LABOR REVIEW (Atty.

Peter-Joey Usita) 2017-2018

LABOR REVIEW SYLLABUS Therefore, such contracts are subject to the special laws on labor unions, collective
Atty. Peter-Joey Usita bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of
labor and similar subjects.
2017-2018
Art. 1712 If the death or injury is due to the negligence of a fellow worker, the latter and the

I. PROCEDURE & JURISDICTION employer shall be solidarily liable for compensation. If afellow worker's intentional
malicious act is the only cause of the death or injury, the employer shall not be
answerable, unless it should be shown that the latter did not exercise due diligence in
NOTES: the selection or supervision of the plaintiff's fellow worker.

1) Constitutional basis for labor relations policy

Section 3, Article 13: 3) Definitions of:

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote Term Definition
full employment and equality of employment opportunities for all.
Labor relations Is the interaction between the employer and employees or their
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful representatives and the mechanism by which the standards and other terms
concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, and conditions of the employment are negotiated, adjusted and enforced.
humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes
Labor relations laws Define the status, rights and duties and the institutional mechanisms that
affecting their rights and benefits as may be provided by law.
govern the individual and collective interactions of employers, employees
and other representatives
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 Labor standards Part of labor law which prescribes the minimum terms and conditions of
foster industrial peace. employment when the employer is required to grant to its employees
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in Labor organization any union or association of employees which exists in whole or in part for
the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth. the purpose of collective bargaining or of dealing with employers
concerning terms and conditions of employment.

Legitimate labor organization any labor organization duly registered with the Department of Labor and
2) Civil Code provisions - Articles 19, 224, 1700 to 1712. Employment, and includes any branch or local thereof.

Article Provision Labor union any labor organization whose formation, function or administration has
been assisted by any act defined as unfair labor practice by this Code.
Art. 19 Every person must, in the exercise of his rights and in the performance of his duties, act
with justice, give everyone his due, and observe honesty and good faith. Labor dispute includes any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating,
Art. 224 The family home may be established judicially or extrajudicially.
fixing, maintaining, changing or arranging the terms and conditions of
Art. 1700 The relations between capital and labor are not merely contractual. They are so employment, regardless of whether the disputants stand in the proximate
impressed with public interest that labor contracts must yield to the common good. relation of employer and employee.

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Company union any labor organization whose formation, function or administration has
been assisted by any act defined as unfair labor practice by this Code.
Bargaining representative a legitimate labor organization whether or not employed by the employer.
PROCEEDINGS BEFORE THE LA & NLRC
The proceedings before the Labor Arbiters and the NLRC are governed by the Labor Code, as amended, the 2011 1. Unfair labor practice (ULP) cases;
NLRC Rules of Procedure, and suppletorily, the Rules of Court.
2. Termination disputes (or illegal dismissal cases);
1. Labor Arbiter
Article 223 (formerly Art. 217): Jurisdiction of the Labor Arbiter
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 non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions
of employment;
Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims arising from employer-employee relations,
including those of persons in domestic or household service, involving an
amount 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
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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)
NOTES:
Under Article 217 of the Labor Code, Labor Arbiters have jurisdiction over the following cases:
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 employer-employee relations;
5. Cases arising from any violation of Article 264 of the Labor Code, including questions involving the legality of
strikes and lockouts;
6. Except claims for employees compensation not included in the next succeeding paragraph, 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), whether
or not accompanied with a claim for reinstatement;
7. Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to Republic
Act No. 6627;
8. Enforcement of compromise agreements when there is non-compliance by any of the parties pursuant to Article
227 of the Labor Code, as amended;
9. Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving
Filipino workers for overseas employment, including claims for actual, moral, exemplary and other forms of damages
as provided by Section 10 of R.A. No. 8042, as amended by R.A. No. 10022;
10.Contested cases under the exception clause of Article 128(b) of the Labor Code, as amended by R.A. 7730; and
11.Other cases as may be provided by law.
Law gives primacy or prefers voluntary arbitration instead of compulsory arbitration
the law forbids a labor arbiter from entertaining a dispute properly belonging to the jurisdiction of a
voluntary arbitrator
LA: employment related cases. Test:
LABOR REVIEW (Atty. Peter-Joey Usita)
if the principal relief sought will be resolved by applying the Labor code or labor related statutes or
CBA ==> LABOR ARBITER
if the applicable law is the general law ==> REGULAR COURTS
ULP : belongs to the labor arbiters
Jurisdiction over corporate disputes was under SEC but later on transferred to regular courts by virtue of
the Securities Regulations Code
the LA may award damages
VENUE:
all cases which LA have authority shall be filed before the REGIONAL ARBITRATION BRANCH
having jurisdiction over the workplace of the complainant/petitioner
if OFW, Regional Arbitration Branch where the complainant resides or where the
principal office of the respondent
Halaguea v. PAL, G.R. No. 172013, October 2, 2009 (jurisdiction of the LA)
[G.R. No. 172013. October 2, 2009.]
PATRICIA HALAGUEA, and other flight attendants of PHILIPPINE AIRLINES vs. PHILIPPINE
AIRLINES INCORPORATED
FACTS:
- Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL) prior to
November 22, 1996. They are members of the Flight Attendants and Stewards Association of the (Petitioners Claim)
Philippines (FASAP), a labor organization certified as the sole and exclusive certified as the sole and
exclusive bargaining representative of the flight attendants, flight stewards and pursers of respondent.
- On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement referred as PAL-
FASAP CBA.
- Section 144, Part A of the PAL-FASAP CBA, provides that the compulsory retirement for females shall be
fifty-five (55) years old and for males shall be sixty (60) years old.
(Respondents Claim)
- Petitioners manifested that the aforementioned CBA provision on compulsory retirement is discriminatory,
and demanded for an equal treatment with their male counterparts.
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- Petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary
Restraining Order and Writ of Preliminary Injunction 7 with the Regional Trial Court (RTC) of Makati City
against respondent for the invalidity of Section 144.
RTC
- On August 9, 2004, the RTC issued an Order upholding its jurisdiction over the present case. The RTC
reasoned that:
o The allegations in the Petition do not make out a labor dispute arising from employer-
employee relationship as none is shown to exist. This case is not directed specifically against
respondent arising from any act of the latter, nor does it involve a claim against the respondent.
Rather, this case seeks a declaration of the nullity of the questioned provision of the CBA,
which is within the Court's competence, with the allegations in the Petition constituting the
bases for such relief sought.
- On September 27, 2004, the RTC issued an Order directing the issuance of a writ of preliminary injunction
enjoining the respondent or any of its agents and representatives from further implementing Sec. 144, Part A
of the PAL-FASAP CBA pending the resolution of the case.
- (Respondent filed a Petition with the Court of Appeals (CA) praying that the order of the RTC be annulled
and set aside for having been issued without and/or with grave abuse of discretion amounting to lack of
jurisdiction)
CA
- The CA rendered a Decision granting the respondent's petition, and ruled that the RTC have NO
JURISDICTION OVER THE CASE and, consequently, all the proceedings, orders and processes it
has so far issued therein are ANNULED and SET ASIDE.
- (Petitioner filed a motion for reconsideration, which was denied by the CA. Hence, the instant petition to
the SC)
- RTC has jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary
estimation and in all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions. The RTC has the power to adjudicate all controversies except
those expressly withheld from the plenary powers of the court. As the issue involved is constitutional in
character (constitutionality or legality of the provisions of Section 144), the labor arbiter or the National
Labor Relations Commission (NLRC) has no jurisdiction over the case.
- The labor tribunals have jurisdiction over the present case, as the controversy partakes of a labor dispute.
The dispute concerns the terms and conditions of petitioners' employment in PAL, specifically their
retirement age.
LABOR REVIEW (Atty. Peter-Joey Usita)
ISSUE PERTITENT TO ART 217:
- Whether the RTC has jurisdiction over the petitioners' action challenging the legality or constitutionality of
the provisions on the compulsory retirement age contained in the CBA between respondent PAL and
FASAP. [YES]
HELD:
- YES.
- From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue raised is whether
Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional. Here, the petitioners'
primary relief is the annulment of the said provision, which allegedly discriminates against them for being
female flight attendants. The subject of litigation is incapable of pecuniary estimation, exclusively cognizable by
the RTC. Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.
- The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the application of the
Constitution, labor statutes, law on contracts and the Convention on the Elimination of All Forms of
Discrimination against Women.
- The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can ONLY be resolved by reference to the Labor
Code, other labor statutes, or their collective bargaining agreement.
- Not every controversy or money claim by an employee against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter.
- Actions between employees and employer where the employer-employee relationship is merely incidental and
the cause of action precedes from a different source of obligation is within the exclusive jurisdiction of the
regular court.
- Here, the employer - employee relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.
- Thus, where the principal relief sought is to be resolved not by reference to the Labor Code or other labor
relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction over the
dispute belongs to the regular courts of justice and not to the labor arbiter and the NLRC.
WHEREFORE, the petition is PARTLY GRANTED . The Decision and Resolution of the Court of
Appeals, are REVERSED and SET ASIDE. The Regional Trial Court of Makati City, Branch 147
is DIRECTED to continue the proceedings.
Lapanday Agricultural Devt. Corp v. CA, G.R. No. 112139, January 31, 2000
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SYNOPSIS
Petitioner Lapanday Agricultural Development Corporation and respondent Commando Security Service Agency,
Inc., entered into a Guard Service Contract. Respondent provided security guards in petitioner's banana plantation.
Sometime in June 1986, Wage Order Nos. 5 and 6 were promulgated increasing the prevailing minimum wage at that
time. Respondent demanded that its guard service contract with petitioner be upgraded in compliance with the wage
orders. Petitioner refused. Respondent filed a complaint with the Regional Trial Court demanding the rate
adjustment. The trial court ruled in favor of respondent. Petitioner filed a motion for reconsideration, but was denied.
Petitioner contended that it is the National Labor Relations Commission (NLRC) and not the civil courts that has
jurisdiction to resolve the issue in the present case for it refers to the enforcement of wage orders and other benefits
due to respondent security guards. HSIaAT
The Supreme Court ruled that the Regional Trial Court has jurisdiction over the subject of the present case.
According to the Court, while the resolution of the issue involves the application of labor laws, reference to the
Labor Code was only for the determination of the solidary liability of the petitioner to the respondent where no
employer-employee exists. Employer-employee relationship is an indispensable jurisdictional requisite and there was
none in the present case. The Court, however, ruled that private respondent had no cause of action against petitioner
to recover the wage increases because the liability of the petitioner to reimburse the respondent only arises if and
when respondent actually pays its employees the increases granted by the wage orders. The record showed that
private respondent had not yet paid the security guards the wage increases. The Court stressed that the increases are
intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage
adjustments that it has not actually paid. Otherwise, the contractor would be unduly enriching itself by recovering
wage increases, for its own benefit.
SYLLABUS
1. REMEDIAL LAW; JURISDICTION; THE REGIONAL TRIAL COURT HAS JURISDICTION OVER THE
SUBJECT MATTER OF THE PRESENT CASE; WHILE THE RESOLUTION OF THE ISSUE INVOLVES THE
APPLICATION OF LABOR LAWS, REFERENCE TO THE LABOR CODE WAS ONLY FOR THE
DETERMINATION OF THE SOLIDARY LIABILITY OF THE PETITIONER TO THE RESPONDENT
WHERE NO EMPLOYER-EMPLOYEE RELATION EXISTS. We agree with the respondent that the RTC has
jurisdiction over the subject matter of the present case. It is well-settled in law and jurisprudence that where no
employer-employee relationship exists between the parties and no issue is involved which may be resolved by
reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but
seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under
their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to
the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor
code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-
employee relation exists.
2. CIVIL LAW; JOINT AND SOLIDARY OBLIGATIONS; PRIVATE RESPONDENT MAY NOT ASSERT A
CLAIM AGAINST PETITIONER FOR SALARY WAGE ADJUSTMENTS THAT IT HAS NOT ACTUALLY
LABOR REVIEW (Atty. Peter-Joey Usita)
PAID; IT IS ONLY WHEN PRIVATE RESPONDENT PAYS THE INCREASES MANDATED THAT IT CAN
CLAIM AN ADJUSTMENT FROM THE PETITIONER TO COVER THE INCREASES PAYABLE TO THE
SECURITY GUARDS. It is clear also from the foregoing that it is only when contractor pays the increases
mandated that it can claim an adjustment from the principal to cover the increases payable to the security guards. The
conclusion that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor)
arises only if he has paid the amounts for which both of them are jointly and severally liable is in line with Article
1217 of the Civil Code. Pursuant to the above provision, the right of reimbursement from a co-debtor is recognized
in favor of the one who paid. It will be seen that the liability of the petitioner to reimburse the respondent only arises
if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment,
which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the
operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds
to each of the debtors. The records show that judgment was rendered by Labor Arbiter Newton R. Sancho holding
both petitioner and private respondent jointly and solidarily liable to the security guards in a Decision dated October
17, 1986 (NLRC Case No. 2849-MC-XI-86). However, it is not disputed that the private respondent has not actually
paid the security guards the wage increases granted under the Wage Orders in question. Neither is it alleged that
there is an extant claim for such wage adjustments from the security guards concerned, whose services have already
been terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to
recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and
the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually paid.
Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage
increases, for its own benefit.
G.R. No. 112139 January 31, 2000
LAPANDAY AGRICULTURAL DEVELOPMENT CORPORATION, petitioner,
vs.THE HONORABLE COURT OF APPEALS (Former Eighth Division) and COMMANDO SECURITY SERVICE
AGENCY, INC., respondents.
FACTS:
June 1986, plaintiff Commando Security Service Agency, Inc., and defendant Lapanday Agricultural
Development Corporation entered into a Guard Service Contract. Plaintiff provided security guards in
defendant's banana plantation.
Wage Orders increased the minimum wage in 1983. It was complied by the defendant
2 more wage order (WO 5&6) was promulgated with an increase on the ECOLA
Both Wage orders contain the following provision: "In the case of contract for construction projects and for ISSUE:
security, janitorial and similar services, the increase in the minimum wage and allowances rates of the
Whether or not the RTC has jurisdiction (yes)
workers shall be borne by the principal or client of the construction/service contractor and the contracts shall
be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this order" (Sec. 6 and Sec. 9, Whether or not Commando Security Agency has a right of action (no)
Wage Orders No. 5 and 6, respectively).
HELD:
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Plaintiff demanded the contract to be upgraded in compliance with WO 5 & 6, but defendant refused.
IN 1986 the contract expired without the implementation of WO 5 & 6.
The plaintiffs filed a complaint but defendant opposed the complaint raising the defense: (1) the rate
adjustment is the obligation of the plaintiff as employer of the security guards; (2) assuming its liability, the
sum it should pay is less in amount; and (3) the Wage Orders violate the impairment clause of the
Constitution.
RTC: The trial court ruled in favor of respondent. Petitioner filed a motion for reconsideration, but was denied. The
Supreme Court has rejected the impairment of contract argument in sustaining the validity and constitutionality of
labor and social legislation (Eagle Security Agency, Inc. vs. National Labor Relation Commission and Phil.
Tuberculosis Society, Inc)
PETITIONERS CONTENTION:
Petitioner asserts that private respondent has no factual and legal basis to collect the benefits under subject
Wage Order Nos. 5 and 6 intended for the security guards without the authorization of the security guards
concerned. nasmuch as the services of the forty-two (42) security guards were already terminated at the time
the complaint was filed
petitioner submits that it is the National Labor Relations Commission (NLRC) and not the civil courts that
has jurisdiction to resolve the issue involved in this case for it refers to the enforcement of wage adjustment
and other benefits due to private respondent's security guards mandated under Wage Order Nos. 5 and 6.
Considering that the RTC has no jurisdiction, its decision is without force and effect.6
RESPONDENTS CONTENTION
basis of its action against petitioner-appellant is the enforcement of the Guard Service Contract entered into
by them, which is deemed amended by Section 6 of Wage Order No. 5 and Section 9 of Wage Order No. 6;
that pursuant to their amended Guard Service Contract, the increases/adjustments in wages and ECOLA are
due to private respondent and not to the security guards who are not parties to the said contract.
private respondent alleges that the suit filed before the trial court is for the purpose of securing the upgrading
of the Guard Service Contract entered into by herein petitioner and private respondent in June 1983. The
enforcement of this written contract does not fall under the jurisdiction of the NLRC because the money
claims involved therein did not arise from employer-employee relations between the parties and is
intrinsically a civil dispute. Thus, jurisdiction lies with the regular courts.
LABOR REVIEW (Atty. Peter-Joey Usita) 2017-2018

RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence G.R. No. 182295 June 26, 2013 7K CORPORATION, vs. EDDIE ALBARICO
that where no employer-employee relationship exists between the parties and no issue is involved which
may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, FACTS
it is the Regional Trial Court that has jurisdiction
Eddie Albarico (Albarico) was a regular employee of 7K Corporation, a company selling water purifiers.
private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and
damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The Albaricos employment was terminated on 5 April 1993 allegedly for his poor sales performance.
action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts
Albarico stopped reporting for work. Submitted his money claims against 7K Corporation for arbitration
While the resolution of the issue involves the application of labor laws, reference to the labor code was only before the National Conciliation and Mediation Board (NCMB). The issue here being W/N Albarico is
for the determination of the solidary liability of the petitioner to the respondent where no employer- entitled to the payment of separation pay and the sales commission.
employee relation exists.
While the arbitration case before NCMB was pending, Albarico filed a Complaint against 7K
The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is
Corporation with the Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal
made the indirect employer of the contractor's employees to secure payment of their wages should the
dismissal with money claims for overtime pay, holiday compensation, commission, and food and
contractor be unable to pay them.15 Even in the absence of an employer-employee relationship, the law
travelling allowances.
itself establishes one between the principal and the employees of the agency for a limited purpose i.e. in
order to ensure that the employees are paid the wages due them.
The labor arbiter (LA) decided in favor of Albarico. Awarded Albarico separation pay in lieu of
The Wage Orders are explicit that payment of the increases are "to be borne" by the principal or client. "To reinstatement, backwages and attorneys fees.
be borne", however, does not mean that the principal, PTSI in this case, would directly pay the security
guards the wage and allowance increases because there is no privity of contract between them. The security 7K Corporation appealed to the NLRC.
guards' contractual relationship is with their immediate employer
The NLRC vacated the LAs Decision for forum shopping, because the NCMB arbitration case was still
It is clear also from the foregoing that it is only when contractor pays the increases mandated that it can pending. The dismissal was without prejudice to the pending NCMB arbitration case. This became final
claim an adjustment from the principal to cover the increases payable to the security guards. The conclusion after no appeal was taken.
that the right of the contractor (as principal debtor) to recover from the principal as solidary co-debtor) arises
only if he has paid the amounts for which both of them are jointly and severally liable 7K Corporation filed its Position Paper in the NCMB arbitration case on 17 September 1997. Claimed
that Albarico had voluntarily stopped reporting for work after receiving a verbal reprimand for his sales
it is not disputed that the private respondent has not actually paid the security guards the wage increases
performance. Claimed that Albarico was guilty of abandonment of employment!
granted under the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage
adjustments from the security guards concerned, whose services have already been terminated by the Albarico made an oral manifestation that he was adopting the position paper he submitted to the LA.
contractor. Accordingly, private respondent has no cause of action against petitioner to recover the wage
increases. On 12 January 2005, almost 12 years after the filing of the NCMB case, both parties appeared in a
The decision of the Court of Appeals dated May 24, 1993 is REVERSED and SET hearing before the NCMB.
ASIDE. The complaint of private respondent COMMANDO SECURITY SERVICE AGENCY, INC.
is hereby DISMISSED. Albarico manifested that he was willing to settle the case amicably based on the decision of the LA
ordering the payment of separation pay in lieu of reinstatement, backwages and attorneys fees.

7K Corporation made a counter-manifestation that it was likewise amenable to settling the dispute.
7K Corp. vs. Albarico, GR No. 182295, June 26, 2013 However, it was willing to pay only the separation pay and the sales commission according to the
(jurisdiction of the LA) Submission Agreement dated 19 April 1993.

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The factual findings of the voluntary arbitrator, as well as of the CA, are not clear on what happened
afterwards. Even the records are bereft of sufficient information.
HELD
The NCMB voluntary arbitrator rendered a Decision in favor of Albarico on 18 November 2005.
Decided 7K Corporation was liable for illegal dismissal. The promotions, increases in salary, and awards No. The NCMB voluntary arbitrator did not exceed his jurisdiction.
received by Albarico belied the claim that the latter was performing poorly. Albarico could not have According to 7K, the CA wrongly concluded that Albaricos entitlement to separation pay was necessarily based
abandoned his job, as the abandonment should have been clearly shown. Mere absence was not on illegal dismissal, thereby making the issue of the legality of dismissal implicitly submitted to the voluntary
sufficient, but must have been accompanied by overt acts. The immediate filing of a complaint for illegal arbitrator for resolution. 7K argues, this was an erroneous conclusion, because separation pay may in fact be
dismissal against the employer, with a prayer for reinstatement, showed that the employee was not awarded even in circumstances in which there is no illegal dismissal.
abandoning his work. Also, Albarico was dismissed without due process. Although 7K is correct in saying that separation pay may in fact be awarded for reasons other than illegal dismissal,
the circumstances of the instant case lead to no other conclusion than that the claim of Albarico for separation
7K Corporation appealed to the CA, imputing to the NCMB voluntary arbitrator grave abuse of pay was premised on his allegation of illegal dismissal. Thus, the voluntary arbitrator properly assumed jurisdiction
discretion amounting to lack or excess of jurisdiction for awarding backwages and attorneys fees to over the issue of the legality of his dismissal.
Albarico based on the formers finding of illegal dismissal. Contended that the issue of the legality of
True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it is also
dismissal was not explicitly included in the Submission Agreement dated 19 April 1993 filed for
given to employees who are terminated for authorized causes, such as redundancy, retrenchment or installation of
voluntary arbitration and resolution. It prayed that the said awards be set aside, and that only separation
labor-saving devices under Article 283 of the Labor Code. Additionally, jurisprudence holds that separation pay may
pay of P8,912.00 and sales commission of P4,787.60 be awarded.
also be awarded for considerations of social justice, even if an employee has been terminated for a just cause other
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award of attorneys fees for than serious misconduct or an act reflecting on moral character. The Court has also ruled that separation pay may be
having been made without factual, legal or equitable justification. awarded if it has become an established practice of the company to pay the said benefit to voluntarily resigning
employees or to those validly dismissed for non-membership in a union as required in a closed-shop agreement.
7K Corporation filed a Motion for Partial Reconsideration. CA denied. In this case, however, the other circumstances when separation pay may be awarded are not present in this case.
The issue of separation pay emanates solely from Albaricos allegation of illegal dismissal.
Hence, 7K Corporation filed this instant Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court. It argues that, assuming that the voluntary arbitrator (VA) has jurisdiction over the
Even the NLRC was of the understanding that the NCMB arbitration case sought to resolve the issue of the legality of
present termination dispute, the VA should have limited his decision to the issue contained in the
the dismissal. In fact, the identity of the issue of the legality of his dismissal, which was previously submitted to the
Submission Agreement the issue of whether Albarico was entitled to separation pay and to the
NCMB, and later submitted to the NLRC, was the basis of the latters finding of forum shopping and the
sales commission. Under Article 262 of the Labor Code, the jurisdiction of a voluntary arbitrator is
consequent dismissal of the case before it. In fact, 7K also implicitly acknowledged this when it filed before the
strictly limited to the issues that the parties agree to submit. Thus, it contends that the voluntary
NLRC its Motion to Dismiss Albaricos Complaint on the ground of forum shopping. Thus, it is now estopped
arbitrator exceeded his jurisdiction when he resolved the issues of the legality of the dismissal of
from claiming that the issue before the NCMB does not include the issue of the legality of the dismissal of
Albarico and the Albaricos entitlement to backwages on the basis of a finding of illegal dismissal.
Albarico.
III. ISSUE/S In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, a voluntary arbitrator has plenary
jurisdiction and authority to interpret an agreement to arbitrate and to determine the scope of his own
W/N the NCMB voluntary arbitrator exceeded his jurisdiction in deciding issues not specified in the submission authority when the said agreement is vague subject only, in a proper case, to the certiorari jurisdiction of this
agreement of the parties. Court.
Having established that the issue of the legality of dismissal of Albarico was in fact necessarily albeit not
(W/N the NCMB VA arbitrator properly assumed jurisdiction to decide the issue of the legality of the dismissal and
explicitly included in the Submission Agreement signed by the parties, this Court rules that the voluntary
the entitlement to backwages, even if neither the legality nor the entitlement was expressedly claimed in the
arbitrator rightly assumed jurisdiction to decide the said issue.
Submission Agreement of the parties.)

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In Sime Darby we ruled that although the specific issue presented by the parties to the voluntary arbitrator was only
"the issue of performance bonus," the latter had the authority to determine not only the issue of whether or not a
performance bonus was to be granted, but also the related question of the amount of the bonus, were it to be granted.
We explained that there was no indication at all that the parties to the arbitration agreement had regarded "the issue of
performance bonus" as a two-tiered issue, of which only one aspect was being submitted to arbitration. Thus, we held
that the failure of the parties to limit the issues specifically to that which was stated allowed the arbitrator to assume
jurisdiction over the related issue.
Similarly, in the present case, there is no indication that the issue of illegal dismissal should be treated. as a two-tiered
issue whereupon entitlement to backwages must be determined separately. Besides, "since arbitration is a final resort
for the adjudication of disputes," the voluntary arbitrator in the present case can assume that he has the necessary
power to make a final settlement. Thus, we rule that the voluntary arbitrator correctly assumed jurisdiction over the
issue of entitlement of Albarico to backwages on the basis of the former's finding of illegal dismissal.
Voluntary arbitrators may, by agreement of the parties, assume jurisdiction over a termination dispute such as the
present case, contrary to the assertion of 7K Corporation that they may not.
Petition is DENIED.
Issue/s:
Peoples Broadcasting vs. Sec. of Labor, GR No. 179652, March 6, 2012
PEOPLES BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.) -versus- THE SECRETARY OF 1.
THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION
VII, AND JANDELEON JUEZAN. 2.
[G.R. No. 179652, MARCH 6,2012]
Facts: Held:
Private respondent Jandeleon Juezan filed a complaint against petitioner with the DOLE Regional Office
No. VII, Cebu City, for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium 1.
pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage
of SSS, PAG-IBIG and Philhealth.
DOLE Reg. Dir Order
After summary investigations, DOLE Reg. Dir. Found out that Juezan was an employee of the petitioner and
entitled to the money claims.
SecLab Order
Petitioner sought reconsideration of the Directors Order, but failed. The Acting DOLE Secretary dismissed
petitioners appeal because petitioner submitted a Deed of Assignment of Bank Deposit instead of posting a
cash or surety bond.
CA Decision
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Where petitioner claimed that it had been denied due process, it was held that petitioner was accorded due
process as it had been given the opportunity to be heard, and that the DOLE Secretary had jurisdiction over
the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the
DOLE Secretary under Art. 128(b) of the Code had been repealed by RA 7730.
SC Decision
CA Decision reversed and set aside; The Court found that there was no employer-employee relationship
between petitioner and private respondent. It was held that while the DOLE may make a determination of
the existence of an employer-employee relationship, this function could not be co-extensive with the
visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The
National Labor Relations Commission (NLRC) was held to be the primary agency in determining the
existence of an employer-employee relationship. This was the interpretation of the Court of the clause in
cases where the relationship of employer-employee still exists in Art. 128(b). From this Decision, the Public
Attorneys Office filed a Motion for Clarification of Decision (with Leave of Court) seeking to clarify as to
when the visitorial and enforcement power of the DOLE be not considered as co-extensive with the power to
determine the existence of an employer-employee relationship. The Court treated the Motion for
Clarification as a second motion for reconsideration, granting said motion and reinstating the petition, it
being apparent to delineate SecLab jurisdiction vis--vis that of NLRC.
WON DOLE may determine existence of ee-er relationship?
If so, up to what extent?
Yes
No limitation in the law was placed upon the power of the DOLE to determine the existence of an
employer-employee relationship. No procedure was laid down where the DOLE would only make a
preliminary finding or that the power was primarily held by the NLRC, or that the matter would be referred
to it. The DOLE must have the power to determine whether or not an employer-employee relationship
exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of
the Labor Code, as amended by RA 7730. DOLE also determines existence of ee-er relations via the four-
fold test, such test being not limited w/in NLRC domain. The tests are as follows: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employers power
to control the employees conduct. The expanded visitorial and enforcement power of the DOLE granted by
RA 7730 would be rendered nugatory if the alleged employer could, force the referral of the matter to the
NLRC by disputing the ee-er relationship. The Court issued the declaration that at least a prima
facie showing of the absence of an employer-employee relationship be made to oust the DOLE of
jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will
weigh it, to see if the same does successfully refute the existence of said relationship.
LABOR REVIEW (Atty. Peter-Joey Usita)
If the DOLE makes a finding that there is an existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the
employer-employee relationship has already been terminated, or it appears, upon review, that no employer-
employee relationship existed in the first place.
The Court, in limiting the power of the DOLE, gave the rationale that such limitation would
eliminate the prospect of competing conclusions between the DOLE and the NLRC. The prospect of
competing conclusions could just as well have been eliminated by according respect to the DOLE findings,
to the exclusion of the NLRC, and this accdng to the SC, is the more prudent course of action to take.
2. When NLRC, LA has jurisdiction.
If a complaint is brought before the DOLE to give effect to the labor standards provisions of the
Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-
employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds
that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint
is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with
the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original
and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the
NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the
DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under
Rule 65 of the Rules of Court.
In the present case, the finding of the DOLE Regional Director that there was an employer-
employee relationship has been subjected to review by this Court, with the finding being that there was no
employer-employee relationship between petitioner and private respondent. There being no ee-er relations
bet. Juezan and PBS, DOLE does not acquire jurisdiction, hence dismissal of the case is proper.
2. National Labor Relations Commission
Art. 213. National Labor Relations Commission. There shall be a National Labor Relations Commission
which shall be attached to the Department of Labor and Employment for program and policy coordination
only, composed of a Chairman and fourteen (14) Members.
Five (5) members each shall be chosen from among the nominees of the workers and employers
organizations, respectively. The Chairman and the four (4) remaining members shall come from the public
sector, with the latter to be chosen from among the recommendees of the Secretary of Labor and
Employment.
Upon assumption into office, the members nominated by the workers and employers organizations shall
divest themselves of any affiliation with or interest in the federation or association to which they belong.
The Commission may sit en banc or in five (5) divisions, each composed of three (3) members. Subject to
the penultimate sentence of this paragraph, the Commission shall sit en banc only for purposes of
promulgating rules and regulations governing the hearing and disposition of cases before any of its
divisions and regional branches, and formulating policies affecting its administration and operations. The
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Commission shall exercise its adjudicatory and all other powers, functions, and duties through its divisions.
Of the five (5) divisions, the first, second and third divisions shall handle cases coming from the National
Capital Region and the parts of Luzon; and the fourth and fifth divisions, cases from the Visayas and
Mindanao, respectively; Provided that the Commission sitting en banc may, on temporary or emergency
basis, allow cases within the jurisdiction of any division to be heard and decided by any other division
whose docket allows the additional workload and such transfer will not expose litigants to unnecessary
additional expense. The divisions of the Commission shall have exclusive appellate jurisdiction over cases
within their respective territorial jurisdictions. [As amended by Republic Act No. 7700].
The concurrence of two (2) Commissioners of a division shall be necessary for the pronouncement of
judgment or resolution. Whenever the required membership in a division is not complete and the
concurrence of two (2) commissioners to arrive at a judgment or resolution cannot be obtained, the
Chairman shall designate such number of additional Commissioners from the other divisions as may be
necessary.
The conclusions of a division on any case submitted to it for decision shall be reached in consultation
before the case is assigned to a member for the writing of the opinion. It shall be mandatory for the division
to meet for purposes of the consultation ordained herein. A certification to this effect signed by the
Presiding Commissioner of the division shall be issued and a copy thereof attached to the record of the case
and served upon the parties.
The Chairman shall be the Presiding Commissioner of the first division and the four (4) other members
from the public sector shall be the Presiding Commissioners of the second, third, fourth and fifth divisions,
respectively. In case of the effective absence or incapacity of the Chairman, the Presiding Commissioner of
the second division shall be the Acting Chairman.
The Chairman, aided by the Executive Clerk of the Commission, shall have administrative supervision over
the Commission and its regional branches and all its personnel, including the Executive Labor Arbiters and
Labor Arbiters.
The Commission, when sitting en banc shall be assisted by the same Executive Clerk and, when acting thru
its Divisions, by said Executive Clerks for the second, third, fourth and fifth Divisions, respectively, in the
performance of such similar or equivalent functions and duties as are discharged by the Clerk of Court and
Deputy Clerks of Court of the Court of Appeals. (As amended by Section 5, Republic Act No. 6715, March
21, 1989)
Art. 214. Headquarters, Branches and Provincial Extension Units. The Commission and its First,
Second and Third divisions shall have their main offices in Metropolitan Manila, and the Fourth and Fifth
divisions in the Cities of Cebu and Cagayan de Oro, respectively. The Commission shall establish as many
regional branches as there are regional offices of the Department of Labor and Employment, sub-regional
branches or provincial extension units. There shall be as many Labor Arbiters as may be necessary for the
effective and efficient operation of the Commission. Each regional branch shall be headed by an Executive
Labor Arbiter. (As amended by Section 6, Republic Act No. 6715, March 21, 1989)
Art. 215. Appointment and Qualifications. The Chairman and other Commissioners shall be members of
LABOR REVIEW (Atty. Peter-Joey Usita) 2017-2018

The commission acts as a whole in 4 instances

the Philippine Bar and must have engaged in the practice of law in the Philippines for at least fifteen (15)
promulgate rules and regulations governing the hearing and disposition of cases
years, with at least five (5) years experience or exposure in the field of labor-management relations, and
to formulate policies affecting its administration and operations
shall preferably be residents of the region where they are to hold office. The Executive Labor Arbiters and
to allow cases within the jurisdiction of any division to be heard and decided by another division
Labor Arbiters shall likewise be members of the Philippine Bar and must have been engaged in the practice to recommend appointment of a labor arbiter
of law in the Philippines for at least seven (7) years, with at least three (3) years experience or exposure in
the field of labor-management relations: Provided, However, that incumbent Executive Labor Arbiters and a. Original Jurisdiction of the NLRC
Labor Arbiters who have been engaged in the practice of law for at least five (5) years may be considered
ORIGINAL JURISDICTION EXCLUSIVE APPELLATE JURISDICTION
as already qualified for purposes of reappointment as such under this Act. The Chairman and the other
Commissioners, the Executive Labor Arbiters and Labor Arbiters shall hold office during good behavior
until they reach the age of sixty-five years, unless sooner removed for cause as provided by law or become 1. Injunction in ordinary labor disputes to enjoin 1. All cases decided by the Labor Arbiters
incapacitated to discharge the duties of their office. or restrain any actual or threatened commission including contempt cases; and
of any or all prohibited or unlawful acts or to 2. Cases decided by the DOLE Regional Directors
The Chairman, the division Presiding Commissioners and other Commissioners shall be appointed by the
require the performance of a particular act in or his duly authorized Hearing Officers (under
President, subject to confirmation by the Commission on Appointments. Appointment to any vacancy shall
any labor dispute which, if not restrained or Article 129) involving recovery of wages,
come from the nominees of the sector which nominated the predecessor. The Executive Labor Arbiters and
performed forthwith, may cause grave or simple money claims and other benefits not
Labor Arbiters shall also be appointed by the President, upon recommendation of the Secretary of Labor
irreparable damage to any party; exceeding P5,000 and not accompanied by
and Employment and shall be subject to the Civil Service Law, rules and regulations.
2. Injunction in strikes or lockouts under Article claim for reinstatement.
The Secretary of Labor and Employment shall, in consultation with the Chairman of the Commission, 264 of the Labor Code; and
appoint the staff and employees of the Commission and its regional branches as the needs of the service 3. Certified labor disputes causing or likely to
may require, subject to the Civil Service Law, rules and regulations, and upgrade their current salaries, cause a strike or lockout in an industry
benefits and other emoluments in accordance with law. (As amended by Section 7, Republic Act No. 6715, indispensable to the national interest, certified
March 21, 1989) to it by the Secretary of Labor and Employment
Art. 216. Salaries, benefits and other emoluments. The Chairman and members of the Commission shall for compulsory arbitration.
receive an annual salary at least equivalent to, and be entitled to the same allowances and benefits as those
of the Presiding Justice and Associate Justices of the Court of Appeals, respectively. The Executive Labor
Arbiters shall receive an annual salary at least equivalent to that of an Assistant Regional Director of the Bartolino vs Coca Cola Bottlers Gr. No 153660 June 10, 2003
Department of Labor and Employment and shall be entitled to the same allowances and benefits as that of a
Regional Director of said Department. The Labor Arbiters shall receive an annual salary at least equivalent SYNOPSIS
to, and be entitled to the same allowances and benefits as that of an Assistant Regional Director of the
Petitioners filed a complaint against respondent for illegal dismissal. The Labor Arbiter ordered respondent to
Department of Labor and Employment. In no case, however, shall the provision of this Article result in the
reinstate complainants to their former positions and to pay their full back wages. On appeal, the National Labor
diminution of existing salaries, allowances and benefits of the aforementioned officials. (As amended by
Relations Commission (NLRC) sustained the finding of the Labor Arbiter. Respondent appealed to the Court of
Section 8, Republic Act No. 6715, March 21, 1989)
Appeals (CA) which affirmed the finding of the NLRC, but agreed with the respondent that the affidavits of some of
the complainants should not have been given probative value for failure to affirm the contents thereof and to undergo
cross-examination. As a consequence, the CA dismissed their complaints for lack of sufficient evidence. Hence, this
NOTES:
petition.
principal government agency that hears and decides labor-management disputes
NLRC is independent from DOLE, attached to DOLE only for purposes of policy coordination In granting the present petition, the Supreme Court ruled that administrative bodies like the NLRC are not bound by
NLRC is less tied to technical rules of the regular courts the technical niceties of law and procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of
NLRC has regional arbitration branches or RAB's Court and prevailing jurisprudence may be given only stringent application, i.e., by analogy or in suppletory
LABOR ARBITERS are the representative of the NLRC in various regions character and effect. The submission by respondent, citing People v. Sorrel, that an affidavit not testified to in a trial,

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is mere hearsay evidence and has no real evidentiary value, cannot find relevance in the present case considering that
a criminal prosecution requires a quantum of evidence different from that of an administrative proceeding. Under the
Rules of the Commission, the Labor Arbiter is given the discretion to determine the necessity of a formal trial or
hearing. Hence, trial-type hearings are not even required as the cases may be decided based on verified position
papers, with supporting documents and their affidavits.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; AFFIDAVITS; GIVEN EVIDENTIARY VALUE DESPITE FAILURE OF
AFFIANTS TO UNDERGO CROSS-EXAMINATION IN PROCEEDINGS BEFORE ADMINISTRATIVE
BODIES LIKE THE NLRC. The oft-cited case of Rabago v. NLRC squarely grapples a similar challenge
involving the propriety of the use of affidavits without the presentation of affiants for cross-examination. In that
case, we held that "the argument that the affidavit is hearsay because the affiants were not presented for cross-
examination is not persuasive because the rules of evidence are not strictly observed in proceedings before
administrative bodies like the NLRC where decisions may be reached on the basis of position papers only." In Rase
v. NLRC, this Court likewise sidelined a similar challenge when it ruled that it was not necessary for the affiants to
appear and testify and be cross-examined by counsel for the adverse party. To require otherwise would be to negate
the rationale and purpose of the summary nature of the proceedings mandated by the Rules and to make mandatory
the application of the technical rules of evidence.
2. ID.; ID.; RULES OF EVIDENCE PREVAILING IN COURTS OF LAW DO NOT CONTROL PROCEEDINGS
BEFORE THE LABOR ARBITER AND THE NLRC. Southern Cotabato Dev. and Construction Co. v.
NLRC succinctly states that under Art. 221 of the Labor Code, the rules of evidence prevailing in courts of law do
not control proceedings before the Labor Arbiter and the NLRC. Further, it notes that the Labor Arbiter and the
NLRC are authorized to adopt reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law and procedure, all in the interest of due process. We find no compelling reason
to deviate therefrom. To reiterate, administrative bodies like the NLRC are not bound by the technical niceties of law
and procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing
jurisprudence may be given only stringent application, i.e., by analogy or in a suppletory character and effect. The
submission by respondent, citing People v. Sorrel, that an affidavit not testified to in a trial, is mere hearsay evidence
and has no real evidentiary value, cannot find relevance in the present case considering that a criminal prosecution
requires a quantum of evidence different from that of an administrative proceeding. Under the Rules of the
Commission, the Labor Arbiter is given the discretion to determine the necessity of a formal trial or hearing. Hence,
trial-type hearings are not even required as the cases may be decided based on verified position papers, with
supporting documents and their affidavits.
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; WAIVERS AND QUITCLAIMS, WHEN VALID; CASE
AT BAR. As to whether petitioner Nestor Romero should be properly impleaded in the instant case, we only need
to follow the doctrinal guidance set by Periquet v. NLRC which outlines the parameters for valid compromise
agreements, waivers and quitclaims "Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may
not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was
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wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the
law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking." In closely examining the subject
agreements, we find that on their face the Compromise Agreement and Release, Waiver and Quitclaim are devoid of
any palpable inequity as the terms of settlement therein are fair and just. Neither can we glean from the records any
attempt by the parties to renege on their contractual agreements, or to disavow or disown their due execution.
Consequently, the same must be recognized as valid and binding transactions and, accordingly, the instant case
should be dismissed and finally terminated insofar as concerns petitioner Nestor Romero.
G.R. No. 153660 June 10, 2003
PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE LADICA, ARMAN QUELING,
ROLANDO NIETO, RICARDO BARTOLOME, ELUVER GARCIA, EDUARDO GARCIA and NELSON
MANALASTAS,petitioners,
vs.COCA-COLA BOTTLERS PHILS., INC., respondent.
FACTS:
15 February 1995 sixty-two (62) employees of respondent Coca-Cola Bottlers, Inc., and its officers,
Lipercon Services, Inc., People's Specialist Services, Inc., and Interim Services, Inc., filed a complaint
against respondents for unfair labor practice through illegal dismissal, violation of their security of tenure
and the perpetuation of the "Cabo System." They thus prayed for reinstatement with full back wages, and the
declaration of their regular employment status.
For failure to prosecute as they failed to either attend the scheduled mandatory conferences or submit their
respective affidavits, the claims of fifty-two (52) complainant-employees were dismissed. Labor Arbiter
Jose De Vera conducted clarificatory hearings
the complainants averred that in the performance of their duties as route helpers, bottle segregators, and
others, they were employees of respondent Coca-Cola Bottlers, Inc. They further maintained that when
respondent company replaced them and prevented them from entering the company premises, they were
deemed to have been illegally dismissed.
RESPONDENTS CONTENTION:
In lieu of a position paper, respondent company filed a motion to dismiss complaint for lack of jurisdiction
and cause of action, there being no employer-employee relationship between complainants and Coca-Cola
Bottlers, Inc., and that respondents Lipercon Services, People's Specialist Services and Interim Services
being bona fide independent contractors, were the real employers of the complainants.3 As regards the
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corporate officers, respondent insisted that they could not be faulted and be held liable for damages as they
only acted in their official capacities while performing their respective duties.
LABOR ARBITER
Labor Arbiter Jose De Vera rendered a decision ordering respondent company to reinstate complainants to
their former positions with all the rights, privileges and benefits due regular employees, and to pay their full
back wages
the testimonies of the complainants were more credible as they sufficiently supplied every detail of their
employment, specifically identifying who their salesmen/drivers were, their places of assignment, aside
from their dates of engagement and dismissal
NLRC:
sustained the LA's decision. There was an EE-ER relationship.
CA
Respondent Coca-Cola Bottlers appealed to the Court of Appeals which,
affirming the finding of the NLRC that an employer-employee relationship existed between the contending
parties, nonetheless agreed with respondent that the affidavits of some of the complainants, namely,
Prudencio Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and
Nelson Manalastas, should not have been given probative value for their failure to affirm the contents
thereof and to undergo cross-examination
ISSUE
Whether or not the CA should have given weight to respondents claim of failure to cross-examine the complainants
(propriety of giving evidentiary value to the affidavits despite the falure of the affiants to affirm their contents and
undergo the test of cross-examination
HELD
Rabago v. NLRC "the argument that the affidavit is hearsay because the affiants were not presented for
cross-examination is not persuasive because the rules of evidence are not strictly observed in proceedings
before administrative bodies like the NLRC where decisions may be reached on the basis of position papers
only."
Rase v. NLRC it was not necessary for the affiants to appear and testify and be cross-examined by counsel
for the adverse party. To require otherwise would be to negate the rationale and purpose of the summary
nature of the proceedings mandated by the Rules and to make mandatory the application of the technical
rules of evidence
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Labor Arbiter and the NLRC are authorized to adopt reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law and procedure, all in the interest of due
process. We find no compelling reason to deviate therefrom.
To reiterate, administrative bodies like the NLRC are not bound by the technical niceties of law and
procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing
jurisprudence may be given only stringent application, i.e., by analogy or in a suppletory character and
effect. Under the Rules of the Commission, the Labor Arbiter is given the discretion to determine the
necessity of a formal trial or hearing. Hence, trial-type hearings are not even required as the cases may be
decided based on verified position papers, with supporting documents and their affidavits.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered
into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply
because of a change of mind.
at the time the instant petition was filed on 7 May 2002 petitioners were not yet represented by counsel.
Surely, petitioners who are non-lawyers could not be faulted for the procedural lapse since they could not be
expected to be conversant with the nuances of the law, much less knowledgeable with the esoteric
technicalities of procedure. For this reason alone, the procedural infirmity in the filing of the present petition
may be overlooked and should not be taken against petitioners.
The Decision of the Court of Appeals is REVERSED and SET ASIDE and the decision of the NLRC dated
30 March 2001 which affirmed in toto the decision of the Labor Arbiter dated 29 May 1998 ordering
respondent Coca-Cola Bottlers Phils., Inc., to reinstate Prudencio Bantolino, Nilo Espina, Eddie Ladica,
Arman Queling, Rolando Nieto, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and Nelson Manalastas
to their former positions as regular employees, and to pay them their full back wages, with the exception of
Prudencio Bantolino whose back wages are yet to be computed upon proof of his dismissal,
is REINSTATED, with the MODIFICATION that herein petition is DENIED insofar as it concerns
Nestor Romero who entered into a valid and binding Compromise Agreement and Release, Waiver and
Quitclaim with respondent company.
b. Article 223 (formerly Art. 217); Exclusive Appellate jurisdiction
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
2. The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
c. Article 229 (formerly Art. 223); Appeal
Art. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such
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decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds:
1. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
2. If the decision, order or award was secured through fraud or coercion, including graft
and corruption;
3. If made purely on questions of law; and
4. If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in the amount equivalent to the monetary award in the judgment appealed from.
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar
as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the same terms and conditions prevailing prior
to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for reinstatement provided herein.
To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon the erring parties.
Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within ten (10)
calendar days from receipt by the party of the decision. From the decision of the NLRC, there is no appeal.
The only way to elevate the case to the Court of Appeals is by way of the special civil action of certiorari
under Rule 65 of the Rules of Civil Procedure. From the ruling of the Court of the Appeals, it may be
elevated to the Supreme Court by way of ordinary appeal under Rule 45 of the Rules of Civil Procedure.
The appeal shall be:
(1) filed within the reglementary period provided in Section 1 of the Rule;
(2) verified by the appellant himself/herself in accordance with Section 4, Rule 7 of the
Rules of Court, as amended;
(3) in the form of a memorandum of appeal which shall state the grounds relied upon
and the arguments in support thereof, the relief prayed for, and with a statement of the
date the appellant received the appealed decision, award or order;
(4) in three (3) legibly typewritten or printed copies; and (5) accompanied by proof of
payment of the required appeal fee and legal research fee, posting of a cash or surety
bond as provided in Section 6 of this Rule, and proof of service upon the other parties.
Appeal from the decision of the LA's decision is not perfected if cash or surety bond is not posted
within the 10-day appeal period.
A MOTION TO REDUCE the bond may be filed on meritorious grounds, but meantime, a bond in a
reasonable amount in relation to the monetary award should be posted with the appeal (check Mcburnie
case)
EFFECT OF APPEAL FROM LA to NLRC:
LA loses jurisdiction over the case
perfection of appeal stays the decision of the LA
IF the LA's decision includes a reinstatement order the LA shall immediately issue a
partial writ of execution even pending the appeal
actual reinstatement employee returns back to work
payroll reinstatement employee does not work but still gets paid regularly

APPEAL: Labor Code 2011 NLRC Rules of Procedure (EXTRAORDINARY

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.
Such appeal may be entertained only on
any of the following grounds:
The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer If there is prima facie evidence of abuse of
of the appellee. The decision of the Commission shall be final and executory after ten (10) calendar discretion on the part of the Labor Arbiter;
days from receipt thereof by the parties. If the decision, order or award was
secured through fraud or coercion,
including graft and corruption;
Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the If made purely on questions of law; and
Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic If serious errors in the findings of facts are
Act No. 6715, March 21, 1989) raised which would cause grave or
irreparable damage or injury to the
NOTES: appellant.
REMEDIES)
(a) If there is prima facie evidence of
abuse of discretion on the part of the
Labor Arbiter;
(b) If serious errors in the findings of facts
are raised which, if not corrected, would
cause grave or irreparable damage or
injury to the petitioner;
(c) If a party by fraud, accident, mistake or
excusable negligence has been prevented
from taking an appeal;
(d) If made purely on questions of law; or
(e) If the order or resolution will cause
injustice if not rectified. (As amended by

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En Banc Resolution No. 05-14, Series of 1. Memorandum of Appeal8 and Motion to Reduce Bond9, and
2014)
Petition may include an order to suspend 2. posted an appeal bond in the amount ofP100,000.00.
or stop the execution of the LA's order or
The respondents contended in their Motion to Reduce Bond, inter alia, that the monetary awards of the LA were null
resolution.
and excessive, allegedly with the intention of rendering them incapable of posting the necessary appeal bond. They
claimed that an award of "more than P60 Million Pesos to a single foreigner who had no work permit and who left the
Mcburnie vs. Ganzon, GR No. 178034, Oct. 17, 2013 country for good one month after the purported commencement of his employment" was a patent
nullity. 10 Furthermore, they claimed that because of their business losses that may be attributed to an economic crisis,
G.R. Nos. 178034 & 178117 G R. Nos. 186984-85 they lacked the capacity to pay the bond of almost P60 Million, or even the millions of pesos in premium required for
such bond.
October 17, 2013
On March 31, 2005, the NLRC denied 11 the motion to reduce bond, explaining that "in cases involving monetary
ANDREW JAMES MCBURNIE, Petitioner, award, an employer seeking to appeal the [LAs] decision to the Commission is unconditionally required by Art. 223,
vs. EULALIO GANZON, EGI-MANAGERS, INC. and E. GANZON, INC., Respondents. Labor Code to post bond in the amount equivalent to the monetary award x x x." 12 Thus, the NLRC required from the
respondents the posting of an additional bond in the amount of P54,083,910.00.
Doctrine: Rule of appeal bonds and guidelines for reduction of appeal bond. Their motion for reconsideration was denied, 13
FACTS COURT OF APPEALS (petition was filed while the NLRC has not yet decided on the case)
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary The respondents decided to elevate the matter to the Court of Appeals (CA) via the Petition for Certiorari and
claims against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year employment Prohibition (With Extremely Urgent Prayer for the Issuance of a Preliminary Injunction and/or Temporary Restraining
agreement5 with the company EGI as an Executive Vice-President who shall oversee the management of the Order)14 docketed as CA-G.R. SP No. 90845.
companys hotels and resorts within the Philippines. He performed work for the company until sometime in November
1999, when he figured in an accident that compelled him to go back to Australia while recuperating from his injuries. NLRC (while there is a pending appeal in the Court of Appeals)
While in Australia, he was informed by respondent Ganzon that his services were no longer needed because their In view of the respondents failure to post the required additional bond, the NLRC dismissed their appeal in a
intended project would no longer push through. Resolution15 dated March 8, 2006. The respondents motion for reconsideration was denied on June 30, 2006. 16
LABOR ARBITRER COURT OF APPEALS (the 2nd petition was consolidated with the earlier appeal/petition)
McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary claims against the This prompted the respondents to file with the CA the Petition for Certiorari (With Urgent Prayers for the Immediate
respondents.The respondents opposed the complaint, contending that their agreement with McBurnie was to jointly Issuance of a Temporary Restraining Order and a Writ of Preliminary Injunction) 17docketed as CA-G.R. SP No.
invest in and establish a company for the management of hotels. They did not intend to create an employer-employee 95916, which was later consolidated with CA-G.R. SP No. 90845. (CA-G.R. SP Nos. 90845 and 95916)
relationship, and the execution of the employment contract that was being invoked by McBurnie was solely for the
On February 16, 2007, the CA issued a Resolution 18 granting the respondents application for a writ of preliminary
purpose of allowing McBurnie to obtain an alien work permit in the Philippines. At the time McBurnie left for
injunction. It directed the NLRC, McBurnie, and all persons acting for and under their authority to refrain from
Australia for his medical treatment, he had not yet obtained a work permit.
causing the execution and enforcement of the LAs decision in favor of McBurnie, conditioned upon the respondents
LA declared McBurnie as having been illegally dismissed from employment, and thus entitled to receive from the posting of a bond in the amount of P10,000,000.00. McBurnie sought reconsideration of the issuance of the writ of
respondents the following amounts: (a) US$985,162.00 as salary and benefits for the unexpired term of their preliminary injunction, but this was denied by the CA in its Resolution 19 dated May 29, 2007.
employment contract, (b) P2,000,000.00 as moral and exemplary damages, and (c) attorneys fees equivalent to 10%
SUPREME COURT (petitions and motions were not granted thus the SC decision became final and executory)
of the total monetary award.
McBurnie then filed with the Court a Petition for Review on Certiorari 20 docketed as G.R. Nos. 178034 and 178117,
NLRC
assailing the CA Resolutions that granted the respondents application for the injunctive writ. On July 4, 2007, the
Feeling aggrieved, the respondents appealed the LAs Decision to the NLRC. 7 On November 5, 2004, they filed their Court denied the petition on the ground of McBurnies failure to comply with the 2004 Rules on Notarial Practice and

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to sufficiently show that the CA committed any reversible error. 21 A motion for reconsideration was denied with The Court explained that the respondents failure to post a bond equivalent in amount to the LAs monetary award was
finality in a Resolution22 dated October 8, 2007. fatal to the appeal. 39 Although an appeal bond may be reduced upon motion by an employer, the following conditions
must first be satisfied: (1) the motion to reduce bond shall be based on meritorious grounds; and (2) a reasonable
Unyielding, McBurnie filed a Motion for Leave (1) To File Supplemental Motion for Reconsideration and (2) To
23 amount in relation to the monetary award is posted by the appellant. Unless the NLRC grants the motion to reduce the
Admit the Attached Supplemental Motion for Reconsideration, which was treated by the Court as a second motion
cash bond within the 10-day reglementary period to perfect an appeal from a judgment of the LA, the employer is
for reconsideration, a prohibited pleading under Section 2, Rule 56 of the Rules of Court. Thus, the motion for leave
24 mandated to post the cash or surety bond securing the full amount within the said 10-day period. 40 The respondents
was denied by the Court in a Resolution dated November 26, 2007.
initial appeal bond of P100,000.00 was grossly inadequate compared to the LAs monetary award.
The Courts Resolution dated July 4, 2007 then became final and executory on November 13, 2007; accordingly, entry
(FIRST MOTION FOR RECONSIDERATION) The respondents first motion for reconsideration 41 was denied by
of judgment was made in G.R. Nos. 178034 and 178117.25
the Court for lack of merit via a Resolution42dated December 14, 2009.
COURT OF APPEALS (decided on the merits of the case)
Meanwhile, on the basis of the Courts Decision, McBurnie filed with the NLRC a motion for reconsideration with
In the meantime, the CA ruled on the merits of CA-G.R. SP No. 90845 and CA-G.R. SP No. 95916 and rendered its motion to recall and expunge from the records the NLRC Decision dated November 17, 2009. 43 The motion was
Decision26 dated October 27, 2008, allowing the respondents motion to reduce appeal bond and directing the NLRC granted by the NLRC in its Decision44 dated January 14, 2010.45
to give due course to their appeal. Petitioners are hereby DIRECTED to post appeal bond in the amount
(SECOND MOTION FOR RECONSIDERATION) Undaunted by the denial of their first motion for
ofP10,000,000.00. The NLRC is hereby DIRECTED to give due course to petitioners appeal which is ordered
reconsideration of the Decision dated September 18, 2009, the respondents filed with the Court a Motion for Leave to
remanded to the NLRC for further proceedings.
Submit Attached Second Motion for Reconsideration 46 and Second Motion for Reconsideration, 47 which motion for
NLRCs denial of the respondents motion to reduce appeal bond: the CA ruled that the NLRC committed grave leave was granted in a Resolution48 dated March 15, 2010. McBurnie was allowed to submit his comment on the
abuse of discretion in immediately denying the motion without fixing an appeal bond in an amount that was second motion, and the respondents, their reply to the comment. On January 25, 2012, however, the Court issued a
reasonable, as it denied the respondents of their right to appeal from the decision of the LA. 29The CA explained that Resolution denying the second motion "for lack of merit," "considering that a second motion for reconsideration is a
"(w)hile Art. 223 of the Labor Code requiring bond equivalent to the monetary award is explicit, Section 6, Rule VI of prohibited pleading x x x."50
the NLRC Rules of Procedure, as amended, recognized as exception a motion to reduce bond upon meritorious
The Courts Decision dated September 18, 2009 became final and executory on March 14, 2012. Thus, entry of
grounds and upon posting of a bond in a reasonable amount in relation to the monetary award." 30
judgment51 was made in due course
NLRCs dismissal of the appeal on the ground of the respondents failure to post the additional appeal bond:
ISSUE
the CA also found grave abuse of discretion on the part of the NLRC, explaining that an appeal bond in the amount
of P54,083,910.00 was prohibitive and excessive. Moreover, the appellate court cited the pendency of the petition for 1. THE PREVIOUS 15 MARCH 2010 RESOLUTION OF THE HONORABLE COURT ACTUALLY
certiorari over the denial of the motion to reduce bond, which should have prevented the NLRC from immediately GRANTED RESPONDENTS "MOTION FOR LEAVE TO SUBMIT A SECOND MOTION FOR
dismissing the respondents appeal.32 RECONSIDERATION."
NLRC (acting on the CAs order of remand)
In the meantime, the NLRC, accepted the appeal from the LAs decision, and in its Decision 35 dated November 17, HENCE, RESPONDENTS RESPECTFULLY CONTEND THAT THE SUBSEQUENT 25
2009, reversed and set aside the Decision of the LA, and entered a new one dismissing McBurnies complaint. It JANUARY 2012 RESOLUTION CANNOT DENY THE " SECOND MOTION FOR
explained that based on records, McBurnie was never an employee of any of the respondents, but a potential investor RECONSIDERATION " ON THE GROUND THAT IT IS A PROHIBITED PLEADING.
in a project that included said respondents, barring a claim of dismissal, much less, an illegal dismissal. Granting that MOREOVER, IT IS RESPECTFULLY CONTENDED THAT THERE ARE VERY PECULIAR
there was a contract of employment executed by the parties, McBurnie failed to obtain a work permit which would CIRCUMSTANCES AND NUMEROUS IMPORTANT ISSUES IN THESE CASES THAT
have allowed him to work for any of the respondents. 36 In the absence of such permit, the employment agreement was CLEARLY JUSTIFY GIVING DUE COURSE TO RESPONDENTS "SECOND MOTION FOR
void and thus, could not be the source of any right or obligation. RECONSIDERATION," WHICH ARE:
SUPREME COURTS (reversed the decision of the CA on the reduction of the appeal bond)
On September 18, 2009, the Third Division of this Court rendered its Decision 37 which reversed the CA Decision
dated October 27, 2008 and Resolution dated March 3, 2009.

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2. THE 10 MILLION PESOS BOND WHICH WAS POSTED IN COMPLIANCE WITH THE OCTOBER
27, 2008 DECISION OF THE COURT OF APPEALS IS A SUBSTANTIAL AND SPECIAL
MERITORIOUS CIRCUMSTANCE TO MERIT RECONSIDERATION OF THIS APPEAL.
3. THE HONORABLE COURT HAS HELD IN NUMEROUS LABOR CASES THAT WITH RESPECT TO
ARTICLE 223 OF THE LABOR CODE, THE REQUIREMENTS OF THE LAW SHOULD BE GIVEN A
LIBERAL INTERPRETATION, ESPECIALLY IF THERE ARE SPECIAL MERITORIOUS
CIRCUMSTANCES AND ISSUES.
4. THE LAS JUDGMENT WAS PATENTLY VOID SINCE IT AWARDS MORE THAN P60 MILLION
PESOS TO A SINGLE FOREIGNER WHO HAD NO WORK PERMIT, AND NO WORKING VISA.
HELD:
(THIRD MOTION FOR RECONSIDERATION) On March 27, 2012, the respondents filed a Motion for Leave to
File Attached Third Motion for Reconsideration, with an attached Motion for Reconsideration (on the Honorable
Courts 25 January 2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc.
On September 4, 2012, the Court en banc55 issued a Resolution56 accepting the case from the Third Division. It also
issued a temporary restraining order (TRO) enjoining the implementation of the LAs Decision dated September 30,
2004. This prompted McBurnies filing of a Motion for Reconsideration, 57 where he invoked the fact that the Courts
Decision dated September 18, 2009 had become final and executory, with an entry of judgment already made by the
Court.
(1) Third motion for reconsideration
General rule: Court emphasizes that second and subsequent motions for reconsideration are, as a, prohibited. Section
2, Rule 52 of the Rules of Court provides that "no second motion for reconsideration of a judgment or final resolution
by the same party shall be entertained." The rule rests on the basic tenet of immutability of judgments.
Exceptions:
Sec. 3. Second motion for reconsideration. The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of
justice by the Court en banc upon a vote of at least two-thirds of its actual membership. There is
reconsideration "in the higher interest of justice" when the assailed decision is not only legally
erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and
irremediable injury or damage to the parties. A second motion for reconsideration can only be
entertained before the ruling sought to be reconsidered becomes final by operation of law or by the
Courts declaration.
In a line of cases, the Court has then entertained and granted second motions for reconsideration
16
2017-2018
1. "in the higher interest of substantial justice," as allowed under the Internal Rules when the assailed decision
is "legally erroneous," "patently unjust" and "potentially capable of causing unwarranted and irremediable
injury or damage to the parties."
2. "extraordinarily persuasive reasons and only after an express leave shall have been obtained."
3. Issue involved therein was a matter of public interest, as it pertained to the proper application of a basic
constitutionally-guaranteed right in the governments implementation of its agrarian reform program.
4. In San Miguel Corporation v. NLRC, 62 the Court set aside the decisions of the LA and the NLRC that
favored claimants-security guards upon the Courts review of San Miguel Corporations second motion for
reconsideration.
5. In Vir-Jen Shipping and Marine Services, Inc. v. NLRC, et al., 63 the Court en banc reversed on a third
motion for reconsideration the ruling of the Courts Division on therein private respondents claim for wages
and monetary benefits.
6. It is also recognized that in some instances, the prudent action towards a just resolution of a case is for the
Court to suspend rules of procedure, for "the power of this Court to suspend its own rules or to except a
particular case from its operations whenever the purposes of justice require it, cannot be questioned."
7. 64
In De Guzman v. Sandiganbayan, 65 The rules of procedure should be viewed as mere tools designed to
facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be avoided.
Even the Rules of Court envision this liberality. This power to suspend or even disregard the rules can
be so pervasive and encompassing so as to alter even that which this Court itself has already declared
to be final, as we are now compelled to do in this case.
8. Verily, the Court had, on several occasions, sanctioned the recall of entries of judgment in light of attendant
extraordinary circumstances. The power to suspend or even disregard rules of procedure can be so pervasive
and compelling as to alter even that which this Court itself had already declared final.
9. In Munoz v. CA,69 the Court resolved to recall an entry of judgment to prevent a miscarriage of justice. This
justification was likewise applied in Tan Tiac Chiong v. Hon. Cosico, 70 wherein the Court held that:
10. In Barnes v. Judge Padilla,72 we ruled: A final and executory judgment can no longer be attacked by any of
the parties or be modified, directly or indirectly, even by the highest court of the land.However, this Court
has relaxed this rule in order to serve substantial justice considering (a) matters of life, liberty, honor or
property, (b) the existence of special or compelling circumstances, (c) the merits of the case, (d) a cause not
entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (e) a lack
of any showing that the review sought is merely frivolous and dilatory, and (f) the other party will not be
unjustly prejudiced thereby.73 (Citations omitted)
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(2) The rule on appeal bonds
The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which was substantially
the same provision in effect at the time of the respondents appeal to the NLRC, and which reads:
RULE
APPEALS
Sec. 6. BOND. In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash or
surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the
monetary award, exclusive of damages and attorneys fees.
No motion to reduce bond shall be entertained except on meritorious grounds and upon the
posting of a bond in a reasonable amount in relation to the monetary award.
posting of a bond in a reasonable amount, shall suffice to suspend the running of the period to perfect an appeal
from the labor arbiters decision to the NLRC.79 To require the full amount of the bond within the 10-day
reglementary period would only render nugatory the legal provisions which allow an appellant to seek a reduction of
the bond. Thus, we explained in Garcia:
VI
The NLRC has full discretion to grant or deny the motion to reduce bond. In order to give full effect to the
provisions on motion to reduce bond, the appellant must be allowed to wait for the ruling of the NLRC on the
motion even beyond the 10-day period to perfect an appeal. If the NLRC grants the motion and rules that there
is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, the appellant may still file a motion for reconsideration as provided
under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there
is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is
perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and executory.

The filing of the motion to reduce bond without compliance with the requisites in the preceding In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period to perfect an
paragraph shall not stop the running of the period to perfect an appeal. (Emphasis supplied) appeal is not absolute. The Court, however, has relaxed this requirement under certain exceptional circumstances in
order to resolve controversies on their merits.
While the CA, in this case, allowed an appeal bond in the reduced amount of P10,000,000.00 and then ordered the
cases remand to the NLRC, this Courts Decision dated September 18, 2009 provides otherwise, as it reads in part: A serious error of the NLRC was its outright denial of the motion to reduce the bond, without even considering the
respondents arguments and totally unmindful of the rules and jurisprudence that allow the bonds reduction. Instead
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the of resolving the motion to reduce the bond on its merits, the NLRC insisted on an amount that was equivalent to the
decision of the Labor Arbiter. The lawmakers clearly intended to make the bond a mandatory requisite for the monetary award. When the respondents sought to reconsider, the NLRC still refused to fully decide on the motion. It
perfection of an appeal by the employer as inferred from the provision that an appeal by the employer may be refused to at least make a preliminary determination of the merits of the appeal
perfected "only upon the posting of a cash or surety bond." The word "only" makes it clear that the posting of a cash
or surety bond by the employer is the essential and exclusive means by which an employers appeal may be perfected. (3) Prevailing rules and jurisprudence allow the reduction of appeal bonds.
x x x. The Court has cautioned the NLRC to give Article 223 of the Labor Code, particularly the provisions requiring
Moreover, the filing of the bond is not only mandatory but a jurisdictional requirement as well, that must be complied bonds in appeals involving monetary awards, a liberal interpretation in line with the desired objective of
with in order to confer jurisdiction upon the NLRC. Non-compliance therewith renders the decision of the Labor resolving controversies on the merits. Courts should proceed with caution so as not to deprive a party of the right to
Arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they appeal, but rather, ensure that every party has the amplest opportunity for the proper and just disposition of their cause,
will receive the money judgment in their favor upon the dismissal of the employers appeal. It is intended to free from the constraints of technicalities. 85 Considering the mandate of labor tribunals, the principle equally applies to
discourage employers from using an appeal to delay or evade their obligation to satisfy their employees just and them.
lawful claims. Section 2, Rule I of the NLRC Rules of Procedure also provides the policy that "the Rules shall be liberally construed
Thus, it behooves the Court to give utmost regard to the legislative and administrative intent to strictly require the to carry out the objectives of the Constitution, the Labor Code of the Philippines and other relevant legislations, and to
employer to post a cash or surety bond securing the full amount of the monetary award within the 10[-]day assist the parties in obtaining just, expeditious and inexpensive resolution and settlement of labor disputes." 87
reglementary period. Nothing in the Labor Code or the NLRC Rules of Procedure authorizes the posting of a bond that In accordance with the foregoing, although the general rule provides that an appeal in labor cases from a decision
is less than the monetary award in the judgment, or would deem such insufficient posting as sufficient to perfect the involving a monetary award may be perfected only upon the posting of a cash or surety bond, the Court has relaxed
appeal. this requirement under certain exceptional circumstances in order to resolve controversies on their merits.
Reduction of Bond : bond may be reduced upon motion by the employer, this is subject to the conditions These circumstances include:

Prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond, coupled with 1. the fundamental consideration of substantial justice;
compliance with the two conditions for the grant of such motion, namely, (1) a meritorious ground, and (2) 2. the prevention of miscarriage of justice or of unjust enrichment; and

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3. special circumstances of the case combined with its legal merits, and the amount and the issue In this case, the NLRC then should have considered the respondents arguments in the memorandum on appeal that
involved.88 was filed with the motion to reduce the requisite appeal bond. Although a consideration of said arguments at that point
would have been merely preliminary and should not in any way bind the eventual outcome of the appeal, it was
4. The bond requirement in appeals involving monetary awards has been and may be relaxed in apparent that the respondents defenses came with an indication of merit that deserved a full review of the decision of
meritorious cases, including instances in which (1) there was substantial compliance with the Rules, the LA. The CA, by its Resolution dated February 16, 2007, even found justified the issuance of a preliminary
(2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a injunction to enjoin the immediate execution of the LAs decision, and this Court, a temporary restraining order on
liberal interpretation of the requirement of an appeal bond would serve the desired objective of September 4, 2012.
resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their
For the NLRC, the employment agreement could not have given rise to an employer-employee relationship by reason
willingness and/or good faith by posting a partial bond during the reglementary period. 90
of legal impossibility. The two conditions that form part of their agreement, namely, the successful completion of the
The bond requirement imposed upon appellants in labor cases is intended to ensure the satisfaction of awards that are project financing for the hotel project in Baguio City and McBurnies acquisition of an Alien Employment Permit,
made in favor of appellees, in the event that their claims are eventually sustained by the courts. 93 On the part of the remained unsatisfied. The NLRC declared that absent an employment permit, any employment relationship that
appellants, its posting may also signify their good faith and willingness to recognize the final outcome of their appeal. McBurnie contemplated with the respondents was void for being contrary to law. A void or inexistent contract, in turn,
At the time of a motion to reduce appeal bonds filing, the question of what constitutes "a reasonable amount of bond" has no force and effect from the beginning as if it had never been entered into. Thus, without an Alien Employment
that must accompany the motion may be subject to differing interpretations of litigants. Permit, the "Employment Agreement" is void and could not be the source of a right or obligation. In support thereof,
To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance the DOLE issued 106
a certification that McBurnie has neither applied nor been issued an Alien Employment Permit (p.
to seek a reduction of the appeal bond are effectively carried out, without however defeating the benefits of the 204, Records). .
bond requirement in favor of a winning litigant, all motions to reduce bond that are to be filed with the NLRC In addition to the apparent merit of the respondents appeal, the Court finds the reduction of the appeal bond justified
shall be accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary award that is by the substantial amount of the LAs monetary award. Given its considerable amount, we find reason in the
subject of the appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime respondents claim that to require an appeal bond in such amount could only deprive them of the right to appeal, even
that an appellants motion is pending resolution by the Commission and it shall exclude damages and force them out of business and affect the livelihood of their employees
attorneys fees.
What constitutes a reasonable amount in the determination of the final amount of appeal bond
The foregoing shall not be misconstrued to unduly hinder the NLRCs exercise of its discretion, given that the
As regards the requirement on the posting of a bond in a "reasonable amount," the Court holds that the final
percentage of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to
determination thereof by the NLRC shall be based primarily on the merits of the motion and the main appeal.
resolve the motion and determine the final amount of bond that shall be posted by the appellant, still in accordance
with the standards of "meritorious grounds" and "reasonable amount". Although the NLRC Rules of Procedure, particularly Section 6 of Rule VI thereof, provides that the bond to be posted
shall be "in a reasonable amount in relation to the monetary award ," the merit of the motion shall always take
(4) Meritorious ground as a condition for the reduction of the appeal bond
precedence in the determination.
In all cases, the reduction of the appeal bond shall be justified by meritorious grounds and accompanied by the posting
Notably, in the present case, following the CAs rendition of its Decision which allowed a reduced appeal bond, the
of the required appeal bond in a reasonable amount.
respondents have posted a bond in the amount of P10,000,000.00.
The requirement on the existence of a "meritorious ground" delves on the worth of the parties arguments,
Given the circumstances in this case and the merits of the respondents arguments before the NLRC, the Court holds
taking into account their respective rights and the circumstances that attend the case . The Court held that to
that the respondents had posted a bond in a "reasonable amount", and had thus complied with the requirements for the
reduce the amount of the bond, the exercise of the authority is not a matter of right on the part of the movant, but lies
perfection of an appeal from the LAs decision. In dismissing outright the motion to reduce bond filed by petitioners,
within the sound discretion of the NLRC upon a showing of meritorious grounds." 96 By jurisprudence, the merit
NLRC abused its discretion. It should have fixed an appeal bond in a reasonable amount. Said dismissal deprived
referred to may pertain to an appellants lack of financial capability to pay the full amount of the bond, 97 the merits of
98 petitioners of their right to appeal the Labor Arbiters decision.
the main appeal such as when there is a valid claim that there was no illegal dismissal to justify the award, the
absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are The effect of a denial of the appeal to the NLRC
99 100

raised in the appeal.101 For the purpose of determining a "meritorious ground", the NLRC is not precluded from
receiving evidence, or from making a preliminary determination of the merits of the appellants contentions. 102

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Without the reversal of the Courts Decision and the dismissal of the complaint against the respondents, McBurnie GUIDELINES in filing and acceptance of motions to reduce appeal bond (Sec. 6 Rule VI of the 2011 NLRC Rules of
would be allowed to claim benefits under our labor laws despite his failure to comply with a settled requirement for Prcedure)
foreign nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim under our labor laws, it was
necessary for him to establish, first and foremost, that he was qualified and duly authorized to obtain employment
within our jurisdiction. A requirement for foreigners who intend to work within the country is an employment permit,
as provided under Article 40, Title II of the Labor Code which reads:
Art. 40. Employment permit for 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.
Section 4, Rule XIV, Book I of the Implementing Rules and Regulations provides: "Employment
permit required for entry. No alien seeking employment, whether as a resident or non-resident,
may enter the Philippines without first securing an employment permit from the Ministry. If an
alien enters the country under a non-working visa and wishes to be employed thereafter, he may
be allowed to be employed upon presentation of a duly approved employment permit."
The NLRC has ruled in its Decision dated November 17, 2009 on the issue of illegal dismissal. It declared that
McBurnie was never an employee of any of the respondents.
The NLRCs findings on the contractual relations between McBurnie and the respondents are supported by the
records. Besides the employment agreement, McBurnie failed to present other competent evidence to prove his claim
of an employer-employee relationship. Given the parties conflicting claims on their true intention in executing the
agreement, it was necessary to resort to the established criteria for the determination of an employer-employee
relationship, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct. 125 The rule of thumb remains: the onus probandi falls
on the claimant to establish or substantiate the claim by the requisite quantum of evidence. Whoever claims
entitlement to the benefits provided by law should establish his or her right thereto. 126McBurnie failed in this
regard.1wphi1 As previously observed by the NLRC, McBurnie even failed to show through any document such as
payslips or vouchers that his salaries during the time that he allegedly worked for the respondents were paid by the
company. In the absence of an employer-employee relationship between McBurnie and the respondents, McBurnie
could not successfully claim that he was dismissed, much less illegally dismissed, by the latter. Even granting that
there was such an employer-employee relationship, the records are barren of any document showing that its
termination was by the respondents dismissal of McBurnie.
(5) (8) It bears mentioning that although the Court resolves to grant the respondents motion for to prove by ample and sufficient evidence that he stole gold bearing highgrade ores from the company premises. If
reconsideration, the other grounds raised in the motion, especially as they pertain to insinuations on
irregularities in the Court, deserve no merit for being founded on baseless conclusions. Furthermore, the
Court finds it unnecessary to discuss the other grounds that are raised in the motion, considering the grounds
that already justify the dismissal of McBurnies complaint.
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(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10,) of the monetary award subject of the appeal,
exclusive of damages and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 1 0-day
reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final
amount o bond that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount
o the provisional bond, the appellant shall be given a fresh period o ten 1 0) days from notice o the NLRC
order within which to perfect the appeal by posting the required appeal bond.
Lepanto Consolidated Mining vs. Icao, GR No. 196047, Jan. 15, 2014
G.R. No. 196047 January 15, 2014
LEPANTO CONSOLIDATED MINING CORPORATION, Petitioner,
vs. BELIO ICAO, Respondent.
FACTS
Private respondent, Rogelio C. Belio filed a complaint for illegal dismissal and damages against petitioners Lepanto
Consolidated Mining Company (LCMC) before the Arbitration Branch of the NLRC. He essentially alleged in his
complaint that he was an employee of petitioner LCMC assigned as a lead miner in its underground mine in Paco,
Mankayan, Benguet. Private respondent was then charged with "highgrading" or the act of concealing, possessing or
unauthorized extraction of highgrade material/ore without proper authority. He vehemently denied the charge, but was
dismissed from his work.
Private respondent claimed that his dismissal from work was without just or authorized cause since petitioners failed
private respondent was really placing a wrapped object inside his boots, he should have been sitting or bending down
to insert the same, instead of just standing on a muckpile as alleged by petitioners. Moreover, it is beyond imagination
that a person, knowing fully well that he was being chased for allegedly placing wrapped ore inside his boots, will
transfer it to his skullguard. The tendency in such situation is to throw the object away.
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For their defense, petitioners averred that the security guard on-duty saw private respondent inserting a wrapped
object inside his right rubber boot, chased, apprehended, and recovered from the latter a high-grade material . A
hearing was held where private respondent, together with the officers of his union as well as the apprehending guards
appeared. Thereafter, private respondent was dismissed from employment due to breach of trust and confidence and
the act of high-grading.
appeal bond equivalent to P345,879.45.
Furthermore, the CA said that since the payment of appeal fees and the posting of an appeal bond are indispensable
jurisdictional requirements, noncompliance with them resulted in petitioners failure to perfect its appeal.
Consequently, the labor arbiters Decision became final and executory and, hence, binding upon the appellate court.

THE LABOR ARBITERS RULING THAT THE ISSUE

PETITIONER LCMC IS LIABLE FOR ILLEGAL DISMISSAL The sole issue before the Court is whether or not petitioner complied with the appeal bond requirement under the
Labor Code and the NLRC Rules by filing a Consolidated Motion to release the cash bond it posted in another case,
The alleged highgrading attributed by LCMCs security guards was found to have been fabricated; consequently, which had been decided with finality in its favor, with a view to applying the same cash bond to the present case.
there was no just cause for the dismissal of respondent. The labor arbiter concluded that the claim of the security
guards that Icao had inserted ores in his boots while in a standing position was not in accord with normal human SUPREME COURT RULING
physiological functioning. To further support the improbability of the allegation of highgrading, the labor arbiter
noted that throughout the 21 years of service of Icao to LCMC, he had never been accused of or penalized for The Petition is meritorious. The Court finds that petitioner substantially complied with the appeal bond
highgrading or any other infraction involving moral turpitude until this alleged incident. requirement.

THE NLRC ORDER DISMISSING THE APPEAL The well-entrenched doctrine regarding APPEAL:

OF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL BOND An appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the manner provided
by law and the rules. Thus, a party who seeks to exercise the right to appeal must comply with the requirements of the
Petitioner filed an appeal before the NLRC, but instead of posting the required appeal bond in the form of a cash bond rules; otherwise, the privilege is lost.
or a surety bond in an amount equivalent to the monetary award of P345,879.45 adjudged in favor of Icao, they filed a
Consolidated Motion For Release Of Cash Bond And To Apply Bond Subject For Release As Payment For In appeals from any decision or order of the labor arbiter, the posting of an appeal bond is required under Article
Appeal Bond (Consolidated Motion). They requested therein that the NLRC release the cash bond of P401,610.84, 223 of the Labor Code, which reads:
which they had posted in the separate case Dangiw Siggaao v. LCMC, and apply that same cash bond to their present
appeal bond liability. They reasoned that since this Court had already decided Dangiw Siggaao in their favor, and Article 223. APPEAL. Decisions, awards, or orders of the Labor Arbiter are final and executory unless
that the ruling therein had become final and executory, the cash bond posted therein could now be released. 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:
The NLRC First Division dismissed the appeal of petitioner and the latters CEO for non-perfection. It found that
they had failed to post the required appeal bond equivalent to the monetary award of P345,879.45. It explained that xxxx
their Consolidated Motion for the release of the cash bond in another case (Dangiw Siggaao), for the purpose of
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the
applying the same bond to the appealed case before it, could not be considered as compliance with the requirement
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the
to post the required appeal bond. Consequently, it declared the labor arbiters Decision to be final and executory.
amount equivalent to the monetary award in the judgment appealed from.
THE CA RULING AFFIRMING THE ORDER OF THE NLRC
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI, Section 6, which
The CA explained that under Article 223 of the Labor Code, an appeal from the labor arbiters Decision must be provides:
filed within 10 calendar days from receipt of the decision. In case of a judgment involving a monetary award, the
SECTION 6. Bond. In case the decision of the Labor Arbiter or the Regional Director involves a monetary
posting of a cash or surety bond in an amount equivalent to the monetary award is mandatory for the perfection of
award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in
an appeal. In the instant case, the CA found that petitioner and its CEO did not pay the appeal fees and the required
the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages

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and attorneys fees.
The Supreme Court reiterated their ruling in Araneta v. Rodas, where the Court said that when the law does not
clearly provide a rule or norm for the tribunal to follow in deciding a question submitted, but leaves to the
tribunal the discretion to determine the case in one way or another, the judge must decide the question in
conformity with justice, reason and equity, in view of the circumstances of the case. Applying this doctrine, the
Court ruled in the present case that petitioner substantially complied with the mandatory requirement of posting an
appeal bond for the following reasons:
4) The appeal was filed within the 10-day reglementary period.
5) The petitioner has an unencumbered amount of money in the form of cash in the custody of the NLRC.
Under the Rule VI, Section 6 of the 2005 NLRC Rules,
"[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case
is finally decided, resolved or terminated, or the award satisfied." Hence, it is clear that a bond is
encumbered and bound to a case only for as long as (1) the case has not been finally decided,
resolved or terminated; or (2) the award has not been satisfied. Therefore, once the appeal is finally
decided and no award needs to be satisfied, the bond is automatically released. Since the money
is now unencumbered, the employer who posted it should now have unrestricted access to the cash
which he may now use as he pleases as appeal bond in another case, for instance. This is what
petitioner simply did.
6) The cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than enough to cover the
appeal bond in the amount of P345,879.45 required in the present case.
7) The ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure that workers
will receive the money awarded in their favor when the employers appeal eventually fails.
There was no showing at all of any attempt on the part of petitioner to evade the posting of the appeal bond. On the
contrary, petitioners move showed a willingness to comply with the requirement. Hence, the welfare of Icao is
adequately protected.
Moreover, the Court has liberally applied the NLRC Rules and the Labor Code provisions on the posting of an
LA
appeal bond in exceptional cases.
1) In Your Bus Lines v. NLRC, the Court excused the appellants failure to post a bond, because it relied on
the notice of the decision. While the notice enumerated all the other requirements for perfecting an appeal, it did
not include a bond in the list.
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2) In Blancaflor v. NLRC, the failure of the appellant therein to post a bond was partly caused by the labor
arbiters failure to state the exact amount of monetary award due, which would have been the basis of the amount
of the bond to be posted.
3) In Cabalan Pastulan Negrito Labor Association v. NLRC petitioner-appellant was an association of Negritos
performing trash-sorting services in the American naval base in Subic Bay. The plea of the association that its
appeal be given due course despite its non-posting of a bond, on account of its insolvency and poverty, was
granted by this Court.
4) In UERM-Memorial Medical Center v. NLRC we allowed the appellant-employer to post a property bond in
lieu of a cash or surety bond. The assailed judgment involved more than P17 million; thus, its execution could
adversely affect the economic survival of the employer, which was a medical center.
If in the above-cited cases, the Court found exceptional circumstances that warranted an extraordinary exercise of its
power to exempt a party from the rules on appeal bond, there is all the more reason in the present case to find that
petitioner substantially complied with the requirement.
Having complied with the appeal bond requirement, petitioner s appeal before the NLRC must therefore be
reinstated.1
Sadol vs. Pilipinas Kao, GR No. 87530, June 13, 1990
G.R. No. 87530 June 13, 1990
GERONIMO SADOL, petitioner,
vs.PILIPINAS KAO, INC., REQUITO VEGA, BELEN GOMEZ, ARTURO GOMEZ & NLRC SECOND
DIVISION, respondents.
FACTS:
Petitioner was recruited as a laborer by private respondents Requito Vega, Antonio Gomez and Belen
Gomez, who are the owners of Vega & Co., a private recruitment agency, with assignment at respondent
Pilipinas Kao, Inc. (PKI for brevity), particularly at the Pit Burning area.
Petitioner filed a complaint for reinstatement and backwages with Region X of the Department of Labor
and Employment in Cagayan de Oro City.
labor arbiter ordered all parties to submit their position papers. Only petitioner complied.
the labor arbiter rendered a decision ordering private respondents to jointly and solidarity pay petitioner his
separation pay computed at one month for every year of service within the reglementary period
NLRC
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LABOR REVIEW (Atty. Peter-Joey Usita)
Petitioner appealed to the NLRC. Said respondents also appealed but it was filed out of time.
Second Division of the NLRC promulgated a decision modifying the appealed decision in that respondent
PKI was ordered to reinstate petitioner to his former position without loss of seniority rights and other
accrued benefits and with full backwages from the time of dismissal up to his actual reinstatement, and in
case reinstatement is impossible, payment of full backwages and separation pay of one (1) month salary for
every year of service. The appeal of respondent Pig was dismissed for having been filed out of time.
The PKI allegedly received a copy of the decision of the NLRC only on September 13, 1988. A motion for
reconsideration of said decision dated September 22, 1988 was filed by said respondent and a similar motion
was filed by Samahang Kabuhayan ng Barangay Luz Banzon (SKLB for brevity) to which an opposition
was filed by petitioner.|||
a resolution was promulgated by the same division of the NLRC, setting aside its decision and dismissing
the case for lack of merit. A motion for reconsideration thereof filed by petitioner who besides questioning
its findings of facts raised the issue that said respondent's appeal having been filed out of time its motion for
reconsideration of the decision should not have been entertained as it raised issues for the first on appeal
which were not raised before the labor arbiter. This motion was denied
NLRC resolution: SKLB had clearance certificate as labor contractor. It had payrolls showing that it is an
independent labor contractor. SKLB also submitted affidavits of complainants co-workers and neighbors
who attested that Complainant abandoned his work and went to Manila to apply for abroad, and when it did
not become successful complainant returned after 8 months. A Memorandum dated April 21, 1984 was also
sent to complainant requiring the latter to report to its office immediately otherwise he would be deemed to
have abandoned his work. It does strike Us as odd that if indeed complainant was dismissed sometime in Facts:
April 1984 it took him almost three (3) years before filing the instant case for illegal dismissal
ISSUE:
The issue posed in this case is whether or not a party who failed to appeal from a decision of the labor arbiter to the
National Labor Relations Commission (NLRC) within the ten (10) day reglementary period can still participate in a
separate appeal timely interposed by the adverse party by filing a motion for reconsideration of a decision of the
NLRC on such appeal.
HELD:
There is no question that private respondents failed to file a timely appeal from the decision of the labor
arbiter while the petitioner was able to interpose his appeal within the reglementary period. It is also an
accepted postulate that issues not raised in the lower court or the labor arbiter may not be raised for the first
time on appeal.
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Note is taken of the fact that even the Solicitor General refused to represent the NLRC in this proceeding as
it shares the view of petitioner that the decision of the labor arbiter having become final by the failure to
respondent PKI to appeal on time the NLRC may no longer amend, modify, much less set aside the same.
This posture is correct insofar as respondent PKI is concerned. However, as petitioner had filed a timely
appeal the NLRC had jurisdiction to give due course to his appeal and render the decision of August 28,
1988, a copy of which was furnished respondents. Having lost the right to appeal can respondent PKI file a
motion for reconsideration of said decision? The Court resolves the question in the affirmative. The rules of
technicality must yield to the broader interest of justice. It is only by giving due course to the motion for
reconsideration that was timely filed that the NLRC may be able to equitably evaluate the conflicting
versions of facts presented by the parties.
The factual findings of the NLRC are conclusive on this Court because the same appear to be supported by
substantial evidence.
WHEREFORE, the petition is DISMISSED for lack of merit. No costs.
Ong vs. CA, GR No. 152494, Sept. 22, 2004
MARIANO ONG, doing business under the name and style MILESTONE METAL MANUFACTURING, petitioner,
vs. THE COURT OF APPEALS, CONRADO DABAC, BERNABE TAYACTAC, MANUEL ABEJUELLA,
LOLITO ABELONG, RONNIE HERRERO, APOLLO PAMIAS, JAIME ONGUTAN, NOEL ATENDIDO,
CARLOS TABBAL, JOEL ATENDIDO, BIENVENIDO EBBER, RENATO ABEJUELLA, LEONILO ATENDIDO,
JR., LODULADO FAA and JAIME LOZADA, respondents.
(1) Petitioner is the sole proprietor of Milestone Metal Manufacturing (Milestone), which manufactures,
among others, wearing apparels, belts, and umbrellas. [3] Sometime in May 1998, the business suffered
very low sales and productivity because of the economic crisis in the country. Hence, it adopted a
rotation scheme by reducing the workdays of its employees to three days a week or less for an
indefinite period.
(2) The 15 respondents filed before the National Labor Relations Commission (NLRC) complaints for
illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive
leave pay, 13th month pay, damages, and attorneys fees against petitioner.
(3) Petitioner claimed that 9 of the 15 respondents were not employees of Milestone but of Protone
Industrial Corporation which, however, stopped its operation due to business losses.Further, he claims
that respondents Manuel Abuela, Lolita Abelong, Ronnie Herrero, Carlos Tabbal, Conrado Dabac, and
Lodualdo Faa were not dismissed from employment; rather, they refused to work after the rotation
scheme was adopted. Anent their monetary claims, petitioner presented documents showing that he
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paid respondents minimum wage, 13th month pay, holiday pay, and contributions to the SSS, Medicare, ART. 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
and Pag-Ibig Funds Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. x
x x.
LA
xxxxxxxxx
Awarded the respondents the aggregate amount of P1,111,200.40 representing their wage differential, holiday pay,
service incentive leave pay and 13th month pay, plus 10% thereof as attorneys fees. Further, petitioner was ordered to In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting
pay the respondents separation pay equivalent to month salary for every year of service due to the indefiniteness of the of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount
rotation scheme and strained relations caused by the filing of the complaints equivalent to the monetary award in the judgment appealed from.

[12]
Petitioner filed with the NLRC a notice of appeal with a memorandum of appeal and paid the docket fees The pertinent provisions of Rule VI of the New Rules of Procedure of the NLRC, which were in effect when
therefor. However, instead of posting the required cash or surety bond, he filed a motion to reduce the petitioner filed his appeal, provide:
appeal bond.
Section 1. Periods of Appeal. Decisions, awards or orders of the Labor Arbiter and the POEA Administrator shall be
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 of the Labor Arbiter x x x.
NLRC
xxxxxxxxx
Denied the motion to reduce bond and dismissed the appeal for failure to post cash or surety bond within the
reglementary period.[7] Petitioners motion for reconsideration was likewise denied. Section 3. Requisites for Perfection of Appeal. (a) The appeal shall be filed within the reglementary period as
provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the
Petitioner filed a petition for certiorari with the Court of Appeals alleging that the NLRC acted with grave posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of
abuse of discretion in dismissing the appeal for non-perfection of appeal although a motion to reduce appeal appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a
bond was seasonably filed. statement of the date when the appellant received the appealed decision, order or award and proof of service on the
other party of such appeal.
CA
A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the period
Dismissed and thereafter the motion for reconsideration was likewise dismissed for lack of merit. for perfecting an appeal.

ISSUE: WON the posting of bond on appeal may be dispensed with in this case. xxxxxxxxx

HELD: Section 6. Bond. In case the decision of the Labor Arbiter, the Regional Director or his duly authorized Hearing
Officer involves a monetary award, an appeal by the employer shall be perfected only upon the posting of a cash or
NO. The right to appeal is not a natural right or a part of due process, it is merely a statutory privilege, and may be surety bond, which shall be in effect until final disposition of the case, issued by a reputable bonding company duly
exercised only in the manner and in accordance with the provisions of law. The party who seeks to avail of the same accredited by the Commission or the Supreme Court in an amount equivalent to the monetary award, exclusive of
must comply with the requirements of the rules. Failing to do so, the right to appeal is lost. damages and attorneys fees.

Article 223 of the Labor Code, as amended, sets forth the rules on appeal from the Labor Arbiters monetary The employer, his counsel, as well as the bonding company, shall submit a joint declaration under oath attesting that
award: the surety bond posted is genuine.

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LABOR REVIEW (Atty. Peter-Joey Usita)
The Commission may, in justifiable cases and upon Motion of the Appellant, reduce the amount of the bond. The
filing of the motion to reduce bond shall not stop the running of the period to perfect appeal. (Emphasis ours)
In the case at bar, petitioner received the decision of the Labor Arbiter on January 6, 2000. He filed his
notice of appeal with memorandum of appeal and paid the corresponding appeal fees on January 17, 2000,
the last day of filing the appeal. However, in lieu of the required cash or surety bond, he filed a motion to
reduce bond alleging that the amount of P1,427,802,04 as bond is unjustified and prohibitive and prayed that
the same be reduced to a reasonable level. The NLRC denied the motion and consequently dismissed the WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals
appeal for non-perfection. Petitioner now contends that he was deprived of the chance to post bond because in CA-G.R. SP No. 62129, dated October 10, 2001, dismissing the petition for certiorari for lack of merit,
the NLRC took 102 days to decide his motion. is AFFIRMED.
We agree with the Court of Appeals that the NLRC did not act with grave abuse of discretion when it denied
petitioners motion for the same failed to either elucidate why the amount of the bond was unjustified and
prohibitive or to indicate what would be a reasonable level
The provisions explicitly provide that an appeal from the Labor Arbiter to the NLRC must be perfected
within ten calendar days from receipt of such decisions, awards or orders of the Labor Arbiter. In a judgment
involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required
appeal fee; (2) posting of a cash or surety bond issued by a reputable bonding company; and (3) filing of a
memorandum of appeal. A mere notice of appeal without complying with the other requisites mentioned
shall not stop the running of the period for perfection of appeal. [17] The posting of cash or surety bond is not
only mandatory but jurisdictional as well, and non-compliance therewith is fatal and has the effect of
rendering the judgment final and executory. [18] This requirement is intended to discourage employers from
using the appeal to delay, or even evade, their obligation to satisfy their employees just and lawful claims
The NLRC Rules clearly provide that the filing of the motion to reduce bond shall not stop the running of
the period to perfect appeal. Petitioner should have seasonably filed the appeal bond within the ten-day
reglementary period following the receipt of the order, resolution or decision of the NLRC to forestall the
finality of such order, resolution or decision. In the alternative, he should have paid only a moderate and
reasonable sum for the premium, as was held in Biogenerics Marketing and Research Corporation v. NLRC
While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this
can only be done where there was substantial compliance of the Rules or where the appellants, at the very
least, exhibited willingness to pay by posting a partial bond. [22] Petitioners reliance on the case of Rosewood
Processing, Inc. v. NLRC [23] is misplaced. Petitioner in the said case substantially complied with the rules by
posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc.
while his motion to reduce appeal bond was pending before the NLRC.
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In the case at bar, petitioner did not post a full or partial appeal bond within the prescribed period, thus, no
appeal was perfected from the decision of the Labor Arbiter.For this reason, the decision sought to be
appealed to the NLRC had become final and executory and therefore immutable. Clearly, then, the NLRC
has no authority to entertain the appeal, much less to reverse the decision of the Labor Arbiter. Any
amendment or alteration made which substantially affects the final and executory judgment is null and void
for lack of jurisdiction, including the entire proceeding held for that purpose.
d. Article 224 (formerly Art. 218); Powers of the Commission
Art. 218. Powers of the Commission. The Commission shall have the power and authority:
1. To promulgate rules and regulations governing the hearing and disposition of cases before it and its
regional branches, as well as those pertaining to its internal functions and such rules and regulations
as may be necessary to carry out the purposes of this Code; (As amended by Section 10, Republic Act
No. 6715, March 21, 1989)
2. To administer oaths, summon the parties to a controversy, issue subpoenas requiring the attendance
and testimony of witnesses or the production of such books, papers, contracts, records, statement of
accounts, agreements, and others as may be material to a just determination of the matter under
investigation, and to testify in any investigation or hearing conducted in pursuance of this Code;
3. To conduct investigation for the determination of a question, matter or controversy within its
jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto who has
been summoned or served with notice to appear, conduct its proceedings or any part thereof in public
or in private, adjourn its hearings to any time and place, refer technical matters or accounts to an
expert and to accept his report as evidence after hearing of the parties upon due notice, direct parties
to be joined in or excluded from the proceedings, correct, amend, or waive any error, defect or
irregularity whether in substance or in form, give all such directions as it may deem necessary or
expedient in the determination of the dispute before it, and dismiss any matter or refrain from further
hearing or from determining the dispute or part thereof, where it is trivial or where further
proceedings by the Commission are not necessary or desirable; and
4. To hold any person in contempt directly or indirectly and impose appropriate penalties therefor in
accordance with law.
A person guilty of misbehavior in the presence of or so near the Chairman or any member of the
Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the same,
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LABOR REVIEW (Atty. Peter-Joey Usita)
including disrespect toward said officials, offensive personalities toward others, or refusal to be
sworn, or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to
do so, may be summarily adjudged in direct contempt by said officials and punished by fine not
exceeding five hundred pesos (P500) or imprisonment not exceeding five (5) days, or both, if it be the
Commission, or a member thereof, or by a fine not exceeding one hundred pesos (P100) or
imprisonment not exceeding one (1) day, or both, if it be a Labor Arbiter.
The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission and the
execution of the judgment shall be suspended pending the resolution of the appeal upon the filing by
such person of a bond on condition that he will abide by and perform the judgment of the
Commission should the appeal be decided against him. Judgment of the Commission on direct
contempt is immediately executory and unappealable. Indirect contempt shall be dealt with by the
Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised Rules of Court;
and (As amended by Section 10, Republic Act No. 6715, March 21, 1989)
5. To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts
or to require the performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or render ineffectual any
decision in favor of such party: Provided, That no temporary or permanent injunction in any case
involving or growing out of a labor dispute as defined in this Code shall be issued except after hearing
the testimony of witnesses, with opportunity for cross-examination, in support of the allegations of a
complaint made under oath, and testimony in opposition thereto, if offered, and only after a finding of
fact by the Commission, to the effect:
1. That prohibited or unlawful acts have been threatened and will be
committed and will be continued unless restrained, but no injunction or
temporary restraining order shall be issued on account of any threat,
prohibited or unlawful act, except against the person or persons,
association or organization making the threat or committing the
prohibited or unlawful act or actually authorizing or ratifying the same
after actual knowledge thereof;
2. That substantial and irreparable injury to complainants property will
follow;
3. That as to each item of relief to be granted, greater injury will be
inflicted upon complainant by the denial of relief than will be inflicted
upon defendants by the granting of relief;
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4. That complainant has no adequate remedy at law; and
5. That the public officers charged with the duty to protect complainants
property are unable or unwilling to furnish adequate protection.
Such hearing shall be held after due and personal notice thereof has been served, in such manner as
the Commission shall direct, to all known persons against whom relief is sought, and also to the Chief
Executive and other public officials of the province or city within which the unlawful acts have been
threatened or committed, charged with the duty to protect complainants property: Provided, however,
that if a complainant shall also allege that, unless a temporary restraining order shall be issued without
notice, a substantial and irreparable injury to complainants property will be unavoidable, such a
temporary restraining order may be issued upon testimony under oath, sufficient, if sustained, to
justify the Commission in issuing a temporary injunction upon hearing after notice. Such a temporary
restraining order shall be effective for no longer than twenty (20) days and shall become void at the
expiration of said twenty (20) days. No such temporary restraining order or temporary injunction shall
be issued except on condition that complainant shall first file an undertaking with adequate security in
an amount to be fixed by the Commission sufficient to recompense those enjoined for any loss,
expense or damage caused by the improvident or erroneous issuance of such order or injunction,
including all reasonable costs, together with a reasonable attorneys fee, and expense of defense
against the order or against the granting of any injunctive relief sought in the same proceeding and
subsequently denied by the Commission.
The undertaking herein mentioned shall be understood to constitute an agreement entered into by the
complainant and the surety upon which an order may be rendered in the same suit or proceeding
against said complainant and surety, upon a hearing to assess damages, of which hearing, complainant
and surety shall have reasonable notice, the said complainant and surety submitting themselves to the
jurisdiction of the Commission for that purpose. But nothing herein contained shall deprive any party
having a claim or cause of action under or upon such undertaking from electing to pursue his ordinary
remedy by suit at law or in equity: Provided, further, That the reception of evidence for the
application of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters
who shall conduct such hearings in such places as he may determine to be accessible to the parties
and their witnesses and shall submit thereafter his recommendation to the Commission. (As amended
by Section 10, Republic Act No. 6715, March 21, 1989)
NOTES:
The powers of the NLRC may be summed up as:
power to make rules and regulations pertaining to its functions
the power to administer oaths and issue subpoena and summons
the power to investigate, hear and decide disputes within its jurisdiction
the power to hold persons in contempt
the power to issue restraining orders and injunctions
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power to conduct ocular inspection and separate from the reliefs sought and the issues involved in the proceedings before the Labor Arbiter and the
the power to decide appealed cases NLRC. Besides, petitioner pointed out that neither the NLRC nor the Labor Arbiter is empowered to adjudicate
matters involving ownership of properties.

Yupangco Cotton Mills vs. CA, GR No. 126332, Jan. 16, 2002 On August 27, 1996, the Court of Appeals denied petitioners motion for reconsideration.
Facts:
Issues:
The facts, as found by the Court of Appeals, are as follows:
5. whether the Court of Appeals erred in ruling that petitioner was guilty of forum shopping
From the records before us and by petitioners own allegations and admission, it has taken the following actions in
connection with its claim that a sheriff of the National Labor Relations Commission erroneously and unlawfully levied (2) whether the Court of Appeals erred in dismissing the petitioners accion reinvindicatoria on the ground of
upon certain properties which it claims as its own. lack of jurisdiction of the trial court.

1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995. Held:

2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC) on July 4, 1995,
which was dismissed on August 30, 1995, by the Labor Arbiter. (1)

3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila on October 6, 1995. The No. The petitioner is not guilty of forum shopping.
Regional Trial Court dismissed the case on October 11, 1995 for lack of merit.
In Golangco v. Court of Appeals, we held:
4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which dismissed the appeal for lack What is truly important to consider in determining whether forum shopping exists or not is the vexation caused the
of merit on December 8, 1995. courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or
related causes and/or grant the same or substantially the same reliefs, in the process creating possibility of conflicting
5. It filed an original petition for mandatory injunction with the NLRC on November 16, 1995. decisions being rendered by the different for a upon the same issues.

6. It filed a complaint in the Regional Trial Court in Manila. The dismissal of this case by public respondent triggered There is no forum-shopping where two different orders were questioned, two distinct causes of action and issues were
the filing of the instant petition. raised, and two objectives were sought.

In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner of the properties located In the case at bar, there was no identity of parties, rights and causes of action and reliefs sought.
in the compound and buildings of Artex Development Corporation, which were erroneously levied upon by the sheriff
of the NLRC as a consequence of the decision rendered by the said Commission. The case before the NLRC where Labor Arbiter Reyes issued a writ of execution on the property of petitioner was a
labor dispute between Artex and Samar-Anglo.Petitioner was not a party to the case. The only issue petitioner raised
before the NLRC was whether or not the writ of execution issued by the labor arbiter could be satisfied against the
CA property of petitioner, not a party to the labor case. the accion reinvindicatoria filed by petitioner in the trial court was
to recover the property illegally levied upon and sold at auction. Hence, the causes of action in these cases were
Court of Appeals promulgated a decision [3] dismissing the petition on the ground of forum shopping and that different.
petitioners remedy was to seek relief from this Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of the decision . Petitioner The rule is that for forum-shopping to exist both actions must involve the same transactions, the same
argued that the filing of a complaint for accion reinvindicatoria with the Regional Trial Court was proper because it is circumstances. The actions must also raise identical causes of action, subject matter and issues.
a remedy specifically granted to an owner (whose properties were subjected to a writ of execution to enforce a
decision rendered in a labor dispute in which it was not a party) by Section 17 (now 16), Rule 39, Revised Rules of (2)
Court and by the doctrines laid down in Sy v. Discaya, Santos v. Bayhon and Manliguez v. Court of Appeals
A third party whose property has been levied upon by a sheriff to enforce a decision against a judgment debtor
In addition, petitioner argued that the reliefs sought and the issues involved in the complaint for recovery of property is afforded with several alternative remedies to protect its interests. The third party may avail himself of
and damages filed with the Regional Trial Court of Manila, presided over by respondent judge, were entirely distinct

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alternative remedies cumulatively, and one will not preclude the third party from availing himself of the other PAL vs. NLRC, GR No. 120567, March 20, 1998
alternative remedies in the event he failed in the remedy first availed of. [G.R. No. 120567. March 20, 1998.] PHILIPPINE AIRLINES, INC. vs. NATIONAL LABOR
RELATIONS COMMISSION
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
FACTS:
b) If the third party claim is denied, the third party may appeal the denial to the NLRC.
Even if a third party claim was denied, a third party may still file a proper action with a competent court to recover
ownership of the property illegally seized by the sheriff. This finds support in Section 17 (now 16), Rule 39, Revised - Private respondents are flight stewards of the petitioner. Both were dismissed from the service for their
Rules of Court, to wit: alleged involvement in the April 3, 1993 currency smuggling in Hong Kong.

SEC. 17 (now 16). Proceedings where property claimed by third person. -If property claimed by any other person than - private respondents filed with the NLRC a petition for injunction praying:
the judgment debtor or his agent, and such person makes an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serve the same upon the officer making the levy, and a copy (1) to prohibit petitioner (PAL) from effecting or enforcing the decision for dismissal;
thereof upon the judgment creditor, the officer shall not be bound to keep the property, unless such judgment creditor
or his agent, on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the
value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court (2) to reinstate petitioners temporarily while a hearing on the propriety of the issuance of a writ of
issuing the writ of execution. preliminary injunction is being undertaken; and
The officer is not liable for damages, for the taking or keeping of the property, to any third-party claimant unless
a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred (3) after hearing, that petitioners be awarded full back wages, moral damages and exemplary damages,
twenty (120) days from the date of the filing of the bond. But nothing herein contained shall prevent such claimant or attorney's fees, and the costs of suit.
any third person from vindicating his claim to the property by any proper action.
NLRC:
When the party in whose favor the writ of execution runs, is the Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be required, and in case the sheriff or levying officer is sued for
damages as a result of the levy, he shall be represented by the Solicitor General and if held liable therefor, the actual - Issued a temporary mandatory injunction enjoining petitioner to cease and desist from enforcing its
damages adjudged by the court shall be paid by the National Treasurer out of such funds as may be appropriated for February 22, 1995 Memorandum of dismissal.
the purpose.
- NLRC adopted the view that:
Quite obviously, too, this proper action would have for its object the recovery of ownership or possession of the
property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and detention thereof o private respondents cannot be validly dismissed on the strength of petitioner's Code of Discipline
despite the third-party claim; and it may be brought against the sheriff and such other parties as may be alleged to have which was declared illegal by this Court in the case of PAL, Inc. vs. NLRC, (G.R. No. 85985), it
colluded with him in the supposedly wrongful execution proceedings, such as the judgment creditor himself. Such
proper action, as above pointed out, is and should be an entirely separate and distinct action from that in which was formulated by the petitioner (PAL) without the participation of its employees as required in
execution has issued, if instituted by a stranger to the latter suit. R.A. 6715, amending Article 211 of the Labor Code;

The remedies above mentioned are cumulative and may be resorted to by a third-party claimant independent of or
separately from and without need of availing of the others. If a third-party claimant opted to file a proper action to
vindicate his claim of ownership, he must institute an action, distinct and separate from that in which the judgment is
being enforced, with the court of competent jurisdiction even before or without need of filing a claim in the court
which issued the writ, the latter not being a condition sine qua non for the former. In such proper action, the validity
and sufficiency of the title of the third-party claimant will be resolved and a writ of preliminary injunction against the
sheriff may be issued.
In light of the above, the filing of a third party claim with the Labor Arbiter and the NLRC did not preclude the
petitioner from filing a subsequent action for recovery of property and damages with the Regional Trial Court. And,
the institution of such complaint will not make petitioner guilty of forum shopping.
o the whimsical, baseless and premature dismissals of private respondents which "caused them
grave and irreparable injury" is enjoinable as private respondents are left "with no speedy and
adequate remedy at law" except the issuance of a temporary mandatory injunction;
o the NLRC is empowered under Article 218 (e) of the Labor Code not only to restrain any actual
or threatened commission of any or all prohibited or unlawful acts but also to require the
performance of a particular act in any labor dispute, which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party; and

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o the temporary mandatory power of the NLRC was recognized by this Court in the case of Chemo-
Technische Mfg., Inc. Employees Union, DFA, et. al. vs. Chemo-Technische Mfg., Inc.
- (Petitioner moved for reconsideration. Argued:
(1) the NLRC it has no jurisdiction to issue an injunction or restraining order since this may be issued only
under Article 218 of the Labor Code if the case involves or arises from labor disputes; and
(2) the NLRC divests the labor arbiter of its original and exclusive jurisdiction over illegal dismissal
cases)
- NLRC denied petitioners motion for reconsideration. Ruled:
(4) Petitioner (PAL) cannot validly claim that the NLRC cannot exercise our injunctive power under
Article 218 (e) of the Labor Code on the pretext that what they have in the case is not a labor dispute;
(5) Article 218 (e) of the Labor Code empowered the Commission not only to issue a prohibitory
injunction, but a mandatory ("to require the performance") one as well;
(6) In requiring as a condition for the issuance of a 'temporary or permanent injunction'- 'That complainant
has no adequate remedy at law;' Article 218 (e) of the Labor Code clearly envisioned adequacy, and
not plain availability of a remedy at law as an alternative bar to the issuance of an injunction. An illegal
dismissal suit while available as a remedy under Article 217 (a) of the Labor Code, is certainly not an
'adequate remedy at law. Thus, Article 218 (e) stands as the sole 'adequate remedy at law' for
petitioners (PAL) here.
- (Petitioner (PAL) filed petition for certiorari under Rule 65 of the Revised Rules of Court to the SC)
ISSUE PERTINENT TO ART 218:
- Whether the National Labor Relations Commission (NLRC), even without a complaint for illegal dismissal
filed before the labor arbiter, can entertain an action for injunction and issue such writ. [NO]
HELD:
- NO.
- In labor cases, Article 218 of the Labor Code empowers the NLRC
o "(e) To enjoin or restrain any actual or threatened commission of any or all prohibited or
unlawful acts or to require the performance of a particular act in any labor dispute which, if
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not restrained or performed forthwith, may cause grave or irreparable damage to any party
or render ineffectual any decision in favor of such party;
- Complementing the above-quoted provision, Sec. 1, Rule XI of the New Rules of Procedure of the
NLRC, pertinently provides as follows:
o "Section 1. Injunction in Ordinary Labor Dispute. A preliminary injunction or a restraining
order may be granted by the Commission through its divisions pursuant to the provisions of
paragraph (e) of Article 218 of the Labor Code, as amended, when it is established on the
bases of the sworn allegations in the petition that the acts complained of, involving or arising
from any labor dispute before the Commission, which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any
decision in favor of such party.
xxx xxx xxx
The foregoing ancillary power may be exercised by the Labor Arbiters only as an incident to
the cases pending before them in order to preserve the rights of the parties during the
pendency of the case, but excluding labor disputes involving strikes or lockout.
- From the foregoing provisions of law, the power of the NLRC to issue an injunctive writ originates from
"any labor dispute" upon application by a party thereof, which application if not granted "may cause grave
or irreparable damage to any party or render ineffectual any decision in favor of such party."
- It is an essential requirement that there must first be a labor dispute between the contending parties
before the labor arbiter. In the present case, there is no labor dispute between the petitioner and private
respondents as there has yet been no complaint for illegal dismissal filed with the labor arbiter by the private
respondents against the petitioner.
- The petition for injunction directly filed before the NLRC is in reality an action for illegal dismissal. This is
clear from the allegations in the petition which prays for; reinstatement of private respondents; award of full
backwages, moral and exemplary damages; and attorney's fees. As such, the petition should have been filed
with the labor arbiter who has the original and exclusive jurisdiction to hear and decide the following cases
stated in Art 217.
- the NLRC shall have exclusive appellate jurisdiction over all cases decided by labor arbiters as
provided in Article 217(b) of the Labor Code. In short, the jurisdiction of the NLRC in illegal dismissal
cases is appellate in nature and, therefore, it cannot entertain the private respondents' petition for injunction
which challenges the dismissal orders of petitioner.
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LABOR REVIEW (Atty. Peter-Joey Usita)
- Article 218(e) of the Labor Code does not provide blanket authority to the NLRC or any of its divisions to
issue writs of injunction, considering that Section 1 of Rule XI of the New Rules of Procedure of the
NLRC makes injunction only an ancillary remedy in ordinary labor disputes"
- Thus, the NLRC exceeded its jurisdiction when it issued the assailed Order granting private respondents'
petition for injunction and ordering the petitioner to reinstate private respondents.
- WHEREFORE, the petition is hereby GRANTED.
DEFINITIONS:
- Labor dispute - any controversy or matter concerning terms and conditions of employment or the
association or representation or persons in negotiating, fixing, maintaining, changing, or arranging the terms
and conditions of employment regardless of whether or not the disputants stand in the proximate relation of
employers and employees.
- Controversy - a litigated question; adversary proceeding in a court of law; a civil action or suit , either at
law or in equity; a justiciable dispute.
- Justiciable controversy - is one involving an active antagonistic assertion of a legal right on one side and
denial thereof on the other concerning a real, and not a mere theoretical question or issue.
ISSUE/S NOT PERTINENT TO ART 218:
- Whether Article 218 (e) stands as the sole 'adequate remedy at law' for petitioners (PAL).
- [NO]
- An "adequate" remedy at law has been defined as one "that affords relief with reference to the matter
in controversy, and which is appropriate to the particular circumstances of the case ." Under the Labor
Code, the ordinary and proper recourse of illegally dismissed employees is to file a complaint for illegal
dismissal with the labor arbiter. In Lamb vs. Phipps, we ruled that if the remedy is specifically provided by
law, it is presumed to be adequate. Moreover, the preliminary mandatory injunction prayed for the private
respondents in their petition before the NLRC can also be entertained by the labor arbiter who, as shown
earlier, has the ancillary power to issue preliminary injunctions or restraining orders as an incident in the
cases pending before him in order to preserve the rights of the parties during the pendency of the case.
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- Whether the labor Arbiter has original and exclusive jurisdiction over actions for illegal dismissals.
- [YES]
- The labor arbiter who has the original and exclusive jurisdiction to hear and decide cases involving all
workers, whether agricultural or non-agricultural under Art. 217 (a) of the Labor Code. The jurisdiction
conferred being both original and exclusive means no other officer or tribunal can take cognizance of, hear
and decide any of the cases therein enumerated. The only exceptions are where the Secretary of Labor and
Employment or the NLRC exercises the power of compulsory arbitration, or the parties agree to submit the
matter to voluntary arbitration pursuant to Article 263 (g) of the Labor Code.
- Whether there is irreparable injury in the petition for injunction.
- [NONE]
- An injury is considered irreparable if it is of such constant and frequent recurrence that no fair and
reasonable redress can be had therefor in a court of law, or where there is no standard by which their amount
can be measured with reasonable accuracy, that is, it is not susceptible of mathematical computation.
- In the case at bar, the alleged injury which private respondents stand to suffer by reason of their alleged
illegal dismissal can be adequately compensated and therefore, there exists no "irreparable injury," as
defined above which would necessitate the issuance of the injunction sought for. Article 279 of the Labor
Code provides that an employee who is unjustly dismissed from employment shall be entitled to
reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages,
inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement
3. Article 232 (formerly Art. 226) Bureau of Labor Relations
Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations Divisions
in the regional offices of the Department of Labor, shall have original and exclusive authority to act, at
their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts,
and all disputes, grievances or problems arising from or affecting labor-management relations in all
workplaces, whether agricultural or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or
voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by
agreement of the parties. (As amended by Section 14, Republic Act No. 6715, March 21, 1989).
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LABOR REVIEW (Atty. Peter-Joey Usita)
Diokno vs. Cacdac, GR No. 168475, July 4, 2007
Gr. No. 168475|July 4, 2007
EMILIO E. DIOKNO, VICENTE R. ALCANTARA, ANTONIO Z. VERGARA, JR., DANTE M. TONG,
JAIME C. MENDOZA, ROMEO M. MACAPULAY, ROBERTO M. MASIGLAT, LEANDRO C. ATIENZA,
ROMULO AQUINO, JESUS SAMIA, GAUDENCIO CAMIT, DANTE PARAO, ALBERTO MABUGAT,
EDGARDO VILLANUEVA, JR., FRANCISCO ESCOTO, EDGARDO SEVILLA, FELICITO MACASAET,
and JOSE Z. TULLO, Petitioners, v. HON. HANS LEO J. CACDAC, in his capacity as Director of the Bureau of
Labor Relations, DOLE, MANILA, MED-ARBITER TRANQUILINO C. REYES,EDGARDO DAYA, PABLO
LUCAS, LEANDRO M. TABILOG, REYNALDO ESPIRITU, JOSE VITO, ANTONIO DE LUNA, ARMANDO
YALUNG, EDWIN LAYUG, NARDS PABILONA, REYNALDO REYES, EVANGELINE ESCALL,
ALBERTO ALCANTARA, ROGELIO CERVITILLO, MARCELINO MORELOS, FAUSTINO ERMINO,
JIMMY S. ONG, ALFREDO ESCALL, NARDITO C. ALVAREZ, JAIME T. VALERIANO, JOHNSON S.
REYES, GAUDENCIO JIMENEZ, JR., GAVINO R. VIDANES, ARNALDO G. TAYAO, BONIFACIO F.
CIRUJANO, EDGARDO G. CADVONA, MAXIMO A. CAOC, JOSE O. MACLIT, JR., LUZMINDO D.
ACORDA, JR., LEMUEL R. RAGASA, and GIL G. DE VERA, Respondents
Ponente: Chico-Nazario, J
Doctrine:
Intra-union Dispute refers to any conflict between and among union members, and includes all disputes or grievances
arising from the violation or disagreement over any provision of the constitution and by-laws of a union, including DOLE-NCR a petition to: a.) nullify Order of Disqualification; b.) Nullify election proceedings and counting of votes;
cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of c.) declare failure of election; and d.) declare holding of new election to be controlled and supervised by the DOLE.
union membership provided for in the code.
Facts:
The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization
which is the supervisory union of Meralco. The petitioners and the private respondents are members of FLAMES. On
April 1, 2003, the executive board of the union created the Committee on Elections (COMELEC) for the conduct of
the union election scheduled May 7, 2003.
(Ong, et.al.)
On April 12, 2003, the committee rejected the candidacy of Jimmy Ong because he was
not a member of the union. Similarly, the certificates of candidacy of Nardito Alvarez, Alfredo private respondent Daya, et.al.
Escall, and Jaime Velariano (Ong, et.al.) were also rejected because their department was
excluded in the scope of the existing collective bargaining agreement (CBA). Hence, they filed a
case with the Med-Arbitration Unit of the Department of Labor and Employment (DOLE). They 30, 2014.
prayed to nullify the order of the COMELEC which disallowed their candidacy, order the
petitioner to render an accounting of funds with full and detailed disclosure of expenditures and
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financial transactions., and lastly to appoint a representative of the Bureau of Labor Relation
(BLR) as chairman of the COMELEC in lieu of petitioner Dante Tong.
April 30, 2003, DOLE-NCR Regional Director Alex E. Maraan issued an order directing
DOLE personnel to observe the conduct of the FLAMES election on May 7, 2003.
(Daya, et.al.)
May 2, 2003, the petitioners filed a petition with the COMELEC seeking
disqualification against private respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog,
Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona,
Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos,
and Faustino Erminio (Daya, et.al.) on the grounds of allowing to be assisted by a non-union
member and committed acts of disloyalty to the union.
May 6, 2003, the COMELEC issued a decision declaring Daya, et. al. officially
disqualified. According to them, Daya, et.al. violated FLAMES Constitution and By-Laws (CBL)
by allowing a non-member to aid them in their campaign.
On May 7, 2003, the COMELEC proclaimed the winning candidates of the unions election.
May 8, 2003, private respondents Daya, et. al. and Ong, et.al. filed with the Med-Arbitration Unit of the
(Jimenez, et.al.)
May 14, 2003, another group led by private respondent Gaudencio Jimenez, Jr., along
with private respondents Johnson Reyes, Gavino Vidanes, Arnaldo Tayao, Bonifacio Cirujano,
Edgardo Cadavona, Maximo Caoc, Jose Maclit, Jr., Luzmindo Acorda, Jr., Lemuel Ragasa, and
Gil de Vera (Jimenez, et.al.) filed a petition with the Med-Arbitration Unit of the DOLE-NCR
against the petitioners to nullify the May 7, 2003 election on the ground that tha same was not
free, orderly, and peaceful. This case was consolidated together with the petition of Daya, et.al.
and the petition of Ong, et.al.
Meanwhile in a subsequent election held on June 30, 20004, which was participated in and won by herein
The petitioners filed a case before the DOLE wherein they assailed the validity of the election held on June
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LABOR REVIEW (Atty. Peter-Joey Usita)
Med-Arbiter issued a decision in favor of the private respondents, Daya, et.al. In this case, the COMELEC erred in
relying on the CBL as a basis for disqualification. The said provisions were for the dismissal and/or expulsion of a ATTY. ALLAN S. MONTAO, Petitioner, vs. ATTY. ERNESTO C. VERCELES, Respondent. G.R. No. 168583
member from FLAMES, but not to the disqualification of a member as a candidate in a union election. It was held that
such power to disqualify candidates on the same ground is vested by the CBL on the Executive Board. Also, the
COMELEC denied due process to Daya, et. al. when it failed to receive the motion for reconsideration of the order of FACTS
their disqualification. This refusal amounted to a violation of the unions CBL.
On the other hand, the petition of Jimenez, et.al. was also dismissed because it was premature, it appearing that the
COMELEC had not yet resolved their protest prior to their resort to the Med-Arbiter.
Finally the petition of Ong, et.al was ordered dismissed because it is had been rendered moot and academic.
Bureau of Labor Relation Director affirmed in toto the decision of the Med-Arbiter.
Court of Appeals affirmed the findings of BLR director that the COMELEC committed procedural shortcuts when it
disqualified Daya, et.al.
Issue:
Whether or not the CA committed grave abuse of discretion when it affirmed the jurisdiction of the BLR to take
cognizance of the case and then upheld the ruling of the BLR Director and Med-Arbiter, nullifying the COMELECs
order of disqualification of private respondents Daya, et.al. and annulling the May 7, 2003 FLAMES election?
Held:
Article 226 (now 232) of the Labor Code the Bureau of Labor Relations and the Labor Relations Divisions in the
regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or
upon request either or both parties, on all inter-union and inter-union conflicts, and all disputes, grievance or problems
arising from or affecting labor-management relations in all workplaces whether agricultural or non-agricultural, except
those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject
of grievance procedure and/or voluntary arbitration. An IntraUnion Dispute refers to any conflict between and
among union members, and includes all disputes or grievance arising from the violation of or disagreement over any
provision of the constitution and bylaws of a union, including cases arising from chartering or affiliation of labor
organizations or from any violation of the rights and conditions of union membership provided for in the code. It is
very clear that the controversy at bar is an intra-union dispute, since the main issue of the case is propriety of the
disqualification of private respondents Daya, et.al. by the FLAMES COMELEC in the May 7, 2003 elections. Hence
BLR has jurisdiction over the case.
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Montano vs. Verceles, GR. No. 168583, July 6, 2010
July 26, 2010
Atty. Montao worked as legal assistant of Federation of Free Workers (FFW) Legal Center on October 1,
1994. Subsequently, he joined the union of rank-and-file employees, the FFW Staff Association. In July
1997, he became the unions President. In November 1998, he was likewise designated officer-in-charge of
FFW Legal Center.
During the 21st National Convention and Election of National Officers of FFW, Atty. Montao was
nominated for the position of National Vice-President.
However, the FFW COMELEC informed him he is not qualified for the position as his candidacy violates
the 1998 FFW Constitution and By-Laws, particularly Section 76 of Article XIX and Section 25 (a) of
Article VIII.
Section 76. Except as otherwise provided in this Constitution, no Member of the Governing Board shall at
the same time be an employee in the staff of the Federation. (see 1998 FFW Constitution & By-Laws, CA
rollo, pp. 53-70.)
Section 25. A Candidate/Nominee for the position of Governing Board Member, whether Titular or
Deputy shall, except as otherwise provided in this Constitution, possess the following qualifications:
a. he/she must be a bonafide member of the Federation for at least two (2) consecutive years and a
member of an affiliated organization which is up to date with its monthly dues to the Federation. (see
1998 FFW Constitution and By-Laws, id.)
Atty. Montao filed an Urgent Motion for Reconsideration. Prayed that his name be included in the official
list of candidates.
Election ensued in the National Convention. The convention delegates allowed his candidacy despite the
pending motion with the FFW COMELEC, and strong opposition and protest of Atty. Verceles.
Atty. Verceles is a delegate to the convention and President of University of the East Employees
Association (UEEA-FFW), which is an affiliate union of FFW.
Atty. Montao won in the election and was proclaimed as the National VP.
Atty. Verceles reiterated to the Chairman of FFW COMELEC his protest over Atty. Montaos candidacy
which he manifested during the plenary session before the holding of the election in the Convention.
Atty. Verceles sent a follow-up letter to the President of FFW requesting for immediate action on his protest.
Atty. Verceles, as President of UEEA-FFW and officer of the Governing Board of FFW, filed a Petition for
the NULLIFICATION of the ELECTION of Atty. Montao as FFW National VP with the BLR. Alleged
that as already ruled by the FFW COMELEC, Atty. Montao is not qualified to run for the position because
the FFW Constitution and By-Laws prohibits federation employees from sitting in its Governing Board.
That Atty. Montaos premature assumption of duties and formal induction as vice-president will cause
serious damage. Prayed for injunctive relief.
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Atty. Montao filed his Comment with Motion to DISMISS. Argued that the Regional Director of the
(DOLE) and not the BLR has jurisdiction over the case. That the filing of the petition was premature due to
the pending and unresolved protest before the FFW COMELEC. That Atty. Verceles has no legal standing
to initiate the petition not being the real party in interest.
FFW COMELEC sent a letter to FFW National President, Bro. Jabar in reference to the election protest filed
by Atty. Verceles before it. FFW COMELEC intimated its firm stand that Atty. Montaos candidacy ISSUE
contravenes the FFWs Constitution, by stating:
We, the Comelec unanimously made the decision that Atty. Montao and others are disqualified and barred from
running for any position in the election of the FFW, in view of pertinent provisions of the FFW Constitution.
Our decision which was final was however further deliberated upon by the body, which then gave the go signal for
Atty. Montaos candidacy notwithstanding our decision the fact that the convention body is not a constitutional
convention body and as such could not qualify to amend the FFWs present constitution to allow Atty. Montao to
run.
We submit that the decision of the convention body in allowing Atty. Montaos candidacy is not valid in view of
the fact that it runs counter to the FFW Constitution and the body at that time was not acting as a Constitutional
Convention body empowered to amend the FFW Constitution on the spot.
Our having conducted the election does not depart from the fact that we did not change our decision. The National
Convention as a co-equal constitutional body of the Comelec was not given the license nor the authority to violate
the Constitution. It therefore, cannot reverse the final decision of the Comelec.
BLR dismissed the Petition for Nullification. Upheld its jurisdiction over the intra-union dispute case.
Affirmed Atty. Verceles legal personality to institute the action as president of an affiliate union of FFW.
Held that the applicable provision to determine whether one is qualified to run for office is not Section 76 of
Article XIX but Section 26 of Article VIII. That the requirements laid down by this applicable provision was
sufficiently complied with and, besides, the convention delegates unanimously decided that Atty. Montao
was qualified to run for the position of National Vice-President.
Atty. Verceles filed a Motion for Reconsideration.
BLR denied the Motion for Reconsideration.
Atty. Verceles filed a Petition for Certiorari with the CA. Argued that the Convention had no authority under
the FFW Constitution and By-Laws to overrule and set aside the FFW COMELECs Decision rendered
pursuant to the latters power to screen candidates.
CA granted the Petition for Certiorari. Held that Atty. Montao was unqualified, but not because of the
prohibition under the FFW Constitution and By-Laws which prohibits federation employees from sitting in
its Governing Board. But because he did not possess the qualification requirement under paragraph (d) of
Section 26 that candidates must be an officer or member of a legitimate labor organization. That since
Atty. Montao, as legal assistant employed by FFW, is considered as confidential employee, consequently,
he is ineligible to join FFW Staff Association, the rank-and-file union of FFW. Nullified the election of
Atty. Montao as FFW National Vice-President.
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Atty. Montao filed a Motion for Reconsideration. Reiterated his allegations of lack of jurisdiction and lack
of cause of action due to a pending protest.
CA denied Atty. Montaos Motion for Reconsideration.
Atty. Montao filed a Petition for Review on Certiorari with the SC.
W/N the BLR has jurisdiction over intra-union disputes involving a federation. [YES]
HELD
Section 226 of the Labor Code clearly provides that the BLR and the Regional Directors of DOLE have
concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the conduct or
nullification of election of union and workers association officers.
In this case, there is no doubt as to the BLRs jurisdiction over the dispute as the same involves member-unions of a
federation arising from disagreement over the provisions of the federations constitution and by-laws.
Rule XVI lays down the decentralized intra-union dispute settlement mechanism:
Section 1. Any complaint in this regard shall be filed in the Regional Office where the union is domiciled. The
concept of domicile in labor relations regulation is equivalent to the place where the union seeks to operate or has
established a geographical presence for purposes of collective bargaining or for dealing with employers concerning
terms and conditions of employment.
The matter of venue becomes problematic when the intra-union dispute involves a federation, because the
geographical presence of a federation may encompass more than one administrative region. In this case, FFW, having
local unions all over the country, operates in more than one administrative region. Pursuant to BLRs authority under
Article 226, this Bureau exercises original jurisdiction over intra-union disputes involving federations.
Therefore, this Bureau maintains original and exclusive jurisdiction over disputes arising from any violation of
or disagreement over any provision of its constitution and by-laws.
OTHER LABOR ISSUES/DOCTRINES (other than those related to Article 226)
1. W/N the petition to annul Atty. Montaos election as VP was prematurely filed. [NO]
There is no merit to the argument that the petition should have been immediately dismissed due to a pending and
unresolved protest before the FFW COMELEC pursuant to the Omnibus Rules Implementing the Labor Code.
It is true that under the Implementing Rules, redress must first be sought within the organization itself in
accordance with its constitution and by-laws. However, this requirement is not absolute but yields to exception
under varying circumstances.
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In this case, Atty. Verceles made his protest over Atty. Montaos candidacy during the plenary session before the
holding of the election. The FFW COMELEC, despite this, allowed Atty. Montaos candidacy and proclaimed him
winner for the position. Under the rules, the committee on election shall endeavor to settle or resolve all protests
during or immediately after the close of election proceedings and any protest left unresolved shall be resolved
by the committee within five days after the close of the election proceedings. A day or two after the election, Atty.
Verceles made his written/formal protest with the FFW COMELEC. He exhausted the remedies under the constitution
and by-laws to have his protest acted upon by the proper forum and even asked for a formal hearing on the matter.
Still, the FFW COMELEC failed to timely act thereon. Thus, Atty. Verceles had no other recourse but to take the
next available remedy to protect the interest of the union he represents as well as the whole federation, especially
given that Atty. Montao, immediately after being proclaimed, already assumed and started to perform the duties of
the position. Consequently, Atty. Verceles properly sought redress from the BLR so that the right to due process
will not be violated. To insist on the contrary is to render the exhaustion of remedies within the union as illusory and
vain.
2. W/N Atty. Montao is qualified to run as FFW National Vice-President. [NO]
Section 76, Article XIX of the FFW Constitution and By-laws provides that no member of the Governing
Board shall at the same time be an employee in the staff of the federation.
Atty. Montao, at the time of his nomination and election for the position in the Governing Board, is the head
of FFW Legal Center and the President of FFW Staff Association. Even after he was elected, he continued as staff
member of FFW and no evidence showed that he tendered his resignation. On this basis, the FFW COMELEC
disqualified Atty. Montao. The BLR, however, overturned FFW COMELECs ruling and held that the applicable
provision is Section 26 of Article VIII which was sufficiently complied with. The CA held otherwise stating Atty.
Montao unqualified for the position for failing to meet the requirements set forth in Section 26.
We find that both the BLR and CA erred in their findings.
The Federation/Unions Constitution and By-Laws govern the relationship between and among its members.
They are akin to ordinary contracts in that their provisions have obligatory force upon the federation/ union and
its member. What has been expressly stipulated therein shall be strictly binding on both.
Under the FFW Constitution and By-Laws, FFW COMELEC is vested with authority and power to screen
candidates and determine their qualifications and eligibility to run in the election and to adopt and
promulgate rules concerning the conduct of elections.
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Under the Rules Implementing the Labor Code, the Committee shall have the power to prescribe rules on the
qualification and eligibility of candidates and such other rules as may facilitate the orderly conduct of
elections. The Committee is also regarded as the final arbiter of all election protests.
From the foregoing, FFW COMELEC, undeniably, has sufficient authority to adopt its own interpretation of the
explicit provisions of the federations constitution and by-laws and unless it is shown to have committed grave
abuse of discretion, its decision and ruling will not be interfered with. The FFW Constitution and By-laws are clear
that no member of the Governing Board shall at the same time perform functions of the rank-and-file staff. The
BLR erred in disregarding this clear provision.
Thus, Atty. Montao is not qualified to run for the position but not for failure to meet the requirement under Section
26 (d) of Article VIII of FFW Constitution and By-Laws which states that candidates must be an officer or member of
a legitimate labor organization, but because Atty. Montao is disqualified to run for the position of National Vice-
President in view of the proscription in the FFW Constitution and By-Laws on federation employees from
sitting in its Governing Board.
The election of Atty. Montao as FFW Vice-President is null and void.
Petition is DENIED.
4. National Conciliation and Mediation Board Jurisdiction
THE 2011 NLRC RULES OF PROCEDURE, AS AMENDED
SECTION 8. MANDATORY CONCILIATION AND MEDIATION CONFERENCE. (a) The
mandatory conciliation and mediation conference shall be called for the purpose of: (1) amicably settling
the case upon a fair compromise; (2) determining the real parties in interest; (3) determining the necessity
of amending the complaint and including all causes of action; (4) defining and simplifying the issues in the
case; (5) entering into admissions or stipulations of facts; and (6) threshing out all other preliminary
matters. The Labor Arbiter shall personally preside over and take full control of the proceedings and may
be assisted by the Labor Arbitration Associate in the conduct thereof. Provided that, in areas where there is
no Labor Arbiter assigned, conciliation and mediation may be conducted by a Labor Arbitration Associate,
any other NLRC personnel with sufficient training and knowledge on conciliation and mediation,
authorized by the Chairman or a duly authorized personnel of the Department of Labor and Employment
pursuant to any Memorandum of Agreement executed for this purpose. (As amended by En Banc
Resolution No. 05-14, Series of 2014)
(b) Conciliation and mediation efforts shall be exerted by the Labor Arbiters or the said authorized
personnel all throughout the mandatory conferences. (As amended by En Banc Resolution No. 05-14,
Series of 2014) Any agreement entered into by the parties whether in partial or full settlement of the
dispute shall be reduced into writing and signed by the parties and their counsel or the parties authorized
representatives, if any.
(c) In any case, the compromise agreement shall be approved by the Labor Arbiter, if after explaining to
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the parties, particularly to the complainants, the terms, conditions and consequences thereof, he/she is
satisfied that they understand the agreement, that the same was entered into freely and voluntarily by them,
and that it is not contrary to law, morals, and public policy.
(d) A compromise agreement duly entered into in accordance with this Section shall be final and binding
upon the parties and shall have the force and effect of a judgment rendered by the Labor Arbiter.
(e) The mandatory conciliation and mediation conference shall, except for justifiable grounds, be
terminated within thirty (30) calendar days from the date of the first conference.
(f) No motion for postponement shall be entertained except on meritorious grounds and when filed at least
three (3) days before the scheduled hearing. (3a
SECTION 9. EFFECT OF FAILURE OF SETTLEMENT. If the parties fail to agree on an amicable
settlement, either in whole or in part, during the mandatory conciliation and mediation conference, the
Labor Arbiter or the said duly authorized personnel shall proceed to the other purposes of the said
conference as enumerated in Section 8(a) hereof. (4a) (As amended by En Banc Resolution No. 05-14,
Series of 2014)
NOTES:
What is the purpose of mandatory conciliation and mediation conference?
The mandatory conciliation and mediation conference shall be called for the purpose of (1) amicably settling
the case upon a fair compromise; (2) determining the real parties in interest; (3) determining the necessity of
amending the complaint and including all causes of action; (4) defining and simplifying the issues in the
case; (5) entering into admissions or stipulations of facts; and (6) threshing out all other preliminary matters
The National Conciliation and Mediation Board is an attached agency under the supervision and control of
the DOLE. It was created to handle the conciliation, mediation, and voluntary arbitration functions of the
BLR and is composed of an administrator and 2 deputies.
Functions:
1.) Formulate policies, programs, procedures, standards, operation manuals and guidelines on
effective mediation and conciliation of labor disputes
2.) Preventive mediation and conciliation functions
3.) Coordinate and maintain linkages with other sectors and institutions and other government
5. Regional Directors Jurisdiction
authorities concerned with matters relative to the prevention and settlement of labor disputes
4.) Formulate policies, plans, programs, standards, procedures, operations manuals and guidelines
pertaining to the promotion of cooperative and non-adversarial schemes, grievance handling,
voluntary arbitration and other voluntary modes of dispute settlement
5.) Administer the voluntary arbitration program; maintain/update a list of voluntary arbitrations
and compile arbitration awards and decisions
6.) Provide counseling and preventive mediation assistance particularly in the administration of
collective agreements
7.) Monitor and exercise technical supervision over BLR programs implemented in regional
offices
8.) Perform other such function provided by law or assigned by the DOLE secretary
the NLRC rules of procedure requires the LA to call and preside over a mandatory conciliation and
mediation conference to try to amicably settle the case, to define and simplify the issues, or thresh out other
preliminary matters.
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The rules encourages compromise settlement but they have to be approved by the LA
even at the APPEAL STATE of a a LA's decision, amicable settlement is a preferred mode
NLRC DECISION: SECTION 15. MOTIONS FOR RECONSIDERATION. Motion for reconsideration of
any decision, resolution or order of the Commission shall not be entertained except when based on palpable
or patent errors; provided that the motion is filed within ten (10) calendar days from receipt of decision,
resolution or order, with proof of service that a copy of the same has been furnished, within the reglementary
period, the adverse party; and provided further, that only one such motion from the same party shall be
entertained. (15a)
if MOTION FOR RECONSIDERATION FAILED BEFORE THE NLRC: may avail of the special civil
action under Rule 65 of the Rules of Court case may go the CA or the SC as both of them have the power
to review the NLRC decision. The decision under the principle of hierarchy of courts must be filed before
the CA
GENERAL RULE: quasi-judicial agencies decision are accorded respect and finality as such findings are
supported by substantial evidences
EXCEPT:
conclusion is a finding grounded on speculations, surmises and conjectures
the inferences made are manifestly mistaken, absurd or impossible
there is a grave abuse of discretion
there is a misapprehension of facts
the court in arriving at its findings went beyond the issues of the case and the same are contrary to
the admissions of the parties or the evidence presented
where respondent commission has sustained irregular procedures and through the invocation of
summary methods, including rules on appeal, has affirmed an order which tolerates violation of
due process
where the rights of a party were prejudiced because the administrative findings, conclusions or
decisions were in violation of constitutional provisions, in excess of statutory authority, or
jurisdiction, made upon irregular procedure, vitiated by fraud, imposition or mistake, not
supported by substantial evidence
Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations Divisions
in the regional offices of the Department of Labor, shall have original and exclusive authority to act, at
their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts,
and all disputes, grievances or problems arising from or affecting labor-management relations in all
workplaces, whether agricultural or non-agricultural, except those arising from the implementation or
interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or
voluntary arbitration.
The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by
agreement of the parties. (As amended by Section 14, Republic Act No. 6715, March 21, 1989).
Art. 227. Compromise agreements. Any compromise settlement, including those involving labor
standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional
office of the Department of Labor, shall be final and binding upon the parties. The National Labor
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Relations Commission or any court, shall not assume jurisdiction over issues involved therein except in
case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through
fraud, misrepresentation, or coercion.
[ Art. 228. Indorsement of cases to Labor Arbiters.
a.Except as provided in paragraph (b) of this Article, the Labor Arbiter shall entertain only cases endorsed
to him for compulsory arbitration by the Bureau or by the Regional Director with a written notice of such
indorsement or non-indorsement. The indorsement or non-indorsement of the Regional Director may be
appealed to the Bureau within ten (10) working days from receipt of the notice.
b.The parties may, at any time, by mutual agreement, withdraw a case from the Conciliation Section and
jointly submit it to a Labor Arbiter, except deadlocks in collective bargaining.] (Repealed by Section 16,
Batas Pambansa Bilang 130, August 21, 1981)
Art. 229. Issuance of subpoenas. The Bureau shall have the power to require the appearance of any
person or the production of any paper, document or matter relevant to a labor dispute under its jurisdiction,
either at the request of any interested party or at its own initiative.
Art. 230. Appointment of bureau personnel. The Secretary of Labor and Employment may appoint, in
addition to the present personnel of the Bureau and the Industrial Relations Divisions, such number of
examiners and other assistants as may be necessary to carry out the purpose of the Code. (As amended by
Section 15, Republic Act No. 6715, March 21, 1989)
Art. 231. Registry of unions and file of collective bargaining agreements. The Bureau shall keep a
registry of legitimate labor organizations. The Bureau shall also maintain a file of all collective bargaining
agreements and other related agreements and records of settlement of labor disputes and copies of orders
and decisions of voluntary arbitrators. The file shall be open and accessible to interested parties under
conditions prescribed by the Secretary of Labor and Employment, provided that no specific information
submitted in confidence shall be disclosed unless authorized by the Secretary, or when it is at issue in any
judicial litigation, or when public interest or national security so requires.
Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties shall submit
copies of the same directly to the Bureau or the Regional Offices of the Department of Labor and
Employment for registration, accompanied with verified proofs of its posting in two conspicuous places in
the place of work and ratification by the majority of all the workers in the bargaining unit. The Bureau or
Regional Offices shall act upon the application for registration of such Collective Bargaining Agreement
within five (5) calendar days from receipt thereof. The Regional Offices shall furnish the Bureau with a
copy of the Collective Bargaining Agreement within five (5) days from its submission.
The Bureau or Regional Office shall assess the employer for every Collective Bargaining Agreement a
registration fee of not less than one thousand pesos (P1,000.00) or in any other amount as may be deemed
appropriate and necessary by the Secretary of Labor and Employment for the effective and efficient
administration of the Voluntary Arbitration Program. Any amount collected under this provision shall
accrue to the Special Voluntary Arbitration Fund.
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The Bureau shall also maintain a file and shall undertake or assist in the publication of all final decisions,
orders and awards of the Secretary of Labor and Employment, Regional Directors and the
Commission. (As amended by Section 15, Republic Act No. 6715, March 21, 1989)
Art. 232. Prohibition on certification election. The Bureau shall not entertain any petition for
certification election or any other action which may disturb the administration of duly registered existing
collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this
Code. (As amended by Section 15, Republic Act No. 6715, March 21, 1989)
Art. 233. Privileged communication. Information and statements made at conciliation proceedings shall
be treated as privileged communication and shall not be used as evidence in the Commission. Conciliators
and similar officials shall not testify in any court or body regarding any matters taken up at conciliation
proceedings conducted by them.
ART. 129. Recovery of wages, simple money claims and other benefits. - Upon complaint of any interested
party, the Regional Director of the Department of Labor and Employment or any of the duly authorized
hearing officers of the Department is empowered, through summary proceeding and after due notice, to
hear and decide any matter involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or household service
or househelper under this Code, arising from employer-employee relations: Provided, That such complaint
does not include a claim for reinstatement: Provided further, That the aggregate money claims of each
employee orhousehelper 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 itsrules.chan robles virtual law library
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,
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1989)
NOTES:
In a March 2012 decision, the Supreme Court delineates the jurisdiction of the DOLE Secretary vis--vis that of the
NLRC.
The Court ruled that no limitation in the law was placed upon the power of the DOLE to determine the existence
of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary
finding, that the power was primarily held by the NLRC. x x x
The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to
follow, the same guide the courts themselves use. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; (4) the employers power to control the employees conduct. The use of this test is not solely limited to the
NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection,
making use of the same evidence that would have been presented before the NLRC. x x x
If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the
matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee
relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed
in the first place. x x x
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the
Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC.
If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with
the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an
existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE,
however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. (Peoples
Broadcasting Service vs. The Secretary of the Department of Labor and Employment, G.R. No. 179652, March 6,
2012)
The DOLE Secretary may assume jurisdiction over a labor dispute, or certify it to the NLRC for compulsory
arbitration, if, in his opinion, it may cause or likely to cause a strike or lockout in an industry indispensable
to the national interest. The President may also exercise the power to assume jurisdiction over a labor
dispute.
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MEDIATOR-ARBITRATOR (MED-ARB) refers to an officer in the DOLE Regional office or in the bureau
of labor relations who is authorized to hear and decide representation cases, inter/intra-union disputes and
related labor relations disputes EXCEPT cancellation of union registration cases
Representation Cases proceedings intended to determine which one, among rival unions, should be
officially designated or certified as the exclusive representative of the employees in bargaining
collectively with their employee
Inter-Union Dispute refers to any conflict between legitimate labor unions involving representation
questions for purposes of CBA or to any dispute between legitimate labor unions
Intra-Union Dispute conflict between member unions.
Examples of inter/intra-union disputes
cancellation of union registration
audit of union funds
violation of union members' rights
APPEAL FROM MED-ARB DECISION and REGIONAL DIRECTOR appeal to the Bureau of Labor
Relations. Bureau Director may be appealed to the Office of the Secretary of DOLE
a. Article 128- Visitorial and Enforcement Powers
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
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2, 1994).
An order issued by the duly authorized representative of the Secretary of Labor and Employment
under this Article may be appealed to the latter. In case said order involves a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount
equivalent to the monetary award in the order appealed from. (As amended by Republic Act No. 7730,
June 2, 1994)
c.The Secretary of Labor and Employment may likewise order stoppage of work or suspension of
operations of any unit or department of an establishment when non-compliance with the law or
implementing rules and regulations poses grave and imminent danger to the health and safety of
workers in the workplace. Within twenty-four hours, a hearing shall be conducted to determine
whether an order for the stoppage of work or suspension of operations shall be lifted or not. In case the
violation is attributable to the fault of the employer, he shall pay the employees concerned their
salaries or wages during the period of such stoppage of work or suspension of operation.
d.It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render
ineffective the orders of the Secretary of Labor and Employment or his duly authorized representatives
issued pursuant to the authority granted under this Article, and no inferior court or entity shall issue
temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case
involving the enforcement orders issued in accordance with this Article.
e.Any government employee found guilty of violation of, or abuse of authority, under this Article
shall, after appropriate administrative investigation, be subject to summary dismissal from the service.
f.The Secretary of Labor and Employment may, by appropriate regulations, require employers to keep
and maintain such employment records as may be necessary in aid of his visitorial and enforcement
powers under this Code.
Maternity Childrens Hospital vs. Sec. of Labor, GR No. 79809, June 30,
1989
[G.R. No. 78909. June 30, 1989.]
MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO,
President, petitioner, vs. THE HONORABLE SECRETARY OF LABOR AND THE
REGIONAL DIRECTOR OF LABOR, REGION X, respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; EMPLOYMENT; LABOR STANDARDS,
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CONSTRUED. Labor standards refer to the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits,
including occupational, safety, and health standards (Section 7, Rule I, Rules on the Disposition of Labor
Standards Cases in the Regional Office, dated September 16, 1987).
2. ID.; ID.; ID.; LABOR DISPUTES; POWER OF THE REGIONAL DIRECTOR TO ADJUDICATE
MONEY CLAIMS; CONDITIONS. Under the present rules, a Regional Director exercises both visitorial
and enforcement power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of the regional office
is not contested by the employer concerned. (Art. 128-b of the Labor Code,as amended by E.O. No. 111)
3. ID.; ID.; MORE POLICY INSTRUCTIONS NOS. 6 AND 37; ADJUDICATORY POWERS OF THE
REGIONAL DIRECTOR REQUIRES THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The provisions of MOLE Policy Instructions Nos. 6, (Distribution of Jurisdiction Over Labor Cases) and 37
(Assignment of Cases to Labor Arbiters) gave the Regional Directors adjudicatory powers over uncontested
money claims discovered in the course of normal inspection, provided an employer-employee relationship still
exists.
4. ID.; ID.; ID.; ID.; CONFIRMED BY E.O. NO. 111. E.O. 111 authorizes a Regional Director to order
compliance by an employer with labor standards provisions ofthe Labor Code and other legislation. It is Our
considered opinion however, that the inclusion of the phrase, "The provisions of Article 217 of this Code to the
contrary notwithstanding and in cases where the relationship of employer-employee still exists" . . . in Article
128(b), as amended, above-cited, merely confirms/reiterates the enforcement adjudication authority of the
Regional Director over uncontested money claims in cases where an employer-employee relationship still exists.
5. ID.; ID.; ID.; ID.; ID.; INTENTION OF POLICY INSTRUCTIONS NOS. 6 AND 37, GIVEN WEIGHT AND
ENTITLED TO GREAT RESPECT. The amendment of the visitorial and enforcement powers of the Regional
Director (Article 128-b) by said E.O. 111 reflects the intention enunciated in Policy Instructions Nos. 6 and 37 to
empower the Regional Directors to resolve uncontested money claims in cases where an employer-employee
relationship still exists. This intention must be given weight and entitled to great respect.
6. ID.; LABOR LAWS; EXECUTIVE ORDER NO. 111, A CURATIVE STATUTE WITH RETROSPECTIVE
APPLICATION. The proceedings before the Regional Director must, perforce, be upheld on the basis of
Article 128(b) as amended by E.O. No. 111, dated December 24, 1986, this executive order "to be considered in
the nature of a curative statute with retrospective application." (Progressive Workers' Union, et al. vs. Hon. F.P.
Aguas, et al. (Supra); M. Garcia vs. Judge A. Martinez, et al., G.R. No. L-47629, May 28, 1979, 90 SCRA 331).
7. ID.; LABOR CODE; ENFORCEMENT POWER OF THE REGIONAL DIRECTOR CANNOT BE UPHELD
IN CASES OF SEPARATED EMPLOYEES. There is no legal justification for the award in favor of those
employees who were no longer connected with the hospital at the time the complaint was filed, having resigned
therefrom in 1984. The enforcement power of the Regional Director cannot legally be upheld in cases of separated
employees. Article 129 of the Labor Code,cited by petitioner is not applicable as said article is in aid of the
enforcement power of the Regional Director; hence, not applicable where the employee seeking to be paid
underpayment of wages is already separated from the service. His claim is purely a money claim that has to be the
subject of arbitration proceedings and therefore within the original and exclusive jurisdiction of the Labor Arbiter.
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FACTS:
Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro
Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as hold-over President.
The hospital derives its finances from the club itself as well as from paying patients, averaging 130 per
month. It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro
City government
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees are given
food, but the amount spent therefor is deducted from their respective salaries
REGIONAL DIRECTOR OF LABOR AND EMPLOYMENT
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions filed a
complaint with the Office of the Regional Director of Labor and Employment, Region X, for underpayment
HISTORY OF JURISDICTION OF LABOR STANDARD CASES
of their salaries and ECOLAs
On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect
the records of the petitioner to ascertain the truth of the allegations in the complaints
the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of
wages and ECOLAs of all the employees by the petitioner
Based on this inspection report and recommendation, the Regional Director issued an Order dated August 4,
1986, directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all the
petitioner's employees,
MINISTER OF LABOR AND EMPLOYMENT
Petitioner appealed
a Decision on September 24, 1986, modifying the said Order in that deficiency wages and ECOLAs should
be computed only from May 23, 1983 to May 23, 1986
petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his Order dated
May 13, 1987, for lack of merit
ISSUE
whether or not the Regional Director had jurisdiction over the case and if so, the extent of coverage of any
award that should be forthcoming, arising from his visitorial and enforcement powers under Article 128 of
the Labor Code.
HELD
petitioner alleged that the original and exclusive jurisdiction over money claims is properly lodged in the
Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code and questions the all-embracing
applicability of the award involving salary differentials and ECOLAs, in that it covers not only the hospital
employees who signed the complaints, but also those (a) who are not signatories to the complaint, and (b)
those who were no longer in the service of the hospital at the time the complaints were filed.
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THIS IS A LABOR STANDARDS CASE and is governed by Art. 128-b of the Labor Code,as amended
by E.O. No. 111
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations
relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits,
including occupational, safety, and health standards
Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor
standards cases, and is therefore empowered to adjudicate money claims, provided there still exists an
employer-employee relationship, and the findings of the regional office is not contested by the employer
concerned.
Originally labor standards cases were exclusive functions of labor arbiters under Art 216 (jurisdiction
of the commission) of the Labor Code.
The promulgation of P.D. No. 850, issued on December 16, 1975, which transferred labor
standards cases from the arbitration system to the enforcement system. Under the then Labor
Code therefore (PD 442 as amended by PD 570-a, as further amended by PD 850), there were
three adjudicatory units: The Regional Director, the Bureau of Labor Relations and the Labor Arbiter.
It became necessary to clarify and consolidate all governing provisions on jurisdiction into one
document. 2 On April 23, 1976, MOLE Policy Instructions No. 6 was issued.
E.O. No 111 . As seen from the foregoing, EO 111 authorizes a Regional Director to order compliance
by an employer with labor standards provisions of the Labor Code and other legislation. It is Our
considered opinion however, that the inclusion of the phrase, "The provisions of Article 217 of this
Code to the contrary notwithstanding and in cases where the relationship of employer-employee still
exists" . . . in Article 128(b), as amended, above-cited, merely confirms/reiterates the enforcement
adjudication authority of the Regional Director over uncontested money claims in cases where an
employer-employee relationship still exists. 6
Viewed in the light of PD 850 and read in coordination with MOLE Policy Instructions Nos. 6, 7 and
37, it is clear that it has always been the intention of our labor authorities to provide our workers
immediate access (when still feasible, as where an employer-employee relationship still exists) to their
rights and benefits, without being inconvenienced by arbitration/litigation processes that prove to be not
only nerve-wracking, but financially burdensome in the long run.
The Regional Director correctly applied the award with respect to those employees who signed the
complaint, as well as those who did not sign the complaint, but were still connected with the hospital at the
time the complaint was filed.
The justification for the award to this group of employees who were not signatories to the complaint is that
the visitorial and enforcement powers given to the Secretary of Labor is relevant to, and exercisable over
establishments, not over the individual members/employees, because what is sought to be achieved by its
exercise is the observance of, and/or compliance by, such firm/establishment with the labor standards
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regulations. Necessarily, in case of an award resulting from a violation of labor legislation by such
establishment, the entire members/employees should benefit therefrom
". . . It would be highly derogatory to the rights of the workers, if after categorically finding the
respondent hospital guilty of underpayment of wages and ECOLAs, we limit the award to only those
who signed the complaint to the exclusion of the majority of the workers who are similarly situated.
Indeed, this would be not only render the enforcement power of the Minister of Labor and Employment
nugatory, but would be the pinnacle of injustice considering that it would not only discriminate but also
deprive them of legislated benefits.
his view is further bolstered by the provisions of Sec. 6, Rule II of the "Rules on the Disposition of Labor
Standards cases in the Regional Offices" (supra) presently enforced, viz:
"SECTION 6. Coverage of complaint inspection. A complaint inspection shall not be limited to the
specific allegations or violations raised by the complainants/workers but shall be a thorough inquiry
into and verification of the compliance by employer with existing labor standards and shall cov
there is no legal justification for the award in favor of those employees who were no longer connected with
the hospital at the time the complaint was filed, having resigned therefrom in 1984
The enforcement power of the Regional Director cannot legally be upheld in cases of separated employees.
Article 129 of the Labor Code,cited by petitioner (p. 54,Rollo) is not applicable as said article is in aid of
the enforcement power of the Regional Director; hence, not applicable where the employee seeking to be
paid underpayment of wages is already separated from the service. His claim is purely a money claim that
has to be the subject of arbitration proceedings and therefore within the original and exclusive jurisdiction of
the Labor Arbiter.
Separate Opinions
MELENCIO-HERRERA, J., concurring:
I concur, with the observation that even as reconciled, it would seem inevitable to state that the
conclusion in the Zambales and Ong cases that, prior to Executive Order No. 111, Regional Directors
were not empowered to share the original and exclusive jurisdiction conferred on Labor Arbiters over
money claims, is now deemed modified, if not superseded.
Section 2, Republic Act No. 6715, which amends further the Labor Code of the Philippines (PD No.
442)
"SEC. 2. Article 129 of the Labor Code of the Philippines, as amended, is hereby further amended
to read as follows:
Art. 129. Recovery of wages, simple money claims and other benefits. Upon complaint of any
interested party, the Regional Director of the Department of Labor and Employment or any of the
duly authorized hearing officers of the Department is empowered, through summary proceeding
and after due notice, to hear and decide any matter involving the recovery of wages and other
monetary claims and benefits, including legal interest, owing to an employee or person employed
in domestic or household service or househelper under this Code, arising from employer-employee
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relations: Provided, That such complaint does not include a claim for reinstatement: Provided,
further, That the aggregate money claims of each employee or househelper do not exceed five
thousand pesos (P5,000.00). 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 . . ."
b. Adjudicatory Power
Brokenshire Memorial Hospital vs. Minister of Labor, GR. No. 74621,
Feb. 7, 1990
[G.R. No. 74621. February 7, 1990.]
BROKENSHIRE MEMORIAL HOSPITAL, INC., petitioner, vs. THE HONORABLE
MINISTER OF LABOR & EMPLOYMENT AND BROKENSHIRE MEMORIAL HOSPITAL
EMPLOYEES AND WORKER'S UNION-FFW Represented by EDUARDO A.
AFUAN, respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; REPUBLIC ACT 6715; JURISDICTION OF REGIONAL
DIRECTORS AND OTHER HEARING OFFICERS OVER MONEY CLAIMS; REQUISITES. RA
6715 amended Art. 129 and Art. 217 of the Labor Code. It will be observed that what in fact conferred upon
Regional Directors and other hearing officers of the Department of Labor (aside from the Labor Arbiters)
adjudicative powers, i.e., the power to try and decide, or hear and determine any claim brought before them
for recovery of wages, simple money claims, and other benefits, is Republic Act 6715, provided that the
following requisites concur, to wit: 1) The claim is presented by an employee or person employed in domestic
or household service, or househelper under the code; 2) The claimant, no longer being employed, does not
seek reinstatement; and 3) The aggregate money claim of the employee or househelper does not exceed five
thousand pesos (P5,000.00).
2. ID.; ID.; ID.; ID.; IN ABSENCE OF ANY OF THE REQUISITES, LABOR ARBITERS HAVE EXCLUSIVE
ORIGINAL JURISDICTION. In the absence of any of the three (3) requisites, the Labor Arbiters have
exclusive original jurisdiction over all claims arising from employer-employee relations, other than claims for
employee's compensation, social security, medicare and maternity benefits.
3. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. Considering further that the aggregate claims involve an amount in
excess of P5,000.00, We find it more appropriate that the issue of petitioner hospital's liability therefor, including
the proposal of petitioner that the obligation of private respondents to the former in the aggregate amount of
P507,237.57 be used to offset its obligations to them, be ventilated and resolved, not in a summary proceeding
before the Regional Director under Article 128 of the Labor Code, as amended, but in accordance with the more
formal and extensive proceeding before the Labor Arbiter. Nevertheless, it should be emphasized that the amount
of the employer's liability is not quite a factor in determining the jurisdiction of the Regional Director. However,
the power to order compliance with labor standards provisions may not be exercised where the employer contends
or questions the findings of the labor regulation officers and raises issues which cannot be determined without
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taking into account evidentiary matters not verifiable in the normal course of inspection, as in the case at bar.
4. ID.; ID.; CONSIDERED A CURATIVE STATUTE. RA 6715 is in the nature of a curative statute. Curative
statutes have long been considered valid in our jurisdiction, as long as they do not affect vested rights. In this case,
We do not see any vested right that will be impaired by the application of RA 6715.
5. CONSTITUTIONAL LAW; SUPREME COURT; HAS POWER TO ULTIMATELY DECLARE A LAW
UNCONSTITUTIONAL; WITHOUT THE DECLARATION, LEGISLATION REMAINS OPERATIVE. The
Supreme Court is vested by the Constitution with the power to ultimately declare a law unconstitutional. Without
such declaration, the assailed legislation remains operative and can be the source of rights and duties especially so
in the case at bar when petitioner complied with Wage Order No. 5 by paying the claimants the total amount of
P163,047.50, representing the latter's minimum wage increases up to October 16, 1984, instead of questioning
immediately at that stage before paying the amount due, the validity of the order on grounds of constitutionality.
The Regional Director is plainly without the authority to declare an order or law unconstitutional and his duty is
merely to enforce the law which stands valid, unless otherwise declared by this Tribunal to be unconstitutional. On
our part, We hereby declare the assailed Wage Orders as constitutional, there being no provision of the 1973
Constitution (or even of both the Freedom Constitution and the 1987 Constitution) violated by said Wage Orders,
which Orders are without doubt for the benefit of labor.
FACTS:
The case originated from a complaint filed by private respondent against petitioner with the Minister of
Labor and Employment for non-compliance with the provisions of Wage Order No.5
The Regional Director rendered a decision in favor of private respondents, it became final and executory.
A writ of execution whereby some movable properties of the hospital (petitioner) were levied upon and its
operating expenses kept with the bank were garnished.
The garnishment and levy was lifted after payment of the hospital in the amount of P163, 047.50 (June 16-
October 15, 1984)
After the said payment, the petitioner hospital failed to continue to comply with Wage Order No 5. and also
the new Wage Order No. 6 which took effect on November 1, 1984.
the respondent was not prompted to file against petitioner the case at bar.
REGIONAL DIRECTOR
Petitioner asserted that: the Regional office of the ministry of labor does not have jurisdiction because of
want of allegation and that wage order no. 5 and 6 was unconstitutional thus void.
PETITIONER: filed a motion for certification to the NLRC for a full blown hearing because according to
the petitioner, complainants / respondents had unpaid obligations with the hospital which might offset with
the alleged obligation of the hospital
Issues having been joined, the Regional Director rendered a decision on April 12, 1985 in favor of the
complainants (private respondents herein) declaring that petitioner (respondent therein) is estopped from
questioning the acquisition of jurisdiction because its appearance in the hearing is in itself submission to
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jurisdiction and that this case is merely a continuance of a previous case where the hospital already willingly
paid its obligations to the workers on orders of the Regional Office.
On the matter of the constitutionality of the Wage Order Nos. 5 and 6, the Regional Director declared that
only the court can declare a law or order unconstitutional and until so declared by the court, the Office of the
Regional Director is duly bound to enforce the law or order.
OFFICE OF THE MINISTER OF LABOR
Petitioner appealed to the Office of the Minister of Labor, which dismissed the appeal for lack of merit. A
motion for reconsideration was likewise denied by said Office, giving rise to the instant petition reiterating
the issues earlier mentioned.
ISSUE:
whether or not the Regional Director has jurisdiction over money claims of workers concurrent with the Labor Arbiter.
HELD:
It is worthy of note that the instant case was deliberated upon by this Court at the same time that Briad Agro
Development Corporation v. de la Cerna, G.R. No. 82805 and L.M. Camus Engineering Corporation v.
Hon. Secretary of Labor, et al. G.R. No. 83225, promulgated on June 29, 1989 and Maternity Children's
Hospital vs. Hon. Secretary of Labor, et al., G.R. No. 78909, promulgated 30 June 1989, where deliberated
upon; for all three (3) cases raised the same issue of jurisdiction of the Regional Director of the Department
of Labor to pass upon money claims of employees. Hence, we will be referring to these cases, most
especially the case of Briad Agro which, as will be seen later, was reconsidered by the court.
in view of the promulgation of Executive Order No. 111, the ruling in the earlier case of Zambales Base
Metals is already abandoned. In accordance with the rulings in Briad Agro, L.M. Camus, and Maternity
Children's Hospital, the Regional Director exercises concurrent jurisdiction with the Labor Arbiter over
money claims
'. . . Executive Order No. 111 is in the character of a curative law, that is to say, it was intended to
remedy a defect that, in the opinion of the legislative (the incumbent Chief Executive in this case, in the
exercise of her lawmaking power under the Freedom Constitution) had attached to the provision subject
of the amendment. This is clear from the proviso: "The provisions of Article 217 to the contrary
notwithstanding . . ." Plainly, the amendment was meant to make both the Secretary of Labor (or the
various Regional Directors) and the Labor Arbiter share jurisdiction." (Briad Agro Dev. Corp. v. Sec.
of Labor, supra).
"Under the present rules, a Regional Director exercises both visitorial and enforcement power
over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of the
regional office is not contested by the employer concerned." (Maternity Children's Hospital v.
Sec. of Labor, supra). cdphil
the decision in the consolidated cases of Briad Agro Development Corp. and L.M. Camus Engineering
Corp. was reconsidered and set aside by this Court. It will be observed that what in fact conferred upon
Regional Directors and other hearing officers of the Department of Labor (aside from the Labor Arbiters)
adjudicative powers, i.e., the power to try and decide, or hear and determine any claim brought before them
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for recovery of wages, simple money claims, and other benefits, is Republic Act 6715, provided that the
following requisites concur, to wit:
1) The claim is presented by an employee or person employed in domestic or household service, or
househelper under the code;
2) The claimant, no longer being employed, does not seek reinstatement; and
3) The aggregate money claim of the employee or househelper does not exceed five thousand pesos
(P5,000.00).
In the absence of any of the three (3) requisites, the Labor Arbiters have exclusive original jurisdiction
over all claims arising from employer-employee relations, other than claims for employee's
compensation, social security, medicare and maternity benefits.
We hereby adopt the view taken by Mr. Justice Andres Narvasa in his Separate Opinion in the case of Briad
Agro Dev. Corp., as reconsidered, a portion of which reads: llcd
"In the resolution, therefore, of any question of jurisdiction over a money claim arising from employer-
employee relations, the first inquiry should be into whether the employment relation does indeed still
exist between the claimant and the respondent.
"If the relation no longer exists, and the claimant does not seek reinstatement, the case is cognizable by
the Labor Arbiter, not by the Regional Director. On the other hand, if the employment relation still
exists, or reinstatement is sought, the next inquiry should be into the amount involved.
If the amount involved does not exceed P5,000.00, the Regional Director undeniably has jurisdiction.
But even if the amount of the claim exceeds P5,000.00, the claim is not on that account necessarily
removed from the Regional Director's competence. In respect thereof, he may still exercise the
visitorial and enforcement powers vested in him by Article 128 of the Labor Code, as amended, supra;
that is to say, he may still direct his labor regulations officers or industrial safety engineers to inspect
the employer's premises and examine his records; and if the officers should find that there have been
violations of labor standards provisions, the Regional Director may, after due notice and hearing, order
compliance by the employer therewith and issue a writ of execution to the appropriate authority for the
enforcement thereof. However, this power may not, to repeat, be exercised by him where the employer
contests the labor regulation officers' findings and raises issues which cannot be resolved without
considering evidentiary matters not verifiable in the normal course of inspection. In such an event, the
case will have to be referred to the corresponding Labor Arbiter for adjudication, since it falls within
the latter's exclusive original jurisdiction."
SC: We hereby declare the assailed Wage Orders as constitutional, there being no provision of the 1973
Constitution (or even of both the Freedom Constitution and the 1987 Constitution) violated by said Wage
Orders, which Orders are without doubt for the benefit of labor.
not be deemed uncontested as to bring the case at bar within the competence of the Regional Director:
aggregate claims involve an amount in excess of P5,000.00, We find it more appropriate that the issue of
petitioner hospital's liability therefor, including the proposal of petitioner that the obligation of private
respondents to the former in the aggregate amount of P507,237.57 be used to offset its obligations to them,
be ventilated and resolved, not in a summary proceeding before the Regional Director under Article 128 of
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the Labor Code, as amended, but in accordance with the more formal and extensive proceeding before the
Labor Arbiter.
the power to order compliance with labor standards provisions may not be exercised where the employer
contends or questions the findings of the labor regulation officers and raises issues which cannot be
determined without taking into account evidentiary matters not verifiable in the normal course of inspection,
as in the case at bar.
RA 6715: N ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE
CONSTITUTIONAL RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE
BARGAINING AND PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE
AND HARMONY, PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF
SETTLING LABOR DISPUTES, AND REORGANIZE THE NATIONAL LABOR RELATIONS
COMMISSION, AMENDING FOR THESE PURPOSES CERTAIN PROVISIONS OF
PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR
CODE OF THE PHILIPPINES, APPROPRIATING FUNDS THEREFORE AND FOR OTHER
PURPOSES
Viewed in the light of RA 6715 and read in consonance with the case of Briad Agro Development Corp., as
reconsidered, We hold that the instant case falls under the exclusive original jurisdiction of the Labor
Arbiter. RA 6715 is in the nature of a curative statute. Curative statutes have long been considered valid in
our jurisdiction, as long as they do not affect vested rights. In this case, We do not see any vested right that
will be impaired by the application of RA 6715. Inasmuch as petitioner had already paid the claims of
private respondents in the amount of P163,047.50 pursuant to the decision rendered in the first complaint,
the only claim that should be deliberated upon by the Labor Arbiter should be limited to the second amount
given by the Regional Director in the second complaint together with the proposal to offset the obligations.
D.O No. 83-07, Series of 2007
Designation of DOLE Regional Directors and Asst. Regional
Directors as Ex-Officio Voluntary Arbitrators
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6. Grievance Machinery and Voluntary Arbitration
Title VII-A
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
Article. 260. Grievance machinery and voluntary arbitration. - The parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from
the interpretation or implementation of their Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar days
from the date of its submission shall automatically be referred to voluntary arbitration prescribed in the
Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of
qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrator or panel of
Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in the
Collective Bargaining Agreement, which shall act with the same force and effect as if the Arbitrator or
panel of Arbitrators has been selected by the parties as described above.
Article. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character, shall no longer be treated as
unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose
and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective
Bargaining Agreement.
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Article. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all otherlabor disputes including
unfair labor practices and bargaining deadlocks.
Article. 262-A. Procedures. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the
power to hold hearings, receive evidences and take whatever action is necessary to resolve the issue or
issues subject of the dispute, including efforts to effect a voluntary settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration proceedings. The attendance of any third
party or the exclusion of any witness from the proceedings shall be determined by the Voluntary Arbitrator
or panel of Voluntary Arbitrators. Hearing may be adjourned for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of
Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from the date of
submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of Voluntary Arbitrators shall contain the facts
and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of
the copy of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of Voluntary Arbitrators or
the Labor Arbiter in the region where the movant resides, in case of the absence or incapacity of the
Voluntary Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a writ of execution
requiring either the sheriff of the Commission or regular courts or any public official whom the parties
may designate in the submission agreement to execute the final decision, order or award.
Article. 262-B. Cost of voluntary arbitration and Voluntary Arbitrators fee. - The parties to a
Collective Bargaining Agreement shall provide therein a proportionate sharing scheme on the cost of
voluntary arbitration including the Voluntary Arbitrators fee. The fixing of fee of Voluntary
Arbitrators, whether shouldered wholly by the parties or subsidized by the Special Voluntary Arbitration
Fund, shall take into account the following factors:
(a) Nature of the case;
(b) Time consumed in hearing the case;
(c) Professional standing of the Voluntary Arbitrator;
(d) Capacity to pay of the parties; and
(e) Fees provided for in the Revised Rules of Court.
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a. Grievance Machinery Definition
What is a Grievance?
A grievance is defined by the collective bargaining agreement.
Generally speaking, a grievance is any difference or dispute between an employee or the union, and the employer
with respect to the interpretation, application, or of compliance with any terms and conditions of the contract.
morale and reduce efficiency. A good grievance procedure guarantees that individual gripes will be fully heard
and considered.
The law mandates no particular set-up for grievance machinery. Rather, Article 260 of the Labor Code, as
incorporated in RA 6715 provides for single grievance machinery in the workplace.
Reasons for Establishing Grievance Machinery

Other authors defined Grievance as any dissatisfaction, complaint, irritation, or misunderstanding (real or Generally, the grievance procedure:
imagined) of an employee arising from his job, or his relationship with his employer, any violation of the CBA or 1. Provides for peaceful resolution of disputes;
of the Labor Code that he thinks or feels he is wronged or treated unfairly (Sison 1991). 2. Provides a systematic way to resolve problems through fact finding
In the broadest sense, grievance includes all dissatisfaction that arise in an organization whether unionized or not. 3. Provides a method of interpreting the contract
If the term grievance is to be applied in the loose or generic sense, any dispute or controversy respecting terms and 4. Protects the integrity of the contractual agreement
conditions of employment which an employee or group of employees may present to the employer can be a
5. Improves the efficiency of the organization
grievance, even without a union or CBA. Under this interpretation, any complaint, question or problem that an
employee or group of employees may wish to take up or discuss with the employer respecting terms and 6. Can improve labor-management relations
conditions of employment for the purpose of resolving or satisfying the same, constitutes a grievance. The 7. Identifies problems in plant operations or the contract itself
expansion of original and exclusive jurisdiction of voluntary arbitrators to include questions arising from the
8. Keeps the lines of communication between the parties open during the life of the contract
interpretation and enforcement of company policies has the effect of widening the meaning and interpretation of
grievance to include a situation where there is no collective bargaining agent and no CBA. 9. It gives employees an opportunity to voice their concerns
10. Provides the individual union member with the ability to appeal a decision and ultimately allows the
member to resolve the problem through exhausting his/her rights under the grievance procedure, or possibly by
The Grievance Machinery
overturning the decision of management through arbitration
Article 260 of the Labor Code requires parties to establish a grievance machinery for the adjustment and
resolution of grievances arising from the interpretation or implementation of a collective bargaining agreement
or the interpretation or enforcement of company personnel policies. Typical Steps in the Grievance Process
Grievances submitted to the grievance machinery and not settled within seven calendar days shall automatically Essentially, the grievance process involves union and management addressing the grievance and attempting to
be referred to voluntary arbitration. reach an acceptable resolution. The specifics of the grievance process will be spelled out in the labor agreement.
The grievance procedure refers to the internal rules of procedures intended to resolve all issues arising from the Typically, the contract outlines the specific steps in grievance handling, specifying time limits for both sides. The
implementation and interpretation of the CBA. ramifications of not adhering to these time limits are usually identified as well, e.g., the grievance may be
considered waived or settled or may automatically move on to the next step.
Established by the parties in their CBA, this grievance procedure leads to voluntary arbitration as the final step. It
is part of the continuous process of collective bargaining, which intended to promote friendly dialogue between Step 1. Shop floor level. Presentation by the employee problems to the foreman or supervisor who would
labor and management as a means of maintaining industrial peace. listen to the employee and record the facts of the problem. The supervisor should settle the problem within
three (3) days. If the employee is not satisfied, proceed to step 2.
It is an orderly process established in the CBA whereby the employer, the employee and the union, present to each
other a complaint or dissatisfaction, in the hope of getting it settled quickly. Grievance machinery, which lays Step 2. Plant level. Discussion of the problem between the employee, the supervisor, and the department
down a formal process for settling complaints and stresses an employees right to air his gripes and expect redress, manager takes place. If no satisfactory solution within seven days, proceed to step 3.
is one of the chief tools of employee relations. It is designed to give employees every opportunity to be heard. Its
aim is to eliminate or reduce dissatisfaction, misunderstanding, or complaint, which can affect the employees

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Step 3. Top level. Discussion of the problem between the supervisors, the department manager, the
complainant, and top management (President or General Manager). If no satisfactory solution within ten
(10) days, proceed to step 4.
Step 4. Arbitrators level. The problem or case may be taken to voluntary arbitration for final decision.
Characteristics of Effective Grievance Machinery
1. The successive steps in the procedure, the method of presenting grievances or disputes, and the method of
taking an appeal from one step to another should be so clearly stated in the agreement as to be readily understood
by all employees, union officials and management representatives.
2. The procedure should be adaptable to the handling of various types of grievances and disputes, which
come under the terms of the agreement.
3. The procedure should be designed to facilitate the settlement of grievances and disputes as soon as possible
after the arise. To this end:
The agreement should provide adequate stated time limits for the presentation of grievances and disputes,
thus rendering of decisions, and the taking of appeals.
Issues should be clearly formulated at the earliest possible moment. In all cases, which cannot be settled in
the first informal discussions, the positions of both sides should be reduced to writing.
Management and union should encourage their representatives to settle at the lower steps grievances,
which do not involve broad questions or policy, or of contract interpretation and should delegate sufficient
authority to them to accomplish this end.
Provision should be made for priority handling of grievances involving discharge, suspension, or other
disciplinary action.
4. The procedure should be open to the submission of grievances by all parties to the agreement.
http://ncmb.ph/VAP/Overview/grievance_machinery.htm
b. Article 267 (formerly Art. 261) Jurisdiction of Voluntary Arbitrators
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The
Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of this article, gross violations of
Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with
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the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor
and Employment shall not entertain disputes, grievances or matters under the exclusive and
original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.
Jurisdiction of Voluntary Arbitrators
Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators (Art. 261-262, Labor Code)
Exclusive and original jurisdiction to hear and decide all grievances:
1.Arising from the implementation or interpretation of the collective bargaining agreements;
2.Arising from the interpretation or enforcement of company personnel policies;
3.Wage distortion issues arising from the application of any wage orders in organized
establishments (Par. 4, Art. 124, RA 6727);
Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by
any Regional Board results in distortions or wage structure within an establishment, the employer and the
union shall negotiate to correct the distortions. Any dispute arising from wage distortion 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.
4.Unresolved grievances arising from the interpretation and implementation of the productivity
incentive programs under RA 6971.
Sec. 9, RA 6971
Sec. 9. Disputes and Grievances Whenever disputes, grievances, or other matters arise from the
interpretation or implementation of the productivity incentive program, the labor-management committee
shall meet to resolve the dispute, and may seek the assistance of the National Conciliation and Mediation
Board of the Department of Labor and Employment for such purpose. Any dispute which remains
unresolved within twenty (20) days from the time of its submission to the labor-management committee shall
be submitted for voluntary arbitration in line with the pertinent provisions of the Labor Code as amended.
The Productivity incentives program shall include the name(s) if the voluntary arbitrator or panel of
voluntary arbitrators previously chosen and agreed upon by the labor-management committee.
Concurrent Jurisdiction
Any other labor dispute upon agreement of the party may be submitted to a voluntary arbitrator or panel of voluntary
arbitrators.
Before or at any stage of the compulsory arbitration process, the parties may opt to submit to their dispute to voluntary
arbitration.
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The NLRC and its Regional Branches as well as the Regional Directors of the DOLE are prohibited from entertaining
disputes, grievances or matters under the exclusive and original jurisdiction of the voluntary arbitrator or panel of Accordingly, the Grievance Committee convened on October 7, 2002 consisting of representatives from PLDT and
voluntary arbitrators. They shall immediately dispose and refer the same to the appropriate grievance machinery or GUTS. The Grievance Committee, however, failed to reach an agreement. In effect, it denied Octavios demand for
voluntary arbitration provided in the collective bargaining agreement.
Powers of the Voluntary Arbitrators or Panel of Voluntary Arbitrators (Sec. 4, Rule XI, Book V)
1.To hold hearings;
2.To receive evidence;
3.To take whatever action is necessary to resolve the issue/s subject of the dispute;
4.To conciliate or mediate to aid the parties in reaching a voluntary settlement of the dispute;
5.To issue a writ of execution to enforce final decisions, orders, resolutions or awards.
Carlos L. Octavio vs. PLDT Co., GR No. 175492, Feb. 27, 2013
FACTS:
On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga Superbisor (GUTS) entered into a CBA
covering the period January 1, 1999 to December 31, 2001 (CBA of 1999-2001). Article VI, Section I thereof
provides:
Section 1. The COMPANY agrees to grant the following across-the-board salary increase during the three years
covered by this Agreement to all employees covered by the bargaining unit as of the given dates:
Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is higher;
Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is higher;
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is higher.
On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a probationary status. He became a member of
GUTS. When Octavio was regularized on January 1, 2001, he was receiving a monthly basic salary of P10,000.00. On
February 1, 2002, he was promoted to the position of Sales System Analyst 2 and his salary was increased to
P13,730.00.
On May 31, 2002, PLDT and GUTS entered into another CBA covering the period January 1, 2002 to December 31,
2004 (CBA of 2002-2004) which provided for the following salary increases: 8% of basic wage or P2,000.00
whichever is higher for the first year (2002); 10% of basic wage or P2,700.00 whichever is higher for the second year
(2003); and, 10% of basic wage or P2,400.00 whichever is higher for the third year (2004).
Claiming that he was not given the salary increases of P2,500.00 effective January 1, 2001 and P2,000.00 effective
January 1, 2002, Octavio wrote the President of GUTS, Adolfo Fajardo (Fajardo). Acting thereon and on similar
grievances from other GUTS members, Fajardo wrote the PLDT Human Resource Head to inform management of the
GUTS members claim for entitlement to the across-the-board salary increases.
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salary increases. Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a Complaint for payment of said
salary increases. The Labor Arbiter dismissed the Complaint of Octavio and upheld the Committee Resolution.
Upon Octavios appeal, the NLRC, in its September 30, 2005 Resolution, affirmed the Labor Arbiters Decision.
Octavios Motion for Reconsideration was likewise dismissed by the NLRC in its November 21, 2005 Resolution.
Octavio thus filed a Petition for Certiorari which the CA found to be without merit. In its August 31, 2006 Decision,
the CA declared the Committee Resolution to be binding on Octavio, he being a member of GUTS, and because he
failed to question its validity and enforceability.
In his Motion for Reconsideration, Octavio disclaimed his alleged failure to question the Committee Resolution by
emphasizing that he filed a Complaint before the NLRC against PLDT. However, the CA denied Octavios Motion for
Reconsideration.
ISSUE: Whether Octavio properly raised the issues to the court despite remedies stated in the grievance machineries
in the CBA.
HELD: The Petition has no merit.
LABOR LAW
Under Article 260 of the Labor Code, grievances arising from the interpretation or implementation of the parties CBA
should be resolved in accordance with the grievance procedure embodied therein. It also provides that all unsettled
grievances shall be automatically referred for voluntary arbitration as prescribed in the CBA.
In its Memorandum, PLDT set forth the grievance machinery and procedure provided under Article X of the CBA of
2002-2004, viz:
Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management Grievance Committee composed of
three (3) Union representatives designated by the UNION Board of Directors and three (3) Management
representatives designated by the company President. The committee shall act upon any grievance properly processed
in accordance with the prescribed procedure. The Union representatives to the Committee shall not lose pay for
attending meetings where Management representatives are in attendance.
Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes between labor and management may be
settled through friendly negotiations; that the parties have the same interest in the continuity of work until all points in
dispute shall have been discussed and settled; that an open conflict in any form involves losses to the parties; and that
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therefore, every effort shall be exerted to avoid such an open conflict. In furtherance of these principles, the parties The premature invocation of the courts judicial intervention is fatal to ones cause of action. The underlying principle
agree to observe the following grievance procedures. of the rule on exhaustion of administrative remedies rests on the presumption that when the administrative body, or
grievance machinery, is afforded a chance to pass upon the matter, it will decide the same correctly.
Step 1. Any employee (or group of employees) who believes that he has a justifiable grievance shall present the matter
initially to his division head, or if the division is involved in the grievance, to the company official next higher to the
By failing to question the Committee Resolution through the proper procedure prescribed in the CBA, that is, by
division head (the local manager in the provincial exchanges) not later that fifteen (15) days after the occurrence of the
raising the same before a Board of Arbitrators, Octavio is deemed to have waived his right to question the same.
incident giving rise to the grievance. The initial presentation shall be made to the division head either by the aggrieved
party himself or by the Union Steward or by any Executive Officer of the Union who is not a member of the grievance
Clearly, he departed from the grievance procedure mandated in the CBA and denied the Board of Arbitrators the
panel. The initial presentation may be made orally or in writing.
opportunity to pass upon a matter over which it has jurisdiction. Hence, and as correctly held by the CA, Octavios
failure to assail the validity and enforceability of the Committee Resolution makes the same binding upon him. On this
Step 2. Any party who is not satisfied with the resolution of the grievance at Step 1 may appeal in writing to the score alone, Octavios recourse to the labor tribunals below, as well as to the CA, and, finally, to this Court, must
Union-Management Grievance Committee within seven (7) days from the date of receipt of the department heads therefore fail.
decision.
DENIED
Step 3. If the grievance is not settled either because of deadlock or the failure of the committee to decide the matter,
the grievance shall be transferred to a Board of Arbitrators for the final decision. The Board shall be composed of
three (3) arbitrators, one to be nominated by the selection of such Voluntary Arbitrator or panel of Voluntary
Arbitrators, preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the
parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary
Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the selection procedure agreed upon in
the Collective Bargaining Agreement, which shall act with the same force and effect as if the Arbitrator or panel of
Arbitrators has been selected by the parties as described above. The decision of the board shall be final and binding
both the company and the Union in accordance with law. Expenses of arbitration shall be divided equally between the
Company and the Union.

Indisputably, the present controversy involves the determination of an employees salary increases as provided in the
CBAs. When Octavios claim for salary increases was referred to the Union-Management Grievance Committee, the
clear intention of the parties was to resolve their differences on the proper interpretation and implementation of the
pertinent provisions of the CBAs. And in accordance with the procedure prescribed therein, the said committee made
up of representatives of both the union and the management convened. Unfortunately, it failed to reach an agreement.
Octavios recourse pursuant to the CBA was to elevate his grievance to the Board of Arbitrators for final decision.
Instead, nine months later, Octavio filed a Complaint before the NLRC.

It is settled that when parties have validly agreed on a procedure for resolving grievances and to submit a dispute to
voluntary arbitration then that procedure should be strictly observed. Moreover, we have held time and again that
before a party is allowed to seek the intervention of the court, it is a precondition that he should have availed of all the
means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be
resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within
his jurisdiction, then such remedy should be exhausted first before the courts judicial power can be sought.

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II. RECRUITMENT & PLACEMENT
1. Article 13 (b): Definition of Recruitment & Placement
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.
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. 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.
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.
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.
Art. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least seventy-
five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens
shall be permitted to participate in the recruitment and placement of workers, locally or overseas.
Art. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to have such
substantial capitalization as determined by the Secretary of Labor.
Art. 29. Non-transferability of license or authority. No license or authority shall be used directly or indirectly by
any person other than the one in whose favor it was issued or at any place other than that stated in the license or
authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address,
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appointment or designation of any agent or representative including the establishment of additional offices anywhere
shall be subject to the prior approval of the Department of Labor.
Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all
applicants for license or authority.
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.
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.
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.
THE FOLLOWING ARE AUTHORIZED TO RECRUIT AND PLACE WORKERS FOR LOCAL OR
OVERSEAS EMPLOYMENT
public employment offices
private recruitment entities
private employment agencies
shipping or manning agents or representatives
the POEA
construction contractors if authorized to operate by DOLE and the Construction Industry
Authority
members of the diplomatic corps although hirings done by them have to be processed through
POEA
other persons or entities as may be authorized by the DOLE secretary
2. Article 13 (b): When there is a presumption of Recruitment & Placement
People v. Panis, L-58674-77, July 11, 1986
[G.R. No. L-58674-77. July 11, 1986.]
PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. DOMINGO PANIS, Presiding
Judge of the Court of First Instance of Zambales & Olongapo City, Branch III and
SERAPIO ABUG, respondents.
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DOCTRINE
the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto
but merely to create a presumption. The presumption is that the individual or entity is engaged in
recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
FACTS:
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo
City alleging that Serapio Abug, private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there
wilfully, unlawfully and criminally operate a private fee-charging employment agency by charging fees and
expenses (from) and promising employment in Saudi Arabia" to four separate individuals named therein, in
violation of Article 16 in relation to Article 39 of the Labor Code
Abug filed a motion to quash on the ground that the informations did not charge an offense because he was
accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article
13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner
promised or offered any employment for a fee."
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court
PRIVATE RESPONDENT: is that to constitute recruitment and placement, all the acts mentioned in this
article should involve dealings with two or more persons as an indispensable requirement.
PETITIONER argues that the requirement of two or more persons is imposed only where the recruitment
and placement consists of an offer or promise of employment to such persons and always in consideration of
a fee. The other acts mentioned in the body of the article may involve even only one person and are not
necessarily for profit.
ISSUE:
How to interpret Article 13(b) of PD 442
HELD
Article 13(b) of P. D. 442, otherwise known as the Labor Code, reading as follows:
"(b) 'Recruitment and placement' refers to any act of canvassing, 'enlisting, contracting, transporting,
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."
the proviso was intended neither to impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to
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whom, in consideration of a fee, an offer or promise of employment is made in the course of the
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is involved.
The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise
or offer of employment to two or more prospective workers, the individual or entity dealing with them shall
be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that
presumption
The trouble with presidential decrees is that they could be, and sometimes were, issued without previous
public discussion or consultation, the promulgator heeding only his own counsel or those of his close
advisers in their lofty pinnacle of power
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
3. Illegal Recruitment
a. Definition of Illegal Recruitment under Labor Code
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.
b.Illegal recruitment when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage and shall be penalized in accordance with Article 39
hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.
c.The Secretary of Labor and Employment or his duly authorized representatives shall have the
power to cause the arrest and detention of such non-licensee or non-holder of authority if after
investigation it is determined that his activities constitute a danger to national security and public
order or will lead to further exploitation of job-seekers. The Secretary shall order the search of
the office or premises and seizure of documents, paraphernalia, properties and other implements
used in illegal recruitment activities and the closure of companies, establishments and entities
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found to be engaged in the recruitment of workers for overseas employment, without having
been licensed or authorized to do so.
b. Definition of Illegal Recruitment under the Migrant Workers Act (R.A.
No. 8042)
II. ILLEGAL RECRUITMENT
Sec. 6. DEFINITIONS. - For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes
referring, contact services, promising or advertising for employment abroad, whether for profit
or not, when undertaken by a non-license or non-holder of authority contemplated under Article
13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines. Provided, that such non-license or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed so engaged. It
shall likewise include the following acts, whether committed by any persons, whether a non-
licensee, non-holder, licensee or holder of authority.
(a) To charge or accept directly or indirectly any amount greater than the specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a
worker pay any amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment
or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his employment in order to
offer him another unless the transfer is designed to liberate a worker from oppressive terms and
conditions of employment;
(e) To influence or attempt to influence any persons or entity not to employ any worker who has
not applied for employment through his agency;
(f) To engage in the recruitment of placement of workers in jobs harmful to public health or
morality or to dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or
by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies, remittances of
foreign exchange earnings, separations from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;
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(i) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof by
the parties up to and including the period of the expiration of the same without the approval of
the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an officer or member
of the Board of any corporation engaged in travel agency or to be engaged directly on indirectly
in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before departure for monetary
or financial considerations other than those authorized under the Labor Code and its
implementing rules and regulations;
(l) Failure to actually deploy without valid reasons as determined by the Department of Labor
and Employment; and
(m) Failure to reimburse expenses incurred by the workers in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker's fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered as offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate carried out by a 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.
2 KINDS OF ILLEGAL RECRUITER
1. Non-licensee or nonholder of authority not having been issued a license or authority to
recruit, commits illegal recruitment when it performs any of the acts defined in the law as
recruitment and placement such as canvassing, enlisting, contracting workers; or any of the 14
acts enumerated in Sec 6 of RA 8042
2. Licensed recruiter possesses a license or authority to recruit. It may be charged with
illegal recruitment only when it commits any of the 13 wrongful acts enumerated in Sect 6
ESSENTIAL ELEMENT: presupposes deceit or misrepresentation
Constitutionality Lazo v. Salac, G.R. No. 152642, November 13, 2012
Facts:
Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other
purposes, sets the Governments policies on overseas employment and establishes a higher standard of
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protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress.
Sections 29 and 30 of the Act commanded the Department of Labor and Employment (DOLE) to begin
deregulating within one year of its passage the business of handling the recruitment and migration of overseas
Filipino workers and phase out within five years the regulatory functions of the Philippine Overseas
Employment Administration (POEA). PGMA signed into law RA9422, which expressly repealed Sec. 29 and 30
of RA8042. Hence, Salac, et. al cases were dismissed for being moot and academic.
In another case, the Court found Jasmins death not work-related or work-connected since her rape and death did
not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted
the award of actual damages but ruled that Becmens corporate directors and officers are solidarily liable with
their company for its failure to investigate the true nature of her death. The corporate directors and officers of
Becmen filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the
second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and
solidarily liable with their company for money claims filed by OFWs against their employers and the
recruitment firms. Court allowed the intervention and admitted the MR.
Issue:
Constitutionality of Sections 6, 7, 9, and 10(par.2, last sentence) of R.A. 8042.
Ruling:
1) Section 6 is clear. The RTC declared Section 6 unconstitutional after hearing on the ground that its definition
of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed recruiters. But
Section 6 is clear and unambiguous. By its terms, persons who engage in "canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers" without the appropriate government license or authority are
guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate
government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts
enumerated in Section 6.
2) Section 7 is clear. RTC also declared Section 7 unconstitutional on the ground that its sweeping application of
the penalties failed to make any distinction as to the seriousness of the act committed for the application of the
penalty imposed on such violation. But, in fixing uniform penalties for each of the enumerated acts under
Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible,
consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is
not within the power of the Court to question the wisdom of this kind of choice.
3) Section 9 is clear. RTC also invalidated Section 9 of R.A. 8042 on the ground of improper venue. But there is
nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A.
8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule
110 of the latter Rules allows exceptions provided by laws.
4) Section 10 is clear. RTC held as unconstitutional the last sentence of the 2nd paragraph of Section 10 of R.A.
8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company
had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their
right to due process of law. But the Court has already held, pending adjudication of this case, that the liability
of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their
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company, there must be a finding that they were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities. 19 In the case of Becmen and White Falcon,20 while there
is evidence that these companies were at fault in not investigating the cause of Jasmins death, there is no
mention of any evidence in the case against them that intervenors Gumabay, et al., Becmens corporate officers
and directors, were personally involved in their companys particular actions or omissions in Jasmins case.
c. Article 13: License v. Authority
LICENSE AUTHORITY
means a document issued by the Department of means a document issued by the Department of
Labor authorizing a person or entity to operate Labor authorizing a person or association to
a private employment agency. engage in recruitment and placement activities
as a private recruitment entity.
d. Article 34: Prohibited Acts
Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder
of authority:
a.To charge or accept, directly or indirectly, any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any
amount greater than that actually received by him as a loan or advance;
b.To furnish or publish any false notice or information or document in relation to recruitment or
employment;
c.To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code.
d.To induce or attempt to induce a worker already employed to quit his employment in order to
offer him to another unless the transfer is designed to liberate the worker from oppressive terms
and conditions of employment;
e.To influence or to attempt to influence any person or entity not to employ any worker who has
not applied for employment through his agency;
f.To engage in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;
g.To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly
authorized representatives;
h.To fail to file reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor.
i.To substitute or alter employment contracts approved and verified by the Department of Labor
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from the time of actual signing thereof by the parties up to and including the periods of
expiration of the same without the approval of the Secretary of Labor;
j.To become an officer or member of the Board of any corporation engaged in travel agency or to
be engaged directly or indirectly in the management of a travel agency; and
k.To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under this Code and its implementing rules
and regulations.
e. Additional grounds (prohibited acts) added by Migrant Workers act,
apart from Art. 34
(1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent
(8%) per annum, which will be used for payment of legal and allowable placement fees
and make the migrant worker issue, either personally or through a guarantor or
accommodation party, postdated checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to avail of a loan only from specifically designated institutions, entities or
persons;
(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker
after the latter's employment contract has been prematurely terminated through no fault of
his or her own;
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to undergo health examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case of a seafarer whose medical
examination cost is shouldered by the principal/shipowner;
(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to undergo training, seminar, instruction or schooling of any kind only from
specifically designated institutions, entities or persons, except for recommendatory
trainings mandated by principals/shipowners where the latter shoulder the cost of such
trainings;
(6) For a suspended recruitment/manning agency to engage in any kind of recruitment
activity including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the
overseas Filipino worker or deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges, as provided under the
compulsory worker's insurance coverage
PERSONS LIABLE FOR ILLEGAL RECRUITMENT
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Principals accomplices and accessories
For Juridical person officers having control, management or direction of their
business who are responsible for the commission of the offense and the responsible
employees/agents shall be liable
EMPLOYEE WHEN LIABLE
Employee may be held liable as principal if it shown that, together with his
employer, he actively and consciously participated in illegal recruitment
FOREIGN EMPLOYER in case of final and executory judgment automatically
disqualified without further proceedings from participating in the POEA and from
recruiting and hiring Filipino workers until and unless it fully satisfied the judgment
award
POEA has no power to issue search or arrest warants : Salazar vs Achacoso
A person who has committed any act that constitutes IR may be arrested after the
issuance by a judge of a WOA
f. Illegal recruitment as economic sabotage
IR shall be considered an offense involving economic sabotage if any of the
QUALIFYING CIRCUMSTANCES exists:
Committed by a syndicate
Committed in large scale
Large scale and in by a syndicate are separate or separate categories They need not
coincide in the same case
People vs. F. Hernandez - Where only one complainant filed individual complaints, there is
no illegal recruitment in large scale, but the three conspiring recruited can be held guilty of
illegal recruitment by a syndicate
People vs. Tan Tiong Meng The accused appellants act of accepting placement fees from
job applicants and representing to said applicants that he could get them jobs in Taiwan
constitute recruitment and placement under the LC. The offense committed against 6
complainants in this case is illegal recruitment in large scale punishable under Art 39 (a) of the
LC with life imprisonment and 1k fine
Hon. Patricia St. Tomas vs. Salac - Where the illegal recruitment is proved, but the elements
of large scale or syndicate are absent, the accused can only be convicted of simple IR
g. Differences: Simple Illegal recruitment, illegal recruitment in large scale,
illegal recruitment by a syndicate
SIMPLE IR Where the illegal recruitment is proved, but the elements of large scale
or syndicate are absent, the accused can only be convicted of simple
IR
LARGE SCALE Carried out AGAINST THREE OR MORE PERSONS,
IR individually or as a group
SYNDICATE IR Carried out BY A GROUP OF THREE OR MORE
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PERSONS conspiring or confederating with one another
h. Illegal Recruitment v. Estafa
IR is a crime separate and distinct from estafa
illegal recruitment is a MALUM PROHIBITUM where criminal intent is not necessary for
conviction, while estafa is MALUM IN SE where criminal intent of the accused is necessary
for conviction
A worker who suffers pecuniary damage, regardless of amount, as a result of previous or
simultaneous false pretense resorted to by nonlicensee or or nonholder of authority may
complain of estafa under Art 315 aside from IR
The court said that a person convicted of IR under LC can be convicted for violation of
Estafa in RPC provided that the elements of the crime are present. The elements are:
1. That the accused defrauded another by abuse of confidence or by means of deceit
2. That the damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person
Estafa under Art 315, par 2 of the RPC is committed by any person who defrauds another by
using a fictitious name, or falsely pretends to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions or by means of similar deceits
executed prior to or simultaneously with the commission of the fraud. The offended party must
have relied on the false pretense, fraudulent act or fraudulent means of the accused-appellant and as a
result thereof, the offended party suffers damages
i. Liabilities of the local employment agency and the employer
Principals accomplices and accessories
For Juridical person officers having control, management or direction of their business who are
responsivle for the commission of the offense and the responsible employees/agents shall be liable
In case of a final and executory judgment against a foreign employer/principal ! it shall be
automatically disqualified without further proceedings, from participating in the POEA and from
recruiting and hiring Filipino workers until and unless it fully satisfied the judgment award
j. Theory of Imputed Knowledge
Sunace International vs. NLRC G.R. No. 161757, January 25, 2006
Facts:
Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and existing
under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic FACTS
helper under a 12-month contract. The deployment was with the assistance of a Taiwanese broker, Edmund Petitioner Antonio Serrano, a Filipino seafarer, was hired by Gallant Maritime Services, Inc. and
Wang, President of Jet Crown International Co., Ltd. After the expiration of her contract, Divina continued Marlow Navigation Co., Ltd. (respondents) under a POEA-approved Contract of Employment with
working for her Taiwanese employer, Hang Rui Xiong, for two more years.
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Divina filed a complaint before NLRC against Sunace, Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three months and that she was underpaid. She
claims that under her original contract, and the extended contract, is within the knowledge and consent of
Sunace, and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999
were not.
Sunace alleged that the 2-year extension was without its knowledge and consent, and hence, had no liability
to any claim arising therefrom.
LA, NLRC & CA: Sunace had knowledge and consent since Sunace and Edmund Wang have not stopped
communicating with each other.
Issue: W/N Sunace had knowledge of the extended contract, and thus, shall be held liable.
Ruling:
No, the theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be
imputed to its agent Sunace. The message does not provide evidence that Sunace was privy to the new
contract executed after the expiration of the original contract. There being no substantial proof that Sunace
knew of and consented to be bound under the 2-year employment contract extension, it cannot be said to be
privy thereto. As such, it and its owner cannot be held solidarily liable for any of Divinas claims arising
from the 2-year employment extension.
k. Rule on the pre-termination of contract of a migrant worker
Serrano v. Gallant, G.R. No. 167614, March 24, 2009
ANTONIO M. SERRANO, Petitioner, vs. Gallant MARITIME SERVICES, INC. and MARLOW
NAVIGATION CO., INC., Respondents. [G.R. No. 167614 March 24, 2009]
AUSTRIA-MARTINEZ, J.:
DOCTRINE: the clause or for three months for every year of the unexpired term, whichever is less
provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the
rights of OFWs to equal protection of the laws. The subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
Moreover, the subject clause does not state or imply any definitive governmental purpose; hence, the same
violates not just petitioners right to equal protection, but also his right to substantive due process under
Section 1, Article III of the Constitution.
the following terms and conditions:
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LABOR REVIEW (Atty. Peter-Joey Usita)
o Duration of Contract 12 mos
o Position Chief Officer
o Basic Monthly Salary - US$1,400
o Hours of work 48hrs/wk
o OT - US$700/month
o Vaca Leave w/ Pay 7 days/month
On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000.00,
upon the assurance and representation of respondents that he would be made Chief Officer by the end
of April 1998.
Because respondents did not deliver on their promise to make petitioner Chief Officer, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.
Petitioner's employment contract was for a period of 12 months (March 19, 1998 up to March 19,
1999), but at the time of his repatriation on May 26, 1998, he had served only 2 months and 7 days
of his contract, leaving an unexpired portion of 9months and 23 days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for CONSTRUCTIVE
DISMISSAL and for payment of his money claims in the total amount of US$26,442.73,
LA
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and
awarding him monetary benefits,
ordered the respondents to pay Serrano, jointly and severally, in Phil. Currency, based on the rate of
exchange prevailing at the time of payment;
o salary for 3 months of the unexpired portion of the aforesaid contract of employment. =
US $8,770
o Serranos claim for a salary differential = US$ 45.00
***In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on CA
the salary period of 3 months only -- rather than the entire unexpired portion of nine months and
23 days of petitioner's employment contract - applying the subject clause. However, the LA
applied the salary rate of US$2,590.00, consisting of petitioner's "basic salary,
US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation
leave pay = US$2,590.00/compensation per month."***
ISSUES
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1. Respondents appealed to the NLRC to question the finding of the LA that petitioner was illegally
dismissed.
2. Petitioner also appealed to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. NLRC that in case of illegal dismissal,
OFWs are entitled to their salaries for the unexpired portion of their contracts.
NLRC
- In a Decision dated June 15, 2000, the NLRC modified the LA Decision
- Respondents ordered to pay complainant, jointly and severally, in Philippine currency, at the
prevailing rate of exchange at the time of payment the following: (TOTAL: US$4,669.50)
o 3 months salary ($1,400 x 3) = US$4,200.00
o Salary Differential (US$4,245) = 45.00
o 10% Attys Fees = 424.50
***The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay."***
(4) Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause
Last clause in the Par. 5 of Section 10, R.A. NO. 8042 (MIGRANT WORKERS & OVERSEAS
FILIPINOS ACT OF 1995), to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract OR FOR THREE (3) MONTHS
FOR EVERY YEAR OF THE UNEXPIRED TERM, WHICHEVER IS LESS.
(5) NLRC denied the motion.
(6) Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge
against the subject clause.
(7) CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the
CA skirted the constitutional issue raised by petitioner.
(8) His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to
the SC by way of Petition for Review under Rule 45.
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1. WON the subject clause violate Section 10, Article III of the Constitution on non-impairment of RESPONDENTS CONTENTION: that the constitutional issue should not be entertained, for this was
contracts? belatedly interposed by petitioner in his appeal before the CA, and not at the earliest opportunity, which
40
2. Is petitioner Serrano is entitled to his monetary claim which is the lump-sum salary for the entire was when he filed an appeal before the NLRC.
unexpired portion of his 12-month employment contract, and not just for a period of 3 months ARGUMENTS OF THE SOLICITOR GENERAL:
3. Should petitioners OT and leave pay form part of the salary basis in the computation of his (3) OSG points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not
monetary award, because these are fixed benefits that have been stipulated into his contract. have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having
preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms
PETITIONERS ARGUMENT:
of petitioner's employment, especially on the matter of money claims, as this was not
that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to stipulated upon by the parties.
negotiate for and stipulate in their overseas employment contracts a determinate employment
(4) Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
period and a fixed salary package. It also impinges on the equal protection clause, for it treats
their employment, such that their rights to monetary benefits must necessarily be treated
OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of
differently. The OSG enumerates the essential elements that distinguish OFWs from local
lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to
workers:
the same monetary award for local workers when their dismissal is declared illegal; that the
disparate treatment is not reasonable as there is no substantial distinction between the two a. while local workers perform their jobs within Philippine territory, OFWs perform
groups; and that it defeats Section 18, Article II of the Constitution which guarantees the their jobs for foreign employers, over whom it is difficult for our courts to acquire
protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas. jurisdiction, or against whom it is almost impossible to enforce judgment; and
petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is b. as held in Coyoca v. NLRC and Millares v. NLRC, OFWs are contractual
entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire employees who can never acquire regular employment status, unlike local
nine months and 23 days left of his employment contract, computed at the monthly rate of workers who are or can become regular employees.
US$2,590.00 (7) Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no available to OFWs; that these peculiarities make for a reasonable and valid basis for the
other purpose but to benefit local placement agencies. differentiated treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection clause nor
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause Section 18, Article II of the Constitution.
sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better
off than local employers because in cases involving the illegal dismissal of employees, foreign (8) Lastly, the OSG defends the rationale behind the subject clause as a police power measure
employers are liable for salaries covering a maximum of only three months of the unexpired adopted to mitigate the solidary liability of placement agencies for this "redounds to the
employment contract while local employers are liable for the full lump-sum salaries of their benefit of the migrant workers whose welfare the government seeks to promote. The survival
employees. As petitioner puts it: of legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions."
In terms of practical application, the local employers are not limited to the amount of backwages they
have to give their employees they have illegally dismissed, following well-entrenched and HELD
unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to 1. NO, THE SUBJECT CLAUSE DOES NOT VIOLATE SECTION 10, ARTICLE III OF THE
giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries CONSTITUTION ON NON-IMPAIRMENT OF CONTRACTS.
notwithstanding the unexpired term of the contract that can be more than three (3) months.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term
Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of of his employment and the fixed salary package he will receive is not tenable.
the salaries and other emoluments he is entitled to under his fixed-period employment contract.
Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall
be passed.

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The prohibition is aligned with the general principle that laws newly enacted have only a prospective the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out
operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, one classification of OFWs and burdens it with a peculiar disadvantage.
their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under The Court likewise added that the clause violates the petitioner-seafarers right to substantive due process
Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate for it deprives him of property, consisting of monetary benefits without any existing valid governmental
from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the purpose. With the above ruling, the Supreme Court has reverted to the old, simple, and logical manner by
parties thereto. which claims of illegally dismissed OFWs are computed, (i.e., their basic salaries multiplied by the entire
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the unexpired portions of their contracts, and accordingly disregarded any distinction relating to the OFWs
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. contract periods or the unexpired portions thereof.)
No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when 3. PETITIONERS OT AND LEAVE PAY DOES NOT FORM PART OF THE SALARY BASIS IN
the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the THE COMPUTATION OF HIS MONETARY AWARD.
provisions of R.A. No. 8042.
Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation
But even if the Court were to disregard the timeline, the subject clause may not be declared of his monetary award, because these are fixed benefits that have been stipulated into his contract.
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a business, profession or calling, particularly the Petitioner is mistaken.
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner,
well-being of OFWs wherever they may be employed. Police power legislations adopted by the State to DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in
promote the health, morals, peace, education, good order, safety, and general welfare of the people are which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas
generally applicable not only to future contracts but even to those already in existence, for all private overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday
contracts must yield to the superior and legitimate measures taken by the State to promote public welfare. pay is compensation for any work "performed" on designated rest days and holidays.
2. THE SUBJECT CLAUSE BEING UNCONSTITUTIONAL, PETITIONER IS ENTITLED TO HIS By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay
SALARIES FOR THE ENTIRE UNEXPIRED PERIOD OF NINE MONTHS AND 23 DAYS OF HIS in the computation of petitioner's monetary award, unless there is evidence that he performed work during
EMPLOYMENT CONTRACT, PURSUANT TO LAW AND JURISPRUDENCE PRIOR TO THE those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,
ENACTMENT OF R.A. NO. 8042.|||
However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in
Petitioner is awarded his salaries for the entire unexpired portion of his employment contract consisting of Cagampan v. National Labor Relations Commission, to wit:
9 months and 23 days at the rate of US$1,400 per month. The subject clause or for three months for
every year of the unexpired term, whichever is less provided in the 5th paragraph of Section 10 of R.A. The rendition of overtime work and the submission of sufficient proof that said was actually performed are
No. 8042 is unconstitutional for being violative of the rights of OFWs to equal protection of the laws. conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on
the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to
OFWs vis--vis Local Workers With Fixed-Period Employment overtime pay but the entitlement to such benefit must first be established.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted
discharged were treated alike in terms of the computation of their money claims: they were uniformly since the same is given during the actual service of the seamen.
entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of
R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year
unexpired portion of one year or more in their employment contract have since been differently treated in of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042
that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005
workers with fixed-term employment. Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his
salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days
The Court concludes that the subject clause contains a suspect classification in that, in the computation computed at the rate of US$1,400.00 per month. No costs.
of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap
on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on Yap v. Thenamaris, G.R. No. 179532, May 30, 2011

56 DIATO2013400036
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Facts:
Claudio S. Yap was employed as electrician of the vessel M/T SEASCOUT for a year. However, before the
expiration of the contract, the vessel was sold, and will be scrapped. Yap received his seniority bonus,
vacation bonus, extra bonus along with the scrapping bonus.
However, with respect to the payment of his wage, he refused to accept the payment of one-month basic
wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was
illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made.
Respondent claims that there was no illegal dismissal.
LA, NLRC & CA: in favour of Yap. There was illegal dismissal.
Issue:
W/N Sec. 10 of RA8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit
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 constitutional (Note: at this point, the court declared the
unconstitutionality of the clause or for three months for every year of the unexpired term, whichever is
less provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime
Services, Inc.[21] on March 24, 2009).
Respondents claim: Pursuant to the Civil Code, there should be no retroactive application of the law in this
case. Moreover, respondents asseverate that petitioners tanker allowance of US$130.00 should not be
included in the computation of the award as petitioners basic salary, as provided under his contract, was only
US$1,300.00. Respondents submit that the CA erred in its computation since it included the said tanker
allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to
US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance should
be excluded from the definition of the term salary. Also, respondents manifest that the full sum
of P878,914.47 in Intermares bank account was garnished and subsequently withdrawn and deposited with
the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case was
pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as his
award, together with the sum of P86,744.44 to petitioners former lawyer as attorneys fees, and the amount
of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be denied and
that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.
Petitioners claim: the tanker allowance should not have been included in the computation of the award, as
this was not raised by respondent before the LA, NLRC and CA, nor in any of their pleadings.
Ruling:
It was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by
respondents. Petitioner was correct that we cannot subscribe to respondents postulation that the tanker
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allowance of US$130.00 should not be included in the computation of the lump-sum salary to be awarded to
petitioner. First. It is only at this late stage, more particularly in their Memorandum, that respondents are
raising this issue. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first
time on appeal, pass upon this question. Second. Respondents invocation of Serrano is unavailing. Indeed,
we made the following pronouncements in Serrano, to wit:
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work performed in
excess of the regular eight hours, and holiday pay is compensation for any work performed on
designated rest days and holidays. [32]
A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a
bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of
petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioners
basic salary, pursuant to the contract, was US$1,300.00 + US$130.00 tanker allowance.[33] If respondents
intended it differently, the contract per se should have indicated that said allowance does not form part of
the basic salary or, simply, the contract should have separated it from the basic salary clause.
4. Regulation and Enforcement
a. Article 35: Suspension or cancellation of license or authority
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.
b. Penalties of Illegal Recruitment under R.A. No. 8042
SEC. 7. PENALTIES -
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not
less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less
than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
Provided, however, that the maximum penalty shall be imposed if the person illegally recruited
is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.
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(c) Any person found guilty of any of the prohibited acts shall suffer the penalty of imprisonment
of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine
of not less than Five hundred thousand pesos (P500,000.00) nor more than One million
pesos (P1,000,000.00).
If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be
deported without further proceedings
In every case, conviction shall cause and carry the automatic revocation of the license or
registration of the recruitment/manning agency, lending institutions, training school or medical
clinic.
c. Rule on remittance of foreign exchange earnings
Art. 22. Mandatory remittance of foreign exchange earnings. It shall be mandatory for all
Filipino workers abroad to remit a portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries in the country in accordance with rules and
regulations prescribed by the Secretary of Labor.
5. Article 18: Direct Hiring, and Rules & Regulations Governing Overseas
Employment: Exceptions
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.
Rationale for the Law
- Art. 18 is intended to enable the monitoring of overseas contract workers and
- to ensure that Filipino overseas workers are afforded fair and equitable recruitment and employment
practices thereby assuring the best terms and conditions of employment and facilitating the enforcement of
employment contracts.
2. Exception to the Ban on Direct-Hiring
- prohibition against direct hiring of overseas workers does not apply to workers hired by:
a. members of the diplomatic corps;
b. international organizations; and
c. other employers who may be allowed by the Secretary of Labor and Employment to directly hire
their workers.
ci. Name Hire : A name hire is a worker who is able to secure an overseas employment on his own
without the assistance or participation of any agency.
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4. Registration of Name Hires
- Name hires should register with the POEA by submitting the following documents:
a. Employment contract
b. Valid passport
c. Employment visa or work permit, or equivalent document
d. Certificate of medical fitness
e. Certificate of attendance to the required employment orientation/ briefing.
III. LABOR STANDARDS
1. Hours of Work
a. Article 82: Who are covered and excluded from the provision
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 certaint
EXCLUDED EMPLOYEES
Art 82 to 96 applies to all employees in all establishment except the following:
1. Government employees
2. Managerial employees, including officers or members of the managerial staff
3. Field personnel
4. Employers family members who depend upon his for support
5. Domestic helpers
6. Persons in the personal service of others
7. Workers who are paid by results as determined under DOLE regulations
i. Health Workers
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For public health workers, a specific provision of special law provides for an on call
pay (Sect. 15, RA 7305)
o On call pay equivalent to 50% of his/her regular wage
o On call status refers to a condition when the public health workers are called
upon to respond to urgent or immediate need for health/medical assistance or relief
working during emergencies such that he cannot devote his time for his own use
Health personnel in government service are excluded from coverage of Art 82 to 96
Their work hours, night shift differential pay and other employment benefits are specified
under RA 7305 (March 26, 1992)
Health personnel covered by 48 hour week resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, and all other hospital or clinic personnel, medical secretaries
The practice of making resident physicians work 24 hours a day = violates Art 83
x permissible even if they are given additional compensation
ii. Compressed Work Week DOLE ADVISORY NO 02-04
GR: Overtime compensation cannot be waived
E: Compressed Work Week arrangement
COMPRESSED WORK WEEK - Under this scheme, the number of work days is reduced but
the number of work hours in a day is increased to more than 8 hours, but no OT pay may be
claimed
Alternative arrangement whereby the normal workweek is reduced to less than 6 days but the total
number of work hours per week shall remain at 48 hours
DOLE ADVISORY NO. 02, series 2004 - Taking into account the emergency of new technology
and the continuing restructuring and modernization of the work process, encourages voluntary
adoption of compressed workweek schemes
VALID ONLY IF THE CONDITIONS STATED IN THE ADVISORY ARE OBSERVED,
OTHERWISE, OT PAYMENT MAY STILL BE CLAIMED
1. The scheme is expressly and voluntarily supported by majority of the
employees affected
2. In firms using substances or operating in conditions that are hazardous to
health, a certification is needed from an accredited safety organization or the firms
safety committee that work beyond 8 hours is within the limits or levels of exposure set
by DOLEs occupational safety and health standards
2. DOLE regional office is duly notified
EFFECTS
If adopted according to the preceding conditions, the CWW agreement produces the
following effects:
1. Unless there is a more favorable practice existing in the firm, work beyond 8 hours
will not be compensable by OT premium, provided that the total no. of hours worked
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per day will not exceed 12 hours. In any case, any work performed beyond 12 hours a
day or 48 hours a week shall be subject to OT premium
2. Consistent with Art 85 of the LC, employees under the CWW scheme are entitled to
meal period of not less than 60 minutes. The right of employees to rest day as well as
holiday pay, rest day or payday leaves in accordance with the law or applicable CBA or
company practice shall not be impaired
3. Adoption of the CWW scheme shall in no case result in diminution of existing
benefits. Reversion to normal eight hour work day shall not constitute diminution of
benefits. The reversion shall be considered a legitimate exercise of management
prerogatives, provided that the employer shall give the employees prior notice of such
reversion within a reasonable period of time
DOLE shall recognize only those CWW schemes that have been entered into consistent with the advisory
b. Article 83: Normal hours of work & exceptions
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.
The normal hours of work of any employee shall not exceed eight (8) hours a day.
HOW WORK DAY IS COUNTED
8 hour labor law understood to be the 24 hour period which commences from
the time the employee regularly starts to work
It is not the same as calendar day from 12 MN to 12 MN, unless the
employee starts working at 12MN
If an employee works from 8 am to 4 pm
o 8 am to 8 am the following day = work day
o 8 to 4 pm = regular working hours
o Any work in excess of 8 hours within the 24 hour period = overtime
work regardless of whether work covers 2 calendar days
o Any work in excess of 8 hours not falling within the 24 hour period = X
considered overtime work
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PART TIME WORK is not prohibited to have less than 8 hours work a day/
WORK HOURS OF HEALTH PERSONNEL
Health personnel covered by 48 hour week resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians paramedical
technicians, psychologists, midwives, and all other hospital or clinic personnel, medical
secretaries
he practice of making resident physicians work 24 hours a day = violates Art 83
x permissible even if they are given additional compensation
E: X apply 48 hour work week if there is a training agreement between the resident
physician and the hospital and the training program is duly accredited or approved
by the appropriate government agency ! no E to E relationship on account of the
approved training program
An act prescribing 48 hours a week of labor for government and private hospitals or
clinic personnel repealed with the passage of the LABOR CODE
c. Article 84: Hours Worked
Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is
required to be on duty or to be at a prescribed workplace; and (b) all time during which an
employee is suffered or permitted to work.
Rest periods of short duration during working hours shall be counted as hours worked.
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.
IRR states guiding principles to determine compensable or non-compensable hours
Sec. 4 Principles in Determining Hours Worked the following general principals shall
govern in determining whether the time spent by an employee is considered hours
worked for purpose of this Rule:
(a) All hours are hours worked which the employee is required to give his
employer, regardless of whether or not such hours are spent in productive labor or
involve physical or mental exertion
(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 workplace, to go elsewhere, whether within or
outside the premises of his workplace
(c) If the work performed was necessary, or it benefitted the employer, or the
employee could not abandon his work at the end of his normal working hours
because he had no replacement, at 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
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(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
PRELIMINARY ACTIVITIES those done before work and after actual work
deemed to be performed during working hours where such activities are controlled or
required by the employer and are pursued necessarily and primarily for the employers
benefit.
WORKING WHILE SLEEPING
Sleeping time may be considered working time ! if it is subject to serious
interruptions or takes place under conditions substantially less desirable than would
be likely to exist in the employees home
Sleeping time is not regarded as working time ! if there is an opportunity for
comparatively uninterrupted sleep under fairly desirable conditions, even though
the employee is required to remain on or near the employers premises and must
hold himself in readiness for a call to action employment
this is dependent on the agreement between the parties
ON CALL
When the work is not continuous, the time when the laborer can leave his work
and rest completely shall = not be counted in the computation
However, if they are required to be in their place of work before or after regular
working hours and within the call of their employers ! the time they stay in the
place of work should not be discounted from their working hours
Example: Truck drivers who are required by the company to be at the place of work
before or after working hours does not do anything at work but could not leave
because he may at any time be called to work ! X prejudice time he spent not
actually working
WITH CELLULAR PHONE OR OTHER CONTACT DEVICE If employee is kept
within reach thru a cellphone or other contact device = X considered to be in work status
TRAVEL TIME
Time spent walking, riding, travelling to or from place of work = X constitute work
time
Depends upon the kind of travel involved
1. Travel from home to work
Engaged in the ordinary home-to work travel which is normal incident
of employment
Exception: When an employee receives an emergency call outside of his
regular working hours and is required to travel to his place of business or
some other work site = working time
2. Travel that is all in the days work
Travel as part of his principal activity, such as travel from jobsite to
jobsite during the workday = counted as hours worked
Travel to a place to receive meeting report = counted as hours worked
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3. Travel away from home
Travel that keeps an employee away from home overnight is travel
away from home = work time
If the employees regular working day is Monday to Friday from 9-5
Travel time during these work hours on Saturdays and Sundays is
worktime
Regular meal period is not counted
X considered as work time those spent in travel away from home
OUTSIDE of regular working hours as a passenger on an airplane, train,
boat or automobile
Any work which an employee is required to perform while traveling is
counted as hours worked (except bona fide meal periods or permitted to
sleep)
Time spent by an employee in travelling to a place outside Metro
manila to do installation jobs is considered worktime when the travel
time cuts across or coincides with his regular work hours ! hence he
should be paid his regular salary for said time
LECTURES, MEETINGS AND TRAINING PROGRAMS
Attendance at lectures, meetings and training programs, and similar activities need
not be counted as working time if the following criteria are met:
1. Attendance is outside of the employees regular working hours
2. Attendance is voluntary
3. The employee does not perform any productive work during such attendance
i. Meal Break
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless
of sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is credited as compensable hours
worked of the employee:
(a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16)
hours a day;
ii.
(c) In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss
which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
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xxx xxx xxx
not less than sixty (60) minutes time-off for their regular meals
The employee must be completely relieved from duty for the purpose of eating
regular meals
Meal time = x compensable if he is completely freed from his duties even though
he remains at his workplace
But the employee is not relieved if he is required to perform his duties whether
active or inactive, while eating = compensable
Summary:
o Non compensable meal break = free time, the employers own time
o Compensable = X free time, whether the worker is able to eat or not
NOT REQUIRED to stay within premises of work
When work is continuous for several shifts, the meal time breaks should be counted
as working time for the purpose of overtime compensation
GR: Meal period should not be less than 60 minutes, in which case it is time-off or
noncompensable time
If less than 20 minutes = rest period; working time; compensable
The situations where meal time can be less than 60 minutes but not less than
20n minutes:
1. Where the work is non-manual or does not involve serious physical
exertion
2. Establishment regularly operates not less than 16 hours a day
3. Where the is actual or impending emergencies or there is urgent work to
be performed on machineries, equipment or installations to avoid serious
loss which the employer would otherwise suffer
4. Where the work is necessary to prevent serious loss of perishable goods
Similar to the situations of emergency overtime work
SHORTENED MEAL BREAK UPON EMPLOYEES REQUEST
Employee may request that their meal period be shorted so that they can
leave earlier than previously established schedule = NOT COMPENSABLE
Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, April 15,
1998
PAN-AM v. PAN-AM Employees Association, 1 SCRA 527
Waiting Time
ENGAGED TO WAIT OR WAITING TO BE ENGAGED?
Question of fact resolved by appropriate finding of the TC
The facts may show that the employee was engaged to wait or may show that
he waited to be engaged
Controlling factor: Whether the waiting time spent in idleness is so spent
predominantly for the employers benefit or for the employees
examples:
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Firefighters who are in standby capacity who spent time in idleness playing
cards or other amusement in the facilities provided by the employer ! X render
inapplicable the overtime provisions of the act
Truck driver who has to wait at or near the jobsite for goods to be loaded is
working during the loading period ! engaged to be waiting = considered working
time
Truck driver done with task and waiting for 6 pm when he goes on duty for the
return trip Waiting to be engaged = Idle time is not working time
iii. Rule on Brownout
Work interruption due to brownouts Brownouts is not included in Hours worked
d. Night shift differential (NSD) and those not covered by NSD
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.
This is NOT WAIVABLE
BURDEN OF PROOF OF PAYMENT : Employer has burden of proving a clam for night
shift differential pay
Night-shift work is more onerous and burdensome, and thus deserves more remuneration than compensation required in this Chapter.
their day time counterparts. There is no dispute that ordinary and regular normal work is
performed in the daytime, and that night work is exceptional and is only justified in
unavoidable circumstances necessary for the business of the employer. [Shell Company vs.
NLU, 81 Phil. 315 (1948)]
e. Overtime Work/Overtime 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;
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
NIGHT SHIFT DIFFERENTIAL PAY OVERTIME PAY
payment for work done during the night payment for the excess of regular 8 hour work
i. Condition for entitlement to overtime pay
Additional pay for service or work rendered or performed in excess of 8 hours a
day by employees or laborers covered by the 8 hour labor law and not exempt from
its requirements
ii. Basis for Computation
OVERTIME RATE BASED ON REGULAR WAGE Overtime pay =
compensation added to regular wage
REGULAR BASE PAY excludes money received by the employee in different
concepts, such as Christmas bonus and other fringe benefits
The COLA shall not be included in the computation of overtime pay.
the minimum overtime pay rates vary according to the day the overtime work is
performed
COMPUTATION:

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1. For work in excess of 8 hours performed on ORDINARY WORKING
DAY Plus 25%
For work in excess of 8 hours performed on a SCHEDULED REST DAY
OR A SPECIAL DAY plus 30% of the hourly rates on said days
For work in excess of 8 hours performed on a REGULAR HOLIDA
plus 30% of the hourly rates on the said days
4. For work in excess of 8 hours performed on a REGULAR HOLIDAY
WHICH FALLS ON A SCHEDULE REST DAY! plus 30% of the hourly
rates on the said days
iii. Waiver or quitclaim
WAIVER OF QUITCLAIM; NO WAIVER OF OVERTIME PAY, GENERALLY
The right to OT pay cannot be waived
WHEN VALID; WAIVER IN EXCHANGE FOR CERTAIN BENEFITS
GR: Overtime compensation cannot be waived
E: When the alleged waiver of OT is in consideration of benefits and privileges
which may be more than what will accrue to them in OT pay, the waiver may be
permitted
2. Wages
no work no pay principle and exception to no work no pay
Facilities v. Supplements
Exempted from the rules on wages
Non-diminution rule
Wage Distortion
Rule on those paid by results
Article 113: 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.
3. Rest Day
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a. Article 91: Right to Weekly Rest Day
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.
b. Article 93: Compensation for Rest Day, Sunday, Holiday Work
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
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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.
4. Holiday pay/Premium pay
a. Article 94: 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;
b. The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate;
and
c. As used in this Article, "holiday" includes: New Years Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and
thirtieth of December and the day designated by law for holding a general
election.
b. Article 94: Computation
c. Legal Holidays
d. Holiday Economic Rule
5. Leaves
a. Service Incentive Leave (SIL) and Exemptions
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.
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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.
b. Vacation Leave & Sick Leave
PSTMSDWO, represented by its president, Rene Soriano v. PNCC
Skyway Corp, G.R. No. 171231, February 17, 2010
c. Leaves that are required by Law (mandatory)
i. SIL
Autobus Transport System v. Bautista, May 16, 2005
ii. Paternity Leave (R.A. No. 8187)
iii. Maternity Leave (SSS Law)
iv. Solo Parent Leave (R.A. No. 8972)
v. Battered Woman Leave (R.A. No. 9262)
6. Thirteenth Month Pay (P.D. 851)
a. Value of 13th month pay
b. Coverage
7. Separation Pay
Songco v. NLRC, G.R. No. L-50999, March 23, 1990
Millares v. NLRC, G.R. No. 122827, March 29, 1999
8. Retirement Pay
9. Apprentices, Learners and Handicapped Workers
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
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an individual employer or any of the entities recognized under this Chapter.
c. An "apprenticeable occupation" means any trade, form of employment or occupation
which requires more than three (3) months of practical training on the job
supplemented by related theoretical instruction.
d. "Apprenticeship agreement" is an employment contract wherein the employer binds
himself to train the apprentice and the apprentice in turn accepts the terms of training.
Art. 59. Qualifications of apprentice. To qualify as an apprentice, a person shall:
a. Be at least fourteen (14) years of age;
b. Possess vocational aptitude and capacity for appropriate tests; and
c. Possess the ability to comprehend and follow oral and written instructions.
Trade and industry associations may recommend to the Secretary of Labor appropriate educational
requirements for different occupations.
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. 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. 62. Signing of apprenticeship agreement. Every apprenticeship agreement shall be signed by the
employer or his agent, or by an authorized representative of any of the recognized organizations,
associations or groups and by the apprentice.
An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, if the
latter is not available, by an authorized representative of the Department of Labor, and the same shall be
binding during its lifetime.
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Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate
apprenticeship committees, if any, and a copy thereof shall be furnished both the employer and the
apprentice.
Art. 63. Venue of apprenticeship programs. Any firm, employer, group or association, industry
organization or civic group wishing to organize an apprenticeship program may choose from any of the
following apprenticeship schemes as the training venue for apprentice:
a. Apprenticeship conducted entirely by and within the sponsoring firm, establishment or
entity;
b. Apprenticeship entirely within a Department of Labor and Employment training center
or other public training institution; or
c. Initial training in trade fundamentals in a training center or other institution with
subsequent actual work participation within the sponsoring firm or entity during the
final stage of training.
Art. 64. Sponsoring of apprenticeship program. Any of the apprenticeship schemes recognized herein
may be undertaken or sponsored by a single employer or firm or by a group or association thereof or by a
civic organization. Actual training of apprentices may be undertaken:
a. In the premises of the sponsoring employer in the case of individual apprenticeship
programs;
b. In the premises of one or several designated firms in the case of programs sponsored
by a group or association of employers or by a civic organization; or
c. In a Department of Labor and Employment training center or other public training
institution.
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
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available administrative remedies.
Art. 68. Aptitude testing of applicants. Consonant with the minimum qualifications of apprentice-
applicants required under this Chapter, employers or entities with duly recognized apprenticeship
programs shall have primary responsibility for providing appropriate aptitude tests in the selection of
apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and
Employment shall perform the service free of charge.
Art. 69. Responsibility for theoretical instruction. Supplementary theoretical instruction to apprentices
in cases where the program is undertaken in the plant may be done by the employer. If the latter is not
prepared to assume the responsibility, the same may be delegated to an appropriate government agency.
Art. 70. Voluntary organization of apprenticeship programs; exemptions.
a. The organization of apprenticeship program shall be primarily a voluntary undertaking
by employers;
b. When national security or particular requirements of economic development so
demand, the President of the Philippines may require compulsory training of
apprentices in certain trades, occupations, jobs or employment levels where shortage of
trained manpower is deemed critical as determined by the Secretary of Labor and
Employment. Appropriate rules in this connection shall be promulgated by the
Secretary of Labor and Employment as the need arises; and
c. Where services of foreign technicians are utilized by private companies in
apprenticeable trades, said companies are required to set up appropriate apprenticeship
programs.
Art. 71. Deductibility of training costs. An additional deduction from taxable income of one-half (1/2) of
the value of labor training expenses incurred for developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such
program is duly recognized by the Department of Labor and Employment: Provided, further, That such
deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person
or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the
minimum wage.
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
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LEARNERS
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.
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.
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. 77. Penalty clause. Any violation of this Chapter or its implementing rules and regulations shall be
subject to the general penalty clause provided for in this Code.
HANDICAPPED WORKERS
Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical
or mental deficiency or injury.
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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.
TESDA (TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY)
IMPLEMENTS THE APPRENTICESHIP PROGRAM
Sect 18 of TESDA Act of 1994 expressly empowers TESDA to implement and administer the
apprenticeship program in accordance with existing laws, rules and regulations
APPRENTICEABLE AGE
This article 14; IRR 15 (what to follow? Moot and academic question already because:)
RA 7610 prohibits the employment of children below 15 years old
WORKING SCHOLAR, LIABILITY OF SCHOOL: There is NO employer-employee
relationship between students and schools where there is a WRITTEN agreement between them
under which the student agree to work for the school in exchange for the privilege to study free of
charge, provided that the students are given real opportunities, including suchfacilities as may be
reasonable and necessary to finish their chosen coursesunder such agreement
If the student injures a 3rd party, does the school become liable? YES
LEADERSHIP APPRENTICESHIP
SIMILARITIES Both mean training periods for jobs requiring skills that can be
acquired through actual work experience
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Paid wages 25% lower than the applicable minimum wage
FOCUS Semi-skilled jobs or in industrial Highly technical industry
occupation
TRAINING PERIOD Less than 3 months Exceeds 3 months
DIFFICULTY Job is more easily learned Harder to learn (apprenticeable job)
COMMITMENT OF Employer is committed to hire the No such commitment
EMPLOYER learner-trainee as an employee after
the training period
TYPE OF Non-technical jobs Highly technical industries and only
JOB/INDUSTRY in apprenticeable occupations
approved by DOLE
A learner is not an apprentice but an apprentice, is conceptually also a learner
MAGNA CARTA FOR DISABLED PERSONS (RA 7277, MARCH 24, 1992)
QUALIFIED DISABLED EMPLOYEE Equal Opportunity for Employment. No disabled
person shall be denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able
bodied person
QUALIFIED INDIVIDUAL WITH A DISABILITY
Shall mean an individual with a disability who, with or without reasonable accommodations, can
perform the essential functions of the employment position that such individual holds or desires.
However, consideration shall be given to the employer's judgment as to what functions of a job are
essential, and if an employer has prepared a written description before advertising or interviewing
applicants for the job, this description shall be considered evidence of the essential functions of the
job
Sheltered Employment If suitable employment for disabled persons cannot be found through
open employment as provided in the immediately preceding Section, the State shall endeavor to
provide it by means of sheltered employment. In the placement of disabled persons in sheltered
employment, it shall accord due regard to the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere and efficient production.
SHELTERED EMPLOYMENT- Refers to the provision of productive work for disabled persons
through workshops providing special facilities, income-producing projects or homework schemes with
a view to giving them the opportunity to earn a living thus enabling them to acquire a working capacity
required in open industry;|||
DISCRIMINATION ON EMPLOYMENT No entity, whether public or private, shall discriminate
against a qualified disabled person by reason of disability in regard to job application procedures, the
hiring, promotion, or discharge of employees, employee compensation, job training, and other terms,
conditions, and privileges of employment. The following constitute acts of discrimination: casia
a) Limiting, segregating or classifying a disabled job applicant in such amanner that adversely
affects his work opportunities;
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b) Using qualification standards, employment tests or other selection criteria that screen out
or tend to screen out a disabled person unless such standards, tests or other selection criteria are
shown to be job-related for theposition in question and are consistent with business necessity;
c) Utilizing standards, criteria, or methods of administration that:
1. Have the effect of discrimination on the basis of disability; or
2. 2) Perpetuate the discrimination of others who are subject to common administrative
control.
d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by reason of his disability, than the amount to which a
non-disabled person performing the same work is entitled;
e) Favoring a non-disabled employee over a qualified disabled employee with respect to
promotion, training opportunities, study and scholarship grants, solely on account of the latter's
disability;
f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by
reason of his disability;
g) Dismissing or terminating the services of a disabled employee by reason of his disability
IV. LABOR RELATIONS LAW
unless the employer can prove that he impairs the satisfactory performance of the work involved
to the prejudice of the business entity:Provided, however, That the employer first sought to 1. Right to Self-Organization
provide reasonable accommodations for disabled persons; cda
h) Failing to select or administer in the most effective manner employment tests which accurately
a. Who can join
reflect the skills, aptitude or other factor of the disabled applicant or employee that such tests La Suerte Cigar & Cigarette Factory v. Director of BLR, G.R. No. L-
purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant 55674, July 25, 1983
or employee, if any; and
i) Excluding disabled persons from membership in labor unions or similar organizations
b. Exceptions
QUALIFIED DISABLED PERONS ARE REGULAR EMPLOYEES 2. Labor Organizations
a. Classification of Labor Organizations
10. Women Workers b. Disaffiliation of a local union from the federation
a. Non-Discrimination Rule Tropical Hut Employees Union-CGW v. Tropical Hut Food Market, Inc,
b. Stipulation Against Workers G.R. No. L-43495-99, January 20, 1990
11. Minor Workers (R.A. No. 7678, R.A. No. 9231, & R.A. 7323)
12. Househelpers (Domestic Workers Act, R.A. No. 10361) 3. Bargaining Agent and Certification Election
a. Voluntary Recognition (D.O. 40-03, Rule VII)
b. Certification Election
UST Faculty Union v. Bitonio, Jr., G.R. No. 131235, November 16, 1999
Progressive Development Corporation-Pizza Hut v. Laguesma, G.R. No.
115077
i. Certification Election in an Organized v. Unorganized
Establishment
ii. Procedure in Pre-Election Contest (D.O. 40-03)
iii. Grounds for denial of petition for certification election (contract-
bar rule, deadlock bar-rule, charge-of-company unionism rule,

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outside-of-the-freedom-period rule, negotiation rule, appeal bar b. Economic v. ULP Strike

rule). c. Procedural Requirements
c. Consent Election d. Liability in case of Illegal Strike/lockout
d. Run-Off Election Jackbilt Industries Inc v. Jackbilt Employees Workers Union-NAFLU-
e. Re-run Election KMU, G.R. Nos. 171618-19, March 20, 2009
i. Union Officers
4. Union Security Arrangements ii. Members
Bataan Shipyard and Engineering Co., Inc. v. NLRC, G.R. No. 78604, May 9, iii. Employer
1988
5. Unfair Labor Practice
a. Article 253 (formerly Art. 247): Unfair Labor Practice
V. TERMINATION OF EMPLOYMENT
b. Article 254 (formerly Art. 248): ULP of Employers
Complex Electronics Employees Association v. NLRC, G.R. No. 121315, 1. Employer-Employee Relationship
July 19, 1999 a. Four-Fold Test
1. The selection and engagement of the employee
Standard Chartered Bank v. Hon. Confesor, G.R. No. 114974, June 16, 2. The payment of wages
2004 3. The power of dismissal
c. Article 255 (formerly Art. 249): ULP of Labor Organization 4. The employers power to control the employee with respect to the means and methods
6. Collective Bargaining & Administration of Agreements by which the work is to be accomplished (most important, without this, there is no E-
E relationship)
a. Procedures/steps in collective bargaining
b. Article 257: Duty to Bargain Collectively in the absence of Collective Sonza v. ABS-CBN, G.R. No. 138051, June 10, 2004
Bargaining Agreements DOCTRINES:
1. Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and
c. Article 258: Duty to Bargain Collectively Definition engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to
Kiok Loy v. NLRC, 141 SCRA 179 control the employee on the means and methods by which the work is accomplished. The last element, the so-called
d. Article 259: Duty to Bargain Collectively when there exists a CBA control test, is the most important element.
2. The control test is the most important test our courts apply in distinguishing an employee from an independent
e. Article 260: Terms of CBA contractor.
i. Principle of Hold-over FACTS:
ii. Substitutionary Doctrine
In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation
iii. Deadlock in CBA renegotiation
(MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza, as
Divine Word University of Tacloban v. Sec. of Labor, G.R. No. President and general manager, and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC
91995, September 11, 1992 agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to
pay Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and third year.

7. Strikes & Lockouts On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events
concerning his program and career. After the said letter, Sonza filed with the Department of Labor and Employment a
a. Definition of strikes & lockouts complaint alleging that ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month pay,

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signing bonus, travel allowance and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This
that no employee-employer relationship existed between the parties. However, ABS-CBN continued to remit Sonzas circumstance indicates an independent contractual relationship between SONZA and ABS-CBN. SONZA admits that
monthly talent fees but opened another account for the same purpose. even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC D. Power of Control
affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC.
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.
ISSUE: The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor.
Whether or not there was employer-employee relationship between the parties.
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work. SONZAs
HELD: argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs. ABS-
CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How
No employer-employee relationship exists between the parties. SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. We find
that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work.ABS-
Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to format and airtime schedule for more effective programming. ABS-CBNs sole concern was the quality of the shows
and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of
control the employee on the means and methods by which the work is accomplished. ]The last element, the so-called
performance of SONZAs work.
control test, is the most important element. Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and
standards of performance. SONZA claims that this indicates ABS-CBNs control not only [over] his manner of work
A. Selection and Engagement of Employee
but also the quality of his work. The Agreement stipulates that SONZA shall abide with the rules and standards of
The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed performance covering talents of ABS-CBN. The Agreement does not require SONZA to comply with the rules and
by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement refers to the Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which
has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.
Agreement with SONZA but would have hired him through its personnel department just like any other employee.
Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-
B. Payment of Wages
CBN exercised over him. This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring
that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS- party. In the broadcast industry, exclusivity is not necessarily the same as control.
CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity
status not possessed by ordinary employees. The payment of talent fees directly to SONZA and not to MJMDC does b. Economic Reality Test
not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. TWO TIERED APPROACH; THE ECONOMIC DEPENDENCE TEST
Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee Two tiered Test
accruing under the Agreement. 1. Power of control of employer
2. Underlying economic realities of the activity of relationship
C. Power of Dismissal Totality of the circumstance depends on the circumstance of the whole economic activity
such as:
1. Extent to which services performed are integral part of the employers business
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show
2. Degree of control exercised by the employer
that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent 3. Workers opportunity for profit
losses as provided under labor laws. Even if it suffered severe business losses, ABS-CBN could not retrench SONZA

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4. Amount of initiative, skill, judgment or foresight required for the success of the
independent enterprise
5. Permanency and duration of the relationship
6. Degree of dependency of the worker upon the employer for his continued
employment in that line of business
7. Extent of workers investment in equipment andfacilities
" Economic dependence whether the worker is dependent on the alleged employer for his
continued employment in that line of business
" Respondent = employee = served for 6 years before her dismissal and received salaries =
economically dependent on corporation
" Constrictively dismissed when salary was reduced = illegal termination of employment =
entitled to fill backwages + separation pay in lieu of reinstatemen
In 1996, petitioner was designated Acting Manager. For five years, petitioner performed the duties of Acting Manager.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to
sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei
Corporation.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001.
Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001,
petitioner did not receive her salary from the company. On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she
was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before
the labor arbiter.

Francisco v. NLRC, G.R. No. 170087, August 21, 2006
DOCTRINES:
1. Two-tiered test: The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This
two-tiered test would provide us with a framework of analysis, which would take into consideration the
totality of circumstances surrounding the true nature of the relationship between the parties. This is
especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latters employment.
Kasei Corporation averred that petitioner was not an employee and to prove that, they submitted a list of employees
for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported
to the BIR. Private respondent corporation also alleged that petitioner was hired as one of its technical consultants on
accounting matters and act concurrently as Corporate Secretary. Petitioners designation as technical consultant
depended solely upon the will of management. As such, her consultancy may be terminated any time considering that
her services were only temporary in nature and dependent on the needs of the corporation.
Labor Arbiter: petitioner was illegally dismissed.
NLRC: affirmed the decision of the Labor Arbiter.
CA: reversed the NLRC decision and dismissed the complaint.

2. The determination of the relationship between employer and employee depends upon the circumstances of
the whole economic activity, such as: (1) the extent to which the services performed are an integral part of
the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the
nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.
ISSUE:
Whether there was an employer-employee relationship between petitioner Francisco and private respondent Kasei
Corporation.
HELD:
Yes, by applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
FACTS: corporation because she had served the company for six years before her dismissal, receiving check vouchers
In 1995, petitioner Angelina Francisco was hired by Kasei Corporation during its incorporation stage. She was indicating her salaries/ wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager,
company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as
permits and other licenses for the initial operation of the company. manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and
the inclusion of her name in the online inquiry system of the SSS evinces the existence of an employer-employee

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relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latters line of business.
2. Kinds of Employment
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.
3 CATEGORIES OF EMPLOYEE'S UNDER ART 280
regular employees or those whose work is necessary or desirable to the usual business of the
employer;
Regular employees may be classified into:
(1) regular employees by nature of work Employee performs work that
is usually necessary and desirable in the usual business or trade of the
employer. A continuing need for respondents' services is sufficient
evidence of the necessity and indispensability of their services to
petitioner's business .
(2) regular employees by years of service A casual employee who has
rendered at least one (1) year of service, whether continuous or broken is
a regular employee. The status of regular employment under this category
attaches to the casual worker on the day immediately after the end of his
first year of service as such casual employee.
project employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee, or where the work or
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services to be performed is seasonal in nature and the employment is for
the duration of the season;
casual employees or those who are neither regular nor project employees
a. Regular Employees
Reasonable connection rule The primary standard, therefore, of determining a regular
employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the employee
has been performing the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists.
De Leon v. NLRC, G.R. No. 70705, August 21, 1989
DOCTRINES:
1. The primary standard, therefore, of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer.
2. What determines whether a certain employment is regular or casual is not the will and word of the employer, to
which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying
his salary. It is the nature of the activities performed in relation to the particular business or trade considering all
circumstances, and in some cases the length of time of its performance and its continued existence.
FACTS:
Moises de Leon was employed by La Tondea Inc. on December 11, 1981, at the Maintenance Section of its
Engineering Department. His work consisted mainly of painting company building and equipment, and other odd jobs
relating to maintenance. He was paid on a daily basis through petty cash vouchers. After a service of more than one
year, De Leon requested from La Tondea that he be included in the payroll of regular workers, instead of being paid
through petty cash vouchers. La Tondea's response, however, was his dismissal from employment on January 16,
1983. Having been refused reinstatement despite repeated demands, De Leon filed a complaint for illegal dismissal,
reinstatement and payment of backwages before the LA.
De Leon: alleged that he was dismissed following his request to be treated as a regular employee; that his work
consisted of painting company buildings and maintenance chores like cleaning and operating company equipment,
assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by La
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Tondea indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of La Tondea, and was the painting and maintenance work given him manifest a treatment consistent with a maintenance man and not just a
made to perform the tasks which he used to do. painter, for if his job was truly only to paint a building there would have been no basis for giving him other work
assignments In between painting activities.
La Tondea: claimed that De Leon was not a regular employee but only a casual worker hired allegedly only to paint
a certain building in the company premises, and that his work as a painter terminated upon the completion of the It is of no moment that petitioner was told when he was hired that his employment would only be casual, that he was
painting job. paid through cash vouchers, and that he did not comply with regular employment procedure. Precisely, the law
overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position needs the
LA: found the dismissal illegal; ordered La Tondea to reinstate De Leon with full backwages and other benefits. LA support of the State. What determines whether a certain employment is regular or casual is not the will and
ruled that De Leon was not a mere casual employee as asserted by La Tondea but a regular employee. He concluded word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the
that the dismissal of De Leon from the service was prompted by his request to be included in the list of regular employee or the manner of paying his salary. It is the nature of the activities performed in relation to the
employees and to be paid through the payroll and is, therefore, an attempt to circumvent the legal obligations of an particular business or trade considering all circumstances, and in some cases the length of time of its
employer towards a regular employee. performance and its continued existence.

NLRC: Reversed the LA decision; ruled that De Leons job cannot be considered as necessary or desirable in the
b. Casual Employees
usual business or trade of the employer because, "Painting the business or factory building is not a part of the
respondent's manufacturing or distilling process of wines and liquors.
Philippine Geothermal, Inc. v. NLRC, G.R. No. 82643-47, August 30, 1990
ISSUE: DOCTRINE:

WON the NLRC erred in finding that De Leon was not a regular employee, and thus, was not illegally dismissed. 1. There are two kinds of regular employees, as: 1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and 2) those who have rendered at least one (1)
HELD: year of service, whether continuous or broken with respect to the activity in which they are employed. While the
actual regularization of these employees entails the mechanical act of issuing regular appointment papers and
Yes. Under Art. 281 of the Labor Code, an employment is deemed regular when the activities performed by the compliance with such other operating procedures, as may be adopted by the employer, it is more in keeping with the
employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day
the so-called "project employment" the completion or termination of which is more or less determinable at the time immediately after the end of his first year of service.
of employment, such as those employed in connection with a particular construction project and seasonal employment
which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least
one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he FACTS:
performed and while such activity actually exists. Petitioner is a U.S. corporation engaged in the exploration and development of geothermal energy resources as an
alternative source of energy. Private respondents are employees of herein petitioner occupying various positions
The primary standard, therefore, of determining a regular employment is the reasonable connection between ranging from carpenter to Clerk II who had worked with petitioner company under individual contracts, categorized as
the particular activity performed by the employee in relation to the usual business or trade of the employer. contractual employment, for a period of 15 to 3 months. These contracts were regularly renewed until 1983 and 1984
The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. when petitioner started terminating their employment by not renewing their individual contracts. Subsequently
petitioner entered into job contracting agreement with Dra. Gonzales who supplies it with skilled manpower. Private
In the case at bar, during De Leons period of employment, the tasks assigned to him included not only painting of respondents organized a separate labor union in view of their exclusion in the bargaining unit of the regular rank and
company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and file employees. They filed a petition for certification election. Petitioner allegedly started harassing them and replaced
other odd jobs assigned to him when he had no painting job. It is self-serving, to say the least, to isolate petitioner's them with so called "contract workers". Thus, complainant union and herein respondent employees filed a case for
painting job to justify the proposition of casual employment and conveniently disregard the other maintenance illegal lock-out and unfair labor practice for unfair labor practice and/or illegal dismissal, reinstatement backwages
activities of petitioner which were assigned by the respondent company when he was not painting. The law demands and service incentive. LA decided in favor of petitioners. NLRC affirmed. Hence, this petition.
that the nature and entirety of the activities performed by the employee be considered. In the case of petitioner,

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ISSUE: FACTS:
Petitioners did not look with favor workers having organized themselves into a union. Thus when the respondent
Whether or not private respondents may be considered regular and permanent employees due to their length of service union was certified as the collective bargaining representative in the certification elections, petitioners refused to sit
in the company despite the fact that their employment is on contractual basis. down with the respondents for the purpose of entering into a collective bargaining agreement. Moreover, the workers
were not given work for more than one month. In protest, complainants staged a strike which was however settled
HELD: upon the signing of a Memorandum of Agreement which stipulated among others that management will provide
fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority.
Petitioner alleges that it engaged the services of private respondents on a monthly basis to ensure that manpower However, in case the said workforce would not be enough, the management can hire additional workers to supplement
would be available when and where needed. Private respondents were fully aware of the nature of their employment as them.
this was clearly spelled out in the employment contracts. What happened to them was not a case of unwarranted
dismissal but simply one of expiration of the tenure of employment contracts and the completion of the phase of the However, alleging that respondents failed to load the fifteen wagons, petitioners reneged on its commitment to sit
project for which their services were hired. This Court classified the two kinds of regular employees, as: 1) those who down and bargain collectively. Instead, petitioners employed all means including the use of private armed guards to
are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the prevent the organizers from entering the premises.
employer; and 2) those who have rendered at least one (1) year of service, whether continuous or broken with respect
to the activity in which they are employed. Moreover, starting September 1991, petitioners did not any more give work assignments to the respondents forcing the
union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of
While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers Agreement was signed. However, petitioners still reneged on its commitment pursuant to the 2nd Memorandum which
and compliance with such other operating procedures, as may be adopted by the employer, it is more in keeping with prompted the respondents to file a complaint.
the intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day
immediately after the end of his first year of service. Assuming therefore, that an employee could properly be regarded The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on
as a casual (as distinguished from a regular employee) he becomes entitled to be regarded as a regular employee of the leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security
employer as soon as he has completed one year of service. Under the circumstances, employers may not terminate the of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
service of a regular employee except for a just cause or when authorized under the Labor Code. It is the policy of the
state to assure the right of workers to "security of tenure." The guarantee is an act of social justice. When a person has ISSUE:
no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected
against any arbitrary deprivation of his job. Whether or not the seasonal employees have become regular employees.

c. Seasonal Employees
Hacienda Fatima v. National Federation of Sugarcane Workers, G.R. No. 149440,
January 28, 2003
DOCTRINE:
1. The primary standard of determining regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual trade or business of the employer. The connection can be
determined by considering the nature of the work performed and its relation to the scheme of the particular business
or trade in its entirety
HELD:
Yes they are regular employees. For respondents to be excluded from those classified as regular employees, it is
not enough that they perform work or services that are seasonal in nature. They must have also been employed
only for the duration of one season. The evidence proves the existence of the first, but not of the second,
condition. The fact that respondents repeatedly worked as sugarcane workers for petitioners for several years
is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore,
the general rule of regular employment is applicable.
The primary standard of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if the performance is not

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continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre
evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered protested the announced termination of his employment. He argued that although his contract did stipulate that the
regular, but only with respect to such activity and while such activity exists.
Respondents, having performed the same tasks for petitioners every season for several years, are considered the not be removed except for valid cause.
latters regular employees for their respective tasks. Petitioners eventual refusal to use their services -- even if they
were ready, able and willing to perform their usual duties whenever these were available -- and hiring of other workers Regional Director - application for clearance to terminate employment (not a report of termination), and accepting
to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.
d. Fixed-Term
Brent School, Inc. v. Zamora, G.R. No. 48494, February 5, 1990
DOCTRINES:
1. Article 319 undertook to define "employment without a fixed period" in the following manner: 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.
2. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate
which needed the approval of the Department of Labor to make the termination of his services effective. In any case,
such clearance should properly have been given, not denied.
FACTS:
Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. The
contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the
original contract of July 18, 1971.
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was
given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of
the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to
July 17, 1976 as full payment of contract.
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same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could
the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of
Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages.
ISSUE: Whether or not the contract of employment was lawfully terminated?
HELD: Yes, Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by
reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor
Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was
impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the
Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly
acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was
approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No
prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly
legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly
recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD
442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period
employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of
term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees and those employed
WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321
prescribed the just causes for which an employer could terminate "an employment without a definite period." And
Article 319 undertook to define "employment without a fixed period" in the following manner: 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. Subsequently, the
foregoing articles regarding employment with "a definite period" and "regular" employment were amended by
Presidential Decree No. 850, effective December 16, 1975.
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Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to DOCTRINE:
persons "employed with a fixed period," and was renumbered (becoming Article 271).
1. Article 280 of the Labor Code provides that an employment shall be deemed to be regular where the employee has
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of employer, except where the employment has been fixed for a specific project or undertaking the completion or
his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be termination of which has been determined at the time of the engagement of the employee or where the work or
given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term services to be performed is seasonal in nature and the employment is for the duration of the season.
employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a
means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or,
more relevantly, curing a headache by lopping off the head.
FACTS:
Respondent Romago is a general contractor engaged in contracting and sub-contracting of specific building
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still
good rulea rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, construction projects or undertaking such as electrical, mechanical and civil engineering aspects in the repair of
1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the buildings and from other kindred services.
expiration of the last of three successive fixed-term employment contracts, the Court held:
Individual complainants (petitioners) are employed by the respondent in connection with particular construction
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was projects and in hiring the herein complainants to be assigned to a particular project they have to fill up an employment
probationary, contractual in nature, and one with a definitive period. At the expiration of the period application form and are subjected to a pre-hiring examination. If evaluated to be qualified they sign at the end portion
stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non- of their employment application form that states that they agree to the condition that their employment was for a fixed
renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the
employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to period and for the specific project only.
expire and that the contract would no longer be renewed. It is not a letter of termination.
Petitioners allege that they have worked on many projects by the respondent and they were hired over and over again
so they should be regarded as regular employees.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with
Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department ISSUE:
of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of
Whether or not petitioners are regular employees or project employees.
termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to
make the termination of his services effective. In any case, such clearance should properly have been given, not
HELD:
denied.
They are project employees, the NLRC is correct in ruling that said petitioners should be deemed as project
e. Project Employees employees. The fact that the complainants worked for the respondent under different project employment contracts for
PROJECT refers to a job/undertaking within the regular or usual business of the employer, so many years could not be made a basis to consider them as regular employees for they remain project employees
but which is distinct and separate and identifiable from the undertakings of the company. regardless of the number of projects in which they have worked on.
Such job/undertaking begins and ends at determined or determinable times
Principal Test for Project Employment As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from
(a) Whether one is assigned to carry out a specific project or undertaking, the duration
real estate developers and builders of buildings. Since its work depends on the availability of such contracts or
and scope of which are specified at the time of engagement for a project.
"projects," necessarily the duration of the employment of its work force is not permanent but co-terminus with the
(b) Duration of work to be performed must be defined in the employment contract, and
(c) Terms and conditions of employment must be made clear to the employee at the time projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their
of hiring employer who, like them, depends on the availability of projects, if it would have to carry them as permanent
employees and pay them wages even if there are no projects for them to work on.
Cartajenas v. Romago Electric Company, Inc., G.R. No. 82973, September 15, 1989

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3. Probationary Employment
PROBATIONARY EMPLOYEE Refers to one who, for a given period of time, is being
observed and evaluated to determine whether he is
qualified for permanent employment. [Woodridge School
vs. Pe Benito, 570 SCRA 164, October 29, 2008]
PROBATIONARY EMPLOYMENT A phase in employment where the employer is afforded
the opportunity to observe the fitness of a probationary
employee while at work, and to ascertain whether he will
become an efficient and productive employee. [Magis
Young Achievers' Learning Center vs. Manalo, G.R. No.
178835, February 13, 2009; Philippine Daily Inquirer,
Inc. vs. Magtibay, Jr., G.R. No. 164532, July 27, 2007]
Rules
Period of Probation
While there is no statutory cap on the minimum term of probation, the law sets a maximum trial
period during which the employer may test the fitness and efficiency of the employee. [Magis
Young Achievers' vs. Manalo, supra]
The computation of probationary period is made on a calendar date basis to be reckoned from the
date of appointment, NOT on a 30-days per month basis as provided for in Art. 13, Civil Code.
[Alcira vs. NLRC, 431 SCRA 508 (June 9, 2004) citing CALS Poultry Supply vs. Roco, 385
SCRA 479, 488 (2002)]
BUT,
An employer, under exceptional circumstances, can extend a probationary period of employment,
such as when the same is established by company policy, or when it is required by the nature of
the work, provided such extension was agreed upon by the parties, and exercised before the
expiration of the original period of probation. [San Miguel Corporation vs. Caroline C. Del
Rosario, 477 SCRA 604 (December 13, 2005), citing Buiser vs. Leogardo, 216 Phil. 144, 150
(1984)] In fact, length of time is immaterial in determining the correlative rights of both parties in
dealing with each other during probationary period. [Philippine Daily Inquirer vs. Magtibay, Jr.,
supra]
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the contract
is binding for the full three-year probationary period. [Magis Young Achievers' vs. Manalo, supra]
Nature of Probation
The provision on employment on probationary status under the Labor Code is a primary example
of the fine balancing of interests between labor and management. Employment on probationary
status affords management the chance to fully scrutinize the true worth of hired personnel before
the full force of the security of tenure guarantee comes into play. Management is given the
opportunity to reject during the probationary period hirees who fail to meet its own adopted but
reasonable standards.
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A probationary employee enjoys security of tenure while on probation. He can be dismissed only
for a just cause OR when he fails to qualify for regular employment.
Evaluation is made before expiration of the probationary period
This means that they are terminable anytime. The employer could well decide if he no longer
needed the probationary's service or his performance fell short of expectations.
International Catholic Migration Commission v. NLRCC, G.R. No. 72222, January 30,
1989
DOCTRINES:
1. Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just
cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the
Labor Code.
2. An employee who was terminated during the probationary period of her employment is not entitled to her salary
for the unexpired portion of her six-month probationary employment.
FACTS:
Petitioner (ICMC) engaged the services of private respondent Bernadette Galang as a probationary cultural orientation
teacher.
After three months, private respondents services were terminated for her failure to meet the prescribed standards of
petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program.
Subsequently, private respondent returned to the ICMC premises on to accomplish the clearance requirements. In the
evening of that same day, she was found at the Freedom Park of Morong wet and shivering from the rain and acting
bizarrely. She was then taken to petitioner's hospital where she was given the necessary medical attention.
Two days later, she was taken to her residence in Manila. Thru a letter, her father expressed appreciation to petitioner
for taking care of her daughter. On that same day, her father received, on her behalf, the proportionate amount of her
13th month pay and the equivalent of her two-week pay.
Private respondent filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner
with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral
damages.
The Labor Arbiter rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for
moral and exemplary damages but ordered the ICMC to pay private respondent the sum of P6,000.00 as payment for
the last three months of the agreed employment period.
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Petitioner countered, stating that private respondent who was employed for a probationary period of three months 4. Difference between Job Contracting & Labor-Only Contracting
could not rightfully be awarded P6,000.00 because her services were terminated for failure to qualify as a regular
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
employee in accordance with the reasonable standards prescribed by her employer.
for the performance of the formers work, the employees of the contractor and of the latters subcontractor,
if any, shall be paid in accordance with the provisions of this Code.
NLRC sustained the decision of the Labor Arbiter.

ISSUE: 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
Whether or not an employee who was terminated during the probationary period of her employment is entitled to her employees to the extent of the work performed under the contract, in the same manner and extent that he is
salary for the unexpired portion of her six-month probationary employment liable to employees directly employed by him.

HELD:
No. Private respondent was terminated during her probationary period of employment for failure to qualify as a
regular member of petitioner's teaching staff in accordance with its reasonable standards. Records show that private
respondent was found by petitioner to be deficient in classroom management, teacher-student relationship and
teaching techniques.
Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for
terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the Labor Code.
A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial
by an employer during which the employer determines whether or not he is qualified for permanent employment. A
probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while
at work, and to ascertain whether he will become a proper and efficient employee. The word "probationary", as used to
describe the period of employment, implies the purpose of the term or period, but not its length
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

Notwithstanding the finding of legality of the termination of private respondent, the NLRC justified the award of
salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six JOB CONTRACTING LABOR-ONLY CONTRACTING
(6) months is an employment for a "definite period" which requires the employer to exhaust the entireprobationary
period to give the employee the opportunity to meet the required standards. ob contracting or subcontracting refers to an Labor-only contracting is an arrangement
Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary employee for a just arrangement whereby a principal agrees to put wherein the contractor merely acts as an agent
cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the out or farm out with the contractor or in recruiting and supplying the principal
employer to the employee at the time of his engagement. subcontractor the performance or completion employer with workers for the purpose of
of a specific job, work or service within a circumventing labor law provisions setting
Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 definite or predetermined period regardless of down the rights of employees. It is not
of the Labor Code does not likewise preclude the employer from terminating the probationary employment on whether such job, work or service is to be condoned by law.
justifiable causes as in the instant case. performed or completed within or outside the
premises of the principal
The SC found unmeritorious, therefore, public respondents argument that the security of tenure of probationary In legitimate job contracting, the law creates an Where labor-only contracting exists, the Labor
employees within the period of their probation, as in the case of herein private respondent, justified the award of salary employer-employee relationship between the Code itself establishes an employer-employee
for the unexpired portion of her probationary employment. employer and the contractors employees only relationship between the employer and the

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for a limited purpose
Substantial capital or investment refers to
capital stocks and subscribed capitalization in
the case of corporations, tools, equipments
[sic], implements, machineries and work
premises, actually and directly used by the
contractor or subcontractor in the performance
or completion of the job, work or service
contracted out.
Mandaue Galleon Trade v. Andales, G.R. No. 159668, March 7, 2008
DOCTRINE:
employees of the 'labor-only' contractor in
order to prevent a circumvention of labor laws.
Here, the contractor is considered merely an
agent of the principal employer.
functions which were necessary to the business and that the independent contractors were not properly identified.
On the other hand, MGTI denied the existence of employer-employee relationship (EER) and claimed that they were
workers of independent contractors. It further claimed that, as a survival measure, the management had decided to
retrench its employees and that the complainants were jealous of the separation pay paid to retrenched employees.
LA: Ordered the petitioners to take back the complainants and to pay 13th month pay (P545K) and held that there was
no dismissal. 183 complainants were regular piece-rate employees of MGTI since they were made to perform
NLRC: Affirmed LA but there was constructive dismissal thru the unilateral transfer. Ordered to pay separation pay
in addition ot the 13th month pay. It held that labor-only contracting and not job-contracting was present since the
alleged contractors did not have substantial capital in the form of equipment, machineries and work premises. The
NLRC, however, did not agree with the LA's finding that there was no dismissal.
CA: Initially dismissed the petition for certiorari an affirmed NLRC. Upon motion, an Amended Decision was made
which ordered petitioners to pay the 183 respondents of their separation pay computed an month salary per year of
service up to the promulgation. (Reduction of sep pay)
ISSUE: WON there was EER

1. Labor-only contracting exists when the following criteria are present:
(a) Where the contractor or subcontractor supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among other things; and the workers
recruited and placed by the contractor or subcontractor are performing activities which are directly related to the
principal business of such employer; or
(b) Where the contractor does not exercise the right to control the performance of the work of the contractual
employee.
HELD: There was EER.
Based on Article 106 of the Labor Code and Sections 5 and 7 of the Implementing Rules, labor-only contracting exists
when the following criteria are present: (1) where the contractor or subcontractor supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among
other things; and the workers recruited and placed by the contractor or subcontractor are performing activities which
are directly related to the principal business of such employer; or (2) where the contractor does not exercise the right
to control the performance of the work of the contractual employee.
In this case, petitioners claimed that their contractors were independent contractors, and, therefore, this case was one
of permissible job contracting, was without basis.

FACTS:
The complainants alleged that MGTI hired them as weavers, grinders, sanders and finishers; some of them were told
that they would be transferred to a contractor, while some were told to look for work elsewhere as the company had no
work for them; some workers were not allowed to enter the company premises, while others were told that they could
no longer work since there was no work available; and they were dismissed without notice and just cause.
They further alleged that they were regular employees of MGTI because: (a) they performed their work inside the
company premises; (b) they were issued uniforms and were told to strictly follow company rules and regulations; (c)
they were under the supervision of MGTI; (d) MGTI supplied the materials, designs, tools and equipment in the
production of furniture; (e) MGTI conducted orientations; (f) MGTI issued memoranda regarding absences and waste
of materials; and (g) MGTI exercised the power to discipline them.
(1) The respondents work was directly related to MGTI's principal business. Where the employees are tasked to
undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered
as a labor-only contractor and such employees are considered as regular employees of the employer.
(2) MGTI was unable to present any proof that its contractors had substantial capital. The law casts the burden on the
contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove
that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.
Thus, the contractors were labor-only contractors since they did not have substantial capital or investment which
related to the service performed and respondents performed activities which were directly related to MGTI's main
business. MGTI, the principal employer, was solidarily liable with the labor-only contractors, for the rightful claims of
the employees. Under this set-up, labor-only contractors are deemed agents of the principal, MGTI, and the law makes
the principal responsible to the employees of the labor-only contractor as if the principal itself directly hired or

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employed the employees. In prohibiting labor-only contracting and creating an employer-employee relationship withheld from him up to the time of his actual reinstatement. (As amended by Section 34,
between the principal and the supposed contractors employees, the law intends to prevent employers from Republic Act No. 6715, March 21, 1989)
circumventing labor laws intended to protect employees.
Security of tenure is a paramount right of every employee that is held sacred by the
constitutional guarantees as an act of social justice. The right of every employee to security of
NOTES: tenure is all the more secured by the Labor Code by providing that the employer shall not
terminate the services of an employee, except for a just cause or when authorized by law
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this case of private school teachers, their entitlement to security of tenure is governed by the
purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, Manual of Regulations for Private Schools and not the Labor Code
supplies or places workers to perform a job, work or service for a principal, and any of the following elements are [is] AUTHORIZED CAUSES IN GENERAL
present: 296 just causes
297 and 298 authorized causes
i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or Others:
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are 1. Total and permanent disability
performing activities which are directly related to the main business of the principal; or 2. Disease not curable in 6 months
3. Valid application of a union security clause
ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. 4. Expiration of period in term employment
5. Completion of projct in project employment
The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as 6. Failure in probation
amended. 7. Sale amounting to closure of business
8. Relocation of business to a distant place
Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, 9. Non-feasible reinstatement
tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or 10. Floating status or off-detail beyond 6 months
subcontractor in the performance or completion of the job, work or service contracted out. 11. Resignation
12. Violation of a contractal commitment as such being a consultant to a
The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are competitor
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that 13. Retirement
end. 14. Death of the employee
Differentiation in name is not always observed
The following are the AUTHORIZED causes for termination:
5. Dismissal from Employment 1. The installation of labor-saving devices
DISMISSAL connotes permanent severance or complete separation of the worker from the service on
2. Redundancy
the initiative of the employer regardless of the reasons therefor. [Industrial & Transport Equipment,
Inc. vs. Tomas Tugade, et al., G.R. No. 158539, January 15, 2009] 3. Retrenchment to prevent losses or the closing or
SUSPENSION is a disciplinary measure that is imposed for violation by the employee of a reasonable 4. Cessation of operation of the establishment or undertaking unless the closing is for the
rule of conduct prescribed by the employer and made known to the employee. [Anonas Construction purpose of circumventing the provisions of this Title,
and Industrial Supply Corporation vs. NLRC, G.R. No. 164052, October 17, 2008] In transfer of ownership, the sale or disposition must be motivated by good faith as a
condition for exemption from liability. A change of ownership done in bad faith, or used to
a. Security of Tenure defeat the rights of labor, apart from making the successoremployer liable for the
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate transgressions of its predecessor-employer, the displaced employees shall be deemed
the services of an employee except for a just cause or when authorized by this Title. An absorbed. [Peafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento, et al., G.R.
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of No. 178397, October 20, 2010, Nachura, J.]
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 b. 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.
a. Serious SERIOUS MISCONDUCT
misconduct or An improper and wrong conduct;
willful A transgression of some established and definite rule of
disobedience by action, a forbidden act, a dereliction of duty, willful in
the employee of character, and implies wrongful intent and not mere error in
judgment.
the lawful orders
For misconduct to be considered serious, it must be of such
of his employer or
grave and aggravated character and not merely trivial or
representative in unimportant.
connection with Elements of Serious Misconduct to be a just cause for dismissal:
his work; it must be serious;
it must relate to the performance of the employees duties;
and
it must show that the employee has become unfit to continue
working for the employer
Insubordination, as a just cause for the dismissal of an employee,
requires the concurrence of at least two requisites: (1) the employee's
assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and 92) 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
Elements of Willful Disobedience
(a) the employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful
and perverse attitude; and
(b) the order violated must have been reasonable and lawful,
made known to the employee, and must pertain to the duties
which he has been engaged to discharge.
81
2017-2018
b. Gross and GROSS NEGLIGENCE The want or absence of even slight care or
habitual neglect diligence amounting to a reckless disregard of the safety of a person or
by the employee property. In evinces a thoughtless disregard of consequences without
of his duties;
exerting any effort to avoid them. [Metro Transit Organization, Inc. vs.
NLRC, October 17, 1996; Philippine Aeolus United Corporation vs.
NLRC, supra]
HABITUAL NEGLECT The repeated failure to perform ones duties for
a period of time. [Chua vs. NLRC, G.R. No. 146780, March 11, 2005
citing JEB & Associates vs. NLRC, 254 SCRA 457 (1996)]
Under Article 282 of the Labor Code, gross and habitual neglect by
the employee of his duties is a sufficient and legal ground to
terminate employment. Gross negligence connotes want of care in
the performance of one's duties. Habitual neglect implies repeated
failure to perform one's duties for a period of time, depending upon
the circumstances.
In dismissing an employee for gross and habitual neglect of duties,
the employer must be able to identify what specific duties the
employee violated and whether the violations were gross and
habitual.
TARDINESS/ ABSENTEEISM Habitual tardiness and absenteeism are
forms of neglect of duty. Lack of initiative, diligence, and discipline to
come to work on time everyday exhibit the employees deportment
towards work, which is inimical to the general productivity and business
of the employer.
Even assuming that respondent's absenteeism constitutes willful
disobedience, such offense does not warrant respondent's dismissal.
Not every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal. There must
be a reasonable proportionality between the offense and the penalty
While management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers, pursuant to
company rules and regulations, however, such management
prerogatives must be exercised in good faith for the advancement of
the employer's interest and not for the purpose of defeating or
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circumventing the rights of the employees under special laws and There must be an actual breach; [Salas vs. Aboitiz One, Inc, G.R.
valid agreements. Nevertheless, it may terminate an employee only NO. 178236, June 27, 2008]
for a just cause, his prerogative to dismiss must be exercised
without abuse of discretion. Its implementation should be tempered (2) The loss of confidence must not be simulated;
with compassion and understanding
(3) It should not be used as a subterfuge for causes which are
c. Fraud or willful LOSS OF CONFIDENCE When the employer has reasonable ground to illegal, improper, or unjustified;
breach by the believe the employee is responsible for the misconduct, and the nature of
employee of the (4) It may not be arbitrarily asserted in the face of overwhelming
his participation renders him unworthy of the trust and confidence
trust reposed in evidence to the contrary
demanded by his position. [Caete, Jr. vs. NLRC, G.R. No. 130425,
him by his September 30, 1999; Tolentino vs. PLDT, G.R. No. 160404, June 8,
(5) It must be genuine, not a mere afterthought to justify earlier
employer or duly 2005] Applies only to an employee who holds a position of
action taken in bad faith; [Tolentino vs. PLDT, G.R. No. 160404,
authorized responsibility or trust and confidence, or a person invested with
June 8, 2005; Weh Yueh Restaurant vs. Jayona, G.R. No. 159448,
representative; confidence on delicate matters. [Sanchez vs. NLRC, G.R. No. 124348,
December 16, 2005; Perez vs. PT&T, G.R. No. 152048, April 7,
August 1999; Cruz vs. Coca-Cola Bottlers Phils., Inc., G.R. No
2009]
BREACH OF TRUST A willful violation of the trust. A breach is willful
(6) The employee involved holds a position of trust and confidence
if it is done intentionally, knowingly, and purposely without justifiable
[Molina vs. Pacific Plans, Inc., G.R. No. 165476, March 10, 2006,
excuse, as distinguished from an act done carelessly, thoughtlessly,
484 SCRA 498]
heedlessly, or inadvertently. [Pastor Dionisio Austria vs. NLRC, G.R.
No. 124382, August 16, 1999; PNCC vs. Mandagan, G.R. No. 160965,
(7) proof beyond reasonable doubt need not be established to prove
July 21, 2008
loss of trust and confidence, as reasonable ground is enough. [P.J.
Lhuillier, Inc. vs. NLRC, G.R. No. 158758, April 29, 2005; Norsk
BUT, Loss of trust and confidence can be based on gross negligence
Hydro (Phils.), Inc. vs. Rosales, Jr., G.R. No. 162871, January 31,
2007]
Loss of trust and confidence is premised on the fact that an employee
concerned holds a position where greater trust is placed by management
(8) must be grounded on facts clearly and convincingly established
and from whom greater fidelity to duty is correspondingly expected.
by the employer proving the facts and incidents upon which the loss
This includes managerial personnel entrusted with confidence on
of confidence was based [Philippine Aeolus Automotive United
delicate matters, such as custody, handling or care and protection of the
Corporation vs. NLRC, 311 SCRA 237, 247 (2000)] mere
employer's property. The betrayal of this trust is the essence of the
uncorroborated assertions and accusations will not be sufficient;
offense for which an employee is penalized
[Uniwide Sales Warehouse Club vs. NLRC, G.R. No. 154503,
February 29, 2008; Metro Eye Security, Inc. vs. Salsona, G.R. No.
In the absence of any malicious intent or fraud, an employee's
167637, September 28, 2007] and
negligence or carelessness is not a justifiable ground for the employer's
loss of trust and confidence, for the breach conceived of here should be
breach of trust and confidence as ground for dismissal must be
founded on a dishonest, deceitful or fraudulent act.
related to the performance of the duties of the employee such as
would show unfitness to continue working for the employer. [Blue
Requisites
Dairy Corp. vs. NLRC, G.R. No. 129843, September 14, 1999;

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Rentokil (Initial) Philippines vs. Sanchez, G.R. No. 176219, Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental
December 23, 2008] and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work.
f.Commission of a
Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999, the
crime or offense
by the employee Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary
against the person claims. The NLRC, however, reversed the Labor Arbiter because it found that the petitioners had abandoned their
of his employer or work, and were not entitled to backwages and separation pay. The Court of Appeals in turn ruled that the dismissal of
any immediate the petitioners was not illegal because they had abandoned their employment but ordered the payment of money
member of his claims.
family or his duly
authorized Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless
representatives;
they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on this
and
arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim
g.Other causes Termination of employment pursuant to a Union Security Clause Termination that private respondent did not comply with the twin requirements of notice and hearing.
analogous to the of employment by virtue of a union security clause embodied in a CBA is
foregoing. recognized and accepted in our jurisdiction. This practice strengthens the union Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. In
and prevents disunity in the bargaining unit within the duration of the CBA. By fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work.
preventing member disaffiliation with the threat of expulsion from the union and Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
the consequent termination of employment, the authorized bargaining about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work.
representative gains more numbers and strengthens its position as against other However, petitioners did not report for work because they had subcontracted to perform installation work for another
unions which may want to claim majority representation company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted,
petitioners stopped reporting for work and filed the illegal dismissal case.
Totality of infractions doctrine The totality of infractions or the number of violations
committed during the period of employment shall be considered in determining the penalty to be ISSUE:
imposed upon an erring employee. The offenses committed by petitioner should not be taken
singly and separately Was the dismissal of petitioners for a just cause?

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

DOCTRINE:
YES. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code
1. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of
enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the
neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of
employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b)
abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more
reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no
employee against the person of his employer or any immediate member of his family or his duly authorized
more intention to work. The intent to discontinue the employment must be shown by clear proof that it was
representative; and (e) other causes analogous to the foregoing.
deliberate and unjustified.
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
FACTS:

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abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or misconduct or willful disobedience". There must be reasonable proportionality between, on the one hand, the willful
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more disobedience by the employee and, on the other hand, the penalty imposed therefor.
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more
intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and FACTS:
unjustified. Private respondent Jose Bacalso was employed as an admeasurer by the petitioner Gold City Integrated Port Services,
Inc. ("Gold City"). He was suspected by management of under measuring cargo. Hence, on 23 January 1987, the cargo
In February 1999, petitioners were frequently absent having subcontracted for an installation work for another control officer ordered two (2) other admeasurers to re-measure three (3) pallets of bananas which had already been
company. Subcontracting for another company clearly showed the intention to sever the employer-employee measured by private respondent. The re-measurement revealed that respondent had under-measured the bananas.
relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for
work because they were working for another company. Private respondent at that time warned petitioners that they Private respondent felt insulted by the re-measurement and so the next day he went to the office of the Chief
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever Admeasurer, Rolando Guanaco, and there confronted Nigel Mabalacad, one of the two (2) admeasurers who had re-
their employer-employee relationship. The record of an employee is a relevant consideration in determining the checked his work, regarding the matter. Private respondent quarreled with Mabalacad in the presence of Guanaco,
penalty that should be meted out to him. their immediate superior, inside the latter's office. Guanaco directed private respondent to stop provoking Mabalacad
and told both that being in his office, they should behave properly. Private respondent ignored this oral directive and a
The law imposes many obligations on the employer such as providing just compensation to workers, observance of the fistfight erupted then and there between him and Mabalacad. Both were eventually pacified by their co-workers.
procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good performance, adequate work and Private respondent Bacalso was then charged with assaulting a co-employee and falsifying reports and records of the
diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons company relative to the performance of his duties, and was preventively suspended pending investigation of his case
whose continuance in the service will patently be inimical to his interests. by the union-management grievance committee.

Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, September 21, 1990
DOCTRINES:
1. It is less than fair for management to charge an employee with one offense and then to dismiss him for having
committed another offense with which he had not been charged and against which he was therefore unable
adequately to defend himself. Correct specification of private respondent's alleged wrongdoing was obviously
important here, since the penalty that could appropriately be meted out depended upon what offense was charged and
proven. It has been stressed by the Court that the right of an employee to procedural due process consists of the twin
rights of notice and hearing. The purpose of the requirement of notice is obviously to enable the employee to defend
himself against the charge preferred against him by presenting and substantiating his version of the facts.
2. Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages
the concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful or intentional,
the wilfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to
discharge.
3. Not every case of insubordination or wilful disobedience by an employee of a lawful work-connected order of the
employer or its representative is reasonably penalized with dismissal. For one thing, Article 282 (a) refers to "serious
On 11 April 1987, private respondent received a notice of termination of services upon the grounds of assaulting a co-
employee and of insubordination.
Private respondent Bacalso filed a complaint for illegal dismissal with the Regional Arbitration Branch No. 10 of the
Department of Labor and Employment on 25 May 1987.
Labor Arbiter - In favor of private respondent Bacalso holding that the dismissal was illegal because there was no
evidence to support the charge of insubordination, and that assault on a co-employee was punishable only with fifteen
(15) days suspension under the CBA's Schedule of penalties. In view of the strained relations between the parties,
however, the Labor Arbiter did not order reinstatement and awarded Bacalso separation pay and attorney's fees
instead.
NLRC Affirmed with reinstatement with backwages. It declined to characterize the assailed conduct of Bacalso as
insubordination under Article 282 (a) of the Labor Code because Guangco's order was "not connected with" Bacalso's
work, and did not amount to wilful or gross disrespect.
In its Petition, Gold City emphasizes management's prerogative to promulgate rules of discipline and to enforce the
Schedule of disciplinary sanctions providing for dismissal of an employee who commits gross disrespect of a superior
officer. 13

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In his Comment on the Petition, private respondent Bacalso alleged that he was apprised of the charge of
insubordination only in his notice of termination, and that he was thereby denied an opportunity to be heard on this
charge before being dismissed, in violation of Sections 2 and 5 of Rule 14 of the Omnibus Rules Implementing the
Labor Code.
ISSUES:
1. Whether or not private respondent was denied due process in the course of his dismissal; and
2. Whether or not private respondent was dismissed for a just cause
HELD:
1. No.
The petitioner did not properly inform private respondent of all the infractions of company regulations which
subsequently became the justification for his dismissal. After being preventively suspended, he was charged with
assaulting a co-employee and falsifying reports and records of the company relating to the performance of his duties.
Consequently, throughout the investigation conducted at the company level, private respondent's explanations in
defense were shaped to meet only those charges.
Petitioner discovered it could not sustain the charge of falsification of company records against private respondent.
Since assault upon a co-employee, the charge admitted by private respondent, is punishable only with fifteen (15) days
suspension under the CBA's Schedule of penalties, it in effect became necessary for petitioner to characterize said
assault as an act of "insubordination or disrespect towards a superior officer", an offense punishable with dismissal
under the Schedule. So it came to pass that when private respondent received his notice of termination, the causes
therefor were stated as assault on a co-employee and insubordination.
The Court considers that there was here at least a partial deprivation of private respondent's right to procedural due
process. He could not be expected adequately to defend himself as he was not fully or correctly informed of the
charges against him which management intended to prove. Since Gold City here in effect charged private respondent
with a second offense other than falsification of company records, it was incumbent upon petitioner employer to have
given private respondent additional time and opportunity to meet the new charge against him of insubordination. Gold
City failed to do that here. In so failing, Gold City failed to accord to private respondent the full measure of his right to
procedural due process.
2. No.
Article 282 of the Labor Code provides in part:
Art. 282. Termination by Employer.-An employer may terminate an employment for any of the following causes: a)
Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work.
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Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages the
concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful or intentional, the
wilfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to
discharge. Both requisites are present in the instant case.
It does not follow, however, that private respondent Bacalso's services were lawfully terminated either under
Article 282 (a) of the Labor Code or under the CBA Schedule of penalties. We believe that not every case of
insubordination or wilful disobedience by an employee of a lawful work-connected order of the employer or its
representative is reasonably penalized with dismissal. For one thing, Article 282 (a) refers to "serious misconduct or
willful disobedience". There must be reasonable proportionality between, on the one hand, the willful disobedience by
the employee and, on the other hand, the penalty imposed therefor. Examination of the circumstances surrounding
private respondent's assault upon his co-employee shows that no serious or substantial danger had been posed by that
fistfight to the well-being of his other co-employees or of the general public doing business with petitioner employer;
and neither did such behavior threaten substantial prejudice for the business of his employer. The fistfight occurred
inside the offices of the Surveyors' Division, more particularly, Mr. Guangco's office, away from the view of
petitioner's customers or of the general public.
c. Authorized 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 one (1) month before the intended date thereof. In case of termination due
to the installation of labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or
to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
INSTALLATION OF Streamlining of personnel structure through the installation of
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LABOR REVIEW (Atty. Peter-Joey Usita)
LABOR-SAVING machineries and equipment, or introduction of new methods for
DEVICE purposes of achieving maximum profitability of employers business.
[Agustilo vs. CA, G.R. No. 142875, September 7, 2001]
REDUNDANCY Exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and superfluity of a
position/s may be the outcome of a number of facts, such as over hiring
of employees, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken
by the enterprise. [Coats Manila Bay, Inc. vs. Ortega, G.R. No. 172628,
February 13, 2009]
Requisites for Valid Redundancy Program (1) good faith on the part of
the employer in abolishing the redundant position; and fair and
reasonable criteria in ascertaining what positions are to be declared
redundant, and accordingly abolished.
The ground of redundancy does not require the exhibition of proof of
losses or imminent losses.
The wisdom or soundness of abolishing a position for being redundant is
CLOSURE
not subject to the discretionary review of the labor arbiter and the
NLRC, provided there is no violation of the law and no showing that it
was prompted by an arbitrary or malicious act
RETRENCHMENT One of the ways of terminating employment to preserve the viability of
the business. [Eastridge Golf Club, Inc. vs. Eastridge Golf Club, Inc.,
Labor Union-SUPER, G.R. No. 166760, August 22, 2008]
Termination of employment initiated by the employer through no fault
of the employees, and without prejudice to the latter, resorted to by
management during periods of business recession, industrial depression,
or seasonal fluctuations or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient
machinery, or of automation. [Mobilia Products, Inc. vs. Demecillo,
G.R. No. 170669, February 4, 2009; AMA Computer College vs.
Garcia, infra]
Adequate, credible and persuasive evidence of dire financial
straits from drastic business losses must be presented by the
Two (2) Types of Closure:
employer
It is a means of last resort, and justified only when all other less drastic
means have been tried and found insufficient. [FASAP vs. PAL, infra]
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Requisites for Valid Retrenchment
(a) the retrenchment is necessary to prevent losses and such
losses are proven;
(b) written notice to the employees and to DOLE at least one
(1) month prior to the intended date of retrenchment;
(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. [AMA Computer College, Inc. vs.
Garcia, supra; Manatad vs. PT&T, G.R. No. 172363, March 7,
2008; TPI Philippines Cement Corp vs. Cajucom VIII, 483
SCRA 494, 502- 03 (2006)]
(d) the employer exercised its prerogative to retrench in good
faith; and
(e) it uses fair and reasonable criteria ascertaining who would
be retrenched or retained. [Mendros, Jr. vs. Mitsubishi Motors
Phils. Corporation (MMPC), G.R. No. 169780, February 16,
2009]
(f) the employer must first exhaust all other means to avoid
further losses without retrenching its employees. [FASAP vs.
PAL, G.R. No. 178083, July 22, 2008]
Complete or partial cessation of the operations and/or shutdown of the
establishment of the employer. It is carried out to either stave off the
financial ruin or promote the business interest of the employer.
Requisites for Valid Closure
(a) the closure/cessation of business is bona fide its purpose
is to advance the interest of the employer and not to defeat or
circumvent the rights of employees under the law or a valid
agreement;
(b) a written notice was served on the employees and the
DOLE at least one month before the intended date of
closure/cessation of business; and
(c) IN CASE OF CLOSURE NOT DUE TO FINANCIAL
LOSSES, that the employees affected have been give
separation pay equivalent to month pay for every year of
service or one month pay, whichever is higher. [Eastridge Golf
Club, Inc., supra]
(1) Due to business losses or reverses; and
(2) NOT due to losses - Closure or cessation of business operations is allowed even
if the business is not undergoing economic losses. Just as no law forces anyone to
go into business, no law can compel anybody to continue in it.
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LABOR REVIEW (Atty. Peter-Joey Usita)
Procedural steps required :The law only requires that the employer serve a written
notice of the retrenchment on the employee concerned and the DOLE at least one
month before the intended date of retrenchment.
1-Month Notice Rule If an employee consented to his retrenchment or
voluntarily applied for retrenchment, the required previous notice to the
DOLE is not necessary as the employee thereby acknowledged the existence
of a valid cause for termination of his employment.
A written notice that is short of the 30 days prior to notice rule will constitute
substantial compliance if the period not covered is compensated even if
unworked
Payment of Separation Pay under Article 283 The amount of separation pay must be
computed from the time the employee commenced employment until the cessation of
operations of the employers business
Requisites for Valid Dismissal under Art. 284 : The employer must adduce:
(a) That the employee is suffering from a disease that is:
(1) prohibited by law;
(2) prejudicial to his health; or
(3) prejudicial to his co-employees
(b) A certification from a competent public authority that the disease of the
employee is incurable within a period of 6 months even with proper treatment.
[Duterte vs. Kingswood Trading Co., Inc., G.R. No. 160325, October 4, 2007] (c)
(c) Payment of separation pay of one (1) month salary or one-half (1/2) month
salary for every year of service, whichever is higher, and a fraction of at least 6
months is considered as one (1) year.
Santos v. CA, G.R. No. 141947, July 5, 2001
DOCTRINE:
1. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet
the demands of the enterprise. Based on the facts, PEPSI wanted to restructure its organization. The soundness of
this business judgment of PEPSI is not subject to discretionary review on the part of the Labor Arbiter or of the
NLRC so long as no violation of law or arbitrary and malicious action is indicated.
FACTS:
Petitioners Ismael V. Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists
(CDS) while Hilario M. Pastrana was employed as Route Manager. In a letter dated 26 December 1994, PEPSI
informed its employees that due to poor performance of its Metro Manila Sales Operations it would restructure certain
sales distribution systems. Certain positions, including that of petitioners, were declared redundant and abolished.
Consequently, on 15 January 1995 petitioners left their respective positions, accepted their separation pays and
executed the corresponding releases and quitclaims. However, before the end of the year, petitioners learned that
PEPSI created new positions called Account Development Managers (ADM) with substantially the same duties and
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responsibilities as the CDS. Aggrieved petitioners filed a complaint with the Labor Arbiter for illegal dismissal with a
prayer for reinstatement, back wages and damages.
In their complaint, petitioners alleged that the creation of the new positions belied PEPSIs claim of redundancy.
PEPSI, on the other hand, maintained that termination due to redundancy was a management prerogative the wisdom
and soundness of which were beyond the discretionary review of the courts. It further maintained that the redundancy
program was made in good faith and that a close perusal of the job descriptions of both the CDS and ADM positions
would show that the two (2) were very different in terms of the nature of their functions, areas of concerns,
responsibilities and qualifications.
LA: Dismissed the complaint for lack of merit. Furthermore, he ruled that the one (1)-month written notice prior to
termination required by Art. 283 was complied with.
NLRC: Initially affirmed LA but later on reversed the LA upon finding that the Establishment Termination Report
was only submitted to the DOLE 2 months after the termination had already taken place. onetheless, the NLRC
dismissed the appeal, citing International Hardware, Inc. v. NLRC,which held -
x x x x if an employee consented to his retrenchment or voluntarily applied for retrenchment with the employer due to
the installation of labor-saving devices, redundancy, closure or cessation of operation or to prevent financial losses to
the business of the employer, the required previous notice to the DOLE is not necessary as the employee thereby
acknowledged the existence of a valid cause for termination of his employment x x x x
CA: Dismissed special civil action for certiorari upon finding that the verification and certification against forum
shopping were executed merely by petitioners counsel and not by petitioners.
ISSUE:
Whether the petitioners were illegally dismissed.
HELD:
NO. The question of whether the duties and responsibilities of the CDS and ADM positions are similar is a question
properly belonging to both the Labor Arbiter and the NLRC. In fact, the NLRC merely affirmed the finding of the
Labor Arbiter.Thus it ruled -
x x x We cannot subscribe to the complainants assertions that the positions have similar job descriptions. First, CDS
report to a CD Manager, whereas the ADMs do not report to the CD Manager, leading us to believe that the
organizational set-up of the sales department has been changed.
Second, CDS are field personnel who drive assigned vehicles and deliver stocks to dealers who, under the job
description are those who sell and deliver the same stocks to smaller retail outlets in their assigned areas. The ADMs
are not required to drive trucks and they do not physically deliver stocks to wholesale dealers. Instead, they help
dealers market the stocks through retail.
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LABOR REVIEW (Atty. Peter-Joey Usita)
Therefore, the two (2) positions being different, it follows that the redundancy program instituted by PEPSI was
undertaken in good faith. Redundancy exists when the service capability of the work force is in excess of what is
reasonably needed to meet the demands of the enterprise.
Based on the fact PEPSI wanted to restructure its organization. The soundness of this business judgment of PEPSI has
been assailed by petitioners but the wisdom or soundness of business judgment is not subject to discretionary review
on the part of the Labor Arbiter or of the NLRC so long as no violation of law or arbitrary and malicious action is
indicated. In the case at bar, no such violation or arbitrary action was established by petitioners.
We agree with the NLRC in its application of International Hardware v. NLRC that the mandated one (1) month
notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker
himself. Petitioners assail the voluntariness of their consent by stating that had they known of PEPSIs bad faith they
would not have agreed to their termination, nor would they have signed the corresponding releases and quitclaims.
Having established private respondents good faith in undertaking the assailed redundancy program, there is no need to
rule on this contention.
d. Procedural Due Process (Twin-notice & Hearing)
Art. 277. Miscellaneous provisions.
XXX
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)
The law mandates that the burden of proving the validity of the termination of employment for work. At the same time, he was required to report for work the following day or on May 1, 1998. Gonzales father
rests with the employer. Failure to discharge this evidentiary burden would necessarily mean Anacleto sent a telegram to Acesite stating that he was still recovering from severe stomach disorder and would report
that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, back for work on May 4, 1998. A medical certificate dated May 3, 1998 issued by a Dr. Laureano C. Gonzales, Jr.
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accusations, and conclusions of employers do not provide for legal justification for
dismissing employees
The employer is bound to furnish the employee concerned with two (2) written notices before
termination of employment can be legally effected. One is the notice apprising the employee
of the particular acts or omissions for which his dismissal is sought and this may loosely be
considered as the proper charge. The other is the notice informing the employee of the
management's decision to sever his employment. However, the decision must come only after
the employee is given a reasonable period from receipt of the first notice within which to
answer the charge. The requirement of notice is not a mere technicality but a requirement of
due process to which every employee is entitled.
REMEMBER, Article 277(b) recognizes the right to due process of all workers, without
distinction as to the cause of their termination, thus, none should be construed.
Acesite Corp v. NLRC, G.R. No. 152308, January 26, 2005
DOCTRINES:
1. Willful disobedience entails the concurrence of at least two (2) requisites: the employees assailed conduct has
been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he
had been engaged to discharge.
2. In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may be excused on
the ground of strained relations. This may be invoked against employees whose positions demand trust and
confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement.
FACTS:
Leo A. Gonzales (Gonzales) was hired as Chief of Security of Manila Pavillion Hotel. On January 1, 1995, Acesite
Corporation (Acesite) took over the operations of Manila Pavillion and renamed it Holiday Inn Manila (the hotel).
Acesite retained Gonzales as Chief of Security of the hotel.
Gonzales took a 4-day sick leave and took emergency leave on March 30, 1998. On April 16-29, 1998, he again took a
12-day vacation leave, thereby using up all leaves that he was entitled for the year. Before the expiration of his 12-day
vacation leave or on April 23, 1998, Gonzales filed an application for emergency leave for 10 days commencing on
April 30 up to May 13, 1998. The application was not, however, approved. By Acesites claim, he received a telegram
informing him of the disapproval and asking him to report back for work on April 30, 1998.
Gonzales did not report for work. On even date, he received a telegram from Acesite advising him that he was on
unauthorized leave and asking him to provide a written explanation within the next 24 hours why he was not reporting
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stating that Gonzales was under his care from April 30 to May 3, 1998 was presented to prove that he indeed was In Gonzales case, his assailed conduct has not been shown to have been characterized by a perverse attitude, hence,
treated from such sickness. the first requisite is wanting. His receipt of the telegram disapproving his application for emergency leave starting
April 30, 1998 has not been shown. And it cannot be said that he disobeyed the May 5, 1998 telegram since he
On May 4, 1998, around lunchtime, Gonzales reported for work and presented himself to Johann Angerbauer, then received it only on May 7, 1998. On the contrary, that he immediately went back to Manila upon receipt thereof
Resident Manager of the hotel. Angerbauer claims that when Gonzales went to him, he asked him to explain why he negates a perverse attitude.
had been absent despite orders for him to report back for work to which he (Gonzales) replied that it was necessary for
him to go home to his province in Abra As to Gonzales alleged concealment of his candidacy (for provincial board member) as a ground for Acesites loss of
trust and confidence in him, the same is not impressed with merit. It should be noted that Acesites ground for
Gonzales, on the other hand, claims that when he conferred with Angerbauer, he requested for leave without pay from terminating the services of Gonzales as stated in the Notice of Termination is his alleged acts of
May 5-9, 1998 which was provisionally approved on condition that he (Gonzales) would be sending his explanation insubordination/disobedience. The concealment of candidacy angle harped upon by Acesite can only thus be
through e-mail behind his absences on April 30, 1998 and May 2, 1998 so that Angerbauer could send it to the hotel considered as mere afterthought to further justify his illegal dismissal.
General Manager Phil Kennedy who was then out of the country.
With regard to Gonzales perceived feigning of illness, the same is purely speculatory. If there is anything that
Around 5:33 pm of May 4, 1998, Gonzales sent his explanation to Angerbauer through e-mail. In the evening Gonzales can be faulted for, it is his being too presumptuous that his application for leave would be approved.
Gonzales left for Abra.
2. No. Gonzales petition claims, among others, that the said court should not have given Acesite the option to
Also on May 4, 1998 Angerbauer sent another inter-office memo to Gonzales, requesting him to submit an reinstate him or not since the case at bar does not fall under circumstances for which reinstatement is no longer
explanation for failure to report to work despite the formers request. Gonzales claims that he got hold of a copy of the possible. This contention has no merit.
above-quoted memo only on May 8, 1998. Gonzales, who claims to have received the May 5, 1998 telegram only in
the afternoon of May 7, 1998, immediately repaired back to Manila on May 8, 1998 only to be humiliatingly and In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may be excused on the
ignominiously barred by the guard (a subordinate of Gonzales) from entering the premises It appears that on May 7, ground of strained relations. This may be invoked against employees whose positions demand trust and confidence, or
1998, Angerbauer issued a Notice of Termination through an inter-office memo. whose differences with their employer are of such nature or degree as to preclude reinstatement.

Gonzales thus filed a complaint against Acesite, Angerbauer and Kennedy for illegal dismissal with prayer for In the case at bar, Gonzales was Chief of Security, whose duty was to manage the operation of the security areas of the
reinstatement and payment of full backwages, service incentive leave, 13th month pay, moral and exemplary damages hotel to provide and ensure the safety and security of the hotel guests, visitors, management, staff and their properties
and attorneys fees. Gonzales, however, failed to appear in 2 consecutive hearings despite notice, meriting the dismissal according to company policies and local laws. It cannot be gainsaid that Gonzales position is one of trust and
by the Labor Arbiter of his complaint. confidence, he being in charge of the over-all security of said hotel.

ISSUES:
1. Whether there has been just cause to dismiss Gonzales from employment
2. Whether Gonzales is entitled to be reinstated
HELD:
1. No. Gonzales cannot be considered to have willfully disobeyed his employer. Willful disobedience entails the
concurrence of at least two (2) requisites: the employees assailed conduct has been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.
Thus, reinstatement is no longer possible. In lieu thereof, Acesite is liable to pay separation pay of 1 month for every
year of service.
6. Abandonment
ABANDONMENT the deliberate and unjustified refusal of an employee to resume his employment,
without any intention of returning. It is a form of neglect of duty. [Sugue vs. Triumph International
(Phils.), Inc., infra]
Elements of Abandonment
1. failure to report for work or absence without valid or justifiable reason;
2. clear intention to sever the employer-employee relationship [Sugue vs. Triumph International
(Phils.), Inc., G.R. No. 164804, January 30, 2009; Fe La Rosa vs. Ambassador Hotel, G.R. No.
177059, March 13, 2009]

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3. employer should have reported such fact to the nearest Regional Office of DOLE in accordance
with Rule XXIII, Section 7, Book V, DO 9-97 [R. Transport Corporation vs. Ejandra, G.R. No.
155264, May 6, 2005] The operative act that will ultimately put an end to this relationship is the
dismissal of the employee after complying with the procedure prescribed by law. [Kams
International, Inc. vs. NLRC, G.R. No. 128806, September 28, 1999; Floren Hotel vs. NLRC,
G.R. o. 155264, May 6, 2005]
Presumption: A complaint for illegal dismissal negates allegation of abandonment. [Big AA
Manufacturer vs. Antonio, G.R. No. 160854, March 3, 2006, 484 SCRA 33] Mere failure to
report for work is not enough to amount to abandonment of work. Abandonment is the deliberate
and unjustified refusal of an employee to resume his employment.
BUT, If employer alleges that employee was never even dismissed, the presumption does
not hold.
BECAUSE, Sometimes the complaint for illegal dismissal is only made as leverage to gain
monetary benefits.
THUS, The rule is that an employee must positively prove first that he was indeed
dismissed before the burden of the employer under Article 277(b) applies.
Labor,et.al v. NLRC, G.R. No. 110388, September 14, 1995
DOCTRINE:
1. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid
or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element
as the more determinative factor and being manifested by some overt acts. Mere absence is insufficient. The
immediate filing of the complaint of illegal dismissal is proof enough of their desire to return to work.
FACTS:
Labor et. al. filed an illegal dismissal case against Gold City alleging that they were prevented from entering their
work place on 22 August 1991 to 24 August 1991, that their time cards were taken off the time card rack and they
were advised to resign. They assailed the notice of termination given to them only on 06 September 1991 and denied
having abandoned their work. They further aver that they were illegally dismissed to the violation of labor standards
they filed against private respondent. Gold City, on the other hand, avers that petitioners were not illegally dismissed
but abandoned their work. It also alleged that petitioners were under investigation for dishonest acts which they were
charged with estafa and the filing of the violation of labor standards were made to preempt action taken therein.
Furthermore, it alleged that notices of termination were given on 06 September 1991 to petitioners. However,
petitioners failed to reply and did not report for work.
LA ruled for petitioners. No abandonment as evidenced by the immediate filing of the complaint.
NLRC reversed NLRC. There is abandonment. They were given notices but failed to reply and return to work.
ISSUE:
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WON there was abandonment on the part of the petitioners.
HELD:
NO. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid
or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as
the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. Gold City did
not adduce any proof of some overt act of the petitioners that clearly and unequivocally show their intention to
abandon their posts. On the contrary, the petitioners lost no time in filing the case for illegal dismissal against them,
taking only four days from the time most of them were prevented from entering their work place from 22 August 1991
to 24 August 1991. They cannot, by any reasoning, be said to have abandoned their work, for as we have also
previously ruled, the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return
to work, thus negating the employer's charge of abandonment. Furthermore, petitioners Labor and Bonita presented
proof that during some of those days that they were supposedly on AWOL (absence without official leave), they were
actually on official leave.
7. Constructive Dismissal
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.
CONSTRUCTIVE DISMISSAL - Termination by reason of a bonafide suspension of operation of a
business or undertaking that exceeds six months. Otherwise stated, if the employee was forced to
remain without work or assignment for a period exceeding six months, then he is in effect
constructively dismissed.
INRSELY, A bona fide suspension of the employers operation of a business or undertaking for a
period not exceeding six (6) months does not amount to termination of employment, but only a
temporary displacement of employees. The paramount consideration should be the dire exigency of the
business of the employer that compels it to put some of its employees temporarily out of work. [Pido
vs. NLRC, G.R. No. 169812, February 23, 2007]
BUT, If the operation of the business is resumed within six months, it shall be the duty of the
employer to reinstate his employees to their former positions without loss of seniority rights.
[Lagonoy Bus Co., Inc. vs. CA, G.R. No. 165598, August 14, 2007]
PROVIDED, That the employee should indicate his desire to resume his work not later than one
(1) month from resumption of operation/undertaking; or relief from military or civic duty.
Constructive dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay
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or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the 2. WON private respondent's absence from work on June 2 to June 3, 1986 constituted an abandonment of her job in
employee leaving the latter with no other option but to quit. the company resulting in the forfeiture of the benefits due her (because she believed the transfer was illegal).

Philippine Japan Active Carbon Corp. v. NLRC, G.R. No. 83239, March 8, 1989
DOCTRINE:
1. A constructive discharge is defined as: "A quitting because continued employment is rendered impossible,
unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay."
2. It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes,
and competence, to move them around in the various areas of its business operations in order to "ascertain where
they will function with maximum benefit to the company. An employee's right to security of tenure does not give
him such a vested right in his position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to
him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal.
FACTS:
The private respondent, who had been employed in petitioner corporation since January 19, 1982, as Assistant
Secretary/Export Coordinator, was promoted on May 20, 1983 to the position of Executive Secretary to the Executive
Vice President and General Manager. On May 31, 1986, for no apparent reason at all and without prior notice to her,
she was transferred to the Production Department as Production Secretary, swapping positions with Ester Tamayo.
Although the transfer did not amount to a demotion because her salary and workload remained the same, she believed
otherwise so she rejected the assignment and filed a complaint for illegal dismissal.
LA: The Labor Arbiter found, on the basis of the evidence of both parties, that the transfer would amount to punishment for it, as her complaint for illegal dismissal was filed in good faith .
constructive dismissal hence, her refusal to obey the transfer order was justified.
NLRC: approved the Labor Arbiter's decision but reduced to P10,000 the award of moral damages and the attorney's
fees to 10% of the judgment.
In her comment to the petition, the private respondent argued that she was dismissed without due process because she
was not given the opportunity to be heard concerning the causes of her transfer. Upon a careful consideration of the
petition and the documents annexed thereto as well as private respondent's comment.
ISSUES:
1. WON the employee was constructively discharged
HELD:
1. Employee was NOT constructively dismissed.
In this case, the private respondent's assignment as Production Secretary of the Production Department was not
unreasonable as it did not involve a demotion in rank (her rank was still that of a department secretary) nor a
change in her place of work (the office is in the same building), nor a diminution in pay, benefits, and
privileges. It did not constitute a constructive dismissal.
It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes, and
competence, to move them around in the various areas of its business operations in order to "ascertain where they will
function with maximum benefit to the company. An employee's right to security of tenure does not give him such a
vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him
where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may
not complain that it amounts to a constructive dismissal.
2. Failure to report to work constituted mere insubordination and not abandonment,
On the other hand, we reject the petitioner's contention that the private respondent's absence from work on June 2 to
June 3, 1986 constituted an abandonment of her job in the company resulting in the forfeiture of the benefits due her.
While she was guilty of insubordination for having refused to move out of her position as Executive Secretary to the
Executive Vice-President and General Manager of the company, dismissal from the service would be a draconian
8. Floating Status
Temporary off-detail or floating status is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post until
they are transferred to a new one. It takes place when the security agency's clients decide not to
renew their contracts with the agency, resulting in a situation where the available posts under its
existing contracts are less than the number of guards in its roster. It also happens in instances
where contracts for security services stipulate that the client may request the agency for the
replacement of the guards assigned to it even for want of cause. [Bebina G. Salvaloza vs. NLRC,
et al., G.R. No. 182086, November 24, 2010, Nachura, J.]
An employee who was placed on temporary off-detail on the ground of poor performance
and inefficiency, allegations of which were never made known to him, and instead was given
to various assignments amounts to constructive dismissal. Assignment to different posts
despite repeated errors and poor performance is considered condonation, which the employer
cannot invoke to justify placing the employee on temporary off-detail.

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There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the CA were one in their
Reyes v. RP Guardians Security Agency, G.R. No. 193756, April 10, 2013
DOCTRINE:
1 Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a
security agency's client decided not to renew their service contract with the agency and no post is available for the
relieved security guard. Such situation does not normally result in a constructive dismissal. Nonetheless, when the
floating status lasts for more than six (6) months, the employee may be considered to have been constructively
dismissed.
FACTS:
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemesio M. Calanno, Rogelio A. Supe, Jr.,
Roland R. Trinidad, and Aurelio A. Duldulao (petitioners) were hired by respondent RP Guardians Security Agency,
Inc. (respondent) as security guards. They were deployed to various clients of respondent, the last of which were the
different branches of Banco Filipino Savings and Mortgage Bank (Banco Filipino).
In September 2006, respondent's security contract with Banco Filipino was terminated. Petitioners were individually
informed of the termination of the security contract with Banco de Oro. Petitioners were directed to turnover their
duties and responsibilities to the incoming security agency and were advised that they would be placed on floating
status while waiting for available post. Petitioners waited for their next assignment, but several months lapsed and
they were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint for constructive dismissal. Respondent claimed that
there was no dismissal, of petitioners, constructive or otherwise, and asserted that their termination was due to the
expiration of the service contract which was coterminus with their contract of employment.
Labor Arbiter ruled in favor of petitioners ordering respondent to pay petitioners separation pay, backwages, refund of
trust fund, moral and exemplary damages, and attorneys fees. Aggrieved, respondent appealed to the NLRC. The
NLRC promulgated its sustained the finding of constructive dismissal by the LA, and the awards she made in the
decision. Respondent filed a petition for certiorari before the CA. The CA rendered a decision dismissing the petition
and affirming the assailed NLRC decision and resolution
ISSUE:
Whether or not the petitioners were constructively dismissed in view of their floating status for a period of more than 6
months.
HELD:
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conclusion that respondent was guilty of illegal dismissal when it placed petitioners on floating status beyond the
reasonable six-month period after the termination of their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a security
agency's client decided not to renew their service contract with the agency and no post is available for the relieved
security guard. Such situation does not normally result in a constructive dismissal. Nonetheless, when the floating
status lasts for more than six (6) months, the employee may be considered to have been constructively dismissed. No
less than the Constitution guarantees the right of workers to security of tenure, thus, employees can only be dismissed
for just or authorized causes and after they have been afforded the due process of law.
9. Consequences of Illegal Dismissal
An illegally dismissed employee is entitled to twin reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct.
a. Reinstatement - 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. It presupposes that the previous position form 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. An order of reinstatement is immediately self-
executory without the need for the issuance of a writ of execution
i. Actual Reinstatement - Actual reinstatement is restoration of an illegally
dismissed employee the position s/he had occupied prior to the illegal dismissal. In
order that s/he may be actually reinstated to his former position, said position from
which one had been removed must still exist, or that there is an unfilled position which
is substantially equivalent or of similar nature as the one previously occupied by the
employee
ii. Payroll Reinstatement - In cases where the employer opted to
choose payroll reinstatement in compliance with the decision of the
labor arbiter, the employee reinstated in the employer's payroll is
equally entitled to receive all the benefits given to a regular employee
under the CBA
Refund Doctrine If the decision of the labor arbiter is later
reversed on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he
received while the case was pending appeal, or it can be deducted
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from the accrued benefits that the dismissed employee was
entitled to receive
iii. Separation in lieu of Reinstatement
Strained Relation rule - Where reinstatement is not feasible, expedient or
practical, as where reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between the employer and
employee has been unduly strained by reason of their irreconcilable differences,
particularly where the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order payment of separation
pay instead of reinstatement.
Other Instances where Separation pay is awarded
if reinstatement is no longer feasible Payment of separation pay as a
substitute for reinstatement is allowed only under exceptional circumstances,
viz.: (1) when reasons exist which are not attributable to the fault or are
beyond the control of the employer, such as when employer closes business;
(2) when he 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.
as financial assistance (in cases of valid dismissal) Although by way of
exception, the grant of separation pay or some other financial assistance may
be allowed to an employee dismissed for just causes on the basis of equity 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. The policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the
underprivileged.
Starlite Plastic Industrial Corp v. NLRC, G.R. No. 78491, March 16, 1989
DOCTRINE:
1. Loss of confidence, when adequately proven, constitutes a valid ground for dismissing an employee, however, the
right of an employer to dismiss employees on such ground must not be exercised arbitrarily and without just cause.
The basis thereof must be clearly and convincingly established and failure to do as such will caused in the illegal
dismissal of an employee. If the employee was dismissed illegally, the employer is obligated to reinstate such
employee to his former position or one reasonably equivalent thereto without loss of seniority rights, and to pay
backwages, without qualification or deduction. In the event that reinstatement is no longer feasible, or if the
employee decides not to be reinstated, the employer shall pay the employee separation pay in lieu of reinstatement.
2. Loss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper,
illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the
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contrary. It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
3. The theft charge not having been established, the dismissal of GOMEZ on the ground of loss of trust and
confidence cannot be sustained.
FACTS:
Edgar Gomez was employed as a factory worker by Starlite sometime in March 1981. On 22 June 1984, Starlite
dismissed him on the ground that he was caught attempting to steal one ballast costing P80.00. Starlite reported the
matter to the police, after grievance meetings failed to resolve the controversy. A criminal complaint was filed against
Gomez, but the investigating fiscal dismissed the same saying that Starlite failed to establish a prima facie case against
Gomez.
Gomez then filed a complaint for illegal dismissal against Starlite. After the parties submitted their respective position
papers, the Labor Arbiter rendered his decision on dismissing the complaint for lack of merit. Gomez appealed the
decision to the NLRC which reversed the ruling of the Labor Arbiter.
Starlite filed a motion for reconsideration on the decision of the NLRC but was denied hence, the a petition for
certiorari was, with a prayer for the issuance of a writ of preliminary injunction or a temporary restraining order.
The Supreme Court issued a temporary restraining order enjoining the NLRC from enforcing its decision and the
petition was given due course.
Starlite mainly contends that it was justified in dismissing Gomez since it had lost its trust and confidence in him for
his act of attempting to steal the ballast and public respondent NLRC therefore committed grave abuse of discretion
amounting to lack of jurisdiction when it ordered the reinstatement of Gomez with full backwages.
Starlite argues that even if the fiscal dismissed the charges against Gomez, still it has reasonable ground to believe that
Gomez was responsible for the theft of the ballast and that such act of dishonesty justifies his dismissal on the ground
of loss of confidence.
ISSUE:
Whether or not Gomez was illegally dismissed by Starlite.
HELD:
Yes, Gomez was illegally dismissed by Starlite. There is no dispute that loss of confidence, when adequately proven,
constitutes a valid ground for dismissing an employee and proof beyond reasonable doubt is not required to terminate
him on this charge. It is sufficient that there is some basis for such loss of confidence and that the employer has
reasonable ground to believe or entertain the moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein would render him absolutely unworthy of the trust and
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confidence demanded of his position. The doctrine goes on further to include the basic rule that the conviction of an
employee in a criminal case is not indispensable to warrant his dismissal by his employer and that the fact that a
criminal complaint against the employee has been dropped by the city fiscal is not binding and conclusive upon a
labor tribunal.
The Court, however, has time and again stressed that the right of an employer to dismiss employees on the ground that
it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause; that although the
dropping of a criminal prosecution for an employee's alleged misconduct does not bar his dismissal and proof beyond
reasonable doubt is not necessary to justify the same, still the basis thereof must be clearly and convincingly
established.
Thus, the Court in the case of General Bank and Trust Co. v. CA (1985) laid down the guidelines in the
applicability of the doctrine of loss of confidence. Loss of confidence should not be simulated. It should not be used as
a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in
the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.
Applying the foregoing in this case, the Court found that there was utter failure here to establish or substantiate the
theft charge against Gomez. The NLRC found that contrary to the Labor Arbiter's findings that Gomez failed to
present an iota of evidence to prove his innocence, Gomez indeed presented exculpatory evidence consisting of the
statements of his co-employees Tamondong and Biong, the former attesting that he was not aware of any missing
ballast from his department and the latter claiming that it was in fact Alvarez who brought out a canopy containing a
ballast, which Gomez was accused of stealing. Although Starlite subsequently submitted the recanting affidavits of
said witnesses, said recanting affidavits did not inspire belief and the NLRC disregarded the same. The NLRC also
found that the findings of the fiscal exonerating Gomez from the theft charge was entitled to great weight as these
findings reveal at once that the theft charge which is the basis for the dismissal of Gomez was not clearly and
convincingly established by petitioner.
In view of the finding that Gomez was dismissed illegally, Starlite is obligated to reinstate Gomez to his former
position or one reasonably equivalent thereto without loss of seniority rights, and to pay backwages for three years,
without qualification or deduction. In the event such reinstatement is no longer feasible, or if Gomez decides not to be
reinstated, Starlite shall pay him separation pay in lieu of reinstatement.
b. Backwages
Components of the amount of backwages An unjustly dismissed employee is entitled to
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. [Siemens Philippines, Inc. vs. Domingo, G.R. No. 150488, July
28, 2008] As a rule, backwages shall be computed from the time of illegal dismissal up to
the finality of the decision
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HOWEVER, If the dismissal was due to cessation of business operations, backwages is not
to be computed beyond the closure of operations, as it is confiscatory.
AND, An employee who was dismissed on the ground of AWOL due to incarceration, is
entitled to reinstatement, and under the principle of no work, no pay, his full backwages
shall only commence from the time he is refused work after acquittal.
Yardsticks in the computation of the final amount of liability in Illegal Dismissal Cases
(1) Employees who have been re-employed without loss of seniority rights shall be
paid backwages but only up to actual reinstatement;
(2) Employees who have been re-employed as new hires shall be restored their
seniority and other preferential rights. However, their backwages shall be computed
only to date of actual re-hiring;
(3) Employees who have reached compulsory age of retirement shall receive
backwages up to their retirement only. The same is true as regards the heirs of those
who have passed away;
(4) Employees who have not been re-employed, plus those who have executed
quitclaims and received separation pay or financial assistance, shall be reinstated
without loss of seniority rights, and paid full backwages, after deduction of whatever
amounts already received; and
(5) Employees who had obtained substantially equivalent or even more lucrative
employment elsewhere in 1998 or thereafter are deemed to have severed their
employment with their previous employer, and shall be entitled to full backwages from
the date of their retrenchment only up to the date they found gainful employment
elsewhere
10. Voluntary Resignation
VI. SOCIAL LEGISLATION
1. SSS Law
a. Coverage- Philippine Blooming Mills v. SSS
2. GSIS Law
3. Limited Portability Law (R.A. No. 7699)
4. Employees Compensation and State Insurance Fund
Belarmino v. ECC, G.R. No. 90204, May 11, 1990
Lopez v. ECC, G.R. No. 90267, December 21, 1993
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