said standards or regulations which are yet to be established, the policy of PAL against
marriage is patently illegal.
Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have categorically
expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole
text and supported by Article 135 that speaks of non-discrimination on the employment of women.
94. Star Paper Corporation v. Simbol

G.R. No. 164774, April 12, 2006
Petitioners’ sole contention that "the company did not just want to have two (2) or more of its employees related
between the third degree by affinity and/or consanguinity is lame. That the second paragraph was meant to give
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teeth to the first paragraph of the questioned rule is evidently not the valid reasonable business necessity required
by the law. Petitioners contend that their policy will apply only when one employee marries a co-employee, but they
are free to marry persons other than co-employees. The questioned policy may not facially violate Article 136 of the
Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could
pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice
the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working
together in one company.
SEXUAL HARRASMENT
95. Domingo v. Rayala

GR No. 155831, February 18, 2008
It is true that Sec. 3, RA 7877 calls for a "demand, request or requirement of a sexual favor." But it is not necessary
that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement.
It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingo’s shoulders,
running his fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her
money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable
sexual overtones – all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor.
It is not essential that the demand, request or requirement be made as a condition for continued employment or for
promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or
offensive environment for the employee. That the acts of Rayala generated an intimidating and hostile environment
for Domingo is clearly shown by the common factual finding of the Investigating Committee, the OP and the CA that
Domingo reported the matter to an officemate and, after the last incident, filed for a leave of absence and requested
transfer to another unit.
96. Philippine Aeolus Automotive United Corp. v. NLRC

GR No. 124617, April 28, 2000
The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of
power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well
substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the
proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the
emotional threshold of the employee.
Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual
impositions. Not many women, especially in this country, are made of the stuff that can endure the agony and
trauma of a public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that
terminated the services of private respondent, we could only speculate how much longer she would keep her
silence. Moreover, few persons are privileged indeed to transfer from one employer to another. The dearth of quality
employment has become a daily "monster" roaming the streets that one may not be expected to give up one's
employment easily but to hang on to it, so to speak, by all tolerable means. Perhaps, to private respondent's mind,
for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere
occupational hazards. This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years,
and one could only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time.
ARTICLE 139
97. Apex Mining Company v. NLRC

G.R. No. 94951, April 22, 1991
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms "househelper" or "domestic
servant" are defined as follows:
The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to
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any person, whether male or female, who renders services in and about the employer'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 employer's family.
The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses of a company,
like petitioner who attends to the needs of the company's guest and other persons availing of said facilities. By the
same token, it cannot be considered to extend to then driver, houseboy, or gardener exclusively working in the
company, the staffhouses and its premises. They may not be considered as within the meaning of a "househelper"
or "domestic servant" as above-defined by law.
The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While
it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a
company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance
they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship
engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer. In such instance, they are employees of the
company or employer in the business concerned entitled to the privileges of a regular employee.
Module 11
HEALTH, SAFETY, AND WELFARE BENEFITS; COMPENSABILITY
98. GSIS v. CA and Heirs of Cate

GR No. 124208, January 28, 2008
Art. 167 (l), Chapter 1, Title II, Book Four of the Labor Code of the Philippines, defines sickness as "any illness
definitely accepted as an occupational disease listed by the [Employees’ Compensation Commission], or any illness
caused by employment, subject to proof that the risk of contracting the same is increased by working conditions."
The same provision empowers ECC to determine and approve occupational diseases and work-related illnesses
that may be considered compensable based on peculiar hazards of employment.
Under Sec. 1 (b), Rule III of the Amended Rules on Employees’ Compensation, "[f]or the sickness and the resulting
disability or death to be compensable, the sickness must be the result of an occupational disease listed under Annex
‘A’ of these Rules with the conditions set therein satisfied; otherwise, proof must be shown that the risk of contracting
the disease is increased by the working conditions."
Osteosarcoma is not listed as an occupational disease in the Amended Rules on Employees’ Compensation.
Hence, it is supposed to be upon the claimant or private respondents to prove by substantial evidence that the risk
of contracting Osteosarcoma was increased by the working conditions of the late Abraham. Substantial evidence
means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The rule
is that awards of compensation cannot rest on speculations and presumptions as the claimant must prove a positive
thing. The application of the rules would mean that absent any proof that the risk of contracting the ailment was
increased by the working conditions of the late Abraham, private respondents would not be entitled to compensation.
99. Salmone v. ECC

GR No. 142392, September 26, 2000
For a sickness and the resulting disability or death to be compensable, the said sickness must be an occupational
disease listed under Annex "A" of said Rules, otherwise, the claimant or employee concerned must prove that the
risk of contracting the disease is increased by the working condition.
She was diagnosed as suffering from "atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia" which, as
heretofore stated, is included within the term cardiovascular diseases. Indisputably, cardiovascular diseases, which,
as herein above-stated include atherosclerotic heart disease, atrial fibrillation, cardiac arrhythmia, are listed as
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compensable occupational diseases in the Rules of the Employees' Compensation Commission, hence, no further
proof of casual relation between the disease and claimant's work is necessary.
The degree of proof required under P. D. No. 626, is merely substantial evidence, which means, "such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion." The claimant must show, at
least, by substantial evidence that the development of the disease is brought largely by the conditions present in
the nature of the job. What the law requires is a reasonable work-connection and not a direct causal relation. It is
enough that the hypothesis on which the workmen's claim is based is probable. Medical opinion to the contrary can
be disregarded especially where there is some basis in the facts for inferring a work- connection. Probability, not
certainty, is the touchtone.
100. Heirs of Deauna v. Fil Star Maritime Corporation

GR No. 191563, June 20, 2012
THE DEATH OF A SEAFARER IS COMPENSABLE WHEN IT OCCURS WHILE STILL IN THE EMPLOYENT
OF THE EMPLOYER.
Article 22.1(b) (CBA) considers an employment as terminated if a seafarer signs off from the vessel due to sickness,
but subject to the provisions of Article 29.
Article 29.1 of the IBF/AMOSUP/IMMAJ CBA provides that the death of a seafarer, for any cause, is compensable
when it occurs while he is in the employment of the company. Article 29.4, on the other hand, clarifies that the
seafarer shall be considered as in the employment of the company for so long as the provisions of Articles 25 and
26 apply and provided the death is directly attributable to sickness or injury that caused the seafarer's employment
to be terminated in accordance with Article 22.1(b).
Under Article 25.3, a seafarer repatriated to the port of his engagement, unfit as a result of sickness, shall be entitled
to medical attention at the company's expense for up to a maximum period of 130 days after repatriation, subject
to the submission of satisfactory medical reports. Article 26.2 further states that a seafarer shall likewise be entitled
to sick pay at the rate equivalent to his basic wage while he remains sick up to a maximum of 130 days. Article 26.4
allows continued entitlement to sick pay beyond the 130-day period, reckoned from repatriation, provided
satisfactory medical reports shall be submitted and endorsed where necessary, by a company-appointed doctor.
101. Debaudin v. SSS

GR No. 148308, September 21, 2007
An employee is entitled to compensation benefits if the sickness is a result of an occupational disease listed under
the Rules on Employees' Compensation; or in case of any other illness, if it is caused by employment, subject to
proof that the risk of contracting the same is increased by the working conditions. This is as it should be because
for an illness to be compensable, it must be (1) directly caused by such employment; (2) aggravated by the
employment; or (3) the result of the nature of such employment. Jurisprudence provides that to establish
compensability of a non-occupational disease, reasonable proof of work-connection and not direct causal relation
is required.
In the present case, petitioner’s chronic open angle glaucoma is not listed as an occupational disease; hence, he
has the burden of proving by substantial evidence, or such relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion, that the nature of his employment or working conditions increased the risk of
contracting the ailment or that its progression or aggravation was brought about thereby.
It is enough that the hypothesis on which the workmen's claim is based is probable. Probability, not the ultimate
degree of certainty, is the test of proof in compensation proceedings since in carrying out and interpreting the
provisions of the Labor Code and its implementing rules and regulations the primordial and paramount consideration
is the employees' welfare.
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102. Austria v. ECC
GR No. 146636, August 12, 2012
The test of whether or not an employee suffers from permanent total disability is a showing of the capacity of the
employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury
or sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does
not come within the coverage of Rule X of the Amended Rules on Employees Compensability (which, in more
detailed manner, describes what constitutes temporary total disability), then the said employee undoubtedly suffers
from permanent total disability regardless of whether or not he loses the use of any part of his body.
Under Section 2 Rule VII of the Amended Rules on Employees Compensation, a disability is total and permanent if
as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous
period exceeding 120 days; and a disability is partial and permanent if as a result of the injury or sickness, the
employee suffers a permanent partial loss of the use of any part of his body. Total disability does not require that
the employee be absolutely disabled, or totally paralyzed. What is necessary is that the injury must be such that
she cannot pursue her usual work and earn therefrom.
Petitioner has been employed as bag piler for twenty (20) years at the Central Azucarera de Tarlac. His duties
require him to carry heavy loads of refined sugar and to perform other manual work. Since his work obviously taxes
so much on his back, his illness which affects his lumbar spine renders him incapable of doing his usual work as
bag piler. Hence, his disability to perform his regular duties may be considered total and permanent.
103. Gatus v. SSS

GR No. 174725, January 26, 2011
The grounds for compensability are set forth in Section 1, Rule III of the Amended Rules on Employees
Compensation (the Amended Rules), the pertinent portion of which states:
RULE III
Compensability
Sec. 1. Grounds x x x
(b) For the sickness and the resulting disability or death to be compensable, the sickness must be the result
of an occupational disease listed under Annex A of these Rules with the conditions set therein satisfied;
otherwise, proof must be shown that the risk of contracting the disease is increased by the working conditions.
Further, under Annex A of the Amended Rules, for an occupational disease and the resulting disability or death to
be compensable, all of the following conditions must be satisfied:
1. The employee's work must involve the risks described herein;
2. The disease was contracted as a result of the employee's exposure to the described risks;
3. The disease was contracted within a period of exposure and under such other factors necessary to
contract it;
4. There was no notorious negligence on the part of the employee.
Cardiovascular diseases are considered as occupational when contracted under any of the following conditions:
(a) If the heart disease was known to have been present during employment there must be proof that an
acute exacerbation clearly precipitated by the unusual strain by reason of the nature of his work.
(b) The strain of work that brings about an acute attack must be of sufficient severity and must be followed
within twenty-four (24) hours by the clinical signs of a cardiac insult to constitute causal relationship.
(c) If a person who was apparently asymptomatic before subjecting himself to strain at work showed signs
and symptoms of cardiac injury during the performance of his work and such symptoms and signs persisted,
it is reasonable to claim a causal relationship (ECC Resolution No. 432, July 20, 1977).
104. Republic v. Mariano

GR No. 139455, March 28, 2003
At the onset, Workmen’s Compensation claims are governed by the laws in force at the time the claimant contacted
the illness. In this case, the applicable rule is Section 1 (b), 13 Rule III, of the Rules Implementing P.D. No. 626.
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Under said Rule, for the sickness to be compensable, the same must be an "occupational disease" included in the
list provided, with the conditions set therein satisfied; otherwise, the claimant must show proof that the risk of
contracting it is increased by the working conditions.
What kind and quantum of evidence would constitute an adequate basis for a reasonable man (not necessarily a
medical scientist) to reach one or the other conclusion, can obviously be determined only on a case-to-case basis.
For reasons herein elaborated, the Court agreed with the appellate court. The ECC itself admitted that the toxic
chemicals to which the claimant was exposed could have caused the Parkinson’s disease, and that the nature of
his work could have caused his ailments. Regardless of the rulings on both ailments, hypertension certainly was a
compensable disease.
105. Magsaysay Maritime Corporation v. Lobusta

GR No. 177578, January 25, 2012
Whether the Labor Code’s provision on permanent total disability applies to seafarers is already a settled matter. In
Palisoc, we cited the earlier case of Remigio v. National Labor Relations Commission where we said:
(1) that the standard employment contract for seafarers was formulated by the POEA pursuant to its
mandate under Executive Order No. 247 “to secure the best terms and conditions of employment of Filipino
contract workers and ensure compliance therewith,” and “to promote and protect the well-being of Filipino
workers overseas”;
(2) that Section 29 of the 1996 POEA Standard Employment Contract itself provides that all rights and
obligations of the parties to the contract, including the annexes thereof, shall be governed by the laws of
the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is
a signatory; and
(3) that even without this provision, a contract of labor is so impressed with public interest that the Civil
Code expressly subjects it to the special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.
Disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent
total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature
that [he] was trained for or accustomed to perform, or any kind of work which a person of [his] mentality and
attainment could do. It does not mean absolute helplessness.
106. SSS v. Azote

GR No. 209742, April 15, 2015
Section 8 (e) and (k) of RA No. 8282, the amendatory law of RA No. 1161 or the Social Security Law expressly
provides that only the legal spouse of the deceased-member is qualified to be the beneficiary of the latter’s SS
benefits.
In this case, there is a concrete proof that Edgardo contracted an earlier marriage with another individual as
evidenced by their marriage contract. Edgardo even acknowledged his married status when he filled out the 1982
Form E-4 designating Rosemarie as his spouse.
It is undisputed that the second marriage of Edgardo with Edna was celebrated at the time when the Family Code
was already in force. Using the parameters outlined in Article 41 of the Family Code, Edna, without doubt, failed to
adduce evidence to prove that the earlier marriage of Edgardo was either annulled or dissolved or whether there
was a declaration of Rosemarie's presumptive death before her marriage to Edgardo. What is apparent is that Edna
was the second wife of Edgardo. Considering that Edna was not able to show that she was the legal spouse of a
deceased-member, she would not qualify under the law to be the beneficiary of the death benefits of Edgardo. It is
of no moment that the first wife, Rosemarie, did not participate or oppose Edna's claim. Rosemarie's non-
participation or her subsequent death did not cure or legitimize the status of Edna.
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107. Marlow Navigation Phil. v. Heirs Ganal
GR No. 220168, June 7, 2017
The death of a seafarer by reason of any work-related injury or illness during the term of his employment is
compensable unless the injury or illness is caused by his willful or criminal act or intentional breach of his duties.
Ganal's act of intentionally jumping overboard, while in a state of intoxication, could be considered as a deliberate
and willful act on his own life which is directly attributable to him. There was no competent proof to show that Ganal's
state of intoxication during the said incident actually deprived him of his consciousness and mental faculties which
would have enabled him to comprehend the consequences of his actions and keep in mind his personal safety.
The words "arising out of' refer to the origin or cause of the accident and are descriptive of its character, while the
words "in the course of' refer to the time, place, and circumstances under which the accident takes place. By the
use of these words, it was not the intention of the legislature to make the employer an insurer against all accidental
injuries which might happen to an employee while in the course of the employment, but only for such injuries arising
from or growing out of the risks peculiar to the nature of work in the scope of the workmen's employment or incidental
to such employment, and accidents in which it is possible to trace the injury to some risk or hazard to which the
employee is exposed in a special degree by reason of such employment.
108. Seapower Shipping Inc., v. Sabanal

GR No. 198544, June 19, 2017
The POEA standard employment contract for Filipino seafarers exempts the employer from liability for death or
injury resulting from the seafarer's willful act BUT evidence of insanity or mental sickness (the seafarer suffered
from complete deprivation of intelligence in committing the act or complete absence of the power to discern the
consequences of his action) may be presented by the heirs as a counter-defense.
In Agile Maritime Resources, Inc. v. Siador, SC held that the insanity or mental illness required to be proven must
be one that deprived him of the full control of his senses; the seafarer's strange behavior alone is insufficient to
prove his insanity. Establishing the insanity of [a deceased seafarer] requires opinion testimony which may be given
by a witness who is intimately acquainted with the person claimed to be insane, or who has rational basis to conclude
that a person was insane based on the witness' own perception of the person, or who is qualified as an expert, such
as a psychiatrist.
108. GSIS v. Pauig

GR No. 210328, January 30, 2017
Compulsory coverage under the GSIS had previously and consistently included regular and permanent employees,
and expressly excluded casual, substitute or temporary employees from its retirement insurance plan. Therefore,
Pauig's casual and temporary service in the government from February 12, 1964 to July 18, 1977 must necessarily
be excluded from the creditable period of service for retirement purposes.
109. CF Sharp Crew Management v. Castillo

GR No. 208215, April 19, 2017
Entitlement of seamen on overseas work to disability benefits is a matter governed, not only by medical findings,
but by law and by contract. Considering that respondent was hired in 2008, the 2000 POEA-SEC applies. The
illness of respondent, cavernoma, is not included in the list of occupational diseases under Section 32-A of the
POEA-SEC. However, Section 20(B) (4) of the contract provides that those illnesses not listed in Section 32 are
disputably presumed as work-related.
The conflicting findings of the company's doctor and the seafarer's physician often stir suits for disability
compensation. As an extrajudicial measure of settling their differences, the POEA-SEC gives the parties the option
of agreeing jointly on a third doctor whose assessment shall break the impasse and shall be the final and binding
diagnosis. The POEA-SEC provides for a procedure to resolve the conflicting findings of a company designated
physician and personal physician. If a doctor appointed by the seafarer disagrees with the assessment, a third
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doctor may be agreed jointly between the Employer and the seafarer. The third doctor's decision shall be final and
binding on both parties.
110. Lemoncito v. BSM Crew Service

GR No. 247409, February 3, 2020
Upon finding that the seafarer suffers a work-related injury or illness, the employer is obligated to refer the former
to a company-designated physician, who has the responsibility to arrive at a definite assessment of the farmer's
fitness or degree of disability within a period of 120 days from repatriation. This period may be extended up to a
maximum of 240 days, if the seafarer requires further medical treatment, subject to the right of the employer to
declare within this extended period that a permanent partial or total disability already exists.
Failure of the company-designated physician to arrive at a definite assessment of the seafarer's fitness to work or
permanent disability within the prescribed periods and if the seafarer's medical condition remains unresolved, the
law steps in to consider the latter's disability as total and permanent.
111. Abundo v. Magsaysay Maritime

GR No. 222348, November 20, 2019
Referral to a third doctor as provided in Section 20(A)(3) of the POEA-SEC is mandatory in case there are
disagreements made by the company-designated physician and the seafarer’s chosen physician as to his medical
condition. Citing the cases of Murillo v. Philippine Transmarine Carriers, Inc., and Dionio v. Trans-Global Maritime
Agency, Inc., referral to a third doctor is mandatory, and that the seafarer’s failure to abide thereby is a breach of
the POEA-SEC which makes the assessment of the company-designated physician final and binding.
However, the SC ruled that before a seafarer should be compelled to initiate referral to a third doctor, there must
be a final and categorical assessment made by the company-designated physician as to the seafarer’s disability
within 120/240-day period. Otherwise, the seafarer shall be considered permanently disabled by operation of law.
Consequently, the absence of a final assessment by the company-designated physician makes the rule on third-
doctor-referral inapplicable in the instant case.
OTHER COMPENSABILITY CASES (Azucena)
1. Belarmino v. ECC
GR No. 90104, May 11, 1990
Condition of the classroom causing Belarmino to slip and fall and suffer injury as a result; the fall precipitated
abdominal pains, and premature delivery with tragic consequences, and that, was the cause of her septicemia post
partum. Her fall then is the proximate or responsible cause, set in motion with unbroken chain of events leading to
her death. Therefore, her primary injury arouse in the course of her employment; therefore compensable.
2. Himoguin v. ECC
GR No. 84307, April 17, 1989
The concept of workplace cannot be always be applied to a soldier on active duty status, and must go to where his
company is stationed. Sgt. Hinoguin and his companions securing a lawful permission cannot be very different from
a place where they are required to go by their commanding officer. Note that they are not on vacation leave; and
by virtue of the fact that a soldier on active duty is really on duty 24 hours a day, and the Line of Duty Board already
determined that the death occured “in line of duty”, he died in the course of performance of official functions and his
death is compensable. A soldier should be presumed to be on official duty unless he is shown to have clearly and
unequivocally put aside that status or condition temporarily.
3. GSIS v. CA and Alegre

GR No. 128524, April 20, 1999
For death to become compensable, the conditions must be followed:

1. Employee must have been injured at the place where his work requires him to be;
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2. The employee must have been performing his official functions;
3. Where the injury was sustained elsewhere, the employee must have been executing an order for the employer.
In the case at bar, Alegre at the time of his death is ferrying passengers for a fee, an intrinsically private and unofficial
nature. In the absence of prior authority, like in Hinoguin, or peacekeeping nature of the act attended to by the
policeman, there is no justification in holding that SPO2 Alegre met the requirements set forth in ECC Guidelines.
The 24-hour duty doctrine should not be sweepingly applied to all acts and circumstances causing the death of a
police officer but only to those which, although not an official line of duty, are nonetheless, basically police service
in character.
4. Valeriano v. ECC
GR No. 136200, June 8, 2000
Applying the principle laid down in the Alegre case, the 24-hour doctrine is not meant to embrace all acts and
circumstances of an employee though he be on active “on call” duty. Valeriano was neither at his assigned work
place nor in pursuit of the orders of his superiors when he met the accident. He was also not doing an act within
his duty and authority as a firetruck driver, or any other act of such nature, at the time he sustained his injuries. In
fact, he was pursuing a purely personal and social function when the accident happened. The accident not work-
connected was, therefore, non-compensable.
5. IDECO v. WCC
GR No. L-26341, November 27, 1978
General rule: In going and coming rule, in the absence of special circumstances, an employee injured in, going to,
or coming from, his place of work is excluded from the benefits of workmen’s compensation acts. Exception:
1. going to or from his work on the premises of his employer;

2. where he is about to enter or about to leave the premises by way of customary or exclusive means of ingress or
egress;
3. employee is charged, while on his way to or from his place or at his home, during his employment, with some
duty or special errand connected with his employment;
4. employer provides, as an incident of the employment, means of transportation to and from the place of
employment.
The fact that the assault was unexplained is no matter; if it happens in the immediate proximity, it arose out of
employment.
6. Alano v. ECC
GR No. L-48594, March 16, 1988
The deceased died while going to work; she was at the place where her job necessarily required her to be if she
reach her place of work on time. Her employment required her to be there. Therefore, it is compensable.
7. Lazo v. ECC
GR No. 78617, June 18, 1990
The claim is compensable. Employee left his station several hours after his regular hours of duty because his
reliever failed to arrive; and hence rendered overtime. Employment includes not only the actual doing of the work,
but a reasonable margin of time and space necessary to be used in passing to and from the place where the work
is to be done.
8. Menez v. ECC
GR No. L-48488, April 25, 1980
An occupational disease is one which results from the nature of the employment; Nature of the employment is
meant conditions to which all employees of a class are subject and which produce the disease as a natural incident
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of a particular occupation. To be occupational, the disease must be one due wholly to causes and conditions which
are normal and constantly present and characteristic of the particular occupation, and that science and industry
have not yet learned how to eliminate. From there, it may be considered that the aforestated disease may be
occupational disease.
In the case at bar:

a) All public high school teachers are admittedly the most underpaid but overworked employees of the government;
b) subject to emotional stress;
c) her workplace appears to be a tough area, inhabited by lawless elements, aggravated by heavy pollution and the
stinking smell of the Estero de la Reina neaby;
d) she, like any other women, are the most vulnerable to unhealthy conditions therein.
Even if the aforestated is not an occupational disease, there is ample proof that the disease is caused by the risks
and adverse working conditions above-mentioned.
9. Narazo v. ECC
GR No. 80157, February 6, 1990
The death of petitioner’s husband is caused by, “Uremia due to obstructive nephropathy and benign prostatic
hypertrophy”, admittedly not among those listed as occupational disease. One of it causes, as it appears, is the
obstruction of the flow of urinary waste products. The nature of the work of the deceased as Budget Examiner in
the Office of the Governor dealt with the detailed preparation of the budget, and had to sit for hours and even delay
and even forego urination not to interrupt the flow of concentration, in addition to tension and pressure aggravating
the situation.
The cause of death is work-connected, i.e. the risk of contracting the illness was aggravated by the nature of the
work, so much so that the petitioner is entitled to receive compensation benefits for his death. Note that as the facts
appear, the risk of contracting the disease, though not directly caused by its nature, is aggravated by their working
habits necessitated by demands of job efficiency
10. Limbo v. ECC

GR No. 146891, July 30, 2002
Despite the fact that the disease: end-stage renal disease secondary to uric acid nephtopathy” is not among the
Occupational Diseases compensable, it would not automatically bar petitioner’s claim so long as he could prove
that the risk of contracting the illness was increased by his working conditions. Petitioner’s job description is that he
is responsible for the following:
1. Territory’s collection, merchandising, market hygiene, and promotion goals;
2. Nestle’s principal satisfaction provider to the company’s customers and business partners, govt and others;
3. Principal Liaison of the territory with the National Sales Manager;
4. Leads and manages sales force and third party support.
Considering the workload and areas of responsibility of petitioner, it is not unlikely for him to develop hypertension,
which in turn led to uremia.
11. Raro v. ECC

GR No. 58445, April 27, 1989
Jurisprudence on compensability of cancer has become a source of confusion among the claimants and
government agencies enforcing the ECL.
The problem lies on the inherent difficulty in applying the new principle of “proof of increased risk”. Note that there
are two approaches to a solution in where it cannot be proved that the risk of contracting an illness not listed as
occupational disease was increased by claimant’s working conditions:
1. if a claimant cannot prove the necessary work connection because the causes of disease are still unknown, it
must be presumed that the working conditions increased the risk of contracting the ailment; or
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2. if there is no proof of required work connection, the disease is not compensable because the law says so.
Unless it be shown that a particular form of cancer is caused by specific working conditions, the Court cannot
conclude that it was the employment which increased the risk of contracting the disease.
12. NAESS Shipping v. NLRC

GR No. 73441, September 4, 1987
No law or rule would make it illegal for an employer to assume the obligation to pay death benefits in favor of his
employee in their contract of employment. Since NAESS freely bound itself (in the CBA) to a contract which on its
face makes it unqualifiedly liable to pay compensation benefits while in its service, regardless of whether or not it
intended to make itself the insurer, in the legal sense, NAESS cannot escape liability. In short, NAESS is liable
under the contract which covers “loss of life” during employment regardless of the cause of death (in this case,
suicide).
13. Solidum v. GSIS

ECC Case No. 4061, November 23, 1988
ECC noted that the deceased pointed the muzzle of his rifle to himself and squeezed its trigger causing his death.
Such an act constitute notorious negligence. Note that the compensation program under the appellant seeks relief
is designed to compensate only the working men who are victims of work-connected injuries and contingencies. In
this case, it is attended by notorious negligence therefore not compensable.
14. Quizon v. GSIS

ECC Case No. 3015, October 26, 1987
The ECC’s belief that there is indeed negligence, but should not be perceived as notorious, as perceived by GSIS.
Note that NOTORIOUS NEGLIGENCE signifies deliberate act of the employee to disregard his own personal safety;
Disobedience to rules does not in itself constitute notorious negligence, if no intention can be attributed to the injured
to end his life.
15. GSIS v. CA and Balais

GR No. 117572, January 29, 1998
It is possible that an injury which at first was considered to be temporary may later on become permanent; or one
who suffers partial disability becomes totally and permanently disabled from the same cause. The Court has ruled
that disability should not be understood strictly on its medical significance, but on the loss of earning capacity. Note
that the private respondent’s persistent illness forced her to retire early which, in turn, resulted in her unemployment,
and loss of earning capacity. Loss of earning capacity here does not mean state of absolute helplessness, but
inability to do substantially customary and usual manner.
16. Central Azucarera v. De Leon

GR No. L-10036, December 28, 1957
The fact of new employment, even if proven true, would not in itself necessarily affect the laborer’s claim for
compensation for a permanent partial disability. An injured laborer’s incapacity for work is not to be measured solely
by the wages he receives. It may indicate:
1. Employee as mere beneficiary of a mere gratuity and not actually earing “wages”;
2. That the employee, considering his education and training, has fitted himself for more remunerative employment;
3. Employee works longer hours than he did before his injury, his hourly remuneration also increased;
4. General change in wage scales has taken place for the type of work;
5. New wage are intended as an inducement to him to refrain from pursuing a claim;
6. Employee before the injury was younger or a minor; or
7. That the employment in which the employee was employed was of uncertain duration.
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Module 12
SSS LAW
112. SSS v. Azote

G.R. No. 209741, April 15, 2015
Section 8 (e) and (k) of RA No. 8282, the amendatory law of RA No. 1161 or the Social Security Law expressly
provides that only the legal spouse of the deceased-member is qualified to be the beneficiary of the latter’s SS
benefits.
In this case, there is a concrete proof that Edgardo contracted an earlier marriage with another individual as
evidenced by their marriage contract. Edgardo even acknowledged his married status when he filled out the 1982
Form E-4 designating Rosemarie as his spouse.
It is undisputed that the second marriage of Edgardo with Edna was celebrated at the time when the Family Code
was already in force. Using the parameters outlined in Article 41 of the Family Code, Edna, without doubt, failed to
adduce evidence to prove that the earlier marriage of Edgardo was either annulled or dissolved or whether there
was a declaration of Rosemarie's presumptive death before her marriage to Edgardo. What is apparent is that
Edna was the second wife of Edgardo. Considering that Edna was not able to show that she was the legal spouse
of a deceased-member, she would not qualify under the law to be the beneficiary of the death benefits of
Edgardo. It is of no moment that the first wife, Rosemarie, did not participate or oppose Edna's claim. Rosemarie's
non-participation or her subsequent death did not cure or legitimize the status of Edna.
113. SSS v. Favila

GR No. 170195, March 28, 2011
Under Sec. 8(e) and (k) of RA 1161, for a spouse to qualify as a primary beneficiary under paragraph (k) thereof,
he/she must not only be a legitimate spouse but also a dependent as defined under paragraph (e), that is, one
who is dependent upon the member for support.
In Re: Application for Survivors Benefits of Manlavi, the Court defined "dependent" as "one who derives his or her
main support from another or relying on, or subject to, someone else for support; not able to exist or sustain oneself,
or to perform anything without the will, power or aid of someone else.
In SSS v. Aguas, "the obvious conclusion is that a wife who is already separated de facto from her husband cannot
be said to be dependent for support upon the husband, absent any showing to the contrary. Conversely, if it is
proved that the husband and wife were still living together at the time of his death, it would be safe to presume that
she was dependent on the husband for support, unless it is shown that she is capable of providing for herself."
In this case, aside from Teresita’s bare allegation that she was dependent upon her husband for support and her
misplaced reliance on the presumption of dependency by reason of her valid and then subsisting marriage with
Florante, Teresita has not presented sufficient evidence to discharge her burden of proving that she was dependent
upon her husband for support at the time of his death. On the contrary, what is clear is that she and Florante had
already been separated for about 17 years prior to the latters death as Florante was in fact, living with his common
law wife when he died. Whoever claims entitlement to the benefits provided by law should establish his or her right
thereto by substantial evidence.
114. Mendoza v. People

GR No. 183891, October 19, 2011
RA No. 9903 grants condonation only to employers with delinquent contributions or pending cases for their
delinquencies and who pay their delinquencies within the six (6)-month period set by the law. Mere payment of
unpaid contributions does not suffice; it is payment within, and only within, the six (6)-month availment period that
triggers the applicability of RA No. 9903.
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True, the petitioner’s case was pending with us when RA No. 9903 was passed. Unfortunately for him, he paid his
delinquent SSS contributions in 2007. By paying outside of the availment period, the petitioner effectively placed
himself outside the benevolent sphere of RA No. 9903. This is how the law is written: it condones employers — and
only those employers — with unpaid SSS contributions or with pending cases who pay within the six (6)-month
period following the law’s date of effectivity (2010). Dura lex, sed lex.
115. SSS v. Signey

GR No. 173582, January 28, 2008
For the purposes of this Act, the following terms shall, unless the context indicates otherwise, have the following
meanings:
xxx
(e) Dependents. The dependent shall be the following:
1) The legal spouse entitled by law to receive support from the member;
2) The legitimate, legitimated, or legally adopted, and illegitimate child who is unmarried, not
gainfully employed and has not reached twenty-one years (21) of age, or if over twenty-one (21)
years of age, he is congenitally or while still a minor has been permanently incapacitated and
incapable of self-support, physically or mentally; and
3) The parent who is receiving regular support from the member.
(k) Beneficiaries The dependent spouse until he or she remarries, the dependent legitimate, legitimated or
legally adopted, and illegitimate children, who shall be the primary beneficiaries of the member: Provided,
That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate,
legitimated or legally adopted children: Provided, further, That in the absence of the dependent legitimate,
legitimated or legally adopted children of the member, his/her dependent illegitimate children shall be
entitled to one hundred percent (100%) of the benefits. In their absence, the dependent parents who shall
be the secondary beneficiaries of the member. In the absence of all of the foregoing, any other person
designated by the member as his/her secondary beneficiary.
Had the legitimate child of the deceased and Editha survived and qualified as a dependent under the SSS Law,
Ginalyn and Rodelyn would have been entitled to a share equivalent to only 50% of the share of the said legitimate
child. Since the legitimate child of the deceased predeceased him, Ginalyn and Rodelyn, as the only qualified
primary beneficiaries of the deceased, are entitled to 100% of the benefits.
116. SSS v. Jarque vda. de Bailon

GR No. 165545, March 24, 2006
SSS and/or SSC has no jurisdiction to declare a marriage null and void. Although SSC is empowered to settle any
dispute with respect to SSS coverage, benefits and contributions, in so exercising such power, however, it cannot
review, much less reverse, decisions rendered by courts of law as it did in the case at bar when it declared that the
CFI Order was obtained through fraud and subsequently disregarded the same, making its own findings with respect
to the validity of Bailon and Alice’s marriage on the one hand and the invalidity of Bailon and respondent’s marriage
on the other.
In interfering with and passing upon the CFI Order, the SSC virtually acted as an appellate court. The law does not
give the SSC unfettered discretion to trifle with orders of regular courts in the exercise of its authority to determine
the beneficiaries of the SSS.
GSIS LAW
117. Gersip Association, Inc. v. GSIS

GR No. 18982, October 16, 2013
Re: nature of the funds under the Provident Fund Plan of GSIS to GSIS Employees
A provident fund is a type of retirement plan where both the employer and employee make fixed contributions. Out
of the accumulated fund and its earnings, employees receive benefits upon their retirement, separation from service
or disability.
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The GSIS Provident Fund was established through Resolution No. 201 of the GSIS Board. The GSIS Board likewise
adopted a set of rules and regulations (PFRR) to govern the membership, fund contributions and investment,
payment of benefits and the trustees.
On July 23, 1981, a Trust Agreement was executed between respondent and the Committee. The latter was tasked
to administer, manage and invest the Fund, out of which it shall pay the benefits due to members or their
beneficiaries in accordance with the policies, rules and regulations approved by respondent. The Agreement
likewise explicitly declares:
SECTION 2. - The COMMITTEE OF TRUSTEES shall hold title and manage the FUND in trust for the
exclusive benefit of the members and their beneficiaries as provided for in the PLAN. No part of the FUND
shall be used for, or diverted to any purpose or purposes other than for the exclusive benefits of such
members and their beneficiaries.
There is no doubt that respondent intended to establish a trust fund from the employees’ contributions (5% of
monthly salary) and its own contributions (45% of each member’s monthly salary and all unremitted Employees
Welfare contributions). We cannot accept petitioners’ submission that respondent could not impose terms and
conditions on the availment of benefits from the Fund on the ground that members already own respondent’s
contributions from the moment such was remitted to their account. Petitioners’ assertion that the Plan was a purely
contractual obligation on the part of respondent is likewise mistaken.
Republic Act No. 8291, otherwise known as "The Government Service Insurance System Act of 1997," mandated
respondent to maintain a provident fund subject to rules and regulations it may adopt. Thus:
SECTION 41. Powers and Functions of the GSIS. — The GSIS shall exercise the following powers and
functions:
xxxx
(s) to maintain a provident fund , which consists of contributions made by both the GSIS and its officials
and employees and their earnings, for the payment of benefits to such officials and employees or their heirs
under such terms and conditions as it may prescribe;
Under the PFRR, however, the GRF is allocated for specific purposes and not intended for distribution to members.
It is clear that while respondent’s monthly contributions are credited to the account of each member, and the same
were received by petitioners upon their retirement, they were entitled to only a proportionate share of the earnings
thereon. The benefits of retiring members of the Fund are covered by Section 1(b), Article V which states:
(b) Retirement. In the event the separation from the System is due to retirement under existing laws, such
as P.D. 1146, R.A. 660 or R.A. 1616, irrespective of the length of membership to the Fund, the retiree shall
be entitled to withdraw the entire amount of his contributions to the Fund, as well as the corresponding
proportionate share of the accumulated earnings thereon, and in addition, 100% of the System’s
contributions, plus the proportionate earnings thereon.
118. GSIS v. De Leon

GR No. 186560, November 17, 2010
Disqualification from receiving retirement benefits under R.A. No. 910 does not mean that he is disqualified from
receiving any retirement benefit under any other existing retirement law.
Retirement laws, in particular, are liberally construed in favor of the retiree because their objective is to provide for
the retiree’s sustenance and, hopefully, even comfort, when he no longer has the capability to earn a livelihood.
The liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security, and
well-being of government employees may be enhanced. Indeed, retirement laws are liberally construed and
administered in favor of the persons intended to be benefited, and all doubts are resolved in favor of the retiree to
achieve their humanitarian purpose.
Since respondent has been declared ineligible to retire under R.A. No. 910, GSIS should simply apply the proper
retirement law to respondent’s claim, in substitution of R.A. No. 910. In this way, GSIS would be faithful to its
mandate to administer retirement laws in the spirit in which they have been enacted, i.e., to provide retirees the
182
wherewithal to live a life of relative comfort and security after years of service to the government. Respondent will
not receive --- and GSIS is under no obligation to give him --- more than what is due him under the proper retirement
law.
It must be emphasized that P.D. No. 1146 specifically mandates that a retiree is entitled to monthly pension for life.
As this Court previously held: considering the mandatory salary deductions from the government employee, the
government pensions do not constitute mere gratuity but form part of compensation.
In a pension plan where employee participation is mandatory, the prevailing view is that employees have contractual
or vested rights in the pension where the pension is part of the terms of employment. The reason for providing
retirement benefits is to compensate service to the government. Retirement benefits to government employees are
part of emolument to encourage and retain qualified employees in the government service. Retirement benefits to
government employees reward them for giving the best years of their lives in the service of their country.
Thus, where the employee retires and meets the eligibility requirements, he acquires a vested right to benefits that
is protected by the due process clause. Retirees enjoy a protected property interest whenever they acquire a right
to immediate payment under pre-existing law. Thus, a pensioner acquires a vested right to benefits that have
become due as provided under the terms of the public employees’ pension statute. No law can deprive such person
of his pension rights without due process of law, that is, without notice and opportunity to be heard.
119. GSIS v. Alcaraz

GR No. 187474, February 6, 2013
Resolution No. 432 provides (as one of the conditions) that a heart disease is compensable if it was known to have
been present during employment, there must be proof that an acute exacerbation was clearly precipitated by the
unusual strain by reason of the nature of his work. Based on the evidence on record, we find as the CA did, that the
nature of Bernardo’s duties and the conditions under which he worked were such as to eventually cause the onset
of his myocardial infarction. The stresses, the strain, and the exposure to street pollution and to the elements that
Bernardo had to bear for almost 29 years are all too real to be ignored. They cannot but lead to a deterioration of
health particularly with the contributing factors of diabetes and pulmonary disease.
Bernardo had in fact been a walking time bomb ready to explode towards the end of his employment days. Records
show that the debilitating effect of Bernardo’s working conditions on his health manifested itself several months
before his death.
As a final point, we take this occasion to reiterate that as an agency charged by law with the implementation of
social justice guaranteed and secured by the Constitution – the ECC (as well as the GSIS and the SSS) – should
adopt a liberal attitude in favor of the employees in deciding claims for compensability, especially where there is
some basis in the facts for inferring a work connection to the accident or to the illness. This is what the Constitution
dictates.
xxXxx
We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of his employers, must look up to the
law for his protection. Fittingly, that law regards him with tenderness and even favor and always with faith and hope in his capacity
to help in shaping the nation's future. It is error to take him for granted. He deserves our abiding respect. How society treats him
will determine whether the knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance and
revenge. The choice is obvious, of course. If we cherish him as we should, we must resolve to lighten "the weight of centuries" of
exploitation and disdain that bends his back but does not bow his head.
(Cebu Royal Plant v. Deputy Minister of Labor, G.R. No. L-58639, August 12, 1987)
183

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LABOR LAW REVIEW

REVIEW OF EMPLOYER-EMPLOYEE RELATIONSHIP

1. Javier v. Fly Ace Corporation

2. Southeast International Rattan, Inc v. Coming

3. Tenazas v. R. Villegas Taxi Transportation

4. Sagun v. ANZ Global

5. LVN Pictures v. Philippine Musicians Guild

6. Paguio Transport, Corp. v. NLRC

8. Dy Keh Beng v. International Labor and Marine Union of the Philippines

9. Insular Life Assurance Company v. NLRC and Basiao

10. Tongko v. Manulife

NB: Motion for Reconsideration (June 29, 2010)

NB: Motion for Reconsideration (January 25, 2011)

11. AFP Mutual Benefit Association v. NLRC

12. Encyclopaedia Brittanica v. NLRC

13. HSY Marketing v. Villastique

14. Coca-Cola Bottlers Phils., Inc. v. Climaco

15. Corporal v. NLRC

16. Maraguinot v. NLRC GR NO. 120969 January 22, 1998

19. Calamba Medical Center v. NLRC

18. Jardin v. NLRC

19. Sonza v. ABSCBN

20. Begino v. ABSCBN

22. TAPE, Inc. v. Servana

24. WPP Marketing v. Galera

25. Matling Industrial v. Coros

26. Malcaba v. Prohealth Pharma Philippines GR NO. 209085 June 6, 2018

27. Republic v. Asiapro Cooperative GR NO. 172101 November 23, 2007

28. Locsin v. PLDT G.R. No. 185251 October 2, 2009

29. Professional Services v. CA

31. Bernarte v. PBA

32. Chavez v. NLRC

33. Felix v. Buenaseda

34. Autobus Transport v. Bautista

35. David v. Macasio

37. Weslayan University v. Maglaya

38. Nestle Phils. v. Puedan

REASONABLE CAUSAL CONNECTION RULE

40. San Miguel Corporation v. Ectuban

41. Kawachi v. Del Quero

43. Indophil Textile Mills v. Adviento

Labor Dispute, Definition

45. PAL v. NLRC

46. San Miguel Corporation Employees Union v. Bersamira

Managerial Employee, Definition

47. Penaranda v. Baganga Plywood Corporation

48. Pondoc v. NLRC GR NO. 116347 October 3, 1996

49. Villamaria v. CA and Bustamante GR NO. 165881 April 19, 2006

40. Allan Mendoza v. Manila Water Employees Union

51. Atlas Farms v. NLRC

52. Negros Metal v. Lamayo

A quick perusal of the pertinent provision of the CBA show:

54. University of Immaculate Conception v. NLRC

55. Austria v. NLRC

57. Locsin v. Nissan Lease Philippines

Re: jurisdiction over issues on corporate officer’s dismissal

58. Wesleyan University v. Maglaya