Labor Law–3questions

i. Basic principles
ii. Existence of employer-employee relationship; tests
iii. Termination of employment
iv. Requirements for labor-only contracting
v. Rights of employees and of labor organizations; membership in unions
vi. Management prerogative
vii. Illegal recruitment of overseas Filipino workers
viii. Remedies (labor standards violations)

I. BASIC PRINCIPLES

 STATE POLICY TOWARDS LABOR

- Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective

bargaining and negotiations, and peaceful concerted activities, including the
right to strike in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.

The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to expansion
and growth.

- 2018 BAR: Enumerate at least four (4) policies enshrined in Section 3,

Article XIII of the Constitution that are not covered by Article 3 of the
Labor Code on declaration of basic policy.

Four (4) policies enshrined in Section 3, Article XIII of the 1987 Constitution
which are not covered by Article 3 of the Labor Code on declaration of basic
policy are:

1. All workers shall have the right to peaceful concerted activities,

2. Including the right to strike in accordance with the law
3. They shall be entitled to a living wage
4. They shall participate in policy and decision making processes affecting
their rights and benefits as may be provided by law.
5. The state shall promote the principle of shared responsibility between
workers and employers.
 CONSTRUCTION IN FAVOR OF LABOR

- All doubts in the implementation and interpretation of the provisions of this

Code, including its implementing rules and regulations, shall be resolved in
favor of labor. (Art. 4, LC)

- In case of doubt, all legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer. (Art. 1702, Civil Code)

- Article 4 of the Labor Code only applies when there is doubt as to the
implementation and interpretation of the Labor Code. This does not mean that
Labor gets an undue advantage. If there is no doubt in the law, it will be
applied as it is (Spectra, 2018)

- BAR: Procopio was dismissed from employment for stealing his co-employee Raul’s
watch.

Procopio filed a complaint for illegal dismissal. The Labor Arbiter ruled in
Procopio’s favor on the ground that Raul’s testimony was doubtful, and, therefore,
the doubt should be resolved in favor of Procopio. On appeal, the NLRC reversed
the ruling because Article 4 of the Labor Code – which states that all doubts in the
interpretation and implementation of the provisions of the Labor Code, including
the implementing rules and regulations, shall be resolved in favor of labor –
applied only when the doubt involved the “implementation and interpretation” of
the Labor Code; hence, the doubt, which involved the application of the rules on
evidence, not the Labor Code, could not necessarily be resolved in favor of
Procopio.Was the reversal correct? Explain your answer.

Ans: In Peñaflor v. Outdoor Clothing Manufacturing, G.R. No. 177114, January 21,
2010, the Supreme Court explained the application of Article 4 of the Labor Code
regarding doubts on respondent’s evidence on the voluntariness of petitioner’s
resignation.

Thus, the High Court said: Another basic principle is that expressed in Article 4 of
the Labor Code – that all doubts in the interpretation and implementation of the
Labor Code should be interpreted in favor of the workingman. This principle has
been extended by jurisprudence to cover doubts in the evidence presented by the
employer and the employee. (Fujitsu Computer Products Corporation of the
Philippines v. Court of Appeals, 494 Phil. 697 [2005])

As shown above, Peñaflor has, at very least, shown serious doubts about the merits
of the company’s case, particularly in the appreciation of the clinching evidence on
which the NLRC and CA decisions were based. In such contest of evidence, the
cited Article 4 compels us to rule in Peñaflor’s favor. Thus, we find that Peñaflor
was constructively dismissed given the hostile and discriminatory working
environment he found himself in, particularly evidenced by the escalating acts of
unfairness against him that culminated in the appointment of another HRD
manager without any prior notice to him.

Where no less than the company’s chief corporate officer was against him, Peñaflor
had no alternative but to resign from his employment. (Unicorm Safety Glass, Inc.
v. Basarte, 486 Phil. 493 [2004])
 II. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP; TESTS

 What is the two-tiered test of employer-employee relationship?

- The two-tiered test is composed of:

a. The putative employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished (control test);
and
b. The underlying economic realities of the activity or relationship (broader
economic reality test).

- These two-tiered tests apply to cases where there are several parties
alleged to be employers of one individual. The determinant factor is
economic dependency of such individuals. In other words, under the
economic reality test, the question to ask is - among the parties alleged
to be the employer, to whom is the individual economically dependent?
(Francisco vs. NLRC, G.R. No. 170087 August 31, 2006).

 FOUR-FOLD TEST (Sonza v. ABS-CBN, 2004)

1. Selection and engagement of the employee

2. Payment of wages;
3. Power of dismissal; and
4. Employer’s power to control the employee’s conduct with respect to the means
and methods by which the work is to be accomplished

- It is the so-called “control test” which constitutes the most important index of
the existence of the employer-employee relationship that is, whether the
employer controls or has reserved the right to control the employee not only as
to the result of the work to be done but also as to the means and methods by
which the same is to be accomplished (Pacific Consultants International v.
Schonfeld, 516 SCRA 209).

- Registration of a person in the SSS is a conclusive indication of ER-EE

Relationship. In registration before the SSS, ER-EE relationship must be
present (Haveria v. SSS, 2018).

 What kind of control is needed to establish an employer-employee

relationship?

- Under the control test, in order to establish an employer-employee

relationship, the employer must have reserved the right to control the
employee as to the result of the work to be done and the means and methods
by which the same is to be accomplished (Chan, Pre-week notes on Labor Law,
2018, p. 40).

- Note: The power of control refers to the existence of the power and not
necessarily to the actual exercise thereof. It is not essential, in other words, for
the employer to actually supervise the performance of duties of the employee;
it is enough that the former has the right to wield the power (Equitable
 Banking Corporations vs. NLRC, G.R. No. 102467, June 13, 1997; Felicilda vs.
Uy, G.R. No. 221241, September 14, 2016).

 BAR: Gregorio was hired as an insurance underwriter by the Guaranteed Insurance

Corporation (Guaranteed). He does not receive any salary but solely relies on
commissions earned for every insurance policy approved by the company. He hires and
pays his own secretary but is provided free office space in the office of the company.
He is, however, required to meet a monthly quota of twenty (20) insurance policies,
otherwise, he may be terminated. He was made to agree to a Code of Conduct for
underwriters and is supervised by a Unit Manager.

Is Gregorio an employee of Guaranteed?

Ans: No, Gregorio is not an employee of Guaranteed. Control is the most important
element of employer-employee relationship, which refers to the means and methods by
which the result is to be accomplished (Avelino Lambo and Vicente Belocura v. NLRC
and J.C. Tailor Shop and/or Johnny Co., 375 Phil. 855 [1999]), .citing Makati
Haberdashery, Inc. v. NLRC, 259 Phil. 52 [1989]. The requirement of complying with
quota, company code of conduct and supervision by unit managers do not go into the
means and methods by which Gregorio must achieve his work. He has full discretion on
how to meet his quota requirement, hence, there is no employer-employee relationship
between Gregorio and Guaranteed.

 BAR: A, B, and C were hired as resident-doctors by MM Medical Center, Inc. In the

course of their engagement, A, B, and C maintained specific work schedules as
determined by the Medical Director. The hospital also monitored their work through
supervisors who gave them specific instructions on how they should perform their
respective tasks, including diagnosis, treatment, and management of their patients.

One day, A, B, and C approached the Medical Director and inquired about the non-
payment of their employment benefits. In response, the Medical Director told them that
they are not entitled to any because they are mere “independent contractors” as
expressly stipulated in the contracts which they admittedly signed. As such, no-
employer-employee relationship exists between them and the hospital.

Is the Medical Director’s reliance on the contracts signed by A, B, and C to refute the
existence of an employer-employee relationship correct? If not, are A, B, and C
employees of MM Medical Center, Inc.? Explain.

Ans: No, the Medical Director is not correct. Employer-employee relationship is a

question of both law and fact. Law provides its cognitive significance, whereas
evidence gives its out-there representation. Being a matter of law and evidence, it
cannot be the subject of stipulation. A, B, and C, who are not medical specialists, are
the employees of MM Medical Center, Inc. owing to the “means-methods control”
exercised by the latter over them.

III. TERMINATION OF EMPLOYMENT

 REQUISITES FOR VALIDITY OF TERMINATING EMPLOYEES

- Substantive Due Process - whether the termination was based on the

provisions of the Labor Code or in accordance with jurisprudence.
- The dismissal must be for any of the causes provided for in Art. 297-299
 JUST CAUSES: Article 297 [282] (Termination by the Employer) -which provides
for the following grounds:

1. Serious Misconduct or Willful Disobedience (Insubordination)

2. Gross & Habitual Neglect of Duties
3. Fraud/Willful Breach of Trust
4. Commission of A Crime
5. Analogous cases

A. Serious Misconduct or Willful Disobedience:

Requisites of Serious Misconduct

1. There must be misconduct
2. The misconduct is of such grave and aggravated character
3. It must relate to the performance of the employee’s duties
4. A showing that the employee becomes unfit to continue working for the
employer.
- Misconduct refers to the improper or wrong conduct that transgresses
some established and definite rule of action, a forbidden act, a dereliction
of duty, willful in character, and implies wrongful intent and not mere
error in judgment. (Northwest Airlines Inc v. Del Rosario, 2014)

Requisites of Willful Disobedience

1. There must be disobedience or insubordination;
2. The disobedience or insubordination must be willful or intentional
characterized by a wrongful and perverse attitude;
3. The order violated must be reasonable, lawful and made known to the
employee
4. The order must pertain to the duties which he has been engaged to
discharge.

B. Gross and Habitual Neglect of Duties: Requisites

1. There must be a neglect of duty

2. The neglect must be both gross and habitual in character.

- Gross negligence has been defined as the want or absence of or failure to

exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them. In order to constitute just cause for an EE’s dismissal due to
negligence, it must be both gross and habitual. A single or an isolated act
cannot be categorized as habitual. (National Bookstore v. CA, 2002)
- Gross negligence - want of care in the performance of one’s duties
- Habitual neglect - repeated failure to perform one’s duties for a period of
time.
- Gross negligence includes gross inefficiency
- Gross and habitual neglect of duty includes gross inefficiency, negligence
and carelessness.

C. Fraud/Willful Breach of Trust:

 Requisites of Fraud or will breach of trust:

1. There must be an act, omission or concealment;

2. The act, omission or concealment involves a breach of legal duty, trust, or
confidence justly reposed;
3. It must be committed against the ER or his/her representative; and
4. It must be in connection with EE’s work.

- When dismissal is proper for fraud/willful breach of trust:

i. Such breach is willful if it is done intentionally, knowingly, and

purposely, without justifiable excuse as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.
ii. The act complained of must be work- related and shows that the
employee is unfit to continue working.
iii. In addition, it must be premised on the fact that the EE concerned
holds a position of responsibility, trust and confidence or is entrusted
with confidence with respect to delicate matters such as handling or
case and protection of the property and assets of the ER. (Villanueva,
Jr. v. NLRC, 2012)

Requisites of loss of confidence

1. There must be an act, omission or concealment;

2. The act, omission or concealment justifies the loss of trust and confidence of
the ER to the EE;
3. The EE concerned must be holding a position of trust and confidence;
4. The loss of trust and confidence should not be simulated;
5. It should not be used as a subterfuge for causes which are improper, illegal
or unqualified; and
6. It must be genuine and not a mere afterthought to justify an earlier action
taken in bad faith.

Positions of trust and confidence

1. Managerial EEs - vested with 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.
2. Fiduciary Rank and File - those who in the normal and routine exercise of
their functions, regularly handle significant amounts of money or property.
Ex. Cashiers, auditors, property custodians

D. Commission of a Crime: Requisites:

1. There must be an act or omission punishable or prohibited by law; and

2. The act or omission was committed by the EE against the person of the ER
or his family, or his duly authorized representative.

- The ER may validly dismiss for loss of trust and confidence an EE who
commits an act of fraud prejudicial to the interest of the ER. Neither a
 criminal prosecution nor a conviction beyond reasonable doubt for the
crime is a requisite for the validity of the dismissal. (Concepcion v.
Mimex Imports, 2012).

E. Analogous causes: Requisites

1. There must be an act or omission similar to those specified just causes; and
2. The act or omission must be voluntary and/or willful on the part of the EEs.

Other causes

1. Abandonment
2. Courtesy of Resignation: Resignation per se means voluntary relinquishment of a
position or office. Adding the word ‘courtesy’ did not change the essence of the
resignation. (Batongbacal v. Associated Bank, 2013)

3. Change of ownership – A mere change in the equity composition of a

corporation is neither just nor an authorized cause that would legally
permit the dismissal of the corporation’s employees en masse. (SME Bank
Inc. v. De Guzman, 2013)

4. Habitual absenteeism/tardiness – This is analogous to gross neglect of

duty.

5. Poor performance

6. Past offenses - Previous offenses may be used as a valid justification for

dismissal only if the infractions are related to the subsequent offense upon
which the basis of termination is decreed.
7. Habitual infractions
- This is analogous to gross/habitual neglect of duties
- A series of irregularities when put together may constitute serious
misconduct, under which Art 297 of the Labor Code is a just cause for
dismissal.

8. Drug Addiction
- This is analogous to Serious Misconduct and Willful Disobedience
- Drug Addiction is a valid ground for an ER to terminate the employment
of the addicted EE.

9. Immorality
- This is analogous to Serious Misconduct and Willful Disobedience
- Disgraceful or immoral conduct can be used as a basis for termination
of employment.
- Standard of morality: It is public and secular, not religious. Whether a
conduct is considered disgraceful or immoral should be made in
accordance with the prevailing norms of conduct, which as stated in
Leus, refer to those conducts which are proscribed because they are
detrimental to conditions upon which depend the existence of and
progress of human society.
- Pregnancy out of wedlock: When the law speaks of immoral or
necessarily, disgraceful conduct, it pertains to public and secular
morality.
 - Pre-marital sexual relations between two consenting adults, who have
no impediment to marry each other, and consequently, conceiving a
child out of wedlock, gauged from a purely public and secular view of
morality does NOT amount to an immoral conduct. (Cheryl Leus v. St.
Scholastica College Westgrove, 2015)

10. Totality of infractions

11. Pregnancy out of wedlock

 AUTHORIZED CAUSES

- Article 298 [283] (Business-related causes) – The ER may also terminate the
employment of any EE due to:
1. The installation of labor-saving devices,
2. Redundancy,
3. Retrenchment to prevent losses or
4. The closing or cessation of operation of the establishment or undertaking
not due to serious loss

Other causes

1. Disease incurable in 6 months [Art. 299]

2. Enforcement of union security clause in the CBA
3. Dismissal of union officers for the conduct of an illegal strike; Dismissal of
union members for participating in the commission of illegal acts in a
strike [Art. 279 (a)]
4. Termination in conformity with existing statute/qualification requirements.

- Written notice - For all authorized causes, a written notice served on both the
EEs and the DOLE at least one month prior to the intended date of termination
is required.

A. Installation of labor-saving devices : This refers to the installation of

machinery to effect efficiency and economy in the ER’s method of production.

1. There must be introduction of machinery, equipment, or other devices;

2. The introduction must be done in good faith;
3. The purpose for such introduction must be valid such as to save on cost,
enhance efficiency and other justifiable economic reasons;
4. There is no other option available to employer than the introduction of
machinery, equipment or device and the consequent termination of
employment of those affected thereby; and
5. There must be fair and reasonable criteria in selecting employees to be
terminated.

- GR: In cases of installation of labor- saving devices, redundancy and

retrenchment, the Last-In, First-Out Rule shall apply.

- Exception: EE volunteers to be separated from employment.

B. Redundancy

- Redundancy exists when the service capability of the workforce is in excess

of what is reasonably needed to meet the demands of the business
enterprise.

- A position is redundant when it is superfluous and superfluity of a position

or positions could be the result of a number of factors such the overhiring of
workers, a decrease in the volume of business or dropping of a particular
line or service previously manufactured or undertaken by the enterprise.
(Morales v. Metrobank, 2012)

Requisites

1. There must be superfluous positions or services of EEs;

2. The positions or services are in excess of what is reasonably demanded by
the actual requirements of the enterprise to operate in an efficient and
economical manner;
3. There must be good faith in abolishing redundant positions;
4. There must be fair and reasonable criteria in selecting the employees to be
terminated; and
5. There must be adequate proof of redundancy such as but not limited to the
new staffing pattern, feasibility studies/proposal, on the viability of newly
created positions, job description and the approval by the management of
the restructuring.

- In implementing a redundancy program, the ER is required to adopt fair and

reasonable criteria taking into consideration factors such as (a) preferred
status, (b) efficiency, and (c) seniority among others. (Morales v. Metrobank,
2012)

C. Retrenchment to prevent serious loss: Requisites

1. The retrenchment is reasonably necessary and likely to prevent business

losses;
2. The losses, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected are reasonably imminent as
perceived objectively and in good faith by the employer;
3. The expected or actual losses must be proved by sufficient and convincing
evidence;

- The retrenchment must be in good faith for the advancement of its interest
and not to defeat or circumvent the employees’ right to security of tenure;
and

- There must be fair and reasonable criteria in ascertaining who would be

dismissed and would be retained among the employees such as status,
efficiency, seniority, physical fitness, age and financial hardship for certain
workers.

- The ER bears the burden of proving the existence of the imminence of

substantial losses with clear and satisfactory evidence that there are
 legitimate business reasons justifying a retrenchment. (Mount Carmel
College Employees Union v. Mount Carmel College, 2014)

- Two kinds of losses justifying retrenchment

1. Incurred losses - substantial, serious actual and real

2. Expected losses - reasonably imminent

D. Closing or cessation of business not due to serious loss: Requisites

1. There must be a decision to close or cease operation of the enterprise by the

management;
2. The decision was made in good faith; and
3. There is no other option available to the employer except to close or cease
operations.
4. The ER must serve a written notice on the workers and the SOLE at least 1
month before the intended date thereof. [Art. 298]

Guidelines
- Closure or cessation of operations of establishment or undertaking may
either be partial or total.
- Closure or cessation of operations of establishment or undertaking may or
may not be due to serious business losses or financial reverses. In both
instances, proof must be shown that:
- It was done in good faith to advance the ER’s interest and not for the
purpose of defeating or circumventing the rights of EEs under the law or a
valid agreement; and
- A written notice on the affected employees and the DOLE is served at least 1
month before the intended date of termination of employment.
- The ER can lawfully close shop even if not due to serious business losses or
financial reverses but separation pay, which is equivalent to at least one
month pay as provided for by Article 283 of the Labor Code, as amended,
must be given to all the affected EEs.
- If the closure or cessation of operations of establishment or undertaking is
due to serious business losses or financial reverses, the ER must prove such
allegation in order to avoid the payment of separation pay. Otherwise, the
affected EEs are entitled to separation pay.
- The burden of proving compliance with all the above-stated falls upon the
ER.

E. Disease:

Requisites: The employee must be suffering from a disease which cannot be

cured within 6 months, even with proper medical treatment. Continued
employment is either:

1. Prohibited by law or
2. Prejudicial to his health or
3. Prejudicial to the health of his co- employees; and

An ER may terminate the services of an EE:

 1. Who has been found to be suffering from any disease; and
2. Whose continued employment is prohibited by law or is prejudicial to his
health as well as the health of his co- EEs. [Art. 299]
3. A certification to that effect issued by a competent public health authority,
which must state that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical
treatment.

- Burden of proof with ER- The burden of proof falls upon the employer to
establish the requisites. In the absence of such certification, the
dismissal must be necessarily declared illegal.

- Prior certification required - It is only where there is a prior certification

from a competent public authority that the disease afflicting the EE
sought to be dismissed is of such nature or at such stage that it cannot
be cured within 6 months even with proper medical treatment that the
latter could be validly terminated from his job.

- Note: If the disease or ailment can be cured within the period of 6

months, the employer shall not terminate the employee but shall ask the
employee to take a leave of absence. The employer shall reinstate such
employee to his former position immediately upon the restoration of his
health

Separation Pay
- An employee terminated on the ground of disease shall be paid separation
pay equivalent to at least 1 month salary or to 1⁄2 month salary for every
year of service, whichever is greater. [Art. 299]

- Note: A fraction of at least six (6) months being considered as one (1)
whole year.

F. Enforcement of Union Security Clause in CBA

- The law authorizes the enforcement of union security clauses, provided it is

not characterized by arbitrariness and always with due process.
- In terminating the employment of an employee by enforcing the Union
Security Clause, the ER needs only to determine and prove that:

1. The union security clause is applicable

2. The union is requesting for the enforcement of the union security
provision in the CBA
3. There is sufficient evidence to support the union’s decision to expel the
EE from the union or company.

G. Dismissal of Union Officers for the conduct of an illegal strike; Dismissal

of union members for participating in the commission of illegal acts in a
strike

- Any union officer who knowingly participates in an illegal strike, and any
worker or union officer who knowingly participates in the commission of
 illegal acts during a strike may be declared to have lost employment status.
[Art. 279]

H. Termination in Conformity with Existing Statute/ Qualification

Requirements

- While the right of workers to security of tenure is guaranteed by the

Constitution, its exercise may be
- reasonably regulated pursuant to the police powers of the State to
safeguard health, morals, peace, education, order, safety, and the general
welfare of the people.
- Consequently, persons who desire to engage in the learned professions
requiring scientific or technical knowledge may be required to take an
examination as a prerequisite to engaging in their chosen careers. (St.
Luke's Medical Center Employees Association v. NLRC, 2007)

 PROCEDURAL DUE PROCESS

- The ER shall:

1. Furnish the worker, whose employment is sought to be terminated, a

written notice containing a statement of the causes for termination; and
2. Afford the latter ample opportunity to be heard and to defend himself, with
the assistance of his representative if he so desires, in accordance with
company rules and regulations promulgated pursuant to guidelines set by
the DOLE.

- Procedural Due Process - manner in which the dismissal was effected

(Twin Notice Rule):

1. The first written notice to be served on the EEs should contain the specific
causes or grounds for termination against them, and a directive that the EEs
are given the opportunity to submit their written explanation within a
reasonable period. (First Notice)
2. The requirement of a hearing is complied with as long as there was an
opportunity to be heard, and not necessarily an actual hearing was
conducted.
3. After determining that termination of employment is justified, the ERs shall
serve the EEs a written notice of termination indicating that:

- All circumstances involving the charge against the EE have been

considered, and
- The grounds have been established to justify the severance of the
employment. (Second Notice) (Inguillo v. First Phil Scales, 2019)

- Contents of First Notice:

1. Specific causes or grounds for termination against the EE

2. Directive that the EE is given the opportunity to submit his written
explanation within a “reasonable period” or every kind of assistance that
management must accord to enable him to prepare adequately for his
 defense. This should be construed as a period of at least 5 calendar days
from receipt of notice.
3. Detailed narration of the facts and circumstances that will serve as basis for
the charge against the EE. A general description of the charge will not
suffice. (Unilever v. Rivera, 2013)
4. The company rules, if any, violated and/or the grounds under Art. 288 being
charged against the EE. (United Tourist Promotions v. Kemplin, 2014)

- Contents of Second Notice:

1. All circumstances involving the charge against the employee considered

2. Grounds established to justify the severance of employment. (United Tourist
Promotions v. Kemplin, 2014)

- Hearing

1. In EE dismissal cases, the essence of due process is simply the opportunity

to be heard, it is the denial of this that constitutes a violation of due process
of law. (Technol Eight Philippines Corporation v. NLRC, 2010)
2. While a formal hearing or conference is ideal, it is not an absolute,
mandatory or exclusive avenue of due process. (Perez v. PT&T, 2009)

 ILLEGAL DISMISSAL

- Kinds

1. No just or authorized cause

- For the dismissal of an EE to be valid, the dismissal must be for any of the
causes provided for in Art. 297-299.
- An ER who dismisses an EE without just or authorized cause is liable for:
a. Reinstatement or separation pay if reinstatement is not possible; and
b. Full backwages.

2. Constructive dismissal: Constructive dismissal is cessation of work

because continued employment is either:

a. Rendered impossible, unreasonable or unlikely;

b. When there is a demotion in rank or diminution in pay or both; or
c. When a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee. (Dusit Hotel Nikko v.
NUHWRAIN-Dusit Hotel Chapter, 2005)

- The Test of Constructive Dismissal is whether a reasonable person in

the EE’s position would have felt compelled to give up his position under
the circumstances. (Tuazon v. Bank of Commerce, 2012)
- Burden of proof: The burden of proving that the termination was for a
valid or authorized cause shall rest on the ER. [Art. 292 (b)]
- In illegal dismissal cases, the onus of proving that the EE was not
dismissed or, if dismissed, that the dismissal was not illegal, rests on the
ER, failure to discharge which would mean that the dismissal is not
 justified and, therefore, illegal. (Macasero v. Southern Industrial Gases
Philippines, 2014)
- Liability of officers: As a general rule, officers are not personally liable
for corporate obligation, with the exception that in order to hold a
director or officer personally liable occurs when the following requisites
are present:
- Reliefs from illegal dismissal : The following reliefs are cumulative and not
alternative:

1. Actually reinstate the dismissed employees or,

2. Constructively reinstate them in the payroll.
2. Backwages
3. Damages and Attorney’s Fees
4. Separation Pay

 TERMINATION BY EMPLOYEE

1. With notice to the ER

- An EE may terminate without just cause the ER-EE relationship

- By serving a written notice on the ER at least one (1) month in advance
- The ER upon whom no such notice was served may hold the EE liable for
damages [Art. 300]
- Notice is required when termination is without just cause. Written notice to
resign must be submitted one (1) month in advance. [Art. 300]
- The 30-day notice requirement for an EE’s resignation is for the benefit of
the ER in order to afford the him enough time to hire another EE if needed
and to see to it that there is proper turn-over of the tasks which the
resigning EE may be handling (Hechanova v. Matorre, 2013).
- Since the 30-day notice is for the ER’s benefit, he may waive such period
(Paredes v. Feed the Children Philippines Inc., 2015).

Resignation

- Resignation is the voluntary act of an EE who finds himself in a situation

where he believes that personal reasons cannot be sacrificed in favor of
the exigency of the service, such that he has no other choice but to
disassociate himself from his employment. (Cervantes v. PAL Maritime
Corp., 2013)

- To constitute a resignation:
a. It must be unconditional and with the intent to operate as such;
b. There must be an intention to relinquish a portion of the term of office
accompanied by an act of relinquishment.

2. Without notice to the ER

- An EE may put an end to the relationship without serving any notice on the
ER for any of the following requirements:
a. Serious insult by the ER or his representative on the honor and person
of the EE;
 b. Inhuman and unbearable treatment accorded the EE by the ER or his
representative;
c. Commission of a crime or offense by the ER or his representative
against the person of the EE or any of the immediate members of his
family; and
d. Other causes analogous to any of the foregoing. [Art. 300]

- Notice is NOT required when termination is with just cause. [Art. 300]

Retirement

- Retirement- It is the result of a bilateral act of the parties, a voluntary

agreement between the ER and the EE whereby the latter, after reaching a
certain age agrees to sever his or her employment with the former.

- Who are covered: All EEs in the private sector, regardless of their position,
designation, or status, and irrespective of the method by which their wages
are paid. Exceptions:

a. EEs covered by the Civil Service Law;

b. EEs in retail, service and agricultural establishments or operations
regularly employing not more than ten EEs

IV. REQUIREMENTS FOR LABOR-ONLY CONTRACTING

 LEGITIMATE CONTRACTING AS DISTINGUISHED FROM LABOR-ONLY

CONTRACTING

- Contracting or subcontracting refers to an arrangement whereby a principal

agrees to farm out to a contractor the performance or completion of a specific
job or work within a definite or predetermined period, regardless of whether
such job or work is to be performed or completed within or outside the premises
of the principal.

 There is "labor-only" contracting where:

1. The person supplying workers to an employer does not have substantial capital
or investment in the form of tools, equipment, machineries, work premises,
among others. (No substantial capital)

2. The workers recruited and placed by such person are performing activities
which are directly related to the principal business of such employer.
(Work is directly related to ER’s business)

- Effect of labor-only contracting: In such cases, the person or intermediary

shall be considered merely as an agent of the ER who shall be responsible
to the workers in the same manner and extent as if the latter were directly
employed by him. (Contractor is ER’s agent, ER liable for all EE benefits of
Contractor’s EEs)

 RULES FOR CONTRACTING/SUBCONTRACTING

 1. Whenever ER enters into a contract with another person for the performance of
the former’s work, the EEs of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of the Labor Code. [Art.
106, par. 1]

2. In the event that the contractor or subcontractor fails to pay the wages of his
EEs in accordance with this Code, the ER shall be jointly and severally liable
with his contractor or subcontractor to such employees:

a. To the extent of the work performed under the contract

b. In the same manner and extent that he is liable to EEs directly employed by
him. [Art. 106, par. 2]

3. The SOLE may, by appropriate regulations, restrict or prohibit the contracting-

out of labor to protect the rights of workers established under this Code. [Art.
106, par. 3]
- He/She may make appropriate distinctions between labor-only contracting
and job contracting as well as differentiations within these types of
contracting.
- He/She may determine who among the parties involved shall be considered
the employer for purposes of this Code.

4. An ER, whether direct or indirect, may require the contractor or subcontractor

to furnish a bond equal to the cost of labor under contract, on condition that the
bond will answer for the wages due the employees should the contractor or
subcontractor, as the case may be, fail to pay the same. [Art. 108]
5. Contractors and subcontractors referred to in these rules are prohibited from
engaging in recruitment and placement activities.
- A service agreement refers to the contract between the principal and
contractor containing the terms and conditions governing the performance
or completion of a specific job or work being farmed out for a definite or
predetermined period.

 ELEMENTS OF LEGITIMATE CONTRACTING:

- To be considered legitimate contracting or subcontracting, the following

elements must concur:
1. Distinct and independent business: Contractor or subcontractor is
engaged in a distinct and independent business and undertakes to perform
the job on its own responsibility, according to its own manner and method;

2. Substantial capital or investment: Contractor or subcontractor has

substantial capital to carry out the job farmed out by the principal on his
account, manner and method, investment in the form of tools, equipment,
machinery and supervision;
- Substantial Capital refers to paid-up capital stocks/shares of at least
P5,000,000 in the case of corporations, partnerships and cooperatives;
in case of single proprietorship, a net worth of at least P5,000,000.
 3. Free from control/direction of the principal: In performing the work,
contractor or subcontractor is free from the control/direction of the
principal in all matters regarding performance of the work except the result;

4. Compliance with labor laws: Service Agreement ensures that employees

of the contractor/subcontractor are given all the benefits and rights they are
entitled to under labor laws.

 TRILATERAL RELATIONSHIP

- When the above-elements are present, a trilateral relationship arises. It

consists of the following parties:

1. Principal - Any natural or juridical entity, whether an employer or not,

who puts out or farms out a job or work to a contractor.
2. Contractor - Any person or entity engaged in a legitimate contracting or
subcontracting arrangement providing services for a specific job or
undertaking farmed out by a principal under a Service Agreement.
3. Contractor’s employee - Employee of the contractor hired to perform or
complete a job or work farmed out by the principal.

- Note: Contractor may also be a subcontractor.

Relationships within the trilateral relationship

1. ER- EE between the contractor and the employees it engaged to perform the
specific job, work or service being contracted; and
2. Contractual relationship between the principal and the contractor as governed
by the provisions of the Civil Code.

 DIFFERENCES BETWEEN SUBCONTRACTING AND LABOR-ONLY

CONTRACTING:

Subcontracting/Job Labor Only Contracting

Contracting
As to Existence of There is no employer-employee The Labor Code itself
ER-EE Relationship relationship between the establishes an employer-
with employees of the job contractor employee relationship between
Employer/Principal and the principal employer. the employer and the employees
of the “labor-only” contractor.
The employer or principal is
merely an indirect employer, The employer or principal is
by operation of law, of his treated as a direct employer of
contractor’s employees. the contractor’s employees in all
instances (contractor is deemed
agent of the employer).
As to Liability of There exists a solidary liability The principal becomes solidarity
the Principal on the part of the principal and liable with the contractor not
the contractor for purposes of only for unpaid wages but also
enforcing the provisions of the for all rightful claims of the
Labor Code and other social employees under the Labor Code
legislations, to the extent of and ancillary laws.
the work performed under the
employment contract in the
event of:
 1. Violation of any provision of
the Labor Code; or
2. Failure to pay wages
As to Validity Permissible Prohibited by DOLE by virtue of
its authority under Art. 106 of
the Labor Code

 BAR: Star Crafts is a lantern maker based in Pampanga. It supplies Christmas

lanterns to stores in Luzon, MetroManila, and parts of Visayas, with the months of
August to November being the busiest months. Its factory employs a workforce of
2,000 workers who make different lanterns daily for the whole year. Because of
increased demand, Star Crafts entered into a contractual arrangement with People
Plus, a service contractor, to supply the former with 100 workers for only 4
months, August to November, at a rate different from what they pay their regular
employees. The contract with People Plus stipulates that all equipment and raw
materials will be supplied by Star Crafts with the express condition that the
workers cannot take any of the designs home and must complete their tasks within
the premises of Star Crafts.

Is there an employer-employee relationship between Star Crafts and the100

workers from People Plus? Explain.

Ans: Yes. People Plus is a labor-only-contractor because it is not substantially

capitalized. Neither does it carry on an independent business in which it actually
and directly uses its own investment in the form of tools, equipment, machineries
or work premises. Hence, it is just an agent or recruiter of workers who perform
work directly related to the trade of Star Crafts. Since both essential element and
con2rming element of labor-only contracting are present, Star Crafts as principal
and the supplied workers are related as employer and employees.

As principal, Star Crafts will always be an employer in relation to the workers

supplied by its contractor. Its status as employer is either direct or indirect
depending on the latter’s standing in law. Thus even if People Plus were a
legitimate job contractor, still Star Crafts will be treated as a statutory employer
for purposes of paying the workers’ unpaid wages and benefits (Art. 106, Labor
Code; D.O. 18-A).

V. RIGHTS OF EMPLOYEES AND OF LABOR ORGANIZATIONS;

MEMBERSHIP IN UNIONS

 The State shall assure the rights of workers to:

1. Self-organization,
2. Collective bargaining,
3. Security of tenure, and
4. Just and humane conditions of work.

 Right of Self- Organization and Collective Bargaining

 - The State shall guarantee the right of the people, including those employed in
the public and private sectors, to form unions, associations, or societies for
purposes not contrary to law. (Art. III, Sec. 8, 1987 Constitution)
- The State shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall
also participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
- The State shall promote the principle of shared responsibility between workers
and employers and the preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance therewith to
foster industrial peace.
- The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to expansion
and growth. (Art. XIII, Sec. 3, 1987 Constitution)
- All persons employed in commercial, industrial and agricultural enterprises,
and in religious, charitable, medical or educational institutions, whether
operating for profit or not, shall have the right to self-organization, to form,
join, or assist labor organization of their own choosing for purposes of
collective bargaining (Art. 254, LC).
- Employees of government corporations established under the corporation code
shall have the right to organize, and bargain collectively with their respective
employers (Art. 255, LC).
- Infringement of the right to self- organization: It shall be unlawful for any
person to restrain, coerce, discriminate against or unduly interfere with
employees and workers in their exercise of the right to self-organization (Art.
257, LC)

Scope of right to self-organization:

- Right to form, join or assist labor organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing
(Art. 257, LC);
- Right to engage in lawful concerted activities for the same purpose (collective
bargaining) or for their mutual aid and protection (Art. 257, LC)
- The right to form or join a labor organization necessarily includes the right to
refuse or refrain from exercising said right. It is self-evident that just as no one
should be denied the exercise of a right granted by law, so also, no one should
be compelled to exercise such a conferred right. (Reyes v. Trajano, 1992)
- The freedom to form organizations would be rendered nugatory if the members
could not choose their own leaders to speak on their behalf and to bargain for
them. (Pan- American World Airways, Inc v. Pan- American Employees
Association, 1969)

 RIGHTS OF A LABOR ORGANIZATION

- A Legitimate Labor Organization (LLO) shall have the ff. rights:

1. To represent its members in collective bargaining

2. To be certified as exclusive representative in collective bargaining
3. To ask for financial statements
 4. To own property
5. To sue and be sued
6. To do acts which benefit the
organization
7. To collect membership fees

Check Off, Assessment, Agency Fees

- A check-off is a process or device whereby the ER, on agreement with the
Union, recognized as the proper bargaining representative, or on prior
authorization from the EEs, deducts union dues or agency fees from the
latter’s wages and remits them directly to the Union. (Marino v. Gamilla,
2009)

 MEMBERSHIP IN UNIONS: SCOPE

• All Employees

- All persons employed in commercial, industrial and agricultural enterprises

and in religious, charitable, medical or educational institutions, whether
operating for profit or not, shall have the right to self-organization and to
form, join or assist labor organizations of their own choosing for purposes of
collective bargaining. (Presumes ER-EE relationship)
- Ambulant, intermittent and itinerant workers, self-employed people, rural
workers and those without any definite employers may form labor
organizations for their mutual aid and protection. [Art. 253]
- Any EE, whether employed for a definite period or not, shall, beginning on
his first day of service, be considered an employee for purposes of
membership in any labor union. [Art. 292(c)]
- “Employee” (EE) shall include any individual whose work has ceased as a
result of or in connection with any current labor dispute or because of any
unfair labor practice if he has not obtained any other substantially
equivalent and regular employment. [Art. 219(f)]

• Government EEs of corporations created under the Corporation Code

- The right to self-organization shall not be denied to government EEs. [Sec.

2(5), Art. IX-B, 1987 Constitution]
- EEs of government corporations established under the Corporation Code
shall have the right to organize and to bargain collectively with their
respective ERs
- All other EEs in the civil service shall have the right to form associations for
purposes not contrary to law. [Art. 254]
- Government EEs right to organize is for a limited purpose. – Government
EEs cannot negotiate matters which are fixed by law such as those involving
appropriation of funds.

• Supervisory EEs

- Supervisory EEs are those who, in the interest of the ER, effectively
recommend such managerial actions if the exercise of such authority is not
merely routinary or clerical in nature but requires the use of independent
judgment. [Art. 219(m)]
 - What is essential is the nature of the EE’s function and not the
nomenclature or title given to the job which determines whether the EE has
rank- and-file or managerial status or whether he is a supervisory employee.
(Tagaytay Highlands International Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PTGWO, 2003)

• Aliens with valid working permits

- GR: All aliens, natural or juridical, are strictly prohibited from engaging
directly or indirectly in all forms of trade union activities. [Art. 284]

- Exception: Aliens may exercise the right to self-organization and join or

assist labor unions for purposes of collective bargaining, provided the
following requisites are fulfilled:
1. With valid working permits issued by the DOLE; and
2. They are nationals of a country which grants the same or similar rights
to Filipino workers [Art. 284]

• Security personnel

- The security guards and other personnel employed by the security service
contractor shall have the right:
1. To form, join, or assist in the formation of a labor organization of their
own choosing for purposes of collective bargaining and
2. To engage in concerted activities which are not contrary to law
including the right to strike

• Ineligibility of Managerial EEs; Rights of Supervisory EEs

- Managerial EEs are not eligible to join, assist or form any labor
organization. [Art. 255]
- Supervisory EEs shall not be eligible for membership in the collective
bargaining unit of the rank-and-file EEs but may join, assist or form separate
collective bargaining units and/or legitimate labor organizations of their
own. The rank- and-file union and the supervisors' union operating within
the same establishment may join the same federation or national union.
- Rationale: Supervisory EEs, while in the performance of supervisory
functions, become the alter ego of the management in the making and the
implementing of key decisions at the sub-managerial level. Certainly, it
would be difficult to find unity or mutuality of interests in a bargaining unit
consisting of a mixture of rank-and- file and supervisory EEs.

• Doctrine of Necessary Implication

- While Art. 255 of the Labor Code singles out managerial EEs as ineligible to
join, assist or form any labor organization, under the doctrine of necessary
implication, confidential EEs are similarly disqualified. This doctrine states
that what is implied in a statute is as much a part thereof as that which is
expressed. (Metrolab Industries Inc. v. Roldan-Confessor, 1996)

- Nature of Access Test: Confidential EEs, by the nature of their functions,

assist and act in a confidential capacity to, or have access to confidential
 matters of, persons who exercise managerial functions in the field of labor
relations.
Requisites
1. The confidential relationship must exist between the EEs and his
supervisor, and
2. The supervisor must handle the prescribed responsibilities relating to
labor relations. (San Miguel Supervisors and Exempt Union v.
Laguesma, 1997)

Function Test: Nomenclature is not controlling

- The mere fact that an EE is designated “manager” does not ipso facto
make him one. Designation should be reconciled with the actual job
description of the EE. (Paper Industries Corp. of the Philippines. v.
Laguesma, 2000)
- Confidential information: Must relate to labor relations and not from a
business standpoint
- An EE must assist or act in a confidential capacity and obtain
confidential information relating to labor relations policies. Exposure to
internal business operations of the company is not per se a ground for
the exclusion in the bargaining unit. (Coca-Cola Bottlers v. IPTEU, 2015)

Rationale of Exclusion of Confidential EEs

- If confidential employees could unionize in order to bargain for

advantages for themselves, then they could be governed by their own
motives rather than the interest of the employers.

- Moreover, unionization of confidential EEs for the purpose of collective

bargaining would mean the extension of the law to persons or
individuals who are supposed to act in the interest of the ERs. It is not
far-fetched that in the course of collective bargaining, they might
jeopardize that interest which they are duty bound to protect. (Metrolab
Industries Inc. v. Roldan- Confessor, 1996)

• Other People Who Cannot Form, Join or Assist Labor Organizations

New EEs

- Persons who are not EEs of a company are not entitled to the constitutional
right to join or form a labor organization for purposes of collective
bargaining. The question of whether ER-EE relationship exists is a
primordial consideration before extending labor benefits under the
workmen's compensation, social security, Medicare, termination pay and
labor relations law. (Singer Sewing Machine Co. v. Drilon, 1991)

EE-member of a Cooperative

- GR: An EE of a cooperative who is a member and co-owner thereof cannot

invoke the right to collective bargaining for certainly an owner cannot
bargain with himself or his co-owners. (Batangas-I Electric Cooperative
Labor Union v. Romeo A. Young, 1988)
 - XPN: EEs who withdrew their membership from the cooperative are entitled
to form or join a labor union for the negotiations of a Collective Bargaining
Agreement. (Central Negros Electric Cooperative, Inc. v. DOLE, 1991)
- Irrespective of the degree of their participation in the actual management of
the cooperative, all members thereof cannot form, assist or join a labor
organization for the purpose of collective bargaining. (Benguet Electric
Cooperative v. Ferrer-Calleja, 1989)

EEs of International Organizations

- International organizations are endowed with some degree of international

legal personality. They are granted jurisdictional immunity, as provided in
their organization’s constitutions, to safeguard them from the disruption of
their functions.

Members of the AFP, Policemen, Police Officers, Firemen, and Jail

Guards
- Members of the AFP, Policemen, Police Officers, Firemen and Jail Guards
are expressly excluded by EO 180, Sec. 4 from the coverage of the EO 180
which provides guidelines for the exercise of the right to organize of
government EEs.

Commingling or Mixture of Membership

- Effect of Inclusion of EEs Outside the Bargaining Unit or Commingling

GR: It shall not be a ground for the cancellation of the registration of the
union. Said EEs are automatically deemed removed from the list of
membership of said union. [Art. 256]

Previously, commingling was a ground for cancellation of union registration.

But now, under the
amendments, commingling is no longer a ground for denial of registration,
but rather, the disqualified EEs are just deemed removed from the union.

Exception: Unless such mingling was brought about by misrepresentation,

false statement or fraud under Art. 247.

 Rights and Conditions of Membership Nature of Relationship

Member-Labor Union
- The nature of the relationship between the union and its members is fiduciary
in nature, which arises from the dependence of the EE on the union, and from
the comprehensive power vested in the union with respect to the individual.
The union may be considered but the agent of its members for the purpose of
securing for them fair and just wages and good working conditions. (Heirs of
Cruz v. CIR, 1969)

Admission and Discipline of Members

- No arbitrary or excessive initiation fees or fines. No arbitrary or excessive

initiation fees shall be required of the members of a legitimate labor
 organization nor shall arbitrary, excessive or oppressive fine and forfeiture be
imposed. [Art. 250(e)]

Prohibition on subversive activities or membership

- No labor organization shall knowingly admit as members or continue in

membership any individual who:
1. Belongs to a subversive organization; or
2. Who is engaged directly or indirectly in any subversive activity;

- Unions cannot arbitrarily exclude qualified applicants: Unions are not entitled to
arbitrarily exclude qualified applicants for membership, and a closed shop
provision would not justify the ER in discharging, or a union in insisting upon
the discharge of, an employee whom the union thus refuses to admit to
membership, without any reasonable ground therefor. Needless to say, if said
unions may be compelled to admit new members, who have the requisite
qualifications, with more reason may the law and the courts exercise the
coercive power when the EE involved is a long-standing union member, who,
owing to provocations of union officers, was impelled to tender his resignation
which he forthwith withdrew or revoked. (Salunga v. CIR, 1967)

VI. MANAGEMENT PREROGATIVE

- Management Prerogative is the right of an ER to regulate all aspects of

employment.
- Courts often decline to interfere in legitimate business decisions of ERs. In fact,
labor laws discourage interference in ERs’ judgment concerning the conduct of
their business.
- Basis: The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
(Art. II, Sec. 20, 1987 Constitution)
- The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and the
right of enterprises to reasonable returns to investments, and to expansion and
growth. (Art. XIII, Sec. 3 (4), 1987 Constitution)

 LIMITS TO MANAGEMENT PREROGATIVE

1. Good faith - So long as a company’s management prerogatives are exercised

in good faith for the advancement of the employer’s interest and not for the
purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements, this Court will uphold them (Ymbong
v. ABS-CBN, 2012).
2. Without grave abuse of discretion - The managerial prerogative to transfer
personnel must be exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the right should not
be confused with the manner in which the right is exercised.
2. Law – The privilege of management prerogative is not absolute, but subject to
limitations imposed by law.
3. Collective Bargaining – The CBA provisions agreed upon by the Company and
the Union delimit the free exercise of management prerogative. The parties in
 a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good
customs, public order or public policy.
4. Equity and/or Substantial Justice – The Court should still ensure that the
employer exercises the prerogative to discipline humanely and considerately,
and that the sanction imposed is commensurate to the offense involved and to
the degree of the infraction.

 DISCIPLINE

- The Right to discipline includes the rights of the ER to:

1. Discipline
2. Dismiss
3. Determine who to punish
4. Promulgate rules and regulations
5. Impose a penalty subject to the
proportionality rule
6. Right to choose what penalty to impose
7. Right to impose heavier penalties than
what company rules provide.

- Proportionality Rule- Penalty imposed should be commensurate to the infraction

committed.

 TRANSFER OF EMPLOYEES

- Transfer is the lateral movement from one position to another of equivalent

rank, level, or salary, without break of service.

- Kinds of Transfer:

A transfer means a movement:

1. From one position to another equivalent rank, level, or salary, without

break of service.
2. From one office to another within the same business establishment
(Chan, 2017).
- Reason for transfer: To maximize service of EEs
- Consent of EEs is not required. It is inherent in management
prerogative.
- An EE’s right to security of tenure does not give him the vested right
in his position as would deprive the company of its prerogative to
change his assignment or transfer him where he would be most useful
(PT&T v. NLRC, 1991).

- Requisites of a Valid Transfer:

1. It must be REASONABLE or it must have a sound purpose- If there is a

need to augment work force because of a work assignment.
2. NOT INCONVENIENT to the welfare of EE
3. NOT PREJUDICIAL to the EE
 4. NOT INVOLVE A DEMOTION of rank or status or a diminution of EE’s
salary
and other benefits.
5. Not motivated by DISCRIMINATION
towards EE
6. Must not be made in BAD FAITH
- Violation of these requirements constitutes constructive dismissal.
- Right to transfer is a valid management prerogative, but it must not
be exercised as a means to harass EEs.

- Reliefs of Illegal Transfer:

1. Illegal Transfer- Reinstatement

2. Constructive Dismissal- Reinstatement with backwage

- Notes:
1) The exercise of the prerogative to transfer or assign from one office or
area of operation to another is valid provided that there is no demotion
in rank and status, nor diminution of salary and other benefits. The
transfer should not be motivated by discrimination or made in bad faith.
(Mendoza v. Rural Bank of Lucban, 2004).
2) A commitment by EE to be reassigned anywhere in the Philippines is
binding upon him.
3) Even if EE is performing well in his current post, management may
reassign him anytime.
4) The refusal by an EE to be transferred was held to be justified if there is
a showing that the transfer was directed by the ER under questionable
circumstances.
5) An EE who refuses to be transferred, when such transfer is valid, is
guilty of insubordination or willful disobedience of a lawful order of an
ER.
6) Refusal to be transferred due to parental obligations, inconvenience,
additional expenses is NOT VALID.
7) Refusal to transfer overseas is valid.
8) Refusal to transfer consequent to promotion is valid.
9) Transfer to avoid conflict of interest is valid.
10)A transfer from one position to another occasioned by the abolition of
the position is valid (Chan, 2017).

 PRODUCTIVITY STANDARDS

- The ER has the right to demote and transfer an EE who has failed to observe
proper diligence in his work and incurred habitual tardiness and absences
and indolence in his assigned work. (Petrophil Corporation v. NLRC, 1986)

- In the case of Leonardo v. NLRC (2000), the ER claimed that the EE was
demoted pursuant to a company policy intended to foster competition among
its EE. Under this scheme, its EE are required to comply with a monthly sales
quota. Should a supervisor such as the EE fail to meet his quota for several
consecutive months, he will be demoted, whereupon his supervisor’s
allowance will be withdrawn and be given to the individual who takes his
 place. When the EE concerned succeeds in meeting the quota again he is re-
appointed supervisor and his allowance is restored.

- The Supreme Court held that this arrangement is an allowable exercise of

company rights since an ER is entitled to impose productivity standards for
its workers. In fact, non-compliance may be visited with a penalty even more
severe than demotion.

 BONUS

- A bonus is "a gratuity or act of liberality of the giver which the recipient has
no right to demand as a matter of right" (Philippine National Construction
Corp. v. NLRC, 345 Phil. 324, 331)
- It is something given in addition to what is ordinarily received by or strictly
due the recipient.
- The granting of a bonus is basically a management prerogative which cannot
be forced upon the ER "who may not be obliged to assume the onerous
burden of granting bonuses or other benefits aside from the employee's basic
salaries or wages" (Kamaya Point Hotel v. NLRC, 1989; Traders Royal Bank v.
NLRC, 1990)
- The matter of giving a bonus over and above the worker’s lawful salaries and
allowances is entirely dependent on the financial capability of the ER to give
it. (Kimberly-Clark Philippines, Inc. v. Dimayuga, 2009)

 CHANGE OF WORKING HOURS

- Management retains the prerogative, whenever exigencies of the service so

require, to change the working hours of its EEs. So long as such prerogative
is exercised in good faith for the advancement of the ER’s interest and not for
the purpose of defeating or circumventing the rights of the EEs under special
laws or under valid agreements, this Court will uphold such exercise. (Sime
Darby Pilipinas Inc. v. NLRC, 1998)

 BONA FIDE OCCUPATIONAL QUALIFICATIONS

- Bona Fide Occupational Qualification- To justify a bona fide occupational

qualification, the ER must prove two factors:
1. The employment qualification is reasonably related to the essential
operation of the job involved;
2. There is factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties
of the job.

- Two Theories of Employment Discrimination (Spectra 2018):

1. Disparate Treatment- Plaintiff must prove that an employment policy is
discriminatory in its face.
2. Disparate Impact- Complainant must prove that a facial neutral policy has
a disproportionate effect on a part of the class.

 POST-EMPLOYMENT RESTRICTIONS
 - In cases where an EE assails a contract containing a provision prohibiting
him or her from accepting competitive employment as against public policy,
the ER has to adduce evidence to prove that the restriction is reasonable and
not greater than necessary to protect the employer’s legitimate business
interests. The restraint may not be unduly harsh or oppressive in curtailing
the EE legitimate efforts to earn a livelihood, and must be reasonable in light
of sound public policy. (Rivera v. Solidbank, 2006)
- Non-Compete Clause
- A non-compete agreement is a type of “restrictive covenant” generally used
by ERs to limit an EE’s freedom to pursue a similar profession if and when
the employment relationship ends.
- Non-compete clauses are valid and enforceable as long as there are
reasonable limitations as to time, trade, and place (Tiu v. Platinum Plans
Philippines, 2007).

 MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR EMPLOYERS

- GR: Stipulation against marriage- It shall be unlawful for an ER to require as a

condition of employment or continuation of employment that a woman EE shall
not get married, or to stipulate expressly or tacitly that upon getting married, a
woman EE shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman EE merely by reason
of her marriage (Art. 136).

- Exception: In Duncan Association of Detailman-PTGWO and Pedro Tecson v.

Glaxo Wellcome Philippines, Inc. (2004), we passed on the validity of the policy
of a pharmaceutical company prohibiting its EEs from marrying employees of
any competitor company. We held that Glaxo has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors. We considered the prohibition
against personal or marital relationships with EEs of competitor companies
upon Glaxo’s EEs reasonable under the circumstances because relationships of
that nature might compromise the interests of Glaxo. In laying down the
assailed company policy, we recognized that Glaxo only aims to protect its
interests against the possibility that a competitor company will gain access to
its secrets and procedures. (Star Paper Corp. v. Simbol, 2006)

- A requirement that a woman EE must remain unmarried could be justified as a

"bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in the workplace.
A requirement of that nature would be valid provided it reflects an inherent
quality reasonably necessary for satisfactory job performance. (Phil. Telegraph
and Telephone Company v. NLRC, 1997)

 BAR: Pepe Santos was an international flight steward of Flysafe Airlines. Under FSA's
Cabin Crew Administration Manual, Santos must maintain, given his height and body
frame, a weight of 150 to 170 pounds. After 5 years as a flight steward, Santos began
struggling with his weight; he weighed 200 lbs., 30 pounds over the prescribed
maximum weight. The Airline gave him a one-year period to attain the prescribed
weight, and enrolled him in several weight reduction programs. He consistently failed
to meet his target. He was given a 6-month grace period, after which he still failed to
meet the weight limit. FSC thus sent him a Notice of Administrative Charge for
 violation of company standards on weight requirements. He stated in his answer that,
for medical reasons, he cannot have a rapid weight loss. A clarificatory hearing was
held where Santos fully explained his predicament. The explanation did not satisfy FSA
and so it decided to terminate Santos's service for violation of company standards.
Santos filed a complaint for illegal dismissal, arguing that the company's weight
requirement policy is unreasonable and that his case is not a disciplinary but a medical
issue (as one gets older, the natural tendency is to grow heavier). FSA defended its
policy as a valid exercise of management prerogative and from the point of view of
passenger safety and extraordinarydiligence required by law of common carriers; it
also posited that Santos failure to achieve his ideal weight constituted gross and
habitual neglect of duty, as well as willful disobedience to lawful employer orders. The
Labor Arbiter found the dismissal illegal for there was neither gross and habitual
neglect of duty nor willful disobedience. Is the Labor Arbiter correct? Why or why not?
Explain fully.

ANS: Yes, the Labor Arbiter is correct.

The exercise of management prerogatives may be availed of for as long as they are
reasonable, exercised in good faith and do not infringed upon the employee‘s security
of tenure. It is circumscribed by limitations found in law, collective bargaining
agreement, or the general principles of fair play and justice (PAL v. NLRC, G.R. No.
85985, August 13, 1993).

The weight policy clearly has repercussions on Pepe Santo‘s right to security of tenure.
After Pepe established that his inability to lose weight despite earnest effort was a
medical problem, it cannot be said that he acted with gross habitual neglect of duty.

 BAR: Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with
the union of rank-and-file employees consisting, among others, of bartenders, waiters,
roomboys, housemen and stewards. During the lifetime of the CBA, Harbor View Hotel,
for reasons of economy and efficiency, decided to abolish the position of housemen and
stewards who do the cleaning of the hotel's public areas. Over the protest of the Union,
the Hotel contracted out the aforementioned job to the City Service Janitorial
Company, a bonafide independent contractor which has a substantial capital in the
form of Janitorial tools, equipment, machineries and competent manpower.

Is the action of the Harbor View Hotel legal and valid?

Ans: The action of Harbor View Hotel is legal and valid.

The valid exercise of management prerogative, discretion and judgment encompasses

all aspects of employment, including the hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be followed, supervision
of workers, working regulations, transfer of employees, work supervision, lay-off of
workers, and the discipline, dismissal and recall of workers, except as provided for, or
limited by special laws.

Company policies and regulations are, unless shown to be gross oppressive or contrary
to law, generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiation or by
competent authority. (San Miguel Corporation vs. Reynaldo R. Ubaldo and Emmanuel
Noel A. Cruz, Chairman and Member respectively of the Voluntary Arbitration Panel, et
al G.R No. 92859, 1 February 1993. J. Campos, Jr., 218 SCRA 293)
 VII. ILLEGAL RECRUITMENT OF OVERSEAS FILIPINO WORKERS

 ILLEGAL RECRUITMENT

- Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or

procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non- holder of authority contemplated under
Art. 13(f), LC. [Sec. 5, R.A. No.10022]

 KINDS OF ILLEGAL RECRUITMENT: The following are the kinds of illegal

recruitment:

1. Simple – illegal recruitment committed by a person who has no valid license or

authority against one or two persons only.

Elements:
i. The offender has no valid license or authority required by law to enable one
to lawfully engage in recruitment and placement of workers; and
ii. He undertakes either any activity within the meaning of “recruitment and
placement” defined under Art. 13(b) or any prohibited practices under Art.
34 of the Labor Code (Sec. 6 of RA No. 8042 as amended by Sec. 5 of RA
10022).

2. Illegal Recruitment as Economic Sabotage:

a. Syndicated – illegal recruitment committed by a syndicate if carried out by

a group of three (3) or more persons in conspiracy or confederation with
one another.

Elements:
i. The accused have no valid license or authority required by law to
enable them to lawfully engaged in the recruitment and placement of
workers;
ii. The accused engaged in this activity of recruitment and placement by
actually recruiting, deploying and transporting; and
iii. Illegal recruitment was committed by three (3) persons conspiring and
confederating with one another.(People vs. Hashim, G.R. No. 194255,
June 13, 2012)

b. Large scale or qualified – illegal recruitment committed against three (3)

or more persons, individually or confederating with one another (People vs.
Sadiosa, G.R. No. 107084, May 15, 1998; P.D 2018, Sec 1 Art. 38 of PD 442,
as amended)).

Elements:
i. The offender has no valid license or authority required by law to enable
him to lawfully engage in recruitment and placement of workers;
ii. The offender undertakes any of the activities within the meaning of
“recruitment and placement” under Art. 13 (b) of Labor Code, or any of
the prohibited practices enumerated under Art. 34 of the said Code
(now Sec. 6 of the R.A. No. 8042); and
 iii. The offender committed the same against three (3) or more persons,
individually or as a group (People vs. Taguinay, G.R. No. 186132,
February 27, 2012).

- May a person who has committed illegal recruitment be charged and convicted
of estafa?

Yes. A person who has committed illegal recruitment may be charged and
convicted separately of illegal recruitment under the Labor Code and estafa
under Art. 315 of the Revised Penal Code (RPC). The crime of illegal
recruitment is malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the criminal intent
of the accused is necessary for conviction. In other words, a person convicted
under the Labor Code may be convicted of offenses punishable by other laws.

 LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER

- What is the nature of liability of the local recruitment agency and the foreign
employer for the claims of the OFW?

The nature of liability of the foreign principal/employer and the licensed local
recruitment agency is joint and several (solidarity) for any and all claims
arising out of the implementation of the employment contract involving OFWs.

- Is the rule on solidary liability of the corporate officers of recruitment agency

absolute?

Yes. The joint and several liability of the principal/employer,

recruitment/placement agency, and the corporate officers of the latter, for the
money claims and damages of an OFW is absolute and without qualification. It
is intended to give utmost protection to the OFW, who may not have resources
to pursue her money claims and damages against the foreign
principal/employer in another country.

- What is the Theory of Imputed Knowledge?

The Theory of Imputed Knowledge ascribes the knowledge of the agent, to the
principal, not the other way around. The knowledge of the principal/foreign
employer cannot, therefore, be imputed to its agent.

 TERMINATION OF CONTRACT OF MIGRANT WORKER

- What are the remedies of an employee whose service was terminated without
just, valid or authorized cause as defined by their law or contract?

1. Full reimbursement of his Placement fee with interest of twelve percent

(12%) per annum;
2. Salaries for the unexpired portion of his employment contract.
3. Exemplary, moral, and other forms of damages if the acts or omission of
the employer is tainted with bad faith, malice, or fraud (RA No. 8042, as
amended, Sec. 10).
 JURISDICTION OF ILLEGAL RECRUITMENT CASES:

1. A criminal action arising from illegal recruitment of migrant workers shall be

filed with the RTC of the province or city:

2. Where offense was committed, or Where the offended party actually resides at
the time of the commission of the offense. [Sec. 9, RA 8042] Provided, the court
where such action is first filed acquires jurisdiction to the exclusion of other
courts. [Sec. 6, Rule IV, Omnibus Rules implementing RA 8042, as amended]

 PRESCRIPTION

Crime Classification Prescriptive Period

Simple / Economic 3 years (Art. 305 LC)
Local Workers
Sabatoge
Simple 5 years
Migrant Workers
Economic Sabotage 20 years

 BAR: Maryrose Ganda's application for the renewal other license to recruit workers for
overseas employment was still pending with the Philippine Overseas Employment
Administration (POEA). Nevertheless, she recruited Alma and her three sisters, Ana,
Joan, and Mavic, for employment as housemates in Saudi Arabia. Maryrose
represented to the sisters that she had a license to recruit workers for overseas
employment. Maryrose also demanded and received P30,000.00 from each of them for
her services. However, Maryrose's application for the renewal of her license was
denied, and consequently failed to employ the four sisters in Saudi Arabia.

The sisters charged Maryrose with large scale illegal recruitment. Testifying in her
defense, Maryrose declared that she acted in good faith because she believed that her
application for the renewal of her license would be approved. Maryrose adduced in
evidence the Affidavits of Desistance which the four private complainants had executed
after the prosecution rested its case.

In the said affidavits, they acknowledge receipt of the refund by Maryrose of the total
amount of P120,000.00 and indicated that they were no longer interested to pursue the
case against

Maryrose. Resolve the case with reasons.

ANS: Illegal recruitment is defined by law as any recruitment activities undertaken by

non-licenses or non-holders of authority. (People v. Senoron, G.R. No. 119160, January
30,1997) And it is large scale illegal recruitment when the offense is committed against
3 or more persons, individually or as a group. (Article 38[b], Labor Code)

In view of the above, Maryrose is guilty of large scale illegal recruitment. Her defense
of good faith and the Affidavit of Desistance as well as the refund given will not save
her because R.A. No. 8042 is a special law, and illegal recruit

 BAR: On December 12, 2008, A signed a contract to be part of the crew of ABC
Cruises, Inc. through its Philippine manning agency XYZ. Under the standard
employment contract of the Philippine Overseas Employment Administration
(POEA), his employment was to commence upon his actual departure from the port
in the point of hire, Manila, from where he would take a flight to the USA to join
 the cruise ship “MS Carnegie.” However, more than three months after A secured
his exit clearance from the POEA for his supposed departure on January 15, 2009,
XYZ still had not deployed him for no valid reason.

Is A entitled to relief?

ANS: Yes, even if no departure took place, the contract of employment has already
been perfected which creates certain rights and obligations, the breach of which
may give riseto a cause of action against the erring party:

1) A can file a complaint for Recruitment Violation for XYZ‘s failure to deploy him
within the prescribed period without any valid reason, a ground for the
imposition of administrative sanctions against XYZ under Section 2, Rule I,
Part V of the 2003 POEA Rules of Employment of Seafarers.

2) At the same time, A can file for illegal recruitment under Section 6(L) of Rep.
Act No 8042 (cf: Section 11 Rule I, Part V of the 2003 POEA Rules on
Employment of Seafarers). A may file a complaint for breach of contract, and
claim damages therefor before the NLRC, despite absence of employer-
employee relationship. Section 10 of Rep. Act No 8042 conferred jurisdiction
on the Labor Arbiter not only claims arising out of EER, but also by virtue of
any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages.
(Santiago v. CF Sharp Crew Management, 527 SCRA 165 [2007]).

 BAR: A was approached for possible overseas deployment to Dubai by X, an

interviewer of job applicants for Alpha Personnel Services, Inc., an overseas
recruitment agency. X required A to submit certain documents (passport, NBI
clearance, medical certificate) and to pay P25,000 as processing fee. Upon payment of
the said amount to the agency cashier, Awas advised to wait for his visa. After five
months, A visited the office of Alpha Personnel Services, Inc. during which X told him
that he could no longer be deployed for employment abroad. A was informed by the
Philippine Overseas Employment Administration (POEA) that while Alpha Personnel
Services, Inc. was a licensed agency, X was not registered as its employee, contrary to
POEA Rules and Regulations. Under POEA Rules and Regulations, the obligation to
register personnel with the POEA belongs to the officers of a recruitment agency.

May the officers having control, management or direction of Alpha Personnel Services,
Inc. be held criminally liable for illegal recruitment? Explain.

ANS: Yes, Alpha, being a licensed recruitment agency, still has obligation to A for
processing his papers for overseas employment. Under Section 6(m) of Rep. Act. No.
8042, failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker‘s fault, amounts to illegal
recruitment.

 BAR: A was an able seaman contracted by ABC Recruitment Agency for its foreign
principal, Seaworthy Shipping Company (SSC). His employment contract provided that
he would serve on board the Almieda II for eight (8) months with a monthly salary of
US$450. In connection with his employment, he signed an undertaking to observe the
drug and alcohol policy which bans possession or use of all alcoholic beverages,
prohibited substances and un-prescribed drugs on board the ship. The undertaking
provided that: (1) disciplinary action including dismissal would be taken against
 anyone in possession of the prohibited substances or who is impaired by the use of any
of these substances, and (2) to enforce the policy, random test sampling would be done
on all those on board the ship.

On his third month of service while the Almieda II was docked at a foreign port, a
random drug test was conducted on all members of the crew and A tested positive for
marijuana. He was given a copy of the drug test result. In compliance with the
company’s directive, he submitted his written explanation which the company did not
find satisfactory. A month later, he was repatriated to the Philippines.

Upon arrival in the Philippines, A filed with the National Labor Relations Commission
(NLRC) a complaint against the agency and the principal for illegal dismissal with a
claim for salaries for the unexpired portion of his contract.

Is his claim for salaries for the unexpired portion of his contract tenable? Explain.

Ans: Yes, Section 10 of Rep. Act No. 8042 (as amended by Rep. Act No. 10022)
provides that 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 with interest at twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three (3) years for every year
of the unexpired term, whichever is less (cf. Serrano v. Gallant Maritime, 582 SCRA
254 [2009]).

VIII. REMEDIES (LABOR STANDARDS VIOLATIONS)

 VISITORIAL AND ENFORCEMENT POWERS OF THE SECRETARY OF

LABOR AND EMPLOYMENT

- Visitorial and Enforcement Power - The Secretary of Labor and Employment

(SOLE) or his duly authorized representatives, including labor regulation
officers, shall:

1. have access to employer’s records and premises at any time of the day or
night whenever work is being undertaken therein. The SOLE or his
representatives also have the right:

a. To copy therefrom,
b. To question any EE and
c. To investigate any fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement of this Code
and of any labor law, wage order or rules and regulations issued
pursuant thereto.

2. The SOLE/ rep also has the power to issue compliance orders

- Purpose: to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of
inspection.
- Notwithstanding the provisions of this Code to the contrary, and in
cases where the relationship of ER-EE still exists
 3. The SOLE/ rep can also issue writs of execution to the appropriate authority
for the enforcement of their orders
- Exception: cases where the ER contests the findings of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.

- Visitorial Power. – The SOLE or his duly authorized representatives may, at any
time –

1. Inspect the premises, books of accounts and records of any person or entity
covered by this Title
2. Require it to submit reports regularly on prescribed forms, and
3. Act on violation of any provisions of this Title.

 VISITORIAL POWERS OF SOLE OR REP:

- The SOLE or his duly authorized representative is hereby empowered:

1. To inquire into the financial activities of legitimate labor organizations.

- Upon the filing of a complaint under oath and duly supported by the
written consent of at least twenty percent (20%) of the total
membership of the labor organization concerned
2. To examine their books of accounts and other records to determine
compliance or non-compliance with the law
3. To prosecute any violations of the law and the union constitution and by-
laws.

 ANTI-INJUNCTION

- It shall be UNLAWFUL for any person or any entity to obstruct, impede, delay
or otherwise render ineffective the orders of the SOLE or his duly authorized
representative issued pursuant to the authority granted under this Article, and
no inferior court or entity shall issue temporary or permanent injunction or
restraining order or otherwise to assume jurisdiction over any case involving
the enforcement orders issued in accordance with this Article (Spectra 2018).

- The visitorial and enforcement powers of the DOLE Regional Director to order
and enforce compliance with labor standard laws can be exercised even where
the individual claim exceeds P5,000.00 (Spectra 2018).

 POWER TO SUSPEND EFFECTS OF TERMINATION

- Art. 292 (b). Visitorial and Enforcement Power - The SOLE may suspend the
effects of a termination pending resolution of the dispute in the event of a prima
facie finding by the appropriate official of the DOLE that:
1. The termination may cause a serious labor dispute (may or may not be a
strike or a lockout)
2. The termination is in implementation of a mass lay-off.

 REMEDIES
 - The aggrieved party from a decision of the SOLE may file one motion for
reconsideration within 10 days from receipt thereof.
- If the motion for reconsideration is denied, the party may appeal via Rule 65
to the CA 60 days from receipt of the denial. Upon denial, the party may
proceed via Rule 45 to the SC. (Rule 65, ROC; St. Martin Funeral Home v.
NLRC, 1998)
- Filing of MR before going to CA or SC is MANDATORY AND
JURISDICTIONAL.
VOLUNTARY ARBITRATOR
- Voluntary Arbitration – Referred to as a contractual proceeding whereby the
parties to any dispute, in order to obtain a speedy and inexpensive final
disposition of the matter, select a judge of their own choice and by consent,
submit their controversy to him for determination (Spectra 2018).
- It is the policy of the State to encourage voluntary arbitration to settle labor-
management disputes.
- Before the conduct of compulsory arbitration, the parties may opt to submit
their dispute to voluntary arbitration.
- The “judge” in voluntary arbitration is named by the parties pursuant to an
arbitration clause in their CBA.
- The “judge” in Voluntary Arbitration cases is called a VOLUNTARY
ARBITRATOR (VA) (Spectra 2018).

 AUTOMATIC REFERRAL IF GRIEVANCE MACHINERY FAILS

- All grievances submitted to the grievance machinery which are not settled
within 7 calendar days from the date of its submission shall automatically be
referred to voluntary arbitration prescribed in the CBA.

 WHO IS A VOLUNTARY ARBITRATOR: A “VOLUNTARY ARBITRATOR” IS:

- Any person accredited by the NCMB as such; or

- Any person named or designated in the CBA by the parties to act as their VA;
or
- One chosen, with or without the assistance of the NCMB, pursuant to a
selection procedure agreed upon in the CBA; or
- Any official that may be authorized by the SOLE to act as VA upon the written
request and agreement of the parties to a labor dispute.

 JURISDICTION

- Exclusive and Original Jurisdiction over Unresolved Grievances

1. Interpretation or implementation of the CBA

2. Interpretation or enforcement of company personnel policies
3. Violations of a CBA which are not gross in character. (Gross being flagrant
and/or malicious refusal to comply with the economic provisions of the
CBA.)
- Note: If gross violation of CBA, amounts to Unfair Labor Practice, and
thus a strikable issue. In cases of these, follow the procedures for a
valid strike.
4. All other labor disputes including ULP and bargaining deadlock, if the
parties agree
 5. Wage distortions arising from application of any wage orders in organized
establishments
6. Unresolved grievances arising from the interpretation and implementation
of the productivity incentives program under RA 6971.

- Remedies:

i. Motion for Reconsideration: An MR may be filed by the parties within 10

days from the receipt of the decision of the VA.
ii. Appeal: The decision of a VA is appealable by ordinary appeal under
Rule 43 of the Rules of Civil Procedure directly to the CA (Appeal from
decisions of Quasi- Judicial Bodies to CA).

 LABOR ARBITER

- The Labor Arbiter (LA) has Jurisdiction over the following cases:

1. Termination Disputes
2. Unfair Labor Practices
3. If accompanied with a claim of
reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work, and other terms and conditions of employment
4. Claims for damages involving ER-EE relations
5. Questions on the legality of strikes or lockouts
6. All other claims arising from ER-EE relations including those persons in
domestic and household service, involving an amount greater than
P5,000.00 regardless of whether accompanied by a claim for
reinstatement.
- The National Labor Relations Commission (NLRC) has exclusive
appellate jurisdiction over cases decided by LAs.

- Other matters falling within the JD of LAs:

1. Disputes involving legislated wage increases and wage distortion in
unorganized establishments.
2. Contested cases under the exception clause of Article 128, LC.
3. Enforcement of compromise agreements when there is non- compliance by
the parties
4. Issuance of writs of execution to enforce decisions of Voluntary
Arbitrators.
5. Money claims of OFWs arising from ER- EE relations, including death and
disability claims, as well as damages.

 PRESCRIPTION OF ACTIONS

- Money claims

All money claims arising from employer- employee relations accruing during the
effectivity of this Code shall be filed WITHIN 3 YEARS FROM THE TIME
THE CAUSE OF ACTION ACCRUED; otherwise, they shall be forever barred.

- Illegal dismissal
 In illegal dismissal cases, the EE concerned is given a period of FOUR YEARS
from the time of his dismissal within which to institute a complaint. This is
based on Art. 1146 of the Civil Code which states that actions based upon an
injury to the rights of the plaintiff must be brought within four years. (Victory
Liner, Inc. v. Race, 2007)

 BAR: The Labor Arbiter dismissed the complaint for illegal dismissal filed by
Genevieve Cruz against Bulag Optical Inc. (BOI) which denied her prayer for
reinstatement but awarded financial assistance in her favor. BOI appealed the decision
of the Labor Arbiter to the NLRC within the reglementary period. Genevieve filed an
opposition to the appeal. The NLRC affirmed in toto the decision of the Labor Arbiter.
Both the BOI and Genevieve are not satisfied with the decision of the NLRC.

a. What is the remedy, if any, of BOI and before what forum? Explain briefly.
b. Can Genevieve Cruz avail herself of the same remedy as that of BOI? Why?

ANS:
a. BOI can file a Motion for Reconsideration with the NLRC after ten (10) calendar
days from receipt of the decision. If the NLRC denies the Motion for
Reconsideration, BOI can file a petition for certiorari with the Court of Appeals
under Rule 65 of the Rules of Court since the decision of the NLRC is final and
executory.

b. Genevieve Cruz can avail herself of the same remedy as that of the BOI. The
remedies described for the BOI are also the same remedies available to
Genevieve Cruz as a party to the case, pursuant to the Labor Code (Article 223)
and the Rules of Court (Rule 65).