2013 lyceum bar ops labor pre-week final 100113 ada

LYCEUM OF THE PHILIPPINES UNIVERSITY COLLEGE OF LAW 2013 LABOR LAW BAR REVIEW HAND-OUTS Ada D. Abad for ONE LYCEUM BAR OPERATIONS 2013

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HAND-OUTS FOR

LABOR LAW REVIEW BAR EXAMS 2013

From the notes of Atty. Ada D. Abad

For 2013 Bar with 20% MCQs and 80% essay

A. GENERAL CONCEPTS

1. CONSTITUTIONAL AND STATUTORY BASIS OF LABOR LAW AND SOCIAL LEGISLATION

1.1 Promotion of human dignity (Art 2, sec 2) 1.2 Freedom from poverty (Art 2, sec 9) 1.3 Principle of distributive justice (Art. 2, sec 9) 1.4 Freedom of Initiative and Self-reliance (Art. 12, sec. 2) 1.5 Right to due process 1.6 Right to equal protection of the law 1.7 Right to self-organization 1.8 Right against involuntary servitude 1.9 Right against imprisonment for debt

Contrary to the concept of “laissez faire”, which is an economic theory that

government should NOT interfere in business affairs, the peculiarity in Philippine labor law is that the State is mandated to balance the conflicting yet intimately intertwined interests1 between management to its profit, as against the employees’ right to self-organization and security of tenure, through the exercise of its police power, as well as the application of the social justice and protection to labor clauses in the Constitution.

Hence, under the principle of incorporation, the minimum labor standards and benefits in Labor Code are considered inherent in every employer-employee relationship even absent a written employment contract.

2. DISTINCTION BETWEEN LABOR LAW AND SOCIAL LEGISLATION

LABOR LAW SOCIAL LEGISLATION

Affects direcly actual employment, e.g., wages

Governs effects of employment, e.g., compensation for death

Meets the daily needs of workers Involves long range benefits

Paid by the employer Paid by government agencies

3. MEMORIZE ARTICLE 3, LABOR CODE: DECLARATION OF POLICY (Mnemonic: APE-SC-SJ)

1 Cebu Institute of Technology vs. Ople, 156 SCRA 620 (1987). Ponente: J. Irene Cortes.


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ART. 3. Declaration of basic policy. - 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.

4 Principle of Social and Distributive Justice: Balancing of interests in case

workers’ and management’s rights collide. -- The policy of social justice is not intended

to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be [a] refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted

the cause of labor with the blemishes of their own character. (Tirazona vs. Phil. Eds Techno-

Service (PET INC.), G.R. No. 169712, 20 January 2009).

5. How to balance conflicting interests; basic principles of labor law

5.1 Burden of proof is always upon employer to show validity of its exercise of management prerogatives, especially as regards termination of employment.

NOTE: HOWEVER COMPLAINANT EMPLOYEE INITIALLY HAS THE BURDEN OF PROVING THAT HE IS AN EMPLOYEE OF THE COMPANY. In sum, the rule of thumb remains: the onus probandi falls on petitioner (EMPLOYEE) to establish or substantiate such claim by the requisite quantum of evidence. “Whoever claims entitlement to the benefits provided by law should establish his or her right thereto x x x.” Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief. In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA. (Danilo “Bitoy” Javier vs. CA, G.R. No. 192558, 15 February 2012)

5.2 There must exist substantial evidence to prove valid exercise of management

prerogatives, viz., just or authorized cause of termination. Proof beyond reasonable doubt not required in administrative cases.

Note: Failure of employer to submit documents which are presumed to be in its possession, inspite of an Order to do so, implies that the presentation of said documents is prejudicial to its case. (De Guzman vs. NLRC, 540 SCRA 210 [Dec. 2007]).

5.3 Interpretation in favor of labor. “Where the contract of employment, being a contract of

adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it.” (Price vs. Innodata Phils., 567 SCRA 122 [2008])

General Rule: Art. 223, Labor Code is given liberal interpretation in line with the desired objective of resolving controversies on the merits, to achieve substantial justice. (Aujero vs. Philcomsat, G.R. No. 193484, January 18, 2012.)

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Exception: When the Labor Arbiter’s Decision became final, the petitioner attained a vested right to said judgment. They had the right to rely fully on the immutability of said Decision. In Sofio vs. Valenzuela (666 SCRA 55 [2012]), it was amply stressed that: “The Court will not override the finality and immutability of a judgment based on the negligence of a party’s counsel in timely taking all the proper recourses from the judgment to justify an override, the counsel’s negligence must only be gross but also be shown to have deprived the party the right to due process.” (Building Care Corporation, etc. vs. Myrna Macaraeg, G.R. No. 198357, 10 December 2012.)

5.4 In the imposition of penalty, whether suspension or termination, the same must be commensurate to the offense committed. (Sagales v. Rustan’s Commercial Corporation (G.R.

No. 166554, 27 November 2008) 5.5 But management prerogatives are likewise to be equally protected when circumstances

show the validity of the exercise.

5. Paradigm shift towards mutual cooperation - It is high time that employer and employee

cease to view each other as adversaries and instead recognize that there is a symbiotic relationship, wherein they must rely on each other to ensure the success of the business. (Toyota Motor Phils. Workers vs. NLRC, 537 SCRA 171)

B. EMPLOYER-EMPLOYEE RELATIONSHIP

1. CONCEPT OF EMPLOYER-EMPLOYEE RELATIONSHIP

The employer-employee relationship is contractual in character. It arises from the agreement of the parties, e.g., for one to render services to another in exchange for remuneration or compensation. However, such relationship is so impressed with the public interest that labor contracts must yield to the common good (Civil Code Art. 1700).. Thus, employment contracts are subject to laws on minimum standards of wages, hours of work, etc., right to unionization, collective bargaining, strikes, picketing and other collective actions.

2. ER-EE RELN. CONDITION SINE QUA NON FOR APPLICATION OF LABOR CODE: JURISDICTION OF LABOR COURTS

The existence of the employer-employee relationship is a condition sine qua non for the application of labor laws. There must be a REASONABLE CAUSAL CONNECTION between the parties and the claim.

"Reasonable causal connection rule." Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-employee relations, then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction.

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Thus, where there is no employer-employee relationship, there can be no obligation on the part of the “employer” to collectively bargain; nor of the “employee” to enforce his rights under the Labor Code. In short, the Labor Code will not apply, and labor courts will not have jurisdiction. The determination of rights and obligations in the relationship which is not one of “employer-employee”, will be governed by civil laws, and which ordinary courts of justice would have jurisdiction.

2.1 Employee benefit: Is it a labor dispute or a civil dispute?

SMART Communications vs. Astorga, G.R. 148132, 28 Jan 2008. -- An employer’s demand for the payment of the market value of the car, or in the alternative, the surrender of a car, is not a labor dispute but a civil one. Hence, this demand properly falls within the jurisdiction of the civil courts. No reasonable causal connection between the claim to the issue of an employer-employee relationship. Contra: Car Loan Agreement with Forfeiture clause in case of resignation. – Grandteq Industrial Steel Products vs. Edna Margallo, G.R. No. 181393, 28 July 2009. – In a termination case, the claim by employee for reimbursement of car loan payments under car loan agreement with employer was dismissed by Labor Arbiter, finding that the contract stipulation should be strictly followed as the law between the parties. On appeal, NLRC/CA and Supreme Court all reversed the Labor Arbiter’s decision, and declared the forfeiture provision of the car loan agreement as null and void.

“Although not strictly a labor contract, a car loan agreement herein involves a benefit extended by the employers, Grandteq and Gonzeles, to their employee Margallo. It should benefit, and not unduly unburden Margallo. The court cannot, in any way, uphold a car loan agreement that threatens the employee with the forfeiture of all the car loan payments he/she had previously made, plus loss of the possession of the car, should the employee wish to resign; otherwise, said agreement can then be used by employer as an instrument to either hold said employee hostage to the job or punish him/her for resigning.” ADA’S COMMENT AS REGARDS JURISDICTION IN CASE OF ESSAY QUESTION:

In determining the nature of the case, check the principal relief sought by the complainant. That is the determinative factor that determines jurisdiction. In the Smart case, the case filed was one of replevin, and hence, jurisdiction lies with the regular courts. In the Margallo case, the principal case was one of illegal termination with claim for reimbursement as well as damages, and hence, properly falls within the jurisdiction of the Labor Arbiter.

2.2 Corporate officer or employee?

Ada’s notes: 1. If the complainant is named as a corporate officer per Articles and/or by-laws, then

the removal of the person is an intra-corporate controversy and within the jurisdiction of the ordinary courts. If not, then the person is an ordinary employee who may only be terminated for just or authorized cause, and after due process compliance.

2. Who are corporate officers?

Under Corporation Code, the following are corporate officers: President, Treasurer and Corporate Secretary

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Other positions specifically mentioned in the Articles and By-laws.

CASES:

Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, 13 October 2010. -- It is not the nature of the services performed, but on the manner of creation of the office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate employees who may only be terminated for just cause. Under Section 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to a By-Law provision giving a president the power to create an office does not qualify as a By-Law position. In the present case, the position of Vice President for Finance and Administration which respondent held was merely created by Matling’s President pursuant to the company’s By-Laws. It is not a corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted from office at will. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.-- Where there is a finding that Locsin was a corporate officer, not an employee. Therefore jurisdiction lies with the RTC and not the Labor Arbiter.

Renato Real vs. Sangu Philippines, Inc. G.R. No.168757, 19 January 2011. -- The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are not stockholders, members or associates, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.’ [Citations omitted.] With the elements of intra-corporate controversy being absent in the case, the complaint for illegal dismissal is not intra-corporate. Rather, it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter pursuant to 217 of the Labor Code.

3. WHO ARE YOUR EMPLOYEES:

TESTS TO DETERMINE EXISTENCE OF EMPLOYER—EMPLOYEE RELATIONSHIP In considering whether an employer-employee relationship exists, one has to determine, at the very outset, whether the facts of the case would give rise to an employer-employee relationship. This calls for the application of several tests.

(MEMORY AID: SOUTH WEST DISASTER CONTROL)

a. Selection and hiring;

b. payment of Wages;

c. power of Dismissal;

d. Control test.

Of these four tests however, the most important test is the element of control, which has been defined as “one where the employer has reserved the right to control not only the work to be achieved, but the manner and method by which such work is to be achieved.” (LVN Pictures vs. LVN Musician’s Guild, 1 SCRA 132). Simply put, an employer-employee

http://sc.judiciary.gov.ph/jurisprudence/2010/october2010/157802.htm




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relationship is deemed to exist where the employer has a right to control the conduct of the employee in relation to his work.”

3.1 Nota Bene on the control test:

Not every form of control will have the effect of establishing an employer-employee

relationship. A line should be drawn between:

o Rules that merely serve as guidelines, which only promote the result. In such case, no employer-employee relationship exists.

o Rules that fix the methodology and bind or restrict the party hired to the use of

such means or methods. These address both the result and means employed to achieve it and hence, employer-employee relationship exists. (Insular Life vs. NLRC, 179 SCRA 459).

3.2 CASES:

3.2.1 Masonic Contractor and Melvin Balais vs. Magdalena Madjos et. al., G.R. No. 185094, 25 November 2009. -- In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (a) the selection and engagement of the employee; (b) the payment of wages; (c) power of dismissal; and (d) the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called "control test" that is the most important element.

The existence of an employer-employee relationship is a question of fact which should be supported by substantial evidence. Petitioners’ defense that they merely contracted the services of respondents through Malibiran fails to persuade us. The facts of this case show that respondents have been under the employ of MCI as early as 1991. They were hired not to perform a specific job or undertaking. Instead, they were employed as all-around laborers doing varied and intermittent jobs, such as those of drivers, sweepers, gardeners, and even undertakers or tagalibing, until they were arbitrarily terminated by MCI in 2004. Their wages were paid directly by MCI, as evidenced by the latter’s payroll summary,18 belying its self-serving and unsupported contention that it paid directly to Malibiran for respondents’ services. Respondents had identification cards or gate passes issued not by Malibiran, but by MCI,19 and were required to wear uniforms bearing MCI’s emblem or logo when they reported for work.

3.2.2 Resident physicians are also employees of Hospital; control test used. (Calamba Medical Center, Inc. vs. NLRC et al, G.R. No. 176484, 25 November 2008; Carpio-Morales) -- NOT ASKED IN THE 2010 2011 and 2012 BAR.

Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task. Resident doctors maintained specific work-schedules as determined by the Medical Director, and hospital supervised and monitored the resident doctors’ work through the nursing supervisors, charge nurses and orderlies. Respondent doctors were made subject to hospital's Code of Ethics, the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property and the hospital's interest. Lastly, IDs, BIR forms and SSS/Medicare program enrollment all prove that resident doctors were employees. With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation

http://www.lawphil.net/judjuris/juri2009/nov2009/gr_185094_2009.html#fnt18

http://www.lawphil.net/judjuris/juri2009/nov2009/gr_185094_2009.html#fnt19

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or incentive similar to what commission-based employees receive as contemplated in the Labor Code

C. NEW LABOR LAWS AND DEPARTMENT ORDERS: 1. REPUBLIC ACT NO. 10361 OTHERWISE KNOWN AS THE “BATAS KASAMBAHAY”.

Effective 18 January 2013. Implemeting Rules effective on 04 June 2013 (by Atty. Enz Palmares)

“For quite a time, the welfare of our poor household helpers has been overlooked and neglected not only by the government but by our society, as well. It is for this reason that this Representation filed Senate Bill No. 860, with the ardent purpose of protecting the rights and interests of this massive, yet invisible everyday army and unsung heroes of the Philippine economy.” – Sen. Jinggoy Estrada 1.1 Applicable to the following personnel whether under a live-in or live-out

arrangements, to wit:

a) General househelp; b) Yaya; c) Cook; d) Gardener; e) Laundry person; or f) Any person who REGULARLY performs domestic work in one household on an

occupational basis.

1.2 NOT applicable to the following personnel: a) Service providers; b) Family drivers;

c) Children under foster family arrangements; and d) Any other person who performs work occasionally or sporadically and not on

an occupational basis. 1.3 EMPLOYMENT CONTRACT - an employment contract must be duly executed by the

employer and the Kasambahay in a language or dialect known to both parties. A copy said contract shall be furnished to the Punong Barangay of the barangay where the employer lives. The employment contract must contain the following pertinent details, to wit:

a) Duties and responsibilities of the Kasambahay, including the responsibility to render satisfactory service at all times;

b) Period of employment; c) Compensation; d) Authorized deductions; e) Hours of work and proportionate additional payment; f) Rest days and allowable leaves; g) Board, lodging and medical attention; h) Agreements on deployment expenses, if any; i) Loan agreement, if any; j) Termination of employment; and k) Any other lawful condition agreed upon by both parties.

1.4 RIGHTS OF KASAMBAHAY

a. MINIMUM WAGE - A minimum wage of Two Thousand Five Hundred Pesos (P2,500.00) per month shall be paid to a Kasambahay employed in the National


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Capital Region (minimum wage of P2,000.00 for those employed in cities and first class municipalities outside NCR, and P1,500.00 for those employed in other municipalities), which must be paid in cash at least once a month.

b. DAILY AND WEEKLY REST PERIODS - The Batas Kasambahay ensures that a

Kasambahay must have an aggregate daily rest period of eight (8) hours per day, and at least twenty four (24) consecutive hours of rest in a week. The employer and Kasambahay may further agree to the following:

1) Scheduled weekly rest day of the Kasambahay, wherein the latter’s preference

must be respected if the same is based on religious grounds; 2) Offsetting a day of absence with a particular rest day; or 3) Accumulating rest days not exceeding five (5) days.

c. SERVICE INCENTIVE LEAVE -- A Kasambahay who has rendered at least one (1)

year of service shall be entitled to a service incentive leave of at least five (5) days with pay. Unused service incentive leave shall not be carried over to succeeding years and are not convertible to cash.

d. THIRTEENTH (13th) MONTH PAY -- The Kasambahay who has rendered at least one

month service shall be entitled to a thirteenth month pay of at least one-twelfth (1/12) of his total basic salary. The 13th month pay shall be paid to the Kasambahay not later than 24 December of every year or upon his/her separation from employment.

e. MANDATORY GOVERNMENT CONTRIBUTIONS (SSS, PHILHEALTH, PAG-IBIG) -

The Batas Kasambahay dictates upon the employers their obligation to register every Kasambahay in their employ to the SSS, PhilHealth and Pag-ibig: provided, that the Kasambahay concerned has rendered at least one (1) month of service to the employer. The mandatory premium payments or contributions shall be borne solely by the employer. However, if the Kasambahay is receiving a monthly wage of at least Five Thousand Pesos (P5,000.00), the latter shall pay the proportionate share in the premium payments or contributions in the SSS, PhilHealth and Pag-ibig.

2. REPUBLIC ACT NO. 10151 ENTITLED “AN ACT ALLOWING THE EMPLOYMENT OF NIGHT

WORKERS, THEREBY REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE

NUMBER FOUR HUNDRED FORTY-TWO, AS AMENDED, OTHERWISE KNOWN AS THE

LABOR CODE OF THE PHILIPPINES”

The general rule before was that women were prohibited from working the nightshift between

the hours of 10:00 p.m. and 6:00 a.m. of the following day, whether with or without

compensation. This prohibition has thus been repealed by Republic Act No. 10151.

The new law applies to all workers who shall be employed or permitted or suffered to work at

night, with the exception of the following:

(a) pregnant women or nursing mothers, subject to certain conditions; and

(b) those workers employed in agriculture, stock raising, fishing, maritime transport and inland

navigation.

As defined, a night worker means “any employed person whose work requires performance of a

substantial number of hours of night work which exceeds a specified limit”. The parameters and

limits have yet to be fixed by the Department of Labor which is presently working on the

Implementing Rules.

Some salient features of this new law are as follows:

2.1 As regards women night workers, the law provides that women who are pregnant or nursing

their children for a period of at least sixteen (16) weeks before or after childbirth, are to be

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allowed alternative to night work, such as: (a) transfer to day work where this is possible; (b) the provision of social security benefits; or (c) an extension of maternity leave.

During the periods referred to above, a woman night worker shall NOT be dismissed or given notice of dismissal, EXCEPT for just or authorized causes provided for in this Code that are not connected with pregnancy, childbirth and childcare responsibilities.

During these instances, the women night worker shall not lose the benefits regarding her status, seniority and access to promotion which may attach to her regular night work position. These measures shall not have the effect of REDUCING the protection and benefits connected with maternity leave under existing laws.

Pregnant women and nursing mothers may be allowed to work at night only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant employees, the period of the pregnancy that they can safely work.

2.2 Rights of the Night Workers:

Right to health assessement. -- At their request, workers shall have the right to undergo a health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work on the following instances: (a) Before taking up an assignment as a night worker: (b) At regular intervals during such an assignment: and (c) If they experience health problems during such an assignment which are not

caused by factors other than the performance of night work. With the exception of a finding of unfitness for night work, the findings of such assessments shall not be transmitted to others without the workers' consent and shall not be used to their detriment.

Right to safe and healthful working conditions

Right to compel employer to provide the following mandatory facilities: (a) Suitable first aid facilities (b) Adequate or reasonable facilities such as sleeping or resting quarters in the

establishment (c) Adequate transportation from the work premises to the nearest point of their

residence subject to the exceptions and guidelines to be provided by the DOLE

Right to transfer to similar job. -- Night workers who are certified as unfit for night work, due to health reasons, shall be transferred, whenever practicable, to a similar job for which they are unfit to work. If such transfer to a similar job is not practicable, these workers shall be granted the same benefits as other workers who are unable to work, or to secure employment during such period. A night worker certified as temporarily unfit for night work shall be given the same protection against dismissal as other workers who are prevented from working for reasons of health"

Right to social services. -- Appropriate social services shall be provided for night workers and, where necessary, for the workers performing night work."

2.3 Consultation on Night Work Schedules. - Before introducing work schedules requiring the

services of night workers, the EMPLOYER shall CONSULT the workers' representatives/labor organizations concerned on the details of such schedules and the forms of organization of night work that are best adapted to the establishment and its personnel, as well as on the occupational health measures and social services which are required. In establishments employing night workers, consultation shall take place regularly.


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2.4 AS AMENDED BY DOLE Department Order No. 119-12 [24 January 2012]

Implementing Rules of RA 10151 –

GENERAL RULE:

There should always be facilities for transportation or sleeping/resting quarters for

the night workers.

EXCEPTIONS:

• When there is already an existing company policy or CBA providing for an equivalent or

superior benefit i.e. there is already transportation allowance;

• Start or end of work rendered does not fall between 12mn to 5am;

• Where the workplace is located in an area that is accessible twenty four (24) hours to

public transportation; and

• Insufficient number or night workers to warrant the necessity for sleeping/resting

facilities.

3. REPUBLIC ACT 9710 ENTITLED “THE MAGNA CARTA OF WOMEN”. (By Atty. Suzy

Selleza)

Recognizing the economic, political, and sociocultural realities affecting women’s current condition, Republic Act No. 9710, otherwise known as the Magna Carta of Women was enacted along with its Implementing Rules effective on 15 September 2009 and 10 July 2010, respectively. The promulgation of this law affirms the role of women in nation building, and recognizes the substantive equality of women and men. As such, measures have been made to promote empowerment of women, pursue equal opportunities for women and men, ensure equal access to resources and to development results and outcome, and eliminate discrimination and inequality in the economic, political, social and cultural life of women and men.

3.1. Discrimination defined:

any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other field;

any act or omission, including by law, policy, administrative measure, or practice, that directly or indirectly excludes or restricts women in the recognition and promotion of their rights and their access to and enjoyment of opportunities, benefits, or privileges;

a measure or practice of general application that fails to provide for mechanisms to offset or address sex or gender-based disadvantages or limitations of women, as a result of which women are denied or restricted in the recognition and protection of their rights and in their access to and enjoyment of opportunities, benefits, or privileges; or women, more than men are shown to have suffered the greater adverse effects of those measures or practices; and

discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity, age, poverty, or religion. (Section 4 [B])

3.2. Some pertinent benefits and protection granted:

Protection from all forms of violence, including those committed by the State. -- This includes the incremental increase in the recruitment and training of women in government services that cater to women victims of gender-related offenses. It also ensures mandatory training on human rights and gender sensitivity to all government personnel involved in the protection and defense of women against gender-based violence, and mandates local

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government units to establish a Violence Against Women Desk in every barangay to address violence against women cases; (Section 12)

Equal access and elimination of discrimination against women in education, scholarships and training. This includes revising educational materials and curricula to remove gender stereotypes and images, and outlawing the expulsion, non-readmission, prohibiting enrollment and other related discrimination against women students and faculty due to pregnancy outside of marriage; (Section 16) POSSIBLE QUESTION FOR LABOR OR POLITICAL LAW: TERMINATION OF PREGNANT FACULTY IN CATHOLIC SCHOOLS. POSITION OF SCHOOL RE: ACADEMIC FREEDOM AND RELIGIOUS NATURE OF CATHOLIC SCHOOLS TO IMPOSE HIGHER STANDARDS OF MORALITY VS. STRICT IMPLEMENTATION OF MAGNA CARTA OF WOMEN

Non-discrimination in employment in the field of military, police and other similar services.

Leave benefits of two (2) months with full pay based on gross monthly compensation, for women employees who undergo surgery caused by gynecological disorders, provided that they have rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months; (Section 21) AS AMENDED BY DOLE Department Order No. 112-A [22 May 2012] amended the guidelines on the Implementation of the leave benefit for Women Employees in the private sector. -- Ada DOLE inserted a new provision under Section 4, which provides: “The special leave benefit. – The two (2) months special leave benefit is the maximum period of leave with pay that a woman may avail of under RA 9710. For purposes of determining the period of leave with pay that will be allowed to a woman employee, the certification of a competent physician as required period for recuperation shall be controlling.”

Additionally, Section 6 of the DO 112-A also provides as follows: “Frequency of availment. – A woman employee can avail of the special leave benefit for every instance of surgery due to gynecological disorder for a maximum total period of two (2) months per year.” EFFECT: The total recovery period for a woman employee is limited to two months per year regardless of the frequency of surgical operations that a female employee might undergo.

3.3. Notes: In addition to the two-month gynecological leave, please take note that the woman employee may, in certain cases, avail of additional leaves, to wit:

3.3.1 Battered Woman Leave under Republic Act No. 9262, ANTI-VIOLENCE AGAINST

WOMEN AND CHILDREN:

SECTION 43. Entitlement to Leave. – Victims under this Act shall be entitled to take a paid leave of absence up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations, extendible when the necessity arises as specified in the protection order.

Any employer who shall prejudice the right of the person under this section shall be penalized in accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an employer who shall prejudice any person for assisting a co-employee who is a victim under this Act shall likewise be liable for discrimination.


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3.3.2 Solo Parent Leave under Republic Act No. 8972, SOLO PARENTS’ WELFARE ACT OF 2000:

SECTION 8. Parental Leave. — In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.

D. MANAGEMENT PREROGATIVES:

1. MEMORIZE ELEMENTS: Valid exercise of management prerogatives The free will of the management to conduct its own affairs to achieve its purpose cannot be denied, PROVIDED THAT THE SAME IS EXERCISED: • IN GOOD FAITH (BONA-FIDE IN CHARACTER), • FOR THE ADVANCEMENT OF THE EMPLOYER’S INTEREST; AND • NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES. (Capitol

Medical Center vs. Meriz; San Miguel Brewery and Union Carbide cases).

2. NEW CASES:

2.1 NOT ASKED IN 2012 BAR: Management may validly impose a prohibition against elective office as an exercise of its prerogatives.

Ymbong vs. ABS-CBN, G.R. 184885, 07 March 2012, -- In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded. ABS-CBN strongly believes that it is to the best interest of the company to continuously remain apolitical. While it encourages and supports its employees to have greater political awareness and for them to exercise their right to suffrage, the company, however, prefers to remain politically independent and unattached to any political individual or entity.

2.2 IMPORTANT CASE: Briccio “Ricky” A. Pollo vs. Chairperson Karina Constantino-David, et al., G.R. No. 181881. 18 October 2011. -- Management may

search office computer to check on misconduct; non-infringement of right to privacy.

This case involves a search of office computer assigned to a government employee who was charged administratively and eventually dismissed from the service. The employee’s personal files stored in the computer were used by the government employer as evidence of misconduct. Question: May the search conducted on employee’s office computer and copying of personal files without his knowledge and consent, an infringement of the employee’s constitution right to privacy? Answer: No, it is not an infringement of the right to privacy.. Petitioner failed to prove that he had an actual (subjective) expectation of privacy either in his office or government-issued computer which contained his personal files. Petitioner did not allege that he had a separate enclosed office which he did not share with anyone, or that his office was always locked and not open to other employees or visitors. Neither did he allege that he used passwords or adopted any means to prevent other employees from accessing his computer files. On the contrary, hes ubmits that being in

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the public assistance office of the CSC, he normally would have visitors in his office. Even assuming that petitioner had at least a subjective expectation of privacy in his computer as he claims, the same is negated by the presence of policy regulating the use ofoffice computers. The CSC had implemented a policy that puts its employees on notice that they have no expectation of privacy in anything they create, store, send or receive on the office computers. Under this policy, the CSC may monitor the use of the computer resources usingboth automated or human means. This implies that on-the-spot inspections may be done toensure that computer resources were used only for legitimate business purposes.

Question: May the search on the employee’s computer be considered as reasonable? Answer: Yes. The search of petitioner’s computer files was conducted in connection with an investigation of work-related misconduct prompted by an anonymous letter-complaint addressed to Commissioner David regarding anomalies in the CSC-ROIV where the head of the Mamamayan Muna Hindi Mamaya Na division is supposedly “lawyering” for individuals with pending cases in the CSC. A search by a government employer of an employee’s office is justified at inception when there are reasonable grounds for suspecting that it will turn up evidence that the employee is guilty of work-related misconduct. Under the facts obtaining, the search conducted on petitioner’s computer was justified at its inception and scope.

2.3 RULES ON TRANSFER: It is the prerogative of management to transfer an employee where he can be most useful to the company; Insubordination if not followed.

Tuason vs. Bank of Commerce, et al., G.R. No. 192076, 21 November 2012. -- The right of management to transfer its employees is part of management prerogative. But like all rights, the same cannot be exercised with unbridled discretion. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play.

Question: May an employee refuse to comply with transfer order of Management by raising this as a grievance issue? Manila Pavillion vs. Henry Delada, GR 189947, 25 January 2012, CJ Sereno

Supreme Court: NO!!! The refusal to obey a valid transfer order constitutes willful

disobedience of a lawful order of an employer. Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. In fact, Delada cannot hide under the legal cloak of the grievance machinery of the CBA or the voluntary arbitration proceedings to disobey a valid order of transfer from the management of the hotel. While it is true that Delada’s transfer to Seasons is the subject of the grievance machinery in accordance with the provisions of their CBA, Delada is expected to comply first with the said lawful directive while awaiting the results of the decision in the grievance proceedings.

Pharmacia and UPJOHN, Inc. (now Pfizer Philippines, Inc.) vs. Albayda, Jr., G.R. No. 172724, 23 August 2010. -- It is the prerogative of management to transfer an employee from one office to another within the business establishment based on its assessment and perception of the employee’s qualifications, aptitudes and competence, and in order to ascertain where he can function with maximum benefit to the company. This is a privilege inherent in the employer’s right to control and manage his enterprise effectively. An employee who refuses to be transferred

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when such transfer is valid, is guilty of insubordination.

CONTRA; Prince Transport, Inc. vs. Garcia, et al. G.R. No. 167291, 12 January 2011; When transfer is done in bad faith. -- When the President of Prince Transport, Inc. (PTI) suspected that the drivers, conductors, mechanics or inspectors were about to form a union, he made known his objection to the formation of the same. In order to block the continued formation of the union, PTI caused the transfer of all union members and sympathizers to one of its sub-companies, Lubas Transport (Lubas). Later, the business of Lubas deteriorated because of the refusal of PTI to maintain and repair the units being used therein, which resulted in the virtual stoppage of its operations and the workers' loss of employment. The transfer of the workers to Lubas was designed by PTI as a subterfuge to foil the former’s right to organize themselves into a union. This is ULP as it interferes with, restrains or coerces the workers of PTI in the exercise of their right to self-organization.

2.4 Off-detailing or floating status for a period of not more than six (6) months, is not constructive dismissal. –

Nippon Housing Phil. Inc., et. al., vs. Maia Angela Reyes, G.R. No. 177816, 03 August 2011. -- Considering that even labor laws discourage intrusion in the employers’ judgment concerning the conduct of their business, courts often decline to interfere in their legitimate business decisions, absent showing of illegality, bad faith or arbitrariness. Indeed, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or immediately upon being placed on floating status as a consequence of NHPI’s hiring of a new Property Manager for the Project. The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a "floating status" lasts for more than six months that the employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed.

2.5 Contracting out of services. (See also discussion on Valid job-contracting vs. Labor-

only contracting on SECTION F, PAGE ___ HEREUNDER.)

General rule: Management may contact out services in the exercise of its management prerogatives. Doctrinal case: Asian Alcohol Corporation vs. NLRC, 305 SCRA 416, at 435-436 [1999], cf. Serrano vs. NLRC, G.R. No. 117040 [27 Jan 2000]). – The Supreme Court has held in a number of cases that an employer's good faith in implementing a redundancy program is NOT necessarily destroyed by the availment of the services of an independent contractor, to replace the services of the

terminated employees. The reduction of employees in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Burden

of proof is thus on the complaining employees to show proof that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to do a specific activity. Absent such proof, the Supreme Court has no basis to interfere with the bona fide decision of management to effect a more economic and efficient methods of production.


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MERALCO vs. Quisumbing, 22 Feb 2000 -- The added requirement of consultation imposed by the Secretary of Labor in cases of contracting out for six months or more was rejected by the Supreme Court.

“Suffice it to say that the employer is allowed to contract out services for six months or more. However, a line must be drawn between management prerogatives regarding business operations per se, and those which affect the rights of the employees. In treating the latter, the employer should see to it that its employees are at least properly informed of its decision or modes of action in order to attain harmonious labor-mgmt relationship. Management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operations. It has the ultimate determination whether services should be performed by its personnel or contracted out to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management decides. Contracting out of services is an exercise of business judgment or management prerogative; Absent proof that management acted maliciously or arbitrarily, the Court will not interfere in the exercise of such judgment by the employer.”

E. KINDS OF EMPLOYMENT

1. REGULAR EMPLOYEES – those who are hired for activities which are necessary or desirable in the usual trade or business of the employer

ABS-CBN CASES: (a) ON-CAMERA TALENT IS AN INDEPENDENT CONTRACTOR: Jose Sonza vs. ABS-CBN, G.R. 138051, 10 June 2004. – Relationship of a big name talent (Jay Sonza) and a television-radio broadcasting company is one of an independent contracting arrangement. ABS-CBN engaged SONZA’s 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 SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZA’s script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZA’s work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBN’s 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 performance of SONZA’s work.

(b) “OFF-CAMERA TALENTS” ARE EMPLOYEES.

IMPORTANT BRION CASE: Farley Fulache et al vs. ABS-CBN, G.R. No. 183810, 21 January 2010.. – Complainants were drivers, cameramen, editors, teleprompter and VTR man who sought inclusion in the appropriate bargaining unit of the rank-and-file employees and availment of CBA benefits. ABS-CBN denied employment relationship, on the ground that they were “off-camera talents” in the nature of independent contractors. Pending the regularization case filed before the

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NLRC, ABS-CBN dismissed the drivers for their refusal to sign up employment contracts with service contractor ABLE services. Supreme Court affirmed CA and Labor tribunals findings, re: existence of employer-employee relationship and hence, to be considered as regular employees who may be included in the CBA availments.

2. PROBATIONARY EMPLOYEES – those who are hired generally for regular

positions but are placed on a probationary status for a period of 6 months (as a general rule). May become regular once he has qualified as such in accordance with reasonable standards made known to him at the time of hiring. They are considered regular if they are allowed to work beyond the probationary period.

Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, 06 February 2012, where Supreme Court found that probationary employee was validly dismissed after one month of employment for reasons of obstinacy and utter disregard of company policies, propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives, lack of concern for the company’s interest in refusing to attend companyseminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives, lack of enthusiasm

toward work, and lack of interest in fostering relationship with his co-employees.

May a probationary lineman validly claim that being a subordinate, he cannot be considered a conspirator in the commission of pilferage committed by his superior? Manila Electric Company vs. Jan Carlo Gala, G.R. No. 191288. 07 March 2012. Facts: Complainant Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006. He maintains that: • He had no direct participation in the incident • He was not aware that an illegal activity was going on as he was at some

distance from the trucks when the alleged theft was being committed. • He did not call the attention of the foremen because he was a mere lineman

and he was focused on what he was doing at the time. Supreme Court: Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his probationary employment agreement, viz. • non-violation of the Company Code on Employee Discipline, Safety Code,

rules and regulations and existing policies. • to observe at all times the highest degree of transparency, selflessness and

integrity in the performance of his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest.

Termination of employees on probationary status, guiding principles: 2.1 Burden of proof upon employer to show that the employee failed to

qualify as a regular employee in accordance with reasonable standards made known to him at the time of engagement.

Hacienda Primera Devlpt Corp vs. Villegas, G.R. No. 186243, 11 April 2011. – General Manager hired as probationary employee for three (3)

months. Petitioner Hacienda FAILED to specify the reasonable standards by

which employee’s alleged poor performance was evaluated --- much less, to prove that such standards were made known to him at the start of employment. Thus, the employee is deemed to have been hired from DAY ONE as a regular employee. DUE PROCESS dictates that an employee be

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apprised beforehand of the conditions of his employment and of the advancement therein.

2.2 While the probationary employee is required to be appraised of the standards

against which his performance shall be assessed, there is however no need to inform the probationary employee that he has to follow company rules and regulations – such requirement strains credulity. (Philippine Daily Inquirer vs. Magtibay, 528 SCRA 355 [2007]).

2.3 IMPORTANT BRION CASE, NOT ASKED IN PREVIOUS 2010 AND 2011 BAR. Ruling on Probationary employment on fixed-term contract; expiration of contract NO LONGER valid ground. (Yolanda Mercado, et al. vs. AMA Computer College Parañaque City, Inc. 618 SCRA 218 [2010].) -

The teachers in this case were on probationary status on fixed term contracts from the time they were employed and until the expiration of their teaching contracts. Subsequently, before they were able to complete three consecutive years of service, they were informed by the school that with the expiration of their contract to teach, their contract would no longer be renewed (Ada: In ordinary parlance, “END OF CONTRACT). Hence, they filed a complaint for illegal dismissal.

The Labor Arbiter ruled that the teachers were illegally dismissed and stated that Article 281 of the Labor Code on probationary employment applied to the case. On appeal, the NLRC affirmed the Labor Arbiters decision. On a petition for certiorari, the Court of Appeals reversed the decision of the NLRC. Issues: Are fixed-term probationary contracts valid? Was the school correct in simply refusing to renew the probationary fixed-term contract? Decision: the Supreme Court stated that nothing is illegitimate in defining the school-teacher on fixed term basis. HOWEVER, the school should not forget that its system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew contracts simply because their terms have expired. Given the clear constitutional and statutory intents, the Supreme Court concluded that in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-period character of the contract must give way. NOTE1: In this instance therefore, the School illegally dismissed the teachers because it simply refused to renew the employment contract. Because the teachers were under a probationary period, it was incumbent upon the School to have evaluated said teachers, and to have informed them of their failure to qualify as regular employees in accordance with standards made known to them at the time of hiring. While the Supreme Court can grant that the standards were duly communicated to the teachers and could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the school’s evidence still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show how these standards were applied to the teachers. Without these pieces of evidence the Supreme Court had nothing to consider and pass upon as

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valid or invalid for each of the teachers. Inevitably, the non-renewal (or effectively, the termination of employment of employees on probationary status) lacks the supporting finding of just cause that the law requires and, hence, is illegal. NOTE2: To highlight what the Supreme Court meant by a fixed-term contract specifically used for the fixed term it offers, a replacement teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent teacher on a one-year study leave. The expiration of the replacement teacher’s contracted term, under the circumstances, leads to no probationary status implications as she was never employed on probationary basis; her employment is for a specific purpose with particular focus on the term and with every intent to end her teaching relationship with the school upon expiration of this term. (Mercado, et al. vs. AMA Computer College Parañaque City, Inc. 618 SCRA 218 [2010]. Emphasis supplied.)

2.4 While the probationary employee is required to be appraised of the standards

against which his performance shall be assessed, there is however no need to inform the probationary employee that he has to follow company rules and regulations – such requirement strains credulity. (Philippine Daily Inquirer vs. Magtibay, 528 SCRA 355 [2007]).

3. TERM EMPLOYEES – those who are hired for a specific period, the arrival of the date specified in the contract of which automatically terminates the employer-employee relationship. (Brent School vs. NLRC, 181 SCRA 702 [1989], reiterated in AMA Computer – Paranaque vs. Austria, 538 SCRA 438 [November 2007]).

3.1 A contract of employment for a definite period terminates by its own terms at the

end of such period 3.2 The decisive determinant in term employment should not be the 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.

3.3 Criteria for fixed term employment contracts so that the same will not

circumvent security of tenure:

A. The fixed period of employment was KNOWINGLY AND VOLUNTARILY AGREED UPON by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; AND

B. It satisfactorily appears that the employer and employee DEALT WITH EACH

OTHER ON MORE OR LESS EQUAL TERMS with no moral dominance whatever being exercised by the former on the latter.(PNOC vs. NLRC [G.R. No. 97747, 31 March 1993] and Brent School vs. NRLC, 181 SCRA 702]

CASE: Question: Whether or not fishing boat crew individually hired on a “por viaje” basis with contracts per trip are term employees or regular employees? Lynvil

Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, 01 February 2012 Textually, the provision that: “NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang “por viaje” na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila” is for a fixed period of employment. In the context, however, of the


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facts that: (1) the respondents were doing tasks necessarily to Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the security of tenure of the respondents as regular employees. And respondents are so by the express provisions of the second paragraph of Article 280, thus: xxx 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.” N.B. ADA’S CRITIQUE: Do not agree with the reasoning made by the Supreme Court, viz., application of the collatilla in Par 2 of Article 280, Labor Code. Following the doctrinal case of Mercado vs. NLRC, said collatilla should only apply to casual employees, and not to the classification of project or seasonal employees in first paragraph. If at all, argument that the term contract was not entered into by the parties on equal footing, would be more appropriate.

4. PROJECT EMPLOYEES – The principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project.

4.1 The length of service or the re-hiring of construction workers on a

project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees. (Hanjin Heavy Industries vs. Ibanez et., al., G.R. 170181, 26 June 2008.)

4.2 Indicators of Project Employment is found in Section 2.2(e) and (f) of

DOLE Department Order No. 19, Series of 1993, entitled Guidelines Governing the Employment of Workers in the Construction Industry, to wit: “2.2 Indicators of project employment. - 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 employee is in connection with the particular

project/undertaking for which he is engaged. (d) The employee, while not employed and awaiting engagement, is free to offer his

services to any other employer. (e) The termination of his employment in the particular project/undertaking is reported

to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees' terminations/dismissals/suspensions.

(f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.

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4.3 Purely Project employees – are those employed in connection with a particular construction project.

Effect: (a) not entitled to separation pay if terminated as a result of the completion of

the project or any phase thereof in which they are hired; (b) no prior clearance for termination is necessary, but termination must be

reported to DOLE; (c) however, if the project or phase lasts for more than one (1) year, he may not

be terminated prior to completion of project or phase without previous written clearance from DOLE.

4.4 Employees from Labor Pool -- those employed by a construction company

without reference to any particular project. May be further classified into probationary and regular.

Effect: (a) right to organize and to collectively bargain, or join rank-and-file union of the

construction company may not be curtailed; (b) completion of project or phase will not sever employer-employee

relationship, as they are to be considered employees for an indefinite term. 4.5 Report of termination of project employers compulsory. – Failure to file

termination reports, particularly on the cessation of petitioner’s employment, was an indication that the petitioner was not a project employee but a regular employee. Goma vs. Pamplona Plantation, Inc., 557 SCRA 124 (2007)

4.6 CASES:

Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. 07 March 2012 -- The length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees.

CONTRA: D.M. Consunji vs. Estelito Jamin, G.R. No. 192514, 18 April 2012. -- We agree with the CA. In Liganza v. RBL Shipyard Corporation where this Court held that “[a]ssuming, without granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8) years have undeniably made him a regular employee.” We find the Liganza ruling squarely applicable to this case, considering that for almost 31 years, DMCI had repeatedly, continuously and successively engaged Jamin’s services since he was hired on December 17, 1968 or for a total of 38 times — as shown by the schedule of projects submitted by DMCI to the labor arbiter[ and three more projects or engagements added by Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his engagements. Xxx While the contracts indeed show that Jamin had been engaged as a project employee, there was an almost unbroken string of Jamin’s rehiring from December 17, 1968 up to the termination of his employment on March 20, 1999. With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted termination of employment reports, pursuant

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to Policy Instructions No. 20 (Undated[46]), as superseded by DOLE Department Order No. 19 (series of 1993), has become academic. To set the records straight, DMCI indeed submitted reports to the DOLE but as pointed out by Jamin, the submissions started only in 1992.[48] DMCI explained that it submitted the earlier reports (1982), but it lost and never recovered the reports. It reconstituted the lost reports and submitted them to the DOLE in October 1992; thus, the dates appearing in the reports.

Exodus International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, 23 February 2011.-- Petitioner is a duly licensed labor contractor engaged in painting houses and buildings. Respondents, former painters of the petitioner, filed an illegal dismissal case against petitioner. The Court ruled that there are two types of employees in the construction industry. The first is referred to as project employees or those employed in connection with a particular construction project or phase thereof and such employment is coterminous with each project or phase of the project to which they are assigned. The second is known as non-project employees or those employed without reference to any particular construction project or phase of a project. Respondents belonged to the second type and are classified as regular employees of petitioner. It is clear from the records of the case that when one project is completed, respondents were automatically transferred to the next project awarded to petitioners. There was no employment agreement given to respondents which clearly spelled out the duration of their employment and the specific work to be performed and there is no proof that they were made aware of these terms and conditions of their employment at the time of hiring. Thus, it is now too late for petitioner to claim that respondents are project employees whose employment is coterminous with each project or phase of the project to which they are assigned.

5. SEASONAL EMPLOYEES -- those hired for work or services which is seasonal in

nature, and the employment is for the duration of the season 6. CASUAL EMPLOYEES – those who are hired to perform work or service which is

merely incidental to the business of the employer. Any casual employee who has rendered at least one (1) year of service, whether it be continuous or broken, shall be considered a regular employee with respect to the activity for which he is employed, and his employment shall continue while such activity exists.

EMPLOYEE CLASSIFICATION AS TO RANK 7. MANAGERIAL EMPLOYEES – those vested with powers or prerogatives to lay down

and execute management policies and/or to hire, transfer, suspend, lay-off, recall employees. (Art. 212, par. M, Labor Code)

7.1 CONFIDENTIAL EMPLOYEES: Doctrine of necessary implication and/or

confidential employee rule reiterated.

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 — e.g., the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of the employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be

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accomplished by the “confidential employee rule”. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, G.R. No. 162025, 03 August 2010.; See also: San Miguel Corporation Supervisors and Exempt Employees Union vs. Laguesma, 277 SCRA 370 [1997].

8. SUPERVISORY EMPLOYEES – those who, in the interest of management,

effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature, but requires use of independent judgment. (Art. 212, par. N, Labor Code)

9. RANK-AND-FILE EMPLOYEES - All other employees not falling within the definition

of “managerial” or “supervisory” employees, are considered rank-and-file employees for purposes of Book V of the Labor Code.

FRAMEWORK: General rule: Employment is deemed regular Exception: Probationary Seasonal Term Casual Project Exception to exception: Probationary employees allowed to work after probn. period Casual workers rendering service for more than one year Term employee allowed to work after term Project employee allowed to work after project without any contract

F. INDEPENDENT CONTRACTORSHIP ARRANGEMENTS VS. LABOR ONLY CONTRACTING

Employees of an independent contractor are not your employees.

F.1 VALID INDEPENDENT CONTRACTING OR SUB-CONTRACTING ARRANGEMENTS

Article 106, LB; IRR S8R8B3;

ELEMENTS: (MEMORY AID: I ARM FREE CAPITAL TEMWORK R&B)

There is a job-contracting permissible by law where the contractor/agency carries on

an INDEPENDENT business and undertakes the contract work on his ACCOUNT,

under his own RESPONSIBILITY, using his own MANNER AND METHODS,

FREE from the control of the principal in all matters connected with the

performance of work excepting the results thereof.

He has his own CAPITAL in the form of TOOLS, EQUIPMENT,

MACHINERY, WORK PREMISES, and that the agreement between the contractor

and principal assures the former’s employees of ALL RIGHTS AND BENEFITS

under the law.

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F.2 ELEMENTS OF LABOR-ONLY CONTRACTING PROHIBITED UNDER THE LAW [NO CAP DIRECT CONTROL] -- Philippine Airlines

vs. Ligan, 548 SCRA 181 (2008).

There is labor-only contracting where the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. TWO WAYS OF PROVING LABOR-ONLY CONTRACTING: For labor-only to exist, Sec. 5 of Department Order No. 18-02 requires any two of the elements to be present, viz.:

The contractor or sub-contractor DOES NOT HAVE SUBSTANTIAL

CAPITAL or investment to actually perform the job, work or service under

its own account and responsibility; and the employees recruited, supplied or

placed by such contractors are performing activities which are DIRECTLY RELATED to the main business of the principal;

OR The CONTRACTOR has NO CONTROL over the conduct of the work to be done

by his employees.

To emphasize, a finding that a job contractor is a labor-only contractor is equivalent to declaring that there is an employer-employee relationship between the company and the employees of the labor-only contractor.2 This is because the labor-only contractor is considered as a mere agent of the EMPLOYER and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. (Alviado et. al. vs. Procter & Gamble, and Promm Gemm, G.R. No. 160506, 09 March 2010

F.3 EFFECT OF LABOR-ONLY CONTRACTING AND VALID JOB

CONTRACTING AGREEMENTS -- San Miguel Corp. vs. MAERC Integrated

Systems, 405 SCRA 579 [10 July 2003]

If labor only contracting: illegal. The employer is deemed the DIRECT employer and is made liable to the employees of the contractor for a more comprehensive purpose (wages, monetary claims, and all other benefits in the Labor Code such as SSS/Medicare/Pag-Ibig). The labor-only contractor is deemed merely an agent.

If job-contracting: legal. The employer is considered an INDIRECT EMPLOYER, and is made solidarily liable with the contractor to the employees of the latterr for a more limited purpose, viz.: payment of unpaid wages and other monetary claims, including 13th month pay, service incentive leave pay. (New Golden Builders case)

F.4 SALIENT FEATURES OF DEPARTMENT ORDER NO. 18-02, SERIES 2002.

• MANDATORY REGISTRATION OF INDEPENDENT CONTRACTORS (D.O. 18, S11) -

Establishment of a registration system to govern contracting arrangements. Registration of the contractors and sub-contractors shall be necessary for purposes of establishing

2 Industrial Timer Corp., vs. NLRC, 169 SCRA 341

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an effective labor market information and monitoring. Failure to register shall give rise to a presumption that contractor is engaged in LABOR ONLY CONTRACTING

• REQUIREMENTS FOR REGISTRATION (per DOLE Application Form) Name and business address of contractor Names and addresses of the officers of the contractor Nature of the contractor’s business, and the industry where the contractor seeks to

operate Number of regular workers; list of clients, if any; number of personnel assigned to

each client and the services provided to the client Description of the phases of the contract, and number of employees covered in each

phase, when appropriate Copy of audited financial statements (companies/partnership/cooperative or union),

or ITR (sole proprietorship) Certified copy of the certificate of registration of firm or business name from the

Securities and Exchange Commission, Department of Trade and Industry, Cooperative Development Authority or from the DOLE

Certified copy of the license or business permit issued by the local government unit or units where the contractor or subcontractor operates.

The application shall be verified, and shall contain an undertaking that the contractor or sub-contractor shall abide by all applicable labor laws and regulations

• OTHER OBLIGATIONS OF INDEPENDENT CONTRACTOR: Duty to produce copy of the contract between the principal and the contractor, if

required during regular inspection; also, the contractor of employment of the contractual employee

Annual reporting of the registered contractors not later than 15th of January of every year. Report shall include: (a) list of contracts entered with principal during the subject reporting period; (b) number of workers covered by each contract with principal; and © sworn undertaking that the mandatory government-imposed benefits (SSS, HDMF, Philhealth, ECC and withholding taxes) due the contractual employees have been made during the subject reporting period.

• EFFECT OF NON-COMPLIANCE – DELISTING OF CONTRACTORS

F.5 NEW REQUIREMENTS UNDER DEPT. ORDER NO. 18-A, SERIES 2011 (14 NOV 2011).

1. Declaration of the Independent Contractor’s net financial contracting capacity (NFCC) to be incorporated in the service contract (sec 3 [g])

“CURRENT ASSETS LESS CURRENT LIABILITIES X K [CONTRACT DURATION] EQUIVALENT, MINUS VALUE OF ALL OUTSTANDING, ON-GOING OR STARTING PROJECTS” where K = 10, if contract is one year or less; = 15, for more than one (1) year up to two (2) years;

= 20, for more than two (2) years

2. Substantial capital of at least Three Million Pesos (P3,000,000.00) in case of

corporations, partnerships, cooperatives or single proprietorship (sec 13[l]) 3. Registration fee of Twenty Five Thousand Pesos (P25,000.00) plus renewal fee of

Twenty Five Thousand Pesos (P25,000.00) every three years (sections 19 and 21)


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F.6 THE NEGATIVE LIST: WHAT CANNOT BE VALIDLY SUB-CONTRACTED OUT? (Dept. Order No. 18-02 as amended by Dept Order

No. 18-A, series of 2011)

1. Contracting out of a job, work or service when not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit

2. Contracting out to a “Cabo.”

Under the “cabo” system, (a) the union is the independent contractor that engages the services of its members who are seconded to the principal; (b) the charges against the principal are made by the Union; and © the workers are paid on union payroll without intervention of the principal.

3. Taking undue advantage of the economic situation or lack of bargaining strength of the

contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances:

i) In addition to his assigned functions, requiring the contractual employee to perform

functions which are currently being performed by the regular employees of the principal or of the contractor or subcontractor;

ii) Requiring him to sign, as a precondition to employment or continued employment, an

antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of future claims; and

iii) Requiring him to sign a contract fixing the period of employment to a term shorter

than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement.”

4. Contracting out of a job, work or service through an IN-HOUSE AGENCY 5. Contracting out of a job, work or service directly related to the business or operation of the

principal by reason of a strike or lockout whether actual or imminent. 6. Contracting out of a job, work or service being performed by union members when such

will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in Art. 248 (c) of the Labor Code, as amended.

NEW PROHIBITIONS TO THE ORIGINAL NEGATIVE LIST PROVIDED UNDER DEPT ORDER 18-A SERIES OF 2011 (SECTION 7): 7. REPEATED HIRING OF EMPOYEES UNDER AN EMPLOYMENT CONTRACT of short

duration or under a service agreement of short duration with the same or different contractors, which circumvents the Labor Code provisions on security of tenure

8. Requiring employees under a sub-contracting arrangement to sign a contract fixing the

period of employment to a term SHORTER THAN THE TERM OF THE SERVICE AGREEMENT, except when the contract is divisible into phases xxx and this is made known to the employee

9. Refusal to provide a copy of the Service Agreement and employment contracts between

the contractor and employees, to the principal’s certified bargaining agent.


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10. Engaging or maintaining by the principal of subcontracted employees IN EXCESS OF THOSE PROVIDED FOR IN APPLICABLE COLLECTIVE BARGAINING AGREEMENTS OR SET BY THE INDUSTRY TRIPARTITE COUNCIL (ITC)

F.7 SYNTHESIS AND CLARIFICATION OF DOCTRINES ON JOB-CONTRACTING

7.1 IMPORTANT BRION CASE: COCA-COLA BOTTLERS VS. DELA CRUZ ET AL, G.R. No. 184977, 07 December 2009 (BRION, J), -- Contracting out is valid as an exercise of management prerogative for as long as it complies with the limits and standards provided by the Labor Code. Essentially, there must be proof of capitalization, and of control over his employees on the part of the independent contractor. In the case the Supreme Court said:

“Contracting and sub-contracting are "hot" labor issues for two reasons. The first is that job contracting and labor-only contracting are technical Labor Code concepts that are easily misunderstood. For one, there is a lot of lay misunderstanding of what kind of contracting the Labor Code prohibits or allows. The second, echoing the cry from the labor sector, is that the Labor Code provisions on contracting are blatantly and pervasively violated, effectively defeating workers’ right to security of tenure.

This Court, through its decisions, can directly help address the problem of misunderstanding. The second problem, however, largely relates to implementation issues that are outside the Court’s legitimate scope of activities; the Court can only passively address the problem through the cases that are brought before us. Either way, however, the need is for clear decisions that the workers, most especially, will easily understand and appreciate. We resolve the present case with these thoughts in mind.

The law allows contracting and subcontracting involving services but closely regulates these activities for the protection of workers. Thus, an employer can contract out part of its operations, provided it complies with the limits and standards provided in the Code and in its implementing rules. xxx In strictly layman’s terms, a manufacturer can sell its products on its own, or allow contractors, independently operating on their own, to sell and distribute these products in a manner that does not violate the regulations. From the terms of the above-quoted D.O. 18-02, the legitimate job contractor must have the capitalization and equipment to undertake the sale and distribution of the manufacturer’s products, and must do it on its own using its own means and selling methods.xxx”

IMPORTANT BRION CASE: Temic Automotive Phils. Vs. Temic Automotive Phils Inc. Employees Union – FFW, G.R. No. 186965, 23 December 2009. – Company is engaged in the manufacture of electronic brake systems and comfort body electronics for automotive vehicles. Union members are regular rank-and-file employees working in warehouse receiving section, raw materials, and finished goods section. Management however contracts out forwarding, packing, loading of raw materials and finished goods to independent contractors. Issue raised on validity of contracting out of said jobs, to the detriment of the regular workers. The Supreme Court ruled in this manner:

“As forwarders they act as travel agents for cargo. They specialize in arranging transport and completing required shipping documentation of respondent's company's finished products. They provide custom crating and packing designed for specific needs of respondent company. These freight forwarders are actually acting as agents for the company in moving cargo to an overseas destination. These agents are familiar with the import rules and regulations, the methods of shipping, and the documents related to foreign trade. They recommend the packing methods that will protect the merchandise during transit. Freight

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forwarders can also reserve for the company the necessary space on a vessel, aircraft, train or truck.

Significantly, both the voluntary arbitrator and the CA recognized that the petitioner was within its right in entering the forwarding agreements with the forwarders as an exercise of its management prerogative. The petitioner's declared objective for the arrangement is to achieve greater economy and efficiency in its operations – a universally accepted business objective and standard that the union has never questioned. In Meralco v. Quisumbing,

25 we

joined this universal recognition of outsourcing as a legitimate activity when we held that a company can determine in its best judgment whether it should contract out a part of its work for as long as the employer is motivated by good faith; the contracting is not for purposes of circumventing the law; and does not involve or be the result of malicious or arbitrary action.

Our own examination of the agreement shows that the forwarding arrangement complies with the requirements of Article 106

26 of the Labor Code and its implementing rules.

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reiterate, no evidence or argument questions the company’s basic objective of achieving "greater economy and efficiency of operations." This, to our mind, goes a long way to negate the presence of bad faith. The forwarding arrangement has been in place since 1998 and no evidence has been presented showing that any regular employee has been dismissed or displaced by the forwarders’ employees since then. No evidence likewise stands before us showing that the outsourcing has resulted in a reduction of work hours or the splitting of the bargaining unit – effects that under the implementing rules of Article 106 of the Labor Code can make a contracting arrangement illegal. The other requirements of Article 106, on the other hand, are simply not material to the present petition. Thus, on the whole, we see no evidence or argument effectively showing that the outsourcing of the forwarding activities violate our labor laws, regulations, and the parties’ CBA, specifically that it interfered with, restrained or coerced employees in the exercise of their rights to self-organization as provided in Section 6, par. (f) of the implementing rules.

7.2 NOT ASKED IN 2011 AND 2012 BAR.: The law and its implementing rules recognize that management may rightfully exercise its prerogatives in determining what activities may be contracted out, REGARDLESS OF WHETHER SUCH ACTIVITY IS PERIPHERAL OR CORE IN NATURE. (Alviado et. al. vs. Procter & Gamble, and Promm Gemm, G.R. No. 160506, 09 March 2010, Del Castillo, J).

In the said case of Alviado vs. Proctor & Gamble (supra.), the Supreme Court noted that the company Procter & Gamble was principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.” In denying the claims by the complainants that they were employees of Procter & Gamble, and not of the job contractors, the Supreme Court ruled:

“Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. Xxx.

In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other

http://www.lawphil.net/judjuris/juri2009/dec2009/gr_186965_2009.html#fnt25



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1) good faith 2) ! for circumventing the law 3) ! malicious or arbitrary

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clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02. The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order.” (Alviado et. al. vs. Procter & Gamble, and Promm Gemm, G.R. No. 160506, 09 March 2010; citations omitted. Emphasis supplied.)

It was further reiterated by the Supreme Court in the same case of Alviado that where ‘labor-only’ contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor." The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

7.3 HOWEVER, PRELIMINARY PRESUMPTION IS THAT CONTRACTOR IS LABOR-

ONLY CONTRACTING UNLESS such contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like. (Garden of Memories Park and Life Plan vs. NLRC 2nd Division, GR 160278, 08 Feb 2012, 665 SCRA 293, J. Mendoza, citing 7K Corporation vs. NLRC, GR 148490, 22 Nov 2006, 507 SCRA 509, 523)

Thus: Labor only contracting under Sec. 5 of Department Order No. 18-02

requires any two of the elements to be present, viz.: (a) The contractor has NO SUFFICIENT CAPITAL, and the employees supplied to

the COMPANY are performing work which are DIRECTLY RELATED to the principal business business of the so-called Indirect employer; OR

(b) The employer has NO CONTROL over the conduct of the work to be done by the contractor and/or his employees.

NOTE: A cooperative may likewise engage in sub-contracting arrangements but it must comply with the requirements for an independent contractor. The fact that it was a duly registered cooperative does not preclude the possibility that it was engaged in labor-only contracting as confirmed by the findings of the Regional Director. (Norkis Trading Corporation vs. Buenavista et al., GR No. 182018, 10 October 2012).

7.4 NOT ASKED IN 2010, 2011 AND 2012 BAR. Whether DOLE Certification that

one is a legitimate job-contractor sufficient.—

General Rule: The DOLE certification simply gives rise to a presumption that the contractor is a legitimate one.

In the absence of evidence to the contrary presented by the complainants, then the Supreme Court had ruled that in the case of RAMY GALLEGO VS. BAYER PHILS. G.R. No. 179807, 31 July 2009, Carpio-Morales, J that “(T)he DOLE certificate having been issued by a public officer, it carries with it the presumption that it was issued in the regular performance of official duty. Petitioner’s bare assertions fail to

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rebut this presumption. Further, since the DOLE is the agency primarily responsible for regulating the business of independent job contractors, the Court can presume, in the absence of evidence to the contrary, that it had thoroughly evaluated the requirements submitted by PRODUCT IMAGE before issuing the Certificate of Registration.” In this case, the Supreme Court found Product Image to be a independent contractor as it had shown proof of substantial capitalization and control over the employees.

Exception: IMPORTANT: BRION CASE of COCA COLA BOTTLERS VS. RICKY DELA CRUZ, ET AL. (G.R. No. 184977, 07 December 2009) and COCA COLA BOTTLERS VS. AGITO ET AL (G.R. 179546, 13 Feb 2009, J. Chico-Nazario), However, apart and separate from the existence of said DOLE certification, and especially in instances where there are contradictory findings between the Court of

Appeals and the NLRC/Labor Arbiter, the Supreme Court may consider other factors in the determination of whether or not a contractor complies with the

requisite elements of a legitimate sub-contracting as enumerated in the Labor Code and the Dept. Order No. 18-02. In these cases, the Supreme Court reviewed the records and found that the so-called independent contractors had no substantial capitalization and investment, and that the workers supplied by it were performing activities which were necessary and desirable in the usual trade or business of the employer.

G. SPECIFIC ISSUES ON LABOR STANDARDS 1. WAGES.

1.1 Article 97 (f) Labor Code, definition: Remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under the written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. Fair and reasonable value shall not include any profit to the employer or to any person affiliated with the employer.

1.2 CASE. Wages; facilities and supplements. SLL International Cables Specialist and

Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011. -- Respondent employees alleged underpayment of their wages. Petitioner employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should be included in the computation of the wages received by respondents. The Court makes a distinction between “facilities” and “supplements.”

Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers’ basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item

http://sc.judiciary.gov.ph/jurisprudence/2011/march2011/172161.htm

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(food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by petitioner employer for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects. Thus, the Court is of the view that the food and lodging, or the electricity and water allegedly consumed by respondents in this case were not facilities but supplements which should not be included in the computation of wages received by respondent employees.

1.2 EMPLOYEES NOT COVERED BY PROVISIONS ON WAGES:

farm tenancy / leasehold; domestic service (household or domestic helpers); persons working in their respective homes in needle work or in any cottage industry

duly registered in accordance with law; Barangay micro business enterprise (BMBE) under RA 9178, the BMBE Law. BMBE

– any business entity or enterprise engaged in the production, processing, or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall not be more than P3M.

1.3 PAYMENT OF WAGES

Wages shall be paid in cash, legal tender at or near the place of work

Payment may be made through a bank upon written petition of majority of the workers in establishments with 25 or more employees and within one kilometer radius to a bank

Payment shall be made directly to the employees

Wages shall be given not less than once every two (2) weeks or twice within a month at intervals not exceeding 16 days

1.4 SOME GOVERNING RULES:

FAIR AND REASONABLE VALUE shall not include any profit to the employer, or to any person affiliated with the employer.

“NO WORK NO PAY” PRINCIPLE. -- If there is no work performed by the employee,

there can be no wage or pay unless the laborer was able, willing, and ready to work but was prevented by management or was illegally locked out, suspended or dismissed. But where the failure of employees to work was not due to the employer’s fault, the burden of economic loss suffered by the employers should not be shifted to the employer. Each party must bear his own loss.

EQUAL PAY FOR EQUAL WORK. -- Employees who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions should be paid similar salaries (International School Alliance of Educators vs. Quisumbing, GR No.128845, June 1, 2000).

CIVIL CODE PROVISIONS: Art. 1705. The laborer’s wages shall be paid in legal currency. Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the employer. Art. 1707. The laborer’s wages shall be a lien on the goods manufactured or the work done. Art. 1708. The laborer’s wages shall not be subject to execution or attachment except for debts incurred for food, shelter, clothing, and medical attendance.

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see Kasambahay Law

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Art. 1709. The employer shall neither seize nor retain any tool or other articles belonging to the laborer.

1.5. WAGE AND WAGE-RELATED BENEFITS

Minimum wages must always be complied with. -- Wage Order No. NCR-17 for

Metro Manila monthly minimum is P11,633.17,3 computed at P446.00/day, effective 03 June 2012. Note that by November 2012, the minimum daily rate will increase to P456.00/day

Hours of work: Hours of worked shall include: (a) all time during which an employee is required to be on duty or to be at the prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. The normal working hours shall be no more than eight (8) hours a day. Meal and rest

period: meal break of less than one (1) hour and short rest periods shall be considered compensable working time

Holiday pay. -- The employee is entitled to the payment of his regular daily basic wage (100%) during said holidays, even if the worker did not report for work on said days; PROVIDED that he was present or was on leave of absence

with pay on the work day immediately preceding the holiday. If the employee was suffered to work during the said holidays, they will be entitled to payment of holiday premium of 200% of his basic wage (100% of basic wage PLUS 100%).

Premium pay for work within 8 hours on a: 1. Special or rest day: plus 30% of basic daily rate (BDR) 2. Rest day falling on a special day: plus 50% of BDR 3. Rest day falling on a regular holiday: plus 30% of 200% of BDR

Overtime pay for work in excess of 8 hours on: 1. Ordinary days: plus 25% of the basic hourly rate 2. Special days, rest days and holidays: plus 30% of the regular hourly rate on

said days

Situation: Company issued a memo changing work hours of the Purchasing and Stockroom department every Tuesday and Thursday, from the usual 9am-5pm, to 1pm-8pm considering that deliveries of raw merchandise were done in the afternoons of said days . MWF still same at 9am-5pm. The union then questioned the change in schedule, stating the right to overtime pay for Tuesdays and Thursdays has been effectively eliminated or diminished, and hence, resulting in diminution of benefit. Question: Is there diminution of benefits? In short, is overtime a benefit or compensation? Answer: No diminution of benefits. Note that overtime pay is simply ADDITIONAL compensation for work done beyond the 8-hour work day. Company had valid justification to change the schedule of the employees, as a valid exercise of management prerogatives. (Manila Jockey Club case).

Nightshift differential pay: plus 10% of the basic/regular rate for work between 10PM – 6AM

Service incentive leave: 5 days with pay per year of service

3 P446.00/day x 313 days [Sundays/restdays not paid]

------------------------------------------------------------------------- = Monthly rate of Rank-and-File employee 12 months

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MIN(NCR) = Php 466 asof Oct 2013


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Service charges: 85% for distribution to rank-and-file employees; 15% for losses, breakages, or distribution to managerial employees (applicable only in establishments collecting service charges)

13th-month pay: 1/12 of the total basic salary earned within the calendar year

Paternity leave: 7 days with full pay to attend to needs of legal wife before/during/after delivery

1.6 GENERAL RULE: WAGE DEDUCTIONS ARE NOT ALLOWED

EXCEPTIONS:

ALLOWABLE DEDUCTIONS WITHOUT EMPLOYEES CONSENT: a. SSS, Philhealth and PAG-IBIG contributions; b. Withholding taxes on income c. Where the employer is authorized by law or regulations issued by the Secretary of

Labor; d. Agency fees, where the employee who is not a member of the exclusive bargaining

agent but a member of the appropriate bargaining unit, may be assessed a reasonable fee for benefits received under a CBA.

ALLOWABLE DEDUCTIONS WITH THE EMPLOYEE’S CONSENT:

a. Reasonable value of meals and other facilities; b. Payment of union dues, which may or may not be under an automatic charging-off

arrangement c. Debt payments to the employer or third persons with employee’s explicit written

consent d. Worker’s insurance acquired by the employer with employee’s consent;

2. THIRTEENTH MONTH PAY

2.1 How much: 1/12th of the basic salary of an employee within a calendar year. 2.2 COVERAGE

All employers are required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year.

Such employees are entitled to the benefit regardless of their designation or employment

status and irrespective of the method by which their wages are paid, provided that they have worked for at least 1 month during a calendar year;

2.3 EXCLUSIONS or EXEMPTIONS FROM COVERAGE

1. Government and any of its political subdivisions, including GOCCs. Exception: Corporations operating essentially as private subsidiaries of the Government;

2. Employers already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of issuance of PD 851;

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“Its equivalent” includes Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, COLA and all other allowances regularly enjoyed by the employees as well as non-monetary benefits.

3. Employers of household helpers and persons in the personal service of another in

relation to such workers;

4. Distressed employers: a. currently incurring substantial losses or b. in the case of non-profit institutions and organizations, where their income, whether

from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance;

5. Employers of those who are paid on commission, boundary, or task basis, and those

who are paid a fixed amount for performance of a specific work, irrespective of the time consumed in the performance thereof.

Exception: Where the workers are paid on a piece-rate basis, in which case the employer shall grant the required 13th month pay to such workers.

Piece Rate – employees who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.

3. BONUS

3.1 Nature of a bonus: a prerogative, not an obligation. -- The matter of giving a bonus

over and above the worker’s lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. (Traders Royal Bank vs. NLRC, 189 SCRA 274 [1990]).

EXCEPTION: When demandable under a contract.

NEW CASE: EASTERN TELECOM PHILS. VS. EASTERN TELECOM EMPLOYEES UNION, GR 185665, 08 FEB 2012). – Company has an existing collective bargaining agreement with the Union, including a Side Agreement to the effect that “14th, 15th and 16th month bonuses (other than 13th month pay) are granted." Company plan to defer payment of the 14th, 15th and 16th month bonuses due to alleged continuing deterioration of company’s financial position. ISSUE: Is Company bound to pay for the bonuses as per CBA?

ANSWER: YES! A reading of the provision in the agreement reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. The wording of the provision does not allow any other interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the benefits, contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. Terse and clear, the said provision does not state that the subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations.

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3.2 Mid-year bonus and Christmas bonus are equivalents of 13th month pay. (Producers Bank vs. NLRC, 355 SCRA 489 [2001]).

However, benefits in the form of food or free electricity are not proper substitutes for the

13th month pay. So, also, year-end rewards for loyalty and service cannot be considered in lieu of 13th month pay. (Framanlis vs. Minister of Labor, 171 SCRA 87 [1989]).

3.3 Are commissions included in computing 13th month pay?

a. If the commission form part of the employees’ basic salary, then this will likewise be

included in the computation of 13th month pay. (Philippine Duplicators, Inc. vs. NLRC, 241 SCRA 380 [1995]).

b) If the commissions were in the nature of profit-sharing bonuses (productivity

bonuses), then these do not form part of the “basic salary” and should not included in the computation of the 13th month pay. (Boie-Takeda Chemicals, Inc. vs. Dela Serna 228 SCRA 329 [1993]).

3. HOURS OF WORK.

3.1 Hours of worked shall include: (a) all time during which an employee is required to be on duty or to be at the prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. (Art. 84, Labor Code; See also Rada vs. NLRC, 205 SCRA 69 [1992].)

3.2 Rest period of short duration during working hours shall be counted as hours worked. (Art.

84, Labor Code.) Example: coffee break of 15 minutes; meal period of less than one hour, e.g., 30 minutes.

3.3 Exemptions. (See Art. 82, Labor Code.) . -- The following employees are not covered by

the Labor Code provisions on hours of work:

a) Government employees;

b) Managerial employees (International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213

[1998].);

c) Field Personnel; d) Members of the employer who are dependent upon him for support; e) Domestic helpers and persons in the personal service of another; f) Workers who are paid by results, e.g., piece workers. (Red V Coconut Products,

Ltd. vs. CIR, 17 SCRA 553 [1966], citing Lara vs. del Rosario, 94 Phil. 780) (Note: Reason is that workers who are paid by the result are compensated on the basis of the work completed, and NOT in respect of the time spent working on it).

4. EMPLOYMENT OF HOUSEHELPERS VS. HOMEWORKERS (See KASAMBAHAY LAW)

4.1 Domestic helper or househelpers or domestic servant defined. -- shall refer to

any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.”

Such definition covers family drivers, domestic servants, laundry women, yayas,

gardeners, houseboys and other similar househelps. (Apex Mining Company, Inc. vs.

NLRC, 196 SCRA 251 [1991]). – NOTE DISCREPANCY BETWEEN LAW AND IMPLEMENTING RULES WHICH EXCLUDED THE DRIVERS FROM COVERAGE.

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If the househelp or laundrywomen is suffered to work in staffhouses of a company to attend to the needs of the company’s guest and other persons availing of said facilities, then they are NOT household helpers as defined by law but employees of the company. (Apex Mining Company, Inc. vs. NLRC, ibid.)

BENEFITS ACCORDED TO HOUSE-HELPERS (Book III, Title 3, Chapter III, LC)

1. Not to be assigned to non-household work; 2. Reasonable compensation (minimum cash wage); 3. Lodging, food and medical attendance; 4. If under 18 years, an opportunity for elementary education (cost of which shall be

part of househelper’s compensation); 5. Contract for household service shall not exceed 2 years (renewable from year to

year); 6. Just and humane treatment; 7. Right not to be required to work for more than 10 hrs. a day (if the househelper

agrees to work overtime and there is additional compensation, the same is permissible);

8. Right to 4 days vacation each month with pay (if the helper does not ask for the vacation, the number of vacation days cannot be accumulated, he is only entitled only to its monetary equivalent);

9. Funeral expenses must be paid by the employer if the house-helper has no relatives with sufficient means in the place where the head of the family lives;

10. Termination only for just cause; 11. Indemnity for unjust termination of service; 12. Employment certification as to nature and duration of service and efficiency and

conduct of the house-helper. 4.2 Homeworker, defined.-- one who performs in or about his home any processing

of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an employer and thereafter to be returned to the latter. (Book III, Rule XIV, Section 1 of the Omnibus Rules Implementing the Labor Code.)

HOUSEHELPERS HOME WORKERS

Minister to the personal needs and comfort of his employer in the latter’s home

Performs in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an employer and sold thereafter to the latter.

RIGHTS and BENEFITS ACCORDED TO HOMEWORKERS (Department Order No. 5,

replacing Rule XIV of the Rules Implementing Book III of the Labor Code):

1) Formation and registration of labor organization of industrial homeworkers. 2) It also makes explicit the employer’s duty to pay and remit SSS, Philhealth and ECC

premiums.

3) Prohibitions for Homework explosives, fireworks and articles of like character; drugs and poisons; other articles, the processing of which requires exposure to toxic substance.

5. EMPLOYMENT OF MINORS: (Sec. 12, R.A. 7610, as amended by R.A. 9231).

General Rule: Employment of any child below fifteen (15) years of age is prohibited

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Except:

1. When he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling. The following conditions must be met:

• The employment does not endanger the child’s life, safety, health and morals; • The employment does not impair the child’s normal development; • The employer parent or legal guardian provides the child with the primary and/or

secondary education prescribed by the Department of Education

2. Where the child’s employment or participation in public entertainment or information through

cinema, theater, radio or TV is essential provided that: • The employment does not involve ads or commercials promoting ALCOHOLIC

BEVERAGES, INTOXICATING DRINKS, TOBACCO AND ITS BY-PRODUCTS OR EXHIBITING VIOLENCE;

• There is a written contract approved by the DOLE; and

ON HAZARDOUS WORK. -- Any person between fifteen (15) and eighteen (18) years of age may be employed for NON-HAZARDOUS WORK for such number of hours and such periods of the day as determined by the Secretary of Labor in appropriate regulations. No such prohibition if eighteen (18) years old and above.

PROHIBITION AGAINST CHILD DISCRIMINATION. -- No employer shall discriminate against any person in respect to terms and conditions of employment on account of his age.

6. APPRENTICESHIP AND LEARNERSHIP

6.1 Apprenticeship is the practical on-the-job training as supplemented by related theoretical instruction (Art. 58 (a), LC).

6.2 Learners are persons hired as trainees in semi-skilled and other industrial occupations which

are non-apprenticeable and may be learned through practical training on the job in a relatively short period of time which shall not exceed three months.

APPRENTICES LEARNERS

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NATURE PERIOD COMITMT TO HIRE WAGES DOLE Approval DEDUCT-ION for Expenses

APPRENTICESHIP

• highly-technical • SIX (6) months • At option of employer • May be paid or not; if paid, 75% of

minimum

• Yes, DOLE approval is essential

• Yes, expenses for training

deductible from income tax

LEARNERSHIP

semi-skill; non-apprenticeable

THREE (3) months

• At option of learner

• Must always be paid; 75% of minimum

• No, DOLE approval not required; inspection only.

• None.

6.3 CASE ON VALIDITY OF APPRENTICESHIP

Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R.

187320, January 26, 2011. -- Apprenticeship agreement NOT valid where complainants were hired as employees first before execution of apprenticeship. The respondent employees were already rendering service to the company when they were made to undergo apprenticeship. The respondent were regular employees because they occupied positions such as machine operator, scaleman and extruder operator – tasks that are usually necessary and desirable in petitioner employer’s usual business or trade as manufacturer of plastic building materials. These tasks and their nature characterized the respondents as regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law.

WHAT NEED

• Practical training on the job • Supplemented by related

theoretical instruction • Covered by a written

apprenticeship agreement with an individual employer or entity

• Needs DOLE approval • Shall not exceed 6 months • Only in highly technical industries • Only in apprenticeable

occupations

• Persons hired as trainees in semi-skilled and other industrial occupation

• Non-apprenticeable • May be learned through practical

training on the job in a relatively short period of time

• Shall not exceed 3 months • No experienced workers available • Prevent curtailment of employment

opportunities • Not to create unfair competition in

labor costs and lower working standards

http://sc.judiciary.gov.ph/jurisprudence/2011/january2011/187320.htm


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The apprenticeship agreements did not indicate the trade or occupation in which the apprentice would be trained; neither was the apprenticeship program approved by the Technical Education and Skills Development Authority (TESDA). These were defective as they were executed in violation of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the employees, the employer, to all intents and purposes, recognized the completion of their training and their acquisition of a regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself, is a violation of the Labor Code’s implementing rules and is an act manifestly unfair to the employees.

7. ON EMPLOYEE BENEFITS; BEREAVEMENT LEAVE.

Continental Steel Manufacturing Corporation vs. Hon. Accredited Voluntary Arbitrator Allan S.

Montano, et al., G.R. No. 182836, October 13, 2009. --Bereavement leave and other death benefits are granted to an employee to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the loss of a loved one. It cannot be said that the parents’ grief and sense of loss arising from the death of their unborn child, who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents whose child was born alive but died subsequently. Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should be interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor. In the same way, the CBA and CBA provisions should be interpreted in favor of labor.

8. EMPLOYEE BENEFITS; RETIREMENT.

8.1 RETIREMENT AGE

GENERAL RULE: R.A. 7641 a. OPTIONAL at 60 years with minimum 5 years of service b. MANDATORY at 65 years, no service requirement EXCEPTION: Where the company provides for a Retirement Plan with earlier retirement age, then the company’s Retirement Plan will apply

8.2 RETIREMENT BENEFITS

GENERAL RULE: R.A. 7641 ½ month for every year of service (expanded concept per Sec 1, RA 7641) Expanded concept: 22.5 days (Capitol Wireless vs. Confesor) EXCEPTION: Where the company provides for a Retirement Plan with better benefits, then the company’s Retirement Plan will apply

8.3 CASES:

a) Difference between termination of employment and retirement (General Milling Corporation vs. Viajar, G.R. No. 181738, January 30, 2013, Citing Quevedo vs. Benguet Electric Cooperative, Inc., 599 SCRA 438 [2009].) --

While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with varying judicial bases and


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resulting benefits. Retirement from the service is contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and procedure. The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits.

b. Difference between voluntary and involuntary retirement. --

Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause. The employee’s intent is the focal point of analysis. In determining such intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant parameters. (ibid.)

c. Early retirement is the option of the EMPLOYEE. Eastern Shipping Lines, Inc.

vs. Ferrer D. Antonio, G.R. No. 171587, October 13, 2009. –

The age of retirement is primarily determined by the existing agreement or employment contract. In the absence of such agreement, the retirement age shall be fixed by law. Under the aforecited law, the mandated compulsory retirement age is set at 65 years, while the minimum age for optional retirement is set at 60 years. Under Paragraph B of the retirement plan, a shipboard employee, upon his written request, may retire from service if he has reached the eligibility age of 60 years. In this case, the option to retire lies with the employee. Records show that respondent was only 41 years old when he applied for optional retirement, which was 19 years short of the required eligibility age. Thus, he cannot claim optional retirement benefits as a matter of right.

d. IMPORTANT CASE: MAY RETIREMENT FUND FOR THE EMPLOYEES BE

APPLIED TO OUTSTANDING LOANS OF THE COMPANY? Metrobank vs. Board of Trustees of Riverside Mills Provident and Retirement Fund, GR No. 17695, 08 Sept 2010. --

Answer: NO. Employees trusts or benefits plans are intended to provide economic assistance to employees upon occurrence of old age, retirement, death, sickness or disability. Here, while the Plan provides for a reversion of the Fund to the employer RMC, this cannot be done until all the liabilities of the Plan have been paid. And when RMC ceased operations in 1984, the Fund became liable not only for the benefits of the qualified retirees at the time of the RMC closure, but also of those who were separated from work as a consequence of the closure, per the Retirment Plan itself.

e. QUESTION: MAY THE EMPLOYER DEDUCT COST OF TRAINING FROM THE RETIREMENT BENEFITS OF THE EMPLOYEE? Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, 16 July 2012.

ANSWER: YES! By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the company’s effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PAL’s employ within a period of 3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly covered the petitioner’s obligation to render service to PAL within 3 years to enable it to recoup the costs of its investment. Further, to allow the


http://sc.judiciary.gov.ph/jurisprudence/2012/july2012/181995.pdf

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petitioner to leave the company before it has fulfilled the reasonable expectation of service on his part will amount to unjust enrichment.

H. THE RIGHT TO UNIONIZE AND THE APPROPRIATE BARGAINING UNIT

(PLEASE SEE CHART “A”) 1. Existence of ER-EE relationship is essential for the determination of whether or not one

may exercise right of self-organization for purposes of collective bargaining

2. Who may unionize for purposes of collective bargaining negotiations?

2.1 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 a definite period or not. (Article 277 [c], Labor Code; See also: UST Faculty Union vs. Bitonio)

2.2 Exceptions: Who may NOT unionize

2.2.1 Managerial employees (Art. 245, Labor Code.)

N.B.: Supervisory employees may unionize and form labor organizations of their own, but may not join rank-and-file union. Q: Can a supervisory union affiliate with a Federation with rank-and-file unions? A: Yes. Article 245 has now been amended by Congress under Rep. Act No. 9481 to read as follows:

“ART. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors’ union operating within the same establishment may join the same federation or national union.”

2.2.2 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 — e.g., the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of the employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the

“confidential employee rule”. (Tunay na Pagkakaisa ng Manggagawa sa Asia

Brewery vs. Asia Brewery, G.R. No. 162025, 03 August 2010)

Article 245 of the Labor Code does not directly prohibit confidential employees

from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees. The confidential-employee rule justifies exclusion of


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confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. It must be stressed, however, that when the employee does NOT have access to confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union. (Sugbuanon Rural Bank, v. Laguesma, [G.R. No. 116194. February 2, 2000)

2.2.3 Government Employees, including GOCCs WITH original charter

2.2.4 Employees who are members of a cooperative; Rationale: A cooperative

is different from an ordinary business concern, inasmuch as its owners are likewise the ones who run and operate the business themselves. Hence, incongruous situation where the owners will just bargain with themselves or their co-workers (who are also co-owners). However, this will not apply insofar as it involves employees of the cooperative WHO ARE NOT owners or members thereof.

SSS VS. ASIAPRO COOPERATIVE: While members of a cooperative cannot form unions and bargain with themselves, they are to be considered as employees with respect to SSS coverage because the Cooperative acts as an independent contractor vis-à-vis principal clients they secure.

2.2.5 Employees of International Organizations or Specialized Agencies

which are registered with the United Nations and which enjoys diplomatic immunity. (International Catholic Migration Commission vs. Calleja;

and Kapisanan ng Manggagawa at TAC sa IRRI, etc. vs. Secretary of Labor.)

CONTRA CASE: IMPT - NOT ASKED IN 2010, 2011 and 2012 BAR - German Agency for Technical Cooperation (GTZ) vs. CA, GR No. 152318, 16 April 2009 – Complaint filed by six GTZ contractual employees for

illegal dismissal. Motion to dismiss, GTZ defense: “Labor Arbiter has no jurisdiction. GTZ’s acts were undertaken in the discharge of the governmental functions and sovereign acts of the Government of the Federal Republic of Germany,” and hence, immune from suit and not liable as a foreign governmental agency which argument was similarly adopted by the OSG. Supreme Court ruled that the GTZ failed to establish immunity from suit, inasmuch as it was found to be akin to a Phil. counterpart of a government-owned and controlled corporation despite activities performed being governmental in nature. The Court ruled: “Assuming that characterization is correct, it does not automatically invest GTZ with the ability to invoke State immunity from suit. The distinction lies in whether the agency is incorporated or unincorporated. The following lucid discussion from Justice Isagani Cruz (in a cited case) is pertinent:

Where suit is filed not against the government itself or its officials but against one of its entities, it must be ascertained whether or not the State, as the principal that may ultimately be held liable, has given its consent to be sued. This ascertainment will depend in the first instance on whether the government agency impleaded is incorporated or unincorporated. An incorporated agency has a charter of its own that invests it with a separate juridical personality, like the Social Security System, the University of the Philippines, and the City of Manila. By contrast, the unincorporated agency is so called because it has no separate juridical personality but is merged in the general machinery of the government, like the Department of Justice, the Bureau of Mines and the Government Printing Office.

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3. SALIENT FEATURES OF REPUBLIC ACT NO. 9481: “AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR THESE PURPOSE PRES. DECREE 442, OTHERWISE KNOWN AS THE LABOR CODE”

3.1 Modified previous Supreme Court rulings prohibiting supervisors’ unions

from joining with the same federation as the rank and file. New law now explicity ALLOWS for the commingling of the two.

Section 8 of new law provides: “Article 245 of the Labor Code is hereby amended to read as follows -- ART. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors’ union operating within the same establishment may join the same federation or national union.”

3.2 REQUIREMENTS FOR REGISTRATION

3.2.1 Independent Union or Federations/National Unions – will acquire legal personality upon issuance of certificate of registration

ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or an independent union shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor

organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings;

(c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and

(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it.”

3.2.2 Local or a of Chapter Federations/National Unions – will acquire legal personality only for the purpose of filing a petition for certificate of registration upon issuance of the CHARTER CERTIFICATE by the registered Federation/National Union. The Chapter/Local shall be entitled to all other rights appurtenant thereto ONLY upon submission of the following other documents.

“ART. 234-A. Chartering and Creation of a Local Chapter. - A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter


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shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter’s officers, their addresses, and the principal office of

the chapter; and (b) The chapter’s constitution and by-laws: Provided, That where the chapter’s

constitution and by-laws are the same as that of the federation or the national union, this fact shall be indicated accordingly.

The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president.”

ADA’S NOTES: For purposes of filing a petition for certification election, the charter certificate is already sufficient to vest the local chapter with legal personality. However, the local chapter/union will not be considered to have legal personality for purposes of other rights and privileges (e.g., to bargain, to enter into contracts, etc.) UNLESS the other documents (a) and (b) as adverted above are SUBMITTED to the DOLE Regional Office or Bureau of Labor Relations, and a certificate of registration having been issued thereafter.

3.3 Failure to comply with reportorial requirements shall no longer be a ground

for cancellation of union registration, but shall subject errant officers/members to penalty.

“ART. 242-A. Reportorial Requirements. - The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned:

(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-law or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election; (c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau.

Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty.”

3.4 There are now FEWER grounds for cancellation of union registration. Under the new law, there are ONLY THREE GROUNDS allowed, whereas the old law provides for at least seventeen (17) different grounds for cancellation. Republic Act No. 9481 amended ART. 239 of the Labor Code on grounds for cancellation of union registration, as follows:

“ART. 239. Grounds for cancellation of union registration. - The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification;


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(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. (new mode)

3.5 WHAT CAN NO LONGER BE RECOGNIZED AS GROUNDS FOR CANCELLATION OF UNION REGISTRATION?

a) VIOLATIONS UNDER ARTICLE 239 OF THE LABOR CODE CAN NO

LONGER BE A GROUND FOR CANCELLATION OF UNION REGISTRATION. These are:

1. Failure to submit consti, by-laws and ratification docs within 30 days from

adoption or ratification 2. Failure to submit annual financial report to Bureau; misrepresentation, false

entries or fraud in preparation of financial statements 3. Acting as Labor-only contractor (Cabo) 4. Entering into a CBA with sub-minimum provisions 5. Asking/Accepting attorney’s fees or negotiation fees from employers 6. Checking-off without signed individual written authorizations 7. Failure to submit list of members yearly

b) VIOLATIONS UNDER ARTICLE 241 REFERRING TO RIGHTS AND

CONDITIONS OF UNION MEMBERSHIP [EVEN WITH SIGNATURE

REQUIREMENTS CONSTITUTING 30% OF UNION MEMBERSHIP], CAN NO LONGER BE A GROUND FOR CANCELLATION OF UNION REGISTRATION. These are:

1. Right to financial statements 2. Right to freely elect their officers, or determine questions on major union policy,

by secret ballot 3. No labor organization shall knowingly admit as member any individual who

belongs to a subversive organization; 4. Right against collection of fees without due authority; 5. Right to transparency in union finances 6. No special assessments will be made without authorization by writtten resolution

of majority of members in a general membership meeting called for such purpose 7. No check-off of special assessment or negotiation fees or attys fees without

individual written authorization duly signed by employee

ADA’S NOTES: Implication of above is that the Union must still be allowed to exist notwithstanding violations. If at all, Union members and concerned parties are not without any remedy, inasmuch as they may file the necessary administrative cases against the union officers (Art. 242-A, Labor Code). Note further: Nothing in law which prohibits filing criminal and civil cases in the regular courts, whenever applicable.

3.6 THE INCLUSION OF UNION MEMBERS OF EMPLOYEES OUTSIDE THE

BARGAINING UNIT NO LONGER A GROUND FOR CANCELLATION OF UNION REGISTRATION. NOTE THAT THIS IS CONTARY TO THE IMPLICATION IN PREVIOUS SUPREME COURT DECISIONS IN TOYOTA MOTOR AND TAGAYTAY HIGHLANDS CASES.

Republic Act No. 9481, Sec. 9. -- A new provision, Article 245-A is inserted into the Labor Code to read as follows:


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“ART. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the

bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union.”

3.7 REQUIREMENTS FOR VOLUNTARY CANCELLATION OF UNION REGISTRATION – 2/3 VOTE OF GENERAL MEMBERSHIP

“ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor organization may be cancelled by the organization itself.

Provided, That at LEAST TWO-THIRDS of its general membership

votes, in a meeting duly called for that purpose to dissolve the organization: Provided, further, That an application to cancel registration is thereafter submitted by the board of the organization, attested to by the president thereof.”

3.8 EXPLICIT PROVISION THAT EMPLOYER IS SIMPLY A BY-STANDER AND CAN NO LONGER OPPOSE OR PARTICIPATE IN THE CERTIFICATION PROCEEDINGS.

“ART. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to

oppose a petition for certification election. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition

4. WHAT ARE THE RIGHTS APPURTENANT TO UNIONIZATION?

• The creation of a Union is NOT an act of disloyalty to the employer • right to use all LAWFUL means of communicating with employees, and to persuade

them to join • union may impose obligations upon its members, viz., payment of union dues • right to expel members who commit acts inimical to the interests of the union • right to be certified as exclusive bargaining agent • right to make union security arrangements

5. 2010-2012 CASES:

5.1. On Labor organization; Registration requirements. Samahang Manggagawa sa

Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011. –

Question: Whether a charter certificate issued by the Federation needs to be certified and attested by the local union officers, as part of the registration requirements of a chapter. –

Answer: No. It is not necessary for the charter certificate to be certified and attested by the local/chapter officers. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapter’s officers certify or attest to a document which they did not prepare. In accordance with this



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ruling, petitioner union’s charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-laws— the last two requirements having been executed under oath by the proper union officials.

5.2. Unions; disaffiliation -- Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek

Electronics, Inc., G.R. No. 190515. June 6, 2011.—

Question: May the local union disaffiliate at any time? Answer: Yes. A local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rules. Such disaffiliation, however, does not result in it losing its legal personality.

A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. In the present case, whether the FFW went against the will of its principal (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent employer to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the union or a rival labor organization, but not the employer as in this case.

5.3. IMPORTANT CASE; NOT ASKED IN PREVIOUS BAR

QUESTION: IS A REGISTERED UNION REQUIRED TO SUBMIT FINANCIAL STATEMENTS AND/OR KEEP MEMBERSHIP REPRESENTING 20% OF THE APP. BARG. UNIT THROUGHOUT ITS LIFETIME, OR RISK CANCELLATION OF ITS REGISTRATION? The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011. ANSWER: NO. The constitutionally guaranteed freedom of association and right of workers to self-organization outweighs respondent’s noncompliance with the statutory requirements to maintain its status as a legitimate labor organization. The amendment introduced by RA 9481 sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, which provides that “workers’ and employers’ organizations shall not be liable to be dissolved or suspended by administrative authority.” Reason behind this is that the cancellation of union registration by the BLR would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities. In this case, it is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. . There is also nothing essentially mysterious or irregular about the fact that only 127 members ratified the union’s constitution and by-laws when 128 signed the attendance sheet. It cannot be assumed that all those who attended approved of the constitution and by-laws. Any member had the right to hold out and refrain from ratifying those documents or to simply ignore the

http://sc.judiciary.gov.ph/jurisprudence/2011/june2011/190515.htm



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process. AT ANY RATE, THE LABOR CODE AND ITS IMPLEMENTING RULES DO NOT REQUIRE THAT THE NUMBER OF MEMBERS APPEARING ON THE DOCUMENTS IN QUESTION SHOULD COMPLETELY DOVETAIL. For as long as the documents and signatures are shown to be genuine and regular and the constitution and by-laws democratically ratified, the union is deemed to have complied with registration requirements. See also similar case of Mariwasa Siam Ceramics vs. Secretary of Labor et al., GR No. 183317, 21 Dec 2009., where a substantial number of members allegedly recanted their membership in the union and this was made a ground for cancellation of union registration. “We cannot give full credence to these affidavits which were executed under suspicious circumstances, and which contain allegations unsupported by evidence. At best, these affidavits are self-serving. They possess no probative value. Nevertheless, even assuming the veracity of said affidavits, the legitimacy of the respondent Union as a labor organization must be affirmed. While it is true that withdrawal of support may be considered as resignation from the union, THE FACT REMAINS THAT AT THE TIME OF THE UNION’S APPLICATION FOR REGISTRATION, THE AFFIANTS WERE MEMBERS OF THE UNION AND COMPRISED MORE THAN THE REQUIRED 20% MEMBERSHIP FOR PURPOSES OF REGISTRATION AS A UNION. ART. 234 MERELY REQUIRES A MINIMUM OF 20% MEMBERSHIP DURING APPLICATION FOR UNION REGISTRATION. IT DOES NOT MANDATE THAT A UNION MUST MAINTAIN THE 20% MINIMUM MEMBERSHIP REQUIREMENT ALL THROUGHOUT ITS EXISTENCE.

I. APPROPRIATE BARGAINING UNIT 1. Bargaining unit, defined. - A "bargaining unit" has been defined as a group of employees of

a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. (Golden Farms vs. Calleja, supra.)

2. Rationale: The law encourages employee participation in policy and decision making, while

promoting collective bargaining. Hence, it provides for election of a legitimate labor organization that will exclusively represent the employees for purposes of collective bargaining with employer, for improved terms and conditions of work.

3. Are employees precluded from raising grievances in the absence of a labor organization certified as an exclusive bargaining representative?

No. The law likewise promotes the creation of a Labor Management Council (LMC) which may exist in companies without a union, or may even co-exist with a union. Jurisdiction pertains to grievances which arise from interpretation or implementation of CBA, or of company personnel policies. In fact, Article 255 of the Labor Code provides that any individual employee or group

of employees have the right, at any time, to present their grievances to the employer. 4. What is a proper bargaining unit?

A proper bargaining unit may be said to be a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all of the employees indicate to be best suited to serve the reciprocal rights and duties of the parties under the Collective bargaining provisions of the law. (Golden Farms vs. Calleja, supra.) It is that group of jobs that serves as the election constituency in the enterprise.


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5. Determination of the appropriate bargaining unit. --- The fundamental factors

in determining the appropriate collective bargaining unit are enumerated in the case of San Miguel vs. Laguesma, 236 SCRA 595:

(a) GLOBE DOCTRINE - the will of the employees; (b) COMMUNITY OF INTERESTS RULE - which takes into consideration the affinity and unity

of employees’ interests, such as substantial similarity of work and duties, or similarity of compensation and working conditions;

(c) Prior bargaining history; and (d) Similarity of employment status,

6. General Rule: community or mutuality of interests. The most efficacious bargaining unit is one which is comprised of workers enjoying community of interests. This is so because the basic test of a bargaining unit’s acceptability is whether it will best assure to all employees concerned of the exercise of their collective bargaining rights.

Factors to be considered: (a) similarity in scale and manner of determining earnings; (b)

similarity in employment benefits, hours of work, other terms and conditions of employment; (c) similarity in kind of work performed; (d) similarity in qualifications, skills, training of employees; (e) frequency of contact or interchange between employees; (f) geographic proximity; (g) continuity or integration of production processes; (h) common supervision and determination of collective bargaining; etc.

J. CERTIFICATION ELECTION (FRAMEWORK) 1. Definition and nature of certification election

1.1 Definition: It is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining. (Sec. [n], Rule I, Book V, Implementing Rules.)

1.2 Nature of certification election: A certification election is not a litigation but merely an

investigation of a non-adversarial fact-finding character in which the Bureau of Labor Relations plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation. (Airline Pilots Assn. Of the Philippines vs. CIR, 76 SCRA 274.)

2. Role of Employer during certification elections

General Rule: The employer is not a party in a certification election, which activity is the sole concern of the workers. It is improper for the employer to be present at all during the proceedings, even as an observer, let alone sit and participate therein thru a representative. Thus, Republic Act No. 9481 explicitly mandates that the employer is to be a BYSTANDER in the certification election proceedings. Hence:

“Art. 258-A, LC. -- In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for


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certification election. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition”

Exception: Where the employer has to file a petition for certification election pursuant to Art. 258 of the Labor Code because it was requested to bargain collectively. Even then, it becomes a neutral bystander.

2. Other kinds of recognition of employee representation excluding certification elections

2.1 Direct certification - not allowed Central Negros Electric Coop. vs. Sec. of Labor, 201 SCRA 584

Certification of an exclusive bargaining agent without need of election behing held for the purpose no longer allowed and has been discontinued under Article 257 of the Labor Code. This amendment affirms the superiority of the certification election over direct certification election (Rationale: prevent possible abuse thereof by employers, by certifying company union)

2.2 Voluntary recognition - Dept. Order No. 9, Rule X, Sec. I [c]; Dept Order No. 40-03, Rule VII.

This is allowed only if there is no other legitimate labor organization operating within the bargaining Unit. WHO HAS POWER TO RECOGNIZE? EMPLOYER may voluntarily recognize representation status of union ELEMENTS FOR VOLUNTARY RECOGNITION

Unorganized establishment

There is ONLY ONE legitimate labor organization operating within the bargaining unit If both elements are present, the employer MAY OPT to voluntarily recognize the union.

2.3 Consent election (Aligre vs. De Mesa, 237 SCRA 647)

Consent election is an one, the purpose merely being to determine the issue of majority

representation of all of the workers in the appropriate bargaining unit.

Dept. Order No. 40, Rule 8, Section 10. Consent Election; Agreement. – In case the contending unions agree to a consent election, the Med-Arbiter shall not issue a formal order calling for the conduct of certification election, but shall enter the fact of the agreement in the minutes of the hearing. The minutes of the hearing shall be signed by the parties and attested to by the Med-Arbiter. The Med-Arbiter shall, immediately thereafter, forward the records of the petition to the Regional Director or his/her authorized representative for the determination of the Election Officer by the contending unions through raffle. The first pre-election conference shall be scheduled within ten (10) days from the date of entry of agreement to conduct consent election.

Section 23. Effects of consent election. – Where a petition for certification election had been filed, and upon the intercession of the Med-Arbiter, the parties agree to hold a consent election, the results thereof shall constitute a bar to the holding of a certification election for


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one (1) year from the holding of such consent election. Where an appeal has been filed from the results of the consent election, the running of the one-year period shall be suspended until the decision on appeal has become final and executory. Where no petition for certification election was filed but the parties themselves agreed to hold a consent election with the intercession of the Regional Office, the results thereof shall constitute a bar to another petition for certification election.

3. Certification election and procedure Art. 256-257, LC; BR R5 S1-9, IRR; Dept. Order No. 9 s1-9, Dept. Order No. 40-03 Rule VIII s1-25. (PLEASE SEE CHART “B”)

3.1 Two-fold objectives of certification election:

a) To determine the appropriate bargaining unit; and b) To ascertain the majority representation of the bargaining representative, if the employees desire to be represented at all by anyone.

3.2 Who may and where to file petition for CE B5 R5 S1-2, IRR; Dept Order No. 40-03, R8, secs 1-25

Who may file: General rule - any legitimate labor organization Exception – Employer, if requested to bargain collectively and

the majority status of the labor organization is questionable

Where to file: Mediation-Arbitration Branch, through the Regional Office which has jurisdiction over the principal office of the employer. Officer who will hear the petition is called the Med-Arbiter.

Form: If filed by legitimate labor organization, petition must be in writing and under oath, and must contain the following:

(a) name of petitioning union, address and affiliation, if any; (b) name, address and nature of business of employer (c) description of appropriate bargaining unit, not including the supervisory

employees (d) approximate number of employees in the alleged bargaining unit (e) names and addresses of othe rlegitimae labor orgns in the bargaining unit,

if any (f) signature of 25% of all employees of the bargaining unit, where the

establishment is organized (g) other relevant facts If filed by ER in accordance with Article 259 (a) name, address and nature of busienss (b) name, address of legitimate labor orgs in bargaining unit (c) approx. number of employees in bargaining unit (d) description of bargaining unit (e) other relevant facts


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Procedure in filing of petition for certification election Dept. Order No. 40-03, Rule 8, secs. 5-25

(a) Raffle of the case. – Upon the filing of the petition, the Regional Director or any of

his/her authorized representative shall allow the party filing the petition to personally determine the Med-Arbiter assigned to the case by means of a raffle. Where there is only one Med-Arbiter in the region, the raffle shall be dispensed with and the petition shall be assigned to him/her.

(b) Notice of preliminary conference. – Immediately after the raffle of the case or

receipt of the petition, the same shall be transmitted to the Med-Arbiter, who shall in the same instance prepare and serve upon the petitioning party a notice for preliminary conference. The first preliminary conference shall be scheduled within ten (10) days from receipt of the petition.

Within three (3) days from receipt of the petition, the Med-Arbiter shall cause the service of notice for preliminary conference upon the employer and incumbent bargaining agent in the subject bargaining unit directing them to appear before him/her on a date, time and place specified. A copy of the notice of preliminary conference and petition for certification election shall be posted in at least two conspicuous places in the establishment.

[c] Preliminary Conference; Hearing. – The Med-Arbiter shall conduct a preliminary

conference and hearing within ten (10) days from receipt of the petition to determine the following:

o the bargaining unit to be represented; o contending labor unions; o possibility of a consent election; o existence of any of the bars to certification election under Section 3 of this

Rule; and o such other matters as may be relevant for the final disposition of the case.

(d) Number of Hearings; Pleadings. – If the contending unions fail to agree to a

consent election during the preliminary conference, the Med-Arbiter may conduct as many hearings as he/she may deem necessary, but in no case shall the conduct thereof exceed fifteen (15) days from the date of the scheduled preliminary conference/hearing, after which time the petition shall be considered submitted for decision. The Med-Arbiter shall have control of the proceedings. Postponements or continuances shall be discouraged.

(e) Order/Decision on the petition. – Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: o the name of the employer or establishment; o the description of the bargaining unit; o a statement that none of the grounds for dismissal enumerated in the succeeding

paragraph exists; o the names of contending labor unions which shall appear as follows: petitioner

union/s in the order in which their petitions were filed, forced intervenor, and no union; and

o a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order.


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(f) Denial of the petition; Grounds. – The Med-Arbiter may dismiss the petition on any

of the following grounds: o the PETITIONER UNION IS NOT LISTED in the Department’s registry of

legitimate labor unions or that ITS LEGAL PERSONALITY HAS BEEN REVOKED OR CANCELLED WITH FINALITY in accordance with Rule XIV of these Rules;

o CONTRACT BAR RULE: the petition was filed before or after the freedom period

of a duly registered collective bargaining agreement; provided that the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement;

o ONE YEAR BAR RULE: the petition was filed within one (1) year from entry of

voluntary recognition or a valid certification, consent or run-off election and no appeal on the results of the certification, consent or run-off election is pending;

o DEADLOCK BAR RULE: a duly certified union has commenced and sustained

negotiations with the employer in accordance with Article 250 of the Labor Code within the one-year period referred to in Section 14.c of this Rule, or there exists a bargaining deadlock which had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout to which an incumbent or certified bargaining agent is a party;

o in case of an organized establishment, FAILURE TO SUBMIT THE TWENTY-

FIVE PERCENT (25%) support requirement for the filing of the petition for certification election.

(g) Release of Order/Decision within ten (10) days from the last hearing, – The Med-Arbiter shall release his/her order or decision granting or denying the petition personally to the parties on an agreed date and time.

(h) Appeal. – The order granting the conduct of a certification election in an unorganized establishment shall not be subject to appeal. Any issue arising therefrom may be raised by means of protest on the conduct and results of the certification election. The order granting the conduct of a certification election in an organized establishment and the decision dismissing or denying the petition, whether in an organized or unorganized establishment, may be appealed to the Office of the Secretary within ten (10) days from receipt thereof. The appeal shall be verified under oath and shall consist of a memorandum of appeal, specifically stating the grounds relied upon by the appellant with the supporting arguments and evidence. Where to file appeal. – The memorandum of appeal shall be filed in the Regional Office where the petition originated, copy furnished the contending unions and the employer, as the case may be. Within twenty-four (24) hours from receipt of the appeal, the Regional Director shall cause the transmittal thereof together with the entire records of the case to the Office of the Secretary. Finality of Order/Decision. – Where no appeal is filed within the ten-day period, the Med-Arbiter shall enter the finality of the order/decision in the records of the case and cause the transmittal of the records of the petition to the Regional Director.


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Period to Reply. – A reply to the appeal may be filed by any party to the petition within ten (10) days from receipt of the memorandum of appeal. The reply shall be filed directly with the Office of the Secretary.

(g) Decision of the Secretary. – The Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. The decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the decision shall be entertained.

3.3 When to file petition for CE

3.3.1 If unorganized establishment (B5 R5 S3-6, IRR)

- Petition for certification election may be filed at any time by a legitimate labor organization

- Note that the 25% signature requirement is not applicable. Why? Literal

interpration of law in favor of labor. The Labor Code merely provides that it may be filed by any legitimate labor organization.

3.3.2 If organized establishment (with existing majority union)

a) No duly registered CBA – Petition for certification election may be filed at any time

b) With duly registered CBA - DO 9, Rule XI, S3 1) Contract bar rule - only during freedom period (Art. 232, LC; B5 R5 S4, IRR; see previous notes)

Note1: If a CBA has been duly registered in accordance with Article 231, a petition for CE or motion for intervention can only be entertained within 60 days prior to the expiry date of the CBA (freedom period). Note2: The operative phrase here is “DULY REGISTERED CBA”. Hence, if CBA has been executed, but parties did not register the CBA with the Department of Labor (Bureau of Labor Relations, then contract bar rule will not apply. A petition for certification election may still prosper in this instance.

2) One year bar rule; also known as certification year bar rule (B5 R5 S3, IRR) No certification election may be held within one (1) year from the date of the issuance of a final certification election result. Note1: This presupposes that the employees of the appropriate bargaining unit did not want to be represented by any union, or that having elected a majority union as exclusive bargaining representative, the latter is given one (1) year within which to negotiate with the employer.


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Note 2: Where the one year period – known as the certification year during which the certified union is required to negotiate with the employer and the filing of a petition for CE is prohibited – has expired and the majority union fails to bring the employer to the bargaining table, the minority union may file petition for CE. (Kaisahan ng Manggagawa vs. Trajano, 201 SCRA 453)

3) Deadlock bar rule (B5 R5 S3, IRR)

Neither may a representation question be entertained if, before the filing of a petition for certification election, a CBA deadlock to which an incumbent or certified bargaining agent is a party, had been submitted for conciliation or arbitration, or had become the subject of a Neither may a representation question be entertained if, before the filing of a petition for certification election, a CBA deadlock to which an incumbent or certified bargaining agent is a party, had been submitted for conciliation or arbitration, or had become the subject of a valid notice of strike/lock-out

3.4 IN ANY EVENT, REGISTRATION OF UNION CANNOT BE ATTACKED COLLATERALLY DURING THE CERTIFICATION ELECTION PROCEEDINGS

Dept. Order No. 40, Rule 8, sec. 15. Prohibited grounds for the denial/suspension of the petition. – All issues pertaining to the existence of employer-employee relationship, eligibility or mixture in union membership raised before the Med-Arbiter during the hearing(s) and in the pleadings shall be resolved in the same order or decision granting or denying the petition for certification election. Any question pertaining to the validity of petitioning union’s certificate of registration or its legal personality as a labor organization, validity of registration and execution of collective bargaining agreements shall be heard and resolved by the Regional Director in an independent petition for cancellation of its registration AND NOT BY THE MED-ARBITER IN THE PETITION FOR CERTIFICATION ELECTION, unless the petitioning union is not found in the Department’s roster of legitimate labor organizations or an existing collective bargaining agreement is unregistered with the Department.

LABOR ORGANIZATION; COLLATERAL ATTACK ON LEGAL PERSONALITY IS

PROHIBITED. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v.

Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011. -- Respondent company questioned the legal personality of the petitioner union in a certification election

proceeding. The Court ruled that the legal personality of the petitioner union cannot be collaterally attacked by respondent company. Except when it is requested to

bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, considering that its purpose is to determine if the employees would like to be represented by a union and to select the organization that will represent them in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even the allegation that some employees participating in a petition for certification election are actually managerial employees will give an employer legal personality to block the certification election. The employer’s only right in the proceeding is to be notified or informed thereof.

CERTIFICATION ELECTION; PENDENCY OF A PETITION FOR CANCELLATION OF UNION REGISTRATION DOES NOT PRECLUDE COLLECTIVE BARGAINING.



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Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No.

169754, February 23, 2011. -- Respondent union filed a petition for certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency of a petition for cancellation of the union’s registration. The DOLE Secretary ruled in favor of the legitimacy of the respondent as a labor organization and ordered the immediate conduct of a certification election. Pending appeal in the Court of Appeals, the petition for cancellation was granted and became final and executory. Petitioner argued that the cancellation of the union’s certificate of registration should retroact to the time of its issuance. Thus, it claimed that the union’s petition for certification election and its demand to enter into collective bargaining agreement with the petitioner should be dismissed due to respondent’s lack of legal personality. The Court ruled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining, and that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the union’s registration because at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order cancelling its registration.

4. REQUIREMENTS FOR VALID CERTIFICATION ELECTION (Dept. Order No.9, Section 12, Rule XIII; Dept Order No. 40-03 Rule 9)

4.1 TO FIND OUT IF THERE IS A VALID ELECTION: To have a valid election, a majority of all eligible voters in the appropriate bargaining unit must have CASTED their votes (JUST COUNT HOW MANY VOTED).

4.2 TO FIND OUT WHO WON ELECTIONS: The Union obtaining majority of ALL VALID

VOTES cast shall be certified as sole and exclusive bargaining representative of the workers in the appropriate bargaining unit.

4.3 Note for computation of eligible voters: base number is not limited to the members of the

union, but shall include both union and non-union members, as long as they are part of the bargaining unit.

Example1: 100 members in the appropriate bargaining unit Election results: Union A – 40 No Union - 2 Union B – 5 Illegal/stray votes: 10 Q1: Is there a valid election? Yes. 57 members (requirement: 51 members only) cast

their votes Q2: Who won? Union A. Out of 47 valid votes, Union A won majority thereof (47 divided

by 2 = 23.5 + 1 = 24.5) Example2: 100 members in the appropriate bargaining unit Election results: Union A – 40 No Union - 2 Union B – 5 Illegal/stray votes: 0 Q1: Is there a valid election? No valid election. Only 47 voted. A majority of the

members of the appropriate bargaining unit did not vote. Q2: Remedy: Re-run or repeat the certification election.

4.4 RUN-OFF ELECTION, REQUISITES (Dept. Order No. 9, Rule XIII):

a) Between three or more choices, and no choice receiving a majority of the valid votes cast;

b) The total number of votes for all contending unions is at least 50% of the number of votes cast

c) Between the two labor unions receiving the two highest number of votes.




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Example: 100 members in the appropriate bargaining unit. All members casted their votes. Election results: Union A – 24 Union C - 10 Union B – 15 No Union - 5 Total number of votes: 54 valid votes, with the rest declared illegal or stray (abstentions are not valid votes either). Q1: Is the election valid? Yes, because everyone voted. Q2: Who won? None of the three unions won, because not one received a majority of

the valid votes cast. (Majority is 28 votes) Q3: Is run-off election a remedy here? No. The total number of votes for all contending

unions is LESS than 50% of ALL of the number of votes cast . (Unions A, B and C garnered 49 votes, or at least one vote short of the requirement).

Remedy: Re-election (or re-run election, per Pascual)

5. IMPORTANT CASE: NUHWRAIN MANILA PAVILLION VS. MANILA PAVILLION HOTEL, G.R. No. 181531, 31 July 2009 citing Airtime Specialist vs. Calleja– NOT ASKED IN 2010, 2011 OR 2012 BAR.

Issue: May the probationary employees be allowed to vote in the certification elections, in the light of a CBA provision explicitly excluding them in the vote? Answer: YES. The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon. A law is read into, and forms part of, a contract. Provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy.

In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining." Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as basis for eligibility in supporting the petition for certification election. The law refers to "all" the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the "bargaining unit."

K. INTER-UNION AND INTRA-UNION DISPUTES (DOLE Dept. Order No. 40-03, series of 2003)

1. WHAT ARE INTER OR INTRA-UNION DISPUTES: (sec 1&2)

(a) cancellation of registration of a labor organization filed by its members or by another

labor organization; (b) conduct of election of union and workers’ association officers/nullification of election of

union and workers’ association officers; (c) audit/accounts examination of union or workers’ association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation;


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(f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers

and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers’ association

constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective

bargaining agreements; (l) violations of the rights and conditions of union or workers’ association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of

collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union

membership and collective bargaining –

(1) between and among legitimate labor organizations; (2) between and among members of a union or workers’ association.

Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers’ association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader.

2. WHAT ARE THE EFFECTS OF PENDENCY OF INTER/INTRA-UNION DISPUTE? (Sec 3)

PARTIES TO REMAIN STATUS QUO ANTE. “The rights, relationships and obligations of the parties litigants against each other and other parties-in-interest prior to the institution of the petition shall continue to remain during the pendency of the petition and until the date of finality of the decision rendered therein. Thereafter, the rights, relationships and obligations of the parties litigants against each other and other parties-in-interest shall be governed by the decision so ordered.

INTER/INTRA-UNION DISPUTE SHALL NOT BE CONSIDERED PREJUDICIAL

QUESTION. -- The filing or pendency of any inter/intra-union dispute and other related labor relations dispute is not a prejudicial question to any petition for certification election and shall not be a ground for the dismissal of a petition for certification election or suspension of proceedings for certification election.

3. WHO MAY FILE INTER OR INTRA-UNION DISPUTE (Sec 4):

Any legitimate labor organization or member(s) thereof specially concerned may file a complaint or petition involving disputes or issues enumerated in (a) to (n) of Section 1.

Any party-in-interest may file a complaint or petition involving disputes or issues regarding cancellation of registration of unions and workers associations; and/or a petition for interpleader

Where the issue involves the entire membership of the labor organization, the complaint or petition shall be supported by at least thirty percent (30%) of its members.

4. WHERE TO FILE INTER/INTRA-UNION DISPUTES.

4.1 With Regional Office that issued the certificate of registration or certificate of creation of chartered local, for the following complaints --

Complaints or petitions involving labor unions with independent registrations, chartered

locals, workers’ associations, its officers or members


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Petitions for cancellation of registration of labor unions with independent registration, chartered locals and workers association shall be resolved by the Regional Director. He/She may appoint a Hearing Officer from the Labor Relations Division.

petitions for deregistration of collective bargaining agreements Other inter/intra-union disputes and related labor relations disputes shall be heard and

resolved by the Med-Arbiter in the Regional Office.

4.2 With Bureau of Labor Relations, for the following complaints --

Complaints or petitioners involving federations, national or industry unions, trade union centers and their chartered locals, affiliates or member organizations, its officers or member organizations. (Note, if filed with the Regional Office, the complaint/petition shall stil be heard and resolved by the Bureau).

When two or more petitions involving the same parties and the same causes of action are filed, the same shall be automatically consolidated.

5. IMPORTANT CASE: MAY THE UNION COMPROMISE THE INDIVIDUAL MONEY CLAIMS

OF THE WORKERS? (Dusit Hotel Nikko vs. National Union of Workers in Hotel Restaurant and Allied Industries (Nuwhrain), 09 August 2005)

First, even if a clear majority of the union members agreed to a settlement with the employer, the Union has no authority to compromise the individual claims of the members who did not consent to the settlement. Rule 138, Sec 23 of the Rules of Court requires a special authority before an attorney may compromise his client’s litigation. The authority to compromise cannot lightly be presumed and shold be duly established by evidence. In this case, the minority union members did not authorize the Union to compromise their individual claims. Absent a showing of the Union’s special authority to compromise (SPA) the individual claims of private respondents for reinstatement and backwages, there is no valid waiver of the aforesaid rights. ARE THE DISSENTING MINORITY UNION MEMBERS BOUND BY THE MAJORITY DECISION APPROVING A COMPROMISE AGREEMENT? No. Money claims due to laborers cannot be the object of settlement or compromise effected by the Union or counsel, WITHOUT THE SPECIFIC INDIVIDUAL CONSENT OF EACH LABORER CONCERNED. The beneficiaries are the individual complainants themselves. The Union to which they belong can only assist them but cannot decide for them. For a waiver thereof to be legally effective, the individual consent or ratification of the workers or employees involved must be show. Neither the officers nor the majority of the Union had any authority to waive the accrued rights pertaining to the dissenting minority members, even under a Collective Bargaining Agreement which provided for a Union shop.

L. COLLECTIVE BARGAINING: NEGOTATIONS AND AGREEMENT (PLEASE SEE CHART/DIAGRAM “C”) 1. COLLECTIVE BARGAINING DEFINED:

Collective bargaining which is defined as “negotiations towards a collective agreement”, is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management, and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the union, and is characterized as a legal obligation.


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Labor Code, Article 252. Meaning of duty to bargain collectively. -- The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such agreement and executing a contract incorporating such agreements if requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession.” (Underscoring supplied.)

“ Labor Code. Art. 254. Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties.”

2. GENERAL PRINCIPLES IN BARGAINING:

2.1 Standard of conduct: GOOD FAITH IN BARGAINING.

Ada’s notes: This implies earnest efforts exerted by the parties toward a reasonable compromise or agreement acceptable to both parties. Contrast this with the following concepts:

a) “surface bargaining”, which has been defined as "going through the

motions of negotiating" without any legal intent to reach an agreement.

Note that the Supreme Court has even noted that “the resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table. It involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.” Standard Chartered Bank Employees Union (NUBE) vs. Secretary Nieves Confesor and Standard Chartered Bank, GR No. 11497, 16 June 2004.

b) “individual bargaining”. “It is an unfair labor practice for an employer operating

under a collective bargaining agreement to negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative.” (Insular Life Assurance Co., Ltd., Employees-

NATO vs. Insular Life Ass. Co. Ltd., 76 SCRA 50 citing Melo Photo Supply Corporation vs.

National Labor Relations Board, 321 U.S. 332).

2.2 DUTY TO BARGAIN collectively does NOT compel any party to agree to any proposal nor

to make any concession by virtue thereof (Article 253, Labor Code), nor are the parties obliged to reach an agreement. (Union of Filipro Employees vs. Nestle Philippines, G.R. Nos.

158930-31, 03 March 2008).

Employer is not under obligation to bargain unless the Union shall have been

certified as the exclusive bargaining agent in a certification election duly called for such purpose, and that the latter shall have forwarded to the employer its bargaining demands.


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When there is a collective bargaining agreement, the duty to bargain collectively

shall also mean that neither party shall terminate or modify such agreement during its lifetime, EXCEPT during the freedom period of at least sixty (60) days prior to the expiration day (“freedom period”).

Note AUTOMATIC RENEWAL CLAUSE as regards expired CBA. Under this clause, the terms and conditions of the existing CBA shall continue to be in full force and effect during the sixty-day freedom period (Union of Filipro Ees. vs. NLRC, 192 SCRA 414), or until a new CBA is reached. Thus, despite the lapse of the effectivity of the old CBA, the law considers the same as continuing in full force and effect until a new CBA is negotiated

and entered into. (Lopez Sugar Corporation vs. FFW, G.R. Nos. 75700-01, 30 Aug. 1990).

Mandatory provisions which must be included in the negotiations; otherwise, the CBA will not be registered: (a) no strike-no lockout clause; (b) grievance machinery. Note further that minimum standards must likewise be complied with; otherwise, the DOLE will not allow its registration.

2.3 Disclosure of information (e.g., Financial Statements). – In collective bargaining, and upon request, the parties shall make available such up-to-date financial information on the economic situation of the undertaking, which is normally submitted to relevant government agencies, as is material and necessary for meaningful negotiations. Where the disclosure of some of this information could be prejudicial to the undertaking, its communication may be made condition upon a commitment that it would be regarded as confidential to the extent required. The information to be made available may be agreed upon between the parties to collective bargaining.

3. TWO KINDS OF BARGAINING:

3.1 SINGLE ENTERPRISE BARGAINING. – One where any voluntarily recognized or certified labor union may demand negotiations with its employer for terms and conditions of work covering employees in the bargaining unit concerned.

3.2 MULTIPLE EMPLOYER BARGAINING. – One where a legitimate labor union(s) and

employers may agree in writing to come together for the purpose of collective bargaining, provided:

(a) only legitimate labor unions who are incumbent exclusive bargaining agents may participate and negotiate in multi-employer bargaining;

(b) only employers with counterpart legitimate labor unions who are incumbent

bargaining agents may participate and negotiate in multi-employer bargaining; and

(c) only those legitimate labor unions who pertain to employer units who

consent to multi-employer bargaining may participate in multi-employer bargaining.

4. Union Security Clauses. -- applied to and comprehends "closed shop," "union shop,"

"maintenance of membership," or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August

2010).

4.1 General rule on coverage of union security clause:


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All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. Exception: However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely: a) employees who at the time the union shop agreement takes effect are bona fide

members of a religious organization which prohibits its members from joining labor unions on religious grounds (Elizalde Rope Workers case);

b) employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect (Art. 248 [e]);

c) confidential employees who are excluded from the rank and file bargaining unit; and

d) employees excluded from the union shop by express terms of the agreement. (Bank

of the Philippine Islands vs. BPI Employees Union - Davao Chapter - Federation of Unions in BPI Unibank, G.R. No. 164301, 10 August 2010; En Banc.).

4.2 Kinds of union security clauses:

o Closed Shop. – A form of union security whereby only union members can be hired

and the workers must remain union members as a condition of continued employment. (Juat vs. Court of Industrial Relations, 122 Phil. 794, cited in Philippine Law Dictionary by Moreno, 2nd Edition.) It is one where no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).

o Union Shop. — There is union shop where an employer may hire new employees,

but once they become regular employees, they are required to join the union within a certain period as a condition for their continued employment. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).

o Modified Union Shop Agreement. -- A union shop agreement with a provision

exempting certain employee groups from its operation, such as old employees already with the company at a designated date, key personnel, persons with religious scruples in joining labor unions. (Ibid.)

o Maintenance of membership shop. -- There is maintenance of membership shop

when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit, or the agreement is terminated. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010; see also: Bank of Philippine Islands vs. BPI Employees Union – Davao Chapter – Federation of Unions in BPI Unibank, G.R, No. 164301, 10 August 2010, En Banc.)

o Open shop -- An arrangement on recruitment whereby an employer may hire any

employee, union member or not, but the new employee must join the union within a specified time and remain a member in good standing. (LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August 1997).

o Agency shop -- An arrangement whereby non-members of the contracting union

must pay the union a sum equal to union dues known as agency fees for the benefits they received as a consequence of the bargaining negotiations effected through the efforts of the union. (LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August 1997).


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5. ULP IN COLLECTIVE BARGAINING:

a. Bargaining in bad faith. Individual bargaining – see previous notes

Surface bargaining – see previous notes.

b. Refusal to bargain. -- The employer, by its refusal to bargain, is guilty of violating

the duty to bargain collectively in good faith. Hence, the Union’s draft CBA proposal may unilaterally be imposed upon the employer as the collective bargaining

agreement to govern their relationship. (Divine World vs. Secretary of Labor, 213 SCRA

759 [1992].) c. Gross violation of CBA provisions. – see below; new case of Bayer Phils.

6. 2010-2012 CASES:

6.1 NOT ASKED IN 2011-2012 BAR. IMPORTANT CASE: Employees Union of Bayer Phils. Vs. Bayer Philippines, GR No. 162943, 06 Dec 2010. Gross violation of CBA is NOT limited to economic provisions, for ULP in collective bargaining to be committed. -- Where the violation of the CBA is GROSS PER SE, as where the employer negotiated with SPLINTER Union which had allegedly disaffiliated from the original union (two contending sets of officers), then ULP is committed by the employer as it is in contravention of the duty to bargain collectively and in interfering with the determination of representation issue between the two unions.

“It must be remembered that a CBA is entered into in order to foster stability and mutual cooperation between labor and capital. AN EMPLOYER SHOULD NOT BE ALLOWED TO RESCIND UNILATERALLY ITS CBA WITH THE DULY CERTIFIED BARGAINING AGENT IT HAD PREVIOUSLY CONTRACTED WITH, AND DECIDE TO BARGAIN ANEW WITH A DIFFERENT GROUP IF THERE IS NO LEGITIMATE REASON FOR DOING SO AND WITHOUT FIRST FOLLOWING THE PROPER PROCEDURE. If such behavior will be tolerated, bargaining and negotiations between the employer and the union will never be truthful and meaningful, and no CBA forged after arduous negotiations will ever be honored or be relied upon.”

6.2 CBA: Duty of parties to maintain status quo pending renegotiation. -- General Milling

Corporation-Independent Labor Union [GMC-ILU] vs. General Milling Corporation/General Milling Corporation vs.General Milling Corporation-Independent Labor Union [GMC-ILU], et al., G.R. Nos. 183122/183889, June 15, 2011.

Article 253 of the Labor Code mandates the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one in the present case. Hence, considering that no new CBA had been, in the meantime, agreed upon by respondent GMC and the Union, the provisions of the imposed CBA continues to have full force and effect until a new CBA is entered into by the parties.

6.3 IMPORTANT: NOT ASKED IN 2010, 2011 OR 2012 BAR. Exclusive bargaining status beyond five year period cannot be subject of negotiation nor could parties

http://sc.judiciary.gov.ph/jurisprudence/2011/june2011/183122.htm


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agree to extend the same.-- FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) Vs. Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independet and General Labor Organization (SANAMA-FVC-SIGLO), G.R. No. 176249, November 27, 2009.

While the parties may agree to extend the CBA’s original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the union’s exclusive collective bargaining status. By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties (management and union) to agree upon. In other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBA’s first five years. In the present case, the CBA was originally signed for a period of five years, XXX with a provision for the renegotiation of the CBA’s other provisions at the end of the 3rd year of the five-year CBA term. Thus, prior to expiration on January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003.

The negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO’s exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWO’s exclusive bargaining status, was seasonably filed.

6.4 2012 CASE: De la Salle University vs. De la Salle University Employees

Association, G.R. No. 169254. 23 August 2012. – Intra-union disputes, law of the case.

QUESTION: In cases where there are two contending factions of officers in an inter-union dispute (of the majority union), may the employer unilaterally refuse to remit union dues to on the pretext that there is an on-going intra-union dispute between the two factions? Is the non-remittance of union dues constitutive of ULP as an interference in internal affairs of the Union?

ANSWER: [T]he University [is] guilty of refusal to bargain amounting to an unfair labor practice under Article 248(g) of the Labor Code. The University is bound to comply with its obligations under the CBA, including the remittance of union dues. In unilaterally refusing to do so, it has committed ULP, as such an act constituted an intentional avoidance of a duty imposed by law. The issue of union leadership is distinct and separate from the duty to bargain. In fact, BLR Director Cacdac clarified that there was no void in [respondent’s] leadership. For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals’ finding – that petitioner erred in suspending collective bargaining negotiations with the union and in placing the union funds in escrow considering that the intra-union dispute between the Aliazas and Bañez factions was not a justification therefor — is binding herein.

http://sc.judiciary.gov.ph/jurisprudence/2009/november2009/176249.htm

http://sc.judiciary.gov.ph/jurisprudence/2009/november2009/176249.htm

http://sc.judiciary.gov.ph/jurisprudence/2012/august2012/169254.pdf


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M. STRIKES, PICKETING AND LOCK-OUTS (PLEASE SEE DIAGRAM “E2 AND “E-3”) 1. Who may declare a strike or lock-out? (B5,R13, S2, IRR)

General Rule: Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks or ULP.

Exception: In the absence of a certfied or duly recognized bargaining representative, any legitimate labor organization may declare a strike, BUT ONLY ON THE GROUND OF ULP.

2. Requisites of a valid strike: (a) Must have a lawful purpose; (b) conducted

through lawful means; and (c) must be in compliance with the procedural requirements under the Labor Code

2.1 Lawful purpose

The Labor Code allows only two (2) kinds of strike/lockout:

(a) Economic strike - is intended to force wage and other concessions from the employer which is not required by law to grant. Usually, 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.

Note 1 - Examples of ULP under Articles 248-249, LC: (1) interference, restraint or coercion of the employees in their exercise of right to self-organization; (2) yellow-dog contracts, e.g., stipulation requiring employee not to join unions, or for employee to withdraw from union as condition for continued employment; (3) refusal to collectively bargain; (4) economic inducement and/or discrimination in regard to wages, hours of work, in order to encourage/discourage union membership; (5) contracting out of services/functions being performed by union members, where such will interfere in the exercise of right to self-org., among others.

Note 2 - All other forms of strikes, viz.: lightning strike, sit-down strike; sympathetic strike, slowdown strike; wildcat strike; intermittent strike, are all prohibited for lack of valid purpose or failure to comply with procedural requirements (discussion below).

Note 3 - An economic strike may be converted into a ULP strike, when the employer unjustifiably dismisses the officers of the union during a strike due to deadlock in collective bargaining negotiations.

Note 4 - What are non-strikeable issues? Article 263 (b); Dept. Order No. 9, Rule 12, Sec. 2

(a) Violations of CBA which are not gross in character shall be resolved via the

Grievance Machinery; (b) Inter-union or intra-union disputes; (c) Labor standards cases such as wage orders (Guidelines governing Labor

Relations [19 Oct. 1987] issued by Sec. Drilon; See: Appendix “Y” of Foz’s Labor Code; See also: Article 261, LC)


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(d) Those issues which had already been brought to voluntary or compulsory arbitration

Note 5 - Is a violation of the CBA a case for ULP? It depends. Check Article 261, LC; See also: Dept. Order No. 9, Rule 22, Sec. 1.

“The voluntary arbitrator or panel xxx shall have original

and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA, and those arising from the interpretation of company personnel policies xxx.

Accordingly, VIOLATIONS OF THE CBA, EXCEPT

THOSE WHICH ARE GROSS IN CHARACTER, SHALL NO LONGER BE TREATED AS ULP AND SHALL BE RESOLVED AS GRIEVANCES UNDER THE CBA. For purposes of this Article, gross violations of the CBA shall mean flagrant and/or malicious refusal to comply with the economic provisions of the CBA.”

Cases on lawful purpose:

a. NOT ASKED IN 2012 BAR. IMPORTANT CASE: ILLEGAL STRIKE WHERE CONDUCTED BY A UNION WHICH IS NOT A LEGITIMATE LABOR ORGANIZATION. Abaria vs. NLRC, GR 154113. 07 December 2011. -- Records of the DOLE NCMB and Region 7 reveal that NAMA-MCCH-NFL had not registered as a labor organization, having submitted only its charter certificate as an affiliate or local chapter of NFL. Not being a legitimate labor organization, it is not entitled to those rights granted to a legitimate labor organization, e.g., to act as representative of its members in colletie bargaining, and be certified as the exclusive representative of all the employees in the appropriate bargaining unit for purposes of collective bargaining. Even assuming that it disaffiliated with NFL, it has not done so as there was no effort on its part to comply with the legal requisites for valid disaffiliation during freedom period through a majority vote in a secret balloting in accordance wth Art. 241 (d). Nava and her group simply demanded that the hospital directly negotiate with the local union which has not even registered as one. Xxx Consequently, the mandatory notice of strike and conduct of strike vote were ineffective for having been filed by an entity without legal personality. Lastly, the strike is illegal due to the commission of violence, coercion, intimidation and harassment against non-participating employees, and blockage of free ingress to and egress out of the hospital premises. Union officers having knowingly participated in an illegal strike lose their employment status. However, union members who, despite having participated in an illegal strike but did not actually participate in the commission of illegal acts (violence threat etc), could not be dismissed for lack of evidence showing actual commission of illegal acts. While they may be reinstated, they will not be given backwages for the days when they did not render work on account of the strike, following the principle of a “fair day’s wage for a fair day’s labor”. b. MANILA DIAMOND HOTEL vs. MANILA DIAMOND HOTEL EMPLOYEES

UNION, G.R. No. 158075, 30 June 2006, -- Illegal strike (no lawful purpose) where the strike was called by union which was not the exclusive bargaining representative; reiteration of diff. liabilities between union officers and union members; Unconditional offer to return to work is not a valid basis for award


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of backwages during strike, especially where the strike was illegal in the first place.

1. Strike had no valid purpose. – Note that the Union was not certified as the exclusive bargaining representative of the majority of the employees of the rank-and-file, and hence, it could not demand from the Hotel the right to collectively bargain in their behalf. Secondly, Union cannot bargain only in behalf of its employees, insofar as it goes against the objective of having a “single employer-wide unit which is more to the broader and greater benefit of the employees’ working force.” The philosophy is to avoid fragmentation of the bargaining unit so as to strengthen the employees’ bargaining power with the management. To veer away from such goal would be contrary, inimical and repugnant to the objectives of a strong and dynamic unionism. Thirdly, Union violated Art. 264 which proscribes the stating of a strike on ground of ULP DURING THE PENDENCY OF CASES INVOLVING THE SAME GROUNDS FOR STRIKE. Lastly, means employed in the conduct of strike viz., obstruction of free engress and ingress, holding noise barrage and threatening hotel guess, renders the strike illegal.

2. Distinctions as to liability of union officer vs. union member. - [a]ny union

officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during strike may be declared to have lost his employment status . . ." On the other hand, an ordinary striking worker cannot be dismissed for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike, unlike a union officer who may be dismissed by mere knowingly participating in an illegal strike and/or committing an illegal act during a strike.

3. General rule as to entitlement of backwages,: For the general rule is that backwages shall not be awarded in an economic strike on the principle that "a fair day’s wage" accrues only for a "fair day’s labor." This Court must thus hearken to its policy that "when employees voluntarily go on strike, even if in protest against unfair labor practices," no backwages during the strike is awarded.

2.2 Lawful means

2.2.1 Article 264 (b) and (e), Labor Code; as amended Dept. Order No. 9, Rule 22, Sec. 12, pars. 1 and 2

“(b) No person shall obstruct, impede or interfere with by force, violence, coercion,

threats or intimidation any peaceful picketing by employees during any labor controversy, or in the eercise of the right of self-orgn., or collective bargaining, or shall aid or abet such destruction or interference. No employer shall use or employ any person to commit such acts, nor shall any person be employed for such purpose (prohibition against strike-breakers was added under Dept. Order No. 9).

(e) No person engaged in picketing shall commit any act of violence, coercion or

intimidation, or obstruct the free ingress to and egress from the employer’s premises for lawful purposes, or to obstruct public thoroughfares.”

2.2.2 Guidelines on Removal of Illegal Blockades at Factory Gates, DOLE Memo

dated 22 October 1987

“16. Picketing as part of the freedome of expression during strikes shall be respected, provided that it is peaceful. Shanties and structures set-up to effectively block lawful ingress to, and egress from, company premises for legal purposes and the free passage to public thoroughfares may be summarily demolished in accordance with law.


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2.2.3 Guidelines for Conduct of PNP/AFP Personnel during Strikes, Lock-outs and other Labor disputes, DOLE Memo dated 22 October 1987

“1. Obstructions on places and thoroughfares devoted to public use, such as

the streets, sidewalks, alleys and the like are NUISANCES PER SE. As such, they may be removed summarily by the local government authorities, through their respective law enforcement authorities, and they may act independently of the DOLE even if said obstructions are placed as a result of or in connection with a pending labor strike.

2. However, obstructions on points of ingress/egress within private properties

during a labor dispute, although likewise prohibited by law, cannot be summarily demolished by law enforcement authorites. Instead, these obstructions or barricades may be removed only in accordance with the proper orders issued by the DOLE Office of the Secretary, or the NLRC, with proper coordination between the said labor officials and the police authorites to ensure that no undue harm is inflicted upon any person or property.”

2.2.4 What are the consequences if any of the prohibited activities as mentioned

above are committed during the conduct of the strike? The otherwise valid strike may be converted into an illegal one

Association of Independent Unions in the Philippines (AIUP) vs. NLRC, March 25, 1999. -- To be valid, a strike must be pursued within legal bounds. The right to strike as a means for the attainment of social justice is never meant to oppress or destroy the employer. The law provides limits for its exercise. Among such limits are the prohibited activities under Article 264 of the Labor Code, particularly paragraph (e), which states that no person engaged in picketing shall: a. commit any act of violence, coercion, or intimidation or b. obstruct the free ingress to or egress from the employer’s premises for lawful

purposes or c. obstruct public thoroughfares. Even if the strike is valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal.

2.2.5 What are the liabilities of the workers who participated in the commission

of the prohibited activities as mentioned above are committed during the conduct of the strike? Loss of employment status

Union officers – may lose employment status if:

(a) he knowingly participates in an illegal strike, viz.: non-compliance with purpose and process; OR

(b) he knowingly participates in the commission of illegal activities, whether the strike is legal or illegal

Union members – may lose employment status only if he knowingly participates in illegal activities.

Note1: If the existence of force is pervasive and widespread, consistently and deliberately resorted to as a matter of union policy, responsibility is collective (meaning that all the union officers will be held liable even if did not personally commit the same). Otherwise, responsibility is only individual. (Almira vs. BF Goodrich, 58 SCRA 1290)

Note2: In order to hold the labor organization liable for the unlawful acts of the individual officers, agents or members, there must be proof of actual authorization or ratification of such acts after actual knowledge thereof. Thus,


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where a union, through its officers, not only had knowledge of the acts of violence committed by some of its strikers, but either participated or ratified the same, the strike was held to be illegal and the dismissal of ALL active participants therein was justified. (Phil. Marine Officers Guild vs. Compania Maritima, 22 SCRA 1113).

Note 3: AIUP vs. NLRC, supra; see also Great Pacific Employees Union vs. Great Pacific Life Assurance, February 11, 1999. It follows therefore that the dismissal of officers of the striking union was justified and valid. Their dismissal as a consequence of the illegality of the strike staged by them find support in Article 264(a) of the Labor Code, pertinent portion of which provides:” …Any union officer who knowingly participates in an illegal strike and any… union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status…” Union officers are duty bound to guide their members to respect the law. If instead of doing so, the officers urge the members to violate the law and defy the duly constituted authorities, their dismissal from the service is a just penalty or sanction for their unlawful acts. The officers’ responsibility is greater than that of the members.

2.3 Compliance with procedural requirements of the Labor Code

Apart and separate from the lawful purposes and lawful means in the conduct of a valid strike, the third requisite is compliance with the procedural requirements of law. Thus:

2.3.1 Notice of strike or lockout - must be filed prior to the intended date of strike,

taking into consideration the cooling off period

Cooling off period (Art. 263, LC; B5 R8 S3, IRR) If bargaining deadlocks – 30 days If ULP – 15 days If ULP on the ground of union busting: Union may take action immediately, but note that a strike vote must have been conducted and results submitted to DOLE (Art. 263 [b]; Dept Order No. 9, Rule 22, Secs. 3 and 7)

2.3.2 Conciliation proceedings – NCMB to immediately call parties involved to a

conference within period of 48 hours from receipt of notice, using the fastest means possible (telephone, telegraph or messenger)

Note1: Parties obliged to meet promptly and expeditiously in good faith, as part

of their duty to bargain collectively which covers proceedings before the NCMB. If employer refuses to attend conference, may be charged with ULP. (Dept. Order No. 9, R22, S6 [2]).

Note2: During the conciliation and mediation proceedings before the NCMB,

parties are supposed to refrain from doing any act which will exacerbate the proceedings – re: maintenance of status quo.

2.3.3 Strike vote – approved by a majority of the TOTAL UNION MEMBERSHIP in

the bargaining unit (hence: only members of the majority union may vote), via secret ballot, in a meeting or referenda specially called for the purpose

Lock-out vote - approved by a majority of the Board of Directors of the employer company, by secret ballot in a meeting called for such purpose.


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2.3.4 Seven Day Strike ban (Dept. Order No. 9. R22, S7[e]) - after the strike vote is taken, it is required that the union must file the result of the strike vote with the NCMB at least 7 days prior to the intended date of strike.

Note1: Both cooling off period and 7-day strike ban must be complied

with and is mandatory. Otherwise, illegal strike. (National Federation of Sugar Workers vs. Ovejera, 114 SCRA 354)

3. Assumption of Jurisdiction by the Secretary of Labor or Certification of the Labor Dispute to the National Labor Relations Commission for Compulsory Arbitration. (Article 264[g], Labor Code; Please see CHART/DIAGRAM “E”)

3.1 The Secretary of Labor is not precluded from assuming jurisdiction over a labor

dispute in a vital industry even if there is no notice of strike or a formal complaint. He need not wait for a notice of strike or a formal complaint about a strike already in progress before he could exercise the powers given to him by law to avoid the strikes, picketing or lockouts contemplated in the grant of power. (Saulog Transit vs. Lazaro, 128 SCRA 591.)

3.2 Secretary of Labor has discretion to assume jurisdiction or to certify to the NLRC on

the ground that the labor dispute is one "adversely affecting the national interest", and said exercise of discretion cannot be questioned. (FEATI University vs. Bautista, 18 SCRA 1191)

3.3 Nature and Effect of Assumption and Certification

a) Assumption and certification orders are executory in character and are strictly to be complied with by the parties even during the pendency of any petition questioning their validity.

b) It automatically results in a return-to-work of all striking workers (if one has

already taken place), or enjoins the taking place of a strike (Union of Filipro Employees vs. Nestle Philippines, Inc., 192 SCRA 396.)

c) While termination by reason of an illegal strike requires hearing, replacement by

reason of violation of a return-to-work order does not. (Free Telephone Workers Union vs. PLDT, 113 SCRA 663, 678.)


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3.4 Effect of Defiance of Assumption or Certification Orders.

"A Strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended (Zamboanga Wood Products, Inc. vs. NLRC, G.R. 82088, October 13, 1989; 178

SCRA 482). The Union, officers and members, as a result, are deemed to have lost their employment status for having knowingly participated in an illegal act." (Union of Filipino Employees vs. Nestle Philippines, Inc. [192 SCRA

396])

4. "No Strike No Lockout" Clause in the CBA.

“No Strike-No Lockout” clause in the CBA applies only to economic strikes; it does not apply to ULP strikes. Hence, if the strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be considered a violation of the no-strike clause. (Master Iron Labor Union vs. NLRC, 219 SCRA 47.)

5. 2010-2012 CASES 5.1 IMPORTANT CASE; CONTRA TO EXISTING DECISIONS ON DEFIANCE OF RETURN

TO WORK ORDER. Solidbank vs. Gamier et al, GR 159460, 15 Nov 2010; Solidbank vs. Solidbank Union et al., GR 159461, 15 Nov 2010. – A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is a prohibited activity and thus illegal. Xxx There is no dispute that when respondent Union officers and members conducted their mass action, the proceedings before the Secretary of Labor were still pending as both parties filed Motions for reconsideration of the SOLE Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of a mass demonstration simultaneous with concerted work abandonment/boycott.

ADA’S NOTES: General rule: Both union officers and members who defy the Secretary’s assumption and return to work order may summarily be dismissed, because this is a patent defiance of the lawful orders of government. (Union of Filipino Employees vs. Nestle Philippines, Inc. [192 SCRA 396]; Allied Banking Corporation vs. NLRC, 258 SCRA 724; and

Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals,348 SCRA 565 [2000]). However, in this particular Solidbank case, the Supreme Court though

Justice Villarama made a distinction, paraphrased succinctly as follows: “Notwithstanding illegality of the strike, we cannot sanction petitioners’ act of indiscriminately terminating the services of individual respondents who admitted joining the mass actions and who have refused to comply with the offer of the management to report back to work. The liabilities of individual respondents must be determined under Article 264 (a) Labor Code, thus: (a) Union officers who participated in the illegal strike may be considered to have lost their employment status; BUT (b) a worker who merely participated in the illegal strike may NOT be terminated from employment if he did NOT commit any illegal act during the strike. Xxx There is no evidence that the ordinary union member had actually committed illegal acts during the strike.” DEAN TONY AND ADA ABAD position: Article 264 was misapplied, as said provision applies only to illegal strikes, and NOT to instances where there is a DEFIANCE of a Return-to-work Order as in the instant case. This is simply contradictory to all previous rulings, which we believe are better and more appropriate.


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5.2 Jurisdiction; Secretary of Labor. -- Cirtek Employees Labor Union-Federation of Free Workers vs. Electronics, Inc., G.R. No. 190515, November 15, 2010.

Question: May the Secretary of Labor give an award higher than what was agreed upon by the management and labor union, when he assumes jurisdiction over the labor dispute? Answer: YES. In the exercise of his power to assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code, it is well-settled that the Secretary of Labor

may resolve ALL ISSUES involved in the controversy including the award of wage increases and benefits. In the instant case, the fact that the award was higher than that which was purportedly agreed upon in the MOA between management and the labor union is of no moment because the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents submitted by respondent as well as the parties’ bargaining history and respondent’s financial outlook and improvements as stated in its website.

5.3 Unfair labor practice. -- Manila Mining Corp. Employees Association, et al. vs.. Manila

Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010. –

Question: Is suspension of CBA negotiation an unfair labor practice? Answer: NO. Article 252 of the Labor Code defines the phrase “duty to bargain collectively.” For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was oppressive to labor. The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded feelings or grave anxiety. In this case, it cannot be said that MMC deliberately avoided the negotiation. It merely sought a suspension and even expressed its willingness to negotiate once the mining operations resume. There was valid reliance on the suspension of mining operations for the suspension of the CBA negotiation. The Union failed to prove bad faith.

5.4 Dismissal on account of illegal strike. -- Danilo Escario, et al vs. National Labor

Relations Commission, G.R. No. 160302, September 27, 2010.

Question: Are ordinary workers who were reinstated due to dismissal for their participation in an illegal strike, entitled to payment of backwages? Answer: NO. Conformably with the long honored principle of a fair day's wage for a fair day's labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike.

By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the employer dismisses the employee without observing due process, either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee as provided under Articles 278, 283 or 284 of the Labor Code; while procedural due process demands compliance with the twin-notice requirement.

5.5 Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012. -

Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary

damages;

QUESTION: May employees who have gone on mass leaves without prior authorization be presumed to have conducted an illegal strike?

http://www.google.com/url?q=http%3A%2F%2Fsc.judiciary.gov.ph%2Fjurisprudence%2F2010%2Fnovember2010%2F190515.htm&sa=D&sntz=1&usg=AFQjCNGazA08g8Y4qVU2u64hOZgZrRCaKg

http://sc.judiciary.gov.ph/jurisprudence/2010/september2010/178222-23.htm

http://sc.judiciary.gov.ph/jurisprudence/2010/september2010/160302.htm

http://sc.judiciary.gov.ph/jurisprudence/2012/september2012/171118.pdf


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It is undeniable that going on leave or absenting one’s self from work for personal reasons when they have leave benefits available is an employee’s right. The contention of Biomedica that the enjoyment of said leaves is in reality an illegal strike does not hold water in the absence of strong controverting proof to overturnthe presumption that “a person is innocent of x x x wrong.” Thus, the individual leaves of absence taken by the petitioners are not such absences that can be regarded as an illegal mass action. Here, the five (5) petitioners were absent on November 7, 2006. The records are bereft of any evidence to establish how many workers are employed in Biomedica. There is no evidence on record that 5 employees constitute a substantial number of employees of Biomedica. And, as earlier stated, it is incumbent upon Biomedica to prove that petitioners were dismissed for just causes, this includes the duty to prove that the leave was large-scale in character and unauthorized. This, Biomedica failed to prove. Having failed to show that there was a mass leave, the Court concludes that there were only individual availment of their leaves by petitioners and they cannot be held guilty of any wrongdoing, much less 37 RULES OF COURT, Rule 131(a). anything to justify their dismissal from employment. On this ground alone, the petition must be granted. Petitioners did not go on strike Granting for the sake of argument that the absence of the 5 petitioners on November 7, 2006 is considered a mass leave, still, their actions cannotbe considered a strike. Art. 212(o) of the Labor Code defines a strike as “any temporary stoppage of work by the concerted action of employees as a result of any industrial or labor dispute.” “Concerted” is defined as “mutually contrived or planned” or “performed in unison.”38 In the case at bar, the 5 petitioners went on leave for various reasons. Petitioners were in different places on November 7, 2006 to attend to their personal needs or affairs. They did not go to the company premises to petition Biomedica for their grievance. To demonstrate their good faith in availing their leaves, petitions reported for work and were at the company premises in the afternoon after they received text messages asking them to do so. This shows that there was NO intent to go on strike. Unfortunately, they were barred from entering the premises and were told to look for new jobs. Surely the absence of petitioners in the morning of November 7, 2006 cannot in any way be construed as a concerted action, as their absences are presumed to be for valid causes, in good faith, and in the exercise of their right to avail themselves of CBA or company benefits. Moreover, Biomedica did not prove that the individual absences can be considered as “temporary stoppage of work.” Biomedica’s allegation that the mass leave “paralyzed the company operation on that day” has remained unproved.

N. LAW ON TERMINATION

BASIC PRINCIPLES IN DISCIPLINARY CASES 1. Code of Conduct vs. security of tenure

Balancing of interests in disciplinary cases

1.1 Labor’s interests

A worker’s right to labor is recognized by the Constitution as a property right. As such, an employee cannot be deprived of his work without just cause or due process. 1.2 Management’s interests

On the other hand, the employer is allowed, in the exercise of its management prerogatives, to promulgate rules and regulations, and to enforce/implement them for the efficient operations of the business. Moreover, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty.


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1.3 Balancing of interests: Thus, in the context of implementing the rules and regulations for the conduct of human relationships and work performance within the business, certain parameters will have to be observed:

a) Burden of proof is upon the employer to show just cause for the imposition of a penalty upon the employee. Hence, there must exist substantial evidence to prove just or authorized cause of termination. Proof beyond reasonable doubt not required in administrative cases.

Note1: Failure of employer to submit documents which are presumed to be in its possession, inspite of an Order to do so, implies that the presentation of said documents is prejudicial to its case. (De Guzman vs. NLRC, 540 SCRA 210 [Dec. 2007]).

b) In the imposition of penalty, whether suspension or termination, the same must be commensurate to the offense committed.

2012 CASE: Negros Slashers vs. Alvin Teng, G.R. No. 187122, 22 Feb 2012

Facts: Basketball player Alvin Teng had a below-par performance during Game Number 4 of Championship Round for which he was pulled out from the game, and then he untied his shoelaces and donned his practice jersey. In Game Number 5, he did not play. Case for Negros Slashers: (a) basketball organization is a "team-based" enterprise and that a harmonious working relationship among team players is essential to the success of the organization; (b) Teng "abandoned" them during a crucial Game Number 5 in the MBA championship round. Supreme Court: We find that the penalty of dismissal handed out against Teng was indeed too harsh. As an employee of the Negros Slashers, Teng was expected to report for work regularly. Missing a team game is indeed a punishable offense. Untying of shoelaces when the game is not yet finished is also irresponsible and unprofessional. However, we agree with the Labor Arbiter that such isolated foolishness of an employee does not justify the extreme penalty of dismissal from service. Petitioners could have opted to impose a fine or suspension on Teng for his unacceptable conduct.

c) Thus: for valid termination, there must both be JUST CAUSE AND DUE

PROCESS. (exception: Agabon ruling, see Section 4 hereunder)

MANAGEMENT VS. LABOR

Management prerogatives Security of tenure

Right to discipline employee in accordance with rules and regulations

Right to continuous employment until termination for just or authorized cause

STATE Police power/social justice

Interpretation in favor of labor


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2. GROUNDS FOR TERMINATION

2.1 JUST CAUSES FOR TERMINATION (Art. 282, LC)

2.1.2 SERIOUS MISCONDUCT - Defined as improper or wrong conduct, a transgression of a definite rule of action, a forbidden act or dereliction of duty which is willful in character and implies wrongful intent, and not mere error in judgment. - For misconduct or improper behavior to be a just cause for dismissal, the same must be related to the performance of the employee’s duties and must show that he has become unfit to continue working for the employer. CASES ON SERIOUS MISCONDUCT

a) IMPORTANT CASE NOT ASKED IN 2012 BAR: Samahan Ng Manggagawa Sa Hyatt-NUHWRAIN Vs. Magsalin, GR No. 164939, 06 June 2011

Question: May a company validly terminate an employee under a provision in the employee handbook which states “committing offenses penalized with three suspensions within a twelve-month period”? Answer: Yes, in this case where a union officer was found guilty of several infractions during negotiations stand-off. The company terminated the union officer on the basis of a specific provision in their employees handbook, which provided that an employee may be terminated for the commission of offenses meriting three suspensions within a twelve-month period. The Supreme Court ruled that a series of irregularities, when put together, may constitute serious misconduct and hence, a just cause for termination. (See also: Mapili vs. Phil Rabbit Bus Lines, 27 July ) However, while Voluntary Arbitrator Magsalin found valid ground for termination, he awarded the employee P100,000.00 for and as financial assistance. This was raised as another error in the Supreme Court, which overruled VA Magsalin as follows: The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best, it may mitigate the penalty but it certainly will not condone it. Social justice cannot be permitted to be a refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean, and their motives blameless, and not simply because they happen to be poor. xxx” – Samahan ng Manggagawa sa Hyatt-NUHWRAIN ibid., citing PLDT vs. NLRC, No. L-80609, 23 Aug 1998.

b) REQUIREMTS FOR VALID DRUG TEST under Rep. Act No, 9156: (AER vs.

Progresibong Union sa AER, 15 July 2011 citing Nacague vs. Suplicio Case,

Aug 2010)

• The drug tests shall be performed only by any government forensic laboratories or authorized drug testing centers accredited by the Dept. Of Health, (list of accredited centers at www.oshc.dole.gov.ph)

• Drug testing shall conform with procedure prescribed by the Dept. of Health

http://www.oshc.dole.gov.ph/


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• Two testing methods: screening text and confirmatory test c.) Theft of company property vs. personal property of co-employee.

General rule: If company property, valid termination on the ground of serious misconduct. Caltex (Phils.), Inc vs. Agad, G.R. No. 162017, 23 April 2010; Theft of Company Property (scrap metal). – Even if considered as scrap materials, the

LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltex’s consent. Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company property. This act is akin to a serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code.” Exception: If not company property but personal property of co-employee, Supreme Court has made divergent rulings. c.1) Villamor Golf Club vs. Pehid, G.R. No. 166152, 04 October 2005. -- Malversation of a “Paluwagan” or voluntary contribution to a common fund by the employees which was not known by the employer, is not serious misconduct. The Supreme Court quoted with approval the finding of the Court of Appeals thus: “In the case at bench, the voluntary contribution by the locker personnel amongst themselves to a mutual fund for their own personal benefit in times of need is not in any way connected with the work of the locker boys and the complainant. If ever there was misappropriation or loss of the said mutual fund, the respondent will not and cannot be in any way “tend or cause to prejudice the club.” Such mutual fund is a separate transaction among the employees and is not in any way connected with the employee’s work. Thus, if a co-employee “A” owes employee “B” P100,000.00 and the former absconds with the money, the employer cannot terminate the employment of employee “A” for dishonesty and/or serious misconduct since the same was not committed in connection with the employee’s work.” c.2) Cosmos Bottling Vs. Wilson Fermin, G.R. 193676 and Wilson Fermin Vs. Cosmos Bottling, GR 194303, 20 June 2012 -- Theft committed against a co-employee is considered as a case analogous to serious misconduct, for which the penalty of dismissal from service may be meted out to the erring employee “It must be noted that in the case at bar, all the lower tribunals were in agreement that Fermin’s act of taking Braga’s cellphone amounted to theft. Factual findings made by administrative agencies, if established by substantial evidence as borne out by the records, are final and binding on this Court, whose jurisdiction is limited to reviewing questions of law.[25] The only disputed issue left for resolution is whether the imposition of the penalty of dismissal was appropriate. We rule in the affirmative.”

d.) Conspiracy vis-à-vis serious misconduct. –

Sargasso Construction and Development Corporation vs. NLRC, G.R. No. 164118, 09 February 2010; Where conspiracy is not sufficiently proven. – While it is true that in conspiracy, direct proof is not essential, it must however, be shown that it exists as clearly as the commission of the offense itself. There must at least be adequate proof that the malefactors had come to an

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agreement concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist, it is essential that there must be conscious design to commit an offense. Conspiracy is not the product of negligence but of intentionality on the part of the cohorts. Absent such proof of conspiracy, then termination is illegal. White Diamond Trading Corporation vs. NBLRC, G.R. No. 186019, 29 March 2010; where conspiracy is proved. -- On the other hand, sufficient evidence exists to establishing serious misconduct and dishonest where three employees allegedly conspired with each other in defrauding the company by making it appear in the internal company records that a Toyota Town Ace was sold for P190,000.00 when in fact, it was sold for P200,000.00 per receipt with the buyer, and kept the P10,000.00 for themselves. The payment of the purchase price, the issuance of the receipt and the handing of the deed of sale to Aquino were not separate isolated acts. They occurred in one continuous logical sequence with the players in close proximity with one another.

2.1.2 GROSS INSUBORDINATION Elements: (a) employee’s assailed conduct must be willful or intentional; (b) willfulness characterized by wrongful or perverse attitude; (c) the order violated must be reasonable, lawful and made known to the employee; and (d) the order must pertain to the duties which the employee has been engaged to discharge. a) IMPORTANT: NOT ASKED IN PREVIOUS BARS. - ePacific Global Contact

Center vs. Cabansay, 538 SCRA 498 [23 Nov. 2007].

Question: May a manager be terminated for gross insubordination if the complained act was within manager’s discretionary power? Answer: Yes. Although a managerial employee is clothed with discretion to determine what was in the best of the company, said managerial discretion is not without limits. Its parameters were contained the moment the discretion was exercised, and then opposed by the immediate superior/officer for being against the policies and welfare of the company. Hence, any action in pursuit of the discretion thus opposed had ceased to be discretionary and could be considered as willful disobedience.

b) IMPORTANT - NOT ASKED IN 2012 BAR: Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9, 2011. When not gross insubordination.- Petitioner employer ordered the respondent employee to prepare checks for payment of petitioner’s obligations. Respondent did not immediately comply with the instruction since petitioner employer has no sufficient funds to cover the checks. Petitioner employer dismissed respondent employee for willful disobedience.

The Court held that respondent employee was illegally dismissed. The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. Though there is nothing unlawful in the directive of petitioner employer to prepare checks in payment of petitioner’s obligations, respondent employee’s initial reluctance to prepare the checks, although seemingly disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner employer from liability under the Bouncing Checks Law was foremost in her



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mind. It was not wrongful or willful. Neither can it be considered an obstinate defiance of company authority. The Court takes into consideration that respondent employee, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it.

2.1.3 GROSS AND HABITUAL NEGLECT OF DUTIES a) gross negligence: connotes want of care in the performance of one’s duties, or absence of even slight care or diligence as to amount to a reckless disregards of the safety of the person or property b) habitual neglect: implies repeated failure to perform one’s duties over a period of time c) willful neglect of duties: imply bad faith on the part of the employee in failing to perform his job, to the detriment of the employer and the latter’s business d) Totality of infractions ruling: 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”. It is the totality, not the compartmentalization of company infractions that the employee had consistently committed, which justified the penalty of dismissal. (Meralco vs. NLRC, 263 SCRA 531 [24 Oct 1996]). 2012 CASE ON TOTALITY OF INFRACTIONS:

Mansion Printing Center and Clement Cheng vs Diosdado Bitara, Jr. , G.R. No. 168120, 15 January 2012. -- “The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other.”

In the present case, petitioners have repeatedly called the attention of respondent concerning his habitual tardiness. The Memorandum dated 23 June 1999 of petitioner Cheng required him to explain his tardiness. Also in connection with a similar infraction, respondent even wrote petitioner Cheng a letter dated 29 November 1999 where he admitted that his tardiness has affected the delivery schedules of the company, offered an apology, and undertook to henceforth report for duty on time. Despite this undertaking, he continued to either absent himself from work or report late during the first quarter of 2000

e) Absences: Habitual absenteeism and excessive tardiness are forms of neglect of duty on the part of the employee and constitute just and sufficient cause for termination. f) Abandonment of work: the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, and hence, a just cause for termination by the employer. For a valid finding of abandonment, two factors must be present:: (a) the failure to report for work or absence without valid or justifiable reason; and (b) a clear intention to sever the employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.


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CASES: IMPORTANT CASE – NOT ASKED IN 2012 BAR: Alert Security vs.

Pasawilan et al., G.R. No. 182397, 14 Sept 2011. – On the element of failure of employees to report to work, the Supreme Court did not accept the company’s argument that they were terminated for unjustifiably refusing to report for duty in their new posts where they were transferred. A careful review of records reveal that there is no showing that employees were notified of transfer and hence, cannot be considered as having abandoned their work. Moreover, it appears that employees were relieved of their posts because they filed a complaint for underpayment of wages with the NLRC.

IMPORTANT CASE -- Dismissal; gross and habitual neglect. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166,

October 20, 2010. -- Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties. 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. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Assuming arguendo that respondent was negligent, although the Court found otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause for his dismissal. .

Inefficiency of employee; condonation by employer; Bebina G. Salvaloza

vs. National Labor Relations Commission, Gulf Pacific Security Agency,

Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010. -- While it is

acknowledged that petitioner Gregorio’s service record shows that his performance as a security guard was below par, respondent Gulf Pacific never issued any memo citing him for the alleged repeated errors, inefficiency, and poor performance while on duty, and instead continued to assign him to various posts. This amounts to condonation by Gulf Pacific of whatever infractions Gregorio may have committed. Even assuming the reasons for relieving Gregorio of his position were true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws.

2.1.4 FRAUD OR WILLFUL BREACH OF TRUST - Fraud: the deliberate and false representation of fact, despite knowledge of its falsehood, in order to induce another who relied upon it and benefit therefrom.

- Elements of willful breach of trust leading to loss of trust and confidence: (a) the breach must be willful and not ordinary breach [hence, done knowingly and intentionally]; (b) employee holds a position of trust and confidence; (c) must be in relation to the work performed; (d) there must exist substantial evidence, and should not be based on mere surmises, speculations and conjectures. IMPORTANT CASE; NOT ASKED IN 2012 BAR: Prudential Bank vs. Antonio

Maurico et al., GR 183350, 18 Jan 2012. Prudential Bank terminated Manager Mauricio for allegedly repeatedly allowing the withdrawals of dollar check transactions by a valued customer prior to clearing without sufficient balance or funding, and in the course of time after due audit, caused the loss of approx US $775,000.00. Manager’s defense: This was within his discretionary powers. Is this a valid termination for loss of trust and confidence?



http://www.google.com/url?q=http%3A%2F%2Fsc.judiciary.gov.ph%2Fjurisprudence%2F2010%2Fnovember2010%2F182086.htm&sa=D&sntz=1&usg=AFQjCNGctpbzK_dWFQM5LPnYPGYASFBuYg


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Answer: No. The Supreme Court ruled that on the basis of evidence, it appears that the manager’s act in allowing the immediate withdrawal by the valued customers is well within his functions as branch manager. A person occupying such position exercises a certain degree of discretion with respect to accommodations to valued clients. No evidence that Manager was prompted by any malicious motive in approving the encashment or to have abused the discretion he was clothed with, absent some semblance of parameters. Note that Manager reported all the transactions to the Head Office; if such a transaction was irregular or prohibited, the Head Office of Prudential should have immediately called the manager’s attention to the same. Instead, Prudential continued to credit the account of the clients for the value of the returned checks. ADA’S NOTES: The difference between this case and that of ePacific Global is that the Manager in Prudential Bank had exercised discretionary powers and was not prohibited nor questioned in doing so until much later after the audit findings. In ePacific Global, the Manager’s superior had already prohibited her from proceeding with the presentation, and she insisted on continuing the same.

Abelardo Abel vs. Philex Mining Corporation, G.R. No. 178976, 31 July

2009. – IMPORTANT CASE in pointing out that there are two classes of positions of trust. The first class consists of managerial employees. They are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The second class consists of cashiers, auditors, property custodians, etc.. They are defined as those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.

IMPORTANT, NOT ASKED IN PREVIOUS BAR EXAMS. Question: May an employee be dismissed for fraud and/or dishonesty, even if he did not benefit from it? Dela Cruz V. Coca-Cola Bottlers (31 July 2009), This is a case of the friends of an employee was involved in a motor vehicle accident while driving Coca-Cola vehicle without authorization. Driver was hospitalized in San Fernando, La Union, where he was observed to have been under the influence of alcohol. This was evidenced by a medical certificate and police report secured by Coca-cola. Two friends of the drunk driver (one was a supervisor) secured a police report and medical certificate omitting any reference to employee being drunk, and submitted it to the HRD in behalf of the drunk driver. It is for this reason that they were charged with DISHONESTY. After due process, they were dismissed and they thereafter questioned the termination on the ground that: (a) they did not occupy positions of trust and confidence; and (b) they did not benefit from the fraud. The Supreme Court ruled that the supervisor and friend were VALIDLY TERMINATED. ‘“By obtaining an altered police report and medical certificate, petitioners deliberately attempted to cover up the fact that Sales was under the influence of liquor at the time of accident. In so doing, they committed acts inimical to company interest – work-related wilful breach of trust and confidence.”

CONTRA: When NOT breach of trust and confidence; duties of employee. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6,

http://sc.judiciary.gov.ph/jurisprudence/2011/april2011/169564.htm


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2011. -- Petitioner was employed as Assistant Vice-President in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent bank. The Supreme Court held that petitioner was illegally dismissed because the act of betrayal of trust, if any, must have been committed by the employee in connection with the performance of his function or position. The court found that the element of ‘work-connection’ was not present in this case since petitioner was assigned under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards, which was under a different department altogether.

2.1.5 Commission of crime by employee against employer xxx Torreda vs. Toshiba Info Equipment Phils. 515 SCRA 133 [Feb 2007]). -- This will also include false accusation by the employee of his immediate superior of a crime such as robbery, as such is tantamount to serious misconduct

2.1.6 OTHER ANALOGOUS CAUSES

INCOMPETENCE –

EDI Staff Builders vs.NLRC, 537 SCRA 409 [Oct 2007]. -- An allegation of incompetence should have a factual foundation and may be shown by weighing it against a standard, benchmark or criterion.

IMMORALITY -

This has been defined as such conduct which conflicts with generally or traditionally held moral principles. It is akin to the phrase “moral turpitude”, the term implying something immoral in itself, regardless of whether it is punishable by law or not. Toledo vs. Toledo, 544 SCRA 27 [06 February 2008]; case on common live-in relationships. – The Court has previously defined immoral conduct as that conduct which is “willful, flagrant or shameless, and which shows a moral indifference to the opinion of the good and respectable members of the community.” In disbarment cases however, this Court has ruled that the mere fact of sexual relations between two unmarried adults is not sufficient to warrant administrative sanction for such illicit behavior. Whether a lawyer’s sexual congress with a woman not his wife or without benefit of marriage should be characterized as “grossly immoral conduct” will depend on the surrounding circumstances. The Supreme Court further ruled that intimacy between a man and a woman who are not married, where both suffer from no impediment to marry, voluntarily carried on and devoid of any deceit on the part of the respondent, is neither so corrupt as to constitute a criminal act nor so unprincipled as to warrant disbarment or disciplinary against a member of the Bar. As such, the Court cannot conclude that this act of cohabiting with a woman and betting children by her without benefit of marriage falls within

the category of “grossly immoral conduct”.

TERMINATION DUE TO UNION SECURITY CLAUSE – Inguillo and Bergante vs. First Philippine Scales, G.R. No. 165407 (05 June 2009). -- In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the


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union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union's decision to expel the employee from the union or company. Note that while the dismissal of employees was justified, the company did not comply with due process requirement. Furnishing the employees with copies of the “Petisyon” filed by the collective bargaining agent/union is not sufficient compliance with due process requirements, especially where there is no evidence that the employees were given an opportunity to explain or present evidence in support of their defenses. Neither did the HRD Manager show that she was able to ascertain the validity of the charges mentioned in the Petisyon.

3. AUTHORIZED CAUSES FOR TERMINATION

(Art. 283-284, LC) Memory aid: DIRe2C

3.1 Disease (separation pay of 1/2 month pay for every year of service) Employee must be suffering from a disease, and continued employment is

prohibited by law and/or is prejudicial to his health and/or that of his co-employees;

Disease cannot cannot be cured within a period of six (6) months, and said fact is certified by a competent public health authority

If curable, then employer cannot terminate but may ask employee to take a leave; immediately upon restoration of normal health, employer must reinstate employee to former position.

3.2 Installation of labor saving devices (sepn pay: 1 mo/yr of service)

Example: computerization of accounting and payroll system; mechanization of assembly line, etc.

Presumption is that the employer does not have any serious business losses,

as to afford the purchase of labor-saving devices.

3.3 Redundancy (Sepn pay: 1 mo/yr of service) Redundancy is akin to retrenchment and is another authorized cause for the termination of employees under Article 283 of the Labor Code, through no fault of the latter. Under this circumstance, the employer may thus validly terminate the employee because he has no legal obligation to keep in his payroll more employees than are necessary for the economical operation of the business.4 Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the business operations. Succinctly stated otherwise, a position may be declared redundant and the employee terminated where his position has become superfluous or is a duplication of work, viz., caused by overhiring of workers, decreased volume of business, dropping of a particular product line or service activity.

2011 CASES: Illegal dismissal; redundancy. Nelson A. Culili v. Eastern Telecommunications

Philippines, Inc., et al. G.R. No. 165381, February 9, 2011. -- Respondent-company, due to business troubles and losses, implemented a Right-Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or abolition of certain departments of the company. As a result,

4 Wiltshire File Co. Inc. vs. NLRC, G.R. No. 82249 [07 February 1991].


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respondent-company terminated the services of petitioner on account of redundancy. Petitioner filed a complaint against respondent-company and its officers for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly dismissed. The Court has been consistent in holding that the determination of whether or not an employee’s services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC. However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, such as but not limited to: preferred status, efficiency, and seniority. The Court also held that the following evidence may be proffered to substantiate redundancy: adoption of a new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring. However, it failed to provide the Department of Labor and Employment with a written notice regarding petitioner’s termination. The notice of termination was also not properly served on the petitioner. Further, a reading of the notice shows that respondent-company failed to properly inform the petitioner of the grounds for his termination. While employers have the right to terminate employees it can no longer sustain, our laws also recognize the employee’s right to be properly informed of the impending termination of his employment. Though the failure of respondent-company to comply with the notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner is however entitled to nominal damages in addition to his separation pay.

3.4 Retrenchment (Sepn. Pay: 1/2 month pay for every year of service)

Retrenchment is the termination of employment by the employer through no fault of the employees, and is usually resorted to by the employer primarily to avoid or minimize economic or business reverses during periods of business recession, industrial depression, seasonal fluctuations, re-organization or automation of the company operations.5 Where the employer suffers serious and actual business losses, management has the final say as to whether it will continue to risk its capital or not.6 However, the employer bears the burden to prove his allegation of business losses.7 Elements for valid retrenchment: Under Article 283 of the Labor Code, in conjunction with Section 2, Rule XXIII of the Implementing Rules of the Labor Code, the following elements must be strictly complied with in order that the retrenchment may be considered as valid:

a) The losses expected should be substantial and not merely de minimis in extent. -- b) The substantial losses apprehended must be reasonably imminent;

5 See: Sebuguero vs. NLRC, 248 SCRA 533 [1995].

6 San Pedro Hospital of Digos, Inc. vs. Secretary of Labor, 263 SCRA 98 [1996].

7 Guerrero vs. NLRC, 261 SCRA 301 [1996]


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c) The retrenchment must be reasonable necessary and likely to effectively prevent the expected losses; and d) The alleged losses, if already incurred and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.8 This means that retrenchment must be reasonably necessary and is likely to prevent business losses which, if already incurred, must be substantial, serious, actual and real, OR if only expected , are reasonably imminent as perceived objectively and in good faith by the employer. In addition, the employer should have taken other measures prior or parallel to retrenchment to forestall losses, e.g., cut other costs. Thus, the Supreme Court has ruled that the retrenchment undertaken by a company to be invalid where it was shown that the company likewise continued to dispense fat executive bonuses to its officers.

Virgilio Anabe vs. AsiaKonstruct, G.R. No. 183233, 23 December 2009; financial statements as proof of serious business losses. -- Anabe was a radio technician operator who was retrenched on account of alleged serious business reversal. Labor Arbiter for complainant, on account of failure of company to prove serious business losses. On appeal to NLRC, company submitted financial statement, and as such, NLRC reversed the Labor Arbiter’s ruling. . Supreme Court ruling as to financial statement. – While NLRC may receive evidence on appeal, note that the burden of proof is upon the employer. Company inexplicably submitted financial statements TWO YEARS after the case was filed and pending, and ONLY AFTER it had received the adverse decision of the Labor Arbiter. The delay in the submission of the evidence should be clearly explained and should adequately prove the employer’s allegations of the cause of termination. In this case, Asiakonstruct proferred no explanation behind the belated submission. Moreover, the financial statements covering period 1998-2000 was prepared only in 2001 – which begs the question of how the management knew at such date of the company’s huge losses to justify Anabe’s retrenchment in 1999. Lastly, SEC certification that no financial statements were submitted for the period 1998-2000, and 2003-2005, thereby lending credence to Anabe;s theory that the financial statements submitted on appeal may have been fabricated. Indeed, AsiaKonstruct could have easily submitted its financial statements during the pendency of the proceedings at the arbitral level.

Retrenchment; elements. Flight Attendants and Stewards Association of the Philippines (FASAP) vs. Philippine Airlines, Inc., G.R. No. 178083, October 2, 2009. -- In order for a retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor Code must concur or be present. In the absence of one element, the retrenchment scheme becomes an irregular exercise of management prerogative. The employer’s obligation to exhaust all other means to avoid further losses without retrenching its employees is a component of the first element as enumerated above. To impart operational meaning to the constitutional policy of providing full protection to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting.

3.5 Cessation or closure of employer’s business (1/2 month pay for every year of

service)

8 San Miguel Jeepney Services vs. NLRC, 265 SCRA 35 [1996]



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Angeles vs. Polytex Design, 536 SCRA 159 [Oct 2007]). -- An employer is not prevented from exercising its prerogatives to close shop so long as it is done in good faith to advance its interests, and not for the purpose of defeating or circumventing the rights of the employees.

Dismissal; closure of business in bad faith. Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010. -- Petitioner terminated the employment of respondents on the ground of closure or cessation of operation of the establishment which is an authorized cause for termination under Article 283 of the Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the sale or disposition must be motivated by good faith as a condition for exemption from liability. In the instant case, however, there was, in fact, no change of ownership. Petitioner did not present any documentary evidence to support its claim that it sold the same to ALPS Transportation. On the contrary, it continuously operates under the same name, franchises and routes and under the same circumstances as before the alleged sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents.

4. PROCEDURE FOR TERMINATION:

General Rule: The twin requirements of NOTICE and HEARING are the essential elements of due process in termination cases, which cannot be dispensed with without violating the constitutional right to due process NOTICE REQUIREMENT, MUST SUBSTANTIATE INFRACTION, GENERAL NARRATIVE NOT SUFFICIENT. King of Kings Transport vs. Mamac, 526 SCRA116 (29

Jun 2007). -- In order to intelligently prepare the employees for their explanation and

defenses, the notice should contain a detailed narration of the facts & circumstances that will serve as the basis for the charge against the employee – a

general description of the change will not suffice.

ILLEGALITY OF THE ACT OF DISMISSAL - DISCHARGE WITHOUT JUST CAUSE:

Remedies under the Labor Code: 1. Reinstatement to his former position without loss of seniority rights. If no longer

available nor any equivalent position, then separation pay to be given in lieu or reinstatement computed 1 month pay for every year of service.

2. Payment of FULL backwages corresponding to the period from his illegal

dismissal up to actual reinstatement. 3. Damages plus attorney’s fees.

ILLEGALITY IN THE MANNER OF DISMISSAL - DISMISSAL WITHOUT DUE PROCESS: (WENPHIL, SERRANO AND AGABON RULING) 1. In any event, NO REINSTATEMENT. However, as regards penalty for non-

compliance with due process requirements, the newest Supreme Court ruling circa November 2004 is that the employer shall be sanctioned with penalty of




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P30,000.00 in accordance with the Agabon vs. NLRC case, which now affirms the Wenphil doctrine and abandoning the Serrano ruling.

2. Wenphil vs. NLRC ruling (for terminations occurring prior to 2000) -- Because of

failure to comply with the Constitutional right to due process, the employer may be penalized a fine (of P3,000.00 to P10,000.00, depending upon discretion of the SC).

3. Serrano vs. NLRC decision promulgated in 27 Jan 2000 (for terminations

occurring after 2000 but before November 2004) -- Due to apparent abuse by employers of the Wenphil doctrine, Supreme Court increased penalty from the previous P3,000.00 to P10,000.00 fine, to a fine in an amount equivalent to backwages computed from date of termination until finality of judgment finding that there was just cause but no due process.

4. Agabon vs. NLRC ruling, G.R. No. 158693, 11/17/2004 (for terminations

occurring after 17 November 2004) – The Supreme Court has apparently abandoned the Serrano ruling and reverted to the Wenphil ruling, insofar as it ruled that in cases where there was substantial evidence proving just cause BUT that due process was not followed, the termination will be UPHELD (considered valid and effective) but the employee will be penalized the amount of P30,000.00. The Supreme Court stated that “it would not be right to order either reinstatement of the dismissed employee or the payment of backwages to the employee. But for failing to comply with the procedure prescribed by law in terminating the services of the employee, the employer should be made liable for the payment of separation pay.”

5. Should employee seek damages on this account, may file with regular court.

[Governed exclusively by the Civil Code. (Shoemart vs. NLRC, supra.)]

5. ON NOTICE AND HEARING Dept. Order No. 10, Article V; IRR B5 R14 S1-11

5.1 Two notices required:

1st notice: Notice of appraisal, which is a written notice served on the employee specifying the ground or grounds of termination, and giving the

employee reasonable opportunity within which to explain his side

The first notice should contain a detailed narration of facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice. The notice should specifically mention which company rules, if any, are violated. (King of Kings Transport vs. Mamac, 526 SCRA 116 [29 June 2007]), and that the employer seeks dismissal for the act or omission charged against the employee; otherwise; the notice does not comply with the rules. (Magro Placement vs. Hernandez, 526 SCRA 408 [04 July 2007])

On “Reasonable opportunity”: This means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of FIVE (5) CALENDAR DAYS from receipt of notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. (King of Kings Transport, ibid.)


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2nd notice: Notice of termination, which is a written notice of termination served upon the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

5.2 Hearing:

a hearing or a conference during which the employee concerned, with the assistance of counsel if he so desires, is given the opportunity to respond to the charge, to present his evidence, or to rebut the evidence presented against him.

note that a formal hearing (as in the manner of regular courts) is not required;

only substantial evidence is necessary. There is no necessity for a formal hearing where an employee admits

responsibility for the alleged misconduct. It is sufficient that she be informed of the findings of management and the basis of its decision to dismiss her.

5.3 Right to counsel on the part of the employee – is this mandatory and

indispensable as part of due process?

NO. In the case of Lopez vs. Alturas Group, 11 April 2011, the Supreme Court ruled that the “right to counsel and the assistance of one in investigations involving termination cases is neither indispensable nor mandatory, except when the employee himself requests for one or that he manifests that he wants a formal hearing on the charges against him.”

6. BURDEN OF PROOF RESTS UPON THE EMPLOYER

The employer must show that the dismissal of the employee is for just cause. Failure to do so means that the dismissal is not justified and the employee is entitled to reinstatement. In fact, as early as the case of Century Textile Mills vs. NLRC [G.R. No. 77859, 25 May 1988], a finding of the employee’s participation in the criminal conspiracy cannot be made to rest solely on the unilateral declaration of one who is himself a confirmed “co-conspirator.” The co-conspirator’s confession must be corroborated by other competent and convincing evidence.

7. ON REINSTATEMENT:

Where the former position is no longer available, the employee must be reinstated to an equivalent position.

Where the reinstatement is no longer viable in view of the strained relations between the employer and employee, or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of reinstatement

Nature of the order of the Labor Arbiter on reinstatement. --

The reinstatement order of the Labor Arbiter is immediately executory even pending appeal. (Article 223 (3), Labor Code; cf Pioneer Texturizing vs. NLRC (280 SCRA 806 [1997]).

Hence, it is the obligation of the employer to immediately admit the employee back to work or reinstate him in the payroll at his option. Otherwise, the employer will be held liable for backwages from the date of notice of the order (International Container Terminal Services, Inc. vs. NLRC, 360 Phil. 527 [1998]), up to the date of employees actual or payroll reinstatement. Thus, it was held in Garcia vs. Philippine Airlines, Inc. (531 SCRA 574 [2007]), that failure on the part of the employer to exercise the


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options in the alternative, the employer must pay the employee’s salaries. ADA’S NOTE: In a situation where Labor Arbiter dismisses complaint and rules that dismissal is valid, but NLRC reverses on appeal and rules illegal termination, with reinstatement and backwages. Note that THE NLRC ORDER OF REINSTATEMENT IS NOT IMMEDIATELY EXECUTORY. The employer need not immediately reinstate the employee, who must first file a Motion for Execution.

Where the order of reinstatement by the Labor Arbiter is reversed on appeal. --

Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Roquero vs. Philippine Airlines, Inc., 401 SCRA 424 [2003], cited in Garcia vs. PAL, G.R. No. 164856, 20 January 2009; En Banc).

Exception:

After the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. (Garcia vs. Phlippine Airlines, G.R. No. 164856, 20 January 2009; En Banc). The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay (or non-execution) must not be due to the employer’s unjustified act or omission. (ibid.)

8. LIABILITY OF CORPORATE OFFICERS IS JOINT, UNLESS THERE IS AN EXPRESS PRONOUNCEMENT OF SOLIDARY LIABILITY

General Rule 1: Director or corporate officer is not personally liable for the debts of the

corporation. Presumption of good faith prevails. Exception: When director or corporate officer is found to be in bad faith in the

discharge of the duties and responsibilities.

Carmen Dy-Dumalasa Vs. Domingo Sabado S. Fernandez, et. al., G.R. No. 178760 [23 July 2009]. -- Thus, in order to hold a a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed. Bad faith does not connote bad judgment or negligence. Bad faith imports a dishonest purpose. Bad faith means breach of a known duty through some ill motive or interest. Bad faith partakes of the nature of fraud. Ineluctably, absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that can be individually attributed to petitioner as an officer thereof, and without the pronouncement in the Decision that she is being held solidarily liable, petitioner is only jointly liable.

General Rule 2: If there is a finding of bad faith, then corporate officer to be held jointly liable with the company for the damages. Exception: When Decision explicitly pronounces solidary liability.


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In labor cases, the corporate directors and officers are solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. The term “bad faith” contemplates a “state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose.” -- Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, 01 February 2012

The Supreme Court reiterated its ruling in Industrial Management Int’l. Development Corp v. NLRC (G.R. No. 101723, May 11, 2000), and Carag vs. NLRC (G.R. No. 147590, April 2, 2007) that as an elementary principle of procedure, the resolution of the court in a given issue as embodied in the dispositive part of a decision or order is the controlling factor as to settlement of rights of the parties. In the instant case, notwithstanding the finding of bad faith on the part of the management, the dispositive portion of the Labor Arbtier’s Decision did not expressly mention the solidary liability of the officers and Board members, including petitioner. As such, solidary obligation cannot lightly be inferred. There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. (Carmen Dy-Dumalasa case, ibid.)

9. ON BACKWAGES

For termination effected after effectivity of RA 6715

‘FULL” backwages to be computed from the time of termination to the time of actual reinstatement. “With the passage of RA 6715 which took effect on 21 March 1989, Article 2709 of the Labor Code was thus amended to include payment of “full” backwages. The Mercury drug rule which limited the award of backwages of illegally dismissed workers to three (3) years without deduction or qualification, is no longer applicable.” (Ferrer vs. NLRC) Basis for computing backwages: The workers are to be paid their backwages fixed as of the time of the dismissal, i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers. Awards including salary differentials are not allowed. (Central Azucarrera de Tarlac vs. Sampang)

Backwages to be awarded to an illegally dismissed employee should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of illegal dismissal. (Bustamante vs. NLRC)

M. MIGRANT WORKERS, ILLEGAL RECRUITMENT AND COMPENSABILITY OF DISABILITY

1. IMPORTANT; On liability of recruitment agency; theory of imputed knowledge, when it can bind the agency vis-à-vis liability of principal employer -- Sunace International Mgmt Services vs. NLRC, GR No. 161757, 25 January 2006,

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, AND NOT THE OTHER WAY AROUND. The knowledge

of the principal-foreign employer cannot, therefore, be imputed to its agent Sunace.



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There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment contract extension of the domestic helper Divina, it cannot be said to be privy thereto. As such, it and its “owner” cannot be held solidarily liable for any of Divina’s claims arising from the 2-year employment

extension.

2. Compensability of injury; complainant employee must discharge burden of proof that injury sustained on board ship is proximate cause of stroke.-- Spouses Aya-Ay vs. Arpaphil Shipping and Magna Marine, G.R. No. 155359, 31 January 2006

No sufficient evidence to prove that the death (stroke during eye operation) was proximately caused by the injury suffered during his employment on board M/V Panoria. In order that death benefits may be claimed, it must be proven that the injury is the proximate cause, or at least increased the risk of his death. Burden of proof is upon claimant to show that: (a) the cause of Aya-ay’s death was reasonably connected with his work; or (b) the sickness/ailment for which he died is an accepted occupational disease; or (c) his working conditions increased the risk of contracting the disease for which he died. Otherwise, death compensation benefits cannot be awarded.

It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. NEW CASES:

Illness; when deemed pre-existing and not compensable. Jerry M. Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No. 190545, November 22, 2010. -- Petitioner’s illness already existed when he commenced his fourth contract of employment with respondents, hence, not compensable. Given that the employment of a seafarer is governed by the contract he signs every time he is rehired and his employment is terminated when his contract expires, petitioner’s illness during his previous contract with respondents is deemed pre-existing during his subsequent contract. That petitioner was subsequently rehired by respondents despite knowledge of his seizure attacks does not make the latter a guarantor of his health.

Compensable illness. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A. Nazam, G.R. No. 190804. October 11, 2010. -- For an injury or illness to be duly compensated under the terms of the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing that the injury or illness and the ensuing disability occurred during the effectivity of the employment contract. Moreover, all of these conditions must be satisfied — 1.) The seafarer’s work must involve the risks described in the POEA-SEC; 2.) The disease was contracted as a result of the seafarer’s exposure to the described risks; 3.) The disease was contracted within a period of exposure and under such other factors necessary to contract it; and 4.) There was no notorious negligence on the part of the seafarer. Specifically, with respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the head which did not occur in this case. In fact, respondent claimed that he became depressed due to the frequent verbal abuse he received from his German superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his depression

http://www.google.com/url?q=http%3A%2F%2Fsc.judiciary.gov.ph%2Fjurisprudence%2F2010%2Fnovember2010%2F190545.htm&sa=D&sntz=1&usg=AFQjCNG6UJ4tSK7V_xXuf1G6WP0_7k2sOw



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3. Compensability of injury; right of seafarer to seek second opinion. -- NYK-Fil Ship Management Inc., et al vs. Alfonso T. Talavera, G.R. No. 175894, 14 November 2008;

Carpio-Morales. See also: Virgen Shipping Corp. et. al. vs. Jesus B. Barraquio, G.R. No.

178127, 16 April 2009

The right of a seafarer to seek a second opinion is recognized by the POEA Standard Employment Contract of 2000, the CBA governing the relationship between petitioners and respondent, and jurisprudence. For disability to be compensable under 2000 POEA Standard Employment Contract, it must be the result of a work-related injury or illness, unlike the 1996 POEA Standard Employment Contract in which it was sufficient that the seafarer suffered injury or illness during the term of his employment. The 2000 POEA Standard Employment Contract defines "work-related injury" as "injury(ies) resulting in disability or death arising out of and in the course of employment" and "work-related illness" as "any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied." In the case at bar, a reasonable connection between the respondent's injuries and the nature of his job has been established and hence, approved permanent partial disability (filler/metal welder vs. chronic back pain)

4. Section 10, Republic Act No. 8042 on 3-month cap on backwages for illegal

dismissal is unconstitutional insofar as it is violative of the equal protection of laws and discriminatory against migrant workers with long-term contracts. -- Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011.

Petitioner Yap was employed as an electrician for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his contract term. The Court of Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No. 8042. On certiorari, the Supreme Court reversed the CA and declared that petitioner was entitled to his salaries for the full unexpired portion of his contract. The Court has previously declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause “or for three months for every year of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. 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 petitioner’s right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution.

4.1 Doctrine of Operative Fact; not applied as a matter of equity and fair play. Yap vs.

Thenamaris Ship’s Mgmt case, supra. -- In deciding to award petitioner his salaries for the entire unexpired portion of his contract, the Supreme Court rejected the application of the operative fact doctrine. As an exception to the general rule, the doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. This case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner

http://sc.judiciary.gov.ph/jurisprudence/2011/may2011/179532.htm



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and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law.

5. Illegal recruitment; elements: People of the Philippines vs. Teresita “Tessie” Laogo, G.R. No. 176264, January 10, 2011.

Recruitment and placement refers to the 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. When a person or entity, in any manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. And when the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed. It is important that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad.

N. PROCEDURES AND REMEDIES 1. Teekay Shipping vs. Concha, , GR 185463, 22 Feb 2012 -- FOUR YEAR PRESCRIPTIVE

PERIOD FOR TERMINATION CASES. “One’s employment, profession, trade or calling is a “property right,” within protection of a constitutional guaranty of due process of law. Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated “upon an injury to the rights of the plaintiff,” as contemplated under Art. 1146 of the New Civil Code, which must be brought within FOUR (4) YEARS” . Hence this is the reason why termination cases have a prescriptive period of four (4) years, viz: injury upon rights of plaintiff under art 1146 of Civil Code

2. PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (G.R. No. 179652, March 6, 2012); Jurisdiction of DOLE on its visitorial power

The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.



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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.

To recapitulate:

a. 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.

b. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC.

c. 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.

d. 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.

3. REQUISITES TO PERFECT AN APPEAL (Mary Abigail’s Food Services Inc. vs. CA, 09 May 2005)

Must be made within 10 calendar days from receipt of decision/award

Proof of payment of the required appeal bond

Accompanied by a Memorandum of Appeal

Posting of a cash or surety bond equivalent to the monetary award less damages and attorney’s fees.

CASES:

3.1 Appeal; posting of Appeal Bond; Government’s exemption from the same. Banahaw

Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011. -- Respondents are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC). Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision ordering petitioner BBC to pay the money claims. On appeal to the NLRC, petitioner BBC averred that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond. The NLRC dismissed the appeal of BBC for non-perfection. The Court of Appeals affirmed the NLRC. The Supreme Court, in sustaining the CA, held that as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds.

The rationale for the appeal bond is to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent. This exemption, however, does not, as a general rule, apply to government-owned and controlled corporations (GOCCs) for the reason that the latter has a personality distinct from its shareholders. In this case, BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latter’s exemption from the posting of appeal bonds.




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3.2 VERIFICATION AND CERTIFICATION;

Effect of failure to sign. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.-- A petition satisfies the formal requirements only with regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other petitioners to sign it on their behalf. In the case at bar, only seven (7) of the nine petitioners signed the verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to such non-conforming petitioners.

Who can sign for the company without need of board resolution. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, et al, G.R. No. 173326, December 15, 2010. –

The following can sign the verification and certification against forum shopping without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized signatories, the determination of the sufficiency of the authority was done on a case to case basis. In the foregoing cases the authority of said corporate representatives to sign the verification or certificate is justified in their being in a position to verify the truthfulness and correctness of the allegations in the petition. However, the better procedure is still to append a board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the verification and certification.

3.3 Mediation. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel

Davao, G.R. No. 174040-41, September 22, 2010. -- Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation with the NCMB. It is only after this step that a submission agreement may be entered into by the parties. Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediation—only a certified or duly recognized bargaining agent. Cullo admitted that the case was filed not by the Union but by individual members thereof. Clearly, the NCMB had no jurisdiction to entertain the notice filed before it.

3.4 Employee money claim; prescription. Philippine Long Distance Telephone Company

(PLDT) vs. Roberto R. Pingol, G.R. No. 182622, September 8, 2010. -- The Labor Code provides that money claims arising from employer-employee relations shall be filed within 3 years from the time the cause of action accrues; otherwise they shall be barred

4. RESIGNATIONS, STRAINED RELATIONS IMPORTANT CASE: UY VS. CENTRO CERAMICA, 19 OCT 2011

RESIGNATION – It is the voluntary act of employees who are compelled by reasons to disassociate themselves fro their employment. It must be done with intention of relinquishing the office, accompanied by the act of abandonment. Where evidence reveals otherwise, thenillegal dismissal.

http://sc.judiciary.gov.ph/jurisprudence/2010/december2010/186091.htm



http://sc.judiciary.gov.ph/jurisprudence/2010/september2010/174040-41.htm

http://sc.judiciary.gov.ph/jurisprudence/2010/september2010/182622.htm


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STRAINED RELATIONS – Where reinstatement is no longer desirable or viable in view of strained relations between the parties, then separation pay is an acceptable alterative to reinstatement. Computation: one month for every year of service, computed from date of hiring until finality of the Decision finding for illegal termination.

5. IMPORTANT CASE ON QUITCLAIMS: GOODRICH VS. ATIVO, 01 FEB 2010.

GENERAL RULE: Courts look with disfavor on quitclaims and releases made by employees who have been pressured into signing them by unscrupulous employers seeking to evade legal responsibilities and frustrate just claims fo employees. EXCEPTION: However, quitclaims will be considered as valid and binding if the employer is able to prove the following:

Employee executes the quitclaim voluntarily

There is no fraud or deceit on the part of the employer

Consideration for the quitclaim is credible and reasonable

Contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.

In this case, employer was able to prove all of the above. The consideration is not grossly inadequate vis-à-vis what they should receive in full. The difference in the anounts expected from those that were received may be considered as a fair and reasonable bargain on the part of the both parties.

6. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012. – NLRC’s Jurisdiction, Probationary Employees, Security of Tenure

Issue: WHETHER OR NOT THE NLRC HAS JURISDICTION TO REVIEW ON APPEAL CASES DECIDED BY THE POEA ON MATTERS PERTAINING TO DISCIPLINARY ACTIONS AGAINST PRIVATE RESPONDENTS. Answer: NLRC has no jurisdiction. Petitioners’ adamant insistence that the NLRC should have appellate authority over the POEA’s decision in the disciplinary action because their complaint against respondents was filed in 1993 was unwarranted. Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. It is clear to us, therefore, that the NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers.The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting overseas workers.

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

7. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.) vs.

Philippine National Bank. G.R. No. 171132, August 15, 2012. – Lien on unpaid wages;





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As to petitioner's argument on the right of first preference as regards unpaid wages, the Court has elucidated in the case of Development Bank of the Philippines v. NLRC that a distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 of the Labor Code, does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted pursuant to PNB 's right as a secured creditor to enforce its lien on specific properties of its debtor, ARCAM.

8. Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012. –

Piercing corporate veil; Liability of corporate officers; Moral and exemplary damages;

To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed. In the case at bar, respondents utterly failed to prove by competent evidence that Park Hotel was a mere instrumentality, agency, conduit or adjunct of Burgos, or that its separate corporate veil had been used to cover any fraud or illegality committed by Burgos against the respondents. Accordingly, Park Hotel and Burgos cannot be considered as one and the same entity, and Park Hotel cannot be held solidary liable with Burgos. Nonetheless, although the corporate veil between Park Hotel and Burgos cannot be pierced, it does not necessarily mean that Percy and Harbutt are exempt from liability towards respondents. Verily, a corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. However, corporate officers may be deemed solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith. In the present case, the lower tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously in terminating the services of respondents without any valid ground and in order to suppress their right to self-organization.

9. Crew and Ship Management International Inc. and Salena, Inc. Vs. Jina T. Soria - G.R. No.

175491. December 10, 2012 – Death Benefits

Seaman injured at sea, re: burned leg on hot engine. Was repatriated to Philippines but failed to comply with medical check-up within three days from repatriation. Seaman died after a month of “pneumonia”. Claim for compensability: Cause of death was burn injury which led to tetanus and triggering pneumonia. Issue: Is the death compensable? Answer: No. The rule is that, in labor cases, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. The oft-repeated rule is that whoever claims entitlement to the benefits provided by law should establish his or her right thereto by substantial evidence. Substantial evidence is more than a mere scintilla. Any decision based on unsubstantiated allegations cannot stand as it will offend due process. In arguing for the compensability of Zosimo's death, respondent claims that the burn injury suffered by him on board M.V. Apollo brought about the tetanus infection which eventually led to pneumonia causing his death. The Court, however, finds difficulty in accepting this.

http://sc.judiciary.gov.ph/jurisprudence/2012/september2012/171118.pdf

http://sc.judiciary.gov.ph/jurisprudence/2012/december2012/175491.pdf

http://sc.judiciary.gov.ph/jurisprudence/2012/december2012/175491.pdf


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