THE CONSTITUTION AND PROTECTION TO LABOR

1. The Constitution affords full protection to labor; when conflicting interest

of labor and capital collide.

2. The Constitutional protection given to labor is not designed to oppress or

destroy capital
The constitutional policy of providing full protection to labor is not intended
to oppress or destroy management. The commitment of the Supreme Court to
the cause of labor does not prevent the High Tribunal fro sustaining the
employer when it is the right.
3. Social justice ceases to be an effective instrument for the “equalization of
the social and economic forces” by the State when it is used to shield
wrongdoing.
The cause of social justice is not served by upholding the interest of the
employees in disregard of the right to the company.
It should be made clear that when the law tilts the scale of justice in favour of
labor, it is but a recognition of the inherent economic inequality between labor
and management. The intent is to balance the scale of justice; to put the two
parties on relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interest of management but
never should the scale be so tilted if the result is an injustice to the employer.

What is the protection-to-labor clause in the Constitution?

“The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full, employment and equality of employment
opportunities for all. It shall guarantee the rights of all workers to self organization,
collective bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and benefits as may be provided
by law.

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

”The State shall regulate the relations between workers and employers, recognizing
the right of labor to its just share in the fruits of production and the right of enterprises
to reasonable returns on investments, and to expansion and growth.”(Sec. 3 (Labor),
Article XIII of the 1987 Constitution)

What are the basic principles enunciated in the Labor Code on protection to labor?

a. The State shall afford protection to labor, promote full employment,, ensure
equal work opportunities regardless of sex, race or creed and regulate the
relations between workers and employers. The State shall assure the rights of
 workers to self-organization, collective bargaining, security of tenure, and just
and humane conditions of work.
b. Labor contracts are not ordinary contracts as the relation between capital and
labor is impressed with public interest.
c. In case of doubt, labor laws and rules shall be interpreted in favor of labor.
d. Labor Code applies to all workers, whether agricultural or non-agricultural.
e. Applicability of Labor Code to government-owned or controlled corporations:
a. When created with original or special charter – Civil Service Laws,
rules and regulations
b. When created under the Corporation Code – Labor Code applies

CONSTRUCTION IN FAVOR OF LABOR

1. In interpreting the Labor Code provisions, the workingman’s welfare should

be the primordial and paramount consideration.
2. In the interpretation of contracts relating to employment, like the CBA, the
constitutional policy of according utmost protection and just to labor should be
upheld
3. As applied to evidence. – If doubts exist between the evidence presented by
the employer and the employee, the doubt should be resolved in favor of the
employee.

Labor Relations
The interactions between employers and employees and their representatives
and the mechanism by which the standards and other terms and conditions of
employment are negotiated, adjusted and enforced.

Labor standards
That part of labor law which prescribes the minimum terms and conditions of
employment which the employer is required to grant to its employees. Examples:
Books One to Four of the Labor Code as well as Book VI thereof which deal with
working conditions, wages, hours of work, holiday pay and other benefits, conditions
of employment of women, minors, househelpers and homeworkers, medical and
dental services, occupational health and safety, termination of employment and
retirement.

What is the distinction between “labor relations” and “labor standards”?

Labor relations - refers to that part of labor law which regulates the relations
between employers and workers. Example: Book V of the Labor Code which deals
with labor organizations, collective bargaining, grievance machinery, voluntary
arbitration, conciliation and mediation, unfair labor practices, strikes,
picketing and lockout.

What are the cases falling under the jurisdiction of the Labor Arbiters?
Labor Arbiters have jurisdiction over the following cases
1. Unfair labor practice (ULP) cases;
2. Termination disputes (or illegal dismissal cases);
3. Cases that workers may file involving wages, rates of pay, hours of work and other
terms and conditions of employment, if accompanied with claim for reinstatement;
4. 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

What are the money claims over which Labor Arbiters have jurisdiction?
Money claims falling within the original and exclusive jurisdiction of the Labor
Arbiters may be classified as follows:
1. any money claim, regardless of amount, accompanied with a claim for
reinstatement (which involves a termination case); or
2. any money claim, regardless of whether accompanied with a claim for
reinstatement, exceeding the amount of P5,000.00 per claimant (which does not
necessarily involve termination of employment).

What is the doctrine of forum non conveniens? May this be invoked against the
exercise of jurisdiction by the Labor Arbiters/NLRC?

In the case of The Manila Hotel Corp. vs. NLRC, (G. R. No. 120077, October13,
2000), the Supreme Court ruled that under the international law doctrine of forum
non conveniens, the NLRC has no jurisdiction when the main aspects of the case
transpired in foreign jurisdictions and the only link that the Philippines has with the
case is that the employee is a Filipino Citizen. In this case, the Filipino was hired
directly (without the intervention of the POEA) by the foreign employer while he was
working in the Sultanate of Oman and was assigned to a hotel in China. The NLRC is
not a convenient forum given that all the incidents of the case – from the time of
recruitment, to employment, to dismissal - occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants – the Palace
Hotel and MHICL - are not nationals of the Philippines. Neither are they “doing
business in the Philippines.” Likewise, the main witnesses, Mr. Schmidt and Mr.
Henk are non-residents of the Philippines.

Explain the doctrine of forum non-conveniens. May this doctrine be invoked

against the exercise of jurisdiction by the labor arbiter?
Under the rule of forum non conveniens, a Philippine court or agency MAY assume
jurisdiction over the case if it chooses to do so, PROVIDED:

a. that the Philippine court is one to which the parties may conveniently resort to;
b. that the Philippine court is in a position to make an intelligent decision as to the law
and the facts; and
c. that the Philippine court has or is likely to have power to enforce its decision.
This doctrine may be invoked against the exercise of jurisdiction of the labor arbiters
as held in the case of Manila Hotel Corporation and Manila Hotel International
limited vs. NLRC and Marcelo Santos which ruled that the NLRC was a seriously
inconvenient forum on the following grounds:
a. The NLRC is an inconvenient forum given that all the incidents of the case- from
the time of recruitment, to employment, and to dismissal occurred outside the
Philippines. The inconvenience is compounded by the fact that the proper defendants
– the Palace Hotel and MHICL
– are not nationals of the Philippines. Neither are they doing business in the
Philippines. Likewise, the main witnesses are non-residents of the Philippines.
b. Neither can an intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This calls for the
application of the principle of lex loci contractus (the law of the place where the
contract was made).
c. Even assuming that the proper decision could be reached by the NLRC, such would
not have any binding effect against the employer, the Palace Hotel. The Palace hotel
is a corporation incorporated under the laws of China and was not even served with
summons, hence jurisdictions over its person was not acquired.

What is the visitorial and enforcement power of the DOLE Secretary and his
duly authorized representatives under Article 128 of the Labor Code?
1. Power to inspect employer’s 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 the Labor
Code and of any labor law, wage order or rules and regulations issued pursuant
thereto.
2. 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.
3. Power to 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.
4. Power to 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.

What are the cases falling under the jurisdiction of the POEA?
The POEA has no more jurisdiction over monetary claims of OFWs, the same having
been transferred to the Labor Arbiters by virtue of R. A. 8042. POEA’s jurisdiction is
now confined to recruitment or preemployment cases which are administrative in
nature, involving or arising out of recruitment laws, rules and regulations, including
money claims arising therefrom or violation of the conditions for issuance of
license to recruit workers.

Art. 212 :
 An “ER” – Any person acting in the interest of the ER, directly or indirectly.
The term shall not include any labor organization or any of its officers except
when acting as an ER.

 “EE” – Any person in the employ of an ER. The term shall not be limited to
the EE’s of a particular ER, unless this Code explicitly states. It shall include
any individual whose work has ceased as a result or in connection with any
 current labor dispute or because of fair labor practice if he has not obtained
any other substantially equivalent or regular employment.

EMPLOYER-EMPLOYEE RELATIONSHIP

FOUR FOLD TEST:

In determining whether a given set of circumstances constitute or exhibit an

employer-employee relationship, the accepted rule is that the elements or
circumstances relating to the following matters shall examined and considered:

a. the selection and engagement of the employees

b. the payment of wages
c. the power of dismissal; and
d. the power to control the employees’ conduct

Of the above, control of the employees’ conduct is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employer-
employee relationship.

Note however that not every form of control will have the effect of establishing an
employer-employee relationship. A line should be drawn between:
a. Rules that merely serve as guidelines, which only promote the result. In such
case, no employer-employee relationship exists.
b. Rules that fix the methodology and bind or restrict the party hired to the use of
such means of methods. These address both the result and the means employed
to achieve it and hence, employer-employee relationship exists.

In the case of jeepney owners/operators and jeepney drivers, the former exercises
supervision and control over the latter. The management of the business is in the
owner’s hands. The owner, as holder of the certificate of public convenience, must
see to it that the driver follows the route prescribed by the franchising authority
and the rules promulgated as regards its operation. Moreover, jeepney drivers
perform activities which are usually necessary or desirable in the usual business or
trade of their employer.
By analogy, the doctrine also applies to the relationship between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, taxi
owners/operators and taxi drivers.

ART. 279 SECURITY OF TENURE

Security of Tenure is the right not to be removed from one’s job without valid cause
and procedure.

a. It is so fundamental it extends to regular(permanent) as well as non-

regular(temporary) workers.
 b. Managerial employees occupying positions of trust and confidence are entitled
to security of tenure, fair standards of employment and the protection of labor
laws.

Article 279 is defective because it recognizes security of tenure only “in cases of
regular employment”. Such specification is not found in the Constitution which
entitles “all workers” to the right to security of tenure.

ART. 280 REGULAR AND CASUAL EMPLOYMENT

REGULAR EMPLOYMENT
An employee is deem a 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.

Standard to Determine Regularity

What determines regularity or casualness is not the employment contract but

the nature of the job. If the job is usually necessary or desirable to the main business
of the employer, then employment is regular. The nature of work performed must be
viewed from a prospective of the business in its entirety and not on a confined scope.

The repeated rehiring and the continuing need for his services are sufficient
evidence of the necessity and indispensability of his service to the business.

KINDS OF REGULAR EMPLOYEES

a) Regular by Nature of Work

Those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.
b) Regular by Years of Service
Those who have rendered at least one year of service, whether continuous or
broken with respect to the activity in which they are employed for.

CASUAL EMPLOYMENT

Simply state otherwise, where employment is one which is neither regular nor
seasonal or fixed for a specific project, it is deemed to be casual. Employment is
casual when it is irregular, unpredictable, sporadic and brief in nature, and outside the
usual business of the employer. Employer is causal where and when it is not
permanent nor periodically regular, but occasional or by chance, and not in the usual
course of the employer’s trade or business.

Casual Employee after one year of service becomes regular.

Project Employment
 A project employee is one whose employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.

Are project employees entitled to separation pay?

No as employment terminates upon completion of the project.

Principal Test
Principal test for determining whether particular employees are properly
characterized as “project employees” is whether or not the “project employees” were
assigned to carry out a “specific project or undertaking”, the duration of which were
specified at the time of the employees were engaged for the project. Length of
time/service of a project employee is not the controlling test of employment tenure but
whether or not “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.

TEMPORARY EMPLOYMENT

An employment may only be said to be “temporary” where it has been fixed

for a specific undertaking “the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for a duration of
the season.

Seasonal Employment

Seasonal employees are considered regular employee. Regular seasonal employees

are those called to work from time to time according to the occurrence of varying
need during a season, and are laid off after a completion of the required phase of
work. The nature of their relationship with the employer is such that during off season
they are temporarily laid off but during summer season they are re-employed, or when
their services may be needed. They are not, strictly speaking, separated from the
service but are merely considered as on leave of absence without pay only suspended.

Seasonal workers who work more than one season are deemed to have acquired
regular employment. The fact that workers do not work continuously for one whole
year but only for the duration of the season does not detract from considering them in
regular employment since in a litany of cases the Supreme Court has already settles
that seasonal workers who are called to work from time to time and are temporarily
laid off during off-season are not separated from service in said period, but merely
considered on leave until re-employed.

FIXED-PERIOD EMPLOYMENT OR TERM EMPLOYMENT

A contract of employment for a definite period terminates by its own terms at the end
of such period. Fixed-period employment contracts continue to be legitimate under
the Labor Code. The decisive determinant in term employment should not be
activities that the employee is called upon to perform. But the day certain agreed upon
by the parties for the commencement and the termination of their employment
relation.

Brent School Doctrine

Art. 280 does not prescribe or prohibit an employment contract with a fixed
period, provided the same is entered into by the parties without any force, duress, or
improper pressure being brought to bear upon the employee and absent any other
circumstance vitiating consent. It does not necessarily follow that where the duties of
the employee consist of activities usually necessary or desirable in the usual business
of the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing essentially contradictory
between a definite period of employment and the nature of employee’s duties.

While the Supreme Court, in Brent case has upheld the legality of a fixed-term
employment, it has done so, however, with a stern admonition that where from the
circumstances it is apparent that the period has been imposed to preclude the
acquisition of tenurial security by the employee, then it should be struck down as
being contrary to law, morals, good customs, public order and public policy.

Pre-termination of Fixed-Period Employment

A fixed-period employee is not regular because his job, as anticipated and
agreed, will exist only for a specified period of time. In other words, it is not
permanent. But he is deemed regular in two cases:

1. The nature of his work is necessary or desirable in the principal business of the
employer.
2. He enjoys security of tenure during the limited time of his employment.
Before the end of the agreed period he cannot be removed without valid cause
and valid procedure. If it is done, the employer commit illegal dismissal. He
commits breach of contract.

Sea-fearers are considered contractual employees. Their employment is governed by

the contracts they sign every time they are hired and their employment is terminated
when the contract expires.

Indicators of Project Employment

Sec 2 of the DO 19
Either one or more of the following circumstances, among others, may be
considered as indicators that an employee is a project employee:

a. The duration of the specific/identified undertaking for which the worker is

engaged is reasonably determinable;
b. Such duration, as well as the specific work/service to be performed, is defined
in an employment agreement and is made clear to the employee at the time of
hiring;
 c. The work/service performed by the employees is in connection with the
particular project/undertaking for which he is engaged;
d. The employee, while not employed and awaiting engagement, is free to offer
his services to any other employer;
e. The termination of his employment in the particular project undertaking is
reported to the DOLE Regional Office having jurisdiction over the workplace
within 30 days following the date of his separation from work, using the
prescribed form on employees termination/dismissal/suspension;
f. An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most construction
companies.

Work Pool

Members of a work pool from which a construction company draws its project
employees, if considered employee of the construction company while in the work
pool, are not project employees or employees for an indefinite period. If they are
employed in a particular project, the completion of the project or any phase thereof
will not mean severance of employer-employee relationship.
If they are free to leave anytime and offer their service to other employers then
they are project employees employed by a construction company.

What makes a project employee regular?

1. Nature of work is vital, necessary and indispensable
2. Continuous rehiring even after cessation of a project.

ART. 281 PROBATIONARY EMPLOYMENT

Definition:

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

Standards of Probationary Employment

Employer shall make known to the employee the standards under which he
will qualify as a regular employee at the time of his engagement. Absence of such, he
will be deemed a regular employee.
If the employment contract does not contain any stipulation that the employee
shall undergo a probationary period of employment – he shall be deemed a regular.

Probation Period

General Rule: Should not exceed six months (180 days) from the date employee
started working.
Exceptions:
1. When the employer and the employee agree on a shorter or longer period.
2. When the nature of the work to be performed by the employee requires a
longer period.
3. When a longer period is required and established by the company policy.

Can it be extended?

Yes, provided there is mutual consent thereto by the employer and employee.
If beneficial to the probationary employee.

Probation Period for Teachers

Full time teachers who have rendered 3 consecutive years of satisfactory service shall
be considered permanent(Manual of Regulations in Private Schools)

Valid Grounds for Termination

During the probation period, the employee enjoys security of tenure except for just
cause as provided by law or under the employment contract.

1. Just and authorized cause - Notice is necessary

2. Failure to qualify as a regular - Notice is NOT necessary
3. Expiration of contract - Notice is NOT necessary

Any probationary employee who is allowed to work after a probationary period shall
be considered a regular employee.

Limitations to Termination of Probation Employment Contract

1. It must be exercised in accordance with the specific requirements of the

contract.
2. If a particular time is prescribed, the termination must be within such time and
if formal notice is required, then that form must be used.
3. The employer’s dissatisfaction must be real and in good faith, not feigned so
as to circumvent the contract or the law;
4. There must be no unlawful discrimination in the dismissal.

In termination cases, the burden of proof is upon the employer to show just or
authorized causes of dismissal by substantial evidence; otherwise, the dismissal is
illegal.

Training (OJT) period plus probationary period equals DOUBLE PROBATION.

LABOR CONTRACTING AND LABOR-ONLY CONTRACTING

When is there “labor-only”contracting?

 A person is deemed to be engaged in “labor-only” contracting where:
1, 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
2. the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer.

When is there “job contracting”?

Specifically, there is “job contracting” where:

1. the contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and
2. the contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct
of his business.

ART. 282 TERMINATION BY EMPLOYER

MANAGEMENT RIGHTS
1. Right to Manage people
2. Right to Contract out jobs
3. Right to Discipline
4. Right to Transfer employees
5. Right to Demote
6. Right to Dismiss – A measure of self preservation. - Not absolute
To constitute a completely valid and faultless dismissal, it is well-settled that
the employer must show not only sufficient ground therefore but it must also
prove that it observed procedural due process by giving the employee 2
notices; one of the intention to dismiss, indicating therein his acts or omissions
complained against, and two, notice of the decision to dismiss; and an
opportunity to answer and rebut the charges against him, in between such
notices.

JUST CAUSE FOR TERMINATION

1. Causes of Dismissal in General

A company has the right to dismiss its erring employees if only as a measure
of self protection against acts inimical to its interest.

2. Serious Misconduct
Misconduct is improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty,
wilful in character, and implies wrongful intend and not mere error in judgement.
The misconduct to be serious within the meaning of the Act must be of such a
grave and aggravated character and not merely trivial or unimportant. Such
misconduct, however serious must nevertheless be in connection with the
employee’s work to constitute just cause for his separation.
Immoral Conduct
That conduct which is so wilful, flagrant, or shameless as to show indifference
to the opinion of good and respectable members of the community. Furthermore, such
conduct must not only be immoral but grossly immoral. That is, it must be so corrupt
as to constitute a criminal act so unprincipled as to be reprehensible to a high degree
or committed under such scandalous or revolting circumstances as to shock the
common sense of decency.

The employer may dismiss an employee if the former has reasonable grounds to
believe, or to entertain the moral conviction, that the latter is responsible for the
misconduct and the nature of his participation therein renders him absolutely
unworthy of the trust and confidence demanded by his position.

3. Willful Disobedience
In order that the wilful disobedience by the employee may constitute a just
cause for the terminating his employment, the orders, regulation, or instruction
of the employer or representative must be:
1. Reasonable and lawful
2. Sufficiently known to the employee
3. In connection with the duties which the employee has been engaged to
discharge.

Elements of Disobedience
The employees assailed conduct must been wilful or intentional, the wilfulness
being characterized by a “wrongful and perverse attitude”; and the other violated been
reasonable, lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge.

Valid Transfer
Management has the right to transfer or reassign an employee. It is his prerogative.
The only limitation on the discretion of management in this regard is its mala fides.
The only time the employer cannot exercise this right is where it is vitiated by
improper motive and is merely a disguised attempt to remove or punish the employee
sought to be transferred.

Invalid Transfer
It must be exercised without grave abuse of discretion, putting to mind the
basic element of justice and fair play. But the transfer can be upheld when there is no
showing that it is unnecessary, inconvenient and prejudicial to the displaced
employee.
Inconvenience tot employee does not necessarily invalidate a transfer order.
But inconvenience caused by unreasonableness of the transfer order makes the order
itself invalid, and disobedience thereof is not a reason to dismiss the worker.
Reasonableness and lawfulness of a rule, order or instruction depend on the
circumstances availing in each case. Reasonableness pertains to the kind or character
of directives and commands and the manner to which they are made.

Transfer with Promotion

 A transfer becomes unenforceable if the transfer is coupled with or is in the
nature of a promotion, where the promotion is rejected by the employee.
There is no law that compels an employee to accept a promotion, as a
promotion is in the nature of a gift or a reward, which a person has the right to refuse.
Any increase in salary should only be considered incidental but never determinative
of whether or not a promotion is bestowed upon an employee.

Transfer vs. Promotion

Transfer is a movement from one particular position to another of equivalent
rank, level or salary without break in the service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities are authorized by law, and usually accompanied by an increase in
salary.

An employee cannot be promoted, even if merely as a result of a transfer, without his

consent. A transfer that results of promotion or demotion, advancement or reduction
or a transfer that aims to lure the employee away from his permanent position cannot
be done without the employees’ consent.

The employer must be able to show that the transfer is not reasonable, inconvenient or
prejudicial to the employee; nor does it involve a demotion in rank or a dimunition of
his salaries, privileges and other benefits. Should the employer fail to overcome this
burden of proof, the employee’s transfer shall be tantamount to constructive dismissal.

The mere fact that it would be inconvenient does not by itself make the transfer
illegal.

NEGLECT OF DUTIES
The employer cannot rightfully discharge an employee for trivial and
unimportant acts of negligence and thus relieve himself from the requirements
imposed by the Act. It is difficult, however, to lay down any general rule as a guide
on the question whether, in a particular case, the act of negligence is gross or not.
Generally, gross neglect means an absence of that diligence that an ordinarily prudent
man would use in his own affairs.

To justify the dismissal of an employee for neglect of duties, however, it does

not seem necessary that the employer show that he has incurred actual loss, damage,
or prejudice by reason of the employee’s conduct. It is sufficient that the gross and
habitual neglect by the employee of his duties tends to prejudice the employer’s
interest since it would be unreasonable to require the employer to wait until he is
materially injured before removing the cause of the impending peril.

Gross Negligence
It is the want or absence or failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless disregard of consequence without
exerting any effort to avoid them. The neglect of duties must not only be gross but
also habitual. Thus a single or isolated acts of negligence do not constitute a just cause
for the dismissal of the employee.
TOTALITY OF INFRACTIONS DOCTRINE
Where the employee has been found to have repeatedly incurred several suspensions
or warnings on account of violations of company rules and regulations, the law
warrants their dismissal as it is akin to “habitual delinquency”.

Abandonment
Abandonment of job is a form of neglect of duty. To constitute abandonment,
there must be a clear and deliberate intent to discontinue one’s employment without
any intention of returning back.
An employee may be dismissed on the ground of abandonment or negligence
of duty where said employee had been absent for a period of 1 year and the prolonged
absence from work was without any valid notice or leave from the company, and said
absence is not by reason of any illness or disease.

Elements of Abandonment
1. The failure to report for work or absence without valid or justifiable reason
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. It is the employer who has the burden of proof
to show a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning.

Tardiness and Absenteeism

Generally, like abandonment are a form of neglect of duty.

DISHONESTY, LOSS OF CONFIDENCE

Fraud is any act, omission, or concealment which involves a breach of legal
duty, trust, or confidence justly reposed and is injurious to another. To contribute a
just cause for terminating the employee’s services, the fraud must be committed
against the employer or representative and in connection with the employee’s work.
Thus, the fraud committed by an employee against 3rd persons not in connection with
his work and which does not in anyway involve his employer is wilfulness or
wrongful intent, the innocent nondisclosure of facts by the employee to the employer
will not constitute a just cause for the dismissal of the employee.

To whom applicable?

Loss of confidence should ideally be applied only to:

1. Cases involving employees occupying positions of trust and confidence.
2. Situation whose the employee is routinely charged with the care and custody
of the employer’s money or property.

GUIDELINES FOR APPLYING DOCTRINE OF LOSS OF CONFIDENCE

1. The loss of confidence should not be simulated.

 2. It should not be used as a subterfuge for causes which are improper, illegal or
unjustified.
3. It may be arbitrarily asserted in the face of overwhelming evidence to the
contrary.
4. It must be genuine, not a mere afterthought to justify earlier actions taken in
bad faith.
5. The employee in-charged holds a position of trust and confidence

While proof beyond reasonable doubt is not required, still substantial evidence is vital
and the burden rests as the employer to establish it.

Commission of A Crime or Offense

Immediate members of the family referred to are limited to spouse, ascendants,

descendants, or legitimate, natural, or adopted brother or sisters of the employer or of
his relatives by affinity in the same degree and by consanguinity within the fourth
civil degree.
Conviction or prosecution not required. An employer may dismiss an employee for
breach of trust in the handling of funds in spite of his having been acquitted in the
course of criminal prosecution.

RIGHT TO SELF-ORGANIZATION

Who may unionize for purposes of collective bargaining negotiations?

General Rule: Any employee may be eligible to join and be a member of a labor
union, beginning on his first day of service, whether employed for definite period or
not.

Who may exercise the right to self-organization?

All persons employed in commercial, industrial and agricultural enterprises and in religious,
charitable, medical, or educational institutions, whether operating for profit or not, shall have the right
to
self-organization and to form, join, or assist labor organizations of their own choosing for purposes of
collective bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural
workers
and those without any definite employers may form labor organizations for their mutual aid and
protection.
Any employee, whether employed for a definite period or not, shall beginning on the first day of
his/her service, be eligible for membership in any labor organization.
Right to join includes right not to join.

Exception:
Managerial employees
A managerial employee is (a) one who is vested with powers or prerogatives
to lay down and execute management policies, or to hire, transfer, suspend, lay off,
recall, discharge, assign or discipline employees; or (b) one who is vested with both
powers or prerogatives. A supervisory employee is different from a managerial
employee, in the sense that the supervisory employee, in the interest of the employer,
effectively recommends such managerial actions, if the exercise of such managerial
authority is not routinary in nature but requires the use of independent judgment.

What is the distinction between managerial employees and supervisory employees?

The principal distinction between managerial employees and supervisory employees is: the
former have the power to decide and do managerial acts; while the latter have the power only to
recommend managerial acts such as laying down policy, hiring or dismissal of employees and the like.

Confidential employees
Confidential employees are those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management
policies in the field of labor relations. The two criteria are cumulative, and both must
be met if an employee is to be considered a confidential employee.

• Government Employees, including GOCC with original charter

• Employees who are members of a cooperative.
• Employees of International Organizations and Specialized Agencies
which are registered with the UN and which enjoy diplomatic immunity.
• Aliens without valid working permits; or Aliens with valid working
permits but are nationals of a country which do not grant Filipinos to
exercise the right of self-organization and to join or assist labor
organization.

COLLECTIVE BARGAINING

Collective Bargaining
A established process looking towards the execution of a labor contract
between the employer and the exclusive bargaining agent of an appropriate bargaining
unit regarding wages, hours of work and other terms and conditions of employment.

Collective Bargaining Agreement

A CBA refers to a contract executed upon request of either the employer or the
exclusive bargaining representative incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and conditions
of employment, including proposal for adjusting any grievances or questions arising
under such agreement.

The CBA is the law between the contracting parties and compliance therewith is
mandated by the express policy of the law. In case of conflict between the words of
the CBA and the evident intention of the parties, the intention must prevail.

Mandatory Aspects if Bargaining

1. Wages, hours of work and other terms and conditions of employment.
2. CBA should not provide for benefits below the standard prescribed by law,
award or order.
3. CBA should include the mandatory provisions such as grievance procedure,
family planning, “no strike – no lock out” clause, cooperative scheme, Labor
Management Council.

Bargaining Representative
 The labor organization designated or selected by the majority of the employees
in an appropriate collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. An employer does not
have the power to declare a union as the exclusive representative of it’s workers for
the purpose of collective bargaining. The union representative need not be an
employee of the company. However, the union officer must be an employee in the
bargaining unit of the company.

ULP in Collective Bargaining;

a. Bargaining in bad faith
b. Refusal to bargain
c. Individual bargaining
d. Gross violation of CBA provisions

Union Security Clause

Closed Shop Agreement. An agreement whereby an employer binds himself to hire

only members of the contracting union who must continue to remain members in
good standing to keep their jobs.

Union Shop Agreement. An agreement whereby the employer binds himself to keep
only union men on the payroll but the employer may hire non-union men who must,
however, join the union within a stipulated time or face dismissal from their jobs.

Modified Union Shop Agreement. Employees who are n

Expiration of CBA
Although a CBA has expired, it continues to have legal effects as between the
parties until a NEW CBA has been entered into.

UNFAIR LABOR PRACTICE

UNFAIR LABOR PRACTICES OF EMPLOYERS

Article 248. Unfair labor practices of employers. – It shall be unlawful for an

employer to commit any of the following unfair labor practice:

(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
(b) To require as a condition of employment that a person or an employee shall not
join a labor organization or shall with-draw from one to which he belongs;
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights to
self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other
support to it or its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and other terms and conditions
of employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of another union at
the time of the signing of the collective bargaining agreement. Employees of an
appropriate bargaining unit who are not members of the recognized collective
bargaining agent may be assessed a reasonable fee equivalent to the dues and other
fees paid by members of the recognized collective bargaining agent, if such non-union
members accept the benefits under the collective bargaining agreement: Provided, that
the individual authorization required under Article 242, paragraph (o) of this Code
shall not apply to the non-members of the recognized collective bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against an employee
for having given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney’s fees to the union or its officers or agents as part
of the settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and
agents of corporations, associations or partnerships who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable.

Test to determine whether or not employer is guilty of ULP

The test of whether an employer has interfered with and coerced employees
within the meaning of is whether the employer has engaged in conduct which (it may
reasonably be said tends to interfere with the free exercise of employees’ rights (to
self-organization) and it is not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements of threats of the employer
if there is a reasonable inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining.

UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS

Article 249. Unfair labor practices of labor organizations. - It shall be unfair labor
practice for a labor organization, its officers, agents or representatives:
(a) To restrain or coerce employees in the exercise of their right to self-organization.
However, a labor organization shall have the right to prescribe its own rules with
respect to the acquisition or retention of membership;
(b) To cause or attempt to cause an employer to discriminate against an employee,
including discrimination against an employee with respect to whom membership in
such organization has been denied or to terminate an employee on any ground other
than the usual terms and conditions under which membership or continuation of
membership is made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the employer, provided it
is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or
deliver any money or other things of value, in the nature of an exaction, for services
which are not performed or not to be performed, including the demand for fee for
union negotiations;
(e) To ask for or accept negotiation or attorney’s fees from employers as part of the
settlement of any issue in collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers,
members of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized or ratified
unfair labor practices shall be held criminally liable.

ELEMENTS OF ULP
a. EER between the offender and the offended
b. The act done is expressly defined in the Code as an act of unfair labor
practice
What is the concept of unfair labor practice?
An unfair labor practice act violates the right of workers to self-organization, is inimical to the
legitimate interests of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupts industrial
peace and hinders the promotion of healthy and stable labor-management relations.

Who are Liable when ULP is Committed by Other

than a Natural Person
The penalty shall be imposed upon the guilty
officers of a corporation, partnership, association or
entity (Art. 289). If the ULP is committed by a labor
organization, the parties liable are the officers,
members of governing boards, representatives or
agents or members of labor associations or
organizations who have actually participated in,
authorized or ratified such (Art. 249).

What are the aspects of unfair labor practice?

There are two (2) aspects, namely: (1) Civil; and (2) Criminal.
Labor Arbiters shall have jurisdiction over the civil aspect of all cases involving unfair labor practices,
which may include claims for actual, moral, exemplary and other forms of damages, attorney’s fees and
other affirmative relief. Recovery of civil liability in the administrative proceedings shall bar recovery
under the Civil Code. No criminal prosecution may be instituted without a final judgment finding that
an unfair labor practice was committed having been first obtained in the labor case.

What is totality of conduct doctrine?

The “totality of conduct doctrine” means that expressions of opinion by an employer, though
innocent in themselves, may be held to be constitutive of unfair labor practice because of the
circumstances under which they were uttered, the history of the particular employer’s labor relations or
anti-union bias or because of their connection with an established collateral plan of coercion or
interference. An expression which might be permissibly uttered by one employer, might, in the mouth
of a more hostile employer, be deemed improper and consequently actionable as an unfair labor
practice.

Doctrine of Successor-Employer
� A new company will be treated as a continuation or successor of the one that closed in the new or
take-over company is engaging in the same business as the closed company or department, or is owned
by the same people, and the "closure" is calculated to defeat the worker's organizational right in which
case the closure may be declared a subterfuge.
� The successor-employer doctrine is just an enforcement of the piercing the veil of corporate
entity.

Factors to Determine Continuity:

1. Retention of CONTROL
2. Use of the SAME PLANT OR FACTORY
3. Use of the SAME OR SUBSTANTIALLY THE
SAME EMPLOYEES, workers, supervisors or
managers
4. Similar or substantially the same work or
production under SIMILAR OR SUBSTANTIALLY
THE SAME WORKING CONDITIONS
5. Use of the SAME MACHINERY AND
EQUIPMENT
6. Manufacture of the SAME PRODUCTS or the
performance of the same services

What is “yellow-dog contract”?

A “yellow dog contract” is an agreement which exacts from workers as a condition of employment,
that they shall not join or belong to a labor organization, or attempt to organize one, during their period
of employment or that they shall withdraw therefrom, in case they are already members of a labor
organization.

Second ULP: Yellow Dog (Art. 248 (B))

Yellow Dog Contract – a promise exacted from
workers as a condition of employment that they are
not to belong to, or attempt to foster, a union during
their period of employment
3 Usual Provisions under the Yellow Dog
Contract
1. a representation by the employee that he is not a
member of a labor union
2. a promise by the employee not to join a labor
union
3. a promise by the employee that, upon joining

What is a runaway shop?

A “runaway shop” is an industrial plant moved by its owners from one location to another to escape
union labor regulations or state laws. It may also be a relocation motivated by anti-union animus rather
than for business reasons.

What is “feather-bedding”?
According to this doctrine, it shall be unfair labor practice for a labor organization, its officers, agents
or representatives to cause or attempt to cause an employer to pay or deliver or agree to pay or deliver
any money or other things of value, in the nature of an exaction, for services

Discrimination in Layoff or Dismissal

� Even where business conditions justified a layoff
of employees, unfair labor practices in the form of
discriminatory dismissal were found where only
unionists were permanently dismissed while non
– unionists were not.
Test of Discrimination
� For the purpose of determining whether or not a
discharge is discriminatory, it is necessary that
the underlying reason for the discharge be
established.
� The fact that a lawful cause for discharge is
available is not a defense where the employee is
actually discharged because of his union
activities. If the discharge is actually motivated by
a lawful reason, the fact that the employee is
engaged in union activities at the time will not lie
against the employer and prevent him from the
exercise of his business judgment to discharge
an employee for

STRIKES, LOCKOUTS AND PICKETING

STRIKES
The concerted temporary stoppage of work as a result of an industrial or labor dispute.

Picketing
The marching to and fro at the employer’s premises, usually accompanied by the
display of placards and other signs making known the facts involved in a labor
dispute.

Boycotts
The concerted refusal to patronize an employer’s goods or services and to persuade
others to a like refusal.

Slowdown
A “strike on the instalment plant”; a wilful reduction in the rate of work by concerted
action of workers for the purpose of restricting the output of the employer, in relation
to a labor dispute. This is generally condemned as inherently illicit and unjustifiable.

Requisite for a valid strike

a. a notice of strike filed with the DOLE at least 30 days before the
intended date thereof or 15 days in case of unfair labor practice;
b. strike vote approved by a majority of the total union membership in the
bargaining unit concerned, obtained by secret ballot in a meeting called
for that purpose;
c. notice given to the DOLE of the results of the voting at least 7 days
before the intended strike.

The presumption of legality of strikes prevails even if the allegation of unfair labor
practice is subsequently found to be untrue, provided that the union and its members
believe in good faith in the truth of such averment.

Purpose must be Lawful

The Labor Code allows only two (2) kinds of strike/lockout:
 a) Economic Strike – is defined as one which is not force wage and other
concessions from the employer which is not required by law to grant. Usually,
this is the consequence of a deadlock in collective bargaining negotiations; and
b) ULP Strike – is called against the unfair labor practices of the employer,
usually for the purpose of making him desist from further committing such
practices.

Means must be Lawful

A strike though valid may be declared invalid where the means employed are illegal.

Lockout
The temporary refusal of the employer to furnish work as a result of an industrial or
labor dispute.

When strike or lockout cannot be declared

1. Violations of CBA which are not gross.
2. Grounds involving inter/intra union disputes
3. When there is no notice of strike or lockout or
without the strike or lockout vote
4. After assumption of jurisdiction by the Secretary
5. After certification or submission of dispute to
compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds
for strike or lockout.
Who may declare a strike or lockout
1. Any legitimate labor organization
2. Any certified or duly recognized bargaining
representative
3. Employer
� If there is certified or duly recognized bargaining
representative, any legitimate labor organization
may declare a strike but only on grounds of unfair
labor practice.
Notice of strike or lockout
1. In case of bargaining deadlocks: at least 30 days
before the intended date of strike
2. In case of unfair labor practice: at least 15 days
before the intended date of strike
3. In case of ULP involving the dismissal of a union
officer which may constitute union-busting: union
may take action immediately after the strike vote
and the submission of the results of the strike
vote to the regional branch of the Board
Contents of the notice of strike or lockout
1. Names and addresses of employer
2. Union involved
3. Nature of industry to which the employer belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant data
7. In case of bargaining deadlocks: the unresolved
issues, written proposals of the union, counterproposals
of the employer and proof of request
for conference to settle differences
8. In case of unfair labor practice: the acts
complained of, and the efforts taken to resolve
the dispute
� Board shall inform the concerned party in case
notice does not conform with the requirements.
are needed to see this picture.
When labor may strike or when the employer may
lock out its workers
If the dispute remain unsettled after the lapse of
the requisite number of days from the filing of the
notice of strike or lockout and of the results of the
election.
The regional branch of the Board shall continue
mediating and conciliating.
Prohibited activities during strikes and lockouts
1. strike or lock-out without first having bargained
collectively strike or lock-out without the
necessary notice being filed with the DOLE
2. strike or lock-out without the necessary vote first
having been obtained and reported to the DOLE
3. strike or lock-out after DOLE has assumed
jurisdiction or the President or after certification
or submission of dispute to the compulsory
arbitration/voluntary arbitration or during the
pendency of cases involving the same grounds
for the strike or lockout
4. knowingly participating in illegal strike or
knowingly participates in the commission of
illegal acts during a strike � ground for
termination of employment
5. obstruct, impede, or interfere with by force,
violence, coercion, threats, or intimidation any
peaceful picketing by employees during any labor
controversy or shall abeit or aid such obstruction
or interference
6. employment or use of any strikebreaker/
employed as a strike breaker
7. bringing in, introducing, or escorting by any public
officer or employee, including officers and
personnel of the AFP or PNP, or any armed
person in any manner of any individual who
seeks to replace strikers in entering or leaving
the premises of a strike area or work in place of
strikers
8. commit any act of violence, coercion or
intimidation while engaged in picketing or
obstruct the ingress or egress from the
employer's premises for lawful purposes or
obstruct public thoroughfares (must be pervasive
and widespread/consistently and deliberately
resorted to as a matter of policy)

Injunction
GR: No court or entity shall enjoin any picketing,
strike or lockout.
Exceptions:
1. When prohibited or unlawful acts are being or
about to be committed that will cause grave or
irreparable damage
2.National Interest

ART 283-284 AUTHORIZED CAUSES

Under 283 an employer may terminate the employment of any employee due to the
following causes;
1. Installation of Labor-Saving Devices
2. Redundancy
3. Retrenchment to protect losses
4. Closing or cessation of operation of the establishment or undertaking unless
closing is for the purpose of circumventing the provisions of law.

Other Authorized Causes:

1. Total or permanent disability of an employee
2. Disease not curable in 6 months
3. Valid application of a union security clause
4. Expiration of period in term of employment
5. Completion of a project employment
6. Failure in probation
7. Sale amounting to closure of business
8. Relocation of business to a distant place
9. Defiance of return-to-work order
10. Commission of illegal acts in a strike
11. Non feasible reinstatement
12. Floating status or off detail beyond 6 months
13. Resignation
14. Violation of a contractual commitment
15. Retirement
16. Death

Labor Saving Devices

Reduction of the number of workers in a company made necessary by the introduction

of machinery in the manufacture of its products is justified.

Redundancy

Redundancy exists where the services of an employee are in excess of what is

reasonably demanded by the actual requirement of the enterprise. Succinctly put, a
position is redundant where it is superfluous, and superfluity of a position or position
may be the outcome of a number of factors, such as over-hiring of workers, decreased
volume of business, or dropping of a particular product line or service activity
previously manufactured as undertaken by the enterprise. The employer has no legal
obligation to keep in its payroll more employee than are necessary for the greater of
its business.

Retrenchment

Retrenchment is one of the economic grounds to dismiss employees. It is resorted to

by an employer primarily to avoid or minimize business losses. However, the
employer bears the burden to prove his allegation of economic or business reverses.
The employer’s failure to prove it necessarily means that the employee’s dismissal
was prejudiced.

Requisite of a Valid Retrenchment

1. The retrenchment is necessary to prevent losses and such losses or proven
2. Written notice to the employees and the DOLE at least one month prior to the
intended date of retrenchment
3. Payment of separation pay equivalent to one month pay or at least ½ month
pay for every year of service whichever is higher.
4. The employer exercises its prerogatives to retrench employees in good faith
for the advancement of its interest and not to defeat or circumvent the
employee’s right to security of tenure.
5. The employer uses fair and reasonable criteria in ascertaining who will be
dismissed or retained among the employees, such as status, efficiency,
seniority, physical fitness, age and financial hardship for certain workers.

STANDARDS OF RETRENCHMENT
1. The losses expected should be substantial and not merely de minimis in extent
2. The substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and good faith by the employer
3. It must b reasonably necessary and likely to effectively prevent the expected
losses.
4. Alleged losses if already realized, and the expected imminent losses sought to
be forestalled, must be proven by sufficient and convincing evidence.

Closure of Business

An employer is allowed to terminate the services of his employees in event of closure

of business as result of grave financial losses. But the employment must comply with
the clearance of report required under the Code.

Requirement
a. Service of a written notice to the employees as to the business to the DOLE
one month before the intended date thereof;
b. The cessation of or withdrawal from business operation must be bona fide in
character
c. Payment to the employees of termination pay amounting to at least ½ month
pay for each year of service, or one month pay whichever is higher.

Right to Close Whether Losing or Not

A closure is not allowed only in cases the business is losing. If the business is not
losing but its owner, for reason of his own, wants to get out of the business, he in
good faith can lawfully do so anytime.

Partial Closure is Also Valid

Temporary shutdown is not a good reason to terminate employees.

Should separation pay be paid in case of closure because of serious business losses?

Art 283 governs the grant of separation benefits in case of closure or cessation of
operation of business establishment NOT due to serious business losses or financial
reverses. Where, however, the closure was due to business losses, the Labor Code
does not impose any obligation upon the employer to pay separation benefits for
obvious reasons.. (North Davao Mining Corp vs. NLRC, G.R. No. 112546)
Where closure was due to an act of the government, workers are not entitled to
separation pay.

Must the company pay the same generous separation benefits that it paid other
employees before its closure?

If the employer still have enough resources to afford payment of separation pay. One
cannot squeeze blood out of a dry stone. Nor water out of a parched land.

Sale in Good Faith

No law prohibits bona fide sale of a going enterprise. When that happens, the
purchaser, unless he agrees to do so, has no legal obligation to continue employing the
employees of the seller. The seller, as employer is obliged to pay his employees
separation pay and other benefits founded on law, policy, or contract. The transferee
may, but is not obliged, to give employment preference to the former employee, if
hired, they may be required to pass probation.
Unless expressly assure, labor contracts such as employment contracts and collective
bargaining agreements are not enforceable against a transferee of an enterprise, labor
contracts being in personam, thus binding only between the parties.

Who pays? The former owner of the company unless stipulated in the contract of sale.
Neither liability for past unfair labor practice of the previous owner, without
stipulation, will pass.

Sale Business: Is it “closure”or “Cessation of business”

In Manlimos case, the court declared that whether it is a closure or cessation is
not material. In any case, the employees lose their jobs unless the new owner elects to
retain or rehire them.

In case of merger or consolidation, they are required to absorb the employees of the
dissolved companies and also to include the length of service earned by the absorbed
employees with their former employees.

Ailment or Disease

If the employee suffers from a disease and his continued employment is

prohibited by law or prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment unless there is a certificate by a
competent public health authority that he disease is of such nature or at such a stage
that it cannot be cured within a period of 6 moths even with proper medical treatment.
Procedure To Terminate Employment

Two Facets of Valid Termination:

a. The legality of the act of dismissal - If is for a just cause - Substantive

b. The legality in manner of dismissal – If there was due process - Procedural

“Ample Opportunity To Be Heard”

If the employee committed an act which was a lawful cause or justification for his
dismissal, the employer should give him the opportunity to explain or present his side.
The right of a person to his labor is deem to be property within the meaning of
Constitutional guarantee. The guarantee of due process applies to all workers,
including managerial employees.

Standards of Due Process

For termination of employment based on just causes

a. A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side.
b. A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him
c. A written notice of termination served on the employee indicating
upon due consideration of all the circumstances, ground have been
established to justifying his termination.

II. For termination of employment on authorized causes, the requirements of due

process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional Office of the DOLE at least 30 days before
the effectivity of the termination, specifying the ground or grounds for
termination.

III. If the termination is brought about by the completion of the contract or phase
thereof, no prior notice is required. If the termination is brought about by the
failure of an employee to meet the standards of the employer in the case of
probationary employment, it shall be sufficient that a written notice is served the
employee within a reasonable time from the effective date of termination.

Preventive Suspension and Investigation do not replace “2 notice requirement”

Ample opportunity – is meant every kind of assistance that management must accord
to the employee to enable him to prepare adequately for his defense.
The law lays down the procedure prior to the dismissal of an employee. It need not be
observed to the letter, but at least, it must be done in the natural sequence of notice,
hearing and judgement.
Procedural Due Process not wiped away by union security clause
Notwithstanding a union security clause in the CBA, the company should have
reasonably satisfied itself by its own inquiry that the union had not been merely acting
arbitrarily and capriciously in impeaching and expelling the employee.

When hearing not required

In employment termination due to authorized causes the due process requirement is

not completely done away with. Investigation and hearing need not be done by the
employer. But the 1 month advance notice to the affected and to DOLE must be
complied with under Art. 282. Any question as to the good faith character of the
dismissal should be held in the DOLE note the employer itself.

If the employer 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 loss to the business, the required
notice to the DOLE is not necessary as the employee thereby acknowledged the
existence of a valid cause for termination.
Hearing is not needed if the employee has admitted his guilt.

Burden of proof rests upon the employer to show that the dismissal is for just and
valid cause.
Proof required is substantial evidence. – It means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.

Condonation by the employer – waiver of his right to insist or the employee’s acts as
ground for dismissal – such condoning and pardoning of the employee’s misconduct
is being deemed to have been conditioned upon future good conduct.

Preventive suspension – The employment may place the worker concerned under the
preventive suspension if he continues employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers.

Cannot last for an indefinite period only for 30 days. After that period the employer
shall reinstate the worker in his former position or in a substantially equivalent
position, or the employer may extend the period of suspension, provided that during
the period of the suspension, he pays the wages and other benefits due to the workers.
In such case the worker shall not be bound to reimburse the amount paid to him
during the extension if the employer decide, after completion of the hearing, to
dismiss the worker.

Amount of Pay for Authorized Causes

For terminations because of introduction of labor saving devices or of

redundancy, the separation pay is equivalent to whichever is higher of either;
a. one month pay
b. one month pay multiplied by the employee’s years of service
 For terminations caused by retrenchment or closure or cessation of operations
not due to serious business losses, the separation pay is lower than that for the
preceding two causes precisely because the business caught in financial straits. The
separation pay is equivalent to whichever is higher of either;
a. one month pay
b. ½ month pay multiplied by the employee’s year of service

A faction of at least 6 months being counted as one year. This is the formula
applicable to separation due to disease under Art. 284.

BACKWAGES vs. SEPARATION PAY

Separation pay is granted where reinstatement is no longer advisable because of

strained relation between the employee and employer. Backwages represent
compensation that should be earned but collected because of the unjust dismissal.
The basis for computing the two is different, the first being usually the length of the
employee’s service and the second, the actual period when he was unlawfully
prevented from working.

Backwages is a form of relief that restores the income that was lost by reason of
unlawful dismissal while separation pay is designed to provide the employee with the
wherewithal during the period that he is looking for another employment.

Backwages
Backwages and reinstatement are two relief given on illegally dismissed employee.
They are separate and distinct from each other. In other words, an illegally dismissed
employee is entitled (1) either reinstatement, if viable, or separation pay if
reinstatement is no longer viable and (2) Backwages

TERMINATION OF EMPLOYMENT
Resignation – the voluntary act of an employee who finds himself in a situation
where he believes that personal reason cannot be sacrificed in favour of the
exigencies of the service, then he has no other choice but to dissociate himself
from his employment.
Written notice of resignation must be given 1 month in advance.

It is withdrawable?

Resignation is withdrawable even if the employee has called it “irrevocable”.

But after it is accepted or approved by the employer, its withdrawal need the
employee’s consent/

Is an employee who voluntarily resigned his job entitled to separation pay?

The general rule is that an employee voluntarily resign from employment is
not entitled to separation pay unless there is a stipulation for payment of such in
the employment contract or CBA, or payment is sanctioned by established
employer practice or policy

CONSTRUCTIVE DISMISSAL
A constructive dismissal is “a quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a dimunition in pay.

ART 286

Floating status must not be longer than 6 months.

ART 287 RETIREMENT

Compulsory - 65 years old with at least 5 years of service

Optional – upon reaching 60 years of age; with at least 5 years of service; at the
option of the employee.

Component of Retirement Pay:

a. 15 days based on the employee’s latest salary;
b. 1/12 of the 13th month pay; and
c. Cash equivalent of the 5 days service incentive leave.

The option to retire upon reaching the age of below 65 is given by law to the
employee not to the employer.

It only becomes the employer’s option where the CBA itself provide for that
option. Extension of service of retiree is left to the sound discretion of the
employee.