University of the Philippines

COLLEGE OF LAW

LABOR LAW I
TFernandez Notes*
1ST Semester, AY 2008-2009
I.

1.
2.

Introduction to Labor Law

LABOR: Concept
a. In its general sense physical toil (skilled or unskilled)
b. In its technical sense work force (working or potential workers)
LABOR LAW:
a.
Definition
b.
1. Justification: Social Justice aim and reason or justification of labor law,
promotion of public welfare.

3.

Classification
a. Labor Standards

minimum requirements prescribed by existing laws, rules and regulations relating to

wages, hours of work, cost of living, monetary and welfare benefits and
occupational, safety and health hazards
material or subject to be processed

b. Labor Relations
-

Regulates the institutional relationship between workers organized into a union and
employers
Defines status, rights and duties that govern interactions of employers and
employees

c. Welfare Legislation
-

4.

Designed to take care of contingencies that may affect the workers

Particular kind of protection or benefits for furtherance of social welfare and
justice.

Basis
a. Economic Basis
inherent inequality between labor and capital
Azucena: 7 Principles underlying code
i.
Labor relations to be responsive and responsible for national development
ii.
Labor laws to substitute rationality for controntation
iii.
Labor justice as expeditious without sacrificing due process
iv.
Manpower development as a major dimension of labor policy
v.
Global labor market
vi.
Labor laws for adequate resources and capable machinery to sustain implementation
vii.
Policy making through tripartism of government, laborer and employer

b. Legal Basis
i.
1987 constitution, *1935 Const Art XIV, Section 6, *1973 Const Art II Sec
6, 9
PNB v. Cabansag
Florence Cabansag was hired by the PNB Branch in Singapore and was terminated (even if her good
work was commended) allegedly due to cost cutting then because of the need for a Chinese speaking
employee. She was not properly notified by her boss and she was not given a chance to be heard.
There was no due process. PNB should have 1) apprised her of her particular act or omission 2) inform
her of their decision to dismiss her. 282, 283, 284 valid grounds of dismissal. She did not commit any
offenses or omissions under 282, the business was not closing (283) and she did not have any diseases
(284). She was simple forced to resign and was illegally dismissed. contract of employment is imbued
with public interest and cannot insinuate themselves from impact of labor laws

i.a. Right to Security of Tenure

Casimiro v. Stern Real Estate, Inc
Stern owns Rembrandt Hotel and due to losses, they offered a Special Separation Program which the
petitioners did not avail of. Rembrandt, the court held, gave valid notifications and proved their reason
for retrenching (283) due to major business losses. Quitclaims were also voluntarily signed by Casimiro
and others after receiving their pay and are thus valid and binding on them. There is no illegal
dismissal. Retrenchment termination of employment initiated by employer without fault or prejudice
to the employees resorted to by management in times of business recession It is not the function of
law to compel a business to operate at a continuing loss simply because it has to maintain its workers
in employment. Such an act would be tantamount to taking of property without due process of law

ii.
Civil Code
Innodata Philippines, Inc. v. Quejada-Lopez
Quejada and Natividad were employed as formatters for Innodata under a supposed fixed-term
employment. They were separated from the company and therefore they files a case for illegal
dismissal. The court ruled that the fixed-term employment agreement fixed not only a one year term
but also a 3 month probationary period where the employer can pre terminate the employment
therefore making it illegal.
blocking the acquisition of tenure by employees deserve to be struck down for being contrary to law,
morals, good customs, public order and public policy.

iii.
iv.
-

Labor Code and Omnibus Rules Implementing to Labor Code

International Conventions, Recommendations

International Labor Organization> tripartism: government representatives, employees,

workers organization. Philippines is an ILO member
Universal Declaration of Human Rights (23, 24, 25, Covenant on Economic, Social and Cultural
Rights)

International School Alliance of Educators v. Quisumbing

Local Hires of the ISchool claim discrimination in pay as compared to foreign hires (those who are hired
from abroad to do expatriate teaching here) who earn 25% more than them and are entitled to
benefits such as housing. The court ruled that salaries could not be used to entice foreign hires. (but
lodging is okay) public policy abhors inequality and discrimination. Foreign hires do not perform 25%
more efficiently and thus should be paid equal pay for work of equal value.

5. The Labor Code of the Philippines

a. Brief History: began in 1968 under Blas Ople to address needs of economic
development and justice.
b. Name of Decree (Art 1) Labor Code of the Philippines PD 442
c. Date of Effectivity (2) 6 mos. After promulgation which was on (May 1,
1974) therefore, Nov 1, 1974
d. Declaration of Basic Policy (3) Full employment, Equal work opportunity,
Security of Tenure, etc.
e. Construction in Favor of Labor (4) in favor of safety and decent living of the
laborer however, it must be noted that the management also has rights
(management prerogatives)
Reyes v. CA
Dr. Pedrito demanded PhilMalay for separation payment similar to its employees as well as for
underpayment of salary, a new car, life insurance policy, office rentals and legal service costs he
incurred. The LA claimed that the retrenchment of PhilM is valid. NLRC reduced the awards. His appeal
was dismissed by CA for failure to attach position paper, decision by Labor Arbiter and Memorandul of
Appeal.
Leniency should be applied. If the rules of procedure are applied very rigidly, justice would be
defeated. Labor laws mandate speedy disposition of cases without sacrificing fundamental requisites
of due process

Salinas Jr. v.NLRC

Constant renewals by AG&P of Salinas etc. contracts as cement workers etc. as project based
employees but did not comply with department order which requires them to submit to DOLE the
notice and reason of termination upon the end of the project. It would be prejudicial and would run
counter to the constitutional mandate on social justice and protection to labor

f.

Technical Rules not binding (221) 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 as well as due process.
Huntington Steel Products, Inc. v. NLRC

Complaint for illegal dismissal by Orbase and 11 other employees against Huntington Steel Products
was dismissed due to the lack of a certificate of non-forum shopping required by Circular No. 28-91
with the petitioners commenting that the complaint was a mere scrap of paper.
Labor cases must be supported by evidence. Disregarding technical rules of procedure will not sacrifice
the fundamental requisites of due process ALSO the complaint form supplied by the LA were just filled
up by them and therefore, respondents should not be faulted.
CA ruled that technical rules shall not be applied strictly if the result would be detrimental to the
working man REMEDIED BY A POSITION PAPER.

Industrial Timber Corp v. Ababon (2 petitions are consolidated as one)

Industrial Plywood Group Corporation did not continue to lease the plant to ITC (herein petitioner)
which led to ITC to close its operations. ITC posted a final notice of closure of business and asked its
workers to collect the benefits due them. Ababon is one of the 387 workers laid off due to the plants
shutdown and thus he and 96 of his co-workers filed a case of illegal dismissal. LA required (1/2 mo)
separation pay, reinstatement etc. ITC filed with the NLRC who reinstated the LAs decision. Ababon
filed with the SC and was referred to the CA which ruled that retrenchment was valid because of proof
on non-renewal of license HOWEVER, ITC did not properly notify its employees (1 month before) 50k as
damages was awarded.
ITC: they were 3 days late in filing the MoR and thus, CA cannot validly overturn NLRCs decision.
Apply liberality in applying technical rules. Substantial Justice is best served by allowing the petition
for relief despite the procedural defect of PETITIONERS of filing the motion for reconsideration 3 days
late INJUSTICE TO EMPLOYER.
Art 218 (c), LC: it is within power of commission to correct, amend, or waive any error, defect or
irregularity whether in substance or in form

g. Rules and Regulations or Limitation (5)

-

Department of Labor and Employment shall promulgate necessary regulations which shall
have the force of law and is entitled to great respect + ANY OTHER (TO ADMINISTER, ENFORCE
AND IMPLEMENT)
EXCEPT if its in the excess of authority

Kapisanan ng mga manggagawang Pinagyakap v. NLRC

The negotiated daily wage increase of P. 1.33 could be credited to and deducted from the P60/monthly
living allowance which in effect, nullified the P 1. 33 increase. The LA ruled according to Sec 1(k) of the
Labor departments rules implementing PD 1123 (made to protect wages against inflation) which
exempts those that have granted the 60-peso monthly allowance from paying for anything extra. ALL
DOUBTS SHALL BE RESOLVED IN FAVOR OF LABOR.
In the Philippine Apparel case, this paragraph was already declared void for contravening the statutory
authority granted to the secretary of Labor., Due to facts as well as the ruling with regard to dismissal
for lack to serve a Memorandum of Agreement as being inconsistent with the requirement of social
justice to terminate employee of his employment on a mere technicality, the petition is granted
h. Applicability (6) All rights and benefits granted to workers under this Code shall, except as
may otherwise be provided herein, apply alike to all workers, whether agricultural or
nonagricultural.
276: Government employees. The terms and conditions of employment of all government
employeesshall be governed by the Civil Service Law, rules and regulationsHowever, there shall be
no reduction of benefits and other terms and conditions of employment being enjoyed by them at
the time of the adoption of this Code.
Consti Art IX- B Sec (2) 1: The civil service embraces all branches, subdivisions, instrumentalities,
and agencies of the Government, including government-owned or controlled corporations with original
charters.

PNOC Energy Development Corp v. NLRC

Danilo Mercado was dismissed for alleged acts of dishonesty (negotiating cost then pocketing the
money)
1. The decision was made when the 1987 constitution was in effect and not the 1973 constitution
therefore it is already the Labor Code and not the Civil Service Decree that it in effect. The test is the
manner of its creation, those under the civil service law, CS. Those created under the General

Corporation Law, are under the Labor Code. ALSO case arose in 1973 but it was promulgated on July
1987, therefore under the 1987 constitution.
2. Also, there was no evidence of the alleged violations, in fact the testimony as well as the
explanations provided by Mercados affidavit is satisfactory for the Labor Arbiter.

i.

Enforcement and sanctions

217 a Labor Arbiters Jurisdiction

128 Visitorial and enforcement power.
129 Recovery of wages, simple money claims and other benefits.
288 Penalties.
289 Who are liable when committed by other than natural person.
290 Offenses.
291 Money claims
292 Institution of Money claims
Art III Constitution
Sec 11 Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be
denied to any person by reason of poverty.
16 All persons shall have the right to a speedy disposition of their cases before all judicial, quasijudicial, or administrative bodies.

6.

Work Relationship
a. Definition

97
a: person- individual, partner etc
B: employer person acting directly or indirectly in interest of employer
167
c: employee employed by employer
F: employer employing employee
G: employee compulsorily covered by GSIS
H: person - any individual, partnership, firm, association, trust, corporation or legal representative
thereof.
212
e: employer acting in the interest of employer
F: employee: in employ of employer even those whose work has ceased given unfair labor practices.

b. Employer Employee relationship

1.
Factors/ Tests
Four Fold Test of ER-EE relationship
i.
Selection and engagement of EE
ii.
Payment of Wages by ER
iii.
Power of Dismissal is with ER
iv.
Control Test: is the end achieved controlled by ER?;
manner or means it is achieved controlled by ER?
Television and Prod. Exponents Inc. v. RC Servana

Roberto Servana served as a security guard for TAPE and was terminated due to TAPEs decision to hire
a professional security agency. TAPE says that Servana is an independent contractor, a talent and part
of the support group. His termination, TAPE said, was due to redundancy. The court ruled that there is,
in fact a ER-EE relationship because the four-fold test and the ID given as well as the bundy cards of
Servana serve as proof of the employer employee relationship of TAPE and Servana (Servana was
hired, paid by and controlled by respondents) (even if program employee, already regularized, more
than 1 yr, 281). Nominal damages of 10k. POLICY INSTRUCTION 40. SHOULD BE FILED WITH
BROADCAST MEDIA COUNCIL.

Chavez v. NLRC
Pedro Chavez is a truck driver for Supreme Packaging Inc. since 1984. In 1992, he wanted to be
regularized to get the benefits of the regular employees. In 1995, this not being granted, he filed
complaint for regularization but he was terminated (due to gross negligence in proper maintenance of
truck, wanting to sever ties with the company etc) before the case was heard. ER-EE relationship is
present due to the four fold test. (Same work, paid by SPI, dismissed by SPI, his truck is owned by SPI
and his truck routes are controlled by SPI.) That he was paid on a per trip basis is not significant.
Reinstated to his work with full backwages, 279. However, separation pay instead of reinstatement is
more equitable in this case. NOT INDEPENDENT CONTRACTOR BECAUSE NOT ENOUGH CAPITAL

 Vicente Sy v. CA
Jamie Sahot was with SB Trucking (owned by Sy) since 1965. In 1994, Sahot strated to have thigh pains
and filed for leave. He was later dismissed for failure to go to work. He found out later that his SSS
premiums were not paid by employers. Court found that an ER-EE relationship is present between SBT
and Sahot and he was not, infact, an industrial partner (he did not receive any share of the division of
profits and he was not shown to be part of any managerial duty; he was in fact content to follow the
instructions of petitioners during those years). Dismissal was not valid and it was without notice (he
was simply threatened then dismissed). Even if he was offered a job which is less strenuous is of no
matter; also, being terminated of a disease under 284 requires a medical certificate by the employer
which was not shown in the case. He is entitled to separation pay.
2.
Piercing the Corporate veil See through protective shroud to distinguish a
corporaion from a seemingly separate one.

Pamplona Plantation Co., Inc. v. Tinghil

PPCI took over the operations of Hacienda Pamplona but did not absorb all of them. CA ruled that
Pamplona illegally dismissed its employees. Pamplona claimed that no relationship was formed
between them and that the non-joinder of PAMPLONA PLANTATION LEISURE CORP in the complaint
warrants a dismissal and that there is no ER-EE between them. The court ruled that there is a
relationship (ER-EE) since they were hired, being paid under the corporate control of Jose Luis Bondoc,
the managing director of the company (2 separate entities as far as workers are concerned; devious),
also, there should be no need to implead PPLC since petitioner company and Leisure Corporation are
one and the same entity (Corporation has same incorporators and are under one management)

c. Independent Contractor and Labor-Only Contractor

Independent contractor: implementing rules section 8
own account and responsibility and capital
free from control of performance but toward same result
Labor only contractor
no substantial capital or tools
workers recruited perform activities related (necessary and desirable) to the principal business
of ER
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the formers work, the employees of the contractor and of the latters
subcontractor
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer.
In such cases, the person or intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the latter were directly
employed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply
to any person, partnership, association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or project.
Art. 108. Posting of bond. An employer or indirect employer may require the contractor or
subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond
will answer for the wages due the employees should the contractor or subcontractor, as the case may
be, fail to pay the same.
Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining the extent of their civil liability
under this Chapter, they shall be considered as direct employers.

D.O. No. 10, Rule VIII-A Bk III, 1997 (Rules implementing above)

D.O. No. 3, S. May 2001 (Revoked above D.O.) Labor only Contracting prohibited, nonimpairment of existing contracts
D.O. No. 14, September 18, 2001, Section 8: Re employment of security guards and similar
personnel. Security service contractor as the employer of the security guards. Not company
assigned to them etc
Phil. Bank of Communications v. NLRC
PBC and CESI (Corporate Executive Search Inc) entered into an agreement for the hiring of 11
mesengers. Orpiada and the others were relieved of their jobs because of the eventual termination of
PBC and CESIs agreement.
The court ruled that although Orpiada was assigned to and not chosen by bank the fact remains that
PBC agreed. Also, control as to what they are to do etc. is with bank. The payment and the power to
dismiss was with CESI.
Having completed more than 1 yr (16 mos) of service Orpiada is considered to be a regular employee
(Art 281, LC). CESI is not a parcel delivery company it is a recruitment corporation who, in this case,
made a letter agreement with PBC for only the temporary services of the msgrs. Temporary service
leads to the presumption to labor-only contracting. CESI is then rendered as a mere agent. PBC to pay
Orpiada because he is liable as though it directly employed him but can sue CESI of reimbursement

Alexander Vinoya v. NLRC

Alexander Vinoya worked in Regent Food as a sales rep. booking sales in groceries, getting payment
etc. He was required to post a monthly bond of 200 to ensure compliance with his duties. He was then
moved to PMCI then reassigned to RFC and was soon terminated because of the expiration of the
contract of service between RFC and PMCI. Court said that PMCI is engaged in labor-only contracting
not having substantial capital and investment and did not carry on an independent business OR own
manner of undertaking of its contract. The Court cited Neri v. NLRC saying that in the case, BCC was
found to be an independent contractor because (4 fold test) control of employees is with BCC,
employer is concerned only with end result BCC had the power to reassign the employees, deployment
of which is not subject to the approval of the employer. BCC is paid with lump sum
In Vinoyas case PMCI did not have substantial capital or investment in form of tools.
Authorized capital stock of 1M but only 75k paid in capital nor did they carry on an
independent business nor did it undertake the performance of its contract according to its own
manner or method.
PMCI was not engaged to perform a specific and special job or service
thus, satisfying the application of the 4 fold test. Issuance if ID is also proof of Vinoyas employment
with RFC prior to his reassignment to PMCI and ALSO there was no sufficient notice. Reinstatement and
Backwages.

PAL v. E. Ligan, et al.

Synergy undertook loading and unloading of baggage for PAL. PAL soon cut ties with Synergy and thus,
E. Ligan etc. were dismissed. Applying the 4 fold test, it is shown that respondent performed desirable
and necessary duties related to the main business of PAL and that the equipment used was owned by
PAL. Also, Synergy mentioned but did not show that it had substantial capital and as to how much that
capital is. Also according to D.O. 18-02, labor-only contracting is present when one of these elements
are present:
1. The contractor does not have substantial capital
2. Contractor does not exercise the right to control the performance of the work
of the employee.
Synergy was not shown to have substantial capital and it was PAL who had control over the schedule
and the tasks of the employees (dependent on the frequency of plane arrivals) Also, respondents and
PALs employees were doing the same kind of work therefore, there is labor only contracting. Synergy,
being categorized as a mere agent and respondents having acquired security of tenure are therefore
entitled to reinstatement or separation pay, wage differential and backwages from PAL.
Mandaue Galleon Trade Inc. v. V. Andales
Vicente Andales is one of the 260 workers laid off due to the termination of their contracts by MGTI.
MGTI claims that due to the dwindling demand for rattan products, they retrenched some of their
employees and the 260 envied the substantial separation pay of the regular employees. The court held
that the 260 independent contractors did not have substantial capital and tools and that their work is
directly related to MGTIs business. This proves a labor only contraction and thus, equivalent to
declaring that there is an ER-EE relationship between the principal and the employees of the supposed
contractor. They are entitled to separation pay of month for every year of service.

EXECPTIONS to the rule

- When the findings are grounded entirely on speculation
- When the inference made is manifestly mistaken
- Where there is grave abuse of discretion
- Judgment is made from misapprehension of facts
- Findings of fact are conflicting
- (in making its findings) CA went beyond issue
- Findings are contrary to the trial court
- Conclusions without citation
- Facts set forth not disputed by respondent
- Findings premised on absence of evidence
- CA overlooked relevant facts disputed by parties.
*The first 2 par. Of article 106 set the general rule that a principal is permitted by law to engage the
services of a contractor for the performance of a particular job, but the principal, nevertheless,
becomes SOLIDARILY liable with the contractor.

d. Registration of Contractors
D.O. 18-03 (11-12: registration requirements, submission of annual report (SSS, GSIS, HDMF,
PhilHealth)
Effect of non compliance
D.O. 18-02, Sec 11, 3rd par: failure to register gives rise to presumption of laboronly contracting
Sandoval Shipyards v. Pepito et al.,
The Natl Fed of Labor NFL filed a petition for certification election with DOLE alleging that its members
are already regular employees of SSI and were dismissed due tot heir participation in the strike.
Finding an EE-EE to exist, the Med Arbiter granted the petition. Undersecretary Laguesma reversed
saying that there is a valid subcontracting agreement between the parties. Illegal dismissal cases were
filed and the LA and NLRC upheld Laguesma saying that there was illegal dismissal but that they are
not employees of SSI. CA reversed the decision and said that SSI is their direct employer. On the basis
that:
A) The so-called subcontractors do not even have a license to engage in subcontracting
(presumption of LO)
B) Salaries are paid by SSI
C) They were hired by SSI and placed under their respective subcontractors
D) Tools used are owned by SSI. EVIDENCE OF LABOR ONLY CONTRACTION.

e. Liability of Indirect Employer

Sec 7 D.O. No 18-02 (109) indirect employers are solidarily liable with principal.

Eparwa Security and Janitorial Services Inc. v. Liceo de Cagayan University

Eparwa and LDCU entered into a contract for services of 11 security guards. Security guards filed a
claim for underpayment of wages (leave, overtime, holiday, 13 th month etc.) against both entities.
LDCU made a claim for reimbursement from Eparwa and was not approved by NLRC.
Both companies appealed. NLRC held that although both were solidarily liable (Art 109): Eparwa as
employer and LDCU as agent, It is Eparwa that may claim reimbursement from LDCU in lieu of allowing
an adjustment of the contract (since their contract expired, the payment needed by Eparwa cannot be
amended anymore).LDCU cannot ask for reimbursement. If contractor does not pay overtime/ busts
union, to hold principal liable will be absurd and unfair. Based on Eagle Security Agency Case

II.

Labor Standards Law

1. Employment Policies, Recruitment and Placement of Workers, and

Agencies
Reference Arts 12-39, Local Employment, Overseas Employment, POEA Rules
a.
Employment Policies: 12 a-f, Constitution, Art II, Sec. 9, RA
8042 Sec 2,4,5**
Art. 12. Statement of objectives. It is the policy of the State:
a. To promote and maintain a state of full employment through improved manpower training,
allocation and utilization;
b. To protect every citizen desiring to work locally or overseas by securing for him the best

possible terms and conditions of employment;

c. To facilitate a free choice of available employment by persons seeking work in conformity
with the national interest;
d. To facilitate and regulate the movement of workers in conformity with the national interest;
e. To regulate the employment of aliens, including the establishment of a registration and/or
work permit system;
f. To strengthen the network of public employment offices and rationalize the participation of
the private sector in the recruitment and placement of workers, locally and overseas, to
serve national development objectives;
g. To insure careful selection of Filipino workers for overseas employment in order to protect
the good name of the Philippines abroad.
RA 8042, Migrant Workers and Overseas Filipino Act of 1995 declares that the state does not promote
overseas employment as a means to sustain economic growth, instead THE STATE SHALL
CONTINUOUSLY CREATE LOCAL EMPLOYMENT OPPORTUNITIES AND PROMOTE THE EQUITABLE
DISTRIBUTION OF WEALTH AND THE BENEFITS OF DEVELOPMENT. It requires a certain guarantee of
protection for the overseas worker.
Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate
social services, promote full employment, a rising standard of living, and an improved quality of life for
all.
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
SEC. 2. DECLARATION OF POLICIES-(a) In the pursuit of an independent foreign policy and while considering national sovereignty,
territorial integrity, national interest and the right to self-determination paramount in its relations with
other states, the State shall, at all times, uphold the dignity of its citizens whether in country or
overseas, in general, and Filipino migrant workers, in particular.
(b) The State shall afford full protection to labor, local and overseas, organized and unorganized,
and promote full employment and equality of employment opportunities for all. Towards this end, the
State shall provide adequate and timely social, economic and legal services to Filipino migrant
workers.
(c) While recognizing the significant contribution of Filipino migrant workers to the national economy
through their foreign exchange remittances, the State does not promote overseas employment
as a means to sustain economic growth and achieve national development. The existence of
the overseas employment program rests solely on the assurance that the dignity and fundamental
human rights and freedoms of the Filipino citizens shall not, at any time, be compromised or violated.
The State, therefore, shall continuously create local employment opportunities and promote the
equitable distribution of wealth and the benefits of development.
(d) The State affirms the fundamental equality before the law of women and men and the
significant role of women in nation-building. Recognizing the contribution of overseas migrant women
workers and their particular vulnerabilities, the State shall apply gender sensitive criteria in the

formulation and implementation of policies and programs affecting migrant workers and the
composition of bodies tasked for the welfare of migrant workers.
(e) Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be
denied to any persons by reason of poverty. In this regard, it is imperative that an effective mechanism
be instituted to ensure that the rights and interest of distressed overseas Filipinos, in general,
and Filipino migrant workers, in particular, documented or undocumented, are adequately protected
and safeguarded.
(f) The right of Filipino migrant workers and all overseas Filipinos to participate in the democratic
decision-making processes of the State and to be represented in institutions relevant to overseas
employment is recognized and guaranteed.
(g) The State recognizes that the ultimate protection to all migrant workers is the possession of skills.
Pursuant to this and as soon as practicable, the government shall deploy and/or allow the
deployment only to skilled Filipino workers.
(h) Non-governmental organizations, duly recognized as legitimate, are partners of the State in the
protection of Filipino migrant workers and in the promotion of their welfare, the State shall cooperate
with them in a spirit of trust and mutual respect.
(I) Government fees and other administrative costs of recruitment, introduction, placement and
assistance to migrant workers shall be rendered free without prejudice to the provision of Section
36 hereof.
Nonetheless, the deployment of Filipino overseas workers, whether land-based or sea-based by local
service contractors and manning agencies employing them shall be encouraged. Appropriate
incentives may be extended to them.
SEC. 3. DEFINITIONS. - For purposes of this Act:
(a) "Migrant worker" refers to a person who is to be engaged, is engaged or has been engaged in a
renumerated activity in a state of which he or she is not a legal resident to be used
interchangeably with overseas Filipino worker.
(b) "Gender-sensitivity" shall mean cognizance of the inequalities and inequities prevalent in
society between women and men and a commitment to address issues with concern for the
respective interests of the sexes.
(c) "Overseas Filipinos" refers to dependents of migrant workers and other Filipino nationals abroad
who are in distress as mentioned in Sections 24 and 26 of this Act.
I. DEPLOYMENT
SEC. 4. Deployment of Migrant Workers - The State shall deploy overseas Filipino workers only in
countries where the rights of Filipino migrant workers are protected. The government recognizes
any of the following as guarantee on the part of the receiving country for the protection and the rights
of overseas Filipino workers:
(a) It has existing labor and social laws protecting the rights of migrant workers;
(b) It is a signatory to multilateral conventions, declaration or resolutions relating to the protection of
migrant workers;
(c) It has concluded a bilateral agreement or arrangement with the government protecting the rights of
overseas Filipino workers; and

(d) It is taking positive, concrete measures to protect the rights of migrant workers.
SEC. 5. TERMINATION OR BAN ON DEPLOYMENT - Notwithstanding the provisions of Section 4 hereof,
the government, in pursuit of the national interest or when public welfare so requires, may, at any
time, terminate or impose a ban on the deployment of migrant workers.

b.

Employment Agencies
b.1. Private Sector- Agencies and Entities
1.)
Parties
i.
Worker

13 a: Worker means any member of the labor force, whether employed or unemployed.
RA 8042, Sec 3 (a) <the countries they are deployed to has existing labor and social laws protecting
the rights of the migrant workers.

ii.

Private employment agency

iii.

Private recruitment entity

Art. 13. Definitions.

c. "Private fee-charging employment agency" means any person or entity engaged in recruitment
and placement of workers for a fee which is charged, directly or indirectly, from the workers or
employers or both.
d. "License" means a document issued by the Department of Labor authorizing a person or entity to
operate a private employment agency.
Art. 12. Statement of objectives. It is the policy of the State:
f. To strengthen the network of public employment offices and rationalize the participation of the
private sector in the recruitment and placement of workers, locally and overseas, to serve national
development objectives;
Art. 14. Employment promotion. The Secretary of Labor shall have the power and authority:
a. To organize and establish new employment offices in addition to the existing employment offices
under the Department of Labor as the need arises;
Art. 13. Definitions.
e. "Private recruitment entity" means any person or association engaged in the recruitment and
placement of workers, locally or overseas, without charging, directly or indirectly, any fee from
the workers or employers.
f. "Authority" means a document issued by the Department of Labor authorizing a person or
association to engage in recruitment and placement activities as a private recruitment entity.

2.)

i.

Recruitment and Placement

Local Employment

Art. 13. Definitions.

b. "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to
two or more persons shall be deemed engaged in recruitment and placement.
***WON for profit, IF ANY PERSON OFFERS OF PROMISES A FEE EMPLOYMENT TO 2 OR MORE PERSONS
SHALL BE DEEMED ENGAGED IN RECRUITMENT AND PLACEMENT.

ii.

Overseas employment Sec 6, RA 8042

Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more
persons conspiring or confederating with one another. It is deemed committed in large scale if
committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and accessories. In
case of juridical persons, the officers having control, management or direction of their business shall
be liable.

3.)

i.

Allowed and Protected Entitites

Allowed private agencies and entities

Art. 12. Statement of objectives. It is the policy of the State:

10

f. To strengthen the network of public employment offices and rationalize the participation of the
private sector in the recruitment and placement of workers, locally and overseas, to serve national
development objectives;
Art. 16. Private recruitment. Except as provided in Chapter II of this Title, no person or entity other
than the public employment offices, shall engage in the recruitment and placement of workers.
Art. 25. Private sector participation in the recruitment and placement of workers.
Pursuant to national development objectives and in order to harness and maximize the use of private
sector resources and initiative in the development and implementation of a Comprehensive
employment program, the private employment sector shall participate in the recruitment and
placement of workers, locally and overseas, under such guidelines, rules and regulations as may be
issued by the Secretary of Labor.

ii.

Prohibited business agencies and entities.

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

Exceptions: 18, 2nd sentence (See below)

ii.1. Direct Hiring - Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker
for overseas employment except through the Boards and entities authorized by the Secretary of Labor.
Direct-hiring by members of the diplomatic corps, international organizations and such
other employers as may be allowed by the Secretary of Labor is exempted from this
provision.
ii.2. Travel Agencies Art. 26. Travel agencies prohibited to recruit. Travel agencies
and sales agencies of airline companies are prohibited from engaging in the business of recruitment
and placement of workers for overseas employment whether for profit or not.
POEA rules II, Sec 2

Section 2. Disqualification. The following are not qualified to engage in the business of recruitment
and placement of Filipino workers overseas:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation engaged in the business of a travel
agency;
c. Corporations, when any of its officers is also an officer of a corp. engaged in the business of a
travel agency;
d. Persons, partnerships or corporations which have derogatory records, such as but not limited to
the following:
1) Those certified to have derogatory record
2) Those with prima facie finding of guilt for illegal recruitment or other related cases
exists;
3) Those convicted for illegal recruitment or other related cases and/or crimes involving
moral turpitude
4) Those agencies whose licenses have been previously revoked or cancelled (violation
of RA 8042, PD 442)
f. Persons or partners, officers and Directors of corporations whose licenses have been previously
cancelled or revoked for violation of recruitment laws.

Hornales v. NLRC

Mario Hornales filed a complaint for nonpayment of wages and recovery of damages against JEAC (run
by Cayanan). JEAC sent Hornales to Singapore to work and upon meeting Mr. Victor Lim, he was
assigned as a fisherman. There, Hornales was subjected to maltreatment, lack of food and water, and
22 hours/day work for no pay. He managed to return to the Philippines and demanded for the rightful
payment of his wages. JEAC simply asked him of his passport and gave him 500 pesos. The issue is
Won JEAC is responsible for petitioners recruitment and deployment to Singapore. NLRCs conclusions
(overturning POEAs findings) that JEAC was a mere travel agency and Hornales is a tourist is
unfounded since even respondents claim they are a licensed recruitment agency. Also the PNB checks
and the letter agreements issued by JEAC to Hornales and Lim respectively show a quantum of

11

evidence that proves JEACs connivance with the foreign employer (Step Up). JEAC and its surety are
jointly and severally liable to Hornales.
(under Rule 5 Book 1 Sec 2 e or the IRR: requires a private employment agency to assume all
responsibilities for the implementation of the contract of employment of an overseas worker; under
book 2 Rule 2 Section 3 of the POEA rules and regulations, private employment agency shall assume
joint and solidary liability with the implementation of a contract)
POEA decision reinstated (but minus 16,000 paid by JEAC for Hornales travel)

4.)

Government Techniques of Regulation Private Recruitment

i. Licensing: Citizenship 27: for permit to participate in recruitment and placement of

workers (local and overseas)

i. Filipino Citizens
ii. Corp or partnerships at least 75% of the authorized and voting capital stock of which is owned and
controlled by Filipino Citizens.

POEA Rules Part II, Rule I, Sec 1 (a)

Section 1. Requirements Qualifications. Only those who possess the following qualifications may be
permitted to
engage in the business of recruitment and placement of Filipino workers:
a. Filipino citizens, partnerships or corporations at least seventy five percent (75%) of the authorized
capital stock of which is owned and controlled by Filipino citizens;
a. Capitalization 28: substantial capitalization as determined by the secretary of labor.
Required for all applicants for authority to hire or renewal of license to recruit.

POEA Rules Part II, Rule I, Sec 1 (b)

b. A minimum capitalization of Two Million Pesos (P2,000,000.00) in case of a single proprietorship or

partnership and a minimum paid-up capital of Two Million Pesos (P2,000,000.00) in case of a
corporation; Provided that those with existing licenses shall, within four years from effectivity hereof,
increase their capitalization or paid up capital, as the case may be, to Two Million Pesos
(P2,000,000.00) at the rate of Two Hundred Fifty Thousand Pesos (P250,000.00) every year.
b. Duration

POEA Rules Part II, Rule II, Sec 5, 6

Section 5. Provisional License. Applicants for new license shall be issued a provisional license which
shall be valid for a limited period of one (1) year within which the applicant should be able to comply
with its undertaking to deploy 100 workers to its new principal. The license of a complying agency shall
be upgraded to a full license entitling them to another three years of operation. Non-complying
agencies will be notified of the expiration of their license.
Section 6. Validity of the License. Except in case of a provisional license, every license shall be valid for
four (4) years from the date of issuance unless sooner cancelled, revoked or suspended for violation of
applicable Philippine law, these rules and other pertinent issuances. Such license shall be valid only at
the place/s stated therein and when used by the licensed person, partnership or corporation.
c.

Non-transferability 29: n-t of license or authority.

Who may use? Only the person in whose favor it was issued.
Where it may be used? Only at place stated in the license or authority.
Prohibition? Transfer/conveyance to other person or entity. Approval of DOLE required in: 1. transfer of
business address 2. appointment or designation of any agent/representative 3. establishment of
additional offices.

POEA Rules Part II, Rule II, Sec 7

Non-Transferability of License. No license shall be transferred, conveyed or assigned to any person,

partnership or corporation. It shall not be used directly or indirectly by any person, partnership or
corporation other than the one in whose favor it was issued.
d. Registration fees 30
Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the
registration of all applicants for license or authority.

12

POEA Rules Part II, Rule II, Sec 4: Payment of Fees and Posting of Bonds.
e. Bonds 31

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

ii.

Workers Fees (Placement Fees) 32

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

POEA Rules Part II, Rule V, Sec 3

Section 3. Fees/Costs Chargeable to the Workers. Except where the prevailing system in the country
where the worker is to be deployed, either by law, policy or practice, do not allow the charging or
collection of placement and recruitment fee, a landbased agency may charge and collect from its hired
workers a placement fee in an amount equivalent to one month salary, exclusive of documentation
costs. Documentation costs to be paid by the worker shall include, but not limited to, expenses for the
following:
a. Passport
b. NBI/Police/Barangay Clearance
c. Authentication
d. Birth Certificate
e. Medicare
f. Trade Test, if necessary
g. Inoculation, when required by host country
h. Medical Examination fees
In the event that the recruitment agency agrees to perform documentation services, the worker
shall pay only the actual cost of the document which shall be covered by official receipts.
The above-mentioned placement and documentation costs are the only authorized payments that may
be collected from a hired worker. No other charges in whatever form, manner or purpose, shall be
imposed on and be paid by the worker without prior approval of the POEA. Such fees shall be collected
from a hired worker only after he has obtained employment through the facilities of the recruitment
agency.

iii.

Reports/ Employment Information 33, 14 d, 34 h, RA 8042

Sec 6h

Art. 14. Employment promotion. The Secretary of Labor shall have the power and authority:
***d. To require any person, establishment, organization or institution to submit such employment
information as may be prescribed by the Secretary of Labor.

Art. 33. Reports on employment status. Whenever the public interest requires, the Secretary of
Labor may direct all persons or entities within the coverage of this Title to submit a report on the
status of employment, including job vacancies, details of job requisitions, separation from jobs, wages,
other terms and conditions and other employment data.
Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of
authority:
h. To fail to file reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as may be
required by the Secretary of Labor.

iv.

Illegal Recruitment RA 8042 Sec 6-12; 34, 38 a b

Art. 38. Illegal recruitment.

a. Any recruitment activities, including the prohibited practices enumerated under Article 34 of this
Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and
punishable under Article 39 of this Code. The Department of Labor and Employment or any law
enforcement officer may initiate complaints under this Article.

13

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

a. When Undertaken by non-licensees, non-holders

b. Prohibited Practices
Rodolfo v. People of the Philippines

Rosa Rodolfo approached the complainants and invited them to apply for overseas employment in
Dubai claiming that she knew Florante Hinahon, the owner of the agency. She collected the processing
fees. Their flights were being constantly rescheduled and as a result of this they asked for their money
back. Aside from the 1k given to Ferre (one of the complainants) no reimbursement was given. A case
of illegal recruitment was filed against Rodolfo who claimed that she was the one approached by
complainants and that she gave the money directly to Hinahon. The court said that since
1. She had no valid license to recruit
2. Rodolfo undertook activity wherein she passed along or forwarded an
applicant for employment and the court said that it is sufficient that the
accused promises or offers for a fee employment.
The court further said that she could have advised them to pay directly to the agency. CA affirmed.

Pp v. Jamilosa

Jamilosa, under the guise of an FBI agent of the US on a mission recruited a number of people whom
he met on the bus, in malls etc. by saying that his sister is the head nurse in a nursing home in
California and that he has connections in the US embassy being an FBI agent. The complainants gave
him the money (and on a few instances jewelry and 2 bottles of black label) for processing of their
application. He even insisted to meet a few of the complainants family and showed to them the Xerox
of the passport as well as the ticket. The appellant never issued receipts. They were never able to fly
out of the country and upon asking the money from the petitioner, he avoided them. Bamba, one of
the complainants filed an illegal recruitment case against him.
Jamilosa claims that Bamba is an aggrieved lover who is imputing the case against him because of
their separation. Also, he showed certifications signed by complainants stating that Jamilosa is not an
illegal Recruiter.
COURT: Petition has no merit. It is sufficient that the accused promises or offers for a fee employment
to warrant conviction for illegal recruitment. The certifications were signed after the notice that he was
being sued was issued because he did not present them in his counter affidavit. (graduate of UE dapat
mas matalino). Appeal is dismissed.

Pp v. Comila

Aida and Comila was looking for workers for a factory in Intaly. Comila introduced the complainants to
Erlinda Ramos, one of the agents of Mrs. Indira Lastra. After their flights not pushing through, they ask
for a refund which was not given but rather, they were left with an assurance and they were brought to
Lastra who was in Manila City Jail. A case of illegal recruitment was filed against them. Aida said she
never professed she has the authority to recruit and was merely trying to help the complainants
process their papers. As for her husband, he claimed that the prosecution failed in proving his
participation.The court said that they cannot feign ignorance of the matters that were happening as it
was Aida herself who informed the complainants of the existence of the job orders. There must be at
least a promise or offer of employment from the person posing as a recruiter whether locally or abroad.
Also, they can be charged with estafa and illegal recruitment given that estafa is malum in se and IL is
malum prohibitum. Appeal of Comilas is dismissed.

14

Salazar v. Achacoso 183 SCRA 145

Due to the refusal of Salazar to return the PECC card of complainant Rosalie Tesoro, Tesoro filed an
illegal recruitment case against her. The POEA ordered a closure and seizure order and soon went to
her dance studio and confiscated certain costumes. Hortencia Salazar sent a letter to POEA demanding
the return of her seized items and also filed a suit for prohibition. The sole issue of the case is WON
issuing of a warrant of arrest against her by the POEA/ Secretary of Labor as well as the seizing of her
dance studio, pursuant to Art 38, LC, is valid. The court held that 38 c is a product of several decrees
which were the dying vestiges of an authoritarian rule. The court further said that the secretary of
labor, not being a judge cannot issue search and arrest warrants. Under the constitution, these can
only be exercised by the courts. The president issuing an arrest of aliens for deportation is the only
exception. 38 c of labor code is UNCONSTITUTITONAL.
(declared Art 38 unconstitutional because of Art III, Section 2. The right of the people to be secure
in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever
nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing the
place to be searched and the persons or things to be seized. )

v.
Enforcement Powers
a. Regulatory power 35, 36

Art. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have
the power to suspend or cancel any license or authority to recruit employees for overseas employment
for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment
Development Board, or for violation of the provisions of this and other applicable laws, General Orders
and Letters of Instructions.
MISCELLANEOUS PROVISIONS
Art. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the
recruitment and placement activities of all agencies within the coverage of this Title and is hereby
authorized to issue orders and promulgate rules and regulations to carry out the objectives and
implement the provisions of this Title.
Art. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any
time, inspect the premises, books of accounts and records of any person or entity covered by this Title,
require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this
Title.

b. Rule-making power -36

c. Visitorial Power 37

DOLE Phil Inc. v. Esteva

Dole Phil hired members of CAMPCO (Cannery Multi Purpose Coop) depending on their sole needs.
Upon evaluation, DOLE Regional Task force found CAMPCO and Dole Phil engaged in Labor Only
contracting, having no substantial capital as well as the fact that the workers recruited are performing
activities directly related to the principal business of Dole. Dole Philippines appealed raising that the
DOLE Regional Director committed error in Law in directing cooperatives to cease and desist from
Labor Only Contracting saying that this had been their practice ever since. Despite the order being
final and executory, Dole Phil continued its operations. On appeal LA and NLRC found CAMPCO is not
engaged in Labor Only Contracting. CA reversed LA and NLRC holding that the order by DOLE should
be given weight in the exercise of its visitorial and enforcement power (Art 128 a and b). Ruling: Art
128 Secretary of Labor can issue compliance orders to give effect to Labor standards. The regional
director of DOLE made procedural steps such as sending a task force to investigate before issuing his
order to cease and desist based on his findings that CAMPCO is guilty of Labor Only Contracting. Dole
Phil is found guilty. CA affirmed.

vi.
POEA Part II, Rule II

Joint and Several Liability of Employment agent and

principal

Section 1. Requirements for Licensing. Every applicant for license to operate a private employment
agency shall submit a written application together with the following requirements: A verified
undertaking stating that the applicant:
1. Shall select only medically and technically qualified recruits;
2. Shall assume full and complete responsibility for all claims and liabilities which may arise in
connection with the use of the license;

15

3. Shall assume joint and solidary liability with the employer for all claims and liabilities which may
arise in connection with the implementation of the contract, including but not limited to payment of
wages, death and disability compensation and repatriations;
4. Shall guarantee compliance with the existing labor and social legislations of the Philippines and of
the country of employment of the recruited workers;
5. Shall assume full and complete responsibility for all acts of its officials, employees and
representatives done in connection with recruitment and placement;
6. Shall negotiate for the best terms and conditions of employment;
7. Shall disclose the full terms and conditions of employment to the applicant workers;
8. Shall deploy at least 100 workers to its new markets within one (1) year from the issuance of its
license;
9. Shall provide orientation on recruitment procedures, terms and conditions and other relevant
information to its workers and provide facilities therefor; and
10. Shall repatriate the deployed workers and his personal belongings when the need arises. For the
purpose of compliance with item (1), the agency may require the worker to undergo trade testing and
medical examination only after the worker has been pre-qualified for employment.

RA 8042 Sec 10 2nd par. (See below)

OSM Shipping Phil Inc. v. NLRC

Fermin Gurrero filed a case against OSM Shipping since despite the services he rendered to OSM, no
compensation was paid to him. OSM alleged that the ship owner changed its plans on the use of the
vessel (Princess Hoa) and instead chartered it to PCSLC. Since OSM and PCSLCs contract was
terminated, PCSLC became employer of the crew.
Issues: Sec 3 Rule 46 of RoC requires a certified true copy of LAs decision but court said that it is not
necessary to send pleadings as long as Guerrero is represented by counsel. Also, from the inception of
the case at the LAs office, Guerrero, a seaman was often not there. Service of pleadings is futile.
The fact that petitioner and its principal have already terminated their agency agreement does not
retrieve the formenr of its liability. Responsibilities of such parties towards the contracted employees
under the agreement do not end but rather extends until the expiration of the employment contract.

I.

5.)
Jurisdiction
RTC over criminal action arising from illegal recruitment

II.

LA over money claims

RA 8042, SEC. 9. VENUE. - A criminal action arising from illegal recruitment as defined herein shall
be filed with the Regional Trial Court of the province or city where the offense was committed or
where the offended party actually resides at the same time of the commission of the offense:
Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the
exclusion of other courts. Provided, however, That the aforestated provisions shall also apply to
those criminal actions that have already been filed in court at the time of the effectivity of this Act.

RA 8042, 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 filing of the complaint, the claims
arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages.
The liability of the principal/employer and the recruitment/placement agency for any and all claims
under this section shall be joint and several. This provisions shall be incorporated in the contract for
overseas employment and shall be a condition precedent for its approval. The performance bond to be
filed by the recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the case may be, shall themselves
be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and
damages.

Flourish Maritime Shipping v. Donato Almazor

Almazor worked in a Taiwan vessel as a fisherman for Flourish or FSM for only 26 days and he was
subjected to working with almost no sleep and was not provided with food. His contract with Flourish is
for 2 years. In RA 8042 Sec 10, it says that there are 2 money claims available for illegal dismissal.
1. Salaries for the unexpired portion of the employment contract

16

2. 3 months salary for every year of the unexpired term. Whichever is less.
He was given option 2 by the LA because even if his contract is for 2 years, he was only made to work
for 26 days.

III.
POEA over administrative cases
a. Pre-employment Cases
Omnibus rules implementing RA 8042 Sec 28 a
Section 28. Jurisdiction of the POEA. - The POEA shall exercise original and exclusive jurisdiction to
hear and decide: a. all cases, which are administrative in character, involving or arising out of
violations of rules and regulations relating to licensing and registration of recruitment and employment
agencies or entities; and b. disciplinary action cases and other special cases, which are administrative
in character, involving employers, principals, contracting partners and Filipino migrant workers.

b. Disciplinary Cases
Omnibus rules implementing RA 8042 Sec 28 b
2. Alien Employment Regulation

Art. 12. Statement of objectives. It is the policy of the State:

e. To regulate the employment of aliens, including the establishment of a registration and/or work
permit system;
EMPLOYMENT OF NON-RESIDENT ALIENS
Art. 40. Employment permit of non-resident aliens. Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to engage an
alien for employment in the Philippines shall obtain an employment permit from the Department of
Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent, able and willing
at the time of application to perform the services for which the alien is desired. For an enterprise
registered in preferred areas of investments, said employment permit may be issued upon
recommendation of the government agency charged with the supervision of said registered enterprise.
Art. 41. Prohibition against transfer of employment.
a. After the issuance of an employment permit, the alien shall not transfer to another job or change his
employer without prior approval of the Secretary of Labor.
b. Any non-resident alien who shall take up employment in violation of the provision of this Title and its
implementing rules and regulations shall be punished in accordance with the provisions of Articles 289
and 290 of the Labor Code. In addition, the alien worker shall be subject to deportation after service of
his sentence.
Art. 42. Submission of list. Any employer employing non-resident foreign nationals on the effective
date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days
after such date indicating their names, citizenship, foreign and local addresses, nature of employment
and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an
employment permit.

Omnibus Rules, Book I, Rule XIV

D.O. No. 12 Omnibus Guidelines for Issuance of Employment Permits to Foreign Nationals
(see reviwer) Book III Rule I.1 Exemption Rule I.2
D.O. Nos 19-02, 26-02

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

a. Coverage 40

Art. 40. Employment permit of non-resident aliens. Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires to engage an
alien for employment in the Philippines shall obtain an employment permit from the Department of
Labor.
The employment permit may be issued to a non-resident alien or to the applicant employer after a
determination of the non-availability of a person in the Philippines who is competent, able and willing
at the time of application to perform the services for which the alien is desired.

17

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

Almodiel v. NLRC

Farle Almodiel claims that he was illegally dismissed by Raytheon Philippines after the company
terminated his services on the basis of redundancy. LA granted his petition for reinstatement but the
NLRC only allowed him his separation pay. He claims that there is bad faith, malice and irregularity on
the part of Raytheon. The court found that prior to his termination, he was notified by the company
and was given separation pay which he did not accept. Furthermore, his allegations that Ang Tan Chai,
an alien with no working permit absorbed his position is untenable given the fact that it is immaterial
whether his job was absorbed rendering him jobless because it is the managements prerogative. Also,
Ang Tan Chai was found to be a resident alien and therefore according to Article 40, LC he does not
need a working permit. Petition Dismissed.

b. Conditions for Grant of Permit

Omnibus rules, Book I Part III, Rule II, 1 2 3 (See page 613 of Azucena if Maam asks)

1.) Accreditation of foreign principals, employers and projects with no POLO (Philippine Overseas
Labor Office) shall undergo accreditation under POEA
2.) Documentary Requirements for Accreditation to be submitted to the POEA for evaluation.
(SPoA, Employment Contract, Manpower request <position and salary of workers>, Business
License, Visa assurance)
3.) Validity of Accreditation will be valid up to 4 years unless revoked by POEA (grounds: expiration
of business license, written mutual agreement, false documentation, final judgment)

Pacific Consultants Intl Asia Inc. v. Schonfeld

Klaus Schonfeld, a Canadian was hired by PCIJ thru PPI as its VP of water and sanitation. He was
dismissed and was not given the money claims he was promised such as the cost of shipment of goods
and unpaid salary. LA and NLRC dismissed his complaint for illegal recruitment on the basis of the
employment contract he signed stating that all disputes between employer and employee should be
filed in London, ruling that PCIJ is its employer and PPI is only a mere subsidiary. Respondent company
PCIJ say that it should have been filed in London or Japan where PCIJ is based and not in the Philippines
since its courts did not have jurisdiction.
CA declared that the claim of the respondents of multiple venues of filing actually shows that the
venue is not limited to just one place. Also, CA found that Schonfeld is an employee of PPI and not PCIJ.
Schonfelds Alien Employment Permit obtained in the Philippines was obtained by PPI stating that
Schofeld is its employee. Also, using the 4 fold test, it can be proven that Schonfeld is indeed an
employee of PPI. SC denied petition and upheld CA decision.

c. Validity of AEP (Alien Employment Regulation) DO- 12 Omnibus R. Rule II 7

d. Revocation/Cancellation, Grounds Rule III.1

3. Development of Human Resources

Art 57-81
Technical Education and Skills Development of Filipino Middle-level Manpower
a.
Manpower Development
1.) Definition Article 44 (a)

Art. 44. Definitions. As used in this Title:

a. "Manpower" shall mean that portion of the nations population which has actual or potential
capability to contribute directly to the production of goods and services.

RA 7796 Sec 4 b c e
2.) General Policy RA 7796, Sec 2
3.) Specific Goals and Objectives RA 7796, Sec 3
b.
Training and Employment of Special Workers Apprentices and Learners
1.) Policy Objectives 57
Art. 57. Statement of objectives. This Title aims:
1. To help meet the demand of the economy for trained manpower;
2. To establish a national apprenticeship program through the participation of employers,
workers and government and non-government agencies; and
3. To establish apprenticeship standards for the protection of apprentices.

2.) Definition : RA 7796 Sec 4 j k l m n

18

Apprentice:

Art. 58. Definition of Terms. As used in this Title:

a. "Apprenticeship" means practical training on the job supplemented by related theoretical
instruction.
b. An "apprentice" is a worker who is covered by a written apprenticeship agreement with an
individual employer or any of the entities recognized under this Chapter.

RA 7796 Sec 4 k
Learner:

Art. 73. Learners defined. Learners are persons hired as trainees in semi-skilled and other
industrial occupations which are non-apprenticeable and which may be learned through
practical training on the job in a relatively short period of time which shall not exceed three

(3) months.
RA 7796 Sec 4 n
3.) Allowed Employment and When 60, 74

Art. 60. Employment of apprentices. Only employers in the highly technical industries may
employ apprentices and only in apprenticeable occupations approved by the Secretary of Labor and
Employment. (As amended by Section 1, Executive Order No. 111, December 24, 1986)
Art. 74. When learners may be hired. Learners may be employed when no experienced
workers are available, the employment of learners is necessary to prevent curtailment of
employment opportunities, and the employment does not create unfair competition in terms of labor
costs or impair or lower working standards.

RA 7796 Sec 4 m
4.) Conditions of Employment 61, 281, 75, 76, 72

Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the

wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship
agreements providing for wage rates below the legal minimum wage, which in no case shall start
below 75 percent of the applicable minimum wage, may be entered into only in accordance with
apprenticeship programs duly approved by the Secretary of Labor and Employment. The Department
shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order
No. 111, December 24, 1986)
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.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a
learnership agreement with them, which agreement shall include:
a. The names and addresses of the learners;
b. The duration of the learnership period, which shall not exceed three (3) months;
c. The wages or salary rates of the learners which shall begin at not less than seventy-five percent
(75%) of the applicable minimum wage; and
d. A commitment to employ the learners if they so desire, as regular employees upon
completion of the learnership. All learners who have been allowed or suffered to work during the first
two (2) months shall be deemed regular employees if training is terminated by the employer before
the end of the stipulated period through no fault of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or
his duly authorized representative.
Art. 76. Learners in piecework. Learners employed in piece or incentive-rate jobs during the
training period shall be paid in full for the work done.
Art. 72. Apprentices without compensation. The Secretary of Labor and Employment may
authorize the hiring of apprentices without compensation whose training on the job is required by
the school or training program curriculum or as requisite for graduation or board examination.

Wage Order No. NCR-14

5.) Enforcement 65, 66, 67

19

Art. 65. Investigation of violation of apprenticeship agreement. Upon complaint of any

interested person or upon its own initiative, the appropriate agency of the Department of Labor and
Employment or its authorized representative shall investigate any violation of an apprenticeship
agreement pursuant to such rules and regulations as may be prescribed by the Secretary of Labor and
Employment.
Art. 66. Appeal to the Secretary of Labor and Employment. The decision of the authorized
agency of the Department of Labor and Employment may be appealed by any aggrieved person to the
Secretary of Labor and Employment within five (5) days from receipt of the decision. The decision of
the Secretary of Labor and Employment shall be final and executory.
Art. 67. Exhaustion of administrative remedies. No person shall institute any action for the
enforcement of any apprenticeship agreement or damages for breach of any such agreement, unless
he has exhausted all available administrative remedies.

c.

Disabled Persons (Handicapped Workers) 78-81

Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age
or physical or mental deficiency or injury.
Art. 79. When employable. Handicapped workers may be employed when their employment is
necessary to prevent curtailment of employment opportunities and when it does not create unfair
competition in labor costs or impair or lower working standards.
Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into
an employment agreement with them, which agreement shall include:
1. The names and addresses of the handicapped workers to be employed;
2. The rate to be paid the handicapped workers which shall not be less than seventy five (75%)
percent of the applicable legal minimum wage;
3. The duration of employment period; and
4. The work to be performed by handicapped workers. The employment agreement shall be subject
to inspection by the Secretary of Labor or his duly authorized representative.
Art. 81. Eligibility for apprenticeship. Subject to the appropriate provisions of this Code,
handicapped workers may be hired as apprentices or learners if their handicap is not such as to
effectively impede the performance of job operations in the particular occupations for which
they are hired.

Magna Carta for Disabled Persons (RA 7277)

1.) Definition RA 7277 Sec 4 a b c d
2.) Policy Declaration - RA 7277 Sec 2
3.) Coverage - RA 7277 Sec 3
4.) Rights and Privileges 81
RA 7277 Sec 4 I 5, 6, 7
Bernardo v. NLRC
43 deaf mute employees were dismissed by Far East Bank after their contracts with the bank as money
counters were terminated. The employees filed for illegal dismissal. The Bank claimed that they 1.
hired them only as an answer to the Governments pakiusap 2. that it was already their tellers job to
count the money 3. the workers were told from the start that they will not be regularized. LA and NLRC
dismissed the complaint for lack of merit
The court granted the petition because they noted that RA 7277 was controlling and not Art 80 as used
by the LA and NLRC the workers being considered as QULAIFIED for their jobs. The court held that the
an employee is considered regular because of the nature of the work & the length of the service, not
because of the mode or reasoning for hiring them.
The Petitioners contracts (except for 17 of them) were regularly renewed and since they have already
completed the 6 moth probationary period, they are entitled to separation pay (cannot reinstate
because there is no more job title of money counters.)

5.) Discrimination Sec 32, 33 (see pg 8 of RA)

6.) Enforcement Sec 44-46 (see pg 13 of RA)
4. Conditions of employment
A. Hours of Work
Art 82-90

20

Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on
him for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate regulations. As used herein,
"managerial employees" refer to those whose primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty.
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight
(8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours
for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in
which case, they shall be entitled to an additional compensation of at least thirty percent
(30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel"
shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers,
laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel.

Omnibus Rules, Book III, rule I, IA, II (go to page 663 of Azucena if maam asks)
RULE I-A
Hours of Work of Hospital and Clinic Personnel
SECTION 1. General statement on coverage. This Rule shall apply to:
(a) All hospitals and clinics, including those with a bed capacity of less than one hundred (100) which
are situated in cities or municipalities with a population of one million or more; and
(b) All hospitals and clinics with a bed capacity of at least one hundred (100), irrespective of the size of
the population of the city or municipality where they may be situated.
SECTION 2. Hospitals or clinics within the meaning of this Rule. The terms "hospitals" and "clinics" as
used in this Rule shall mean a place devoted primarily to the maintenance and operation of facilities
for the diagnosis, treatment and care of individuals suffering from illness, disease, injury, or deformity,
or in need of obstetrical or other medical and nursing care. Either term shall also be construed as any
institution, building, or place where there are installed beds, or cribs, or bassinets for twenty-four (24)
hours use or longer by patients in the treatment of disease, injuries, deformities, or abnormal physical
and mental states, maternity cases or sanitorial care; or infirmaries, nurseries, dispensaries, and such
other similar names by which they may be designated.
SECTION 3. Determination of bed capacity and population. (a) For purposes of determining the
applicability of this Rule, the actual bed capacity of the hospital or clinic at the time of such
determination shall be considered, regardless of the actual or bed occupancy. The bed capacity of
hospital or clinic as determined by the Bureau of Medical Services pursuant to Republic Act No. 4226,
otherwise known as the Hospital Licensure Act, shall prima facie be considered as the actual bed
capacity of such hospital or clinic.
(b) The size of the population of the city or municipality shall be determined from the latest official
census issued by the Bureau of the Census and Statistics.
SECTION 4. Personnel covered by this Rule. This Rule applies to all persons employed by any private
or public hospital or clinic mentioned in Section 1 hereof, and shall include, but not limited to, resident

21

physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians

paramedical technicians, psychologists, midwives, and attendants.
SECTION 5. Regular working hours. The regular working hours of any person covered by this Rule
shall not be more than eight (8) hours in any one day nor more than forty (40) hours in any one week.
For purposes of this Rule a "day" shall mean a work day of twenty-four (24) consecutive hours
beginning at the same time each calendar year. A "week" shall mean the work of 168 consecutive
hours, or seven consecutive 24-hour work days, beginning at the same hour and on the same calendar
day each calendar week.
SECTION 6. Regular working days. The regular working days of covered employees shall not be more
than five days in a work week. The work week may begin at any hour and on any day, including
Saturday or Sunday, designated by the employer.
Employers are not precluded from changing the time at which the work day or work week begins,
provided that the change is not intended to evade the requirements of this Rule.
SECTION 7. Overtime work. Where the exigencies of the service so require as determined by the
employer, any employee covered by this Rule may be scheduled to work for more than five (5) days or
forty (40) hours a week, provided that the employee is paid for the overtime work an additional
compensation equivalent to his regular wage plus at least thirty percent (30%) thereof, subject to the
provisions of this Book on the payment of additional compensation for work performed on special and
regular holidays and on rest days.
SECTION 8. Hours worked. In determining the compensable hours of work of hospital and clinic
personnel covered by this Rule, the pertinent provisions of Rule 1 of this Book shall apply.
SECTION 9. Additional compensation. Hospital and clinic personnel covered by this Rule, with the
exception of those employed by the Government, shall be entitled to an additional compensation for
work performed on regular and special holidays and rest days as provided in this Book. Such
employees shall also be entitled to overtime pay for services rendered in excess of forty hours a week,
or in excess of eight hours a day, whichever will yield the higher additional compensation to the
employee in the work week.
SECTION 10. Relation to Rule I. All provisions of Rule I of this Book which are not inconsistent with
this Rule shall be deemed applicable to hospital and clinic personnel.
1.) Coverage: This rule shall apply to all employees except government, retail, domestic
helpers, managerial employees, field personnel.
2.) Night Shift differential (same as Art 86)

1. Regulation. RationaleManila Terminal Co. Inc. v. CIR

Manila Terminal Company Inc (MTC) took the arrastre service in some of the piers in Manila for which it
hired 30 watchmen on 12 hour shifts. These watchmen are part of the Manila Terminal Relief and
Mutual Aid; after organizing themselves, they asked the Court of Industrial relations for MTC to pay
them their overtime shifts. CIR granted their request. MTC filed a petition for certiorari saying that CIR
has no jurisdiction over the case and that in the agreement for the 12 hour shifts, the overtime pay is
already included in the salary and that due to the passage of time, MTRMA are barred due to laches
and estoppel.
According to the court, CIR has jurisdiction over the case. The findings of the court point out that after
strict 8 hour shifts were imposed by MTC in lieu of the 12 hour shifts, the salary was not reduced which
proves that overtime pay was not yet included in the salary. Also, it cannot be said that the watchmen
have waived their rights to compensation due to laches and estoppel for this would be contrary to the
8 hour law which should always be construed as for the employee (another point: so the contract,
being against the law should not be the reason why the employer should not pay. It is because of its
nullity that he should.)

22

2. Coverage 82, 276

Art. 276. Government employees. The terms and conditions of employment of all government
employees, including employees of government-owned and controlled corporations, shall be
governed by the Civil Service Law, rules and regulations. Their salaries shall be standardized by
the National Assembly as provided for in the New Constitution. However, there shall be no reduction
of existing wages, benefits and other terms and conditions of employment being enjoyed
by them at the time of the adoption of this Code.

Book III, Rule I, Sec 1-2 (See page 658 of Azucena)

1.
2.

General Statement on Coverage: apply to all employees except to those exempted.

Government Employees, Managerial Employees, Officers or members of Managerial Staff,
Domestic Servants, Workers paid by results, Nonagricultural field personnel.

SECTION 2. Exemption. The provisions of this Rule shall not apply to the following persons if they
qualify for exemption under the conditions set forth herein:
(a) Government employees whether employed by the National Government or any of its political
subdivision, including those employed in government-owned and/or controlled corporations;
(b) Managerial employees, if they meet all of the following conditions:
(1) Their primary duty consists of the management of the establishment in which they are employed or
of a department or sub-division thereof.
(2) They customarily and regularly direct the work of two or more employees therein.
(3) They have the authority to hire or fire employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to the promotion or any other change of status of other
employees, are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion and independent judgment; and
(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 work week to activities which
are not directly and closely related to the performance of the work described in paragraphs (1), (2) and
(3) above.
(d) Domestic servants and persons in the personal service of another if they perform such services in
the employer's home which are usually necessary or desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort, convenience, or safety of the employer as well as the
members of his employer's household.
(e) Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or
task basis, and other non-time work if their output rates are in accordance with the standards

23

prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been
fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.
(f) Non-agricultural field personnel if they regularly perform their duties away from the principal or
branch office or place of business of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.

Exemptions
a. Government Employees 82, 276
Constitution Art IX-B, Section 2. (1) The civil service embraces all branches, subdivisions,

instrumentalities, and agencies of the Government, including government-owned or controlled

corporations with original charters.

b. Managerial Employees 82

212 m. "Managerial employee" is one who is vested with the 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.

Omnibus Rules, Book III, Rule I, Sec 2 (b)(c) (Managerial employees, officers/ members of
managerial staff)

International Pharmaceuticals Inc. v. NLRC

Virginia Quintia was hired by Intl Pharmaceuticals (IPI) as its Medical Director for the Research
Department which is still in its experimental stage and because of this, the contract of employment
was subject to renewal. Her contract was renewed and she was given the added task of being the
company Physician. In one meeting, she pointed out the inequality of the interest rates given to low
salaried employees which led them to demand full disclosure of the financials. She was later on
dismissed due to the expiration of her contract and Paz Wong replaced her as head. LA and NLRC
found her to be illegally dismissed and held that she was a regular employee not a project employee.
The court was of the same opinion, pointing out that Quinta was continued as the Medical director and
was even given the job of company physician. Although she was not required to report her number of
hours at work as a managerial employee, she performed acts which are necessary and desirable to
IPIs business therefore satisfied the test of WON a person is a regular employee of the company. Also,
the court said that if she was a project employee and that her contract expired due to the project being
terminated, there would be no need to replace her.
IPI is allowed wider discretion in terminating the management personnel and loss of confidence can be
alleged; however, mere allegation is not sufficient, it must be substantiated by evidence because
managerial employees are entitled to security of tenure as well. Separation pay and backwages.

c. Field Personnel 82
Omnibus Rules, Book III, Rule I, Sec 2 (f) (Non agricultural field personnel)

Mercidar Fishing Corp v. NLRC

Fermin Agao filed a case against Mercidar for illegal dismissal because when he reported back for work
after his sick leave, the Company refused to give him work nor issue him a certificate of employment
after. LA ordered his reinstatement and NLRC affirmed dismissing Mercidars claim that Agao is a field
personnel and thus not entitled to service incentive leave pay. Art 82 defined field personnel as the
non-agricultural employees who perform their duties away from principal place of business and are
therefore not covered by the Working Conditions and Rest Periods title. In this case, Agao cannot be
considered as a field personnel even though his work is performed away from the principal place of
business or office of Mercidar given the fact that the crew has no choice but to remain on the vessel
and stay under the supervision of the vessel master. Petition dismissed.

Far East Agricultural Supply, Inc. v. Lebatique

Jimmy Lebatique was hired by Far East as a truck driver to deliver animal feeds. Lebatique complained
of nonpayment of overtime work and was dismissed by the Uy brothers (one as the general manager
of far east). LA found that Lebatique was illegally dismissed. NLRC dismissed Lebatiques complaint for
lack of merit finding him to be a field personnel. CA reversed the NLRC decision ruling that he was
illegally dismissed and that he was not a field personnel. The court ruled that Far East failed to prove

24

the burden that the termination was for a valid cause and in fact, the court found, that it was his
complaint for non payment of overtime work which prompted his dismissal.
The court also found that he is not a field personnel given that being one does not only concern the
location of the job but also the fact that the employees time and performance is not controlled and
unsupervised by the employer. The fact that company drivers are given a specific schedule to deliver
goods as well as the instance that drivers are directed to stay in the company premises during truck
ban shows that Lebatique is a regular employee and thus entitled to the benefit of overtime pay.
Petition denied.

d. Dependent Family Members 82

e. Domestic Helpers 82, 141, 145

Art. 141. Coverage. This Chapter shall apply to all persons rendering services in households for
compensation.
"Domestic or household service" shall mean service in the employers home which is usually necessary
or desirable for the maintenance and enjoyment thereof and includes ministering to the personal
comfort and convenience of the members of the employers household, including services of family
drivers.
Art. 145. Assignment to non-household work. No househelper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.

Omnibus Rules, Book III, Rule I, Sec 2 (d) (Domestic servants)

f. Persons in the Personal Service of Another 82
g. Piece Workers 82
Omnibus Rules, Book III, Rule I, Sec 2 (e) (Workers who are paid by results)

Labor Congress vs. NLRC

99 rank and file employees of Empire food products were dismissed due to abandonment of post which
led to the spoiling of the cheese curls. They filed a case of illegal dismissal and underpayment of
wages which the LA and the NLRC dismissed due to the testimonies of the company guard as well as
the management and that the employees, being piece workers or pakiao workers, are not entitled to
underpayment of wages. Upon appeal by the employees under the Office of the Solicitor General, it
was shown to the court that the LA disregarded the testimonies of the 99 complainants because he
was of the perception that he would not be subjected to the rebuke of the NLRC if it were not for the
employees. The court held that even if petitioners are pakiao workers does not imply that they are not
regular employees. Given the fact that they perform necessary operations in the day to day operations
of Empire food, makes them regular employees. Pieceworkers, however, are not entitled to overtime
pay if the output rates are in accordance with Sec 8 Rule VII Book III or fixed rates of the Secretary of
Labor (Sec 2(e) Rule I Book III). The court found however, that Empire Foods did not adhere to the
standard in Section 8 nor with the rates of the Sec. of Labor therefore, they are not exempted from
giving overtime pay. Petition granted.

3. Normal Hours of Work 83

Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight
(8) hours a day. Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals,
except where the exigencies of the service require that such personnel work for six (6) days or fortyeight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty
percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health
personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all
other hospital or clinic personnel.

4. Compensable Hours of Work In General

Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is required
to be on duty or to be at a prescribed workplace; and (b) all time during which an employee is suffered
or permitted to work. Rest periods of short duration during working hours shall be counted as hours
worked.
a. On Duty 84(a),
Book III, Rule I, Sec 3 (a) (page 659 of Azucena): Hours worked: All time during which an employee is
required to be on duty or to be at the employers remises or to be at the prescribed work place and;
Sec (4) a: Principles in determining hours worked: All hours are hours worked which the employee is

25

required to give the employer regardless of WON such hours are spent in productive labor or involve
physical or mental exertion.
b. At Work 84(a), Book III, Rule I, Sec 3 (b): All time during which an employee is suffered or
permitted to work.

5. Specific Rules
a. Rest Period
i.)
Short Duration or coffee break
84 2nd Par
-

Book III Rule I Sec 7 2nd Par: Rest periods or coffee breaks running from 5 to 20 minutes shall be
considered as compensable working time.

Book III Rule I Sec 4 (b): An employee need not leave the premises of the workplace in order
that his rest period shall not be counted, it being enough that he stops working, may rest
completely and may leave his work place, to go elsewhere, whether within or outside the
premises of his workplace.

ii.)

More than 20 minutes

b. Meal Period
i.)
Regular Meal Period (1 hour)

Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall
be the duty of every employer to give his employees not less than sixty (60) minutes time-off for
their regular meals.
-

Book III, Rule I Section 7 1st paragraph (page 660, Azucena) : Every employer shall give his
employees, regardless of sex, not less than 1 hour time of for regular meals except for
(nonmanual labor; not less than 16 hours a day; actual or impending emergencies; work is
necessary to prevent loss of perishable goods)

Philippine Airlines v. NLRC (1999)

Dr. Herminio Fabros a flight surgeon, left the clinic to have his dinner at his residence which was only 5
minutes away. Manuel Acosta suffered a heart attack and was brought to the clinic at 7:50pm. Fabros
reached the clinic at 7:51 when the Nurse Eusebio has already left with Acosta. Acosta died the next
day.
Fabros was suspended by PAL because he abandoned his post while on duty because he was obliged to
stay in the company premises for not less than 8 hours. Fabros contested this suspension claiming that
he was entitled to a thirty minute break. LA and NLRC nullified the suspension. The court affirmed their
ruling and said that the eight hour work period does not include the meal break and no where in the
law (Art 83, 85) is it stated that employees must take their meal within the company premises.
Suspension is void.

ii.)
Shorter Meal Period (Less than 1 hour but not less than 20 minutes)
Section 7 1st par
c. Waiting Time
-

Book III Rule I, Sec 5(a): Waiting time spent by an employee shall be considered as working
time if waiting is an integral part of his work or the employee is required or engaged by the
employer to wait.

Arica v. NLRC

Workers of Standard Philippine Fruits Corporation (Stanfilco) filed a complaint against the company
claiming that the 30 minute assembly time is considered as waiting time or work time. LA and NLRC
held that an agreement of the parties includes the long standing practice of non-compensable
assembly time. The Minister of Labor, relied on by the LA and the court held that the 30 minute
assembly time was institutionalized by mutual consent of the parties under Article IV of their collective
bargaining agreement and is a deeply-rooted routinary practice of the employees. Given that their
houses are on the farms, they can attend to household chores during the assembly time and are
therefore not subject to the control of the management during this time. The assembly time is
primarily for the employees to indicate their availability or non availability for work during that day.
Petition Dismissed.

d. On Call
-

Book III, Rule I, Sec 5 (b): An employee who is required to remain on call in the employers
premises or so close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call. An employee who is not required to leave

26

word at his home or with company officials where he may be reached is NOT working while on
call.

e. Inactive due to work interruptions

-

Book III, Rule I, Sec 4(d): The time during which an employee is inactive by reason of
interruptions in his work beyond his control shall be considered time either if the imminence of
the resumption of work requires the employees presence at the place of work or if the interval
is too brief to be utilized effectively and gainfully in the employees own interest

University of Pangasinan Faculty Union v. University of Pangasinan.

The University of Pangasinan Union filed a complaint against the university for payment of the
Emergency Cost of Living Allowances or ECOLA for the semestral break as well as for salary increases
from 60 percent of the tuition increase mandated under PD 451 sec 3. The University claims that the
principle of no work no pay applies to this case and that the increase in tuition fees is for the
increasing operating expenditures, development, student assistance and ROI of the school. The court
held that no work no pay does not apply to this case because although it is a forced leave, they are
still tasked with checking papers, grading reports and other tasks during the break. Also, Section 4d of
the Omnibus Rules Implementing the Labor Code provides that time during which employee is
inactive because of interruptions in his work beyond his control shall be considered as hours worked.
As for the tuition increase, PD 451 is clear and unambiguous, 60% of the increase should be dedicated
to salary increase of the teachers. Petition granted.

f.

Work after normal hours

Book III Rule I Sec 4 (c): If the work performed was necessary, or it benefited the employer, or
the employee could not abandon his work at the end of his normal working hours because he
had no replacement, all time spent for such work shall be considered as hours worked, if the
work was with the knowledge of his employer or immediate supervisor.

g. Lectures, meetings, trainings

-

Book III Rule I Sec. 6: Attendance at lectures, meetings, training programs, and other similar
activities shall not be counted as working time if all of the following conditions are met:
i.)
Attendance is outside of the employees regular working hours
ii.)
Attendance is voluntary
iii.)
The employee does not perform any productive work during such attendance.

h. Travel time
Rada v. NLRC

Hilario Rada was hired as a truck driver for the construction supervision phase of the Manila North
Expressway Extension. Having dismissed after working for 8 years with Philnor Consultants and
Planters Inc., Rada filed a case for illegal dismissal and for overtime pay for picking up and dropping off
Philcors other employees. LA ordered his reinstatement and NLRC reversed this decision dismissing
Radas petition. The court found that Philnor hired the petitioner as a contractual or project employee
as supported by documents which show that Rada was hired and re-hired during the continually
extending duration of the project because of his satisfactory work. His services were rendered only for
a particular project.
The court however, granted the overtime compensation to Rada claiming that the pickup and drop off
was primarily for the benefit of Philnor to delay inefficiencies. Proof of this is that when Rada was
absent, another driver replaced him for the day. If it is not part of Radas job, there would be no need
to find a replacement. NLRC affirmed except with respect to overtime pay.

6. Overtime Work/Pay

Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that the
employee is paid for the overtime work, an additional compensation equivalent to his regular wage
plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or
rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a
holiday or rest day plus at least thirty percent (30%) thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be
offset by overtime work on any other day. Permission given to the employee to go on leave on some
other day of the week shall not exempt the employer from paying the additional compensation
required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be required by the employer to perform
overtime work in any of the following cases:
a. When the country is at war or when any other national or local emergency has been declared by the
National Assembly or the Chief Executive;

27

b. When it is necessary to prevent loss of life or property or in case of imminent danger to public safety
due to an actual or impending emergency in the locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other disaster or calamity;
c. When there is urgent work to be performed on machines, installations, or equipment, in order to
avoid serious loss or damage to the employer or some other cause of similar nature;
d. When the work is necessary to prevent loss or damage to perishable goods; and
e. Where the completion or continuation of the work started before the eighth hour is necessary to
prevent serious obstruction or prejudice to the business or operations of the employer. Any employee
required to render overtime work under this Article shall be paid the additional compensation required
in this Chapter.
Art. 90. Computation of additional compensation. For purposes of computing overtime and other
additional remuneration as required by this Chapter, the "regular wage" of an employee shall include
the cash wage only, without deduction on account of facilities provided by the employer.
Book III, Rule I, Secs. 8-11 (see page 660, Azucena) (8: overtime pay: 25%, 9: Premium and
Overtime pay for holiday and rest day work: not less than 30% of his regular wage; 10: Compulsory
Overtime work; 11: Computation: regular wage without deduction of facilities provided by employer.)

a.
b.
c.
d.

Overtime in ordinary working day 87, Book III, Rule I, Secs. 8

Emergency or compulsory overtime work -89
Undertime work/leave - 88
Additional Compensation 87
7. Night Work

Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less
than ten percent (10%) of his regular wage for each hour of work performed between ten oclock in
the evening and six oclock in the morning.

a. Coverage/ Exclusion Sec 1 Book III, RULE II Night Shift Differential

SECTION 1. Coverage. This Rule shall apply to all employees except: (a) Those of the government
and any of its political subdivisions, including government-owned and/or controlled corporations; (b)
Those of retail and service establishments regularly employing not more than five (5) workers; (c)
Domestic helpers and persons in the personal service of another; (d) Managerial employees as
defined in Book Three of this Code; (e) Field personnel and other employees whose time and
performance is unsupervised by the employer including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof.
SECTION 2. Night shift differential. An employee shall be paid night shift differential of no less than
ten per cent (10%) of his regular wage for each hour of work performed between ten o'clock in the
evening and six o'clock in the morning.
SECTION 3. Additional compensation. Where an employee is permitted or suffered to work on the
period covered after his work schedule, he shall be entitled to his regular wage plus at least twentyfive per cent (25%) and an additional amount of no less than ten per cent (10%) of such overtime rate
for each hour or work performed between 10 p.m. to 6 a.m.
SECTION 4. Additional compensation on scheduled rest day/special holiday. An employee who is
required or permitted to work on the period covered during rest days and/or special holidays not falling
on regular holidays, shall be paid a compensation equivalent to his regular wage plus at least thirty
(30%) per cent and an additional amount of not less than ten (10%) per cent of such premium pay rate
for each hour of work performed.
SECTION 5. Additional compensation on regular holidays. For work on the period covered during
regular holidays, an employee shall be entitled to his regular wage during these days plus an
additional compensation of no less than ten (10%) per cent of such premium rate for each hour of work
performed.

28

SECTION 6. Relation to agreements. Nothing in this Rule shall justify an employer in withdrawing or
reducing any benefits, supplements or payments as provided in existing individual or collective
agreements or employer practice or policy.
SECTION 1. General statement on coverage. The provisions of this Rule shall apply to all employees
in all establishments and undertakings, whether operated for profit or not, except to those specifically
exempted under Section 2 hereof.

b. Additional Compensation
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not less
than ten percent (10%) of his regular wage for each hour of work performed between ten oclock in the
evening and six oclock in the morning.
-

Rule II, Sec 2 3 4 5

Shell Oil Co. of the Philippines, Ltd. v. National Labor Union

Acting on a request by the National Labor Union, The industrial relations court rendered a decision
allowing a 50% in salary for the night shift workers of Shell Oil Company. Shell Oil had to hire workers
for night shifts because the plane from abroad often land an take off at night and chores such as
supplying gasoline, lubricants and other duties are needed to be performed. Shell invokes
Commonwealth Act 444 which does not provide that night work is considered overtime work but rather
provides that it is when work goes over 8 hours a day that compensation is required and that also, CIR
has no jurisdiction.
The petitioner employees on the other hand contend that it is Commonwealth Act No. 103 that is in
force. 103 stipulates that differences arising from wages, compensation, hours of work or conditions of
employment are taken cognizance by the Court of Industrial relations.
The court concludes that CA 444 pertains only to wages or compensation during the day of Sunday
and holidays and goes on a lengthy discussion about the effects of night work. They say that there are
injurious effects of permanently remote nightwork manifested in the later years of the employees life.
The workers social life is also disarranged, including the recreational activities of his leisure hours and
family relations. From on economic point of view, nightwork has an adverse effect on efficiency and
output. There is also a moral argument in the case of women working out late.
Night was made for rest and sleep and not for work

B. Weekly Rest Periods

Art. 91. Right to weekly rest day.

a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to
collective bargaining agreement and to such rules and regulations as the Secretary of Labor and
Employment may provide. However, the employer shall respect the preference of employees as to
their weekly rest day when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his
employees to work on any day:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent
danger to public safety;
b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid
serious loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of
Labor and Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee shall be

29

entitled to such additional compensation for work performed on Sunday only when it is his established
rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty
percent (30%) of his regular wage for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee. Where such holiday work falls on the employees
scheduled rest day, he shall be entitled to an additional compensation of at least fifty per cent (50%)
of his regular wage.
d. Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Article, the employer shall pay such
higher rate.
Book III RULE III: Weekly Rest Periods
SECTION 1. General statement on coverage. This Rule shall apply to all employers whether
operating for profit or not, including public utilities operated by private persons.
SECTION 2. Business on Sundays/Holidays. All establishments and enterprises may operate or open
for business on Sundays and holidays provided that the employees are given the weekly rest day and
the benefits as provided in this Rule.
SECTION 3. Weekly rest day. Every employer shall give his employees a rest period of not less than
twenty-four (24) consecutive hours after every six consecutive normal work days.
SECTION 4. Preference of employee. The preference of the employee as to his weekly day of rest
shall be respected by the employer if the same is based on religious grounds. The employee shall
make known his preference to the employer in writing at least seven (7) days before the desired
effectivity of the initial rest day so preferred. Where, however, the choice of the employee as to his rest
day based on religious grounds will inevitably result in serious prejudice or obstruction to the
operations of the undertaking and the employer cannot normally be expected to resort to other
remedial measures, the employer may so schedule the weekly rest day of his choice for at least two
(2) days in a month.
SECTION 5. Schedule of rest day. (a) Where the weekly rest is given to all employees
simultaneously, the employer shall make known such rest period by means of a written notice posted
conspicuously in the work place at least one week before it becomes effective.
(b) Where the rest period is not granted to all employees simultaneously and collectively, the employer
shall make known to the employees their respective schedules of weekly rest through written notices
posted conspicuously in the work place at least one week before they become effective.
SECTION 6. When work on rest day authorized. An employer may require any of his employees to
work on his scheduled rest day for the duration of the following emergencies and exceptional
conditions:
(a) In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity, to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or installations to avoid serious
loss which the employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special circumstances, where the employer
cannot ordinarily be expected to resort to other measures;
(d) To prevent serious loss of perishable goods;

30

(e) Where the nature of the work is such that the employees have to work continuously for seven (7)
days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in
other similar cases; and
(f) When the work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.
No employee shall be required against his will to work on his scheduled rest day except under
circumstances provided in this Section: Provided, However, that where an employee volunteers to work
on his rest day under other circumstances, he shall express such desire in writing, subject to the
provisions of Section 7 hereof regarding additional compensation.
SECTION 7. Compensation on rest day/Sunday/holiday. (a) Except those employees referred to under
Section 2, Rule I, Book Three, an employee who is made or permitted to work on his scheduled rest day
shall be paid with an additional compensation of at least 30% of his regular wage. An employee shall
be entitled to such additional compensation for work performed on a Sunday only when it is his
established rest day.
(b) Where the nature of the work of the employee is such that he has no regular work days and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of his
regular wage for work performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid with an additional compensation of at least
30% of the regular wage of the employees. Where such holiday work falls on the employee's scheduled
rest day, he shall be entitled to additional compensation of at least 50% of his regular wage.
(d) The payment of additional compensation for work performed on regular holiday shall be governed
by Rule IV, Book Three, of these regulations.
(e) Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Section, the employer shall pay such
higher rate.
SECTION 8. Paid-off days. Nothing in this Rule shall justify an employer in reducing the
compensation of his employees for the unworked Sundays, holidays, or other rest days which are
considered paid-off days or holidays by agreement or practice subsisting upon the effectivity of the
Code.
SECTION 9. Relation to agreements. Nothing herein shall prevent the employer and his employees or
their representatives in entering into any agreement with terms more favorable to the employees than
those provided herein, or be used to diminish any benefit granted to the employees under existing
laws, agreements, and voluntary employer practices.

Caltex Regular Employees, etc. vs. Caltex (Phils.) Inc. and NLRC

Caltex Regular Employees Association called Caltexs attention to the non payment of night shift
differential and overtime pay for work performed during a Saturday as stipulated in their collective
bargaining agreement. After promises by the company, the workers were paid excluding the first 2
hours of Saturday. The Union filed a complaint of unfair labor practice against Caltex because in effect
they were paying regular rates during Saturdays which was supposed to be a day of rest or day off.
Caltex claimed that Saturday was never designated as a day of rest in their CBA.
LA ruled for the Union and this decision was set aside by NLRC for lack of evidence. The court is not
asked to interpret Article III and Annex B of the CBA which provides that Caltex agreed to pay day of
rest rates for work performed on an employees day of rest The Union mistakenly interpreted Annex
B, which was intended only as a guide, to appropriate Saturday as a day of rest. The decision of the
labor arbiter therefore was based on mere allegation by the Union.
The court held that Saturday is not a day off. Extra compensation applies only when the worker is
made to work for an excess of 40 hours per calendar week. (Union was unable to show grave abuse of
discretion in the part of NLRC.) Petition Dismissed.

1.

Coverage

31

Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations. As used herein, "managerial employees" refer to
those whose primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof, and to other officers or members of the
managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to
collective bargaining agreement and to such rules and regulations as the Secretary of Labor and
Employment may provide. However, the employer shall respect the preference of employees as to
their weekly rest day when such preference is based on religious grounds.
Book III RULE III Weekly Rest Periods SECTION 1. General statement on coverage. This Rule shall
apply to all employers whether operating for profit or not, including public utilities operated by private
persons.

2.

Determination, Compulsory work, Compensation

WEEKLY REST PERIODS

Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his employees subject to
collective bargaining agreement and to such rules and regulations as the Secretary of Labor and
Employment may provide. However, the employer shall respect the preference of employees as to
their weekly rest day when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his
employees to work on any day:
a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity to prevent loss of life and property, or imminent
danger to public safety;
b. In cases of urgent work to be performed on the machinery, equipment, or installation, to avoid
serious loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as determined by the Secretary of
Labor and Employment.

Manila Electric Company v. Public Utilities Employees Association

Manila Electric, the petitioner, assails the decision of the CIR that they should grant 1 day vacation
with pay to every workingman who had worked for 7 consecutive days including Sundays and that
because Sundays and holidays are for rest, the CIR interposed a 50% increase in pay for work during
these times.
Manila Electric contends that the decision is against the provision of Sec 4 Commonwealth Act 444
which provides that the prohibition shall not apply to public utilities performing some public service
such a supplying gas, electricity, power, water or providing means of transportation or communication
The court held that the decision of the CIR is erroneous and contrary to CA 444 because appellant is a
public utility which supplies electricity and is therefore obviously exempted from the prohibition. They

32

may compel workers to work on Sunday without extra compensation because public utilities are
exempted from the prohibition given that they are required to perform a continuous service including
Sundays.
The purpose of the Rule (CA 444) is to restrict the power of the CIR given in Act 103, to fix the
minimum additional compensation and to exempt public utilities affected with public interest from
payment of compensation. The rling of the CIR is therefore contrary to law.

3.

Premium Pay

4.

CBA on higher premium pay

Art. 93. Compensation for rest day, Sunday or holiday work.

a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee shall be
entitled to such additional compensation for work performed on Sunday only when it is his established
rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty
percent (30%) of his regular wage for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional compensation of at least thirty
percent (30%) of the regular wage of the employee. Where such holiday work falls on the employees
scheduled rest day, he shall be entitled to an additional compensation of at least fifty per cent (50%)
of his regular wage.

d. Where the collective bargaining agreement or other applicable employment contract stipulates the
payment of a higher premium pay than that prescribed under this Article, the employer shall pay such
higher rate.

C. Holidays

[ REPUBLIC ACT NO. 9492 ] amending EO 203

AN ACT RATIONALIZING THE CELEBRATION OF NATIONAL HOLIDAYS AMENDING FOR THE PURPOSE
SECTION 26, CHAPTER 7, BOOK I OF EXECUTIVE ORDER NO. 292, AS AMENDED, OTHERWISE KNOWN
AS THE ADMINISTRATIVE CODE OF 1987.
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
SECTION 1. Section 26, Chapter 7, Book I of Executive Order No. 292, as amended, otherwise known
as the Administrative Code of 1987, is hereby amended to read as follows:
Sec. 26, Regular Holidays and Nationwide Special Days. (1) Unless otherwise modified by
law, and or proclamation, the following regular holidays and special days shall be observed in the
country:
a) Regular Holidays
New years Day
Maundy Thursday
Good Friday
Eidul Fitr
Araw ng Kagitingan
(Bataaan and Corregidor Day)
Labor Day
Independence Day
National Heroes Day
Bonifacio Day
Christmas Day
Rizal Day

January 1
Movable date
Movable date
Movable date
Monday nearest April 9
-

Monday nearest May 1

Monday nearest June 12
Last Monday of August
Monday nearest November 30
December 25
Monday nearest December 30

Monday nearest August 21

b) Nationwide Special Holidays:

Ninoy Aquino Day

33

All Saints Day

Last Day of the Year
c)

November 1
December 31

In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of
the week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that
follows:
Provided, That for movable holidays, the President shall issue a proclamation, at least
six months prior to the holiday concerned, the specific date that shall be declared as a
nonworking day:
Provided, however, The Eidul Adha shall be celebrated as a regional holiday in the
Autonomous Region in Muslim Mindanao.

SEC. 2. All laws, orders, presidential issuances, rules and regulations

inconsistent with this Act are hereby repealed or modified accordingly.

or part thereof

SEC. 3. This Act shall take effect after fifteen (15) days following its publication in at least two
newspapers of general circulation.

PD 1083 (Code of Muslim Personal Laws)

1.
Coverage/ Exclusions

Art. 94. Right to holiday pay.

a. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;
Book III RULE IV Holidays with Pay
SECTION 1. Coverage. This rule shall apply to all employees except:
(a) Those of the government and any of the political subdivision, including government-owned and
controlled corporation;
(b) Those of retail and service establishments regularly employing less than ten (10) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book Three of the Code;
(e) Field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.

Definition
a. Retail Establishment: Rules Implementing RA 6727 par f

RULES IMPLEMENTING REPUBLIC ACT NO. 6727. Pursuant to the authority granted to the
Secretary of Labor and Employment under Section 13 of Republic Act No. 6727, otherwise known as
the Wage Rationalization Act, the following rules are hereby issued for guidance and compliance by all
concerned:
Pursuant to the authority granted to the Secretary of Labor and Employment under Section 13 of
Republic Act No. 6727, otherwise known as the Wage Rationalization Act, the following rules are hereby
issued for guidance and compliance by all concerned:
Definition of Terms. As used in this Rules -

34

f."Retail Establishment" is one principally engaged in the sale of goods to end-users for personal or
household use;

b. Service Establishment: par g

g."Service Establishment" is one principally engaged in the sale of service to individuals for their own
or household use and is generally recognized as such;

Mantrade/FMMC Division Employees and Workers Union v. Arbitator Bacungan

and Mantrade Corp

Mantrade Union questions the validity of Art 94 of the LC providing holiday pay. The respondent
Corporation says that the petitioner is barred from pursuing the present action regarding the holiday
pay because it was already held that any stipulation of the arbitrators award shall be final and
executory under Art 2044, CC. Respondent Arbitrator stated that although monthly salaried employees
are not among those excluded in Art 94 of the LC, Sec 2 Rule IV Book III of the omnibus rules provides
otherwise (SECTION 2. Status of employees paid by the month. Employees who are uniformly paid
by the month, irrespective of the number of working days therein, with a salary of not less than the
statutory or established minimum wage shall be paid for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve.)
The court held that In Insular Bank of Asia v. Inciong, the Section was considered void because it
AMENDED the provision of holiday pay by including monthly paid employees thus enlarging the scope.
It is clear in Art 94, LC that monthly paid employees are not excluded from the benefits of holiday pay.
Chartered Bank Employees Association v. Ople also reiterated this ruling. Therefore, the court
concluded that it is the legal duty of the Corporation to grant the holiday pay. The decision of the
Arbitrator is set aside.

2.

Holiday Pay

Art. 94. Right to holiday pay. b. The employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to twice his regular rate; and

a. Faculty in Private School Book III Rule IV SECTION 8. Holiday pay of certain employees. (a)
Private school teachers, including faculty members of colleges and universities, may not be
paid for the regular holidays during semestral vacations. They shall, however, be paid for the
regular holidays during Christmas vacation;
(b) Where a covered employee, is paid by results or output, such as payment on piece work, his
holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday; Provided, However, that in no case shall the holiday pay be less than
the applicable statutory minimum wage rate.
(c) Seasonal workers may not be paid the required holiday pay during off-season when they are not at
work.
(d) Workers who have no regular working days shall be entitled to the benefits provided in this Rule.

Jose Rizal College v. NLRC

The National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty of Jose Rizal
College, filed a complaint with the Ministry of Labor for non-payment of holiday pay. The issue in the
case is WON school faculty whoa re aid per lecture per hour are entitled to holiday pay. Petitioner
maintains that it is not covered by Book V of the LC and that its hourly paid employees are paid on a
contact basis.
The Solicitor General Argued that holiday pay applies to all employees except those in retail/ service
establishments because the purpose of holiday pay is to prevent diminution of the monthly income of
the workers on account of work interruptions; although the worker is forced to take a rest, he should
earn what he should earn. Under Art 94,LC and Rule IV Book III Section A, although JRC is a non-profit

35

institution, it is under the obligation to give pay even on unworked regular holidays to the hourly paid
faculty members because of the purpose of the holiday pay as stated earlier.
The court held that for the hourly paid teachers, it is already understood that when they entered their
contracts, they should not expect payment for the no class days or the regular holidays. For Special
Public holidays, the regular class day is cancelled and the hourly paid teacher does not earn what he
should earn that day. Therefore, for special holidays, the petitioner should pay their hourly paid
teachers.
SECTION 8. Holiday pay of certain employees. (a) Private school teachers, including faculty
members of colleges and universities, may not be paid for the regular holidays during semestral
vacations. They shall, however, be paid for the regular holidays during Christmas vacation; (b) Where a
covered employee, is paid by results or output, such as payment on piece work, his holiday pay shall
not be less than his average daily earnings for the last seven (7) actual working days preceding the
regular holiday; Provided, However, that in no case shall the holiday pay be less than the applicable
statutory minimum wage rate. (c) Seasonal workers may not be paid the required holiday pay during
off-season when they are not at work. (d) Workers who have no regular working days shall be entitled
to the benefits provided in this Rule.

b. Divisor as Factor

Trans-Asia Phil Employees Association (TAPEA)v. NLRC

TAPEA entered into a Collective Bargaining Agreement with their employer with the stipulation that on
a legal holiday, the employee is entitled to 200% of the regular daily wage and a 60% premium pay.
Due to non-compliance of their employer, TAPEA filed a complaint for the non inclusion of the holiday
pays in their monthly pay. They showed the Employees manual, the appointment papers of their
employer as well as the CBA itself as proof that their employer does not include their holiday pay in
their monthly salary. TransAsia contended that these do not prove their non-payment of holiday pay
stating that they have used the 286 divisor in computing for the employees overtime pay which is
based on RA 6640 where 262 is used instead of 286. (52 weeks/yr x 44 hours per week 8 work hours
per day = 286); (262 + 26 working Saturdays of employees = 286, their divisor). The LA dismissed the
complaint and was affirmed by the NLRC. Thus this petition. The court held that the use of 286 clearly
shows the inclusion of the employees benefits and deductions in Trans-Asias computation. The court
upheld the decision of the NLRC with the slight modification of changing the divisor to 287 to include
the regular and special holidays as set in EO 203.

c. Sunday: Art. 93. Compensation for rest day, Sunday or holiday work.

a. Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage. An employee shall be
entitled to such additional compensation for work performed on Sunday only when it is his established
rest day.
b. When the nature of the work of the employee is such that he has no regular workdays and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least thirty
percent (30%) of his regular wage for work performed on Sundays and holidays.
Book III Rule III SECTION 2. Business on Sundays/Holidays. All establishments and enterprises may
operate or open for business on Sundays and holidays provided that the employees are given the
weekly rest day and the benefits as provided in this Rule.
SECTION 9. Regular holiday falling on rest days or Sundays. (a) A regular holiday falling on the
employee's rest day shall be compensated accordingly. (b) Where a regular holiday falls on a Sunday,
the following day shall be considered a special holiday for purposes of the Labor Code, unless said day
is also a regular holiday.

Wellington Investment Inc. v. Trajano

A routine inspection by the Labor enforcement officer held that Wellington flour wills did not pay
regular holidays falling on Sunday for monthly paid employees. The petitioner raised the issue of WON
a monthly paid employee receiving a fixed monthly compensation is entitled to additional pay aside
from his usual holiday pay whenever a regular holiday pay falls on a Sunday. The petitioner contends
that it uses the 314 factor and that it undeniably covers and already includes payment for all the
working days of the month including the 10 unworked regular holidays. On a motion for
reconsideration, the Undersecretary affirmed the order of the regional director finding the divisor of

36

Wellington does not reflect the actual working days in a year.

The court held that Wellington was paying the holiday pay according to Art 94 of LC. That at the time
of inspection, wellington was already paying its employees a salary not less than the statutory or
established minimum wage. The 314 facor simply deducts the 51 Sundays from the 365 days per year
to determine the monthly salary which in effect leaves no day unaccounted for during the 365 day
year. To uphold the ruling of the undersecretary that the 317 factor should be used in the year of 1988
(because of the regular holidays falling on a Sunday that year) would make it a year of 368 days. The
public respondents have acted beyond their authority in using the power to order and administer given
to the Regional director under Sec 2 Rule X Book III. Undersecretary and Regional Directors orders are
nullified.

d. Muslim Holiday
PD 1083 169-172
Article 169. Official Muslim holidays. The following are hereby recognized as legal Muslim holidays:
(a) 'Amun Jadid (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nabi (Birthday of the Prophet Muhammad), which falls on the twelfth day of the
third lunar month of Rabi-ul-Awwal;
(c) Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of the Prophet Muhammad), which
falls on the twenty-seventh day of the seventh lunar month of Rajab;
(d) 'Id-ul-Fitr (Hari Raya Pausa), which falls on the first day of the tenth lunar month of
Shawwal, commemorating the end of the fasting season; and
(e) 'Id-ul-Adha (Hari Raja Haji), which falls on the tenth day of the twelfth lunar month of Dhu 1Hijja.
Article 170. Provinces and cities where officially observed.
(1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte,
Lanao del Sur, Maguindanao, North Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del
Norte and Zamboanga del Sur, and in the Cities of Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter be created.
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.
Article 171. Dates of observance. The dates of Muslim holidays shall be determined by the Office of the
President of the Philippines in accordance with the Muslim Lunar Calendar (Hijra).
Article 172. Observance of Muslim employees.
(1) All Muslim government officials and employees in places other than those enumerated
under Article 170 shall also be excused from reporting to office in order that they may be able
to observe Muslim holidays.
(2) The President of the Philippines may, by proclamation, require private offices, agencies or
establishments to excuse their Muslim employees from reporting for work during a Muslim
holiday without reduction in their usual compensation.

SMC v. CA

The Department of Labor and Employment conducted a routine inspection in San Miguel, Iligan finding
that there was underpayment by SMC of regular Muslim Holiday pay to its employees. Director of DOLE

37

issue a compliance order from which SMC filed an appeal. SMCs appeal was dismissed. CA ruled that
SMC should pay muslim holiday (150% of basic salary) thus this petition for certiorari.
The court upheld the decision of the CA citing PD 1083 (Sec 169-170) and 94, LC. Petitioner asserts
that the provisions of PD 1083 (Art 3(3) of the PD) should be applicable only to muslims. The court held
however, that there should be no distinction between muslims and non-m as regard the payment of
benefits. (Only if maam asks: Given Art 128 of the LC as amended by RA 7730, Regional director
Macarayas issuing of the compliance order is within his power) The petition is dismissed.

3.

Absences

Book III Rule IV SECTION 6. Absences. (a) All covered employees shall be entitled to the benefit
provided herein when they are on leave of absence with pay. Employees who are on leave of absence
without pay on the day immediately preceding a regular holiday may not be paid the required holiday
pay if he has not worked on such regular holiday.
(b) Employees shall grant the same percentage of the holiday pay as the benefit granted by competent
authority in the form of employee's compensation or social security payment, whichever is higher, if
they are not reporting for work while on such benefits.
(c) Where the day immediately preceding the holiday is a non-working day in the establishment or the
scheduled rest day of the employee, he shall not be deemed to be on leave of absence on that day, in
which case he shall be entitled to the holiday pay if he worked on the day immediately preceding the
non-working day or rest day.
SECTION 10. Successive regular holidays. Where there are two (2) successive regular holidays, like
Holy Thursday and Good Friday, an employee may not be paid for both holidays if he absents himself
from work on the day immediately preceding the first holiday, unless he works on the first holiday, in
which case he is entitled to his holiday pay on the second holiday.

4.

Non-Working day/Schedule. Rest Day. Section 6 c

Book III Rule IV SECTION 6. Absences. (c) Where the day immediately preceding the holiday is a nonworking day in the establishment or the scheduled rest day of the employee, he shall not be deemed
to be on leave of absence on that day, in which case he shall be entitled to the holiday pay if he
worked on the day immediately preceding the non-working day or rest day.

D. Service Incentive Leave Book III RULE V Service Incentive Leave

SECTION 1. Coverage. This rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including government-owned
and controlled corporations;
(b) Domestic helpers and persons in the personal service of another;
(c) Managerial employees as defined in Book Three of this Code;
(d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those
who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof;
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; and
(g) Those employed in establishments regularly employing less than ten employees.

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SECTION 2. Right to service incentive leave. Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
SECTION 3. Definition of certain terms. The term "at least one-year service" shall mean service for
not less than 12 months, whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contract is less
than 12 months, in which case said period shall be considered as one year.
SECTION 4. Accrual of benefit. Entitlement to the benefit provided in this Rule shall start December
16, 1975, the date the amendatory provision of the Code took effect.
SECTION 5. Treatment of benefit. The service incentive leave shall be commutable to its money
equivalent if not used or exhausted at the end of the year.
SECTION 6. Relation to agreements. Nothing in the Rule shall justify an employer from withdrawing
or reducing any benefits, supplements or payments as provided in existing individual or collective
agreements or employer's practices or policies.

1.

Coverage

Art. 95. Right to service incentive leave.

a. Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
b. This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment.
c. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or
any court or administrative action.

Makati Haberdashery Inc. v. NLRC

Respondents have been working for Makati Haberdashery as tailors, seamstress, basters and
plantsadoras. They are paid on a piece rate basis and are given a daily allowance of 3 pesos to report
for work before 9:30 am everyday. They are required to work from Monday to Saturday and even
Sundays on peak periods. The workers filed a complaint for underpayment, nonpayment of overtime
work, non payment of service incentive pay.
During the pendency of the case, respondent Pelobello left a jusi barong tagalog with Zapata who
admitted he as copying the design. A memorandum was issued to each of them which they did not
reply to, instead, they did not report for work and thus they were dismissed by petitioners. LA found
respondents to have violated cost of living allowance, service incentive leave pay and 13 th month. This
was affirmed by NLRC. Thus this petition.
The court found that the petitioners were the employers of the respondents using the four fold test and
the memorandum as the courts basis. They also found that the Respondents are entitled to the
minimum wage, COLA and 13th month pay but they are NOT entitled to service incentive leave pay
because as piece-rate workers, they are being paid at a fixed amount irrespective of the time
consumed. They fall under the exceptions in Book III Rule V 1(d).
Also, their blatant disregard of their employers memorandum is an open defiance to their lawful
orders. It should not be assumed that every labor dispute would be decided in favor of labor.
Haberdashery had lawful ground in terminating them.
Decision of NLRC modified. Complaint for illegal dismissal dismissed.

Labor Congress v. NLRC supra

99 rank and file employees of Empire food products were dismissed due to abandonment of post which
led to the spoiling of the cheese curls. They filed a case of illegal dismissal and underpayment of
wages which the LA and the NLRC dismissed due to the testimonies of the company guard as well as
the management and that the employees, being piece workers or pakiao workers, are not entitled to
underpayment of wages. Upon appeal by the employees under the Office of the Solicitor General, it
was shown to the court that the LA disregarded the testimonies of the 99 complainants because he
was of the perception that he would not be subjected to the rebuke of the NLRC if it were not for the

39

employees. The court held that even if petitioners are pakiao workers does not imply that they are not
regular employees. Given the fact that they perform necessary operations in the day to day operations
of Empire food, makes them regular employees. Pieceworkers, however, are not entitled to overtime
pay if the output rates are in accordance with Sec 8 Rule VII Book III or fixed rates of the Secretary of
Labor (Sec 2(e) Rule I Book III). The court found however, that Empire Foods did not adhere to the
standard in Section 8 nor with the rates of the Sec. of Labor therefore, they are not exempted from
giving overtime pay. Petition granted.
Section 1 (e), Rule II, Sec. 1(e) Rule IV and Sec. 1(d), Rule V of Book II
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, field personnel and
other employees whose time and performance is unsupervised by the employer, including those who
are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the performance thereof. Plainly, petitioners
as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor
under the control of private respondents as their employer, likewise did petitioners toil throughout the
year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b),
Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled
to holiday pay.

2.

Requirements
E. Paternity Leave
RA 8187, Sec 1-6 AND implementing guidelines
1.
Coverage
2.
Requirements
3.
Employment- related rights and benefits
F. Parental Leave
RA 8972 (Solo Parents Welfare Act of 2000)
1.
Coverage
2.
Requirements
3.
Employment- related rights and benefits
G. Victims Leave

RA 9262 Sec 43 March 08, 2004 AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR
CHILDREN, PROVIDING FOR PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING PENALTIES
THEREFORE, AND FOR OTHER PURPOSES
SECTION 43. Entitled to Leave. Victims under this Act shall be entitled to take a paid leave of
absence up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service
Rules and Regulations, extendible when the necessity arises as specified in the protection order.
Any employer who shall prejudice the right of the person under this section shall be penalized in
accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an
employer who shall prejudice any person for assisting a co-employee who is a victim under this Act
shall likewise be liable for discrimination.
Implementing Rules Section 42. Ten-day paid leave in addition to other leave benefits. - At any
time during the application of any protection order, investigation, prosecution and/or trial of the
criminal case, a victim of VAWC who is employed shall be entitled to a paid leave of up to ten (10) days
in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations and
other existing laws and company policies, extendible when the necessity arises as specified in the
protection order. The Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may
be, shall issue a certification at no cost to the woman that such an action is pending, and this is all that
is required for the employer to comply with the 10-day paid leave. For government employees, in
addition to the aforementioned certification, the employee concerned must file an application for leave
citing as basis R.A. 9262. The administrative enforcement of this leave entitlement shall be considered
within the jurisdiction of the Regional Director of the DOLE under Article 129 of the Labor Code of the
Philippines, as amended, for employees in the private sector, and the Civil Service Commission, for
government employees.

40

The availment of the ten day-leave shall be at the option of the woman employee, which shall cover
the days that she has to attend to medical and legal concerns. Leaves not availed of are
noncumulative and not convertible to cash.
The employer/agency head who denies the application for leave, and who shall prejudice the victimsurvivor or any person for assisting a co-employee who is a victim-survivor under the Act shall be held
liable for discrimination and violation of R.A 9262.
The provision of the Labor Code and the Civil Service Rules and Regulations shall govern the penalty to
be imposed on the said employer/agency head.

H. Service Charges

Art. 96. Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees
and fifteen percent (15%) for management. The share of the employees shall be equally distributed
among them. In case the service charge is abolished, the share of the covered employees shall be
considered integrated in their wages.

Book III Rule VI Service Charges

SECTION 1. Coverage. This rule shall apply only to establishments collecting service charges such as
hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and
gambling houses, and similar enterprises, including those entities operating primarily as private
subsidiaries of the Government.
SECTION 2. Employees covered. This rule shall apply to all employees of covered employers,
regardless of their positions, designations or employment status, and irrespective of the method by
which their wages are paid except to managerial employees.
As used herein, a "managerial employee" shall mean one who is vested with powers or prerogatives to
lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign, or discipline employees or to effectively recommend such managerial actions. All employees
not falling within this definition shall be considered rank-and-file employees.
SECTION 3. Distribution of service charges. All service charges collected by covered employers shall
be distributed at the rate of 85% for the employees and 15% for the management. The 85% shall be
distributed equally among the covered employees. The 15% shall be for the disposition by
management to answer for losses and breakages and distribution to managerial employees at the
discretion of the management in the latter case.
SECTION 4. Frequency of distribution. The shares referred to herein shall be distributed and paid to
the employees not less than once every two (2) weeks or twice a month at intervals not exceeding
sixteen (16) days.
SECTION 5. Integration of service charges. In case the service charges is abolished the share of
covered employees shall be considered integrated in their wages. The basis of the amount to be
integrated shall be the average monthly share of each employee for the past twelve (12) months
immediately preceding the abolition of withdrawal of such charges.
SECTION 6. Relation to agreements. Nothing in this Rule shall prevent the employer and his
employees from entering into any agreement with terms more favorable to the employees than those
provided herein, or be used to diminish any benefit granted to the employees under existing laws,
agreement and voluntary employer practice.
SECTION 7. This rule shall be without prejudice to existing, future collective bargaining agreements.

41

Nothing in this rule shall be construed to justify the reduction or diminution of any benefit being
enjoyed by any employee at the time of effectivity of this rule.

1.
2.

Covered Employees - 96
Sharing - 96
5. Minimum Wages and Wage Fixing Machinery
97-119, Omnibus Rules Book III Rules VII-VIII
A. Minimum Wages 99

Art. 99. Regional minimum wages. The minimum wage rates for agricultural and nonagricultural
employees and workers in each and every region of the country shall be those prescribed by the
Regional Tripartite Wages and Productivity Boards. (As amended by Section 3, Republic Act No. 6727,
June 9, 1989).
1987 Constitution, ARTICLE XIII LABOR
Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all. It shall
guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled
to security of tenure, humane conditions of work, and a living wage. They shall also participate in
policy and decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace. The State shall regulate the relations between
workers and employers, recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to expansion and growth.

1.

General Principles

a. No work, no pay OR A fair days wage for a fair days labor

Atok Big Wedge Mining Co. Inc. v. Atok Big Wedge Mutual Benefit Association

A demand was sent to Atok Big Wedge Mining Corp by the Officers of the companys union which the
CIR fixed the wage at P3.20 declaring that additional compensation representing efficiency bonus
should not be included as part of the wage.
The court ruled ruling that P2.58 as provided by RA 602 is only the minimum amount needed by the
laborer and his family AND that a persons needs increase as his means increase. That the law
guarantees the laborer a fair and just wage therefore the minimum must be fair and just. The extra
amount of P0.22 a day is not excessive for the purpose of improving the workers mode of living.
As for the efficiency bonus, it should not be part of the minimum wage the same as living quarters
because the bonus is given when actual work accomplished is efficient and is paid as a prize, therefore
not part of the wage. Petition dismissed.

Aklan Electric Corp., Inc. v. NLRC

The main office in Lezo. Aklan, was, BY RESOLUTION, temporarily moved to Kalibo Aklan because it was
dangerous to hold office at Lezo during the time. Despite the resolution, a majority of the workers
continued to report at Lezo and were not paid their wages. When it was safe the work at Lezo again,
the workers and the office were removed from Kalibo. Herein complainants however, reported for work
at Lezo and were not paid their salaries from Apr to May 1993. Complainant and 163 other workers
submitted a complaint for non-payment of wages. LA dismissed complaint. NLRC reversed the decision
of the LA and ordered AEC to pay wages. The petitioner assailed the decision in this petition for
certiorari saying that NLRC committed grave abuse of discretion when it reversed the findings of the
LA that the workers refused to work under the lawful orders of AEOs management and therefore, they
are not covered by the no work, no pay claim for unpaid wages.
The court found that the letter of the exchange of letters between Leyson (one of the complainants)
and Mationg (the general manager), as well as the computation used as basis for the request of the
unpaid wages are self serving and that the temporary resolution of AEO should be given credence. If
there is no work performed by the employee there can be no wage pay unless the laborer was able
willing and ready to work but was ILLEGALLY locked out, suspended or dismissed. In this case, the
company legally transferred it business to Kalibo without prejudice to its workers. NLRC decision
reversed.

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b. Equal pay for work of equal value 135, 248

Art. 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against
any woman employee with respect to terms and conditions of employment solely on account of her
sex.
The following are acts of discrimination:
a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employees as against a male employee, for work of equal value; and
b. Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes. Criminal liability for the
willful commission of any unlawful act as provided in this Article or any violation of the rules and
regulations issued pursuant to Section 2 hereof shall be penalized as
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action
under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and other affirmative reliefs. The
actions hereby authorized shall proceed independently of each other. (As amended by Republic Act No.
6725, May 12, 1989)
Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any
of the following unfair labor practice:
a. To interfere with, restrain or coerce employees in the exercise of their right to selforganization;
b. To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;
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 rights to selforganization;
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;
e. To discriminate in regard to wages, hours of work and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. Nothing in this Code or in any
other law shall stop the parties from requiring membership in a recognized collective bargaining agent
as a condition for employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement. Employees of an appropriate bargaining
unit who are not members of the recognized collective bargaining agent may be assessed a reasonable
fee equivalent to the dues and other fees paid by members of the recognized collective bargaining
agent, if such non-union members accept the benefits under the collective bargaining agreement:
Provided, that the individual authorization required under Article 242, paragraph (o) of this Code shall
not apply to the non-members of the recognized
collective bargaining agent;
f. To dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or
being about to give testimony under this Code;
g. To violate the duty to bargain collectively as prescribed by this Code;
h. To pay negotiation or attorneys fees to the union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other dispute; or
i. To violate a collective bargaining agreement.The provisions of the preceding paragraph
notwithstanding, only the officers and agents of corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor practices shall be held criminally liable. (As
amended by Batas Pambansa Bilang 130, August 21, 1981)

Intl School Alliance of Education v. Sec. Quisumbing (supra)

Local Hires of the ISchool claim discrimination in pay as compared to foreign hires (those who are hired
from abroad to do expatriate teaching here) who earn 25% more than them and are entitled to
benefits such as housing. The court ruled that salaries could not be used to entice foreign hires. (but
lodging is okay) public policy abhors inequality and discrimination. Foreign hires do not perform 25%
more efficiently and thus should be paid equal pay for work of equal value.

c. Form: agreement for compensation of services Art 97 (f)

d. Art. 97. Definitions. As used in this Title:

f. "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the

43

employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or
to any person affiliated with the employer.

Arms Taxi v. NLRC

Ludivico C. Culla was hired by the Tanongon spouses to work as a mechanic, shop manager, garage
caretaker etc in their taxi business and he was paid P5K a month. His quarters were forced open
without his consent and he was ejected from his living quarters there and was dismissed by the
spouses. Culla filed a complaint saying that his ejectment and dismissal were illegal and he prayed for
reinstatement with backwages as well as his 15% commission of the gross income of the tax business.
Tanongon spouses denied that Culla was their employee. LA found for Culla but denied 13 th month pay,
over time pay and 15% commission. Both parties appealed to the NLRC which affirmed the LA. The
court holds that salary is a fixed compensation for regular work whereas commission is a percentage or
allowance made to a factor or agent transacting business for another. If it were true that he had
commission he must show memorandum to prove it and he should not have waited for 6 years to claim
it. Also, Culla was found to be an employee and is entitled to reinstatement and full backwages.
Petition dismissed.

2.

Coverage

Art. 97. Definitions. As used in this Title:

b. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation
to an employee and shall include the government and all its branches, subdivisions and
instrumentalities, all government-owned or controlled corporations and institutions, as well as nonprofit private institutions, or organizations.
c. "Employee" includes any individual employed by an employer.
e. "Employ" includes to suffer or permit to work.
98. Application of Title. This Title shall not apply to farm tenancy or leasehold, domestic
service and persons working in their respective homes in needle work or in any cottage industry
duly registered in accordance with law.

Book III Rule VII SECTION 3.

Phil. Fisheries Development Authority v. NLRC

PFD entered into a contract with Odin Security Agency for the security services of its Iloilo Fishing Port
which was renewable unless terminated by either party. Wage order number 6 was enforced,
increasing the wages for security, janitorial and similar service contracts prompting the respondents
asked for an adjustment of the contract, which was ignored by the petitioners. Thus, Odin filed a
complaint for unpaid amounts of re-adjustment rate under Wage Order No. 6. LA dismissed case
claiming that the petitioner is a government owned corporation and should be under the Civil Service
Commission and not the NLRC. NLRC reversed. This court agrees because the guards are not
employees of the petitioner but are contractual employees of Odin working for PFD therefore under the
scope of the NLRC. The employees must be guaranteed wages due them for the performance of any
work and it is the Odin as the employers duty to know the labor laws and adequacy of compensation.
Odin and PFD are held jointly and severally liable (1/2, because Odin entered into a contract without
taking Wage O.N. 6 into consideration. Costs against petitioner.

3.

Minimum Wage

Art. 99. Regional minimum wages. The minimum wage rates for agricultural and nonagricultural
employees and workers in each and every region of the country shall be those prescribed by the
Regional Tripartite Wages and Productivity Boards. (As amended by Section 3, Republic Act No. 6727,
June 9, 1989).
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage
rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The
period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage
rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship programs duly approved
by the Secretary of Labor and Employment. The Department shall develop standard model programs of
apprenticeship. (As amended by Section 1, Executive Order No. 111, December 24, 1986)
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a
learnership agreement with them, which agreement shall include:
c. The wages or salary rates of the learners which shall begin at not less than seventy-five percent
(75%) of the applicable minimum wage; and The learnership agreement shall be subject to inspection
by the Secretary of Labor and Employment or his duly authorized representative.

44

Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into
an employment agreement with them, which agreement shall include:
1. The names and addresses of the handicapped workers to be employed;
2. The rate to be paid the handicapped workers which shall not be less than seventy five
(75%) percent of the applicable legal minimum wage;

Wage Order NO. 14

RA 7323 of 1992 AN ACT TO HELP POOR BUT DESERVING STUDENTS PURSUE THEIR EDUCATION BY

ENCOURAGING THEIR EMPLOYMENT DURING SUMMER AND/OR CHRISTMAS VACATIONS, THROUGH

INCENTIVES GRANTED TO EMPLOYERS, ALLOWING THEM TO PAY ONLY SIXTY PER CENTUM OF THEIR
SALARIES OR WAGES AND THE FORTY PER CENTUM THROUGH EDUCATION VOUCHERS TO BE PAID BY
THE GOVERNMENT, PROHIBITING AND PENALIZING THE FILING OF FRAUDULENT OR FICTITIOUS CLAIMS
AND FOR OTHER PURPOSES
Section 2. Sixty per centum (60%) of said salary or wage shall be paid by the employer in cash and
forty per centum be applicable in the payment for his tuition fees and books in any educational
institution for secondary, tertiary, vocational or technological education. The amount of the education
voucher shall be paid by the government to the educational institution
concerned within thirty (30) days from its presentation to the officer or agency designated by the
Secretary of Finance.
The voucher shall not be transferable except when the payee thereof dies or for a justifiable cause
stops in his duties in which case it can be transferred to his brothers or sisters. If there be none, the
amount thereof shall be paid his heirs or to the payee himself, as the case may be.

Book III Rule VII

a. Determination of Compliance with minimum wage

Iran v. NLRC

Antonio Iran is engaged in Softdrinks merchandising and distribution in Cebu and they employ truck
drivers who double as salesmen who receive commissions per case sold. While conducting an audit,
Iran noted that there were cash shortages and disallowed employees to go on their respective routes.
They stopped reporting for work and Iran construed this as abandonment of post and he filed estafa
charges against them. Complaints were filed against Iran for illegal dismissal and underpayment of
wages. LA ruled for Iran but ruled that the 13th month pay was not paid. Both parties appealed to
NLRC. Iran presented vouchers signed by the employees showing payment of 13 th month pay while
respondents claim that they were illegally dismissed. NLRC affirmed the validity of dismissal but said
that the same did not comply with proper procedure and that commissions are not included in the
minimum wage already given and thus still demandable.
According to Art 97, f, commissions are part of wages. The commission earned by private respondents
selling soft drinks must be considered part of the wages paid them there is no law mandating that the
commissions should be given AFTER the wage as contended by the NLRC. Also, vouchers presented
only cover 1 year and thus are admissible only for that year. The decision is reversed and set aside,
remanded to the LA for determination of proper wages.

b. Facilities and Supplements or Allowances

Book III Rule VII Sec 4-7
Millares v. NLRC and PICOP
Petitioners are the 116 workers of Paper Industries Corp (PICOP) who were terminated in the
retrenchment of the respondents due to major financial setbacks. Petitioners now ask that the
allowances they received on a monthly basis should be included in the computation of their separation
pay. LA granted the petition and NLRC reversed said decision by decreeing that allowances are not part
of the salary base in computing the separation pay. In this petition for certiorari, petitioners contend
that the allowances are part of the definition of facilities in 97,f of the LC defining wage.
The court here clarifies that the retrenchment pay under 283 is not synonymous to wage in Art 97f.
The receipt of an allowance does not ipso facto characterize it as regular and forming part of the
salary. Also, the disputed allowance was not regularly received by petitioners and thus there is really
no reason for petitioners to claim what is not part of their salary. Petition Dismissed.

97 (f)

c. Cash Wage/ Commission

Art. 97. Definitions. As used in this Title:

f. "Wage" paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for

45

services rendered or to be rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the
employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or
to any person affiliated with the employer

Book III Rule VII-A Section 1

Songco v. NLRC

F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the
gound of retrenchment. The petitioners opposed this claiming that the company is not suffering from
any losses but later on, contended that they are no longer contesting their dismissal but rather wanted
to receive separation pay including the commissions, allowances etc which they receive every month.
LA excluded the commissions and NLRC dismissed the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that
computation of backwages and separation pay should include transportation and emergency living
allowances. As for commissions, the court held that commission is not part of the basic salary but is
the reward of an agent or salesman and that the nature of his job as a salesman demonstrates that
such type of remuneration is part of their salary. Petition is Granted.

Boie Takeda v. De La Serna

A routine inspection was conducted in the premises of Boie Takeda Chemicals and it was found that BT
had not been including the commissions earned by its medical representatives in the computation of
their 13th month pay. Labor Dept issued a notice of inspection results which was disputed by BT
expressing that commissions are not part of the basic or regular pay of their med reps. Regional
Director issued the order of payment/ BT filed a motion for reconsideration which the Labor Secretary
ruled on, affirming the regional director. Hence this petition.
The court rules for BT. Memorandum 28 issued by Corazon Aquino did not repeal PD 851 but rather
merely modified Sec 1 of PD 851 removing the P1k salary ceiling. Therefore, the interpretation of basic
salary in PD 851 should be followed in memorandum 28 which is rate of pay for a standard work
period exclusive of such additional payments as bonuses and overtime. Petitions Granted.

Phil. Duplicators v. NLRC

LA directed petitioner to pay 13th month pay to private respondent employees plus the sales
commissions. NLRC affirmed this order and the petition for certiorari was dismissed. Thus this petition
for reconsideration submitting that the decision in Boie Takeda has reversed the decision of Philippine
Duplicators and should thus be applicable in their case.
The court said that Boie Takeda is not a precedent under stare decisis and that the petirion of PD has
been decided with finality. Also, PD did not raise the issue of the validity of the 13 th month pay law as
issued by Franklin Drilon and that the doctrines in the two cases actually co-exist.
Sales commissions received for every duplicating machine sold are part of the basc compensatin of the
salesmen of Philippine Duplicators in doing their job and that these are not over time payments or
profit sharing payments not any other benefit. These salesmens commissions form part of the
definition of basic salary. A bonus is a gratuity or act of liberality on the part of the giver which the
recipient has no right to demand. Productivity bonuses, although similar to Sales commission (both
being incentives) are tied to productivity or profit generation whereas sales commissions are directly
proportional to the extent or energy of the employees endeavors such as in the case of BT and PD.
Petition is denied.

d. Gratuity and Salary/ Wages. Differences

Plastic Town Center Corp (PTCC) v. NLRC+Nagkakaisang Lakas ng Manggagawa (NLM)

NLM Katipunan filed a complaint for violation of wage order No. 5 and unfair labor practices by giving
only 26 days of pay instead of 30 as gratuity pay. LA ruled for PTCC sating that the 1 peso increase was
ahead of the implementation of the CBA and thus the LA cannot fault PTCC for a refusal for a 2 nd
increase. Union appealed to NLRC which reversed LAs decision. Motion for reconsideration was denied
and thus this petition. Wage order No. 4 provided for the integration of the mandatory emergency cost
of living allowances into the basic pay. Wage order No. 5 provided for a 3 peso increase to the basic
salary of the employees.
Petitioner argues that Wage order No. 5 provided an across the board increase in salary and they
incurred a 1 peso deficiency after implementing Wage order No.4 and thus advanced (to May 1, 1984)
the increase, 2 months before Wage order No. 4s implementation to help their employees; AND that
the gratuity pay should be computed at 26 days because workers do not work on Sundays and
Holidays.

46

Sec 3 of the CBA provides that increases shall be granted against future allowances or wage orders
and thus, the increase on May 1 was not a July increase but a May increase and that complying with
the wage orders does not relieve them of their obligations in the CBA. As for the gratuity pay, it is not
intended to pay the worker for actual service rendered but it is supposed to reward employees or
laborers who have rendered satisfactory and efficient service o the company. Grant of this pay is not
mandatory and thus s not part of salary but a reward for the employee. Court dismissed the petition
because it was devoid of merit.

e. Effect on Benefits

Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall
be construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.

Davao Fruits Coporation v. NLRC+ Associated Labor Unions (ALU)

ALU filed a complaint against Davao Fruits for payment of the 1982 13 th month pay differentials of
DFCs employees equivalent to sick, vacation, maternity leaves, rest day and holidays, which had been
the practice of the company since 1975. Petitioner claimed that it has erroneously added these and the
mistake was only discovered in 1981. LA and NLRC ruled for ALU. Thus this petition for review. Basic
salary under IRR of PD 851 includes all remunerations or earnings paid by the employer to the
employee but excludes cost of living allowances, profit sharing payments and all allowances and
monetary benefits which have not been considered as part of the basic salary such as fringe benefits
or allowances. From 1975 to 1981, petitioner had freely and continuously included these in their
computation and this practice had ripened into a benefit which cannot b reduced or eliminated by the
employer (Sec 10 IRR PD 851, Art 100, LC). Solution indebiti cannot be invoked because it is a concept
in civil law and also because it did not demand the return of the wages mistakenly paid but rather
rectify the mistake. Petition dismissed NLRC affirmed.

B. WAGE FIXING MACHINERY

RA 6727, Sec 3

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and nonagricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art 120-127
Book III Rule IX Wage Studies and Determination
Wage order No. NCR-14
1. Rationale for Wage Rationalization (6727, Sec 2)

Sec. 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to
promote productivity-improvement and gain-sharing measures to ensure a decent standard of living
for the workers and their families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through industry dispersal; and to
allow business and industry reasonable returns on investment, expansion and growth.

2. Agencies in Wage Fixing Machinery

a. National Wages and Productivity Commission

Art. 120. Creation of National Wages and Productivity Commission. There is hereby created a
National Wages and Productivity Commission, hereinafter referred to as the Commission, which shall
be attached to the Department of Labor and Employment (DOLE) for policy and program coordination.
(As amended by Republic Act No. 6727, June 9, 1989).
Art. 121. Powers and functions of the Commission. The Commission shall have the following
powers and functions:

47

a. To act as the national consultative and advisory body to the President of the Philippines and
Congress on matters relating to wages, incomes and productivity;
b. To formulate policies and guidelines on wages, incomes and productivity improvement at the
enterprise, industry and national levels;
c. To prescribe rules and guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial, or industry levels;
d. To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to
determine if these are in accordance with prescribed guidelines and national development plans;
e. To undertake studies, researches and surveys necessary for the attainment of its functions and
objectives, and to collect and compile data and periodically disseminate information on wages and
productivity and other related information, including, but not limited to, employment, cost-of-living,
labor costs, investments and returns;
f. To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine
whether these are consistent with national development plans;
g. To exercise technical and administrative supervision over the Regional Tripartite Wages and
Productivity Boards;
h. To call, from time to time, a national tripartite conference of representatives of government, workers
and employers for the consideration of measures to promote wage rationalization and productivity;
and
i. To exercise such powers and functions as may be necessary to implement this Act. The Commission
shall be composed of the Secretary of Labor and Employment as ex-officio chairman, the DirectorGeneral of the National Economic and Development Authority (NEDA) as exofficio vice-chairman, and
two (2) members each from workers and employers sectors who shall be appointed by the President
of the Philippines upon recommendation of the Secretary of Labor and Employment to be made on the
basis of the list of nominees submitted by the workers and employers sectors, respectively, and who
shall serve for a term of five (5) years. The Executive Director of the Commission shall also be a
member of the Commission.
The Commission shall be assisted by a Secretariat to be headed by an Executive Director and two (2)
Deputy Directors, who shall be appointed by the President of the Philippines, upon the
recommendation of the Secretary of Labor and Employment.
The Executive Director shall have the same rank, salary, benefits and other emoluments as that of a
Department Assistant Secretary, while the Deputy Directors shall have the same rank, salary, benefits
and other emoluments as that of a Bureau Director. The members of the Commission representing
labor and management shall have the same rank, emoluments, allowances and other benefits as those
prescribed by law for labor and management representatives in the Employees
Compensation Commission. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 126. Prohibition against injunction. No preliminary or permanent injunction or temporary
restraining order may be issued by any court, tribunal or other entity against any proceedings before
the Commission or the Regional Boards. (As amended by Republic Act No. 6727, June 9, 1989)
Art. 127. Non-diminution of benefits. No wage order issued by any regional board shall provide for
wage rates lower than the statutory minimum wage rates prescribed by Congress. (As amended by
Republic Act No. 6727, June 9, 1989)

Regions:

b. Regional Tripartite Wages and Productivity Board (3, 122, 126)

Region I (ILOCOS REGION)

Region II (CAGAYAN VALLEY)
Region III (CENTRAL LUZON)
Region IV (CALABARZON & MIMAROPA)
Region V (BICOL REGION)
Region VI (WESTERN VISAYAS)
Region VII (CENTRAL VISAYAS)
Region VIII (EASTERN VISAYAS)
Region IX (ZAMBOANGA PENINSULA)
Region X (NORTHERN MINDANAO)
Region XI (DAVAO REGION)
Region XII (SOCCSKSARGEN)
Region XIII (CARAGA)
AUTONOMOUS REGION IN MUSLIM MINDANAO (ARMM)

48

CORDILLERA ADMINISTRATIVE REGION (CAR)

NATIONAL CAPITAL REGION (NCR)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No.
442, as amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127,
are hereby incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and
non- agricultural employees and workers in each and every region of the country
shall be those prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. There is
hereby created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as
Regional Boards, in all regions, including autonomous regions as may be established by law.
The Commission shall determine the offices/headquarters of the respective Regional Boards.
The Regional Boards shall have the following powers and functions in their respective
territorial
jurisdictions:
a. To develop plans, programs and projects relative to wages, incomes and productivity
improvement for their respective regions;
b. To determine and fix minimum wage rates applicable in their regions, provinces or
industries therein and to issue the corresponding wage orders, subject to guidelines issued
by the Commission;
c. To undertake studies, researches, and surveys necessary for the attainment of their
functions, objectives and programs, and to collect and compile data on wages, incomes,
productivity and other related information and periodically disseminate the same;
d. To coordinate with the other Regional Boards as may be necessary to attain the policy and
intention of this Code;
e. To receive, process and act on applications for exemption from prescribed wage rates as
may be provided by law or any Wage Order; and
f. To exercise such other powers and functions as may be necessary to carry out their
mandate under this Code.
Implementation of the plans, programs, and projects of the Regional Boards referred to in
the second paragraph, letter (a) of this Article, shall be through the respective regional
offices of the Department of Labor and Employment within their territorial jurisdiction;
Provided, however, That the Regional Boards shall have technical supervision over the
regional office of the Department of Labor and Employment with respect to the
implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional Director of the Department of Labor
and Employment as chairman, the Regional Directors of the National Economic and
Development Authority and the Department of Trade and Industry as vice-chairmen and two
(2) members each from workers and employers sectors who shall be appointed by the
President of the Philippines, upon the recommendation of the Secretary of Labor and
Employment, to be made on the basis of
the list of nominees submitted by the workers and employers sectors, respectively, and
who shall serve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As
amended
by Republic Act No. 6727, June 9, 1989)

49

Nasipit Lumber Co. v. National Wages and Productivity Commission (NWPC) and the
Unions

Nasipit Lumber Co. Anakan Lumber Co. and Phil. Watershed Corp jointly filed an application for
exemption to Wage Order No. RX-01 and 01-A (issued by Region Tripartite Wages and Productivity
Board) which increased the minimum wage by 11 to 13 pesos. Nasipit applied for exemption from
Wage Orders issued by Region 10 Board due to:
1. depressed economic activities due to worldwide recession
2. peace and order and other related problems causing disruption and suspension of normal
logging operations
3. imposition of environmental fee for timber production in addition to regular forest charges
4. logging moratorium in Bukidnon
Unions claimed that company was not distressed since capitalization has not been impaired by 25%
The RTWPB approved the exemption but granting them only temporary reprieve as stated in Guideline
No. 3. Respondents appealed with NWPC and it affirmed ALCOs application but reversed the two
others. It is said that the commission does not approve rules implementing wage orders issued by the
RTWPB. Thus this petition.
WON guidelines by an RTWPB without approval of NWPC is valid. NO.
1. RA 6727 amended LC and grants NWPC power to prescribe rules and guidelines for
determination of minimum wage and productivity measures
2. RTWPB has power to issue wage orders but subject to rules on Minimum Wage Fixing
3. NWPC never assented to Guideline No. 3
4. Insertion of Guideline of distressed industry as criterion for exemption is void: irregularly
takes away mandated increase in minimum wage awarded to workers
ALCO application approved: sustained capital impairment of 28.72%. Petition dismissed.
3. Standards or Criteria for Minimum Wage Fixing (3, 124)
Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and nonagricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Art. 124. Standards/Criteria for minimum wage fixing. The regional minimum wages
to be established by the Regional Board shall be as nearly adequate as is economically
feasible to maintain the minimum standards of living necessary for the health, efficiency and
general wellbeing of the employees within the framework of the national economic and
social development program. In the determination of such regional minimum wages, the
Regional Board shall, among
other relevant factors, consider the following:
a. The demand for living wages;
b. Wage adjustment vis--vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the imperatives of economic and
social development.

50

The wages prescribed in accordance with the provisions of this Title shall be the standard
prevailing minimum wages in every region. These wages shall include wages varying with
industries, provinces or localities if in the judgment of the Regional Board, conditions make
such local differentiation proper and necessary to effectuate the purpose of this Title.
Any person, company, corporation, partnership or any other entity engaged in business shall
file and register annually with the appropriate Regional Board, Commission and the National
Statistics Office, an itemized listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners, apprentices and
disabled/handicapped workers who were hired under the terms prescribed in the
employment contracts, and their corresponding salaries and wages.
Where the application of any prescribed wage increase by virtue of a law or wage order
issued by any Regional Board results in distortions of the wage structure within an
establishment, the employer and the union shall negotiate to correct the distortions. Any
dispute arising from wage distortions shall be resolved through the grievance procedure
under their collective bargaining agreement and, if it remains unresolved, through voluntary
arbitration. Unless otherwise agreed by
the parties in writing, such dispute shall be decided by the voluntary arbitrators within ten
(10) calendar days from the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions, the employers
and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall
be settled through the National Conciliation and Mediation Board and, if it remains
unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate
branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the
NLRC to conduct continuous hearings
and decide the dispute within twenty (20) calendar days from the time said dispute is
submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of law or
wage order.
As used herein, a wage distortion shall mean a situation where an increase in prescribed
wage rates results in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation. All workers paid by
result, including those who are paid on piecework, takay, pakyaw or task basis, shall receive
not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion
thereof for working less than eight (8) hours.
All recognized learnership and apprenticeship agreements shall be considered automatically
modified insofar as their wage clauses are concerned to reflect the prescribed wage rates.
(As amended by Republic Act No. 6727, June 9, 1989)
4. Wage Order (3, 123-124)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No. 442, as
amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127, are hereby
incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and nonagricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

51

Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board shall

investigate and study all pertinent facts; and based on the standards and criteria herein prescribed,
shall proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take
effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general
circulation in the region.
In the performance of its wage-determining functions, the Regional Board shall conduct public
hearings/consultations, giving notices to employees and employers groups, provincial, city and
municipal officials and other interested parties.
Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the
Commission within ten (10) calendar days from the publication of such order. It shall be mandatory for
the Commission to decide such appeal within sixty (60) calendar days from the filing thereof. The filing
of the appeal does not stay the order unless the person appealing such order shall file with the
Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment
to the employees affected by the order of the corresponding increase, in the event such order is
affirmed. (As amended by Republic Act No. 6727, June 9, 1989)

a. Methods of Fixing (According to Employers Confederation case)

i.)
Floor Wage method
fixing of determinate amount that would be added to the prevailing statutory
minimum wage
ii.)
Salary-ceiling or Salary Cap method
wage adjustment is applied to employees receiving a certain denominated salary
ceiling (RA 6640 and 6727). Shift to this kind of salary method is brought about by
labor disputes arising from wage distortions (brought about by the floor wage
method)
Employers Confederation of the Phil v. National Wages and Productivity
Commission

ECOP is questioning the validity of Wage Order No. 01-A of the RTWPB pursuant to RA 6727 which
amended No. 01 by not only increasing the minimum wage by 17 pesos but also entitling the
employees receiving P125 and above to the said order. ECOP appealed to the NWPC and this was
dismissed for lack of merit.
ECOP claims that RA6727 may only prescribe minimum wages and not determine salary ceiling. It
insists that wage fixing is a legislative function and that the boards may adjust only floor wages. The
Solicitor General argued that RA 6727 is intended to correct wage distortions through the salary ceiling
method.
In this petition the court held that the constitution protects that rights of the workers and ECOP is
mistaken in interpreting RA 6727 in empowering management to decide the wages. In this case, it
seems that Congress has delegated the power to fix rates to the commission and that the Commission
has correctly upheld the Boards decision in this case. The statute would have no need of a board if the
only question to be solved is how much. The state is concerned woth distributing wages more evenly.
The petition is denied.

b. Validity
Metropolitan Bank and Trust company Inc. v. National Wages and Productivity
Commission and Regional Tripartite Wages and Productivity Board

RTWPB Tuguegarao issued Wage Order No. R02-03 which raised the wage P15.00 across the board. In a
letter inquiry to the NWPC, The Bankers Council for Personnel Management (BCPM) in behalf of its
member banks requested for an exemption from the wage order since the member banks are already
paying for more than the minimum wage rate in the NCR which is the principal place of their business.
NWPC replied that they are not under the exemptible categories. In a letter inquiry, BCPM asked for
interpretation on the applicability of the wage order. NWPC referred the inquiry to the RTWPB who said
that the wage order covers all private establishments in Region II regardless of the adoption of the
establishments of wage orders in Metro Manila.
Pet filed a petition for certiorari and prohibition with the CA asking to nullify the wage order claiming
that RTWPB acted without authority in issuing said order and that implementing it will cause the
petitioner and similarly situated employers to incur huge financial losses and eventually labor unrest.
OSG affirmed the petitioners claim.

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Ca denied the petition saying that the wage order had long become fait accompli and that no appeal
from the said wage order was done during the time allotted (10 days from publication of order as
shown in Sec 13 of the wage order).
RA 6727 gives RTWPB the authority to fix minimum wage rates as applicable in their respective
regions.
In the present case however, the RTWPB did not set a wage level (floor wage method) or set a range to
which a wage adjustment or increase shall be added (salary-ceiling method). In simply increasing P15
across the board, it exceeded its authority. When the application of administrative issuances modifies
existing laws by exceeding the intended scope, issuance become VOID not only for being ultra vires
but for being unreasonable. Petition partially granted. Wage order is void as to employees who receive
more than the prevailing minimum wage.

c. Wage Distortion (3, 124)

Sec. 3. In line with the declared policy under this Act, Article 99 of Presidential Decree No.
442, as amended, is hereby amended and Articles 120, 121, 122, 123, 124, 126 and 127,
are hereby incorporated into Presidential Decree No. 442, as amended, to read as follows:
"Art. 99. Regional Minimum Wages. - The minimum wage rates for agricultural and
non- agricultural employees and workers in each and every region of the country
shall be those prescribed by the Regional Tripartite Wages and Productivity Boards."
"Art. 120. Creation of the National Wages and Productivity Commission
"Art. 121. Powers and Functions of the Commission
"Art. 122. Creation of Regional Tripartite Wages and Productivity Boards
"Art. 123. Wage Order
"Art. 124. Standards/Criteria for Minimum Wage Fixing
"Art. 126. Prohibition Against Injunction.
"Art. 127. Non-Diminution of Benefits.

Prubankers Association v. Prudential Bank and Trust Co.

Petitioner granted a Cost Of Living Allowance of 17.50 to its Naga branch employees pursuant to Wage
Order RB 05-03 (issued by RTWPB which provided for COLA to workers of the private sector who had
rendered services for at least 3 months before its effectivity). It also integrated 150 per month COLA
into the basic pay of its rank-and-file employees at its Cebu, Mabolo, and P. del Rosario branches.
Prubankers Association wanted to extend the application of the order to its employees outside regions
V and VII claiming that regional implementation resulted in a wage distortion. The matter was
submitted to a voluntary arbitration which held that there was a wage distortion. On an appeal to the
CA, it was held that there was no wage distortion Thus this petition for review on certiorari.
Issue: WON there was wage distortion Held: NO. Quantitative difference in compensation between
different pay classes remained the same in all branches in the affected region Disparity in wages
between employees holding similar positions but in different regions does not constitute wage
distortion but is expected by the law. Wage distortion arises when a wage order engenders wage parity
between employees in different rungs of the organizational ladder of same establishment
Wage distortion involves four elements:
an existing hierarchy of positions with corresponding salaries
a significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one
elimination of the distinction between the 2 levels
existence of the distortion in the same region of the country
RA 6727 recognizes that there are different needs for the different situations in different regions. The
fact that a person is receiving more in one region does not mean that she/he is better off than a person
in another region. Wages per region depends on the situation per region as determined by the RTWPB
as explained in RA 6727. Petition denied.

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*establishment (NWPC Guideline No 1) an economic unit which engages in one or predominantly one
kind of economic activity with a single fixed location

5. Freedom to Bargain (6727, Sec 2, 2nd par)

Art. 125. Freedom to bargain. No wage order shall be construed to prevent workers in particular
firms or enterprises or industries from bargaining for higher wages with their respective employers. (As
amended by Republic Act No. 6727, June 9, 1989)

6. Penalty for violation (RA 8188) AN ACT INCREASING THE PENALTY AND INCREASING

DOUBLE INDEMNITY FOR VIOLATION OF THE PRESCRIBED INCREASES OR

ADJUSTMENT IN THE WAGE RATES, AMENDING FOR THE PURPOSE SECTION TWELVE
OF REPUBLIC ACT NUMBERED SIXTY-SEVEN HUNDRED TWENTY-SEVEN, OTHERWISE
KNOWN AS THE WAGE RATIONALIZATION ACT

SECTION 1. Section 12 of Republic Act Numbered Sixty-seven hundred twenty-seven is hereby

amended to read to as follows: "Section 12. Any person, corporation, trust, firm, partnership,
association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the
wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five
thousand pesos (P25,000) nor more than One hundred thousand pesos (P100,000) or imprisonment of
not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at the
discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the
benefits provided for under the Probation Law. "The employer concerned shall be ordered to pay an
amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of
indemnity shall not absolve the employer from the criminal liability imposable under this Act. "If the
violation is committed by a corporation, trust or firm, partnership, association or any other entity the
penalty of imprisonment shall be imposed upon the entity's responsible officers, including, but not
limited to, the president, vice-president, chief executive officer, general manager, managing director
or partner."
SECTION 2. All laws, presidential decrees, executive orders, rules and regulations or parts thereof
inconsistent with the provisions of this Act are hereby repealed or modified accordingly.
SECTION 3. This Act shall take effect fifteen (15) days after its complete publication in a newspaper
of general circulation.

C. WAGE PAYMENT AND PROTECTION

1. Form of Payment
Art. 102. Forms of payment. No employer shall pay the wages of an employee by means of
promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even
when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of payment is
customary on the date of effectivity of this Code, or is necessary because of special circumstances as
specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as
stipulated in a collective bargaining agreement.

1705,CC The laborer's wages shall be paid in legal currency.

Book III, Rule VIII, Sec 1-2 SECTION 1. Manner of wage payment. As a general rule, wages shall

be paid in legal tender and the use of tokens, promissory notes, vouchers, coupons, or any other form
alleged to represent legal tender is absolutely prohibited even when expressly requested by the
employee.
SECTION 2. Payment by check. Payment of wages by bank checks, postal checks or money orders is
allowed where such manner of wage payment is customary on the date of the effectivity of the Code,
where it is so stipulated in a collective agreement, or where all of the following conditions are met:
(a) There is a bank or other facility for encashment within a radius of one (1) kilometer from the
workplace;

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(b) The employer or any of his agents or representatives does not receive any pecuniary benefit
directly or indirectly from the arrangement;
(c) The employees are given reasonable time during banking hours to withdraw their wages from the
bank which time shall be considered as compensable hours worked if done during working hours; and
(d) The payment by check is with the written consent of the employees concerned if there is no
collective agreement authorizing the payment of wages by bank checks.

Congson v. NLRC

Dominico Congson is the owner of Southern Fishing Industry and Respondents are hired as piece rate
workers. They were paid P1 per tuna weighing 30 to 80 kilos. They unloaded the fish from the fishing
boats to the truck haulers then unloaded them again at the cold storage plant of the petitioner.
Petitioner announced that it will reduce the rate-per-tuna and Respondents resisted the said reduction.
When they reported for work the next day, they had been replaced. They filed a case for
underpayment of wages, nonpayment of overtime pay, holiday pay, restday pay, 5 day incentive leave
pay, for constructive dismissal as well as for violation of the minimum wage law alleging that with the
petitioners rates and the scarcity of tuna, their earnings did not exceed P1k a month.
Petitioners claim that the respondents abandoned their work for 1 month and that they failed to return
to work when asked. LA ruled for respondents (illegally dismissed!) and NLRC affirmed this decision.
Thus this petition. Petitioners claim that they paid the respondents with up to 3 kilos of the valuable
liver and intestines of the tuna which is highly convertible to cash (15 to 20 pesos per kilo). Combined
with the per-tuna rate, this exceeds the minimum wage.
Court explains that as stated in Art 102 of the LC, wages shall be paid only by means of legal tender.
The only instance when an employer is permitted to pay wages in forms other than legal tender is by
checks or money order. NLRC affirmed.

2. Time of Payment

Art. 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month
at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond
the employers control, payment of wages on or within the time herein provided cannot be made, the
employer shall pay the wages immediately after such force majeure or circumstances have ceased. No
employer shall make payment with less frequency than once a month.
The payment of wages of employees engaged to perform a task which cannot be completed in two (2)
weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement
or arbitration award:
1. That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount
of work completed;
2. That final settlement is made upon completion of the work.

Book III, Rule VIII SECTION 3. Time of payment. (a) Wages shall be paid not less than once every

two (2) weeks or twice a month at intervals not exceeding sixteen (16) days, unless payment cannot
be made with such regularity due to force majeure or circumstances beyond the employer's control in
which case the employer shall pay the wages immediately after such force majeure or circumstances
have ceased.
(b) In case of payment of wages by results involving work which cannot be finished in two (2) weeks,
payment shall be made at intervals not exceeding sixteen days in proportion to the amount of work
completed. Final settlement shall be made immediately upon completion of the work.

3. Place of Payment

Art. 104. Place of payment. Payment of wages shall be made at or near the place of undertaking,
except as otherwise provided by such regulations as the Secretary of Labor and Employment may
prescribe under conditions to ensure greater protection of wages.

Book III, Rule VIII SECTION 4. Place of payment. As a general rule, the place of payment shall be

at or near the place of undertaking. Payment in a place other than the work place shall be permissible
only under the following circumstances:

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(a) When payment cannot be effected at or near the place of work by reason of the deterioration of
peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood,
epidemic or other calamity rendering payment thereat impossible;
(b) When the employer provides free transportation to the employees back and forth; and
(c) Under any other analogous circumstances; Provided, That the time spent by the employees in
collecting their wages shall be considered as compensable hours worked;
(d) No employer shall pay his employees in any bar, night or day club, drinking establishment,
massage clinic, dance hall, or other similar places or in places where games are played with stakes of
money or things representing money except in the case of persons employed in said places.

4. Person to Pay

Art. 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are
due, except:
a. In cases of force majeure rendering such payment impossible or under other special circumstances
to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case,
the worker may be paid through another person under written authority given by the worker for the
purpose; or
b. Where the worker has died, in which case, the employer may pay the wages of the deceased worker
to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of
age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are
his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be
executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the
employer who shall make payment through the Secretary of Labor and Employment or his
representative. The representative of the Secretary of Labor and Employment shall act as referee in
dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the
employer of any further liability with respect to the amount paid.

Book III, Rule VIII SECTION 5. Direct payment of wages. Payment of wages shall be made direct
to the employee entitled thereto except in the following cases:

(a) Where the employer is authorized in writing by the employee to pay his wages to a member of his
family;
(b) Where payment to another person of any part of the employee's wages is authorized by existing
law, including payments for the insurance premiums of the employee and union dues where the right
to check-off has been recognized by the employer in accordance with a collective agreement or
authorized in writing by the individual employees concerned; or
(c) In case of death of the employee as provided in the succeeding Section.
SECTION 6. Wages of deceased employee. The payment of the wages of a deceased employee
shall be made to his heirs without the necessity of intestate proceedings. When the heirs are of age,
they shall execute an affidavit attesting to their relationship to the deceased and the fact that they are
his heirs to the exclusion of all other persons. In case any of the heirs is a minor, such affidavit shall be
executed in his behalf by his natural guardian or next of kin. Upon presentation of the affidavit to the
employer, he shall make payment to the heirs as representative of the Secretary of Labor.

Bermiso v. Escano, Inc. et al.

Case was originally instituted by the Democratic Labor Association and the Katubsanan sa Mamumuo
in the CIR praying for reinstatement with backwages and direct payment to the workers rather than to
the union. CIR found that Hijos de F. Escano is a corporation engaged in transporting people and goods
for compensation. The unions are laborers from Visayas and Mindanao who load and unload vessels in
cebu and have respondent Jose Muana and Vitaliano Sabay as general president and gen treasurer

56

respectively. Its members in cebu are numerous and divided to chapters. One of these chapters are
headed by Sabay (SABAY group). CIR ordered the reinstatement of the SABAY group but without
backwages . Thus this petition for certiorari. The court found that the workers are employees of
Escano. However, the work of stevedoring was taken as a group and not as individuals. There was also
no evidence that racketeering was employed by the unions. Futhermore, Escano did not pay for the
stevedoring charges. They were collected by the group from the shippers themselves, there is no
ground for escano to pay backwages. Petition denied.

D. WAGE PROHIBITIONS
Prohibition against interference in disposal of wages

Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere
with the freedom of any employee to dispose of his wages. He shall not in any manner force, compel,
or oblige his employees to purchase merchandise, commodities or other property from any other
person, or otherwise make use of any store or services of such employer or any other person.

Book III Rule VIII SECTION 12. SECTION 12. Non-interference in disposal of wages. No employer shall
limit or otherwise interfere with the freedom of any employee to dispose of his wages and no employer
shall in any manner oblige any of his employees to patronize any store or avail of the setrvices offered
by any person.

Prohibition against wage deduction

Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from the wages of his employees, except:
a. In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
b. For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
c. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor
and Employment.
Book III Rule VIII SECTION 13. Wage deduction. Deductions from the wages of the employees may be
made by the employer in any of the following cases:
(a) When the deductions are authorized by law, including deductions for the insurance premiums
advanced by the employer in behalf of the employee as well as union dues where the right to check-off
has been recognized by the employer or authorized in writing by the individual employee himself.
(b) When the deductions are with the written authorization of the employees for payment to the third
person and the employer agrees to do so; Provided, That the latter does not receive any pecuniary
benefit, directly or indirectly, from the transaction.

Apocada v. NLRC + Jose Mirasol+ Intrans Phil Corp

Ernesto Apocada is employed in Intrans. Mirasol persuaded him to subscribe to 1,500 shares of the
corporation at 100 per share (150k). He made an initial payment of 37,500. On 1975, Apocada was
appointed President and General Manager of the Company. He resigned in 1986. That same year, he
instituted a complaint with the NLRC for payment of unpaid wages, cost of living allowance, gasoline
etc. Respondents admitted the money due to the petitioner but said that the same was offset to the
unpaid balance of his subscription. Petitioner said that he was not even informed or notified for the
unpaid subscription and thus the obligation is not enforceable. NLRC ruled for the co. thus this petition
wherein it is held that the NLRC has NO jurisdiction to resolve a claim for nonpayment of stock
subscriptions to a corporation. This jurisdiction belongs to the SEC. Furthermore, the unpaid
subscriptions are not yet due and demandable and such setoff was without lawful basis. Petition
granted.
Prohibition against requirement to make deposits for loss or damage
Art. 114. Deposits for loss or damage. No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is engaged in such trades,

57

occupations or business where the practice of making deductions or requiring deposits is a recognized
one, or is necessary or desirable as determined by the Secretary of Labor and
Employment in appropriate rules and regulations.
Art. 115. Limitations. No deduction from the deposits of an employee for the actual amount of the
loss or damage shall be made unless the employee has been heard thereon, and his responsibility has
been clearly shown.

Book III Rule VIII SECTION 14. Deduction for loss or damage. Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or requiring deposits is
recognized to answer for the reimbursement of loss or damage to tools, materials, or equipment
supplied by the employer to the employee, the employer may make wage deductions or require the
employees to make deposits from which deductions shall be made, subject to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage;
(b) That the employee is given reasonable opportunity to show cause why deduction should not be
made;
(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or
damage; and
(d) That the deduction from the wages of the employee does not exceed 20 percent of the employee's
wages in a week.

Dentech Manufacturing Corp v. NLRC

Respondents used to work as welders, upholsterers, and painters of company making dental
equipment. They were dismissed: allegedly because of union activities (Confederation of Citizens Labor
Union) They wanted to get their 13 th month pay as well as refund of cash bond filed. They cited PD 851
saying that they are receiving more than 1k per month and thus they are entitled (under the PD) to
13th month pay. Company claimed that due to financial losses, they are, under the same PD, exempted
as distressed employers. LA ruled for reinstating complainants and NLRC affirmed LA. Case was
elevated to the Supreme Ct. by the Pet saying that Respondents abandoned their work and that
Memorandum No. 28 (eliminating 1k salary ceiling) does not apply to the case since it was enforced
long after he case was instituted.
Court held that 1k salary ceiling in PD 851 pertains to basic salary and not monthly compensation and
that in invoking exemption, the company must be deemed qualified after prior authorization from the
Secretary of Labor and Employment. As to another Issue: As for refund of the cash bond, the company
said that these have been given to a certain carinderia to pay for the outstanding accounts of private
respondents. The main issue is WON such requirement of cash bond is valid. No. Company failed to
show that it is authorized by law to require workers to file cash bond. Refund! Petition dismissed.

Five J Taxi v. NLRC

The two drivers of Five J Taxi failed to report for work.

Maldigan: allegedly working with Mine of Gold
Sabsalon: allegedly working with Bulaklak Company after not reporting for work after a holdap incident
while driving taxi. LA and NLRC dismissed the case
abandoned cab in Makati without fuel refill worth 300
refused to work
Wanted reimbursement of daily cash deposit:
20- car washing
15- for any deficiency in their boundary for every actual day
Issue: WON such deposits may be reimbursed
Court Held: Yes to 15, no to 20
Ratio:
1. to defray deficiency in boundary is not contemplated by 114 (loss or damage to tools,
materials, equipment). The same is illegal.

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2.

Also, when they stopped working, alleged purpose for deposits no longer existed and should be
returned
20 pesos:
1. not entitled to refund
2. nothing prevents them from washing cars themselves
NLRC decision modified. 15 deposit reimbursable.
Prohibition against Withholding of wages
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.
Art. 1706, CC. Withholding of the wages, except for a debt due, shall not be made by the employer.

Prohibition against deduction to ensure employment

Art. 117. Deduction to ensure employment. It shall be unlawful to make any deduction from
the wages of any employee for the benefit of the employer or his representative or intermediary as
consideration of a promise of employment or retention in employment.

Prohibition against retaliatory measures

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.

Prohibition against false reporting

Art. 119. False reporting. It shall be unlawful for any person to make any statement, report, or
record filed or kept pursuant to the provisions of this Code knowing such statement, report or
record to be false in any material respect.
Book III, Rule X, SECTION 13. False reporting. It shall be unlawful for any employer or any person to
make any false statement, report or record on matters required to be kept or maintained pursuant to
the provisions of this Rule.

Prohibition against keeping of employees records in a place other than the work place
Book III, RULE X, SECTION 11. Place of records. All employment records of the employees shall be
kept and maintained by the employer in or about the premises of the work place. The premises of a
work-place shall be understood to mean the main or branch office of the establishment, if any,
depending upon where the employees are regularly assigned. The keeping of the employee's records
in another place is prohibited.
SECTION 12. Preservation of records. All employment records required to be kept and maintained by
employers shall be preserved for at least three (3) years from the date of the last entry in the records.

South Motorists Enterprises v. Tostoc

On the strength of an inspection report, an order was issued by Labor Officer Domingo Reyes directing
South Motorists to pay Tostoc his ECOLA. MFR filed were all denied. Hence this petition by South
Motorists questioning the monetary award as well as his jurisdiction to grant the same and claiming
that only the labor arbiter may determine the existence of an employer employee relationship. Art 129
(Recovery of Wages) and Art 217 (Jurisdiction of LA) were applied by the court to this case in
explaining that regional directors are empowered to hear and decide in summary proceeding claims for
recovery of wages and other monetary claims or benefits. It is only when the ff requisites do not
concur that the jurisdiction falls with the LA:
claim of a worker employed as a domestic helper or household service under the code
claim arises from employer-employee relations
does not seek reinstatement
money claim does not exceed 5k, < Art 217 (6)>

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The court ruled that 11 out of the 46 respondents, the money claims being above 5k should be
remanded to the LA. Decision Modified and Petition partially granted.

Prohibition against garnishment or execution

Art. 1708, CC. The laborer's wages shall not be subject to execution or attachment, except for debts
incurred for food, shelter, clothing and medical attendance.

Rosario Gaa v. CA +Europhil Industries Corporation

Gaa was building admin of Trinity Building. Europhil Industries filed a civil action in CFI for damages
against petitioner for cutting off its electricity, removing its name from building directory, gate passes
of their employees. CFI ruled for Europhil. Writ of garnishment of Gaas salary, commission, and/or
remuneration was served to El Grande Hotel where petitioner worked due to these acts. She filed a
motion to lift the writ on the ground that her salaries, commission/remuneration are exempted from
execution according to Art 1708 of the NCC. This was denied by the CA because Gaa, being a person
who holds a managerial position, is not a laborer as the word is contemplated in 1708. 1708 used the
word wages and not salary. Salary is contemplated as to relate to a person of office or position. Wages
refer to those who look to the reward of a day;s labor for immediate or present support, and thus in
need of the exeption of 1708. Gaa is not part of this group. CA affirmed.
1. wages vs salary: wages for manual labor, skilled or unskilled, paid at stated times, and
measured by day, week, month or season while salary denotes a higher degree of employment

E. WORKER PREFERNCE IN THE EVENT OF BANKRUPTCY

Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation
of an employers business, his workers shall enjoy first preference as regards their wages and other
monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and
monetary claims shall be paid in full before claims of the government and other creditors may be
paid. (As amended by Section 1, Republic Act No. 6715, March 21, 1989)

Book III, Rule VIII Sec SECTION 10. Payment of wages and other monetary claims in case of
bankruptcy. In case of bankruptcy or liquidation of the employers business, the unpaid wages and
other monetary claims of the employees shall be given first preference and shall be paid in full before
the claims of government and other creditors may be paid (as amended by Sec 1 of the IRR of RA
6715, 1989)

Civil Code

Art. 1707. The laborer's wages shall be a lien on the goods manufactured or the work done
Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall
be preferred:
(1) Duties, taxes and fees due thereon to the State or any subdivision thereof;
(2) Claims arising from misappropriation, breach of trust, or malfeasance by public officials committed
in the performance of their duties, on the movables, money or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said movables, so long as they are in the
possession of the debtor, up to the value of the same; and if the movable has been resold by the
debtor and the price is still unpaid, the lien may be enforced on the price; this right is not lost by the
immobilization of the thing by destination, provided it has not lost its form, substance and identity;
neither is the right lost by the sale of the thing together with other property for a lump sum, when the
price thereof can be determined proportionally;
(4) Credits guaranteed with a pledge so long as the things pledged are in the hands of the creditor, or
those guaranteed by a chattel mortgage, upon the things pledged or mortgaged, up to the value
thereof;
(5) Credits for the making, repair, safekeeping or preservation of personal property, on the movable
thus made, repaired, kept or possessed;
(6) Claims for laborers' wages, on the goods manufactured or the work done;

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In the foregoing cases, if the movables to which the lien or preference attaches have been wrongfully
taken, the creditor may demand them from any possessor, within thirty days from the unlawful seizure.
(1922a)
Art. 2242. With reference to specific immovable property and real rights of the debtor, the following
claims, mortgages and liens shall be preferred, and shall constitute an encumbrance on the immovable
or real right:
(3) Claims of laborers, masons, mechanics and other workmen, as well as of architects, engineers and
contractors, engaged in the construction, reconstruction or repair of buildings, canals or other works,
upon said buildings, canals or other works;
Art. 2244. With reference to other property, real and personal, of the debtor, the following claims or
credits shall be preferred in the order named:
(2) Credits for services rendered the insolvent by employees, laborers, or household helpers for one
year preceding the commencement of the proceedings in insolvency;

F. WAGE RECOVERYJURIDICTION

ADMINISTRATION AND ENFORCEMENT

Art. 128. Visitorial and enforcement power.
a. The Secretary of Labor and Employment or his duly authorized representatives, including labor
regulation officers, shall have access to employers records and premises at any time of the day or
night whenever work is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules
and regulations issued pursuant thereto.
b. Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect to the
labor standards provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests the findings
of the labor employment and enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection. (As amended by Republic Act No. 7730, June 2,
1994).
An order issued by the duly authorized representative of the Secretary of Labor and Employment under
this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent
to the monetary award in the order appealed from. (As amended by Republic Act No. 7730, June 2,
1994)
c. The Secretary of Labor and Employment may likewise order stoppage of work or suspension of
operations of any unit or department of an establishment when non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to the health and safety of
workers in the workplace. Within twenty-four hours, a hearing shall be
conducted to determine whether an order for the stoppage of work or suspension of operations shall
be lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such stoppage of work or suspension
of operation.
d. It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render
ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives
issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue
temporary or permanent injunction or restraining order or
otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance
with this Article.
e. Any government employee found guilty of violation of, or abuse of authority, under this Article shall,
after appropriate administrative investigation, be subject to summary dismissal from the service.

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f. The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep
and maintain such employment records as may be necessary in aid of his visitorial and enforcement
powers under this Code.
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any
interested party, the Regional Director of the Department of Labor and Employment or any of the duly
authorized hearing officers of the Department is empowered, through summary proceeding and after
due notice, to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person
employed in domestic or household service or househelper under this Code, arising from
employeremployee relations: Provided, That such complaint does not include a claim for
reinstatement:
Provided further, That the aggregate money claims of each employee or househelper does not exceed
Five thousand pesos (P5,000.00). The Regional Director or hearing officer shall decide or resolve the
complaint within thirty (30) calendar days from the date of the filing of the same. Any sum thus
recovered on behalf of any employee or househelper pursuant to this Article shall be held in a special
deposit account by, and shall be paid on order of, the Secretary of Labor and
Employment or the Regional Director directly to the employee or househelper concerned. Any such
sum not paid to the employee or househelper because he cannot be located after diligent and
reasonable effort to locate him within a period of three (3) years, shall be held as a special fund of the
Department of Labor and Employment to be used exclusively for the amelioration and benefit of
workers.
Any decision or resolution of the Regional Director or hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of this Code, within five (5) calendar days from
receipt of a copy of said decision or resolution, to the National Labor Relations Commission which shall
resolve the appeal within ten (10) calendar days from the submission of the last pleading required or
allowed under its rules.
The Secretary of Labor and Employment or his duly authorized representative may supervise the
payment of unpaid wages and other monetary claims and benefits, including legal interest, found
owing to any employee or househelper under this Code. (As amended by Section 2, Republic Act No.
6715, March 21, 1989)
Art. 217. Jurisdiction of the 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 nonagricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
b. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
c. Cases arising from the interpretation or implementation of collective bargaining agreements and
those arising from the interpretation or enforcement of company personnel policies shall be disposed
of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as
may be provided in said agreements. (As amended by Section
9, Republic Act No. 6715, March 21, 1989)
Art. 111. Attorneys fees.
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings
for the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered
BOOK III RULE X Administration and Enforcement

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SECTION 1. Visitorial power. The Secretary of Labor and Employment or his duly authorized
representatives, including Labor Regulations Officers or Industrial Safety Engineers, shall have access
to employer's records and premises at any time of the day or night whenever work is being undertaken
therein, and right to copy therefrom, to question any employee, and to investigate any fact, condition
or matter relevant to the enforcement of any provision of the Code and of any labor law, wage order or
rules and regulations issued pursuant thereto.
SECTION 2. Enforcement power. (a) The Regional Director in cases where employer relations shall
exist, shall have the power to order and administer, after due notice and hearing, compliance with the
labor standards provisions of the Code and other labor legislations based on the findings of the Labor
Regulation Officers or Industrial Safety Engineers (Labor Standard and Welfare Officer) and made in the
course of inspection, and to issue writs of execution to the appropriate authority of the enforcement of
his order. In line with the provisions of Article 128 in relation to Articles 289 and 290 of the Labor Code
as amended in cases, however, where the employer contests the findings of the Labor Standards and
Welfare Officers and raises issues which cannot be resolved without considering evidentiary matters
that are not verifiable in the normal course of inspection, the Regional Director concerned shall indorse
the case to the appropriate arbitration branch of the National Labor Relations Commission for
adjudication.
(b) The Regional Director shall give the employer fifteen (15) days within which to comply with his
order before issuing a writ of execution. Copy of such order or writ of execution shall immediately be
furnished the Secretary of Labor and Employment.
SECTION 3. Enforcement power on health and safety of workers. (a) The Regional Director may
likewise order stoppage of work or suspension of operations of any unit or department of an
establishment when non-compliance with the law, safety order or implementing rules and regulations
poses grave and imminent danger to the health and safety of workers in the workplace.
(b) Within 24 hours from issuance of the order of stoppage or suspension, a hearing shall be conducted
to determine whether the order for the stoppage of work or suspension of operation shall be lifted or
not. The proceedings shall be terminated within seventy-two (72) hours and a copy of such order or
resolution shall be immediately furnished the Secretary of Labor and Employment. In case the violation
is attributable to the fault of the employer, he shall pay the employees concerned their salaries or
wages during the period of such stoppage of work or suspension of operation.
SECTION 4. Power to review. (a) The Secretary of Labor and Employment, at his own initiative or
upon request of the employer and/or employee, may review the order of the Regional Director. The
order of the Regional Director shall be immediately final and executory unless stayed by the Secretary
of Labor and Employment upon posting by the employer of a reasonable cash or surety bond as fixed
by the Regional Director.
(b) In aid of his power of review, the Secretary of Labor and Employment may direct the Bureau of
Working Conditions to evaluate the findings or orders of the Regional Director. The decision of the
Secretary of Labor and Employment shall be final and executory.
SECTION 5. Interference and injunctions prohibited. It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render ineffective the exercise of the enforcement power of the
Secretary of Labor and Employment, Regional Director or their duly authorized representatives
pursuant to the authority granted by the Code and its implementing rules and regulations, and no
inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise
assume jurisdiction over any case involving the enforcement orders issued in accordance with the
Code. In addition to the penalties provided for by the Labor Code, any government employees found
guilty of violation or abuse of authority, shall be subject to the provisions of Presidential Decree No. 6

6. Thirteenth Month Pay (PD 851)

PRESIDENTIAL DECREE NO. 851; REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13th-MONTH
PAY
WHEREAS, it is necessary to further protect the level of real wages from the ravage of worldwide
inflation;

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WHEREAS, there has been no increase in the legal minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to show its concern for the plight of
the working masses so they may properly celebrate Christmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested in me by the Constitution,
do hereby decree as follows:
Section 1. All employers are hereby required to pay all their employees receiving a basic salary of not
more than P1,000 a month, regardless of the nature of their employment, a 13th-month pay not later
than December 24 of every year.
Sec. 2. Employers already paying their employees a 13th-month pay or its equivalent are not covered
by this Decree.
Sec. 3. This Decree shall take effect immediately.

a. History of the Law

Dentech Mfg. Corp v. NLRC
Respondents used to work as welders, upholsterers, and painters of company making dental
equipment. They were dismissed: allegedly because of union activities (Confederation of Citizens Labor
Union) They wanted to get their 13 th month pay as well as refund of cash bond filed. They cited PD 851
saying that they are receiving more than 1k per month and thus they are entitled (under the PD) to
13th month pay. Company claimed that due to financial losses, they are, under the same PD, exempted
as distressed employers. LA ruled for reinstating complainants and NLRC affirmed LA. Case was
elevated to the Supreme Ct. by the Pet saying that Respondents abandoned their work and that
Memorandum No. 28 (eliminating 1k salary ceiling) does not apply to the case since it was enforced
long after he case was instituted.
Court held that 1k salary ceiling in PD 851 pertains to basic salary and not monthly compensation and
that in invoking exemption, the company must be deemed qualified after prior authorization from the
Secretary of Labor and Employment. As to another Issue: As for refund of the cash bond, the company
said that these have been given to a certain carinderia to pay for the outstanding accounts of private
respondents. The main issue is WON such requirement of cash bond is valid. No. Company failed to
show that it is authorized by law to require workers to file cash bond. Refund! Petition dismissed.

b. Coverage

REVISED GUIDELINES ON THE IMPLEMENTATION OF THE 13TH MONTH PAY LAW.

1. Removal of Salary Ceiling.
On August 13, 1986, President Corazon C. Aquino issued Memorandum Order No. 28 which provides as
follows:
"Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are
hereby required to pay all their rank-and-file employees a 13th month pay not later than December 24
of every year."
Before its modification by the aforecited Memorandum Order, P.D. No. 851 excludes from entitlement
to the 13th month pay those employees who were receiving a basic salary of more than P1,000.00 a
month. With the removal of the salary ceiling of P1,000.00, all rank and file employees are now entitled
to a 13th month pay regardless of the amount of basic salary that they receive in a month if their
employers are not otherwise exempted from the application of P.D. No. 851. Such employees are
entitled to the benefit regardless of their designation or employment status, and irrespective of the
method by which their wages are paid, provided that they have worked for at least one (1) month
during a calendar year.
2. Exempted Employers.

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The following employers are still not covered by P.D. No. 851:
a. The Government and any of its political subdivisions, including government-owned and controlled
corporations, excepts those corporations operating essentially as private subsidiaries of the
Government;
b. Employers already paying their employees a 13th month pay or more in a calendar year or its
equivalent at the time of this issuance;
c. Employers of household helpers and persons in the personal service of another in relation to such
workers; and
d. Employers of those who are paid on purely commission, boundary, or task basis, and those who are
paid a fixed amount for performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such workers.
As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard amount
for every piece or unit of work produced that is more or less regularly replicated, without regard to the
time spent in producing the same.
The term "its equivalent" as used on paragraph (b) hereof shall include Christmas bonus, mid-year
bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall
not include cash and stock dividends, cost of living allowances and all other allowances regularly
enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than
required 1/12th of the employees basic salary, the employer shall pay the difference.
3. Who are Rank-and File Employees.
The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides that a
managerial employee is one who is vested with powers of prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or discipline
employees, or to effectively recommend such managerial actions. All employees not falling within this
definition are considered rank-and-file employees.
The above distinction shall be used as guide for the purpose of determining who are rank-and-file
employees entitled to the mandated 13th month pay.
4. Amount and payment of 13th Month Pay
(a) Minimum of the Amount. The minimum 13th month pay required by law shall not be less than
one-twelfth of the total basic salary earned by an employee within a calendar year. For the year 1987,
the computation of the 13th month pay shall include the cost of living allowances (COLA) integrated
into the basic salary of a covered employee pursuant to Executive Order 178.
E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for nonagricultural workers shall be integrated into the basic pay of covered employees effective 1 May 1987,
and the remaining P8.00 effective 1 October 1987. For establishments with less than 30 employees
and paid-up capital of P500,000 or less, the integration of COLAs shall be as follows: P4.50 effective on
1 May 1987; P4.50 on 1 October 1987; and P8.00 effective 1 January 1988. Thus, in the computation of
the 13th month pay for 1987, the COLAs integrated into the basic pay shall be included as of the date
of their integration.
Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said
COLA as part of the of the basic pay for the purpose of computing the 13th month pay shall be
reckoned from the date of actual integration.

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The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all
remunerations or earning paid by this employer for services rendered but does not include allowances
and monetary benefits which are not considered or integrated as part of the regular or basic salary,
such as the cash equivalent of 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.
(b) Time of Payment. The required 13th month pay shall be paid not later than December 24 of
each year. An employer, however, may give to his employees one half () of the required 13th month
pay before the opening of the regular school year and the other half on before the 24th of December of
every year. The frequency of payment of this monetary benefit may be the subject of agreement
between the employer and the recognized/collective bargaining agent of the employees.
5. 13th Month Pay for Certain Types of Employees.
(a) Employees Paid by Results. Employees who are paid on piece work basis are by law entitled to
the 13th month pay.
Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the
mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their
fixed or guaranteed wage and commission.
(b) Those with Multiple Employers. Government employees working part time in a private
enterprise, including private educational institutions, as well as employees working in two or more
private firms, whether on full or part time basis, are entitled to the required 13th month pay from all
their private employers regardless of their total earnings from each or all their employers.
(c) Private School Teachers. Private school teachers, including faculty members of universities and
colleges, are entitled to the required 13th month pay, regardless of the number of months they teach
or are paid within a year, if they have rendered service for at least one (1) month within a year.
6. 13th Month Pay of Resigned or Separated Employee.
An employee who has resigned or whose services were terminated at any time before the time for
payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time
he worked during the year, reckoned from the time he started working during the calendar year up to
the time of his resignation or termination from the service. Thus, if he worked only from January up to
September his proportionate 13th month pay should be equivalent of 1/12 his total basic salary he
earned during that period.
The payment of the 13th month pay may be demanded by the employee upon the cessation of
employer-employee relationship. This is consistent with the principle of equity that as the employer
can require the employee to clear himself of all liabilities and property accountability, so can the
employee demand the payment of all benefits due him upon the termination of the relationship.
7. Non-inclusion in Regular Wage.
The mandated 13th month pay need not be credited as part of regular wage of employees for
purposes of determining overtime and premium pays, fringe benefits insurance fund, Social Security,
Medicare and private retirement plans.
Prohibitions against reduction or elimination of benefits.

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Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way,
supplements, or other employee benefits or favorable practice being enjoyed by the employee at the
time of promulgation of this issuance.

c. Rationale (Whereas Clauses)

d. Amount and Date of Payment- Revised Guidelines
Revised Guidelines, Sec 4. Amount and payment of 13th Month Pay
(a) Minimum of the Amount. The minimum 13th month pay required by law shall not be less than
one-twelfth of the total basic salary earned by an employee within a calendar year. For the year 1987,
the computation of the 13th month pay shall include the cost of living allowances (COLA) integrated
into the basic salary of a covered employee pursuant to Executive Order 178.
E.O. No. 178 provides, among other things, that the P9.00 of the daily COLA of P17.00 for nonagricultural workers shall be integrated into the basic pay of covered employees effective 1 May 1987,
and the remaining P8.00 effective 1 October 1987. For establishments with less than 30 employees
and paid-up capital of P500,000 or less, the integration of COLAs shall be as follows: P4.50 effective on
1 May 1987; P4.50 on 1 October 1987; and P8.00 effective 1 January 1988. Thus, in the computation of
the 13th month pay for 1987, the COLAs integrated into the basic pay shall be included as of the date
of their integration.
Where the total P17.00 daily COLA was integrated effective 1 May 1987 or earlier the inclusion of said
COLA as part of the of the basic pay for the purpose of computing the 13th month pay shall be
reckoned from the date of actual integration.
The "basic salary" of an employee for the purpose of computing the 13th month pay shall include all
remunerations or earning paid by this employer for services rendered but does not include allowances
and monetary benefits which are not considered or integrated as part of the regular or basic salary,
such as the cash equivalent of 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.
(b) Time of Payment. The required 13th month pay shall be paid not later than December 24 of
each year. An employer, however, may give to his employees one half () of the required 13th month
pay before the opening of the regular school year and the other half on before the 24th of December of
every year. The frequency of payment of this monetary benefit may be the subject of agreement
between the employer and the recognized/collective bargaining agent of the employees.

1. Basic Wage/ Commissions Sec 4

Songco v. NLRC
F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the
gound of retrenchment. The petitioners opposed this claiming that the company is not suffering from
any losses but later on, contended that they are no longer contesting their dismissal but rather wanted
to receive separation pay including the commissions, allowances etc which they receive every month.
LA excluded the commissions and NLRC dismissed the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that
computation of backwages and separation pay should include transportation and emergency living
allowances. As for commissions, the court held that commission is not part of the basic salary but is
the reward of an agent or salesman and that the nature of his job as a salesman demonstrates that
such type of remuneration is part of their salary. Petition is Granted.

Boie Takeda v. De La Serna

A routine inspection was conducted in the premises of Boie Takeda Chemicals and it was found that BT
had not been including the commissions earned by its medical representatives in the computation of
their 13th month pay. Labor Dept issued a notice of inspection results which was disputed by BT
expressing that commissions are not part of the basic or regular pay of their med reps. Regional

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Director issued the order of payment/ BT filed a motion for reconsideration which the Labor Secretary
ruled on, affirming the regional director. Hence this petition.
The court rules for BT. Memorandum 28 issued by Corazon Aquino did not repeal PD 851 but rather
merely modified Sec 1 of PD 851 removing the P1k salary ceiling. Therefore, the interpretation of basic
salary in PD 851 should be followed in memorandum 28 which is rate of pay for a standard work
period exclusive of such additional payments as bonuses and overtime. Petitions Granted.

Phil. Duplicators v. NLRC

LA directed petitioner to pay 13th month pay to private respondent employees plus the sales
commissions. NLRC affirmed this order and the petition for certiorari was dismissed. Thus this petition
for reconsideration submitting that the decision in Boie Takeda has reversed the decision of Philippine
Duplicators and should thus be applicable in their case.
The court said that Boie Takeda is not a precedent under stare decisis and that the petirion of PD has
been decided with finality. Also, PD did not raise the issue of the validity of the 13 th month pay law as
issued by Franklin Drilon and that the doctrines in the two cases actually co-exist.
Sales commissions received for every duplicating machine sold are part of the basc compensatin of the
salesmen of Philippine Duplicators in doing their job and that these are not over time payments or
profit sharing payments not any other benefit. These salesmens commissions form part of the
definition of basic salary. A bonus is a gratuity or act of liberality on the part of the giver which the
recipient has no right to demand. Productivity bonuses, although similar to Sales commission (both
being incentives) are tied to productivity or profit generation whereas sales commissions are directly
proportional to the extent or energy of the employees endeavors such as in the case of BT and PD.
Petition is denied.

2. Substitute Payment Sec 2

7. Bonus
a. Nature
b. Definition, When demandable
8. Working Conditions for Special Groups of Workers
A. Women
RA 7192 Women in Development and Nation Building Act
RA 7877 Anti sexual Harassment Act
1. Women under the constitution

Art II Section 14. The State recognizes the role of women in nation-building, and shall ensure the
fundamental equality before the law of women and men.
Art XIII Section 14. The State shall protect working women by providing safe and healthful working
conditions, taking into account their maternal functions, and such facilities and opportunities that will
enhance their welfare and enable them to realize their full potential in the service of the nation.

2. Coverage
Book III, Rule XII, SECTION 1. General statement on coverage. This Rule shall apply to all employers,
whether operating for profit or not, including educational, religious and charitable institutions, except
to the Government and to government-owned or controlled corporations and to employers of
household helpers and persons in their personal service insofar as such workers are concerned.

3. Prohibited Acts
a. Night Work/Exception

Art. 130. Nightwork prohibition. No woman, regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:
a. In any industrial undertaking or branch thereof between ten oclock at night and six oclock in the
morning of the following day; or
b. In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between
midnight and six oclock in the morning of the following day; or
c. In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine
(9) consecutive hours.
Art. 131. Exceptions. The prohibitions prescribed by the preceding Article shall not apply in any of
the following cases:
a. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or calamity, to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety;

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b. In case of urgent work to be performed on machineries, equipment or installation, to avoid serious

loss which the employer would otherwise suffer;
c. Where the work is necessary to prevent serious loss of perishable goods;
d. Where the woman employee holds a responsible position of managerial or technical nature, or
where the woman employee has been engaged to provide health and welfare services;
e. Where the nature of the work requires the manual skill and dexterity of women workers and the
same cannot be performed with equal efficiency by male workers;
f. Where the women employees are immediate members of the family operating the establishment or
undertaking; and
g. Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate
regulations.

b. Discrimination

Art. 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against
any woman employee with respect to terms and conditions of employment solely on account of her
sex.
The following are acts of discrimination:
a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employees as against a male employee, for work of equal value; and
b. Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes. Criminal liability for the
willful commission of any unlawful act as provided in this Article or any violation of the rules and
regulations issued pursuant to Section 2 hereof shall be penalized as
provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action
under this provision shall not bar the aggrieved employee from filing an entirely separate and distinct
action for money claims, which may include claims for damages and other affirmative reliefs. The
actions hereby authorized shall proceed independently of each other. (As amended by Republic Act No.
6725, May 12, 1989)

c. Stipulation against Marriage

Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman employee shall not get married,
or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

Book III Rule XII SECTION 13. Prohibited acts. It shall be unlawful for any employer:
(e) To require as a condition for a continuation of employment that a woman employee shall not get
married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.

d. Discharge to prevent enjoyment of benefits (137, 1)

Art. 137. Prohibited acts.

a. It shall be unlawful for any employer:
1. To deny any woman employee the benefits provided for in this Chapter or to discharge any woman
employed by him for the purpose of preventing her from enjoying any of the benefits provided under
this Code.
Book III Rule XII SECTION 13. Prohibited acts. It shall be unlawful for any employer:
(a) To discharge any woman employed by him for the purpose of preventing such woman from
enjoying the maternity leave, facilities and other benefits provided under the Code;

e. Discharge on account of pregnancy (137, 2-3)

Art. 137. Prohibited acts.

a. It shall be unlawful for any employer:
2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to
her pregnancy;

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3. To discharge or refuse the admission of such woman upon returning to her work for fear that she
may again be pregnant.
Book III Rule XII SECTION 13. Prohibited acts. It shall be unlawful for any employer:
(b) To discharge such woman employee on account of her pregnancy, or while on leave or in
confinement due to her pregnancy;
(c) To discharge or refuse the admission of such woman upon returning to her work for fear that she
may be pregnant;

f.

Discharge on account of testimony

Book III Rule XII SECTION 13. Prohibited acts. It shall be unlawful for any employer:
(d) To discharge any woman or child or any other employee for having filed a complaint or having
testified or being about to testify under the Code; and

4. Facilities

Art. 132. Facilities for women. The Secretary of Labor and Employment shall establish standards
that will ensure the safety and health of women employees. In appropriate cases, he shall, by
regulations, require any employer to:
a. Provide seats proper for women and permit them to use such seats when they are free from work
and during working hours, provided they can perform their duties in this position without detriment to
efficiency;
b. To establish separate toilet rooms and lavatories for men and women and provide at least a dressing
room for women;
c. To establish a nursery in a workplace for the benefit of the women employees therein; and
d. To determine appropriate minimum age and other standards for retirement or termination in special
occupations such as those of flight attendants and the like.
Art. 134. Family planning services; incentives for family planning.
a. Establishments which are required by law to maintain a clinic or infirmary shall provide free family
planning services to their employees which shall include, but not be limited to, the application or use
of contraceptive pills and intrauterine devices.
b. In coordination with other agencies of the government engaged in the promotion of family planning,
the Department of Labor and Employment shall develop and prescribe incentive bonus schemes to
encourage family planning among female workers in any establishment or enterprise.
Book III Rule XII SECTION 14. Facilities for woman employees. Subject to the approval of the
Secretary of Labor and Employment, the Bureau of Women and Young Workers shall, within thirty (30)
days from the effective date of these Rules, determine in an appropriate issuance the work situations
for which the facilities enumerated in Article 131 of the Code shall be provided, as well as the
appropriate minimum age and other standards for retirement or termination of employment in special
occupations in which women are employed.

5. Special Women Matters

Art. 138. Classification of certain women workers. Any woman who is permitted or suffered to
work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar
establishments under the effective control or supervision of the employer for a substantial period of
time as determined by the Secretary of Labor and Employment, shall be considered as an employee of
such establishment for purposes of labor and social legislation.

6. Maternity Leave

Social Security Act of 1997, RA 8282, Sec 14-A Maternity Leave Benefit. - A female member
who has paid at least three (3) monthly contributions in the twelve-month period immediately
preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit
equivalent to one hundred percent (100%) of her average daily salary credit for sixty (60) days or
seventy-eight (78) days in case of caesarian delivery, subject to the following conditions:

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"(a) That the employee shall have notified her employer of her pregnancy and the probable date of her
childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it
may provide;
"(b) The full payment shall be advanced by the employer within thirty (30) days from the filing of the
maternity leave application;
"(c) That payment of daily maternity benefits shall be a bar to the recovery of sickness benefits
provided by this Act for the same period for which daily maternity benefits have been received;
"(d) That the maternity benefits provided under this section shall be paid only for the first four (4)
deliveries or miscarriages;
"(e) That the SSS shall immediately reimburse the employer of one hundred percent (100%) of the
amount of maternity benefits advanced to the employee by the employer upon receipt of satisfactory
proof of such payment and legality thereof; and
"(f) That if an employee member should give birth or suffer miscarriage without the required
contributions having been remitted for her by her employer to the SSS, or without the latter having
been previously notified by the employer of the time of the pregnancy, the employer shall pay to the
SSS damages equivalent to the benefits which said employee member would otherwise have been
entitled to.
Art. 133. Maternity leave benefits.
a. Every employer shall grant to any pregnant woman employee who has rendered an aggregate
service of at least six (6) months for the last twelve (12) months, maternity leave of at least two (2)
weeks prior to the expected date of delivery and another four (4) weeks after normal delivery or
abortion with full pay based on her regular or average weekly wages. The employer may require from
any woman employee applying for maternity leave the production of a medical certificate stating that
delivery will probably take place within two weeks.
b. The maternity leave shall be extended without pay on account of illness medically certified to arise
out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless
she has earned unused leave credits from which such extended leave may be charged.
c. The maternity leave provided in this Article shall be paid by the employer only for the first four (4)
deliveries by a woman employee after the effectivity of this Code.

7. Sexual Harrassment (RA 7877)

B. Minors

Art. 139. Minimum employable age.

a. No child below fifteen (15) years of age shall be employed, except when he works directly under the
sole responsibility of his parents or guardian, and his employment does not in any way interfere with
his schooling.
b. Any person between fifteen (15) and eighteen (18) years of age may be employed for such number
of hours and such periods of the day as determined by the Secretary of Labor and Employment in
appropriate regulations.
c. The foregoing provisions shall in no case allow the employment of a person below eighteen (18)
years of age in an undertaking which is hazardous or deleterious in nature as determined by the
Secretary of Labor and Employment.
Art. 140. Prohibition against child discrimination. No employer shall discriminate against any
person in respect to terms and conditions of employment on account of his age.

Omnibus Rules RULE XII Employment of Women and Minors

SECTION 2. Employable age. Children below fifteen (15) years of age may be allowed to work under
the direct responsibility of their parents or guardians in any non-hazardous undertaking where the
work will not in any way interfere with their schooling. In such cases, the children shall not be
considered as employees of the employers or their parents or guardians.

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SECTION 3. Eligibility for employment. Any person of either sex, between 15 and 18 years of age,
may be employed in any non-hazardous work. No employer shall discriminate against such person in
regard to terms and conditions of employment on account of his age.
For purposes of this Rule, a non-hazardous work or undertaking shall mean any work or activity in
which the employee is not exposed to any risk which constitutes an imminent danger to his safety and
health. The Secretary of Labor and Employment shall from time to time publish a list of hazardous work
and activities in which persons 18 years of age and below cannot be employed.

1. Minors under the constitution

Art II Section 13. The State recognizes the vital role of the youth in nation-building and shall promote
and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the
youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

2. Coverage
RA 9231 Section 2. Section 12 of the same Act, as amended, is hereby further amended to read as
follows:

"Sec. 2. Employment of Children - Children below fifteen (15) years of age shall not be
employed except:
"1) When a child works directly under the sole responsibility of his/her parents or legal guardian and
where only members of his/her family are employed: Provided, however, That his/her employment
neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development:
Provided, further, That the parent or legal guardian shall provide the said child with the prescribed
primary and/or secondary education; or
"2) Where a child's employment or participation in public entertainment or information through
cinema, theater, radio, television or other forms of media is essential: Provided, That the employment
contract is concluded by the child's parents or legal guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department of Labor and Employment: Provided,
further, That the following requirements in all instances are strictly complied with:
"(a) The employer shall ensure the protection, health, safety, morals and normal development
of the child;
"(b) The employer shall institute measures to prevent the child's exploitation or discrimination
taking into account the system and level of remuneration, and the duration and arrangement
of working time; and
"(c) The employer shall formulate and implement, subject to the approval and supervision of
competent authorities, a continuing program for training and skills acquisition of the child.
"In the above-exceptional cases where any such child may be employed, the employer shall first
secure, before engaging such child, a work permit from the Department of Labor and Employment
which shall ensure observance of the above requirements.
"For purposes of this Article, the term "child" shall apply to all persons under eighteen (18) years of
age."

Book III RULE XII, Employment of Women and Minors.

SECTION 1. General statement on coverage. This Rule shall apply to all employers, whether
operating for profit or not, including educational, religious and charitable institutions, except to the

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Government and to government-owned or controlled corporations and to employers of household

helpers and persons in their personal service insofar as such workers are concerned.

3. Employment of Children
Art. 139. Minimum employable age.

a. No child below fifteen (15) years of age shall be employed, except when he works directly
under the sole responsibility of his parents or guardian, and his employment does not in any
way interfere with his schooling.
b. Any person between fifteen (15) and eighteen (18) years of age may be employed for such
number of hours and such periods of the day as determined by the Secretary of Labor and
Employment in appropriate regulations.
c. The foregoing provisions shall in no case allow the employment of a person below eighteen
(18) years of age in an undertaking which is hazardous or deleterious in nature as
determined by the Secretary of Labor and Employment.

RA 7610 ARTICLE VIII WORKING CHILDREN SECTION 12. Employment of Children. Children
below fifteen (15) years of age may be employed: Provided, That the following minimum requirements
are present:
(a) The employer shall secure for the child a work permit from the Department of Labor and
Employment;
(b) The employer shall ensure the protection, health, safety and morals of the child;
(c) The employer shall institute measures to prevent exploitation or discrimination taking into account
the system and level of remuneration, and the duration and arrangement of working time; and
(d) The employer shall formulate and implement a continuous program for training and skill acquisition
of the child.
The Department of Labor Employment shall promulgate rules and regulations necessary for the
effective implementation of this section.
SECTION 13. Non-formal Education for Working Children. The Department of Education,
Culture and Sports shall promulgate a course design under its non-formal education program aimed at
promoting the intellectual, moral and vocational efficiency of working children who have not
undergone or finished elementary or secondary education. Such course design shall integrate the
learning process deemed most effective under giver circumstances.
SECTION 14. Prohibition on the Employment of Children Certain Advertisements. No
person shall employ child models in all commercials or advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts and violence.
SECTION 15. Duty of Employer. Every employer shall comply with the duties provided for in
Articles 108 and 109 of Presidential Decree No. 603.
SECTION 16. Penalties. Any person who shall violate any provision of this Article shall suffer the
penalty of a fine of not less than One thousand pesos (P1,000) but not more than Ten thousand pesos
(P10,000) or imprisonment of not less than three (3) months but not more than three (3) years, or both
at the discretion of the court; Provided, That, in case of repeated violations of the provisions of this
Article, the offender's license to operate shall be revoked.

Department Order No. 4: RE: Hazardous Work and Activities to Persons Below 18 Years of
Age

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The Department of Labor and Employments (DOLE) Order No. 4 of 1999 outlines categories of
hazardous work and prohibits the employment of children in these categories. The list includes work
with dangerous substances (e.g., adhesives used in footwear manufacture), work hazardous to morals
(e.g., employment in dance halls), work that entails exposure to extreme elements of cold, heat, noise
or pressure (e.g., deep-sea diving and underground work), and work that is hazardous by its nature
(e.g., mining, logging and pyrotechnics production).

4. Hours of Work
RA 9231 Section 3. The same Act, as amended, is hereby further amended by adding new sections to
be denominated as Sections 12-A, 12-B, 12-C, and 12-D to read as follows:
"Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions provided in Section 12 of
this Act, as amended:
"(1) A child below fifteen (15) years of age may be allowed to work for not more than twenty (20) hours
a week: Provided, That the work shall not be more than four (4) hours at any given day;
"(2) A child fifteen (15) years of age but below eighteen (18) shall not be allowed to work for more than
eight (8) hours a day, and in no case beyond forty (40) hours a week;
"(3) No child below fifteen (15) years of age shall be allowed to work between eight o'clock in the
evening and six o'clock in the morning of the following day and no child fifteen (15) years of age but
below eighteen (18) shall be allowed to work between ten o'clock in the evening and six o'clock in the
morning of the following day."

5. Prohibitions against Worst forms of child labor

RA 9231 Sec 3 "Sec. 12-D. Prohibition Against Worst Forms of Child Labor. - No child shall be engaged
in the worst forms of child labor. The phrase "worst forms of child labor" shall refer to any of the
following:
"(1) All forms of slavery, as defined under the "Anti-trafficking in Persons Act of 2003", or
practices similar to slavery such as sale and trafficking of children, debt bondage and serfdom
and forced or compulsory labor, including recruitment of children for use in armed conflict; or
"(2) The use, procuring, offering or exposing of a child for prostitution, for the production of
pornography or for pornographic performances; or
"(3) The use, procuring or offering of a child for illegal or illicit activities, including the
production and trafficking of dangerous drugs and volatile substances prohibited under
existing laws; or
"(4) Work which, by its nature or the circumstances in which it is carried out, is hazardous or
likely to be harmful to the health, safety or morals of children, such that it:
"a) Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or
"b) Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful
psychologically or may prejudice morals; or
"c) Is performed underground, underwater or at dangerous heights; or
"d) Involves the use of dangerous machinery, equipment and tools such as power-driven or explosive
power-actuated tools; or

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"e) Exposes the child to physical danger such as, but not limited to the dangerous feats of balancing,
physical strength or contortion, or which requires the manual transport of heavy loads; or
"f) Is performed in an unhealthy environment exposing the child to hazardous working conditions,
elements, substances, co-agents or processes involving ionizing, radiation, fire, flammable substances,
noxious components and the like, or to extreme temperatures, noise levels, or vibrations; or
"g) Is performed under particularly difficult conditions; or
"h) Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes and
other parasites; or
"i) Involves the manufacture or handling of explosives and other pyrotechnic products."

6. Discrimination
Art. 140. Prohibition against child discrimination. No employer shall discriminate against any
person in respect to terms and conditions of employment on account of his age.

7. Jurisdiction
RA 9231 Section 9. The same Act is hereby further amended by adding new sections to Section 16 to
be denominated as Sections 16-A, 16-B and 16-C to read as follows:
"Sec. 16-A. Jurisdiction - The family courts shall have original jurisdiction over all cases
involving offenses punishable under this Act: Provided, That in cities or provinces where there
are no family courts yet, the regional trial courts and the municipal trial courts shall have
concurrent jurisdiction depending on the penalties prescribed for the offense charged.
"The preliminary investigation of cases filed under this Act shall be terminated within a period
of thirty (30) days from the date of filing.
"If the preliminary investigation establishes a prima facie case, then the corresponding
information shall be filed in court within forty eight (48) hours from the termination of the
investigation.
"Trial of cases under this Act shall be terminated by the court not later than ninety (90) days
from the date of filing of information. Decision on said cases shall be rendered within a period
of fifteen (15) days from the date of submission of the case.
"Sec. 15. Exemptions from Filing Fees. - When the victim of child labor institutes a separate
civil action for the recovery of civil damages, he/she shall be exempt from payment of filing
fees.
"Sec. 16-C. Access to Immediate Legal, Medical and Psycho-Social Services - The working child
shall have the right to free legal, medical and psycho-social services to be provided by the
State."

C. HOUSEHELPERS/ CAREGIVERS
1. Definition, Section 1b
RULE XIII Employment of Househelpers
SECTION 1. General statement on coverage. (a) The provisions of this Rule shall apply to all
househelpers whether employed on full or part-time basis.

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(b) The term "househelper" as used herein is synonymous to the term "domestic servant" and shall
refer to 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.

2. Coverage

Art. 141. Coverage. This Chapter shall apply to all persons rendering services in households for
compensation.
"Domestic or household service" shall mean service in the employers home which is usually necessary
or desirable for the maintenance and enjoyment thereof and includes ministering to the personal
comfort and convenience of the members of the employers household, including services of family
drivers.

3. Non Household Work

Art. 145. Assignment to non-household work. No househelper shall be assigned to work in a

commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for
agricultural or non-agricultural workers as prescribed herein.

Apex Mining Co v. NLRC

Candido performed laundry services at the staff house of company. Began as piece rate worker then
later was paid on monthly basis. On Dec. 18, 1987, while she was hanging laundry, she fell on her
back. She immediately reported incident to dela Rosa, her immediate supervisor who offered her 2thou
then 5thou for her to quit her job. She refused and preferred to return to work but petitioner did not
allow her to work and she was dismissed. Petitioner claims that Candido should be treated as a mere
househelper or domestic servant and not as a regular employee.
Issue: WON Candida was a householder; Held: No;
Ratio:
1. (b) The term "househelper" as used herein is synonymous to the term "domestic servant" and shall
refer to 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.
2. criteria: personal comfort and enjoyment of the family of the employer in the home of said employer
Separation pay granted. Reinstatement no longer possible.

4. Conditions of Employment

141; Art. 142. Contract of domestic service. The original contract of domestic service shall not
last for more than two (2) years but it may be renewed for such periods as may be agreed upon by the
parties.
Art. 143. Minimum wage.
a. Househelpers shall be paid the following minimum wage rates:
1. Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan
cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Paraaque,
Las Pias, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro Manila and in highly urbanized cities;
2. Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class
municipalities; and
3. Five hundred fifty pesos (P550.00) a month for those in other municipalities. Provided, That the
employers shall review the employment contracts of their househelpers every three (3) years with the
end in view of improving the terms and conditions thereof.
Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00)
shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided
thereunder. (As amended by Republic Act No. 7655, August 19, 1993)
Art. 144. Minimum cash wage. The minimum wage rates prescribed under this Chapter shall be the
basic cash wages which shall be paid to the househelpers in addition to lodging, food and medical
attendance.
145; Art. 146. Opportunity for education. If the househelper is under the age of eighteen (18)
years, the employer shall give him or her an opportunity for at least elementary education. The cost of
education shall be part of the househelpers compensation, unless there is a stipulation to the contrary.
Art. 147. Treatment of househelpers. The employer shall treat the househelper in a just and
humane manner. In no case shall physical violence be used upon the househelper.

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Art. 148. Board, lodging, and medical attendance. The employer shall furnish the househelper,
free of charge, suitable and sanitary living quarters as well as adequate food and medical attendance.
Art. 149. Indemnity for unjust termination of services. If the period of household service is fixed,
neither the employer nor the househelper may terminate the contract before the expiration of the
term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the
compensation already earned plus that for fifteen (15) days by way of indemnity. If the househelper
leaves without justifiable reason, he or she shall forfeit any unpaid salary due
him or her not exceeding fifteen (15) days.
Art. 150. Service of termination notice. If the duration of the household service is not determined
either in stipulation or by the nature of the service, the employer or the househelper may give notice
to put an end to the relationship five (5) days before the intended termination of the service.
Art. 151. Employment certification. Upon the severance of the household service relation, the
employer shall give the househelper a written statement of the nature and duration of the service and
his or her efficiency and conduct as househelper.
Art. 152. Employment record. The employer may keep such records as he may deem necessary to
reflect the actual terms and conditions of employment of his househelper, which the latter shall
authenticate by signature or thumbmark upon request of the employer.

Civil Code

Art. 1689. Household service shall always be reasonably compensated. Any stipulation that household
service is without compensation shall be void. Such compensation shall be in addition to the house
helper's lodging, food, and medical attendance.
Art. 1690. The head of the family shall furnish, free of charge, to the house helper, suitable and
sanitary quarters as well as adequate food and medical attendance.
Art. 1691. If the house helper is under the age of eighteen years, the head of the family shall give an
opportunity to the house helper for at least elementary education. The cost of such education shall be
a part of the house helper's compensation, unless there is a stipulation to the contrary.
Art. 1692. No contract for household service shall last for more than two years. However, such contract
may be renewed from year to year.
Art. 1693. The house helper's clothes shall be subject to stipulation. However, any contract for
household service shall be void if thereby the house helper cannot afford to acquire suitable clothing.
Art. 1694. The head of the family shall treat the house helper in a just and humane manner. In no case
shall physical violence be used upon the house helper.
Art. 1695. House helper shall not be required to work more than ten hours a day. Every house helper
shall be allowed four days' vacation each month, with pay.
Art. 1696. In case of death of the house helper, the head of the family shall bear the funeral expenses
if the house helper has no relatives in the place where the head of the family lives, with sufficient
means therefor.
Art. 1697. If the period for household service is fixed neither the head of the family nor the house
helper may terminate the contract before the expiration of the term, except for a just cause. If the
house helper is unjustly dismissed, he shall be paid the compensation already earned plus that for
fifteen days by way of indemnity. If the house helper leaves without justifiable reason, he shall forfeit
any salary due him and unpaid, for not exceeding fifteen days.
Art. 1698. If the duration of the household service is not determined either by stipulation or by the
nature of the service, the head of the family or the house helper may give notice to put an end to the
service relation, according to the following rules:
(1) If the compensation is paid by the day, notice may be given on any day that the service shall end
at the close of the following day;

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(2) If the compensation is paid by the week, notice may be given, at the latest on the first business day
of the week, that the service shall be terminated at the end of the seventh day from the beginning of
the week;
(3) If the compensation is paid by the month, notice may be given, at the latest, on the fifth day of the
month, that the service shall cease at the end of the month.
Art. 1699. Upon the extinguishment of the service relation, the house helper may demand from the
head of the family a written statement on the nature and duration of the service and the efficiency and
conduct of the house helper.

D. HOMEWORKERS
1. Coverage and Regulation

Art. 153. Regulation of industrial homeworkers. The employment of industrial homeworkers and
field personnel shall be regulated by the government through the appropriate regulations issued by the
Secretary of Labor and Employment to ensure the general welfare and protection of homeworkers and
field personnel and the industries employing them.
Art. 154. Regulations of Secretary of Labor. The regulations or orders to be issued pursuant to
this Chapter shall be designed to assure the minimum terms and conditions of employment applicable
to the industrial homeworkers or field personnel involved.
Art. 155. Distribution of homework. For purposes of this Chapter, the "employer" of homeworkers
includes any person, natural or artificial who, for his account or benefit, or on behalf of any person
residing outside the country, directly or indirectly, or through an employee, agent contractor, subcontractor or any other person:
1. Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in
or about a home and thereafter to be returned or to be disposed of or distributed in accordance with
his directions; or
2. Sells any goods, articles or materials to be processed or fabricated in or about a home and then
rebuys them after such processing or fabrication, either by himself or through some other person.
D.O 5 now Book IIII Rule XIV, SECTION 1. General statement on coverage. This Rule shall apply to
any homeworker who performs in or about his home any processing of goods or materials, in whole or
in part, which have been furnished directly or indirectly by an employer and thereafter to be returned
to the latter.
DEPARTMENT ORDER NUMBER 5

2. Definition
DEPARTMENT ORDER NUMBER 5; SEC 2
D.O 5 now Book IIII Rule XIV, SECTION 2. Definitions. As used in this Rule, the following terms shall
have the meanings indicated hereunder:
(a) "Home" means any room, house, apartment, or other premises used regularly, in whole or in part,
as a dwelling place, except those situated within the premises or compound of an employer,
contractor, and the work performed therein is under the active or personal supervision by, or for, the
latter.
(b) "Employer" means any natural or artificial person who, for his own account or benefit, or on behalf
of any person residing outside the Philippines, directly or indirectly, or through any employee, agent,
contractor, sub-contractor; or any other person:
(1) Delivers or causes to be delivered any goods or articles to be processed in or about a home and
thereafter to be returned or to be disposed of or distributed in accordance with his direction; or
(2) Sells any goods or articles for the purpose of having such goods or articles processed in or about a
home and then repurchases them himself or through another after such processing.

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(c) "Contractor" or "sub-contractor" means any person who, for the account or benefit of an employer,
delivers or caused to be delivered to a homeworker goods or articles to be processed in or about his
home and thereafter to be returned, disposed of or distributed in accordance with the direction of the
employer.
(d) "Processing" means manufacturing, fabricating, finishing, repairing, altering, packing, wrapping or
handling any material.

3. Registration
DEPARTMENT ORDER NUMBER 5; 4 AND 6
4. Conditions of Employment/ Deductions
DEPARTMENT ORDER NUMBER 5; 6 TO 9
Book IIII Rule XIV, SECTION 4. Deductions. No employee, contractor, or sub-contractor shall make
any deduction from the homeworker's earnings for the value of materials which have been lost,
destroyed, soiled or otherwise damaged unless the following conditions are met:
(a) The homeworker concerned is clearly shown to be responsible for the loss or damage;
(b) The employee is given reasonable opportunity to show cause why deductions should not be made;
(c) The amount of such deduction is fair and reasonable and shall not exceed the actual loss or
damages; and
(d) The deduction is made at such rate that the amount deducted does not exceed 20% of the
homeworker's earnings in a week.
Book IIII Rule XIV, SECTION 5. Conditions for payment of work. (a) The employer may require the
homeworker to re-do work which has been improperly executed without having to pay the stipulated
rate more than once.
(b) An employer, contractor, or sub-contractor need not pay the homeworker for any work which has
been done on goods and articles which have been returned for reasons attributable to the fault of the
homeworker.

5. Joint and Several Liability of Employment/ Contractor

DEPARTMENT ORDER NUMBER 5; SEC 11
Book IIII Rule XIV, SECTION 7. Liability of employer and contractor. Whenever an employer shall
contract with another for the performance of the employer's work, it shall be the duty of such
employer to provide in such contract that the employees or homeworkers of the contractor and the
latter's sub-contractor shall be paid in accordance with the provisions of this Rule. In the event that
such contractor or sub-contractor fails to pay the wages or earnings of his employees or homeworkers
as specified in this Rule, such employer shall be jointly and severally liable with the contractor or subcontractor to the workers of the latter, to the extent that such work is performed under such contract,
in the same manner as if the employees or homeworkers were directly engaged by the employer.

6. Prohibitions
DEPARTMENT ORDER NUMBER 5; SEC 13
7. Enforcement
DEPARTMENT ORDER NUMBER 5; SEC 10

9. Medical Dental and Occupational Safety

a. Coverage

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BOOK FOUR Health, Safety and Welfare Benefits RULE I Medical and Dental Services
SECTION 1. Coverage. This Rule shall apply to all employers, whether operating for profit or not,
including the Government and any of its political subdivisions and government-owned or controlled
corporations, which employs in any workplace one or more workers.
The development and enforcement of dental standards shall continue to be under the responsibility of
the Bureau of Dental Health Services of the Department of Health.

b. First Aid Treatment

Art. 156. First-aid treatment. Every employer shall keep in his establishment such first-aid
medicines and equipment as the nature and conditions of work may require, in accordance with such
regulations as the Department of Labor and Employment shall prescribe. The employer shall take steps
for the training of a sufficient number of employees in first-aid
treatment.

c. Emergency Medical and Dental Services

1. When Required

Art. 157. Emergency medical and dental services. It shall be the duty of every employer to
furnish his employees in any locality with free medical and dental attendance and facilities consisting
of:
a. The services of a full-time registered nurse when the number of employees exceeds fifty (50) but
not more than two hundred (200) except when the employer does not maintain hazardous workplaces,
in which case, the services of a graduate first-aider shall be provided for the protection of workers,
where no registered nurse is available. The Secretary of Labor and Employment shall provide by
appropriate regulations, the services that shall be required where the number of employees does not
exceed fifty (50) and shall determine by appropriate order, hazardous workplaces for purposes of this
Article;
b. The services of a full-time registered nurse, a part-time physician and dentist, and an emergency
clinic, when the number of employees exceeds two hundred (200) but not more than three hundred
(300); and
c. The services of a full-time physician, dentist and a full-time registered nurse as well as a dental clinic
and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees
when the number of employees exceeds three hundred (300). In cases of hazardous workplaces, no
employer shall engage the services of a physician or a dentist
who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those
engaged on part-time basis, and not less than eight (8) hours, in the case of those employed on fulltime basis. Where the undertaking is non-hazardous in nature, the physician and dentist may be
engaged on retainer basis, subject to such regulations as the Secretary of Labor and Employment may
prescribe to insure immediate availability of medical and dental treatment and
attendance in case of emergency. (As amended by Presidential Decree NO. 570-A, Section 26)

2. When Not Required

Art. 158. When emergency hospital not required. The requirement for an emergency hospital
or dental clinic shall not be applicable in case there is a hospital or dental clinic which is accessible
from the employers establishment and he makes arrangement for the reservation therein of the
necessary beds and dental facilities for the use of his employees.

d. Employer Assistance

Art. 161. Assistance of employer. It shall be the duty of any employer to provide all the
necessary assistance to ensure the adequate and immediate medical and dental attendance and
treatment to an injured or sick employee in case of emergency.

e. Occupational Safety and Health Standards, training of supervisor or technician

1. When Required

Book IV Rule II SECTION 5. Training of personnel in safety and health. Every employer shall take
steps to train a sufficient number of his supervisors or technical personnel in occupational safety and
health. An employer may observe the following guidelines in the training of his personnel:

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(a) In every non-hazardous establishment or workplace having from fifty (50) to four hundred (400)
workers each shift, at least one of the supervisors or technical personnel shall be trained in
occupational health and safety and shall be assigned as part-time safety man. Such safety man shall
be the secretary of the safety committee.
(b) In every non-hazardous establishment or workplace having over four hundred (400) workers per
shift, at least two of its supervisors shall be trained and a full-time safety man shall be provided.
(c) In every hazardous establishment or workplace having from twenty (20) to two hundred (200)
workers each shift, at least one of it supervisors or technical man shall be trained who shall work as
part-time safety man. He shall be appointed as secretary of the safety committee therein.
(d) In every hazardous establishment or workplace having over two hundred (200) workers each shift,
at least two of its supervisors or technical personnel shall be trained and one of them shall be
appointed full-time safety man and secretary of the safety committee therein.

2. When Not Required

Book IV Rule II SECTION 5. Training of personnel in safety and health. Every employer shall take
steps to train a sufficient number of his supervisors or technical personnel in occupational safety and
health. An employer may observe the following guidelines in the training of his personnel:
(e) The employment of a full-time safety man not be required where the employer enters into a
written contract with a qualified consulting organization which shall develop and carry out his safety
and health activities; Provided, That the consultant shall conduct plant visits at least four (4) hours a
week and is subject to call anytime to conduct accident investigations and is available during
scheduled inspections or surveys by the Secretary of Labor and Employment or his authorized
representatives.
The provisions of this Section shall be made mandatory upon orders of the Secretary of Labor and
Employment as soon as he is satisfied that adequate facilities on training in occupational safety and
health are available in the Department of Labor and Employment and other public or private entities
duly accredited by the Secretary of Labor and Employment.

f.

Enforcement or DOLE obligations

Chapter II OCCUPATIONAL HEALTH AND SAFETY

Art. 162. Safety and health standards. The Secretary of Labor and Employment shall, by
appropriate orders, set and enforce mandatory occupational safety and health standards to eliminate
or reduce occupational safety and health hazards in all workplaces and institute new, and update
existing, programs to ensure safe and healthful working conditions in all places of employment.
Art. 163. Research. It shall be the responsibility of the Department of Labor and Employment to
conduct continuing studies and research to develop innovative methods, techniques and approaches
for dealing with occupational safety and health problems; to discover latent diseases by establishing
causal connections between diseases and work in environmental conditions; and to develop medical
criteria which will assure insofar as practicable that no employee will suffer impairment or diminution
in health, functional capacity, or life expectancy as a result of his work and working conditions.
Art. 164. Training programs. The Department of Labor and Employment shall develop and
implement training programs to increase the number and competence of personnel in the field of
occupational safety and industrial health.
Art. 165. Administration of safety and health laws.
a. The Department of Labor and Employment shall be solely responsible for the administration and
enforcement of occupational safety and health laws, regulations and standards in all establishments
and workplaces wherever they may be located; however, chartered cities may be allowed to conduct
industrial safety inspections of establishments within their
respective jurisdictions where they have adequate facilities and competent personnel for the purpose
as determined by the Department of Labor and Employment and subject to national standards
established by the latter.
b. The Secretary of Labor and Employment may, through appropriate regulations, collect reasonable
fees for the inspection of steam boilers, pressure vessels and pipings and electrical installations, the
test and approval for safe use of materials, equipment and other safety devices and the approval of

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plans for such materials, equipment and devices. The fee so collected shall be deposited in the
national treasury to the credit of the occupational safety and health fund and shall be expended
exclusively for the administration and enforcement of safety and other labor laws administered by the
Department of Labor and Employment.

Article 166 to 208 is repealed by the SSS Law of 1997

Re: Art. 209 See: NHI Law

Art. 209. Medical care. The Philippine Medical Care Plan shall be implemented as provided under RA
6111, as amended.

Book IV Rule II SECTION 8. Administration and enforcement. (a) Every employer shall give to the

Secretary of Labor and Employment or his duly authorized representative access to its premises and
records at any time of the day and night when there is work being undertaken therein for the purpose
of determining compliance with the provisions of this Rule.
(b) Every establishment or workplace shall be inspected at least once a year to determine compliance
with the provisions of this Rule. Special inspection visits, however, may be authorized by the Regional
Office to investigate accidents, conduct surveys requested by the Bureau of Working Conditions,
follow-up inspection, recommendations or to conduct investigations or inspections upon request of an
employer, worker or a labor union in the establishment

III.

Employee Classification

Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of

Employment Section 1. Coverage. This Rule shall apply to all establishments and undertakings,

whether operated for profit or not, including educational, medical, charitable and religious institutions
and organizations in cases of regular employment with the exception of the Government and its
political subdivisions including government-owned or controlled corporations.

1. Coverage

Art. 278. Coverage. The provisions of this Title shall apply to all establishments or undertakings,
whether for profit or not.
Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of Employment
Section 1. Coverage. This Rule shall apply to all establishments and undertakings, whether
operated for profit or not, including educational, medical, charitable and religious institutions and
organizations in cases of regular employment with the exception of the Government and its political
subdivisions including government-owned or controlled corporations.

2. Employee Classification 280 to 281

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 been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous
or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such activity exists.
Art. 281. Probationary employment. 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.
Omnibus Rules Book VI (Post Employment) Sec 1, 5, 6: TITLE I: Termination of Employment
Section 5. (a) Regular employment. - The provisions of written agreements to the contrary

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notwithstanding and regardless of the oral agreements of the parties, employment shall be deemed
regular for purposes of Book VI of the Labor Code where employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or where
the job, work or service to be performed is seasonal in nature and the employment is for the duration
of the season.
(b) Casual employment. - There is casual employment where an employee is engaged to perform a job,
work or service which is merely incidental to the business of the employer, and such job, work or
service is for a definite period made known to the employee at the time of engagement: Provided, that
any employee who has rendered at least one year of service, whether such service is continuous or
not, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.
Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and
privileges, and shall be subject to the duties and obligations, as may be granted by law to regular
employees during the period of their actual employment."
Section 6. Probationary employment. - There is probationary employment where the employee, upon
his engagement, is made to undergo a trial period during which the employer determines his fitness to
qualify for regular employment based on reasonable standards made known to him at the time of
engagement.
"Probationary employment shall be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in
accordance with the standards prescribed by the Department of Labor and Employment, the period of
probationary employment shall be limited to the authorized learnership or apprenticeship period,
which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment
shall not exceed six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only
for a just or authorized cause, when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

a. Employer recognition
Romares v. NLRC

Artemio Romares was employed by PILMICO Foods Corporation in its Maintenance/Projects/Engineering

Department to paint, repair and conduct maintenance on the Corporations business premises. Upon
his dismissal from the company he filed a complaint with the LA for illegal dismissal. The LA agreed
with him saying that the records revealed that he was hired, terminated, and rehired again 3 times in a
span of more than 3 years and performed the same functions in the same department.
In Kimberly Independent Labor Union v. Hon. Franklin Drilon, the court classified 2 kinds of regular
employees
1.) Those engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer
2.) Those who have rendered at least one year of service whether continuous or broken.
The LA ruled that Romares falls within the 2 nd classification and thus a regular employee.
As for his illegal dismissal the 2 requisites laid down in National Service Corp v. NLRC which are:
1.) Notice which apprises the employee of particular acts or omissions
2.) Subsequent notice which informs the employee of the employers decision to dismiss him.
Both of which were not complied with by PILMICO.
NLRC ruled that the termination was due to the expiration of the contracts and reversed the ruling f
the LA.
They said that the applicable rule is Art 280, LC which governs employment contracts for fixed or
temporary periods.
Thus this petition. The court found the petition meritorious because the petitioners work with the
company as a mason is usually necessary and desirable in the business and trade of PILMICO and
during each rehiring, he was assigned to the same position. The contracts were not of Romares
temporary employment but a clear circumvention of the employees right to security of tenure.
The court cited Brent School v. Zamora which laid down criteria under which the term employment
cannot be said to be in circumvention of the law of security of tenure (279,LC)

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1.) Fixed Period of employment was knowingly and voluntarily agreed upon by the parties without
any force, duress or improper pressure. (with consent)
2.) ER and EE dealt with each other in equal terms with no moral dominance exercised by the
former on the latter.
The court held that none of the requisites were complied with by PILMICO and thus the petition is
granted.

b. Employer Determination/ Designation

Phil Federation v. NLRC and Victoria Abril

Victoria Abril was employed by Philippine Federation of Credit Cooperatives (PFCCI) in different
positions within the company such as secretary in 1985 and cashier and again as secretary in 1988,
shortly after resuming her position, she gave birth and upon her return in Nov 1989, she found that she
was already replaced. However, she accepted the offer of the position of Regional Field Officer as
evidenced by the contract prepared by PFCCI which stipulated tat respondents employment status
shall be probationary for 6 months. She was dismissed in 1991.
She then filed a case for illegal dismissal which was dismissed by the LA for lack of merit. NLRC
reversed the decision thus this petition. The court found no merit in the companys petition.
International Catholic Migration v. NLRC defined a probationary employee as one who is on trail by an
employer who determines whether he is qualified for permanent employment. However, probationary
employees are also afforded by the Labor Code with security of tenure, except for a just cause, he
cannot be terminated.
The petitioners argue that Abril is a casual employee under Art 280, LC. Art 280 defines 3 kinds of
employees:
1.) Regular employees: those whose work is necessary and desirable to the usual business of the
employer
2.) Project employees: those whose employment has been fixed for a specific project (only for the
duration of the season)
3.) Casual employees: neither regular nor private.
Upon construing the contract, it can be seen that the stipulations are ambiguous and thus because a
contract of employment is a contract of adhesion, it must be construed strictly against the party who
prepared it. Therefore the dismissal is illegal and the petition is dismissed.

c. Management Prerogative
Industrial Timber v. Ababon
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant leased to Industrial
Timber Corporation (ITC) on August 30, 1985 for a period of five years. They hired 387 workers. ITC
notified the Department of Labor and Employment (DOLE) and its workers that effective March 19,
1990 it will undergo a no plant operation due to lack of raw materials. IPGC notified ITC of the
expiration of the lease contract in August 1990 and its intention not to renew the same. ITC notified
the DOLE and its workers of the plants shutdown due to the non-renewal of anti-pollution permit that
expired in April 1990. This was followed by a final notice of closure or cessation of business operations
on August 17, 1990 with an advice for all the workers to collect the benefits due them under the law
and CBA.
IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit which included
the anti-pollution permit, by the DENR on the same day the ITC ceased operation of the plant.
This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal,
LA ruled for ITC. Ababon, et al. appealed to the NLRC. NLRC ordered the reinstatement of the
employees to their former positions. ITC and IPGC filed a Motion for Reconsideration; it was dismissed
for being filed out of time. CA set aside the decision of the NLRC.
Both parties filed their respective motions for reconsideration which were denied, hence, the present
consolidated petitions. The court allowed the petition for relief despite procedural defect of filing the
motion for reconsideration three days late.
The court also held that the right to close the operation of an establishment or undertaking is one of
the authorized causes in terminating employment of workers, the only limitation being that the closure
must not be for the purpose of circumventing the provisions on termination of employment embodied
in the Labor Code. Article 283 of the Labor Code provides that a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious business losses or financial
reverses or otherwise.
Three requirements are necessary for a valid cessation of business operations:
(a) service of a written notice to the employees and to the DOLE at least one month before the
intended date thereof;
(b) the cessation of business must be bona fide in character; and

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(c) payment to the employees of termination pay amounting to one month pay or at least one-half
month pay for every year of service, whichever is higher.
The court found that ITCs closure or cessation of business was done in good faith and for valid
reasons. Records reveal that the decision to permanently close business operations was arrived at
after a suspension of operation for several months precipitated by lack of raw materials used for
milling operations, the expiration of the anti-pollution permit.
But although the closure was done in good faith and for valid reasons, we find that ITC did not comply
with the notice requirement. ITC notified its employees and the DOLE of the no plant operation on
March 16, 1990 due to lack of raw materials. This was followed by a shut down notice dated June 26,
1990 due to the expiration of the anti-pollution permit. However, this shutdown was only temporary as
ITC assured its employees that they could return to work once the renewal is acted upon by the DENR.
The court said that where dismissal is based on an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement, the sanction should be stiff
because the dismissal process was initiated by the employers exercise of his management
prerogative. P50,000.00 to each employee was awarded as nominal damages. CA reversed. NLRC
affirmed.

A. Regular Employees

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 been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous
or broken, shall be considered a regular employee with respect to the activity in which he is employed
and his employment shall continue while such activity exists.
Art. 281. Probationary employment. 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.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a
learnership agreement with them, which agreement shall include:
a. The names and addresses of the learners; b. The duration of the learnership period, which shall not exceed three (3) months; c.
The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum
wage; and

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

Omnibus Rules Book VI Rule I Sec 5 A&B and 6

Section 5. (a) Regular employment. - The provisions of written agreements to the contrary
notwithstanding and regardless of the oral agreements of the parties, employment shall be deemed
regular for purposes of Book VI of the Labor Code where employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or where
the job, work or service to be performed is seasonal in nature and the employment is for the duration
of the season.
(b) Casual employment. - There is casual employment where an employee is engaged to perform a job,
work or service which is merely incidental to the business of the employer, and such job, work or
service is for a definite period made known to the employee at the time of engagement: Provided, that
any employee who has rendered at least one year of service, whether such service is continuous or
not, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.

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Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and
privileges, and shall be subject to the duties and obligations, as may be granted by law to regular
employees during the period of their actual employment."
Section 6. Probationary employment. - There is probationary employment where the employee, upon
his engagement, is made to undergo a trial period during which the employer determines his fitness to
qualify for regular employment based on reasonable standards made known to him at the time of
engagement.
"Probationary employment shall be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in
accordance with the standards prescribed by the Department of Labor and Employment, the period of
probationary employment shall be limited to the authorized learnership or apprenticeship period,
which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment
shall not exceed six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only
for a just or authorized cause, when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

i.)
Nature of Work
Poseidon Fishing v. NLRC

Jimy S. Estoquia was hired by Poseidon Fishing as a Chief Mate and was promoted to Boat Captain 5
years later (1993). He was demoted to radio operator in 1999 for unknown reasons. On July 2000, he
failed to record a 7:25am call in the log book but was able to record it after the 7:30 call. This
prompted Poseidon to demand from him an explanation and he was instructed the same day to collect
his separation pay from the company. Estoquia filed for illegal dismissal with the LA who ruled in his
favor. The LA ruled that even if he was hired as a casual employee, he earned the status of regular
employee after 12 years of service. Petitioners filed their memorandum of appeal with the NLRC for the
reversal of the aforesaid decision. NLRC affirmed the LA. Thus this petition. The petitioner claims that
he was paid on a por viaje scheme and that Estoquia was hired on a fixed term contract. They also say
that deep sea fishing is seasonal in nature and thus he was only a project employee (assigned to carry
out a specific project for the projects duration and scope only). The court held that in Brent v. Zamora,
the acid test in considering fixed term contracts as valid if from the circumstances it is apparent that
periods have been imposed to preclude acquisition of tenurial security by the employee, they should
be disregarded for being contrary to public policy. In Pakistan International Airlines Corporation v. Ople
it ruled that the critical consideration is the presence or absence of a substantial indication that the
period specified in an employment agreement was designed to circumvent the security of tenure of
regular employees. In the case at bar, the Kasunduan was not only vague, it also failed to provide an
actual of specific date or period for the contract.
It was shown by the respondent through his SSS employee contribution and payrolls that he was
repeatedly hired as an employee of the company for 12 years. Poseidon, who was supposed to carry
the records was not able to refute the payrolls and SSS shown by Estioquia. Also, the court held in
Philex Mining v. NLRC that fishing is not seasonal but continuous in nature. In the same case, project
employees were defined as 1) those hired for a specific project or undertaking 2. the completion of
which has been determined at the time of employment or engagement of the employee.
The test is WON the project employees were assigned to carry out a specific project for a duration
which was already specified to the employees at the time they were engaged. These were not
complied with by the petitioner; Estoquia is a regular employee. Petition denied.

Eddie Pacquing v. Coca Cola

Eddie Pacquing was one of the sales route helpers or cargadores-pahinantes of Coca-Cola Bottlers
Philippines, Inc. Petitioners were part of a complement of three personnel comprised of a driver, a
salesman and a regular route helper, for every delivery truck. Petitioners filed a Complaint against
respondent for unfair labor practice and illegal dismissal with claims for regularization, recovery of
benefits. Petitioners alleged that they should be declared regular employees of respondent since the
nature of their work as cargadores-pahinantes was necessary or desirable to respondent's usual
business.Respondent denied liability to petitioners and countered that petitioners were temporary
workers who were engaged for a five-month period to act as substitutes for an absent regular
employee.

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LA dismissed the complaint NLRC affirmed the LA. The petitioners filed a Petition for Certiorari with the
CA who dismissed the petition. It held that the failure of all the petitioners to affix their signatures in
the verification and certification against non-forum shopping rendered the petition dismissable. Thus
this petition. The court held it is sufficient, for one of the plaintiffs, acting as representative, to sign the
certificate provided that the plaintiffs share a common interest in the subject matter of the case or
filed the case as a collective raising only one common cause of action or defense. In the instant case
where petitioners have filed their case as a collective group, sharing a common interest and having a
common single cause of action against respondent.
The issue left to be resolved is WON the petitioners are regular employees of the respondent. The
basic law on the case is Article 280 of the Labor Code. An employment shall be deemed to be casual if
it is not covered by the preceding paragraph. The applicable test is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the
employer. Even if he is a project or season employee, if he has been performing the job for at least one
year the law deems the repeated and continuing need for its performance as being sufficient to
indicate the necessity or desirability of that activity to the business or trade of the employer. The
repeated rehiring of respondent workers and the continuing need for their services clearly attest to the
necessity or desirability of their services in the regular conduct of the business or trade of petitioner
company. Being regular employees of respondent, petitioners are entitled to security of tenure. Petition
GRANTED.

Dante D. Dela Cruz v. Maersk Filipinas Crewing

Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third engineer. The contract of
employment was for a period of nine months. Petitioner was deployed UAE> His chief engineer
expressed dissatisfaction over petitioner's performance and wrote this is a log book. He was
subsequently informed of hid dismissal. Petitioner thereafter filed a complaint for illegal dismissal with
claims for the monetary equivalent of the unexpired portion of his contract. LA ruled for petitioner.
NLRC affirmed LA. CA reversed NLRC because it deemed the logbook entries to be sufficient
compliance with the first notice requirement of the law. Petitioner filed a motion for reconsideration of
the CA decision. It was denied. Hence, this petition.
The question is whether or not petitioner was illegally dismissed by respondents. The court held that
an employer has the burden of proving that an employee's dismissal was for a just cause. it should
also comply with the rudimentary requirements of due process, The employer is bound to furnish him
two notices: (1) the written charge and (2) the written notice of dismissal (in case that is the penalty
imposed). Contrary to the decision of the CA the logbook entries did not substantially comply with the
first notice because it was only a vague and general accusation and the nature of the acts or omissions
relied upon as basis for the termination of petitioner's employment were not given.
It was petitioner's position that he was already a regular employee when his services were terminated;
respondents, on the other hand, insisted that he was then still on probationary status. In Brent School,
Inc. v. Zamora the court already held that seafarers are not covered by the term regular employment
they are considered contractual employees whose rights and obligations are governed primarily by the
POEA Standard Employment Contract for Filipino Seamen in no case shall a contract of employment
concerning seamen exceed 12 months. It is an accepted maritime industry practice that the
employment of seafarers is for a fixed period only. In using the terms "probationary" and "permanent"
vis- -vis seafarers, what was really meant was "eligible for re-hire and not employees. Petition is
hereby GRANTED.

ii.)
Extended Period
Tomas Lao Construction v. NLRC
Respondents filed individual complaints against petitioner for illegal dismissal. Respondents claim that
they are working under the Lao Group of Companies: Tomas Lao Corp, Thomas and James Developers,
and LVM Construction Company, which enter into joint venture agreements with each other and lease
tools and equipment to one another. In 1989, Lao (Managing Director of LVM and president of T&J)
issued a memorandum asking the employees to sign employment contract forms allegedly for audit
purposes. However, the contracts described the construction workers as project employees. All but one
refused to sign the contract. They were asked to explain why they refused to sign and were later on
dismissed. They filed a case with the LA who ruled that the workers were project employees and
agreed with the Lao company that they were merely trying to formalize their position as project
employees. The NLRC reversed the LA holding that the workers were already regularized and the NLRC
pierced the corporate veil of the companies holding they solidarily liable for the payment of wages.
Thus this petition saying that the petitioners were merely trying to formalize the workers status as
project employees. The court found that the principal test is whether the project employees are

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assigned to carry out specific project or undertaking, the duration of which are specified at the time
the employees were engaged for the project. The court also reiterated their ruling that project
employees whose service has been employed long after the supposed project has been finished are
considered regular employees. In the case at bar, the fact that the workers were continuously being
rehired due to the demands of the petitioners business satisfied the court as proof of their regular
employment. Moreover, the Lao corporations should have immediately submitted the report of
termination as required by DOLE for termination of project employees. The court upheld NLRC. Petition
Dismissed.

iii.) Repeated renewal of contract

Beta Electric Corp v. NLRC

Luzviminda Petilla was hired as a clerk typist and was given 5 extensions after which, her services
were terminated. LA, NLRC and the court ruled in her favor. The court held that she was already a
regular employee, her tenure having exceeded six months. Her work is not temporary just because her
employment hinged from contract to contract. Contrary to the allegations of the petitioner, the nature
of the work is not seasonal or specific but rather, it was engaged as an activity which I necessary and
desirable in the usual business of the employer. Specific undertaking means: a special type of venture
or project whose duration is coterminous with the completion of the project; this does not apply to the
case at bar. Petition is dismissed.

B. Project Employees 1st paragraph 280

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 been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.

Policy Instructions 20 on 1977 entitled "Stabilizing Employer-Employee Relations

in the Construction Industry", provides in relevant part:
"In the interest of stabilizing employer-employee relations in the construction industry and taking into
consideration its unique characteristics, the following policy instructions are hereby issued for the
guidance of all concerned:
Generally, there are two types of employees in the construction industry, namely: 1) Project
employees, and 2) Non-Project employees.

Project employees are those employed in connection with a particular construction project. Nonproject employees are those employed by a construction company without reference to any particular
project.
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the number
of projects in which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection with such
termination. What is required of the company is a report to the nearest Public Employment Office for
statistical purposes.
If a construction project or any phase thereof has a duration of more than one year and a
Project employee is allowed to be employed therein for at least one year, such employee may not be
terminated until the completion of the project or of any phase thereof in which he is employed with a
previous written clearance from the Secretary of Labor. If such an employee is terminated without a
clearance from the Secretary of Labor, he shall be entitled to reinstatement with backwages.
The employees of a particular project are not terminated at the same time. Some phases of the
project are completed ahead of others. For this reason, the completion of a phase of the Project is the
completion of the project for an employee employed in such phase. In other words, employees
terminated upon the completion of their phase of the project are not entitled to separation pay and
exempt from the clearance requirement.

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On the other hand, those employed in a particular phase of a construction project are also not
terminated at the same time. Normally, less and less employees are required as the phase draws
closer to completion. Project employees terminated because their services are no longer needed in
their particular phase of the project are not entitled to separation pay and are exempt from the
clearance requirement, provided they are not replaced. If they are replaced, they shall be entitled to
reinstatement with backwages.
Members of a work pool from which a construction company draws its project employees, if considered
employees of the construction company while in the work pool, are non-project employees or
employees for an indefinite period. If they are employed in a particular project, the completion of the
project or of any phase thereof will not mean severance of employer-employee relationship.
However, if the workers in the work pool are free to leave anytime and offer their services to other
employers then they are project employees employed by a construction company in a particular
project or in a phase thereof.
Generally, there are three (3) types of non-project employees: first, probationary employees; second,
regular employees; and third, casual employees.
Probationary employees are those who, upon the completion of the probationary period, are
entitled to regularization. Regular employees are those who have completed the probationary period
or those appointed to fill up regular positions vacated as a result of death, retirement, resignation, or
termination of the regular holder thereof. On the other hand, casual employees are those employed
for a short term duration to perform work not related to the main line of the business of the employer.
xxx

xxx

xxx.

Policy Instructions No. 20 was subsequently superseded by Department Order No. 19 (series of 1993)
dated April 1, 1993 of the Department of Labor and Employment.

D.O. No. 19 of 1993

According to the Department of Labor and Employment Order No. 19, [April 1, 1993] Series of 1993,
the following are considered indicators of project employment:
(a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable.
(b) Such duration, as well as the specific work/service to be performed, is defined in an employment
agreement and is made clear to the employee at the time of hiring.
(c) The work/service performed by the employee is in connection with the particular
project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting engagement, is free to offer his services to any
other employer.
(e) The termination of his employment in the particular project/undertaking is reported to the
Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace
within 30 days following the date of his separation from work, using the prescribed form on employees
terminations/dismissals/suspensions.
(f) An undertaking in the employment contract by the employer to pay completion bonus to the
project employee as practiced by most construction companies.
In ABC, Inc. v. NLRC, the Supreme Court has ruled that the length of service of a project employee is
not the controlling test of employment tenure but whether or not the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee.

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It is also worthy to note Clause 3.3(a) of Department Order No. 19, which states: Project employees
whose aggregate period of continuous employment in a construction company is at least one year
shall be considered regular employees, in the absence of a day certain agreed upon by the parties
for the termination of their relationship. Project employees who have become regular shall be entitled
to separation pay.
A day as used herein, is understood to be that which must necessarily come, although is may not be
known exactly when. This means that where the final completion of a project or phase thereof is in
fact determinable and the expected completion is made known to the employee, such project
employee may not be considered regular, notwithstanding the one-year duration of employment in the
project or phase thereof or the one-year duration of two or more employments in the same project or
phase of the object.

Considering the above facts and circumstances, what are the rights of a project employee under labor
laws if he has been illegally dismissed? Well settled is the rule that the burden of proving that an
employee was lawfully dismissed lies with the employer. Thus employers who hire project employees
are mandated to state the actual basis for the project employees dismissal.
Section 3.2 of Department Order No. 19, Series of 1993 states that:
Project employees are not entitled to separation pay if their services are terminated as a result of the
completion of the project or any phase thereof in which they are employed. Likewise, project
employees whose services are terminated because they have no more to do or their services are no
longer needed in the particular phase of the project are not by law entitled to separation pay.
The rights of an illegally dismissed project employee is based only in the current project contract
where he was illegally terminated. If the employer fails to prove that the project was already
completed, there is a presumption that the services of the project employee has been terminated with
no valid cause prior to the expiration of the period of his project employment. In such a case, the
illegally dismissed project employee is entitled to reinstatement with full back wages, inclusive of
allowances and other benefits. If the project has already been completed during the pendency of the
labor suit, the project employee can no longer be reinstated. Instead, he shall be entitled to the
payment of his salary and other benefits corresponding to the unexpired portion of his employment,
specifically from the time of the termination of his employment, until the date of completion of the
project.

i.)
Definition
Imbuido v. NLRC

Vivian Imbuido was employed as a data encoder by International Information Services Inc. She was
employed for a span of 3 years (August 1988 to October 1991) wherein 13 separate contracts of
employment were entered into by the petitioner, each lasting 3 months. She was terminated allegedly
due to low volume of work. Imbuido filed a case for illegal dismissal claiming that she was fire not
because of the volume of her work but because she signed a petition for certification election among
the rank and file employees of the company. The company insisted that she was terminated due to her
work as well as because of the expiration of the complainants contact, she being a project employee.
The LA ruled in favor of petitioner and ordered her reinstatement finding her to be a regular employee
while the NLRC reversed the decision and ruled that she is a project employee employed for a specific
project of the company.
Thus she filed a petition for certiorari in the SC. The SC ruled that petitioner is a project employee
using the principal test which is determining WON the employee was assigned to carry out a specific
project, the duration and scope of which were specified at the time the employee was engaged for that
project. As observed by the court through the employment contracts, Imbuido worked for a specific
undertaking, the completion or termination of which had been determined at the time of her
engagement. Although she is a project employee, in Maraguinot v. NLRC it was held that a project
employee or a member of the work pool may acquire the status of a regular employee when
1.. there is a continuous rehiring of project employees even after a cessation of the project
2.. the tasks performed by the alleged project employee are vital, necessary and indispensable to the
usual business or trade of the employer.
To rule otherwise would be to allow circumvention of labor laws in industries not falling within the
ambit of Policy instruction 20 or DO 19.
Being a regular employee, Imbuido is entitiled to security of tenure (Art 279). Petition is granted.

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ii.)
project employment
Uy v. NLRC
Rizalino Uy, a private contractor, were charged by his employees (masons, laborers, carpenters) with
illegal dismissal. The employees claimed that they also rendered services in their other business of UY.
The LA dismissed the complaints for lack of merit and NLRC reversed the LA after finding private
respondents to be regular employees and not project employees. Petitioner filed a motion for
reconsideration and a manifestation to admit and consider evidence. Thus this petition. Uy insists that
the employees are just project employees and as such they were validly terminated. The court held
that according to 280 of the LC project employees are those workers hired for 1. a specific project or
undertaking 2. the completion or termination of which has been determined at the time of engagement
of the employee.
In the present case, Uy did not identify the specific project or the phase of the project for which the
employees were hired. Termination reports, required to be submitted to DOLE upon termination of
project employees, were also not presented. Their jobs were continuous and ongoing.
According to Policy Instructions No. 20: members of a work pool from which a construction company
draws its project employees are non-project employees if considered employees of the construction
company while in the work pool, for an indefinite period. If they are employed in a particular project,
the completion of the project or any phase therof will non means severance of EE-ER relationship.
The court held that. the private respondents are non-project employees

Villa v. NLRC + National Steel Corporation

NSC is one of the biggest modern steel mills in southeast asia. They embarked on a 5 year program
using 100% scrap venturing into a ship breaking operation wherein a ship would be cut up into large
chunks and brought to land to be further cut into smaller sizes. This was stopped due to high costs as
well as lack of ships. Felix Villa and the other petitioners were the workers for this particular project
and were terminated from their service once the project was stopped. The NSC association filed a
notice of strike with the company for illegal termination. The La ruled for the company stating that the
short periods wherein the company hired the petitioners clearly show the intent of the company to hire
them on a per project basis only. NLRC affirmed the LA upon the factual findings it reviewed saying
that the test in determining regularity or employment is the nature of the functions performed which
should be necessary and desirable in the usual business or trade of the employer. However, the
exception is that if it is fixed for a specific project or undertaking, the completion of which has been
predetermined at the time of engagement or where the services to be performed is seasonal in nature,
the same is considered as casual or temporary in nature. Motions for reconsideration were denied. But
upon appeal, the NLRC accepted the motion and ruled that project employees are not regular
employees within the purview of Art 280 of the LC. Thus this petition.
The court held that Art 280 contemplates on 3 kinds of employees:
i.. regular employees (engaged to perform activities which are necessary and desirable in the usual
business and trade of the employer)
ii.. project employees (whose employment has been fixed for a specific project the termination of
which has been predetermined at the time of engagement)
iii... casual employees (those who are neither regular nor project employees)
The court held that contracts of project employment are valid under our law. A project employment
terminates as soon as the project is completed. The services of project employees are coterminous
with the project and may be terminated upon the end or completion of the project for which they were
hired. There are two kinds of projects a business or industry may undertake
1.. a project referring to a particular job or undertaking that is within the usual business of company
but is distinct and separate from other undertakings of the company
2.. a project may refer to a particular job or undertaking that is not within the regular business of the
corporation
NSCs project falls under the second type.
Regardless of how many projects the employees worked on, they remain project employees. Art. 280
stating that employees working for more than 1 year are deemed to be regular employees pertain to
casual and not project employees. Petition dismissed.

Sapio v. Undaloc

A complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal
dismissal by Virgilio Sapio saying that he had been employed as watchman for 3 years when he was
terminated on the ground that the project he was assigned to was already finisished.
Petitioner asserted he was a regular employee having been engaged to perform works which are
"usually necessary or desirable" in respondents' business. Cirilo Undaloc maintained that petitioner
was hired as a project employee and was assigned as watchman from one project to another until the

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termination of the project on 30 May 1998. LA found complainant to be a project employee and his
termination was for an authorized cause. Respondents appealed the award of salary differential to
NLRC which sustained the findings of the Labor Arbiter. Court of Appeals which deleted the award of
salary differential and attorney's fees. Thus, this petition for review on the ground that respondents
failed to attach certified true copies of the NLRC's decision and resolution denying the motion for
reconsideration. It is only now before this Court that petitioner proffered the same.
That petitioner was a project employee became a non-issue beginning with the decision of the Labor
Arbiter. He should have contested this issue when Undaloc filed a motion for reconsideration of award
with the NLRC. Petitioner avers that he was paid a daily salary way below the minimum wage provided
for by law
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets. Labor
Arbiter and NLRC concluded that the entries were susceptible to change or erasure and that that
susceptibility in turn rendered the other payroll sheets though typewritten less credible. Court of
Appeals did not subscribe to the common findings of the Labor Arbiter and the NLRC. The appellate
court pointed out that allegations of fraud in the preparation of payroll sheets must be substantiated
by evidence. Moreover, absent any evidence to the contrary, good faith must be presumed in this
case. Petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of
regularity. Petition is partially granted.

iii.) application of rule in non construction industries

Maraguinot v. NLRC + Viva Films

Alejandro Maraguinot and Paulino Enero claim that they have been employed by Viva films as part of
their filming crew tasked to load, unload and arrange the movie equipment. They claim that they asked
for an increase in their wage in accordance with the minimum wage law and that thereafter, they were
asked to sign a blank employment contract and when they refused to sign, they were terminated. Viva
films on the other hand, claims that they contracts producers or associate producers who produce the
movies and hire project employees such as petitioner. Petitioners filed for illegal dismissal and the LA
declared them to be illegally dismissed, NLRC reversed the LA. Thus this petition.
The OSG rejects their contention that since they were hired for a series of projects, they are deemed as
regular employees. The court disagrees with the OSG. According to Sec 8 Rule VIII Book VIII of the
Omnibus rules implementing the LS, job contracting is permitted id the contractor has substantial
capital and creates the job according to his own mean or method. The court found in the case at hand
that the movie-making equipment are supplied BY Viva and that the associate producer merely leases
the equipment from VIVA (Vivas generators broke down and they had to rent generators, equipment
and crew fro another company) This was, as found by the court, labor only contracting. The
relationship between Viva and its producers or associate producers are that of agency and the control
as to the quality of the film lies with Viva. It may not be argued that petitioners are subject to the
control of the Movie Director and not Vivas control.
The court then said that a project employee or a member of the work pool ma acquire the status of a
regular employee when the following concur:
1.. there is continuous rehiring of project employees even after cessation of the project; and
2.. the tasks performed by the alleged project employee are vital, necessary and indispensable to
the usual business or trade of the employer.
The court further held that once these requisites are complied with, he is a regular employee because
to rule otherwise would be to prevent the acquisition of tenurial security by project or work pool
employees who have already gained the status of employee due to the employers conduct. Petition is
granted.

C. Casual Employees

Art. 280. 2nd paragraph. Regular and casual employment. An employment shall be deemed to
be casual if it is not covered by the preceding paragraph: Provided, That any employee who has
rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.

Omnibus Rules Book VI Rule 1 Sec 5b

Section 5. (b) Casual employment. - There is casual employment where an employee is engaged to
perform a job, work or service which is merely incidental to the business of the employer, and such job,
work or service is for a definite period made known to the employee at the time of engagement:
Provided, that any employee who has rendered at least one year of service, whether such service is
continuous or not, shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

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Notwithstanding the foregoing distinctions, every employee shall be entitled to the rights and
privileges, and shall be subject to the duties and obligations, as may be granted by law to regular
employees during the period of their actual employment."

i.)
Nature of Work
A.M. Oreta and Co. v, NLRC

Sixto Grulla was engaged by Engineering Construction and Industrial Development Company
(ENDECO) through A.M. Oreta and Co. as a carpenter in its project n Saudi for a period of 12 months.
10 days into the job, Grulla met an accident which fractured his lumbar vertebrae while working at the
jobsite. He was discharged from the hospital 12 days after and he underwent therapy for 2 weeks
before he was told that he was physically fit to go back to work. He started working again but was later
given a notice of termination due to his alleged unsatisfactory performance.
Grulla filed a complaint for illegal dismissal with the POEA who ruled for Grulla. NLRC dismissed the
appeal for lack of merit. Thus this petition.
The issue is WON the employment of Grulla was illegally terminated. A.M. Oreta contends that since he
is still a probationary employee, Grulla is validly dismissed. The court rules otherwise satying that
Grulla was employed in the company for 12 month before he was dismissed and it is clear from the
contract that the company hired him as a regular employee and not just a probationary employee;
there was no stipulation in the contract that the latter shall undergo a probationary period and there is
no evidence that he has been apprised of is probationary status. Even given that he was a project
employee, as gleaned from the provision of Art 281 in the LC probationary employees may be
terminated only for a just cause. In the case at bar, the ground of unsatisfactory performance is not
one of the just causes of dismissal in Art 282, LC. Also the twin requirements of notice and hearing
were not complied with. NLRC affirmed.

ii.)
One Year Service
Tabas v. California Manufacturing Co. Inc
Petitioners were prior employees of Livi Manpower Services who assigned them to work as promotional
merchandisers wherein an agreement was made stipulating that California Manufacturing company
had no control over the employees and that the assignment shall be on a seasonal and contractual
basis. Petitioners signed a 6-month contract.
Petitioners now allege that they have become regular California employees and demand similar
benefits as the employees of California due to their being terminated by the company. LA found no EEER relationship to exist. NLRC affirmed LA. Thus this petition. The court reverses saying that the EE-ER
relationship cannot be subject to agreement but rather must be proved through evidence as well as
the four fold test. In the case at bar, the court found that Livi contracts out labor in favor of its clients
thus falling within the ambit of Labor only contracting.
What is the Liability of Livi and California? The court holds that they have become regular employees
of California and acquired security of tenure after performing 6 months of servces which was renewed
for another 6 months. California did not show evidence that it had suffered serious business reverses
as to warrant valid retrenchment of petitioners. Petition granted.

Fortunato Mercado Sr. v. NLRC+Sto. Nino Realty Incorporated +Aurora Cruz

Petitioners are agricultural workers utilized by private respondents in all phases of the work on the 7
hectares of rice land and 10 hectares of sugar land owned by the company, they demand for benefits
in accordance with the fact that they are regular employees. Aurora Cruz denied the allegations saying
that she engaged the services of petitioners through Sps. Fortunato Mercado. LA ruled in favor of Sto.
Nino saying that the workers are not permanent workers because the nature of the terms and
conditions of their hiring reveal that they were required to perform phases of agricultural work for a
definite period of time only. However, the LA awarded them financial assistance. Both parties appealed
to the NLRC who affirmed the decision of the LA deleting the financial assistance. NLRC denied the
MFR. Thus this petition.
The court held that based on the sworn statements of the Mercados, the petitioners were only hired as
casuals. A project employee is defined as to be one whose employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee. Petitioners were found to be project employees or seasonal employees
and that their employment legally ends upon the completion of the project. Petition dismissed.

Cansino v. Prudential Shipping and Management Corporation

Deogracias Cansino worked as a seaman in the Medbulk Maritime Management Corporation for a term
of 12 mos. Capt. Nikolaos Kandylis altered the terms and conditions of the contract asnd changed his
position to pumpman. Several derogatory reports were received by the Captain against Cansino for
drunkenness, insubordination and abandonment of post. 7 members of the crew including Cansino
submitted a request for early repatriation because f family problems which were granted. Upon his

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return, he filed a complaint for illegal dismissal. LA dismissed the complaint, NLRC reversed and ruled
for Cansino. CA set aside the decision of NLRC. The court relied on the Masters Report signed by the
Captain as to the illegal consumption of alcoholic drinks of the crew. The court held that drunkenness is
equivalent to serious misconduct and thus a valid cause of termination in Art 282 of the LC. Petition
denied.

D. Fixed Term Employees

Brent School v. Zamora

Doroteo Alegre was engaged as athletic director by Brent School by virtue of a contract fixed at a
specific term of 5 years. Three months before its expiration, Alegre was given a copy of the application
for clearance filed by Brent with the Department of Labor advising the termination of his services
stating the ground of completion of contract as its reason. Alegre filed a protest to his termination with
the Labor Director saying his services are usual and necessary to the business of Brent. The Labor
Director denied the application and required his reinstatement. Brent school filed a MFR and the
Regional Director denied it, forwarding the case to the Secretary of Labor who affirmed the decision.
The school appealed to the office of the president but the appeal was dismissed. Thus this petition.
Before the advent of the labor code, term employment was already recognized as valid due to the
Termination pay law (RA1052), Code of Commerce (Article 302 discusses the mesada who is given the
salary of the month; mes=month in Spanish) and the civil code which repealed the code of commerce
specifically provisions of oblicon which discusses contracts with a period. The court held that there is
nothing contradictory with fixing the term of employment of an employer who renders usual and
necessary services to the company. Although the Labor Code is more strict than the Civil code as to
fixed term employments, the law, in this case Art 280 LC, must be given a reasonable interpretation as
to reflect the intent of the law which is to prevent the circumvention of the employee right to security
of tenure. It should have no application to instances when the employee knowingly and voluntarily
entered into the contract of employment for a fixed term. The court cited Escudero v. Office of the
president and applied it to Alegres case saying that in a fixed term contract, no notice is needed as he
already knows the dae of its expiration at the time of engagement. Petition granted.

Dumpit Murillo v. CA
Thelma Dumpit-Morillo was employed by the Associated Broadcasting company (ABC) as a newscaster
and a co-anchor of Balitang Balita and Live on Five for which her contract of 3 months was constantly
renewed. After four years of constant renewals of her talent contract, she sent a letter to the VP of ABC
saying that she was interested in renewing her contract subject to a salary increase. She stopped
reporting for work after and a month later ABC still has not replied thus prompting Thelma to send a
demand letter to ABC asking for her reinstatement as well as backwages. She then filed a case of
illegal constructive dismissal with the LA who dismissed the complaint. Upon appeal to the NLRC, it
found that an ER-EE relationship existed and that she was a regular employee. CA, in a petition for
certiorari by ABS, reversed the decision saying that she entered into the contract knowingly and that
she was a fixed term employee and not a regular employee according to Art 280. Thus this petition.
The court held that the talent contracts are valid but not as to categorizing her as a fixed term
employee. Applying the four fold test (selection and engagement, wages, dismissal, control) the court
found that it applies to the case. The law also recognizes those who 1. perform activities necessary
and desirable in the usual business and trade of the employer as well as 2. those who have worked for
more than a year as regular employees. For the contract to be valid as a fixed term contract, no force,
duress or improper pressure should be brought upon the employee thus in effect vitiating her consent,
in the case at hand, Thelma had no choice but to sign her name every 3 months without objection as
to maintain the job she loved and the workplace she has grown accustomed to. As a regular employee,
she is entitled to security of tenure and can be dismissed only for just cause. CA reversed.
1

AMA Computer College Paranaque v. Austria

Respondent Rolando A. Austria (respondent) was hired by AMA Computer College, Paraaque on
probationary employment as a college dean on his appointment as dean was confirmed by AMAs
Officer-in-Charge. Sometime in August 2000, respondent was charged with violating AMAs Employees
Conduct and Discipline provided in its Orientation Handbook. Respondent refuted the charges against
him but was placed on preventive suspension and eventually dismissed due to the loss of trust and
confidence in hisr credibility as a company officer holding a highly sensitive position. Respondent filed
a Complaint for Illegal Dismissal.
LA held that respondent substantially refuted the charges of gross inefficiency, incompetence, and
leaking of test questions filed against him but held that the nature of respondent's employment is one

1 How do you reconcile this with Brent? Shouldnt ABC have let her work again instead of ignored her constructive resignation in order to recognize her services as regularized? The 4 fold test is present in Brent
also but is it necessary to use the 4 fold test as to fixed term employment? E wala namang conflict sa job nila and sa term kasi they know the day certain. M confused. Does the time matter (5 years v. 3 months)?
Or does the amount of renewing matter (none v. 14 times)? So if Alegres contract was renewed and the again, the day certain came and his services were terminated, does it make him a regular employee???

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for a fixed term. The NLRC and the CA both held that respondent is a regular employee because
respondent had fully served the three (3)-month probationary period required in the Handbook, which
the petitioners failed to deny or contravene. Hence, this Petition asking the nature of respondent's
employment? And WON he lawfully dismissed?
As an exception to the general rule, the court held in Molina v. Pacific Plans, Inc. that when the findings
of the National Labor Relations Commission contradict those of the Labor Arbiter, this Court, in the
exercise of its equity jurisdiction, may look into the records of the case.
The court held that the letter of appointment states that he was officially confirmed as Dean of AMA
College, Paraaque, effective from April 17, 2000 to September 17, 2000 and that the nature of
respondent's employment as dean is one with a fixed term. Art. 280 of the Labor Code does not
proscribe or prohibit an employment contract with a fixed period.
Citing Brent School, Inc. v. Zamora, the court said that as to appointments to the positions of
dean, assistant dean, college secretary, which are by practice or tradition rotated
among the faculty members, and where fixed terms are a necessity without which
no reasonable rotation would be possible, these are normally an employment for a fixed term.
The resolution of the second question requires full cognizance of respondents fixed term of
employment and all the effects thereof. It is axiomatic that a contract of employment for a definite
period terminates on its own force at the end of such period. Petition is GRANTED. LA decision
REINSTATED.

E. Seasonal Employees
Phil Tobacco v. NLRC

Philippine Tobbaco has 2 groups of employees, the Lubat group and the Luris groups
The Lubat group is composed of seasonal workers who were not rehired for the next years season
(1994) at the start of the season, they were informed that their employment has been terminated as of
the 1993 season.
The Luris group is made up of seasonal employees who worked for the 1994 season in the Balintawak
plant and was informed that due to serious business losses, petitioner planned to move its operations
to Ilocos Sur. They were given separation pay which was not based on the number of years served but
rather based only on the duration of the 1994 season.
Both groups filed a case for illegal dismissal against the petitioner to which the LA ruled that the
petitioner should pay separation pay and differential plus attorneys fees ACCORDING TO THE NUMBER
OF YEARS SERVED, ruling that the closure of the business was due to serious financial losses and thus
the termination of employment is due to a legal cause. The NLRC affirmed the decision upon appeal
thus this petition.
The court ruled that the petition is not meritorious.
The court found that the business losses pertain only to a unit or division and not the WHOLE business
of the petitioner which is the loss that is referred to in Art 283 LC. This is so that a company will not
be able to easily feign excuses to get rid of unwanted employees. Serious business losses as
contemplated by Art 283 was not proved by the petitioners, infact, the financial statement given by
the petitioner reflects not only its tobacco business but also its other businesses. A perusal made by
the court shows that there is a net gain made by the petitioner for each year of business.
As to the Luris group, there was defective notice given by the petitioner as they did not inform their
employees 1 month before their termination which is a requisite under Art 283 LC. Thus, the Luris
group is entitled to 1 month pay or at least month pay for every year of service, whichever is higher.
As for the Lubat group, the court ruled that they were illegally dismissed citing Manila Hotel Company
v. CIR which ruled that seasonal workers who are called to work from time to time are temporarily laid
off during the off-season are not separated from service during this period but are merely considered
on unpaid leave until employed. Petitioners tried to invoke Mercado v. NLRC and Magcalas v. NLRC but
the court ruled that the facts in this case are different from those cases because Mercado and
Magcalas offered their services to other farm owners which makes them project employees.
The court computed a seasonal workers separation pay as No. of days worked/ No. of total working
days in one year x Daily rate of 15 days.
For this case, the court held that separation pay should be at of their average monthly pay times the
number of years worked. NLRC affirmed with modification.

F. Probationary Employees

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

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his engagement. An employee who is allowed to work after a probationary period shall be considered a
regular employee.
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the
wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and
Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements
providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent
of the applicable minimum wage, may be entered into only in accordance with
apprenticeship programs duly approved by the Secretary of Labor and Employment. The
Department shall develop standard model programs of apprenticeship. (As amended by Section 1,
Executive Order No. 111, December 24, 1986)
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a
learnership agreement with them, which agreement shall include:
a. The names and addresses of the learners; b. The duration of the learnership period, which shall not exceed three (3) months; c.
The wages or salary rates of the learners which shall begin at not less than seventy-five percent (75%) of the applicable minimum
wage; and

d. A commitment to employ the learners if they so desire, as regular employees upon completion of
the learnership. All learners who have been allowed or suffered to work during the first two (2) months
shall be deemed regular employees if training is terminated by the employer before the end of the
stipulated period through no fault of the learners.
Omnibus Rules Book VI Rule I Sec 6 Section 6. Probationary employment. - There is
probationary employment where the employee, upon his engagement, is made to undergo a trial
period during which the employer determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of engagement. "Probationary employment shall
be governed by the following rules:
(a) Where the work for which the employee has been engaged is learnable or apprenticeable in
accordance with the standards prescribed by the Department of Labor and Employment, the period of
probationary employment shall be limited to the authorized learnership or apprenticeship period,
which is applicable.
(b) Where the work is neither learnable nor apprenticeable, the period of probationary employment
shall not exceed six months reckoned from the date the employee actually started working.
(c) The services of an employee who has been engaged on probationary basis may be terminated only
for a just or authorized cause, when he fails to qualify as a regular employee in accordance with
reasonable standards prescribed by the employer.
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

i.)
Definition/Purpose
Cebu Marine Beach Resort v. NLRC
CBMR is owned by Victor Dualan and recruited respondent employees. The resort caters primarily to
Japanese tourists and thus Dualan hired Tsuyoshi Sasaki to give respondents special training in
Japanese customs, traditions, discipline as well as hotel and resort services. One day Sasaki suddenly
scolded respondednts and hurld at them brooms, iron trays etc. warning them not to come back. They
filed a case for illegal dismissal pending which the company sent letters to them demanding them to
explain why they shuld not be terminated from work due to abandonment and FAILURE TO QUALIFY
WITH THE STANDARDS OF PROBATIONARY EMPLOYEES. LA dismissed complaint but held that
respondents should go back to work. On appeal, NLRC ruled that the employees have been illegally
dismissed. Petitioners filed a petitioner for certiorari which was referred to the CA who then affirmed
the decision of the NLRC. Thus this petition for review. The court ruled that they were illegally
dismissed and that the utterances of Sasaki was tantamount to a dismissal despite his lack of authority
to terminated the employees. The dismissal was ratified due to petitioners subsequent acts of sending
the letter to employees demanding explanation of their failure to qualify with the standards. The
petitioner in this case, did not give time to employees to rove that they possess the qualifications to
meet reasonable standards for permanent employment due to premature dismissal. The court ruled in
Lopez v. Javier that probationary employees who are unjustly dismissed from work during the
probationary period shall be entitled to reinstatement and payment of full backwages. CA affirmed.

Espina v. Hon. Court of Appeals

Respondent M.Y. San Biscuits, Inc. (M.Y. San) was previously engaged in the business of manufacturing
biscuits and other related products. In a conciliation proceeding M.Y. San Workers Union was informed
of the closure or cessation of business operations because of the intended sale of the business to
Monde. A separation package and cash equivalents of their vacation and sick leaves were given to the
employees. The written notice of the sale and purchase of the assets of respondent M.Y San to

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respondent Monde. All the employees of respondent M.Y. San received their separation pay and the
cash equivalent of their vacation and sick leaves. Thereafter, they signed their respective Quitclaims.
Monde commenced its operations. All the former employees of respondent M.Y. San who were
terminated upon its closure and who applied and qualified for probationary employment, including
petitioners herein, started working for respondent Monde on a contractual basis for a period of six
months. Subsequently, petitioners were terminated on various dates.
Petitioners filed a Complaint for illegal dismissal alleging that sale of respondent M.Y. San to
respondent Monde was merely a ploy to circumvent the provisions of the Labor Code.
M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist,
respondent Monde alleged that petitioners had no cause of action saying that the probationary
employees of Monde who passed the performance appraisal and who qualified as regular employees
thereof were accordingly appointed as such. Out of the one hundred sixteen (116) probationary
employees engaged by respondent Monde, a total of seventy-four employees qualified for regular
employment.
LA dismissed the case for lack of merit. NLRC affirmed the Decision of the Labor Arbiter. CA denied
petition. Thus this petiton. The court held that as long as the companys exercise of the same is in
good faith to advance its interest and not for the purpose of circumventing the rights of
employees under the law or a valid agreement, such exercise will be upheld. Thus, since private
respondent M.Y. Sans closure and cessation of business was lawful, there was no illegal dismissal of
petitioners to speak of. In the case at bar, petitioners were notified of the standards they have to meet
to qualify as regular employees of respondent Monde when the latter apprised them, at the start of
their employment, Respondent Monde exercised its management prerogative in good faith when it
dismissed petitioners due to absence without leave (AWOL), gross and habitual neglect of duties,
failure to qualify as regular employees in accordance with the terms and conditions of their
probationary employment with respondent Monde.
During the probationary period, the employer is given the opportunity to observe the skill, competence
and attitude of the employee to determine if he has the qualification to meet the reasonable standards
for permanent employment. The length of time is immaterial in determining the correlative rights of
both the employer and the employee in dealing with each other during said period. Thus, as long as
the termination was made before the expiration of the six-month probationary period, the employer
was well within his rights to sever the employer-employee relationship. CA reversed.

ii.)
Duration: Rule/ Exception
Dela Cruz v. NLRC+Shemberg Marketing Corporation (SMC)

Florencio Dela Cruz was hired by SMC as senior sales manager with a probationary period of 6 months.
He was subsequently fired 4 months after due to his failure to meet the required company standards
and for loss of trust and confidence (alleged poor performance, the dissatisfaction of his subordinates
over his management style, his unauthorized use of company cellular phone and the unauthorized
plane tickets of his wife and child.) He filed a case for illegal dismissal. LA declared he was illegally
dismissed. NLRC dismissed the appeal. CA dismissed the case for lack of merit. Hence this petition.
The court found the petition to be without merit. The evidence shows that petitioner was informed of
the standards to be met before he could qualify as a regular employee. For a given period of a time, a
probationary employee is placed under observation and evaluation to determine WON he is qualified
for permanent employment. As the termination was made before the expiration of the 6 month
probationary period, the employer was within his right to terminate the ER-EE relationship. Petition
dismissed.

Cathay Pacific Airways Ltd v. Philip Luis Marin

Marin applied as a Reservation Officer in Cathay Pacific wherein he was accepted with an initial
probationary period of 6 months. He was terminated before the end of the probationary period and he
filed for illegal dismissal. He claimed that he started to work without even being briefed as to the rules
and regulations of Cathay and that he did not commit any infraction during his probationary period as
shown by his performance ratings. He said that he never received any memorandum calling attention
to his alleged infractions and that he did not resign as Cathay was impleading against him. Cathay
Pacific as represented by Marins supervisor Gozun, testified that Marin has been constantly caught
chatting with his workers who are not on break and thus disrupting their work. He was also caught
chatting while on the job leaving calls unanswered. He was informed of this as disruptive conduct and
was asked to mend his ways. He was also, despite his denials, informed of the rules and regulations of
the company as testified to by the reservations manager. Cathay recommended Marin that he should
resign so as not to prejudice him in applying in other companies. LA dismissed the complaint. NLRC
affirmed LA. CA reversed NLRC. Thus this petition. The court held that the employment of a
probationary employee may only be terminated either

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1.. for a just cause ; or

2.. when the employee fails to qualify as a regular employee in accordance with the reasonable
standards made known to him at the start of the employment.
_____________________________________
Power of an employer to terminate an employee on probation is subject to the following conditions:
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 violating the
contract nor the law)
3.. there must be no unlawful discrimination in the dismissal
The burden of proof rests on the employer.
A probationary employee remains secure in his employment during the time of contract remains in
effect but once it expires, the employee can no longer invoke the constitutional protection because it is
in the discretion of the employer WON to renew the contract.
The court found that based on his staff assessment reports, his work was unsatisfactory especially
conduct wise which is a very important field in a working environment. Petition granted.

iii.) Extension of Contract

Phil Federation v. NLRC+Victoria Abril supra

Victoria Abril was employed by Philippine Federation of Credit Cooperatives, Inc. (PFCCI), Respondent,
shortly after resuming her position as office secretary, subsequently went on leave until she gave birth
to a baby girl. When she returned, she had already been replaced and thus she was offered the
position of Regional Field Officer as evidenced by a contract which stipulated, among other things, that
respondents employment status shall be probationary for a period of six (6) months, which she
accepted. Respondent was allowed to work until PFCCI presented to her another employment contract
for a period of one year after which period, her employment was terminated.
She filed a complaint for illegal dismissal. LA dismissed the same for lack of merit. NLRC reversed LA.
Thus this petition. The court found no merit in the petition. Article 281 of the Labor Code, as amended,
allows the employer to secure the services of an employee on a probationary basis which allows him to
terminate the latter for just cause or upon failure to qualify in accordance with reasonable standards
set forth by the employer. Probationary employees, notwithstanding their limited tenure, are also
entitled to security of tenure. Except for just cause as provided by law, or under the employment
contract, a probationary employee cannot be terminated.
In the instant case, petitioner refutes the findings of the NLRC arguing that, after respondent had
allegedly abandoned her secretarial position for eight (8) months, she applied for the position of
Regional Field Officer.
Petitioner insisted that respondent was employed to perform work related to a project funded by the
World Council of Credit Unions (WOCCU) and hence, her status is that of a project employee.
The court cited Villanueva v. NLRC, where the Court ruled that where a contract of employment, being
a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the
party who prepared it. The court found from the facts that the respondent has become a regular
employee
Regardless of the designation petitioner may have conferred upon respondents employment status,
having completed the probationary period and allowed to work thereafter, she became a regular
employee who may be dismissed only for just or authorized causes under Articles 282, 283 and 284 of
the Labor Code, as amended. Petition is hereby DISMISSED.

iv.)
Absorbed Employees
Cebu Stevedoring Co. Inc. v. Regional Director/Minister of Labor
Arsenio Gelig and Maria Quijano were former employees of Cebu Customs Arrastre Service (CCAS)
which was abolished by a resolution by the Secretary of Finance for which all the employees of CCAS
were given their termination pay. All the employees of CCAS were absorbed by herein petitioner Cebu
Stevedoring with the same positions they formerly held. 5 months after they were terminated allegedly
for redundancy and retrenchment and that their probationary period has already expired. A complaint
for reinstatement with backwages was filed by the respondents. The Labor Regional Director ruled for
the employees saying that there was no need to employ them as probationary employees as they have
been doing the same work for a long time prior to being absorbed by the petitioner company. The
Minister of Labor affirmed this ruling. Petitioner appealed to the Office of the President who dismissed
the appeal. Thus this petition. The petitioner claimed that the employees, being casuals, can be
terminated within the 6 month period without clearance from the Minister of Labor. The court however,
agrees with the Minister of Labor that the private respondents cannot be considered as probationary
employees as they were already well-trained in their respective functions. Also, the petitioners were
unable to substantiate supposed business losses. Petitions dismissed.

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v.)
Standards- not-determined
Orient Express v. NLRC + Flores
Antonio Flores was hired as a crane operator by Orient Express Placement Philippines in behalf of
Nadrico Saudi Limited. After only a month, Flores was repatriated to the Philippines allegedly due to
poor job performance for his uncooperative attitude. He filed a complaint for illegal termination with
the POEA who decided in his favor. NLRC affirmed this decision saying that he was originally assigned
as a crane operator and was instead assigned to be a floorman thus, his employer could not have
observed his work as a crane operator. Thus this petition. The court held that petitioner failed to
specify the reasonable standards by which the private respondents poor performance was evaluated.
They were also not able to prove that these standards were made known to him at the time of his
recruitment in Manila. That there was a Licensure Examination on which depended his ultimate
employment cannot be attributable as the fault of Flores. Art 281 LC implicitly requires that reasonable
standards be made known to the employee AT THE TIME OF HIS ENGAGEMENT. NLRC affirmed.

vi.) Private School Teachers Rule

La Salette of Santiago Inc. v. NLRC
La Salette of Santiago hired Clarita Javier as a highschool principal for 3 years. She then became a
college instructor for the companys college and became head of the Colleges Education and Liberal
Arts Department. She later on accepted the offer to return to the highschool as assistant principal. She
then finished her doctorate degree and worked only part time at the college. After this, she transferred
back to the highschool as its principal for one year. Her term was extended for another year. Before the
term ended, the school wrote to her asking her to move to the college as a certain Sister Saturnina
Pascual will replace her as principal. Javier wrote to the board of trustees of La Salette questioning her
sudden removal. They did not inform her of the reason but rather advised her of her teaching load in
the college. Clarita filed a complaint for illegal dismissal. The President of La Salette College wrote to
her saying that there would be no dimunition of compensation or loss of seniority in her transfer.
Despite this, she still refused to report to her teaching assignment. LA ruled in her favor. NLRC upon
appeal affirmed the LA. An MFR was denied thus this petition. The court held that she had not acquired
permanency or tenure as a principal of La Salette. As observed by the court, she had been regularly
moved from the highschool to the college department and that she was aware that her position with
the highschool as an administrative staff is not a permanent one but rather at the pleasure of the
school or at a fixed term. It is her work as a teacher that is continuous. Unlike teachers, those
appointed as department heads or administrative officials (college or department secretaries, dean,
assistant dean, principal, director) should not expect to acquire a second status of permanency. The
petition is granted.2

Escorpizo v. University of Baguio

Esperanza Escorpizo was hired as a highschool teacher. Attainment of permanent status depended on
passing the professional board examination for teachers (PBET). She failed. She appealed her
employment and asked for a second chance. She failed again. She took the next exam at the end of
the same school year. As the results were not yet given, she was not included in the final list of the
accepted teachers for the incoming school year. Even though she passed, the school no longer
renewed her contract of employment. She filed a case for illegal dismissal. The LA ruled that the school
had permissible reason not to hire her. NLRC affirmed the LA. Thus this petition. The court held that a
probationary employee is one who, for a given period of time, is being observed and evaluated to
determine WON he is qualified for permanent employment. She was made aware of the fact of the
rules given to her at the time of her engagement that she had to pass the PBET before she becomes a
permanent employee and that she was on probation for a period of four semesters of two years. Also,
the court cited DECS Order No. 38 of 1990 saying that no teacher in the private schools shall be
allowed to teach unless he or she is a registered professional teacher. Undoubtedly, Escorpizo was
entitled to security of tenure during her probationary period but it is the discretion of management
WON they will rehire her once the contract expires. Her separation is not without justifiable cause as
the university was not under the obligation to rehire her. Petition dismissed.

Aklan College v. Guarino

Rodolfo Guarino was hired as an instructor and was later on appointed as Dean of the Commerce and
Secretarial Department and was dean for 17 years. Guarino eventually took a 1 year leave. A month
before the end of his leave, he informed the school of his intention to resume his position in the college
to which Aklan wrote back saying that he is not qualified for the position due to DECS Order No. 5 of

2 I think the issue here more than anything is her unceremonious termination as a principal WITHOUT ANY EXPLANATION except that the benefits and the seniority will still be the same. Its more of besmirched
feelings and reputation. I dont know why the court did not dwell on this given that EXACTLY, she knows the position is not permanent but that it had a TERM, her term was inappropriately and without reason
suddenly deprived from her. Weird.

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1990 which required that appointment as a Dean depended on graduation in an MBA course; and also
that the position was already filled up by the regular incumbent. The respondent filed a case for illegal
dismissal against petitioner. LA dismissed the case for lack of merit. NLRC reversed the LA saying that
Guarino should he reinstated. The CA affirmed the NLRC. Hence this petition. Aklan cited La Salette of
Santiago v. NLRC which lad down the rule that while an employee attains security of tenure as a
member of the teaching staff, he cannot aspire for a second tenure in an administrative position. The
court sides with Aklan saying that the facts of La Salette are similar to this case. The court cited
Achacoso v. Macaraig saying that a permanent employment can only be issued to a person who meets
all of the requirement s for the position to which he is being appointed. In the case at hand, Guarino
was not able to finish his MBA. Also, DECS Order No. 35 of 1990 and the Manual of Regulations of
Private Schools required that an incumbent dean should have finished his masters and that he should
have taught for 3 years at the college. The court also cited La Salette saying that unlike teachers,
those appointed as department heads or administrative officials (college or department secretaries,
dean, assistant dean, principal, director) should not expect to acquire a second status of permanency.
Petition is granted. (No separation pay. He was not dismissed. He was still an instructor.)

IV.
Termination of Employment
Constitution, ARTICLE XIII LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to
its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2)
month salary for every year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.
Art. 285. Termination by employee.

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a. An employee may terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least one (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.
b. An employee may put an end to the relationship without serving any notice on the employer for any
of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.
Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty.

A. General Concepts
i.)
Coverage

Art. 278. Coverage. The provisions of this Title shall apply to all establishments or
undertakings,
whether for profit or not.

Omnibus Rules Book VI (Post Employment) TITLE I: Termination of Employment Section 1.

Coverage. This Rule shall apply to all establishments and undertakings, whether operated for profit
or not, including educational, medical, charitable and religious institutions and organizations in cases
of regular employment with the exception of the Government and its political subdivisions including
government-owned or controlled corporations.

Equitable PCI Bank v. Caguioa

Generosa Caguioa was a senior manager of Equitable PCI Bank and had been serving the bank for 35
years when she was discharged for alleged connection with accounting activities specifically
discounting checks which caused Antonio Jarina (the customer who instituted the complaint against
her) considerable damage. She denied any connection with the said activities and filed a case of illegal
dismissal. The LA upheld the dismissal of the private respondent ruling that the dismissal was a valid
exercise of management prerogative for having violated the code of conduct on loyalty and honesty.
Upon appeal, the same was denied and thus it was raised to the CA who held that the testimonies of
the people who were in on her with the scheme were insufficient to prove her involvement and justify
her dismissal. CA held that she has been illegally dismissed. Hence this petition. The court held that it
was the petitioner bank who had the burden of proving the legality of the dismissal through substantial
evidence. The court found that there was more than substantial evidence supporting the decision of
the labor arbiter in Caguioas participation in the check-discounting scheme when the LA used bank
records of Jarina and Caguioa which showed 21 matches of deposits and withdrawals, the letter of
Jarina to the bank as well as the testimonies of the audit examiner. Caguioa only had denials and
imputation of lack of probative value of the evidence to counter the banks evidence. Despite her 35
years of service, the court held being a managerial employee and because of her proven acts, Caguioa
may be validly terminated for breach of trust. Petition granted.

ii.)

Security of Tenure

Art. 277. Miscellaneous provisions.

b. Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall rest on the
employer. The Secretary of the Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is pending that the

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termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended
by Section 33, Republic Act No. 6715, March 21, 1989)
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989)

Espina v. Hon of Court of Appeals

Respondent M.Y. San Biscuits, Inc. (M.Y. San) was previously engaged in the business of manufacturing
biscuits and other related products. In a conciliation proceeding M.Y. San Workers Union was informed
of the closure or cessation of business operations because of the intended sale of the business to
Monde. A separation package and cash equivalents of their vacation and sick leaves were given to the
employees. The written notice of the sale and purchase of the assets of respondent M.Y San to
respondent Monde. All the employees of respondent M.Y. San received their separation pay and the
cash equivalent of their vacation and sick leaves. Thereafter, they signed their respective Quitclaims.
Monde commenced its operations. All the former employees of respondent M.Y. San who were
terminated upon its closure and who applied and qualified for probationary employment, including
petitioners herein, started working for respondent Monde on a contractual basis for a period of six
months. Subsequently, petitioners were terminated on various dates.
Petitioners filed a Complaint for illegal dismissal alleging that sale of respondent M.Y. San to
respondent Monde was merely a ploy to circumvent the provisions of the Labor Code.
M.Y. San insisted that its employer-employee relationship with petitioners had ceased to exist,
respondent Monde alleged that petitioners had no cause of action saying that the probationary
employees of Monde who passed the performance appraisal and who qualified as regular employees
thereof were accordingly appointed as such. Out of the one hundred sixteen (116) probationary
employees engaged by respondent Monde, a total of seventy-four employees qualified for regular
employment.
LA dismissed the case for lack of merit. NLRC affirmed the Decision of the Labor Arbiter. CA denied
petition. Thus this petiton. The court held that as long as the companys exercise of the same is in
good faith to advance its interest and not for the purpose of circumventing the rights of
employees under the law or a valid agreement, such exercise will be upheld. Thus, since private
respondent M.Y. Sans closure and cessation of business was lawful, there was no illegal dismissal of
petitioners to speak of. In the case at bar, petitioners were notified of the standards they have to meet
to qualify as regular employees of respondent Monde when the latter apprised them, at the start of
their employment, Respondent Monde exercised its management prerogative in good faith when it
dismissed petitioners due to absence without leave (AWOL), gross and habitual neglect of duties,
failure to qualify as regular employees in accordance with the terms and conditions of their
probationary employment with respondent Monde.
During the probationary period, the employer is given the opportunity to observe the skill, competence
and attitude of the employee to determine if he has the qualification to meet the reasonable standards
for permanent employment. The length of time is immaterial in determining the correlative rights of
both the employer and the employee in dealing with each other during said period. Thus, as long as
the termination was made before the expiration of the six-month probationary period, the employer
was well within his rights to sever the employer-employee relationship. CA reversed.

Philippine Daily Inquirer v. Magtibay

PDI hired Leon Magtibay on a contractual basis for 5 months as a phone operator. Magtibays contract
was extended for 15 days, after the expiration of the contract, PDI announce the availability of a
position for telephone operator for which Magtibay was hired for an initial 6 month probationary
period. A week before the end of the probationary period, PDI terminated Magtibay for failure to meet
company standards. Magtibay filed a complaint for illegal dismissal saying that he had been employed
for 10 months, more than the 6 month probationary period requires and that he was not appraised of
the company standards and thus, there was no basis for his dismissal. PDI denied this and also
countered that the period of his contractual employment does not count as probationary period. LA
ruled for PDI saying that the dismissal is for a valid reason since he repeatedly violated the company
rule of letting unauthorized people to enter the operators room, he did not say that he has a child and
that he locked the room without switching the proper lines to the company guards such that no calls
were entertained. NLRC reversed LA saying that the probationary employment has already ripened into
a regular one. CA agreed with the NLRC because it said that PDI failed to prove that the standards were
made known to him at the time of engagement. Thus this petition.

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The court held that Magtibay is not a regular employee. Art 279 provides security of tenure for both
regular as well as probationary employees. Art 281 or probationary employment stresses that
employment shall not exceed 6 months from the day the employee started working and that they may
be terminated only for
1. just cause or
2. 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.
The court held that all employees, regular or probationary are expected to comply with company
imposed rules and regulations. The rationale that Magtibay did not follow this because he was not
advised to follow these rules does not convince the court. PDI was only exercising its hiring prerogative
in not hiring Magtibay. CA reversed.

a. Nature of Right/ Rationale

Alhambra Industries Inc. v. NLRC
Alhambra is a Filipino cigar manufacturing company. It employed Danilo Rupisan as a salesman on a 6
month probationary basis. A surprise audit was conducted on the records of Rusipan where the
company found he incurred cash shortages due to reimburseable expenses he has incurred. He was
suspended for one month and was eventually terminated at the end of that month for serious
misconduct. He filed a complaint for illegal dismissal. LA ruled for the company finding his termination
is for a just cause but it also ruled that the company violated Rupisans right to due process when he
was not given a copy of the audit report on which his dismissal was based. Both parties appealed to
the NLRC. NLRC ruled for Rupisans reinstatement due to lack of due process. Thus this petition. The
court held that the LA found a valid ground for dismissal which was not disputed by the NLRC and that
to order reinstatement would be circuitous because the case would have to be remanded to the LA.
The desicion to dismiss Rupisan was not according to the rules (then Sec 6 Rule XIV Book V) because it
did not state the reason for his termination but having been found guilty of serous misconduct,
reinstatement and separation pay cannot be awarded. He is only entitiled to damages. Petition
granted.

b. Management Prerogative
Suldao v. Cimech Systems Construction Inc.
Ruperto Suldao was hired as a machinist by Cimech for 5 months on a contractual status. His services
were continually contracted by the company until he became a permanent employee. Due to the lack
of jobs that could be assigned to him, he was asked to take a leave of absence for 15 days in which he
complied. He was then asked to make a letter request for field work transfer which he did. He failed to
report for work the following day because he was sick and he was barred from entering the premises.
He filed a case of constructive dismissal. The LA found that he was indeed constructively dismissed.
NLRC affirmed the LA. The CA reversed the NLRC, dismissing the petition.
Thus this petition. The court held that constructive dismissal is equal to quitting because continued
employment is rendered impossible, unreasonable or unlikely. In cases of constructive dismissal, the
burdn of proof is in the employer to show that his dismissal is for a just and valid cause. In this case,
the employers say that Suldao committed insubordination and abandonment in his refusal to move to
the fabrication department, his arrogant asking for a raise as well as not reporting for work also, that
he was not constructively dismissed as he participated in the Christmas party. The court found that
even if the transfer is valid, the manner in which he was barred after the transfer runs counter to good
faith. The court also found that, upon presentment of a medical certificate, that he was indeed sick
that day and that because of his letter request as required by the company, it can be shown that he
readily accepted the transfer. As to the christmas party, the court held that this not prove that he has
not been constructively dismissed. Petition granted.

Duldulao v. CA

Constancia Duldulao was hired by Baguio Colleges Foundation as a secretary or clerk typist in their
College of Law. A law student filed a case against her for irregularities in the performance of her work
as well as fraternizing with students of the College. The petitioner was asked to submit her answer to
the complaint but she failed to do so. The Dean recommended her assignment outside the College of
Law because of this, the Vice President of Administration issued a Department Order asking her to
move to the highschool. She filed a motion to extend her answer with the dean which was not allowed
as the matter was already elevated to the Executive Board. The petitioner filed a case with the BCF
Grievance Committee but the case was transferred to the Administrative Investigating Committee who

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found the Department Order appropriate since it was intended to prevent to prevent the controversy
from affecting the harmonious relationship within the College of Law. The respondednt constituted a
Fact Finding Committee to investigate the allegations concerning the administrative matters and found
the petitioner guilty of the charges against her.
The petitioner did not report for work and instead took a vacation leave and several other leave of
absences. Petitioner then finally filed a complaint for constructive dismissal. She claimed that she was
arbitrarily asked to transfer from her place of work which is far from her original place of assignment.
LA ruled in Duldulaos favor. NLRC reversed LA saying that petitioner was neither demoted nor
dismissed and her salary remained he same. CA upheld the NLRC. Thus this petition saying that the
constructive dismissal was tainted in bad faith and that it was intended as a punishment. The court
held that there is constructive dismissal if an act of clear discrimination, insensibility or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose any choice by
him except to forego his continued employment. It exists 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 dimunition in pay.
The court held that at the onset, the petitioner has no vested tight to the position of secretary/clerk
typist to the college of law because petitioner was employed not by the college but the BCF system
itself and thus, BCF can exercise its management prerogative, transfer her to any of the departments
as long as the transfer does not result in a demotion in rank or diminution in benefits or salary of the
employee. In this case, she merely had to change the route she took for her new assignment, almost
the same distance from her house as that of her job in the college of law. The court ruled that the
transfer is not as a penalty but a preventive measure to avoid further damage to the college. Petitioner
cannot claim constructive dismissal simply becaue her transfer to another department was against her
wishes. Petition denied.

c. Requisites for Lawful dismissal: Concurrence of Substantive and

Procedural Due Process
Landtex Industries v. CA

Landtex hired Salvador Ayson, who is also an officer of the union, as a knitting operator. Ayson later on
received a letter requiring him to explain within 24 hours why no disciplinary action should be taken
against him for spreading damaging rumors about the personal life of an unspecified person and for
having an altercation with one of the company owners when he was asked to submit an ID picture.
Ayson replied that he cannot defend himself as to the rumors because he does not know what those
rumors are and that as to the ID pictures, he was carrying something and he merely replied in a loud
voice for which he apologized for his actions. Landtex decided to conduct an investigation. In a letter,
the company informed Ayson of his termination due to his lack of cooperation during the
investigations. The union asked to hold meeting with Landtex to discuss Aysons case. Landtex
reaffirmed its decision to terminate and thus, Ayson and the union filed a complaint before the LA. The
LA ruled in favor of Ayson saying that it has jurisdiction and that it did not find any evidence supporting
Landtexs allegations that Ayson spread malicious rumors he allegedly spread during a drinking session
about Wiliam Go (owner of Landtex) and in shouting at Gos wife regarding the ID picture. NLRC agreed
with Landtex that Aysons case falls in the original and exclusive jurisdiction of the voluntary
arbitrators as provided in Art 261 of the LC and as agreed by them in their CBA. Upon appeal, the CA
ruled that the jurisdiction in with the LA and found Ayson to be illegally dismissed as there was no
proof or reason of his alleged acts and that his termination was characterized by bad faith and
wanton and reckless exercise of management prerogative. The court awarded him separation pay.
Both Landtex and Ayson filed a petition for review. Landtex wanted to overturn the decision and insists
that the subject of the petition is covered by the CBA provision on voluntary arbitration and thus
excluded from the LAs jurisdiction. Ayson wanted reinstatement.
Substantive and Procedural Due Process
Art 217, 261, 262 of the LC tackle the jurisdiction of the LA. According to the NLRC, when the union
called for a meeting with Landtex, it initiated the grievance procedure and Aysons case should have
been subjected to voluntary arbitration. However, there is nothing in the records which show that the
meetings are already the grievance machinery contemplated in their CBA. It did not comply with the
requisite number of participants, (CBA: 3 members from union and landtex; 2 landtex, 7 union in their
meeting) and there was nothing in the minutes that shows that the attendes constituted a
Management-Employement Committee (as mandated in their CBA during a grievance proceeding).
Lastly, if Landtx believed that the LA does not have jurisdiction, it should have filed a motion to dismiss
and not have participated in the proceedings before the LA.
The requisites for valid dismissal are
1. For any of the causes in Art 282

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2. Opportunity to be heard and to defend ones self.

Landtex invokes the second requisite and says that it invokes its management prerogative in
dismissing Ayson for insubordination. However, as earlier stated, there was not evidence of the alleged
offenses of Ayson.
Procedural due process in the dismissal of the employee requires notice and hearing. Landtex failed to
understand the laws purpose in requiring the opportunity of being heard. All the meetings conducted
were not free from arbitrariness and Ayson was not able to defend himself from the accusations. No
witness was ever presented against Ayson. A suspicion no matter how sincerely felt cannot substitute
for factual findings carefully established through an orderly procedure . Petition Denied.

Coca-cola Bottlers v. Valentina Garcia

Coca-Cola Bottlers Philippines, Inc. hired Valentina G. Garcia as Quality Control Technician on probationary
status. Petitioner adopted some modernization programs which resulted in increased efficiency and
production. Likewise, the work load of their employees was substantially reduced. As a result, one
employee in the Department became redundant. Respondent, as the most junior employee of the
Department could be validly terminated. However, instead of terminating respondent on ground of
redundancy, petitioner decided to assign her to its Iloilo plant.
Petitioner informed respondent that she would be transferred to the Iloilo plant for being an excess or
redundant employee in the Tacloban plant. Respondent refused to be transferred.
Petitioner gave respondent notice of her transfer to take effect on July 2, 1990. Yet, on said date, respondent
reported for work at the Tacloban plant. After she was refused entry, respondent filed a complaint for illegal
dismissal with Regional Arbitration Branch. LA ruled for her. NLRC reversed. CA held that abandonment of
work was a just cause to effect respondent's dismissal, it found that the dismissal was ineffectual since it did
not comply with due process requirements, It held petitioner liable for backwages from the time respondent
was dismissed
Petitioner and respondent filed their respective motions for partial reconsideration. Hence, the present
petition.
The sole issue for resolution in the present petition is whether respondent was accorded procedural
due process before her separation from work. The court answered in the negative.
In dismissing an employee, the employer has the burden of proving that the dismissed worker has been
served two notices:
(1) the first to inform the employee of the particular acts or omissions for which the employer seeks his
dismissal, and
(2) the second to inform the employee of his employers decision to terminate him.
The first notice must state that the employer seeks dismissal for the act or omission charged against
the employee; otherwise, the notice does not comply with the rules. According to the case of Maquiling
v. Philippine Tuberculosis Society, Inc this notice will afford the employee an opportunity to avail all
defenses and exhaust all remedies to refute the allegations hurled against him for what is at stake is
his very life and limb his employment.
Petitioner argues that the purpose of the notice requirement was achieved when petitioner sent
several notices to respondent at her last known address. The Court is not persuaded by such
argument. Article 277 of the Labor Code explicitly provides that the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the causes for termination
Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides the proper
Standards of due process: requirements of notice. In the case, proof that respondent was properly apprised of
the charges against her and given an opportunity to explain her side is lacking. Respondent's dismissal was
effected without the notice required by law. Thus, petitioner failed to satisfy the two-notice requirement.
Petition is DENIED

d. Burden of Proof
Art. 277. 3rd sentence. Miscellaneous provisions.

b. Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall rest
on the employer. The Secretary of the Department of Labor and Employment may suspend the

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effects of the termination pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such dispute is pending
that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As
amended by Section 33, Republic Act No. 6715, March 21, 1989)

Chavez v. NLRC + Supreme Packaging Inc.

Pedro Chavez is a truck driver for Supreme Packaging Inc. since 1984. In 1992, he wanted to be
regularized to get the benefits of the regular employees. In 1995, this not being granted, he filed
complaint for regularization but he was terminated (due to gross negligence in proper maintenance of
truck, wanting to sever ties with the company etc) before the case was heard. LA ruled for Chavez
finding them guilty of illegal dismissal. NLRC affirmed the decision of the LA. The respondents sought
reconsideration which was granted by the NLRC saying that the fixed period f employment was already
included in the contract of employment and dismissed the petition. Upon appeal, the CA affirmed the
decision of the LA. It also disbelieved the respondents clam that the petitioner abandoned his job
noting that he just filed a complaint for regularization. However, on a motion for reconsideration, the
CA made a complete turn and reinstated the decision of the NLRC. Thus this petition.
The court found that the ER-EE relationship is present due to the four fold test. (Same work, paid by
SPI, dismissed by SPI, his truck is owned by SPI and his truck routes are controlled by SPI.) That he was
paid on a per trip basis is not significant. That there is ER-EE relationship, there is an illegal dismissal.
As a rule, the employer bears the burden of proving that the dismissal was for a valid and just cause.
In this case, the respondents failed to prove abandonment as the cause for the petitioners dismissal.
To constitute abandonment, there are 2 factors that must concur
1. the failure to report for work or absence without valid or justifiable reason
2. a clear intention to sever employer-employee relationship.
The court found that he just filed a complaint for regularization and that a charge of abandonment s
totally inconsistent with the immediate filing of a complaint for illegal dismissal. Negligence cant also
be invoked by the company as a reason because it implied want or absence or failure to exercise slight
care or diligence. The single and isolated case of petitioners negligence in proper maintenance of the
truck does not amount to gross and habitual neglect. Due to the lack of valid and just causes in
terminating the services of the petitioner thus violating Art 279 LC or security of tenure of Chavez, he
is reinstated to his work with full backwages. However due to the circumstances of the case,
separation pay instead of reinstatement is more equitable in this case. Petition granted.

Pepsi Cola Product Philippines v. E.V. Santos

Emmanuel V. Santos was employed by petitioner Pepsi Cola Products Phils he was promoted as Acting
Regional Sales Manager. 11 months later, he received from petitioner Ernesto F. Gochuico a
memorandum charging him with violation of company rules and Article 282(a) of the Labor Code.
The charges arose out of alleged artificial sales by the sales personnel of the Libis Sales Office
allegedly upon the instruction of respondent which resulted in damage to petitioners amounting to
P795,454.54. It is petitioners view that since respondent never denied these allegations, he is
deemed to have admitted the same. Petitioners found respondent guilty of the aforesaid charges
Respondent filed a case for illegal dismissal which the Labor Arbiter. The Labor Arbiter ruled that
petitioners failed to satisfactorily prove the serious charges against respondent. Petitioners appealed
to the NLRC which affirmed the LA. Petitioners appealed to the CA who affirmed the NLRC decision
ruling that the charges in the memorandum of suspension and the notice of termination were not
satisfactorily proven. The only evidence submitted by petitioners was the notice of termination which
narrated what happened during the administrative investigation. It also observed that while
petitioners discovered the alleged fictitious sales in April 1996, it was only on February 14, 1997 that
petitioners placed respondent on preventive suspension and commenced administrative investigation.
Thus this petition.
The court held that in an illegal dismissal case, the onus probandi rests on the employer to prove that
its dismissal of an employee is for a valid cause. In the instant case, petitioners failed to present
evidence to justify respondents dismissal. Save for the notice of termination, there is no other
evidence which would clearly and convincingly show that respondent was guilty of the charges
imputed against him. Petition is PARTIALLY GRANTED.

e. Measure of Penalty
Bago v. NLRC + Standard Insurance Co Inc.

Arlyn Bago was hired by Standard as an encoder. A complaint was filed by Celia Abordo, the head of
the Tuguegarao Branch of SICI, against Bago for manipulating money out of the agents commissions
and for the spreading of rumors that Abordo was having an affair with the claims assistant. An audit
was conducted against Bago which disclosed that the commission slips were not signed and were

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pocketed by those in connivance in the scheme to get part of the commission. The audit also disclosed
that the rumor started when she asked the claims assistant to drive her home and allowed him to bring
home her car. HRD asked Arlyn and those liable to explain why appropriate sanction should not be
imposed. Arlyn wrote back asking for forgiveness. HRD wrote back asking why proper sanction should
not be given them due to their admission. Later on Arlyn stated that she admitted to the offense
deliberately as to end the form of dishonesty served against her and that she had not been involved in
any act of dishonesty. The accused employees were soon terminated from employment and Bago filed
a complaint for illegal dismissal with the LA. The LA found the employees to be illegally dismissed.
NLRC reversed the LA and found them to be validly terminated. CA denied the petition. Thus this
petition. The court held that the dismissal is valid. That loss of trust is one of the reasons for her
termination and that she is NOT a management employee does not lie as her work required a
substantial amount of trust and confidence on the part of her employer. Even given that she is an
ordinary rank and file employer, there is sufficient evidence to show her involvement in the dishonest
scheme of pocketing the commissions. Even if Arlyn has been working there for 8 years, the court held
in the cases of Salvador v. Phil. Mining Service Corp and Flores v. NLRC that the measure of penalty
takes the length of time of service into consideration but given that the offense is pilferage by
petitioner which shoes a lack of loyalty, the same cannot be used as a mitigating factor for it will be
like rewarding disloyalty. Petition is denied.

Supreme Steel Pipe Corporation v. Bardaje

Rogelio Bardaje was hired by Petitioner Supreme as a warehouseman. Supreme employees are
required to wear the yellow uniform while at work but it was common practice for warehousemen to
wear longsleeved shirts over their uniform to serve as protection from heat and dust while working. A
security guard arrogantly ordered him to remove his shirt and Bardaje feeling singled out and offended
challenged him to fight wherein a scuffle ensued but was later on subdued by another security guard.
Bardaje later on received a memorandum of his 1 month suspension due to his violation of the rule
prohibiting the inciting of a fight. When he reported back after his suspension, he was terminated due
to previous infraction of company rules. He filed a complaint for illegal dismissal with the LA. LA ruled
that Bardaje is illegally dismissed and that the company failed to substantiate its claim that
complainant was guilty for serious misconduct but that the suspension was proper as he could just
have called the attention of his superiors instead of inciting a fight. Petitioners appealed but pending
this reinstated the petitioner in their payroll. NLRC dismissed the complaint and imposed the penalty of
dismissal. On appeal, the CA reversed the NLRC and reinstated the decision of the LA finding the
penalty of dismissal too harsh. Thus this petition.
The court ruled that for the reason to be a just cause of termination under Art 282 of the LC, the
misconduct must be serious or that it must be of such grave and aggravated character and not merely
trivial or unimportant. Thus for misconduct or improper behavior to be a just cause of dismissal (Lopez
v. NLRC):
1. it must be serious
2. 2. it must relate to the performance of the employees duties
3. it must show that the employee has become unfit to continue working with the employer.
The court said that not every fight within the company premises would automatically warrant a
dismissal from service. The court found that the accusations of violent temper of the respondent were
due to the provocations of the security guard as corroborated by witnesses from the company. As to
the penalty, the court agrees that the same is too harsh and that it is cruel and unjust to impose the
drastic penalty of dismissal if not commensurate to the gravity of the misdeed. Petition Denied.

Jackqui R. Moreno v. San Sebastian Collegio Recoletos

San Sebastian College-Recoletos, Manila (SSC-R), a domestic corporation and an educational institution
employed petitioner Jackqui R. Moreno (Moreno) as a teaching fellow. Moreno became a member of the
permanent college faculty. She was also offered the chairmanship of the Business Finance and
Accountancy Department. Reports and rumors of Morenos unauthorized external teaching
engagements allegedly circulated and reached SSC-R. Moreno had unauthorized teaching
assignments at the Centro Escolar University and at the College of the Holy Spirit. Moreno received a
memorandum from the Dean of her college, requiring her to explain the reports allegedly violated
Section 2.2 of Article II of SSC-Rs Faculty Manual. Moreno sent a written explanation in which
she admitted her failure to secure any written permission before she taught in other schools. Moreno
admitted she did not formally disclose her teaching loads and that she went beyond the maximum
limit because she needed to support her mother and sister. On the same day that Moreno sent her
letter, the grievance committee unanimously found that she violated the prohibition and her
employment was to be terminated.
Moreno thus instituted with the NLRC a complaint for illegal termination against SSC-R, LA dismissed
Morenos complaint for lack of merit. SSC-R filed a Motion for Reconsideration of the NLRC Decision,

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which was denied for lack of merit. SSC-R instituted with the Court of Appeals which granted the
petition saying that: Willful disobedience of the employers lawful orders, as a just cause for dismissal
of an employee, envisages the concurrence of at least two (2) requisites: the employees assailed
conduct must have been willful or intentional, the willfulness being characterized by a wrongful or
perverse attitude; and the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge and that the
charges are present in the case
Moreno impugns the CA decision. Moreno insists that her right to security of tenure is a more
significant consideration in this case. The court said that: No worker shall be dismissed from
employment without the observance of substantive and procedural due process and in termination
cases, the burden of proof rests on the employer to show that the dismissal is for just cause.
Respondent SSC-R contends that Morenos dismissal from employment was valid because she
knowingly violated the prohibition and in so doing, Moreno allegedly committed serious misconduct
and willful disobedience against the school. The court held that: Under Art. 282(a) of the Labor Code,
willful disobedience of the employers lawful orders as a just cause for termination of employment
envisages the concurrence of at least two requisites: (1) the employees assailed conduct must have
been willful or intentional, the willfulness being characterized by a "wrongful and perverse
attitude"; and (2) the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he has been engaged to discharge. SSC-R miserably
failed to prove that Morenos misconduct was induced by a perverse and wrongful intent as required in
Art. 282(a) of the Labor Code. The Court finds the punishment to be disproportionate to the offense.
Court deems it appropriate to impose the penalty of suspension of one (1) year on Moreno, to be
counted from her illegal dismissal. However, given the period of time in which Moreno was actually
prevented from working in the respondent school, the said suspension should already be deemed
served. Petition for Review is GRANTED.

B. Termination of Employment by Employee

i.)
Resignation
Oriental Shipmanagement Co Inc. v. NLRC + Felecisimo Cuesta, Wilfredo
Gonzaga

Orental is a recruitment agency duly licensed by the Philippine Overseas Employment Administration
(POEA) to recruit seafarers for employment on board vessels accredited to it. Kara Seal Shipping Co.,
Ltd. is petitioner's foreign-based principal, which owns and manages M/V Agios Andreas, a vessel
accredited to petitioner. Respondents Cuesta and Gonzaga were hired as Third Engineers on board the
said vessel for a one-year contract. Kara Seal through its vessels Shipmaster signed an Agreement
with the International Transport Workers Federation (ITF for brevity) increasing the monthly salary.
Later, the ITF inspector found out that the vessels crew has not been paid properly. The Shipmaster
assured him that the workers will be paid accordingly. Upon reaching Port Piombino, however,
respondents were ordered repatriated to Manila and before such repatriation, they were made to sign
Letters of Indemnity saying the contract of employment of the above crewmember is terminated by
mutual agreementconsequently he declares to have no claim whatever against the Shipowner.
Respondents received from Kara Seal payments not in accordance with the Agreement. As such
respondents filed Complaint against Oriental and Kara Seal for illegal dismissal. LA dismissed the
complaint saying The voluntariness of their resignation is confirmed and reflected from the Letter of
Indemnity they executed. They were executed in the presence and with the participation of the ITF
there is no evidence of threat or intimidation to the complainant's resignation. NLRC affirmed LA.
Upon appeal, the CA reversed the NLRC decision saying that the Letters of Indemnity were void. The
CA also denied the MFR filed by Oriental and Kara Seal. Thus this petition.
The court used the doctrine of Pacta privata juri publico derogare non possunct. Private agreements
between parties cannot derogate from public right in ruling that the quitclaims are invalid. Public policy
dictates that they be presumed to have been executed at the behest of the employer. It is the
employer's duty to prove that such quitclaims were voluntary. The employee's acknowledgment of his
termination is not enough to satisfy the requirement of voluntariness on his part.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has
no other choice but to disassociate himself from his employment.
It would have been illogical for respondents to resign and then claim that they were illegally
terminated. Well-entrenched is the rule that resignation is inconsistent with the filing of a complaint for
illegal dismissal. Based on the foregoing disquisition, The SC is convinced that respondents were
forced to sign the Letters of Indemnity. Thus, said Letters of Indemnity must be deemed void. Given
this, the court ruled that they were illegally dismissed since there was no justification for terminating

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their services and there was no due process as Oriental did not serve two written notices to
respondents prior to their termination from employment, as required by the Labor Code. Petition
DENIED.
(As an add on if maam asks)
paragraph 5; Section 10 of Republic Act No. 8042 provides:
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.
The SC also noted that there is no evidence on record of payment of placement fee. Hence, it is unable
to award reimbursement of the same. Cuesta is also entitled to vacation leave pay. Lastly, for
petitioner's breach of contract and bad faith, respondents should be awarded P50,000 in moral
damages and another P50,000 as exemplary damages. In addition, they should also be awarded
attorney's fees equivalent to ten percent (10%) of the aggregate monetary awards.

Globe Telecom v. Jenette Marie Crisologo

Marie Crisologo is a lawyer who was employed by Globe as a manager in its corporate legal services
department. During her pregnancy, she was rushed to the hospital due to profuse bleeding and
possible miscarriage and after a week tendered her resignation citing the advise of the doctor for her
to rest for the duration of her pregnancy. Globe accepted her resignation. A few weeks after, she was
informed that an email was circulating within the company that she solicited money from one of the
companys suppliers. She requested a copy but was declined as there was no longer any reason to
pursue the matter. She also asked for a certification to clear her reputation and said that she resigned
because of the damaging email. The certification was not given, instead, a certification of her
resignation was issued. She filed a complaint for illegal dismissal saying that she was fired on the basis
of a rumor, the veracity of which was never proven. LA dismissed the complaint saying that a lawyer
like her would never sign her rights away. NLRC affirmed LA. Upon appeal, the CA granted the petition
stating that given that there is no sufficient proof that she voluntarily resigned and that it is unlikely
that a person receiving a high salary to resign. Thus this petition. The court said that the resignation
letter was drafted in a clear, concise and categorical language; that a person of her professional
standing will not easily relinquish her legal rights; and that she resigned because of the health of her
child. The court defined resignation as the voluntary act of an employee who finds herself in a
situation where she believes that personal reasons cannot be sacrificed in favor of the exigency of the
service. The court noted that her letter of resignation expressed gratitude towards the company and in
Michael Academy v. NLRC , the court held that expressions of gratitude cannot possibly come from an
employee who is just forced to resign since it belies the allegation of coercion. Petition Granted.

Lazaro v. Dacut et al
Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala were crew members of the LCT BASILISA, an
inter-island cargo vessel owned by private respondent Sta. Clara International Transport and
Equipment Corporation. Dacut discovered a hole in the vessels engine room. The company had the
hole patched up with a piece of iron and cement. Despite the repair, Dacut and Tungala resigned in
July 1999 due to the vessels alleged unseaworthiness. Cajote went on leave from April 12-28, 1999 to
undergo eye treatment. Fearing that he will be charged as Absent Without Leave (AWOL), Cajote
resigned in June 1999.
Petitioners filed a complaint for constructive dismissal amounting to illegal dismissal.
Dacut and Tungala claimed that they resigned after Reynalyn G. Orlina, the secretary of the Personnel
Manager, told them that they will be paid their separation pay if they voluntarily resigned. They also
resigned because the vessel has become unseaworthy after the company refused to have it repaired
properly. Cajote alleged that he resigned because the company hired a replacement while he was still
on leave. When he returned, the Operations Manager told him that he will be paid his separation pay if
he voluntarily resigned;
Labor Arbiter dismissed petitioners complaint. There was sufficient evidence to prove that the vessel
was seaworthy. Thus, the fear of Dacut and Tungala was unfounded; also, Cajote has incurred
excessive unauthorized absences which would warrant his dismissal under the Labor Code.
Petitioners appealed to the NLRC. NLRC affirmed the Labor Arbiters decision. Petitioners elevated the
case to the Court of Appeals which likewise affirmed the findings of the NLRC. Thus this petition.
The court is asked to resolve: (1) whether the Labor Arbiter erred in admitting the companys reply
after the case had been submitted for decision; (2) whether Dacut, Tungala and Cajote voluntarily
resigned from their employment; and (3) whether petitioners were entitled to their monetary claims.
1. Technical rules of procedure are not binding in labor cases. The fact that the Labor Arbiter
admitted the companys reply after the case had been submitted for decision did not make the
proceedings before him irregular.

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2.

Here, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in their findings
that they voluntarily resigned. In fact, the company tried to give Cajote another assignment
but he refused it. The court rules that all factual findings are amply supported by substantial
evidence.
3. There is insufficient evidence to prove petitioners entitlement thereto. As crew members,
petitioners were required to stay on board the vessel by the very nature of their duties, the
correct criterion in determining whether they are entitled to overtime pay or night shift
differential is not whether they were on board. The petitioners failed to submit sufficient proof
that overtime and night shift work were actually performed to entitle them to the
corresponding pay.
Petition is DENIED.

a. Just Causes

Art. 285. Termination by employee.

b. An employee may put an end to the relationship without serving any notice on the employer for any
of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.

b. Without Just Cause

Art. 285. Termination by employee.

a. An employee may terminate without just cause the employee-employer relationship by serving a
written notice on the employer at least one (1) month in advance. The employer upon whom no such
notice was served may hold the employee liable for damages.
ARTICLE III BILL OF RIGHTS Section 18. (1) No person shall be detained solely by reason of his political
beliefs and aspirations.

(2) No involuntary servitude in any form shall exist except as a punishment for a crime whereof the
party shall have been duly convicted.

Azcor Manufacturing Inc. v. NLRC + Candido Capulso

Azcor Manufacturing hired Capulso as a ceramics worker for more than 2 years. He asked to go on sick
leave as recommended by his doctor because he had developed bronchial asthma due to his work at
the ceramic factory (inhaled ceramic dust due to the lack of safety gadgets). He was allowed to do so
but upon returning to work, his supervisor informed him that only the owner can allow him to continue
his job. When it became apparent that he will not be reinstated, he filed the complaint for illegal
dismissal. The company claims that Capulso resigned as evidenced by a letter of resignation. LA
dismissed the complaint. NLRC reversed and ruled that there is illegal dismissal. Hence this petition.
During the pendency of the case, Capulso died of the asthma and a heart disease.
The court held that to constitute a resignation, it must be unconditional and with the intent to operate
as such. There must be an intent to relinquish a portion of the term of office. In this case, Capulso
signified his desire to return to work after he recuperated. The court looked at the subject resignation
letters and found that the letters were pre drafted with blank spaces filled up with the alleged date of
resignation and it was in English which was not the normal vernacular of Capulso given his low level of
education. The court said that the company failed to show that the dismissal of the employee is for a
valid reason and that they are now liable for illegal dismissal. Separation pay. Petition dismissed.

A Prime Security Services Inc. v. NLRC

Othello Moreno had been working as a security guard for a year with the Sugarland Security Services,
Inc., a sister company of petitioner A Prime. He was rehired as a security guard by the petitioner and
assigned to the same post at the U.S. Embassy Building after A Prime absorbed Sugarland. He was
forced by petitioner to sign new probationary contracts of employment for 6 months and before the
period was over, her was terminated.
A Prime said that Moreno was caught sleeping on post for which he was sent a memorandum giving
him a last warning after which he had a quarrel with another security guard, which resulted in a near
shootout. Also that based on a psychological test in which he did not pass the company standard and
therefore, he could not be hired as a regular employee. Moreno filed a complaint for illegal dismissal.
LA ruled for Moreno. NLRC affirmed the LA. Thus this petition.
The court ruled that Morenos employment with A Prime is just a continuation of his employment in
Sugarland. Petitioners failure to deny that Sugarland is its sister company and that petitioner
absorbed Sugarlands security contract and security personnel assumes overriding significance over
the resignation theorized upon, evincing petitioners design to ignore or violate labor laws through the

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use of the veil of corporate personality. The court said that Moreno has already gained the status of
regular employee upon completing the probationary period imposed on him when he was employed in
Sugarland.
The court, having found that Moreno is a regular employee, ruled that he has been illegally dismissed
because there was just, legal and valid basis to do so. What is more, he was not given a chance to
contest his dismissal. He was deprived of an opportunity to be heard.
The dismissal of private respondent was presumably based on the results of his behavioral and
neuropsychological tests and on his violation of a company rule on sleeping on post.
With respect to the behavioral and neuropsychological tests, the Court agrees with NLRCs
assessment: "Complainants result of his behavioral research and neuropsychological test to our mind,
is of no moment, considering that the said test appeared to have been conveniently contrived to be
conducted, and the result produced on the very day of his dismissal, in question.
Also, private respondents alleged violations of sleeping on post, and quarrelling with a co-worker, may
not be proper grounds for dismissal, as the same were first infractions. Circular No. I of A Prime,
governing discipline, suspension and separation from the service of security guards, provides:
"SECTION VIII - SLEEPING ON POST
1st Offense........- Warning
2nd Offense.......- 30 days suspension without pay
3rd Offense........- Dismissal
SECTION IX - CHALLENGING A POSTED SECURITY/LADY GUARD AND SUPERIORS
1st Offense - One (1) month suspension
2nd Offense Dismissal
The infractions of Sections VIII and IX of Circular No. 1 by private respondent were first offenses, they
were not punishable by dismissal. They were not valid grounds for terminating the employment of
private respondent. Petition is DISMISSED

ii.)

Performance of Military of Civic Duty

Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty.
Book VI, Rule I, SECTION 12. Suspension of relationship. The employer-employee relationship
shall be deemed suspended in case of suspension of operation of the business or undertaking of the
employer for a period not exceeding six (6) months, unless the suspension is for the purpose of
defeating the rights of the employees under the Code, and in case of mandatory fulfillment by the
employee of a military or civic duty. The payment of wages of the employee as well as the grant of
other benefits and privileges while he is on a military or civic duty shall be subject to special laws and
decrees and to the applicable individual or collective bargaining agreement and voluntary employer
practice or policy.

iii.) Forced Resignation

JSS Indochina Corp v. Ferrer

Gerardo Ferrer and the other respondents were deployed to Taiwan but only 20 workers were employed
as construction workers at the Formosa Plastics Corporation. The respondents sought assistance from
the Manila Economic and Cultural Office who directed them to sign separate affidavits saying that they
were assigned at Shin Kwan Enterprise and not at Formosa. They were soon repatriated to the
Philippines. The employees filed a complaint for illegal dismissal with the LA. The Company said that
they refused to work after being assigned as pipe tract workers in Shin Kwan. The LA ruled for the
employees saying that they have been forced to resign. Upon appeal, the NLRC affirmed the LA. In the
petition with the CA, the CA dismissed the petition saying that the corporation was not able to prove
that the private respondents dismissal was for just, valid or authorized cause. Thus this petition.
The court held that the petitioners violated their contract by not hiring the respondents as construction
workers as agreed upon. The respondents decision to resign from their employment was made by
force of circumstances not attributable to their own fault. The respondents were forced to resign and
pre-terminate their employment contracts in view of the petitioners breach of its provisions. RA 8042
(Migrant workers act) provides that in cases of termination of contract without valid cause, they shall
be entitled to full reimbursement of placement fee plus salaries for the unexpired portion of the
contract or for 3 months for every year of the unexpired term. Petition denied.

C. Termination of Employment by Employer

i.)
Substantive Requirements Just Causes

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Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
Art. 277. Miscellaneous provisions.
b. Subject to the constitutional right of workers to security of tenure and their right to be protected
against dismissal except for a just and authorized cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the
employer shall be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.
The burden of proving that the termination was for a valid or authorized cause shall rest on the
employer. The Secretary of the Department of Labor and Employment may suspend the effects of the
termination pending resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended
by Section 33, Republic Act No. 6715, March 21, 1989)
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989)

a. Basis Employer Right

Ocean East Agency Corp v. NLRC + Capt. Pepito Gucor

Ocean East hired Capt. Gucor as a master of M/V Alpine for one year. He was later on informed of his
transfer to another vessel pursuant to the transfer clause of the Standard Employment Contract (SEC).
He viewed this as an insult and he signified that all his benefits should be accorded him and that the
cause for his repatriation is unreasonable. The company assured him that he is not being terminated
and that the repatriation s for documentary purposes only. He finally agreed to be repatriated to the
M/V Eleptheria but failed to disembark when ordered to do so. On the ground of serious misconduct or
willful disobedience, Ocean East terminated his services. He filed a complaint for illegal dismissal. LA
dismissed the complaint. NLRC reversed the LA. Thus this petition.
The court held that the transfer clause in the SEC is not violative of Art 34 I of the LC which provides
that it shall be unlawful to substitute or alter employment contracts approved by the DOLE without the
approval of the Secretary of Labor and that in fact it is complementary as a transfer is sanctioned only
if it is to any vessel owned by the same employer and that the rating (terms of service and wages) are
in no way inferior or that the period of employment is not shortened. The transfer clause is
incorporated into the original contract and so the approval of the Sec of Labor is no longer necessary.
In AHS Philippines v. CA the court held that an employer may terminate an employee on the ground of
willful disobedience or to the employers order, regulation or instruction.
(given that the regulations are:
1. reasonable and lawful
2. sufficiently known to the employee at the time of his engagement
3. in connection with the duties which the employee has been engaged to discharge.)
In the case at hand, respondents defiance of the order posed a considerable prejudice to the business
of the employer; there is a valid and legal cause for the termination of the respondent. Petition
granted.
-

b. Just Causes Requisites

Serious Misconduct, Willful disobedience (Insubordination)

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Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

Ha Yuan Restaurant v. NLRC

Juvy Soria worked as a cashier in petitioners establishment located inside the SM Food Court
Makati. Respondents co-worker Sumalague was eating at the back of the store, when respondent
rushed toward Ma. Teresa Sumalague and hit the latter on the face causing injuries and resulting in a
scuffle between the two. Despite the intervention of their supervisor Fiderlie Recide, they were not
pacified. They were brought to the SM Food Court Administration Office and then to the Customer
Relations Office for further investigation.
SM Food Court Manager banned the two from working within the SM Food Courts premises.
Respondent then filed with the Labor Arbiter a complaint for illegal dismissal
LA dismissed case. NLRC affirmed. CA affirmed NLRC. Hence, herein petition
The court held in Philippine Long Distance Telephone Co. vs. NLRC that 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. Separation
pay therefore, depends on the cause of dismissal, and may be accordingly awarded provided that the
dismissal does not fall under either of two circumstances: (1) there was serious misconduct, or (2) the
dismissal reflected on the employees moral character.
The Court holds that respondents cause of dismissal in this case amounts as a serious misconduct and
as such, separation pay should not have been awarded to her. Thus, the petition should be
granted.Her cause of dismissal amounting to a serious misconduct, respondent is not entitled to an
award of separation pay. As further stated in Philippine Long Distance Telephone Co. vs. NLRC: The
policy of social justice is not intended to countenance wrongdoing simply because it is committed by
the underprivileged. Social justice cannot be permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty. Petition is GRANTED.

First Dominion Resources Corp v. Penarenda

Petitioner is a domestic corporation engaged in textile manufacturing. It employed Pearanda as
packer and Vidal as drugman. Both were assigned to the night shift. Pearanda was caught sleeping on
the job on two occasions for which he was asked to explain why he should not be terminated for
committing the same offense. Pearanda merely denied the allegations against him. Petitioner,
however, found his denial insufficient and terminated his employment on June 20, 2001. Respondents
filed separate complaints for illegal dismissal which were consolidated. NLRC reversed the decision of
the labor arbiter, ruling that the dismissal was without just cause, but withheld reinstatement and
payment of backwages. Respondents elevated the case to the Court of Appeals ruled that the
dismissal was illegal. Both parties moved for reconsideration of the decision but both motions were
denied. Thus this petition.
The court held that under Article 282 of the Labor Code, willful disobedience of a lawful order of the
employer is a valid cause for dismissal. Willful disobedience of the employers lawful orders, as a just
cause for the dismissal of an employee, requires the concurrence of at least two requisites: (1) the
employees assailed conduct must have been willful or intentional, the willfulness being characterized
by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful,
made known to the employee and must pertain to the duties which he had been engaged to discharge.
On the first requisite, it is undisputed that respondents violated Company Rule 8 twice. Vidal cleverly
tried to avoid being caught sleeping a second time by sneaking inside the container van. Pearanda,
after being awakened and warned by his supervisor, ignored the same and continued sleeping.
The second requisite is also present in this case. As a manufacturer of finished textile, petitioner
utilizes machines which are operated continuously. The machines functions are interlocked in a way
that a disruption in one interrupts the entire operation.
Court has recognized that management has the right to formulate reasonable rules to regulate the
conduct of its employees for the protection of its interests. We find Company Rule 8 to be a valid
exercise of management prerogative. As for affording due process to the respondents, Petitioner not
only satisfied the two-notice requirement, it also conducted an investigation, albeit summary, to
determine the culpability of the respondents. Respondents were confronted in detail with the charges
against them and given the opportunity to present their side. As long as the employee is given the
opportunity to explain his side and to present evidence in support of his defense, due process is
served. Petition is hereby GRANTED.

Citibank NA v. NLRC

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Rosita Paragas was hired by Citibank as Secretary to several important people but because of the
reorganization, respondent bank declared Paragas position redundant. She was moved around from
task to task until she was assigned to undertake the special project of reorganizing the Universal
Account Opening Forms. The company went thru 9 files boxes only and found 9 misfiles. This level of
errors is not acceptable because a misfiled document is considered LOST and you will have to go
through the file one by one to be able to retrieve it.
As she failed to complete the project she was given another 30 days to complete it. AVP Ferrera
directed complainant to explain in writing why her employment should not be terminated on the
ground of serious misconduct, willful disobedience, gross and habitual neglect of her duties and gross
inefficiency. Correspondingly, complainant was placed under Preventive suspension.
An administrative conference took place with the complainant, her counsel and the Union
President in attendance. Respondent bank notified complainant that her written explanation
were found self-serving, and consequently, terminating her employment on the ground of
serious misconduct, willful disobedience, gross and habitual neglect of duties and gross
inefficiency.
Following the termination of her services, respondent filed a complaint for illegal dismissal
LA dismissed the complaint for lack of merit, NLRC affirmed LA. Respondent filed a MOTION FOR
PARTIAL RECONSIDERATION of the NLRC Resolution. She no longer challenged her dismissal on the
ground of work inefficiency, but prayed that petitioner be ordered to pay her the Provident Fund
benefits under its retirement plan for which she claimed to be qualified pursuant to petitioners
Working Together Manual,
Finding that respondents dismissal was for causes other than misconduct, the NLRC, by the abovementioned October 24, 2001 Resolution granted respondents motion for partial reconsideration.
Petitioner thereupon filed a petition for certiorari with the Court of Appeals to set aside and nullify the
NLRC Resolution. Ca dismissed for lack of merit. Thus this present petition.
The court held that: her Notice of Appeal and Appeal Memorandum was filed after she had already
submitted her position paper. Thus, any mention of the Provident Fund therein would fail to adhere to
the above-ruling in the Maebo case cited by the court which requires all facts, evidence, and causes
of action should already be proffered in the position papers and the supporting documents thereto, not
in any later pleading. Also, the court held that respondent is not entitled to retirement benefits as this
Court finds that she was validly dismissed for serious misconduct and not merely for work inefficiency.
In support of its ruling that respondents dismissal was valid, the labor arbiter relied on the
performance appraisals of respondent wherein the court noted significant behavioral problems in
respondent. Evaluation of respondent cited above finds corroboration in her admission that she may
have been tactless and insolent in dealing with her superior but it does not allegedly warrant the
supreme penalty of dismissal.
In the case of Cathedral School of Technology v. NLRC, the court held that her unreasonable behavior
and unpleasant deportment in dealing with the people she closely works with in the course of her
employment, is analogous to the other just causes enumerated under the Labor Code. It is
respondents obstinate refusal to reform herself which ultimately persuades this Court to find that her
dismissal on the ground of serious misconduct was valid. Having been validly dismissed on the ground
of serious misconduct, respondent is thus disqualified from receiving her retirement benefits pursuant
to the provision of petitioners Working Together Manual. petition is GRANTED

Cosmos Bottling Co v. P Nagrama

Cosmos Bottling Corporation hired Pablo Nagrama, Jr. as a maintenance mechanic he was elected by
the local union as chief shop steward. Respondent was designated by petitioner as waste water
treatment operator. Petitioner hired Clean Flow Philippines, Inc. to conduct training seminars and
Respondent was instructed to attend the seminar. He failed to attend the first two (2) days of the
seminar. His immediate supervisor, Josephine D. Calacien wrote a letter to Nagrama informing him
that the charges of abandonment of duty and gross insubordination had been lodged against him. He
was required to submit his written explanation. Respondent filed his explanation and contended that
he had to attend to an administrative hearing for fellow unionists. He averred that as a union official,
he is obligated to attend to the problems of his fellow union members.
LA rendered judgment sustaining the legality of the dismissal due to the letter Nagrama sent to
Cosmos apologizing, considering it as a judicial admission of guilt. Respondent appealed the matter to
the NLRC who affirmed the decision of the LA. On petition for certiorari to the CA, it reversed the NLRC.
Thus this petition.
The court held that the there is no evidence to justify Nagramas termination. Two (2) elements must
be satisfied for an employee to be guilty of abandonment. The first is the failure to report for work or
absence without valid or justifiable reason. The second is a clear intention to sever the employer-

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employee relationship. A review of the facts discloses that these twin elements are not present
here. He also asked for and was given permission.
For the second charge against him: for gross insubordination, also called willful disobedience of a
lawful order, to lie, two (2) requisites are also necessary. First, the assailed conduct must have been
intentional and characterized by a wrongful and perverse attitude. Second, the order violated must
have been reasonable, lawful, and made known to the employee and should pertain to the duties
which he has been engaged to discharge. These were not found to be present in the case. Petition is
DENIED for lack of merit.

Oscar P. Garcia and Alex Morales v. Malayan Insurance

Petitioners were employed as risk inspectors by Malayan Insurance Company, Inc. Malayan issued to
petitioner Garcia an Inter-Office Memorandum giving him 24 hours to explain his involvement in the
theft of company property. Private respondent also issued to petitioner Morales a similar memorandum
but with additional instruction for his preventive suspension for 30 days pending investigation.
Petitioners denied their involvement in the theft and countered that the filing of the charges against
them was a form of harassment against their union. Malayan notified petitioner Garcia, through a letter
dated February 28, 2000, of the termination of his employment. Petitioners filed before the Labor
Arbiter (LA) a Complaint for illegal dismissal, LA dismissed their Complaint. Petitioners appealed to
NLRC who affirmed the LA. CA affirmed the NLRC. Hence, the present petition.
LA and the NLRC declared the dismissal of petitioners valid in view of substantial evidence that
petitioner Garcia was involved in the theft of private respondent's confidential records and that
petitioner Morales participated in the cover-up thereof relying on the affidavits of Umila and De
Guzman. The NLRC found these witnesses credible because they were not shown to hold any grudge
against [petitioners], much more because said witnesses are ordinary members of the union. While the
CA did not elaborate on its view, it bound itself by the concurrent factual findings of the LA and NLRC.
Petitioners argue that the affidavits of Umila and De Guzman have no probative value for neither had
direct knowledge of the taking of private respondent's properties. De Guzman's statement detailed the
effort to bring said properties back into the premises of private respondent and to make it appear that
these were merely misplaced. Court cannot agree that no direct evidence was presented on the theft
of the properties or the cover-up thereof.While the participation of petitioner Garcia in
said theft and cover-up is detailed in said affidavit, the same cannot be said of the connection of
Morales to said incidents. The only evidence of petitioner Morales's involvement in the cover-up is the
statement of De Guzman that it was said petitioner who instructed him to get a parcel from a third
person. There is no proof that Morales knew the contents of the parcel. Nowhere does it appear that
petitioner Morales had knowledge of what was to happen or had participation in it. Court finds the
affidavit of De Guzman so lacking in crucial detail as to Morales. dismissal.
Petition is PARTLY GRANTED as to Morales only.
Gross and Habitual Neglect of Duties
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.

National Book Store v. CA

National Bookstore Inc. employed Marietta Ymasa and Edna Gabriel as Cash Custodian and Head
Cashier respectively. They were assigned to the SM North Branch. They reported for work to count the
previous days sales as a matter of routine. The money is to be deposited with INTERBANK and PCIB.
After preparing the deposit slips, the counted money was placed inside 2 separate plastic bags sealed
with scotch tapes and rubber bands. Ymasa placed the money n her cabinet and locked it. It was only
in the evening when the plastic bags were taken out because the branch manager was not in his office,
It was handed over to the Assistant Manager for safekeeping in the Branch vault. The private
respondents retrieved the bags from the Assistant Manager the next day in order to give the money to
the roving tellers of PCIB and INTERBANK. It was again counted before being deposited. It was found
that the amount was short of 42,000. The management asked the respondents why they should not be
dismissed for the loss of company funds. In writing, the employees explained that they had no access
to the Bookstores vault and that before leaving the office, they were subjected to a thorough body
search. They also claimed that they have served the petitioner for 13 years without being required to
have a proof of receipt in turning over the collection. They were subsequently terminated for gross

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neglect of duty and loss of confidence. The employees filed a complaint for illegal dismissal against the
company. LA ruled for them, entitling them t reinstatement. NLRC affirmed the LA. Upon appeal, the CA
affirmed the NLRC. Hence this petition. The court held that for valid dismissal, the
1. employee must be afforded due process
2. the dismissal must be for a valid and just cause as provided in Art 282 of the LC
As to the requirement of due process, the employer should give 2 written notices, 1 to inform the
cause of the termination 2. to inform the employee of the decision to dismiss him. National Bookstore
complied with this requirement but they also carry the burden of showing convincing evidence that the
dismissal is based on the just causes enumerated in Art 282 of the LC. The records show that they
were not even remotely negligent of their duties and that they had no access to the vault. Even given
arguendo that they are negligent, it was only a single and isolated act and this does not constitute
gross or habitual neglect of duties. The court found the respondents to have been illegally dismissed
and they are entitled to full backwages inclusive of allowances. LA is affirmed.

Tres Reyes v. Maxims Tea House

Maxims Tea House employed Ariel Tres Reyes as a driver. In the wee hors of the morning as he was
driving to fetch the employees from a ballroom dancing establishment, he figured in an accident when
a 10 wheeler truck failed to stop during a red light and struck the van he was driving. The
management of Maxim required him to explain what happened that morning but upon finding his
explanation unsatisfactory, he was terminated, thus he filed the complaint for illegal dismissal where
the LA found him grossly negligent in failing to avoid the collision. The NLRC reversed the decision of
the La saying that there was no negligence on his part. Upon appeal, the CA ruled in favor of the
employer. Hence the instant case. The court held that the case before the Labor Arbiter depended
primarily on the position papers of the parties and no trial was held thus the finding of the CA that the
LA was in a better position to observe the parties cannot be applied to this case. Upon looking at the
evidence, the court found that truck was n the wrong lane and that it was purely an accident. Thus, the
immediate dismissal of the petitioner is unjustified. The argument that it was already his second
vehicular accident is not also applicable to the case because the court found that the same was also a
pure accident wherein Tres Reyes was a victim. Defenisve driving is also not a defense. The test to
determine the existence of negligence is the question: Did the petitioner, in doing the alleged
negligent act, use that reasonable care and caution which an ordinarily prudent person would use in
the same situation?
The court, as stated earlier said yes as he was the victim of the vehicular accident. Petition is granted.
Loss of Trust and Confidence
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
c. Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

Mercury Drug Corp v. Zenaida Serrano

Zenaida Serrano was employed by Mercury Drug as a pharmacy assistant who was tasked to attend to
customers and handing the money paid to them to the cashier for the receipt. Mercury, upon decision
of the Branch Manager, put Serrano under observation due to the reports from other pharmacy
assistants that she has been pocketing money. The Branch Manager enlisted the help of a mason and 2
students. After the 2 students bought the medicine furnished with the receipt, the mason soon bought
10 capsules of squalene worth 120 pesos which was the exact amount given by the mason. He was not
given the receipt. He soon came back as per the Branch Managers instruction, asking for the receipt
and pinpointing Zenaida as the woman who served him. She then took out the 120 pesos from her
pocket and gave it to the cashier. The Branch Manager confronted her and thus she gave a resignation
letter apologizing as well as saying that she as tempted because it was the exact amount. Mercury did
not accept this and made her undergo an investigation who subsequently found her guilty. Mercury
sent a letter to Zenaida terminating her employment due to loss of trust and confidence. She filed a
complaint for illegal dismissal saying that she had a lot customers at the time and that she just forgot
about the 120 pesos. LA found that the allegations against Zenaida were fabricated and the the
evidence was not substantial to prove her dishonesty. NLRC dismissed the petition finding the
respondent dishonest in her duties. CA upheld the LA. Thus this petition. The court held that although
the reason for her termination, loss of trust and confidence, generally applies to management
employees, if the employee holds a position whose functions may only be performed by someone who
has the confidence f management or has a greater duty to management than ordinary workers, can be
terminated due to the betrayal of trust. Loss of trust and confidence does not need proof beyond
reasonable doubt. In this case, mercury alleged that the pocketing of the 120 pesos was a ground for
her termination due to her dishonesty. Furthermore, she was already convicted of the crime of qualified

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theft to which the mason testified aganst her. Adding credence to her committing of the offense.
However, Mercury failed to abide by the two notice rule and thus deprived her of due process. Thus,
she may be awarded damages. Petition partly granted.

Amelia R. Enriquez v. BPI

Enriquez and Sia were the branch manager and assistant branch manager of BPI-Bacolod. They
maintain
their branch experienced a heavy volume of transactions owing to the fact that it was the last
banking day of the year and that Descartin, one of the tellers had a cash shortage of P36,000.00 due
to an innocent oversight of her mother-in-law, Remedios Descartin (Remedios), to sign the withdrawal
slip when the latter withdrew P36,000.00 earlier that day. Descartin was permitted to leave the bank to
look for Remedios so that the latter could sign the withdrawal slip. Thus, petitioners aver, the
transaction was regularized before the end of the day. It is the position of petitioners that as there was
neither shortage nor loss to the bank. Initial discrepancy was accounted for. Respondents, however,
have a different version of what transpired. Descartin confided to her co-teller Fregil, was incurred
because she had temporarily borrowed the money that week. Fregil was allegedly informed that teller
Descartin was going to prepare a white lie report. Petitioners were instructed to report to the BPI
head office for polygraph testing. Petitioners submitted their respective replies in which they denied
the charges against them. Petitioners were dismissed from employment on grounds of breach of trust
and confidence and dishonesty.
Petitioners filed their respective Complaints for illegal dismissal against respondents and prayed for
reinstatement. LA found that petitioners had been illegally dismissed. NLRC ruled that respondents had
just cause to terminate their employment. Petitioners thereafter elevated the case to the Court of
Appeals. The appellate court, agreeing with the NLRC, denied petitioners appeal and affirmed in toto
the latters assailed decision. Thus this petition.
The petition should be denied. There is no denying that loss of trust and confidence is a valid ground
for termination of employment. Also, it must be shown that the employee is a managerial employee,
since the term trust and confidence is restricted to said class of employees. A review of the tellers
transaction summary of teller Descartin reinforces the conclusion that the shortage in her pico box was
due to a temporary borrowing, under BPIs bank policy, failure to report a shortage is not a ground to
terminate employment.
Taken together with the attending circumstances of the case, the failure of petitioners to report the
cash shortage of teller Descartin, even if done in good faith, nonetheless resulted in their abetting the
dishonesty committed by the latter. It is well-settled that the power to dismiss an employee is a
recognized prerogative that is inherent in the employers right to freely manage and regulate his
business. Their manifest condonation and even concealment of an offense prejudicial to their
employers interest committed by a subordinate under their supervision reflect a regrettable lack of
loyalty which they should have reinforced, instead of betrayed. Petition is DENIED.

Uniwide Sales Warehouse Club v. NLRC

Amalia P. Kawada was employed by Uniwide and was promoted to Full Assistant Store Manager in 1995. In 1998,
Uniwide received reports from the other employees regarding some problems in Kawadas departments. Uniwide,
through Store Manager Apduhan, issued a Memorandum summarizing the various reported incidents signifying
unsatisfactory performance (commingling of good and damaged items, sale of a voluminous quantity of damaged
stocks)
Private respondent answered all the allegations. Unsatisfied, Apduhan sent 2 other Memorandums where Apduhan
claimed that the answers given by the private respondent were all hypothetical; and seeking from the private
respondent an explanation regarding the incidents. Private respondent sought medical help due to complaints of
dizziness. Finding private respondent to be suffering from hypertension, Dr. Zambrano advised her to take five
days sick leave. Dr. Zambrano mistakenly wrote the wrong surname in the med cert which led to a shouting match
between Apduhan and Kawada which allegedly caused her to collapse. Private respondent reported the
confrontation between her and Apduhan to the Central Police District.
Apduhan issued a Memorandum advising Kawada of a hearing and warning her that failure to appear shall
constitute as waiver and the case shall be submitted for decision based on available papers and evidence.
Private respondent filed a case for illegal dismissal before the LA.
Apduhan issued a Memorandum stating that since private respondent was unable to attend the scheduled hearing,
the case was evaluated on the basis of the evidence on record;
LA dismissed the complaint for lack of merit. Private respondent appealed the LAs decision to NLRC the NLRC
ruled in favor of private respondent, Petitioners appealed the NLRC Decision to the CA. CA affirmed in toto the
NLRC Decision. Hence, the present petition. The court found the petition to be meritorious.
The Court agrees with the findings of the LA that the termination of private respondent was grounded on the
existence of just cause under Article 282 (c) of the Labor Code or willful breach by the employee of the trust
reposed on him by his employer or a duly authorized representative.

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Private respondent occupies a managerial position. As a managerial employee, mere existence of a basis for
believing that such employee has breached the trust of his employer would suffice for his dismissal.
In Caoile v. National Labor Relations Commission
managerial employee, mere existence of a basis for believing that such employee has breached
the trust of his employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required.

The irregularities and offenses committed by private respondent, corroborated by the various pieces of evidence
supporting such charges, i.e. records, reports and testimonies of Uniwide employees, in the mind of the Court,
constitute substantial evidence. Although she worked for Uniwide for almost 17 years with a clean bill of record, this
is not sufficient to overcome the findings of petitioners that the private respondent is guilty of the charges imputed
to her.
The September 1, 1998 Memorandum where the private complainant was dismissed for loss of trust and
confidence is valid and complies with the due process requirement. Clearly, private respondent was given an
opportunity to be heard. However, private respondent chose not to attend the scheduled hearing because of her
mistaken belief that she had already been constructively dismissed. Petition is GRANTED.

Mitsubishi Motors Phil v. Rolando Simon

Rolando Simon and Constantino Ajero (respondents) were employees of petitioner and members of the
Hourly Union. Simon was designated as Union Chairman. Rodolfo Siena, one of the accredited rice
suppliers complained to petitioner that respondents had extorted money from him in exchange for
union protection for his rice stores continued accreditation. He detailed that he was approached by
respondents who introduced themselves as newly elected union officers, and demanded that he pay
them P50.00 per sack of rice given to petitioners employees threatening him that they would no
longer get him as a rice supplier. Petitioner, through its Industrial Relations Department, issued a
Notice of Disciplinary Charge with Preventive Suspension against respondents. Administrative
hearings were conducted, after which respondents were found guilty. Respondents filed a case for
illegal dismissal but their complaint was dismissed by the LA. NLRC affirmed the LA but deleted the
award of financial assistance, considering that respondents were dismissed for cause on the ground of
serious misconduct. Upon appeal CA granted the petition. Thus this petition.
The court finds for the petitioner. According to petitioner, said act is a clear case of serious
misconduct, fraud and willful breach of trust, and disloyalty to the Company as their employer as it
sabotages the Companys Rice Subsidy Program and disrupts the efficient administration of services
and benefits to employees. Thus, they claim that respondents betrayed not only the Company, but
also the union members whom they had sworn to serve. We find substantial evidence to support
respondents dismissal. The core of petitioners decision to dismiss respondents is the statements of
the spouses Siena. However, testimonies are to be weighed, not numbered; thus it has been said that
a finding of guilt may be based on the uncorroborated testimony of a single witness when the
tribunal finds such testimony positive and credible. We see no reason to doubt their credibility, nor
any motive for them to make up the story. They are not employees of petitioner; even respondents
admitted that they could not think of any motive why Siena would accuse them of extortion.
Respondents denials and alibi of committing said act fall flat in the face of the credible testimonies of
the spouses Siena.
Respondents acts constitute serious misconduct and willful breach of trust reposed by the employer,
which are just causes for termination under the Labor Code. For serious misconduct to exist, the
act complained of should be corrupt or inspired by an intention to violate the law or a persistent
disregard of well-known legal rules. On the other hand, in loss of trust and confidence, it must be
shown that the employee concerned is responsible for the misconduct or infraction and that the nature
of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by
his position. Petition is GRANTED
Commission of a Crime
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
d. Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
Analogous Cases
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
e. Other causes analogous to the foregoing.

Cathedral School of Technology v. NLRC

Teresita Vallejera aspired to be a nun in their congregation and thus she came to live with the sisters.
During her stay, she volunteered to assist as a library aide and in return for her work she was given
200/month. Later on, she confessed to the sisters that she no longer wanted to be an nun, she pleaded

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however, t that they allow her to live with them. The sisters agreed and tasked her as a library aide
with a salary of more than 1k. The sisters then began receiving numerous complaints about her sour
disposition at work and her difficult personality both the students as well as with her co-workers. She
even managed to have the chief librarian resign She was summoned to the office of the directress
where she walked out upon hearing the negative comments about her while saying OK I will resign
The school, after trying to settle her differences with the directress after storming out of the meeting,
was informed that her resignation has been accepted. She filed a case for illegal dismissal and the LA
ruled for her saying she was illegally dismissed. The NLRC and the CA affirmed the decision of the LA
Thus this petition. The court held that her unreasonable behavior and unpleasant deportment in
dealing with the people she closely works with in the course of her employment, is analogous to the
other just causes enumerated under the Labor Code. It is respondents obstinate refusal to reform
herself which ultimately persuades this Court to find that her dismissal on the ground of serious
misconduct was valid. Being a Catholic School, it is expected that good behavior and proper
deportment is exercised at all times. The lack of procedural due process in giving her notice and
hearing, this does not make her illegally dismissed. The court further held that there can be no
backwages or separation pay given that the termination was for a just cause. NLRC s decisions
annulled.

Lim v. NLRC

Sixta Lim was employed by the Pepsi Cola Company as a secretary since 1981 and when she was
dismissed due to low performance levels, she was already the staff accountant. Pepsi evaluated its
employees as Marginal, Fair, Commendable, Superior and Distinguished wherein Lim rated as Superior.
Later on, the Ratings were changed to Significantly Above Target, AT, On T, Below T, Significantly BT.
This time, she has rated BT since she was poor in production reporting which was raised to 40% of the
overall rating. She was appraised negatively regarding this matter. She asked for a reappraisal which
returned with the same results. She wrote to the Mr. Yasuki Mihara of PepsiCo Japan but before Mihara
could visit the Philippines, she was asked to voluntarily resign but she refused to do so. Petitioner was
verbally informed of her termination. She filed a complaint for dismissal without due process. The LA
ruled for her. NLRC Reversed the LA. Thus this petition.
The court agrees with PEPSI that gross inefficiency falls within the purview of other causes analogous
to those enumerated in Art 282. gross Inefficiency is related to gross neglect because both involve
specific acts of omission on the part of the employee resulting in damage to the employer or to his
business. In the case however, she was never informed of her gross inefficiency and the brochure of
PEPSI entitled Managing Performance, BT rating does not merit a dismissal, infact, even the SBT is
just a ground for probation not termination. PEPSI did not characterize the deficiencies it attributed to
the petitioner as gross inefficiency. As for procedure, PEPSI violated her right to due process when they
served her with the notice of her resignation but did not afford her a venue to be heard or defend
herself of the charges before her actual termination. Petition Granted.

Genuino v. NLRC + CITIBANK v. NLRC

Marilou Genuino was employed by Citibank as a Treasury Sales Division Head. Later on, she received a
letter from the bank charging her with knowledge or involvement which was irregular or even
fraudulent. Genuino asked for a bill of particulars. She was accused of using her family corporations in
order to participate in the diversion of bank client funds from Citibank. The company set an
investigation and Genuino, who did not attend, found her guilty of using their familys corporation
Global Pacific in diversion of bank clients funds to their products which yielded higher interests that
what Citibank offered. She was terminated on grounds of serious misconduct, willful breach f trust and
commission of crime against the bank. She filed a complaint for illegal dismissal. LA ruled fro her
reinstatement. Both parties appealed to the NLRC who ruled that the dismissal was valid and legal. On
appeal to the CA, the court dismissed both petitions. Thus these petitions. The court held that Genuino
was dismissed for just cause but without the observance of due process since even if the bank gave
Genuino an opportunity to deny the truth of the allegations in writing and participate in the
administrative investigation, the fact remains that the charges were too general to enable Genuino to
intelligently and adequately prepare her defense. However, the dismissal remains valid since the
employer, according to Art 282 of the LA, may terminate an employee for fraud or willful breach of
trust. For loss of trust and confidence to be a valid ground, it must be substantial and not arbitrary and
must be founded on clearly established facts but t need not be proven beyond reasonable doubt. The
evidence shows that Genuino did not have her employers interest during these transactions.
Genuinos petition dismissed. Citibank affirmed.
-

c. Other Causes
Abandonment
Padilla Machine Shop v. Rufino Javilgas

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Rufino Javilgas was hired by Padilla Machine Shop. His work consisted of reconditioning machines.
Petitioners made regular deductions for his SSS contributions, but sometime in 2002, he found out that
his employer was not remitting the contributions to the SSS; when he complained about the failure of
his employer to remit his SSS contributions, the latter transferred him to the Novaliches branch office.
Rodolfo Padilla called him by telephone and told him to stop working, but without giving any reason
therefor. He stopped reporting for work and sued petitioners for illegal dismissal,
Padilla (Rodolfo), proprietor of Padilla Machine Shop, alleged that SSS and Medicare contributions were
deducted from Javilgas salary and remitted to the SSS; that in 2000, they (petitioners) submitted a
report to the SSS that Javilgas had voluntarily left and abandoned his work, some months after,
Javilgas returned and pleaded to be re-employed with them; that Rodolfo Padilla took Javilgas back to
work, but their customers were not satisfied with the quality of his work; hence Javilgas was assigned
to the Novaliches branch.
He alleged that Javilgas had opened his own machine shop and even pirated the clients of
petitioners; and finally, Javilgas again voluntarily left Padilla Machine Shop without prior notice.
LA held that Javilgas was illegally dismissed, The NLRC found no sufficient evidence to show that
Javilgas was dismissed or prevented from reporting for work; CA reinstated decision of LA. It held that
the burden of proof is on the petitioners, to show that Javilgas was dismissed for a valid and just cause.
Thus this petition.
The court found Javilgas was found to be illiterate, as he did not even get to finish Grade School. It
likewise declared as without basis the petitioners claim that Javilgas was operating a rival machine
shop, since petitioners failed to prove with sufficient evidence the veracity of said claim.
In illegal dismissal cases, the burden of proof is on the employer to show that the employee was
dismissed for a valid and just cause. Petitioners have failed to discharge themselves of the burden.
With respect to Javilgas claim of illegal dismissal, petitioners merely alleged that Javilgas did not
anymore report for work. He did not elaborate or show proof of the claimed abandonment.
For abandonment to exist, it is essential
(a) that the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and,
(b) that there must have been a clear intention to sever the employer-employee relationship
manifested by some overt acts. The establishment of his own shop is not enough proof that Javilgas
intended to sever his relationship with his employer.
Petitioners, in like manner, consistently deny that Javilgas was dismissed from service; that he
abandoned his employment when he walked out after his conversation with Rodolfo and never
returned to work again. But denial, in this case, does not suffice; it should be coupled with evidence to
support it. In the instant case, petitioners failed to adduce evidence to rebut Javilgas claim of
dismissal and satisfy the burden of proof required. Petition is DENIED.

Big AA Manufacturer v. Antonio

Big AA Manufacturer is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo
who fired the respondents due to abandonment. Respondents filed a complaint with the LA for illegal
lay-off and illegal deductions saying that they worked from 8:00 a.m. to 5:00 p.m. at petitioners office
manufacturing company using petitioners tools and equipment and they received P250 per day. Big
AA denied that respondents were its regular employees. It claimed that Eutiquio Antonio was one of its
independent contractors who used the services of the other respondents. It said that its independent
contractors were paid by results and were responsible for the salaries of their own workers. Allegedly,
it allowed respondents to use its facilities to meet job orders. It also claimed that the workers are
project employees only. It added that since Eutiquio Antonio had refused a job order of office tables,
their contractual relationship ended.
LA ruled against petitioners. Both appealed to NLRC. Respondents appealed for not ordering their
reinstatement to their former positions. The NLRC modified the Labor Arbiters decision. It ordered
petitioner to reinstate respondents to their former positions or to pay them separation pay in case
reinstatement was no longer feasible, with full backwages in either case. The NLRC ruled that
respondents were regular employees, not independent contractors. It further held that petitioner failed
to justify its reason for terminating respondents and its failure to comply with the due process
requirements. CA affirmed NLRC ruling. Thus this petition. The court found that respondents were
employed for more than 1 year and their work as carpenters was necessary or desirable in petitioners
usual trade or business of manufacturing office furniture. Under Art. 280 of the Labor Code, the
applicable test to determine whether an employment should be considered regular or non-regular is
the reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. Also, the court found that respondents cannot be considered
project employees. Petitioner had neither shown that respondents were hired for a specific project the

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duration of which was determined at the time of their hiring nor identified the specific project or phase
thereof for which respondents were hired.
The court also held that they were illegally dismissed. The consistent rule is that the employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause, failing in
which would make the termination illegal, as in this case. Contrary to petitioners claim of
abandonment as a valid just cause for termination, herein respondents did not abandon their work.
Petitioner failed to prove that
(1) not only of respondents failure to report for work or absence without valid reason, but
(2) also of respondents clear intention to sever employer-employee relations as manifested by some
overt acts.
By filing the complaint for illegal dismissal within two days of their dismissal and by seeking
reinstatement in their position paper, respondents manifested their intention against severing their
employment relationship with petitioner and abandoning their jobs. It is settled that an employee who
forthwith protests his layoff cannot be said to have abandoned his work. Petition denied.

Nueva Ecija Electric Corp v. NLRC

Nueva Ecija Electric Cooperative (NEECO) II employed private respondent Eduardo M. Cairlan in 1978
as driver. Danilo dela Cruz, petitioners General Manager, terminated private respondents services on
ground of abandonment. Immediately thereafter, private respondent talked with Mr. dela Cruz
regarding this and dela Cruz promised that he would talk to the Board of Directors about it, which he
never did thus Cairlan filed a complaint for illegal dismissal with prayer for reinstatement and payment
of backwages. Dela Cruz said that since he assumed the position of General Manager he never saw
Cairlan also, that he sent a memorandum to Cairlan asking him to report for duty. Dela Cruz also said
that upon investigation, he found that Cairlan has been working for the Provincial Government of
Nueva Ecija under a different name. LA rules that he was illegally dismissed. NLRC dismissed for lack of
merit. Court of Appeal upheld the decisions of the NLRC and the Labor Arbiter.
Thus this petition. As for the due process issue, the court ruled that the Labor Arbiter is given the
latitude to determine the necessity for a formal hearing or investigation, once the position papers and
other documentary evidence of the parties have been submitted before him.
As for the issue of illegal dismissal, the memorandum was not found in the records and the claim of
him working for another was not sufficiently proven by evidence. The court found that petitioner
miserably failed to establish the fact of abandonment to justify private respondents dismissal. The
evidence submitted by petitioner to buttress its allegation that private respondent abandoned his work
consists merely of indexes of payments to employees under the name Eduardo Caimay without any
further evidence showing that Eduardo Caimay and private respondent Eduardo Cairlan. Abandonment
is the deliberate and unjustified refusal of an employee to resume his employment; it is a form of
neglect of duty hence, a just cause for termination of employment by the employer under Article 282
of the Labor Code.Cairlan is entitled to reinstatement without loss of seniority rights and other
privileges and full backwages. Petition is hereby DENIED.
Courtesy Resignation

Batongbacal v. Associatied Bank

Bienvenido R. Batongbacal, a lawyer, appointed assistant vice-president of Rizal Devt Bank. The bank
merged with Associated Banking Corporation and here, the petitioner resumed his position as assistant
VP. More than six years later or in March, 1982, petitioner learned that the salary and allowances he
was receiving were very much below the standard remuneration of the bank's other assistant vice
presidents. He wrote the bank's board of directors asking foe the money due him. Bank's board of
directors met and approved the resolution asking all those with the rank of manager or higher to
submit their courtesy resignations due to the DEWEY DEE scandal. Petitioner did not submit his
courtesy resignation but was later on set a letter thanking him for his service and saying that his
resignation has been accepted. He filed a complaint for illegal dismissal. LA upheld the petitioner's
arguments and claims. NLRC found the petitioner's dismissal valid. Thus this petition.
The court said that to "streamline" its operation, the new management of the bank called upon all its
employees to submit their courtesy resignations and considered all executive positions vacant.
However, by directing its employees to submit letters of courtesy resignation, the bank in effect forced
upon its employees an act which they themselves should voluntarily do. Resignation means voluntary
relinquishment of a position or office. The court added that Batongbacals dismissal was effected
through a letter "accepting" his resignation and based on the pleadings, also because of
insubordination in view of his failure to comply with the order to submit his letter of courtesy
resignation. The court held that insubordination may not be imputed to one who refused to follow an
unlawful order.

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As to the salary, the NLRC merely relied on the presumption that Batongbacal is a management
employee. Thus, the case is remanded to the NLRC to determine WON he is a management employee.
212(k) of the Labor Code defines a managerial employee as "one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to
effectively recommend such managerial actions."
Policy Instructions No. 8 which was issued by the then Secretary of Labor and which took effect on April 23, 1976, managerial
employees are those (1) who have the power to lay down management policies; (2) who have the power to hire, fire, demote,
promote, etc.; and (3) who have the power to recommend effectively (1) and (2).

Change of Ownership
Manlimos v. NLRC

Super Mahogany Plywood Corporation hired petitioners as patchers, taper-graders, and receiversdryers. A new owner/management group headed by Alfredo Roxas acquired complete ownership of the
corporation. The petitioners were advised of such change of ownership and thus they were terminated.
The new owner published a notice for the hiring of workers. The petitioners then filed their applications
for employment and were hired on probationary basis for six months as patchers or tapers, but were
compensated on piece-rate or task basis.
For their alleged absence without leave, Perla Cumpay and Virginia Etic were considered, as of 4 May
1992, to have abandoned their work. The others, were considered as not up to the standards of
production of the company. They were all dismissed. They filed a complaint for illegal dismissal. LA
ruled for the employees saying that the transfer of ownership partook of a cessation of business
operation not due to business reverses under Article 283 of the Labor Code and the following requisites
must be complied with before the dismissal of employees may be effected:
(1) service of a written notice to the employees and to the Ministry of Labor and Employment (MOLE)
at least one month before the intended date thereof,
(2) the cessation of or withdrawal from business operations must be bona fide in character; and (3)
payment to the employees of termination pay amounting to at least one half month pay for each year
of service or one month pay whichever is higher.
The Labor Arbiter ruled that the first and third requisites were present in this case. NLRC reversed LA
saying that the general rule is that "(C)hange of ownership or management of a business
establishment or enterprise however, is not one of the just causes x x x terminate employment without
a definite period."
Thus, "an innocent transferee of a business has no liability to the employees of the transfer or to
continue employing them hiring of employees on probationary basis is an exclusive management
prerogative. subsequent hiring of complainants on probationary basis by the new
management/corporate owners being the prerogative of management must be sustained
As probationary employees, they are therefore on trial to afford new management to determine
whether or not they would qualify for permanent employment. In the case at bar, the change in
ownership of the management was done bona fide. Because the transfer was in good faith, the
transferee is under no legal duty to absorb the transferor's employees as there is no law compelling
such absorption. Thus, the employees have been validly dismissed. As to Cumpay and Etic, however,
they should have been accorded the constitutional protection of security of tenure such that they may
only be terminated for just cause. Petition is partly GRANTED (as to Cumpay and Etic only.

Elecee Farms Inc. v. NLRC

Elcee Farms entered into a Lease Agreement with Garnele Aqua Culture Corporation (Garnele).
Garnele sub-leased Hacienda Trinidad to Daniel Hilado, who operated HILLA. The contract of lease
executed between Garnele and HILLA stipulated the continued employment of 120 of the former
employees by the latter, but the contract was silent as to the benefits which may accrue to the
employees
Soon after HILLA took over it entered into a CBA with another union and due to their refusal to join the
labor union, the private respondents were terminated by HILLA. Pampelo Semillano and one hundred
forty-three (143) other complainants, represented by their labor union, Sugar Agricultural Industrial
Labor Organization (SAILO), filed this complaint for illegal dismissal.
Labor Arbiter dismissed their claim for damages and denied all claims. Complainants appealed and
NLRC affirmed the amount awarded by the Labor Arbiter as separation pay. The three sets of parties
(1) the complainants; (2) Elcee Farms and Corazon Saguemuller; and (3) HILLA filed their own Motions
for Reconsideration. The NLRC ruled that the simulation of the lease agreement between Elcee Farms
and Garnele was made in bad faith. Thus this Petition for Certiorari.
The court held that the above findings show that even after the execution of the lease agreement
between Elcee and Garnele, Elcee continued to act as the employer of the farm workers of Hacienda
Trinidad. Elcee Farms effectively ceased to operate and manage Hacienda Trinidad when, through
Garnele, it leased the hacienda to HILLA. After the said lease was executed, the employer-employee
relationship between the farm employees and Elcee Farms was severed. The lease agreement between

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Garnele and Daniel Hilado identified the employees who will continue working with the new
management and stipulated that workers who were not in the list, whether new or employed in the
past, will not be employed by the lessee.
Clearly, there was a cessation of operations of Elcee Farms, which renders it liable for separation pay
to its employees, under Section 283 of the Labor Code. In a similar case, Abella v. National Labor
Relations Commission, the Court ruled that an employer whose lease agreement had already expired,
and therefore no longer manages and controls the hacienda, is still required to pay the separation pay.
But although they were absorbed by the new management of the hacienda, in the absence of any
showing that the latter has assumed the responsibilities of the former employer, they will be
considered as new employees. Petition is partially granted. (modification: Corazon Saguemuller should
not be held subsidiarily liable)
Habitual Absenteeism

Manila Electric Co v. NLRC

Jeremias Cortez, Jr. was employed on probationary status by Meralco as a lineman driver. Cortez
service with petitioner is his perennial suspension from work and he was found to have grossly
neglected his duties by not attending to his work as lineman. He filed a complaint for illegal dismissal
against petitioner. LA dismissed the case for lack of merit. NLRC set aside the decision of the Labor
Arbiter and ordered petitioner to reinstate respondent with backwages. Hence, this petition. The court
held that the regulation of manpower by the company clearly falls within the ambit of management
prerogative. This court had defined a valid exercise of management prerogative as the employer being
free to regulate, according to his own discretion and judgment, all aspects of employment. The nature
of Cortez job as a lineman-driver requires his physical presence to minister to incessant complaints
often faulted with electricity. In the case at bar, it was established that complainant violated
respondents Code on Employee Discipline, not only once, but ten (10) times and an employees
habitual absenteeism without leave, which violated company rules and regulation is sufficient to justify
termination from the service. The petition is GRANTED.

RB Michael Press v. Nicasio Galit

Galit was employed by petitioner R.B. Michael Press as an offset machine operator and he was tardy
for a total of 190 times and was absent without leave for a number of days. When he was ordered to
render overtime service in order to comply with a deadline, he refused to do so, supposedly because
he was not feeling well. And so her was told not to work, and to return later in the afternoon for a
hearing. In the hearing, respondent was terminated from employment. Galit filed a complaint for illegal
dismissal. LA found him to be illegally dismissed. NLRC affirmed the LA. CA affirmed the NLRC.
Petitioners aver that Galit was dismissed due to the following offenses:
(1) habitual and excessive tardiness;
(2) commission of discourteous acts and disrespectful conduct when addressing superiors;
(3) failure to render overtime work despite instruction to do so; and
(4) insubordination
The court held that habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and
discipline to come to work on time everyday exhibit the employees deportment towards work. The
fact that the numerous infractions of respondent have not been immediately subjected to sanctions
cannot be interpreted as condonation of the offenses or waiver of the company to enforce company
rules.
For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) conduct
must have been characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge. In the present case, there is no question that petitioners order for
respondent to render overtime service to meet a production deadline complies with the second
requisite and that the excuse he used will not hold water as not evidence was shown to support it. CA
REVERSED
Fixed Term Employment

Medenilla v. PVB
Because of the liquidation of Philippine Veterans banks, petitioners were terminated but were rehired
on the condition that the employment shall be strictly on a temporary basis and only for the duration
of the particular undertaking. Petitioners received a uniform notice of dismissal containing the reasons
justifying the termination. The petitioners instituted a case for illegal dismissal. LA came out with a
decision declaring petitioners' dismissal illegal. NLRC reversed the decision of the LA and dismissed the
Complaints for lack of merit. Thus this petition.

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The court held that the important features of the contract were that the employment shall be on a
strictly temporary basis and only for the duration of the particular undertaking for which he was hired
and only for the particular days during which actual work is available.
The Court has repeatedly upheld the validity of fixed-term employment. Guidelines by which fixed
contracts of employment can be said NOT to circumvent security of tenure, are either:
1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent
2. It satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former on the latter.
The employment contract entered into by the parties herein appears to have observed the said
guidelines since the termination of petitioners' employment was in line with the objective of the
Central Bank of the Philippines to reduce costs and expenses in the liquidation of closed banks. In
cases of illegal dismissal, the burden is on the employer to prove that there was a valid ground for
dismissal. Mere allegation of reduction of costs without any proof to substantiate the same cannot be
given credence by the Court. As the respondents failed to rebut petitioners evidence, the irresistible
conclusion is that the dismissal in question was illegal. As held by this Court, if the contract is for a
fixed term and the employee is dismissed without just cause, he is entitled to the payment of his
salaries corresponding to the unexpired portion of the employment contract. But because PVB is
already liquidated, cannot be reinstated. Petition is PARTLY granted.

Pamantasan ng Lungsod ng Maynila v. Civil Service Commission

16 individual private respondents were full-time instructors of PLM under "temporary contracts" of
employment renewable on a yearly basis. They were given uniform notices of termination informing
them of "the expiration of their temporary appointments and that their retention was not
recommended by their respective Deans. Respondents filed a complaint for illegal dismissal and unfair
labor practice against petitioner with the Public Sector Labor-Management Council 1 ("PSLMC"). PLM
denied having committed any unfair labor practice or having illegally dismissed private respondents. In
its defense, PLM interposed (1) the temporary nature of private respondents' contracts of employment
and (2) reasons that could justify the non- renewal of the contracts. PSLMC found petitioner guilty of
"Unfair Labor Practice" PSLMC transmitted the case to the CSC for appropriate action who then held
that the findings of PSLMC are entitled to respect and there is no need to conduct an investigation of
their own, sustaining the findings of the PSLMC.
Thus this petition. The court held that unfair labor practice charge and the complaint for illegal
dismissal both filed by private respondents are linked since the non-renewal of an employment
contract with a term, it is true, is ordinarily a valid mode of removal at the end of each period. This
rule, however, must yield to the superior constitutional right of employees to self-organization. While, a
temporary employment may be ended with or without cause, it certainly may not, however, be
terminated for an illegal cause. PSLMC found that on two occasions, PLM was directed to produce the
evaluation results of the 16 complainants, evidence points to the fact that PLM seeks to remove their
employees that have been appointed as officers of the union. The finding of the PSLMC that the nonrenewal by petitioner of the questioned contracts of employment had been motivated by private
respondents' union activities is conclusive on the parties. Petition for certiorari is DISMISSED
Past Offenses

Janssen Pharmaceuticals v. Silayro

Janssen employed Benjamin Silayro as a Medical Representative. During his employment, respondent
received from petitioner several awards and citations and a Nomination as one of the Ten Outstanding
Philippine Salesmen but he was also investigated and was found guilty of several administrative
charges. A Notice of Disciplinary Action was issued finding respondent guilty of
(1) delayed submission of process reports, for which he was subjected to a one-day suspension without
pay, and
(2) cheating in his ROL test, for which he was subjected again to a one-day suspension.
A Notice of Preventive Suspension against respondent was also issued for
(1) Failure to turn over company vehicles assigned after the receipt of instruction to that effect from
superiors, and
(2) Refusing or neglecting to obey Company management orders to perform work without justifiable
reason.
Silayro was terminated and thus he filed a complaint for illegal dismissal. LA ruled that he breached
company rules, and which were sufficient grounds for dismissal but found that the penalty of dismissal
is too harsh and recommended his reinstatement. NLRC declared that reinstatement was improper

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where respondent was dismissed for just and authorized causes. CA affirmed LA decision. Thus this
petition.
The court ruled that to constitute a valid dismissal from employment, two requisites must concur:
(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 to defend himself.
Petitioner had not been able to identify an act of dishonesty, misappropriation, or any illicit act, which
the respondent may have committed in connection with the erroneously reported product samples. As
for the three other offenses, Silayro already admitted to them. The court said that even if the
respondent was already punished for the three prior infractions, these offenses, among other offenses,
may still be used as justification for his dismissal.
The court found him negligent in preparing his reports and he was guilty of giving free samples and in
answering the ROL exam. However, the records show that in the same year it was committed, in 1994,
petitioner still gave respondent two awards (5 year service and Wild Boar Arard) Also, the rest of the
infractions were committed during the time he was undergoing serious family problems. As for the ROL
exam, the court found him guilty of such but ratiocinated that his inability to comply with the deadlines
for his process reports are the result of his preoccupation with very serious problems and that due
consideration must be given because of the ill fortune that befell a normally excellent employee. The
petitioner had not shown that during his employment, respondent took a willfully defiant attitude
against it. It also failed to show a pattern of negligence which would indicate that respondent is
incapable of performing his responsibilities. Petition is DISMISSED. Silayro subjected to 5 months
suspension without pay.

Ramoran v. Jardine CMG

Virginia Ramoran started working with Jardine as an accounting clerk and later on was promoted to
junior accountant with Antonio Robles as her immediate supervisor. The HRD noticed some
irregularities in the overtime slips submitted by Ramoran and upon confirmation of its invalidity with
Robles, petitioner was terminated from employment.
Petitioner stated that she just wanted to catch up with work backlog caused by her serving a previous
penalty of suspension for tampering with the receipt for her 6K glasses (she bought P100 worth
contacts lang naman talaga) and, for that reason, she did not immediately file her OT authorization
slips and submitted only when she was reminded by the HRD.
On the other hand, Robles, consistently denied having signed and approved the OT
She filed a complaint of illegal dismissal. Jardine filed a complaint with the Arbitration Board of the
National Labor Relations Commission. Jardine also filed a criminal complaint against petitioner. LA
dismissed the case. The MTC acquitted her of the crime. Believing that the decision of the Panel of
Voluntary Arbitrators may now be overturned following her acquittal in the two criminal cases filed
against her, petitioner filed with CA. Hence, this petition.
The court held that conclusions of voluntary arbitrator (or a panel as in this case) when they are
sufficiently corroborated by the evidence on record, should be respected by appellate tribunals.
It should be noted that the panel did not have the benefit of examining the other evidence apparently
adduced by RAMORAN. Even if the trial court found the same documentary evidence to be inadequate
to sustain Ramoran's conviction, by no means does it prevent the panel from considering the evidence
sufficient to warrant dismissal.
The authorized time must be indicated in the overtime authorization for the purpose of establishing
and limiting the basis of overtime to be performed by an employee. After the same was signed by Mr.
Robles she entered her alleged overtime. Also, due to her previous infraction with the company
causing her suspension, she was already issued a memorandum, warning her that "any future violation
of the same nature, irrespective of the time frame that it is repeated or committed, would result in the
imposition of the maximum penalty of dismissal." Dismissal on the basis of loss of trust and confidence
calls for substantial evidence and in the instant case, petitioner was apprised of the charges against
her but petitioner offers no evidence to disprove her accusation.Petition is hereby DENIED.
Habitual Infractions

Gustilo v. Wyeth Phil

Gustilo was employed by Wyeth Phils Inc. as a pharmaceutical territory manager and among his tasks
was submitting periodic reports of his daily call visits, monthly itinerary and weekly locator and
expenses but he was often suspended or reprimanded for neglecting to submit his periodic reports.
- Wyeth put Gustilo in charge of promoting 4 Lederle (Ws sister company) pharmaceutical products. G
then submitted to W a plan of action but Gustilo failed to achieve his objectives so W sent him 2
notices charging him with willful violation of company rules and regulations and directed him to submit
a written explanation. G explained that he was overworked and an object of reprisal by his immediate
supervisor. Wyeth, upon the recommendation of a review panel, terminated Gustilos services.

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G filed a complaint for illegal dismissal. LAfound that G was illegally dismissed. NLRC- affirmed. Ws MR
was denied. CA- reversed NLRCs decision and dismissed Gs complaint for illegal dismissal (as G was
terminated based on A282 of the LC-gross and habitual neglect by the employee of his duties) but
awarded him separation pay considering the Gustilo isnt entitled to his SP OR to reinstatement as
there was a just cause for dismissal.
- Piedad v Lanao del Norte Electric Cooperative, Inc.- a series of irregularities when put together
may constitute serious misconduct, which under A282 of the LC, as amended, is a just cause for
dismissal.
- The rule embodied in the Omnibus Rules Implementing the Labor Code is that a person dismissed for
cause as defined therein is not entitled to separation pay.
In the case at bar, there is NO exceptional circumstances to warrant the grant of financial assistance or
separation pay to petitioner. G did not only violate company disciplinary rules and regulations.
He falsified his employment application form by not stating therein that he is the nephew
of Mr. Danao, respondent Wyeths Nutritional Territory Manager. G manifested his slack of
moral principle through his infractions. In simple terms, he is dishonest. Petition is DENIED
Immorality

Santos v. NLRC
Jose Santos and Arlene T. Martin both married to different people and employed by the same school
Hagonoy Institute Inc. fell in love with each other. Rumors of their affair spread and prompted the
school officials to inquire about the matter. She was asked to take a leave of absence but she
continued to work and was eventually terminated by force. Martin filed a compliant for illegal
dismissal. LA dismissed petition. NLRC reversed the petition because of lack of due process.
Meanwhile, Santos was charged administratively for immorality and was dismissed from service. he
filed a complaint for illegal dismissal. LA dismissed complaint but awarded monetary sums as financial
assistance. NLRC dismissed appeal and removed the awards. Thus this petition.
The court upheld the NLRC saying that in order to constitute a valid dismissal, two requisites must
concur:
(a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and
(b) the employee must be accorded due process, basic of which are the opportunity to be heard and
defend himself.
Also, under Section 94 (E) of the Manual of Regulations for Private Schools: is says that school
personnels, including faculty, may be terminated for disgraceful or immoral conduct. The court held
that teachers must adhere to the exacting standards of morality and decency. There is no dichotomy of
morality and when a teacher engages in extra-marital relationship, especially when the parties are
both married, such behavior amounts to immorality, justifying his termination from employment.
In this case, the burden of proof rests upon the employer to show that the dismissal was for a just and
valid cause and the testimonies of nine witnesses (a fourth year student, a security guard, a janitor
and six co-teachers) as well as the absence of any motive on their part to falsely testify against the
petitioner led to the courts decision to dismiss petition.
Conviction or Commission of a Crime

Sampaguita Garments Corp v. NLRC

Emilia Santos, an employee of petitioner Sampaguita Garments Corporation was charged with theft for
attempting to bring out of the company premises a piece of cloth belonging to the petitioner. She was
dismissed and so she filed a complaint for illegal dismissal LA ruled for the company and the decision
was reversed by the NLRC, which ordered her reinstatement. Sampaguita also filed a criminal action
against Santos. After trial, she was found guilty
Court dismissed the petition for certiorari against the decision of the NLRC. The decisions in both cases
became final and executory; the petitioner opposed, invoking her conviction in the criminal case.
However, the NLRC sustained her on the ground that its decision had long become final and executory.
Thus this petition. The court held that even if once a judgment has become final and executory, it can
no longer be disturbed but reinstatement is no longer feasible in view of the subsequent conviction of
the private respondent. A contrary rule would have the effect of rewarding rather than punishing the
erring employee for his offense. The punishment is not dismissal only because if the employee who
steals from the company is granted separation pay even as he is validly dismissed, he might commit a
similar offense in the future. Santos conviction of the crime of theft of property belonging to the
petitioner has affirmed the existence of a valid ground for her dismissal and thus removed the
justification for the decision ordering her reinstatement with back wages. Petition is GRANTED.

Eduardo Bughaw Jr. v. Treasure Island Industrial

Eduardo Bughaw was employed as production worker by Treasure Island. Erlito Loberanes (Loberanes),
who was caught in flagrante delicto by the police officers in possession of shabu implicated Bughaw as

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providing him the money to buy the illegal drugs. Treasure Island served a Memo for Explanation to
Bughaw but he failed to appear before the counsel during the hearing date to explain his side. A
second letter was sent to him asking him to attend an administrative hearing but he failed to show up.
A third letter as issued terminating the services of the petitioner. Bughaw filed a complaint for illegal
dismissal. He claimed that he was suspended for 30 days based on the unfounded allegation of his coworker that he used illegal drugs within company premises and that when he reported back to work he
was no longer allowed to enter the work premises and was told not to report back to work. LA ruled in
favor of Bughaw saying that the company failed to substantiate the charge against him. NLRC affirmed
the decision of the LA saying that Treasue Island failed to accord due process to petitioner when it
dismissed him from employment and that the use of illegal drugs can be a valid ground for terminating
employment only if it is proven true. An accusation of illegal drug use, standing alone, without any
proof or evidence presented in support thereof, would just remain an accusation. CA reversed NLRC
saying that the petitioner was afforded the opportunity to explain and defend himself from. Hence this
petition.
The court ruled that the requirements for the lawful dismissal of an employee are two-fold, the
substantive and the procedural aspects. 2 facets of a valid termination of employment are: (a) the
legality of the act of dismissal, i.e., the dismissal must be under any of the just causes provided under
Article 282 of the Labor Code; and (b) the legality of the manner of dismissal, which means that there
must be observance of the requirements of due process. Loberaness statements given to police during
investigation is evidence which can be considered by the respondent against the petitioner. Bughaw
failed to controvert Loberanes claim that he too was using illegal drugs through the administrative
hearings which were set. The respondent cannot be faulted for considering only the evidence at hand,
which was Loberanes statement.
The burden therefore is on respondent to present clear and unmistakable proof that petitioner was duly
served a copy of the notice of termination. The Agabon v. NLRC doctrine enunciates the rule that if the
dismissal was for just cause but procedural due process was not observed, the dismissal should be
upheld. Where the dismissal is for just cause the lack of statutory due process should not nullify the
dismissal or render it illegal or ineffectual. Petition is DENIED.

Qualification Requirements
Santos + St Lukes Medical Center Employees Association AFW v. St. Lukes

Maribel Santos was hired as X-Ray Technician in the Radiology department of St. Lukes Medical Center.
At this time, congress passed and enacted RA 7431 known as the Radiologic Technology Act of 1992
which requires radiology and/or x-ray technologists in the Philippines to get a proper certificate of
registration from the Board of Radiologic Technology. Director of the Institute of Radiology issued a final
notice to petitioner Maribel S. Santos requiring her to comply with RA 7431. Another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC. A month later, Santos was
imformed that the management of private respondent SLMC has approved her retirement in lieu of
separation pay. She filed a complaint for illegal dismissal. LA ruled for Santos ordering SLMC to pay her
separation pay but denied all her other requests. NLRC and CA affirmed the LA. Thus this petition. The
court held that in section 2 of RA 7431, it clearly states that:
Sec. 2. Statement of Policy. It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed
by radiation as well as to ensure safe and proper diagnosis, treatment and research through
the application of machines and/or equipment using radiation.
And that the enactment of R.A. 7431 is an exercise of the States inherent police power. No malice or
ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken
by it conformably to an existing statute. It is undeniable that her continued employment without the
required Board certification exposed the hospital to possible sanctions and even to a revocation of its
license to operate. Private respondent is free to determine, using its own discretion and business
judgment, all elements of employment, "from hiring to firing" except in cases of unlawful
discrimination or those which may be provided by law. None of these exceptions is present in the
instant case. Furthermore, the records show that Ms. Santos did not even seriously apply for another
position in the company. Petition is DENIED

d. Constructive Dismissal
Uniwide Sales v. NLRC supra 23
Amalia P. Kawada was employed by Uniwide and was promoted to Full Assistant Store Manager in 1995. In 1998,
Uniwide received reports from the other employees regarding some problems in Kawadas departments. Uniwide,

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through Store Manager Apduhan, issued a Memorandum summarizing the various reported incidents signifying
unsatisfactory performance (commingling of good and damaged items, sale of a voluminous quantity of damaged
stocks)
Private respondent answered all the allegations. Unsatisfied, Apduhan sent 2 other Memorandums where Apduhan
claimed that the answers given by the private respondent were all hypothetical; and seeking from the private
respondent an explanation regarding the incidents. Private respondent sought medical help due to complaints of
dizziness. Finding private respondent to be suffering from hypertension, Dr. Zambrano advised her to take five
days sick leave. Dr. Zambrano mistakenly wrote the wrong surname in the med cert which led to a shouting match
between Apduhan and Kawada which allegedly caused her to collapse. Private respondent reported the
confrontation between her and Apduhan to the Central Police District.
Apduhan issued a Memorandum advising Kawada of a hearing and warning her that failure to appear shall
constitute as waiver and the case shall be submitted for decision based on available papers and evidence.
Private respondent filed a case for illegal dismissal before the LA.
Apduhan issued a Memorandum stating that since private respondent was unable to attend the scheduled hearing,
the case was evaluated on the basis of the evidence on record;
LA dismissed the complaint for lack of merit. Private respondent appealed the LAs decision to NLRC the NLRC
ruled in favor of private respondent, Petitioners appealed the NLRC Decision to the CA. CA affirmed in toto the
NLRC Decision. Hence, the present petition. The court found the petition to be meritorious.
Court finds the records bereft of evidence to substantiate the conclusions of the NLRC and the CA that private
respondent was constructively dismissed from employment.
Case law defines constructive dismissal as a 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 of
constructive dismissal is whether a reasonable person in the employees position would have felt compelled to give
up his position under the circumstances. It is an act amounting to dismissal but made to appear as if it were not.
(dismissal in disguise.) 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 the present case, private respondent claims that she had been subjected to constant harassment, ridicule and
inhumane treatment by Apduhan. The Court finds that private respondents allegation of harassment is a specious
statement which contains nothing but empty imputation. Bare allegations of constructive dismissal, when
uncorroborated by the evidence on record, cannot be given credence in court.
Petitioners gave private respondent successive memoranda so as to give the latter an opportunity to explain herself.
The memoranda are not forms of harassment, but petitioners compliance with the requirements of due
process. As to the September 1, 1998 Memorandum where the private complainant was dismissed for loss of trust
and confidence, the Court finds the notice of the scheduled August 12, 1998 hearing sufficient compliance with the
due process requirement. Respondent was given an opportunity to be heard. However, private respondent chose
not to attend the scheduled hearing because of her mistaken belief that she had already been constructively
dismissed. The court adopts the findings of the LA: In fact, as it even appears the constructive dismissal
allegedly committed on complainant looks simply an excuse to avoid and/or evade the investigation
and consequences of the violations imputed against her while employed and/or acting as
respondents assistant store manager. Petition is GRANTED.

Duldulao v. CA supra 21

Constancia Duldulao was hired by Baguio Colleges Foundation as a secretary or clerk typist in their
College of Law. A law student filed a case against her for irregularities in the performance of her work
as well as fraternizing with students of the College. The petitioner was asked to submit her answer to
the complaint but she failed to do so. The Dean recommended her assignment outside the College of
Law because of this, the Vice President of Administration issued a Department Order asking her to
move to the highschool. She filed a motion to extend her answer with the dean which was not allowed
as the matter was already elevated to the Executive Board. The petitioner filed a case with the BCF
Grievance Committee but the case was transferred to the Administrative Investigating Committee who
found the Department Order appropriate since it was intended to prevent to prevent the controversy
from affecting the harmonious relationship within the College of Law. The respondednt constituted a
Fact Finding Committee to investigate the allegations concerning the administrative matters and found
the petitioner guilty of the charges against her.
The petitioner did not report for work and instead took a vacation leave and several other leave of
absences. Petitioner then finally filed a complaint for constructive dismissal. She claimed that she was
arbitrarily asked to transfer from her place of work which is far from her original place of assignment.
LA ruled in Duldulaos favor. NLRC reversed LA saying that petitioner was neither demoted nor
dismissed and her salary remained he same. CA upheld the NLRC. Thus this petition saying that the
constructive dismissal was tainted in bad faith and that it was intended as a punishment. The court
held that there is constructive dismissal if an act of clear discrimination, insensibility or disdain by an

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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 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 dimunition in pay.
The court held that at the onset, the petitioner has no vested tight to the position of secretary/clerk
typist to the college of law because petitioner was employed not by the college but the BCF system
itself and thus, BCF can exercise its management prerogative, transfer her to any of the departments
as long as the transfer does not result in a demotion in rank or diminution in benefits or salary of the
employee. In this case, she merely had to change the route she took for her new assignment, almost
the same distance from her house as that of her job in the college of law. The court ruled that the
transfer is not as a penalty but a preventive measure to avoid further damage to the college. Petitioner
cannot claim constructive dismissal simply becaue her transfer to another department was against her
wishes. Petition denied.

e. Transfer
Norkis Trading Co v. Melvin Gnilo

Melvin Gnilo held various positions in the company until he was appointed as Credit and Collection Manager. A
special audit team was conducted and Gnilo admitted his negligence for the monthly collection reports of his
subordinates which were all overstated. Norkis placed him in a 15 day suspension. Another memorandum was
issued to him to report to the head office for a re-training or a possible new assignment. Petitioner requsted
that he be assigned as Sales Engineer or to any position commensurate with his qualifications. However, he
was appointed as Marketing Assistant. He filed a complaint for illegal dismissal with the LA who dismissed the
case for lack of merit. NLRC reversed the LA. The NLRC ruled that respondent was constructively dismissed
and therefore he was entitled to reinstatement. CA affirmed the NLRC. Thus this petition.
Petitioners submit that the positions of Credit and Collection Manager and Marketing Assistant does not
constitute demotion, since respondent's position is more encompassing and vital to the company and
he is receiving the same salary. Well-settled is the rule that it is the prerogative of the employer to
transfer and reassign employees for valid reasons and according to the requirement of its business
however, the employer bears the burden of showing that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; and does not involve a demotion in rank or a diminution of his salaries.
Constructive dismissal is defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution of pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee, leaving him with no option but to forego his
continued employment.
A transfer is defined as a movement from one position to another which is of equivalent rank, level or
salary, without break in service.
Promotion, on the other hand, is the advancement from one position to another with an increase in
duties and responsibilities as authorized by law, and usually accompanied by an increase in salary.
A demotion involves a situation in which an employee is relegated to a subordinate or less important
position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and
responsibilities, and usually accompanied by a decrease in salary.
In this case, while the transfer of respondent from Credit and Collection Manager to Marketing
Assistant did not result in the reduction of his salary, there was a reduction in his duties and
responsibilities which amounted to a demotion tantamount to a constructive dismissal since the
position of Credit and Collection Manager entails great duties and responsibilities and involves
discretionary powers. The work of a Marketing Assistant, on the other hand, is clerical in nature. While
petitioners have the prerogative to transfer respondent to another position, such transfer should be done
without diminution of rank and benefits which has been shown to be present in respondent's case. Petition is
DENIED

Westmont Pharmaceuticals v. Ricardo Samaniego

Unilab hired Samaniego as Professional Service Representative of its marketing arm, Westmont. Later,
Unilab promoted him as Senior Business Development Associate and assigned him in Isabela as Acting
District Manager of Westmont. He was transferred to Metro Manila pending investigation of his
involvement in a sales discount and Rx trade-off controversy. He was then placed under "floating
status" and assigned to perform duties not connected with his position, like fetching at the airport
physicians coming from the provinces; making deposits in banks; fetching field men and doing
messengerial works. His transfer to Metro Manila resulted in the diminution of his salary. Ricardo
Samaniego then filed a complaint for illegal dismissal with the LA who ordered his reinstatement and
payment of his full backwages. NLRC declared the LAs Decision null and void. CA reinstated LA.
Hence, these consolidated petitions. Samaniego claims that upon his reassignment and/or transfer to

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Metro Manila, he was placed on "floating status" and directed to perform functions not related to his
position. For their part, Westmont and Unilab explain that his transfer is based on a sound business
judgment, a management prerogative. In constructive dismissal, the employer has the burden of
proving that the transfer of an employee is for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee. It must not involve a demotion in rank or a diminution of salary and other
benefits. If the employer cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal. Westmont and Unilab failed to discharge this burden.
Samaniego was unceremoniously transferred from Isabela to Metro Manila. We hold that such transfer
is economically and emotionally burdensome on his part. He was constrained to maintain two
residences. Worse, immediately after his transfer to Metro Manila, he was placed "on floating status"
and was demoted in rank, performing functions no longer supervisory in on the part of the employee
that it could foreclose any choice by him except to forego his continued employment. This was what
happened to Samaniego. CA AFFIRMED.

SMC v. Angel C. Pontillas

San Miguel Corporation employed Angel Pontillas as a daily wage company guard. Ricardo Elizagaque,
SMCs Vice President issued a Memorandum ordering the transfer of responsibility of the Oro Verde
Warehouse to the newly-organized VisMin Logistics Operations. Respondent continued to report at Oro
Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not
receive any written order from Capt. Fortich, his immediate superior. Respondent also alleged that he
was wary of the transfer because of his pending case against petitioner. Petitioner informed of an
administrative investigation relative to his alleged offenses of Insubordination or Willful Disobedience
in Carrying Out Reasonable Instructions of his superior. During the investigation, respondent was given
an opportunity to present his evidence and be assisted by counsel. He was eventually terminated for
violating company rules and regulations. Angel filed an amended complaint against petitioner for
illegal dismissal. LA dismissed the case for lack of merit. NLRC ruled that respondent was not informed
of his transfer and that her was a victim of discrimination. CA affirmed NLRC. Thus this petition.
The court held that an employer may terminate an employment for serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or representative in connection with
his work.
Willful disobedience requires the concurrence of two elements:
(1) the employees 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.
The records show that respondent was not singled out for the transfer and that it was the effect of the
integration of the functions of the companys 2 operations. The employer exercises the prerogative to
transfer an employee for valid reasons and according to the requirements of its business, provided the
transfer does not result in demotion in rank or diminution of the employees salary, benefits, and other
privileges. In this case, we found that the order of transfer was reasonable and lawful considering the
integration of Oro Verde Warehouse with VisMin Logistics. Petiion Granted.

f. Promotion
Phil Telegraph Telephone Company (PT&T) v. CA
Petitioner came up with a Relocation and Restructuring Program designed to (a) sustain its (PT&Ts)
retail operations; (b) decongest surplus (c) lower expenses and (d) avoid retrenchment Respondents
Cristina Rodiel, Jesus Paracale, Romeo Tee, Benjamin Lakandula, Avelino Acha, Ignacio Dela Cerna and
Guillermo Demigillo rejected the petitioners offer of giving them the option of the branch of
transfer. The petitioner sent letters to the private respondents requiring them to explain in writing why
no disciplinary action should be taken against them for their refusal to be transferred/relocated. The
private respondents explained that their new assignment involve distant places which would require
their separation from their respective families. Dissatisfied with this explanation, the petitioner
considered the private respondents refusal as insubordination and willful disobedience to a lawful
order; hence, the private respondents were dismissed from work. PT&T Workers Union-NAFLU-KMU,
filed a complaint against the petitioner for illegal dismissal. LA dismissed the complaint. NLRC ruled
that the employees have been illegally dismissed thus said transfers of the respondents as a
promotion; that the movement was not merely lateral but of scalar ascent, considering the movement
of the job grades, and the corresponding increase in salaries. As such, the respondents had the right
to accept or refuse the said promotions.. CA affirmed the NLRC. Thus this petition.

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The court held that the transfer of the complainants is not unreasonable nor does it involve demotion
in rank. They are being moved to branches where the complainants will function with maximum
benefit to the company and they were in fact promoted not demoted from a lower job-grade to a
higher job-grade and receive even higher salaries than before and considering the fact that they were
being moved to provinces provides them with greater spending power. The increase in the
respondents responsibility can be ascertained from the scalar ascent of their job grades. With or
without a corresponding increase in salary, the respective transfer of the private respondents were in
fact promotions. Promotion, as defined in Millares v, Subido, is the advancement from one position to
another with an increase in duties and responsibilities as authorized by law, and usually accompanied
by an increase in salary.
The admissions of the petitioner are conclusive on it. An employee cannot be promoted, even if
merely as a result of a transfer, without his consent. A transfer that results in promotion or demotion,
advancement or reduction or a transfer that aims to lure the employee away from his permanent
position cannot be done without the employees consent. Hence, the exercise by the private
respondents of their right cannot be considered in law as insubordination, or willful disobedience of a
lawful order of the employer. As such, there was no valid cause for the private respondents dismissal.
The court ruled for their reinstatement. CA affirmed.

g. Preventive Suspension
Book V, RULE XIV: Termination of Employment (OLD RULES)

SECTION 3. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of
the employer or of his co-workers.
SECTION 4. Period of suspension. No preventive suspension shall last longer than 30 days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of
the hearing, to dismiss the worker.

Renato Gabonton v. NLRC + Mapua Institute of Technology

Renato Gatbonton is an associate professor of respondent Mapua Institute of Technology (MIT), Faculty
of Civil Engineering. A civil engineering student of respondent MIT filed a complaint against petitioner
for unfair/unjust grading system, sexual harassment and conduct unbecoming of an academician.
Pending investigation Gatbonton was placed under a 30-day preventive suspension. He filed a
complaint for illegal suspension, damages and attorneys fees. LA ruled that his suspension is illegal.
Both respondents and petitioner filed their appeal from the Labor Arbiters Decision, with petitioner
questioning the dismissal of his claim for damages. NLRC granted respondents appeal and set aside
the Labor Arbiters decision. CA affirmed the NLRC. Hence, the present petition.
The court held that: Preventive suspension is a disciplinary measure for the protection of the
companys property pending investigation of any alleged malfeasance or misfeasance committed by
the employee. The employer may place the worker concerned under preventive suspension if his
continued employment poses a serious and imminent threat to the life or property of the employer or
of his co-workers. However, when it is determined that there is no sufficient basis to justify an
employees preventive suspension, the latter is entitled to the payment of salaries during the time of
preventive suspension. R.A. No. 7877 imposed the duty on educational or training institutions to
promulgate rules and regulations in consultation with and jointly approved by the employees or
students or trainees and Gatbontons preventive suspension was based on respondent MITs Rules and
Regulations for the Implemention of the Anti-Sexual Harassment Act of 1995, or R.A. No. 7877.
Rule II Section 1 of the MIT Rules and Regulations provides: Section 1. Preventive Suspension of
Accused in Sexual Harassment Cases. Any member of the educational community may be placed
immediately under preventive suspension during the pendency of the hearing of the charges of grave
sexual harassment against him if the evidence of his guilt is strong and the school head is morally
convinced that the continued stay of the accused during the period of investigation constitutes a
distraction to the normal operations of the institution or poses a risk or danger to the life or property of
the other members of the educational community.
The Mapua Rules is one of those issuances that should be published for its effectivity, since its purpose
is to enforce and implement R.A. No. 7877, In fact, the Mapua Rules itself explicitly required publication
of the rules for its effectivity thus, at the time of his suspension, the Mapua Rules were not yet legally
effective, and therefore the suspension had no legal basis. Moreover, even assuming that the Mapua
Rules are applicable, the Court finds that there is no sufficient basis to justify his preventive suspension
since it is not shown that evidence of petitioners guilt is strong and that the school head is morally

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convinced that petitioners continued stay during the period of investigation constitutes a distraction
to the normal operations of the institution; or that petitioner poses a risk or danger to the life or
property of the other members of the educational community.
Even under the Labor Code, petitioners preventive suspension finds no valid justification. As provided
in Section 8, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:
Sec. 8. Preventive Suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious threat to the life or property of the employer
or of his coworkers.
Petition is PARTIALLY GRANTED. (damages denied because no showing of Badfaith by MIT)

Federito Pido v. NLRC + Cherubim Security Services (2007)

Federito Pido was hired on October 1, 1995 by Cherubim Security and General Services, Inc.
(respondent) as a security guard at the tower and Exchange Plaza of Ayala Center where he worked as
a computer operator at the Console Room, responsible for observing occurrences. He had an
altercation with Richard Alcantara of the ASF because Alcantara allegedly questiones the expiration of
the gun of Pido and tried to grab the gun from his holster. Respondent thus conducted an investigation.
After more than nine months had elapsed since the investigation was conducted by respondent with no
categorical findingsmade, Pido filed a complaint for illegal constructive dismissal. The company denied
this saying that Pido, after a new assignment was offered to him, said pahinga muna ako. La found
him to be constructiveley dismissed. NLRC found that petitioner was indeed constructively dismissed,
it set aside the award of separation pay. CA upheld the NLRC decision and accordingly dismissed
petitioner s appeal. Thus this petition.
ART. 286. When employment not deemed terminated. The bona fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months
or the fulfillment of the employee of a military or civic duty shall not terminate employment. In all such
cases
the employer shall reinstate the employee to his former position without loss of seniority rights if he
indicates his desire to resume his work not later than one (1) month from the resumption of operations
of his employer or from his relief from the military or civic duty.
In Philippine Industrial Security Agency Corporation v. Dapiton, the court held that Article 286 applies
only when there is a bona fide suspension of the employer's operation of a business or undertaking for
a period not exceeding six (6) months. In such a case, there is no termination of employment but only
a temporary displacement of employees, albeit the displacement should not exceed six (6) months.
When a security guard is placed on a "floating status," he does not receive any salary or financial
benefit provided by law. Due to the grim economic consequences to the employee, the employer
should bear the burden of proving that there are no posts available to which the employee temporarily
out of work can be assigned. Cherubim failed to discharge this burden.
Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code
SEC. 8. Preventive suspension.
The employer may place the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his
coworkers.
SEC. 9. Period of suspension.
No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent position or the employer may extend
the period of suspension provided that during the period of extension, he pays the wages and other
benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid
to him during the extension if the employer decides, after completion of the hearing, to dismiss the
worker.
In the event the employer chooses to extend the period of suspension, he is required to pay the wages
and other benefits due the worker and the worker is not bound to reimburse the amount paid to him
during the extended period of suspension even if, after the completion of the hearing or investigation,
the employer decides to dismiss him. In this case, the respondent did not inform petitioner that it was
extending its investigation, nor did it pay him his wages and other benefits after the lapse of the 30day period of suspension. Court of Appeals are AFFIRMED

ii.)

Substantive Requirements Business Related Causes

Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least

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one (1) month before the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.

a.
Basis Employers Right
Edge Apparel Inc. v. NLRC

Edge Apparel, Inc., dismissed private respondents due to retrenchment and thus Antipuesto, et al.,
averred that the retrenchment program was a mere subterfuge used by Edge Apparel to give a
semblance of regularity and validity to the dismissal of the complainants. LA dismissed the complaint
of Antipuesto, et al., against Edge Apparel. NLRC held that "There is therefore basis in the
retrenchment of these 27 workers. Redundancy exists where the services of an employee are in excess
of what is reasonably demanded by the actual requirements of the enterprise. Edge Apparel filed a
motion for a partial reconsideration due to the award of separation pay. NLRC denied the motion; thus
this petition. The court held that: the employer has a right to dismiss employees for valid causes after
proper observance of due process. Retrenchment, in contrast to redundancy, is an economic ground to
reduce the number of employees. In order to be justified, the termination of employment by reason of
retrenchment must be due to business losses or reverses which are serious, actual and real. The
payment of separation pay would be due when a dismissal is on account of an authorized cause. The
amount of separation pay depends on the ground for the termination of employment.
But business enterprises today are faced with the pressures of economic recession, stiff competition,
and labor unrest. Thus, businessmen are always pressured to adopt certain changes and programs in
order to enhance their profits . The Court sustains the position of the LA. Additional award of
separation pay deleted.

b.
Business Related or Authorized Causes
Installation of Labor Devices

Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.

Complex Electronics Employees Association v. NLRC

Complex Electronics Corporation received a message from their client Lite-On Philippines requiring it to
lower its price by 10%. Due to this demand, Complex informed its Lite-On personnel that such request
of lowering their selling price by 10% was not feasible as they were already incurring losses at the
present prices of their products and thus the employees were informed Complex was closing down the
operations of the Lite-On Line. The Union of Complex, on the other hand, pushed for a retrenchment
pay.
Eventually, machinery, equipment and materials being used for production at Complex were pulled-out
from the company premises and transferred to the premises of Ionics Circuit, Inc.
The union filed a complaint for illegal closure and filed a notice of strike. Ionics contended that it was
an entity separate and distinct from Complex and had been in existence since July 5, 1984 or eight (8)
years before the labor dispute arose at Complex. LA ruled for the Union asking Complex to reinstate
them. NLRC reversed the LA and ordered the company to pay the employees in lieu of notice and
separation pay. Hence these petitions. The Union claimed that the said clipping showed that both
corporations, Ionics and Complex are one and the same. The court held that the mere fact that one or
more corporations are owned or controlled by the same or single stockholder is not a sufficient ground
for disregarding separate corporate personalities.

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The court cited Del Rosario vs. National Labor Relations Commission where the Court stated that
substantial identity of the incorporators of two corporations does not necessarily imply that there was
fraud committed to justify piercing the veil of corporate fiction.
Ionics may be engaged in the same business as that of Complex, but this fact alone is not enough
reason to pierce the veil of corporate fiction of the corporation. The closure, therefore, was not
motivated by the union activities of the employees, but rather by necessity since it can no longer
engage in production without the much needed materials, equipment and machinery. The purpose of
the notice requirement is to enable the proper authorities to determine after hearing whether such
closure is being done in good faith. While the law acknowledges the management prerogative of
closing the business, it does not, however, allow the business establishment to disregard the
requirements of the law.
The case of Magnolia Dairy Products v. NLRC as cited by the court says that: The installation of these
devices is a management prerogative, and the courts will not interfere with its exercise in the absence
of abuse of discretion, arbitrariness, or maliciousness on the part of management, as in this case.
Nonetheless, this did not excuse petitioner from complying with the required written notice to the
employee and to the Department of Labor and Employment (DOLE) at least one month before the
intended date of termination. NLRC is AFFIRMED.
Retrenchment to Prevent Losses -283
Art. 283. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operations of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the worker and the Department of Labor and Employment, at least one (1)
month before the intended date thereof. x x x. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of the establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered as one (1) whole year.

TPI Philippines Cement Corp v. Cajucom

TPI Philippines Cement Corporation employed Atty. Benedicto A. Cajucom VII, respondent, as VicePresident for Legal Affairs. As a result of the economic slowdown of the Philippines, TPI had cut on its
expenses. Petitioners sent Cajucom a notice terminating his services. He contested TPIs action,
claiming that the termination of his services was based erroneously on petitioners probable losses,
instead of their actual, substantial and imminent losses, as shown by the following:
(1) an increase or raise in his monthly salary from
(2) hiring by petitioners of more marketing and accounting
(3) acquisition by petitioners in 1998 of a warehouse;
(4) expansion in 1998 of their operations by including sales and marketing of oil products. Cajucom
filed a complaint for illegal dismissal. LA held that TPI failed to adduce sufficient evidence to show
thattheir alleged losses are substantial and imminent. NLRC reversed the LA. CA affirmed the NLRC.
Hence this petition.
The court held that: Retrenchment is an authorized cause for the dismissal of an employee from the
service.
The court held that in Trendline Employees Association-Southern Philippines Federation of
Labor v. NLRC, the requisites of retrenchment are:
(1) The retrenchment is necessary to prevent losses and the same is proven;
(2) Written notice to the employees and to the DOLE at least one month prior to the
intended date thereof;
(3) Payment of separation pay equivalent to one month pay or at least month pay for
every year of service, whichever is higher.
Records show that on December 3, 1998, petitioners sent respondent and the DOLE
separate notices of retrenchment effective December 30, 1998. Following the provision of
Article 283, these notices should have been served one month before, or on
November 30, 1998. Clearly, petitioners failed to comply with the one-month notice
requirement. We reiterate that the dismissal of respondent from the service is by reason of
retrenchment, an authorized cause. But due process was not observed as the required
notices were not sent to respondent and the DOLE one month prior to the effectivity of his
termination. Thus, petitioners should be liable for violation of his right to due process and
should pay him indemnity in the form of nominal damages, pursuant to our ruling in
Agabon, which we fix at P20,000.00. Petition is partly GRANTED

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 AMA Computer College v. Ely Garcia and Teresa Balla

Ely Garcia was hired as a janitress by ACC and Balla was hired as a Social Worker. ACC informed Garcia
and Balla and 52 other employees of the termination of their employment. Balla and Garcia filed a
complaint for illegal dismissal LA affirmed by NLRC and CA, ruled for the employees. Hence, this
Petition.
The court held that in termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer, and the latter's failure to discharge that
burden would result in a finding that the dismissal is unjustified. At the outset that ACC raised different
grounds to justify its dismissal of Garcia and Balla: LA, retrenchment; NLRC, redundancy; CA, both
retrenchment and redundancy. ACC itself is confused as to the real reason why it terminated Garcia
and Balla's employment. Both retrenchment and redundancy are authorized causes for the termination
of employment as enumerated in Article 283 of the Labor Code but retrenchment and redundancy are
two distinct grounds for termination arising from different circumstances, thus, they are in no way
interchangeable.
Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet
the demands of the business enterprise. (overhiring of workers, decreased volume of business, dropping of a
particular product line) Requisites of a valid redundancy program are:
(1) the good faith of the employer in abolishing the redundant position; and
(2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished
ACC presented several memoranda to prove that Garcia and Balla had been remiss in the performance of their
duties, as well as perennially tardy and absent. Other than being self-serving, said memoranda are irrelevant to
prove redundancy of the positions held by Garcia and Balla.
Redundancy arises because there is no more need for the employee's position in relation to the whole business
organization, and not because the employee unsatisfactorily performed the duties and responsibilities required by
his position.
Among the accepted criteria in implementing a redundancy are: (a) less preferred status, e.g., temporary employee;
(b) efficiency; and (c) seniority. There is no showing that ACC applied any of these criteria in determining that,
among its employees, Garcia and Balla should be dismissed, thus, making their dismissal arbitrary and illegal.

Retrenchment is the termination of employment effected by management during periods of business

recession, industrial depression, seasonal fluctuations, lack of work or considerable reduction in the
volume of the employer's business. There are three basic requisites for a valid retrenchment to exist:
(a) the retrenchment is necessary to prevent losses and such losses are proven;
(b) written notice to the employees and to the DOLE at least one (1) month prior to the intended date
of retrenchment; and
(c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher.
In a number of cases, the Court has identified the necessary conditions for the company losses to
justify retrenchment:
(1) the losses incurred are substantial and not de minimis;
(2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and
(4) the alleged losses or the expected imminent losses are proven by sufficient and convincing
evidence.
ACC miserably failed to prove any of the foregoing. In the case at bar, ACC claimed that the
retrenchment of Garcia and Balla was justified due to the financial difficulties experienced by the
college. Not only was ACC unable to prove its losses, it also failed to present proof that it served the
necessary notice to the DOLE one month before the purported retrenchment of Garcia and Balla.
Petition DENIED.

Juvy Manatad v. Phil Telegraph and Tel. Co

Manatad was employed by respondent Philippine Telegraph and Telephone Corporation (PT&T) as junior
clerk. She was separated from employment due to the Temporary Staff Reduction Program adopted by
respondent due to serious business reverses which gave her the option to avail of the Staff Reduction
Program Package. She did not avail of the package and was subsequently retrenched from
employment. She filed a complaint for illegal dismissal saying that respondent was obtaining profits
and was that it was economically viable for respondent to continue its business operations without
downsizing its workforce. LA ruled that the retrenchment program is invalid. NLRC affirmed the LA. CA
reversed the NLRC. Thus this petition.
The court defines retrenchment as the termination of employment initiated by the employer through
no fault of the employees and without prejudice to the latter, resorted to by management during
periods of business recession; industrial depression; or seasonal fluctuations. Retrenchment is a valid

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management prerogative but subject to faithful compliance with the substantive and procedural
requirements.
For a valid retrenchment, the following requisites must be complied with:
(a) the retrenchment is necessary to prevent losses and such losses are proven;
(b) written notice to the employees and to the DOLE at least one month prior to the intended date of
retrenchment; (c) payment of separation pay equivalent to one-month pay or at least one-half month
pay for every year of service, whichever is higher.
In the case at bar, respondent instituted a retrenchment program to arrest its alleged escalating
financial losses by downsizing its workforce. The financial statements prepared by SGV & Co. reflect
that respondent suffered substantial loss in the amount of P558 Million. The company was fully justified
in implementing a retrenchment program since it was undergoing business reverses, not only for a
single fiscal year, but for several years prior to and even after the program. The fact that the financial
statements were audited by independent auditors settles any doubt on the authenticity of these
documents for lack of signature of the person who prepared it. Even if there were no losses, the
company is still authorized by Article 283 of the Labor Code to cease its business operations . The law
recognizes the right of every business entity to reduce its work force if the same is made necessary by
compelling economic factors which would endanger its existence or stability.
In this case, Juvy failed to refute that she received the written notice of retrenchment from respondent.
Although respondent failed to furnish DOLE with a formal letter notifying it of the retrenchment, it still
substantially complied with the requirement. Since the National Conciliation and Mediation Board, the
reconciliatory arm of DOLE, supervised the negotiation for separation package, we agree with the
petitioner is not entitled to backwages. Petition is DENIED.
Retrenchment vis--vis closure

Alabang Country Club Inc. v. NLRC + Union

Francisco Ferrer, then President of ACCI found that the profitability of ACCIs Food and Beverage
Department was not profitable and thus management decided to cease from operating the department
and to open the same to a contractor, such as a concessionaire, which would be willing to operate its
own food and beverage business within the club. ACCI subsequently entered on December 1, 1994 into
an agreement with La Tasca Restaurant Inc. ACCI sent its F & B employees letters of termintation. A
complaint for illegal dismissal was filed against ACCI. LA dismissed the complaint for illegal dismissal
on the ground that a business entity has the right to reduce its work force if necessitated by
compelling economic factors which endanger its existence or stability. NLRC acknowledged the right of
ACCI to regulate, according to its own discretion and judgment, all aspects of employment including
the lay-off of workers and dismissed the appeal. CA reversed those of the NLRC. It held that due to
ACCIs failure to prove by sufficient and competent evidence that its alleged losses were substantial,
continuing. Thus this petition.
The court held that the case is not retrenchment but of the closure of a business undertaking.
Retrenchment and closure of a business establishment or undertaking are are independent authorized
causes for termination of employment.
Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in
terms of salaries and wages resorted to by an employer because of losses in operation of a business
occasioned by lack of work and considerable reduction in the volume of business.
Closure of a business or undertaking due to business losses is the reversal of fortune of the employer
whereby there is a complete cessation of business operations to prevent further financial drain upon
an employer who cannot pay anymore his employees since business has already stopped. One of the
prerogatives of management is the decision to close the entire establishment or to close or abolish a
department or section thereof for economic reasons, such as to minimize expenses and reduce
capitalization.
In the present case, when petitioner decided to cease operating its F & B Department and open the
same to a concessionaire, it did not reduce the number of personnel assigned thereat. It terminated
the employment of all personnel assigned at the department.Petitioners failure to prove that the
closure of its F & B Department was due to substantial losses notwithstanding, this Court finds that
individual respondents were dismissed on the ground of closure or cessation of an undertaking not due
to serious business losses or financial reverses. For any bona fide reason, an employer can lawfully
close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to
continue the same. Managements exercise of its prerogative to close a section, branch, department,
plant or shop will be upheld as long as it is done in good faith to advance the employers interest and
not for the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement. Petition GRANTED.
Redundancy - 283

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 Dusit School Nikko v. NUWHRAIN

Rowena Agoncillo was employed by the Hotel and after some time, she was promoted as Supervisor of
Outlet Cashiers and later promoted as Senior Front Office Cashier. The Hotel though an Inter-Office
Memorandum offered a Special Early Retirement Program (SERP) to all its employees. A total of 243
employees, including Agoncillo, 161 of whom were Union officers and members, were separated from
the Hotels employment. Her supervisor advised Agoncillo to just avail of the Hotel's SERP. Agoncillo
wanted to a complaint for illegal dismissal against the Hotel but before she could do so, she was
offered to be reinstated but not to her former position, she suggested the position of reservation clerk
but the Hotel only allowed her the option of Linen Dispatcher of Head of Houekeeping para nakatago
because the Hotel wanted fresh graduates and new faces since nagpabaya na daw si Agoncillo sa
katawan niya Agoncillo filed a complaint for illegal dismissal. LA dismissed the complaint. SOLE issued
an Order in NCMB-NCR-NS-11-425-96 in favor of the Union. On March 10, 2000, the Union and the
Hotel executed a MOA however, the MOA was not submitted to the NLRC for its approval. Neither did
Agoncillo receive any monetary benefits based on the MOA. NLRC reversed the LA relying on the
evidence of the complainant and the Order of the SOLE. CA dismissed the petition. Thus this petition.
The court held that the requisites of a valid redundancy program are:
(1) the good faith of the employer in abolishing the redundant position; and
(2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished.
It is the prerogative of management to transfer an employee from one office to another within the
business establishment based on its assessment and perception of the employees qualification,
aptitude and competence but the managerial prerogative to transfer personnel must be exercised
without grave abuse of discretion. In the present case, the petitioners recalled the termination of
respondent Agoncillo when they learned that she was going to file a complaint against them with the
NLRC for illegal dismissal. However, instead of reinstating her to her former position, she was offered
the position of Linen Dispatcher in the hotel basement or Secretary of the Roomskeeping Section,
which are lower positions than what she held before. Offers by the petitioners to transfer respondent
Agoncillo to other positions were made in bad faith; in fact, respondent Agoncillo had not been
transferred to another position at all. Petition Denied.

Andrada v. NLRC
Petitioners Ruben Andrada et al. were hired on various dates from 1995 up to 1997 and worked as
architects, draftsmen, operators, engineers, and surveyors in the Subic Legend Resorts and Casino,
Inc. Legend sent notice to the DOLE of its intention to retrench and terminate the employment of
thirty-four (34) of its employees due to its last-in-first-out basis on the strength of the status report of
its Project Development Division. Legend sent the 34 employees their respective notices of
retrenchment. Legend gave said employees a period of one week or until January 14, 1998 to choose
their option, with option number 2 (permanent retrenchment) as the default choice in case they failed
to express their preferences. The petitioners filed a complaint for illegal dismissal when they found out
that Legend was hiring (on the same day) new employees for the positions they vacated. LA ruled for
petitioners. NLRC reversed the LA. The CA held that the retrenched employees were validly dismissed
from employment due to redundancy and not retrenchment. The CA ratiocinated that Legend had
validly terminated the employment of its employees since it had proven that complainants positions
were superfluous. Thus this petition.
Retrenchment is an exercise of managements prerogative to terminate the employment of its
employees en masse, to either minimize or prevent losses. In the present case, Legend glaringly failed
to show its financial condition prior to and at the time it enforced its retrenchment program. It failed to
submit audited financial statements regarding its alleged financial losses. Legend also failed to
establish redundancy. Retrenchment and redundancy are two different concepts; they are not
synonymous and therefore should not be used interchangeably.
Redundancy exists when the number of employees are in excess of what is reasonably necessary to
operate the business. Retrenchment, on the other hand, is used interchangeably with the term layoff. It is an act of the employer of dismissing employees because of losses in the operation of a
business, lack of work, and considerable reduction on the volume of his business. It is however not
enough for a company to merely declare that positions have become redundant. It must produce
adequate proof of such redundancy to justify the dismissal of the affected employees. The pieces of
evidence submitted by Legend (such as a status review of its project division where it reported that the
78-man personnel exceeded the needs of the company ) are mere allegations and conclusions not
supported by other evidence. Legend also failed to establish by the same quantum of proof the fact of
redundancy; hence, petitioners termination from employment was illegal. Petition is GRANTED.

Smart Communications Inc. v. Regina Astorga

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Regina M. Astorga was employed by respondent Smart Communications as District Sales Manager.
SMART launched an organizational realignment to achieve more efficient operations and entered into a
joint venture agreement with NTT forming SNMI. Since SNMI was formed to do the sales and marketing
work, SMART abolished the CSMG/FSD, Astorgas division. NMI agreed to absorb the CSMG personnel
who would be recommended by SMART. SMART then conducted a performance evaluation of CSMG
personnel and those with the highest ratings were recommended. Astorga landed last in the
performance evaluation so she was not recommended but she was offered a supervisory position in
the Customer Care Department, but she refused the offer because the position carried lower salary
rank and rate. SMART issued a memorandum advising Astorga of the termination of her employment
on ground of redundancy. Astorga filed a complaint for illegal dismissal. LA ruled that the dismissal was
illegal. NLRC ruled for Smart. CA affirmed the NLRC that the reorganization undertaken by SMART
resulting in the abolition of CSMG was a legitimate exercise of management prerogative. Thus this
petition.
Astorga was terminated due to redundancy. The nature of redundancy in Wiltshire File Co., Inc.
v. National Labor Relations Commission, is that it ordinarily refers to duplication of work.
Astorga claims that the termination of her employment was illegal and tainted with bad faith
and that the reorganization was done in order to get rid of her but she did not substantiate
these claims. Moreover, Astorga never denied that SMART offered her a supervisory position in
the Customer Care Department. The court held that if SMART wanted to get rid of her, it would
not have offered her a position in any department in the enterprise. However, SMART failed to
comply with the mandated one (1) month notice prior to termination.
CA affirmed with modification of 50K to be paid as damages for not issuing the proper notices.
Closure of Business -283

Business Services of the Future today Inc +Ramon Allado v. CA + Sps.

Veruasa

Mailboxes, Etc.s sstockholders are petitioner Ramon Allado et al. They hired spouses Gilbert and Ma.
Celestina Veruasa, as manager and assistant manager. Allado personally gave notices of termination
effective immediately to the spouses due to negative cashflow. No written notice of closure of business
was given to DOLE. Allado then padlocked the office and appropriated for himself all the transferable
rights and equipment of the office. The sps filed a complaint for illegal dismissal. LA ruled for them.
NLRC dismissed the case saying that (1) Gilbert was both a BSFTI employee and stockholder (2) BSFTI
was not obliged to pay separation benefits to the spouses since there was a valid closure of business
due to serious financial losses; (3) the spouses were not entitled to backwages. CA reversed the NLRC
and the LA saying that using the 4fold test, the sps are in fact employees of the Company. Thus this
petition.
The court cited Agabon v. National Labor Relations Commission, where it was held that if the dismissal
is for an authorized cause, the lack of statutory due process should not nullify the dismissal, or render
it illegal, or ineffectual. Since the NLRC and the CA found bonafide reason for closing shop ang that the
records before us revealed that there were losses from 1996 to 1998, absent the requisite of due
notice, P40,000 as nominal damages are awarded. Petition is PARTIALLY GRANTED.

John Mcleod v. NLRC + Filipinas Synthetic Corporation (Filsyn), Far Eastern

Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu.
Mcleod was hired as the Assistant Spinning Manager of Universal Textiles, Inc. (UTEX) and was
eventually promoted to Senior Manager. He retired and demanded the full benefits of his retirement
plan, rejecting offers of other motary awards by the company. He filed a complaint for retirement
benefits, vacation and sick leave benefits, non-payment of unused airline tickets, holiday pay,
underpayment of salary and 13th month pay, moral and exemplary damages, attorneys fees plus
interest against the respondents. LA ruled that the companies are solidarily liable for Mcleods money
claims. NLRC reversed the LA ordering Peggy Mills alone to pay the money claims. CA upheld the NLRC.
Hence, this petition. The court found that records disclose that McLeod was a managerial employee
only of PMI. PMI hired McLeod as its acting Vice President and General Manager and PMI confirmed
McLeods appointment as Vice President/Plant Manager in the Special Meeting of its Board of Directors.
When PMIs rank-and-file employees staged a strike PMI incurred serious business losses and thus PMI
closed shop and sent a notice of closure to DOLE.
As a rule, a corporation that purchases the assets of another will not be liable for the debts of the
selling corporation, provided the former acted in good faith and paid adequate consideration for such
assets. In this case, PMI transferred its assets to SRTI to settle its obligation to SRTI. There was also no
merger or consolidation of PMI and SRTI.

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Consolidation is the union of two or more existing corporations to form a new corporation called the
consolidated corporation. It is a combination by agreement between two or more corporations by
which their rights
Franchises and property are united and become those of a single
new corporation.
Merger on the other hand is a union whereby one corporation absorbs one or more existing
corporations
and the absorbing corporation survives and continues the combined business.
McLeod is not entitled to payment of vacation leave and sick leave as well as to holiday pay. Article
82, Title I, Book Three of the Labor Code, on Working Conditions and Rest Periods, provides:
Coverage. The provisions of this title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results
McLeod knew that PMI was then suffering from serious business losses. In fact, McLeod testified that
PMI was not able to operate or a period because of the strike. As Vice President of PMI, McLeod was
aware that the company had incurred huge loans from DBP.
Since PMI has no retirement plan, we apply Section 5, Rule II of the Rules Implementing the New
Retirement Law which provides:
5.1
In the absence of an applicable agreement or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.
5.2
Components of One-half (1/2) Month Salary. For the purpose
of determining the
minimum retirement pay due an employee
under this Rule, the term one-half month salary
shall include all of the following: (a)
Fifteen (15) days salary of the employee based on his
latest salary rate.
With McLeod having worked with PMI for 12 years, from 1980 to 1992, he is entitled to a retirement
pay equivalent to month salary for every year of service based on his latest salary rate of P50,495 a
month. CA affirmed.

Antonio Carag v. NLRC + NAFLU, and MAC LABOR UNION

Without notice of any kind Mariveles Apparel Corporation for unknown reasons ceased operations with
the intention of completely closing its shop as manifested in a letter filed on the same day the
company closed. MACs employees filed a complant for illegal closure of business through their labor
union. LA found them liable for illegal closure. NLRC dismissed the petitions and affirmed the LA. Thus
this petition. The court held that the LAs decision to hold Antonio Carag as MACs stockholder and
Chairman has not basis since Complainants did not allege or prove, and Arbiter Ortiguerra did not
make any finding, that Carag approved or assented to any patently unlawful act to which the law
attaches a penalty for its commission. On this score alone, Carag cannot be held personally liable for
the separation pay of complainants. As for his liability as an employer as enumerated under Article
212(e) of the Labor Code (Employer' includes any person acting in the interest of an employer, directly
or indirectly. The term shall not include any labor organization or any of its officers or agents except
when acting as employer.)
The court recounted the cases of McLeod v. NLRC and Spouses Santos v. NLRC that Article 212(e) of
the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the
corporation. The governing law on personal liability of directors for debts of the corporation is still
Section 31 of the Corporation Code.
Thus in McLeod: Personal liability of corporate directors, trustees or officers attaches only when
(1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs,
(2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance,
do not forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable with the corporation; or
(4) they are made by specific provision of law personally answerable for their corporate action.
Thus, it was error for Arbiter Ortiguerra, the NLRC, and the Court of Appeals to hold Carag personally
liable for the separation pay owed by MAC to complainants based on Article 212(e) since it does not
state that corporate officers are personally liable for the unpaid salaries or separation pay of
employees of the corporation. The liability of corporate officers for corporate debts remains governed
by Section 31 of the Corporation Code. Petition Granted.

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Temporary Closure/ Bona fide suspension of operations

Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer
shall reinstate the employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one (1) month from the resumption of operations of his
employer or from his relief from the military or civic duty.

JPL Marketing Promotions v. CA

JPL Marketing and Promotions is a domestic corporation engaged in the business of recruitment and
placement of workersmand they hired Noel Gonzales, Ramon Abesa and Faustino Aninipot as
merchandisers. JPL notified respondents that it would stop its direct merchandising activity in the Bicol
Region and that they would be ransferrd to other clients effective 15 August 1996. On 17 October
1996, respondents filed complaints for illegal dismissal. LA dismissed the complaints for lack of merit.
The Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store where
they were originally assigned by JPL even before the lapse of the six (6)-month period given by law to
JPL to provide private respondents a new assignment. NLRC affirmed the LA. CA affirmed the NLRC but
was required by law to grant the 13th month pay and that since its exemption from paying service
incentive leave pay was not shown, it should be liable for it as well. Thus the petition.
The court held that under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in
cases of dismissals due to any of these reasons:
(a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the
employer's business; (e) when the employee is suffering from a disease and his continued employment
is prohibited by law or is prejudicial to his health and to the health of his co-employees.
However, separation pay shall be allowed as a measure of social justice in those cases where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character, but only when he was illegally dismissed.
In the the employees were not dismissed at all, whether legally or illegally. What they received from
JPL was not a notice of termination of employment, but a memo informing them of the termination of
CMCs contract with JPL.
Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or
undertaking for a period not exceeding (6) months, wherein an employee is placed on a floating
status. After 6 months, he may be considered illegally dismissed. But in this case, the 6 month period
has not yet elapsed and also as they admitted in their comment, all three of them applied for and were
employed by another establishment after they received the notice from JPL. In seeking and obtaining
employment elsewhere, private respondents effectively terminated their employment with JPL.
Petition partly granted. Only liable for 13th month pay.

iii.)

Disease

Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.

Vicente Sy v. CA supra
Jamie Sahot was with SB Trucking (owned by Sy) since 1965. In 1994, Sahot strated to have thigh pains
and filed for leave. He found out later that his SSS premiums were not paid by employers. He asked for
extension of leave but he was later dismissed for failure to go to work. LA ruled for Sy. NLRC found
Sahot to be an employee of Sy. CA affirmed NLRC. Thus this petition.
Court found that an ER-EE relationship is present between SBT and Sahot and he was not, infact, an
industrial partner as ruled by the LA (since he did not receive any share of the division of profits and he
was not shown to be part of any managerial duty; he was in fact content to follow the instructions of
petitioners during those years). The court also held that dismissal was not valid and it was without
notice (he was simply threatened then dismissed). Even if he was offered a job which is less strenuous
is of no matter; also, being terminated of a disease under 284 requires a medical certificate by the
employer and is indispensable which was not complied with by Sy. The burden is on the employer to
show that all the requisites for valid dismissal due to disease have been complied with. He is entitled
to separation pay. Petition Denied.

Crayons Processing v. Felipe Pula

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Crayons Processing, Inc. employed Felipe Pula as a Preparation Machine Operator. At a young age of
34, Pula suffered a heart attack and was rushed to the hospital, where he was confined for a week.
Pula was advised to rest for 3 months. After an angiogram procedure he was certified as fit to work.
However, 13 days after returning to work, he was taken to the company clinic after complaining of
dizziness. Diagnosed as having suffered a relapse, he was advised by his physician to take a leave of
absence from work for one (1) month.
When he returned for work, he was asked by the company to resign and to accept P12,000 as financial
assistance. Pula refused the offer and instead filed a complaint for illegal dismissal. LA ruled for Pula.
It was pointed out that under Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code, implementing in particular Article 284 of the Labor Code, termination on the ground of disease is
prohibited 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 months even with proper
medical treatment.
NLRC ruled for Crayons saying that the fact that Pula was on leave for more than six months due to his
illness rendered unnecessary the certification from a public health authority as required under the
Omnibus Implementing Rules. CA reinstated the decision of the LA.
The termination as upheld by the NLRC was grounded on Article 284 of the Labor Code, which reads:
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:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease
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.
For a dismissal on the ground of disease to be considered valid, two requisites must concur:
(a) the employee must be suffering from a disease which cannot be cured within six months and his
continued employment is prohibited by law or prejudicial to his health or to the health of his coemployees; and
(b) a certification to that effect must be issued by a competent public health authority.
The burden falls upon the employer to establish these requisites, and in the absence of such
certification, the dismissal must necessarily be declared illegal. Without the required certification,
the characterization or even diagnosis of the disease would primarily be shaped according to the
interests of the parties rather than the studied analysis of the appropriate medical professionals. The
requirement of a medical certificate under Article 284 cannot be dispensed with. Petition is DENIED.
Decision of LA reinstated.

D. Procedural Requirements

Art. 277. Miscellaneous provisions.

b. Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to
the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause shall rest
on the employer. The Secretary of the Department of Labor and Employment may suspend the effects
of the termination pending resolution of the dispute in the event of a prima facie finding by the
appropriate official of the Department of Labor and Employment before whom such dispute is pending
that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As
amended by Section 33, Republic Act No. 6715, March 21, 1989)
Omnibus Rules Book VI (Post Employment) TITLE I: Termination of Employment
Section 1. Coverage. This Rule shall apply to all establishments and undertakings,
whether operated for profit or not, including educational, medical, charitable and religious
institutions and organizations in cases of regular employment with the exception of the Government
and its political subdivisions including government-owned or controlled corporations.
Section 2. Security of tenure. - (a) In cases of regular employment, the employer shall not
terminate the services of an employee except for just or authorized causes as provided by law, and
subject to the requirements of due process.

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(b) The foregoing shall also apply in cases of probationary employment: Provided, however, that in
such cases, termination of employment due to failure of the employee to qualify in accordance with
the standards of the employer made known to the former at the time of engagement may also be a
ground for termination of employment.
(c) In cases of employment covered by contracting or subcontracting arrangements, no employee shall
be dismissed prior to the expiration of the contract between the principal and contractor or
subcontractor as defined in Rule VIII-A, Book III of these Rules, unless the dismissal is for just or
authorized cause, or is brought about by the completion of the phase of the contract for which the
employee was engaged but, in any case, subject to the requirements of due process or prior
notice.
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just cases as defined in Article 282 of the Labor Code:
"(i) A written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.
"(ii) A hearing or conference during which the employee concerned, with the assistance of counsel,
if he so desires, is given opportunity to respond to the charge, present his evidence, or rebut the
evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration
of all the circumstances, grounds have been established to justify his termination.
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due
process shall be deemed complied with upon service of a written notice to the employee
and the appropriate Regional Office of the Department of Labor and Employment at least
thirty days before effectivity of the termination, specifying the ground or grounds for
termination.
If the termination is brought about by the completion of a contract or phase thereof, or by failure of an
employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from the effective date
of termination.
Section 3. Reinstatement An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and to backwages.

i.)

In General/Liability for non-compliance with procedural

requisites/Essential Elements of Due Process
Agabon v. NLRC and Riviera Home

Riviera Home Improvements, employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board
and cornice installers and after years under their employ, were dismissed for abandonment of
work. Petitioners then filed a complaint for illegal dismissal and payment of money claims. LA declared
the dismissals illegal. NLRC reversed the LA.CA ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment of money claims.
Hence, this petition.
The court held that 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 through overt acts.
The court found that the Agabond were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the intention to sever
the employer-employee relationship with private respondent
Standards of due process: requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Code:
(a)
A written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side;
(b)
A hearing or conference during which the employee concerned, with the assistance of counsel
if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c)
A written notice of termination served on the employee indicating that upon due consideration
of all the circumstances, grounds have been established to justify his termination. In case of
termination, the foregoing notices shall be served on the employees last known address.

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Dismissals based on just causes contemplate acts or omissions attributable to the employee
Dismissals based on authorized causes involve grounds under the Labor Code which allow the
employer to terminate employees.
A termination for an authorized cause requires payment of separation pay.
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
(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:
(1) the dismissal is for a just cause under Article 282 of the Labor Code for an authorized cause under
Article 283
or for health reasons under Article 284 and due process was observed;
(2) the dismissal is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was no due process; and
(4) the dismissal is for just or authorized cause but due process was not observed. (Wenphil or Belated
Due Process Rule.)
In the fourth situation, the dismissal should be upheld. 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, Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and
10. Breaches of these due process requirements violate the Labor Code. Therefore statutory due
process should be differentiated from failure to comply with constitutional due process. The case at bar
squarely falls under the fourth situation. The dismissal should be upheld because it was established
that the petitioners abandoned their jobs to work for another company. Petition Denied.

Serrano v. NLRC and Isetann

Ruben Serrano was hired by private respondent Isetann Department Store as a security checker to
apprehend shoplifters and prevent pilferage of merchandise. To cut costs, Isetann phased out its entire
security section and engage the services of an independent security agency. Serrano filed a complaint
for illegal dismissal upon his termination. The LA found this termination to be illegal. NLRC held that
the phase-out of private respondents security section and the hiring of an independent security
agency constituted an exercise by private respondent of a legitimate business decision. Hence this
petition.
The court held that contrary to the allegations of Serrano, the dismissal falls under Art. 283 of the
Labor Code for redundancy Art. 283 also provides that to terminate the employment of an employee
for any of the authorized causes the employer must serve "a written notice on the workers and the
DOLE at least one (1) month before the intended date thereof."
In this case, Serrano was given notice the same day of his termination
The rule reversed a long standing policy theretofore followed that even though the dismissal is based
on a just cause or the termination of employment is for an authorized cause, the dismissal or
termination is illegal if effected without notice to the employee. The shift in doctrine took place in 1989
in Wenphil Corp. v. NLRC. The Court holds that the policy of ordering the reinstatement to the service
of an employee without loss of seniority and the payment of his wages during the period of his
separation until his actual reinstatement but not exceeding three (3) years should be re-examined.
The remedy is to order the payment to the employee of full backwages from the time of his dismissal
until the court finds that the dismissal was for a just cause. But, otherwise, his dismissal must be
upheld and he should not be reinstated. This is because his dismissal is ineffectual
For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation
of a labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of
termination in advance, then the termination of his employment should be considered ineffectual and
he should be paid backwages.
There are three reasons why, on the other hand, violation by the employer of the notice requirement
cannot be considered a denial of due process resulting in the nullity of the employees dismissal or
layoff.
First is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does
not apply to the exercise of private power, such as the termination of employment under the Labor

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Code.
Second reason is that notice and hearing are required under the Due Process Clause before the power
of organized society are brought to bear upon the individual.
Third reason why the notice requirement under Art. 283 can not be considered a requirement of the
Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of
his own cause.
Art. 283 of the Labor Code, the employers failure to comply with the notice requirement does not
constitute a denial of due process but a mere failure to observe a procedure for the termination of
employment which makes the termination of employment merely ineffectual. Thus, only if the
termination of employment is not for any of the causes provided by law is it illegal and, therefore, the
employee should be reinstated and paid backwages.
If the employees separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid
full backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee
was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that
article, he should not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect. Petition Granted.

Cabalen Management Co Inc v. Quiambao

The CA Decision held that except for respondents Vizier Inocencio and Vincent Edward Mapa whose
petitions were dismissed , the SC affirmed the CA. Thus this motion of reconsideration because
Cabalen argues that the affidavits of their witnesses, Henry dela Vega Balen and Roderick Malana, as
well as the audit report are admissible and of rational probative value becasue the respondents did not
contest the findings of the audit report that the cancelled Order Slips (OS) and receipts, and the
incidents of swapping dining OS with bar OS were beyond the course of ordinary business and as
opined by the LA and NLRC gives a wholly credible scenario of tip pocketing by respondents and the
alleged admission of respondent Jesus Quiambao in his Sinumpaang Salaysay of the existence of the
anomalous activity.
However, in this motion of reconsideration, the court held that It is the employers burden to prove a
valid dismissal. It is not enough that petitioners showed that Quiambao had confirmed the occurrence
of incidents of tip pocketing; they also had to prove that he and the rest of the respondents were
responsible for it. This duty is all the more pressing in the case of Quiambao considering that it was he
who called the managements attention to the incidents of tip pocketing among some of his coemployees, only to be charged with the offense he had asked to be investigated. Petitioners also had
to prove that due process was observed in terminating the employment of respondents. Petitioners
unfortunately failed in all respects. Petition Denied except as to Quiambaos dismissal since it is still
unresolved.

ii.)
Right to Counsel
Espero Santos Salaw v. NLRC
Espero Santos Salaw was employed by the private respondents as a credit investigator-appraiser.
Criminal Investigation Service (CIS) of the Philippine Constabulary, National Capital Region, extracted
from the petitioner without the assistance of counsel a Sworn Statement which made it appear that the
petitioner, in cahoots with a co-employee, Reynaldo Madrigal sold twenty sewing machines and
electric generators which had been foreclosed by the respondent bank. Salaw was asked to appear
before the bank's Personnel Discipline and Investigation Committee (PDIC) and he was soon
terminated from his employment for alleged serious misconduct or willful disobedience and fraud or
willful breach of the trust reposed on him by the private respondents. Salaw filed a complaint for illegal
dismissal. LA ruled that the complaint is illegal. NLRC reversed the LA and dismissed the case for lack
of merit. Hence, this petition. The court held that the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law (Articles 279, 281, 282-284, New Labor
Code), but the rudimentary requirements of due process notice and hearing must also be observed
before an employee may be dismissed.
The investigation of petitioner Salaw by the respondent Bank' investigating committee violated his
constitutional right to due process, in as much as he was not given a chance to defend himself, as
provided in Rule XIV, Book V of the Implementing Rules and Regulations of the Labor Code governing
the dismissal of employees. Section 5 of the said Rule requires that "the employer shall afford the

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worker ample opportunity to be heard and to defend himself with the assistance of his representative,
if he so desires."
Here petitioner was perfunctorily denied the assistance of counsel during investigation. The court held
that the right to counsel, a very basic requirement of substantive due process, has to be observed as
guaranteed by the 1987 constitution. Considering further that the admission by the petitioner was
made without the assistance of counsel and was the sole basis for his dismissal, it can not be admitted
in evidence against him. Decision of LA reinstated.

iii.) Notice
King of Kings Transport v. Santiago Mamac

Santiago O. Mamac worked as a bus conductor of King of Kings Transport, Inc. Pending the
holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities
and Exchange Commission which acquired new buses. Many DMTC employees were
subsequently transferred to KKTI they organized the Kaisahan ng mga Kawani sa King of Kings
(KKKK) which was registered with DOLE. Respondent was elected KKKK president. Mamac was
required to accomplish a Conductors Trip Report and submit it to the company after each
trip. Upon audit KKTI noted an irregularity. It discovered that respondent declared several sold
tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. In
his letter of explanation, respondent said that the erroneous declaration was unintentional. He
explained that during that days trip, the windshield of the bus assigned to them was smashed;
and they had to cut short the trip in order to immediately report the matter to the police. As a
result of the incident, he got confused in making the trip report. He was later on terminated.
He filed a complaint for illegal dismissal. LA dismissed the complaint for lack of merit. NLRC
ordered KKTI to indemnify complainant in the amount of ten thousand pesos (P10,000) for
failure to comply with due process prior to termination. Affirming the NLRC, the CA held that
there was just cause for respondents dismissal. It ruled that respondents act in declaring
sold tickets as returned tickets constituted fraud or acts of dishonesty justifying his dismissal.
Hence, we have this petition.
The court held that Due process under the Labor Code involves two aspects: first,
substantivethe valid and authorized causes of termination of employment under the Labor
Code; and second, proceduralthe manner of dismissal. In the present case, the CA affirmed
the findings of the labor arbiter and the NLRC that the termination of employment of
respondent was based on a just cause.
Art. 277 of the Labor Code provides the manner of termination of employment. The implementing rule
of the aforesaid provision states: To clarify, the following should be considered in terminating the
services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
Reasonable opportunity under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of the notice
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.
In this case, First, respondent was not issued a written notice charging him of committing an
infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does
not comply with the first notice requirement.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report
notifying him of his offense, such would not comply with the requirements of the law. We observe from
the irregularity reports against respondent for his other offenses that such contained merely a general
description of the charges against him.
Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still
necessary in order for him to clarify and present evidence in support of his defense.
Thus, for non-compliance with the due process requirements in the termination of respondents
employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP
30,000) as damages. Petition is PARTLY GRANTED. Decision of the CA is MODIFIED by deleting the
award of backwages and 13th-month pay.

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Magro Placement v. Cresenciano Hernandez

Cresenciano E. Hernandez filed with Magro Placement for an application for employment abroad as
Auto Electrician. He was hired by Al Yamama in Jeddah, K.S.A. for a two-year contract. Respondent
worked at the Al Yamama as an electrician but because of lack of equipment or tools, the work became
harder. Respondent executed a Statement that: he could no longer continue his job with Al Yamama.
He was soon repatriated to the Philippines for the reason that he was recruited for Al Yamama as Auto
Electrician, but he was not qualified since he had no experience as Auto Electrician; he was allowed to
go for a trade test but failed; he was allowed to find a new job, but he was not qualified to work in
Budget Rent-A-Car Company & Nissan; he was given P2,000.00 as financial assistance. He filed a
Complaint for illegal dismissal. LA dismissed the case for lack of merit. NLRC affirmed this ruling and
the CA MODIFIED THE DECISION by ordering private respondents to pay petitioner separation pay
equivalent to one (1) month pay for every year of service since it found that Magro had just cause to
effect respondent's dismissal but that it found the dismissal did not comply with the due process
requirements. Thus this petition.
The court held that Al Yamama failed to satisfy the two-notice requirement. Without prior notice or
explanation, Al Yamama took respondent's passport and simply brought him to petitioner's foreign
principal, Orbit, and told the latter that respondent did not know his job as electrician. Respondent
heard his employer's complaint against him at that instance only. From these facts, it is clear that
respondent's dismissal was effected without the notice required by law. Article 277 of the Labor Code
explicitly provides:
The Serrano doctrine which awarded full backwages in ineffectual dismissal cases where an
employee dismissed for cause was denied due process, which was applied by the CA, has been
abandoned by the Court's ruling in
Agabon v. National Labor Relations Commission. In that case, the Court held that if the dismissal was
for a cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual.
However, the employers violation of the employees right to statutory due process 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. Court deems the
amount of P30,000.00 as sufficient nominal damages, pursuant to prevailing jurisprudence. Petition is
PARTLY GRANTED

iv.)

Hearing
a. Hearing
Permex Inc v. NLRC
Permex initially hired Emmanuel Filoteo as a mechanic but he was soon promoted to water treatment
operator. One day, Filoteo entered his time-in at 8:45 p.m. and since he was scheduled to work until
7:00 a.m. the next day, he wrote 7:00 a.m. in his scheduled time-out but at around 9:20 p.m., Filoteo
went to see the Assistant Production Manager to inquire if "butchering" of fish would be done that
evening so they could start operating the boiler. Since they were informed that no butchering would be
done, he asked permission to go home and caught the service jeep provided by Permex without
correcting the 7:00am time out.
Later, he received a memorandum from the Assistant Personnel Officer asking him to explain, in
writing, the entry he made in his DTR. Filoteo complied and submitted his written explanation that
same evening. Filoteo was soon suspended indefinitely and thus he filed a complaint for illegal
dismissal. Labor Arbiter dismissed the complaint for lack of merit. NLRC reversed LA. Thus this petition.
The court held that whether private respondent was illegally dismissed or not is governed by Article
282 of the Labor Code. To constitute a valid dismissal from employment, two requisites must concur:
(a) the dismissal must be for any of the causes provided for in Article 282 of the Labor Code; and (b)
the employee must be afforded an opportunity to be heard and defend himself.
This means that an employer can terminate the services of an employee for just and valid causes,
which must be supported by clear and convincing evidence. It also means that, procedurally, the
employee must be given notice, with adequate opportunity to be heard, before he is notified of his
actual dismissal for cause.
In the present case, the NLRC found that the two-fold requirements for a valid dismissal were not
satisfied by the petitioners.
First, petitioner's charge of serious misconduct of falsification or deliberate misrepresentation was not
supported by the evidence on the record contrary
Second, the private respondent was not afforded an opportunity to be heard. As found by the NLRC

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Such dismissal, in our view, was too harsh a penalty for an unintentional infraction, not to mention that
it was his first offense committed without malice, and committed also by others who were not equally
penalized. Considering the factory practice which management tolerated the court held that Filoteo, in
his rush to catch the service vehicle, merely forgot to correct his initial time-out entry. Petition is
DENIED.

Muaje-Tuazon v. Wenphil Corp

Annabelle M. Tuazon and Almer R. Abing worked as branch managers of the Wendys food chains in MCU
Caloocan and Meycauayan, respectively, of respondent Wenphil Corporation. From September 14 to
November 8, 1998, Wendys had a Biggie Size It! Crew Challenge promotion contest. Meycauayan
branch won 2 times in a row. Management received reports that as early as the first round of the
contest, the Meycauayan, MCU Caloocan, Tandang Sora and Fairview branches cheated. An internal
investigation ensued. Immediately thereafter, petitioners were notified, in writing, of scheduled
hearings regarding the matter and of their immediate suspension. On February 29, 2000, petitioners
were dismissed. They filed a complaint for illegal dismissal.
Petitioners insisted that the real reason for their termination was their persistent demands for overtime
and holiday pay. Respondents maintained that petitioners were terminated for dishonesty amounting to
serious misconduct and willful breach of trust.
LA ruled in favor of the employees. NLRC affirmed the LA. CA found substantial proof of petitioners
misconduct. Thus this petition.
Petitioners aver that their right to due process was violated. They were not notified of the accusation
against them before they were summoned to the main office of Wenphil on February 3, 2000 for
investigation.
The court held that First, the law requires that the employee be given two written notices before
terminating his employment, namely: (1) a notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee
of the employers decision to dismiss him. The records show that the petitioners were given written
notices informing them that they were charged with serious misconduct and dishonesty in relation to
the Biggie Size It! Crew Challenge program, and notifying them of the scheduled hearings. The
petitioners, thinking that their verbal explanations were sufficient, opted to forego a written
explanation, and did not appear during the set hearing.
Petitioners contend that respondents did not sufficiently prove the existence of a just cause for their
termination, hence they were illegally dismissed.
In the present case, the tape receipts presented by respondents showed that there were anomalies
committed in the branches managed by the petitioners . Additionally, some employees declared in their
affidavits that the cheating was actually the idea of the petitioners. Even without the affidavits,
sufficient basis exists for respondents loss of trust and confidence on the petitioners as managerial
officers. Petition is DENIED.

b. Use of Position Paper

Seastar Marine Services Inc v. Lucio Bul-an Jr.
Lucio A. Bul-an, Jr. was hired by petitioner Seastar as an Able Seaman for and in behalf of H.S.S.
Holland Ship. Shortly thereafter, Chief Mate Benjamin A. Paruginog mauled the respondent, causing
bodily harm and physical injuries. Bul-An immediately reported the incident to Master Captain Stumpe
Jacobus, who assured him that he would settle the matter. In a Letter, Captain Jacobus reported to his
superiors at the Topaz Seal Shipping Company, that Bul-An was uncooperative, refused to obey his
orders and those of the chief officer, and often pretended to be ill. In a Letter Paruginog reported the
respondents unusual behavior since boarding the ship. Paruginog denied the respondents allegations
that he made threats to kill the respondent. Bul-An was forced to seek help from the Philippine
Embassy at Barcelona, Spain, and executed an Affidavit on the matter.
Bul-An was terminted and thus, the he filed a complaint for illegal dismissal with prayer for payment of
back wages, as well as actual, moral and exemplary damages against the petitioners.
He immediately reported the matter to the petitioners, but instead of receiving assistance, he was
even scolded for returning home. Seastar alleged that the respondent was psychologically ill and
was dismissed for a justified and lawful cause. It was averred that even only after a few days of
boarding the M/V Blue Topaz, the respondent already showed unusual behavior. He not only refused to
obey orders from his superior officers; he also refused to work, after about a week on board, he
confronted the Master of the vessel and told him that the vessel was too small for him and too
many work. Due to the troubles and problems being encountered by the Master of the vessel and
the crew with complainant, he was dismissed and repatriated.

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LA ruled that the petitioner was dismissed without just cause. NLRC ruled in favor of the respondent
and dismissed the appeal for lack of merit.
Petitioners allege that the NLRC should have remanded the case to the labor arbiter for further
proceedings, the following pronouncement of the Court in Caete v. National Labor Relations
Commission is instructive: The case may be decided on the basis of the pleadings and other
documentary evidence presented by the parties. In the absence of any palpable error, arbitrariness or
partiality, the method adopted by the labor arbiter to decide a case must be respected by the
NLRC.Thus, a formal trial-type hearing is not at all times and in all instances essential to due process.
It is enough that the parties are given a fair and reasonable opportunity to explain their respective
sides of the controversy and to present supporting evidence on which a fair decision can be based.
Rule V of the Rules of Procedure of the NLRC, as amended, outlines the procedure to be followed in
cases before the labor arbiter, as follows:
Section 3. Submission of Position Papers/Memorandum.
Should the parties fail to agree upon an amicable settlement, either in whole or in part, during the
conferences, the Labor Arbiter shall issue an order stating therein the matters taken up and agreed
upon during the conferences and directing the parties to simultaneously file their respective verified
position papers.
Those verified position papers shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be accompanied by all the
supporting documents including the affidavits of their respective witnesses which shall take the place
of the latters direct testimony.
The parties shall, thereafter, not be allowed to allege facts, or present evidence to prove facts, not
referred to and any cause or causes of action not included in the complaint or position papers,
affidavits, and other documents. Unless otherwise requested in writing by both parties, the Labor
Arbiter shall direct both parties to submit simultaneously their position papers/memorandum with the
supporting documents and affidavits within fifteen (15) calendar days from the date of the last
conference, with proof of having furnished each other with copies thereof.
Section 4. Determination of Necessity of Hearing. Immediately after the submission by the parties
of their position papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is
a need for a formal trial or hearing. At this stage, he may, at his discretion and for the purpose of
making such determination, ask clarificatory questions to further elicit facts or information, including
but not limited to the subpoena of relevant documentary evidence, if any from any party or witness.
Section 5. Period to Decide Case.
(a) Should the Labor Arbiter find it necessary to conduct a hearing, he shall issue an order to that
effect setting the date or dates for the same which shall be determined within ninety (90) days from
initial hearing.
He shall render his decision within thirty (30) calendar days, without extension, after the submission of
the case by the parties for decision, even in the absence of stenographic notes: Provided, however,
that OFW cases shall be decided within ninety (90) calendar days after the filing of the complaint and
the acquisition by the labor arbiter of jurisdiction over the parties.
(b) If the Labor Arbiter finds no necessity of further hearing after the parties have submitted their
position papers and supporting documents, he shall issue an Order to that effect and shall inform the
parties, stating the reasons therefore. In any event, he shall render his decision in the case within the
same period provided in paragraph (a) hereof.
Petition is DENIED.

v.)

Decision or Award

ARTICLE VIII JUDICIAL DEPARTMENT, Section 14. No decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall be refused due
course or denied without stating the legal basis therefor.

ABD Overseas v. NLRC + Mohmina Macaraya

Mohmina Macaraya applied for employment as a dressmaker with respondent Mars International
Manpower, Inc. MARS submitted to the POEA an overseas contract worker information sheet stating
that she would be employed as a domestic helper for two years with a monthly salary of US$200.00.
Macaraya was soon deployed to Riyadh, Saudi Arabia where her employer took the only copy of her
employment contract and never returned it to her and she was forced to work as a domestic helper.
After working for three months and thirteen days, Macaraya was dismissed by her employer and
repatriated to the Philippines. Macaraya filed with the POEA a complaint for illegal dismissal. POEA,
ruled that Macaraya had been illegally dismissed as both her foreign employer and recruitment agency

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failed to prove that the dismissal was for a just and valid cause. On appeal to the NLRC ABB Overseas
opined that the failure of MARS to prove the legality of Macarayas dismissal from employment should
not mean that the same burden should fall upon petitioner who was not even privy to Macarayas
employment contract. If it were to be held liable for the monetary awards in favor of Macaraya, then it
would result in undue enrichment on the part of MARS. NLRC affirmed the LA. Thus this petition.
The court cited Section 6, Rule I, Book III of the POEA Rules and Regulation which provides: It is clear
from the aforementioned provision of the POEA Rules and Regulation that the transferee agency shall
assume full and complete responsibility to all contractual obligations of the principals to its workers
originally recruited and processed by its former agency.
In the case at bar, respondent ABD Overseas Manpower Corporation being the transferee agency must
assume (the) full liability of the principal.
Section 13
Rule VII of the New Rules of Procedure of the NLRC provides as follows:
SEC. 13. Form of Decision/Resolution/Order. The Decision/ Resolution shall state clearly and
distinctly the findings of facts issues and conclusions of law on which it is based and the relief granted
if any. If the decision or resolution involves monetary awards the same shall contain the specific
amount awarded as of the date the decision is rendered.
This provision of the Rules is obviously in consonance with Section 14 Article VIII of the Constitution
providing that (n)o decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based.
- Nicos Industrial Corporation v. Court of Appeals the Court said: It is a requirement of due process
that the parties to a litigation be informed of how it was decided with an explanation of the factual and
legal reasons that led to the conclusions of the court. It ill becomes an appellate judge to write his
rulings with a pair of scissors and a pot of paste as if he were a mere researcher. He is an innovator not
an echo.
In the case at bar, petitioner became the accredited recruitment agency of the principal, M.S. Al
Babtain Recruitment In labor cases, however, technical rules of procedure are not applicable, but may
apply only by analogy or in a suppletory character. Basic principles of justice and equity dictate that
MARS should not be totally cleared of its liability to Macaraya under the peculiar circumstances of this
case. Considering that it was MARS with whom Macaraya entered into a contract and that it had been
accorded due process at the proceedings before the POEA MARS is the one to be held accountable for
her claims. NLRC Affirmed.

vi.) Burden of Proof

Limketkai Sons Milling Inc. v. Editha Llamera

Limketkai Sons Milling received reports that some of its oil products, particularly Marca Leon Cooking
Oil and Corn Oil had visible impurities and rancid taste. The concerned employees, except respondent
who was then on maternity leave, submitted their respective written explanations and were placed
under preventive suspension. LSMI terminated the services of the suspended employees. Llamera filed
against LSMI a complaint for illegal dismissal. LA ruled in her favor. NLRC reversed the LA. CA affirmd
the NLRC with the MODIFICATION that petitioners dismissal was illegal. Thus this petition.
The court held that where there is no showing of a just or authorized cause for termination of
employment, the law considers the case a matter of illegal dismissal. The burden is on the employer
to prove that the termination of employment was for a just or authorized cause. In the case at hand,
we find untenable petitioners claim of breach of trust and confidence committed by the employee.
The willful breach by the employee of the trust reposed in him by his employer must be founded on
facts established by the employer. The latter must clearly and convincingly prove by substantial
evidence the facts and incidents leading to the loss of confidence in the employee. Petitioners simply
alleged that respondents failure to report to the quality control head the batch that did not meet the
minimum standard showed connivance to sabotage petitioners business. Not only is petitioners logic
flawed, it is an instance of arguing non sequitur. An employee who has been illegally dismissed is
entitled to reinstatement and full back wages, that is, without deducting earnings earned elsewhere
during the period of his illegal dismissal. Petition is DENIED.

Skippers United Pacific Inc v. NLRC

Gervacio Rosaroso was signed up as a Third Engineer with Nicolakis Shipping, S.A. through its
recruitment and manning agency, herein petitioner Skippers United Pacific. The term of the contract
was for one year. Barely a month after boarding the vessel M/V Naval Gent respondent was ordered to
disembark in Varna, Bulgaria and repatriated to the Philippines. Immediately after arriving in the
Philippines, respondent filed a complaint for illegal dismissal. Labor Arbiter found that respondent was

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illegally dismissed. NLRC and CA affirmed the LA, not giving credence to the telexed Chief Engineers
Report saying that Rosaroso was slacking in his duties and was unwilling to help with the repairs. The
reason was that the Report cannot be given any probative value as it is uncorroborated by other
evidence and that it is merely hearsay, having come from a source, the Chief Engineer, who did not
have any personal knowledge of the events reported therein. Thus this Petition.
The court held that the rule in labor cases is that the employer has the burden of proving that the
dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was
unjustified and, therefore, illegal.The two-fold requirements for a valid dismissal are as follows: (1)
dismissal must be for a cause provided for in the Labor Code, which is substantive; and (2) the
observance of notice and hearing prior to the employees dismissal, which is procedural
Substantial evidence is defined as that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion. As all three tribunals found, the Report cannot be given any
weight or credibility because it is uncorroborated, based purely on hearsay, and obviously merely an
afterthought. Skippers failed to overcome the burden of proof tasked upon it in proving that the
dismissal has a just cause. Petition Denied.

vii.) Degree of Proof/Substantial Evidence

Philtread Tire and Rubber Corp v. Vicente
Alberto M. Vicente was employed by Philtread Tire and Rubber Corporation as a housekeeping
coordinator. A complaint against Vicente was from a sign painter with whom petitioner had a service
contract. The painter reported that he was being forced by respondent to overprice by P1,000.00 his
service fee of P3,800.00. Petitioner assigned respondent to perform janitorial duties, prompting him to
request an immediate disposition of his case. But when petitioner directed him to submit his evidence
within three (3) days from notice, he failed to comply. Philtread found respondent guilty of extortion,
fraud, serious misconduct and willful breach of trust and confidence and he was terminated. LA ruled
for Philtread. NLRC reversed the LA and held that the respondent was illegally dismissed. CA affirmed
the NLRC. Hence this petition. The court held that there is neither direct nor documentary evidence to
prove that respondent was involved in extortion. In the minutes of the companys investigation, it was
revelaed that Avis did not categorically state that he was pressured by respondent to overprice his
service fee. The court held that the petitioner failed to prove its charge by substantial evidence.
Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion. CA affirmed with the modification that in lieu of reinstatement,
respondent is awarded separation pay.

Etcuban v. Sulpicio Lines Inc.

Sulpicio Lines, Inc. hired Vicente Ectuban in 1978 and in 1994 he was the Chief Purser of the M/V
Surigao Princess. The boat was subjected to a surprise inspection an it was discovered that several
yellow passengers duplicate original of unissued passage tickets already contained the amount of
P88.00 the fare for adult passengers for the boats route. Suplicio Lines instructed him to report to
the main office for an explanation and investigation. He refused to sign the minutes of the
investigation claiming that it was self-incriminatory. And thus he was placed under suspension and
replaced by the company. Ectuban thought that he was fired from his work. Barely a week after the
preventive suspension, he filed a compalint for illegal dismissal claiming that the dismissal was without
basis. LA ruled for him. NLRC affirmed LA since the offense allegedly has not been established by clear
and competent evidence that the alleged irregular condition of the tickets was attributable to the
complainant or to other members of the team of inspectors who have equal access to the tickets. CA
reversed NLRC saying that there was sufficient basis for loss of trust and confidence on him since as
the custodian of the tickets with the authority to issue them, and the fact that the tampered tickets
were in his possession, it was logical that Etcuban committed the tampering. Thus this petition. The
court held that the degree of proof required in labor cases is not as stringent as in other types of cases.
Uncorroborated assertions and accusations by the employer will not be sufficient but as regards a
managerial employee, the mere existence of a basis for believing that such employee has breached
the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees,
proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss
of confidence.
In the present case, the petitioner is not an ordinary rank-and-file employee. The petitioners work is of
such nature as to require a substantial amount of trust and confidence on the part of the employer.
The fact that the petitioner has worked with the respondent for more than 16 years should be taken
against him. The infraction that he committed, vis-a-vis his long years of service with the company,
reflects a regrettable lack of loyalty. If an employees length of service is to be regarded as a
justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty,

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perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all
undesirables. Petition is DENIED.

De Guzman v. NLRC

Fernandito De Guzman was employed as a bus conductor by private respondent Philippine Rabbit Bus
Line Company. He filed an LOA since he claimed he was experiencing chronic pain from the gunshot
wounds he sustained when he tried to defend the earnings of the company from brigands. His leg
shrunk by at least two (2) inches and three (3) feet of his intestines had to be removed. A bullet was
still imbedded in his leg which allegedly still gave him chronic pain. The Companys operation manager
placed him under preventive suspenson when he went beyond the period of the leave of absence he
applied for. De Guzman gave a statement on the reason for his absences. According to him, he did not
report for duty because the left side of his body above his thigh was very painful and rendered him
unable to stand. He thereafter received a memorandum in reply which claims that he has abandoned
his post. De Guzman filed a complaint for illegal dismissal. LA dismissed the complaint.The NLRC
granted the appeal and gave DeGuzman the money clams. CA reinstated the LA. Thus this petition.
The court found that there was a dismissal and that for a dismissal to be completely valid and
faultless, the employer must show that the dismissal was for a just or authorized cause and that it
observed procedural due process. In the case at bar, private respondents contend that petitioner was
validly dismissed for abandonment of work. To constitute abandonment, two elements must concur:
(1) the failure to report for work or absence without valid or justifiable reason, and
(2) a clear intention to sever the employer-employee relationship. The burden of proof is on the
employer to show an unequivocal intent on the part of the employee to discontinue employment. In
this case, the respondent company failed to discharge this burden. Petition is GRANTED.

viii.) Prescription
Menandro B. Laureano v. CA +Singapore Airlines.
Menandro B. Laureano was hired as B-707 captain. He was offered an extension of his two-year
contract to five (5) years. In Zurich Airport he committed a noise violation offense for which he
apologized. He also figured in a tail scraping incident. Spore Air was hit by a recession and he was one
of the pilots who were terminated. He filed a complaint for illegal dismissal. The trial court found for
Menandro. CA reversed the trial court due to prescription and dismissed the complaint. Thus this
petition.
Petitioner raises the issue of whether his action is one based on Article 1144 or on Article 1146 of the
Civil Code.According to him, his termination of employment effective November 1, 1982, was based on
an employment contract which is under Article 1144, so his action should prescribe in 10 years and not
4 years under Article 1146 used as basis by the CA.
The appellate court concluded that the action for illegal dismissal originally filed before the Labor
Arbiter on June 29, 1983, but which was withdrawn, then filed again in 1987 before the Regional Trial
Court, had already prescribed.
The court held that neither Article 1144 nor Article 1146 of the Civil Code is here pertinent. What is
applicable is Article 291 of the Labor Code:
Art. 291. Money claims. All money claims arising from employee employer relations accruing during
the effectivity of this Code shall be filed within three (3) years from the time the cause of action
accrued; In illegal dismissal, it is settled, that the ten year prescriptive period fixed in Article 1144 of
the Civil Code may not be invoked by petitioners, for the Civil Code is a law of general application,
In the light of Article 291, aforecited, we agree with the appellate court's conclusion that petitioner's
action for damages due to illegal termination filed again on January 8, 1987 or more than four (4)
years after the effective date of his dismissal on November 1, 1982 has already prescribed. We base
our conclusion not on Article 1144 of the Civil Code but on which sets the prescription period at three
(3) years and which governs under this jurisdiction. In Olympia International, Inc., vs., Court of Appeals,
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 the plaintiff leaves in exactly the
same position as though no action had been commenced at all." CA AFFIRMED.

Victory Liner Inc. v. Race

Pablo Race was employed by Victory Liner as a bus driver and as a requisite for his hiring, the
respondent deposited a cash bond in the amount of P10,000.00 to the petitioner. In Tarlac, the bus
Race was driving was bumped by a Dagupan-bound bus and he suffered a fractured left leg. One
month after his release from the hospital, the respondent was confined again for further treatment of
his fractured left leg. Upon his return to the office to report for work he was informed that he was

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considered resigned from his job. Race talked with his officer who told him that he was resigned and
asked him to accept 50k. Race, through hi counsel sent a demand letter to the company and there
being no response, they filed a compalont for illegal dismissal. LA dismissed the complaint saying that
respondent was not a regular employee but a mere field personnel and, therefore, not entitled to
service incentive leave, holiday pay, overtime pay and 13th month pay. He also ruled that Race failed
to present evidence showing that Race was entitled to the abovestated money claims. NLRC reversed
the LA. It ratiocinated that respondent did not abandon his work and, instead, continued to be an
employee of petitioner after he was discharged from the hospital. In illegal dismissal cases, the
employee concerned is given a period of four years from the time of his dismissal within which to
institute a complaint. This is based on Article 1146 of the New Civil Code which states that actions
based upon an injury to the rights of the plaintiff must be brought within four years. In Callanta v.
Carnation Philippines, Inc, it was held that: [O]ne's employment, profession, trade or calling is a
"property right," and the wrongful interference therewith is an actionable wrong. The right is
considered to be property within the protection of a constitutional guaranty of due process of law.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of
the worker.
It is error to conclude that the employment of the respondent was unjustly terminated on 10 November
1994 because he was, at that time, still confined at the Specialist Group Hospital, Dagupan City. It is
apparent that respondent did not abandon his work. His absence from work for a long period of time
was obviously due to the fact that he was still recuperating from two operations on his fractured leg.
Petitioner knew this very well. In fact, petitioner shouldered the respondent's medication and hospital
expenses during the latter's confinement and operation in two hospitals. Petitioner failed to establish
the fact that the respondent ceased to be its employee on 10 November 1994. Except for its flimsy
reason that the sick leave, disability leave and physician consultations were given to the respondent as
mere accommodations for a former employee.
It should be stressed that petitioner is a common carrier and, as such, is obliged to exercise extraordinary diligence in transporting its passengers safely.To allow the respondent to drive the petitioner's
bus under such uncertain condition would, undoubtedly, expose to danger the lives of the passengers
and the property of the petitioner.
Petition is PARTLY GRANTED insofar as it prays for the non-reinstatement of respondent.

ix.) Quitclaim
RCBC v. Bithao
Leonardo Bithao was hired by Rizal Commercial Banking Corporation and eventually filed a complaint for
illegal dismissal when he was terminated based on his signing of a quitclaim. LA ruled for Bithao; On
appeal, except for deleting the award of moral and exemplary damages, and attorneys fees, the NLRC
affirmed the Labor Arbiters decision. CA affirmed the LA and the NLRC. Hence, this appeal. RCBC says
that (1) when respondent executed the quitclaim, the decisions of both the Labor Arbiter and the NLRC
were still pending review by the Court of Appeals; (2) respondent expressly acknowledged and waived
in the quitclaim all amounts due him based on the Labor Arbiters decision.
The court ruled that even if Bithaos quitclaim was to the effect that the amount stated therein was the
full and final settlement of all his claims (including all the amounts due him by reason of the decisions
of the Labor Arbiter and the NLRC) it does not mean that he actually received the judgment award. The
SC agreed with the appellate court that petitioner took undue advantage of respondents predicament
and dire financial needs to let him sign the quitclaim in exchange for his retirement benefits. In the
instant case, when the quitclaim was executed, petitioners appeal before the Court of Appeals was
still pending. Since both the Labor Arbiter and the NLRC have previously ruled in respondents favor,
petitioner was aware of the slim chances it had before the appellate court. RCBC could not deny that
the quitclaim was in its own interest. Petition is DENIED.

Solgus Corporation v. CA
The employees of Solgus separately filed complaints for illegal dismissal and underpayment of salaries
and related benefits allegeing that upn hiring there was no stipulation that they were being hired as
probationary employees and that they worked twelve (12) hours daily and were made to sign blank
payrolls. They were subsequently dismissed from employment. Solgus submitted a Memorandum
alleging that: complainants Telin, Lacerna, Emano, Ballon, Menor, Jr., and Alagos had executed
Affidavits of Desistance evidencing that their complaints had been amicably settled; and the
complaints of Deseo and Soriano should be dismissed because they failed to complete their six-month
probationary period and were, therefore, not regular employees. LA dismissed the complaints and
affirmed the validity of the Affidavits of Desistance. NLRC reversed the LA and ordered the
reinstatement of the employees. CA affirmed the NLRC with a few modifications in the award such as

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reintstatement of Diosdado Telin. Thus this petition. The court held that the Affidavits deserve little
consideration. In Periquet v. National Labor Relations Commission, it was held that: 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 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. However, in the case the company presented the Affidavits of
Desistance for the 1st time 7 months after the company received the order of the LA. The Affidavits of
Desistance do not even bear the prima facie evidence of their due execution accorded to private
documents, because even the notaries public before whom they were acknowledged issued a
certification that no such affidavit was acknowledged by Telin and Alagos before them. Quitclaims,
releases and other waivers of benefits granted by law or contracts in favor of workers should be strictly
scrutinized to protect the weak and the disadvantaged. The waivers should be carefully examined, in
regard not only to the words and terms used, but also to the factual circumstances under which they
have been executed.
The mere fact that the respondents were not physically coerced or intimidated does not necessarily
imply that they freely or voluntarily consented to the terms thereof. Petition is denied.

x.)

Dismissal of case purely on a technical ground frowned

upon
Quintano v. NLRC

ANTONIO S. QUINTANO filed a complaint for illegal dismissal against Moldex Group saying that he
joined respondent MLI as Senior Executive Vice-President upon respondent Uys inducement of a
superior compensation package that included a signing bonus in the amount of P5,150,000.00. The
petitioner alleged that he was to use the said amount to purchase condominium unit and that the
employment contract was for a period of five years.
However, on November 11, 1997, without any warning or explanation, respondents Uy and Vinuya
enjoined him to resign from his position. He refused to do so. Nonetheless, during a company party
held on November 13, 1997, to the petitioners consternation, respondent Uy made a unilateral
announcement of the petitioners resignation from the company.
The company averred that when the petitioner joined respondent MRMI, he requested for a cash
advance in the amount of P5,150,000.00 to purchase a condominium unit, a car, and to pay for his
outstanding cash advances from his former employer and that later on the company learned that he
mortgaged the condominium unit to Citytrust Bank. Uy and Vinuya asked the petitioner to resign for
loss of trust and confidence,
On November 13, 1997, a despedida party was tendered for the petitioner at the Heritage Hotel in
Pasay City. The LA found that petitioner violated his contractual obligation to the respondents by
renting out the condo and resulted in a loss of trust and confidence in the petitioner.
NLRC dismissed the appeal. CA dismissed the petition saying that Quintano failed to attach to the
instant petition for certiorari certified true copies of the assailed NLRC Orders and copies of the
following: his complaint for illegal dismissal, motion for formal trial, notice of appeal, and the
Decision of the Labor Arbiter dated April 16, 1999 (Section 1, Rule 65 in relation to Section 3, Rule 46
of the 1997 Rules of Civil Procedure, as amended). Ths this petition.
The court held that in Section 3, Rule 46, of the Rules of Court it reads:
The submission of the duplicate original or certified true copy of the judgment, order, resolution or
ruling subject of a petition for certiorari is essential to determine whether the court, body or tribunal,
which rendered the same, indeed, committed grave abuse of discretion.[6] The provision states that
either a legible duplicate original or certified true copy thereof shall be submitted. If what is submitted
is a copy, then it is required that the same is certified by the proper officer of the court, tribunal,
agency or office involved or his duly authorized representative. The purpose for this requirement is not
difficult to see. It is to assure that such copy is a faithful reproduction of the judgment, order,
resolution or ruling subject of the petition.
In this case, the submission by the petitioner of copies of the assailed NLRC resolutions each bearing
the stamp certified xerox copy instead of certified true copy is substantial compliance with the
aforesaid requirement. Citing Section 4(b),[8] Rule 48 of the Rules of Court, the appellate court,
likewise, justified the dismissal of the petition for certiorari for the petitioners failure to manifest his
willingness to post a bond which would answer for whatever damages that may be caused to the
respondents The Court agrees with the petitioner that his failure to manifest his willingness to post the
said bond is not fatal. In this case, the CA did not act upon the petitioners application for injunctive
relief. It did not require him to post such bond; neither did the CA determine the amount that he must

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post for the grant thereof. The appellate courts dismissal of the petition for certiorari on the ground
that the petitioner failed to manifest his willingness to post the said bond is, thus, unwarranted.
Petition is GRANTED.

xi.) Criminal Cases

Salvador Lacorte v. Inciong
SALVADOR LACORTE was hired by Asean Fabricators as a warehouseman who was tasked to receive
and store raw and junk materials used by the respondent. One day, he asked to purchase the junk of
the company and signed a cash invoice. It was found that he brought out more than he purchased,
some of whch were brand new. He was found to have committed certain acts in breach of the trust and
confidence of his employer and was terminated. ASEAN filed a case for qualified theft against Salvador.
The dismissal was upheld but the criminal complaint was however, dismissed for insufficiency of
evidence. On appeal by petitioner, the aforementioned order was affirmed. Thus this petition. The
court held that petitioner was accorded more than ample opportunities to fully present his side of the
case. After private respondent's application for clearance to terminate petitioner's employment was
filed on October 7, 1977, the case was set for hearing in Regional Office No. IV. It defies explanation
other than that it was a mere afterthought why it took petitioner so much time to prepare those two
affidavits which contain nothing more than the bare allegation, obviously self-serving, that his union
activities prompted his termination.
Lacorte, however, contends that the dismissal by the Provincial Fiscal of the criminal complaint for
qualified theft filed against him by private respondent for insufficiency of evidence supports his claim
that he is innocent of the imputed acts of stealing.
The purpose of the proceedings before the fiscal is to determine if there is sufficient evidence to
warrant the prosecution and conviction of the accused. In assessing the evidence before him, the fiscal
considers the basic rule that to successfully convict the accused the evidence must be beyond
reasonable doubt and not merely substantial. Respondent company conducted its investigation on the
alleged theft before filing the criminal charges and the application for clearance, and only after having
been convinced of the veracity of the reported attempt to steal. That the company investigated the
incident first while allowing petitioner to stay on his job pending the investigation is not only proper
but in accord with fair process. Petition is dismissed.

Quiambao v. NLRC
Rodolfo Quiambao was hired as officer-in-charge of private respondent Central Cement Corporations
Tuguegarao Branch. Six months later, he was made permanent Branch Manager. He was subsequently
suspended for an indefinite period for poor performance in extending credit to customers, violation of
company rules and regulations and gross negligence. As a result of further investigation petitioner was
charged with estafa before the Provincial Fiscal of Tuguegarao, while a civil case for collection was
brought against him in the Regional Trial Court of Makati.
The criminal complaint was dismissed but on appeal to the Ministry of Justice the then Deputy Minister
of Justice, now Associate Justice of this Court, Reynato S. Puno reversed the provincial fiscal and
ordered the filing of an information for estafa against Quiambao. Petitioner filed a complaint for illegal
dismissal. After hearing, the Labor Arbiter found petitioner to have been illegally dismissed. NLRC
reversed the LA saying that the case was subsequently dismissed by the RTC of Tuguegarao for failure
of the prosecution to prosecute. On the other hand, the civil suit for collection was dismissed by the
RTC of Makati for failure of private respondent to prove its case.
The filing of these cases, therefore, cannot support the private respondents claim of loss of trust and
confidence in petitioner. This case is to be distinguished from those cases in which it was held that the
acquittal of the employee in the criminal case was not a bar to his dismissal on the ground of loss of
confidence. The rulings in those cases were based on findings that the evidence in the criminal case
was not sufficient to satisfy the requirement of proof beyond reasonable doubt but otherwise adequate
to support a finding that there was substantial evidence that the employee was guilty. In contrast, in
the case at bar, there is entire want of evidence to justify the dismissal of the petitioner. The NLRC
merely relied on the fact that the Ministry of Justice found petitioner probably guilty of estafa. In fact,
the NLRC found that the charges against him had not been substantiated. Moreover there was, in this
case, no investigation by the private respondent. There was only a financial and performance audit
conducted. NLRC found no evidence substantiating the charges nor is there evidence that he
misappropriated funds of the company or extorted money from customers. That case was eventually
dismissed by the RTC of Tuguegarao for failure of prosecution witnesses to testify, as was the civil case
brought in the RTC of Makati, which found that it was not petitioner Quiambao but the companys
cashier, Antonio Kho, who had misappropriated the money. Petition is GRANTED.

xii.)

Good Faith of Employee

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Cruz v. Coca-Cola Bottlers Phils Inc

CORNELIO C. CRUZ has been working for respondent companys plant in Calamba, Laguna, as a
driver/helper at times, he gets designated as Acting Salesman for respondents soft drinks and other
beverages. He loaded their their truck with CCBPI products. After the required verification and
confirmation of the products loaded petitioner proceeded to leave the plant vicinity. After gate
inspection, however, petitioner drove back inside the plant on the pretext of refueling. While waiting in
line to refuel, petitioner allegedly asked Aguila to load an additional thirty (30) cases of assorted
canned soft drinks as plus load. He went out again but when asked to be subjected to inspection ge
shouted, Ayos na. Miguel Legaspi, one of the security guards, noticed several cases of canned soft
drinks loaded at the back of the truck which he verified to be unlisted in the trucks LOGP. He was then
directed to return to the plant and unload the products. At this point, it was confirmed that petitioner
did not actually secure any paper for the added products nor did he follow the established procedure
before taking out the extra cases.
An investigation was conducted on the alleged violations committed by petitioner and he was
eventually terminated. Cruz filed a complaint for illegal dismissal. LA dismissed the complaint. NLRC
found the penalty of dismissal too excessive and not proportionate to the alleged infractions
committed. Court of Appeals which ruled that while there was valid cause for petitioners termination,
respondent company failed to satisfy the procedural requirements because the notices it sent to
petitioner were legally deficient in failing to notify with particularity the specific acts of violation he
was being charged of. Thus this peitition.
Several factors militate against petitioners claim of good faith. Petitioners length of service, which
spans almost fifteen (15) years, works against his favor in this case. We have held that the longer an
employee stays in the service of the company, the greater is his responsibility for knowledge and
compliance with the norms of conduct and the code of discipline in the company. Moreover, in his
sworn statement, Aguilar attested that he reminded petitioner of whether he had secured the gate
pass for the products, and petitioner merely replied, Ayos na. Termination of employment by reason
of loss of confidence is governed by Article 282(c) of the Labor Code, which provides that an employer
can terminate the employment of the employee concerned for fraud or willful breach by an employee
of the trust reposed in him. The company rules violated by petitioner are punishable, for the first
offense, with the penalty of suspension. However, respondent company has presented evidence
showing that petitioner has a record of other violations from as far back as 1986. To be sure, the nature
of petitioners offenses is downright inimical to the interests of respondent company. Petition is
DENIED.

E. Reliefs/Remedies in Illegal Dismissal

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989)
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including graft and corruption;
c. If made purely on questions of law; and
d. If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar
as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement
provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon the erring parties. In all cases, the appellant shall
furnish a copy of the memorandum of appeal to the other party who shall file an answer not later than
ten (10) calendar days from receipt thereof. The Commission shall decide all cases within twenty (20)

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calendar days from receipt of the answer of the appellee. The decision of the Commission shall be final
and executory after ten (10) calendar days from receipt thereof by the parties.
Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the
Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic
Act No. 6715, March 21, 1989)

i.)
In general
Lopez v. NLRC

Melody Paulino Lopez, then Guidance Counselor of the elementary department, created an agenda
where the students witnessed soldiers exhibit. She wrote a letter to Letran College where she said that
the program was a success but that some quarters had objections. After that event, she couldnt help
but feel that she was being forced to resign since after the Career Orientation, Mr. Moralino,
Elementary Principal, ordered Dr. Ramos to remove complainant as Elementary Guidance Counselor
and she was replaced by another staff who had no experience in the school set-up. Later, complainant
was offered a sizable amount of money by respondents in exchange for her voluntary resignation. She
was soon dismissed by Letran. Labor Arbiter found that petitioner was dismissed for just cause and
with due process. NLRC ruled that there was an illegal
dismissal due to absence of just cause and due process but ordered private respondents to grant
petitioner separation pay in lieu of reinstatement. THE SC HELD that despite a finding of illegal
dismissal against private respondent school, petitioner should not be reinstated. Whether or not
complainant uttered defamatory words against respondent Fr. Edwin Lao is of no moment, the focal
inquiry being addressed is whether or not such alleged
misconduct was in connection with, or in relation to, with the work of complainant as Head
Psychometrician. Records are bereft of such fact. In general, the remedy for illegal dismissal is the
reinstatement of the employee to his former position without loss of seniority rights and the
payment of backwages. But there may be instances as when reinstatement is not a viable remedy
as where as in this case the relations between the employer and the employee have been so
severely strained that it is not advisable to reinstate. The fact remains that petitioner is not
required to prove her innocence on the charges leveled against her but the burden rests upon
private respondents to establish the valid cause of petitioner's termination.
-

Bustamante vs. NLRC with regard to illegal dismissals effected after March 21, 1989.
We ruled in recent cases that an illegally dismissed employee is entitled to his full
backwages from the time his compensation was withheld from him up to the time of his
actual reinstatement.

The legislative policy behind Republic Act No. 6715 points to "full backwages" as
meaning exactly that, i.e. without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal.

NLRC is AFFIRMED subject to the MODIFICATION that private respondents are also ordered to pay
petitioner full backwages.

United Field Sea Watchman and Checkers Agency v. Requillo

Willie Requillo etc. were security guards of the United Field Sea Watchman and Checkers Agency
(UFSWCA), petitioner and they applied for loans but they founs that their SSS was not remitted. Upon
advice of the SSS, they filed with the Department of Labor and Employment in Surigao del Norte
complaints against UFSWCA. They were transferred but they continued reporting for work at the PPA
office in Surigao City. Hence, UFSWCA refused to pay their salaries for the month of June 1997 as they
were considered absent without leave. They filed a complaint for illegal dismissal. UFSWCA denied
dismissing the respondents from employment. They were merely transferred to other places of work.
LA ruled that they were illegally dismissed. NLRC agreed and deleted the awards. CA set aside the
NLRC. Thus this petition. The sole issue for our resolution is whether the Court of Appeals erred in
holding that petitioners appeal to the NLRC was filed beyond the reglementary period. The registry
return slips addressed to Jaime Amamio and Atty. Estanislao Ebarle show a significant difference when
compared to the registry return slips addressed to PPA. The non-submission of the original return slips
is an indication that if the originals were submitted they would reveal that private respondent Jaime
Amamio and Atty. Estanislao Ebarle received the Decision of the Labor Arbiter not on April 27, 1998 but
on a much earlier date. Thus, the appeal not having been filed within the ten (10) day period
to appeal, the appeal filed by private respondents before the NLRC should not have been
given due course.
ART. 223. Appeals. 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

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decisions awards or orders.

The right to appeal is not part of due process but a mere statutory privilege that has to be exercised
only in the manner and in accordance with the provisions of law. Petition Denied.

a. Reinstatement
1. Definition
Asian Terminals Inc. v. Villanueva

The 4 respondents were employees of Marina Port Services, Inc. (MPSI) and members of the Associated
Workers Union of the Philippines (AWU). AWU president sought the dismissal from service of
respondents who were expelled from AWU. Respondents filed a complaint for constructive illegal
dismissal and unfair labor practice. LA found the termination to be illegal. NLRC affirmed the decision
which became final and executory. Labor Arbiter Dinopol issued a partial writ of execution. Pursuant
thereto, MPSI reinstated respondents. However, respondents alleged that MPSI did not reinstate them
to their former positions or to equivalent positions. Respondents filed a motion for contempt against
AWU and MPSI for non-compliance with the partial writ of execution. Respondents also prayed for
additional backwages because they were allegedly not reinstated to their former positions or to
equivalent positions. Labor Arbiter Bartolabac held that it was proper for MPSI to reinstate them to
their former positions. Labor Arbiter Bartolabac granted additional backwages. NLRC modified the
order of Labor Arbiter Bartolabac by deleting the award of additional backwages. The Court of Appeals
held that at the time of respondents illegal dismissal, respondents were already regular
employees.
MPSI asserts that it reinstated respondents to their former positions. According to MPSI, respondents
were regular employees and that their designation as casual rotation employees merely meant that
they work on rotation.
The NLRC found that MPSI indeed reinstated respondents to their former positions or to substantially
equivalent positions.
Reinstatement means restoration to a state or condition from which one had been removed or
separated. The person reinstated assumes the position he had occupied prior to his dismissal.
Reinstatement 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.
Reinstatement means restoration to the former position occupied prior to dismissal or to substantially
equivalent position. Reinstatement does not mean promotion. Promotion is based primarily on an
employees performance during a certain period. Just because their contemporaries are already
occupying higher positions does not automatically entitle respondents to similar positions. Petition
Granted.

Composite Enterprises v. Caparoso

COMPOSITE ENTERPRISES hired EMILIO M. CAPAROSO and JOEVE QUINDIPAN who filed a complaint for
illegal dismissal upon their termination. LA ruled in favor of the employees. Petitioner appealed ans
said that it cannot reinstate respondents to their former positions since their previous positions were
no longer available. Labor Arbiter issued a Writ of Execution directing the Sheriff to effect respondent's
reinstatement. Consistent with its stand that physical reinstatement was no longer possible, petitioner
reinstated respondents into its payroll, conditioned on the NLRC's ruling on its motion to be allowed to
pay separation pay in lieu of reinstatement. NLRC set aside the Decision of the Labor Arbiter, holding
that there was no illegal dismissal since respondents' contracts of employment were for a fixed
period. CA dismissed the petition for petitioner's failure to present proof that its General Manager was
duly authorized to sign the petition's Verification and Certification of Non-Forum Shopping. Hence, the
present petition.
Petitioner insists that the NLRC should have ordered the payment of separation pay since respondents'
reinstatement to their former positions was physically impossible due to petitioner's implementation of
a retrenchment program.
Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of Republic Act (R.A.) No.
6715, and Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715, Amending the Labor
Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory even
pending appeal.
Reinstatement is the restoration to a state or condition from which one has been removed or
separated. The intent of the law in making a reinstatement order immediately executory is much like a
return to work order, i.e., to restore the status quo in the workplace in the meantime that the issues
raised and the proofs presented by the contending parties have not yet been finally resolved.
Payment of separation pay as a substitute for reinstatement is allowed only under exceptional

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circumstances, viz:
(1) when reasons exist which are not attributable to the fault or are beyond the control of the
employer, such as when the employer -- who is in severe financial strait, has suffered serious business
losses, and has ceased operations -- implements retrenchment, or abolishes the position due to the
installation of labor-saving devices;
(2) when the illegally dismissed employee has contracted a disease and his reinstatement will
endanger the safety of his co-employees; or,
(3) where a strained relationship exists between the employer and the dismissed employee.
Retrenchment: it is a management prerogative consistently recognized and affirmed by this Court. It is
However subject to faithful compliance with the substantive and procedural requirements laid down by
law and jurisprudence. For retrenchment to be considered valid the following substantial requirements
must be met: (a) the losses expected should be substantial and not merely de minimis in extent; (b)
the substantial losses apprehended must be reasonably imminent such as can be perceived objectively
and in good faith by the employer; (c) the retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and (d) the alleged losses if already incurred and the expected
imminent losses sought to be forestalled must be proved by sufficient and convincing evidence.
In this case, petitioner sought to justify the payment of separation pay instead of reinstatement on the
basis of its implementation of a retrenchment program for serious and persistent financial
difficulties. However, petitioner only submitted as evidence the notice of its intention to implement a
retrenchment program, which it sent to the Department of Labor and Employment on July 25, 2000. It
did not submit its financial statements. the petition is GRANTED.

2. Exceptions
Johnson and Johnson v. Johnson Office and Sales Union

Ma. Jesusa Bonsol and Rizalinda Hirondo filed against petitioners Johnson & Johnson (Phils.), Inc. and
Janssen Pharmaceutica. Labor Arbiter dismissed the complaint. NLRC rendered a Resolution, modifying
the decision of the Labor Arbiter. The NLRC ruled that the violations of company procedure committed
by respondents did not constitute serious misconduct or willful disobedience warranting their
dismissal; hence, respondents were entitled to reinstatement. Neither party appealed from the
resolution decision of the NLRC within the reglementary period. The Resolution dated 14 December
2001 became final and executory.
At the conference petitioners reiterated their intention to satisfy respondents monetary award but the
latter refused and insisted on their reinstatement. NLRC issued a Resolution, which directed the
reinstatement of respondents
Aggrieved, petitioners filed a petition for certiorari with the Court of Appeals. They contended that
respondents Motion for the Issuance of a Writ of Execution had the effect of altering the Resolution,
which had already become final and executory and which clearly granted petitioners the option to
either reinstate respondents to their former positions or to pay the monetary award.
Court of Appeals rendered the assailed Decision dismissing the petition and affirming the resolutions of
the NLRC Hence, the instant petition.
An illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years,
however, case law developed that where reinstatement is not feasible, expedient or practical, as where
reinstatement would only exacerbate the tension and strained relations between the parties, or where
the relationship between the employer and employee has been unduly strained by reason of their
irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order payment of separation pay. Petition
DENIED.
Closure of Business

Retuya v. Hon. Dumarpa

Private respondent, Insular Builders, Inc., is a family-owned corporation managed and operated
principally by Antonio Murillo, father, and his son, Rodolfo Murillo. It is engaged in the construction
business. Petitioners, on the other hand, were workers who have rendered services in various
corporations of private respondents.
At the height of the feud between private respondents Antonio Murillo and Rodolfo Murillo, the former
discharged the latter from his position as manager of Insular Builders, Inc. and assumed control of the
company. Petitioners found themselves in the middle of the crossfire and were told to temporarily stop
working. Petitioners filed a complaint for illegal dismissal. Labor Arbiter found Murillos guilty of illegal
dismissal. Hence, this Petition.
In the present case, petitioners were dismissed because of a change of management. They were not
given any prior written notice, but simply told that their services were terminated on the day they

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stopped working for Insular Builders, Inc. Under the circumstances, the CA was correct in upholding
the labor arbiters finding that they had been illegally dismissed. Having been illegally dismissed,
petitioners should be awarded back wages in accordance with Bustamante v. NLRC.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full backwages, inclusive
of allowances and other benefits or their monetary equivalent, from the time their actual
compensation was withheld from them up to the time of their actual reinstatement.
While it may be true that petitioners continued to work in the same place and office as in their
previous employment, it is equally true that they had in fact been illegally dismissed by their previous
employer. Thus, they lost their former work status and benefits in a manner violative of the law.
The records indicate that reinstatement is no longer feasible. Insular Builders, Inc. has ceased
operations. Absent any showing that its business was deliberately stopped to avoid reinstating the
complaining employees, the amount of back wages shall be computed from the time of their illegal
termination, petitioners are entitled to separation pay.
These are distinct and separate reliefs given to alleviate the economic setback brought about by the
employees dismissal. The award of one does not bar the other.
WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the CA is AFFIRMED with the
MODIFICATION that petitioners shall be paid full back wages from the date of their dismissal until the
cessation of the business operations
Economic Business Conditions

Union of Supervisors v. Secretary of Labor

Luna filed a complaint against respondent Bank, charging it with unfair labor practice committed
against its president Mr. Norberto Luna. A supplemental complaint was filed by the same petitioner
with the allegation that after filing of the original complaint, the respondent Bank followed up its
harassment of Mr. Luna by terminating his employment as Branch Manager and as trustee. At the
meeting of the Board of Trustees of the RB Provident Fund, Mr. de Vera proposed a reorganization of
the fund in order to carry out the instruction of the (respondent's) Board of Directors, which wants to
have control of the fund so as to tie it up with the Investment Money Market Operations of the bank.
Mr. Luna vehemently objected to this, saying that the Provident Fund does not belong to the
respondent bank but to the officers and employees. It was during the ensuing discussion that Mr. Luna
allegedly uttered the libelous remarks.
Respondent bank had wanted to do away with Luna even before that eventful February 12th meeting
of the PF Board of Trustees, when one of its Assistant Vice-Presidents, de Vera, who had just been
appointed to fill the temporary vacancy therein. This is evident from the words of de Vera when he
said, "the management proposed a reorganization because it thinks that a new administration can
serve the PF better. You have been tried. Why can we not appoint a new administrator and give us a
chance to do things in our way or fashion ?
Luna challenged the accuracy of the stenographic notes of the said meeting on the ground that Mrs.
Unson was not a court stenographer and her notes do not truly reflect all that transpired during the
meeting. These allegations were never refuted. The minutes should have been signed by him before
being officially released. Without such signature, neither probative value nor credibility could be
accorded to such minutes. The other basis for dismissal insubordination appears to be likewise without
justifiable ground. Such charge arose out of the alleged refusal of Luna to obey the order of his
superior, to turn over the records of the Provident Fund to the new administrator. The Board of
Trustees, upon receipt of such written explanation, should have referred the matter to the grievance
machinery under the collective bargaining agreement.
That the respondent bank tried to maneuver Luna's ouster is evident from the way the investigation
was conducted by its Committee on Personnel. As shown in the above narration of events, the
testimonies of witnesses who were not even under oath were taken without notice to Luna and without
giving him a chance to cross-examine them.
The respondent bank, however, argues that Luna's union activities had nothing to do with his
dismissal, and that the same was for cause. THE RESPONDENT REPUBLIC BANK IS HEREBY DIRECTED
TO IMMEDIATELY REINSTATE COMPLAINANT NORBERTO LUNA TO HIS FORMER POSITION WITHOUT LOSS
OF SENIORITY RIGHTS
??????????????????????????????????????????????????????????????????????????????????????????????????
????????
Employees Unsuitability

Divine Word High School v. NLRC

Complaint filed by Luz Catenza, a high school teacher of petitioner Divine Word College, for illegal
dismissal. She alleged in her complaint that she went on a vacation leave but that when she tried to
report back to work she was informed that she is not anymore allowed to teach because of the

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"misdeeds" and "immoral acts" of her husband Pablo Catenza, then the principal of petitioner school.
Court agrees with the following finding of the Labor Arbiter (which finding has also been affirmed by
the NLRC);
A careful review and evaluation of the entire records of the case show clearly that complainant was
dismissed without a valid cause. ALL throughout the records of the case it is very apparent that the
main reason she was dismissed was because of the alleged immoral conduct of her husband. Granting
that allegation is true, there being no clear showing that complainant's husband was ever investigated
or convicted of the serious act alluded to him, why should his wife be made to suffer for her husband's
indiscretion and infidelity.
Scrutiny of the records shows that petitioners were afforded every opportunity to present their
evidence but they repeatedly failed to appear at the four (4) consecutive hearings scheduled for the
purpose.
We hesitate ordering the reinstatement of private respondent Luz Ballano Catenza as a high school
teacher in the petitioner high school, which is a Catholic institution, serving the educational and
moral needs of its Catholic studentry. Pay separation pay equivalent to one month pay for every year
of service, plus her backwages.
Employees Retirement/Overage

Espejo v. NLRC
EDUARDO M. ESPEJO was hired by Cooperative Insurance System of the Philippines (CISP) as General
Manager. cease and desist order was issued by the Office of the Insurance Commission against CISP
on grounds of capital impairment and margin of solvency deficiency. In order to put up the needed
capital requirements, Board authorized the sale of some CISP properties, including the company car
assigned to petitioner for his personal use. Petitioner objected to such sale. Board overruled
petitioners opposition prompting the latter to tender his resignation. Petitioner filed a case against
CISP for illegal dismissal. Labor Arbiter rendered a decision ordering CISP to (1) reinstate petitioner to
his former position. NLRC promulgated its decision affirming the finding of illegal dismissal by the
Labor Arbiter but modifying the rest thereof by deleting the reinstatement of petitioner for having
become moot and academic considering that he (petitioner) was already 60 years old. SC sustains the
challenged decision insofar as it disallowed reinstatement. The law recognizes as valid any retirement
plan, agreement or management policy regarding retirement at an earlier or older age.
In the case of petitioner, CISP did not have any retirement plan for its employees. In such situation,
Sec. 13, Book IV, of the Omnibus Rules Implementing the Labor Code provides that in the absence of a
retirement plan, agreement or policy an employee may be retired upon reaching the age of sixty (60)
years. Thus, an employee held to be illegally dismissed cannot be reinstated if he had already reached
the age of sixty (60) years at the time of his second complaint (pressing for reinstatement). However
considering that petitioner has already reached the statutory retirement age of sixty (60), we agree
with NLRC that petitioner is entitled only to backwages.
An award of damages would be improper. The decision to sell certain company properties, including
the complainants car, was not that of Director Benjamin Cruz (the complainants ostensible enemy)
alone, but that of at least a majority of the respondents board of directors.NLRC AFFIRMED.
Antipathy and Antagonism Strained Relations

Capitol Medical Center Inc. v. Meris

Capitol Medical Center, Inc. hired Dr. Cesar Meris one of its stockholders, as in charge of its Industrial
Service Unit (ISU). Dr. Meris received from Capitols president and chairman of the board, Dr. Thelma
Navarette-Clemente (Dr. Clemente), a notice advising him of the managements decision to close or
abolish the ISU. Dr. Meris thus filed on September 7, 1992 a complaint against Capitol and Dr.
Clemente for illegal dismissal. Labor Arbiter held that the abolition of the ISU was a valid and lawful
exercise of management prerogatives. NLRC modified the Labor Arbiters decision. It held that in the
exercise of Capitols management prerogatives, it had the right to close the ISU. The appellate court
went on to hold that the ISU was not in fact abolished, its operation and management having merely
changed hands from Dr. Meris to Dr. Clemente. Hence, the present petition.
The right to close the operation of an establishment or undertaking is explicitly recognized under the
Labor Code as one of the authorized causes in terminating employment of workers, the only limitation
being that the closure must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.
The phrase closures or cessation of operations of establishment or undertaking includes a partial or
total closure or cessation AND That not due to serious business losses or financial reverses recognizes
the right of the employer to close or cease his business operations or undertaking even if he is not
suffering from serious business losses or financial reverses. It would indeed be stretching the intent
and spirit of the law if a court were to unjustly interfere in managements prerogative to close or cease

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its business operations just because said business operation or undertaking is not suffering from any
loss. In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU. Existence of
business losses is not required to justify the closure or cessation of establishment or undertaking as a
ground to terminate employment of employees. Even if the ISU were not incurring losses, its abolition
or closure could be justified on other grounds like that proffered by Capitol extinct demand. Capitol
failed, however, to present sufficient and convincing evidence to support such claim of extinct
demand. The termination of the services of Dr. Meris not having been premised on a just or authorized
cause, he is entitled to either reinstatement or separation pay if reinstatement is no longer viable, and
to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee relationship or when
the work or position formerly held by the dismissed employee no longer exists, as in the instant case.
Dr. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every
year of his employment, with a fraction of at least six (6) months being considered as one(1) year, and
full backwages from the time of his dismissal from April 30, 1992 until the expiration of his term as
Chief of ISU. CA affirmed.

Westmont Pharmaceuticals v. Samaniego supra 25

Unilab hired Samaniego as Professional Service Representative of its marketing arm, Westmont. Later,
Unilab promoted him as Senior Business Development Associate and assigned him in Isabela as Acting
District Manager of Westmont. He was transferred to Metro Manila pending investigation of his
involvement in a sales discount and Rx trade-off controversy. He was then placed under "floating
status" and assigned to perform duties not connected with his position, like fetching at the airport
physicians coming from the provinces; making deposits in banks; fetching field men and doing
messengerial works. His transfer to Metro Manila resulted in the diminution of his salary. Ricardo
Samaniego then filed a complaint for illegal dismissal with the LA who ordered his reinstatement and
payment of his full backwages. NLRC declared the LAs Decision null and void. CA reinstated LA.
Hence, these consolidated petitions. Samaniego claims that upon his reassignment and/or transfer to
Metro Manila, he was placed on "floating status" and directed to perform functions not related to his
position. For their part, Westmont and Unilab explain that his transfer is based on a sound business
judgment, a management prerogative. In constructive dismissal, the employer has the burden of
proving that the transfer of an employee is for just and valid grounds, such as genuine business
necessity. The employer must be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee. It must not involve a demotion in rank or a diminution of salary and other
benefits. If the employer cannot overcome this burden of proof, the employees transfer shall be
tantamount to unlawful constructive dismissal. Westmont and Unilab failed to discharge this burden.
Samaniego was unceremoniously transferred from Isabela to Metro Manila. We hold that such transfer
is economically and emotionally burdensome on his part. He was constrained to maintain two
residences. Worse, immediately after his transfer to Metro Manila, he was placed "on floating status"
and was demoted in rank, performing functions no longer supervisory in on the part of the employee
that it could foreclose any choice by him except to forego his continued employment. This was what
happened to Samaniego. However, the circumstances obtaining in this case do not warrant the
reinstatement of Samaniego. Antagonism caused a severe strain in the relationship between him and
his employer. A more equitable disposition would be an award of separation pay equivalent to at least
one month pay, or one month pay for every year of service, whichever is higher (with a fraction of at
least six [6 months being considered as one [1 whole year), 9 in addition to his full backwages,
allowances and other benefits.CA AFFIRMED.

3. Offer to Reinstate
Ranara v. NLRC
Petitioner Carlos Ranara had been working as a driver with Oro Union Construction Supply when he
was told by Fe Leonar, secretary of the other private respondent, Jimmy Ting Chang, not to come back
the following day. Thinking that she was only joking, be reported for work as usual. Chang said he was
in a hospital in Manila and that he had not authorized Leonar, or even his mother who was the officerin-charge during his absence, to terminate Ranara's employment.
We reject as a rank falsity the private respondents' claim that the petitioner had not been illegally
dismissed and in fact abandoned his work
Private respondents themselves claim they have a staff of less than ten persons, and Chang or his
mother could not have failed to notice Ranara's absence after November 1, 1989. Yet they took no
steps to rectify the secretary's act if it was really unauthorized. Neither can Ranara's rejection of
Chang's offer to reinstate him be legally regarded as an abandonment because the petitioner had been
placed in an untenable situation that left him with no other choice.

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Given again the smallness of the private respondents' staff, Ranara would have found it uncomfortable
to continue working under the hostile eyes of the employer who had been forced to reinstate him.It
was not as if Ranara were only one among many other complainants ordered reinstated in a big
company, for whatever enmity the employer might harbor against them would be diluted and less
personalized, so to speak. There would be a certain degree of anonymity, and a resultant immunity
from retaliation
It is clear that the petitioner was illegally dismissed without even the politeness of a proper notice. The
fact that his employer later made an offer to re-employ him did not cure the vice of his earlier arbitrary
dismissal. The wrong had been committed and the harm done. NLRC is AFFIRMED.

b. Backwages
1. Effect of Failure Order
Aurora Land etc v. NLRC

Dagui was hired by Doa Aurora Suntay Tanjangco in 1953 to take charge of the maintenance and
repair of the Tanjangco apartments and residential buildings. Upon the death of Doa Aurora
Tanjangco in 1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the administration of
all the Tanjangco properties. Mrs. Quazon suddenly told him: "Wala ka nang trabaho mula ngayon," on
the alleged ground that his work was unsatisfactory. Private respondent, who was then already sixtytwo (62) years old, filed a complaint for illegal dismissal with the Labor Arbiter. Honorio Dagui earns a
measly sum of P180.00 a day (latest salary). Ostensibly, and by no stretch of the imagination can
Dagui qualify as a job contractor. The bare allegation of petitioners, without more, that private
respondent Dagui is a job contractor has been disbelieved by the Labor Arbiter and NLRC. Private
respondent Dagui should likewise be considered a regular employee by the mere fact that he rendered
service for the Tanjangcos for more than one year, that is, beginning 1953 until 1982, under Doa
Aurora; and then from 1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine (29)
and nine (9) years respectively.
The Court, however, is bewildered why only an award for separation pay in lieu of reinstatement was
made by both the Labor Arbiter and the NLRC.
No backwages were awarded.
It must be remembered that backwages and reinstatement are two reliefs that should be given to an
illegally dismissed employee. They are separate and distinct from each other. In the event that
reinstatement is no longer possible, as in this case, separation pay is awarded to the employee.
The award of separation pay is in lieu of reinstatement and not of backwages.
In other words, an illegally dismissed employee is entitled to (1) either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and (2) backwages.
Payment of backwages is specifically designed to restore an employee's income that was lost because
of his unjust dismissal. On the other hand, payment of separation pay is intended to provide the
employee money during the period in which he will be looking for another employment. Petition is
partly GRANTED.

St. Michaels Institution v. Santos

Carmelita Santos, Florencio Magcamit and Albert Rosarda were regular classroom teachers and Their
service with the school was abruptly interrupted when each of them was served a notice of termination
of employment stemming from a public rally held at the town plaza aimed at calling the attention of
the school administration to certain grievances relative to substandard school facilities and the
economic demands of teachers and other employees of St. Michaels Institute.
The dismissal meted out on the respondents for dereliction of duty for one school day and denouncing
school authority, appears to be too harsh a penalty. In termination of employment disputes that the
burden of proof is always on the employer to prove that the dismissal was for a just and valid cause.
Evidence must be clear,
Misconduct is the transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. As
a just cause for termination, the misconduct must be serious. On the other hand, disobedience, as a
just cause for termination, must be willful or intentional. In the instant case, evidence is wanting on
the depravity of conduct, and willfulness of the disobedience on the part of the respondents.
On the matter of the award of backwages, petitioners advance the view that by awarding backwages,
the appellate court unwittingly reversed a time-honored doctrine that a party who has not appealed
cannot obtain from the appellate court any affirmative relief other than the ones granted in the
appealed decision. We do not agree.
Article 279 of the Labor Code, as amended, mandates that
an illegally dismissed employee is entitled to the twin reliefs of
(a) either reinstatement or separation pay, if reinstatement is no longer viable, and

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(b) backwages.
Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed
employee and, thus, the award of one does not bar the other. Both reliefs are rights granted by
substantive law which cannot be defeated by mere procedural lapses. Petition is hereby DENIED.

2. Computation
Mercury Drug Co. Inc v. CIR

Nardo Dayao was employed by the petitioners originally as driver, later assigned as delivery man, then
as checker and was last promoted to the position of assistant chief checker in the checking
department. Dayao in vain urged herein petitioners to pay them overtime pay, criticized their,
employees' association for failing to protect the welfare of the employees by not securing such
additional compensation for overtime, and campaigned among his co-employees to organize another
labor union. Hearing of Dayao's union activities company told him to resign and persuaded him to
accept the amount of P562.50 as termination pay and to sign a clearance stating to the effect that he
has no claims whatsoever of any kind and nature against herein petitioners. Exactly two years and
fifteen days from his separation on April 10, 1961, Dayao filed a complaint for unfair labor practice
against herein petitioners for dismissing him because of his having campaigned among his coemployees to become members of a new labor union that he was then organizing.
Unfair labor practice charge with the prayer for reinstatement with back wages should be filed within a
reasonable period of time. But laches, like estoppel, should also be alleged as a defense in the answer,
otherwise the same is considered renounced.
However, the lapse of two years and 15 days from the dismissal from the service to the filing of the
ULP charge is not an unreasonable period of time under the circumstances.
Finally, if the dismissal of herein private respondent Dayao was for just cause, then there was no
reason for petitioners-employers to give him termination pay; because under the Termination Pay Law,
otherwise known as Republic Act No. 1052, as amended by Republic Act No. 1787, the employee
whose services are terminated for just cause is not entitled to termination pay.
The remaining question is how much back wages shall be allowed private respondent Dayao.
The period of delay in instituting this ULP charge with claim for reinstatement and back wages,
although within the prescriptive period, should be deducted from the liability of the employer to him
for back wages.The employer in the case at bar should be directed to pay private respondent Dayao
back wages equivalent to one year, eleven months, and fifteen days without further disqualifications.In
fairness to the employer, he should not be compelled to reinstate an employee who is no longer
physically fit for the job from which he was illegally ousted.
WHEREFORE, THE PETITION IS HEREBY DISMISSED AND PETITIONERS ARE HEREBY DIRECTED:
(1) TO PAY PRIVATE RESPONDENT NARDO DAYAO BACK WAGES EQUIVALENT TO ONE YEAR, ELEVEN
MONTHS, AND FIFTEEN DAYS; .
(2) TO REINSTATE HIM AFTER CERTIFICATION OF HIS PHYSICAL FITNESS BY A GOVERNMENT PHYSICIAN;
AND
(3) TO PAY THE COSTS.

Bustamante v. NLRC
The decision of the Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that
backwages shall be paid to petitioners.
The first labor relations law governing the award of backwages was Republic Act No. 875, the Industrial
Peace Act, approved on 17 June 1953.
Itogon-Suyoc Mines, Inc. v. Sagilo-Itogon Workers' Union, this Court restated the guidelines for
deternination of total backwages, thus:
"First. To be deducted from the backwages accruing to each of the laborers to be reinstated is the total
amount of earnings obtained by him from other employment
Second. Likewise, in mitigation of the damages that the dismissed respondents are entitled to, account
should be taken of whether in the exercise of due diligence respondents might have obtained income
from suitable remunerative employment. From this ruling came the burden of disposing of an illegal
dismissal case on its merits of determining whether or not
the computation of the award of backwages is correct.
Mercury Drug Co., Inc., et al. v. CIR, et al.: Justice Teehankee dissented from the majority view that the
employee in said case should be awarded backwages only for a period of 1 year, 11 months and 15
days which represented the remainder of the prescriptive period after deducting the period
corresponding to the delay incurred by the employee in filing the complaint for unfair labor practice
and reinstatement. Justice Teehankee opined that: " an award of back wages equivalent to three
years (where the case is not terminated sooner) should serve as the base figure for such awards

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without deduction, subject to deduction where there are aggravating circumstances (e.g. oppression or
dilatory appeals) on the employer's part.
The effectivity of P.D. 442 Art 279. the Court enforced the Mercury Drug rule and in effect qualified the
provision under P.D. No. 442 by limiting the award of backwages to three (3) years. On 21 march 1989
Republic Act No. 6715 took effect amending the Labor Code.
Article 279 thereof states in part:
"ART. 279. Security of Tenure. . . . An employee who 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." (underscoring
supplied)
An illegally dismissed employee is entitled to his full backwages from the time his compensation was
withheld from him (which as a rule, is from the time of his illegal dismissal) up to the time of his actual
reinstatement.
The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers
than was previously given them under the Mercury Drug rule or the "deduction of earnings elsewhere"
rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived
elsewhere. Peititon Denied.

Star Paper Corporation v. Espiritu

Complainants in this case worked in respondents paper manufacturing business in various capacities
as machine operator, bookbinding head and/or helper. They claimed that, for refusal to sign for the
ratification of an addendum to an existing Collective Bargaining Agreement which was intended to
effect a reduction in their leave benefits of fifteen (15) days for every year of service, they were
subjected to acts of harassment. They were instructed by the company to receive a Memorandum of
Transfer which they refused.
The Court agrees with the analysis and conclusion of the CA that, based on the facts of the case,
respondents were constructively dismissed. It must be stressed that where an employee complains of
constructive dismissal, it is the employer who bears the burden of proving that the transfer of an
employee is for just and valid grounds, such as genuine business necessity, and such transfer is not
unreasonable, inconvenient, or prejudicial to the employee. The combined circumstances of the
immediate transfer of respondents to far-off provinces after their refusal to sign the signature sheet of
the document for the ratification of the Addendum to the Collective Bargaining Agreement point to the
fact that the transfers are motivated by ill-will on the part of petitioner. Petitioner, therefore, failed to
sufficiently prove that respondents transfer is for a just and valid cause.
the Court has ruled in a long line of cases that where an employee would have been entitled to
reinstatement with full backwages, but circumstances, i.e., strained relationships, makes
reinstatement impossible, the more equitable disposition would be an award of separation pay
equivalent to at least one month pay, or one month pay for every year of service, whichever is higher,
in addition to full backwages, inclusive of allowances, and other benefits or their monetary
equivalent, computed from the time the employees compensation was withheld from him up to the
time of his supposed actual reinstatement. In this case, since payment of backwages and separation
pay were ordered only upon promulgation of the CA Decision. The computation of full backwages,
inclusive of allowances, and other benefits or their monetary equivalent, should be computed from the
time the respondents compensation was withheld from them up to the time of the finality of this
decision. Petition is DENIED.

Candano Shipping Lines Inc v. Florantina Sugata-On

Candano Shipping hired Melquiades Sugata-on was employed by Candano Shipping as Third Marine
Engineer. The
vessel encountered rough seas and strong winds while traversing the waters of Lianga Bay, Surigao del
Sur, causing her to tilt. M/V David, Jr. sank together with her cargo at around eleven oclock in the
evening. Upon learning of Melquiades fate, Florentina immediately went to the office of Candano
Shipping in Manila to claim the death benefits of her husband but it refused to pay. Such refusal
prompted Florentina to institute an action seeking indemnity.
She grounded her case on the provision of Article 1711 of the New Civil Code, which imposes upon the
employer liability for the death of his employee in the course of employment, even if the death is
caused by a fortuitous event
RTC resolved the controversy in favor of Florentina and ratiocinated that the provision of Article 391 of
the New Civil Code on presumptive death had become operative since the period of four years had
already elapsed since Melquiades was reported missing

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Appellate court applied the standard prescribed by Article 194 of the Labor Code of the Philippines
Hence, this instant Petition
Floresca v. Philex Mining Company: employee cannot pursue both remedies simultaneously but has the
option to proceed by interposing one remedy and waiving his right over the other. As we have
explained in Floresca, this doctrinal rule is rooted on the theory that the basis of the compensation
under the Workmens Compensation Act is separate and distinct from the award of damages under the
Civil Code.
In the case at bar, Florentina was forced to institute a civil suit for indemnity under the New Civil Code,
after Candano Shipping refused to compensate her husbands death.
In Villa Rey, the common carrier was made liable for the death of its passenger on board a passenger
bus owned and operated by Villa Rey Transit, Inc. going to Manila from Lingayen, Pangasinan. The
obligation of the common carrier to indemnify its passenger or his heirs for injury or death arose from
the contract of carriage entered into by the common carrier and the passenger. In the same breadth,
the employer shall be liable for the death or personal injury of its employees in the course of
employment as sanctioned by Article 1711 of the New Civil Code. In the case at bar, only the award of
actual damages, specifically the award for unearned income is warranted by the circumstances since it
has been duly proven that the cause of death of Melquiades is a fortuitous event for which Candano
Shipping cannot be faulted.
The formula for the computation of unearned income is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living
expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 age of deceased at the time of death]
Life expectancy =
2 / 3 x [80 age of deceased at the time of death]
2 /3 x [80 56]
2 / 3 x [24]
Life expectancy = 16
The argument raised by Candano Shipping that the formula for determining the life expectancy under
Villa Rey cannot be automatically applied without proof of the basis for the expected length of life of a
Filipino does not merit our consideration. In the case at bar, Candano Shipping cannot validly assert
that the standard life expectancy factor laid down in Villa Rey cannot be applied in this case. Petition is
DENIED.

3. Fringe Benefits
Acesite Corp. v. NLRC

Leo A. Gonzales was hired on October 18, 1993 as Chief of Security of Manila Pavillion Hotel. Gonzales
took a 4-day sick leave and took emergency leave he again took a 12-day vacation leave, thereby
using up all leaves that he was entitled for the year. It appears that on May 7, 1998, Angerbauer issued
the following Notice of Termination[10] through an inter-office memo: Gonzales thus filed on May 27,
1998 a complaint against Acesite for illegal dismissal. Labor Arbiter, by Decision of February 7, 2000,
dismissed the complaint. NLRC reversed that of the Labor Arbiter, Court of Appeals, finding that
Gonzales was illegally dismissed, affirmed with modification the NLRC decision. In the present case,
the records do not show compliance by petitioners with the two (2)-notice rule prescribed in the above
provision of law. Although several telegrams were sent to private respondent Gonzales, there is not
one (1) telegram Moreover, as previously discussed, bad faith or malice was not proven. Angerbauer,
acting on behalf of Acesite, was, like Gonzales, perhaps also too presumptuous in thinking that the
telegrams ordering the latter to report for work were all received on time, drawing him to hastily
conclude that Gonzales intentionally disobeyed the orders contained therein.
As to the deletion of the fringe benefits or their monetary equivalent, this Court agrees with
Gonzales that it is not in accord with law and jurisprudence. Article 279 of the Labor Code provides:
ART. 279 SECURITY OF TENURE. In cases of regular employment, the employer shall not terminate
the services of an employee except for 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. (Emphasis and underscoring supplied). Court affirms the assailed
decision.

ii.)
Damages and Attorneys fees
Philippine Aeolus Auto-Motive United Corp v. NLRC
A memorandum was issued to Rosalinda Cortez, the company nurse, requiring her to explain why no
disciplinary action should be taken against her for throwing a stapler at William Chua, the plant

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manager, for the loss of money to be deposited and for asking a co-employee to punch in her time
card making it appear she was in the office earlier than her actual time to arrive. The company placed
her under preventive suspension. She was terminated from services. She filed a complaint for illegal
dismissal. LA held the termination to be legal. NLRC reversed and found her the victim of illegal
dismissal. Thus this petition.
The court held that for misconduct or improper behavior to be a just cause for dismissal, it must be
serious, relate to the performance of the employees duties and must show that the employee has
become unfit to continue working for the employer. The throwing of a stapler though serious
misconduct, was not done in the performance of her duties. Also, the other offenses are not connected
to her duties as a company nurse. As for the punching in of the time card, this is a violation of
company rules but is not SERIOUS misconduct. Also, it was found that Chua has been continually
harassing her since her first year at work. That she failed to report the sexual harassment right away is
of no matter. For moral damages, it must be proven that the complainant suffered anxiety, sleepless
nights, besmirched reputation and social humiliation. For exemplary damages are granted by way of
example or correction for the public good. Her dismissal even her 30 day suspension was not found by
the court to be commensurate to her offense. NLRC affirmed.

Reyes v. CA

Dr. Pedrito demanded PhilMalay for separation payment similar to its employees as well as for
underpayment of salary, a new car, life insurance policy, office rentals and legal service costs he
incurred. The LA claimed that the retrenchment of PhilM is valid. NLRC reduced the awards. His appeal
was dismissed by CA for failure to attach position paper, decision by Labor Arbiter and Memorandul of
Appeal.
Court of Appeals should have reconsidered its dismissal of petitioners appeal after petitioner
submitted a certified true copy of the MeTCs decision. It was clear from the petition for review that
the RTC incurred serious errors in awarding damages to private respondents which were made without
evidence to support the award and without any explanation
In the same vein, there is no basis in awarding moral and exemplary damages, inasmuch as
respondents were not shown to have acted in bad faith in initially refusing to award separation pay
equivalent to 1 month salary for every year of service. Respondents even offered to pay petitioner
separation pay, albeit in an amount not acceptable to petitioner.
Moral damages are recoverable only where the act complained of is tainted by bad faith or fraud, or
where it is oppressive to labor, and done in a manner contrary to morals, good customs, or public
policy. Exemplary damages may be awarded only if the act was done in a wanton, oppressive, or
malevolent manner. None of these circumstances exist in the present case.
In its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court
to be paid by the losing party in a litigation. The instances where these may be awarded are those
enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof which pertains to actions for
recovery of wages, and is payable not to the lawyer but to the client, unless they have agreed that the
award shall pertain to the lawyer as additional compensation or as part thereof. The extraordinary
concept of attorneys fees is the one contemplated in Article 111 of the Labor Code, which provides:
Art. 111. Attorneys fees. (a) In cases of unlawful withholding of wages, the culpable party may be
assessed attorneys fees equivalent to ten percent of the amount of wages recovered
The afore-quoted Article 111 is an exception to the declared policy of strict construction in the
awarding of attorneys fees. Although 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 the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in this case.
In carrying out and interpreting the Labor Code's provisions and its implementing regulations, the
employees welfare should be the primordial and paramount consideration.
In the case at bar, what was withheld from petitioner was not only his salary, vacation and sick leave
pay, and 13th month pay differential, but also his separation pay. Hence, pursuant to current
jurisprudence, separation pay must be included in the basis for the computation of attorneys fees.
Petitioner is entitled to attorneys fees equivalent to 10% of his total monetary award.Petition is
GRANTED.

Elcee Farms v. NLRC

Elcee Farms entered into a Lease Agreement with Garnele Aqua Culture Corporation (Garnele).
Garnele sub-leased Hacienda Trinidad to Daniel Hilado, who operated HILLA. The contract of lease
executed between Garnele and HILLA stipulated the continued employment of 120 of the former
employees by the latter, but the contract was silent as to the benefits which may accrue to the
employees

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Soon after HILLA took over it entered into a CBA with another union and due to their refusal to join the
labor union, the private respondents were terminated by HILLA. Pampelo Semillano and one hundred
forty-three (143) other complainants, represented by their labor union, Sugar Agricultural Industrial
Labor Organization (SAILO), filed this complaint for illegal dismissal.
Labor Arbiter dismissed their claim for damages and denied all claims. Complainants appealed and
NLRC affirmed the amount awarded by the Labor Arbiter as separation pay and allowed their petition
for damages for disturbance of their right to labor. The three sets of parties (1) the complainants; (2)
Elcee Farms and Corazon Saguemuller; and (3) HILLA filed their own Motions for Reconsideration. The
NLRC ruled that the simulation of the lease agreement between Elcee Farms and Garnele was made in
bad faith and thus the award of damages isjustifed. Thus this Petition for Certiorari.
The court held that the above findings show that even after the execution of the lease agreement
between Elcee and Garnele, Elcee continued to act as the employer of the farm workers of Hacienda
Trinidad. Elcee Farms effectively ceased to operate and manage Hacienda Trinidad when, through
Garnele, it leased the hacienda to HILLA. After the said lease was executed, the employer-employee
relationship between the farm employees and Elcee Farms was severed. The lease agreement between
Garnele and Daniel Hilado identified the employees who will continue working with the new
management and stipulated that workers who were not in the list, whether new or employed in the
past, will not be employed by the lessee.
However, the court held that, moral damages are recoverable when the dismissal of an employee is
attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs or public policy. Exemplary damages, on the other hand, are
recoverable when the dismissal was done in a wanton, oppressive, or malevolent manner. Bad faith on
the part of Elcee Farms is shown by the act of simulating a lease agreement with Garnele in order to
evade paying private respondents the proper amount of separation benefits based on the number of
years they worked in the hacienda, as provided by the Labor Code. Records show that Elcee Farms did
not pay any separation benefits to the private respondents when they allegedly leased the hacienda to
Garnele, and again when the hacienda was leased to Daniel Hilado.
Clearly, there was a cessation of operations of Elcee Farms, but although they were absorbed by the
new management of the hacienda, in the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new employees. Petition is partially
granted and the awards of damages and separation pay are given. (modification: Corazon Saguemuller
should not be held subsidiarily liable)

iii.) Separation Pay

Ha Yuan Restaurant v. NLRC
Juvy Soria worked as a cashier in petitioners establishment located inside the SM Food Court
Makati. Respondents co-worker Sumalague was eating at the back of the store, when respondent
rushed toward Ma. Teresa Sumalague and hit the latter on the face causing injuries and resulting in a
scuffle between the two. Despite the intervention of their supervisor Fiderlie Recide, they were not
pacified. They were brought to the SM Food Court Administration Office and then to the Customer
Relations Office for further investigation.
SM Food Court Manager banned the two from working within the SM Food Courts premises.
Respondent then filed with the Labor Arbiter a complaint for illegal dismissal
LA dismissed case. NLRC affirmed. CA affirmed NLRC. Hence, herein petition
The court held in Philippine Long Distance Telephone Co. vs. NLRC that 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. Separation
pay therefore, depends on the cause of dismissal, and may be accordingly awarded provided that the
dismissal does not fall under either of two circumstances: (1) there was serious misconduct, or (2) the
dismissal reflected on the employees moral character.
The Court holds that respondents cause of dismissal in this case amounts as a serious misconduct and
as such, separation pay should not have been awarded to her. Thus, the petition should be
granted.Her cause of dismissal amounting to a serious misconduct, respondent is not entitled to an
award of separation pay. As further stated in Philippine Long Distance Telephone Co. vs. NLRC: The
policy of social justice is not intended to countenance wrongdoing simply because it is committed by
the underprivileged. Social justice cannot be permitted to be refuge of scoundrels any more than can
equity be an impediment to the punishment of the guilty. Petition is GRANTED.

Amkor Technology Philippine Inc. v. Juanco

In our Decision of September 20, 2006, we affirmed with modification the Decision dated October 20,
2004 of the Court of Appeals finding that Nory A. Juangco, respondent, was illegally dismissed. We

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upheld the appellate courts ruling that respondent is entitled to separation pay, backwages and other
privileges and benefits. However, we deleted the awards for moral and exemplary damages for lack
of basis.
Petitioners anchored their motion for partial reconsideration on our recent Decision in Domondon v.
National Labor Relations Commission
The NLRC, relying on the affidavits of the officers of petitioner-company, found that respondent was
not coerced into signing the notice of voluntary retirement. On the other hand, the Court of Appeals
found that respondent was coerced to retire.
Records show that due to business losses, petitioner-company saw the need to reduce its existing
manpower complement. Several meetings were held among its officers and department heads to
discuss actions to be taken to implement the same. Respondent denied the due execution of her
Release Quitclaim and Waiver, alleging that she signed the same under duress and intimidation. She
claimed that she was threatened that she will receive nothing if she will not sign it. The voluntariness
of her retirement is attested and confirmed by top ranking officials of petitioner- company then present
during the meeting in October 2001. She failed to present evidence to contradict their statements.
Respondent is a well-educated woman holding a managerial position. It is highly improbable that with
her employment stature and educational attainment, she could have been duped into signing a
retirement letter against her will.It is safe to conclude that such retirement package was the reason
why she opted to retire.
Respondent received her retrenchment backwage a week after she submitted her resignation paper.
She had ample time to mull over what courses of action to take if indeed she was illegally dismissed.
Instead, she returned to the company to sign the Receipt and Release Waiver and Quit Claim and to
receive her retirement package. Thereafter, she looked for employment in other companies.It is thus
clear that the filing of the complaint was merely an afterthought when she failed to find another
employment. We GRANT petitioners Motion for Partial Reconsideration and RECONSIDER our
Decision.

Central Pangasinan Electric Cooperative v. NLRC

Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative,
Inc. (CENPELCO). Cagampan received a check amounting to P100,831 from Aurora B. Bonifacio as partial
payment for the installation of a transformer in her building and expansion of a three-phase line. Bonifacio
informed CENPELCOs General Manager Salvador de Guzman of the said transaction and that
Cagampan did not issue a receipt for the partial payment made. She also requested the immediate
installation of the transformer. Thereafter, Cagampan was directed to explain in writing why he should
not be disciplined or dismissed for the unauthorized acceptance of payments for new electrical
connections. Cagampan was found guilty of violating CENPELCOs Code of Ethics and Discipline,
namely: (1) unauthorized acceptance of payments for new connection; (2) dishonest or unauthorized
activity whether for personal gain or not; and (3) defrauding others by using the name of the
company. He was dismissed from service. Cagampan filed a complaint for illegal dismissal, praying for
payment of backwages and damages, and reinstatement. at issue in this case is the propriety of the
award of separation pay to private respondent. We find for petitioner.
Separation pay should not be awarded.
Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code provides that when the
employee is dismissed for any of the just causes under Article 282 of the Labor Code, he shall not be
entitled to termination pay Separation pay shall be allowed only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character. Separation pay in such case is granted to stand as a measure of social justice. If the
cause for the termination of employment cannot be considered as one of mere inefficiency or
incompetence but an act that constitutes an utter disregard for the interest of the employer or a
palpable breach of trust in him, the grant by the Court of separation benefits is hardly justifiable.
Although long years of service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination
The fact that private respondent served petitioner for more than twenty years with no negative record
prior to his dismissal, in our view of this case, does not call for such award of benefits, since his
violation reflects a regrettable lack of loyalty and worse, betrayal of the company. petition is
GRANTED
Backwages and Separation Pay, Distinct Reliefs

Triad Security and Allied Services v. Ortega

Respondents Silvestre Ortega, Jr., Ariel Alvaro, Richard Sevillano, Martin Callueng, and Isagani Capila
were formerly employed by petitioner Triad Security as security guards. Respondents filed a complaint
against petitioners According to respondents, during the time that they were in the employ of

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petitioners, they were receiving compensation which was below the minimum wage fixed by law. They
were also made to render services everyday for 12 hours but were not paid the requisite overtime pay.
Labor Arbiter issued an alias writ of execution commanding the sheriff to collect from petitioners the
amount of six hundred three thousand seven hundred ninety-four and seventy-seven centavos
(P603,794.77) representing the unsatisfied balance of the judgment award. Given the foregoing, we
hold that the Court of Appeals correctly dismissed the petition for certiorari brought before it.
Notwithstanding this procedural defect committed by petitioners, in the interest of substantial justice,
we shall proceed to resolve the other issues presented by petitioners.
Petitioners insist that their monetary obligation, as contained in the 28 February 2000 decision of the
labor arbiter, had already been fully satisfied. They posit the argument that with respondents receipt
of their separation pay, they had opted not to seek reinstatement to their former jobs and elected
instead to sever their employment with petitioner Triad Security. In fact, according to petitioners,
respondents had already found new employments and to award them further backwages would be
tantamount to unjust enrichment.
Article 279 of the Labor Code, as amended, states: ART. 279. SECURITY OF TENURE
In cases of
regular employment the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.
As the law now stands, an illegally dismissed employee is entitled to two reliefs, namely: backwages
and reinstatement. These are separate and distinct from each other. However, separation pay is
granted where reinstatement is no longer feasible because of strained relations between the employee
and the employer. Backwages and separation pay are, therefore, distinct reliefs granted to one who
was illegally dismissed from employment. WHEREFORE, premises considered, this Court AFFIRMS the
Decision of the Court of Appeals dated 31 July 2003 and the Order dated 23 April 2003 of the Labor
Arbiter declaring petitioners liable for additional accrued backwages.

Skippers United Pacific v. NLRC supra 27

Gervacio Rosaroso was signed up as a Third Engineer with Nicolakis Shipping, S.A. through its
recruitment and manning agency, herein petitioner Skippers United Pacific. The term of the contract
was for one year. Barely a month after boarding the vessel M/V Naval Gent respondent was ordered to
disembark in Varna, Bulgaria and repatriated to the Philippines. Immediately after arriving in the
Philippines, respondent filed a complaint for illegal dismissal. Labor Arbiter found that respondent was
illegally dismissed. NLRC and CA affirmed the LA, not giving credence to the telexed Chief Engineers
Report saying that Rosaroso was slacking in his duties and was unwilling to help with the repairs. The
reason was that the Report cannot be given any probative value as it is uncorroborated by other
evidence and that it is merely hearsay, having come from a source, the Chief Engineer, who did not
have any personal knowledge of the events reported therein. Thus this Petition.
The court held that as all three tribunals found, the Report cannot be given any weight or credibility
because it is uncorroborated, based purely on hearsay, and obviously merely an afterthought. Skippers
failed to overcome the burden of proof tasked upon it in proving that the dismissal has a just cause.
Finally, with regard to the monetary claims of the respondent, the court held that a seafarer is not a
regular employee as defined in Article 280 of the Labor Code. Hence, he is not entitled to full
backwages and separation pay in lieu of reinstatement as provided in Article 279.
Seafarers are contractual employees whose rights and obligations are governed primarily by the POEA
Standard Employment Contract for Filipino Seamen, the Rules and Regulations Governing Overseas
Employment, and, more importantly, by Republic Act (R.A.) No. 8042, or the Migrant Workers and
Overseas Filipinos Act of 1995. Section 10 of R.A. 8042 provides for the award of money claims in cases
of illegal dismissals, thus:
Section 10. Money Claims.
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.
The award of salaries for the unexpired portion of his employment contract or for three (3) months for
every year of the unexpired term, whichever is less, is not an award of backwages or separation pay,
but a form of indemnity for the worker who was illegally dismissed. The Labor Arbiter may have
mislabeled it as separation pay, nonetheless, the award was made in conformity with law.
Petition Denied. CA affirmed with the modifications that monetary awards of US$2,400.00 and
US$186.69 made by the Labor Arbiter in its Decision should be payable in its equivalent in Philippine
currency computed at the prevailing rate of exchange at the time of payment.

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a. Computation/Rationale
Business Day Information Systems and Services Inc. v. NLRC
Businessday Information Systems due to financial reverses, some plant employees, including the
private respondents, were laid off. BSSI retained some employees in an attempt to rehabilitate its
business as a trading company. However, barely two and a half months later, these remaining
employees were likewise discharged because the company decided to cease business operations
altogether.
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that there
was unlawful discrimination in the payment of separation benefits to the employees. They argued that
the first batch of employees was paid "retrenchment" benefits mandated by law, while the remaining
employees were granted higher "separation" benefits because their termination was on account of the
closure of the business.
In case of retrenchment of a company to prevent losses and closure of business operation, the law
provides:
Art. 283. Closure of establishment and reduction of personnel.-The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operations of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to the installation of labor saving
devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking nut due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole
year." (Labor Code; emphasis supplied.)
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses
or closure of business operations, is recognized by law, but it may not pay separation benefits
unequally for such discrimination breeds resentment and ill-will among those who have been treated
less generously than others.
The law requires the granting of the same amount of separation benefits to the affected employees in
any of the cases. The respondent argued that the giving of more separation benefit to the second and
third batches of employees separated was their expression of gratitude and benevolence to the
remaining employees who have tried to save and make the company viable in the remaining days of
operations. The law requires an employer to extend equal treatment to its employees. It may not, in
the guise of exercising management prerogatives, grant greater benefits to some and less to others.
Management prerogatives are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA 758).
Article 283 of the Labor Code, as amended, protects workers whose employment is terminated
because of closure of the establishment or reduction of personnel (Abella vs. NLRC, 152 SCRA 141,
145).NLRC AFFIRMED.

Songco v. NLRC supra

F.E. Zuelig M. Inc. filed with DOLE an application to terminate Jose Songco, Cipres and Manuel on the
ground of retrenchment. The petitioners opposed this claiming that the company is not suffering from
any losses but later on, contended that they are no longer contesting their dismissal but rather wanted
to receive separation pay including the commissions, allowances etc which they receive every month.
LA excluded the commissions and NLRC dismissed the appeal. Hence this petition.
For allowances, the court used Santos v. NLRC as the prevailing doctrine wherein it said that
computation of backwages and separation pay should include transportation and emergency living
allowances.
As for commissions, the court held that commission is not part of the basic salary. The court held that
the purpose of separation pay is to alleviate the difficulties which confront the dismissed employee
(thrown to the streets to face the harsh necessities of life) and in adopting the general rule that
commissions arent part of the basic salary of salesmen, the purpose of the separation pay will not be
satisfied. The court took judicial notice of the fact that the nature of his job as a salesman
demonstrates that such type of remuneration is part of their salary since some salesmen do not
receive basic salary but rather, rely on allowances or commissions. Petition is Granted.

b. Effect of Receipt
San Miguel Corp v. Javate

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Private respondent was a casual employee of the petitioner assigned to its B-Meg warehouse in San
Miguel, Bulacan. He figured in an accident and was initially confined at the Figueroa Emergency
Hospital. Upon his discharge from the hospital private respondent was fetched by his immediate
supervisor However, they were unable to reach San Miguel, Bulacan, as the roads were rendered
impassable by typhoon "Norming"; to prevent his being declared absent without leave, private
respondent, with the assistance of his supervisor, filed an application for vacation leave for eleven (11)
days with pay.
This being so, the absences incurred by private respondent during said period were charged to his
remaining sick leave benefits with pay, thus fully exhausting them. We find no merit in petitioner's
contention. In the case at bar, the labor arbiter found that the evidence presented by private
respondent sufficiently showed his fitness to resume his work thereby making his termination illegal.
There is likewise no merit to petitioner's contention that private respondent is estopped from assailing
his retirement as he has accepted the benefits under the retirement plan. Private respondent
vehemently denied this contention, and the filing of the complaint for illegal dismissal indisputably
strengthens such denial.
Furthermore, even assuming arguendo that private respondent indeed received his retirement
benefits, it does not estop him from questioning the legality of his dismissal. As this Court stated in De
Leon vs. NLRC: The contention of respondents that petitioner is barred from contesting the illegality of
his dismissal since he has already received his separation pay cannot be sustained. Since he was
forced to retire, he suddenly found himself jobless with a family of eight (8) children to support. He had
no alternative but to accept what was offered to him. . . . Employees who received their separation pay
are not barred from contesting the legality of their dismissal. The acceptance of those benefits would
not amount to estoppel as held in the leading case of Mercury Drug Co. vs. CIR (56 SCRA 694) as aptly
cited in the decision of the Labor Arbiter. (emphasis supplied). Petition is DISMISSED for lack of merit.

iv.)
Financial Assistance (When Allowed/Not Allowed)
Phil Long Distance Tel Co. v. NLRC

The only issue presented in the case at bar is the legality of the award of financial assistance to an
employee who had been dismissed for cause as found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by
two complainants of having demanded and received from them the total amount of P3,800.00 in
consideration of her promise to facilitate approval of their applications for telephone installation.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was
considered warranted, was required regardless of the nature or degree of the ground proved, be it
mere inefficiency or something graver like immorality or dishonesty. The benediction of compassion
was made to cover a multitude of sins, as it were, and to justify the helping hand to the validly
dismissed employee whatever the reason for his dismissal. This policy should be re-examined. It is
time we rationalized the exception, to make it fair to both labor and management, especially to labor.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law
must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if
he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear
dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be
allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really
sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the
situation is changed completely. This is not only inefficiency but immorality and the grant of separation
pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense.
The policy of social justice is not intended to countenance wrongdoing simply because it is committed
by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense
The Court also rules that the separation pay, if found due under the circumstances of each case,
should be computed at the rate of one month salary for every year of service, assuming the length of
such service is deemed material. Petition is GRANTED.

v.)
Indemnity
Serrano v. NLRC and Isetan supra 26
Ruben Serrano was hired by private respondent Isetann Department Store as a security checker to
apprehend shoplifters and prevent pilferage of merchandise. To cut costs, Isetann phased out its entire

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security section and engage the services of an independent security agency. Serrano filed a complaint
for illegal dismissal upon his termination. The LA found this termination to be illegal. NLRC held that
the phase-out of private respondents security section and the hiring of an independent security
agency constituted an exercise by private respondent of a legitimate business decision. Hence this
petition.
The court held that contrary to the allegations of Serrano, the dismissal falls under Art. 283 of the
Labor Code for redundancy Art. 283 also provides that to terminate the employment of an employee
for any of the authorized causes the employer must serve "a written notice on the workers and the
DOLE at least one (1) month before the intended date thereof."
In this case, Serrano was given notice the same day of his termination
Art. 283 of the Labor Code, the employers failure to comply with the notice requirement does not
constitute a denial of due process but a mere failure to observe a procedure for the termination of
employment which makes the termination of employment merely ineffectual. Thus, only if the
termination of employment is not for any of the causes provided by law is it illegal and, therefore, the
employee should be reinstated and paid backwages.
If the employees separation is without cause, instead of being given separation pay, he should be
reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid
full backwages if he has been laid off without written notice at least 30 days in advance.
On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee
was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that
article, he should not be reinstated. However, he must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination of his
employment without legal effect. Petition Granted.

Agabon v. NLRC supra 26

Riviera Home Improvements, employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board
and cornice installers and after years under their employ, were dismissed for abandonment of
work. Petitioners then filed a complaint for illegal dismissal and payment of money claims. LA declared
the dismissals illegal. NLRC reversed the LA.CA ruled that the dismissal of the petitioners was not
illegal because they had abandoned their employment but ordered the payment of money claims.
Hence, this petition.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. The
court found that the Agabon were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to sever the
employer-employee relationship with private respondent. Given that abandonment was established,
the court held in that where the dismissal is for a just cause, as in the case, the lack of statutory due
process should not nullify the dismissal but the employer should indemnify the employee for the
violation of his statutory rights.
The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now,
pay later, which the court sought to deter in the Serrano ruling.
The sanction should be in the nature of indemnification or penalty and should depend on the facts of
each case, taking into special consideration the gravity of the due process violation of the employer.
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. In this case, the award was fixed at
P30,000.00. Pettion Dismissed.

vi.) Liability of Corporate Officers

Petron Corp v. NLRC
Petron, through its Cebu District Office, hired the herein private respondent Chito S. Mantos, an
Industrial Engineer, as a managerial, professional and technical employee. It was while assigned at
Petrons Cebu District Office with petitioner Peter Maligro as his immediate superior, when Mantos, thru
a Notice of Disciplinary Action dated October 29, 1996, a copy of which was received by him on
November 18, 1996, was suspended for 30 days for violating company rules and regulations
regarding Absence Without Leave (AWOL), not having reported for work. Subsequently, in a notice
Termination of Services received by him, Mantos services were altogether terminated.
We are, however, with the petitioners in their submission that the NLRC erred in holding petitioner
Peter Maligro jointly and severally liable with petitioner Petron for the money claims of the private
respondent.
Settled is the rule in this jurisdiction that a corporation is invested by law with a legal personality
separate and distinct from those acting for and in its behalf and, in general, from the people
comprising it. Thus, obligations incurred by corporate officers acting as corporate agents are not

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theirs but the direct accountabilities of the corporation they represent. True, solidary liabilities may at
times be incurred by corporate officers, but only when exceptional circumstances so warrant. For
instance, in labor cases, corporate directors and officers may be held solidarily liable with the
corporation for the termination of employment if done with malice or in bad faith.
In the present case, the apparent basis for the NLRC in holding petitioner Maligro solidarily liable with
Petron were its findings that (1) the Investigation Committee was created a day after the summons in
NLRC RAB-VII Case No. 11-1439-96 was received, with Maligro no less being the chairman thereof;
and (2) the basis for the charge of insubordination was the private respondents alleged making of
false accusations against Maligro.
Those findings, however, cannot justify a finding of personal liability on the part of Maligro inasmuch as
said findings do not point to Maligros extreme personal hatred and animosity with the respondent. It
cannot, therefore, be said that Maligro was motivated by malice and bad faith in connection with
private respondents dismissal from the service.
If at all, what said findings show are the illegality itself of private respondents dismissal, the lack of
just cause therefor and the non-observance of procedural due process. Verily, the creation of the
investigation committee and said committees consideration of the insubordination charge against the
private respondent, were merely aimed to cover up the illegal dismissal or to give it a semblance of
legality.
Besides, the fact that Maligro himself was the committee chairman is not itself sufficient to impute bad
faith on his part or attribute bias against him. It is undisputed that Maligro was private respondents
superior, being Petrons Operations Assistant Manager for Visayas and Mindanao. It is thus logical for
him to be part of the committee that will investigate private respondents alleged infractions of
company rules and regulations. As well, the committee was composed of three other Petron officers as
members, and nowhere is there any showing that Maligro, as committee chairman, influenced the
other committee members to side against the private respondent.
In any event, it must be stressed that private respondents allegation of bad faith on the part of
Maligro was not established in this case. We quote the NLRCs finding in this regard: Whether he really
caught the ire of his immediate supervisor (respondent Maligro) in view of his alleged closeness to the
previous one who migrated to Canada, and whether or not he was assigned to menial clerical jobs
when his designation was that of Operations Engineer, were not clearly established by complainant.
WHEREFORE, the assailed Resolution of the Court of Appeals is SET ASIDE, and the NLRC
decision dated July 31, 2000 is AFFIRMED

Carag v. NLRC supra 26

Without notice of any kind Mariveles Apparel Corporation for unknown reasons ceased operations with
the intention of completely closing its shop as manifested in a letter filed on the same day the
company closed. MACs employees filed a complant for illegal closure of business through their labor
union. LA found them liable for illegal closure. NLRC dismissed the petitions and affirmed the LA. Thus
this petition. The court held that the LAs decision to hold Antonio Carag as MACs stockholder and
Chairman has not basis since Complainants did not allege or prove, and Arbiter Ortiguerra did not
make any finding, that Carag approved or assented to any patently unlawful act to which the law
attaches a penalty for its commission. On this score alone, Carag cannot be held personally liable for
the separation pay of complainants. As for his liability as an employer as enumerated under Article
212(e) of the Labor Code (Employer' includes any person acting in the interest of an employer, directly
or indirectly. The term shall not include any labor organization or any of its officers or agents except
when acting as employer.)
The court recounted the cases of McLeod v. NLRC and Spouses Santos v. NLRC that Article 212(e) of
the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the
corporation. The governing law on personal liability of directors for debts of the corporation is still
Section 31 of the Corporation Code.
Thus in McLeod: Personal liability of corporate directors, trustees or officers attaches only when
(1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs,
(2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance,
do not forthwith file with the corporate secretary their written objection;
(3) they agree to hold themselves personally and solidarily liable with the corporation; or
(4) they are made by specific provision of law personally answerable for their corporate action.
Thus, it was error for Arbiter Ortiguerra, the NLRC, and the Court of Appeals to hold Carag personally
liable for the separation pay owed by MAC to complainants based on Article 212(e) since it does not
state that corporate officers are personally liable for the unpaid salaries or separation pay of
employees of the corporation. The liability of corporate officers for corporate debts remains governed
by Section 31 of the Corporation Code. Petition Granted.

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V.

Retirement

REPUBLIC ACT NO. 7641 (December 9, 1992):RETIREMENT PAY LAW: AN ACT AMENDING ARTICLE 287
OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE
PHILIPPINES, BY PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE
ABSENCE OF ANY RETIREMENT PLAN IN THE ESTABLISHMENT
Section 1. Article 287 of Presidential Decree No. 442, as amended, otherwise known as the Labor
Code of the Philippines, is hereby amended to read as follows:
"Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
"In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those provided herein.
"In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
"Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall
mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent
of not more than five (5) days of service incentive leaves.
"Retail, service and agricultural establishments or operations employing not more than (10)
employees or workers are exempted from the coverage of this provision.
"Violation of this provision is hereby declared unlawful and subject to the penal provisions
provided under Article 288 of this Code."
Sec. 2. Nothing in this Act shall deprive any employee of benefits to which he may be entitled under
existing laws or company policies or practices.
Sec. 3. This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette
or in at least two (2) national newspapers of general circulation, whichever comes earlier.
Pursuant to the provisions of Article 287 of the Labor Code as amended by Republic Act No.
7641, in relation to Article 5 of the same Code, RULE II of Book VI of the Rules
Implementing the Labor Code is hereby issued, the full text of which shall read as follows:
RULE II Retirement Benefits
SECTION 1. General Statement on Coverage. This Rule shall apply 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 under Section 2 hereof. As used herein, the term
Act shall refer to Republic Act No. 7641 which took effect on January 7, 1993.
SECTION 2. Exemptions. This Rule shall not apply to the following employees:
2.1 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.
2.2 Domestic helpers and persons in the personal service of another. (Deleted by Department
Order No. 20 issued by Secretary Ma. Nieves R. Confessor on May 31, 1994.)
2.3 Employees of retail, service and agricultural establishment or operations regularly
employing not more than ten (10) employees. As used in this sub-section;
(a) Retail establishment is one principally engaged in the sale of goods to end-users
for personal or household use. It shall lose its retail character qualified for
exemption if it is engaged in both retail and wholesale sale of goods.
(b) Service establishment is one principally engaged in the sale of service to
individuals for their own or household use and is generally recognized as such.
(c) Agricultural establishment/operations refers to an employer which is engaged in
agriculture. This terms refers to all farming activities in all its branches and
includes among others, the cultivation and tillage of the soil, production,
cultivation, growing and harvesting of any agricultural or horticultural

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commodities, dairying, raising of livestock or poultry, the culture of fish and

other aquatic products in farms or ponds, and any activities performed by a
farmer or on a farm as incident to or in conjunction with such farming operations,
but does not include the manufacture and/or processing of sugar, coconut,
abaca, tobacco, pineapple, aquatic or other farm products.
SECTION 3. Retirement under CBA/contract.
3.1 Any employee may retire or be retired by his employer upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract or
retirement plan subject to the provisions of Section 5 hereof on the payment of retirement
benefits.
3.2 In case of retirement under this Section, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements; provided, however, that an employees retirement benefits
under any collective bargaining and other agreements shall not be less than those provided
under this Rule, and provided further that if such benefits are less, the employer shall pay the
difference between the amount due the employee under this Rule and that provided under the
collective or individual agreement or retirement plan.
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 deficiency.
SECTION 4. Optional; Compulsory Retirement.
4.1 Optional Retirement. In the absence of a retirement plan or other applicable agreement
providing for retirement benefits of employees in an establishment, an employee may retire
upon reaching the age of sixty (60) years or more if he has served for at least five (5) years in
said establishment.
4.2 Compulsory Retirement. Where there is no such plan or agreement referred to in the
immediately preceding sub-section, an employee shall be retired upon reaching the age of
sixty-five (65) years.
4.3 Upon retirement of an employee, whether optional or compulsory, his services may be
continued or extended on a case to case basis upon agreement of the employer and employee.
4.4 Service Requirement. The minimum length of service in an establishment or with an
employer of at least five (5) years required for entitlement to retirement pay shall include
authorized absences and vacations, regular holidays and mandatory fulfillment of a military or
civic duty.
SECTION 5. Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half ()
month salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.
5.2 Components of One-half () Month Salary. For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term one-half month salary shall
include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used
herein, the term salary includes all remunerations paid by an employer to his
employees for services rendered during normal working days and hours, whether
such payments are fixed or ascertained on a time, task, piece of commission
basis, or other method of calculating the same, and includes the fair and
reasonable value, as determined by the Secretary of Labor and Employment, of
food, lodging or other facilities customarily furnished by the employer to his
employees. The term does not include cost of living allowances, profit-sharing
payments and other monetary benefits which are not considered as part of or
integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be
included in the computation of the employees retirement pay.
5.3 One-half month salary of employees who are paid by results. For covered workers who
are paid by results and do not have a fixed monthly rate, the basis for determination of the

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salary for fifteen days shall be their average daily salary (ADS), subject to the provisions of
Rule VII-A, Book III of the Rules Implementing the Labor Code on the payment of wages of
workers who are paid by results. The ADS is the average salary for the last twelve (12) months
reckoned from the date of their retirement, divided by the number of actual working days in
that particular period.
SECTION 6. Exemption from tax. The retirement pay provided in the Act may be exempted from tax
if the requirements set by the Bureau of Internal Revenue under Sec. 2 (b) item (1) of Revenue
Regulations No. 12-86 dated August 1, 1986 are met, to wit:
Pensions, retirement and separation pay. Pensions, retirement and separation pay constitute
compensation subject to withholding, except the following:
(1) Retirement benefits received by officials and employees of private firms under a reasonable
private benefit plan maintained by the employer, if the following requirements are met:
(i) The benefit plan must be approved by the Bureau of Internal Revenue;
(ii) The retiring official or employee must have been in the service of the same
employer for at least ten (10) years and is not less than fifty (50) years of age at
the time of retirement; and
(iii) The retiring official or employee shall not have previously availed of the privilege
under the retirement benefit plan of the same or another employer.
SECTION 7. Penal Provision. It shall be unlawful for any person or entity to circumvent or render
ineffective the provisions of the Act. Violations thereof shall be subject to the penal provisions provided
under Article 288 of the Labor Code of the Philippines.
SECTION 8. Relation to agreements and regulations. Nothing in this Rule shall justify an employer
from withdrawing or reducing any benefits, supplements or payments as provided in existing laws,
individual or collective agreements or employment practices or policies.
All rules and regulations, policy issuances or orders contrary to or inconsistent with these rules are
hereby repealed or modified accordingly.
SECTION 9. Effectivity. This Rule took effect on January 7, 1993 when the Act went into force.
Labor Advisory on Retirement Pay:
GUIDELINES FOR THE EFFECTIVE IMPLEMENTATION OF R.A. 7641, THE RETIREMENT PAY LAW
A. Coverage
Republic Act No. 7641 or the Retirement Pay Law shall apply 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. They shall include part-time employees,
employees of service and other job contractors and domestic helpers or persons in the
Personal service of another.
The law does not cover employees of retail, service and agricultural establishments or
operations employing not more than ten (10) employees or workers and 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.
B. Computation of Retirement Pay
A covered employee who retires pursuant to RA 7641 shall be entitled to retirement
pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
The law is explicit that one-half month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days service incentive leaves unless the parties provide for broader inclusions.
Evidently, the law expanded the concept of one-half month salary from the usual
one-month salary divided by two.
In reckoning the length of service, the period of employment with the same employer
before the effectivity date of the law on January 7, 1993 should be included.
C. Substitute Retirement Plan
Qualified workers shall be entitled to the retirement benefit under RA 7641 in the
absence of any individual or collective agreement, company policy or practice. In case
there is such an agreement, policy or practice providing retirement benefit which is
equal or superior to that which is provided in the Act, said agreement, policy or
practice will prevail.
As provided in RA 7742, a private employer shall have the option to treat the coverage
of the PAG-IBIG Fund as a substitute retirement benefit for the employee concerned
within the purview of the Labor Code as amended; provided, such option does not in

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any way contravene an existing collective bargaining agreement or other employment

agreement. Thus, the PAG-IBIG Fund can be considered as a substitute retirement plan
of the company for its employees provided that such scheme offers benefits which are
more than or at least equal to the benefits under RA 7641. If said scheme provides less
than what the employee is entitled to under RA 7641, the employer is liable to pay the
difference.
If both the employee and the employer contribute to a retirement plan, only the
employers contribution and its increments shall be considered for full or partial
compliance with the benefit under RA 7641. On the other hand, where the employee is
the lone contributor to the PAG-IBIG Fund, the employer being exempted from its
coverage, the employer is under obligation to give his employee retirement benefits
under the Act. Adopted: 24 October 1996

Enriquez Security Services Inc. v. Cabotaje

Victor A. Cabotaje was employed as a security guard by Enriquez Security and Investigation Agency
(ESIA).
Petitioner acknowledged that respondent was entitled to retirement benefits but opposed his claim
that the computation of such benefits must be reckoned from January 1979 when he started working
for ESIA. We find no merit in the petition.
First. Petitioners contention that RA 7641 cannot be applied retroactively has long been settled in the
Guidelines for Effective Implementation of RA 7641 issued on October 24, 1996 by the Department of
Labor and Employment. Paragraph B of the guidelines provides:
In reckoning the length of service, the period of employment with the same employer before the
effectivity date of the law on January 7, 1993 should be included.
Rufina Patis Factory v. Lucas, Sr: RA 7641 is undoubtedly a social legislation. The law has been
enacted as a labor protection measure and as a curative statute that absent a retirement
plan devised by, an agreement with, or a voluntary grant from, an employer can respond, in
part at least, to the financial well-being of workers during their twilight years soon following
their life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits
can be reckoned not only from the date of the laws enactment but retroactively to
the time said employment contracts have started.
Petitioner was thus correctly ordered to pay respondents retirement under RA 7641, computed from
January 1979 up to the time he applied for retirement in July 1997. Petition is hereby DENIED

Jaculbe v. Siliman University

IN 1958 ALPHA C. JACULBE began working for respondents university medical center as a nurse. In
a letter dated December 3, 1992, respondent, through its Human Resources Development Office,
informed petitioner that she was approaching her 35 th year of service with the university and was due
for automatic retirement. Petitioner emphatically insisted that the compulsory retirement under the
plan was tantamount to a dismissal.
From the language of the schools retirement plan rules, the compulsory nature of both membership in
and contribution to the plan debunked the CAs theory that petitioners voluntary contributions were
evidence of her willing participation therein. It was through no voluntary act of her own that petitioner
became a member of the plan. In fact, the only way she could have ceased to be a member thereof
was if she stopped working for respondent altogether. According to the assailed decision, respondents
retirement plan ha(d) been in effect for more than 30 years. What was not pointed out, however, was
that the retirement plan came into being in 1970 or 12 years after petitioner started working for
respondent. In short, it was not part of the terms of employment to which petitioner agreed when she
started working for respondent.
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.
Pantranco North Express, Inc. v. NLRC, to which both the CA and respondent refer, the
imposition of a retirement age below the compulsory age of 65 was deemed acceptable
because this was part of the CBA between the employer and the employees. The consent of
the employees, as represented by their bargaining unit, to be retired even before the statutory
retirement age of 65 was laid out clearly in black and white and was therefore in accord with
Article 287.
Not only was petitioner still a good eight years away from the compulsory retirement age but she was
also still fully capable of discharging her duties as shown by the fact that respondents board of
trustees seriously considered rehiring her after the effectivity of her compulsory retirement. Thus,

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having terminated petitioner solely on the basis of a provision of a retirement plan which was not
freely assented to by her, respondent was guilty of illegal dismissal. Petition is hereby GRANTED

Reyes v. NLRC

Petitioner was employed as a salesman at respondents Grocery Division in Davao. He was eventually
appointed as unit manager of Sales Department., a position he held until his retirement on November
30, 1997. Thereafter, he received a letter regarding the computation of his separation pay. Insisting
that his retirement benefits and 13th month pay must be based on the average monthly salary
petitioner refused to accept the check issued by private respondent; instead, he filed a complaint
before the arbitration branch of the NLRC for retirement benefits.
The petition lacks merit. Any seeming inconsistencies between Philippine Duplicators and Boie-Takeda
had been clarified by the Court.
Philippine Duplicators, the salesmens commissions, comprising a pre-determined percentage
of the selling price of the goods sold by each salesman, were properly included in the term
basic salary for purposes of computing the 13th month pay.
The salesmens commission are not overtime payments, nor profit-sharing payments nor any
other fringe benefit, but a portion of the salary structure which represents an automatic
increment to the monetary value initially assigned to each unit of work rendered by a
salesman.
-

Boie-Takeda, the so-called commissions paid to or received by medical representatives of BoieTakeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded
from the term basic salary because these were paid to the medical representatives and rankand-file employees as productivity bonuses, which are generally tied to the productivity, or
capacity for revenue production, of a corporation and such bonuses closely resemble profitsharing payments and have no clear direct or necessary relation to the amount of work
actually done by each individual employee.
Further, commissions paid by the Boie-Takeda Company to its medical representatives could
not have been sales commissions in the same sense that Philippine Duplicators paid the
salesmen their sales commissions. Medical representatives are not salesmen; they do not
effect any sale of any article at all.

In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or
conditions for its payment. Nevertheless, should petitioners commissions be considered in the
computation of his retirement benefits and 13th month pay? We rule in the negative.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New
Retirement Law, provides:Art. 287. Retirement.
Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall
mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent
of not more than five (5) days of service incentive leaves.
Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides: Section 5.
Retirement Benefits.
5.1
In the absence of an applicable agreement or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.
5.2
Components of One-half (1/2) Month Salary. For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term one-half-month salary shall include all the
following:
(a)
Fifteen (15) days salary of the employee based on his latest salary rate. As used herein,
the term salary includes all remunerations paid by an employer to his employees for services

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rendered during normal working days and hours, whether such payments are fixed or ascertained on a
time, task, piece or commission basis, or other method of calculating the same, and includes the fair
and reasonable value, as determined by the Secretary of Labor and Employment, of food, lodging, or
other facilities customarily furnished by the employer to his employees. The term does not include cost
of living allowance, profit-sharing payments and other monetary benefits which are not considered as
part of or integrated into the regular salary of the employees.
(b)
The cash equivalent of not more than five (5) days of service incentive leave.
(c)
One-twelfth of the 13 month pay due the employee.
(d)
All other benefits that the employer and employee may agree upon that should be
included in the computation of the employees retirement pay. (Emphasis supplied)
The article provides for two types of retirement:
(a) compulsory and
(b) optional.
The first takes place at age 65,
while the second is primarily determined by the collective bargaining agreement or other
employment contract or employers retirement plan.
In the absence of any provision on optional retirement in a collective bargaining agreement,
other employment contract, or employers retirement plan, an employee may optionally retire
upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served
at least five years in the establishment concerned.
For the purpose of computing retirement pay, one-half month salary shall include all of the following:
1)
15 days salary based on the latest salary rate;
2)
cash equivalent of 5 days of service incentive leave (or vacation leave);
3)
1/12 of the 13th month pay;
4)
other benefits as may be agreed upon by employer and employee for inclusion.
But, it shall not include the following:
1)
cost of living allowance;
2)
profit-sharing payments; and
3)
other monetary benefits which are not considered as part of or integrated into the regular
salary of the employees
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he
received are in the form of profit-sharing payments specifically excluded by the foregoing
rules. Petition is DENIED

Intercontinental Broadcasting Corporation v. Amarilla

On various dates, petitioner employed the following persons at its Cebu station. And eventually, the
four (4) employees retired from the company. The complainants averred that their retirement benefits
are exempt from income tax under Article 32 of the NIRC. Sections 28 and 72 of the NIRC, which
petitioner relied upon in withholding their differentials, do not apply to them since these provisions
deal with the applicable income tax rates on foreign corporations and suits to recover taxes based on
false or fraudulent returns. They pointed out that, under Article VIII of the CBA, only those employees
who reached the age of 60 were considered retired.
While petitioner admits that its previous directors had paid the withholding taxes on the retirement
benefits of respondents, it explains that this practice was stopped when the new management took
over. The new management could not be expected to enforce and follow through the illegal policy of
the old management which is adverse to the interests of the petitioner; hence, the decisions of the
NLRC and the CA affirming such undertaking should be reversed.
We agree with petitioners contention that, under the CBA, it is not obliged to pay for the taxes on the
respondents retirement benefits. We have carefully reviewed the CBA and find no provision where
petitioner obliged itself to pay the taxes on the retirement benefits of its employees.
We also agree with petitioners contention that, under the NIRC, the retirement benefits of respondents
are part of their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 provides:
Sec. 28.
Gross Income.
(b)
Exclusions from gross income. - The following items shall not be included in gross income and
shall be exempt from taxation under this Title:
(7)
Retirement benefits, pensions, gratuities, etc. - (A) Retirement benefits received by officials

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and employees of private firms whether individuals or corporate, in accordance with a reasonable
private benefit plan maintained by the employer: Provided, That the retiring official or employee has
been in the service of the same employer for at least ten (10) years and is not less than fifty years of
age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph
shall be availed of by an official or employee only once. For purposes of this subsection, the term
"reasonable private benefit plan" means a pension, gratuity, stock bonus or profit-sharing plan
maintained by an employer for the benefit of some or all of his officials or employees, where
contributions are made by such employer for officials or employees, or both, for the purpose of
distributing to such officials and employees the earnings and principal of the fund thus accumulated,
and wherein it is provided in said plan that at no time shall any part of the corpus or income of the
fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said official
and employees.
Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides:
(b) Pensions, retirements and separation pay. Pensions, retirement and separation pay constitute
compensation subject to withholding tax, except the following:
(1)
Retirement benefit received by official and employees of private firms under a reasonable
private benefit plan maintained by the employer, if the following requirements are met:
(i)
The retirement plan must be approved by the Bureau of Internal Revenue;
(ii)
The retiring official or employees must have been in the service of the same employer for at
least ten (10) years and is not less than fifty (50) years of age at the time of retirement; and
(iii)
The retiring official or employee shall not have previously availed of the privilege under the
retirement benefit plan of the same or another employer.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to
prove the concurrence of the following elements:
(1) a reasonable private benefit plan is maintained by the employer;
(2) the retiring official or employee has been in the service of the same employer for at least 10 years;
(3) the retiring official or employee is not less than 50 years of age at the time of his retirement; and
(4) the benefit had been availed of only once.
Respondents received their retirement benefits from the petitioner in three staggered installments
without any tax deduction for the simple reason that petitioner had remitted the same to the BIR with
the use of its own funds. It was only when respondents demanded the payment of their salary
differentials that petitioner alleged, for the first time, that it had failed to present the 1993 CBA to the
BIR for approval, rendering such retirement benefits not exempt from taxes.
An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and
for them to avail of the optional retirement scheme is not contrary to law or to public morals. Petitioner
had agreed to shoulder such taxes to entice them to voluntarily retire early, on its belief that this
would prove advantageous to it.
Respondents agreed and relied on the commitment of petitioner.
For petitioner to renege on its contract with respondents simply because its new management had
found the same disadvantageous would amount to a breach of contract. Petition is DENIED

1. 3 kinds of retirement plans

Gerlach v. Reuters

Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices worldwide,
hired Marilyn Odchimar Gerlach, petitioner, as its local correspondent. On January 23, 1984,
respondent assigned petitioner as a journalist to Reuters Singapore. Before leaving, Rachel Addison,
Reuters Eastern Region Staff Manager, apprised her of the details of her forthcoming assignment,
specifically that her home base will always be the Philippines. She soon retired.
Article 287 of the Labor Code reads: "Article 287. Retirement. Any employee may be retired upon
reaching the retirement age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements."
(Emphasis supplied)
The first paragraph of the above provisions deals with the retirement age of an employee established
in (a) a collective bargaining agreement or (b) other applicable employment contract.
The second paragraph deals with the retirement benefits to be received by a retiring employee which
he may have earned under (a) an existing law, (b) a collective bargaining or (c) other agreements.

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Llora Motors, Inc. vs. Drilon,[29] we held that Article 287, does not in itself purport to impose
any obligation upon employers to set up a retirement scheme for their employees over and
above that already established under existing laws, like the Social Security Act.
Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI of the
Labor Code, provides: "Sec. 14. Retirement benefits. (a) An employee who is retired pursuant
to a bona fide retirement plan or in accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to all the retirement benefits
provided therein . . ."
Respondent based petitioners retirement benefits on its Plan and established policy, which is in accord
with the above provision. Consequently, petitioners theory that the computation of her retirement
benefits should be based on her basic annual salary while stationed abroad is untenable. We agree
with the Court of Appeals that petitioners retirement benefits must be based on her notional Philippine
salary. It is very clear that from the very start of her first assignment overseas, respondent apprised
her that the companys contribution to the Plan is based on her notional Philippine salary. In fact, under
the Plan, the companys contribution to the fund is 10% of the basic monthly salary of each
participant. Respondent also informed petitioner of the amount of her notional Philippine salary
whenever she was transferred to her next overseas assignment or when there were increases in her
salary, both actual and notional. Significantly, respondent was able to prove that it has been its
practice worldwide that the notional salary of an employee is its basis in computing its
contribution to the retirement plan for a local employee detailed abroad. It follows that the
amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary.
Besides, it is a basic rule in evidence that the burden of proof is on the part of the party who makes the
allegations ei incumbit probatio, qui dicit, non qui negat. Petition is hereby DENIED.
-

PAL v. Airline Pilots Association

Issue is between PAL and respondent Airline Pilots Association of the Philippines (ALPAP), the
exclusive bargaining representative of all commercial airline pilots of petitioner, stemmed from
petitioner's act of unilaterally retiring airline pilot Captain Albino Collantes under Section 2, Article VII,
of the 1967 PAL-ALPAP Retirement Plan.
The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service as a
pilot for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The normal
retirement date is the date on which he completes twenty (20) years of service, or on which he logs his
20,000 hours as a pilot for PAL. The member who retires on his normal retirement shall be entitled to
either (a) a lump sum payment of P100,000.00 or (b) to such termination pay benefits to which he
may be entitled to under existing laws, whichever is the greater amount.
SECTION 2. Late Retirement. Any member who remains in the service of the Company after his normal
retirement date may retire either at his option or at the option of the Company and when so retired he
shall be entitled either (a) to a lump sum payment of P5,000.00 for each completed year of service
rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing
laws, whichever is the greater amount.
A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the prime
of his life and at the peak of his career, compared to one who retires at the age of 60 years old. Based
on this peculiar circumstance that PAL pilots are in, the parties provided for a special scheme of
retirement different from that contemplated in the Labor Code.
Provisions of Article 287 of the Labor Code could not have contemplated the situation of PALs pilots.
Rather, it was intended for those who have no more plans of employment after retirement, and are
thus in need of financial assistance and reward for the years that they have rendered service. In any
event, petitioner contends that its pilots who retire below the retirement age of 60 years not only
receive the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of the retirement
fund under the PAL Pilots Retirement Benefit Plan, entered into between petitioner and respondent
on May 30, 1972.
The PAL Pilots Retirement Benefit Plan is a retirement fund raised from contributions exclusively from
petitioner of amounts equivalent to 20% of each pilots gross monthly pay. Upon retirement, each pilot
stands to receive the full amount of the contribution. In sum, therefore, the pilot gets an amount
equivalent to 240% of his gross monthly income for every year of service he rendered to petitioner.
This is in addition to the amount of not less than P100,000.00 that he shall receive under the 1967
Retirement Plan.
On the other hand, Article 287 of the Labor Code:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established
in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may

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have earned under existing laws and any collective bargaining agreement and other agreements:
provided, however, That an employees retirement benefits under any collective bargaining and other
agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement plan providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions of the above-quoted Article
287 of the Labor Code are less than those that he would get under the applicable retirement plans of
petitioner.
Bulletin Publishing Corp. v. Sanchez, this Court held: The aforestated sections explicitly declare, in no
uncertain terms, that retirement of an employee may be done upon initiative and option of the
management. And where there are cases of voluntary retirement, the same is effective only upon the
approval of management. The requirement to consult the pilots prior to their retirement defeats the
exercise by management of its option to retire the said employees. Petition is GRANTED

Naguit v. NLRC
Aniceto W. Naguit, Jr., an employee of respondent Manila Electric Company (MERALCO) since August
11, 1959, was dismissed after 32 years of service. In fine, this Court credits the petitioner with good
faith when he did not correct the entry in the Notice of Overtime and Timesheet reflecting that he
worked up to 5:00 p.m. on June 6, 1987. The charge of falsification against him does not thus lie. As
clearly established by his own account, petitioner, despite his knowledge that Cabuhat did not hire any
jeep nor conduct field verification on June 6, 1987, released the petty cash representing Cabuhats
meal allowance and rental fee for a jeep. At best, petitioner wants to convey that it was mere oversight
on his part not to have reviewed the voucher, it having already borne the signature of the approving
officer and, therefore, he should not be held culpable.
Petitioners attempt at exoneration deserves scant consideration. As custodian of the petty cash fund,
he had the duty to ascertain that the circumstances which brought about any claim therefrom were in
order. He cannot now shirk from this responsibility by indirectly pinning the blame on the approving
officer and asserting that the transgression was the result of mere inadvertence, given his admission
that he very well knew that Cabuhat did not conduct any field work on June 6, 1987, he (Cabuhat)
having merely driven for him to Pagbilao.
Petitioner thus committed dishonesty and breached MERALCOs trust, which dishonesty calls for
reprimand to dismissal under MERALCOs rules.
At the time petitioner was dismissed, he was still below the retirement age of employees of MERALCO
at 60. To date, however, he is now about 65. Imposing a penalty less harsh than dismissal and ordering
his reinstatement are thus functus oficio, the Labor Arbiters order for his reinstatement not having
been executed.
To this Court, a denial of the award of backwages to petitioner from the time of his dismissal up to his
age of retirement suffices as punishment for his dishonesty. He should not, however, be deprived of his
retirement benefits. NLRC are hereby SET ASIDE.

Sta. Catalina v. NLRC

In June 1955, Hilaria was hired as an elementary school teacher at the Sta. Catalina College In 1970,
she applied for and was granted a one year leave of absence without pay on account of the illness of
her mother. After the expiration in 1971 of her leave of absence, she had not been heard from by
petitioner school. She went back to the school and on May 31, 1997, Hilaria reached the compulsory
retirement age of 65.
Retiring pursuant to Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school
pegged her retirement benefits at P59,038.35, computed on the basis of fifteen years of service from
1982 to 1997.

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Hilaria insisted, however, that her retirement benefits should be computed on the basis of her thirty
years of service, inclusive of the period from 1955 to 1970; and that the gratuity pay earlier given to
her should not be deducted therefrom.
Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement
benefits. For, after her one year leave of absence expired in 1971 without her requesting for extension
thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with
petitioner school, she abandoned her teaching position as in fact she was employed elsewhere.
As Hilaria was considered a new employee when she rejoined petitioner school upon re-applying in
1982, her retirement benefits should thus be computed only on the basis of her years of service from
1982 to 1997.
JAM Transportation Co., Inc. v. Flores teaches:Private respondents re-employment as a new
employee x x x would mean a demotion in rank and privileges, retirement benefits, for
example, as his entire previous eighteen (18) years of service with petitioner, would simply be
considered as non-existent.
Article 287 of the Labor Code as amended by Republic Act 7641 or the New Retirement Law
provides: ART. 287. Retirement. Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement the employee shall be entitled to receive such retirement benefits as he may
have earned under existing laws and any collective bargaining agreement and other agreements:
Provided however That an employees retirement benefits under any collective bargaining
and other agreements shall not be less than those provided herein.
Likewise 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.

Hence, Hilaria is entitled to receive P98,706.45 computed as follows:

One-half month salary =
+ (1/12 of 13th month pay)

Retirement Pay

(15 days x latest salary per day) + (5 days leave x latest salary per day)

P4,512.30 + P1,504.10 + P547.33

P6,563.73

number of years in service x one-half month salary

15 years x P6,580.43

=
P98,455.95
Petition is GRANTED in part.

2. Voluntary Retirement
Ariola v. Philex Mining Corp
Roberto Ariola, Franco Mallare, Benjamin Biete and Hermogenes Mamayson (petitioners) are former
supervisors of respondent Philex Mining Corporation. On 14 May 1993, Philex informed the
Department of Labor and Employment (DOLE), Cordillera Administrative Region, Baguio City, of its
plan to retrench 241 employees. On 1 June 1993, petitioners, with six[9] other supervisors and 49
rank-and-file employees, received from Philex termination notices informing them of their
retrenchment.
This Office holds that the separation of the other complainants namely, Messrs. Banayat, Mallare,
Martin, Ariola, Ferraro, Mamayson, Candol, Brian and Biente (sic) may not be questioned because
complainants opted to avail of the early voluntary retirement program offered by the Company. Thus,

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from the evidences presented, it clearly appears that complainants voluntarily retired from the
company for a valuable consideration. The quitclaim[s] executed in favor of the company [amount] to
a valid and binding agreement.
As basis for their findings that petitioners retired from service, the Court of Appeals and Arbitrator
Advincula cited the vouchers petitioners signed showing their receipt of retirement gratuity. Although
there is no dispute that petitioners received varied amounts denominated in the vouchers in question
as retirement gratuity, the records show that Philex paid these amounts because of petitioners
retrenchment.
Clearly, under Philexs Retirement Gratuity Plan, retirement gratuity is paid not only to retiring
employees but also to those who, like petitioners, are dismissed for cause beyond their control such
as retrenchment. Indeed, Philex treated the retirement gratuity as petitioners basic separation pay,
which, with transportation allowance. Significantly, Philex paid petitioners such separation pay after
notifying them of their retrenchment. Furthermore, Philexs failure to submit other documents proving
petitioners claimed retirement, such as their applications for retirement under Philexs early
voluntary retirement program and their clearance slips, undermines its claim. The submission of these
documents, which should indicate the reason for petitioners separation from service, would have put
to rest any doubt on the cause of such separation.
In sum, we hold that by themselves, the vouchers in question do not suffice to prove petitioners
retirement from Philex. Retirement results from a voluntary agreement between the employer and the
employee where the latter, after reaching a certain age, agrees to sever his employment with the
former. The intent to retire is not clearly established or if the retirement is involuntary, it is to be
treated as a discharge. We GRANT the petition. If reinstatement is no longer possible Philex Mining
Corporation shall pay backwages as computed above plus, in lieu of reinstatement, separation pay
equal to one-half month pay for every year of service.

3. Forfeiture of Benefits
Equitable PCI Bank v. Caguoia

Generosa Caguioa was a senior manager of Equitable PCI Bank and had been serving the bank for 35
years when she was discharged for alleged connection with accounting activities specifically
discounting checks which caused Antonio Jarina (the customer who instituted the complaint against
her) considerable damage. She denied any connection with the said activities and filed a case of illegal
dismissal. The LA upheld the dismissal of the private respondent ruling that the dismissal was a valid
exercise of management prerogative for having violated the code of conduct on loyalty and honesty.
Upon appeal, the same was denied and thus it was raised to the CA who held that the testimonies of
the people who were in on her with the scheme were insufficient to prove her involvement and justify
her dismissal. CA held that she has been illegally dismissed. Hence this petition. The court held that it
was the petitioner bank who had the burden of proving the legality of the dismissal through substantial
evidence. The court found that there was more than substantial evidence supporting the decision of
the labor arbiter in Caguioas participation in the check-discounting scheme when the LA used bank
records of Jarina and Caguioa which showed 21 matches of deposits and withdrawals, the letter of
Jarina to the bank as well as the testimonies of the audit examiner. Caguioa only had denials and
imputation of lack of probative value of the evidence to counter the banks evidence. Despite her 35
years of service, the court held that since banks thrive on honesty and loyalty of its employees, the
valid dismissal of Caguioa from service deprives her of retirement benefits. The court said that even
government employees who are validly terminated are also deprived of these benefits. Being a
managerial employee, Caguioa may be validly terminated for breach of trust. Petition granted.

Sy v. Metropolitan Bank and Trust Company

Dennis D. Sy, herein substituted by his heirs Soledad Y. Sy, Ronald Allan Y. Sy, and Melinda S.
Pompenada, was the branch manager in Bajada, Davao City, of respondent Metropolitan Bank and
Trust Company.
Under the bank's Retirement Plan, an employee must retire upon reaching the age of 55 years or after
rendering 30 years of service, whichever comes first. We hold that petitioner Sy was validly dismissed
on the ground of fraud and willful breach of trust under Article 282 of the Labor Code. Records show
that as bank manager, he authorized "kiting" or drawing of checks against uncollected funds in wanton
violation of the bank's policies. It was sufficient basis for the bank to lose trust in him.
Petitioner, however, theorizes that having been compulsorily retired, he could no longer be dismissed
by the bank. His premise is absurd. Indeed, he would have qualified for compulsory retirement under
the bank's Retirement Plan. However, he opted to accept the bank's offer of extending his employment
for another year with a corresponding salary increase. Thus, in effect, he had never retired.
Unfortunately for him, while serving such extended term, the bank discovered his unauthorized grant
of accommodation to accounts engaged in "kiting" activity.

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Such act is a clear breach of the trust reposed in him by the bank. He cannot now elude dismissal for a
just cause by claiming he was already retired compulsorily.
Is petitioner nevertheless entitled to retirement benefits?
Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other
privileges including reinstatement and backwages. Since petitioner's dismissal was for a just cause, he
is not entitled to any retirement benefit. To hold otherwise would be to reward acts of willful breach of
trust by the employee. It would also open the floodgate to potential anomalous banking transactions
by bank employees
Notably, the Court has also disallowed claims for retirement benefits in valid dismissal cases because
the retirement plan itself precluded employees dismissed for cause from availing it. Although no such
prohibition in the retirement plan was alleged or proved in this case, we nevertheless deny petitioner's
claims because his offenses, vis--vis his long years of service with the bank, reflect a regrettable lack
of loyalty which he should have strengthened instead of betrayed.Petition is hereby DENIED.

VI.

The end. Bow.

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