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Labor Law Digests 2

Q. The factory workers of Sime Darby used to work from 7:45 a.m. to 3:45 p.m. with a 30-
minute paid on call lunch break. In 1992, Sime Darby issued a memorandum to all factory
workers advising them of a change in work schedule. The new work schedule eliminated the
30-minute paid on call lunch break and gave the workers a one-hour unpaid lunch break.
Under the new schedule, the workers will still work for eight hours per day. The workers filed a
complaint for unfair labor practice. Did the company commit any unfair labor practice when it
revised the work schedule?

A. No, the company did not commit any unfair labor practice. The right to fix the work
schedules of the employees rests principally on their employer. Under the old schedule, the
workers could be called upon to do jobs during their 30-minute paid lunch break. Under the
new schedule, the workers were given a one-hour lunch break without any interruption from
their employer. Thus, there is no need to compensate the workers for this period. Since the
new schedule applies to all employees in the factory whether union members or not, it is not
discriminatory. It cannot be said that this new scheme prejudices the workers right to self-
organization. Hence, there is no unfair labor practice in this case.

Q. Should the appeal bond be posted within the ten (10) day reglementary period for filing an
appeal from the Labor Arbiters decision?

A. As a general rule, yes. When the judgment involves a monetary award, an appeal by the
employer may be perfected only upon posting of a cash or surety bond in an amount equivalent
to the monetary award in the judgment appealed from. Compliance with the requirement of
posting a bond is both mandatory and imperative as the perfection of an appeal within the
reglementary period is jurisdictional. In a growing number of cases, however, the Supreme
Court has relaxed the stringent application of the rule concerning the posting of the appeal bond
within the ten (10) day reglementary period as a requirement for the perfection of an appeal.
The Supreme Court has allowed the filing of a motion for reduction of bond in lieu of the appeal
bond within the reglementary period for filing an appeal. In such case, the appeal bond may be
filed after the lapse of the reglementary period and after the resolution of the motion to reduce
the amount of the bond . (Alcosero v. NLRC, 288 SCRA 129, March 26, 1998)

Q. Roberto was a driver of Philtranco who was assigned to the Legaspi City-Pasay City route.
He was dismissed from the service. He filed a complaint for illegal dismissal before the NLRCs
National Capital region Arbitration Branch in Manila. Philtranco filed a Motion to Dismiss
stating that the complaint should have been lodged with the NLRCs Regional Arbitration Branch
in Legaspi City not only because Roberto was a resident thereof but also because the latter was
hired, assigned, and based in Legaspi City. Decide.

A. The Motion to Dismiss must be denied. The question of venue pertains to the trial and
relates more to the convenience of the parties rather than upon the substance and merits of the
case. Provisions on venue are intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. The New Rules of Procedure of the NLRC cited
by Philtranco speaks of the complainants workplace, evidently showing that the rule is intended
for the exclusive benefit of the worker. This being the case, the worker may waive said
benefit. Moreover, since Roberto was assigned to Legaspi City-Pasay City route, the filing of
the complaint with the National Capital Region Arbitration Branch was proper, Manila being
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considered as part of Robertos workplace. (Philtranco Service Enterprises, Inc. v. NLRC,
288 SCRA 585, April 1, 1998)

Q. Mario was hired to work on board the passenger cruise vessel Odyssey for 12 months as
utility man. When he boarded the vessel, he was unaware that there was an existing animosity
between the Filipino crew and the Greek crew. One day, a heated argument occurred between
Mario and a Greek deck steward, Zakkas, which resulted in a scuffle between the two. Zakkas
pushed Mario who fell hitting his head against the steel molding of the door. Mario suffered a
cut in the head. Prior to this incident, Zakkas and the other Greek workers continuously
ridiculed Mario. The night before the incident, Zakkas threatened to pour hot coffee on Marios
head. Mario reported the abuses to the ship captain but the latter just blamed Mario for joining
the ship. Because of his fear that further trouble may erupt between him and the Greek crew,
Mario left the ship. When he was repatriated to the Philippines, he filed a complaint for illegal
dismissal. The labor arbiter dismissed the complaint on the ground that Mario voluntarily
signed off from the vessel. Is the ruling correct?

A. No, the ruling is erroneous. Constructive dismissal exists when there is a quitting because
continued employment is rendered impossible, unreasonable or unlikely. In this case, Mario
quit because he feared for his life and his fear was well founded. His decision to leave the ship
was not voluntary but was impelled by a legitimate desire for self-preservation. The ship
captain, as the general agent of the ship owner, could be held responsible for failing to make the
workplace safe for Mario. This is a clear case of constructive dismissal. (Singa Ship
Managament Phils., Inc. v. NLRC, 288 SCRA 692, April 14, 1998)

Q. PISI is a duly licensed security agency. It hired Escobin and several other security guards to
work as guards in the premises of Basilan Plantations, Inc. in Basilan, Mindanao. Escobin and
his companions were residents of Basilan and heads of families. After working for five years as
guards in the plantation, Escobin and his group were placed under reserved or floating status.
This was due to the reduction of the security force ordered by Basilan Plantations, Inc.. Later,
the guards placed on reserved or floating status were instructed by registered letter to report to
PISI Head Office in Metro Manila for posting to PISI clients within Metro Manila. The guards
did not reply. A second letter was sent but the guards likewise failed to reply. PISI sent
individual letters to the guards ordering them to explain why no disciplinary action should be
taken against them for failing to comply with PISIs order. The guards did not send their
answers to PISI. PISI dismissed the guards on the ground of insubordination or willful
disobedience to lawful orders of their employer. During the proceedings before the Labor
Arbiter, the guards justified their inability to comply with PISIs order to report to the head office
in Metro Manila, saying: they were residents of Basilan, have families of their own in Basilan,
have never traveled beyond Visayas and Mindanao, not provided by PISI with fare money as
they cannot, on their own, finance their travel from Basilan to Manila. Assuming the allegations
of the guards were true, was the dismissal valid?

A. No, the dismissal was not valid. Disobedience, to be a just cause for termination, must be
willful and perverse mental attitude rendering the employees act inconsistent with proper
subordination. A willful or intentional disobedience justifies dismissal only when the rule, order
or instruction is (1) reasonable and lawful, (2) sufficiently known to the employee, and (3)
connected with the duties which the employee has been engaged to discharge. The
reasonableness and lawfulness of a rule depend on the circumstances of each case.
Reasonableness pertains to the kind or character of directives and commands and to the
manner in which they are ade. In this case, the order to report to the Manila office fails to meet
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this standard. It was grossly inconvenient for the guards who were residents and heads of
families in Basilan. The guards were not provided with funds to defray their transportation and
living expenses. The dismissal in this case was too harsh a penalty for the insubordination
which was neither willful nor intentional. The guards failure to answer PISIs show-cause
letters does not negate this conclusion as PISI granted other guards a second chance to
explain, an opportunity it denied Escobin and his group. (Escobin v. NLRC, 289 SCRA 48,
April 15, 1998)

Q. Drivers/salesmen and truck helpers of a softdrinks merchandiser filed a case for illegal
dismissal, underpayment of wages, and other claims. The Labor Arbiter decided, among
others, that the employer had not complied with the minimum wage requirements. In arriving at
this conclusion, the Labor Arbiter refused to include the commissions paid to the workers in
determining compliance with the minimum wage requirement. As part of their compensation,
the workers received commissions per case of softdrinks sold. Is the Labor Arbiters ruling
correct?

A. No, the ruling is erroneous. The definition of the term wage in the Labor Code explicitly
includes commissions. While commissions are incentives or forms of encouragement to inspire
workers to put a little more industry on their jobs, still these commissions are direct
remunerations for services rendered. There is no law mandating that commissions be paid
only after the minimum wage has been paid to the worker. The establishment of a minimum
wage only sets a floor below which an employees remuneration cannot fall, not that
commissions are excluded from wages in determining compliance with the minimum wage law.
(Iran v. NLRC, 289 SCRA 433, April 22, 1998)

Q. In a complaint for illegal dismissal and unfair labor practices, judgment was rendered in favor
of Buda Labor Union. The Labor Arbiter ordered the company, Buda Enterprises to reinstate
the individual complainants and to pay them full backwages. The decision became final and
executory and a writ of execution was issued. Parcels of land allegedly belonging to Buda
Enterprises, but later found to be registered under the names of Co Tuan, S. Ang, J. Lim, and E
Gotamco, were levied upon. Upon learning of such levy, Co Tuan and his three other relatives
filed an Urgent Motion to Quash the Writ of Execution claiming that they hold valid and lawful
title to the said properties by virtue of the Extra-judicial Settlement and Sale of the Estate of the
Deceased Edilberto Soriano executed by the heirs. None of the heirs, except Lourdes Soriano,
the proprietress and manager of Buda Enterprises, were parties in the labor case. The motion
was granted. The workers appealed and asked the Commission to order the Labor Arbiter to
implead the movants, praying that the sale between the movants and Buda Enterprises be
declared void. Is the NLRC competent to determine the legality of the sale?

A. No. The power of the NLRC to execute its judgment extends only to properties
unquestionably belonging to the judgment debtor. If the property under levy does not belong
to the judgment debtor in the NLRC case, it could not be levied upon by the sheriff for the
satisfaction of the judgment therein. Even upon a mere prima facie showing of ownership by
the third-party claimant, if the third party claim does not involve nor grows out of a labor
dispute, a separate action for injunctive relief against such levy may be maintained in court. If
there is suspicion that the sale of properties was not in good faith, i.e. was made in fraud of
creditors, the NLRC is incompetent to make a determination . The task is judicial and the
proceedings must be adversary. (Co Tuan v. NLRC, 289 SCRA 415, April 22, 1998)
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Q. The Regional Wage Board for Region X issued Wage Order No. RX-01. Three corporations
filed applications for exemption as distressed establishments under Guidelines No. 3 issued by
the Regional Wage Board. Under the Regional Wage Boards guideline, a corporation is a
distressed establishment if it is engaged in an industry that is distressed due to conditions
beyond its control. This criterion is different from the criterion laid down in the guidelines
promulgated by the National Wages and Productivity Commission. Should the applications be
granted pursuant to the Regional Wage Boards guidelines?

A. No, the applications should be denied. The law grants the NWPC, not the Regional Wage
Board, the power to prescribe the rules and guidelines for the determination of minimum wage
and productivity measures. While the Regional Wage Board has the power to issue wage
orders, such wage orders are subject to the guidelines prescribed by the NWPC. Since the
Regional Wage Boards Guideline No. 3 was not approved by the NWPC and is contrary to
NWPCs guidelines, the said guideline issued by the Regional Wage Board is inoperative and
cannot be used by the latter in deciding on the applications for exemption. (Nasipit Lumber
Company, Inc. v. NWPC, 289 SCRA 667, April 27, 1998)

Q. Virginia was an employee of Judy Philippines, Inc.. Because of her erroneous assortment
and packaging of 2,680 dozens of infant wear, the company dismissed her from employment on
the ground of gross negligence. Virginia committed the infraction for the first time. Is the
dismissal valid?

A. No, the dismissal is invalid. Gross negligence implies a want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. Article 282 (b) of the
Labor Code requires that such neglect must not only be gross, it should be gross and habitual
neglect. The penalty of dismissal is quite severe here since the worker committed the
infraction for the first time. (Judy Philippines, Inc. v. NLRC, 289 SCRA 755, April 29,
1998)

Q. In an illegal dismissal case filed by security guards of Scout Security Agency, the labor arbiter held
Rosewood, Inc., the principal, jointly and severally liable with the security agency for wage differential,
backwages, and separation pay. The labor arbiter stated that Rosewood was liable as the guards indirect
employer under Arts. 106, 107, and 109 of the Labor Code. Rosewood appealed claiming that it had no
participation in the illegal dismissal of the guards. Assuming Rosewoods claim is true, should the labor
arbiters ruling be reversed?

A. Yes, the labor arbiters ruling should be reversed. Under the Labor Code, an employer is
solidarily liable for legal wages due security guards for the period of time they were assigned
to it by its contracted security agency. However, in the absence of proof that the employer
itself committed the acts constitutive of illegal dismissal or conspired with the security agency in
the performance of such acts, the employer shall not be liable for backwages and/or
separation pay arising as a consequence of such unlawful termination. (Rosewood
Processing, Inc. v. NLRC, 290 SCRA 408, May 21, 1998)

Q. In an illegal dismissal case, the Labor Arbiter upheld the validity of a retrenchment program
implemented by a mining company. As basis for the ruling, the Labor Arbiter took judicial
notice of the economic difficulties suffered by the mining sector. Is the ruling correct?

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A. No, the ruling is erroneous. Jurisprudence prescribes the minimum standards necessary to
prove the validity of a retrenchment: (a) the losses expected must be substantial and not
merely de minimis in extent; (b) the substantial losses apprehended must be reasonably
imminent; (c) the retrenchment must be reasonably necessary and likely to effectively prevent
the expected losses; and (d) the alleged losses, if already incurred, and the expected imminent
losses sought to be forestalled must be proved by sufficient and convincing evidence. In this
case, the retrenchment cannot be considered valid on the basis of the judicial notice taken by
the Labor Arbiter. (Anino v. NLRC, 290 SCRA 489, May 21, 1998)

Q. Included in a complaint for illegal dismissal is a claim for night shift differentials. The
employer did not deny that the complainant rendered night shift work. The labor arbiter
dismissed the claim for night shift differentials because the complainant allegedly failed to
substantiate his claim for night shift differentials. Is the ruling correct?

A. No, the ruling is erroneous. The fact that the complainant neglected to substantiate his claim
for night shift differentials is not prejudicial to his cause. The burden of proving payment rests
on the employer. The workers claim of non-payment of this benefit is a negative allegation
which need not be supported by evidence. The worker cannot adequately prove the fact of
non-payment of the night shift differentials since the pertinent employee files, payrolls, records,
and other similar documents are not in his possession but in the custody and absolute control of
petitioner. By choosing not to fully and completely disclose information to prove that it had paid
all the nights shift differentials due the worker, the employer failed to discharge the burden of
proof. (National Semiconductor Distribution, Ltd. V. NLRC, 291 SCRA 348, June 26, 1998)

Q. After the Labor Arbiter dismissed a complaint for illegal dismissal, the worker appealed. The
employer was not furnished a copy of the memorandum of appeal. Thus, the employer was not
aware of the appeal and did not participate in the appeal interposed by the worker. Without
the employers participation, the NLRC reversed the Labor Arbiters decision and ruled in favor
of the appellant worker. Is the decision valid?

A. No, the NLRCs decision is null and void. It is a cardinal rule in law that a decision or judgment is
fatally defective if rendered in violation of a party-litigants right to due process. The fault lies with the
NLRC and not with the appellant worker. While the New Rules of Procedure of the NLRC require proof
of service of the appeal on the other party, non-compliance therewith will present no obstacle to the
perfection of the appeal nor does it amount to a jurisdictional defect to the NLRCs taking cognizance
thereof. While the law excuses the appellant from notifying the other party of the appeal, no reason can
be given by the NLRC that would exempt it from informing the latter of the appeal and giving it an
opportunity to be heard. The case should be set for further proceedings to afford the employer the
opportunity to be heard. (Philippine National Construction Corporation v. NLRC, 292 SCRA 266,
July 10, 1998)

Q. In their answer to a case for illegal dismissal, the employer filed position papers supported by
affidavits. Subsequently, the Labor Arbiter ordered the company to pay wage differentials and
other benefits. They appealed to the NLRC by filing a supplemental memorandum to correct and
amplify inadequate allegations and certain omissions. In this appeal, the seek to introduce new
evidence to prove that there was no employee-employer relationship. Should the NLRC admit
new evidence?

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A. No. Hearings had already been scheduled, yet the employer chose merely to submit position
papers. As such, the company had every opportunity to submit before the labor arbiter the
evidence which they sought to adduce before the NLRC. (Santos v. NLRC; July 23, 1998)


Q. Petitioner was employed as Accounting Manager entrusted with the evaluation and
assessment of contacts. A contractor complained that petitioner was asking two thousand
pesos for every contract the contractor gets from the company. Petitioner admitted having
accepted money on four different occasions. The company terminated petitioner on this ground.
Was she validly dismissed?

A. Yes, the companys reliance on petitioners assessment of contracts was based primarily on
trust and confidence. Her acceptance of money, even if voluntary on the contractors part, casts
doubt on her integrity. Having occupied a managerial position, petitioner maybe dismissed on
the ground of loss of trust and confidence. Even if she was a first-time offender, a company
may resort to acts of self-defense against a managerial employee who has breached their trust
and confidence. Furthermore, each of the four occasions is treated as a separate offense;
hence, militating her plea of first infraction. (Villanueva v. NLRC; July 27, 1998)

Q. Petitioners were dismissed from service after they were asked by the company to go through
drug-tests, as the company received information that they were smoking something (shabu)
inside the work premises. Petitioners and the company submitted their respective position
papers on the incident. The Labor Arbiter found the dismissal based on the position papers as
valid which the NLRC affirmed. Can a full-blown trial be dispensed with by the labor arbiter?

A. Yes. Rules of evidence in courts shall not be controlling in any case brought before the
commission (Art. 221, LC). The Labor Code allows the labor arbiter and NLRC to decide the
case based on position papers and other documents. The holding of a trial is discretionary on
the labor arbiter and cannot be demanded as a matter of right by the parties. (Suarez v. NLRC;
July 31, 1998)

Q. A supervisory employee labor organization was issued a charter certificate by a national
federation to which the companys rank and file union was also affiliated` with. It filed a
petition for certification election, opposed by the company because the union was allegedly
composed of both supervisory and rank and file employees since both unions are affiliated with
the same federation. Should the petition for certification elections be granted?

A. Yes. The affiliation of two local unions in a company with the same national federation is not
a negation of their independence (as unions) since in relation to the employer, the local unions
are considered as principals while the federation is deemed as their agent. The locals are
separate from each other and their affiliation with the same federation would not make them
members of the same labor union. A supervisory organization is prohibited from joining the
same federation as that of the rank and file organization only if two conditions are present: 1.
The R & F employees are directly under the authority of supervisory employees and 2. The
national federation is actively involved in union activities in the company. (DLSU Medical
Center v. Laguesma; August 12, 1998)

Q. Private respondents were employed by PAL with a salary of P1,860. They got a salary
increase of P400/mo. for a total monthly compensation of P2,260 under the CBA.
Subsequently, RA 6640 was passed raising the minimum wage of worker. Their salaries were
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adjusted again by adding P304 pursuant to the RA thus their total gross pay amounted to
P2,565. After four months, they were promoted and their basic pay of P1,860 was raised to
P2,300/mo. plus the CBA wage increase of P400/mo. thereby making their gross pay to
P2,700/mo.. The employees were not satisfied with their gross pay, invoking the P304 wage
increase under RA 6640. PAL however refused claiming that the increase of P440 which is the
difference between their new basic salary and their old basic salary (P2,300-1,860) was
sufficient compliance with the RA. Thus respondents instituted an action against PAL for
violations of RA 6640. Is the salary increase of the employees sufficient compliance with RA
6640? Should the CBA increase be credited to the wage increase under the RA?

A. No. Sec. 7 of the RA prohibits the diminution of existing benefits and allowances by
workers. Consequently, it was improper and not allowed by law for petitioner to apply or
consider as compliance, with the mandated wage hike of its workers, the salary increases
corresponding to their promotion in rank. Unlike the Wage Order Nos. 5 and 6 in the Apex
ruling, there is no creditability provision in RA 6640. It was not the intention of Congress to
credit salary increases by reason of CBA wage adjustments or promotions in rank for the
mandated wage increase. (PAL v. NLRC; Sept. 3,1998)

Q. Complaints for illegal dismissal were filed against respondent. Summons and notices of
hearings were sent to the respondent which were received by its bookkeeper. Thereafter, the
labor arbiter rendered a judgment by default after finding that the respondent tried merely evaded
all the summons and notices by refusing to claim its mails. Respondent contends that the he was
not validly served with summons since the bookkeeper cannot be considered an agent under the
Rules of Court and thus the labor arbiter never acquired jurisdiction over respondent. Did the
labor arbiter acquire jurisdiction over respondent?

A. Yes. Procedural rules are liberally construed and applied in quasi-judicial proceedings.
Substantial compliance in this case is considered adequate. The bookkeeper can be
considered an agent because his job is integrated with the corporation. (Pabon v. NLRC, Sept.
24,1998)

Q. Can a company, dissatisfied with the decision of the Labor Arbiter, file a Motion to Amend
the Order of the Labor Arbiter more than a month after the date of issuance of the Order?

A. No. To allow the amendment of the order will result in the circumvention of Sec. 17 of the
Rules of Procedure of the NLRC which provide that No Motion for Reconsideration of any order
or decision of the Labor Arbiter shall be allowed. To permit this would only allow the petitioner
to violate the statutory 10-day period requirement for appeal. (Schering Employees Labor
Union v. NLRC, Sept. 25,1998)

Q. Respondent was first hired by SMC (engaged in the manufacture of glass) for a period of 4
months to repair and upgrade its furnace. 10 days after his first contract ended, he was again
hired to drain another furnace for 3 months. Is he a project employee?

A. Yes. There are two kinds of project employees: 1.Those employed in a project usually
necessary or desirable in the usual trade or business (UNOD in UTOB) of the employer but is
separate and distinct from the other undertaking of the company; or 2.Those not UNOD in
UTOB but is also distinct and separate from the other undertaking of the company. But both
jobs begin and end at determined or determinable time. In the case at bar, the employee falls
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under the second category. The process of manufacturing glass requires a furnace which is to
be repaired only after being used continuously for varying period of 5-10 years. Therefore, the
job of the respondent is a project not UNOD in UTOB. (SMC v. NLRC, October 7,1998)

Q. Petitioner was employed as an assistant credit and collection manager. From the start, he was
informed that those not eligible for membership in the bargaining unit are not entitled to CBA
benefits, but to benefits at least equivalent or higher than that provided in the CBA.
Subsequently, petitioner was diagnosed with pulmonary disease, prompting him to apply for
optional retirement as provided by the CBA. He wished to retire on July 16,1992 but was asked
by the company to change it to April 30,1992. The employee, due to urgent need, agreed, for
which he received P100,000 as advances on his retirement pay. Could the employee avail of the
optional retirement benefit in the CBA? Could the employer vary the effective date of
retirement?

A. Yes, although managerial employees are not covered by the CBA, the employer voluntarily
agreed to grant them benefits at least equivalent or higher than that provided in the CBA. Thus,
this agreement is the applicable retirement contract under the Labor Code. Moreover, the
employer may vary the effective date of retirement as petitioner assented to the change, in
consideration for an advance of his retirement pay. So long as the agreement is voluntary and
reasonable, it is valid. (Martinez v. NLRC, October 12, 1998)

Q. Respondent employee was a truck driver who was dismissed because he allegedly drove
while drunk after he chase an office personnel with a knife. The incident resulted to the damage
of the ten-wheeler truck he drove. The employee only reported the incident on March 1993,
though it happened on December 1992. Prior to the accident, he was already caught stealing
diesel fuel from the company. As a result of these actions, he was dismissed for serious
misconduct. Was the dismissal valid? Can the company rely on past offenses to justify the
dismissal?

A. No, the reliance by petitioner corporation on his past offenses to justify his dismissal is
unavailing. The correct rule has always been that such previous offenses may be used as valid
justification for dismissal from work only if the infractions are related to the subsequent offense
upon which basis the termination is decreed. The vehicular accident causing damage to the
truck is not a just cause for dismissal. The penalty of dismissal is grossly disproportionate to the
offense of driving through reckless imprudence resulting in damage to property. He was
likewise deprived of due process as he was not afforded ample opportunity to be heard. If after
the thirty-day period the employee does not give his explanation of what happened, he must
again be sent a notice of dismissal stating the particular acts constituting the ground for
dismissal and an inquiry why he did not give his explanation. (La Carlota Planters Association
v. NLRC, October 27, 1998)

Q. PAL entered into a service agreement with STELLAR Corp., a corporation in the business of
job contracting janitorial services. After the agreement expired, PAL called for a bidding but in
the meantime allowed STELLAR to maintain the janitorial contract. Subsequently, PAL sent a
letter to STELLAR informing them that the contract would no longer be renewed. STELLAR,
terminated their services, so respondent employees filed a case for illegal dismissal against PAL
and STELLAR. The NLRC affirmed the decision of the labor arbiter finding the dismissal
illegal. Was there an employee-employer relationship existing between PAL and respondents?
And were they illegally dismissed?
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A. No, there is no employee-employer relationship between PAL and the respondents. PAL is
not engaged in labor-only contracting evidenced by the service agreement that it would be
STELLAR who will employ the janitors. PAL was engaged in permissible job contracting and
the employees were employees of STELLAR not PAL. However, the employees were illegally
dismissed by STELLAR. They were regular employees not project employees. A project
employee must be employed in a project distinct, separate and identifiable from the main
business of the employer and its duration must be determined or determinable. While the
service agreement may have had a specific term, STELLAR disregarded it and repeatedly
renewed the agreement and continued hiring the respondents for thirteen years. (PAL. V.
NLRC, Nov. 9, 1998)

Q. Several security guards of Sentinel Security, assigned to PHILAM were found to have been
illegally dismissed. Can PHILAM be made liable for the payment of backwages and separation
pay of the illegally dismissed employees?

A. Yes. Although an indirect employer should not be made liable without a finding that it had
committed or conspired in the illegal dismissal (Rosewood ruling), in the case at bar the
exoneration of PHILAM was not included in the DISPOSITIVE PORTION of the Courts decision
despite the fact that it was clearly stated in the body of the decision that they were exonerated.
The decision did not completely exonerate PHILAM which, as an indirect employer is solidarily
liable with Sentinel for the complainants unpaid service incentive leave pursuant to Art. 106,
107 and 109 of the Labor Code. Should the contractor fail to pay the wages of its employees in
accordance with law, the indirect employer is jointly and severally liable with the contractor, but
such responsibility should be understood to be limited to the extent of work performed under the
contract, in the same manner and extent that he is liable to the employees directly employed by
him. (Sentinel Security v. NLRC, Nov. 16,1998)

Q. Producers Bank was placed by the Central Bank under a conservator to protect its assets.
When the retired employees sought the implementation of the CBA regarding their retirement
plan and uniform allowance, the conservator objected, resulting in an impasse between the bank
and the union. Should the CBA provisions be implemented, despite the banks status?

A. Yes. The conservator cannot rescind a valid and existing contract and the CBA is the law
between the contracting parties. Although the employees are already retired, retirement does
not affect their employment status when it involves all rights and benefits due them. The
retirement scheme was part of their employment package and the benefits under the scheme
constituted a continuing consideration for services rendered and effective inducement to remain
in the company. The employees were not pleading for the companys generosity but were
demanding their rights under the CBA. (Producers Bank v. NLRC, Nov. 16,1998)

Q. After negotiations failed to produce any agreement, the exclusive bargaining agent of Coca-
Cola decided to file a notice of strike. Conciliation hearings were conducted but were
unavailing. The union conducted a strike vote on April 14, which shoed that the members were
in favor of conducting a strike. On April 20, the union staged the strike. The company filed a
petition to declare the strike illegal as it was staged without observing the mandatory seven-day
strike ban and that it was staged in bad faith. The company then fired alleged union officers by
virtue of the illegal strike. Was the strike legal? Was the termination of the employees (allegedly,
union officers) valid?

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A. The strike was illegal for failure to observe the mandatory requirements of Articles 264 and
265 of the Labor Code. The failure of the union to observe the 7-day strike ban made the strike
illegal. While the strike vote was conducted around 7:30 am to 8:45 am and the strike held on
April 20 was around 8:30 am, the Civil Code states that in computing a period, the first day shall
be excluded and the last day included; hence the failure to observe 7 days. However, the
dismissal of the strikers was not valid. The employees were mere union members and not
officers who should not be dismissed unless they knowingly participate in illegal acts during a
strike. Although these employees signed the CBA, nowhere in these documents can it be found
that the cited employees signed it as union officers. Their active participation in the negotiations
did not render them union officers. (CCBPI Postmix Workers Union v. NLRC, Nov. 27,1998)

Q. A case for illegal dismissal was filed against Orlando Farms Growers Association, an
informal association of landowners engaged in the production of export quality bananas. Can an
unregistered association be considered an employer independently of the respective members it
represents?

A. Yes, being an unregistered association and having been formed solely to serve as an
affective medium for dealing collectively with another company is not an element of an
employee-employer relationship. The Labor Code does not require an employer to register
before he may come within the purview of the said law. (Orlando Farms Growers Association
v. NLRC, Nov. 25,1998)

Q. Respondent employee was recruited for employment with Gulf Catering Company in Saudi as
a waitress. When she was deployed to Saudi, she was made to wash dishes, cooking pots and
utensils, janitorial work and other unrelated jobs in 12-hour shifts without overtime pay. Due to
the strenuous work, she was confined in a housing facility during which, she was not paid her
salaries. She worked again after getting well but was not paid her compensation. Subsequently,
she was hospitalized and went through surgical operations, again without compensation. She was
then dismissed on the ground of illness without any separation pay or salary payment for the
periods she was not allowed to work. She filed a complaint before POEA against petitioner for
underpaid salaries and damages. Was she illegally dismissed? Is the employee entitled to the
payment of underpaid salaries?

A. She was illegally dismissed because the manner by which she was terminated was in
violation of the Labor Code since her illness was not prohibited by law nor was it prejudicial to
her health as well as that of her co-employees (Art. 284). Her illness was not even contagious
(Carpal Tunnel Syndrome). As for the time she was hospitalized and she was not given any
compensation, the no work-no pay rule does not apply since that period was due to her illness
which was clearly work-related. (Triple Eight Integrated Services v. NLRC, Dec. 3, 1998)

Q. Does Section 4, Rule V of the NLRC New Rules of Procedure require the Labor Arbiter to
propound clarificatory questions to the parties in order to determine whether a formal hearing is
necessary?

A. There is no legal justification for a mandatory interpretation. A reading of Sec
4 Rule V of the New Rules of Procedure of the NLRC readily shows that
clarificatory questions may be propounded to the parties at the discretion of the
Page 11 of 20

LA. Aside from employing the word may which denotes discretion negating a
mandatory or obligatory effect, the provision expressly states that it is
discretionary on the part of the LA. (RDS Trucking vs NLRC, 294 SCRA NLRC)

Q. Melchor, a taxi driver under the boundary system, met a vehicular accident. After filing a
report to the office of respondents, he was allegedly advised to stop working and have a rest. He
thus filed a complaint for illegal dismissal. The company maintains that Melchor was not
illegally dismissed, there being in the first place no employer-employee relationship between
them. Is there an employer-employee relationship under the boundary system?

A. The employer-employee relationship was deemed to exist. (Martinez v. NLRC)
The relationship of taxi owners and taxi drivers is the same as that between jeepney owners
and jeepney drivers under the boundary system. The taxi operator exercises control over the
driver. In Martinez v NLRC this court already ruled that the relationship of taxi owners and taxi
drivers is the same as that between jeepney owners and jeepney drivers under the boundary
system. In both cases the employer-employee relationship was deemed to exist, viz: The
relationship between jeepney owners/operators on one hand and jeepney drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee.xxx Thus,
private respondent were employees xxx because they had been engaged to perform activities
which were usually necessary or desirable in the usual trade or business of the employer.
(Paguio Transport Corporation v NLRC, 294 SCRA 65)

Q. Moneral Andal applied with G & M Phils. Inc. for an overseas employment as a domestic
helper in Riyadh KSA. She was hired for a term of 2 years (1991-1993) at a monthly basic
salary of $200.00. However, she was repatriated on 11 Jan 1992. Upon her repatriation she filed
a complaint before the POEA for illegal dismissal, non-payment and underpayment of salaries.
Impleaded as co-respondent in the complaint was Empire Insurance (petitioner), in its capacity as
the surety of G & M. Is Empire solidarily liable for the payment of the employees monetary
claims?

A. Yes. Petitioner is solidarily liable with its principal. When Empire entered
into suretyship agreement with G & M Phils Inc it bound itself to answer for the
debt or default of the latter. Where the surety bound itself solidarily with the
principal obligor, the former is so dependent on the principal debtor such that
the surety is considered in law as being the same party as the debtor in relation
to whatever is adjudged touching the obligation of the latter, and the liabilities
are interwoven as to be inseparable. The purpose of the required bond is to
insure that the rights of the overseas are violated by their employer recourse
would still be available to them against the local companies that recruited them
for the foreign principal. (Empire Insurance Company v NLRC, 294 SCRA 263)

Page 12 of 20

Q. Private respondent is Samuel L. Bangloy was a production supervisor and radio
commentator of the DZJC-AM radio station in Laoag City, owned by MBC. Bangloy
subsequently applied for a leave of absence in order to run for Board Member in Ilocos Norte.
The company later on informed him that, as a matter of company policy, any employee who files
a certificate of candidacy for any elective national or local office would be considered resigned
from the company. Bangloy nonetheless ran, but lost. Neither was he permitted to return to
work. Is MBCs policy that any employee who is running for elective public position shall be
considered to have voluntarily terminated his employment relations valid?

A. The policy is justified. Working for the government and the
company at the same time is clearly disadvantageous and
prejudicial to the rights and interest not only of the company but
the public as well. In the event that the employee loses in the
election, the impartiality and cold neutrality of an employee as
broadcast personality is suspect, thus readily eroding and
adversely affecting the confidence and trust of the listening
public to employers station. As such, the dismissal is justified.
An employee may be dismissed for willful disobedience of the
lawful orders of his employer in connection with his work.
(Manila Broadcasting Company v NLRC, 294 SCRA 486)

Q. What are the requirements for a valid closure due to retrenchment?

A. The following requirements must be met to justify retrenchment. First, the loss should be
substantial and not merely de minimis. Second, the loss must be reasonably imminent,
perceived objectively and in good faith by the employer. In other words, there should be a
certain degree of urgency for the retrenchment. Third, the retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses. Fourth, the employer should
have taken other measures prior or parallel to retrenchment to forestall losses, so retrenchment
may only be undertaken as a last resort. Finally, the alleged losses if already realized, and the
expected imminent losses to be forestalled must be proven by sufficient evidence. (Stainless
Steel Corporation v. NLRC, 11 March 1998)

Q. Victoria Abril was employed by PFCCI in different capacities from 1982-1988, until she went
on maternity leave. Upon her return in 1989, she discovered that another person had been
appointed to her former position. Nevertheless, she accepted another position as evidenced by
a contract which stipulated that her employment would be probationary for a period of 6 months.
After the period elapsed, she continued to work until she and her employer entered into another
employment contract for a period of 1 year, after which her employment was terminated. Abril
filed a case for illegal dismissal. PFCCI claims that her appointment had been fixed for a
Page 13 of 20

specific project, and should therefore be considered as causal or contractual employment under
Article 280 of the Labor Code. Was Abril's termination valid? Is she a regular employee?

A. Article 281 of the Labor Code allows the employer to secure the services of an employee on
a probationary basis allowing the employer to terminate the latter for just cause or upon failure
to qualify in accordance with reasonable standards set forth by the employer at the time of his
employment. A probationary employee is one who is on trial by an employer during which the
employer determines whether or not he is qualified for permanent employment. Probationary
employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus,
except for just cause as provided by law, or under the employment contract a probationary
employee cannot be terminated.
Under Article 280 of the Labor Code, there are 3 kinds of employees: regular, project
and casual employees. With respect to contractual employees, stipulations in employment
contracts providing for term employment are valid when the period was agreed upon knowingly
and voluntarily by the parties without force, duress or improper pressure being brought to bear
upon the employee, and absent any other circumstances vitiating his consent, or where is
satisfactorily appears that the employer and employee dealt with each other in more or less
equal terms.
The present employment contract entered into initially provides that the period of
employment is for a fixed period. However, the succeeding provisions contradicted the same
when it provided that respondent would be under probationary status. Given the ambiguity in the
contract, and following the pronouncement in Villanueva v. NLRC (10 Sept. 1998), where a
contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein
should be construed strictly against the party who prepared it. Furthermore, all labor contracts
should be construed in favor of the laborer, pursuant to Article 1702 of the Civil Code. Thus,
notwithstanding the designation made by PFCCI, having completed the probationary period and
allowed to work thereafter, Abril became a regular employee who may be dismissed only for just
or authorized causes under the Labor Code. Hence, the dismissal, premised on the expiration of
the contract, is illegal. (Phil. Federation of Credit Cooperatives v. NLRC, 300 SCRA 72, 11
December 1998)

Q. X was dismissed by her employer, FTH. Upon her dismissal, FTH withheld 15 days worth of
her salary, and applied it to a Xs personal loan to the companys general manager. Both the
labor arbiter and the NLRC approved the deduction of the amount of the personal loan from Xs
salary. Is this action of the labor arbiter correct?

A. Article 217 of the Labor Code limits the jurisdiction of labor arbiters to:
(a) unfair labor practice cases;
(b) termination disputes
(c) if accompanied by a claim for reinstatement, cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment
(d) claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations
(e) cases arising from violations of Article 264 of the Labor Code, including questions on the
legality of strikes and lockouts
(f) all other claims from employer-employee relations, including those of persons in
domestic/household service involving an amount not exceeding P5,000 regardless of whether
accompanied by a claim for reinstatement (except for claims of Employees Compensation, SSS,
Medicare and maternity benefits)
As the personal loan did not arise from the employer-employee relationship, said loan
is not within the ambit of the Labor Arbiter's jurisdiction. Moreover, following Article 217 of the
Page 14 of 20

Labor Code, if a claim does not fall within the exclusive original jurisdiction of the labor arbiter,
the NLRC cannot have appellate jurisdiction therein. Thus, the garnishment of Espino's salary
was disregarded. (Food Traders House v. NLRC, 300 SCRA 360, 21 December 1998)

Q. In a case for illegal dismissal, the Labor Arbiter found the dismissal of X unjustified, and
ordered the employer to reinstate X with full backwages. On appeal by the company, the NLRC
reversed the labor arbiters decision, in effect finding the termination legal. However, the NLRC
ordered the employer to pay Xs wages from 25 January 1991 (date of filing the appeal with the
NLRC) up to 23 September 1993 (promulgation of the NLRC decision), pursuant to Article 223
of the Labor Code. Under Article 223 of the Labor Code, the employer found to have illegally
dismissed an employee is required to reinstate the employee either actually or through payroll at
the employer's option. Does this requirement need execution of enforcement? Or was the LA's
decision immediately self-executory?

A. While the interpretation of Article 223 has been divergent, the Court in the 1997 Pioneer
Case laid down the doctrine that henceforth an award or order for reinstatement is self-
executory, and does not require a writ of execution, much less a motion for its issuance. Article
224 only applies to final and executory decisions which are not within the coverage of Article
223. Thus, the employer was bound to either re-admit X or include him in the payroll, and inform
X of its choice in order to enable him to act accordingly. Failing to exercise these options, the
company must pay his salary, which automatically accrued from notice of the LA's order until its
reversal by the NLRC. International Container Terminal Services, Inc. v. NLRC 300 SCRA
335 (21 December 1998)

Q. Eduardo Felipe, employee of Hyundai Engineering and Construction Co., through its local
agent Omanfil, perished in an accident. Hyundai deposited 14,400 Malaysian Ringgit as Felipe's
death benefits in the Melacca labor office. This was done pursuant to Section 8 of Malaysia's
labor law, which provides that death benefits in a lump sum equal to 45 months earnings
($27,902.02) or MR 14,400 shall be awarded, whichever is less. Felipe's widow alleged that the
amount should be US$27,902.02, and that the deposit made by Hyundai to the Melacca labor
office did not constitute payment. What amount is the Felipe family entitled to?

A. The Felipe's are entitled to MR 14,400, in compliance with the provisions of Malaysia's labor
law. A manning agency cannot be faulted for following applicable foreign law. As a result,
Omanfil has discharged its monetary obligation to Mrs. Felipe. (Omanfil International
Manpower Devt. Corp v. NLRC, 300 SCRA 454 ,22 December 1998)

Q. X was one of the 2 employees of Gandara Mill Supply. In February 1995, X did not report to
work for 2 weeks, and when he returned, he was informed that someone had been hired to
replace him. However he was advised that he was to be readmitted in June of 1996. Was there
an illegal dismissal?

A. Admittedly, it is unclear whether respondent was actually dismissed. However, there is no
indication that he was to be reinstated. In effect, the offer to re-admit Germano was merely a
gesture used to mitigate the impact of his extended suspension. This is contrary to the explicit
provisions of the Labor Code, which provide that no preventive suspension should last more
than 30 days. As the supposed suspension was expected to last for more than the period
allowed by law, the suspension constitutes an illegal dismissal.
Even assuming that X's absence caused difficulty to the company, his dismissal was
unwarranted. Given the constitutional mandate of protection to labor, the rigid rules of procedure
may sometimes be dispensed with to give room for compassion. In calling for the protection of
Page 15 of 20

labor, the Constitution does not condone wrongdoing by the employee, it nevertheless urges a
moderation of the sanctions to be applied, in the light of the many disadvantages of laborers.
(Gandara Mill Supply v. NLRC, 300 SCRA 702, 29 December 1998)

Q. The offices and factory of Master Shirt Co. were burned, so the company had to cease
operations. Management and the union held a conference with the NCMB, where they agreed
that the company would try to resume operations ASAP, but if this did not occur within 6
months, the workers would be paid their corresponding separation benefits. After 6 months, the
company failed to resume operations, but the company refused to grant separation pay, for it
had not recovered on their claim for damages against their insurance company. The union and
its members filed a complaint for illegal dismissal, separation pay and damages against Manila
Shirt Co. Are the employees entitled to separation pay?

A. Separation pay is paid to an employee whose services are validly terminated as a result of
retrenchment, suspension, closure of business or disease. IT does not necessarily follow that if
there is no illegal dismissal, no award of separation pay may be made. The basis for the award
in this case is the agreement entered into between the company and the employees. The
agreement is the law between the parties and must be enforced. The claim for damages is
unavailing, in the absence of malice or bad faith. (Master Shirt Co. v. NLRC, 300 SCRA 649,
29 December 1998)


Thank you to Cris, Yumi, Andrew and Sten.



1997 CASES

Q. In an illegal dismissal case, the Labor Arbiter ruled in favor of the complainant and ordered
his reinstatement. The employer appealed. Refusing to reinstate the worker pending appeal,
the employer claims that the order of reinstatement needs a writ of execution. The employer
further maintains that even if a writ of execution was issued, a timely appeal coupled by the
posting of appropriate supersedeas bond effectively forestalled and stayed the execution of the
Labor Arbiters reinstatement order. Is the employers contention correct?

A. No, the employers contention is erroneous. The law as now worded employs the phrase
shall immediately be executory without qualification emphasizing the need for prompt
compliance. The term shall denotes an imperative obligation and is inconsistent with the idea
of discretion. The Labor Arbiters order of reinstatement does not need a writ of execution. It
is self-executory. The posting of a bond by the employer shall not stay the execution for
reinstatement. After receipt of the decision ordering reinstatement, the employer has the right
to chose whether to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance,
the employer has to inform the employee of his choice. (Pioneer Texturizing Corp. v. NLRC,
280 SCRA 806, October 16, 1997)

Q. When can R.A. No. 7641 (Retirement Pay Law), which took effect on January 7, 1993, be given
retroactive effect?

Page 16 of 20

A. R.A. 7641 may be given retroactive effect where (1) the claimant for retirement benefits was
still the employee of the employer at the time the statute took effect; and (2) the claimant was in
compliance with the requirements for eligibility under the statute for such retirement benefits.
Thus, the law can apply to labor contracts still existing at the time the statute took effect and its
benefits can be reckoned not only from the date of the laws enactment but retroactively to the
time said employment contracts have started. (Cabcaban v. NLRC, 277 SCRA 671, August
18, 1997)

Q. An insurance agent was required to solicit business exclusively for AFP Mutual Benefit Association,
Inc. pursuant to an Insurance Commission regulation. He was also bound by company policies,
memo/circulars, rules and regulations issued by the company relating to payment of the agents
accountabilities, availment by the agent of cash advances, incentives and awards, and other matters
concerning the selling of insurance, in accordance with the rules promulgated by the Insurance
Commission. Given this set of facts, can the insurance agent be considered an employee of the
company?

A. No, the facts are not sufficient to support the conclusion that there exists an employer-
employee relationship between the agent and the company. The significant factor in
determining the relationship of the parties is the presence or absence of supervisory authority to
control the method and the details of performance of the service being rendered, and the
degree to which the principal may intervene to exercise such control. Not every form of control,
however, may be accorded the effect of establishing an employer-employee relationship.
There is a difference between rules that merely serve as guidelines towards the achievement of
the mutually desired result without dictating the means or methods to be employed in attaining
it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.
In this case, the rules that the agent should follow merely aim to promote the result desired,
primarily to conform to the requirements of the Insurance Commission. (AFP Mutual Benefit
Association v. NLRC, 267 SCRA 47, January 28, 1997)

Q. An employer appealed from the Labor Arbiters decision. Instead of posting cash or surety bond, the
employer posted a Real Estate Bond consisting of land and various improvements. Is such property bond
allowed?

A. While Article 223 of the Labor Code provides that an appeal by the employer may be
perfected only upon the posting of cash or surety bond, this provision should be given a liberal
interpretation. This policy stresses the importance of deciding cases on the basis of their
substantive merit and not on strict technical rules. When the real property bond sufficiently
protects the interests of the workers should they finally prevail, the appeal should be allowed.
(UERM-Memorial Medical Center v. NLRC, 269 SCRA 70, March 3, 1997)

Q. CFTI, a close family corporation owned by the Naguiat family, stopped its taxi business within Clark
Air Base because of the phase-out of U.S. military presence at the said installation. In an illegal
dismissal complaint filed by CFTIs dismissed employees, the Labor Arbiter ruled that Sergio Naguiat,
CFTIs president who had actively engaged in the management and operation of the corporation, was
solidarily liable with CFTI for the separation pay due the employees. Is the Labor Arbiters ruling
correct?

Page 17 of 20

A. Yes, the ruling is correct. Sergio Naguiat can be held solidarily liable with the corporation.
First, as the president of CFTI who actively managed the business, Naguiat falls within the
meaning of an employer as contemplated by the Labor Code, who may be held jointly and
severally liable for the obligations of the corporation to its dismissed employees. Second,
Section 100 of the Corporation Code states that stockholders actively engaged in the
management or operation of the business of a close corporation shall be personally liable for
corporate torts unless the corporation has obtained reasonably adequate liability insurance.
Tort is a breach of a legal duty. Since the Labor Code mandates the payment of separation
pay to employees in case of closure or cessation of operations not due to business losses,
failure to comply with this law-imposed duty can be considered a corporate tort. Hence,
pursuant to the Corporation Code, Naguiat should be held solidarily liable for this corporate
tort. In this case, the rule that a corporate officer cannot be held solidarily liable with a
corporation in the absence of evidence that he acted in bad faith is not applicable. (Naguiat v.
NLRC, 269 SCRA 564, March 13, 1997)

***In another case, the Court held:

The fictional veil of a corporation can be pierced by the very same law which created it
when the notion of the legal entity is used as a means to perpetrate fraud, an illegal act, as a
vehicle for the evasion of an existing obligation, and to confuse legitimate issues. Under the
Labor Code, for instance, when a corporation violates a provision declared to be penal in
nature, the penalty shall be imposed upon the guilty officer or officers of the corporation.

To justify solidary liability, there must be an allegation or showing that the officers of the
corporation deliberately or maliciously designed to evade the financial obligation of the
corporation to its employees, or a showing that the officers indiscriminately stopped its business
to perpetrate an illegal act, as a vehicle for the evasion of existing obligations, in circumvention
of statutes, and to confuse legitimate issues. (Reahs Corporation v. NLRC, 271 SCRA 247,
April 15, 1997)

Q. Purificacion was a founding member, a member of the Board of Trustees, and the corporate secretary
of pamana Golden Care Medical Center Foundation, a non-stock corporation engaged in extending
medical and surgical services. In 1990, the Board of Trustees issued a memorandum appointing
Purificacion as Medical Director and Hospital Administrator of the foundations medical center. A
medical director and aa hospital administrator are considered as corporate officers under the foundations
by-laws. When the Board of Trustees relieved Purificacion of her position as Medical Director and
Hospital Administrator, she filed a complaint for illegal dismissal and non-payment of wages before the
Labor Arbiter. Does the Labor Arbiter have jurisdiction over the case?

A. No, the Labor Arbiter has no jurisdiction over the case. The Securities and Exchange
Commission has jurisdiction. The charges filed by Purificacion partake of the nature of an intra-
corporate controversy. An office is created by the charter of the corporation and the officer is
elected by the directors or stockholders. On the other hand, an employee usually occupies no
office and generally is employed not by action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be paid such
employee. In this case, Purificacion was appointed by the Board of Trustees to offices stated in
the by-laws. She is deemed an officer of the corpporation. An officers dismissal is always a
corporate act, or an intra-corporate controversy, and the nature is not altered by the reason or
wisdom which the Board of Directors may have in taking such action. The question of
remuneration of an officer is likewise not a simple labor problem but a matter that comes within
Page 18 of 20

the area of corporate affairs and management and is a corporate controversy. (Tabang v.
NLRC, 266 SCRA 462, January 21, 1997)

Q. Reformist Union, a labor union staged a strike against R.B. Liner in 1989. R.B. Liner petitioned the
Secretary of Labor to assume jurisdiction over the dispute or certify it to the NLRC. The Secretary
certified the case to the NLRC for compulsory arbitration. The certified case was dismissed after the
union and the company reached an agreement providing, among others, for the holding of a certification
election. Later, when the union filed a complaint for unfair labor practice against the company, i.e.
illegal lockout that allegedly took place after the strike and the election, R.B. Liner countered with
another case that sought to declare the 1989 strike illegal. Can the company still contest the legality of
the 1989 strike?

A. No, the company can no longer contest the legality of the strike. The company itself sought
compulsory arbitration in order to resolve that very issue. The dispute or strike was settled
when the company and the union entered into an agreement. By acceding to the peaceful
settlement brokered by the NLRC, the company waived the issue of the illegality of the strike.
The very nature of compulsory arbitration makes the settlement binding upon the company.
Compulsory arbitration has been defined both as the process of settlement of labor disputes by
a government agency which has the authority to investigate and to make an award which is
binding on all the parties, and as a mode of arbitration where the parties are compelled to
accept the resolution of their dispute through arbitration by a third party. Clearly, the legality of
the strike can no longer be reviewed. (Reformist Union of R.B. Liner, Inc. v. NLRC, 266
SCRA 713, January 27, 1997)

Q. From 1953 until 1991, Honorio worked as maintenance man, carpenter, plumber, electrician
and mason at the Tanjangco apartments and residential buildings. In short, he took charge of
the maintenance and repair of the buildings. He reported for work from 7:00 a.m. to 4:00 p.m..
He earned P180 a day (latest salary). When Honorio filed a complaint for illegal dismissal,
Tanjangco claimed that Honorio was an independent contractor. Tanjangco further claimed
that even assuming that Honorio can be considered an employee, he was merely a project
employee whose services were hired only with respect to a specific job and only while the same
exists.

(a) On the basis of this set of facts, can Honorio be considered an independent contractor?

A. No, Honorio was not an independent contractor but an employee of Tanjangco. He was not
compensated in terms of profits for his labor orservices like an independent contractor. Rather,
he was paid on a daily wage basis. It is absurd to expect that with such humble resources,
Honorio woulld have substantial capital or investment in the form of tools, equipment, and
machineries with which to conduct the business of supplying Tanjangco with manpower and
services for maintaining the apartments and buildings. The most important requisite of control
that determines the existence of an employer-employee relationship is present. The power of
control refers merely to the existence of the power and not to the actual exercise thereof.
Naturally, Honorios work as maintenance man had to be performed within the premises of
Tanjangco. It is not far-fetched to expect that Honorio had to observe the instructions and
specifications given by Tanjangco as to how his work had to be performed. Tanjangco could
easily exercise control on Honorio.

(b) What kind of an employee is Honorio?

Page 19 of 20

A. Honorio is a regular employee. There are two kinds of regular employees: (1) those who are
engaged to perform activities which are usually necessary or desirable in the usual trade or
business of the employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are employed.
Whichever standard is applied, Honorio qualifies as a regular employee. Honorio cannot be
considered a project employee. If he was employed as a project employee, Tanjangco should
have submitted a report of termination to the nearest public employment office everytime his
employment is terminated due to completion of each project, as required by Policy Instruction
No. 20. There should have been filed as many reports of termination as there were projects
actually finished. (Aurora Land Projects Corp. v. NLRC, 266 SCRA 48, January 2, 1997)

Q. Antonio was hired by Orient Express as crane operator subject to a 3-month probationary
period. After only one month and five days, he was dismissed. When he filed a complaint for
illegal dismissal, Orient Express claimed that he was terminated for poor job performance.
Orient Express did not inform Antonio about the standards of work required of him by which his
competency would be adjudged. When he was dismissed, Orient Express did not point out the
reasonable standards of work by which he was evaluated and how he failed to live up to such
standards. Is the dismissal valid?

A. No, the dismissal is not valid. The services of an employee hired on a probationary basis
may be terminated when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement. Antonios dismissal cannot be sustained on this ground because Orient Express
failed to specify the reasonable standards by which Antonios alleged poor performance was
evaluated, much less to prove that such standards were made known to him at the time of his
recruitment. (Orient Express Placement Philippines v. NLRC, 273 SCRA 256, June 11,
1997)

Q. Capili was an instructor of a private educational institution. In 1993, the school informed
Capili that he would be eligible for retirement when he would reach the age of 60 years. Capili
answered that he was not opting to retire but would continue to serve until he reaches the age
of 65. When the school reiterated its position that it could retire him, Capili filed a complaint
questioning his forced retirement. Later, after receiving the Labor Arbiters decision but before
filing his appeal, Capili received partial payment of his retirement pay. During the pendency of
his apppeal with the NLRC, he received full payment of his retirement benefiits.

(a) Can an employee be compelled to retire at the age of sixty years?

A. No, an employee cannot be compelled to retire at the age of sixty years in the absence of a
provision on retirement in the CBA or if the employer has no retirement plan. Under the Labor
Code, as amended by R..A. NO. 7641, the option of the employer to retire an employee at age
60 no longer exists. Under the present rule, the option to retire upon reaching the age of 60
years or more but not beyond 65 is the exclusive prerogative of the employee if there is no
provision on retirement in the CBA or any agreement or if the employer has no retirement plan.

(b) Will the subsequent acceptance of retirement benefits estop an employee
from pursuing his complaint questioning the validity of his forced retirement?

Page 20 of 20

A. Yes, the acceptance of retirement benefits will estop the employee from pursuing his case.
By accepting the retirement benefits, the employee is deemed to have opted to retire under the
present rule stated above. (Capili v. NLRC, 273 SCRA 576, June 17, 1997)

Q. Can an employee unilaterally withdraw his/her resignation?

A. No, an employee cannot unilaterally withdraw his/her resignation. Resignation, once
accepted, may not be withdrawn without the consent of the employer. If the employer consents
to the withdrawal, the employee retains the job. If the employer does not, the employee cannot
claim illegal dismissal. To say that an employee who has resigned is illegally dismissed is to
encroach upon the right of the employers to hire persons who will be of service to them. An
employment contract is consensual and voluntary. If the resignation is accepted by the
employer, its consequent effect is severance of the contract of employment. A resigned
employee who desires to take his job back has to reapply therefor and cannot demand an
appointment. (Philippines Today, Inc. v. NLRC, 267 SCRA 202, January 30, 1997)

Q. Can the employer dismiss an employee who is afflicted with pulmonary tuberculosis?

A. Yes, but only if there is a prior certification from a competent public authority that the disease
afflicting the employee sought to be dismissed is of such nature or at such stage that it cannot
be cured within six (6) months even with proper medical treatment. The fact that an employee
is suffering from a disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to that of his co-employees does not ipso facto make the
employee a candidate for dismissal. (Tan v. NLRC, 271 SCRA 216, April 14, 1997)

Q. In the proceedings before the Labor Arbiter, only the unregistered trade name of the
employercorporation, Hacienda Lanutan, and its administrator-manager were impleaded and
subsequently held liable for illegal dismissal. On appeal, the NLRC motu proprio included the
corporate name of the employer as jointly and severally liable for the workers claims. There is
no dispute that Hacienda Lanutan which was owned solely by the employer-corporation was
impleaded and heard. It was represented by its corporate officer in the proceedings before the
Labor Arbiter. Is the NLRCs action justified?

A. Yes, the action is justified. In quasi-judicial proceedings, procedural rules governing service
of summons are not strictly construed. Substantial compliance thereof is sufficient. In labor
cases, punctillious adherence to stringent technical rules may be relaxed in the interest of the
worker; it should not defeat the complete and equitable resolution of the rights and obligations
of the parties. Furthermore, the NLRC is given the power to correct, amend, or waive any
error, defect or irregularity whether in the substance or in the form of the proceedings before it.
The non-inclusion of the corporate name of the employer was a mere procedural error which did
not at all affect the jurisdiction of the labor tribunals. (Pison-Arceo Agricultural and
Development Corp. v. NLRC, 279 SCRA 312, September 18, 1997)