• Post employment prohibition

The employer, in the exercise of its prerogative, may insist on an agreement with the
employee for a certain prohibition to take effect after the termination of their employer-
employee relationship. The following stipulations in an employment contract are illustrative of
the prohibitions normally agreed upon by the employer and the employee.

A. Non-Compete or Non-Involvement Cause

B. Forfeiture-for-competition clause or Compensation-For-Competition Clause
C. Garden-Leave Clause
D. Confidentiality and Non-disclosure Clause
E. Non-Solicitation Clause
F. Non-Recruitment or Anti-Piracy Clause
G. Inventions Assignment Clause (Intellectual Property Clause)

• Compare Glaiserman, Richard and Consulta on post employment ban

In G. Martini, Ltd. v. Glaiserman, 39 Phil. 120 (1918), a similar stipulation was declared as
void for being unreasonable restraint of trade. There, the employee was prohibited from engaging
in any business similar to that of his employer for a period of one year. Since the employee was
employed only in connection with the purchase and export of abaca, among the many business
of the employer, the restraint was considered too broad since it effectively prevented the
employee from working in any other business similar to his employer even if his employment was
limited only to one of its multifarious business activities.

However, in Del Castillo v. Richmond, 45 Phil. 679 (1974), a similar stipulation was upheld
as legal, reasonable, and not contrary to public policy. In the said case, the employee was
restricted from opening, owning or having any connection with any other drugstore within a
radius of four miles from the employer’s place of business during the time the employer was
operating his drugstore. A contract in restraint of trade is valid provided there is a limitation upon
either time or place and the restraint upon one party is not greater than the protection the other
party requires.

Finally, in Consulta v. Court of Appeals, G.R. No. 145443, March 18, 2005, 453 SCRA 732,
a non-involvement clause was held in accordance with Article 1306 of the Civil Code. While the
complainant in that case was an independent agent and not an employee, she was prohibited for
one year from engaging directly or indirectly in activities of other companies that compete with
the business of her principal. The restriction did not prohibit the agent from engaging in any other
business, or from being connected with any other company, for as long as the business or
company did not compete with the principal’s business. Further, the prohibition applied only for
one year after the termination of the agent’s contract and was therefore a reasonable restriction
designed to prevent acts prejudicial to the employer.
• Discuss non-involvement clause in the light of Tiu case
Daisy Tiu v. Platinum Plans, Inc.
G.R. No. 163512, February 28, 2007

Facts: Daisy Tiu was employed as Division Marketing Director of the respondent, a pre-
need company. In 1995, she stopped working and became the Vice President for Sales of
Professional Pension Plans, Inc., another pre-need company. She was sued for damages for
violating her contract with respondent which prohibited her in a business of the same nature
within two (2) years separation, whether voluntary or involuntary. The RTC and the CA held her
liable. Before the SC, the petitioner contended that the non-involvement clause is offensive to
public policy since the restraint imposed is much greater than what is necessary to afford
respondent a fair and reasonable protection. She added that since the products sold in the pre-
need industry are more or less the same, the transfer to a rival company is acceptable. She
likewise argued that a strict application of the non-involvement clause would deprive her of the
right to engage in the only work she knows.

Issue: Whether the non-involvement clause is valid

Ruling: Yes. A non-involvement clause in a contract is valid provided that there are
limitations as to time, place and trade. In this case, the non-involvement clause has a time limit:
two years from the time petitioner’s employment with respondent ends. It is also limited as to
trade, since it only prohibits petitioner from engaging in any pre-need business akin to
respondents.

In this case what makes the non-involvement clause valid is that, she had been privy to
confidential and highly sensitive marketing strategies of respondent’s business. To allow her to
engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable
especially in a highly competitive marketing environment. In sum, the non-involvement clause is
not contrary to public welfare and not greater than is necessary to afford a fair and reasonable
protection to respondent. (Ollendorff v. Abrahamsom, 38 Phil. 585 (1918)).

In any event, Article 1306 of the Civil Code provides that parties to a contract may
establish such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or public policy.

• Compare Simbol and Glaxo cases- prohibition against marriage

Q: Is the stipulation in the employment contract prohibiting an employee from marrying
another employee of a competitor company a valid exercise of management prerogative?

A: Yes, the policy is not aimed at restricting a personal prerogative that belongs only to
the individual. However, an employee’s personal decision does not detract the employer from
exercising management prerogatives to ensure maximum profit and business success. It does not
impose an absolute prohibition against relationships between its employees and those of
 competitor companies. What the company merely seeks to avoid is a conflict of interest between
the employee and the company that may arise out of such relationships. It is not violative of the
equal protection clause because it is a settled principle that the commands of the equal
protection clause are addresses only t the State or those acting under color of its authority.
Corollary, it has been held in a long array of U.S. Supreme Court decision that the equal protection
clause erects no, shield against merely private conduct, however, discriminatory or wrongful. The
only exception occurs when the state in any of its manifestations or actions has been found to
have become entwined or involve in the wrongful private conduct (Duncan Assoc. of Datialman-
PTGWO v. Glaxo Wellcome Phil. Inc., G.R. No. 162994, September 17, 204).

he failure of the employer to prove legitimate business concern in imposing the

questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination
based upon stereotypes of married persons working together in one company. Thus, for failure
of the employer to present undisputed proof of a reasonable business necessity, we rule that
questioned policy is an invalid exercise of management prerogative. (Star Paper v. Simbol, G.r.
No. 164774, April 12, 2006)

Bona fide occupational qualification rule ( BFOQR)

There must be a finding of any BFOQ to justify an Employer’s no spouse employment rule.
There must be a compelling business necessity for which no alternative exists than the
discriminating practice. To justify a BFOQ the Employer must prove two factors:

1.That the employment qualification is reasonably related to the essential

operation of the job involved; and
2.That there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of the job ( Star
Paper v. Simbol, G.r. No. 164774, April 12, 2006)

Importance of the BFOQR

1.To ensure that the employee can effectively perform his work.
2.So that the non-spouse employment rule will not impose any danger to the business.

• PT&T and Duncan cases- prohibition against marriage

In the case of Duncan Association of Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., the contract of employment expressly prohibited an employee from
having a relationship with an employee of a competitor company.

The Supreme Court ruled that this stipulation is a valid exercise of management
prerogative. The prohibition against personal or marital relationships with employees of
competitor-companies upon its employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, the employer only aims to protect its interests against the possibility
 that a competitor company will gain access to its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information

In Philippine Telegraph and Telephone Company v. NLRC., it was held that a company
policy of not accepting or considering as disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against, discrimination afforded all women
workers by our labor laws and by no less than the Constitution.

• Sime darby Pilipinas and Manila Jockey Club Employees cases - Change of working hours/lunch
break
Management retains the prerogative to change the working hours of its employees
whenever exigencies of the service so require.

In addition, workers with a 30-minute paid “on-call” lunch break could be called upon to
do jobs during that period as they were “on call”. Even if denominated as lunch break, this period
could be considered as working time because the employees were required to work if necessary
and were paid accordingly for working.

• Difference between non-demandable or enforceable bonus and demandable or enforceable

bonus
If it is additional compensation which the employer promised and agreed to give without
any conditions imposed for its payment, such as success of business or greater production or
output, then it is part of the wage then it is demandable. But if it is paid only if profits are realized
or if a certain level of productivity.

• When is refusal to transfer valid? When is it not?

The refusal of the employees 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, in Yuco Chemical Industries, Inc. vs. Ministry of Labor and Employment, [G.
R. No. 75656, May 28, 1990], the employees were being transferred during the height of union
concerted activities in the company where they were active participants. Further, the transfer
from the province to Manila was made after classes started, the employer knowing fully well that
they were working students. Rendering the transfer more questionable is the fact that there was
no showing that the company cannot hire employees in Manila who can perform the job assigned
to the employees sought to be transferred, which job did not require any special dexterity which
only said employees can perform

But, in the case of Zafra vs. Hon. CA, [G. R. No. 139013, September 17, 2002], despite the
petitioner-employees’ agreement in their application for employment to be transferred or
assigned to any branch, their refusal to be transferred from Cebu to Manila which was made a
condition for their training abroad (Germany) was held valid. According to the High Court, the fact
that petitioners, in their application for employment, agreed to be transferred or assigned to any
branch should not be taken in isolation, but rather in conjunction with the established company
 practice in PLDT (the respondent employer) of disseminating a notice of transfer to employees
before sending them abroad for training. This should be deemed necessary and later to have
ripened into a company practice or policy that could no longer be peremptorily withdrawn,
discontinued, or eliminated by the employer. Fairness at the workplace and settled expectations
among employees require that this practice be honored and this policy commended. While
transfer of an employee ordinarily lies within the ambit of management prerogatives, however, a
transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient, or
prejudicial to the employee, and involves a demotion in rank or diminution of salaries, benefits,
and other privileges.

• Can the employer impose a heavier penalty than what the company rules prescribe? Explain.
Cruz vs Coca Cola Bottlers
The employer has the right to impose a heavier penalty than that prescribed in the
company rules and regulations if circumstances warrant the imposition thereof.

In Cruz vs. Coca-Cola Bottlers Phils., Inc., [G. R. No. 165586, June 15, 2005], admittedly,
the company rules violated by petitioner are punishable, for the first offense, with the penalty of
suspension. However, the Supreme Court affirmed the validity of the dismissal because
respondent company has presented evidence showing that petitioner has a record of other
violations from as far back as 1986. In 1991, petitioner was found to have deliberately
misrepresented on two occasions the total number of empties and was consequently suspended
for six (6) days. In 1990 and 1991, petitioner was also suspended for his involvement in vehicular
accidents which caused damage to another car and an outlet store. On several occasions,
petitioner has been investigated for shortages in remittances of collections from customers.
These misdemeanors are aggravated by several AWOLS which petitioner had taken in the course
of his employment.

• Limitations on the exercise of management prerogative

Needless to state, the exercise of management prerogative is not absolute. The exercise
of management prerogative is subject to the limitations imposed by law or by CBA, employment
contract, employer policy or practice and general principles of fair play and justice. (The Philippine
American Life and General Insurance Co. vs. Gramaje, G. R. No. 156963, Nov. 11, 2004).

• Boundary vs Commission on retirement computation

A question may be posed. Supposing the retiring employee, by reason of the nature of
his work, was not entitled to 13th month pay or to the service incentive leave pay pursuant to the
exceptions mentioned in the 13th-Month Pay Law and the Labor Code, should he be paid upon
retirement, in addition to the salary equivalent to fifteen (15) days, the additional 2.5 days
representing one-twelfth [1/12] of the 13th month pay as well as the five (5) days representing
the service incentive leave for a total of 22.5 days?

This question was answered in the negative in the 2004 case of R & E Transport, Inc. vs.
Latag, [G. R. No. 155214, February 13, 2004]. The Supreme Court ruled that employees who are
not entitled to 13th month pay and service incentive leave pay while still working should not be
 paid the entire “22.5 days” but only the fifteen (15) days salary. In other words, the additional
2.5 days representing one-twelfth [1/12] of the 13th month pay and the five (5) days of service
incentive leave should not be included as part of the retirement benefits.

The employee in the said case was a taxi driver who was being paid on the “boundary”
system basis. It was undisputed that he was entitled to retirement benefits after working for 14
years with R & E Transport, Inc. On the question of how much he should receive as and by way of
retirement benefits, the Supreme Court pronounced:

“The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. (Section 5, Rule II of the
Rules Implementing RA 7641 or the New Retirement Law). Since Pedro was paid according
to the “boundary” system, he is not entitled to the 13th month in accordance with Section
3 of the Rules and Regulations Implementing P. D. No. 851 [which exempts from its
coverage employers of those who are paid on purely boundary basis], and the service
incentive leave pay pursuant to Section 1 of Rule V, Book III of the Rules to Implement the
Labor Code [which expressly excepts field personnel and other employees whose
performance is unsupervised by the employer, including those who are engaged on task
or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance]. Hence, his
retirement pay should be computed on the sole basis of his salary.

“It is accepted that taxi drivers do not receive fixed wages, but retain only those
sums in excess of the “boundary” or fee they pay to the owners or operators of their
vehicles. Thus, the basis for computing their benefits should be the average daily income.
In this case, the CA found that Pedro was earning an average of five hundred pesos (P500)
per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of
service equals P105,000. Compared with this amount, the P38,850 he received, which
represented just over one third of what was legally due him, was unconscionable.”
(Underscoring supplied)

• Capitol Wireless vs Confesor on half month computation -22.5 days

To dispel any further confusion on the meaning of “one-half [½] month salary” in the law,
the Supreme Court, in the case of Capitol Wireless, Inc. vs. Confesor, [G. R. No. 117174, November
13, 1996, 264 SCRA 68, 77], simplified its computation by declaring that it means the total of “22.5
days” arrived at after adding 15 days plus 2.5 days representing one-twelfth [1/12] of the 13th
month pay plus 5 days of service incentive leave.

• Razon and San Miguel - benefits of dismissed employee

Management discretion may not be exercised arbitrarily or capriciously especially with
regards to the implementation of the retirement plan. As held in Razon, Jr. vs. NLRC, [G. R. No.
80502, May 7, 1990, 185 SCRA 44], upon acceptance of employment, a contractual relationship is
 established giving the employee an enforceable vested interest in the retirement fund. Hence,
the dismissed employee is entitled to the retirement benefits provided thereunder. chanrobles
virtual law library

However, in the 2002 case of San Miguel Corporation vs. Lao, [G. R. No. 143136-37, July
11, 2002], an employee who was dismissed for cause was held not entitled to the retirement
benefits under the company’s retirement plan which concededly prohibits the award of
retirement benefits to an employee dismissed for a just cause, a proscription that binds the
parties to it.

Distinguishing Razon from San Miguel, the Supreme Court ruled that in Razon, the
employer’s refusal to give the employee his retirement benefits is based on the provision of the
retirement plan giving management wide discretion to grant or not to grant retirement benefits,
a prerogative that obviously cannot be exercised arbitrarily or whimsically. But in San Miguel, the
retirement plan expressly prohibits the grant of retirement benefits in case of dismissal for cause.
Hence, the employee is bound by such prohibition.

• When both retirement pay and separation pay must be paid (Aquino vs NLRC)
In Aquino vs. NLRC, the Supreme Court ordered the payment of both the separation pay
for retrenchment embodied in the CBA as well as the retirement pay provided under a separate
Retirement Plan to the retrenched employees. The argument of the company that it has more
than complied with the mandate of the law on retrenchment by paying separation pay double
that required by the Labor Code (at the rate of one month pay instead of the one-half month pay
per year of service) was not favorably taken into account by the Supreme Court because the
employees were not pleading for generosity but demanding their rights embodied in the CBA
which was the result of negotiations between the company and the employees.

On the issue of mutual exclusivity of the CBA-mandated separation pay in case of

retrenchment, on the one hand, and the retirement benefits provided in the Retirement Plan, on
the other, the Supreme Court in this case of Aquino opined that:

“The Court feels that if the private respondent (company) really intended to make the
separation pay and the retirement benefits mutually exclusive, it should have sought inclusion of
the corresponding provision in the Retirement Plan and the Collective Bargaining Agreement so
as to remove all possible ambiguity regarding this matter.

“We may presume that the counsel of the respondent company was aware of the
prevailing doctrine embodied in the cases earlier cited. Knowing this, he should have made it a
point to categorically provide in the Retirement Plan and the CBA that an employee who had
received separation pay would no longer be entitled to retirement benefits. Or to put it more
plainly, collection of retirement benefits was prohibited if the employee had already received
separation pay.”
• Jaculbe vs Cercado- consent of employee
In Jaculbe v. Silliman University,16the Supreme Court ruled that in order for retirement
at an earlier age to be valid, it must be shown that the employee’s participation in the plan is
voluntary. An employer is free to impose a retirement age of less than 65 for as long as it has the
employees’ consent. Stated conversely, employees are free to accept the employer’s offer to
lower the retirement age if they feel they can get a better deal with the retirement plan presented
by the employer.

Following Jaculbe, the retirement of petitioner in the 2010 case of Lourdes Cercado v.
Uniprom, Inc. 17at the age of 47, after having served respondent company for 22 years, pursuant
to its Employees’ Non-Contributory Retirement Plan, which provides that employees who have
rendered at least 20 years of service may be retired at the option of the company, was declared
illegal because it was not shown that she has given her consent thereto. Not even an iota of
voluntary acquiescence to respondent’s early retirement age option is attributable to petitioner.
The assailed retirement plan was not embodied in a CBA or in any employment contract or
agreement assented to by petitioner and her co-employees. On the contrary, it was unilaterally
and compulsorily imposed on them.

• Significance of Pantranco case

Indeed, Article 287 makes clear the intention and spirit of the law to give employers and
employees a free hand to determine and agree upon the terms and conditions of retirement. The
law presumes that employees know what they want and what is good for them absent any
showing that fraud or intimidation was employed to secure their consent thereto. (Pantranco
North Express, Inc. vs. NLRC, G. R. No. 95940, July 24, 1996, 259 SCRA 161).

In Pantranco North Express, Inc. vs. NLRC, [G. R. No. 95940, July 24, 1996, 259 SCRA 161],
it was ruled that an employee who was compulsorily retired after rendering 25 years of service in
accordance with the provision of the CBA cannot claim that he was illegally dismissed. Providing
in a CBA for compulsory retirement of employees after 25 years of service is legal and enforceable
so long as the parties agree to be governed by such CBA.

• Cases where SC award reinstatement without backwages and reinstatement with limited
backwages
Reinstatement without backwages
- UNIVERSAL ROBINA SUGAR MILLING CORP. VS. ABLAY, ET. AL. G.R. NO. 218172
- TRI-C General Services vs. Nolasco B. Matuto, Romeo E. Magno And Elvira B.
Laviña, G.R. No. 194686

Reinstatement with limited backwages

- Victory Liner, Inc. vs. Pablo Race G.R. No. 164820
- Julius B. Campol vs. Mayor Ronald S. Balao-as and Vice Mayor Dominador I.
Sianen G.R. No. 197634
• Bustamante doctrine
Supreme Court allowed full recovery of backwages without deduction and without
qualification, which means that backwages should not be diminished or reduced by earning
derived by the employee elsewhere during the period of his separation.

• Strained relations rule

Under the doctrine of strained relations, the payment of separation pay has been
onsidered an acceptable alternative to reinstatement when the latter option is no longer desirable
or viable. On the one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other, the payment releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust. (Coca-Cola
Bottlers Phils. vs. De Leon, G.R. No. 156893, June 21, 2005.)

Nevertheless, the principle of strained relations should not be used so indiscriminately as

to bar the reinstatement of illegally dismissed workers, especially when they themselves have not
indicated any aversion to returning to work, as in this case. It is only normal to expect a certain
degree of antipathy and hostility to arise from a litigation between parties, but not in every
instance does such an atmosphere of antagonism exist as to adversely affect the efficiency and
productivity of the employee concerned. (Ibid.)

The doctrine of strained relations may be invoked only against employees whose
positions demand trust and confidence, or whose differences with their employer are of such
nature or degree as to preclude reinstatement.

In Maranaw Hotels vs. NLRC, G.R. No. 123880, February 23, 1999, the Court refused to
apply the doctrine of strained relations on the ground that the position of a room boy is not such
a sensitive position that demands complete trust and confidence.

• Reliefs for illegal dismissal. Explain each

In general, an illegally dismissed employee is entitled to one or more of the following
reliefs:
1. Reinstatement;
2. Payment of Backwages;
3. Separation Pay

Right to Reinstatement.
An employee who is unjustly dismissed from work is entitled to reinstatement
without loss of seniority rights and other privileges.

Right to Backwages.
An employee who is unjustly dismissed from work shall be entitled to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
Computation of Backwages.
Inclusive period. Full backwages is to be computed from the time compensation
was withheld from the employee up to the time of his actual reinstatement.

Base figure. The based figure to be used in the computation shall include not just
the basic salary, but also regular allowances and other benefits or their monetary
equivalent, i.e., transportation, emergency living allowance, 13th-month pay, etc.

Wage rate. The computation of backwages may be based either on the current
wage rate or the wage rate at the time of the dismissal. If current wage rate is awarded,
it must be expressly stated in the decision. If not expressly stated (award is unqualified),
the wage rate at the time of the dismissal should be used. (Paramount Vinyl vs. NLRC, G.R.
No. 81200, October 17, 1990.)

Separation Pay.
Separation pay is the relief awarded to employee when reinstatement is no
longer feasible or practicable, or when reinstatement is no longer desirable or will not
serve the best interest of the parties.

The amount of separation pay in lieu of reinstatement is not fixed by the Labor
Code. But the trend in recent cases is to compute the same using the formula – one month
pay, or one month pay per year of service. (This formula was used in the 2005 case P. J.
Lhuillier vs. NLRC.)

In other older cases, the court used one half month pay per year of service.
Cases
1. Separation pay and backwages are distinct and separate from each other. A
Labor Arbiter cannot order that the separation pay be deducted from the
backwages. (Solis vs. NLRC, G.R. No. 116175, October 28, 1996.)

2. The NLRC reverses the decision of the Labor Arbiter and ordered the
employees’ reinstatement, but failed to award backwages. On appeal filed by
the employer, the Court of Appeals (CA) awarded backwages although the
employee did not appeal the decision. The Supreme Court ruled that the
award made by the CA is proper. Backwages is a mere consequence of finding
of illegal dismissal. (St. Michael’s Institute vs. Santos, G.R. No. 145280,
December 4, 2001.)

3. Backwages was not granted to the employee because the employer was in
good faith when it dismissed the employee who received P7,000.00 from an
applicant for illegal installation of power line. (Meralco vs. NLRC, G.R. No.
78763, July 12,1989.)
• Agabon vs Jaka doctrine
Termination for a just cause or authorized cause but without affording the employee
procedural due process should no longer be considered illegal or ineffectual but legal.
Consequently, the employee will not be ordered reinstated but will be awarded an indemnity in
the form of nominal damages the amount of which will depend on whether the termination is
grounded on just cause or authorized cause, thus:

1. If based on just cause - P30,000.00 per Agabon doctrine.

2. If based on authorized cause - P50,000.00 per Jake doctrine.

• 7 standard situations in termination

The rules on termination of employment in the Labor Code and pertinent jurisprudence
re applicable to 7 different situations, namely:
1. The dismissal was for a just cause under Article 297 [282], for an authorized
cause under Article 298 [283], or for health reasons under Article 299 [284],
and due process was observed - termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process was
observed - termination is ILLEGAL.
3. The dismissal was without a just or authorized cause and due process was not
observed - termination is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was not
observed - termination is LEGAL.
5. The dismissal was for a non-existence cause - termination is ILLEGAL.
6. The dismissal was not supported by any evidence of termination - this
termination is NEITHER LEGAL NOR ILLEGAL as there is no dismissal to speak
of. Reinstatement is ordered not as a relief for illegal dismissal but on
equitable ground.
7. The dismissal was brought about by the implementation of a law - this
termination is LEGAL.

• Perez doctrine on hearing requirement

Perez doctrine enunciates the new guiding principles on the hearing on the hearing aspect
of procedural due process. It interpreted the term “ample opportunity to be heard” as any
meaningful opportunity (verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in a hearing, conference or some
other fair, just and reasonable way.

A formal hearing or conference is no longer mandatory. It becomes mandatory only under

under any of the following circumstances:
(1) When requested by the employee in writing;
(2) When substantial evidentiary disputes exist;
(3) When a company rule or practice requires it; or
(4) Similar circumstances justify it
• King of kings transport doctrine-2 Notice requirement
In just cause termination, the twin-notice requirement applies. The following procedures
in the order presented should be followed: (King of kings Transport, Inc v. Mamac)
(1) First written notice.
The first written notice to be served on the employee should contain specific
causes or grounds for termination against him; a directive that employee is given
opportunity to submit his written explanation within the reasonable period of 5 calendar
days from receipt of notice; the detailed narration of the facts and circumstances as basis
for the charge against him; and specifically mention which company rules are violated.

(2) Hearing required.

After serving first notice, the employer should schedule and conduct hearing or
conference wherein the employee is given the opportunity to explain or clarify his
defense; present evidence in support of his defense; and rebut evidence presented
against him by the management. During hearing, employee is given a chance to defend
himself personally, with the assistance of a representative or counsel of his choice.

(3) Second written notice.

After determining that termination of employment is justified, the employer shall
serve the employee a written notice of termination indicating all circumstances involving
the charges against the employee have been considered; and grounds established to
justify termination of employment.

• When does 2nd notice not applicable? Why?-twin notice rule on king of kings
In King of Kings Transport, Inc. v. Mamac, the rule on procedural due process which
consist of first written notice, hearing and second written notice does not apply in case of
abandonment. Abandonment is a just cause to terminate employment. It is considered a form of
gross neglect of duties under Art 297(b) [282(b)] of the Labor Code. Due process in abandonment
cases does not involve the conduct of hearing. Compliance with the two notices suffices.

• Abbott laboratories -contractual due process

The norm since Agabon is that compliance with the statutorily-prescribed procedural due
process under Article 277(b) would suffice. Whether there is an existing company policy which
also enunciates the procedural due process in termination cases need not be considered nor given
any weight in determining the validity of the termination. However, under the latest doctrinal en
banc ruling in the 2013 case of Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz, it is now
required that in addition to compliance with the statutory due process, the employer should still
comply with the due process procedure prescribed in its own company rules. The employer‟s
failure to observe its own company-prescribed due process will make it liable to pay an indemnity
in the form of nominal damages, the amount of which is equivalent to the P30,000.00 awarded
under the Agabon doctrine. It was found in this case of Abbott Laboratories that respondent
Alcaraz, who was hired as a probationary managerial employee, was afforded both the statutorily-
mandated substantive and procedural due process, when she was terminated269for failure to
qualify as a regular employee. Nonetheless, despite the existence of a sufficient ground to
 terminate Alcaraz‟s employment and Abbott‟s compliance with the Labor Code termination
procedure, it was found that petitioner Abbott breached its contractual obligationto Alcaraz when
it failed to abide by its own procedure in evaluating the performance of a probationary employee.
Company personnel policies create an obligation on the part of both the employee and the
employer to abide by the same.

• Competent public health authority means

The word “competent” in the legal phrase “competent public health authority” refers to
a government doctor whose medical specialization pertains to the disease being suffered by the
employee. For instance, an employee who is sick of tuberculosis should consult a government-
employed pulmonologist who is competent to make an opinion thereon.

• Any disease, meaning

This means that for an employee to be terminated on the ground of his disease, the
disease must be:
a) of such nature that his continued employment is considered prohibited by law;
or
b) prejudicial to himself or to the other employees; and that
c) it cannot be cured within a period of six months even with proper medical
attention.

Furthermore, the law states that should the disease be curable within six months, the
employee should be asked to take a leave of absence instead of terminating his employment. And
that the employee is subject to reinstatement after his recovery from his disease.

• Compare Deoferio and Fuji on employee illness 298(283)

In Deferio v. Intel Technology Philippines, Inc., substantive requisites and procedural
equisites must be complied with before termination of employment due to disease may be
justified.

Substantive Requisites:
(1) An employee has been found to be suffering from any disease£;
(2) His continued employment is (a) prohibited by law; or (b) prejudicial to
his health as well as to the health of his co-employees; and
(3) A competent public health authority issues a medical certificate that the
disease is of such nature at such stage that it cannot be cured within a period of 6 months
even with proper medical treatment.

Procedural Requisites:
The employer must furnish the employee two (2) written notices: (a) to apprise
he employee of the ground for which his dismissal is sought; and (b) to inform the
employee of his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense.
 On the other hand, in Fuji Television Network, Inc. vs. Arlene S. Espiritu, the due process
requirement in termination due to disease was further expounded, this time by categorically
specifying the right of the ailing employee to present countervailing evidence in the form of
medical certificates to prove that his dismissal due to disease is not proper and therefore illegal.

• Redundancy requires losses?

Redundancy does not require the exhibition of proof of losses or imminent losses. In fact,
of all the statutory grounds provided in Article 283 of the Labor Code, it is only retrenchment
which requires proof of losses or possible losses as justification for termination of employment.
(Coats Manila Bay, Inc., v. Purita M. Ortega G.R. No. 172628 February 13, 2009)

• When do you not pay separation pay in authorized cases?

The rule, is that in all cases of business closure or cessation of operation or undertaking
of the employer, the affected employee is entitled to separation pay. This is consistent with the
state policy of treating labor as a primary social economic force, affording full protection to its
rights as well as its welfare. The exception is when the closure of business or cessation of
operations is due to serious business losses or financial reverses; duly proved, in which case, the
right of affected employees to separation pay is lost for obvious reasons. (Jaka Food Processing
Corp. v. Pacot et.al., G.R. 151378, March 28, 2005. 454 SCRA 119)

• Common requisites of Authorized causes under Article 298(283)

The common requisites of authorized causes under Article 298(283) are the following:
1. There is good faith in effecting the termination
2. The termination is a matter of last resort, there being no other option
available to the employer after resorting to cost-cutting measures
3. Two separate written notices are served on both the affected employee
and the DOLE at least one month prior to the intended day of termination
4. Separation pay is paid to the affected employee, to wit:
a. If based on:
i. Installation of labor-saving device
ii. Redundancy
1 month pay or at least 1 month pay for every years of service, whichever
is higher, a fraction of at least 6 months shall be construed as 1 whole year
b. If based on:
i. Retrenchment
ii. Closure not due to serious business losses or financial
reverses
1 month pay or at least ½ moth pay for every year of service, whichever
is higher, a fraction of at least 6 months shall be considered as 1 whole year.

• Alabang Country Club and JAT cases- retrenchment vs closure

Retrenchment
Retrenchment, on one hand, is the reduction of personnel usually due to poor
financial returns so as to cut down the costs of operation in terms of salaries and wages
 to prevent bankruptcy of the company. It is sometimes also referred to as down-sizing
and an authorized cause for termination of employment which the law accords an
employer who is not doing well in its operations in order to cut back on expenses and
wages by laying off some employees. The purpose of retrenchment is to save a financially
ailing business establishment from eventually collapsing.

Closure of business
On the other hand, closure of business is the reversal of fortune of the employer
whereby there is a complete cessation of business operations and/or an actual locking-
up of the doors of the establishment, usually due to financial losses. Closure of business
is an authorized cause for termination of employment and it aims to prevent further
financial drain upon an employer who can no longer pay his employees because his
business has already stopped.

J.A.T. General Services v. NLRC and Alabang Country Club Inc. v. NLRC
In a number of cases, retrenchment has been confused with closure of the entire business
establishment or a department, division, or outlet thereof.

In the 2004 case of J.A.T. General Services v. NLRC, it was held that the issues and
contentions are more centered on closure of business operation rather than retrenchment. What
gave rise to the closure of the business is the decline in the sale of a heavy equipment because of
the Asian currency crisis. As a result, JAT filed an Establishment Termination Report with the DOLE,
notifying the latter of its decision to close its business operations due to business losses and
financial reverses.

In the 2005 case of Alabang Country Club Inc. v. NLRC, the Court of Appeals found that
the ground for termination is for retrenchment and not foreclosure of the business. Realizing that
it was no longer profitable for ACCI to maintain its own food and beverage Department, the
management decided to cease form operating and to open the same to a contractor La Tasca
Restaurant Inc. which would be more willing to operate its own food and beverage business within
the club. This resulted to the closure of the food and beverage Department whose employees
were terminated.

• Marina port services case and Manila Jockey case-trust and confidence
A position of trust and confidence is one where a person is entrusted with confidence on
delicate matters, such as the custody, handling, or care and protection of the employer’s money,
assets, or property. Loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employees are
routinely charged with the care and custody of the employer’s money or property.

The relationship of the employer and employee, especially where the latter has access to
the former’s property, necessarily involves trust and confidence. Where the rules laid down by
the employer to protect its property are violated by the employee who is entrusted and expected
to follow and implement the rules, the employee may be validly dismissed form service.
 As firmly entrenched in jurisprudence, loss of trust and confidence as a just cause of
termination of employment is premised on the fact that an employee concerned holds a position
where greater trust is placed by the management and from whom greater fidelity to his duty is
correspondingly expected. The betrayal of his trust is the essence of the offense which an
employee is penalized.

Marina Port Services, Inc. vs NLRC

Every employee, must enjoy the same degree of trust and confidence from the employer
as that is one reason why he was employed in the first place. One certainly does not employ a
person he distrusts. Indeed, even the lowly janitor must enjoy that trust and confidence in some
measure if only because he is the one who opens the office in the morning and closes it at night
and in this sense is entrusted with care or protection of the employer’s property. The key he holds
are the symbol of that trust and confidence.

By the same token, the security guard must also be considered as enjoying the trust and
confidence of this employer, whose property he is safeguarding. Like a janitor, he has access to
the employer’s property. He too, is charged with its care and protection.

Notably, however, and like the janitor again, he is entrusted only with the physical task of
protecting that property. The employer’s trust and confidence in him is limited to that ministerial
function. He is not entrusted, in the Labor Arbiter’s words, ‘with the duties of safekeeping and
safeguarding company policies, management instructions, and company secrets such as
operation devices’. He is not privy to these confidential matters, which are shared only in the
higher echelons of management. It is the persons of such levels who, because they discharge
these sensitive duties, may be considered holding positions of trust and confidence. The security
guard does not belong in such category.

Manila Jockey Club, Inc. v. Aimee Trajano

A classic example of a case where the invocation of the doctrine of loss of trust and
confidence was not genuine but a mere afterthought is Manila Jockey Club, Inc. v. Aimee Trajano.
The Court had unavoidably noted here that the invocation of loss if trust and confidence as a
ground for dismissing respondent Trajano was made belatedly. MCJI invoked the grounds under
paragraphs (a) and (b) of Article 297 of the Labor Code to support its dismissal for Trajano,
submitting then the unauthorized cancellation of ticket constituted a serious violation of company
policy amounting to dishonesty. The first time that MCJI invoked breach of trust was in its motion
for reconsideration of the decision of the NLRC. MCJI also thereafter urged the ground of breach
of trust in its petition for certiorari in the CA. Such belated invocation of loss of confidence broadly
hints the ground as a mere afterthought to buttress an otherwise baseless dismissal of Trajano.

• 3 classes of positions on trust

SUBSTANTIVE ASPECT; DISMISSAL BASED ON LOSS OF TRUST AND CONFIDENCE
[BAGUIO CENTRAL UNIVERSITY, Petitioner, vs. IGNACIO GALLENTE, Respondent. G.R. No. 188267,
December 2, 2013]
 Loss of trust and confidence is a just cause for dismissal under Article 282(c) of the Labor
Code. Article 282(c) provides that an employer may terminate an employment for "fraud or willful
breach by the employee of the trust reposed in him by his employer or duly authorized
representative." However, in order for the employer to properly invoke this ground, the employer
must satisfy two conditions.

First, the employer must show that the employee concerned holds a position of trust and
confidence. Second, the employer must establish the existence of an act justifying the loss of trust
and confidence.

Jurisprudence provides for two classes of positions of trust: (1) managerial employees and
(2) fiduciary rank-and-file employees.

Managerial employees are defined as those vested with the powers or prerogatives to lay
down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions. They refer to those
whose primary duty consists of the management of the establishment in which they are employed
or of a department or a subdivision thereof, and to other officers or members of the managerial
staff. Officers and members of the managerial staff perform work directly related to management
policies of their employer and customarily and regularly exercise discretion and independent
judgment.

The second class or fiduciary rank-and-file employees consist of cashiers, auditors,

property custodians, etc., or those who, in the normal exercise of their functions, regularly handle
significant amounts of money or property. These employees, though rank-and-file, are routinely
charged with the care and custody of the employers money or property, and are thus classified
as occupying positions of trust and confidence.

• Significance of Imasen case

G.R. No. 194884, October 22, 2014
IMASEN PHILIPPINE MANUFACTURING CORPORATION, petitioner, Vs. RAMONCHITO T.
ALCON, and JOANN S. PAPA, respondents

Preliminary Considerations: Management Prerogatives

Law and jurisprudence guarantee to every employee security of tenure. Courts will not
hesitate to strike down any invalid act of the employer to undermine workers’ tenurial security,
in accordance with social justice principles.

The law, however, does not authorize the oppression of the employer. Constitutional and
legal protection equally recognize the employer’s right and prerogative to manage its operation
according in reasonable standards and norms for fair play.
 Accordingly, an employer is free to regulate, according to his own judgment and
discretion, all aspects of employment, including hiring, working methods, processes, working
regulations, the discipline, dismissal of workers, etc. As a general proposition, an employer has
free reign over every aspect of its business, as long as the exercise of management prerogative is
done reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent
the rights of workers.

In this light, the Court’s task is to balance such conflicting rights of the respondent’s
security of tenure, and Imasen’s management prerogative.

Elements of Serious Misconduct for a Just Cause for Dismissal

According to Art. 296 of the labor Code, serious misconduct by the employee justifies the
employer terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It implies wrongful intent, and
not mere error in judgment. To constitute a valid cause of dismissal under Art. 296, the following
elements must be present:
a. the misconduct must be serious (of such grave and aggravated character and not
merely trivial or unimportant)
b. it must relate to the performance of the employer’s duties showing that the
employee has become unfit to continue working for the employer, and
c. it must have been performed with wrongful intent

Supreme Court’s Ruling

NLRC is correct in affirming the respondents’ dismissal.

Sexual acts between two consenting adults belong to the realm of purely private
relations. Whether aroused by lust or sincere affection, such acts should be carried out when and
where it will not offend public decency nor disturb accepted social morals. As such, sexual acts
between two adults have no place in the work environment.

The facts itself are already punishable misconduct. Respondents did not only disregard
company rules but flaunted their disregard in a manner that could reflect adversely on the status
of ethics and morality in the company.

Additionally, respondents engaged in sexual intercourse in an area where company

personnel have ready and available access, and when such personnel are, in fact, working.

Hence, respondents’ misconduct are to be considered grave and aggravated in character

so the company was justified in imposing dismissal. By their misconduct, they issued an open
invitation for others to commit the same infraction. Taken together, these considerations reveal
a depraved disposition that the Court considered as a valid cause for dismissal.
• Bisig Manggagawa sa Tryco vs. NLRC- valid transfer, no constructive dismissal
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President,
JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-AY,
Petitioners, - versus - NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. RIVERA, G.R. No. 151309, October 15, 2008

In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners
were not constructively dismissed.

Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of
hether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope
of its inherent right to control and manage its enterprise effectively. While the law is solicitous of
the welfare of employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.

This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer and
reassign employees according to the requirements of its business. Management's prerogative of
transferring and reassigning employees from one area of operation to another in order to meet
the requirements of the business is, therefore, generally not constitutive of constructive dismissal.
Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was
well within the scope of its management prerogative.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee,

and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges,
the employee may not complain that it amounts to a constructive dismissal. However, the
employer has the burden of proving that the transfer of an employee is for valid and legitimate
grounds. The employer must show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries,
privileges and other benefits.

Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore,
anchor their objection solely on the ground that it would cause them great inconvenience since
they are all residents of Metro Manila and they would incur additional expenses to travel daily
from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not sufficient to
warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the
personal inconvenience or hardship that will be caused to the employee by reason of the transfer
is not a valid reason to disobey an order of transfer.
• Star paper corp. vs Espiritu- transfer to province
In this case, Star Paper Corp ordered for the immediate transfer of the concerned
employees to far-off provincial branches after their refusal to sign the signature sheet of the
document for the ratification of the Addendum to the 1995 CBA and petitioners infractions at
work. The Supreme Court held that the petitioner’s order for respondents to report for work in
the provincial branches on the same day the Memo of Transfer is served is extremely
unreasonable as it would unduly inconvenience the respondents and their families. Thus, Star
Paper Corp. failed to sufficiently prove that respondents’ transfer is for just and valid cause and
not unreasonable, inconvenient, or prejudicial to them, making it liable for constructive dismissal.

• Test of Constructive Dismissal

The test of constructive dismissal is whether a reasonable person in the employee’s
position would have felt compelled to give up his position under the circumstances. It is an act
amounting to dismissal but made to appear as if it were not. In fact, the employee who is
constructively dismissed may be allowed to keep on coming to work. Constructive dismissal is
therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of the
employees in order to protect their rights and interests from the coercive acts of the employer.

• Graceful exit (Cathay Pacific and Sutherland Global Services)

Cathay Pacific Airways, Ltd. V. Marin

In this case, the respondent was asked to resign voluntarily or else face the
adverse consequences of not being extended regular employment on account of
unsatisfactory work performance. Had he resigned voluntarily before the expiry of the
probationary period, he would have a brighter prospect for employment with another
airline or other business entities. The court held that a decision of petitioner to afford
respondent a graceful exit is perfectly within its discretion.

Sutherland Global Services (Philippines), Inc. v. Labrador

The respondent, a call center agent, has committed several infractions and
requested that instead of being dismissed for just cause, that he be allowed to resign from
the company to protect his reputation and future employment chances. The petitioner
agreed. Later on, the respondent filed a case for constructive dismissal. The Supreme
Court held that the issue is moot an academic. This is so because even if Labrador had not
submitted his resignation letter, Sutherland could still not be held liable for constructive
dismissal given the existing just cause to terminate his employment.

• Hechanova case on 30-day period

Atty. Matorre expressed her intention to resign and requested that it be made effective
on September 30, 2008. But thinking that the date is too far off, Atty. Hechanova accepted the
resignation on the condition that it be made effective on Sept. 15, 2008. Atty. Matorre alleged
that the shortening of the period was an act of harassment. The Supreme Court held that it is not
an act of harassment. This is so because the 30-day notice requirement is actually for the benefit
 of the employer who has he discretion to waive such period. Its purpose is to afford the employer
enough time to hire another employee if needed and to see to it that there is proper turn-over of
the tasks which the resigning employee may be handling.

• Norkis case on lack of control of contractor

“Lack of control by the contractor is justification for declaring the contractor as a labor-
only contractor.”

NORKIS TRADING CORPORATION v. BUENAVISTA

G.R. No. 182018 October 10, 2012

Lack of control was cited as additional justification for declaring the contractor as a labor-
only contractor in this case. Thus, together with the DOLE Regional Director’s finding that
Panaghiusa sa Kauswagan (PASAKA) Multipurpose Cooperative, a duly registered cooperative,
evidently lacked substantial capital or investment required of legitimate job contractors, the
cooperative failed to dispute the respondents’ allegation that officers of Norkis Trading
supervised the work and paid the salaries of its employees.

• Eparwa vs Liceo de Cagayan University- solidarily

“The contractor’s employees may collect from either or both the principal or legitimate
contractor”
EPARWA SECURITY AND JANITORIAL SERVICES, INC. v. LICEO DE CAGAYAN
UNIVERSITY
G.R. No. 150402 November 28, 2006

As far as the security guards are concerned, the actual source of the payment of their
wage differentials and premium for holiday and rest day work does not matter as long as they are
paid. This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the security
guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as
between themselves, two solidary debtors are liable for only half of the payment.

• Rosewood Processing Inc. vs NLRC-direct liability

“Solidary Liability of principal is only to the extent of the work performed under the
employment contract.”
ROSEWOOD PROCESSING, INC. v. NLRC
G.R. Nos. 116476-84. May 21, 1998

In this case, the security guards farmed out by the security agency to petitioner were
assigned to its other clients. Withal, fairness dictates that the petitioner should not be assigned
to its other clients. Under Articles 106, 107 and 109 of the Labor Code, should the contractor pay
the wages of its employees in accordance contractor, but such responsibility should be
understood to be limited to the extent of the work performed under the contract, in the same
manner and extent that he is liable to the employees directly employed by him. This liability of
petitioner covers the payment of the workers’ performance of any work, task, job, or project. So
 long as the work, task, job or project has been performed for petitioner’s benefit or on its behalf,
the liability accrues for such period even if, later on, the employees are eventually transferred or
reassigned elsewhere. To reiterate, the principal’s (indirect employer) liability to the contractor’s
employees extends only to the period during which they were working for the petitioner, and the
fact that they were reassigned to another principal necessarily ends such responsibility. The
principal is made liable to his indirect employees because it can protect itself from irresponsible
contractors by withholding such sums and paying them directly to the employees or by requiring
a bond from the contractor for this purpose.

• Subcontracting vs Labor only Contracting

SUBCONTRACTING VS. LABOR ONLY CONTRACTING

The principal distinctions between legitimate, permissible job contracting, on the one
hand, and the prohibited labor-only contracting, on the other.

a. In the former, no employer-employee relationship exists between the employees

of the job contractor and the principal employer (indirect employer); while in the latter, an
employer-employee relationship is created by law between the principal employer and the
employees of the labor-only contractor.

b. In the former, the principal employer is considered only an “indirect employer”,

as this term is understood under Article 107 of the Labor Code; while in the latter, the principal
employer is considered the “direct employer” of the employees in accordance with the last
paragraph of Article 106 of the Labor Code.

c. In the former, the joint and several obligation of the principal employer and the
legitimate job contractor is only for a limited purpose, that is, to ensure that the employees are
paid their wages. Other than this obligation of paying the wages, the principal employer is not
responsible for any claim made by the employees; while in the latter, the principal employer
becomes solidarily liable with the labor-only contractor for all the rightful claims of the
employees.

d. In the former, the legitimate job contractor provides specific services; while in the
latter, the labor-only contractor provides only manpower.

e. In the former, the legitimate job contractor undertakes to perform a specific job
for the principal employer; while in the latter, the labor-only contractor merely provides the
personnel to work for the principal employer.

• Explain trilateral relationship

Trilateral Relationship refers to the relationship in contracting or subcontracting
arrangement where there is a contract for a specific security job, work, or service between the
principal and the SSC/PSA, and a contract of employment between the latter and its security
guards. There are 3 parties involved in these arrangements: the principal who decides to farm
 out a security job, work, or service to a security service contractor; the SSC/PSA who has the
capacity to independently undertake the performance of the security job, work, or service; and
the security guards and other private security personnel engaged by the SSC/PSA to accomplish
the security job, work, or service.
SSC(security service contractor)
SA(private Security Agency)

• Fixed term employment of OFWs

• Never acquire regular employment
• Employment contracts of OFWs for indefinite period- not valid
• OFWs do not become regular employees by reason of nature of work
• Series of rehiring- do not become regular employees
• CBA cannot override the terms and conditions prescribed by POEA
• Probationary employment of OFWs – none
• Employment of OFWs for a fixed term- not discriminatory
• contracts of OFWs cease upon the expiration thereof
• hiring of seafarer for overseas employment but assigning to local vessel does
not affect his status as an OFW- but hiring after the expiration of the overseas contract- ceases
to be an OFW

• Jay Sonza case as contractor

Facts: In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s services
exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly
talent fee of P310, 000 for the first year and P317, 000 for the second and third year.

On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of
the recent events concerning his program and career. After the said letter, Sonza filed with the
Department of Labor and Employment a complaint alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive pay,13th month pay, signing bonus, travel allowance and
amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended that no employee-
employer relationship existed between the parties. However, ABS-CBN continued to remit Sonza’s
monthly talent fees but opened another account for the same purpose.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer
relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of
NLRC.

Issue: Whether or not there was employer-employee relationship between the parties.

Ruling: Case law has consistently held that the elements of an employee-employer
relationship are selection and engagement of the employee, the payment of wages, the power of
 dismissal and the employer’s power to control the employee on the means and methods by which
the work is accomplished. The last element, the so-called "control test", is the most important
element.

Sonza’s services to co-host its television and radio programs are because of his peculiar
talents, skills and celebrity status. Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary employees. The specific
selection and hiring of SONZA, because of his unique skills, talent and celebrity status not
possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. For violation of any provision of the Agreement,
either party may terminate their relationship. Applying the control test to the present case, we
find that SONZA is not an employee but an independent contractor.

The control test is the most important test our courts apply in distinguishing an employee
from an independent contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well – the less control the hirer
exercises, the more likely the worker is considered an independent contractor. To perform his
work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBN’s control. ABS-CBN did not instruct
SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format
and airtime schedule "for more effective programming." ABS-CBN’s sole concern was the quality
of the shows and their standing in the ratings.

Clearly, ABS-CBN did not exercise control over the means and methods of performance
of Sonza’s work. A radio broadcast specialist who works under minimal supervision is an
independent contractor. Sonza’s work as television and radio program host required special skills
and talent, which SONZA admittedly possesses.

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like Sonza as independent contractors. The right of labor to security of
tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship
under labor laws. Individuals with special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and livelihood guarantees this freedom to
contract as independent contractors. The right of labor to security of tenure cannot operate to
deprive an individual, possessed with special skills, expertise and talent, of his right to contract as
an independent contractor.

• Buiser vs Leogardo -18months probationary period

FACTS:
Iluminada Ver Buiser, Ma. Cecilia Rillo-Acuna and Ma. Mercedes P. Intengan entered into
an "Employment Contract (on Probationary Status) "with private respondent, a
 corporation engaged in the business of publication and circulation of the directory of the
Philippine Long Distance Telephone Company.

Company hereby employs the employee as telephone representative on a probationary

status for a period of eighteen (18) months.

The Employee recognizes the fact that the nature of the telephone sales representative's
job is such that the company would be able to determine his true character, conduct and
selling capabilities only after the publication of the directory, and that it takes about
eighteen (18) months before his worth as a telephone saw representative can be fully
evaluated inasmuch as the advertisement solicited by him for a particular year are
published in the directory only the following year.

The private respondent prescribed sales quotas to be accomplished or met by the

petitioners. Failing to meet their respective sales quotas, the petitioners were dismissed
from the service by the private respondent.

Petitioners filed a complaint for illegal dismissal.

ISSUE: Whether probationary period is limited only to 6months.

HELD:
General rule: The probationary period of employment is limited to six (6) months.
Exception: When the parties to an employment contract may agree otherwise, such as
when the same is established by company policy or when the same is required by the
nature of work to be performed by the employee.

In the latter case, there is recognition of the exercise of managerial prerogatives in

requiring a longer period of probationary employment, such as in the present case where
the probationary period was set for eighteen (18) months, especially where the employee
must learn a particular kind of work such as selling, or when the job requires certain
qualifications, skills, experience or training.

Probationary Period — New employees hired for regular or permanent shall undergo a
probationary or trial period of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be eighteen (I 8) months.

• 5 Classifications of employee
Regular or Permanent Employment is when an employee performs activities that are
usually necessary or desirable in the usual business or trade of the employer. They enjoy the
benefit of security of tenure provided by the Philippine Constitution and cannot be terminated
for causes other than those provided by law and only after due process is given to them.
 Term or Fixed-Term Employment is when the employee renders service for a definite
period of time and the employment contract must be terminated after such period expires. This
type of employment is determined not by the activities that the employee is expected to perform
but by the commencement and termination of the employment relationship.

Fixed-term employment is highly regulated and is subject to the following criteria:

• be voluntarily and knowingly agreed upon by the parties without any
force, duress or improper pressure being brought to bear upon the employee and absent
any vices of consent; or
• it satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no dominance exercised by the former over
the latter.

Project Employment is defined when an employee is hired for a specific project or

undertaking and the employment duration is specified by the scope of work and/or length of the
project. A project employee may acquire the status of a regular employee when they are
continuously rehired after the completion of the project or when the tasks they perform are vital,
necessary, and indispensable to the usual business or trade of the employer.

Seasonal Employment is when the work to be performed is only for a certain time or
season of the year and the employment is only for that duration. This type is common practice to
Retail, Food and Beverage, Hospitality and other related industries as augmentation to their
workforce to cover for the demand during peak seasons.

Under these are the so-called “regular seasonal employees”, who are called to
work during peak seasons (e.g. Christmas season) and are temporarily suspended during
off-seasons. These employees are not separated from service but are only considered on
Leave of Absence (LOA) without pay until re-employed.

Casual Employment is when an employee performs work that is not usually necessary or
primarily related to the employer’s business or trade. The definite period of employment should
be made known to the employee at the time they started rendering service.

If the employee has rendered service for at least one (1) year in the same
company, whether the casual employment is continuous or not, they shall be considered
a regular employee with respect to the activity they are employed and will continue
rendering service while such activity exists.

• Economic Reality test (Orozco case)

Facts: Orozco was engaged by the Philippine Daily Inquirer to write a weekly column for
its Lifestyle section. After several months of regular writing, the editor decided to stop the
publication of the said column. Orozco now filed a case for illegal dismissal. PDI countered stating
that Orozco was never an employee and simply a contractor.
 Issue: Is Orozco a regular employee of PDI?

Held: Orozco was not able to prove that she was an employee of PDI. The control test is
lacking for PDI has no control on how Orozco writes her column, only on the end result.

The Court also, in this case, used the economic reality test. As said by the Court:

“The economic realities prevailing within the activity or between the parties are
examined, taking into consideration the totality of circumstances surrounding the true nature of
the relationship between the parties. This is especially appropriate when, as in this case, there is
no written agreement or contract on which to base the relationship. In our jurisdiction, the
benchmark of economic reality in analyzing possible employment relationships for purposes of
applying the Labor Code ought to be the economic dependence of the worker on his employer.”

In the present case, Orozco’s main occupation is not as a columnist for PDI but as a
women’s rights advocate working in various organizations. Thus, the Court concluded that Orozco
is an independent contractor, engaged to do independent work for the PDI.

• Francisco doctrine (er-ee relp)

The Francisco Doctrine simply states that the four-fold test was deemed insufficient
because it would cause injustice. Thus, a better test would be the two-tiered test, where aside
from the control test, the economic dependency test is also applied. Therefore, to determine if
there is an employer-employee relationship, the test must involve:
1) the putative employer’s power to control the employee with respect to
the means and methods by which the work it to be accomplished, and
2) the underlying economic realities of the activity or relationship, where
the worker is dependent on the alleged employer for his continued employment in that
line of business.

• Kasambahay exception (Apex Mining, Remington and Barcenas cases)

Under these three cases, the Court sustained that an employee hired as a kasambahay,
but performs work outside his employer’s personal home and not exclusively for the comfort and
enjoyment of the same and his family, is not a kasambahay and shall be deemed a regular
employee. Therefore, kasambahays who are hired to perform work for a corporation, or entity
other than the personal family of the employer shall be considered as a regular employee of that
entity.

Apex Mining v. NLRC

X was hired to perform laundry services at the staff house of Y corporation. Is X a

kasambahay or a regular employee?

X is deemed to be a regular employee. A kasambahay is one that works for the personal
comfort and enjoyment of the family of the employer in the home of said employer.
 The definition cannot be interpreted to include househelp or laundrywomen working in
staffhouses of a company, like X who attends to the needs of the company's guest and other
persons availing of said facilities. By the same token, it cannot be considered to extend to then
driver, houseboy, or gardener exclusively working in the company, the staffhouses and its
premises. They may not be considered as within the meaning of a "househelper" or "domestic
servant" as above-defined by law.

Remington v. Castaneda

X was hired as a company cook by Y corporation. She was then notified that she was
terminated because her services were no longer needed when Y corporation transferred to a new
site. X filed for illegal dismissal, while Y countered stating the X is a domestic helper, not a regular
employee. X’s job as a cook has nothing to do with the regular business of Y.

Is X a kasambahay?

Again, X is not a kasambahay. The term househelper or kasambahay as used herein is

synonymous to the term domestic servant and shall refer to any person, whether male or female,
who renders services in and about the employers home and which services are usually necessary
or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal
comfort and enjoyment of the employers family.

Barcenas v. NLRC

X was hired as a secretary and interpreter of a Buddhist Temple. Included in her position
is to receive and assist tourists as a tour guide, run errands, and attend to the calls of the Head
Monk. After the death of the Head Monk, X was terminated on the ground that she is a personal
servant of the Monk and that her employment is co-terminus with her master.

The Court held that X is not a kasambahay, but a regular employee of the Temple. Her
work as a translator is work done for the Temple itself, and not a single employer.

• I AM WET
SEXUAL HARASSMENT ELEMENT
Work, education, or training related sexual harassment is committed:
a. by an employer, employee, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other person who,
having authority, influence or moral ascendancy over another
b. in a work, training, or education environment,
c. demands, requests, or otherwise requires any sexual favor from other,
d. regardless of whether the demand, request for requirement for
submission is accepted by the object of said act.
 In a work-related or employment environment, sexual harassment is committed
when:
a. the sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said individual
favorable compensation, terms, conditions, promotions, or privileges, or the
refusal to grant the sexual favor results in limiting, segregating, or classifying the
employee which in any way would discriminate, deprive, or diminish employment
opportunities or otherwise adversely affect said employee;
b. the above act would impair the employee’s rights or privileges under
existing labor laws; or
c. the above acts would result in an intimidating, hostile, or offensive
environment for the employee.

In an education or training environment, sexual harassment is committed:

a. against one who is under the care, custody, or supervision of the
offender.
b. against one whose education, training, apprenticeship, or tutorship is
entrusted to the offender;
c. when the sexual favor is made a condition to the giving of a passing
grade, or the granting of honors, and scholarship, or the payment of a stipend,
allowance or other benefits, privileges, or considerations; or
d. when the sexual advances result in an intimidating, hostile, or offensive
environment for the result, trainee, or apprentice.

Any person who directs or induces another to commit any act of sexual harassment as
herein defined, or who cooperates in the commission thereof by another without which it would
not have been committed, shall also be held liable.

• Del Monte vs Velasco case and Lakpue Drug, Inc -cases on pregnancy
FACTS:
Lolita Velasco started working with the Del Monte Philippines on 1976 as a
seasonal employee and was only regularized on 1977, her last employment was a field
personnel. She was warned due to her absences without permission on several instances
and was sent a letter. On 1994, she incurred more than 6 absences without permission
which is a violation of the company regulation and a ground for dismissal. She was given
an opportunity to be heard but she was dismissed. She filed for an illegal dismissal against
the company alleging that her absences was due to urinary tract infection, a pregnancy
borne, at the time she committed the alleged absences without permission on 1994, and
that she had sent an application for leave to her supervisor who refuses to receive it and
that she was advised to have a Rest-in-Quarter. The labor arbiter hold the contention of
the company that her absences was not due to her pregnancy. The decision was reversed
by the NLRC and affirmed by the Court of appeals holding that she was illegally dismissed.

Issue: whether Lolita’s absences were pregnancy related to justify her absences
 Ruling:
Yes, it would be unreasonable to isolate such conditions strictly to the dates
stated to Lolita’s Medical Certificate or the Discharge Summary. It can be safely assumed
that her absences were due to her continuing condition of pregnancy and related illness,
which justifies Lolita’s absences.

The company admitted the pregnancy of Lolita which reduce their standing and
now comes to the ambit of Article 137 of Labor Code which prohibits the discharge such
woman on account of her pregnancy, which on leave or confinement due to her
pregnancy.

• Prubankers Association vs Prudential Bank and Trust Company –distortion

FACTS:
The Regional Tripartite Wages and Productivity Board Region V issued Wage
Order no. RB 05-03 which provided for a Cost of Living Allowance to workers in the private
sector who had rendered services for at least 3 months before its effectivity, and for the
same period thereafter. RTWPB Region VII however followed suit but the COLA amounts
in other cities nationwide were different from that issued by RTWPN Region V. this caused
Prubankers Association to write the petitioner requesting that the Labor Management
Committee be immediately convened to discuss and resolve the alleged wage distortion
created in the salary structure upon the implementation of the said wage orders. As the
grievance could not be settled in the meetings, the parties agreed to submit the matter
to voluntary arbitration.

Prubankers argued that there exists a wage distortion because the

implementation of the two wage orders has resulted in the discrepancy in the
compensation of employees of similar pay classification in different regions.

ISSUE: whether the two wage order resulted to wage distortion

Ruling: NO, there is no wage distortion since the wage order implementation covers all
the branches of the bank. The hierarchy of positions was still preserved.

Also, petitioner’s claim of wage distortion must also be denied for one other
reason. The difference in wages between employees in the same pay scale in different
regions in not the mischief sought to be banished by the law. RA 6727 recognizes existing
regional disparities in the cost of living as provided in section 2 of the said law.

• Methods of fixing Minimum wage rate. Explain each

There are two methods namely:
1. floor-wage method which involves the fixing of a determinate amount to be
added to the prevailing statutory minimum wage rates; and
 2. Salary-Cap or Salary-ceiling method where the wage adjustment is to be
applied to employees receiving a certain denominated salary ceiling. In other words,
workers already being paid more than the existing minimum wage ( up to a certain
amount stated in the wage order) are also to be given a wage increase.

To illustrate, under the Floor wage Method it would be sufficient if the wage order simply
set 15php as the amount to be added to the prevailing statutory minimum wage rates; while in
Salary Ceiling Method it would be sufficient if the wage order states specific salary, such as
250php, and those earning below it shall be entitled to the wage increase.

• Globe Mackay Cable case and TSPIC Corp case vs Arco Metal Products case- erroneous
interpretation of law re Art. 100
• Tiangco case, Republic Planters case and Standard Chartered case- consistently and intentionally
re Art. 100
1st and 2nd case regarding ART 100 Labor Code globe mckay and Tiangco case
Art. 100, Labor Code. Prohibition against elimination or diminution of benefits. —Nothing in this
Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.

General Rule: No diminution of salary or benefits

Exceptions:
(a) When employee consents to the deduction (b) To correct an error (TSPIC
vs. Tspic Employees Union, G.R. No. 163419, Feb2008; [VELASCO CASE]
e
Exception to the exception:
If the error is left uncorrected for a reasonable period of time, it ripens into a
company policy and employees can demand for it as a matter of right.

Requisites for voluntary employer practice such that the same cannot be unilaterally
withdrawn anymore: (a) It should have been practiced over a long period of time; and (b) It must
be shown to have been consistent and deliberate. (Sevilla Trading Company vs. Semana, 428 SCRA
239 [2004], citing Globe Mackay Cable and Radio Corp. vs. NLRC, 163 SCRA 71 [1988].

• Based on the cases, what do you mean by "done for a considerable period of time"?(Phil.
Appliance, Davao Fruits, Sevilla, Central Azucarere, et.al)
With regard to the length of time the company practice should have been exercised to
constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer,
we hold that jurisprudence has not laid down any rule requiring a specific minimum number of
years. In the above quoted case of Davao Fruits Corporation vs. Associated Labor Unions,[10]the
company practice lasted for six (6) years. In another case, Davao Integrated Port Stevedoring
Services vs. Abarquez,[11] the employer, for three (3) years and nine (9) months, approved the
commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its
intermittent workers. While in Tiangco vs. Leogardo, Jr.,[12] the employer carried on the practice
of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three
 (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits
has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case
at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at
least two (2) years. This, we rule likewise constitutes voluntary employer practice which cannot
be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this
Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code.

• Mayon hotel on minimum wage

The minimum wage rates prescribed by law shall be the basic cash wages without
deduction therefrom of whatever benefits, supplements or allowances which the employees
enjoy free of charge aside from the basic pay.

The principal reason why a legislative wage increase is considered valid is that it prevents
the exploitation of defenseless workers who are situated in an unequal position vis-à-vis their
employers in terms of bargaining power. By setting the minimum below which the law considers
illegal, the workers are assured of decent living subsistence without the need for them to bargain
for the same.

The employer cannot hope to validate his non-compliance with the legislated minimum
wage by contending that he has liquidity problem or is suffering from financial reverses or
business losses. Whatever problem he may have in the operation of his business cannot certainly
affect his obligation to pay the minimum wage rate fixed by law.

Thus, in Mayon Hotel & Restaurant v. Adana, the Supreme Court ruled that petitioner’s
repeated invocation of serious business losses is not a defense to payment of labor standard
benefits. The employer cannot exempt himself from liability to pay minimum wages because of
poor financial condition of the company. The payment of minimum wages is not dependent on
the employer’s ability to pay.

It must be noted that acceptance by the employee of wage below the minimum set by
law does not preclude him suing for the deficiency. The principle of estoppel or laches does not
apply in these situations.

• Honda Phils on basic wage

The term “basic wage” means all the remuneration or earnings paid by an employer to a
worker for services rendered on normal working days and hours but does not include cost-of-
living allowances, profit-sharing payments, premium payments, 13th month pay or other
monetary benefits which are not considered as part of or integrated into the regular salary of the
workers.
 Further, as held in Honda Phils. Inc. v. Samahan ng Malayang Manggagawa sa Honda, the
following should be excluded from the computation of “basic salary.” To wit: payments for sick,
vacation and maternity leaves, night differentials, regular holiday pay and premium for work done
on the rest days and special holidays.

• Arica vs NLRC -waiting time

Waiting time spent by an employee shall be considered as working time if waiting is an
integral part of his work or the employee is required or engaged by the employee to wait.

In Arica v. NLRC, it was ruled that the 30-minute assembly time practiced by the
employees of the company cannot be considered “waiting time” and should therefore be
compensable.

Although it is clear that employers must compensate employees for time actually spent
working, questions arise as to whether the minimum wage and overtime provisions also apply to
time spent waiting to perform productive work. Under the regulations, whether waiting time is
time worked depends on the particular circumstances.

Time spent waiting for work is compensable if it is spent “primarily for the benefit of the
employer and its business.” Conversely, if the time is spent primarily for the benefit of the
employee, the time is not compensable. In determining whether waiting time constitutes hours
worked, the amount of control the employer has over the employee during the waiting time, and
whether the employee can effectively use that time for his own purposes is material.

• Bisig Manggagawa sa Tryco case vs Linton Commercial case on CWW scheme case

Bisig Manggawa sa Tryco vs NLRC

The MOA provided that 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and payable to the
employee for work rendered during those hours. The MOA specifically stated that the employee
waives the right to claim overtime pay. The MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. Considering
that the MOA clearly states that the employee waives the payment of overtime pay inexchange
of a fiveday workweek, there is no room for interpretation and itsterms should be implemented
as they are written.

Linton Commercial Co., Inc. vs. Hellera

Permitting reduction of work and pay at the slightest indication of losses would be
contrary to the State’s policy to afford protection to labor and provide full employment.—A close
examination of petitioners’ financial reports for 1997-1998 shows that, while the company
 suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and
operating income. Clearly then, while Linton suffered from losses for that year, there remained
enough earnings to sufficiently sustain its operations. In business, sustained operations in the
black is the ideal but being in the red is a cruel reality. However, a year of financial losses would
not warrant the immolation of the welfare of the employees, which in this case was done through
a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted
period. Permitting reduction of work and pay at the slightest indication of losses would be
contrary to the State’s policy to afford protection to labor and provide full employment.

• Discuss Sameer Overseas Placement case and Serrano case doctrines on OFWs dismissal\
It must be noted that under the 2009 Serrano doctrine, (Antonio M. Serrano v. Gallant
Maritime Services, Inc.,) an illegally dismissed OFW is now entitled to all the salaries for the entire
unexpired portion of their employment contracts, irrespective of the stipulated term or duration
thereof.

The underlined phrase in Section 10 below has been declared unconstitutional in this
case: “In case of termination of overseas employment without just, valid or authorized cause as
defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the
worker shall be entitled to the full reimbursement of his placement fee and the deductions made
with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his
employment contract or for three (3) months for every year of the unexpired term, whichever is
less.”

However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant
Workers and Overseas Filipinos Act of 1995), has replicated and re-enacted the same
unconstitutional provision exactly as above quoted.

The question is: was the unconstitutionality of the above-underlined part of the provision
cured by such replication or re-enactment in the amendatory law?

The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles,
answered this in the negative. The said provision was thus declared still unconstitutional and null
and void despite its replication.

In Serrano, SC identified the classifications made by the reinstated clause. It distinguished

between fixed-period overseas workers and fixed-period local workers. It also distinguished
between overseas workers with employment contracts of less than one year and overseas
workers with employment contracts of at least one year. Within the class of overseas workers
with at least one-year employment contracts, there was a distinction between those with at least
a year left in their contracts and those with less than a year left in their contracts when they were
illegally dismissed.

Consequently the ruling in Sameer:

 Overseas workers regardless of their classifications are entitled to security of tenure, at
least for the period agreed upon in their contracts. This means that they cannot be dismissed
before the end of their contract terms without due process. If they were illegally dismissed, the
workers’ right to security of tenure is violated.

• Substantive and produceral in OFW termination case

The Philippine Overseas Employment Administration Standard Employment Contract
(POEA-SEC) requires compliance with two basic requirements for a lawful dismissal: a just or
authorized case as prescribed by law, and observance of due process. The former comprises the
substantive requirement, and the latter constitutes the procedural requirement for a valid
dismissal.

An employer can terminate the services of an employee only for valid and just causes,
which must be supported by clear and convincing evidence. The burden of proving that the
termination of an employee was for a just or authorized cause lies with the employer. If the
employer fails to meet this burden, the conclusion would be that the dismissal was unjustified
and, therefore, illegal.

To discharge this burden, the employer must present substantial evidence, which is
defined as that amount of relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion, and not based on mere surmises or conjectures.

In any case of early termination, the seafarer must be accorded procedural due process
in compliance with the provisions of Section 17 of the POEA-SEC, which requires the “twin-notice
rule.” An erring seafarer is given a written notice of the charge against him and is afforded an
opportunity to explain or defend himself.

Before the issuance of the second notice, the requirement of a hearing must be complied
with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be
conducted. Should sanctions be imposed, then a written notice of penalty and the reasons for it
shall be furnished the erring seafarer.

It is only in the exceptional case of clear and existing danger to the safety of the crew or
vessel that the required notices are dispensed with; but just the same, a complete report should
be sent to the manning agency, supported by substantial evidence of the findings.

• Damages entitlement of OFW

Entitlement to moral and exemplary damages

In 2005 case of Athenna International Manpower Services, Inc. vs Villanos, the High
Tribunal ruled that because of the breach of contract and bad faith alleged against the employer
and the petitioner recruitment agency, the award of P50,000 in moral damages and P50,000 as
exemplary damages, in addition to attorney’s fees of ten percent (10%) of the aggregate
monetary awards, must be sustained.
• Century Canning Corp vs Ramil-doubt or ambiguity in evidence
• Colegio de san juan vs Villas -doubt or ambiguity on labor contracts
• PLDT vs NLRC-employee wrongdoing
@
Ghisleen Calsiyao

• Becmen Service Exporter case and Leyte Geothermal Power- Civil Code provisions 1700,1702
It was held in the case of Becmen Service Exporter vs Cuaresma that local employment
agency is solidarily liable with foreign principal. Severance of relations between local agent and
foreign principal does not affect liability of local recruiter. Private employment agencies are held
jointly and severally liable with the foreign-based employer for any violation of the recruitment
agreement or contract of employment. This joint and solidary liability imposed by law against
recruitment agencies and foreign employers is meant to assure the aggrieved worker of
immediate and sufficient payment of what is due him. If the recruitment/placement agency is a
juridical being, the corporate officers and directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid
claims and damages.

It was held in Leyte Geothermal vs PNOCEDC that by entering into such a project
employment contract, an employee is deemed to understand that his employment is coterminous
with the project. He may not expect to be employed continuously beyond the completion of the
project. However, this fact alone is not a valid reason for bestowing special treatment on them or
for invalidating a contract of employment. Project employment contracts are not lopsided
agreements in favor of only one party thereto. The employer’s interest is equally important as
that of the employee’s for theirs is the interest that propels economic activity. While it may be
true that it is the employer who drafts project employment contracts with its business interest as
overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is
the employee left helpless by a prejudicial employment contract. After all, under the law, the
interest of the worker is paramount.

• Lopez vs Alturas Group of Companies on right to counsel

In the decided case of Lopez vs Alturas Group that there is no violation of due process
even if no hearing was conducted, where the party was given a chance to explain his side of the
controversy. What is frowned upon is the denial of the opportunity to be heard. Petitioner was
given the opportunity to explain his side when he was informed of the charge against him and
required to submit his written explanation with which he complied. The right to counsel and the
assistance of one in investigations involving termination cases is neither indispensable nor
mandatory, except when the employee himself requests for one or that he manifests that he
wants a formal hearing on the charges against him.

• BPI vs BPI employees union-involuntary servitude

In the case of BPI vs BPI Employees Union – Davao Chapter the court held that all
employees in the bargaining unit covered by a Union Shop Clause in their CBA with management
are subject to its terms. However, under law and jurisprudence, the following kinds of employees
are exempted from its coverage, namely, employees who at the time the union shop agreement
takes effect are bona fide members of a religious organization which prohibits its members from
joining labor unions on religious grounds; employees already in the service and already members
of a union other than the majority at the time the union shop agreement took effect; confidential
employees who are excluded from the rank and file bargaining unit; and employees excluded from
the union shop by express terms of the agreement. Hence, what is material is that all of these
legal consequences of the merger took place during the life of an existing and valid CBA between
BPI and the Union wherein they have mutually consented to include a Union Shop Clause.