2014 Lyceum Bar Ops Labor Pre-Week 092714 Ada3

2014 LABOR LAW BAR REVIEW HAND-OUTS
FOR 2014 JOINT LYCEUM-ADAMSON BAR OPERATIONS

ATTY. ADA D. ABAD
HAND-OUTS FOR
2014 LABOR BAR EXAMS

PRE-WEEK USE
From the notes of Atty. Ada D. Abad
For 2014 Bar with 20% MCQs and 80% essay
Including 2013 Bar Problems and MCQs with answers,
pertinent SC 2010-March 2014 and Peralta cases in Labor Law.
A. GENERAL CONCEPTS
1. CONSTITUTIONAL AND STATUTORY BASIS OF LABOR LAW AND SOCIAL
LEGISLATION
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
Promotion of human dignity (Art 2, sec 2)

Freedom from poverty (Art 2, sec 9)
Principle of distributive justice (Art. 2, sec 9)
Freedom of Initiative and Self-reliance (Art. 12, sec. 2)
Right to due process
Right to equal protection of the law
Right to self-organization
Right against involuntary servitude
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
Affects direcly actual employment,
e.g., wages
Meets the daily needs of workers
Paid by the employer
SOCIAL LEGISLATION
Governs effects of employment,
e.g., compensation for death
Involves long range benefits
Paid by government agencies
Cebu Institute of Technology vs. Ople, 156 SCRA 620 (1987). Ponente: J. Irene Cortes.
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ATTY. ADA D. ABAD
3. MEMORIZE ARTICLE 3, LABOR CODE: DECLARATION OF POLICY

(Mnemonic: APE-SC-SJ)
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 managements 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]).

ATTY. ADA D. ABAD
5.3 In cases of ambiguity, interpretation shall be made 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, 18 January 2012.)
Exception:
When the Labor Arbiters 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 partys
counsel in timely taking all the proper recourses from the judgment
to justify an override, the counsels 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.)
NEW CASES ON INTERPRETATION OF LABOR CONTRACTS:

CASE1. BPI vs. BPI Employees Union Metro Manila, G.R. No. 175678
[22 August 2012]:
Issue: In a CBA which provides for multipurpose loans which may be
availed of by the employees, is the imposition of a NO NEGATIVE
DATA BANK (No NDB) policy violative of the CBA obligation?
Position of the Union and Voluntary Arbitrator: The imposition of No NDB
is a new condition for the implementation and availment of loans and in
contravention of CBA provision.
Position of BPI: No NDB policy is not violative of the CBA, but is a valid
andreasonable requirement consistent with sound banking practice and
meant to inculcate among both officers and employees the need for
responsibility and discipline, especially in an industry where trust is
paramount.
SUPREME COURT DECISION: YES, it is violative of CBA. For the
Union.
A CBA refers to the negotiated contract between the Union and the
Employer regarding terms and conditions of work. As in all other contracts,,
there must be clear indications that the parties reached a meeting of the
minds, as the CBA is considered the law between the parties. The CBA in
this case contains no provision on the No Negative Data Bank policy as a
prerequisite for the entitlement of the benefits it set forth for the employees.
IN fact, a close reading of the CBA would show that the terms and
conditions contained therein relative
to the availment of the loans are plain and clear, thus all they need is thus
all they need is the proper implementation in order to reach their objective.
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ATTY. ADA D. ABAD
The CA was therefore correct when it ruled that, although the Bank is
authorized to issue rules and regulations pertinent to the availment and
administration of loans under the CBA, the additional rules and regulations
must NOT impose new conditions which are not contemplated in the CBA
and should be within the realm of reasonableness. The No NDB policy is
a new condition which is NEVER contemplated in the CBA and at some
points, unreasonable to the employees because it provides that before an
employee or his/her spouse can avail of the loan benefits under the CBA,
the said employee or his/her spouse must not be listed in the Negative Data
Bank, or if previously listed therein, must obtain clearance of at least one
(1) year or six months, s the case may be, prior to a loan application. If the
Bank intended to include the No NDB policy in the CBA, it should
have presented such proposal to the union during negotiations. To
include such policy after the effectivity of the CBA is deceptive and
goes beyond the original agreement between the parties.
CASE2 ON FUNERAL AND BEREAVEMENT AID FOR DEATH OF

LEGAL
DEPENDENTS: (Philippine Journalist Inc. vs.Journal Employees
Union, G.R. No. 192601, 26 June 2013)
ISSUE: In the availment of funeral and bereavement aid under the
CBA, may the Company interpret legal dependent in accordance
with the SSS definition of beneficiary and hence, refuse payment of
the benefit?
Married employee sought payment of funeral/bereavement aid under CBA
when one of his parents died. Company denied the claim, based on its
interpretation that a married employees legal dependent is limited only to
legitimate spouse and minor children; while the legal dependents of a
single employee are the parents and siblings 18 yrs old and below, in
accordance with SSS definitions. CBA provision states:
SECTION 4. Funeral/ Bereavement Aid. The COMPANY
agrees to grant a funeral/bereavement aid in the
following instances:
a. Death of a regular employee in line of duty
P50,000
b. Death of a regular employee not in line of duty
P40,000
c. Death of legal dependent of a regular employee
P15,000.
SUPREME COURT DECISION: NO, the Company cannot do so.
Citing statutory definitions, the Supreme Court concluded that the civil
status of the employee as either married or single is not the controlling
consideration in order that a person may qualify as the employees legal
dependent. What is rather decidedly controlling is the fact that the spouse,
child, or parent is actually dependent for support upon the employee. The
Court defined a dependent as "one who derives his or her main support
from another. Meaning, relying on, or subject to, someone else for support;
not able to exist or sustain oneself, or to perform anything without the will,
power, or aid of someone else."
The coverage of the term legal dependent as used in a stipulation in a
collective bargaining agreement (CBA) granting funeral or bereavement
benefit to a regular employee for the death of a legal dependent, if the
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ATTY. ADA D. ABAD
CBA is silent about it, is to be construed as similar to the meaning

that contemporaneous social legislations have set. This is because
the terms of such social legislations are deemed incorporated in or
adopted by the CBA.
Considering that existing laws always form part of any contract, and are
deemed incorporated in each and every contract, the definition of legal
dependents under the aforecited social legislations applies herein in the
absence of a contrary or different definition mutually intended and adopted
by the parties in the CBA.
Accordingly, the concurrence of a legitimate spouse does not disqualify a
child or a parent of the employee from being a legal dependent, provided
substantial evidence is adduced to prove the actual dependency of the child
or parent on the support of the employee.
CASE3 EN CONTRA: Mitsubishi Motors Phils. Salaried Employees
Union (MMPSEU) vs. Mitsubishi Motors Phils Corp., G.R. No. 175773,
17 June 2013.
ISSUE: In a CBA which provides for reimbursement of hospitalization
benefits to dependents, is the employer company under obligation to
reimburse employee if the dependents hospital expenses had already
been covered by another Health Maintenance Organization (HMO)
provider?
Position of Voluntary Arbitrator: CBA has no express provision barring
claims for hospitalization expenses already paid by other insurers. Hence,
the covered employees can recover from both.
Position of Court of Appeals and Company: The CA did not agree with
Voluntary Arbitrator, saying that the conditions set forth in the CBA implied
an intention of the parties to limit MMPCs liability only to the extent of the
expenses actually incurred by their dependents which excludes the
amounts shouldered by other health insurance companies.
SUPREME COURT DECISION: NO, Mitsubishi Company is under NO
OBLIGATION to reimburse employee for hospital expenses of
dependents which had already been covered by another HMO.
We agree with the CA. The condition that payment should be direct to the
hospital and doctor implies that MMPC is only liable to pay medical
expenses actually shouldered by the employees dependents. It follows that
MMPCs liability is limited, that is, it does not include the amounts paid by
other health insurance providers. This condition is obviously intended to
thwart not only fraudulent claims but also double claims for the same loss of
the dependents of covered employees.
It is well to note at this point that the CBA constitutes a contract between
the parties and as such, it should be strictly construed for the purpose of
limiting the amount of the employers liability. The terms of the subject
provision are clear and provide no room for any other interpretation. As
there is no ambiguity, the terms must be taken in their plain, ordinary and
popular sense.
Consequently, MMPSEU cannot rely on the rule that a contract of
insurance is to be liberally construed in favor of the insured. Neither can it
rely on the theory that any doubt must be resolved in favor of labor.
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ATTY. ADA D. ABAD
5.4 In the imposition of penalty, whether suspension or termination, the same

must be commensurate to the offense committed. (Sagales v. Rustans
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.
6. 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.
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.

ATTY. ADA D. ABAD
General rule:
An employer-employee relationship must exist between the party
litigants for the labor courts to exercise jurisdiction over a particular
case.
Exception/In the reverse:
Article 212(l) of the Labor Code where a labor dispute can nevertheless
exist regardless of whether the disputants stand in the proximate
relationship of employer and employee, provided the controversy
concerns, among others, the terms and conditions of employment or a
change or arrangement thereof.
Put differently, and as defined by law, the existence of a labor dispute is
not negatived by the fact that the plaintiffs and defendants do not stand
in the proximate relation of employer and employee. (San Miguel
Corporation Employees Union-PTGWO vs. Bersamira, 186 SCRA 496
[1990]). EXAMPLE: ALLEGED INDEPENDENT CONTRACTOR VS.
EMPLOYEE
If a labor dispute exists as defined by law, even if in reality, there exists
no employer-employee relationship between the contending parties, the
case could still fall under the original and exclusive jurisdiction of the
labor arbiter. (Abad Opinion)
2.1 Employee benefit: Is it a labor dispute or a civil dispute?

SMART Communications vs. Astorga, G.R. 148132, 28 Jan 2008. -- An
employers 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 Arbiters 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.
ADAS COMMENT AS REGARDS JURISDICTION IN CASE OF ESSAY
QUESTION:
7

ATTY. ADA D. ABAD
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?

Sub-issue:
IS THE TERMINATION OF A HIGHER MANAGEMENT
OFFICER ASST. VICE-PRESIDENT EXECUTIVE VICE-PRESIDENT,
OR SIMPLY VICE-PRESIDENT A LABOR CASE OR A CORPORATE
CASE?
Adas notes:
1. If the complainant is named as a corporate officer per Articles and/or bylaws, 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. How are corporate offices created? Corporate offices are created in two
(2) distinct ways:
(a) by virtue of the Charter or the By-laws of the Corporation; or
(b) by resolution of the Board of Directors duly empowered under the bylaws to create additional offices as may be necessary under the
circumstances. (WPP Communications vs. Galera, G.R. No. 169207 and
Galera vs. WPP Communications, G.R. No. 169239, 25 March 2010)
3. Who are corporate officers?

Corporation Code, Section 25. Corporate officers, quorum. Immediately after their election, the directors of a corporation must formally
organize by the election of a president, who shall be a director, a
treasurer who may or may not be a director, a secretary who shall be a
resident and citizen of the Philippines, and such other officers as may be
provided for in the by-laws. Any two (2) or more positions may be held
concurrently by the same person, except that no one shall act as president
and secretary or as president and treasurer at the same time.
General Rule: Under Corporation Code, the following are corporate

officers: President, Treasurer and Corporate Secretary
Exceptions to the above general rule are as follows:

When the articles or by-laws provide for officers other than
those positions specifically mentioned in the Corporation,
Articles and By-laws.
When the Board of Directors, duly empowered and authorized
to create such additional corporate offices in the articles or bylaws, create said additional corporate offices by board
resolution
CASES:

ATTY. ADA D. ABAD
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 Matlings
President pursuant to the companys 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 intracorporate 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

EMPLOYEREMPLOYEE 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 Musicians Guild, 1 SCRA
132). Simply put, an employer-employee relationship is deemed to exist where the
employer has a right to control the conduct of the employee in relation to his work.
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ATTY. ADA D. ABAD
3.1 Nota Bene on the control test:

Not every form of control will have the effect of establishing an employeremployee 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).
RULES as
GUIDELINES
NO CONTROL
RULES fixing
METHOD
CONTROL,
ER-EE RELN
NO ER-EE
RELN
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 employers 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
latters 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
MCIs emblem or logo when they reported for work.
10

ATTY. ADA D. ABAD
C. NEW LABOR LAWS AND DEPARTMENT ORDERS:

1. REPUBLIC ACT NO. 10361 OTHERWISE KNOWN AS THE BATAS
KASAMBAHAY. Effective 18 January 2013. Implementing 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)
b)
c)
d)
e)
f)
General househelp;
Yaya;
Cook;
Gardener;
Laundry person; or
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; (Adas note: Family drivers were NOT exempted
under the law but only in the Implementing Rules. This may thus be
subject to question. FOR POSSIBLE BAR PROBLEM.)
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
11

ATTY. ADA D. ABAD
National 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)
2)
3)
Scheduled weekly rest day of the Kasambahay, wherein the latters

preference must be respected if the same is based on religious
grounds;
Offsetting a day of absence with a particular rest day; or
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 now 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
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ATTY. ADA D. ABAD
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 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
13

ATTY. ADA D. ABAD
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.
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 womens
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;
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ATTY. ADA D. ABAD
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 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 (NOT ASKED IN 2011, 2012 AND 2013 BAR):
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.
GYNECOLOGICAL 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]
providing for 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.
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ATTY. ADA D. ABAD
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.
2013 BAR EXAM PROBLEM ON GYNECOLOGICAL LEAVE:

Because of the stress in caring for her four (4) growing children, Tammy suffered a
miscarriage late in her pregnancy and had to undergo an operation. In the course
of the operation, her obstetrician further discovered a suspicious-looking mass that
required the subsequent removal of her uterus (hysterectomy). After surgery, her
physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the
biopsy of the sample tissue taken from the mass in Tammy's uterus showed a
beginning malignancy that required an immediate series of chemotherapy once a
week for four (4) weeks.
(A) What benefits can Tammy claim under existing social legislation? (4%)
ANSWER: 1. Maternity Leave (SSS law)
2. Gynecological Leave (Magna Carta of Women)
(B) What can Roger, Tammy's 2nd husband and the father of her two (2)
younger children, claim as benefits under the circumstances? (4%)
ANSWER: Paternity Leave if lawfully married to Tammy and cohabiting with her
at the time of the miscarriage.
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:
Allows the victim of violence, which may be physical, sexual, or

psychological, to apply for the issuance of a protection order that will shield
her from further violence and provide her related reliefs.
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.
Conditions for entitlement
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ATTY. ADA D. ABAD
3.3.2
The victim must be an employee. If she is such, she is entitled to a paid

leave of up to 10 days in addition to other paid leaves under the Labor
Code, other laws and company policies
The employee has to submit a certification from the Punong Barangay
or Kagawad or prosecutor or Clerk of Court that an action under RA
9262 has been filed and is pending.
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.
2.
GENERAL PRINCIPLE: Management is free to regulate, according to its

discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers.
Julies Bakeshop vs. Arnaiz, 666 SCRA 1010 [2012]; see also: Reyes-Rayal
vs. Philippine Luen Thai Holdings, 676 SCRA 183 [2012].
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 EMPLOYERS INTEREST;
AND
NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES.
(Capitol Medical Center vs. Meriz; San Miguel Brewery and Union
Carbide cases).
3. CASES:
3.1 NEW CASE: Royal Plant Workers Union vs. Coca-Cola Bottlers Phils.,
G.R. 198783, 15 April 2013.
Question: Is the decision of Coca-Cola Bottlers to take out the chairs of
employees in an assembly line in exchange for additional periods of
rest/breaks, a valid exercise of management prerogatives, or is it a diminution
of benefit which cannot be withdrawn without employees consent?
Unions position: The use of chairs by the operators had been a company
practice for 34 years, and cannot be withdrawn without consent of affected
employees. Having chairs are favourable to the assembly line operators who
get tired and exhausted; the frequency of the break period is not advantageous
to the operators because it cannot compensate for the time they are made to
stand throughout their working time.
Management position: The directive to take out the chairs is in line with the I
Operate, I Maintain, I Clean program of petitioner for bottling operators,
17

ATTY. ADA D. ABAD
wherein every bottling operator is given the responsibility to keep the

machinery and equipment assigned to him clean and safe, and reinforces the
task of bottling operators to constantly move about in the performance of their
duties and responsibilities. The removal of the chairs was implemented so that
the bottling operators will avoid sleeping, thus, prevent injuries to their persons.
Answer: For Management. Valid exercise of management prerogatives.
The decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move
about while working. In short, the removal of the chairs was designed to
increase work efficiency. Hence, CCBPIs exercise of its management
prerogative was made in good faith without doing any harm to the workers
rights.
The rights of the Union under any labor law were not violated. There is no law
that requires employers to provide chairs for bottling operators. The CA
correctly ruled that the Labor Code, specifically Article 132 thereof, only
requires employers to provide seats for women. No similar requirement is
mandated for men or male workers. It must be stressed that all concerned
bottling operators in this case are men.
The Union should also not complain too much about standing and moving
about for one and one-half (1 ) hours because studies show that sitting in
workplaces for a long time is hazardous to ones health. The report of
VicHealth, Australia,12 disclosed that prolonged workplace sitting is an
emerging public health and occupational health issue with serious implications
for the health of our working population. Importantly, prolonged sitting is a risk
factor for poor health and early death, even among those who meet, or exceed,
national activity guidelines.
3.2 NOT ASKED IN 2012 and 2013 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.
3.3
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 employees personal files stored in the computer were used
by the government employer as evidence of misconduct.
18

ATTY. ADA D. ABAD
Question: May the search conducted on employees office computer and

copying of personal files without his knowledge and consent, an
infringement of the employees 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 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 employees computer be considered as
reasonable?
Answer: Yes. The search of petitioners 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 employees
office is justified at inception when there are reasonable grounds for
suspecting that it will turn up evidence that the employee is guilty of workrelated misconduct. Under the facts obtaining, the search conducted on
petitioners computer was justified at its inception and scope.
3.4 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.
IMPT CASE -- 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
19

ATTY. ADA D. ABAD
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 Deladas 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 employees
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 employers right to control and manage his enterprise effectively. An
employee who refuses to be transferred 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 formers 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.
3.5 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 NHPIs
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 sixmonth and/or the actual dismissal of the employee is generally considered as
prematurely filed.
20

ATTY. ADA D. ABAD
3.6 Contracting out of services. (See also discussion on Valid job-contracting vs.
Labor-only contracting on SECTION F, PAGE 32 HEREUNDER.)
General rule: Management may contact out services in the exercise of its
anagement 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.
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.
21

ATTY. ADA D. ABAD
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
SONZAs services specifically to co-host the "Mel & Jay" programs. ABSCBN 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-CBNs
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 SONZAs 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 SONZAs 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-CBNs sole concern was the quality of the shows and
their standing in the ratings. Clearly, ABS-CBN did not exercise control over
the means and methods of performance of SONZAs work.
(b) OFF-CAMERA TALENTS ARE EMPLOYEES.
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 rankand-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 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
22

ATTY. ADA D. ABAD
familiarizing oneself with the policies and objectives, lack of concern for the
companys 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.
QUESTION: 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 employees 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 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
New 2013 Ruling on Probationary employment on fixed-term

contract; expiration of contract NO LONGER valid ground.
23

ATTY. ADA D. ABAD
(Colegio del Santissimo Rosario vs. Rojo, G.R. No. 170388, 03

September 2013, reiterating Yolanda Mercado vs. AMA Computer
College-Paranaque 618 SCRA 218 [2010].)
Situation: High School teacher on probationary status with fixed term
contracts who was able to complete three consecutive years of service
but no longer rehired on the ground that with the expiration of their
contract to teach, the employment contract would no longer be
renewed.
The fixed-term character of employment essentially refers to the period
agreed upon between the employer and the employee; employment
exists only for the duration of the term and ends on its own when the
term expires. In a sense, employment on probationary status also refers
to a period because of the technical meaning "probation" carries in
Philippine labor law a maximum period of six months, or in the
academe, a period of three years for those engaged in teaching jobs.
Their similarity ends there, however, because of the overriding meaning
that being "on probation" connotes, i.e., a process of testing and
observing the character or abilities of a person who is new to a
role or job.
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But
this same protective character gives rise to the countervailing but
equally protective rule that the probationary period can only last for a
specific maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the
probation, any employer move based on the probationary standards
and affecting the continuity of the employment must strictly conform to
the probationary rules.
However, for teachers on probationary employment, in which case
a fixed term contract is not specifically used for the fixed term it
offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in
determining qualification for regular employment, the same must
have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period
when they were to be applied. These terms, in addition to those
expressly provided by the Labor Code, would serve as the just cause
for the termination of the probationary contract. The specific details of
this finding of just cause must be communicated to the affected
teachers as a matter of due process.42 Corollarily, should the teachers
not have been apprised of such reasonable standards at the time
specified above, they shall be deemed regular employees.
Yolanda Mercado, et al. vs. AMA Computer College Paraaque
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
24

ATTY. ADA D. ABAD
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 schools 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 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 teachers 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 Paraaque 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
25

ATTY. ADA D. ABAD
follow company rules and regulations such requirement strains

credulity. (Philippine Daily Inquirer vs. Magtibay, 528 SCRA 355 [2007]).
2013 BAR EXAM MCQ ON TERMINATION OF PROBATIONARY

EMPLOYEE
Aleta Quiros was a faculty member at BM Institute, a private educational
institution. She was hired on a year-to-year basis under the
probationary employment period provision of the Manual of Regulations
for Private Schools. The terms and conditions of her engagement were
defined under her renewable yearly contract.
For reasons of its own, BM Institute no longer wanted to continue with
Aleta's teaching services. Thus, after the contract for her second year
expired, BM Institute advised Aleta that her contract would no longer be
renewed. This advice prompted Aleta to file a complaint for illegal
dismissal against BM Institute.
Will the complaint prosper? (1%)
(A) Yes, because no just or authorized cause existed for the termination of
her probationary employment.
(B) Yes, because under the Labor Code, Aleta became a regular employee
after 6 months and she may now only be dismissed for cause.
(C) No, because there was no dismissal to speak of. Her employment was
automatically terminated upon the expiration of her year-to-year fixed
term employment.
(D) No, because BM Institute may dismiss its faculty members at will in the
exercise of its academic freedom.
(E) No, because Aleta was still on probationary employment.
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
26

ATTY. ADA D. ABAD
latter.(PNOC vs. NLRC [G.R. No. 97747, 31 March 1993] and Brent
School vs. NRLC, 181 SCRA 702]
3.4 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
REGULAR EMPLOYEES, where it was established that the term contracts

were used to circumvent security of tenure.
Textually, the provision that: NA ako ay sumasang-ayon na maglingkod at
gumawa ng mga gawain sang-ayon sa patakarang por viaje na
magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa
pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of
employment.
In the context, however, of the facts that: (1) the respondents were doing
tasks necessarily to Lynvils 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. ADAS 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
27

ATTY. ADA D. ABAD
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.
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 petitioners
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)
28

ATTY. ADA D. ABAD
4.6 CASES:
Roy Pasos vs. PNCC, G.R. No. 192394, 03 July 2013. While Pasos
was unquestionably hired as a project employee for three months at
the start of his engagement with PNCC, his employment thereafter was
extended without subsequent contract or appointment that specified a
particular duration for the extension. As such, he was then to be
considered a regular employee of PNCC. His status as a regular
employee was NOT affected by the fact that he was assigned to
several other projects thereafter, and that there were intervals in
between said project, because he enjoys security of tenure. The
termination by PNCC of Pasos employment by reason of contract
expiration or project completion at this point therefore, is illegal
because these are not the grounds for the dismissal of a regular
employee.
IMPORTANT PERALTA CASE: Wilfredo Aro, Ronilo Tirol, et
al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. 07 March
2012, J. Peralta -- 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 Jamins 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 Jamins
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 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.
29

ATTY. ADA D. ABAD
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.
IMPORTANT NOTE ON EMERGING TREND:

REGULAR
SEASONAL WORKERS. Where the seasonal employees had been hired
repeatedly and continuously to perform the same tasks or activities for
several seasons or even after the cessation of the season, this length of time
may likewise serve as badge of regular employment. In fact, even though
denominated as seasonal workers, if these workers are called to work from
time to time and are only temporarily laid off during the offseason, the law
does not consider them separated from the service during the off-season
period. The law simply considers these seasonal workers on leave until reemployed.
CASE 1: Gapayao vs. Fulo and SSS, G.R. No. 193493, 13 June 2013
(Sereno, C.J.) -- Farm workers are considered seasonal employees so long
as there is a reasonable causal connection between nature of employers
business and that work should have been rendered for more than one
continuous or accumulated year
Jaime Fulo died due to 1st degree burns from electrocution while doing
repairs at the residence of Gapayao. Due to his alleged compassion, the
latter extended financial help to the heirs of Jaime Fulo. The deceased wife of
Jaime then executed a document waiving her right and desisting from filing of
criminal and/or civil action/s against Gapayao.
Deceaseds wife then went to the SSS in order to claim her husbands death
benefits. It was however discovered that deceased was not a registered
member of the SSS. After proper investigation, the SSC found an existence
of employer-employee relationship between Jaime Fulo and Gapayao. It
ordered the payment of deceaseds death benefits, the remittance of
employers contributions to the SSS plus penalties for late payment of such
remittances. Gapayao then appealed the case to the Court of Appeals, but
the latter affirmed the decision of the SSC.
30

ATTY. ADA D. ABAD
Issue:
Was there an employer-employee relationship between Jaime
Fulo and Gapayao? Yes.
Gapayaos position: Gapayao insists that the deceased was not his
employee, but that of another person. Gapayao contends that he is merely
the landlord of the farm which Jaime Fulo tilled. And that it was Gapayaos
tenant, Amado Gacelo who was Fulos employer. Her likewise contends that
the deceased was really a freelance worker
Decision: YES, Fulo was Gapayaos employee.
Farm workers generally fall under the definition of seasonal employees.
We have consistently held that seasonal employees may be considered as
regular employees. Regular seasonal employees are those called to work
from time to time. The nature of their relationship with the employer is such
that during the off season, they are temporarily laid off; but reemployed
during the summer season or when their services may be needed. They are
in regular employment because of the nature of their job, and not because of
the length of time they have worked.
A reading of the records reveals that the deceased was indeed a farm worker
who was in the regular employ of petitioner. From year to year, starting
January 1983 up until his death, the deceased had been working on
petitioners land by harvesting abaca and coconut, processing copra, and
clearing weeds. His employment was continuous in the sense that it was
done for more than one harvesting season. Moreover, no amount of
reasoning could detract from the fact that these tasks were necessary or
desirable in the usual business of petitioner.
The other tasks allegedly done by the deceased outside his usual farm work
only bolster the existence of an employer-employee relationship. As found by
the SSC, the deceased was a construction worker in the building and a
helper in the bakery, grocery, hardware, and piggery all owned by
petitioner. This fact only proves that even during the off season, the
deceased was still in the employ of petitioner.
CASE2: Universal Robina Sugar Milling Corporation and Rene Cabati,
G.R. No. 186439. 15 January 2014. J Brion.
Facts: The complainants hired as employees of URSUMCO, on various
dates (between February 1988 and April 1996) and on different capacities,8
i.e., drivers, crane operators, bucket hookers, welders,mechanics, laboratory
attendants and aides, steel workers, laborers, carpenters and masons,
among others. At the start of their respective engagements, the complainants
signed contracts of employment for a period of one (1) month or for a given
season. URSUMCO repeatedly hired the complainants to perform the same
duties and, for every engagement, required the latter to sign new employment
contracts for the same duration of one month or a given season.
Complainants filed for regularization plus entitlement to CBA benefits. Labor
Arbiter dismissed the complaints and ruled that they were project or seasonal
employees. On appeal, NLRC reversed the Labor Arbiter and ruled that the
complainants were regular employees entitled to the monetary benefits under
the CBA. On petition for review on certiorari, CA ruled that complainants were
regular albeit seasonal -- employees, but deleted the monetary CBA
benefits because the CBA benefits are for regular workers only.
31

ATTY. ADA D. ABAD
Issue: Whether or not complainants are regular workers or seasonal

workers?\
Are they entitled to CBA benefits accorded the regular employees?
Answer: Complainants are REGULAR SEASONAL WORKER
Complainants are NOT entitled to CBA benefits which are for
regular workers only.
The respondents are neither project, seasonal nor fixed-term employees, but
regular seasonal workers of URSUMCO. The following factual
considerations from the records support this conclusion:
First, the respondents were made to perform various tasks that did not at all
pertain to any specific phase of URSUMCOs strict milling operations that
would ultimately cease upon completion of a particular phase in th emilling of
sugar; rather, they were tasked to perform duties regularly and habitually
needed in URSUMCOs operations during the milling season. The
complainants duties as loader operators, hookers, crane operators and
drivers were necessary to haul and transport the sugarcane from the
plantation to the mill; laboratory attendants, workers and laborers to mill the
sugar; and welders, carpenters and utility workers to ensure the smooth and
continuous operation of the mill for the duration of the milling season, as
distinguished from the production of the sugarcane which involves the
planting and raising of the sugarcane until it ripens for milling.
Second, the complainants-employees were regularly and repeatedly hired to
perform the same tasks year after year. This regular and repeated hiring of
the same workers (two different sets) for two separate seasons has put in
place, principally through jurisprudence, the system of regular seasonal
employment in the sugar industry and other industries with a similar nature of
operations. Under the system, the plantation workers or the mill employees
do not work continuously for one whole year but only for the duration of the
growing of the sugarcane or the milling season.
THEIR SEASONAL WORK, HOWEVER, DOES NOT DETRACT FROM
CONSIDERING THEM IN REGULAR EMPLOYMENT since in a litany of
cases, this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during the
off-season are not separated from the service in said period, but are
merely considered on leave until re-employment
Be this as it may, REGULAR SEASONAL EMPLOYEES, LIKE THE
RESPONDENTS IN THIS CASE, SHOULD NOT BE CONFUSED WITH THE
REGULAR EMPLOYEES OF THE SUGAR MILL such as the administrative
or office personnel who perform their tasks for the entire year regardless of
the season. The NLRC, therefore, gravely erred when it declared the
respondents regular employees of URSUMCO without qualification and that
they were entitled to the benefits granted, under the CBA, to URSUMCOS
regular employees.
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.
32

ATTY. ADA D. ABAD
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 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). Note: Supervisory
employees form part of the managerial staff, which are not covered by the
rules on hours of work, viz., night shift differentials, overtime pay, etc. (See
Art. 82, Labor Code cf. Art. 212 [m]).
9.
RANK-AND-FILE EMPLOYEES - All other employees not falling within the

definition of managerial or supervisory employees, are considered rankand-file employees for purposes of Book V of the Labor Code.
FRAMEWORK:
General rule: Employment is deemed regular
Exception:
Probationary
Term
Project
Seasonal
Casual
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
2013 BAR EXAM MCQs ON CLASSIFICATION OF EMPLOYMENT:

Mr. Del Carmen, unsure if his foray into business (messengerial service catering
purely to law firms) would succeed but intending to go long-term if he hurdles the
first year, opted to open his operations with one-year contracts with two law firms
33

ATTY. ADA D. ABAD
although he also accepts messengerial service requests from other firms as their
orders come. He started with one permanent secretary and six (6) messengers on a
one-year, fixed-term, contract. Is the arrangement legal from the perspective of
labor standards? (1%)
(A) No, because the arrangement will circumvent worker's right to security of tenure.
(B) No. If allowed, the arrangement will serve as starting point in weakening the security of
tenure guarantee.
(C) Yes, if the messengers are hired through a contractor.
(D) Yes, because the business is temporary and the contracted undertaking is specific and
time-bound.
(E) No, because the fixed term provided is invalid.
Mr. Ortanez has been in the building construction business for several years. He
asks you, as his new labor counsel, for the rules he must observe in considering
regular employment in the construction industry. You clarify that an employee,
project or non-project, will acquire regular status if __________. (1%)
(A) he has been continuously employed for more than one year
(B) his contract of employment has been repeatedly renewed, from project to project, for
several years
(C) he performs work necessary and desirable to the business, without a fixed period and
without reference to any specific project or undertaking
(D) he has lived up to the company's regularization standards
(E) All of the above.
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.
CAPITAL in the form of TOOLS, EQUIPMENT,

MACHINERY, WORK PREMISES, and that the agreement between the
contractor and principal assures the formers employees of ALL RIGHTS
AND BENEFITS under the law.
He has his own
34

ATTY. ADA D. ABAD
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
SUBSTANTIAL
or
sub-contractor
DOES
NOT HAVE
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
main business of the principal;
DIRECTLY
RELATED to the
OR
The CONTRACTOR has NO

be done by his employees.
CONTROL over the conduct of the work to
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.(Industrial
Timer Corp., vs. NLRC, 169 SCRA 341). 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:
If job-contracting: LEGAL.
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.
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)
35

ATTY. ADA D. ABAD
2013 LABOR EXAM MCQ ON LIABILITY OF PRINCIPAL IN JOBCONTRACTING ARRANGEMENTS:

Constant Builders, an independent contractor, was charged with illegal
dismissal and non-payment of wages and benefits of ten dismissed
employees. The complainants impleaded as co-respondent Able
Company, Constant Builder's principal in the construction of Able's office
building. The complaint demanded that Constant and Able be held
solidarily liable for the payment of their backwages, separation pay, and
all their unpaid wages and benefits.
If the Labor Arbiter rules in favor of the complainants, choose the
statement that best describes the extent of the liabilities of Constant and
Able. (1%)
(A) Constant and Able should be held solidarily liable for the unpaid wages and
benefits, as well as backwages and separation pay, based on Article 109 of
the Labor Code which provides that "every employer or indirect employer
shall be held responsible with his contractor or subcontractor for any
violation of any provision of this Code."
(B) Constant and Able should be held solidarily liable for the unpaid wages and
benefits, and should order Constant, as the workers' direct employer, to be
solely liable for the backwages and separation pay.
(C) Constant and Able should be held solidarily liable for the unpaid wages and
benefits and the backwages since these pertain to labor standard benefits
for which the employer and contractor are liable under the law, while
Constant alone as the actual employer - should be ordered to pay the
separation pay.
(D) Constant and Able should be held solidarily liable for the unpaid wages and
benefits, and Constant should be held liable for their backwages and
separation pay unless Able is shown to have participated with malice or bad
faith in the workers' dismissal, in which case both should be held solidarily
liable.
(E) The above statements are all inaccurate.
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 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 contractors business, and the industry where the contractor
seeks to operate
36

ATTY. ADA D. ABAD
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 Contractors 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, ONGOING 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)
37

ATTY. ADA D. ABAD
F.6 THE NEGATIVE LIST: WHAT CANNOT BE VALIDLY SUBCONTRACTED 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
38

ATTY. ADA D. ABAD
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 principals certified bargaining
agent.
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 JOBCONTRACTING

7.1
Job contracting is a trilateral work arrangement arising out of two

different contracts:
a) Contract between Principal and the Agency: CIVIL CONTRACT
b) Contract between Agency and its employees: LABOR CONTRACT
But note
There should be NO CONTROL between Principal and Agency or

Principal and employees of the agency; otherwise, an employeremployee relationship is established in either case.
IMPORTANT PERALTA CASE ON LABOR-ONLY CONTRACTING:

(First Philippine Industrial Corporation vs. Calimbas, G.R. No.
179256, 10 July 2013).
Alleged job contractor De Guzman
Manpower Services was found to be a labor-only contractor, for noncompliance with the requirements for legitimate job contracting, to wit:
a) No substantial capitalization. -- The Court categorically stated
that the actual paid-in capital of P75,000 could not be considered

as substantial capital. Thus, DGMSs actual paid-in capital in the
amount of P75,000 does not constitute substantial capital
essential to carry out its business as an independent job
contractor. In spite of its bare assertion that the Vinoya case does
not apply in the present case, DGMS has not shown any serious
and cogent reason to disregard the ruling in the aforementioned
case. Records likewise reveal that DGMS has no substantial
equipment in the form of tools, equipment and machinery. As
a matter of fact, respondents were using office equipment
and materials owned by petitioner while they were rendering
their services at its offices.
b) Principal FPIC exercised the power of control and supervision
over the respondents. -- The daily time records of respondents even
had to be countersigned by the officials of petitioner to check whether
they had worked during the hours declared therein.
39

ATTY. ADA D. ABAD
Respondents worked only at petitioners offices for an

uninterrupted period of five years, occupying the same position at
the same department under the supervision of company officials
c)
7.2
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. [COCA-COLA BOTTLERS VS. DELA CRUZ ET AL, G.R. No.
184977, 07 December 2009 (BRION, J)], -- 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. xxx
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 laymans 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. 1802, the legitimate job contractor must have the capitalization and equipment
to undertake the sale and distribution of the manufacturers products, and
must do it on its own using its own means and selling methods.xxx
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-andfile 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 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
25
questioned. In Meralco v. Quisumbing, we joined this universal recognition of
outsourcing as a legitimate activity when we held that a company can determine in
40

ATTY. ADA D. ABAD
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.
7.3
IMPORTANT PERALTA CASE: The right of management to outsource

parts of its operations is within the purview of management
prerogative, but said right may limited by law, CBA provisions or the
general principles of fair play and justice. Goya Inc. vs. Goya
Employees Union FFW, G.R. No. 170054 21 January 2013, J. Peralta.
Question: May the Company however validly engage an independent
contract for such purpose, despite an explicit provision in the CBA limiting
the companys free exercise of management prerogative pertaining to the
hiring of contractual employees.
Short Answer: NO, it may not. The CBA is the law between the parties,
and having agreed to the provision, management also agreed to limit its
exercise of its prerogatives to this extent
SC Rationale: The company kept on harping that both the VA and the CA
conceded that its engagement of contractual workers from PESO was a
valid
exercise of management prerogative. It is confused. To emphasize,
declaring
that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise
thereof. What the VA and the CA correctly ruled was that the
Companys act of contracting out/outsourcing is within the purview of
management prerogative. Both did not say, however, that such act is
a valid exercise thereof. Obviously, this is due to the recognition that
the CBA provisions agreed upon by the Company and the Union
delimit the free exercise of management prerogative pertaining to the
hiring of contractual employees. Indeed, the VA opined that the right of
the management to outsource parts of its operations is not totally eliminated
but is merely limited by the CBA, while the CA held that [t]his
management prerogative of contracting out services, however, is not
without limitation. x x x [These] categories of employees particularly with
respect to casual employees [serve] as limitation to [the Companys]
prerogative to outsource parts of its operations especially when hiring
contractual employees.
7.4
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:
41

ATTY. ADA D. ABAD
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 (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.
7.5
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. In the present case, although Garden of Memories is not the
contractor, it has the burden of proving that Requizo has sufficient capita or
investment since it is claiming the supposed status of REquino as
independent contractor. Garden of Memories failed to adduce evidence
purporting to show that Requizo had sufficient capitaliizatin. Neither did it
show that she invested in the form of tools, equipment, machineries, work
premises and other materials which are necessary in the completion of the
service contract. (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).
7.6
WHETHER DOLE CERTIFICATION THAT ONE IS A LEGITIMATE

JOB-CONTRACTOR, IS SUFFICIENT TO PROVE STATUS AS
JOB CONTRACTOR.
The DOLE certification simply gives rise to a
presumption that the contractor is a legitimate one. It does NOT
General Rule:
prohibit the Supreme Court, in the exercise of its plenary judicial powers of
42

ATTY. ADA D. ABAD
review, to determine sufficiency of evidence other than the certification, in

ruling that one is, or is not, an independent contractor. Thus -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, CarpioMorales, 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. Petitioners bare assertions fail to 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 an independent contractor as it had
shown proof of substantial capitalization and control over the employees.
Exception: 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, 02 March
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.
43

ATTY. ADA D. ABAD
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 laborers
and his familys 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 (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.
2013 BAR EXAM PROBLEM:
Gamma Company pays its regular employees P350.00 a day, and houses them
in a dormitory inside its factory compound in Manila. Gamma Company also
provides them with three full meals a day.
In the course of a routine inspection, a Department of Labor and Employment
(DOLE) Inspector noted that the workers' pay is below the prescribed minimum
wage of P426.00 plus P30.00 allowance, and thus required Gamma Company
to pay wage differentials.
Gamma Company denies any liability, explaining that after the market value of
the company-provided board and lodging are added to the employees' P350
cash daily wage, the employees' effective daily rate would be way above the
minimum pay required by law. The company counsel further points out that the
employees are aware that their food and lodging form part of their salary, and
have long accepted the arrangement.
QUESTION: Is the company's position legally correct?(8%)
ANSWER: No. The following requisites were not complied with:
(a) proof that such facilities are customarily furnished by the trade;
(b) the provision of deductible facilities is voluntarily accepted by the employee;
and,
(c) the facilities are charged at fair and reasonable value. Mere availment is
not sufficient to allow deduction from employees wages. (Mayon Hotel &
Restaurant vs. Adana, 458 SCRA 609 [2005].)
1.2 EMPLOYEES NOT COVERED BY PROVISIONS ON WAGES:

farm tenancy / leasehold;
domestic service (household or domestic helpers);
44

ATTY. ADA D. ABAD
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 agroprocessing, trading and services, whose total assets including those arising
from loans but exclusive of the land on which the particular business entitys
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 employers 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 laborers 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 laborers wages shall be a lien on the goods manufactured or
the work done.
Art. 1708. The laborers wages shall not be subject to execution or
attachment except for debts incurred for food, shelter, clothing, and medical
attendance.
Art. 1709. The employer shall neither seize nor retain any tool or other
articles belonging to the laborer.
2013 BAR EXAM MCQ ON NON-INTERFERENCE ON WAGES:

45

ATTY. ADA D. ABAD
Robert, an employee of ABC Company, is married to Wanda. One day,

Wanda visited the company office with her three (3) emaciated minor
children, and narrated to the Manager that Robert had been squandering
his earnings on his mistress, leaving only a paltry sum for the support of
their children.
Wanda tearfully pleaded with the Manager to let her have one half of
Robert's pay every payday to ensure that her children would at least have
food on the table. To support her plea, Wanda presented a Kasulatan
signed by Robert giving her one half of his salary, on the condition that she
would not complain if he stayed with his mistress on weekends.
If you were the Manager, would you release one half of Robert's salary to
Wanda? (1%)
(A) No, because an employer is prohibited from interfering with the freedom of its
employees to dispose of their wages.
(B) Yes, because of Robert's signed authorization to give Wanda one half of his
salary.
(C) No, because there is no written authorization for ABC Company to release
Robert's salary to Wanda.
(D) Yes, because it is Robert's duty to financially support his minor children.
(E) No, because Robert's Kasulatan is based on an illegal consideration and is of
doubtful legal validity.
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 P11,633.17,2 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
If the employee was
IMMEDIATELY PRECEDING THE HOLIDAY.
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:
2
P446.00/day x 313 days [Sundays/restdays not paid]

------------------------------------------------------------------------- = Monthly rate of Rank-and-File employee
12 months
46

ATTY. ADA D. ABAD
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
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
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
2013 BAR EXAM MCQ ON SERVICE INCENTIVE LEAVE PAY:

The members of the administrative staff of Zeta, a construction company,
enjoy ten (10) days of vacation leave with pay and ten (10) days of sick
leave with pay, annually. The workers' union, Bukluran, demands that Zeta
grant its workers service incentive leave of five (5) days in compliance with
the Labor Code. Is the union demand meritorious? (1%)
(A) Yes, because non-compliance with the law will result in the diminution of
employee benefits.
(B) Yes, because service incentive leave is a benefit expresslyprovided under
and required by the Labor Code.
(C) No, because Zeta already complies with the law.
(D) No, because service incentive leave is a Labor Code benefit that does not
apply in the construction industry.
(E) Yes, because Labor Code benefits are separate from those voluntarily
granted by the company.
2013 BAR EXAM MCQ ON SERVICE CHARGES:

Ricardo operated a successful Makati seafood restaurant patronized by a
large clientele base for its superb cuisine and impeccable service. Ricardo
charged its clients a 10% service charge and distributed 85% of the
collection equally among its rank-and-file employees, 10% among
managerial employees, and 5% as reserve for losses and break ages.
Because of the huge volume of sales, the employees received sizeable
shares in the collected service charges.
As part of his business development efforts, Ricardo opened a branch in
Cebu where he maintained the same practice in the collection and
distribution of service charges. The Cebu branch, however, did not attract
the forecasted clientele; hence, the Cebu employees received lesser
service charge benefits than those enjoyed by the Makati-based
employees. As a result, the Cebu branch employees demanded
equalization of benefits and filed a case with the NLRC for discrimination
when Ricardo refused their demand.
Will the case prosper? (1%)
47

ATTY. ADA D. ABAD
(A) Yes, because the employees are not receiving equal treatment in the
distribution of service charge benefits.
(B) Yes, because the law provides that the 85% employees' share in the service
charge collection should be equally divided among all the employees, in this
case, among the Cebu and Makati employees alike.
(C) No, because the employees in Makati are not similarly situated as the Cebu
employees with respect to cost of living and conditions of work.
(D) No, because the service charge benefit attaches to the outlet where service
charges are earned and should be distributed exclusively among the
employees providing service in the outlet.
(E) No, because the market and the clientele the two branches are serving, are
different.
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 EMPLOYEES CONSENT:
a.
b.
c.
d.
Reasonable value of meals and other facilities;

Payment of union dues, which may or may not be under an automatic
charging-off arrangement
Debt payments to the employer or third persons with employees explicit
written consent
Workers insurance acquired by the employer with employees consent;
2013 BAR EXAM PROBLEM ON UNION DUES CHECK-OFF; WRITTEN

AUTHORIZATIONS
Pablo works as a driver at the National Tire Company (NTC). He is a member of
the Malayang Samahan ng Manggagawa sa NTC, the exclusive rank-and-file
collective bargaining representative in the company.
The union has a CBA with NTC which contains a union security and a check-off
clause. The union security clause contains a maintenance of membership
provision that requires all members of the bargaining unit to maintain their
membership in good standing with the union during the term of the CBA under
pain of dismissal. The check-off clause on the other hand authorizes the
company to deduct from union members' salaries defined amounts of union dues
and other fees.
Pablo refused to issue an authorization to the company for the check-off of his
dues, maintaining that he will personally remit his dues to the union.
QUESTION (A): Would the NTC management commit unfair labor practice if
it desists from checking off Pablo's union dues for lack of individual
authorization from Pablo? (4%)
48

ATTY. ADA D. ABAD
ANSWER: No. Violation of CBA to be ULP must be gross in character. It must

be flagrant and malicious refusal to comply with the economic provisions of the
CBA.
QUESTION (B): Can the union charge Pablo with disloyalty for refusing to
allow the check off of his union dues and, on this basis, ask the company
to dismiss him from employment? (4%)
ANSWER: No. The check-off clause in the CBA will not suffice. The law
prohibits interference with the disposition of ones salary. The law requires
individual written authorization to deduct union dues from Pablos salaries. For
as long as he pays union dues, Pablo cannot be terminated from employment
under the union security clause. As a matter of fact, filing a complaint against the
union before the Dept. of Labor for forcible deduction from salaries does not
constitute acts of disloyalty against the union. (Tolentino vs. Angeles, 52 O.G.
4262.)
1.7
IMPORTANT PERALTA CASE: DIMINUTION OF BENEFITS, EXPLAINED:

(Vergara vs. Coca Cola Bottlers, G.R. No. 176985, 01 April 2013).
Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc.
from May 1968 until he retired on January 31, 2002 as a District Sales
Supervisor (DSS). As stipulated in respondents existing Retirement Plan Rules
and Regulations at the time, the Annual Performance Incentive Pay of DSSs
shall be considered in the computation of retirement benefits, as follows: Basic
Monthly Salary + Monthly Average Performance Incentive (which is the total
performance incentive earned during the year immediately preceding 12
months) No. of Years in Service.
Claiming his entitlement to an additional Php 474, 600 as Sales Management
Incentives (SMI) and to the amount of Php 496, 016 which respondent allegedly
deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC for Full Retirement
Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual,
Moral and Exemplary Damages, and Attorneys Fees.
Issue: Whether or not the exclusion of Sales Management Incentives in the
computation of retirement benefits is a diminution of Vergaras benefits.
Answer: NO. SMI could not be included in computation, there being no
evidence that the inclusion thereof into the retirement pay has ripened into a
corporate policy.
General rule: Employees have a vested right over existing benefits voluntarily
granted to them by their employer. Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.
Elements for diminution of benefits:
(1) the grant or benefit is founded on a policy or has ripened into a practice over
a long period of time;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful
or difficult question of law; and
(4) the diminution or discontinuance is done unilaterally by the employer.
49

ATTY. ADA D. ABAD
Question: When can a policy be considered to have ripened into a regular

company practice?
Answer: The employee must prove by substantial evidence that the giving of
the benefit is done over a long period of time, and that it has been made
consistently and deliberately. Jurisprudence has not laid down any hard-and-fast
rule as to the length of time that company practice should have been exercised in
order to constitute voluntary employer practice. The common denominator in
previously decided cases appears to be the regularity and deliberateness of the
grant of benefits over a significant period of time. It requires an indubitable
showing that the employer agreed to continue giving the benefit knowing well that
the employees are not covered by any provision of the law or agreement
requiring payment thereof. In sum, the benefit must be characterized by
regularity, voluntary and deliberate intent of the employer to grant the benefit
over a considerable period of time.
1.8 Situation: Company issued a memo changing work hours of the Purchasing
and Stockroom department every Tuesday and Thursday, from the usual 9am5pm, 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).
2013 BAR MCQ ON DIMINUTION OF BENEFITS

In order to improve the Cebu service and sales, Ricardo decided to assign
some of its Makati-based employees to Cebu to train Cebu employees and
expose them to the Makati standard of service. A chef and three waiters were
assigned to Cebu for the task. While in Cebu, the assigned personnel shared in
the Cebu service charge collection and thus received service charge benefits
lesser than what they were receiving in Makati. If you were the lawyer for the
assigned personnel, what would you advice them to do? (1%)
(A) I would advise them to file a complaint for unlawful diminution of service charge
benefits and for payment of differentials.
(B) I would advise them to file a complaint for illegal transfer because work in Cebu is
highly prejudicial to them in terms of convenience and service charge benefits.
(C) I would advise them to file a complaint for discrimination in the grant of service
charge benefits.
(D) I would advise them to accept their Cebu training assignment as an exercise of
the company's management prerogative.
(E) I would advise them to demand the continuation of their Makati-based benefits
and to file a complaint under (B)above if the demand is not heeded.
2013 BAR EXAM PROBLEM ON DIMINUTION OF BENEFITS:

Inter-Garments Co. manufactures garments for export and requires its employees to
render overtime work ranging from two to three hours a day to meet its clients'
deadlines. Since 2009, it has been paying its employees on overtime an additional
50

ATTY. ADA D. ABAD
35% of their hourly rate for work rendered in excess of their regular eight working
hours.
Due to the slowdown of its export business in 2012, Inter-Garments had to reduce its
overtime work; at the same time, it adjusted the overtime rates so that those who
worked overtime were only paid an additional 25%instead of the previous 35%. To
replace the workers' overtime rate loss, the company granted a one-time 5% acrossthe-board wage increase.
Vigilant Union, the rank-and-file bargaining agent, charged the company with Unfair
Labor Practice on the ground that (1) no consultations had been made on who would
render overtime work; and (2) the unilateral overtime pay rate reduction is a violation
of Article 100 (entitled Prohibition Against Elimination or Diminution of Benefits) of
the Labor Code.
QUESTION: Is the union position meritorious? (8%)
ANSWER: NO. The allegation of ULP by the Union is not meritorious. The selection
as to who would render overtime is a management prerogative. However, the
allegation of the Union on diminution of benefits (violation of Art. 100 LC) appears to
be meritorious. Since three (3) years have already elapsed, the overtime rate of
35% has ripened into practice and policy, and cannot anymore be removed. (Revilla
Trading vs. Semana, 428 SCRA 239 [2004].} This is deliberate, consistent and
practiced over a long period of time.
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;
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;
51

ATTY. ADA D. ABAD
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 workers 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.
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 companys 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 ETPIs 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.
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]).
52

ATTY. ADA D. ABAD
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]).
4. HOURS OF WORK.
4.1 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].)
4.2 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.
4.3 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)
d)
e)
f)
Field Personnel;
Members of the employer who are dependent upon him for support;
Domestic helpers and persons in the personal service of another;
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).
5.
EMPLOYMENT OF HOUSEHELPERS VS. HOMEWORKERS

(See KASAMBAHAY LAW)
5.1
Domestic helper or househelpers or domestic servant defined. -- shall

refer to any person, whether male or female, who renders services in and about
the employers 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 employers 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.
If the househelp or laundrywomen is suffered to work in staffhouses of a

company to attend to the needs of the companys 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.)
53

ATTY. ADA D. ABAD
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 househelpers 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.
5.2 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
Minister to the personal needs and
comfort of his employer in the latters
home
HOME WORKERS
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 employers 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.
6.
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
Except:
54

ATTY. ADA D. ABAD
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 childs life, safety, health and morals;
The employment does not impair the childs 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 childs 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.
-- No employer shall
discriminate against any person in respect to terms and conditions of
employment on account of his age.
PROHIBITION AGAINST CHILD DISCRIMINATION.
7.
APPRENTICESHIP AND LEARNER

7.1 Apprenticeship is the practical on-the-job training as supplemented by related
theoretical instruction (Art. 58 (a), LC).
7.2 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.
APPRENTICESHIP
LEARNERSHIP
NATURE
highly-technical
semi-skill; non-apprenticeable
PERIOD
SIX (6) months
THREE (3) months
COMITMT TO
HIRE
At option of employer
At option of learner
WAGES
May be paid or not; if

paid, 75% of minimum
Must always be paid; 75% of

minimum
DOLE
Approval
Yes, DOLE approval is

essential
No, DOLE approval not required;

inspection only.
DEDUCTION for
Yes, expenses for

training deductible
from income tax
None.
Expenses
55

ATTY. ADA D. ABAD
7.3 CASE ON VALIDITY OF APPRENTICESHIP

Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et
al., G.R. 187320, 26 January 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 employers 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.
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 Codes implementing
rules and is an act manifestly unfair to the employees.
8. 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.
9. DISABLED WORKERS
9.1
Equal opportunity for employment.

No disabled person shall be denied access to opportunities for suitable
employment. [R.A. 7277, Sec. 5: Magna Carta for Disabled Persons]
Qualified disabled employees shall be subject to the same terms and

conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able-bodied person.
A worker is not necessarily considered as a handicapped worker if he is

capable, as an able-bodied worker, to function suitably in relation to the work
to which he was hired. (i.e. one-legged transcriptionist)
56

ATTY. ADA D. ABAD
9.2
Incentives for employment of disabled workers (Sec. 2, RA 7277).

1. Private entities that employ disabled persons who meet the required skills or
qualifications either as regular employee, apprentice or learner, shall be
entitled to an additional deduction from their gross income, equivalent to 25%
of the total amount paid as salaries and wages to disabled persons; Provided,
that the following are complied with:
a. Presentation of proof certified by DOLE that disabled persons are under
their employ; and
b. Disabled employee is accredited with DOLE and DOH as to his
disability, skills and qualifications.
2. Private entities that improve or modify their physical facilities to provide
reasonable accommodation for disabled persons shall also be entitled to an
additional deduction from their taxable income, equivalent to 50% of the direct
costs of the improvements or modifications. This does not apply to
improvements required under B.P. Blg. 344.
2013 BAR EXAM MCQ ON DISABLED WORKERS

The minimum wage prescribed by law for persons with disability is __________.
(1%)
(A) 50% of the applicable minimum wage
(B) 75% of the applicable minimum wage
(C) 100% of the applicable minimum wage
(D) the wage that the parties agree upon, depending on the capability of the disabled.
(E) the wage that the parties agree upon, depending on the capability of the disabled,
but not less than 50% of the applicable minimum wage
What is the financial incentive, if any, granted by law to SPQ Garments whose
cutters and sewers in its garments-for-export operations are80% staffed by deaf
and deaf-mute workers? (1%)
(A) Additional deduction from its gross income equivalent to 25% of amount paid as
salaries to persons with disability.
(B) Additional deduction from its gross income equivalent to 50% of the direct costs of
the construction of facilities for the use of persons with disability.
(C) Additional deduction from its net taxable income equivalent to 5% of its total payroll
(D) Exemption from real property tax for one (1) year of the property where facilities for
persons with disability have been constructed.
(E) The annual deduction under (A), plus a one-time deduction under (B).
10.
EMPLOYEE BENEFITS; RETIREMENT.

9.1 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 companys Retirement Plan will apply
57

ATTY. ADA D. ABAD
9.2 RETIREMENT BENEFITS

GENERAL RULE: R.A. 7641
month for every year of service (expanded concept per Sec 1, RA 7641)
Expanded concept: 22.5 days (Capitol Wireless vs. Confesor)
15 days + 5 days service incentive leave + 2.5 days prorated 13th month pay
EXCEPTION:
Where the company provides for a Retirement Plan with better benefits, then the
companys Retirement Plan will apply
9.3 CASES:
a) Difference between termination of employment and retirement (General

Milling Corporation vs. Viajar, G.R. No. 181738, 30 January 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 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 employees 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. --
58

ATTY. ADA D. ABAD
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 companys 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 PALs 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 petitioners obligation to render service to PAL
within 3 years to enable it to recoup the costs of its investment. Further,
to allow the petitioner to leave the company before it has fulfilled the
reasonable expectation of service on his part will amount to unjust
enrichment.
2013 BAR EXAM MCQ ON RETIREMENT

At age 65 and after 20 years of sewing work at home on a piece rate basis
for PQR Garments, a manufacturer-exporter to Hongkong, Aling Nena
decided it was time to retire and to just take it easy. Is she entitled to
retirement pay from PQR? (1%)
(A) Yes, but only to one month pay.
(B) No, because she was not a regular employee.
(C) Yes, at the same rate as regular employees.
(D) No, because retirement pay is deemed included in her contracted per piece
pay.
(E) No, because homeworkers are not entitled to retirement pay.
2013 BAR EXAM PROBLEM ON RETIREMENT

After thirty (30) years of service, Beta Company compulsorily retired Albert at age
65 pursuant to the company's Retirement Plan. Albert was duly paid his full
retirement benefits of one (1) month pay for every year of service under the Plan.
Thereafter, out of compassion, the company allowed Albert to continue working
and paid him his old monthly salary rate, but without the allowances that he used
to enjoy.
After five (5) years under this arrangement, the company finally severed all
employment relations with Albert; he was declared fully retired in a fitting
ceremony but the company did not give him any further retirement benefits.
Albert thought this treatment unfair as he had rendered full service at his usual
hours in the past five (5) years. Thus, he filed a complaint for the allowances that
were not paid to him, and for retirement benefits for his additional five (5) working
years, based either on the company's Retirement Plan or the Retirement Pay
Law, whichever is applicable.
59

ATTY. ADA D. ABAD
QUESTION (A): After Albert's retirement at age 65, should he be considered

a regular employee entitled to all his previous salaries and benefits when
the company allowed him to continue working? (4%)
ANSWER: He would be considered a Contractual Employee, not a regular
employee. His salaries and benefits will be in accordance with the stipulations
of the contract he signed with the company.
QUESTION (B): Is he entitled to additional retirement benefits for the
additional service he rendered after age 65? (4%)
ANSWER: No. He cannot be compulsorily retired twice in the same company
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-andfile 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-andfile 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
60

ATTY. ADA D. ABAD
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 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--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 2011 2012 AND 2013

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. GTZs 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 government61

ATTY. ADA D. ABAD
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.
2.2.6 Aliens with valid working permits (Department Order No. 9

[1997], Rule II, Sec. 2)
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:
62

ATTY. ADA D. ABAD
(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 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 chapters officers, their addresses, and the principal
office of the chapter; and
(b) The chapters constitution and by-laws: Provided, That where the
chapters 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.
ADAS 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
63

ATTY. ADA D. ABAD
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;
(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 attorneys 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:
64

ATTY. ADA D. ABAD
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
ADAS 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:
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
employers participation in such proceedings shall be limited

65

ATTY. ADA D. ABAD
to: (1) being notified or informed of petitions of such nature;

and (2) submitting the list of employees during the preelection 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
2013 BAR EXAM MCQs ON RIGHTS OF A

LEGITIMATE LABOR ORGANIZATION
When there is no recognized collective bargaining agent, can a legitimate labor
organization validly declare a strike against the employer? (1%)
(A) Yes, because the right to strike is guaranteed by the Constitution and cannot be
denied to any group of employees.
(B) No, because only an exclusive bargaining agent may declare a strike against the
employer.
(C) Yes, because the right to strike is a basic human right that the country's
international agreements and the International Labor Organization recognize.
(D) Yes, but only in case of unfair labor practice.
(E) No, in the absence of a recognized bargaining agent, the workers' recourse is to file
a case before the Department of Labor and Employment.
Samahang Tunay, a union of rank-and-file employees lost in a certification
election at Solam Company and has become a minority union. The majority union
now has a signed CBA with the company and the agreement contains a
maintenance of membership clause. What can Samahang Tunay still do within the
company as a union considering that it still has members who continue to profess
continued loyalty to it? (1%)
(A) It can still represent these members in grievance committee meetings.
(B) It can collect agency fees from its members within the bargaining unit.
(C) It can still demand meetings with the company on company time.
(D) As a legitimate labor organization, it can continue to represent its members on nonCBA-related matters.
(E) None of the above.
(F) All of the above.
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.
66

ATTY. ADA D. ABAD
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/chapters officers certify or attest to a document which they did not prepare. In
accordance with this ruling, petitioner unions 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 (NUWHRAINHHMSC), G.R. No. 178296, January 12, 2011.
ANSWER: NO. The constitutionally guaranteed freedom of association and right of
workers to self-organization outweighs respondents 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 selforganization 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
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ATTY. ADA D. ABAD
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 unions 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 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 UNIONS 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
68

ATTY. ADA D. ABAD
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.
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 units
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
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ATTY. ADA D. ABAD
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 certification election. The employers
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
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ATTY. ADA D. ABAD
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 agreed 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 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.
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ATTY. ADA D. ABAD
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
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
o
o
o
o
the bargaining unit to be represented;

contending labor unions;
possibility of a consent election;
existence of any of the bars to certification election under Section 3 of
this Rule; and
such other matters as may be relevant for the final disposition of the
case.
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ATTY. ADA D. ABAD
(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
o
o
o
o
the name of the employer or establishment;

the description of the bargaining unit;
a statement that none of the grounds for dismissal enumerated in the
succeeding paragraph exists;
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
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.
(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 Departments 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;
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;
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 runoff election is pending;
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;
73

ATTY. ADA D. ABAD
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.
2013 BAR EXAM MCQ ON GROUNDS FOR DENIAL OF

CERTIFICATION ELECTION
The Pinagbuklod union filed a Petition for Certification Election,
alleging that it was a legitimate labor organization of the rank-andfile employees of Delta Company. On Delta's motion, the Med Arbiter
dismissed the Petition, based on the finding that Pinagbuklod was
not a legitimate labor union and had no legal personality to file a
Petition for Certification Election because its membership was a
mixture of rank-and-file and supervisory employees.
Is the dismissal of the Petition for Certification Election by the MedArbiter proper? (1%)
(A) Yes, because Article 245 of the Labor Code prohibits supervisory
employees from joining the union of he rank and file employees and
provides that a union representing both rank and file and supervisory
employees as members is not a legitimate labor organization.
(B) No, because the grounds for the dismissal of a petition for certification
election do not include mixed membership in one umon.
(C) No, because a final order of cancellation of union registration is
required before a petition for certification election may be dismissed
on the ground of lack of legal personality of the union.
(D) No, because Delta Company did not have the legal personality to
participate in the certification election proceedings and to file a motion
to dismiss based on the legitimacy status of the petitioning union.
(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.
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ATTY. ADA D. ABAD
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.
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.
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ATTY. ADA D. ABAD
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.
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 unions
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 Departments roster of legitimate labor organizations or an
existing collective bargaining agreement is unregistered with the Department.
LABOR
ORGANIZATION;
COLLATERAL
PERSONALITY IS PROHIBITED.
ATTACK
ON
LEGAL
IMPORTANT PERALTA CASE: Holy Child Catholic School vs. Patricia

Sto. Tomas G.R. No. 179146, 23 July 2013, J. Peralta
Question: May a petition for certification election be dismissed on the ground that
the labor organizations membership allegedly consists of supervisory and rankand file employees?
Answer: No. The concepts of a union and of a legitimate labor organization are
different from, but related to, the concept of a bargaining unit.
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ATTY. ADA D. ABAD
In case of alleged inclusion of disqualified employees in a union, the proper

procedure for an employer like petitioner is to directly file a petition for cancellation
of the unions certificate of registration due to misrepresentation, false statement or
fraud under the circumstances enumerated in Article 239 of the Labor Code, as
amended. To reiterate, private respondent, having been validly issued a
certificate of registration, should be considered as having acquired juridical
personality which may not be attacked collaterally.
Article 212(g) of the Labor Code defines a labor organization as "any union or
association of employees which exists in whole or in part for the purpose of
collective bargaining or of dealing with employers concerning terms and conditions
of employment." Upon compliance with all the documentary requirements, the
Regional Office or Bureau shall issue in favor of the applicant labor organization a
certificate indicating that it is included in the roster of legitimate labor organizations.
Any applicant labor organization 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.
On the other hand, 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 interests of all the employees, consistent with equity to the
employer, indicated to be best suited to serve reciprocal rights and duties of the
parties under the collective bargaining provisions of the law." In determining the
proper collective bargaining unit and what unit would be appropriate to be the
collective bargaining agency, the Court, in the seminal case of Democratic Labor
Association v. Cebu Stevedoring Company, Inc., mentioned several factors that
should be considered, to wit: (1) will of employees (Globe Doctrine); (2) affinity and
unity of employees' interest, such as substantial similarity of work and duties, or
similarity of compensation and working conditions; (3) prior collective bargaining
history; and (4) employment status, such as temporary, seasonal and probationary
employees, xxx we stressed, however, that the test of the grouping is community
or mutuality of interest, because the basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentally the combination which will best
assure to all employees the exercise of their collective bargaining rights."
Indeed, the purpose of a certification election is precisely to ascertain the majority
of the employees choice of an appropriate bargaining unit to be or not to be
represented by a labor organization and, if in the affirmative case, by which one.
CERTIFICATION ELECTION; PENDENCY OF A PETITION FOR

CANCELLATION OF UNION REGISTRATION DOES NOT PRECLUDE
COLLECTIVE BARGAINING.
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 unions 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 unions certificate of
registration should retroact to the time of its issuance. Thus, it claimed that the
unions petition for certification election and its demand to enter into collective
bargaining agreement with the petitioner should be dismissed due to respondents
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 unions registration because
77

ATTY. ADA D. ABAD
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.
3.5 THE INCLUSION OF UNION MEMBERS OF EMPLOYEES OUTSIDE THE

BARGAINING UNIT NO LONGER A GROUND FOR CANCELLATION OF
UNION REGISTRATION
Republic Act No. 9481, Sec. 9. A new provision, Article 245-A is inserted into
the Labor Code to read as follows:
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.
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 THE 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
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)
b)
c)
Between three or more choices, and no choice receiving a majority of the

valid votes cast;
The total number of votes for all contending unions is at least 50% of the
number of votes cast
Between the two labor unions receiving the two highest number of votes.
Example: 100 members in the appropriate bargaining unit. All members

cast their votes.
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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 2011 2012 OR 2013 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;
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ATTY. ADA D. ABAD
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
deregistration of collective bargaining agreements;

validity/invalidity of union affiliation or disaffiliation;
validity/invalidity of acceptance/non-acceptance for union membership;
validity/invalidity of impeachment/expulsion of union and workers association
officers and members;
validity/invalidity of voluntary recognition;
opposition to application for union and CBA registration;
violations of or disagreements over any provision in a union or workers
association constitution and by-laws;
disagreements over chartering or registration of labor organizations and
collective bargaining agreements;
violations of the rights and conditions of union or workers association
membership;
violations of the rights of legitimate labor organizations, except interpretation of
collective bargaining agreements;
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.
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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
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 clients 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 Unions 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.
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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.
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.
Adas 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 partys conduct both at and away from the bargaining table. It
involves the question of whether an employers 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.
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ATTY. ADA D. ABAD
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).
c)
2014 CASE: Tabangao Shell Refinery Employees Association vs. Pilipinas

Shell Petroleum Corporation, G.R. No. 170007, 07 April 2014.
Question: Is a lump-sum amount in lieu of wage increases during CBA
negotiations tantamount to bargaining in bad faith?
No. The duty to bargain does not compel any party to accept a proposal, or make
any concession, as recognized by Article 252 of the Labor Code, as amended.
The laws invite and contemplate a collective bargaining contract, but they do not
compel one. The duty to bargain does not include the obligation to reach an
agreement. Thus, the Companys insistence on a bargaining position to the point
of stalemate does not establish bad faith. The Companys offer[,] a lump sum of
Php88,000 per year, for each covered employee in lieu of a wage increase
cannot, by itself, be taken as an act of bargaining in bad faith. The minutes of
the meetings of the parties, show that they both exerted their best efforts, to try to
resolve the issues at hand. Many of the proposed improvements or changes, were
either resolved, or deferred for further discussion. It is only on the matter of the
wage increase, that serious debates were registered. However, the totality of
conduct of the Company as far as their bargaining stance with the Union is
concerned, does not show that it was bargaining in bad faith.
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.
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).
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ATTY. ADA D. ABAD
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 multiemployer bargaining; and
(c) only those legitimate labor unions who pertain to employer units who
consent to multi-employer bargaining may participate in multiemployer 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:

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
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ATTY. ADA D. ABAD
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).
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).
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.)
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.)
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).
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).
2013 BAR EXAM MCQ ON CBA EFFECTIVITY:

Upon the expiration of the first three (3) years of their CBA, the union and the
company commenced negotiations. The union demanded that the company
continue to honor their 30-day union leave benefit under the CBA. The company
refused on the ground that the CBA had already expired, and the union had
already consumed their union leave under the CBA. Who is correct? (1%)
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ATTY. ADA D. ABAD
(A) The company is correct because the CBA has expired; hence it is no longer bound to
provide union leave.
(B) The company is correct because the union has already consumed the allotted union
leave under the expired CBA.
(C) The union is correct because it is still the bargaining representative for the next two
(2) years.
(D) The union is correct because union leaves are part of the economic terms that
continue to govern until new terms are agreed upon.
(E) They are both wrong.
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 Unions 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. 2010-2014 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.
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ATTY. ADA D. ABAD
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 2011 2012 AND 2013 BAR.

QUESTION: IS SUSPENSION OF CBA NEGOTIATION AN UNFAIR
LABOR PRACTICE? (Manila Mining Corp. Employees Association, et al. vs.. Manila
Mining corp, et al., G.R. Nos. 178222-23, 29 September 2010)
Answer: NO. Article 2523 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.
6.4
IMPORTANT: NOT ASKED IN 2011 2012 AND 2013 BAR.

QUESTION: MAY THE PARTIES AGREE TO EXTEND THE EXCLUSIVE
BARGAINING STATUS BEYOND FIVE YEAR PERIOD? -- 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.
ANSWER: NO. While the parties may agree to extend the CBAs original fiveyear 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 unions 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
unions exclusive bargaining status is effective only for five years and can be
challenged within sixty (60) days prior to the expiration of the CBAs 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 CBAs other provisions at the end of
the 3rd year of the five-year CBA term. Thus, prior to expiration on January 30,
3
Renumbered as Article 262, Labor Code.

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ATTY. ADA D. ABAD
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 FVCLUPTGWOs 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, SANAMASIGLO 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-PTGWOs exclusive bargaining status, was seasonably filed.
6.5
2012 CASE: INTRA-UNION DISPUTES, LAW OF THE CASE. De la Salle

University vs. De la Salle University Employees Association, G.R. No. 169254. 23
August 2012.
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: UNIVERSITY CANNOT REFUSE TO REMIT. [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 [respondents] 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 Baez factions was not a justification therefor is
binding herein.
6.6 2014 ULP CASE WHERE THE EMPLOYER HAS ORCHESTRATED

ACTIVITIES TO SUBVERT CERTIFICATION ELECTIONS. (T & H Shopfitters
Corporation/ Gin Queen Corporation et. al. vs. T & H Shopfitters Corporation/Gin Queen
Workers Union, et. al., G.R. No. 191714, 26 February 2014, J. Mendoza).
The various questioned acts of petitioners show interference in the right to selforganization by the employees, namely: 1) sponsoring a field trip to Zambales for
its employees, to the exclusion of union members, before the scheduled
certification election; 2) the active campaign by the sales officer of petitioners
against the union prevailing as a bargaining agent during the field trip; 3) escorting
its employees after the field trip to the polling center; 4) the continuous hiring of
subcontractors performing respondents functions; 5) assigning union members to
the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members.
Indubitably, the various acts of petitioners, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents free
exercise of their right to self-organization. The Court is of the considered view that
petitioners undisputed actions prior and immediately before the scheduled
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ATTY. ADA D. ABAD
certification election, while seemingly innocuous, unduly meddled in the affairs of

its employees in selecting their exclusive bargaining representative.
M. STRIKES, PICKETING AND LOCK-OUTS

(PLEASE SEE GRAPHS 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 selforganization; (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;
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ATTY. ADA D. ABAD
(c) Labor standards cases such as wage orders (Guidelines governing

Labor Relations [19 Oct. 1987] issued by Sec. Drilon; See: Appendix
Y of Fozs Labor Code; See also: Article 261, LC)
(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.
2013 BAR EXAM MCQ ON VOLUNTARY ARBITRATION:

The parties to a labor dispute can validly submit to voluntary
arbitration _________. (1%)
(A) any disputed issue they may agree to voluntarily arbitrate
(B) only matters that do not fall within the exclusive jurisdiction of the
Labor Arbiter
(C) any disputed issue but only after conciliation at the National
Conciliation and Mediation Board fails
(D) any disputed issue provided that the Labor Arbiter has not assumed
jurisdiction over the case on compulsory arbitration
(E) only matters relating to the interpretation or implementation of a
collective bargaining agreement
Cases on lawful purpose:

1. NOT ASKED IN 2012 BAR. IMPORTANT CASE:
QUESTION: MAY A UNION WHICH IS NOT A LEGITIMATE LABOR
ORGANIZATION CONDUCT A STRIKE?. Abaria vs. NLRC, GR 154113. 07
December 2011.
ANSWER: NO. This is tantamount to an illegal strike for lack of lawful
purpose.
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
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ATTY. ADA D. ABAD
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 days wage for a fair days labor.
2.
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 of backwages during strike,
especially where the strike was illegal in the first place.
a. 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.
b. 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.
c. 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 days wage" accrues only for a "fair days labor." This
Court must thus hearken to its policy that "when employees voluntarily go
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ATTY. ADA D. ABAD
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
employers 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.
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

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ATTY. ADA D. ABAD
b. obstruct the free ingress to or egress from the employers 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.: noncompliance 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

commits an illegal act.
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, 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.
2.2.6 2013 CASE: SIT-DOWN STRIKE; Example of a strike without

lawful purpose and unlawful means; when the union is not the
exclusive bargaining agent Malayang Manggagawa ng Stayfast, Inc. vs.
NLRC, G.R. No. 155306, 28 August 2013, Leonardo-De Castro, J
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ATTY. ADA D. ABAD
FACTS:
Malayang Manggagawa and Nagkakaisang Lakas ng
Manggagawa sa Stayfast sought to be the exclusive bargaining agent of
Stayfast Philippines, Inc. Petitioner Malayang Manggagawa lost the
certification election and sought to appeal the decision but was later on
dismissed. Meanwhile, the Nagkakaisang Lakas ng Manggagawa
demanded to collectively bargain with the respondent company but it
refused. Nagkaisang Lakas went on strike but was later on restrained.
Thereafter, petitioner Malayang Manggagawa filed its own notice of strike
in the NCMB. The respondent company opposed the notice of strike
contending that the petitioner is a minority union. The parties were able to
make concessions during the conciliation proceedings and the notice of
strike was later on withdrawn.
However, on 21 July 1997, the petitioners members staged a sit down
strike to dramatize their demand for a fair and equal treatment as
respondent company allegedly continued to discriminate against them.
The respondent company issued a memorandum to all participants of the
sit down strike requiring them to explain why they should not be
terminated. None of the members complied with the company directive,
so they were all terminated by the respondent company. Consequently,
the petitioner staged a strike and filed a complaint for unfair labor
practice, union busting and illegal lockout.
ISSUE: Whether or not there is an illegal strike?
HELD: YES. The labor courts a quo all unanimously ruled that there
were no sufficient proof of respondent companys alleged discriminatory
acts, viz. that respondent company and its General Manager committed
unfair labor practice or that the termination of the employment of
petitioners officers and members was a case of union busting. On the
other hand, the sit down strike made by the petitioners officers
and members was in violation of respondent companys rules, and
petitioners officers and members ignored the opportunity given by
the respondent company for them to explain their misconduct,
which resulted in the termination of their employment. In sum, there
are abundance of reasons, both procedural and substantive, which are all
fatal to petitioners cause. The instant petition for certiorari suffers from an
acute scarcity of legal and factual support
2.2.7 IMPORTANT PERALTA CASE; Liability of company who fails to

immediately reinstate the union member for participating in an
illegal strike; extent of backwages. C. Alcantara and Sons vs
Court of Appeals and NAGKAHIUSANG MAMUMUO SA ALSONSSPFL, G.R. No. 155109, 14 March 2012. J Peralta.
The Labor Arbiter found the strike illegal and sustained the
dismissal of the Union officers but ordered the reinstatement of the
striking Union members for lack of evidence showing that they
committed illegal acts during the illegal strike. On appeal, NLRC
reversed Labor Arbiter and ruled that union members may also be
terminated. CA and SC sustained NLRC decision.
Question: Are the striking union members who were initially
ordered reinstated by the Labor Arbiter but later on, found to have
been legally terminated by the NLRC, entitled to backwages from
the time of the LA decision until the NLRC reversal?
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ATTY. ADA D. ABAD
Answer: YES. Pursuant to Article 223 of the Labor Code and wellestablished jurisprudence, the decision of the LA reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, pending
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. If the employer fails to exercise the
option of re-admitting the employee to work or to reinstate him in
the payroll, the employer must pay the employees salaries during
the period between the LAs order of reinstatement pending appeal
and the resolution of the higher court overturning that of the LA.
In this case, CASI is liable to pay the striking Union members
their accrued wages for four months and nine days, which is
the period from the notice of the LAs order of reinstatement
until the reversal thereof by the NLRC.
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
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ATTY. ADA D. ABAD
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.
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.)
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ATTY. ADA D. ABAD
c)
3.4
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.)
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.
2010-2013 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.
ADAS NOTES:
General rule: Both union officers and members who defy the Secretarys
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
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ATTY. ADA D. ABAD
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.
5.2 Jurisdiction; Secretary of Labor. -- Cirtek Employees Labor Union-Federation of
Free Workers vs. Electronics, Inc., G.R. No. 190515, 15 November 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. The Secretary of Labor exercises plenary discretionary
powers under the concept of police power in a CBA deadlock. As such, he

is not limited to considering the MOA as basis in computing the wage
increases.
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
respondents financial outlook and improvements as stated in its website.
IMPORTANT MODIFICATION 2013 CASE: Asia Brewery vs. Tunay na

Pagkakaisa ng mga Manggagawa sa Asia (TPMA), G.R. No. 171594, 16
September 2013.
However, in deciding wage increases subject matter of the labor dispute, the
Secretary of Labor must not commit grave abuse of discretion. In cases of
compulsory arbitration before the Secretary of Labor pursuant to Article 263(g) of
the Labor Code, the financial statements of the employer must be properly
audited by an external and independent auditor in order to be admissible in
evidence for purposes of determining the proper wage award.
The Secretary of Labor gravely abused her discretion when she used
the middle ground approach and relied on the unaudited financial
statements.
Said unaudited financial statements are self-serving and
inadmissible, and may have resulted in a wage award that is based on an
inaccurate and biased picture of petitioner corporations capacity to pay. Moreso,
she violated her own Order dated 19 December 2003, which instructed the
petitioner company to submit its complete audited financial report.
5.4
Dismissal on account of illegal strike. -- Danilo Escario, et al vs. National Labor

Relations Commission, G.R. No. 160302, 27 September 2010.
Question: Are ordinary workers who were reinstated due to dismissal for
their participation in an illegal strike, entitled to payment of backwages?
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ATTY. ADA D. ABAD
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
IMPORTANT PERALTA CASE ON DISMISSAL; UNFAIR LABOR PRACTICE;

LIABILITY OF CORPORATE OFFICERS; MORAL AND EXEMPLARY
DAMAGES. (Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118.
September 10, 2012, J. Peralta). QUESTION: May employees who have gone on mass leaves without prior
authorization be presumed to have conducted an illegal strike?
ANSWER: NO. It is undeniable that going on leave or absenting ones self from
work for personal reasons when they have leave benefits available is an
employees 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 overturn the 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 cannot be
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
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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.
Biomedicas allegation that the mass leave paralyzed the company operation on
that day has remained unproved.
2013 BAR EXAM PROBLEM ON ASSUMPTION OF JURISDICTION;

STRIKE.
Philippine Electric Company is engaged in electric power generation and
distribution. It is a unionized company with Kilusang Makatao as the union
representing its rank-and-file employees. During the negotiations for their expired
collective bargaining agreement (CBA), the parties duly served their proposals and
counter-proposals on one another. The parties, however, failed to discuss the
merits of their proposals and counter-proposals in any formal negotiation meeting
because their talks already bogged down on the negotiation ground rules, i.e., on
the question of how they would conduct their negotiations, particularly on whether
to consider retirement as a negotiable issue.
Because of the continued impasse, the union went on strike. The Secretary of
Labor and Employment immediately assumed jurisdiction over the dispute to avert
widespread electric power interruption in the country. After extensive discussions
and the filing of position papers (before the National Conciliation and Mediation
Board and before the Secretary himself) on the validity of the union's strike and on
the wage and other economic issues (including the retirement issue), the DOLE
Secretary ruled on the validity of the strike and on the disputed CBA issues, and
ordered the parties to execute a CBA based on his rulings.
QUESTION: Did the Secretary of Labor exceed his jurisdiction when he
proceeded to rule on the parties' CBA positions even though the parties did not
fully negotiate on their own? (8%)
ANSWER: No. The power of the Secretary of Labor under Article 263 (q) is
plenary. He can rule on all issues, questions or controversies arising from the
labor dispute, including the legality of the strike, even those over which the Labor
Arbiter has exclusive jurisdiction. (Bagong Pagkakaisa ng mga Manggagawa sa
Triumph International Vs. Secretary, G.R. Nos. 167401 and 167407, July 05,
2010.)
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 Labors interests
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A workers 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.
Managements interests
1.2
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.
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]).
Note2:
IMPORTANT PERALTA CASE ON SUBSTANTIAL
EVIDENCE. (Alilem Credit Cooperative vs. Bandiola, G.R. No.
173489, 25 February 2013, J. Peralta).
Question: Whether or not sworn statements of relatives and friends of
respondent attesting to the existence of an extra-marital affair is
sufficient to prove immorality, as a just cause for termination?
Answer: YES. The employers evidence consists of sworn statements
of either relatives or friends of Thelma and respondent. They either had
direct personal knowledge of the illicit relationship or revealed
circumstances indicating the existence of such relationship.
While respondents act of engaging in extra--marital affairs may be
considered personal to him and does not directly affect the performance
of his assigned task as bookkeeper, aside from the fact that the act was
specifically provided for by petitioners Personnel Policy as one of the
grounds for termination of employment, said act raised concerns to
petitioner as the Board received numerous complaints and petitions from
the cooperative members themselves asking for the removal of
respondent because of his immoral conduct.
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
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ATTY. ADA D. ABAD
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 "teambased" 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.
Management prerogatives
Right to discipline
employee in accordance
with rules and regulations
LABOR
Security of tenure
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 employees 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)
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ATTY. ADA D. ABAD
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
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 Caltexs 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 coemployee, 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 employees 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 employees 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 Fermins act of taking Bragas 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.
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d.) Conspiracy vis--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 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.
2013 BAR EXAM PROBLEM:
Jose and Erica, former sweethearts, both worked as sales representatives for
Magna, a multinational firm engaged in the manufacture and sale of
pharmaceutical products. Although the couple had already broken off their
relationship, Jose continued to have special feelings for Erica.
One afternoon, Jose chanced upon Erica riding in the car of Paolo, a coemployee and Erica's ardent suitor; the two were on their way back to the
office from a sales call on Silver Drug, a major drug retailer. In a fit of extreme
jealousy, Jose rammed Paolo's car, causing severe injuries to Paolo and
Erica. Jose's flare up also caused heavy damage to the two company-owned
cars they were driving.
(A) As lawyer for Magna, advise the company on whether just and valid
grounds exist to dismiss Jose. (4%)
ANSWER. Yes; for serious misconduct, violation of company rules and
regulations; and commission of a crime against the employers
representatives
(B) Assuming this time that Magna dismissed Jose from employment for
cause and you are the lawyer of Jose, how would you argue the position that
Jose's dismissal was illegal? (4%)
ANSWER: The offense committed by Jose did not relate to the performance
of his duties.
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ATTY. ADA D. ABAD
II.
2.1.2 GROSS INSUBORDINATION

Elements: (a) employees 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 managers 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 petitioners 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 employees assailed conduct must have been willful, that
is characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee
and must pertain to the duties which he had been engaged to discharge.
Though there is nothing unlawful in the directive of petitioner employer to
prepare checks in payment of petitioners obligations, respondent
employees 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 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

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ATTY. ADA D. ABAD
a) gross negligence: connotes want of care in the performance of ones

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 ones 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 latters
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.
CASES:
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ATTY. ADA D. ABAD
IMPORTANT PERALTA CASE ON ABANDONMENT: Concrete Solutions

vs. Cabusas, G.R. No. 177812, 19 June 2013. J. Peralta.
Settled is the rule that mere absence or failure to report for work is not
tantamount to abandonment of work. Even the failure to report for work after
a notice to return to work has been served does not necessarily constitute
abandonment. In fact, when respondent received petitioners' telegram
stating that he was absent without official leave and to notify CSI as soon as
possible, he went to petitioners premises but was refused entry for reason
that he was AWOL.
There is no showing of respondent's intent to sever the employer-employee
relationship. It is also notable that when respondent was refused entry to
petitioners' premises and the letter of former's counsel was refused
acceptance by the latter, there is already constructive dismissal which led
respondent to seek recourse by filing an illegal dismissal case against
petitioners.
Because Cabusas was a project employee, he could not be reinstated
because the project was already completed. However, since he was
terminated PRIOR to the completion of the project, he is entitled to be paid
salaries for the unexpired portion from time of illegal termination to the date of
the completion of the project.
IMPORTANT PERALTA CASE -- MZR Industries vs. Colambot, G.R. No.

179001, 28 August 2013, J. Peralta.
In this case, the company issued a notice of suspension to the employee,
with directive to report to work on a given date. Company claims that it never
heard from employee until company received a subpoena from the NLRC
because employee had already filed a case for illegal dismissal. Employee
on the other hand claims constructive termination, as he was allegedly made
to choose between resigning or termination.
Issues: Whether there was illegal dismissal?
abandonment?
Whether there was
Decision:
There was no illegal dismissal; however, there was no
abandonment either.
1. There was no illegal dismissal; documentary evidence reveals that the
employee was merely suspended with a directive to return to work.
However, employee could not be considered to have abandoned his work
because mere absence is not enough to amount to abandonment, as in
fact, he filed a case a few days after he was supposed to have reported
back to work.
2.
These circumstances, taken together, the lack of

evidence of dismissal and the lack of intent on the part of the
respondent to abandon his work, the remedy is reinstatement
but without backwages.
However, considering that
reinstatement is no longer applicable due to the strained
relationship between the parties and that Colambot already found
another employment, each party must bear his or her own loss,
thus, placing them on equal footing
REMEDY:
IMPORTANT CASE NOT ASKED IN 2012 BAR: Alert Security vs.

Pasawilan et al., G.R. No. 182397, 14 Sept 2011. On the element of
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ATTY. ADA D. ABAD
failure of employees to report to work, the Supreme Court did not accept the
companys 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. Lukes
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 ones
duties. Habitual neglect implies repeated failure to perform ones duties for a
period of time, depending upon the circumstances. A single or isolated act
of negligence does not constitute a just cause for the dismissal of the
employee. 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 Gregorios 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

a) 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.
b) Elements of willful breach of trust leading to loss of trust and
confidence: (1) the breach must be willful and not ordinary breach
[hence, done knowingly and intentionally]; (2) employee holds a position
of trust and confidence; (3) must be in relation to the work performed; and
(4) there must exist substantial evidence, and should not be based on
mere surmises, speculations and conjectures.
c) IMPORTANT CASE: TWO CLASSES OF POSITIONS OF TRUST.
Abelardo Abel vs. Philex Mining Corporation, G.R. No. 178976, 31 July
2009.
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
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ATTY. ADA D. ABAD
routine exercise of their functions, regularly handle significant amounts of

money or property.
As a general rule, employers are allowed a wide latitude of discretion in
terminating the employment of managerial personnel or those who, while
not of similar rank, perform functions which by their nature require the
employers full trust and confidence. Higher standards expected of
management vis ordinary rank-and-file.
d) 2011-2013 CASES: Examples of Position of Trust, Non-Managerial
1. Bus conductor. -- A bus conductor is a position of trust and
confidence, inasmuch as his duties primarily include the collection of
transportation fares, which is the lifeblood of the bus company. His
position is imbued with trust and confidence because it involves
handling of money. Failure to collect proper fare from riding public
constitutes grave offense which justifies dismissal, especially that this
was his third offense. (Mapili vs. Phil. Rabbit Bus Line, G.R. No.
172506, 27 July 2011)
2. Coca Cola Route Salesman. - A route salesman falls under the
second class of position holding trust, inasmuch as he regularly
handled significant amounts of money and property in the normal and
routine exercise of his functions. There was a high degree of trust and
confidence reposed on him so that when this confidence was
breached, the employer was justified in taking the appropriate
disciplinary action. Moreover, the court ruled that Hormillosas act of
tampering sales invoices and issuing one with non-accredited store
could not have been performed without intent and knowledge on his
part; hence the breach of trust was willful. (Hormillosa vs. Coca Cola,
G.R. No. 198699, 09 September 2013).
3. Dining attendant.-- As may be readily gleaned from the records,
Episcope was employed by Philippine Plaza Hotel as a service
attendant in its Caf Plaza. In this regard, she was tasked to attend to
dining guests, handle their bills and receive their payments for
transmittal to the cashier. It is also apparent that whenever discount
cards are presented, she maintained the responsibility to take them to
the cashier for the application of discounts. Being therefore involved in
the handling of company funds, Episcope is undeniably considered an
employee occupying a position of trust and confidence and as such,
was expected to act with utmost honesty and fidelity. In the instant
case, it is clear that Episcope was remiss in her duty to carefully
account for the money she received from the cafe's guests.
(Philippine Plaza Holdings vs. Episcope, G.R. No. 192826, 27 Feb
2013.)
e) Examples of those not considered positions of trust and

confidence. -Inventory comptroller or clerk. An inventory clerk who is not
routinely charged with the care and custody of Century Irons money or
property is not occupying a position of trust and confidence. As such, he
could not be held responsible for the shortages of gas cylinders and
therefore, he cannot be terminated on the ground of loss and trust and
confidence. (Century Iron Works Inc. vs. Baas, G.R. 184116, 19 June
2013.)
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ATTY. ADA D. ABAD
f)
QUESTION: MAY LENGTH OF SERVICE BE USED TO MITIGATE

PENALTY OF DISMISSAL FOR A FIRST TIME-OFFENDER OF AN
INFRACTION INVOLVING LOSS OF TRUST AND CONFIDENCE?
ANSWER: NO. Where the infraction involves dishonesty and
pilferage, length of service is immaterial.
The general rule is that an employee terminated for just causes is not
entitled to separation pay except on grounds of equity and social
justice. Where the dismissal is based on willful breach by the employee
of the trust reposed in him by the employer, the supervisory employee
Moya is outside the protective mantle of the principle of social justice as
his act of concealing the truth from the company4 is a clear disloyalty to
the company which has long employed him. The defense of the
infraction being his first offense, and that he had no willful intention to
conceal the truth or cover up the mistake of his employee, is unavailing.
His length of service should be taken against him. Length of
service is not a bargaining chip that can simply be stacked against
the employer. If an employer has treated his employee well, has
accorded him fairness and adequate compensation as determined by
law, it is only fair to expect a long-time employee to return such fairness
with at least some respect and honesty. (Reynaldo Moya vs. First Solid
Rubber, G.R. No. 184011, 18 September 2013)
To be sure, length of service is taken into consideration in imposing the
penalty to be meted an erring employee. However, the case at bar
involves dishonesty and pilferage by petitioner which resulted in
respondents loss of confidence in him. Unlike other just causes for
dismissal, trust in an employee, once lost is difficult, if not
impossible, to regain. The infraction that she committed, vis--vis her
long years of service with the company, reflects a regrettable lack of
loyalty which ought to have been strengthened, rather than betrayed.
(Bago vs. NLRC, Standard Insurance Co. Inc., G.R. No. 17000, 04 April
2007).
g)
IMPORTANT PERALTA CASES ON TERMINATION OF MANAGERS

g.1) MAY A BANK VALIDLY TERMINATE AN ASSISTANT BANK
MANAGER FOR LOSS OF TRUST AND CONFIDENCE ARISING
FROM GROSS NEGLIGENCE? (De Leon Cruz vs. BPI, G.R. No.
173357, 13 February 2013, J. Peralta).
After 13 years of continuous service, BPI terminated the Assistant Bank
Manager on grounds of gross negligence and breach of trust, for her
failure to verify genuineness of a forged Letter of Instructions allegedly
issued by three depositors, resulting in illegal and spurious withdrawals
on their respective bank accounts.
In that regard, petitioner was remiss in the performance of her duty to
approve the pre-termination of certificates of deposits by legitimate
depositors or their duly-authorized representatives, resulting in prejudice
to the bank, which reimbursed the monetary loss suffered by the affected
clients. Hence, respondent was justified in dismissing petitioner on the
ground of breach of trust. As long as there is some basis for such loss of
confidence, such as when the employer has reasonable ground to
believe that the employee concerned is responsible for the purported
Failure to report five tires damaged as a result of undercuring brought about by negligence of another
employee.
111

ATTY. ADA D. ABAD
misconduct, and the nature of her participation therein renders her

unworthy of the trust and confidence demanded of his position, a
managerial employee may be dismissed.
g.2) MANAGER WHO ALLEGES THAT HE IS MEDICALLY UNFIT TO
RETURN TO WORK AS YET, HAS TO PROVE THE SAME BY
COMPETENT EVIDENCE. FAILURE TO DO SO MAY LEAD TO HIS
VALID TERMINATION. (Wuerth Philippines. Vs Ynson, G.R. No.
175932, 15 Feb 2012. J Peralta).
Respondent alleged in his letters dated July 21, 2003 and August
12, 2003 that he is not capable of returning to work, because he is
still undergoing medications and therapy. However, apart from the
clearance of respondent's doctors allowing him to return to work,
he has failed to provide competent proof that he was actually
undergoing therapy and medications. It is puzzling why despite
respondent's submission that he was still undergoing treatment in
July and August 2003, he failed to submit official receipts showing
the medical expenses incurred and physicians professional fees
paid by reason of such treatment. This casts serious doubt on the
true condition of the respondent during the prolonged period he
was absent from work and investigations, and as to whether he is
still suffering from any form of illness from July to August 2003.
Being the National Sales Manager, respondent should have
reported back to work or attended the investigations conducted by
petitioner immediately upon being permitted to work by his
doctors, knowing that his position remained vacant for a
considerable length of time. During his absence, nobody was
performing the duties of NSM, which included, among others,
supervising and monitoring of respondent's sales area which is
vital to the companys orderly operation and viability. He did not
even show any sincere effort to return to work. Since there is no
more hindrance for him to return to work and attend the
investigations set by petitioner, respondent's failure to do so was
without any valid or justifiable reason. Respondent's conduct
shows his indifference and utter disregard of his work and his
employer's interest, and displays his clear, deliberate, and gross
dereliction of duties.
g.3) MANAGER VALIDLY TERMINATED ON ACCOUNT OF LOSS
OF TRUST AND CONFIDENCE ARISING FROM HUGE BUSINESS
LOSSES DUE TO HER GROSS NEGLIGENCE IN ALLOWING 2,130
PCS OF CHICKEN JOY REJECTS TO BE KEPT INSIDE FREEZER
AND CAUSING FOOD CONTAINATION AND THREAT TO FOOD
SAFETY. (Cecilia Manese vs. Jollibee Foos, G.R. No. 17-454, 11
October 2012., J. Peralta.)
h) IMPORTANT CASE; NOT ASKED IN 2012 AND 2013 BAR: Prudential
Bank vs. Antonio Mauricio et al., GR 183350, 18 Jan 2012.
QUESTION: MAY A MANAGER BE TERMINATED FOR LOSS OF
TRUST AND CONFIDENCE FOR AN ACT WITHIN HIS
DISCRETIONARY POWERS?
112

ATTY. ADA D. ABAD
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.
Managers defense: This was within his discretionary powers. Is
this a valid termination for loss of trust and confidence?
ANSWER: NO. The Supreme Court ruled that on the basis of evidence,
it appears that the managers 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 managers attention to the same. Instead, Prudential continued to
credit the account of the clients for the value of the returned checks.
MAY
THERE
BE
INSUBORDINATION WHEN THE ACT COMPLAINED OF IS
WITHIN THE DISCRETIONARY POWER OF THE MANAGER?
(ePacific Global Contact Center vs. Cabansay, 538 SCRA 498 [23 Nov. 2007];
CONTRA
CASE,
QUESTION:
Emphasis supplied.)
Answer: YES. In this case, a Senior Training Manager was told by her
boss not to hold a presentation and training that day, and to revise the
training program. She emailed him, as follows: This is a very simple
presentation and I will not postpone it. It is very easy to comprehend as
per your instruction, we will be implementing it next week. So when
should we present this to the team leaders? Lets not make simple things
complicated. I will go on with the presentation this afternoon. When
asked to explain the infraction, the manager stated that clearly it was not
my intention to willfully disregard your order because I was thinking it was
for the best of the company. Management did not consider the
explanation as justifiable and terminated her.
The Supreme Court ruled there was valid cause for termination.
[A]lthough 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.
ADAS 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 Managers superior had
already prohibited her from proceeding with the presentation, and she
insisted on continuing the same.
i) QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD IF THE
COMPANY DID NOT SUFFER FROM IT?
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ATTY. ADA D. ABAD
Answer: YES. In the case of Panuncillo vs. CAP, G.R. No. 161305, 09
February 2007 (Carpio-Morales), the employee caused the double sale
of her own childs CAP educational plan to different customers.
Employee argued that she cannot be terminated for loss of trust and
confidence, because CAP was not itself defrauded or been damaged by
her actuations relative to the multiple sale of her childs educational plan
to customers. The Supreme Court ruled that she may still be terminated
for loss of trust and confidence, because deliberate disregard or
disobedience of rules by the employees cannot be countenanced. The
lack of resulting damage was unimportant. xxx. Damage aggravates
the charge but its absence does not mitigate nor negate the
employees liability."
QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD
AND/OR DISHONESTY, EVEN IF HE DID NOT PERSONALLY
BENEFIT FROM IT?
Answer: YES. Pecuniary gain is not a necessary element for
terminations due to loss of trust and confidence. Even the return of
misappropriated funds will not negate valid dismissal for breach of
trust. This Court has held that misappropriation of company funds,
although the shortages had been fully restored, is a valid ground to
terminate the services of an employee of the company for loss of trust
and confidence. (Santos vs. San Miguel Corp., 254 SCRA 673 [1996]).
In the case of Dela Cruz V. Coca-Cola Bottlers (31 July 2009), an
employee was involved in a motor vehicle accident while driving CocaCola vehicle without authorization. He 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 employee (one was a
supervisor) secured a police report and medical certificate omitting any
reference to employee being drunk, for which 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.
See also: Unilever vs. Ma. Ruby Rivera, G.R. No. 201701, 03 June
2013, where Unilevers internal auditor conducted a random audit and
found out that there were fictitious billings and fabricated receipts
supposedly from Ventureslink amounting to P11,200,000.00. It was also
discovered that some funds were diverted from the original intended
projects. Upon further verification, Ventureslink reported that the fund
deviations were upon the instruction of Rivera. The employee admitted
the fund diversion but explained that such actions were mere resourceful
utilization of budget because of the difficulty of procuring funds from the
head office.
Supreme Court decision: In this case, Rivera was dismissed from work
because she intentionally circumvented a strict company policy,
manipulated another entity to carry out her instructions without the
companys knowledge and approval, and directed the diversion of funds,
which she even admitted doing under the guise of shortening the
114

ATTY. ADA D. ABAD
laborious process of securing funds for promotional activities from the

head office. These transgressions were serious offenses that warranted
her dismissal from employment and proved that her termination from work
was for a just cause. Hence, she is not entitled to a separation pay.
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, 2011. -- Petitioner was employed as Assistant VicePresident 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 workconnection 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
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
Conviction of an employee in a criminal case is not indispensable to

warrant his dismissal by his employer (Mercury Drug Corp. vs. NLRC, 177
SCRA 580 [1989], and the fact that a criminal complaint against the
employees has been dropped by the city fiscal is not binding and
conclusive upon a labor tribunal. (Starlight Plastic Industrial
Corporation vs. NLRC, 171 SCRA 315 [1989].) See also: Concepcion vs.
Minex Import Corporation, etc., G.R. No. 153569, 24 January 2012, En
Banc).
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,
115

ATTY. ADA D. ABAD
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 lawyers 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:

1. For valid termination on this ground, the following must be
proven by the employer -a) the union security clause is applicable;
b) the union is requesting for the enforcement of the
union security provision in the CBA; and
c) there is sufficient evidence to support the Unions
decision to expel
the employee from the union or
company. (Inguillo vs. First Philippines Scales, Inc., 588
SCRA 471 [2009]; See also: PICOP Resources, Inc. (PRI) vs.
Anacleto Taneca et. al, G.R. No. 160828, 09 August 2010).
2. May a union member be terminated from employment by the

company upon demand by the incumbent union pursuant to a
union security clause for "acts of disloyalty" for having signed
an authorization letter to file a petition for certification
election in favor of a rival union during the freedom
period while the CBA is still subsisting?
Answer: NO. The mere signing of the authorization in support of the
Petition for Certification Election of FFW on March 19, 20 and 21, or
before the "freedom period," is not sufficient ground to terminate the
employment of respondents inasmuch as the petition itself was
actually filed during the freedom period.
Nothing in the records would show that respondents failed to maintain
their membership in good standing in the Union. Respondents did not
resign or withdraw their membership from the Union to which they
belong. Respondents continued to pay their union dues and never
joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from
the latter's act of signing an authorization letter to file a petition for
certification election as they signed it outside the freedom period.
However, we are constrained to believe that an "authorization letter to
file a petition for certification election" is different from an actual
"Petition for Certification Election." Likewise, as per records, it was
clear that the actual Petition for Certification Election of FFW was filed
only on May 18, 2000. Thus, it was within the ambit of the freedom
period which commenced from March 21, 2000 until May 21, 2000.
116

ATTY. ADA D. ABAD
Strictly speaking, what is prohibited is the filing of a petition for

certification election outside the 60-day freedom period. This is not the
situation in this case. If at all, the signing of the authorization to file a
certification election was merely preparatory to the filing of the petition
for certification election, or an exercise of respondents right to selforganization. (PICOP Resources, Inc. vs. Tanega, et al., G.R. No. 160828,
09 August 2010).
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)
3.2
INSTALLATION OF LABOR SAVING DEVICES (sepn pay: 1

mo/yr of service)
3.3
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.
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.
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:
See: Sebuguero vs. NLRC, 248 SCRA 533 [1995].

San Pedro Hospital of Digos, Inc. vs. Secretary of Labor, 263 SCRA 98 [1996].
7
Guerrero vs. NLRC, 261 SCRA 301 [1996]
117
6

ATTY. ADA D. ABAD
a)
The losses expected should be substantial and not merely de
minimis in extent. -b)
The substantial losses apprehended must be reasonably
imminent;
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 Arbiters 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 employers allegations of the cause of termination.
In this case, Asiakonstruct proferred no explanation behind the belated
submission. Moreover, the financial statements covering period 19982000 was prepared only in 2001 which begs the question of how the
management knew at such date of the companys huge losses to justify
Anabes 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.
3.4 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.9
8
9
San Miguel Jeepney Services vs. NLRC, 265 SCRA 35 [1996]

Wiltshire File Co. Inc. vs. NLRC, G.R. No. 82249 [07 February 1991].
118

ATTY. ADA D. ABAD
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, 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
employees services are still needed or sustainable properly belongs to
the employer. Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the soundness
or wisdom of this exercise of business judgment is not subject to the
discretionary review of the Labor Arbiter and the NLRC.
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 petitioners termination.
The notice of termination was also not properly served on the
petitioner. Further, a reading of the notice shows that respondentcompany 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 employees 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.
3.5
CESSATION OR CLOSURE OF EMPLOYERS BUSINESS (1/2

month pay for every year of service)
a. Angeles vs. Polytex Design, 536 SCRA 159 [Oct 2007]). -- An
employer is not prevented from exercising its prerogatives to close shop
119

ATTY. ADA D. ABAD
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.
b. Dismissal; closure of business in bad faith. Peafrancia 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.
c. IMPORTANT PERALTA CASE ON GUIDELINES IN CLOSURE
OF BUSINESS:
The Supreme Court made the following summary of principles and
guidelines in the case of Manila Polo Club Employees Union (MPCEUFUR-TUCP) vs. Manila Polo Club, G.R. No. 172846, 24 July 2013, as
follows:
1. Closure or cessation of operations of establishment or
undertaking may either be partial or total.
2. Closure or cessation of operations of establishment or
undertaking may or may not be due to serious business losses
or financial reverses. However, in both instances, proof must be
shown that: (1) it was done in good faith to advance the
employer's interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid
agreement; and (2) a written notice on the affected employees
and the DOLE is served at least one month before the intended
date of termination of employment.
3. The employer can lawfully close shop even if not due to serious
business losses or financial reverses but separation pay, which
is equivalent to at least one month pay as provided for by
Article 283 of the Labor Code, as amended, must be given to
all the affected employees.
4. If the closure or cessation of operations of establishment or
undertaking is due to serious business losses or financial
reverses, the employer must prove such allegation in order to
avoid the payment of separation pay. Otherwise, the affected
employees are entitled to separation pay.
5. The burden of proving compliance with all the above-stated falls
upon the employer.
Guided by the foregoing, the Court shall refuse to dwell on the issue of
whether respondent was in sound financial condition when it resolved to
120

ATTY. ADA D. ABAD
stop the operations of its F & B Department. As stated, an employer can

lawfully close shop anytime even if not due to serious business losses or
financial reverses. Furthermore, the issue would entail an inquiry into the
factual veracity of the evidence presented by the parties, the
determination of which is not Our statutory function. Indeed, petitioner is
asking Us to sift through the evidence on record and pass upon whether
respondent had, in truth and in fact, suffered from serious business
losses or financial reverses.
WHERE CLOSURE IS DONE IN BAD FAITH;

Doctrine of piercing veil of corporate fiction used. (Eric Godfrey
d.
2014 CASE:
Stanley Livesey vs. Binswanger Philippines, Inc. And Keith Elliot, G.R No.
177493, 19 March 2014. J. Brion).
Where a new corporation is formed and used for a non-legitimate purpose
(viz., evasion of a just and due obligation of the old corporation to pay its
employee Livesey his monetary entitlements under a compromise
agreement), then the wrongful intent should not be condoned. The new
corporation should be held liable for the closed corporations unfulfilled
obligations to the latters employee Livesey.
It has long been settled that the law vests a corporation with a personality
distinct and separate from its stockholders or members. In the same
vein, a corporation, by legal fiction and convenience, is an entity shielded
by a protective mantle and imbued by law with a character alien to the
persons comprising it. Nonetheless, the shield is not at all times
impenetrable and cannot be extended to a point beyond its reason
and policy. Circumstances might deny a claim for corporate
personality, under the doctrine of piercing the veil of corporate
fiction.
Piercing the veil of corporate fiction is an equitable doctrine developed to
address situations where the separate corporate personality of a
corporation is abused or used for wrongful purposes.44 Under the
doctrine, the corporate existence may be disregarded where the entity is
formed or used for nonlegitimate purposes, such as to evade a just and
due obligation, or to justify a wrong, to shield or perpetrate fraud or to
carry out similar or inequitable considerations, other unjustifiable aims or
intentions, in which case, the fiction will be disregarded and the
individuals composing it and the two corporations will be treated as
identical.
In the present case, we see an indubitable link between CBBs
closure and Binswangers incorporation. CBB ceased to exist only
in name; it reemerged in the person of Binswanger for an urgent
purpose to avoid payment by CBB of the last two installments of
its monetary obligation to Livesey, as well as its other financial
liabilities. Freed of CBBs liabilities, especially that owing to
Livesey, Binswanger can continue, as it did continue, CBBs real
estate brokerage business.
3.6
2013 CASE: TEMPORARY SUSPENSION OF OPERATIONS (ART.

286, LABOR CODE).
The bona fide suspension of operations of a business or undertaking for a
period not exceeding six (6) months or the fulfillment by employee of
military or civic duty shall not terminate employment.
121

ATTY. ADA D. ABAD
Employer may validly suspend operations for a period not exceeding 6

months, as in this case, where a fire caused the total destruction of the
company premises and company incurred in damage amouting to P22
Million. Employees are on no-work, no-pay during this 6-month period.
However, at the end of the said 6-month period, the employer is obliged
to recall employees back to work. Failing such, the employees are
deemed to been constructively dismissed, for which reason they are thus
entitled to payment of separation pay in accordance with law. (See: SKM
Arts vs. Bauca, G.R. No. 171272,17 November 2013.)
2013 BAR EXAM MCQ ON TERMINATION DUE TO CLOSURE:
After vainly struggling to stay financially afloat for a year, LMN Corp.
finally gave up and closed down its operations after its major creditors
filed a petition for LMN's insolvency and liquidation. In this situation,
LMN's employees are entitled to _________ as separation pay. (1%)
(A) one-half month pay for every year of service
(B) one month pay for every year of service
(C) one-half month pay
(D) one month pay
(E) no separation pay at all
4.
IMPORTANT PERALTA CASE: ON CONTRUCTIVE DISMISSAL

RESIGNATION. Gan vs. Galderma Phils. G.R. No. 177167, 17 January 2013
4.1
VS.
Constructive dismissal is defined as quitting or cessation of work

because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution of pay and other
benefits. It exists if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego
his continued employment. There is involuntary resignation due to the
harsh, hostile, and unfavorable conditions set by the employer. The test of
constructive dismissal is whether a reasonable person in the employee's
position would have felt compelled to give up his employment/position
under the circumstances.
4.2 On the other hand, resignation is the voluntary act of an employee who is
in a situation where one believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, and one has no other
choice but to dissociate oneself from employment. It is a formal
pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment. As the
intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be
considered in determining whether he or she, in fact, intended to sever his
or her employment.
4.3
Burden of proof upon the employee who resigned, to prove that

it was NOT voluntary but forced upon him.
Since Gan submitted a resignation letter, it is incumbent upon him to prove
with clear, positive, and convincing evidence that his resignation was not
voluntary but was actually a case of constructive dismissal; that it is a
product of coercion or intimidation. He has to prove his allegations with
particularity.
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ATTY. ADA D. ABAD
Gan could not have been coerced. Coercion exists when there is a
reasonable or well-grounded fear of an imminent evil upon a person or his
property or upon the person or property of his spouse, descendants or
ascendants. Neither do the facts of this case disclose that Gan was
intimidated.
What the records of this case reveal is that Gan deliberately wrote and filed
a resignation letter that is couched in a clear, concise, and categorical
language. Its content confirmed his unmistakable intent to resign. He was a
managerial employee holding a responsible position and receiving more
than the mandated minimum wage. At the time he resigned, he had more
than a decade of experience in sales and marketing with expertise in
product management. Indeed, it would be absurd to assume that he did not
understand the full import of the words he used in his resignation letter and
the consequences of executing the same. (Gan vs. Galderma Phils. G.R.
No. 177167, 17 January 2013, J. Peralta).
4.4 In cases of voluntary resignation, where it is once accepted by the

employer, cannot be withdrawn without the consent of the employer.
(Intertrod Maritime, Inc. vs. NLRC, 198 SCRA 318 [1991]).
4.5 General rule: An employee who voluntarily resigns is not entitled to
separation pay.
Exception: Unless stipulated in an employment contract or CBA or
sanctioned by established employer practice or policy.
(CJC Trading, Inc. vs. NLRC, 246 SCRA 724 [1995]; Alfaro vs.
Court of Appeals, 363 SCRA 799 [2001]).
5. 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.
EXCEPTION: If no due process but with just cause, then Agabon

ruling to apply.
The denial of the fundamental right to due process being apparent, the
dismissal order in disregard of that right is void for lack of jurisdiction.
The cardinal precept is that where there is a violation of basic
constitutional rights, courts are ousted from their jurisdiction. The
violation of a partys right to due process raises a serious jurisdictional
issue which cannot be glossed over or disregarded at all. It is well
settled that a decision rendered without due process is void ab
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ATTY. ADA D. ABAD
initio and may be attacked at any time directly or collaterally be

means of a separate action, or by resisting such decision in any
action or proceeding where is it invoked. (Salva vs. Valle, G.R. No.
193773, 02 April 2013; En Banc, citations omitted.)
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 attorneys 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 noncompliance with due process requirements, the newest Supreme Court
ruling circa November 2004 is that the employer shall be sanctioned with
penalty of 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 P30,000.00-50,000.00 (see discussion on
difference below). 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.
4.1
Difference in separation pay.-- (Jaka Food Processing v. Pacot,

G.R. No. 151378; 28 March 2005)
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ATTY. ADA D. ABAD
If the dismissal is based on a just cause under Article 282 but the
employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because
the dismissal process was, in effect, initiated by an act imputable
to the employee. Hence: P30,000.00 nominal damages for
non-compliance with due process, because employee has
committed a wrongoing
On the other hand, if the dismissal is based on an authorized

cause under Article 283 but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employers exercise of his
management prerogative.
Hence, P50,000.00 nominal
damages for non-compliance with due process, because
employee did not commit any wrongdoing either.
5. Should employee seek damages on this account, may file with regular court.
[Governed exclusively by the Civil Code. (Shoemart vs. NLRC, supra.)]
6. ON NOTICE AND HEARING

Dept. Order No. 10, Article V; IRR B5 R14 S1-11
6.1 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])
QUESTION:
HOW
SPECIFIC
SHOULD
THE
CAUSE/CHARGE SHEET (PLEASE EXPLAIN MEMO) BE?
SHOW
Answer: It should be specific enough to allow the employee to be

informed of the charges against her.
Hence, in the case of Unilever vs. Ma. Ruby Rivera (ibid., G.R.
201701, 03 June 2013) where the Supreme Court found that there
were valid grounds to terminate her from employment, the Court still
awarded nominal damages to the employee for failure of the employer
Unilever to comply with the procedural requirements of due process.
Thus:
In this case, Unilever was not direct and specific in its
first notice to Rivera. The words it used were couched
in general terms and were in noway informative of the
charges against her that may result in her dismissal
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ATTY. ADA D. ABAD
from employment. Evidently, there was a violation of

her right to statutory due process warranting the
payment of indemnity in the form of nominal damages.
QUESTION: Is the employer required to inform the employee in
the appraisal/charge sheet that he may be terminated for the
infraction?
ANSWER: NO. Contrary to Esguerras allegation, the law does not
require that an intention to terminate ones employment should be
included in the first notice. It is enough that employees are properly
apprised of the charges brought against them so they can properly
prepare their defenses; it is only during the second notice that
the intention to terminate ones employment should be

explicitly stated. Dolores T. Esguerra vs. Valle Verde Country
Club et. al., G.R. No. 173012, 13 June 2012
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.)
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.
6.2 HEARING:
The existence of a formal trial-type hearing, ALTHOUGH PREFERRED, is
NOT absolutely necessary to satisfy an employees right to be heard.
(Esguerra vs. Valle Verde Country Club, 672 SCRA 177 [2012]). - 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.
6.3 Right to counsel on the part of the employee is this mandatory and
indispensable as part of due process?
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ATTY. ADA D. ABAD
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.
7. 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 employees 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 coconspirators confession must be corroborated by other competent and
convincing evidence.
8. 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 options in the alternative,
the employer must pay the employees salaries.
ADAS NOTE: Situation: Labor Arbiter dismisses complaint and rules that
dismissal is valid, but NLRC reverses on appeal and rules that there is illegal
termination, with reinstatement and backwages. Note that in this instance,
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
127

ATTY. ADA D. ABAD
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 Arbiters 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 employers unjustified act
or omission. (ibid.)
2013 BAR PROBLEM ON REINSTATEMENT PENDING APPEAL:

Bobby, who was assigned as company branch accountant in Tarlac where his
family also lives, was dismissed by Theta Company after anomalies in the
company's accounts were discovered in the branch. Bobby filed a complaint and
was ordered reinstated with full backwages after the Labor Arbiter found that he
had been denied due process because no investigation actually took place.
Theta Company appealed to the National Labor Relations Commission (NLRC)
and at the same time wrote Bobby, advising him to report to the main company
office in Makati where he would be reinstated pending appeal. Bobby refused to
comply with his new assignment because Makati is very far from Tarlac and he
cannot bring his family to live with him due to the higher cost of living in Makati.
QUESTION: Is Bobby's reinstatement pending appeal legally correct? (4%)
ANSWER: No. It is not legally correct. The transfer of an employee ordinarily
lies within the ambit of management prerogatives. But like other rights, there are
limits thereto. This managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion, bearing in mind the basic elements
of justice and fair play. Thus, the transfer of Bobby from Tarlac to Makati must
be done in good faith, and it must not be unreasonable, inconvenient or
prejudicial to the employee. For another, the reinstatement of Bobby ought to be
to his former position, much akin to a return to work order, i.e., to restore the
status quo in the work place. (Composite Enterprises vs. Capamaroso, 529
SCRA 470 [2007].)
QUESTION: Advise Bobby on the best course of action to take under the
circumstances. (4%)
ANSWER: The best course of action for Bobby to take under the circumstances
is to allege Constructive Dismissal in the same case, and pray for Separation
Pay in lieu of reinstatement.
9. LIABILITY OF CORPORATE OFFICERS IS JOINT, UNLESS THERE IS
AN EXPRESS PRONOUNCEMENT OF SOLIDARY LIABILITY

128

ATTY. ADA D. ABAD
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.
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 Intl.
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 Arbtiers
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.)
10. ON BACKWAGES
10.1 FULL 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
129

ATTY. ADA D. ABAD
backwages of illegally dismissed workers to three (3) years without

deduction or qualification, is no longer applicable. (Ferrer vs. NLRC)
10.2 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)
10.3 QUESTION: CAN YOU DEDUCT SALARIES EARNED BY EMPLOYEE
FROM ANOTHER EMPLOYER DURING THE PENDENCY OF THE
CASE?
ANSWER: NO. 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)
10.4 IMPORTANT PERALTA CASE CLARIFYING FULL BACKWAGES:
Nacar vs. Gallery Frames, G.R. No. 189871, 13 August 2013, J. Peralta.
Labor Arbiter ruled for illegal termination, and ordered payment of
backwages and separation pay. Gallery Frames appealed all the way to
Supreme Court, which affirmed the decision of the Labor Arbiter. Upon
finality of decision, complainant Nacar moved for recomputation of
backwages up to the finality of SC judgment. Labor Arbiter refused,
stating that the computation of backwages is only up to the time of the
Labor Arbiters decision because Nacar did NOT appeal and hence, as to
Nacar, the decision has become final and executor.
Question: Did the Labor Arbiter err in not recomputing backwages all the
way to finality of SC decision?
Answer: YES, Labor Arbiters position is very incorrect.
By the nature of an illegal dismissal case, the reliefs continue to add up
until full satisfaction, as expressed under Article 279 of the Labor Code.
The recomputation of the consequences of illegal dismissal upon
execution of the decision does not constitute an alteration or amendment
of the final decision being implemented. The illegal dismissal ruling
stands; only the computation of monetary consequences of this dismissal
is affected, and this is not a violation of the principle of immutability of
final judgments.
There are two parts of a decision when it comes to illegal dismissal cases
(referring to cases where the dismissed employee wins, or loses but wins
on appeal). The first part is the ruling that the employee was illegally
dismissed. This is immediately final even if the employer appeals but
will be reversed if employer wins on appeal. The second part is the ruling
on the award of backwages and/or separation pay. For backwages, it will
be computed from the date of illegal dismissal until the date of the
decision of the Labor Arbiter. But if the employer appeals, then the end
date shall be extended until the day when the appellate courts
decision shall become final.
That the amount respondents shall now pay has greatly increased is a
consequence that it cannot avoid as it is the risk that it ran when it
continued to seek recourses against the Labor Arbiters decision. Article
279 provides for the consequences of illegal dismissal in no uncertain
terms, qualified only by jurisprudence in its interpretation of when
130

ATTY. ADA D. ABAD
separation pay in lieu of reinstatement is allowed. When that happens,

the finality of the illegal dismissal decision becomes the reckoning point
instead of the reinstatement that the law decrees. In allowing separation
pay, the final decision effectively declares that the employment
relationship ended so that separation pay and backwages are to be
computed up to that point.
11. ATTORNEYS FEES, TWO CONCEPTS: (Tangga-an vs. Phil. Transmarin Carriers,
Inc., et. al., G.R. No. 180636, 13 March 2013.)
a) Ordinary concept
An attorneys fee is the reasonable compensation paid to a lawyer by his
client for the legal services the former renders; compensation is paid for the
cost and/or results of legal services per agreement or as may be assessed.
b) Extra-ordinary concept
Attorneys fees are deemed indemnity for damages ordered by the court to
be paid by the losing party to the winning party.
In Article 2208 of the Civil Code on actions for recovery of wages, it is
payable not to the lawyer but to the client, unless there is an agreement
between them to the contrary.
Article III of the Labor Code is an exception to the declared policy of strict
construction in the award of attorneys fees. Although an express finding of
facts and law is still necessary to prove the merit of the award, there need
not be any showing that the employer acted maliciously or in bad faith when
it withhold the wages.
Hence, as a result of illegal dismissal, wages are withheld without valid and
legal basis. Consequently, complainant is entitled to an award of attorneys
fees in his favor.
2013 CASE: Czarina Malvar s. Krafts Foods Phils, G.R. No. 183952, 09
September 2013.
QUESTION:
MAY
THE
COMPLAINANTS
LAWYER
(JUSTICE
BELLOSILLO), WHO HAD ACCEPTED THE CASE ON CONTINGENCY
BASIS BUT WAS TERMINATED PRIOR TO THE SETTLEMENT OF THE
CASE, MAY STILL CLAIM ATTORNEYS FEES?
Case for lawyer:
It was certain that the compromise agreement was
authoried by respondents to evade a possible loss of P182 Million or more as a
result of the labor litigation. As counsel, he did everything legally possible to
serve and protet her interest.
Case for client: No such intention to defraud intervenor of his professional
fees. However, the law firm had already ceased after a partner resigned and
another partner was appointed to a government position.
Supreme Court: For lawyer (Ret. Justice Bellosillo). Intervenor lawyer is still
entitled to recover from the Petitioner the full comopensation he deserves as
131

ATTY. ADA D. ABAD
stipulated in the contract. Note that all the elements for full recovery of the
INtervenors compensation are present:
Contract between intervenor lawyer and client was reduced in writing

Intervenor was dismissed without justifiable cause, and at that stage of
proceedings where there is NOTHING left to be done but to await the
Decision or Resolution of the case.
It is basic that an attorney is entitled to have and receive a just and reasonable
compensation for services performed at the special instance and request of his
client. The attorney who had acted in good faith and honesty in representing
and serving the interests of the client should be reasonably compensated for
his service.
M. MIGRANT WORKERS, ILLEGAL RECRUITMENT

AND COMPENSABILITY OF DISABILITY
1. On liability of recruitment agency; theory of imputed knowledge, when it can
bind the agency vis--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.
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 Divinas 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-ays 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.
Illness; when deemed pre-existing and not compensable. Jerry M.

Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza,
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ATTY. ADA D. ABAD
and Fred Olsen Cruise Lines, Ltd., G.R. No. 190545, November 22, 2010. -Petitioners 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,
petitioners 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
seafarers work must involve the risks described in the POEA-SEC; 2.) The
disease was contracted as a result of the seafarers 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.
IMPORTANT PERALTA CASE: Where death was due to willful act of the
OFW even if arising out of alleged mental illness, then this is NOT
compensable. (Crewlink vs. Editha Teringterring, G.R. No. 166803, 11
October 2012, J. Peralta).
Petitioner Crewlink alleged that sometime on April 9, 2001, around 8:20

p.m. while at on board the ship, Jacinto Teringtering suddenly jumped
into the sea, but the second engineer was able to recover him. Because
of said incident, one personnel was directed to watch Jacinto. However,
around 10:30 p.m., while the boat dropped anchor south of the ship and
went on standby, Jacinto jumped off the boat again. Watchman
reported that Jacinto was recovered but despite efforts to revive him, he
was already dead from drowning.
Respondent claimed that her husband's death to be compensable, as it
is enough that he died during the term of his contract and while still on
board. Respondent asserted that Jacinto was suffering from a psychotic
disorder, or Mood Disorder Bipolar Type, which resulted to his jumping
into the sea and his eventual death. Respondent further asserted that
her husbands death was not deliberate and not of his own will,
but was a result of a mental disorder, thus, compensable.
In the instant case, petitioner was able to substantially prove that
Jacinto's death was attributable to his deliberate act of killing
himself by jumping into the sea. Meanwhile, respondent, other than
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ATTY. ADA D. ABAD
her bare allegation that her husband was suffering from a mental
disorder, no evidence, witness, or any medical report was given to
support her claim of Jacinto's insanity. The record does not even show
when the alleged insanity of Jacinto did start. Homesickness and/or
family problems may result to depression, but the same does not
necessarily equate to mental disorder. The issue of insanity is a
question of fact; for insanity is a condition of the mind not
susceptible of the usual means of proof.
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 Ships Management and Intermare
Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011.
Petitioner Yap was employed as an electrician for respondents vessel under a 12month 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 petitioners right to equal
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ATTY. ADA D. ABAD
protection, but also his right to substantive due process under Section 1, Article III
of the Constitution.
4.1
5.
Doctrine of Operative Fact; not applied as a matter of equity and fair

play. Yap vs. Thenamaris Ships 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 and other OFWs, and would,
in effect, send a wrong signal that principals/employers and
recruitment/manning agencies may violate an OFWs security of tenure which
an employment contract embodies and actually profit from such violation
based on an unconstitutional provision of law.
IMPORTANT 2013 PERALTA CASE ON DISABILITY BENEFITS. Distinction of

Supreme Court rulings on whether independent physicians opinion or
company physicians opinion will be upheld as to work-related disability
benefits. (Nazareno vs. Maersk Filipinas, G.R. No. 168703, 26 February 2013, J.
Peralta).
Principle: Giving of disability benefits to Filipino seafarers is in keeping with the
avowed policy of the State to give maximum aid and full protection to labor, holding
that the notion of disability is intimately related to the workers capacity to earn, and
what is compensated is the employees inability to work resulting in the impairment of
his earning capacity. Disability should be understood less on its medical significance
but more on the loss of earning capacity. Further, the Court held that where the
evidence may be reasonably interpreted in two divergent ways, one prejudicial
and the other favorable to the employee, the balance must be titled in favor of
the employee, consistent with the principle of social justice.
General rule in seafarers disability claims: The company-designated physician
initially determines compensability.
However, the seafarer may dispute such an assessment by seasonably exercising
his prerogative to seek a second opinion and consult a doctor of his choice. (Millan
vs. Wallan Maritime Services, Inc. 685 SCRA [2012])
If the independent doctor appointed by the seafarer disagrees with the
findings of the company-designated doctor, a third doctor may be agreed
jointly between the Employer and the seafarer.
The third doctors decision shall be final and binding on both parties
In such instance, the independent doctors evaluations confirming payment for workrelated injuries will be upheld in cases where their findings contradict the diagnosis of
the company-designated physician. PROVIDED, That employee timely questioned
the competence of the company-designated physician by immediately consulting two
independent doctors. (Nazareno vs. Maersk Filipinas, G.R. No. 168703, 26 February
2013, J. Peralta).
When the company-designated physicians opinion vis--vis the contrary
opinion of independent doctors will be upheld by the Supreme Court. -- Where
it appears that the seafarer failed to follow the procedure outlined in the Standard
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ATTY. ADA D. ABAD
Employment Contract (SEC) he signed, and said seafarer NEVER questioned the
company-designated doctors competence until he filed a petition with the courts. On
the contrary, he accepted the company doctors assessment of his fitness and even
executed a certification to this effect (Vergara vs. Hammonia Maritime Services, Inc.
[G.R. No. 172933, 06 October 2008], cited in Nazareno vs. Maersk Filipinas, G.R.
No. 168703, 26 February 2013, J. Peralta).
6. GUIDELINES IN DISABILITY CLAIMS:

The liabilities of the employer when the seafarer suffers work-related injury or
illness during the term of his contract are as follows:
1. The employer shall continue to pay the seafarer his wages during
the time he is on board the vessel;
2. If the injury or illness requires medical and/or dental treatment in a
foreign port, the employer shall be liable for the full cost of such
medical, serious dental, surgical and hospital treatment as well as
board and lodging until the seafarer is declared fit to work or to
repatriated.
3. Upon sign-off from the vessel for medical treatment, the seafarer is
entitled to sickness allowance equivalent to his basic wage until
he is declared fit to work or the degree of permanent disability has
been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a postemployment medical examination by a company-designated
physician within three working days upon his return except
when he is physically incapacitated to do so, in which case, a
written notice to the agency within the same period is deemed as
compliance. Failure of the seafarer to comply with the
mandatory reporting requirement shall result in his forfeiture
of the right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the
assessment, a third doctor may be agreed jointly between the
Employer and the seafarer. The third doctors decision shall be
final and binding on both parties.
4. Those illnesses not listed in Section 32 of this Contract are
disputably presumed as work related.
5. Upon sign-off of the seafarer from the vessel for medical
treatment, the employer shall bear the full cost of repatriation in
the event the seafarer is declared (1) fit for repatriation; or (2) fit to
work but the employer is unable to find employment for the
seafarer on board his former vessel or another vessel of the
employer despite earnest efforts.
6. In case of permanent total or partial disability of the seafarer
caused by either injury or illness the seafarer shall be compensated
in accordance with the schedule of benefits arising from an illness
or disease shall be governed by the rates and the rules of
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ATTY. ADA D. ABAD
compensation applicable at the time the illness or disease was

contracted.
2013 BAR EXAM PROBLEM ON DISABILITY CLAIMS; PROCEDURE

For ten (10) separate but consecutive yearly contracts, Cesar has been deployed as
an able-bodied seaman by Meritt Shipping, through its local agent, Ace Maritime
Services (agency), in accordance with the 2000Philippine Overseas Employment
Administration Standard Employment Contract (2000 POEA-SEC). Cesar's
employment was also covered by a CBA between the union, AMOSl.JP, and Meritt
Shipping. Both the 2000 POEA-SEC and the CBA commonly provide the same mode
and procedures for claiming disability benefits. Cesar's last contract (for nine
months) expired on July 15, 2013.
Cesar disembarked from the vessel M/V Seven Seas on July 16, 2013as a seaman
on "finished contract". He immediately reported to the agency and complained that
he had been experiencing spells of dizziness, nausea, general weakness, and
difficulty in breathing. The agency referred him to Dr. Sales, a cardio-pulmonary
specialist, who examined and treated him; advised him to take a complete rest for a
while; gave him medications; and declared him fit to resume work as a seaman.
After a month, Cesar went back to the agency to ask for re-deployment. The agency
rejected his application. Cesar responded by demanding total disability benefits
based on the ailments that he developed and suffered while on board Meritt Shipping
vessels. The claim was based on the certification of his physician (internist Dr.
Reyes) that he could no longer undertake sea duties because of the hypertension
and diabetes that afflicted him while serving on Meritt Shipping vessels in the last 10
years. Rejected once again, Cesar filed a complaint for illegal dismissal and the
payment of total permanent disability benefits against the agency and its principal.
QUESTION: Assume that you are the Labor Arbiter deciding the case. Identify the
facts and issues you would consider material in resolving the illegal dismissal and
disability complaint. Explain your choices and their materiality, and resolve the case.
(8%)
ANSWER:
1. Did Cesar submit to a post-employment examination within 3 days upon his
return? This is a mandatory requirement; otherwise, Cesar will forfeit his right to
claim benefits.
2, Is Dr. Sales the company-designated physician? The company-designated
physician is the one who initially determines compensability.
3. Was Cesar assessed by Dr. Sales (if he is the company physician) within 120
days?
4.
If the 120 days was exceeded and no declaration was made as to Cesars
disability, was this extended to 240 days because Cesar required further medical
treatment?
5. Was the 240 days exceeded and still no final decision was reached as to Cesars
disability? If so, Cesar is deemed entitled to permanent total disability benefits.
6.
If the companys physician and Cesars physician cannot agree, was a third
physician designated to determine the nature and extent of the disability. The
third physicians finding under the law is final and conclusive.
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ATTY. ADA D. ABAD
7. In the matter of the complaint of illegal dismissal: There is none because Cesar
disembarked on finished contract.
8. Seafarers are contractual employees, for a fixed term, governed by the contract
they sign; an exception to Article 80 of the Labor Code. Hence, the complaint for
illegal dismissal will not prosper.
5.
RECRUITMENT AND PLACEMENT

5.1 DISTINCTION BETWEEN LICENSE AND AUTHORITY:
LICENSE
means a document issued by the Department of Labor,
authorizing a person or entity to operate a private employment agency.
AUTHORITY means a document issued by the Department of Labor,
authorizing a person or association to engage in recruitment and placement
activities as a private recruitment entity.
5.2
DISTINCTION BETWEEN PRIVATE EMPLOYMENT AGENCY VS.

PRIVATE RECRUITMENT AGENCY VS. SHIPPING OR MANNING
AGENCY
PRIVATE EMPLOYMENT AGENCY: Refers to any person or entity engaged
in the recruitment and placement of workers FOR A FEE, which is charged
directly or indirectly, from the workers, or employers, or both.
A licensed employment agency may charge and collect fees
for employment assistance if the worker has obtained
employment through the agency's efforts.
PRIVATE RECRUITMENT AGENCY: Refers to any person or entity engaged
in the recruitment and placement of workers, locally or overseas, WITHOUT
CHARGING ANY FEE directly or indirectly, from the workers, or employers.
Submission by Private Recruitment agency of a VERIFIED
UNDERTAKING to the POEA that it will assume JOINT AND
SOLIDARY LIABILITY with the employer for all claims and
liabilities which might arise in connection with the
implementation of employment
MANNING OR SHIPPING AGENCY: Refers to any person, partnership or
corporation duly licensed by DOLE to recruit seafarers for vessels plying
international waters and for related maritime actvities.
5.3 TYPES OF ILLEGAL RECRUITMENT

SIMPLE (BY LICENSEE): illegal recruitment committed by a licensee or
holder of authority against one or two persons only if they commit any of
the acts enumerated under Section 6 of Republic Act No. 8042.
NON-LICENSEE: committed by a person who has neither a license nor
authority.
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ATTY. ADA D. ABAD
SYNDICATED: that carried out by a group of three (3) or more persons in

conspiracy or confederation with one another.
LARGE SCALE or qualified: that committed against 3 or more persons,
individually or as a group.
5.4
ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE, if any of the

qualifying circumstances exist or when committed:
BY A SYNDICATE If it is carried out by a group of 3 or more persons

conspiring and/or confederating with one another;
IN LARGE SCALE If it is committed against 3 or more persons

individually or as a group.
5.5 ILLEGAL RECRUITMENT; elements: People of the Philippines vs.

Teresita Tessie Laogo, G.R. No. 176264, 10 January 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.
5.6 Illegal recruitment as distinguished from estafa

A person convicted for illegal recruitment under Labor Code can be
convicted for violation of the Revised Penal Code provisions on estafa
provided the elements of the crime are present.
Estafa under Article 315, par.2 of the RPC is committed by any person who
defrauds another by using fictitious name, or falsely pretends to possess
power, influence, qualifications, property, credit, agency, business or
imaginary transactions, or by means of similar deceits executed prior to or
simultaneously with the commission of the fraud.
The offended party must have relied on the false pretense, fraudulent act or
fraudulent means of the accused-appellant and as a result thereof, the
offended party suffered damages.
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ATTY. ADA D. ABAD
5.7 Persons criminally liable for the above offenses: [R.A. 10022, Sec.4]
Individuals: principals, accomplices and accessories.
Juridical Persons: the officers having ownership, control, management

or direction of their business that are responsible for the commission of
the offense and the responsible employees/agents thereof shall be liable.
Where illegal recruitment is proved but the elements of large scale or

syndicate are absent, the accused can be convicted only of simple
illegal recruitment. (People v. Sagun, G.R. No. 110554, 19 February
1999)
5.8 Nature of liability of local recruitment agency vs. foreign principal:
Local Agency is solidarily liable with foreign principal.

Severance of relations between local agent and foreign principal does not
affect liability of local recruiter.
5.9 IMPORTANT PERALTA CASE: BRIGHT MARITIME CORPORATION VS.

FANTONIAL, G.R. No. 165935, 08 February 2012
Contract of Employment was executed by petitioner Bright Maritime
Corporation (BMC) and respondent Ricardo B. Fantonial, which contract was
verified and approved by the Philippine Overseas Employment Administration
(POEA) on January 17, 2000. The employment contract provided that
respondent shall be employed as boatswain of the foreign vessel M/V AUK
for one year, with a basic monthly salary of US$450, plus an allowance of
US$220. Respondent was made to undergo a medical examination and was
issued a Medical Certificate dated January 17, 2000, which certificate had the
phrase FIT TO WORK stamped on its lower and upper portion. However,
he was never deployed because the company said he was not fit to work.
Question: Was the contract of employment perfected?
Answer:
YES. An employment contract, like any other contract, is
perfected at the moment (1) the parties come to agree upon its terms;
and (2) concur in the essential elements thereof: (a) consent of the
contracting parties, (b) object certain which is the subject matter of the
contract, and (c) cause of the obligation. The object of the contract was
the rendition of service by respondent on board the vessel for which
service he would be paid the salary agreed upon.
Hence, in this case, the employment contract was perfected on
January 15, 2000 when it was signed by the parties, respondent and
petitioners, who entered into the contract in behalf of their principal,
Ranger Marine S.A., thereby signifying their consent to the terms and
conditions of employment embodied in the contract, and the contract
was approved by the POEA on January 17, 2000.
However, the employment contract did not commence, since
petitioners did not allow respondent to leave on January 17, 2000 to
embark the vessel M/V AUK in Germany on the ground that he was not
yet declared fit to work on the day of departure, although his Medical
Certificate dated January 17, 2000 proved that respondent was fit to
work. Note that petitioners failed to prove with substantial evidence
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ATTY. ADA D. ABAD
that they had a valid ground to prevent respondent from leaving on the
scheduled date of his deployment. While the POEA Standard Contract
must be recognized and respected, neither the manning agent nor the
employer can simply prevent a seafarer from being deployed without a
valid reason.
Court awarded moral damages in the amount of P30,000.00, plus exemplary
damages and attys fees, as petitioners act was tainted with bad
faith,[26]considering that respondents Medical Certificate stated that he was fit
to work on the day of his scheduled departure, yet he was not allowed to
leave allegedly for medical reasons.
5.10 IMPORTANT PERALTA CASE: DO THE PROVISIONS OF THE LABOR

CODE STILL APPLY TO FILIPINO OFWS WHO HAVE BEEN DEPLOYED
ABROAD AND ARE RETRENCHED BY THE FOREIGN PRINCIPAL?
(International Management Services vs. Logarta, G.R. No. 163657, 18
April 2012, J Peralta.)
Answer: YES. In the case at bar, despite the fact that respondent was
employed by Petrocon as an OFW in Saudi Arabia, still both he and his

employer are subject to the provisions of the Labor Code when
applicable. The basic policy in this jurisdiction is that all Filipino
workers, whether employed locally or overseas, enjoy the protective
mantle of Philippine labor and social legislations. Philippine Law
recognizes retrenchment as a valid cause for the dismissal of a
migrant or overseas Filipino worker under Article 283 of the Labor
Code. Foreign employer must comply with all requirements for
retrenchment, separation pay and notice requirements. Having failed to
comply with procedures (1 month notice), termination is merely
procedurally infirm in the light of a valid authorized cause (decrease in
need of services as piping designer in the work project requirements).
N. PROCEDURES AND REMEDIES

(See Charts F and G on jurisdiction and procedure)
1.
Teekay Shipping vs. Concha, , GR 185463, 22 Feb 2012 -PRESCRIPTIVE PERIOD FOR TERMINATION CASES.
FOUR YEAR
Ones 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 ones 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
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ATTY. ADA D. ABAD
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.
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 Abigails 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
attorneys fees.
CASES:
3.1 Appeal; posting of Appeal Bond; Governments 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
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ATTY. ADA D. ABAD
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 latters exemption from the posting
of appeal bonds.
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 mediationonly a certified or duly recognized bargaining agent.
143

ATTY. ADA D. ABAD
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 vs. TERMINATION vs STRAINED RELATIONS vs RETIREMENT
2013 CASE: IN TERMINATION OF EMPLOYMENT BY THE EMPLOYEE VIA

RESIGNATION. -- The intent to relinquish must concur with the overt act of
relinquishment. (Mendoza vs. HMS Credit Corp., et. al., G.R. No. 187232, 17 April 2013; citing
San Miguel Properties vs. Gucaban, 654 SCRA 18 [2011])
2013 CASE: DIFFERENCE BETWEEN TERMINATION OF EMPLOYMENT AND

RETIREMENT. -- While termination of employment and retirement from service are
common modes of ending employment, they are mutually exclusive, with varying judicial
bases and resulting benefits 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 or
floor benefits. (General Milling Corporation vs. Viajar, G.R. No. 181783, 30 January 2013;
Citing Quevedo vs. Benguet Electric Cooperative, Inc., 599 SCRA 438 [2009])
RESIGNATION It is the voluntary act of employees who are compelled by reasons to
disassociate themselves from their employment. It must be done with intention of
relinquishing the office, accompanied by the act of abandonment. Where evidence reveals
otherwise, then illegal dismissal.
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--vis what they should receive in full. The difference in the anounts
144

ATTY. ADA D. ABAD
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. NLRCs 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 POEAs 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;
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. Piercing corporate veil; Liability of corporate officers; Moral and exemplary damages;
Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012.
To disregard the separate juridical personality of a corporation, the wrongdoing must be
established clearly and convincingly. It cannot be presumed.
145

ATTY. ADA D. ABAD
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. DEATH BENEFITS: Crew and Ship Management International Inc. and Salena, Inc. Vs.
Jina T. Soria - G.R. No. 175491. December 10, 2012
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.
10. IMPORTANT PERALTA CASE: MAY THE ISSUE OF ABSENCE OF EMPLOYEREMPLOYEE RELATIONSHIP BE RAISED FOR THE FIRST TIME ON APPEAL?
ANSWER: NO. The alleged absence of employer-employee relationship cannot be
raised for the first time on appeal. In its Position Paper, petitioner highlighted
respondents complicity and involvement in the alleged fake condemnation of
damaged cigarettes as found by the DFPDC. This, according to petitioner, was a
just cause for terminating an employee.
With the pleadings submitted by petitioner, together with the corresponding
pleadings filed by respondent, the LA and the NLRC declared the dismissal of
respondent illegal. These decisions were premised on the finding that there was an
employer-employee relationship. Nowhere in said pleadings did petitioner deny
the existence of said relationship. Rather, the line of its defense impliedly
admitted said relationship. The issue of illegal dismissal would have been
irrelevant had there been no employer-employee relationship in the first
place.
146

ATTY. ADA D. ABAD
In this case, petitioner insisted that respondent was dismissed from employment
for cause and after the observance of the proper procedure for termination.
Consequently, petitioner cannot now deny that respondent is its employee. While
indeed, jurisdiction cannot be conferred by acts or omission of the parties,
petitioners belated denial that it is the employer of respondent is obviously an
afterthought, a devise to defeat the law and evade its obligations.
2013 BAR PROBLEM ON REMEDIES; NLRC JURISDICTION:
Cris filed a complaint for illegal dismissal against Baker Company. The Labor Arbiter
dismissed the complaint but awarded Cris financial assistance. Only the company
appealed from the Labor Arbiter's ruling. It confined its appeal solely to the question of
whether financial assistance could be awarded. The NLRC, instead of ruling solely on the
appealed issue, fully reversed the Labor Arbiter's decision; it found Baker Company
liable for illegal dismissal and ordered the payment of separation pay and full
backwages.
Through a petition for certiorari under Rule 65 of the Rules of Court, Baker Company
challenged the validity of the NLRC ruling. It argued that the NLRC acted with grave
abuse of discretion when it ruled on the illegal dismissal issue, when the only issue
brought on appeal was the legal propriety of the financial assistance award.
Cris countered that under Article 218(c) of the Labor Code, the NLRC has the authority to
"correct, amend, or waive any error, defect or irregularity whether in substance or in
form" in the exercise of its appellate jurisdiction.
QUESTION: Decide the case. (8%)
ANSWER: Review powers of NLRC in perfected appeals is limited only to those issues raised
on appeal. Hence, it is grave abuse of discretion for the NLRC to resolve issues not raised on
appeal. (United Placement International vs. NLRC, 221 SCRA 445 [1993].)
2013 BAR EXAM MCQ ON PRESCRIPTION OF ACTIONS:

Chito was illegally dismissed by DEF Corp. effective at the close of business hours of
December 29, 2009.
(1). He can file a complaint for illegal dismissal without any legal bar within _________.
(1%)
(A) three (3) years
(B) four (4) years
(C) five (5) years
(D) six (6) years
(E) ten (10) years
(2). If he has money claims against DEF Corp., he can make the claim without any legal
bar within _________. (1%)
(A) three (3) years
(B) four (4) years
(C) five (5) years
(D) six (6) years
(E) ten (10) years
147

ATTY. ADA D. ABAD
2013 BAR EXAM MCQ ON LEGAL ETHICS;

OPINION OF LAWYER ON LABOR ISSUE
Hector, a topnotch Human Resource Specialist who had worked in multinational firms
both in the Philippines and overseas, was recruited by ABC Corp., because of his
impressive credentials. In the course of Hector's employment, the company management
frequently did not follow his recommendations and he felt offended by this constant
rebuff.
Thus, he toyed with the idea of resigning and of asking for the same separation pay that
ABC earlier granted to two (2) department heads when they left the company.
To obtain a legal opinion regarding his options, Hector sent an email to ABC's retained
counsel, requesting for advice on whether the grant by the company of separation pay to
his resigned colleagues has already ripened into a company practice, and whether he
can similarly avail of this benefit if he resigns from his job.
As the company's retained legal counsel, how will you respond to Hector? (1%)
(A) I would advise him to write management directly and inquire about the benefits he can
expect if he resigns.
(B) I would advise him that the previous grant of separation pay to his colleagues cannot be
considered a company practice because several other employees had resigned and were
not given separation pay.
(C) I would advise him to ask for separation pay, not on account of company practice, but on the
basis of discrimination as he is similarly situated as the two resigned department heads who
were paid their separation pay.
(D) I would not give him any legal advice because he is not my client.
(E) I would maintain that his question involves a policy matter beyond the competence of a legal
counsel to give.
FOR THE BAR EXAMINEES:

GOOD LUCK AND GOD BLESS YOU ALL!!
VERITAS ET FORTITUDO. PRO DEO ET PATRIA.
ONE LYCEUM FIGHT!!!
ADA D. ABAD 28 SEPT 2014
148

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2014 LABOR LAW BAR REVIEW HAND-OUTS

FOR 2014 JOINT LYCEUM-ADAMSON BAR OPERATIONS

2014 LABOR BAR EXAMS

Promotion of human dignity (Art 2, sec 2)

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

2. DISTINCTION BETWEEN LABOR LAW AND SOCIAL LEGISLATION

2014 LABOR LAW BAR REVIEW HAND-OUTS

3. MEMORIZE ARTICLE 3, LABOR CODE: DECLARATION OF POLICY

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

5. HOW TO BALANCE CONFLICTING INTERESTS; BASIC PRINCIPLES OF

Burden of proof is always upon employer to show validity of its

5.2 There must exist SUBSTANTIAL EVIDENCE to prove valid exercise of

2014 LABOR LAW BAR REVIEW HAND-OUTS

5.3 In cases of ambiguity, interpretation shall be made in favor of labor.

NEW CASES ON INTERPRETATION OF LABOR CONTRACTS:

2014 LABOR LAW BAR REVIEW HAND-OUTS

CASE2 ON FUNERAL AND BEREAVEMENT AID FOR DEATH OF

2014 LABOR LAW BAR REVIEW HAND-OUTS

CBA is silent about it, is to be construed as similar to the meaning

2014 LABOR LAW BAR REVIEW HAND-OUTS

5.4 In the imposition of penalty, whether suspension or termination, the same

5.5 But management prerogatives are likewise to be equally protected when

The employer-employee relationship is contractual in character. It arises

The existence of the employer-employee relationship is a condition sine

"Reasonable causal connection rule."

Thus, where there is no employer-employee relationship, there can be

2014 LABOR LAW BAR REVIEW HAND-OUTS

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

2014 LABOR LAW BAR REVIEW HAND-OUTS

2.2 CORPORATE OFFICER OR EMPLOYEE?

3. Who are corporate officers?

General Rule: Under Corporation Code, the following are corporate

Exceptions to the above general rule are as follows:

2014 LABOR LAW BAR REVIEW HAND-OUTS

Matling Industrial and Commercial Corp., et al. vs. Ricardo R.

3. WHO ARE YOUR EMPLOYEES:

TESTS TO DETERMINE EXISTENCE OF

2014 LABOR LAW BAR REVIEW HAND-OUTS

3.1 Nota Bene on the control test:

Masonic Contractor and Melvin Balais vs. Magdalena Madjos et.

2014 LABOR LAW BAR REVIEW HAND-OUTS

C. NEW LABOR LAWS AND DEPARTMENT ORDERS:

KASAMBAHAY. Effective 18 January 2013. Implementing Rules effective

1.2 NOT applicable to the following personnel:

1.3 EMPLOYMENT CONTRACT - an employment contract must be duly executed

2014 LABOR LAW BAR REVIEW HAND-OUTS

National Capital Region (minimum wage of P2,000.00 for those employed in

Scheduled weekly rest day of the Kasambahay, wherein the latters

c. SERVICE INCENTIVE LEAVE -- A Kasambahay who has rendered at least

MANDATORY GOVERNMENT CONTRIBUTIONS (SSS, PHILHEALTH,

2. REPUBLIC ACT NO. 10151 ENTITLED AN ACT ALLOWING THE EMPLOYMENT

2014 LABOR LAW BAR REVIEW HAND-OUTS

2.2 Rights of the Night Workers:

Right to safe and healthful working conditions

Right to compel employer to provide the following mandatory facilities:

2014 LABOR LAW BAR REVIEW HAND-OUTS

Right to social services. -- Appropriate social services shall be provided for

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

any gender-based distinction, exclusion, or restriction which has the effect or

any act or omission, including by law, policy, administrative measure, or practice,

2014 LABOR LAW BAR REVIEW HAND-OUTS

a measure or practice of general application that fails to provide for mechanisms to

discrimination compounded by or intersecting with other grounds, status, or