PRINCIPLES on RECRUITMENT AND PLACEMENT

ILLEGAL RECRUITMENT

Mere impression that a person could deploy workers overseas is

sufficient to constitute illegal recruitment. But if no such
impression is given, the accused should not be convicted for
illegal recruitment.

Mere promise or offer of employment abroad amounts to

recruitment.

There is no need to show that accused represented himself as a

licensed recruiter. Referrals may constitute illegal recruitment.

It is illegal recruitment to induce applicants to part with their

money upon false misrepresentations and promises in assuring
them that after they paid the placement fee, jobs abroad were
waiting for them and that they would be deployed soon.

Recruitment whether done for profit or not is immaterial.

The act of receiving money far exceeding the amount as required

by law is not considered as recruitment and placement as this
phrase is contemplated under the law.

Actual receipt of fee is not an element of the crime of illegal

recruitment. Conduct of interviews amounts to illegal
recruitment.

Absence of receipt is not essential to hold a person guilty of

illegal recruitment.

Conviction for illegal recruitment may be made on the strength

of the testimonies of the complainants.

Absence of documents evidencing the recruitment activities

strengthens, not weakens, the case for illegal recruitment.

Only one person recruited is sufficient to convict one for illegal

recruitment. Non-prosecution of another suspect is immaterial.

Execution of affidavit of desistance affects only the civil liability

but has no effect on the criminal liability for illegal recruitment.

Defense of denial cannot prevail over positive identification.

Positive identification where categorical and consistent and not
attended by any showing of ill motive on the part of the
eyewitnesses on the matter prevails over alibi and denial.
Between the categorical statements of the prosecution
witnesses, on the one hand, and bare denials of the accused, on
the other hand, the former must prevail.
ILLEGAL RECRUITMENT INVOLVING ECONOMIC SABOTAGE

The number of persons victimized is determinative of the crime.

A conviction for large scale illegal recruitment must be based on
a finding in each case of illegal recruitment of three (3) or more
persons having been recruited, whether individually or as a
group.

Failure to prove at least 3 persons recruited makes the crime a

case of simple illegal recruitment.

There is no illegal recruitment in large scale based on several

informations filed by only one complainant.

The number of offenders is not material in illegal recruitment in

large scale.

Recruitment in large scale or by a syndicate is malum prohibitum

and not malum in se.
ILLEGAL RECRUITMENT AND ESTAFA AS SEPARATE CRIMES

Same evidence to prove illegal recruitment may be used to prove

estafa.

Conviction for both illegal recruitment and estafa, not double

jeopardy
MONEY CLAIMS OF OFWS

Solidary liability exists even if the foreign principal is a foreign

government instrumentality; immunity from suit cannot be
invoked to defeat the solidary nature of the liability.

Extension of term of employment of OFW without knowledge of

local agent does not bind the latter.

Effect on liability of severance of relations between local agent

and foreign principal. Even if the recruitment agency and the
foreign principal had already severed their agency agreement at
the time the worker was injured, the recruitment agency may still
be sued for violation of the employment contract if no notice of
the termination of the agencys agreement with its foreign

principal was given to the OFW, pursuant to Article 1921 of the

Civil Code which states that if the agency has been entrusted for
the purpose of contracting with specified persons, its revocation
shall not prejudice the latter if they were not given notice
thereof.
Previous owner remains liable to its employees even if there is an
undertaking to assume responsibility by the new owner. The
liability of the former owner of the recruitment agency is not
extinguished by an undertaking made by the new owner thereof
assuming responsibility therefor. Such undertaking does not bind
the employees as would release the former from its liability to
the latter.

PERSONS LIABLE FOR ILLEGAL RECRUITMENT

Employees of a licensed recruitment agency may be held liable

for illegal recruitment as principal by direct participation,
together with his employer, if it is shown that he actively and
consciously participated in illegal recruitment.

Good faith and merely following orders of superiors are not valid
defenses of an employee.

A manager of a recruitment/manning agency is not a mere

employee. As such, he receives job applications, interviews
applicants and informs them of the agencys requirement of
payment of performance or cash bond prior to the applicants
deployment. As the crewing manager, he was at the forefront of
the companys recruitment activities.

Administrative liability of licensee or holder of authority, separate

and distinct from criminal liability for illegal recruitment.

The institution of the criminal action is without prejudice to any

administrative action against the licensee or holder of authority
cognizable by the POEA which could proceed independently of
the criminal action.
EMPLOYMENT OF OFWs

Indefinite period of employment of OFWs is not valid as it

contravenes the explicit provision of the POEA Rules and
Regulations on fixed-period employment.

OFWs do not become regular employees by reason of nature of

work, that is, that they are made to perform work that is usually
necessary and desirable in the usual business or trade of the
employer. The exigencies of their work necessitate that they be
employed on a contractual basis. This notwithstanding the fact
that they have rendered more than twenty (20) years of service.

Regular employment does not result from the series of re-hiring

of OFWs.

The fixed-period employment of OFWs is not discriminatory

against them nor does it favor foreign employers. It is for the
mutual interest of both the seafarer and the employer why the
employment status must be contractual only or for a certain
period of time. Seafarers spend most of their time at sea and
understandably, they cannot stay for a long and an indefinite
period of time at sea. Limited access to shore society during the
employment will have an adverse impact on the seafarer. The
national, cultural and lingual diversity among the crew during the
contract of employment is a reality that necessitates the
limitation of its period.

The expiration of the employment contracts of OFWs marks its

ending.
MONETARY AWARDS TO OFWs

Monetary award to OFW is not in the nature of separation pay or

backwages but a form of indemnity.

Only salaries are to be included in the computation of the

amount due for the unexpired portion of the contract. Overtime,
holiday and leave pay and allowances are not included. However,
this rule on exclusion of allowance does not apply in case it is
encapsulated in the basic salary clause.

Entitlement to overtime pay of OFWs. - As far as entitlement to

overtime pay is concerned, the correct criterion in determining
whether or not sailors are entitled to overtime pay is not whether
they were on board and cannot leave ship beyond the regular
eight (8) working hours a day, but whether they actually
rendered service in excess of said number of hours. An OFW is
not entitled to overtime pay, even if guaranteed, if he failed to

present any evidence to prove that he rendered service in excess

of the regular eight (8) working hours a day.
In case of unauthorized deductions from OFWs salary , he shall
be entitled to the full reimbursement of the deductions made
with interest at twelve percent (12%) per annum. This is in
addition to the full reimbursement of his placement fee with the
same interest of twelve percent (12%) per annum plus his
salaries for the unexpired portion of his employment contract if
he is terminated without just, valid or authorized cause as
defined by law or contract.
Costs of repatriation and transport of personal belongings should
be included in the monetary award to an illegally dismissed OFW.
Right of the employer to recover cost of repatriation from OFWs
wages hinges on whether the latter was legally or illegally
dismissed. If validly discharged, employer has the right to
recover therefrom; otherwise, he cannot so recover.
Unauthorized substitution or alteration of POEA-approved
employment contract from the time of actual signing thereof by
the parties up to and including the period of their expiration
without the approval of the POEA is prohibited.
Effect of a final and executory judgment against a foreign
employer/principal. - It shall be automatically disqualified,
without further proceedings, from participating in the Philippine
Overseas Employment Program and from recruiting and hiring
Filipino workers until and unless it fully satisfies the judgment
award.

DISABILITY CLAIMS OF OFWs

The POEA-SEC is the law between the parties.

Injury is not the one compensated but the incapacity to work

resulting in the impairment of ones earning capacity. Disability
should be understood not more on its medical significance, but
on the loss of earning capacity.

Disability arising from pre-existing illness is not compensable.

Self-inflicted injury is not compensable.

Strict rules of evidence are not applicable to compensation and

disability claims cases of OFWs.

Misrepresentation on disability claims on the part of the claimant

would defeat the claim for total permanent disability.

When the benefit under the law of registry of the vessel is higher
than Philippine law, it is correct to resolve the award based on
the law of registry of the vessel providing greater benefit.

Failure to submit for post-employment medical examination by

company-designated physician within three (3) working days
from repatriation which is a condition sine qua non, bars the
filing of a claim for disability benefits.

The company-designated physician should make a definite

assessment of the seafarers fitness to work or permanent
disability within the period of 120 or 240 days. If the companydesignated physician fails to arrive at a definite assessment of
the seafarer's fitness to work or permanent disability within the
period of 120 or 240 days, the latter shall be deemed totally and
permanently disabled. On the other hand, an employee's
disability becomes permanent and total even before the lapse of
the statutory 240-day treatment period, when it becomes
evident that the employee's disability continues and he is unable
to engage in gainful employment during such period because, for
instance, he underwent surgery and it evidently appears that he
could not recover therefrom within the statutory period.

Accreditation with the POEA of the company-designated

physician is not necessary. Findings of company-designated
physician are not conclusive.

OFW has the right to present controverting evidence.

OFW has the right to seek a second opinion from physicians

other than company- designated physician.

The procedure in jointly engaging a third doctor whose decision

is final and binding on both parties should be complied with.

In case of conflict of opinions, that which is favorable to the OFW

should be adopted. When opinion from an independent third
physician is not secured by the parties, the NLRC has authority to
evaluate the credibility of the findings of their respective doctors
on the basis of their inherent merits.

Moral and exemplary damages may be awarded in disability

claims cases filed by OFWs for their physical suffering and
mental anguish.
Attorneys fees may be granted if OFW is compelled to litigate or
to incur expenses to protect his interest or in any other case
where the court deems it just and equitable to grant.

DEATH BENEFITS OFWs

Death, to be compensable, should be shown to have been

caused by an illness acquired during the term of his employment.
Indeed, the death of a seaman several months after his
repatriation for illness does not necessarily mean that: (a) the
seaman died of the same illness; (b) his working conditions
increased the risk of contracting the illness which caused his
death; and (c) the death is compensable, unless there is some
reasonable basis to support otherwise.

If death is caused by the OFW himself, it is not compensable.

Even in case of death of a seafarer, the grant of benefits in favor

of the heirs of the deceased is not automatic. Without a postmedical examination or its equivalent to show that the disease
for which the seaman died was contracted during his
employment or that his working conditions increased the risk of
contracting the ailment, the employer cannot be made liable for
death compensation.287In fact, the death of a seaman even
during the term of employment does not automatically give rise
to compensation

PRINCIPLES on LABOR STANDARDS

DEDUCTIONS

Deductions due to tardiness or absences. - Tardiness or

absences may be lawfully deducted from the wages of the
workers. For purposes of computing the proper amount of
deduction for the same, the equivalent daily rate (EDR) of the
employee concerned should be used as the basis thereof.

Deductions from 13th month pay. - 13th month pay is

considered part of wages within the meaning and
contemplation of the Labor Code.70No deduction therefore can
be made therefrom without the knowledge and consent of the
employee concerned. Example: In Agabon v. NLRC, the
Supreme Court disallowed for being unauthorized the deduction
of SSS loan and the value of shoes from the 13th month pay of
the employee.

Deductions due to losses on account of alleged

negligence. - In the case of Metropolitan Bank and Trust
Company v. NLRC,72 the act of the bank in deducting P1,000.00
bi-monthly from the salary of a bank teller supposedly to answer
for the loss of P96,370.00 on account of her negligence in failing
to ask the alleged representative of the depositor to present
identification papers and in failing to verify the withdrawal of the
client-depositor considering the large amount involved as
required by the Manual of Procedure of the bank, was held, under
the circumstances, constitutive of illegal deduction since it was
common knowledge that the bank procedures have been relaxed
especially to accommodate special clients who are often allowed
to go directly to the bank officials to facilitate withdrawals. The
teller here was more of a victim than a culprit.

Deductions due to error in the automated payroll system.

- In TSPIC Corp. v. TSPIC Employees Union [FFW], the
deductions made to correct the erroneous overpayment of
salaries were held valid since no vested right could have accrued
in favor of the employees. Hence, any amount given to the
employees in excess of what they were legally entitled to may be
deducted by the employer from the employees salaries.
NON-DIMINUTION PRINCIPLE

As a final word, the Supreme Court, on the issue of what should

be included in the computation of the 13th month pay, declared
that no more error can be asserted at this late hour in the
reckoning of the basic salary as basis for the computation of
the 13th month pay because from the inception of P.D. No. 851
on December 16, 1975, clear-cut administrative guidelines have
been issued to insure uniformity in the interpretation,
application, and enforcement of the provisions of P.D. No. 851
and its implementing rules and regulations. Thus, an employer
cannot successfully assert that it has committed an honest error
in including such salary-related benefits as the cash equivalent of
unused vacation and sick leave credits, overtime, premium, night
differential and holiday pay, and cost-of-living allowances in the
computation of the 13th month pay.

No company practice could ripen in situations where certain

benefits are granted only under certain specified circumstances
such as in case of payment of per diem, relocation allowance,
dislocation pay, gasoline allowance, or similar supplements.
Consequently, even if the employee has been enjoying certain
benefits for quite a long period of time, if the circumstances have
changed which no longer justify the continuation of the grant of
said benefits, the removal thereof does not certainly constitute a
violation of the non-diminution of benefits principle. Thus, the
grant of relocation allowance, dislocation pay, gasoline allowance
or per diem intended for board and lodging once an employee is
assigned away from his home base, may be discontinued if the
employee is no longer assigned to posts requiring the grant
thereof.

Existence of a company practice must be duly proved by

evidence.
FACILITIES AND SUPPLEMENTS

Facilities are deductible from wage but not supplements.

Legal requirements must be complied with before facilities may

be deducted from wages. The employer simply cannot deduct

the value from the employees wages without satisfying the

following:
(1)Proof that such facilities are customarily furnished by the
trade;
(2)The provision of deductible facilities is voluntarily accepted
in writing by the employee; and
(3)The facilities are charged at fair and reasonable value.
An employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less than thirty
percent (30%) of the fair and reasonable value of such facilities.
In such a case, the employer may deduct from the wages of the
employees not more than seventy percent (70%) of the value of
the meals and snacks enjoyed by the employees, provided that
such deduction is with the written authorization of the employees
concerned.
The free board and lodging petitioner SIP furnished its employees
cannot operate as a set-off for the underpayment of their wages.

WEEKLY REST DAY

Where the weekly rest is given to all employees simultaneously,

the employer should make known such rest period by means of a
written notice posted conspicuously in the workplace at least one
(1) week before it becomes effective.

Where the rest period is not granted to all employees

simultaneously and collectively, the employer shall make known
to the employees their respective schedules of weekly rest day
through written notices posted conspicuously in the workplace at
least one (1) week before they become effective.

An express waiver of compensation for work on rest days and

holidays provided in an employment contract which fixes annual
compensation of the employees is not valid and does not operate
to bar claims for extra compensation therefor.

Rest day cannot be offset by regular workdays

HOLIDAYS

Non-Muslims are entitled to Muslim holiday pay during Muslim

holidays considering that all private corporations, offices,
agencies, and entities or establishments operating within the
designated Muslim provinces and cities are required to observe
Muslim holidays, hence, both Muslims and Christians working
within the Muslim areas may not report for work on the days
designated by law as Muslim holidays.

The day designated by law for holding a general election is

deemed a regular holiday.

As far as the May 13, 2013 midterm elections are concerned,

President Benigno Aquino III declared under Proclamation No.
571, signed on April 24, 2013, that it is a special public non working holiday. As such, the "no work, no pay" principle shall
apply. Employees who choose to work on that day as allowed by
their employers shall be paid an additional thirty percent (30%)
of the salary due to them for the day.

In case of two (2) regular holidays falling on the same day, the
worker should be compensated as follows:

If unworked - 200% for the two regular holidays;

If worked - 200% for the two regular holidays plus premium

of 100% for work on that day.30

Monthly-paid employees are not excluded from the coverage of

holiday pay. (Note: A monthly-paid employee refers to one who
is paid his wage or salary for every day of the month, including
rest days, Sundays, regular or special days, although he does not
regularly work on these days. A daily-paid employee refers to
one who is paid his wage or salary only on the days he actually
worked, except in cases of regular holidays wherein he is paid his
wage or salary even if he does not work during those days,
provided that he is present or on leave of absence with pay on
the working day immediately preceding the regular holidays. As
distinguished from monthly-paid employees who are assured of
being paid for every day of the month, the provision of the Labor
Code on holiday pay is principally intended to benefit daily-paid
employees who are normally bound by the principle of no work,
no pay. Before the advent of the Labor Code, they are not paid
for unworked regular holidays).

Regular or special holiday pay benefit cannot be withdrawn after

being practiced for quite a time as when it has been practiced
continuously for eight (8) months.
Offsetting of holiday work with work on regular days is not
allowed.

13TH MONTH PAY

Basic salary or basic wage contemplates work within the

normal eight (8) working hours in a day. This means that the
basic salary of an employee for purposes of computing the 13th
month pay should include all remunerations or earnings paid by
the employer for services rendered during normal working hours.

For purposes of computing the 13th month pay, basic salary

should be interpreted to mean not the amount actually received
by an employee, but1/12 of their standard monthly wage
multiplied by their length of service within a given calendar year.

Extras, casuals and seasonal employees are entitled to 13th

month pay.

SEXUAL HARASSMENT

The employer or head of office or the educational or training

institution are solidarily liable for damages arising from the acts
of sexual harassment committed in an employment, education or
training environment, if such employer or head of office or
educational or training institution is informed of such acts by the
offended party and no immediate action is taken thereon.

The victim of sexual harassment is not precluded from instituting

a separate and independent action for damages and other
affirmative reliefs.

Any action arising from sexual harassment prescribes in three (3)

years.

Any person who violates the provisions of R.A. No. 7877 shall,
upon conviction, be penalized by imprisonment of not less than
one (1) month nor more than six (6) months, or a fine of not less
than ten thousand pesos (P10,000.00) nor more than twenty
thousand pesos (P20,000.00) , or both such fine and
imprisonment at the discretion of the court.
WAGE OF KASAMBAHAY

Frequency of payment of wages. - The wages of the Kasambahay

shall be paid at least once a month. This is so because the
minimum wage rates are on a monthly basis.

The equivalent minimum daily wage rate of the Kasambahay

shall be determined by dividing the applicable minimum monthly
rate by thirty (30) days

The amount of the minimum wage depends on the geographical

area where the Kasambahay works.

Payment of wages:
1.
To whom paid. - It should be made on time directly to the
Kasambahay to whom they are due in cash at least once a
month.
2.
Deductions, prohibition; when allowed. - The employer,
unless allowed by the Kasambahay through a written
consent, shall make no deductions from the wages other
than that which is mandated by law such as for SSS,
Philhealth or Pag-IBIG contributions.
Deduction for loss or damage shall only be made under the
following conditions:
(a)
The Kasambahay is clearly shown to be responsible for
the loss or damage;
(b)
The Kasambahay is given reasonable opportunity to
show cause why deduction should not be made;
(c)
The total amount of such deductions is fair and
reasonable and shall not exceed the actual loss or
damage; and
(d)
The deduction from the wages of the Kasambahay
does not exceed 20% of his/her wages in a month.
The DOLE shall extend free assistance in the determination
of fair and reasonable wage deductions.
3.
Mode of payment. - It should be paid in cash and not by
means of promissory notes, vouchers, coupons, tokens,

4.

5.

6.

tickets, chits, or any object other than the cash wage as

provided for under this Act.
Pay slip. - The employer shall at all times provide the
Kasambahay with a copy of the pay slip containing the
amount paid in cash every pay day, and indicating all
deductions made, if any. The copies of the pay slip shall be
kept by the employer for a period of three (3) years.
Prohibition on Interference in the disposal of wages. - It shall
be unlawful for the employer to interfere with the freedom of
the Kasambahay in the disposition of his/her wages, such as:
(a)
Forcing, compelling, or obliging the Kasambahay to
purchase
merchandise,
commodities
or
other
properties from the employer or from any other
person; or
(b)
Making use of any store or services of such employer
or any other person.
Prohibition against withholding of wages. - It shall be
unlawful for an employer, directly or indirectly, to withhold
the wages of the Kasambahay. If the Kasambahay leaves
without any justifiable reason, any unpaid salary for a period
not exceeding fifteen (15) days shall be forfeited. Likewise,
the employer shall not induce the Kasambahay to give up
any part of the wages by force, stealth, intimidation, threat
or by any other means whatsoever

PRINCIPLES on EMPLOYER-EMPLOYEE RELATIONSHIP

There is no uniform test prescribed by law or jurisprudence to
determine the existence of employer-employee relationship.
The existence of the employer-employee relationship is essential in
that it comprises as the jurisdictional basis for recovery under the
law. Only cases arising from said relationship are cognizable by the
labor courts.
The relationship of employer and employee is contractual in nature. It
may be an oral or written contract. A written contract is not
necessary for the creation and validity of the relationship.
Stipulation in a contract is not controlling in determining existence of
the relationship. The employment status of a person is defined and
prescribed by law and not by what the parties say it should be.
The mode of paying the salary or compensation of a worker does not
preclude existence of employer-employee relationship. Thus,
payment by commission7 or on a piece-rate basis or on a no work,
no pay basis does not affect existence of employment relationship.
Retainer fee arrangement does not give rise to employment
relationship
CASES WHERE EMPLOYMENT RELATIONSHIP EXISTS
1.
Dispatchers of a transportation company.
2.
Persons paid on boundary system basis in relation to the
transport operator such as jeepney drivers and conductors, taxi
drivers, auto-calesa driver, and bus driver. Under the boundary
system, the relationship between the driver and conductor of a
bus and the owner thereof is not that of lessee and lessor but
that of employee and employer.
3.
Musicians employed by a company producing motion pictures for
purposes of making music recordings for title music, background
music, musical numbers, finale music and other forms of music
without which a motion picture is not complete.
4.
Fishermen-crew who rendered services in various capacities
(patron/pilot, master fisherman, second fisherman, chief
engineer, and fisherman) aboard the fishing vessels of a
company engaged in trawl fishing and whose compensation
was paid in cash on percent commission basis.
5.
Stevedores, although supplied to the company by the labor
organization composed of various labor unions, are employees of
the company.
6.
Resident physicians. - There is employer-employee relationship
between resident physicians and the training hospitals unless:
a. there is a training agreement between them; and
b. the training program is duly accredited or approved by the
appropriate government agency.
7.
Employees of cooperatives, but not its members unless the
members are also employees thereof.
8.
Insurance agent
PRINCIPLES on TERMINATION OF EMPLOYMENT
PROBATIONARY EMPLOYMENT

The probationary period may be extended but only upon the

mutual agreement by the employer and the probationary
employee.

Purpose and not length of the probationary period is material.

An employee who is allowed to work after a probationary period

is considered a regular employee.

Employment is deemed regular if the employment contract has

no stipulation on probationary period.

Employee is deemed regular absent any contract to prove

probationary employment.

Repetitive rehiring of a probationary employee means he has

become a regular employee

Regular workers of previous owner of business may be hired as

probationary employees of new owner.

Probationary employment cannot be ad infinitum.

TERMINATION OF EMPLOYMENT OF PROBATIONARY EMPLOYEES

Procedural due process is required only in the case of the first

and second grounds (dismissal due to just or authorized cause) .
The thirdground (failure to qualify as a regular employee) does
not require notice and hearing. Due process of law for the third

ground consists of making the reasonable standards expected of

the employee during his probationary employment known to him
at the time of his engagement.
Termination to be valid must be done prior to lapse of
probationary period.
Termination a few days after lapse of probationary period cannot
be done without due process as he has already become a regular
employee by that time.
Peremptory and arbitrary termination of probationary employees
is not allowed.
No obligation to pay unexpired portion in case of valid
termination prior to lapse of probationary period.
Agabon doctrine applies if dismissal of probationary employee
for a just cause is without due process. Thus, the termination is
considered legal but the employee will be awarded an indemnity
in the form of nominal damages of P30,000.00.
Jaka doctrine applies if dismissal of probationary employee for
an authorized cause is without due process. The amount of
indemnity is higher: P50,000.00.

REGULAR EMPLOYMENT

Law presumes regularity of employment. The presumption

having been made by the law itself, it follows that an employee
is deemed regular by operation of law the moment the fact is
established that the nature of his work is directly related to the
principal business of the employer.

The phrase to perform activities which are usually necessary or

desirable in the usual business or trade of the employer
includes performance of peripheral jobs indirectly related to the
principal business of employer.

No declaration or appointment paper necessary to make one a

regular employee.

Fixed-period employment is the exception to the rule that an

employee becomes regular by reason of nature of work or period
of employment because in fixed-period employment, these
factors are not decisive indicators of regularity of employment.
The decisive determinant is the day certain agreed upon by the
parties for the commencement and termination of their
employment relationship, a day certain being understood to be
that which must necessarily come, although it may not be
known when.

Written or oral agreement is immaterial to determine regularity

of employment. The phrase the provisions of written agreement
to the contrary notwithstanding and regardless of the oral
agreement of the parties in Article 280 simply means that
irrespective of any written or oral agreement stating that the
employment is not regular, once the fact is established that the
employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the employer, his employment is regular by reason of its nature.

However, there is a need to execute a written employment

contract if the intention is to stipulate on such other kinds of
employment such as probationary, project, seasonal, casual or
fixed-term, as the case may be, because the absence thereof will
make the relationship that of regular employment. It is only by
proving the terms and conditions of the contract that the general
presumption that the relationship is regular in nature would be
effectively dispelled. Jurisprudence abounds where the nonpresentation of the written contract was held as evidence that
the status of employment is not what it purports to be, that is,
probationary, project, seasonal, casual or fixed-term but regular
employment.

The doctrine of adhesion applies to employment contracts. It

must be emphasized, however, that the rule on the interpretation
or construction of contracts of adhesion does not apply when the
stipulations contained in a contract are not obscure or
ambiguous. Besides, a contract of adhesion is not prohibited per
se.

The act of hiring and re-hiring the employees over a period of

time without considering them as regular employees evidences
bad faith on the part of the employer.

Manner and method of payment of wage or salary is immaterial

to the issue of whether the employee is regular or not.

PROJECT EMPLOYMENT

Project employees should be informed of their status as such at

inception of the employment relationship.

There must be a written contract of project employment stating

the duration of the project employment as well as the particular
work or service to be performed.

A written project employment contract is an indispensable

requirement.

Failure to present contract of project employment means that

employees are regular.

Regular employment is inconsistent with project employment. In

other words, a regular employee cannot be at the same time a
project employee.

Intervals in employment contracts indicate project employment.

Continuous, as opposed to intermittent, rehiring shows that

employee is regular.

Project-to-project basis of employment is valid.

Length of service is not a controlling determinant of employment

tenure.

Project employment should not be confused with fixed-term

employment to justify continuous rehiring of so-called project
employees
CASUAL EMPLOYMENT

Casual employee becomes regular after one year of service by

operation of law.

No regular appointment papers necessary for casual employees

to become regular.

The one (1) year period should be reckoned from the hiring date.

Repeated rehiring of a casual employee makes him a regular

employee.

The wages and benefits of a casual employee whose status is

converted into regular employment should not be diminished
FIXED-TERM EMPLOYMENT

Fixed-term employment is valid even if duties are usually

necessary or desirable in the employers usual business or trade.

Notice of termination not necessary in fixed-term employment.

Employee is deemed regular if contract failed to state the

specific fixed period of employment.

Charges for misconduct or other wrongful acts or omissions are

relevant only in termination prior to expiration of the term. They
are not relevant if termination is due to expiration of fixed period.

Employees allowed to work beyond fixed term become regular

employees.

Rendering work beyond one (1) year would result to regular

employment.

Successive renewals of fixed-period contracts will result to

regular employment.

Hiring of employees on a uniformly fixed 5-month basis and

replacing them upon the expiration of their contracts with other
workers with the same employment status circumvents their
right to security of tenure.

Employment on a day-to-day basis for a temporary period will

result to regular employment.

Termination prior to lapse of fixed-term contract should be for a

just or authorized cause.

Liability for illegal dismissal of fixed-term employee is only for

salary for unexpired portion.
FIXED-TERM EMPLOYMENT OF OFWs

OFWs can never acquire regular employment.

Employment contracts of OFWs for indefinite period are not valid.

OFWs do not become regular employees by reason of nature of

work.

Series of rehiring of OFWs cannot ripen into regular employment.

CBA cannot override the terms and conditions prescribed by the

POEA under the Standard Employment Contract (SEC) for OFWs.

Probationary employment of OFWs is a misnomer.

The employment of OFWs for a fixed period is not discriminatory.

The contracts of OFWs cease upon expiration thereof.

Hiring of seafarer for overseas employment but assigning him to

local vessel does not affect his status as an OFW.
Seafarer hired for overseas deployment but later assigned to
domestic operations after the expiration of his overseas contract
ceases to be an OFW.

SERIOUS MISCONDUCT

Serious misconduct implies that it must be of such grave and

aggravated character and not merely trivial or unimportant.

Simple or minor misconduct would not justify the termination of

the services of an employee.

The charge for serious misconduct must not be a mere

afterthought.

Series of irregularities, when put together, may constitute serious

misconduct.

Acts destructive of the morale of co-employees constitute serious

misconduct.

Committing libel against an immediate superior constitutes

serious misconduct.

Possession or use of shabu or other drugs is a valid ground to

terminate employment.

Immorality, as a general rule, is not a just ground to terminate

employment. The exception is when such immoral conduct is
prejudicial or detrimental to the interest of the employer.

Immoral act committed beyond office hours is a valid ground to

terminate employment.

Sexual intercourse inside company premises constitutes serious

misconduct.

The act of a 30-year old lady teacher in falling in love with a 16year old student is not immoral.

Fighting is a ground for termination but only the instigator or

aggressor and not the victim who was constrained to defend
himself should be dismissed.

Filing of criminal case by an employee does not indicate his

innocence.

Challenging superiors to a fight is a just cause for termination.

Assaulting another employee is a just cause for termination.

Utterance of obscene, insulting or offensive words constitutes

serious misconduct.

Disrespectful conduct is not serious misconduct if provoked by

superior or employer.

Gambling within company premises is a serious misconduct.

Rendering service to business rival is a just cause to terminate

employment.

Selling products of a competitor is a just cause for termination.

Organizing a credit union by employees in a bank is a serious

misconduct.

Deceiving a customer for personal gain is a just cause for

termination.

Contracting work in competition with employer constitutes

serious misconduct.

Employer need not suffer any damages resulting from a serious

misconduct committed by an employee against a customer.

Intoxication which interferes with the employees work

constitutes serious misconduct.

The act of a teacher in pressuring a colleague to change the

failing grade of a student is serious misconduct.

Sexual harassment is a just ground to dismiss.

Sleeping while on duty is a ground for termination.

Dismissal is too harsh a penalty for eating while at work.

Pilferage or theft of company-owned property is a just cause to

terminate.

Theft of funds or property not owned by employer is not a ground

to terminate.

INSUBORDINATION

Filing of a case questioning the validity of rules and policies does

not prevent employer from enforcing them.

Making false allegations in complaint does not constitute

insubordination.

Failure to answer memo to explain constitutes willful

disobedience.

Another notice is required in case of termination on the ground of

failure to answer memo to explain.
Willfulness of conduct may be deduced from the manner the
reply is written.
Refusal to undergo random drug testing constitutes both serious
misconduct and insubordination.
Prolonged practice, not an excuse for commission of wrongful
acts.
Refusal to render overtime to meet production deadline
constitutes insubordination.
Refusal to comply with a lawful transfer constitutes
insubordination.

GROSS AND HABITUAL NEGLECT OF DUTIES

Simple negligence is not sufficient to terminate employment.

The negligence must be gross in character which means absence

of that diligence that an ordinarily prudent man would use in his
own affairs.

As a general rule, negligence must be both gross and habitual to

be a valid ground to dismiss.

Habituality may be disregarded if negligence is gross or the

damage or loss is substantial.

Habitual negligence implies repeated failure to perform ones

duties for a period of time, depending upon the circumstances.

Negligence is a question of fact.

In the absence of any form of negligence, the dismissal is illegal.

Actual damage, loss or injury is not an essential requisite.

Higher degree of diligence is required in the banking industry.

Gross negligence may result to loss of trust and confidence.

No negligence if the act alleged to be so is in accordance with

standing company practice

No negligence if the act is in accordance with managementsanctioned deviations from the company policy.

Absences, if authorized, cannot be cited as a ground to terminate

employment.

Tardiness or absenteeism, if not habitual, cannot be cited as a

ground to terminate employment.

Tardiness or absenteeism, if habitual, may be cited as a ground

to terminate employment. Tardiness or absenteeism, if habitual,
may be tantamount to serious misconduct.

Absences or tardiness due to emergency, ailment or fortuitous

event are justified and may not be cited as just cause to
terminate employment.

Mere allegation of absences or tardiness is not sufficient; the

burden of proof is on the employer.

Unblemished record belies allegation of gross and habitual

neglect.

Unsatisfactory
or
poor
performance,
inefficiency
and
incompetence are considered just causes for dismissal only if
they amount to gross and habitual neglect of duties.
ABANDONMENT

Mere absence is not enough to constitute abandonment.

Clear intention to sever employment relationship is necessary.

An employee who stopped working because of her mistaken

belief that she has been dismissed is not guilty of abandonment.

Abandonment is a factual issue.

Employer has the burden of proof to prove abandonment.

There is no abandonment when it was the employer who

prevented the workers from reporting for work.

Due process in abandonment cases consists only of the service

of 2 notices to the employee, viz:
a. First notice directing the employee to explain why he
should not be declared as having abandoned his job; and
b. Second notice to inform him of the employers decision to
dismiss him on the ground of abandonment.

No hearing is required to validly dismiss an employee for

abandonment.

Notices in abandonment cases must be sent to employees last

known address per record of the company. The employer need
not look for the employees current whereabouts.

Service of the notices of abandonment of work after the sixmonth period of floating status is not valid.
Immediate filing of a complaint for illegal dismissal praying for
reinstatement negates abandonment
Lapse of time between dismissal and filing of a case is not a
material indication of abandonment. Hence, lapse of 2 years and
5 months or 20 months or 9 months or 8 months before filing the
complaint for illegal dismissal is not an indication of
abandonment. Under the law, the employee has a 4-year
prescriptive period within which to institute his action for illegal
dismissal.
The fact that an employee filed a complaint for illegal dismissal is
not by itself sufficient indicator that he had no intention of
deserting his employment if the totality of his antecedent acts
palpably display the contrary.
Filing of a case to pre-empt investigation of the administrative
case is tantamount to abandonment.
When what is prayed for in the complaint is separation pay and
not reinstatement, the filing of complaint does not negate
abandonment.
It is abandonment when what is prayed for in the complaint is
separation pay and it was only in the position paper that
reinstatement was prayed for.
Employment in another firm coinciding with the filing of
complaint does not indicate abandonment.
There is no abandonment when it was the employer who
prevented the workers from reporting for work.
Offer of reinstatement by employer during proceedings before
Labor Arbiter and refusal by employee does not indicate
abandonment but more of a symptom of strained relations
between the parties.
Subcontracting for another company indicates abandonment.
An employee may be absolved from the charge of abandonment
of work but adjudged guilty of AWOL. These two grounds are
separate and distinct from each other.
An employee who failed to report for work after the expiration of
the duly approved leave of absence is considered to have
abandoned his job.
An employee who failed to comply with the order for his
reinstatement is deemed to have abandoned his work.
An employee who, after being transferred to a new assignment,
did not report for work anymore is deemed to have abandoned
his job.
An employee who deliberately absented from work without leave
or permission from his employer for the purpose of looking for a
job elsewhere is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute
abandonment.
Absence to evade arrest is not a valid justification. To do so
would be to place an imprimatur on the employees attempt to
derail the normal course of the administration of justice.
Requesting for a Certificate of Employment is not evidence of
abandonment.
Employers insistence on commission of wrongful acts like estafa
and/or qualified theft by the employees negates the charge of
abandonment. Rather, it strengthens the finding of petitioners
discrimination, insensibility and antagonism towards the
employees which gave no choice to the latter except to forego
their employment.

FRAUD

Failure to deposit collection constitutes fraud.

Lack of damage or losses is not necessary in fraud cases. The

fact that the employer did not suffer losses from the dishonesty
of the dismissed employee because of its timely discovery does
not excuse the latter from any culpability.

Lack of misappropriation or shortage is immaterial in case of

unauthorized encashment of personal checks by teller and
cashier.

Restitution does not have absolutory effect

THE DOCTRINE OF LOSS OF TRUST AND CONFIDENCE

Employees position must be reposed with trust and confidence.

Position of trust and confidence is one where a person is

entrusted with confidence on delicate matters, or with the
custody, handling, or care and protection of the employers
property
Two (2) classes of positions of trust. The first class consists of
managerial employees or those who, by the nature of their
position, are entrusted with confidential and delicate matters and
from whom greater fidelity to duty is correspondingly expected.
They refer to those vested with the powers or prerogatives to lay
down and execute management policies and/or to hire, transfer
suspend, lay-off, recall, discharge, assign or discipline employees
or to effectively recommend such managerial actions. Their
primary duty consists of the management of the establishment in
which they are employed or of a department or a subdivision
thereof.
The second class includes cashiers, auditors, property
custodians, or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of [the
employers] money or property. They are fiduciary rank-and-file
employees who, though rank-and-file, are routinely charged with
the custody, handling or care and protection of the employer's
money or property, or entrusted with confidence on delicate
matters, and are thus classified as occupying positions of trust
and confidence.
Rules on termination of managerial and supervisory employees
different from those applicable to rank-and-file employees. As a
general rule, the doctrine of trust and confidence is restricted
to managerial employees. This means that the rules on
termination of employment applicable to managerial or fiduciary
employees are different from those involving ordinary employees
not holding positions of trust and confidence. In the latter case,
mere accusations by the employer will not be sufficient. Thus,
with respect to rank-and-file personnel, loss of trust and
confidence as a ground for valid dismissal requires proof of
involvement in the alleged events in question and that
mereuncorroborated assertions and accusations by the employer
will not be sufficient. But as regards a managerial employee, the
mere existence of a basis for believing that he has breached the
trust of his employer would suffice for his dismissal.
There must be some basis for the loss of trust and confidence
which means that there is reasonable ground to believe, if not to
entertain the moral conviction, that the concerned employee is
responsible for the misconduct and that the nature of his
participation therein rendered him absolutely unworthy of trust
and confidence demanded by his position.
In termination for loss of trust and confidence, the fact that the
employer did not suffer losses is of no moment.
Employer has burden of proof.
Dismissal due to feng shui mismatch is not a valid ground to lose
trust and confidence.149 Command responsibility of managerial
employees is a ground to dismiss.
Confidential employee may be dismissed for loss of trust and
confidence.
Grant of promotions and bonuses negates loss of trust and
confidence.
Long years of service, absence of derogatory record and small
amount involved are deemed inconsequential insofar as loss of
trust and confidence is concerned.
Dropping of criminal charges or acquittal in a criminal case
arising from the same act does not affect the validity of dismissal
based on loss of trust and confidence.
Full restitution does not absolve employee of offense which
resulted in the loss of trust and confidence

COMMISSION OF CRIME OR OFFENSE

Because of its gravity, work-relation is not necessary. Neither is it

necessary to show that the commission of the criminal act would
render the employee unfit to perform his work for the employer.

The phrase immediate members of the family refers to those

persons having family relations under Article 150 of the Family
Code, to wit:
(1)
Between husband and wife;
(2)
Between parents and children;
(3)
Among other ascendants and descendants; and

(4)

Among brothers and sisters, whether of the full or half-blood.

TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY

CLAUSE

Dismissal effected by the employer pursuant to a labor unions

demand in accordance with a union security agreement does not
constitute an unfair labor practice.

Employer is obligated to act upon being demanded by the union

to terminate the employment of its errant members.

Employer should afford due process to the expelled unionist.

The employee sought to be terminated should be afforded an

independent and separate hearing which means that the
employer is not duty-bound to immediately implement the
recommendation to terminate made by the union. It has to
conduct its own hearing independent and separate from any
hearing conducted by the union.

Employer has the liability for reinstatement, full backwages,

damages and attorneys fees in illegal dismissal cases based on
the union security clause.

The employer has the right to be reimbursed for payment of any

claims arising out of dismissals made upon demand of the union
under the union security clause

INSTALLATION OF LABOR-SAVING DEVICE

The installation of these devices is a management prerogative

and the courts will not interfere with its exercise in the absence
of abuse of discretion, arbitrariness, or malice on the part of
management.

Redundancy results from installation of labor-saving device. The

installation of labor-saving device will result in making the
positions being held by employees who will be adversely affected
thereby redundant and unnecessary.

Modernization program through introduction of high-speed

machines is valid.

Proof of losses is not required.

REDUNDANCY

The wisdom, soundness or characterization of service as

redundant by the employer is not subject to review. The only
exception is when there is a showing that the same was done in
violation of law or attended with arbitrary and malicious action.

Burden of proof in redundancy rests on the employer.

Evidence of losses is not required.

Elimination of undesirables, abusers and worst performers

through redundancy is not an indication of bad faith.

The act of the employer in hiring replacements is not an

indication of bad faith if the positions have no similar job
descriptions.

Redundancy to save on labor costs is valid.

Redundancy resulting from use of high technology equipment is

valid.

Abolition of positions or departments is valid.

Reorganization through redundancy is valid.

Contracting out of abolished positions to independent contractors

is valid.

Hiring of casuals or contractual employees after redundancy is

valid.

Where two or more persons are performing the same work which
may be effectively accomplished by only one, the employer may
terminate the excess personnel and retain only one.

Even if there is a seniority rule, such as the LIFO (Last In, First
Out) rule, the nature of work and experience of the employees
should still be taken into account by the employer.

The LIFO or FILO (First In, Last Out) rule has no basis in law.

LIFO rule is not controlling as employer has the prerogative to

choose who to terminate
RETRENCHMENT

If said standards are present, wisdom to retrench cannot be

questioned.

The retrenchment must be done in good faith.

Notoriety of the employee is a valid criterion.

The progressive manner of implementing the streamlining and

downsizing of operations resorted to by a construction company
in order not to jeopardize the completion of its projects is valid.
Thus, several departments like the Civil Works Division, Electromechanical Works Division and the Territorial Project
Management Offices, among others, were abolished in the early
part of 1996 and thereafter, the Structural Steel Division by the
end of year 1997.
The fact that there has been economic or other crisis besetting a
particular sector or the country as a whole is not sufficient
justification for retrenchment.
Article 283 applies only to permanent retrenchment or lay-off.
Cost-reduction or cost-saving measures prior to retrenchment are
required.
The phrase retrenchment to prevent losses means that
retrenchment must be undertaken by the employer before the
losses anticipated are actually sustained or realized. The
employer need not keep all his employees until after his losses
shall have materialized. Otherwise, the law could be vulnerable
to attack as undue taking of property for the benefit of another.
Employer bears the burden of proof to show business losses or
financial reverses.
Best evidence of losses - financial statements audited by
independent auditors (not by internal auditors).
Best evidence of losses in a government-controlled corporation financial statements audited by COA.
Period covered by financial statements, material.
Income tax returns, not valid since they are self-serving
documents.
Mere affidavit on alleged losses is not sufficient.
Mere notice of intention to implement a retrenchment program is
not sufficient.
Rehabilitation receivership presupposes existence of losses.
However, the fact that the employer is undergoing rehabilitation
receivership does not by itself excuse it from submitting to the
labor authorities copies of its audited financial statements to
prove the urgency, necessity and extent of its retrenchment
program.
Audited financial statements should be presented before the
Labor Arbiter or the NLRC but not belatedly before the Court of
Appeals or Supreme Court.
Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of
retrenchment.
Compulsory retirement to prevent further losses is valid.
Early Retirement Program (ERP) to prevent further losses and
implemented prior to retrenchment is valid.
Rotation of work may be tantamount to constructive dismissal or
retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify retrenchment. A
mere decline in gross income cannot in any manner be
considered as serious business losses. It should be substantial,
sustained and real
Litany of woes, in the absence of any solid evidence that they
translated into specific and substantial losses that would
necessitate retrenchment, will not suffice to justify retrenchment.
Rehiring of retrenched employees does not necessarily indicate
illegality of retrenchment.
In an enterprise which has several branches nationwide,
profitable operations in some of them will not affect the validity
of the retrenchment if overall, the financial condition thereof
reflects losses.

CLOSURE

Employer may close its business whether it is suffering from

business losses or not; court cannot order employer to continue
its business.

Principle of closure under Article 283 applies in cases of both

total and partial closure or cessation of business operations.
Management may choose to close only a branch, a department,
a plant, or a shop.

Closure of department or section and hiring of workers supplied

by independent contractor as replacements is valid.
Relocation of business may amount to cessation of operations.
The burden of proving that the closure or cessation of business
operations is bona-fide falls upon the employer.
Closure may constitute an unfair labor practice if it is resorted to
as a ruse or scheme to get rid of employees on account of their
union activities.
Closure by reason of enactment of a law is valid. Example: The
closure of the Philippine Veterans Bank by operation of law (R.A.
No. 7169 [An Act to Rehabilitate the Philippine Veterans Bank
Created Under Republic Act 3518, Providing the Mechanisms
Therefor and for other Purposes] or closure of the employers
business because a large portion of its estate was acquired by
the Department of Agrarian Reform pursuant to the
Comprehensive Agrarian Reform Program (CARP) under R.A. No.
6657.
Closure of business to merge or consolidate with another or to
sell or dispose all of its assets, held valid.
Audited financial statements necessary only in closure due to
losses.
Evidence of losses in a closure case should not be presented for
the first time on appeal with the Court of Appeals or Supreme
Court.
For closure to be a valid basis, it must be invoked at the time of
termination and not after.
Closure of a department or section due to losses amounts to
retrenchment.

DISEASE

Burden of proof rests on the employer.

If the disease or ailment can be cured within the period of six (6)
months with proper medical treatment, the employer should not
terminate the employee but merely ask him to take a leave of
absence. The employer should reinstate him to his former
position immediately upon the restoration of his normal health.

In case of death, Article 284 does not apply.

In case the employee unreasonably refuses to submit to medical

examination or treatment upon being requested to do so, the
employer may terminate his services on the ground of
insubordination or willful disobedience of lawful order.

A medical certificate issued by a companys own physician is not

an acceptable certificate for purposes of terminating an
employment based on Article 284, it having been issued not by a
competent public health authority, the person referred to in the
law.

A competent public health authority refers to a government

doctor whose medical specialization pertains to the disease
being suffered by the employee. For instance, if the employee
suffers from tuberculosis, the medical certificate should be
issued by a government
employed pulmonologist who is competent to make an opinion
thereon. If the employee has cardiac symptoms, the competent
physician in this case would be a cardiologist.

Medical certificate is an indispensable requisite.

It is the best evidence of illness.

The medical certificate should be procured by the employer and

not by the employee.

The employer has the burdent to prove existence of the medical

certificate.

Employee dismissed without the medical certificate is entitled to

moral and exemplary damages.

Separate notices of the termination to the affected employee and

to the DOLE is necessary.

Hearing is not required, disease being an authorized cause

HEARING REQUIREMENT

If employee does not answer, hearing should still proceed.

Outright termination violates due process.

Investigation still required even if incident was witnessed by

many.

Meeting, dialogue, consultation or interview is not the hearing

required by law. It may not be a substitute for the actual holding
of a hearing.
Prior consultation with union is not part of the due process
requirement.
Cross-examination or confrontation of witnesses is not necessary
in company investigations.
Co-conspirators confession is not sufficient to merit dismissal.
If a party was not initially given a chance to be heard at the
company level, but later was given full opportunity to submit
position papers or present his case and arguments before the
Labor Arbiter, this defect is cured. But if the dismissal is not
justified, this principle does not apply

REINSTATEMENT PENDING APPEAL UNDER ARTICLE 223

Reinstatement pending appeal under Article 223 is constitutional.

It is similar to return-to-work order.

The Labor Arbiter cannot exercise option of employer by

choosing payroll reinstatement pending appeal.

If the former position is already filled up, the employee ordered

reinstated under Article 223 should be admitted back to work in
a substantially equivalent position.

Reinstatement to a position lower in rank is not proper.

Reinstatement cannot be refused on the basis of the

employment elsewhere of the employee ordered reinstated.

In case of two successive dismissals, the order of reinstatement

pending appeal under Article 223 issued in the first case shall
apply only to the first case and should not affect the second
dismissal.

The failure of the illegally dismissed employee who was ordered

reinstated to report back to work does not give the employer the
right to remove him, especially when there is a reasonable
explanation for his failure.

No reinstatement pending appeal should be made when

antipathy and antagonism exist.

If reinstatement is not stated in the Labor Arbiters decision

(neither in the dispositive portion nor in the text thereof),
reinstatement is not warranted.

SEPARATION PAY IN LIEU OF REINSTATEMENT

Award of separation pay in lieu of reinstatement is not proper if there is

no finding of illegality of dismissal. This is so because the principal
remedy of reinstatement may only be granted in case the dismissal is
illegal.

Separation pay, as a substitute remedy, is only proper for

reinstatement but not for backwages.

Separation pay and backwages are not inconsistent with each other.
Hence, both may be awarded to an illegally dismissed employee.

The payment of separation pay is in addition to payment of

backwages.

Employer does not have the option to choose between actual

reinstatement and separation pay in lieu thereof. Actual reinstatement
has the primacy as the proper relief to which an illegally dismissed
employee is entitled. Payment of separation pay should be ordered
only in the event that there is a showing that reinstatement is no
longer possible by reason of the justifications allowed under
established jurisprudence.

Reinstatement cannot be granted when what is prayed for by

employee is separation pay in lieu thereof.

Grant of separation pay in lieu of reinstatement converts the award of

reinstatement into a monetary award; hence, legal interest may be
imposed thereon
STRAINED RELATIONS

Strained relations must be proved and demonstrated as a fact.

Litigation, by itself, does not give rise to strained relations that may
justify non-reinstatement. The filing of the complaint for illegal dismissal
does not by itself justify the invocation of the doctrine of strained
relations.

No strained relations should arise from a valid and legal act of asserting
ones right; otherwise, an employee who asserts his right could be easily
separated from the service by merely paying his separation pay on the

pretext that his relationship with his employer had already become
strained.
Indeed, if the strained relations engendered as a result of litigation are
sufficient to rule out reinstatement, then reinstatement would become
the exception rather than the rule in cases of illegal dismissal.
The nature of position is material in determining the validity of strained
relations. If the nature of the position requires that trust and confidence
be reposed by the employer upon the employee occupying it as would
make reinstatement adversely affect the efficiency, productivity and
performance of the latter, strained relations may be invoked in order to
justify non - reinstatement. Where the employee, however, has no say in
the operation of his employers business, invocation of this doctrine is
not proper.
Non-settlement of dispute after long period of time is not indicative of
strained relations.
The refusal of an employee to be reinstated is indicative of strained
relations.
Criminal prosecution confirms the existence of strained relations which
would render the employees reinstatement highly undesirable.
A managerial employee should not be reinstated if strained relations
exist.
In case of new ownership of the establishment, reinstatement is proper if
no strained relations exist with new owner.

BACKWAGES

The computation of said regularly paid allowances and benefits as part

of backwages should be made up to the date of reinstatement as
provided under Article 279 of the Labor Code or, if reinstatement be not
possible, up to the finality of the decision granting full backwages.

Salary increases during period of unemployment are not included as

component in the computation of backwages.

Dismissed employees ability to earn is irrelevant in the award of

backwages.

The failure to claim backwages in a complaint for illegal dismissal is a

mere procedural lapse which cannot defeat a right granted under
substantive law. Hence, the illegally dismissed employee may still be
awarded backwages despite said failure.

When Labor Arbiter or NLRC failed to award any backwages, the same
may be corrected on appeal even if worker did not appeal.

In case reinstatement is ordered, full backwages should be reckoned

from the time the compensation was withheld (which, as a rule, is from
the time of illegal dismissal) up to the time of reinstatement, whether
actual or in the payroll.

If separation pay is ordered in lieu of reinstatement, full backwages

should be computed from the time of illegal dismissal until the finality of
the decision. The justification is that along with the finality of the
Supreme Courts decision, the issue on the illegality of the dismissal is
finally laid to rest.
PREVENTIVE SUSPENSION

An employer has the right to preventively suspend the employee during

the pendency of the administrative case against him as a measure of
self-protection.

If the basis of the preventive suspension is the employees absences

and tardiness, the imposition of preventive suspension on him is not
justified as his presence in the company premises does not pose any
such serious or imminent threat to the life or property of the employer or
of the employees co-workers simply by incurring repeated absences
and tardiness.

The grounds of violation of the school rules and regulations on the

wearing of uniform, tardiness or absence, and maliciously spreading
false accusations against the school, do not justify the imposition of
preventive suspension.

The failure by an employee to attend a meeting called by his supervisor

will not justify his preventive suspension.

Preventive suspension does not mean that due process may be

disregarded.

Preventive suspension is not a penalty.

Preventive suspension, by itself, does not signify that the company has
already adjudged the employee guilty of the charges for which she was
asked to answer and explain.

Preventive suspension is neither equivalent nor tantamount to dismissal.

Preventive suspension should only be for a maximum period of thirty

(30) days. After the lapse of the 30-day period, the employer is required
to reinstate the worker to his former position or to a substantially
equivalent position.

During the 30-day preventive suspension, the worker is not entitled to

his wages and other benefits. However, if the employer decides, for a
justifiable reason, to extend the period of preventive suspension beyond
said 30-day period, he is obligated to pay the wages and other benefits

due the worker during said period of extension. In such a case, the
worker is not bound to reimburse the amount paid to him during the
extension if the employer decides to dismiss him after the completion of
the investigation.
Extension of period must be justified. During the 30-day period of
preventive suspension, the employer is expected to conduct and finish
the investigation of the employees administrative case. The period of
thirty (30) days may only be extended if the employer failed to complete
the hearing or investigation within said period due to justifiable grounds.
No extension thereof can be made based on whimsical, capricious or
unreasonable grounds.
Preventive suspension lasting longer than 30 days, without the benefit of
valid extension, amounts to constructive dismissal.
Indefinite preventive suspension amounts to constructive dismissal.
Failure to state the duration of the preventive suspension in the notice
does not mean it is indefinite. There is a reasonable and logical
presumption that said suspension in fact has a duration which could very
well be not more than 30 days as mandated by law.
Salaries should be paid for improperly-imposed preventive suspension.
Period of preventive suspension of workers in the construction industry is
only for 15 days.
Preventive suspension is different from suspension of operation under
Article 286 of the Labor Code.
Preventive suspension is different from floating status.

CONSTRUCTIVE
DISMISSAL
OR
INVOLUNTARY
OR
FORCED
RESIGNATION

Mere allegations of threat or force do not constitute evidence to support

a finding of forced resignation or constructive dismissal.

A threat to sue the employee is not unjust and will not amount to forced
resignation or constructive dismissal. For instance, a threat to file estafa
case, not being an unjust act, but rather a valid and legal act to enforce
a claim, cannot at all be considered as intimidation. A threat to enforce
ones claim through competent authority, if the claim is just or legal,
does not vitiate consent.

Employee who alleges that he was coerced or intimidated into resigning

has the burden to prove such claim.

Giving the employee the choice or option between resignation and

investigation is not illegal.

The facts of the case should be considered to determine if there is

constructive dismissal.

Voluntary resignation is different from constructive dismissal. An

employee who tendered her voluntary resignation and signed the
quitclaim after receiving all the benefits due her for her separation
cannot claim that she was constructively dismissed.
PRINCIPLES on MANAGEMENT PREROGATIVES
PREROGATIVE TO TRANSFER EMPLOYEES

The exercise of the prerogative to transfer or assign employees from

one office or area of operation to another is valid provided there is no
demotion in rank or diminution of salary, benefits and other privileges.
The transfer should not be motivated by discrimination or made in bad
faith or effected as a form of punishment or demotion without
sufficient cause.

The Court cannot look into the wisdom of the transfer of an employee.

Commitment made by the employee in the employment contract to be

re-assigned anywhere in the Philippines is binding on him.

Even if the employee is performing well in his present assignment,

management may reassign him to a new post.

The transfer of an employee may constitute constructive dismissal

when it amounts to an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank and/or a diminution in pay;
or when a clear discrimination, insensibility or disdain by the employer
becomes unbearable to the employee leaving him with no option but
to forego with his continued employment.

More specifically, the following three (3) conditions must concur in

order for the transfer to be considered as constructive dismissal:
1)
When the transfer is unreasonable, inconvenient or prejudicial to
the employee;
2)
When the transfer involves a demotion in rank or diminution of
salaries, benefits and other privileges; and
3)
When the employer performs a clear act of discrimination,
insensibility, or disdain towards the employee, which forecloses any
choice by the latter except to forego his continued employment.

Transfer made in compliance with a government order does not

amount to constructive dismissal.

Burden of proof in transfer cases is on the employer.

An employee cannot claim any vested right to his position. While an

employee may have a right to security of tenure, this does not give her
such a vested right to her position as would deprive the employer of its
prerogative to change her assignment or transfer her where her
service will be most beneficial to the employers interest.
The refusal of an employee to be transferred may be held justified if
there is a showing that the transfer was directed by the employer
under questionable circumstances. For instance, the transfer of
employees during the height of their unions concerted activities in the
company where they were active participants is illegal.
An employee who refuses to be transferred, when such transfer is
valid, is guilty of insubordination or willful disobedience of a lawful
order of an employer under Article 282 of the Labor Code. For example:
The dismissal of a medical representative who acceded in his
employment application to be assigned anywhere in the Philippines but
later refused to be transferred from Manila to a provincial assignment,
was held valid. The reason is that when he applied and was accepted
for the job, he agreed to the policy of the company regarding
assignment anywhere in the Philippines as demanded by his
employers business operation.
Refusal to transfer due to parental obligations, additional expenses,
inconvenience, hardship and anguish is not valid. An employee could
not validly refuse lawful orders to transfer based on these grounds.
Refusal to transfer to overseas assignment is valid.
Refusal to transfer consequent to promotion is valid.
Transfer pursuant to the company policy of preventing connivance is
valid.
Transfer in accordance with pre-determined and established office
policy and practice is valid.
Rotation among employees of banks as required in the Manual of
Regulations for Banks and Other Financial Intermediaries issued by the
Bangko Sentral ng Pilipinas is valid.
Transfer due to the standard operating procedure of rotating
employees from the day shift to the night shift is valid.
Transfer to avoid conflict of interest is valid.
A transfer from one position to another occasioned by the abolition of
the position is valid.
Reassignment and transfer pending investigation of irregularities is
valid.

PROMOTION

An employee has the right to refuse promotion. There is no law which

compels an employee to accept a promotion. Promotion is in the
nature of a gift or reward. Any person may refuse to accept a gift or
reward. Such refusal to be promoted is a valid exercise of such right
and he cannot be punished therefor.

An employee cannot be promoted without his consent even if merely

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

An employee cannot be dismissed because of his refusal to be

promoted. It cannot amount to insubordination or willful disobedience
of a lawful order of the employer.

Employers decision on whether to promote an employee or not is valid

for as long as it does not appear to have been actuated by bad faith.
DEMOTION

Demotion may result from transfer when the same results in reduction
in position and rank or diminution in salary.

Transfer from a highly technical position to one requiring mechanical

work - virtually a transfer from a position of dignity to a servile or
menial job - is demotion.

Change in workplace may result in demotion. Hence, there is demotion

in the case of transfer of an employee from the laboratory - the most
expensive work area, on a per square-meter basis in the companys
premises - to the vegetable processing section which involves
processing of vegetables alone. Definitely, this is a transfer from a
workplace where only highly trusted authorized personnel are allowed
to access to a workplace that is not as critical.

Mere title or position held by an employee in a company does not

determine whether a transfer constitutes a demotion. Rather, it is the
totality of the following circumstances, to wit: economic significance of
the work, the duties and responsibilities conferred, as well as the rank
and salary of the employee, among others, that establishes whether a
transfer is a demotion.

The employer has the right to demote and transfer an employee who
has failed to observe proper diligence in his work and incurred habitual
tardiness and absences and indolence in his assigned work.

Demotion may be validly imposed due to failure to comply with

productivity standards.
Due process principle in termination cases applies to demotions.
Simply put, even the employers right to demote an employee requires
the observance of the twin-notice requirement.

PRINCIPLES on LABOR RELATIONS

RIGHT TO SELF-ORGANIZATION

Any employee, whether employed for a definite period or not,

shall, beginning on the first day of his service, be eligible for
membership in any labor organization.

Right to join a union cannot be made subject of a CBA stipulation.

The separation of unions doctrine46 has already been rendered

nugatory by the latest amendment of Article 245 of the Labor
Code introduced by R. A. No. 948147 which added the phrase:
The rank-and-file union and the supervisors union operating
within the same establishment may join the same federation or
national union. This doctrine prohibits the situation where the
supervisory union and the rank-and-file union operating within the
same establishment are both affiliated with one and the same
federation because of the possible conflict of interest which may
arise in the areas, inter alia, of discipline, collective bargaining and
strike.
GOVERNMENT EMPLOYEES RIGHT TO SELF-ORGANIZATION
The labor organization in the government sector is technically called an
employees organization.

Registration of employees organizations is made with both Civil

Service Commission (CSC) and the Bureau of Labor Relations (BLR)
of the Department of Labor and Employment (DOLE). Once
registered, it is technically called a registered employees
organization. In the private sector, this is theoretically known as a
legitimate labor organization. Cancellation of registration of an
employees organization is likewise made by both the CSC and the
BLR.

The sole and exclusive bargaining union is called an accredited

employees organization. In the private sector, this is in principle
known as a recognized or certified collective bargaining agent.

The unit where the government employees organization seeks to

operate and represent is called organizational unit. It is the
employers unit consisting of rank-and-file employees unless
circumstances otherwise require. In the private sector, this is
technically known as bargaining unit.

Rights and privileges of a registered employees organization.

Upon the issuance of the certificate of registration, the
employees organization shall have the following rights and
privileges:
a.
To be certified, subject to the conditions prescribed in the
Rules and Regulations to Govern the Exercise of the Right of
Government Employees to Self-Organization, as the sole
representative of the rank-and-file employees with the right to
negotiate for them.
b.
To undertake all other activities not contrary to law or public
policy for the furtherance and protection of the interests of its
members
CERTIFICATION ELECTION

The pendency of a petition to cancel the certificate of registration

of a union participating in a certification election does not stay the
conduct thereof.

The pendency of an unfair labor practice case filed against a labor

organization participating in the certification election does not stay
the holding thereof.

Direct certification as a method of selecting the exclusive

bargaining agent of the employees is not allowed. This is because
the conduct of a certification election is still necessary in order to
arrive in a manner definitive and certain concerning the choice of
the labor organization to represent the workers in a collective
bargaining unit.

No certification election in entities immune from suit is allowed.

The No Union vote is always one of the choices in a certification

election. Where majority of the valid votes cast results in No
Union obtaining the majority, the Med-Arbiter shall declare such
fact in the order.

The right to vote starts from first day of employment. Any

employee, whether employed for a definite period or not, shall,
beginning on his first day of service, already be considered an
employee for purposes of membership in any labor union, hence,
eligible to participate in a certification election. Consequently, all

employees - whether probationary or permanent or regular - may

be allowed to participate in the certification election. The law does
not make any distinction. It merely mentions the term
employees.
Only persons who have direct employment relationship with the
employer may vote in the certification election, regardless of their
period of employment.
Challenging of votes, grounds. An authorized representative of any
of the contending unions and the employer may challenge a vote
before it is deposited in the ballot box only on any of the following
grounds:
(a)
That there is no employer-employee relationship between the
voter and the employer; or
(b)
That the voter is not a member of the appropriate bargaining
unit which petitioner seeks to represent.
Spoiled ballots are not reckoned to determine majority.
Protest; when perfected. The protesting party must have its
protest recorded in the minutes of the election proceeding and
should formalize it with the Med-Arbiter, together with the specific
grounds, arguments and evidence, within five (5) days after the
close of the election proceedings. If not recorded in the minutes
and formalized within the said prescribed period, the protest shall
be deemed dropped.
A protest cannot be filed by a labor union which is not a
participant in the certification election.

AFFILIATION

Independent legal personality of an affiliate union is not affected

by affiliation.

The affiliate union is a separate and distinct voluntary association

owing its creation to the will of its members. It does not give the
mother federation the license to act independently of the affiliate
union.

The fact that the local chapter is not a legitimate labor

organization does not affect the principal-agent relationship.

Affiliate union becomes subject of the rules of the federation or

national union.

The appendage of the acronym of the federation or national union

after the name of the affiliate union in the registration with the
DOLE does not change the principal-agent relationship between
them. Such inclusion of the acronym is merely to indicate that the
local union is affiliated with the federation or national union at the
time of the registration. It does not mean that the affiliate union
cannot independently stand on its own.

The fact that it was the federation which negotiated the CBA does
not make it the principal and the affiliate or local union which it
represents, the agent.

However, if it was the federation which negotiated all the CBAs in

the establishment, the local chapter cannot negotiate the renewal
of the CBA without the consent and participation of the federation.

The fact that it was the name of the federation that was
particularly mentioned as the bargaining party in the CBA without
specifying the local union does not have any effect on the right of
the federation to participate in the bargaining process.

It is the local union and not the federation/national union with

which it is affiliated that has the right to administer and enforce
the CBA with the employer.

In case of illegal strike, the local union, not the mother union, is
liable for damages.
DISAFFILIATION

Disaffiliation does not divest an affiliate union of its legal

personality.

Disaffiliation of an affiliate union is not an act of disloyalty.

Disaffiliation for purposes of forming a new union does not

terminate the status of the members thereof as employees of the
company. By said act of disaffiliation, the employees who are
members of the local union did not form a new union but merely
exercised their right to register their local union. The local union is
free to disaffiliate from its mother union

Disaffiliation should be approved by the majority of the union

members.

Disaffiliation terminates the right to check-off federation dues. The

obligation to check- off federation dues is terminated with the
valid disaffiliation of the affiliate union from the federation with
which it was previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to amend
it or change the administration of the contract.
As a general rule, a labor union may disaffiliate from the mother
union to form an independent union only during the 60-day
freedom period prior to the expiration of the existing CBA. It is not,
however, legally impossible to effect the disaffiliation prior to the
freedom period, provided that the same is approved by the
majority of the members of the bargaining unit. Under this
situation, the CBA continues to bind the members of the new or
disaffiliated and independent union up to the expiration thereof.
Disaffiliating from the federation and entering into a CBA with the
employer does not constitute an unfair labor practice.
Disaffiliation is not a violation of the union security clause.
Election protest involving both the mother federation and local
union is not a bar to disaffiliation.
The issue of affiliation or disaffiliation is an inter-union conflict the
jurisdiction of which properly lies with the Bureau of Labor
Relations IBLR) and not with the Labor Arbiter.

SUBSTITUTIONARY DOCTRINE

The substitutionary doctrine cannot be invoked to subvert an

existing CBA, in derogation of the principle of freedom of contract.
The substitution of a bargaining agent cannot be allowed if the
purpose is to subvert an existing CBA freely entered into by the
parties. Such act cannot be sanctioned in law or in equity as it is in
derogation of the principle underlying the freedom of contract and
good faith in contractual relations.

The substitutionary doctrine is applicable also to a situation where

the local union, which was created through the process of
chartering by the mother union, disaffiliates from the latter after it
secured an independent registration. The local union will thus be
substituted to that of the federation which negotiated the CBA as
in Elisco-Elirol Labor Union [NAFLU] v. Noriel, where
petitioner union was created through the mode of chartering by
the National Federation of Labor Unions (NAFLU) and later, it
secured its independent registration with the BLR and disaffiliated
with NAFLU by virtue of a resolution by its general membership.

Substitutionary doctrine in cases of union schism or split. During

the lifetime of the CBA, the majority status of the sole and
exclusive bargaining agent which negotiated it may be questioned
as when there exist extraordinary circumstances which affect its
standing in terms of membership, structure and others as may
have been occasioned by union schism or split which completely
changes the situation of the employer and the bargaining agent. A
petition for certification election may thus be filed to determine
which of the unions has the majority status. The union certified as
the new sole and exclusive bargaining agent will thus substitute
the previous one as a party to the existing CBA. This is allowed
under the same substitutionary doctrine.
UNION DUES AND ASSESSMENTS

Check-off for a special assessment is not valid after the withdrawal

of the individual written authorizations.

Unlike in authorization for union dues and assessments,

disauthorization does not require that it be written individually. The
fact that the disauthorizations were collective in form consisting of
randomly procured signatures and under loose sheets of paper, is
of no moment for the simple reason that the documents
containing the disauthorizations have the signatures of the union
members. Such retractions were valid. There is nothing in the law
which requires that the disauthorizations must be in individual
form.

The right of the incumbent bargaining representative to check off

and to collect dues is not affected by the pendency of a
representation case or an intra-union dispute.

Approval of the union dues and assessments by the majority of all

the members of the union is required. The Labor Code and the
Rules to Implement the Labor Code disallow a deduction for
special assessment which was passed by a mere board resolution
of the directors, and not by the majority of all the members of the

union. Also, a written authorization duly signed individually by the

employees concerned is a condition sine qua non therefor.
Employees are protected by law from unwarranted practices that
have for their object the diminution of the hard-earned
compensation due them.
CBA

CBA is the law between the parties during its lifetime and thus
must be complied with in good faith. It lays down the norms of
conduct between the parties and compliance therewith is
mandated by the express policy of the law. It incorporates the
agreement reached after negotiations between the employer and
the bargaining agent with respect to the terms and conditions of
employment.

Being the law between the parties, any violation thereof can be
subject of redress in court.

Non-impairment of obligations of contract. A contract is the law

between the parties and courts have no choice but to enforce such
contract so long as it is not contrary to law, morals, good customs
or public policy. Otherwise, courts would be interfering with the
freedom of contract of the parties. Simply put, courts cannot
stipulate for the parties or amend the latters agreement, for to do
so would be to alter the real intention of the contracting parties.
The function of courts is to give force and effect to the intention of
the parties.

Unilateral changes in the CBA are not allowed without the consent
of both parties.34 Management rights and prerogatives are limited
by the CBA.

CBA is not an ordinary contract as it is impressed with public

interest.

Automatic Incorporation Clause - law is presumed part of the CBA.

The benefits derived from the CBA and the law are separate and
distinct from each other.

Workers are allowed to negotiate wage increases separately and

distinctly from legislated wage increases. It is provided under
Article 125 of the Labor Code that no Wage Order should be
construed to prevent workers in particular firms or enterprises or
industries from bargaining for higher wages with their respective
employers. This is usually the case because all CBA negotiations
are conducted for the purpose of effecting increases in wages and
other benefits over and above the rates provided for by law.
Obviously, the parties do not sit down and negotiate a CBA for the
purpose of reducing existing benefits way below what the law
mandates.

The parties may validly agree in the CBA to reduce wages and
benefits of employees provided such reduction does not go below
the minimum standards.

Entering into a CBA which contains terms and conditions of

employment below minimum standards established by law shall,
despite its registration, not constitute a bar to the conduct of a
certification election.

Ratification of the CBA by majority of all the workers in the

bargaining unit makes the same binding on all employees therein.

Employees entitled to CBA benefits. The following are entitled to

the benefits of the CBA:
(1)
Members of the bargaining union;
(2)
Non-members of the bargaining union but are members of
the bargaining unit;
(3)
Members of the minority union/s who paid agency fees to
the bargaining union; and
(4)
Employees hired after the expiration of the CBA

Pendency of a petition for cancellation of union registration is not a

prejudicial question before CBA negotiation may proceed.

CBA should be construed liberally. If the terms of a CBA are clear

and there is no doubt as to the intention of the contracting parties,
the literal meaning of its stipulation shall prevail
TERMINATION DUE TO VIOLATION OF UNION SECURITY CLAUSE

Dismissal based on union security clause may only be valid if it is

expressly provided therein as the penalty for its violation. A
dismissal founded on a union security clause which does not
explicitly authorize it for its violation constitutes an unfair labor
practice.

Employer is obligated to act upon being demanded by the union to

terminate the employment of its errant members.
Members of the minority union cannot be compelled to join the
bargaining union. The union security clause therefore does not
cover employees who are members of the union/s other than the
bargaining union. Not being so covered, they cannot be dismissed
for violation of said clause.
Non-retroactivity of union security clause (closed-shop) as to cover
employees who are not members of any labor organization at the
time of effectivity of the CBA.
Exception to the non-retroactivity rule is when non-members of
any other labor organization at the time of effectivity of the CBA
may be compelled to join the bargaining union.
The employer has the right to be reimbursed for payment of any
claims arising out of dismissals demanded by the union under the
union security clause. Such right of reimbursement may be
invoked:
(1)
By express provision in the CBA to that effect; or
(2)
By securing it through judicial directive

COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD

A strike staged on the same day the notice of strike is filed is

patently illegal.

A strike mounted on the same day the strike vote report is

submitted to the NCMB-DOLE is likewise illegal.

Deficiency of even one (1) day of the cooling-off period and 7-day
strike ban is fatal.

One-day strike without complying with the 7-day strike ban is

illegal
ASSUMPTION/CERTIFICATION POWER OF THE DOLE SECRETARY

Prior notice and hearing are not required in the issuance of the
assumption or certification order.

When the DOLE Secretary exercises the powers under Article

263(g) , he is granted great breadth of discretion in order to find
a solution to a labor dispute. It necessarily includes and extends to
all questions and controversies that may have arisen from the
labor dispute over which he assumed jurisdiction, including those
cases falling under the original and exclusive jurisdiction of Labor
Arbiters. It also includes matters incidental to the labor dispute,
i.e., issues that are necessarily involved in the dispute itself, not
just to those ascribed in the notice of strike or otherwise submitted
to him for resolution.

The DOLE Secretary may seek the assistance of law enforcement

agencies like the Philippine National Police to ensure compliance
with the provision thereof as well as with such orders as he may
issue to enforce the same.
RETURN-TO-WORK ORDER

The issue of legality of strike is immaterial in enforcing the returnto-work order.

Return-to-work order is a limitation on employers exercise of

management prerogatives.

Upon assumption or certification, the parties should revert to the

status quo ante litem which refers to the state of things as it was
before the labor dispute or the state of affairs existing at the time
of the filing of the case. It is the last actual, peaceful and
uncontested status that preceded the actual controversy.

Retrenched or redundant employees whose termination brought

about the labor dispute are included in the return-to-work order.

To implement the return-to-work order, the norm is actual

reinstatement. However, payroll reinstatement in lieu of actual
reinstatement may properly be resorted to when special
circumstances
exist
that
render
actual
reinstatement
impracticable or otherwise not conducive to attaining the purposes
of the law.

Non-waiver of demands upon voluntary return to work. The act of

the strikers in voluntarily returning to work does not result in the
waiver of their original demands. Such act of returning to work
only means that they desisted from the strike which desistance is
a personal act of the strikers and cannot be used against the union
and interpreted as a waiver by it of its original demands for which
the strike was adopted as a weapon.

Filing of a motion for reconsideration does not affect the

enforcement of a return-to- work order which is immediately
executory.
The extension of the return-to-work order and the admission of all
striking workers by the company, cannot in any way be considered
a waiver that the union officers can use to negate liability for their
illegal actions of defying the first return-to-work order and for
commission of illegal acts in the course of the strike.

DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER

The assumption/certification order may be served at any time of

the day.

No practice of giving 24 hours to strikers within which to return to

work. There is no law or jurisprudence recognizing this practice.

The defiant workers, besides being dismissed, may be subject of

criminal prosecution as well.

The defiant strikers could be validly replaced.

The refusal to acknowledge receipt of the assumption/certification

orders and other processes is an apparent attempt to frustrate the
ends of justice, hence, invalid. The union cannot be allowed to
thwart the efficacy of the said orders issued in the national
interest through the simple expediency of refusing to acknowledge
receipt thereof
ILLEGALITY OF A STRIKE

For purposes of identifying the union officers, the certifications as

to the union officers issued by the Chief of the Labor Organization
Division of the Bureau of Labor Relations (BLR), being public
records, enjoy the presumption of regularity and deserve weight
and probative value. Thus, in the absence of a clear and
convincing evidence that said certifications are flawed, they
should be taken on their face value.

The fact that the employees are signatories to the CBA does not in
itself sufficiently establish their status as union officers during the
illegal strike. Neither were their active roles during the bargaining
negotiations be considered as evidence of their being union
officers.

Only the union officers during the period of illegal strike are liable.
If the employees acted as union officers after the strike, they may
not be held liable and, therefore, could not be terminated in their
capacity as such.

Shop stewards are union officers. Hence, they should be

terminated upon the declaration of the illegality of the strike.

Union officers may be dismissed despite the fact that the illegal
strike was staged only for 1 day165 or even for less than 10 hours.
This holds true in cases of defiance of the assumption/ certification
order issued in national interest cases.

If the dispositive portion of the decision failed to mention the

names of union officers, resort should be made to the text of the
decision.

Wholesale forfeiture of employment status is not allowed. The

mere filing of charges against an employee for alleged illegal acts
during a strike does not by itself justify his dismissal. The charges
must be proved in an investigation duly called for that purpose,
where the employee should be given an opportunity to defend
himself. This holds true even if the alleged ground constitutes a
criminal offense.

No wholesale dismissal of strikers allowed. The employer cannot

just unceremoniously dismiss a hundred of its employees in the
absence of clear and convincing proof that these people were
indeed guilty of the acts charged and then, afterwards, go to court
to seek validation of the dismissal it whimsically executed. That
certainly cannot be allowed.
COMMISSION OF ILLEGAL ACTS IN THE COURSE OF THE STRIKE

Only members who are identified as having participated in the

commission of illegal acts are liable. Those who did not participate
should not be blamed therefor.

To effectively hold ordinary union members liable, those who

participated in the commission of illegal acts must not only be
identified but the specific illegal acts they each committed should
be described with particularity.

The heated altercations and occasional blows exchanged in the

picket line do not affect or diminish the right to strike.

Exchange of hot words in the picket line is not an illegal act that
would impede or diminish the right to strike.
Use of slanderous, libelous and obscene language during the strike
or lockout is a prohibited act.
If violence was committed by both employer and employees, the
same cannot be cited as a ground to declare the strike illegal.
Dismissal of the criminal case filed by reason of the illegal acts
committed in the course of the strike does not extinguish liability
under the Labor Code.

PRINCIPLES on PROCEDURE AND JURISDICTION

JURISDICTION OVER ULPs
The Labor Arbiter has jurisdiction over all ULPs whether committed by the employers
or the labor organizations.
The law gives utmost priority in the resolution of unfair labor practice cases.
The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the criminal
aspect being lodged with the regular courts
JURISDICTION OVER TERMINATION CASES
The validity of the exercise of jurisdiction by Labor Arbiters over illegal dismissal
cases is not dependent on the kind or nature of the ground cited in support of
the dismissal; hence, whether the dismissal is for just cause or authorized
cause, it is of no consequence.
In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbitrator
over termination cases, the formers jurisdiction shall prevail.
In other words, the Voluntary Arbitrator will only have jurisdiction over illegal
dismissal cases when there is express agreement of the parties to the CBA, i.e.,
the employer and the bargaining agent, to submit the termination case to
voluntary arbitration. Absent the mutual express agreement of the parties,
Voluntary Arbitrator cannot acquire jurisdiction over termination cases. This was
the holding of the Supreme Court in the cases of Negros Metal Corp. v.
Lamayo, Landtex Industries v. CA, Atlas Farms, Inc. v. NLRC, and San
Miguel Corporation v. NLRC. In all these cases, the Supreme Court has
categorically declared that termination cases fall under the original and
exclusive jurisdiction of Labor Arbiters and not of Voluntary Arbitrators.
The express agreement must be stated in the CBA or there must be enough evidence
on record unmistakably showing that the parties have agreed to resort to
voluntary arbitration.
JURISDICTION OVER MONEY CLAIMS
Money claims must arise out of employer-employee relationship. If not, jurisdiction is
with the regular courts.
Award of statutory benefits even if not prayed for is valid.
The money claims lodged by an employee are not to be properly offset by his unpaid
subscription of stocks.
Claim for notarial fees by a lawyer employed by a company is within the jurisdiction
of the Labor Arbiter.
REINSTATEMENT PENDING APPEAL
Employer has no way of staying execution of immediate reinstatement. He cannot
post bond to prevent its execution.
Reinstatement pending appeal applies to all kinds of illegal dismissal cases,
regardless of the grounds thereof.
Reinstatement pending appeal does not apply when the dismissal is legal but
reinstatement is ordered for some reasons like equity and compassionate
justice.
The failure of employee ordered reinstated pending appeal to report back to work as
directed by the employer does not give the employer the right to remove him,
especially when there is a reasonable explanation for his failure.
When former position is already filled up, the employee ordered reinstated pending
appeal should be reinstated to a substantially equivalent position.
Reinstatement to a position lower in rank is not proper.
In case of two successive dismissals, the order of reinstatement pending appeal
under Article 223 issued in the first case shall apply only to the first case and
should not affect the second dismissal. According to Sevilla v. NLRC, the Labor
Arbiter was correct in denying the third motion for reinstatement filed by the
petitioner because what she should have filed was a new complaint based on
the second dismissal. The second dismissal gave rise to a new cause of action.
Inasmuch as no new complaint was filed, the Labor Arbiter could not have ruled
on the legality of the second dismissal.
Reinstatement pending appeal is not affected by the reinstated employees
employment elsewhere.
Effect of grant of achievement award during reinstatement pending appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc., it was
pronounced that the act of respondent CCBPI in giving an award of a
Certificate of Achievement to petitioner for his exemplary sales performance
during his reinstatement ordered by the Labor Arbiter, while respondents
appeal with the NLRC was still pending, constitutes recognition of petitioners
abilities and accomplishments. It indicates that he is a responsible,
trustworthy and hardworking employee of CCBPI. It constitutes adequate proof
weighing in his favor.
The issuance of temporary restraining order (TRO) by the Court of Appeals or by the
Supreme Court, as the case may be, merely suspends the implementation and
enforcement of the reinstatement order but it does not have the effect of
nullifying the right of the employee to his reinstatement and to be paid his
reinstatement wages.
APPEAL
Appeals under Article 223 apply only to appeals from the Labor Arbiters decisions,
awards or orders to the Commission (NLRC).
There is no appeal from the decisions, orders or awards of the NLRC. Clearly,
therefore, Article 223 of the Labor Code is not the proper basis for elevating the
case to the Court of Appeals or to the Supreme Court. The proper remedy from
the decisions, awards or orders of the NLRC to the Court of Appeals is a Rule 65
petition for certiorari and from the Court of Appeals to the Supreme Court, a
Rule 45 petition for review on certiorari.

Appeal from the NLRC to the DOLE Secretary and to the President had long been
abolished.
Appeal is not a constitutional right but a mere statutory privilege. Hence, parties who
seek to avail of it must comply with the statutes or rules allowing it.
A motion for reconsideration is unavailing as a remedy against a decision of the
Labor Arbiter. The Labor Arbiter should treat the said motion as an appeal to the
NLRC.
A Petition for Relief should be treated as appeal.
Affirmative relief is not available to a party who failed to appeal. A party who does
not appeal from a decision of a court cannot obtain affirmative relief other than
the ones granted in the appealed decision.
REGLEMENTARY PERIOD
The reglementary period is mandatory and not a mere technicality.
The failure to appeal within the reglementary period renders the judgment appealed
from final and executory by operation of law. Consequently, the prevailing party
is entitled, as a matter of right, to a writ of execution and the issuance thereof
becomes a ministerial duty which may be compelled through the remedy of
mandamus.
The date of receipt of decisions, resolutions or orders by the parties is of no moment.
For purposes of appeal, the reglementary period shall be counted from receipt
of such decisions, resolutions, or orders by the counsel or representative of
record.
Miscomputation of the reglementary period will not forestall the finality of the
judgment. It is in the interest of everyone that the date when judgments
become final and executory should remain fixed and ascertainable.
Date of mailing by registered mail of the appeal memorandum is the date of its filing.
Motion for extension of time to perfect an appeal is not allowed. This kind of motion
is a prohibited pleading.
Motion for extension of time to file the memorandum of appeal is not allowed. Motion
for extension of time to file appeal bond is not allowed.
MEMORANDUM OF APPEAL
Mere notice of appeal without complying with the other requisites aforestated shall
not stop the running of the period for perfecting an appeal.
Memorandum of appeal is not similar to motion for reconsideration.
Lack of verification in a memorandum of appeal is not a fatal defect. It may easily be
corrected by requiring an oath.
Supplemental appeal need not be verified. Neither the laws nor the rules require the
verification of the supplemental appeal. Furthermore, verification is a formal,
not a jurisdictional, requirement. It is mainly intended as an assurance that the
matters alleged in the pleading are true and correct and not of mere
speculation.
An appeal will be dismissed if signed only by an unauthorized representative.
Only complainants who signed the memorandum of appeal are deemed to have
appealed the Labor Arbiters decision. The prevailing doctrine in labor cases is
that a party who has not appealed cannot obtain from the appellate court any
affirmative relief other than those granted, if any, in the decision of the lower
tribunal.
Certificate of non-forum shopping is no longer provided in the 2011 NLRC Rules of
Procedure. It is only required in the initiatory complaint or petition filed with the
Labor Arbiter.
POSTING OF BOND
The cash or surety bond required for the perfection of appeal should be posted within
the reglementary period. If a party failed to perfect his appeal by the nonpayment of the appeal bond within the 10-calendar day period provided by law,
the decision of the Labor Arbiter becomes final and executory upon the
expiration of the said period.
In case the employer failed to post a bond to perfect its appeal, the remedy of the
employee is to file a motion to dismiss the appeal and not a petition for
mandamus for the issuance of a writ of execution.
Surety bond must be issued by a reputable bonding company duly accredited by the
Commission (NLRC) or the Supreme Court.
The bond shall be valid and effective from the date of deposit or posting, until the
case is finally decided, resolved or terminated, or the award satisfied.
Posting of a bank guarantee or bank certification is not sufficient compliance with the
bond requirement. It is not equivalent to nor can be considered compliance with
the cash, surety or property bond.
Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond; government-owned and/or controlled
corporations, however, are not exempt therefrom.
Bond is not required for the NLRC to entertain a motion for reconsideration. An appeal
bond is required only for the perfection of an appeal of a Labor Arbiters
decision involving a monetary award.
Bond is not required to file a Rule 65 petition for certiorari.
REDUCTION OF BOND
Bond may be reduced when decision failed to specify the exact amount of monetary
award from which the amount of the appeal bond is to be based.
Conversely, the reduction of the bond will not be warranted not only when no
meritorious ground is shown to justify the same but when the appellant
absolutely failed to comply with the requirement of posting a bond, even if
partial; or when circumstances show the employers unwillingness to ensure the
satisfaction of its workers valid claims.
Monetary award running into millions is not justification to reduce bond.

Financial difficulties or financial incapacity is not sufficient grounds to reduce bond.

What appellant has to pay is a moderate and reasonable sum for the premium
for such bond.
The full amount of the monetary award should still be posted within the reglementary
period even if the appellant has filed a motion to reduce bond.
Alternative remedy is to pay partial appeal bond while motion to reduce bond is
pending with the NLRC. Examples:
(1)
Rosewood Processing, Inc. v. NLRC - The petitioner was declared to
have substantially complied with the rules by posting a partialsurety bond
of P50,000.00 while its motion to reduce the appeal bond in the amount of
P789,154.39 was pending before the NLRC.
(2)
Following Rosewood, the filing by petitioners of a motion to reduce appeal
bond to P100,000, enclosing a bond in that amount, from the total
monetary award of P3,132,335.57 was given imprimatur in the 2010 case
of Pasig Cylinder Mfg. , Corp. v. Rollo.
The partial bond must be posted during the reglementary period. The late filing of the
bond divests the NLRC of its jurisdiction to entertain the appeal since the
decision of the Labor Arbiter has already become final and executory with the
lapse of the reglementary period.
Partial bond posted must not be inadequate. In Sapitan v. JB Line Bicol Express,
Inc., the partial bond of P200,000 was found to be inadequate for the liability in
the sum of P9,097,624.00.

REINSTATEMENT WAGES
Employer is not liable to pay any reinstatement backwages if reinstatement is
ordered not by the Labor Arbiter but by the NLRC on appeal and it was not
executed by writ and its finding of illegal dismissal is later reversed by the Court
of Appeals and/or Supreme Court.
Payroll-reinstated employee is entitled not only to reinstatement wages but also to
other benefits during the period of payroll reinstatement until the illegal
dismissal case is reversed by a higher tribunal.
Award of additional backwages and other benefits from the time the Labor Arbiter
ordered reinstatement until actual or payroll reinstatement is proper and valid.
Backwages include the period when employee should have been reinstated by order
of Labor Arbiter.
Med-Arbiter
Med-Arbiters have power to make a determination on the existence of employeremployee relationship and other issues. It is an absurdity to suggest
otherwise.6 He is also empowered to decide other issues related to the
eligibility of employees to vote. However, the Med- Arbiter cannot order the renegotiation of a CBA, his authority being confined to the determination of the
exclusive bargaining agent in the bargaining unit.
Injunctive power. The Med-Arbiter is possessed of the power to issue temporary
restraining order and the writ of injunction in appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded great respect. They are binding if they
are supported by substantial evidence and there exists no capricious exercise of
judgment warranting reversal by certiorari.
Execution of decisions, orders or awards of Med-Arbiters. The Med-Arbiter may, upon
his own initiative or on motion of any interested party, issue a writ of execution
on a judgment within five (5) years from the date it becomes final and
executory, requiring the Sheriff or a duly deputized officer to execute or enforce
the same
JURISDICTION OF VOLUNTARY ARBITRATORS
1) Resort to voluntary arbitration from grievance machinery is in the nature of
appeal. - Article 261 describes the nature of the jurisdiction of Voluntary Arbitrators
or panel of Voluntary Arbitrators as original and exclusive when they exercise their
power to hear and decide unresolved grievances which are elevated to them after
the process of the grievance machinery proved unsuccessful. In reality, the exercise
of such power vested upon them is appellate in nature as may be clearly gleaned
from the provisions of Article 260, in relation to Article 261, that all grievances which
are not settled or resolved within seven (7) calendar days from the date of their
submission for resolution to the last step of the grievance machinery shall
automatically be referred to voluntary arbitration prescribed in the CBA.
2) Note must be made that only grievances that are unresolved by the grievance
machinery fall under the original and exclusive jurisdiction of the Voluntary
Arbitrators or panel of Voluntary Arbitrators. If a grievance therefore has not been
submitted at the first instance to the grievance machinery, the Voluntary Arbitrators
or panel of Voluntary Arbitrators do not have jurisdiction to hear and decide it. Being
mandated by law to hear and decide grievances at the first instance, it is the
grievance
machinery
which
is
in
actuality,
exercising
original
and
exclusivejurisdiction over the same and not the Voluntary Arbitrators or panel of
Voluntary Arbitrators who may only validly acquire jurisdiction over them if they are
not settled or resolved within seven (7) calendar days from the date of the
submission for resolution to the last step of the grievance machinery. Prior to the
completion of the grievance procedure or grievance machinery, the grievance cannot
automatically be referred to voluntary arbitration prescribed in the CBA.
3) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but filed with
Labor Arbiters, DOLE Regional Offices or NCMB should be disposed of by referring
them to the Voluntary Arbitrators or panel of Voluntary Arbitrators mutually chosen
by the parties.

4) Cases cognizable by Voluntary Arbitrators but filed with regular courts should be
dismissed. - The case of Union of Nestle Workers Cagayan de Oro Factory v.
Nestle Philippines, Inc., presents a unique situation where the union filed an
injunction case (with prayer for the issuance of a temporary restraining order) with
the Regional Trial Court (RTC) against the employer to prohibit the implementation of
the Drug Abuse Policy which requires the conduct of simultaneous drug tests on all
employees from different factories and plants in keeping with the governments
thrust to eradicate the proliferation of drug abuse. The company asserts that it has
the right: (a) to ensure that its employees are of sound physical and mental health,
and (b) to terminate the services of an employee who refuses to undergo the drug

test. The union challenged the validity of the implementation of the said policy and
branded it as a mere subterfuge to defeat the employees constitutional rights. In
affirming the ruling of the RTC and Court of Appeals dismissing the complaint, the
Supreme Court ruled that said policy is in the nature of a company personnel policy
and therefore any issue pertaining thereto falls under the jurisdiction of the Voluntary
Arbitrators or panel of Voluntary Arbitrators, not the RTC, under Article 261 of the
Labor Code.
5) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT INVOLVE THE
PARTIES TO A CBA - THE EMPLOYER AND THE BARGAINING UNION - IT IS NOT
SUBJECT TO VOLUNTARY ARBITRATION. While individual or group of employees,

without the participation of the union, are granted the right to bring grievance
directly to the employer, they cannot submit the same grievance, if unresolved by
the employer, for voluntary arbitration without the unions approval and participation.
The reason is that it is the union which is the party to the CBA, and not the individual
or group of employees. - This rule was lately affirmed in the 2009 case of Tabigue v.
International Copra Export Corporation. Pursuant to Article 260 of the Labor
Code, the parties to a CBA shall name or designate their respective representatives
to the grievance machinery and if the grievance is unsettled in that level, it shall
automatically be referred to the voluntary arbitrators designated in advance by
parties to a CBA. Consequently only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary arbitrators.