Contents
II. Recruitment and Placement...................................................................................................................6
Local Employment.......................................................................................................................................6
Overseas Employment.................................................................................................................................6
Definition of Terms..................................................................................................................................6
Private Employment Agency [PEA] v. Private Recruitment Agency [PRE]................................................6
Land-Based Overseas Workers v. Seafarers.............................................................................................6
Illegal Recruitment....................................................................................................................................15
Definition Illegal Recruitment................................................................................................................15
Arts. 38, 34, 39, Labor Code...............................................................................................................15
Sec. 5, R.A. 10022..............................................................................................................................15
C.F. Sharp Crew Management v. Espanol, G.R. No. 155903, September 14, 2007............................15
People of the Philippines v. Saulo, G.R. No. 125903, November 15, 2000.........................................15
People of the Philippines v. Gutierrez, G.R. No. 124439, February 5, 2004.......................................15
People of the Philippines v. Gallardo, G.R. Nos. 140067-71, August 29, 2002...................................15
People of the Philippines v. Juego, G.R. No. 123162, October 13, 1998............................................15
Rodolfo v. People of the Philippines, G.R. No. 146964, August 10, 2006..........................................15
Lapasaran v. People of the Philippines, G.R. No. 179907, February 12, 2009....................................15
People of the Philippines v. Jamilosa, G.R. No. 169076, January 23, 2007........................................15
License v. Authority...............................................................................................................................15
Types of Illegal Recruitment..................................................................................................................15
Simple Illegal Recruitment.................................................................................................................15
Illegal Recruitment Committed by a Syndicate..................................................................................16
Illegal Recruitment in Large Scale......................................................................................................16
Illegal Recruitment v. Estafa..................................................................................................................16
People of the Philippines v. Chua, G.R. No. 187052, September 13, 2012........................................16
See People of the Philippines v. Gallo, G.R. No. 187730, June 29, 2010............................................16
Liabilities................................................................................................................................................16
Liability for Money Claims.....................................................................................................................16
Local Recruitment Agency.................................................................................................................17
Foreign Employers.............................................................................................................................17
Theory of Imputed Knowledge..........................................................................................................17
Sunace International v. NLRC, G.R. No. 161757, January 25, 2006....................................................17
Solidary Liability.................................................................................................................................17
Liability for Illegal Recruitment..............................................................................................................17
Pre-termination of Contract of Migrant Workers..................................................................................18
Direct Hiring..............................................................................................................................................18
Suspension or Cancellation of License or Authority..................................................................................18
Regulatory and Visitorial Powers of DOLE Secretary.................................................................................18
Remittance of Foreign Exchange Earnings.................................................................................................18
Other Prohibited Activities........................................................................................................................18
III. Labor Standards....................................................................................................................................18
Coverage/Exclusions..................................................................................................................................18
•
Art. 82, Labor Code....................................................................................................................18
•
Book III, Rule I, Sec. 2, Implementing Rules (Labor Code)..........................................................18
•
David v. Macasio, G.R. No. 195466, July 2, 2014........................................................................18
•
Penaranda v. Baganga Plywood, G.R. No. 159577, May 3, 2006................................................23
Normal Hours of Work..............................................................................................................................25
Meal break................................................................................................................................................25
•
Sime Darby v. NLRC, G.R. No. 119205, April 15, 1998................................................................25
•
Pan Am v. Pan Am Employees, G.R. No. L-16275, February 23, 1961........................................26
Waiting Time.............................................................................................................................................27
•
Arica v. NLRC, G.R. No. 78210, February 28, 1998.....................................................................27
Overtime Work/Pay...................................................................................................................................28
•
Pigcaulan v. Security and Credit, G.R. No. 173648, January 16, 2012........................................29
Part-time Work..........................................................................................................................................30
•
PAL v. Pascua, G.R. No. 143258, August 15, 2003......................................................................30
•
Perpetual Help Credit v. Faburada, G.R. No. 121948, October 8, 2001.....................................32
•
CIT v. Ople, G.R. No. L-58870, December 18, 1987....................................................................32
•
UST v. NLRZ, G.R. No. 85519, February 15, 1990.......................................................................32
•
Lacuesta v. ADMU, G.R. No. 152777, December 9, 2005...........................................................32
•
Saint Mary’s University v. C.A., G.R. No. 157788, March 8, 2005..............................................32
•
See DOLE Handbook on Workers Statutory Monetary Benefits................................................32
Contract for Piece of Work........................................................................................................................32
Wages........................................................................................................................................................32
Wage v. Salary...........................................................................................................................................32
Minimum wage; Minimum wage setting...................................................................................................32
Minimum wage of workers paid by results................................................................................................33
Workers paid by results.............................................................................................................................33
Apprentices...............................................................................................................................................33
Learners.....................................................................................................................................................33
Persons with disability...............................................................................................................................33
Commissions..............................................................................................................................................33
Deductions from wages.............................................................................................................................33
Non-diminution of benefits.......................................................................................................................34
Facilities v. Supplements...........................................................................................................................34
Wage distortion/rectification....................................................................................................................34
Divisor to determine daily rate..................................................................................................................34
Rest Periods...............................................................................................................................................34
Weekly rest day.........................................................................................................................................34
Emergency rest day...................................................................................................................................35
Holiday pay/Premium pay.........................................................................................................................35
Leaves........................................................................................................................................................35
Service Incentive Leaves........................................................................................................................35
Maternity Leave.....................................................................................................................................35
Paternity Leave......................................................................................................................................36
Parental Leave (R.A. 8972).....................................................................................................................36
Leave for VAWC victims (R.A. 9262)......................................................................................................36
Special Leave benefit for women...........................................................................................................36
Service Charge...........................................................................................................................................36
Thirteenth Month Pay...............................................................................................................................36
Separation Pay...........................................................................................................................................37
Retirement Pay..........................................................................................................................................37
Art. 287, Labor Code..........................................................................................................................37
Serrano v. Santos Transit, G.R. No. 187698, August 9, 2010..............................................................38
Eligir v. PAL, G.R. No. 181995, July 16, 2012......................................................................................40
Grace Christian School v. Lavandera, G.R. No. 177845, August 20, 2014..........................................43
Unilever v. Rivera, G.R. No. 201701, June 3, 2013.............................................................................45
Women Workers.......................................................................................................................................46
Provisions against discrimination..........................................................................................................46
Art. 135, Labor Code..........................................................................................................................46
Chapter II, Sec. 4 (b), R.A. 9710, Magna Carta of Women.................................................................47
Rule II, Sec. 7 (c), Implementing Rules of R.A. 9710...........................................................................47
Rule V, Sec. 25, Implementing Rules of R.A. 9710.............................................................................48
Stipulations against marriage................................................................................................................49
Art. 136, Labor Code..........................................................................................................................49
See Philippine Telegraph v. NLRC, G.R. No. 118978, May 23, 1997...................................................50
See Duncan v. Glaxo, G.R. No. 162994, September 17, 2004.............................................................52
Star Paper v. Simbol, G.R. No. 164774, April 12, 2006.......................................................................54
Prohibited Acts......................................................................................................................................56
Art. 137, Labor Code..........................................................................................................................56
Del Monte v. Velasco, G.R. No. 153477, March 6, 2007....................................................................56
Anti-Sexual Harassment Act, R.A. 7877.................................................................................................58
Implementing Rules, RA 7877............................................................................................................59
Domingo v. Rayala, GR 155831, February 18, 2008...........................................................................59
IV Termination of Employment...............................................................................................63
Employer-Employee Relationship.................................................................................................63
Four-fold test....................................................................................................................................63
Royale Homes v. Alcantara, G.R. No. 195190, July 28, 2014......................................63
Legend Hotel v. Realuyo, G.R. No. 153511, July 18, 2012...........................................63
See Tan v. Lagrama, G.R. No. 151228, August 15, 2002.............................................63
Kinds of employment.....................................................................................................................63
Probationary.....................................................................................................................................63
Regular...............................................................................................................................................63
Project employment.......................................................................................................................63
Seasonal.............................................................................................................................................63
Casual.................................................................................................................................................64
Fixed-term.........................................................................................................................................64
Job contracting.................................................................................................................................65
Effects of Labor-only contracting..........................................................................................65
Trilateral relationship in job contracting.............................................................................65
Articles 106 to 109, Labor Code............................................................................................65
Department Order No. 18-A....................................................................................................65
Department Circular No. 01-12..............................................................................................65
Alilin v. Petron, G.R. No. 177592, June 9, 2014................................................................65
First Philippine Industrial v. Calimbas, G.R. No. 179256, July 10, 2013...................65
Aviado v. Procter and Gamble, G.R. No. 160506, June 6, 2011..................................65
Dismissal from employment...........................................................................................................65
Just Causes........................................................................................................................................65
Arts. 282, 264, 263, 248, Labor Code..................................................................................65
Imasen Phil. v. Alcon, G.R. No. 194884, October 22, 2014..........................................65
Realda v. New Age, G.R. No. 192190, April 25, 2012....................................................65
International School v. I.S. Alliance, G.R. No. 167286, February 5, 2014...............65
School of the Holy Spirit v. Taguiam, G.R. No. 165565, July 14, 2008.....................65
Fernandez v. Newfield Staff, G.R. No. 201979, July 10, 2013.....................................65
Sanden Aircon v. Rosales, G.R. No. 169260, March 23, 2011.....................................65
Lhuillier v. Velayo, G.R. No. 198620, November 12, 2014...........................................65
Aliling v. Feliciano, G.R. No. 185829, April 25, 2012......................................................65
Reyes-Rayel v. Phil. Luen, G.R. No. 174893, July 11, 2012..........................................65
Authorized Causes..........................................................................................................................65
Due Process......................................................................................................................................65
Twin-notice requirement..........................................................................................................65
Hearing; meaning of opportunity to be heard..................................................................65
Reliefs for Illegal Dismissal..............................................................................................................65
Reinstatement..................................................................................................................................65
Pending appeal............................................................................................................................65
Separation Pay in lieu of Reinstatement............................................................................65
Backwages........................................................................................................................................65
Computation.................................................................................................................................65
Limited Backwages.....................................................................................................................65
Preventive Suspension......................................................................................................................65
Constructive Dismissal......................................................................................................................66
Employment of Minors..............................................................................................................................66
Househelpers.............................................................................................................................................66
Homeworkers............................................................................................................................................66
Apprentices and Learners..........................................................................................................................66
Persons with Disability..............................................................................................................................66
Definition...............................................................................................................................................66
Rights.....................................................................................................................................................66
Prohibition against Discrimination.........................................................................................................66
Incentives..............................................................................................................................................66
II. Recruitment and Placement
Local Employment
Art. 25, Labor Code
Rules and Regulations Governing Private Recruitment and Placement Agency for Local Employment
[June 5, 1997]
Overseas Employment
Definition of Terms

R.A. 8042 as amended by R.A. 10022

Rule II- Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by R.A. 10022
PNB v. Cabansag, G.R. No. 157010, June 21, 2005
Private Employment Agency [PEA] v. Private Recruitment Agency [PRE]

Rule II, Sec. 1 (pp)- Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by R.A. 10022
Art. 13, Labor Code
Land-Based Overseas Workers v. Seafarers
POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas
Workers [February 4, 2002]
POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers [May 23, 2003]
Seafarers
Joint and Solidary Liability – refers to the nature
of liability of the principal and the manning
agency, for any and all claims arising out of the
implementation of the employment contract
Land-based
Joint and Several Liability — refers to the nature
of liability of the principal/employer and the
licensed recruitment agency, for any and all
claims arising out of the implementation of the
involving Filipino seafarers. It shall likewise refer
to the nature of liability of officers, directors,
partners or sole proprietors with the company
over claims arising from employer-employee
relationship.
License – refers to the document issued by the
Secretary or his duly authorized representative
authorizing any person, partnership or
corporation to operate a manning agency.
Licensed manning agency – refers to any person,
partnership or corporation duly licensed by the
Secretary
or
his/her
duly
authorized
representative to recruit and deploy seafarers for
maritime employment.
Manning agreement – refers to a written
agreement entered into by and between the
principal and manning agency defining their
respective rights, obligations and responsibilities.
Principal – refers to a foreign person, partnership
or corporation engaging and employing Filipino
seafarers through a licensed manning agency.
Seafarer – refers to any person who is employed
or engaged in any capacity on board a seagoing
ship navigating the foreign seas other than a
government ship used for military or noncommercial purposes. The definition shall include
fishermen, cruise ship personnel and those
serving on foreign maritime mobile offshore and
drilling units.
A minimum capitalization of Two Million Pesos
(P2,000,000.00) in case of a single
proprietorship or partnership and a minimum
paid-up capital of Two Million Pesos
(P2,000,000.00) in case of a corporation;
Undertaking
11. Deploy at least fifty (50) seafarers to its new
market within one-year from issuance of its
license which shall also be a condition to the
accreditation of old principals; and
12. Repatriate the deployed seafarers when the
need arises
Filing Fee P10,000
employment contract involving Overseas Filipino
Workers. It shall likewise refer to the nature of
liability of partners, or officers and directors with
the partnership or corporation over claims arising
from an employer-employee relationship.
License — refers to the document issued by the
Secretary
or
his/her
duly
authorized
representative authorizing a person, partnership
or corporation to operate a recruitment agency.
Licensed Recruitment Agency — refers to any
person, partnership or corporation duly
authorized to engage in the recruitment and
placement of workers for overseas employment.
Recruitment Agreement — refers to an
agreement by and between the principal and the
licensed
recruitment
agency
or
the
Administration defining their rights and
obligations on the recruitment and employment
of workers.
Principal — refers to the employer, or to a
foreign placement agency or a foreign service
contractor/staffing agency, hiring Filipino workers
for overseas employment through a licensed
recruitment
agency
or
through
the
Administration.
Contracted worker — refers to an Overseas
Filipino Worker with employment contract/offer
of employment already processed by the POEA
for overseas deployment, whether as an agencyhire or a direct-hire.
The sole proprietor and partnership shall have a
minimum capitalization of Five Million Pesos
(PhP5,000,000.00) and a minimum paid up capital
of Five Million Pesos (PhP5,000,000.00) in case of
a corporation.
Filing Fee P25,000
Panel Interview.— The proprietor, partners and
members of the Board of Directors, including the
major stockholders, shall undergo a panel
interview to ascertain their qualifications and
fulfillment of the requirements under Rules I and
II, Part II of these Rules.
License Fee P50,000
License Fee P100,000
Post Qualification Requirements
a. A lease contract for an office space measuring
at least one hundred (100) square meters, or
proof of building ownership that will be used as
an office or an identified portion thereof
measuring at least 100 square meters;
b. An office layout
c. An inventory of office equipment and facilities
d. Organizational chart
e. Payment of license fee of One Hundred
Thousand Pesos (PhP100,000.00); and
f. An escrow agreement
It shall submit an escrow agreement in the An escrow agreement with a bank authorized by
amount of One Million Pesos (P1,000,000.00), the Bangko Sentral ng Pilipinas to handle trust
confirmation of escrow deposit with a reputable accounts, with deposit in the amount of One
bank and a surety bond of One Hundred Million Pesos (PhP1,000,000.00).
Thousand Pesos (P100,000.00) from a bonding The escrow deposit shall answer for all valid and
company acceptable to the Administration and legal claims arising from contracts of
accredited with the Insurance Commission.
employment and violations of the conditions for
Agencies with existing licenses shall, within four the grant and use of the license, including fines
years from effectivity hereof, increase their imposed by the Administration. The escrow shall
Escrow Deposit to One Million Pesos likewise guarantee compliance with prescribed
(P1,000,000.00) at the rate of One Hundred recruitment procedures, rules and regulations,
Seventy-Five Thousand (P175,000.00) pesos per appropriate
terms
and
conditions
of
year.
employment, and relevant issuances of the DOLE.
The bonds and escrow shall answer for all valid
and legal claims arising from violations of the
conditions for the grant and use of the license
and/or contracts of employment. The bonds and
escrow shall likewise guarantee compliance with
the provisions of these rules and pertinent
Philippine laws and all liabilities which the
Administration may impose. The surety bonds
shall include the condition that notice to the
principal is notice to the surety and that any final
and executory judgment against the principal in
connection with matters falling under
POEA’s/NLRC’s jurisdiction shall be binding and
conclusive on the surety. The surety bonds shall
The escrow deposit shall not be sourced from the
capitalization requirement.
cover the validity period of the license.
Provisional License. Applicants for new license
shall be issued a provisional license which shall
be valid for a limited period of one (1) year within
which the applicant should be able to comply
with its undertaking to deploy 50 seafarers to its
new principal.
The license of a complying agency (to the
deployment of 50 seafarers) shall be upgraded to
a full license entitling them to another three
years of operation. Non-complying agencies will
be notified of the expiration of their license.
Validity regular license 4 years from the date of
issuance unless sooner cancelled, revoked or
suspended.
Such license shall be valid only at the place/s
stated therein, subject to the conditions of the
subsequent paragraph, and when used by the
licensed person, partnership or corporation.
Issuance and Validity of a Provisional License. —
Within five (5) working days from satisfaction of
the
post-qualification
requirements,
the
Administration shall issue a provisional license
which shall be valid within a non-extendible
period of two (2) years from date of issuance.
Application for Upgrading of Provisional License
to a Regular License.— Upon application, a
provisional license may be upgraded to a regular
license at any time during its validity upon
deployment of one hundred (100) workers to its
new principal/s, and upon submission of the
following:
a. Quality Management System (QMS) manual
b. Updated bank certificate stating that the
escrow deposit remains at One Million Pesos
(PhP1,000,000.00);
c. Certificate of no pending case or any
substantiated adverse report during the validity
of the provisional license;
d. Certificate of attendance to the Continuing
Agency Education Program (CAEP) of all its
officers and staff; and
e. Latest audited financial statement.
The regular license shall be valid up to the full
term of four (4) years from the date of issuance
of the provisional license.
The application for upgrading of the provisional
license shall be filed within three (3) months
before the expiration of the provisional license.
SECTION 58.Special Recruitment Activity. — A
licensed recruitment agency may conduct
recruitment activities outside its registered
address by securing a Special Recruitment
Authority prior to the conduct of the recruitment.
SECTION 62.Letter of Authority (LOA). — The
licensed recruitment agency shall notify the
Administration of the participation of an
accredited
principal/employer
or
its
registered/authorized representative in a
recruitment activity within its registered office
within three (3) days prior to the activity. If the
accredited principal/employer or its registered
authorized representative shall participate in a
recruitment activity outside its registered office,
the application for LOA shall be filed at least
three (3) days prior to the date of the activity.
SECTION 65.Participation in Jobs Fair.— A
licensed recruitment agency may participate in a
jobs fair and conduct recruitment activities based
on POEA-approved job orders, provided, that, a
corresponding DOLE permit has been issued to
the organizer of the jobs fair. Prior written
notification which includes a list of authorized
representatives who will be participating in the
jobs fair, including the venue, date, and list of
principals/employers, shall be submitted to the
Administration for monitoring and supervision.
Section 1. Advertisement for Actual Job
Vacancies. Licensed manning agencies may
advertise for actual job vacancies without prior
approval from the Administration if covered by
manpower requests of accredited foreign
principals and projects. The advertisements shall
indicate the following information:
a. Name, address and POEA license number of
the agency;
b. Type of ship and its registration;
c. Level of competence, skill and knowledge
categories and qualification standards; and
d. Number of available positions.
If the jobs fair is being organized by the PESO, no
such permit shall be required, except for the prior
notification requirement as mentioned above.
SECTION 67.Advertisement for Overseas
Employment.—Advertisement
for
overseas
employment shall include the publication of job
vacancies in any form of communication, such as
press
releases,
printed
materials,
or
advertisements in radio, television, cinemas,
internet, social media and other electronic forms,
billboards, moving and human advertisements,
and ad boards.
SECTION 68.Advertisement of Job Vacancies
with Approved Job Orders.— Licensed
recruitment agencies may advertise job vacancies
covered by approved job orders of accredited
Section 3. Foreign Advertisements for Maritime principals/employers without prior approval from
Employment. Foreign principals/employers who the Administration and within the validity of its
wish to advertise job requirements using accreditation. The advertisement shall indicate
Philippine print media, broadcast or television the following information:
may do so
a. Name, address and POEA license number of
only through a POEA licensed agency.
the agency;
Non-observance of this rule shall be considered b.
Name,
address,
POEA
registration/
as valid ground for cancellation of accreditation accreditation number and worksite of the
of the violating principals/employers.
accredited principal/employer;
c. Skill categories and qualification standards; and
d. Number of available positions and salaries net
of foreign income tax.
SECTION 70. Advertisement for Overseas Job
Vacancies
by
Principals/Employers.
—
Accredited principals/employers may advertise
overseas job vacancies only through POEAlicensed recruitment agencies or through the
Administration.
Section 2. Advertisement for Manpower Pooling. SECTION 69. Advertisement for Manpower
Licensed manning agencies may advertise for Pooling. — Licensed recruitment agencies may
manpower pooling without prior approval from advertise for manpower pooling, subject to prior
the Administration subject to the following approval of the Administration and compliance
conditions:
with the following conditions:
a. The advertisement should indicate in bold a. The advertisement shall indicate the phrases
letters that it is for manpower pooling only; and “for manpower pooling only”, “no fees in any
b. The advertisement indicates the name, address form and/or purpose will be collected from the
and POEA license number of the agency, name of applicants”, and “beware of illegal recruiters and
the ship and the skill categories and qualification human traffickers”, using large font in the
standards.
advertisement; and
b. The advertisement shall specify the name,
address and POEA license number of the agency,
name and worksite of the prospective or
accredited principal/ employer, and the skill
categories and qualification standards.
In case of death of the sole proprietor, and in
order to prevent disruption of operations and so
as not to prejudice the interest of legitimate
heirs, the license may be extended upon request
of the heirs, to continue only for the purpose of
winding up business operations.
Change of Ownership/Relationship of Single
Proprietorship or Partnership. Transfer or change
of ownership of a single proprietorship licensed
to engage in maritime employment shall cause
the automatic revocation of the license.
A change in relationship of the partners in a
partnership duly licensed to engage in maritime
employment, which materially interrupts the
course of the business or results in the actual
dissolution of the partnership, shall likewise
cause the automatic revocation of the license.
Section 9. Upgrading of Single Proprietorship or
Partnerships. License holders, which are single
proprietorships or partnerships, may convert into
a corporation for purposes of upgrading or raising
their capabilities to respond adequately to
Revocation of License of Sole Proprietorship. —
The license of the sole proprietorship shall
automatically be revoked upon the death of the
sole proprietor. The next-in-rank officer of the
agency shall, within ten (10) days, report such
death to the Administration. Failure to report
shall automatically include such next-in-rank
officer in the list of persons with derogatory
record.
Revocation of License of a Partnership Due to
Death or Withdrawal of Partner. — The license of
a partnership shall be automatically revoked
upon the death or withdrawal of a partner which
materially interrupts the course of business or
results in the actual dissolution of the
partnership. The surviving partner/s shall, within
ten (10) days, report such death or withdrawal to
the Administration. Failure to report shall
automatically include the surviving partner/s in
the list of persons with derogatory record.
developments/changes in international shipping
and to enable them to better comply with their
responsibilities arising from the recruitment and
deployment of seafarers.
The approval of merger, consolidation or
upgrading shall automatically revoke or cancel
the licenses of the single proprietorships,
partnerships or corporations so merged,
consolidated or
upgraded.
Appointment/Change of Officers and Personnel.
Every appointment of agents or
representatives of a licensed agency shall be
subject to prior approval or authority of the
Administration. The acknowledgment or approval
may be issued upon submission of or compliance
with the following:
a. Proposed appointment or special power of
attorney;
b. Clearances of the proposed representative or
agent from the NBI and the Anti-illegal
Recruitment Branch of the POEA; and
c. Sworn or verified statement by the designating
or appointing person or company assuming full
responsibility for all acts of the agent or
representative done in connection with the
recruitment and placement of seafarers.
Renewal of License. An agency shall submit an
application for the renewal of its license on or
before the expiration of the license. Such
application shall be supported by the
following documents:
a. Renewed or revalidated surety bond
amounting to One Hundred Thousand Pesos
(P100,000.00);
b. Renewed escrow agreement in the amount of
One Million Pesos (P1,000,000.00)
c. Audited financial statements for the past two
years
Upgrading, Merger or Consolidation of Licensed
Recruitment Agencies. — The upgrading, merger
or consolidation of licensed recruitment agencies
shall be undertaken in accordance with the
regulations of the SEC, without prejudice to the
determination by the Administration of the
qualifications of the new partners or directors.
The upgraded licensed recruitment agencies, the
surviving corporation, or the new corporation, as
the case may be, shall inform the Administration
of such changes within thirty (30) days from
confirmation by SEC of such upgrading, merger or
consolidation.
Appointment, Termination, or Resignation of
Officers and Personnel.— The licensed
recruitment
agency
shall
notify
the
Administration of the appointment, termination
or resignation of any officer and personnel of the
agency within thirty (30) days from such
appointment, termination or resignation. In case
of appointment, the notification shall include the
following documents:
a. Letter of appointment containing duties and
responsibilities duly accepted by the appointee;
b. NBI and AIRB clearances; and
c. Bio-data and two (2) recent passport size
pictures.
Renewal of License. — A licensed recruitment
agency should submit an application for the
renewal of its license within three (3) months
before the expiration of its license. The
application shall be supported by the following
documents:
a. Updated DTI registration or General
Information Sheet
b. Renewed/new escrow agreement with a
commercial bank authorized to handle trust
accounts by the Bangko Sentral ng Pilipinas,
supported by a bank certification;
d. Clearances from the NBI and Anti-Illegal
Recruitment Branch for all its employees and
officers; and
e. Other requirements as may be imposed by the
Administration.
If during the renewal, the applicant has pending
recruitment violation case/s before the
Administration, an additional escrow deposit
shall be required in accordance with the
following schedule:
1-5 cases – 50,000 per case
6-10 cases – 75,000 per case
11 or more cases – 100,000 per case
The total escrow deposit shall, in no case, exceed
Two Million Pesos (PhP2,000,000.00).
Provided, further, that, if in the succeeding
renewal, the licensed recruitment agency has no
pending case, the Administration shall allow the
withdrawal of the additional escrow deposit.
c. Duly filed latest audited financial statements
and income tax returns
d. Clearances from the NBI and the Anti-Illegal
Recruitment Branch of the sole proprietor,
partners, members of the board of directors,
officers, and personnel; and
e. Valid Certificate of Compliance with general
labor standards and valid Certificate of
Compliance with occupational safety and health
standards.
Licensing of POCB-Registered Companies
(Philippine Overseas Construction Board). —
POCB-registered companies with overseas
projects may apply in writing for a special license
to deploy their workers to their overseas
projects.
Issuance of Special License. — The Administration
shall issue a special license to the POCBregistered companies within twenty-four (24)
hours from receipt of application, provided all the
requirements are met by the applicant. Only
applications
with
complete
supporting
documents shall be deemed filed.
SECTION 46. Validity Period of Special License. —
The special license shall be valid for four (4) years
from date of issuance subject to the validity of
the POCB-registration, or unless sooner revoked,
terminated, suspended, or cancelled by the
Secretary
or
his/her
duly
authorized
representative.
SECTION 48. Prohibition on Collection of Fees
from Overseas Filipino Workers.— POCBregistered companies shall not collect any fee
from the workers deployed to their projects
overseas.
SECTION 49. POCB-registered Companies without
Overseas Projects. — POCB-registered companies
without POCB-certified overseas projects that
intend to deploy workers overseas may apply for
a regular license pursuant to Rule II, Part II of
these Rules.
Section 1. Manning agencies shall not charge any
fee from the seafarers for their recruitment and
deployment services.
Section 2. Utilization and Accounting of Maritime
Welfare Fund. Contributions to the Maritime
Welfare Fund shall be used to address welfare
concerns of contributing seafarers and must be
accounted for separately from the General Fund
of OWWA. A report of receipts and
disbursements shall be published annually in a
newspaper of general circulation and be made
available to contributing seafarers, manning
agencies and shipowners
Fees and Costs Chargeable to the Overseas
Filipino Workers. — The Overseas Filipino Worker
shall pay the following fees and costs:
a. Documentation costs:
b. Membership with Philhealth, Pag-Ibig and the
Social Security System.
SECTION 51.Placement Fee.— A placement fee
may be charged against the Overseas Filipino
Worker equivalent to one (1) month basic salary
specified in the POEA approved contract, except
for the following:
a. Domestic workers; and
b. Workers to be deployed to countries where
the prevailing system, either by law, policy or
practice do not allow, directly or indirectly, the
charging and collection of recruitment/placement
fee.
The worker shall pay the placement fee to the
licensed recruitment agency only after signing the
POEA-approved contract. The agency must issue
a BIR-registered receipt stating the date of
payment and the exact amount paid.
SECTION 52. Payment of Insurance Premium. —
The licensed recruitment agency shall be
responsible for the payment of the premium for
the compulsory insurance coverage under
Section 37-A of RA 8042, as amended.
SECTION 54. Prohibition Against Charging of
Other Fees. — No other charges in whatever
amount, form, manner or purpose shall be
charged against the Overseas Filipino Worker,
except those specified in this Rule.
Section 1. Fees Chargeable to Principals. Agencies
shall charge from their principals manning fee to
cover services rendered in the recruitment and
deployment of seafarers.
SECTION 55.Service Fees. — Licensed recruitment
agencies shall charge principals/employers
service fees commensurate to the fair market
value of their services.
SECTION 53.Costs and Fees Chargeable Against
the Principal/Employer. — The costs of
recruitment and placement shall be the
responsibility of principal/employer, which cover
payment for the following:
a. Visa, including the stamping fee;
b. Work permit and residence permit;
c. Round trip airfare;
d. Transportation from the airport to the jobsite;
e. POEA processing fee;
f. OWWA membership fee; and
g. Additional trade test/assessment, if required
by the principal/employer.
Illegal Recruitment
Definition Illegal Recruitment
Arts. 38, 34, 39, Labor Code
Sec. 5, R.A. 10022
C.F. Sharp Crew Management v. Espanol, G.R. No. 155903, September 14,
2007
People of the Philippines v. Saulo, G.R. No. 125903, November 15, 2000
People of the Philippines v. Gutierrez, G.R. No. 124439, February 5, 2004
People of the Philippines v. Gallardo, G.R. Nos. 140067-71, August 29, 2002
People of the Philippines v. Juego, G.R. No. 123162, October 13, 1998
Rodolfo v. People of the Philippines, G.R. No. 146964, August 10, 2006
Lapasaran v. People of the Philippines, G.R. No. 179907, February 12, 2009
People of the Philippines v. Jamilosa, G.R. No. 169076, January 23, 2007
License v. Authority

Art. 13, Labor Code

Rule II, Sec. 1 (w), Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by R.A. 10022
Rule II, Sec. 1 (b), Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by R.A. 10022
Types of Illegal Recruitment
Simple Illegal Recruitment

Romero v. People of the Philippines, G.R. No. 171644, November 23, 2011

People of the Philippines v. Bacos, G.R. No. 178774, December 8, 2010
People of the Philippines v. Gallo, G.R. No. 187730, June 29, 2010
Illegal Recruitment Committed by a Syndicate

Art. 38, Labor Code

Sec. 5, R.A. 10022

See People of the Philippines v. Gallo, G.R. No. 187730, June 29, 2010
People of the Philippines v. Fernandez, G.R. No. 199211, June 4, 2014
Illegal Recruitment in Large Scale

People of the Philippines v. Velasco, G.R. No. 195668, June 25, 2014

See People of the Philippines v. Fernandez, G.R. No. 199211, June 4, 2014

People of the Philippines v. Rea, G.R. No. 197049, June 10, 2013
People of the Philippines v. Daud, G.R. No. 197539, June 2, 2014
Illegal Recruitment v. Estafa
-
A person, for the same act and on the basis of same evidence, may be charged and convicted
separately for both illegal recruitment and estafa
Conviction for both is not double jeopardy
People of the Philippines v. Chua, G.R. No. 187052, September 13, 2012
See People of the Philippines v. Gallo, G.R. No. 187730, June 29, 2010
Principle: Conviction for both illegal recruitment and estafa; Application of the elements of estafa to the
acts committed in illegal recruitment
Liabilities
Liability for Money Claims
Joint and several liability of:
-
Principal and recruitment or manning agency
-
Corporate officers and directors, partners and the Recruitment or Manning Agency
Legal Basis:
1. Migrant Workers Act
2. POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Workers [February 4,
2002]
3. POEA Rules and Regulations Governing the Recruitment and
Employment of Seafarers [May 23, 2003]
Seafarers
Land-based
Joint and Solidary Liability – refers to the nature
of liability of the principal and the manning
agency, for any and all claims arising out of the
implementation of the employment contract
involving Filipino seafarers. It shall likewise refer
to the nature of liability of officers, directors,
partners or sole proprietors with the company
over claims arising from employer-employee
relationship.
Joint and Several Liability — refers to the nature
of liability of the principal/employer and the
licensed recruitment agency, for any and all
claims arising out of the implementation of the
employment contract involving Overseas Filipino
Workers. It shall likewise refer to the nature of
liability of partners, or officers and directors with
the partnership or corporation over claims arising
from an employer-employee relationship.
Liability of Officers of the Agency
-
Rule: Not automatic but culpability must be proved.
Case: Hon Sto Tomas v Salac reiterated in Gagui v Dejero
Principles:
-
Principal liable even if the principal is a foreign government instrumentality – ATCI Overseas
Corporation v Echin, GR 178551, October 11, 2010
Severance of relations between principal and agent does not prejudice the OFW if no notice of
the termination of the agency relationship is given pursuant to Article 1921 of the Civil Cod
which states that if the agency has been entrusted for the purpose of contracting with specified
persons, the revocation of the agency does not prejudice the OFW if they were not given notice.
Philippine Shipping and Equipment Supply Inc v. NLRC, GR 126764, December 23, 1999; Skippers
United Pacific v. Maguad, GR 166363, Aug 15, 2006
Local Recruitment Agency
 Gagui v. Dejero, G.R. No. 196036, October 23, 2013
Foreign Employers
 See People of the Philippines v. Velasco, G.R. No. 195668, June 25, 2014
Theory of Imputed Knowledge
Sunace International v. NLRC, G.R. No. 161757, January 25, 2006
Principle: Extension of term of employment of OFW without knowledge of the local agent does not bond
the agency.
Solidary Liability
APQ Ship Management v. Casenas, G.R. No. 197539, June 2, 2014
Liability for Illegal Recruitment
Natural Persons:
1. Principal
2. Accomplice
3. Accessories
Juridical Persons:
1. Officers having ownership, co
Pre-termination of Contract of Migrant Workers
Direct Hiring

Art. 18, Labor Code

Rule II, Sec. 1 (i), Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by R.A. 10022
Art. 26, Labor Code
Suspension or Cancellation of License or Authority

Art. 35, Labor Code

Sec. 1, Rule I, Part IV, POEA Rules and Regulations Governing the Recruitment and Employment
of Land-Based Overseas Workers [February 4, 2002]
Sec. 1, Rule II, Part V, POEA Rules and Regulations Governing the Recruitment and Employment of
Seafarers [May 23, 2003]
Regulatory and Visitorial Powers of DOLE Secretary
Arts. 36 & 37 v. 128 & 274, Labor Code
Remittance of Foreign Exchange Earnings

Art. 22, Labor Code
Rule XIII, Book 1, Sec. 2, Implementing Rules (Labor Code)
Other Prohibited Activities
Sec. 5, R.A. 10022
III. Labor Standards
Coverage/Exclusions
•
•
•
Art. 82, Labor Code
Book III, Rule I, Sec. 2, Implementing Rules (Labor Code)
David v. Macasio, G.R. No. 195466, July 2, 2014
FACTS: David is the employer, Macasio, the employee. Macasio filed a complaint for non-payment of
overtime pay, holiday pay and 13th month pay.
David’s defense is the Macasio is not his employee and he hired Macasio as a butcher or chopper on
"pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay
pursuant to the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code viz:
(Book III, Rule I, Sec. 2 (e), Implementing Rules)
e. Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or
task basis, and other non-time work if their output rates are in accordance with the standards
prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been
fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.
The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay.
The NLRC also ruled Macasio is not covered by the Labor Standards laws on overtime, SIL and holiday
pay, and 13th month pay under the Rules and Regulations Implementing the 13th month pay law.
But the CA reversed the NLRC: The CA explained that as a task basis employee, Macasio is excluded from
the coverage of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by
the Labor Code, a "field personnel" is one who performs the work away from the office or place of work
and whose regular work hours cannot be determined with reasonable certainty. In Macasio’s case, the
elements that characterize a "field personnel" are evidently lacking as he had been working as a butcher
at David’s "Yiels Hog Dealer" business in Sta. Mesa, Manila under David’s supervision and control, and
for a fixed working schedule that starts at 10:00 p.m.
ISSUE: WON an employee paid on task basis is entitled to SIL, holiday pay and 13 th month pay
HELD: Macasio is entitled to SIL and holiday pay but not 13 th month pay
The existence of employment relationship between the parties is determined by applying the "fourfold" test; engagement on "pakyaw" or task basis does not determine the parties’ relationship as it is
simply a method of pay computation. Accordingly, Macasio is David’s employee, albeit engaged on
"pakyaw" or task basis.
Engagement on "pakyaw" or task basis does not characterize the relationship that may exist between
the parties, i.e., whether one of employment or independent contractorship. Article 97(6) of the Labor
Code defines wages as "xxx the remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to
be rendered[.]"35 In relation to Article 97(6), Article 101 36 of the Labor Code speaks of workers paid by
results or those whose pay is calculated in terms of the quantity or quality of their work output which
includes "pakyaw" work and other non-time work.
A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage
payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work. 45 Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used
in pay computation.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor
Code - provisions governing working conditions and rest periods.
Art. 82. Coverage.— The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and
SIL pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and
"workers who are paid by results" on the other hand, are not covered by the Title I provisions. The
wordings of Article82 of the Labor Code additionally categorize workers "paid by results" and "field
personnel" as separate and distinct types of employees who are exempted from the Title I provisions of
the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR 47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than (10) workers[.]
[emphasis ours]
xxxx
SECTION 1. Coverage. – This Rule shall apply to all employees except:
xxxx
(e)Field personnel and other employees whose time and performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
[emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR 48 pertinently
provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment. [emphases ours]
xxxx
Section 1. Coverage. – This rule shall apply to all employees except:
xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof. [emphasis
ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be
excluded from their coverage, an employee must be one of those that these provisions expressly
exempt, strictly in accordance with the exemption. Under the IRR, exemption from the coverage of
holiday and SIL pay refer to "field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or contract basis[.]" Note that
unlike Article 82 of the Labor Code, the IRR on holiday and SIL pay do not exclude employees "engaged
on task basis" as a separate and distinct category from employees classified as "field personnel." Rather,
these employees are altogether merged into one classification of exempted employees.
as early as 1987 in the case of Cebu Institute of Technology v. Ople 49 the phrase "those who are engaged
on task or contract basis" in the rule has already been interpreted to mean as follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis
that general and unlimited terms are restrained and limited by the particular terms that they follow xxx
Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to nonagricultural employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private
respondents are not entitled to the service incentive leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from
the coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the
holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits
the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and
SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are
paid by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate
regulations."
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v.
Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other
employees whose performance is unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they
follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of
granting Macasio’s petition.
In Serrano, the Court, applying the rule on ejusdem generis 50 declared that "employees engaged on task
or contract basis xxx are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel." 51 The Court explained that the phrase "including
those who are engaged on task or contract basis, purely commission basis" found in Section 1(d), Rule V
of Book III of the IRR should not be understood as a separate classification of employees to which SIL
shall not be granted. Rather, as with its preceding phrase - "other employees whose performance is
unsupervised by the employer" - the phrase "including those who are engaged on task or contract basis"
serves to amplify the interpretation of the Labor Code definition of "field personnel" as those "whose
actual hours of work in the field cannot be determined with reasonable certainty."
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken
counsel from Serrano and earlier cases, they would have correctly reached a similar conclusion
regarding the payment of holiday pay since the rule exempting "field personnel" from the grant of
holiday pay is identically worded with the rule exempting "field personnel" from the grant of SIL pay. To
be clear, the phrase "employees engaged on task or contract basis "found in the IRR on both SIL pay and
holiday pay should be read together with the exemption of "field personnel."
In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and
SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and
performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is
that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically
provided under Article 94 (holiday pay) and Article95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of "field personnel" under the law, then
he is not entitled to these monetary benefits.
Entitlement to 13th month pay
The governing law on 13th month pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee must
be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations
Implementing P.D. No. 85154 enumerates the exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), "employers of those who are paid on xxx task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the time consumed in the performance
thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and
Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference to
"field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the
law did not intend to qualify the exemption from its coverage with the requirement that the task worker
be a "field personnel" at the same time.
•
Penaranda v. Baganga Plywood, G.R. No. 159577, May 3, 2006
FACTS: Bangaga Plywood Corp is the employer. Penaranda is employed by respondent as
Foreman/Boiler Head/Shift Engineer until he was terminated when BPC temporarily shut down.
Penaranda filed a complaint claiming he was not paid his overtime pay, premium pay for working during
holidays/rest days, night shift differentials.
BPC’s defense is that Penaranda was not dismissed but he failed to reapply when BPC reopened and that
being a managerial employee he was not entitled to overtime pay.
The LA found that there was no illegal dismissal but nevertheless awarded petitioner with overtime pay
and premium pay for working on rest days.
The NLRC deleted the award of overtime pay and premium pay for working on rest days. According to
the Commission, petitioner was not entitled to these awards because he was a managerial employee.
The CA dismissed Penaranda’s petition on a technicality.
ISSUE: WON Penaranda is entitled to overtime pay and premium pay on work on restdays
HELD: No, he is a Petitioner claims that he was not a managerial employee, and therefore, entitled to
the award granted by the labor arbiter.
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards.
Labor standards provide the working conditions of employees, including entitlement to overtime pay
and premium pay for working on rest days. 29 Under this provision, managerial employees are "those
whose primary duty consists of the management of the establishment in which they are employed or of
a department or subdivision."30
The Implementing Rules of the Labor Code state that managerial employees are those who meet the
following conditions:
"(1) Their primary duty consists of the management of the establishment in which they are employed or
of a department or subdivision thereof;
"(2) They customarily and regularly direct the work of two or more employees therein;
"(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the promotion or any other change of status of
other employees are given particular weight." 31
The Court disagrees with the NLRC’s finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the managerial staff are not entitled to
the provisions of law on labor standards. 32 The Implementing Rules of the Labor Code define members
of a managerial staff as those with the following duties and responsibilities:
"(1) The primary duty consists of the performance of work directly related to management policies of
the employer;
"(2) Customarily and regularly exercise discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists
of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute
under general supervision work along specialized or technical lines requiring special training, experience,
or knowledge; or (iii) execute under general supervision special assignments and tasks; and
"(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs (1), (2), and
(3) above."33
As shift engineer, petitioner’s duties and responsibilities were as follows:
"1. To supply the required and continuous steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety while working.
"6. Recommend parts and supplies purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
"8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness
limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that petitioner was a member of
the managerial staff. His duties and responsibilities conform to the definition of a member of a
managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing
the operation of the machines and the performance of the workers in the engineering section. This work
necessarily required the use of discretion and independent judgment to ensure the proper functioning
of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. 35
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he
was the foreman responsible for the operation of the boiler. 36 The term foreman implies that he was the
representative of management over the workers and the operation of the department. 37 Petitioner’s
evidence also showed that he was the supervisor of the steam plant. 38 His classification as supervisor is
further evident from the manner his salary was paid. He belonged to the 10% of respondent’s 354
employees who were paid on a monthly basis; the others were paid only on a daily basis. 39
On the basis of the foregoing, the Court finds no justification to award overtime pay and premium pay
for rest days to petitioner.
managerial staff excluded from the benefit of overtime and premium pay
Normal Hours of Work
•
Art. 83, Labor Code
•
Book III, Rule 1, Secs. 3-4, Implementing Rules (Labor Code)
•
DO No. 65-04, Serie s of 2004
•
R.A. 8972, Sec. 6
Flexible Work Schedule. Provided, not affect individual and company productivity: Provided,
further, employer may request exemption from the above requirements from the DOLE on certain
meritorious grounds.
•
R.A. 10361, Secs. 20-21
•
CHED Memorandum Circular No. 40, Series of 2008
a.
Compressed Work Week
•
DOLE Dept. Advisory No. 2, Series of 2004
•
DOLE Dept. Advisory No. 2, Series of 2009
•
DOLE Dept. Advisory No. 4, Series of 2010
Meal break
•
Art. 85, Labor Code
1
•
Book III, Rule I, Sec. 7, Implementing Rules (Labor Code) 1
•
Letter-Opinion dated Nov. 27, 1989, Sec. Drilon to Kodak Philippines
1
•
Manual on Labor Standards 2004- Bureau of Working Conditions
1
•
Sime Darby v. NLRC, G.R. No. 119205, April 15, 1998
FACTS: Sime Darby issued a memorandum to all factory-based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance
Department working on shifts, a change in work schedule which discontinued a 30-minute paid on call
lunch break and implemented 1 hour non-compensable lunch break from 12noon to 1pm and 2 10minute coffee break.
The Union filed a complaint for unfair labor practice and discrimination pursuant to the ruling in Sime
Darby International Tire Co., Inc. v. NLRC (a separate case wherein another group of employees sued for
discrimination because they were not paid for their 30-minute lunch break while the rest of the factory
workers were paid).
The LA dismissed the complaint on the ground that the change in the work schedule and the elimination
of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management
prerogative and that the new work schedule, break time and one-hour lunch break did not have the
effect of diminishing the benefits granted to factory workers as the working time did not exceed eight
(8) hours.
The NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case
wherein petitioner was ordered to pay the money value of these covered employees deprived of lunch
and/or working time breaks. The public respondent declared that the new work schedule deprived the
employees of the benefits of time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended.
ISSUE: Is the act of management in revising the work schedule of its employees and discarding their paid
lunch break constitutive of unfair labor practice?
HELD: NO, valid exercise of management prerogative.
The right to fix the work schedules of the employees rests principally on their employer. In the instant
case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business
operations and its improved production. [6] It rationalizes that while the old work schedule included a 30minute paid lunch break, the employees could be called upon to do jobs during that period as they were
on call. Even if denominated as lunch break, this period could very well be considered as working time
because the factory employees were required to work if necessary and were paid accordingly for
working. With the new work schedule, the employees are now given a one-hour lunch break without
any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can
freely and effectively use this hour not only for eating but also for their rest and comfort which are
conducive to more efficiency and better performance in their work. Since the employees are no longer
required to work during this one-hour lunch break, there is no more need for them to be compensated
for this period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily
work period of eight (8) hours without violating the Labor Code. [7] Besides, the new schedule applies to
all employees in the factory similarly situated whether they are union members or not. [8]
•
Pan Am v. Pan Am Employees, G.R. No. L-16275, February 23, 1961
FACTS: Pan Am was ordered by the CIR to permanently adopt the straight 8-hour shift inclusive of meal
period. Pan Am argues that the finding that the one-hour meal period should be considered overtime
work (deducting 15 minutes as time allotted for eating) is not supported by substantial evidence and
that the court below had no authority to order the company to adopt a straight 8-hour shift inclusive of
meal period.
Petitioner herein claims that the one-hour meal period should not be considered as overtime work (after
deducting 15 minutes), because the evidence showed that complainants could rest completely, and
were not in any manner under the control of the company during that period. The court below found,
on the contrary, that during the so called meal period, the mechanics were required to stand by for
emergency work; that if they happened not to be available when called, they were reprimanded by the
leadman; that as in fact it happened on many occasions, the mechanics had been called from their meals
or told to hurry up eating to perform work during this period.
ISSUE: WON the meal period is compensable
HELD: YES
Far from being unsupported by substantial evidence, the record clearly confirms the above factual
findings of the Industrial Court.
The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period
was but a consequence of its finding that the meal hour was not one of complete rest, but was actually a
work hour, since for its duration, the laborers had to be on ready call. Of course, if the Company
practices in this regard should be modified to afford the mechanics a real rest during that hour (f. ex., by
installing an entirely different emergency crew, or any similar arrangement), then the modification of
this part of the decision may be sought from the Court below. As things now stand, we see no warrant
for altering the decision.
Waiting Time
•
Book III, Rule I, Sec. 5, Implementing Rules (Labor Code) 1
•
Arica v. NLRC, G.R. No. 78210, February 28, 1998
FACTS: Stanfilco was sued for payment of overtime for assembly time as waiting time.
Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the assembly
area is compensable as working time (from 5:30 to 6:00 o'clock in the morning) since these preliminary
activities are necessarily and primarily for private respondent's benefit.
These preliminary activities of the workers are as follows:
(a) First there is the roll call. This is followed by getting their individual work assignments from the
foreman.
(b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report
during which they are often made to explain about their reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and materials.
All these activities take 30 minutes to accomplish.
Stanfilco seeks to dismiss the complaint on the ground of res judicata because of a prior case on the
same dispute.
respondent avers that the instant complaint is not new, the very same claim having been brought
against herein respondent by the same group of rank and file employees in the case of Associated Labor
Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back April 27,
1976 when ALU was the bargaining agent of respondent's rank and file workers. The said case involved a
claim for "waiting time", as the complainants purportedly were required to assemble at a designated
area at least 30 minutes prior to the start of their scheduled working hours "to ascertain the work force
available for the day by means of a roll call, for the purpose of assignment or reassignment of
employees to such areas in the plantation where they are most needed." (Rollo, pp. 64- 65)
Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated
Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where significant findings
of facts and conclusions had already been made on the matter.
The Minister of Labor held:
The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing
the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the employees,
and the proceedings attendant thereto are not infected with complexities as to deprive the workers the
time to attend to other personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll call, which does not necessarily require the
personal presence, they can go back to their houses to attend to some chores. In short, they are not
subject to the absolute control of the company during this period, otherwise, their failure to report in
the assembly time would justify the company to impose disciplinary measures. The CBA does not
contain any provision to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended
for the interests of the employer, but ultimately for the employees to indicate their availability or nonavailability for work during every working day. (Annex "E", Rollo, p. 57).
NLRC dismissed the claim as already barred by res judicata
ISSUE: Whether or not the 30-minute activity of the petitioners before the scheduled working time is
compensable under the Labor Code.
HELD: NO
The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing
the Labor Code. ...
Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the employees,
and the proceedings attendant thereto are not infected with complexities as to deprive the workers the
time to attend to other personal pursuits. They are not new employees as to require the company to
deliver long briefings regarding their respective work assignments. Their houses are situated right on the
area where the farm are located, such that after the roll call, which does not necessarily require the
personal presence, they can go back to their houses to attend to some chores. In short, they are not
subject to the absolute control of the company during this period, otherwise, their failure to report in
the assembly time would justify the company to impose disciplinary measures. The CBA does not
contain any provision to this effect; the record is also bare of any proof on this point. This, therefore,
demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended
for the interests of the employer, but ultimately for the employees to indicate their availability or nonavailability for work during every working day. (Annex "E", Rollo, p. 57).
Overtime Work/Pay
•
Art. 87, Labor Code
2
•
Book III, Rule I, Secs. 8-11, Implementing Rules (Labor Code)
•
See Manual on Labor Standards 2004- Bureau of Working Conditions
2
2
•
Art. 88, Labor Code
2
•
Art. 89, Labor Code
2
•
No. 3, DOLE Handbook on Workers Statutory Monetary Benefits 2
•
Pigcaulan v. Security and Credit, G.R. No. 173648, January 16, 2012
FACTS: Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs
different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter separate
complaints[7] for underpayment of salaries and non-payment of overtime pay.
Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting
the number of hours served and their wages for the same. They likewise presented itemized lists of their
claims for the corresponding periods served.
The LA gave credence to petitioners without indicating any detailed computation of the judgment
award, the Labor Arbiter ordered the payment of overtime pay.
The NLRC affirmed the LA.
But the CA reversed the LA and NLRC rulings.’
ISSUE: WON petitioner is entitled to overtime pay
HELD: NO
There was no substantial evidence to support the grant of overtime pay.
The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and
13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the
itemized computations they submitted which he considered as representative daily time records to
substantiate the award of salary differentials. The NLRC then sustained the award on the ground that
there was substantial evidence of underpayment of salaries and benefits.
We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized
computations are self-serving, unreliable and unsubstantial evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of
verifying the truth of the handwritten entries stated therein. Written only in pieces of paper and solely
prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the Labor
Arbiter, can hardly be considered as competent evidence to be used as basis to prove that the two were
underpaid of their salaries. We find nothing in the records which could substantially support Pigcaulans
contention that he had rendered service beyond eight hours to entitle him to overtime pay and during
Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional
service beyond the normal working hours and days had indeed been rendered, we cannot affirm the
grant of overtime pay to Pigcaulan.
Night Work (R.A. 10151); Night Differential
•
R.A. 10151
2
Part-time Work
•
PAL v. Pascua, G.R. No. 143258, August 15, 2003
FACTS: PAL hired private respondents as station attendants on a four or six-hour work-shift a day at five
to six days a week in 1992.
In 1994, respondents filed a complaint for regularization and payment of benefits.
During the pendency of the case, PAL President Jose Antonio Garcia and PAL Chairman & Corporate
Executive Officer Carlos G. Dominguez converted the employment status of private respondents from
temporary part-time to regular part-time.
In 1995, 1995, private respondents dropped their money claim then pending before the Office of
Executive Labor Arbiter Guanio, thus leaving for consideration their complaint for regularization conversion of their employment status from part-time to regular (working on an 8-hour shift).
The LA dismissed the complaint for being moot and academic since they were already regular.
The NLRC On appeal, the NLRC, finding for private respondents, declared them as regular employees of
PAL with an eight-hour work-shift. The NLRC ruled that the respondents can be considered as casual
employees for a definite period during the first year of their employment and, thereafter, as regular
employees of respondents by operation of law.
The CA affirmed the NLRC.
ISSUE: Did the appellate court err when it upheld the decision of the NLRC to accord respondents
regular full-time employment although petitioner, in the exercise of its management prerogative,
requires only part-time services?
HELD:
a thorough scrutiny of the appeal reveals that despite its lack of preciseness, private respondents were,
in fact, ultimately assailing their part-time status, not just the retroactive date of their regularization as
part-time employees. They contradicted the Labor Arbiters perception that hiring of part-time
employees was justified by the peculiar nature of airport operations. Besides, even petitioner
understood the heart of the appeal when it observed in their Answer to Appeal that [a]ll that they
wanted is to be converted to full time status.
The pleadings filed by private respondents consistently show that they wanted to become regular fulltime employees, not only regular part-time employees. Although they repeatedly said regular
employees, not specifying whether it should be regular part-time or regular full-time, their intention
should be read from the entirety of all their pleadings. Private respondents have consistently alleged
that despite their part-time status, they actually work more than 8 hours daily. Private respondent
Joselito Pascua confirmed this when he testified on November 24, 1995 (TSN, November 24, 1995, pp.
35-36). Ultimately, they want to be entitled to the many collective bargaining agreement (CBA) benefits
which would be possible only if they were regular full-time employees since regular part-time
employees are covered by the Personnel Policies and Procedures Manual, the relevant portion of which
was introduced only for the first time in this Court. While regular part-time employees have their own
package of benefits, it is safe to infer that the benefits under the CBA are better, being a result of
negotiation, than those provided under the Personnel Policies and Procedures Manual which are
unilaterally handed down by petitioner. [10]
It must be borne in mind that the exercise of management prerogative is not absolute. While it may be
conceded that management is in the best position to know its operational needs, the exercise of
management prerogative cannot be utilized to circumvent the law and public policy on labor and social
justice. That prerogative accorded management could not defeat the very purpose for which our labor
laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of
one over the other, but to guaranty that labor and management stand on equal footing when bargaining
in good faith with each other. By its very nature, encompassing as it could be, management prerogative
must be exercised always with the principles of fair play at heart and justice in mind.
Records show that respondents were first hired to work for a period of one year. Notwithstanding the
fact that respondents perform duties that are usually necessary or desirable in the usual trade or
business of petitioner, respondents were considered temporary employees as their engagement was
fixed for a specific period. However, equally borne by the records, is the fact that respondents
employment was extended for more than two years. Evidently, there was a continued and repeated
necessity for their services, which puts to naught the contention that respondents, beyond the one-year
period, still continued to be temporary part-time employees. Article 280 of the Labor Code [13] provides
that any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed, and
his employment shall continue while such activity actually exists.
The NLRC decision now assailed is one based on substantial evidence, which is that amount of relevant
evidence that a reasonable mind might accept as adequate to justify a conclusion. [14] It bears stressing
that findings of fact of quasi-judicial agencies like the NLRC which have acquired expertise in the specific
matters entrusted to their jurisdiction are accorded by this Court not only respect but even finality if
they are supported by substantial evidence. [15] Here we find no compelling reason to go against the
factual findings of the NLRC. The parties had ample opportunity to present below the necessary
evidence and arguments in furtherance of their causes, and it is presumed that the quasi-judicial body
rendered its decision taking into consideration the evidence and arguments thus presented. Such being
the case, it is likewise presumed that the official duty of the NLRC to render its decision was regularly
performed.[16] Petitioner has not shown any compelling justification to warrant reversal of the NLRC
findings. Absent any showing of patent error, or that the NLRC failed to consider a fact of substance that
if considered would warrant a different result, we yield to the factual conclusions of that quasi-judicial
agency. More so, when as here, these NLRC conclusions are affirmed by the appellate court.
It is basic to the point of being elementary that nomenclatures assigned to a contract shall be
disregarded if it is apparent that the attendant circumstances do not support their use or
designation. The same is true with greater force concerning contracts of employment, imbued as they
are with public interest. Although respondents were initially hired as part-time employees for one year,
thereafter the over-all circumstances with respect to duties assigned to them, number of hours they
were permitted to work including over-time, and the extension of employment beyond two years can
only lead to one conclusion: that they should be declared full-time employees. Thus, not without
sufficient and substantial reasons, the claim of management prerogative by petitioner ought to be struck
down for being contrary to law and policy, fair play and good faith.
•
Perpetual Help Credit v. Faburada, G.R. No. 121948, October 8, 2001
•
•
•
•
•
CIT v. Ople, G.R. No. L-58870, December 18, 1987
UST v. NLRZ, G.R. No. 85519, February 15, 1990
Lacuesta v. ADMU, G.R. No. 152777, December 9, 2005
Saint Mary’s University v. C.A., G.R. No. 157788, March 8, 2005
See DOLE Handbook on Workers Statutory Monetary Benefits
Contract for Piece of Work
•
Art. 1713, Civil Code
2
Wages
•
Arts. 97-98, Labor Code 2
Wage v. Salary
•
Equitable v. Sadac, G.R. No. 164772, June 8, 2006
3
•
Songco v. NLRC, G.R. Nos. 50999-501000, March 23, 1990
•
Sugue v. Triumph International, G.R. No. 164804, January 30, 2009
3
•
International School v. Quisumbing, G.R. No. 128845, June 1, 2000
3
•
Atok-Big Association v. Atok-Big Wedge, G.R. No. L-7349, July 19, 1955 3
•
Our Haus v. Parian, G.R. No. 204651, August 6, 2014
•
Reyes v. NLRC, G.R. No. 160233, August 8, 2007 3
•
Book III, Rule VII-A
•
DOLE D.O. No. 126-13, April 2013
3
3
3
3
Minimum wage; Minimum wage setting
•
Art. 99, Labor Code
3
•
R.A. 6727, Wage Rationalization Act
•
Book III, Rule VII, Sec. 1, Implementing Rules (Labor Code)
•
NWPC Guidelines No. 1, Series of 2007 (June 19, 2007) 3
•
Employees Confederation v. NWPC, G.R. No. 96169, September 24, 1991
•
Nasipit Integrated v. Nasipit Employees, G.R. No. 162411, June 27, 2008 3
3
3
3
Minimum wage of workers paid by results
Workers paid by results
•
Art. 124, Labor Code
3
•
Art. 101, Labor Code
3
•
Book III, Rule VII-A, Implementing Rules (Labor Code)
3
•
Tan v. Lagman, G.R. No. 151228, August 15, 2002
3
Apprentices
Learners
•
Arts. 57-60, Labor Code 3
•
Arts. 73-77, Labor Code 3
•
Book II, Rule VI, Sec. 29, Implementing Rules (Labor Code)
3
Persons with disability
•
Arts. 78-81, Labor Code 3
•
R.A. 7277, Magna Carta for Disabled Persons
3
Commissions
•
See Songco v. NLRC, G.R. Nos. 50999-501000, March 23, 1990
•
Soriano v. NLRC, G.R. No. L-75510, October 27, 1987
•
Iran v. NLRC, G.R. No. 121927, April 22, 1998
209
215
219
Deductions from wages
•
Arts. 113-118, Labor Code
220
•
Book III, Rule VIII, Secs. 10-11, Implementing Rules (Labor Code) 220
•
Arts. 1706, 1708, Civil Code
•
Art. 59, R.A. 6938, Cooperative Code of the Phils.
•
Bluer Than Blue v. Esteban, G.R. No. 192582, April 7, 2014
•
Nina Jewelry v. Trinidad, G.R. No. 188169, November 28, 2011 228
•
SHS Perforated v. Diaz, G.R. No. 185814, October 13, 2010
221
221
221
240
Non-diminution of benefits
•
Art. 100, Labor Code
251
•
Wesleyan University v. Faculty, G.R. No. 181806, March 12, 2014
•
Vergara v. Coca-Cola, G.R. No. 176985, April 1, 2013
257
•
Netlink v. Delmo, G.R. No. 160827, June 18, 2014
260
251
Facilities v. Supplements
•
Art. 97 (f), Labor Code 266
•
SLL International v. NLRC, G.R. No. 172161, March 2, 2011
•
Mabeza v. NLRC, G.R. No. 118506, April 18, 1997
•
See Our Haus v. Parian, G.R. No. 204651, August 6, 2014
266
271
Wage distortion/rectification
•
Art. 124, Labor Code
288
•
Metrobank v. NLRC, G.R. No. 102636, September 10, 1993
•
Prubankers Assoc. v. Prudential Bank, G.R. No. 131247, January 25, 1999295
•
Bankard Employees v. NLRC, G.R. No. 140689, February 17, 2004
290
302
Divisor to determine daily rate
•
Lim v. HMR Phils, G.R. No. 201483, August 4, 2014
•
Arellano University Employees v. CA, G.R. No. 139940, September 19, 2006
•
Leyeco IV v. Employees, G.R. No. 157775, October 19, 2007
Rest Periods
Weekly rest day
•
Art. 91, Labor Code
336
309
328
322
•
Book III, Rule III, Implementing Rules (Labor Code)
336
Emergency rest day
•
Art. 92, Labor Code
338
•
Book III, Rule III, Implementing Rules (Labor Code)
•
Art. 93, Labor Code
339
339
Holiday pay/Premium pay
Coverage; exclusions
340
Art. 94, Labor Code
340
Book III, Rule IV, Implementing Rules (Labor Code)
340
Jose Rizal College v. NLRC, G.R. No. 65482, December 1, 1987
341
Insular Bank v. Inciong, G.R. No. L-52415, October 23, 1984
345
No. 3, DOLE Handbook on Workers Statutory Monetary Benefits 356
Teachers, piece workers, takay, seasonal workers, seafarers
•
David v. Macasio, G.R. No. 195466, July 2, 2014 358
•
Tan v. Lagman, G.R. No. 151228, August 15, 2002
358
369
Leaves
Service Incentive Leaves
Art. 95, Labor Code
Article 95. Right to service incentive leave.
Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
This provision shall not apply to those who are already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and those employed in establishments regularly
employing less than ten employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or financial condition of such
establishment.
The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any
court or administrative action.
Book III, Rule V, Implementing Rules (Labor Code)
See David v. Macasio, G.R. No. 195466, July 2, 2014
Those engaged in task or pakyaw basis must be related to field personnel – entitled to SIL and holiday
pay
Not entitled to 13th month pay
See CIT v. Ople, G.R. No. L-58870, December 18, 1987
Those engaged in commission basis must be related to field personnel
Commutation of SIL – convert to cash unused SIL based on latest salary rate
Maternity Leave
Art. 133, Labor Code
Article 133. Maternity leave benefits.
Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of
at least six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to
the expected date of delivery and another four (4) weeks after normal delivery or abortion with full pay
based on her regular or average weekly wages. The employer may require from any woman employee
applying for maternity leave the production of a medical certificate stating that delivery will probably
take place within two weeks.
The maternity leave shall be extended without pay on account of illness medically certified to arise out
of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she
has earned unused leave credits from which such extended leave may be charged.
The maternity leave provided in this Article shall be paid by the employer only for the first four (4)
deliveries by a woman employee after the effectivity of this Code.
Pending bill – 100 days?
Sec. 14-A, Social Security Law (as amended)
3 mos contributions in 12 month period
100% of average daily rate for 60 days NSD and 78 days for CS
Procedure!
What if employer does not remit the SSS contribution? Employer must pay damages
Computation
13th month pay – don’t include maternity leave
Pregnant female not required to be married to avail of ML, only required in paternity leave
No. 11, DOLE Handbook on Workers Statutory Monetary Benefits
R.A. 10151, Sec. 4
Alternative to night work – for at least 16 weeks, divided between time before and after childbirth]
Paternity Leave
R.A. 8187, Paternity Leave Act
- married
- Cohabiting
- first 4 children
7 days
Before or during, if after, within 60 days from delivery
Revised Implementing Rules of R.A. 8187 (March 13, 1997)
Parental Leave (R.A. 8972)
R.A. 8972, Solo Parents’ Welfare Act
Who is a solo parent?
Other benefits: 1. Parental leave 2. Flexible work arrangement
Parental leave 7 days but at least 1 year of service
Requisites: 1 year service, notice, Solo parent ID
Implementing Rules, R.A. 8972
Dela Cueva v. Omaga, A.M. No. P-08-2590, July 5, 2010
Cannot discriminate solo parent – liable for discrimination under RA 8972
Leave for VAWC victims (R.A. 9262)
Sec. 43, R.A. 9262, Anti-VAWC Act
10 days
Protection orders – BPO, TPO
Sec. 42, Implementing Rules, R.A. 9262
Special Leave benefit for women
Sec. 18, R.A. 9710, Magna Carta of Women
Sec. 21, Rule IV, Implementing Rules, R.A. 9710
Sec. 7 (m), Rule II, Implementing Rules, R.A. 971)
What are gynecological disorders – must require surgery
Service Charge
Art. 96, Labor Code
Article 96. Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees
and fifteen percent (15%) for management. The share of the employees shall be equally distributed
among them. In case the service charge is abolished, the share of the covered employees shall be
considered integrated in their wages.
Service charge v tip – voluntary only. Service charge must be paid, included in cost of food or service.
Tips not included in service charge. Tips can be kept by employee EXPN pooling
Rules:
1. Collected by hotels, restaurants, similar establishments
2. Distribution – 85% Management keeps 15%, discretionary whether it is distributed to
managerial employees (purpose is to cover for losses)
3. How often distributed – once every 2 weeks or
4. If abolished, considered as integrated into wages. Bases average past 12 mos.
Book III, Rule V, Implementing Rules (Labor Code)
431
No. 7 (a), (c), DOLE Handbook on Workers Statutory
Monetary Benefits
432
Mayon Hotel v. Adana, G.R. No. 157634, May 16, 2005
Service charge not profit share, hence cannot be deducted from the wage
Philippine Hoteliers v. National Union, G.R. No. 181972,
August 25, 2009
ECOLA and service charge not mutually exclusive
Thirteenth Month Pay
P.D. 851
Nature of 13th month pay – additional income
1/12th of the basic salary
Exempted from coverage - (e) Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate basis in which
case the employer shall be covered by this issuance insofar as such workers are concerned. – NOT THE
SAME RULE with SIL
13th month Not part of the wage but wage is the basis for computation
Computation: all remuneration exclude benefits (leaves, COLA, allowances
Domestic worker – entitled
Revised Guidelines on the Implementation of 13th Month Law
Central Azucarera v. Labor Union, G.R. No. 188949, July 26, 2010
FACTS: gave 13th month pay based on gross monthly
What must be included in basic salary for the purpose of computing 13 th month pay?
Higher 13th month pay – can employer take back? Non diminution of benefits , company practice, no
error because no difficult question of law
King of Kings Transport v. Mamac, G.R. No. 166208, June 29, 2007
Bus drivers, conductors, - entitled if not receiving purely commission
Separation Pay
Arts. 283-284, Labor Code
Sec. 32, Art. V, R.A. 10361
Manila Water v. Rosario, G.R. No. 188747, January 29, 2014
See Toyota v. NLRC, G.R. Nos. 158786 & 158789, October 19, 2007
Bani Rural Bank v. Guzman, G.R. No. 170904, November 13, 2013
PAL v. NLRC, G.R. No. 123294, October 20, 2010
503
Not gross negligence – hence entitled to separation pay
Court disagreed with computation of PAL based on retirement program
Solidbank v. NLRC, G.R. No. 165951, March 30, 2010
Already paid 150% to workers when they closed the bank – cannot be required to pay separation pay in
addition
Escario v. NLRC, G.R. No. 160302, September 27, 2010
Grounds when separation pay can be done in lieu of reinstatement
Motorola Phils. v. Ambrocio G.R. No. 173279, March 20, 2009
Sec. 6, R.A. 9231
Separation pay when Secretary orders closure of business because of violation of RA 9231
Retirement Pay
Art. 287, Labor Code
Article 287. Retirement. Any employee may be retired upon reaching the retirement age established in
the 1. collective bargaining agreement or 2. other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under 1. existing laws and 2. any collective bargaining agreement and 3. other agreements:
Provided, however, That an employee’s retirement benefits under any collective bargaining and other
agreements shall not be less than those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment:
-
an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age,
who has served at least five (5) years in the said establishment, may retire and
shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary’ shall mean:
-
fifteen (15) days PLUS
1/12 of the 13th month pay PLUS
the cash equivalent of not more than five (5) days of service incentive leaves.
EXEMPTED: Retail, service and agricultural establishments or operations employing not more than ten
(10) employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article
288 of this Code.
Article 288. Penalties. Except as otherwise provided in this Code, or unless the acts complained of hinge
on a question of interpretation or implementation of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of this Code declared to be unlawful or penal in
nature shall be punished with a fine of not less than One Thousand Pesos (P1,000.00) nor more than Ten
Thousand Pesos (P10,000.00) or imprisonment of not less than three months nor more than three years,
or both such fine and imprisonment at the discretion of the court.
In addition to such penalty, any alien found guilty shall be summarily deported upon completion of
service of sentence.
Any provision of law to the contrary notwithstanding, any criminal offense punished in this Code, shall
be under the concurrent jurisdiction of the Municipal or City Courts and the Courts of First Instance. (As
amended by Section 3, Batas Pambansa Bilang 70)
Article 289. Who are liable when committed by other than natural person. If the offense is committed by
a corporation, trust, firm, partnership, association or any other entity, the penalty shall be imposed
upon the guilty officer or officers of such corporation, trust, firm, partnership, association or entity.
Serrano v. Santos Transit, G.R. No. 187698, August 9, 2010
FACTS:
Petitioner Rodolfo J. Serrano WORKS as bus conductor for Severino Santos Transit
After 14 years of service or on July 14, 2006, petitioner applied for optional retirement from the
company whose representative advised him that he must first sign the already prepared Quitclaim
before his retirement pay could be released. As petitioners request to first go over the computation of
his retirement pay was denied, he signed the Quitclaim on which he wrote U.P. (under protest) after his
signature, indicating his protest to the amount of P75,277.45 which he received, computed by the
company at 15 days per year of service.
EMPLOYEE: company erred in its computation since under Republic Act No. 7641, otherwise known as
the Retirement Pay Law, his retirement pay should have been computed at 22.5 days per year of service
to include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay
which the company did not.
COMPANY: the Quitclaim signed by petitioner barred his claim and, in any event, its computation was
correct since petitioner was not entitled to the 5-day SIL and pro-rated 13 th month pay for, as a bus
conductor, he was paid on commission basis. Respondents, noting that the retirement differential pay
amounted to onlyP1,431.15, explained that in the computation of petitioners retirement pay, five
months were inadvertently not included because some index cards containing his records had been lost.
LABOR ARBITER:
22.5 days pay per year of service is the correct formula
Legal Basis: RA 7641. The retirement pay is equal to half-months pay per year of service. But halfmonths pay is expanded because it means not just the salary for 15 days but also one-twelfth of the
13th-month pay and the cash value of five-day service incentive leave.
Based on summary of monthly income handwritten by company, not disputed by employee:
We added complainants monthly income from June 2005 until June 2006 or the last twelve months and
we arrived atP189,591.30) and we divided it by twelve (12) to arrive at complainants average monthly
earning of P15,799.28. Thereafter, the average monthly of P15,799.28 is divided by twenty-six (26) days ,
the factor commonly used in determining the regular working days in a month, to arrive at his average
daily income of P607.66. Finally, P607.66 (average daily income) x 22.5 days =P13,672.35 x 14 (length of
service) = P191,412.90 (COMPLETE RETIREMENT PAY). However, inasmuch as complainant already
received P75,277.45, the retirement differential pay due him is P116,135.45 (P191,412.90 P75,277.45).
NLRC: Reversed LA, dismissed complaint, ordered respondents to pay retirement differential in the
amount of P2,365.35.
NLRC RULING: NLRC held that since petitioner was paid on purely commission basis, he was excluded
from the coverage of the laws on 13 thmonth pay and SIL pay, hence, the 1/12 of the 13th month pay and
the 5-day SIL should not be factored in the computation of his retirement pay.
CA: the appellate court affirmed the NLRCs ruling, it merely holding that it was based on substantial
evidence, hence, should be respected.
HELD: LABOR ARBITER DECISION REINSTATED
SIL ISSUE: Entitled
Legal Basis:
-
under P.D. 851 or the SIL Law, the exclusion from its coverage of workers who are paid on a
purely commission basis is only with respect to field personnel. The more recent case of Auto
Bus Transport Systems, Inc., v. Bautista [8] clarifies that an employee who is paid on purely
commission basis is entitled to SIL
-
NLRC’s reliance on R & E Transport, Inc. is erroneous. In said case, the Court held that a taxi
driver paid according to theboundary system is not entitled to the 13th month and the SIL pay,
hence, his retirement pay should be computed on the sole basis of his salary. For purposes,
however, of applying the law on SIL, as well as on retirement, the Court notes that there is
a difference between drivers paid under the boundary system and conductors who are paid on
commission basis. In practice, taxi drivers do not receive fixed wages. They retain only those
sums in excess of the boundary or fee they pay to the owners or operators of the vehicles.
[7]
Conductors, on the other hand, are paid a certain percentage of the bus earnings for the day.
Eligir v. PAL, G.R. No. 181995, July 16, 2012
FACTS:
Petitioner Bibiano C. Elegir was hired by Philippine Airlines, Inc. (PAL) as a commercial pilot, specifically
designated as HS748 Limited First Officer. He was promoted in 1995 as B747-400 Captain wherein he
was trained at Boeing in Seattle, Washington.
On November 5, 1996, after rendering twenty-five (25) years, eight (8) months and twenty (20) days of
continuous service, the petitioner applied for optional retirement authorized under the Collective
Bargaining Agreement (CBA) between PAL and the Airline Pilots Association of the Philippines (ALPAP).
Company: PAL asked him to reconsider his decision, asseverating that the company has yet to recover
the full value of the costs of his training. It warned him that if he leaves PAL before he has rendered
service for at least three (3) years, it shall be constrained to deduct the costs of his training from his
retirement pay
Petitioner still retired.
PAL: costs of his training will be deducted from his retirement pay, which will be computed at the rate
of P 5,000.00 per year of service
Hence complaint for non-payment of retirement pay
LABOR ARBITER:
An employee’s retirement benefits under any collective bargaining agreement shall not be less than
those provided under the New Retirement Pay Law and if such benefits are less, the employer shall pay
the difference between the amount due the employee and that provided under the CBA or individual
agreement or retirement plan
Thus, applying the pertinent CBA provision in correlation with the New Retirement Pay Law,
complainant should receive the following amount, to wit:
22.5 x 26 yrs. x P138,447.00= P2,700,301.50
If we were to follow the PAL’s computation of petitioner’s retirement pay, the latter’s retirement
benefits in the amount of P125,000.00 based on Section 2, Article VII of the Retirement Plan of the CBA
at P5,000.00 per every year of service would be much less than his monthly salary of P138,477.00 at the
time of his retirement.
NLRC:
Retirement benefits should be computed in accordance with both Article 287 of the Labor Code and the
Retirement Plan in the CBA of PAL and ALPAP:
Considering that [petitioner] was only fifty-two (52) years when he opted to retire on November 6, 1996,
he was, strictly, not yet qualified to receive the benefits provided under said Article 287 of the Labor
Code, as amended by R.A. 7641. However, petitioner is eligible for retirement under the CBA between
respondent PAL and ALPAP, as he had already served for more than 25 years with said respondent.
This is covered by the provision in the first paragraph of Article 287 of the Labor Code which states that
an employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract, inasmuch as the CBA in question does not
provide for any retirement age, but limited itself to the number of years of service or flying hours of
the employee concerned. Consequently, anytime that an employee of respondent PAL reaches twenty
(20) years of service or 20,000 (flying) hours as a pilot of PAL, then his age at that precise time would be
considered as the retirement age, as far as he is concerned.
BUT: petitioner is under obligation to reimburse a portion of the expenses incurred for his training as
B747-400 Captain.
CA:
CA ruled that the petitioner’s retirement pay should be computed in accordance with PAL-ALPAP
Retirement Plan and the PAL Pilots’ Retirement Benefit Plan as was held in Philippine Airlines, Inc.
HELD: CA correct
It can be clearly inferred from the language of the foregoing provision that it is applicable only to a
situation where:
(1) there is no CBA or other applicable employment contract providing for retirement benefits for an
employee, or
(2) there is a CBA or other applicable employment contract providing for retirement benefits for an
employee, but it is below the requirement set by law.
The rationale for the first situation is to prevent the absurd situation where an employee, deserving to
receive retirement benefits, is denied them through the nefarious scheme of employers to deprive
employees of the benefits due them under existing labor laws. On the other hand, the second situation
aims to prevent private contracts from derogating from the public law.
The determining factor in choosing which retirement scheme to apply is still superiority in terms of
benefits provided. Thus, even if there is an existing CBA but the same does not provide for retirement
benefits equal or superior to that which is provided under Article 287 of the Labor Code, the latter will
apply. In this manner, the employee can be assured of a reasonable amount of retirement pay for his
sustenance.
To reiterate, the benefit under the PAL Pilots’ Retirement Benefit Plan pertains to the totality of PAL’s
monthly contribution for every pilot, which amounts to 20% of the actual monthly salary. Necessarily,
the computation of this benefit requires a record of the petitioner’s salary, which was unfortunately not
submitted by either of the parties. At any rate, the petitioner did not dispute the fact that he already
received his entitlement under the PAL Pilots’ Retirement Benefit Plan nor did he question the propriety
of the amount tendered. Thus, we can reasonably assume that he received the rightful amount of his
entitlement under the plan.
On the other hand, under Article 287 of the Labor Code, the petitioner would only be receiving a
retirement pay equivalent to at least one-half (1/2) of his monthly salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. To stress, one-half (1/2) month
salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay
and the remaining 5 days for service incentive leave.27
Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5
days worth of salary for every year of service provided under Article 287 of the Labor Code cannot
match the 240% of salary or almost two and a half worth of monthly salary per year of service provided
under the PAL Pilots’ Retirement Benefit Plan, which will be further added to the P125,000.00 to which
the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioner’s
advantage that PAL’s retirement plans were applied in the computation of his retirement benefits.
REIMBURSEMENT ISSUE:
As regards the issue of whether the petitioner should be obliged to reimburse PAL with the costs of his
training, the ruling in Almario v. Philippine Airlines, Inc. 28 is controlling. Essentially, in the mentioned
case, this Court recognized the right of PAL to recoup the costs of a pilot’s training in the form of service
for a period of at least three (3) years. This right emanated from the CBA between PAL and ALPAP, which
must be complied with good faith by the parties
As discussed in Almario, the above provision initially set the age of fifty-five (55) years as the reckoning
point when a pilot becomes disqualified to bid for a higher position. The age of disqualification was set
at 55 years old to enable PAL to fully recover the costs of the pilot’s training within a period of five (5)
years before the pilot reaches the compulsory retirement age of sixty (60). The DOLE Secretary however
lowered the age to fifty-seven (57), thereby cutting the supposed period of recovery of investment to
three (3) years. The DOLE Secretary justified the amendment in that the "prohibitive training costs are
more than offset by the maturity, expertise and the experience of the pilot." 33
By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the
company’s effort in sending pilots for training abroad is an investment which necessarily expects a
reasonable return in the form of service for a period of at least three (3) years. This stipulation had been
repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the
impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the
petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract
expressly requiring the pilot to remain within PAL’s employ within a period of 3 years after he has been
sent on training.
ALSO UNJUST ENRICHMENT: Undeniably, the petitioner was enriched at the expense of PAL. After
undergoing the training fully shouldered by PAL, he acquired a higher level of technical competence
which, in the professional realm, translates to a higher compensation. To prove this point, his monthly
salary of P125,692.00 was increased to P131,703.00 while he was still undergoing training. After his
training, his salary was further increased to P137,977.00. 37Further, his training broadened his
opportunities for a better employment as in fact he was able to transfer to another airline company
immediately after he left PAL.
Grace Christian School v. Lavandera, G.R. No. 177845, August 20, 2014
FACTS:
Filipinas Lavandera was employed by petitioner Grace Christian High School (GCHS) as high school
teacher
She terminated effective May 31, 2001, pursuant to GCHS’ retirement plan which gives the school the
option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half (½) month for every year of service. At that time, Filipinas was only 58 years
old and still physically fit to work.
LABOR ARBITER: Dismissed complaint
The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently
provides:
ARTICLE
RETIREMENT DATES12
X
Section 1. Normal Retirement Date– For qualified members of the Plans, the normal retirement date
shall be the last day of the month during which he attains age sixty (60) regardless of length of service or
upon completion of 20 years of service unless extended at the option of the School. Such extension is
subject tothe approval of the School on a case to case and year to year basis. The School reserves the
right to require an employee before it approveshis application for an extension of service beyond the
normal retirement date, to have a licensed physician appointed by the School, certify that the employee
concerned has no physical and/or mental impediments which will prevent the employee from
performing the duties in the School.13 (Emphasis supplied)
Consequently, the LA ruled that Filipinas was not terminated from employment but was considered
retired14 as of May 31, 1997 after rendering 20 years of service 15 and was only allowed by GCHS to
continue teaching on a year-to-year basis (until May 31, 2001)in the exercise of its option to do so under
the aforementioned retirement plan until she was informed that her contract would not be renewed. 16
Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be deficient
vis-à-vis those provided under RA 7641, 17 and, accordingly, awarded Filipinas retirement pay differentials
based on her latest salaryas follows:
P18,662.00/30
=
P622.06/day
P622.06 x 22.5 = P13,996.35 x 20 = P279,927.00
- P136,210.00
18
P143,717.00
NLRC: the NLRC set aside the LA’s award, and ruled that Filipinas’ retirement pay should be computed
based on her monthly salary at the time of her retirementon May 31, 1997, i.e., 13,621.00. Moreover, it
held that under Article 287 of the Labor Code, as amended by RA 7641, the retirement package consists
of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth (1/12) equivalent. 21
In view of the foregoing, the NLRC awarded Filipinas retirement pay differentials in the amount of
27,057.20consisting of one-twelfth (1/12) of the 13th month pay and SIL pay based on her salary at the
time of her retirement on May 31, 1997, or 13,621.00 multiplied by 20 years.
The CA Ruling
In a Decision23 dated April 30, 2007, the CA affirmed with modification the NLRC’s Decision. It held that
the Court, in the case of Capitol Wireless, Inc.v. Sec. Confesor, 24 has simplified the computation of "onehalf month salary" by equating it to"22.5 days" which is "arrived at after adding 15 days plus 2.5 days
representing one-twelfth of the 13th month pay, plus 5 days of [SIL]." 25 Accordingly, it computed
Filipinas’ retirement benefits differential as follows:
1âwphi1
Monthly salary
P13,624.00
÷ 30 days
÷ 30 days
Daily rate
P454.13
x 22.5 days
x 22.5 days
1/2 month salary28
P10,218.00
x 20 years
x 20 years
Total amount of retirement benefits P204,360.00
- Amount deposited in trust
P136,210.00
26
27
Retirement benefits differential
P68,150.00
29
GCHS’ argument: The 5 days SIL should be pro-rated to their 1/12 equivalent
ISSUE: WON CA erred in applying 22.5 multiplier
HELD: NO. the whole 5 days of SIL are included in the computation of a retiring employees’ pay, 39 as
correctly ruled by the CA.
RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing
for the rules on retirement pay to qualified private sector employees in the absence of any retirement
plan in the establishment. The said law 32 states that "an employee’s retirement benefits under any
collective bargaining [agreement (CBA)] and other agreements shall not be less than those provided"
under the same – that is, at least onehalf (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year – and that "[u]nless the parties provide for
broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive
leaves."
The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing
for retirement benefits to employees, or (b) there is a CBA or other applicableagreement providing for
retirement benefits but it is below the requirement set by law. 33 Verily, the determining factor in
choosing which retirement scheme to apply is still superiority in terms of benefits provided. 34
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it
the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half (1/2) month for every year ofservice. Considering, however, that GCHS
computed Filipinas’ retirement pay without including one-twelfth (1/12) of her 13th month pay and the
cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’
retirement benefits should be computed in accordance withArticle 287 of the Labor Code, as amended
by RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit
differentials due to divergent interpretations of the term "one-half (1/2) month salary" as used under
the law.
The Court, in the case of Elegir v. Philippine Airlines,Inc., 35 has recently affirmed that "one-half (1/2)
month salary means 22.5 days: 15 days plus 2.5 days representingone-twelfth (1/12) of the 13th month
pay and the remaining 5 days for [SIL]."36 The Court sees no reason to depart from this interpretation.
Unilever v. Rivera, G.R. No. 201701, June 3, 2013
FACTS:
Maria Ruby Rivera was employed as its Area Activation Executive for Area 9 South in the cities of
Cotabato and Davao by Unilever. She was charged with a) Conversion and Misappropriation of
Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues after an audit revealed
fictitious billings and fabricated receipts.
Rivera admitted the fund diversions, but explained that such actions were mere resourceful utilization of
budget because of the difficulty of procuring funds from the head office. 5 She insisted that the diverted
funds were all utilized in the company’s promotional ventures in her area of coverage.
Unilever found Rivera guilty of serious breach of the company’s Code of Business Principles compelling it
to sever their professional relations. In a letter, dated September 20, 2007, Rivera asked for
reconsideration and requested Unilever to allow her to receive retirement benefits having served the
company for fourteen (14) years already. Unilever denied her request, reasoning that the forfeiture of
retirement benefits was a legal consequence of her dismissal from work.
(LA) dismissed her complaint for lack of merit and denied her claim for retirement benefits
On appeal, the NLRC partially granted Rivera’s prayer. In its Resolution, dated November 28, 2008, the
NLRC held that although she was legally dismissed from the service for a just cause, Unilever was guilty
of violating the twin notice requirement in labor cases. Thus, Unilever was ordered to pay
her P30,000.00 as nominal damages, retirement benefits and separation pay.
the CA affirmed with modification the NLRC resolution. Justifying the deletion of the award of
retirement benefits, the CA explained that, indeed, under Unilever’s Retirement Plan, a validly dismissed
employee cannot claim any retirement benefit regardless of the length of service. Thus, Rivera is not
entitled to any retirement benefit. It stated, however, that there was no proof that she personally
gained any pecuniary benefit from her infractions, as her instructions were aimed at increasing the sales
efficiency of the company and competing in the local market. For said reason, the CA awarded
separation pay in her favor as a measure of social justice.
HELD: The award of retirement benefit is DELETED.
NO SEPARATION PAY
In this case, Rivera was dismissed from work because she intentionally circumvented a strict company
policy, manipulated another entity to carry out her instructions without the company’s knowledge and
approval, and directed the diversion of funds, which she even admitted doing under the guise of
shortening the laborious process of securing funds for promotional activities from the head office. These
transgressions were serious offenses that warranted her dismissal from employment and proved that
her termination from work was for a just cause. Hence, she is not entitled to a separation pay.
Women Workers
Provisions against discrimination
Art. 135, Labor Code
Article 135. Discrimination prohibited. It shall be unlawful for any employer to discriminate against any
woman employee with respect to terms and conditions of employment solely on account of her sex.
The following are acts of discrimination:
1. Payment of a lesser compensation, including wage, salary or other form of remuneration and
fringe benefits, to a female employees as against a male employee, for work of equal value; and
2. Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.
Criminal liability for the willful commission of any unlawful act as provided in this Article or any violation
of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as provided in Articles
288 and 289 of this Code: Provided, That the institution of any criminal action under this provision shall
not bar the aggrieved employee from filing an entirely separate and distinct action for money claims,
which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall
proceed independently of each other. (As amended by Republic Act No. 6725, May 12, 1989)
Chapter II, Sec. 4 (b), R.A. 9710, Magna Carta of Women
Sec 4. (b) "Discrimination Against Women" refers to any gender-based distinction, exclusion, or
restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or
exercise by women, irrespective of their marital status, on a basis of equality of men and women, of
human rights and fundamental freedoms in the political, economic, social, cultural, civil, or any other
field.
It includes any act or omission, including by law; policy, administrative measure, or practice, that
directly or indirectly excludes or restricts women in the recognition and promotion of their rights and
their access to and enjoyment of opportunities, benefits, or privileges.
FORM of DISCRIMINATION: A measure or practice of general application is discrimination against
women if it fails to provide for mechanisms to offset or address sex or gender-based disadvantages or
limitations of women, as a result of which women are denied or restricted in the recognition and
protection of their rights and in their access to and enjoyment of opportunities, benefits, or privileges;
or women, more than men, are shown to have suffered the greater adverse effects of those measures or
practices.
COMPOUNDED DISCRIMINATION: Provided, finally, That discrimination compounded by or intersecting
with other grounds, status, or condition, such as ethnicity, age, poverty, or religion shall be considered
discrimination against women under this Act.
Rule II, Sec. 7 (c), Implementing Rules of R.A. 9710
C. “Discrimination Against Women“ refers to any gender based distinction, exclusion, or restriction
which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or exercise by
women, irrespective of their marital status, on a basis of equality of men and women, of human rights
and fundamental freedoms in the political, economic, social, cultural, civil, or any other field. It includes
any act or omission, including by law, policy, administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their rights and their access
to and enjoyment of opportunities, benefits, or privileges. A measure or practice of general application
is discrimination against women if it fails to provide for mechanisms to offset or address sex or gender
based disadvantages or limitations of women, as a result of which women are denied or restricted in the
recognition and protection of their rights and in their access to and enjoyment of opportunities,
benefits, or privileges; or women, more than men, are shown to have suffered the greater adverse
effects of those measures or practices. Provided, finally, That discrimination compounded by or
intersecting with other grounds, status, or condition, such as ethnicity, age, poverty, or religion shall be
considered discrimination against women under the Act;
Rule V, Sec. 25, Implementing Rules of R.A. 9710
SECTION 25. Right to Decent Work – The State shall progressively realize and ensure decent work
standards for women that involve the creation of jobs of acceptable quality in conditions of freedom,
equity, security, and human dignity.
A. The DOLE in the case of private sector and the CSC in the case of public sector shall:
1. Advance women’s right to decent work by promoting women’s rights at work,
creating opportunities for women employment, enhancing social protection
coverage, and strengthening tripartism and social dialogue. To achieve this, the
DOLE and CSC shall facilitate adequate consultative mechanisms with workers and
employers groups, government and non-government organizations;
2. Together with other concerned agencies ensure the provision of support services
and gears to protect women from occupational and health hazards taking into
account women’s maternal functions. Further:
a. Women workers shall be protected against safety and health hazards,
including, but not limited to, exposure to hazardous chemicals, infections,
conditions leading to musculoskeletal disorders, work environment leading
to noise-induces hearing loss, and exposure to radiation and psychological
stressors.
b. By reason of the hazardous nature of work that may cause injury or
impairment in the function of any part of the body, every employer shall
provide their women employees with appropriate personal protective
equipment (PPE) to prevent injury or impairment in any part of their bodies
as well as ensure proper maintenance of the PPE used in the workplace.
c. The DOLE, through its concerned agencies, shall make available
occupational safety and health (OSH)- related programs and services to
women workers in the formal and informal sectors. These include, but are
not limited to, the conduct of OSH orientations and trainings, medical
surveillance and research, screening tests for reproductive tract diseases,
provisions for technical support/advice, and development of information,
education and communication materials.
3. Work closely with both the employers and unions or worker representatives, in the
private sector in promoting a safe and healthy workplace. Further:
a. Employers both in the public and private sectors shall provide services in
support to balancing family obligations and work responsibilities. These
include family health services but not limited to: day care and child minding
centers, breastfeeding or lactation stations with appropriate facilities and
corresponding nursing/lactation breaks, health education, counseling on
breastfeeding, seminars on responsible parenthood and family planning,
non-sexist child-rearing, shared parenting and family responsibility, annual
family day, flexible work arrangements, and anti-sexual harassment
initiatives.
Compliance by government agencies and private employers shall be
monitored by the CSC and DOLE, respectively. In establishing facilities as
required by law, the LGUs shall make compliance thereof a pre-requisite in
the grant of any form of building and business permit.
b. In the exercise of their labor rights, women workers are free to exercise
their right to self-organization and are encouraged to form unions and join
associations. The DOLE and CSC shall ensure that such rights are respected
regardless of the workers’ status and place of employment. DOLE and CSC
shall also support programs that will encourage women to develop their
leadership skills to accelerate their qualifications in positions of leadership.
c. Employees who are members of indigenous communities shall be allowed
to observe their cultural practices in the workplace provided that the
employer is notified by the applicant or employee about the cultural
practice/s that she needs to observe and the cultural practice/s will neither
hamper work efficiency of the employee nor be prejudicial to the operation
of the workplace.
B. In recognition of the temporary nature of overseas work and the need to exert all
efforts to address the causes of out-migration, the National Anti-Poverty Commission
(NAPC), in the exercise of its oversight functions in the implementation of the Social
Reform Agenda, shall ensure that policies and programs in addressing poverty reduction
as well as initiatives taken by civil society and the basic sectors shall include local
employment and other economic opportunities for women.
C. DTI, DOLE, other concerned government agencies, and the LGUs shall initiate
investment friendly policies, systems, programs and procedures as well as provide
technical assistance and supporting financial arrangements to returning women migrant
workers to help them establish local business.
D. The DFA, DOLE, Philippine Overseas Employment Administration (POEA), and Overseas
Workers' Welfare Administration (OWWA) shall be responsible in protecting the rights
and promoting the welfare of women migrant workers especially those classified under
the vulnerable skills categories. These agencies shall review and forge bilateral and
multilateral labor agreements to ensure safe migration, better work conditions that will
curb violence against women migrant workers; conduct professional and personal
development among women migrant workers through livelihood and skills development
trainings, seminars, and scholarship grants; and mainstream entrepreneurship and GAD
in skills training, counseling and other support services for the families of the migrant
workers.
Stipulations against marriage
Art. 136, Labor Code
Article 136. Stipulation against marriage. It shall be unlawful for an employer:
1. to require as a condition of employment or continuation of employment that a woman
employee shall not get married, or
2. to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or
3. to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely
by reason of her marriage.
See Philippine Telegraph v. NLRC, G.R. No. 118978, May 23, 1997
FACTS:
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary Project
Worker.
She was again hired as probationary employee, In the job application form that was furnished her to be
filled up for the purpose, she indicated in the portion for civil status therein that she was single although
she had contracted marriage a few months earlier, that is, on May 26, 1991. private respondent had
made the same representation in the two successive reliever agreements which she signed on June 10,
1991 and July 8, 1991
PT & T branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum
dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was
reminded about the company's policy of not accepting married women for employment.
Grace was dismissed
LA: Discrimination
NLRC: Discrimination but deserved to be suspended for three months in view of the dishonest nature of
her acts which should not be condoned
HELD:
petitioner's policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women
workers by our labor laws and by no less than the Constitution. Contrary to petitioner's assertion that it
dismissed private respondent from employment on account of her dishonesty, the record discloses
clearly that her ties with the company were dissolved principally because of the company's policy that
married women are not qualified for employment in PT & T, and not merely because of her supposed
acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial,
the branch supervisor of the company, with the reminder, in the words of the latter, that "you're fully
aware that the company is not accepting married women employee (sic), as it was verbally instructed to
you." 21 Again, in the termination notice sent to her by the same branch supervisor, private respondent
was made to understand that her severance from the service was not only by reason of her concealment
of her married status but, over and on top of that, was her violation of the company's policy against
marriage ("and even told you that married women employees are not applicable [sic] or accepted in our
company.") 22 Parenthetically, this seems to be the curious reason why it was made to appear in the
initiatory pleadings that petitioner was represented in this case only by its said supervisor and not by its
highest ranking officers who would otherwise be solidarily liable with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status from PT & T could not be
properly characterized as willful or in bad faith as she was moved to act the way she did mainly because
she wanted to retain a permanent job in a stable company. In other words, she was practically forced by
that very same illegal company policy into misrepresenting her civil status for fear of being disqualified
from work. While loss of confidence is a just cause for termination of employment, it should not be
simulated. 24 It must rest on an actual breach of duty committed by the employee and not on the
employer's caprices. 25 Furthermore, it should never be used as a subterfuge for causes which are
improper, illegal, or unjustified.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it nonetheless takes
umbrage over the concealment of that fact. This improbable reasoning, with interstitial distinctions,
perturbs the Court since private respondent may well be minded to claim that the imputation of
dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its policy against its
female employees contracting marriage, what could be an act of insubordination was inconsequential.
What it submits as unforgivable is her concealment of that marriage yet, at the same time, declaring
that marriage as a trivial matter to which it supposedly has no objection. In other words, PT & T says it
gives its blessings to its female employees contracting marriage, despite the maternity leaves and other
benefits it would consequently respond for and which obviously it would have wanted to avoid. If that
employee confesses such fact of marriage, there will be no sanction; but if such employee conceals the
same instead of proceeding to the confessional, she will be dismissed. This line of reasoning does not
impress us as reflecting its true management policy or that we are being regaled with responsible
advocacy.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs. Philippine
Air Lines, 33 a decision that emanated from the Office of the President. There, a policy of Philippine Air
Lines requiring that prospective flight attendants must be single and that they will be automatically
separated from the service once they marry was declared void, it being violative of the clear mandate in
Article 136 of the Labor Code with regard to discrimination against married women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial
Corporation 34considered as void a policy of the same nature. In said case, respondent, in dismissing
from the service the complainant, invoked a policy of the firm to consider female employees in the
project it was undertaking as separated the moment they get married due to lack of facilities for married
women.
Under American jurisprudence, job requirements which establish employer preference or conditions
relating to the marital status of an employee are categorized as a "sex-plus" discrimination where it is
imposed on one sex and not on the other. Further, the same should be evenly applied and must not
inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws.
Employment rules that forbid or restrict the employment of married women, but do not apply to
married men, have been held to violate Title VII of the United States Civil Rights Act of 1964, the main
federal statute prohibiting job discrimination against employees and applicants on the basis of, among
other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just against married
women. And, where the employer discriminates against married women, but not against married men,
the variable is sex and the discrimination is unlawful. 36 Upon the other hand, a requirement that a
woman employee 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. Thus, in one case, a no-marriage rule applicable to both male and female flight attendants,
was regarded as unlawful since the restriction was not related to the job performance of the flight
attendants.
See Duncan v. Glaxo, G.R. No. 162994, September 17, 2004
FACTS:
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as
medical representative.
The contract of employment provides:
10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose
a possible conflict of interest in management discretion, you agree to resign voluntarily from the
Company as a matter of Company policy.
Glaxo’s Employee Handbook provides:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may run counter to
the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any competitor supplier
or other businesses which may consciously or unconsciously influence their actions or decisions
and thus deprive Glaxo Wellcome of legitimate profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of Company plans to
advance their outside personal interests, that of their relatives, friends and other businesses.
c. To avoid outside employment or other interests for income which would impair their effective
job performance.
d. To consult with Management on such activities or relationships that may lead to conflict of
interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity with coemployees of competing drug companies are expected to disclose such relationship to the
Management. If management perceives a conflict or potential conflict of interest, every effort
shall be made, together by management and the employee, to arrive at a solution within six (6)
months, either by transfer to another department in a non-counter checking position, or by
career preparation toward outside employment after Glaxo Wellcome. Employees must be
prepared for possible resignation within six (6) months, if no other solution is feasible.
Tecson married Bettsy, an employee of Astra Pharmaceuticals 3(Astra), a competitor of Glaxo. Bettsy was
Astra’s Branch Coordinator in Albay. She supervised the district managers and medical representatives
of her company and prepared marketing strategies for Astra in that area.
Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson’s
superiors reminded him that he and Bettsy should decide which one of them would resign from their
jobs, although they told him that they wanted to retain him as much as possible because he was
performing his job well.
Tecson was transferred which transfer he opposed. Tecson and Glaxo entered into voluntary arbitration
(NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees
and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to
another sales territory.
CA: The appellate court held that Glaxo’s policy prohibiting its employees from having personal
relationships with employees of competitor companies is a valid exercise of its management
prerogatives.
ISSUE: are the company policies discriminatory?
HELD: NO
The prohibition against personal or marital relationships with employees of competitor companies upon
Glaxo’s employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims
to protect its interests against the possibility that a competitor company will gain access to its secrets
and procedures.
it is a legitimate business practice to guard business confidentiality and protect a competitive position by
even-handedly disqualifying from jobs male and female applicants or employees who are married to a
competitor. Consequently, the court ruled than an employer that discharged an employee who was
married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of
1964.23The Court pointed out that the policy was applied to men and women equally, and noted that the
employer’s business was highly competitive and that gaining inside information would constitute a
competitive advantage.
In any event, from the wordings of the contractual provision and the policy in its employee handbook, it
is clear that Glaxo does not impose an absolute prohibition against relationships between its employees
and those of competitor companies. Its employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely seeks to avoid is a conflict of interest
between the employee and the company that may arise out of such relationships.
The Court of Appeals also correctly noted that the assailed company policy which forms part of
respondent’s Employee Code of Conduct and of its contracts with its employees, such as that signed by
Tescon, was made known to him prior to his employment. Tecson, therefore, was aware of that
restriction when he signed his employment contract and when he entered into a relationship with
Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should be complied with in good
faith."29 He is therefore estopped from questioning said policy.
Star Paper v. Simbol, G.R. No. 164774, April 12, 2006
FACTS:
Company policy promulgated in 1995,:
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree
of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one of
them should resign to preserve the policy stated above. 3
LA: Dismissed complaint
NLRC: Affirmed LA
CA: Reversed NLRC
Company allege that its policy "may appear to be contrary to Article 136 of the Labor Code" but it
assumes a new meaning if read together with the first paragraph of the rule. The rule does not require
the woman employee to resign. The employee spouses have the right to choose who between them
should resign. Further, they are free to marry persons other than co-employees. Hence, it is not the
marital status of the employee, per se, that is being discriminated. It is only intended to carry out its noemployment-for-relatives-within-the-third-degree-policy which is within the ambit of the prerogatives
of management
ISSUE: whether the policy of the employer banning spouses from working in the same company violates
the rights of the employee under the Constitution and the Labor Code or is a valid exercise of
management prerogative.
HELD:
It is true that the policy of petitioners prohibiting close relatives from working in the same company
takes the nature of an anti-nepotism employment policy. Companies adopt these policies to prevent the
hiring of unqualified persons based on their status as a relative, rather than upon their ability. 17 These
policies focus upon the potential employment problems arising from the perception of favoritism
exhibited towards relatives.
With more women entering the workforce, employers are also enacting employment policies specifically
prohibiting spouses from working for the same company. We note that two types of employment
policies involve spouses: policies banning only spouses from working in the same company (no-spouse
employment policies), and those banning all immediate family members, including spouses, from
working in the same company (anti-nepotism employment policies).
courts that have broadly26 construed the term "marital status" rule that it encompassed the identity,
occupation and employment of one's spouse. They strike down the no-spouse employment policies
based on the broad legislative intent of the state statute. They reason that the no-spouse employment
policy violate the marital status provision because it arbitrarily discriminates against all spouses of
present employees without regard to the actual effect on the individual's qualifications or work
performance.27 These courts also find the no-spouse employment policy invalid for failure of the
employer to present any evidence of business necessity other than the general perception that spouses
in the same workplace might adversely affect the business. 28 They hold that the absence of such a bona
fide occupational qualification29 invalidates a rule denying employment to one spouse due to the
current employment of the other spouse in the same office. 30 Thus, they rule that unless the employer
can prove that the reasonable demands of the business require a distinction based on marital status and
there is no better available or acceptable policy which would better accomplish the business purpose, an
employer may not discriminate against an employee based on the identity of the employee’s
spouse.31 This is known as thebona fide occupational qualification exception.
We note that since the finding of a bona fide occupational qualification justifies an employer’s nospouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a
compelling business necessity for which no alternative exists other than the discriminatory practice. 32 To
justify a bona fide occupational qualification, the employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of the job involved; and, (2)
that there is a factual basis for believing that all or substantially all persons meeting the qualification
would be unable to properly perform the duties of the job.
We do not find a reasonable business necessity in the case at bar.
It is significant to note that in the case at bar, respondents were hired after they were found fit for the
job, but were asked to resign when they married a co-employee. Petitioners failed to show how the
marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how
this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting
Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised
on the mere fear that employees married to each other will be less efficient. If we uphold the
questioned rule without valid justification, the employer can create policies based on an unproven
presumption of a perceived danger at the expense of an employee’s right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee, but
they are free to marry persons other than co-employees. The questioned policy may not facially violate
Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact
theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business
concern in imposing the questioned policy cannot prejudice the employee’s right to be free from
arbitrary discrimination based upon stereotypes of married persons working together in one company. 40
Prohibited Acts
Art. 137, Labor Code
Article 137. Prohibited acts.
It shall be unlawful for any employer:
1. To deny any woman employee the benefits provided for in this Chapter or
2. to discharge any woman employed by him for the purpose of preventing her from enjoying any
of the benefits provided under this Code.
3. To discharge such woman on account of her pregnancy, or while on leave or in confinement due
to her pregnancy;
4. To discharge or refuse the admission of such woman upon returning to her work for fear that
she may again be pregnant.
Del Monte v. Velasco, G.R. No. 153477, March 6, 2007
FACTS:
Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) on October 21,
1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field
Laborer.
Del Monte terminated the services of respondent effective January 16, 1994 due to excessive absences
without permission
Velasco filed a case for illegal dismissal against petitioner asserting that her dismissal was illegal because
she was on the family way suffering from urinary tract infection, a pregnancy-borne, at the time she
committed the alleged absences. She explained that for her absence from work on August 15, 16, 17 &
18, 1994 she had sent an application for leave to her supervisor, Prima Ybañez. Thereafter, she went to
the company hospital for check-up and was advised accordingly to rest in quarters for four (4) days or on
August 27 to 30, 1994. Still not feeling well, she failed to work on September 1, 1994 and was again
advised two days of rest in quarters on September 2-3, 1994. Unable to recover, she went to see an
outside doctor, Dr. Marilyn Casino, and the latter ordered her to rest for another five (5) consecutive
days, or from September 5 to 9, 1994. She declared she did not file the adequate leave of absence
because a medical certificate was already sufficient per company policy. On September 10, 1994 she
failed to report to work but sent an application for leave of absence to her supervisor, Prima Ybañez,
which was not anymore accepted.
LA: Dismissed complaint
NLRC: Reversed LA. petitioner is guilty of unlawfully discharging respondent on account of her
pregnancy under Article 137(2) of the Labor Code; and, that petitioner’s reference to the previous
absenteeism of respondent is misplaced because the latter had already been penalized therefor.
CA: Affirmed NLRC. the CA held that absences due to a justified cause cannot be a ground for dismissal;
that it is undisputed that the respondent was pregnant at the time she incurred the absences in
question. that it is undisputed that respondent’s sickness was pregnancy-related; that under Article
137(2) of the Labor Code, the petitioner committed a prohibited act in discharging a woman on account
of her pregnancy.
HELD:
In this case, by the measure of substantial evidence, what is controlling is the finding of the NLRC and
the CA that respondent was pregnant and suffered from related ailments. It would be unreasonable to
isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge Summary. It
can be safely assumed that the absences that are not covered by, but which nonetheless approximate,
the dates stated in the Discharge Summary and Medical Certificate, are due to the continuing condition
of pregnancy and related illnesses, and, hence, are justified absences.
In this jurisdiction tardiness and absenteeism, like abandonment, are recognized forms of neglect of
duties, the existence of which justify the dismissal of the erring employee. Respondent’s rule penalizing
with discharge any employee who has incurred six (6) or more absences without permission
or subsequent justification is admittedly within the purview of the foregoing standard.
However, while it is not disputed that complainant incurred absences exceeding six (6) days as she
actually failed to report for work from August 15-18, 23-26, 29-31, September 1-3, 5-10, 12-17, 21-24,
26-30, and October 1-3, 1994, her being pregnant at the time these absences were incurred is not
questioned and is even admitted by respondent. It thus puzzles us why respondent asserts complainant
failed to explain satisfactorily her absences on August 15-18, 29-31, September 1-3 and 5-10, 1994, yet
reconsidered the rest of her absences for being covered with "rest-in-quarters" (RIQ) advice from its
hospital personnel when this advice was unquestionably issued in consideration of the physiological and
emotional changes complainant, a conceiving mother, naturally developed. Medical and health reports
abundantly disclose that during the first trimester of pregnancy, expectant mothers are plagued with
morning sickness, frequent urination, vomiting and fatigue all of which complainant was similarly
plagued with. Union official IBB Lesna’s observation on complainant being [sic] apparently not feeling
well during the investigation conducted by respondent on October 5, 1994 even remains in the
records of said proceedings. For respondent to isolate the absences of complainant in August and midSeptember, 1994 from the absences she incurred later in said month without submitting any evidence
that these were due to causes not in manner associated with her [ ] condition renders its justification
of complainant’s dismissal clearly not convincing under the circumstances.
Despite contrary declaration, the records bear the admission of respondent’s P/A North Supervisor,
PB Ybanez, of her receipt of the hospital record showing complainant’s RIQ advice for August 19-20,
1994 which could already serve as respondent’s reference in resolving the latter’s absences on August
15 to 18, 1994. Respondent further admitted complainant was under RIQ advice on September 2-3,
1994, yet, insisted in including these dates among her 16 purported unexplained absences justifying
termination of her employment.
Petitioner’s contention that the cause for the dismissal was gross and habitual neglect unrelated to her
state of pregnancy is unpersuasive.
The Court agrees with the CA in concluding that respondent’s sickness was pregnancy-related and,
therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will, in
effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of
the latter’s pregnancy.
The undeniable fact is that during her complained absences in 1994, respondent was pregnant and
suffered related illnesses. Again, it must be stressed that respondent’s discharge by reason of absences
caused by her pregnancy is covered by the prohibition under the Labor Code. Since her last string of
absences is justifiable and had been subsequently explained, the petitioner had no legal basis in
considering these absences together with her prior infractions as gross and habitual neglect.
Anti-Sexual Harassment Act, R.A. 7877
WHERE: Work, education or training-related sexual harassment
WHO: committed by:
1. an employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or
2. any other person who, having authority, influence or moral ascendancy over another in
a work or training or education environment,
HOW: demands, requests or otherwise requires any sexual favor from the other, regardless of whether
the demand, request or requirement for submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual harassment is committed when:
(1) The sexual favor is:
-
-
made as a condition in the hiring or in the employment, re-employment or continued
employment of said individual, OR in granting said individual favorable compensation, terms of
conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting, segregating or classifying the employee
which in any way would discriminate, deprive or diminish employment opportunities
OR otherwise adversely affect said employee;
COUPLED WITH ANY OF THE TWO:
(2) The above acts would impair the employee's rights or privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.
(b) In an education or training environment, sexual harassment is committed:
(1) Against one who is under the care, custody or supervision of the offender;
(2) Against one whose education, training, apprenticeship or tutorship is entrusted to the offender;
(3) When the sexual favor is made a condition to the giving of a passing grade, or the granting of honors
and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or consideration;
or
(4) When the sexual advances result in an intimidating, hostile or offensive environment for the student,
trainee or apprentice.
1 and 3 OR 4
2 and 3 OR 4
OTHER PERSONS LIABLE: Any person who directs or induces another to commit any act of sexual
harassment as herein defined, or who cooperates in the commission thereof by another without which
it would not have been committed, shall also be held liable under this Act.
When employer liable: informed but no action taken = solidarily liable
Implementing Rules, RA 7877
Domingo v. Rayala, GR 155831, February 18, 2008
FACTS:
Domingo (Domingo), then Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment
against Rayala before Secretary Bienvenido Laguesma of the Department of Labor and Employment
(DOLE).
Domingo’s affidavit:
xxxx
4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman Rayala ng mga salitang Lot,
gumaganda ka yata?
5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at hahawakan ang aking balikat
sabay pisil sa mga ito habang ako ay nagta-type at habang nagbibigay siya ng
diktasyon. Sa mga pagkakataong ito, kinakabahan ako. Natatakot na baka mangyari sa
akin ang mga napapabalitang insidente na nangyari na noon tungkol sa mga sekretarya
niyang nagbitiw gawa ng mga mahahalay na panghihipo ni Chairman.
6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8 th Floor, may nagsabi sa akin na kailangan
akong bumaba sa 7th Floor kung nasaan ang aming opisina dahil sa may koreksyon daw
na gagawin sa mga papel na tinayp ko. Bumaba naman ako para gawin ito. Habang
ginagawa ko ito, lumabas si Chairman Rayala sa silid ni Mr. Alex Lopez. Inutusan ako ni
Chairman na sumunod sa kaniyang silid. Nang nasa silid na kami, sinabi niya sa akin:
Chairman: Lot, I like you a lot. Naiiba ka sa lahat.
At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na bagay sa aking buhay. Ang ilan
dito ay tungkol sa aking mga magulang, kapatid, pag-aaral at kung may boyfriend na raw ba ako.
Chairman: May boyfriend ka na ba?
Lourdes: Dati nagkaroon po.
Chairman: Nasaan na siya?
Lourdes: Nag-asawa na ho.
Chairman: Bakit hindi kayo nagkatuluyan?
Lourdes: Nainip po.
Chairman: Pagkatapos mo ng kurso mo ay kumuha ka ng Law at ako ang
bahala sa iyo, hanggang ako pa ang Chairman dito.
Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at inaabot sa akin.
Chairman: Kuhanin mo ito.
Lourdes: Huwag na ho hindi ko kailangan.
Chairman: Hindi sige, kuhanin mo. Ayusin mo ang dapat ayusin.
Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at kinakabahan na kapag hindi ko
tinanggap ang pera ay baka siya magagalit kasabay na rito ang pagtapon sa akin kung saan-saan
opisina o kaya ay tanggalin ako sa posisyon.
Chairman: Paglabas mo itago mo ang pera. Ayaw ko ng may makaka-alam
nito. Just the two of us.
Lourdes: Bakit naman, Sir?
Chairman: Basta. Maraming tsismosa diyan sa labas. But I dont give them a
damn. Hindi ako mamatay sa kanila.
Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at pumunta ako sa officemate ko na si
Agnes Magdaet. Ikinwento ko ang nangyari sa akin sa opisina ni Chairman. Habang kinikwento ko
ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng tatlong libong piso (PHP
3,000). Sinabi ni Agnes na isauli ko raw ang pera, pero ang sabi ko ay natatakot ako baka magalit
si Sir. Nagsabi agad kami kay EC Perlita Velasco at sinalaysay ko ang nangyari. Sinabi niya na isauli
ko ang pera at noong araw ding iyon ay nagpasiya akong isauli na nga ito ngunit hindi ako
nagkaroon ng pagkakataon dahil marami siyang naging bisita. Isinauli ko nga ang pera noong
Lunes, Setyembre 14, 1998.
7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa akin si Chairman Rayala na
hindi ko masikmura, at sa aking palagay at tahasang pambabastos sa akin.
Chairman: Lot, may ka live-in ka ba?
Lourdes: Sir, wala po.
Chairman: Bakit malaki ang balakang mo?
Lourdes: Kayo, Sir ha! Masama sa amin ang may ka live-in.
Chairman: Bakit, ano ba ang relihiyon ninyo?
Lourdes: Catholic, Sir. Kailangan ikasal muna.
Chairman: Bakit ako, hindi kasal.
Lourdes: Sir, di magpakasal kayo.
Chairman: Huh. Ibahin na nga natin ang usapan.
8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman Rayala. Ito ay sa
kadahilanang ang fax machine ay nasa loob ng kaniyang kwarto. Ang nag-aasikaso nito, si Riza
Ocampo, ay naka-leave kaya ako ang nag-asikaso nito noong araw na iyon. Nang mabigyan ko na
ng fax tone yung kausap ko, pagharap ko sa kanan ay nakaharang sa dadaanan ko si Chairman
Rayala.Tinitingnan ako sa mata at ang titig niya ay umuusad mula ulo hanggang dibdib tapos ay
ngumiti na may mahalay na pakahulugan.
9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na sekretarya sa opisina, sinabi
ko ito kay Chairman Rayala:
Lourdes: Sir, si Pinky po yung applicant, mag-papainterview po yata sa inyo.
Chairman: Sabihin mo magpa-pap smear muna siya
Chairman: O sige, i-refer mo kay Alex. (Alex Lopez, Chief of Staff).
10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala sa kaniyang opisina upang
kuhanin ko ang diktasyon niya para kay ELA Oscar Uy. Hindi pa kami nakakatapos ng unang
talata, may pumasok na bisita si Chairman, si Baby Pangilinan na sinamahan ni Riza
Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na si Ms. Pangilinan, pinapasok na
niya ako ulit. Umupo ako. Lumapit sa likuran ko si Chairman, hinawakan ang kaliwang balikat ko
na pinipisil ng kanang kamay niya at sinabi:
Chairman: Saan na ba tayo natapos?
Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto siya pagkatapos, at nilagay niya
ang kanang kamay niya sa aking kanang balikat at pinisil-pisil ito pagkatapos ay pinagapang niya
ito sa kanang bahagi ng aking leeg, at pinagapang hanggang kanang tenga at saka kiniliti. Dito ko
inalis ang kaniyang kamay sa pamamagitan ng aking kaliwang kamay. At saka ko sinabi:
Lourdes: Sir, yung kamay ninyo alisin niyo!
Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na maintindihan ang na-isulat
ko dahil sa takot at inis na nararamdaman ko.
Office of the President: Guilty, dismissed from service
CA: Affirmed OP but penalty of dismissal is DELETED and instead the penalty of suspension from service
for the maximum period of one (1) year is HEREBY IMPOSED upon the petitioner. The rest of the
challenged decision stand
Invoking Aquino v. Acosta,[24] Rayala argues that the case is the definitive ruling on what constitutes
sexual harassment. Thus, he posits that for sexual harassment to exist under RA 7877, there must be: (a)
demand, request, or requirement of a sexual favor; (b) the same is made a pre-condition to hiring, reemployment, or continued employment; or (c) the denial thereof results in discrimination against the
employee.
Rayala asserts that Domingo has failed to allege and establish any sexual favor, demand, or request from
petitioner in exchange for her continued employment or for her promotion.
HELD: Favor, demand, request not necessary
contrary to Rayalas claim, it is not essential that the demand, request or requirement be made as a
condition for continued employment or for promotion to a higher position. It is enough that the
respondents acts result in creating an intimidating, hostile or offensive environment for the employee.
[45]
That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly
shown by the common factual finding of the Investigating Committee, the OP and the CA that Domingo
reported the matter to an officemate and, after the last incident, filed for a leave of absence and
requested transfer to another unit.
Rayalas invocation of Aquino v. Acosta[46] is misplaced, because the factual setting in that case is
different from that in the case at bench. In Aquino, Atty. Susan Aquino, Chief of the Legal and Technical
Staff of the Court of Tax Appeals (CTA), charged then CTA Presiding Judge (now Presiding Justice)
Ernesto Acosta of sexual harassment. She complained of several incidents when Judge Acosta allegedly
kissed her, embraced her, and put his arm around her shoulder. The case was referred to CA Justice
Josefina G. Salonga for investigation. In her report, Justice Salonga found that the complainant failed to
show by convincing evidence that the acts of Judge Acosta in greeting her with a kiss on the cheek, in a
`beso-beso fashion, were carried out with lustful and lascivious desires or were motivated by malice or ill
motive. It is clear from the circumstances that most of the kissing incidents were done on festive and
special occasions, and they took place in the presence of other people and the same was by reason of
the exaltation or happiness of the moment. Thus, Justice Salonga concluded:
In all the incidents complained of, the respondent's pecks on the cheeks of the complainant should be
understood in the context of having been done on the occasion of some festivities, and not the assertion
of the latter that she was singled out by Judge Acosta in his kissing escapades. The busses on her cheeks
were simply friendly and innocent, bereft of malice and lewd design. The fact that respondent judge
kisses other people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by Atty.
Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated that they usually practice
'beso-beso' or kissing on the cheeks, as a form of greeting on occasions when they meet each other, like
birthdays, Christmas, New Year's Day and even Valentine's Day, and it does not matter whether it is
Judge Acosta's birthday or their birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's
department, further attested that on occasions like birthdays, respondent judge would likewise greet
her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one of several festive occasions,
female employees of the CTA pecked respondent judge on the cheek where Atty. Aquino was one of
Judge Acosta's well wishers.
In sum, no sexual harassment had indeed transpired on those six occasions. Judge Acosta's acts of
bussing Atty. Aquino on her cheek were merely forms of greetings, casual and customary in nature. No
evidence of intent to sexually harass complainant was apparent, only that the innocent acts of 'besobeso' were given malicious connotations by the complainant. In fact, she did not even relate to anyone
what happened to her. Undeniably, there is no manifest sexual undertone in all those incidents. [47]
This Court agreed with Justice Salonga, and Judge Acosta was exonerated.
To repeat, this factual milieu in Aquino does not obtain in the case at bench. While in Aquino, the Court
interpreted the acts (of Judge Acosta) as casual gestures of friendship and camaraderie, done during
festive or special occasions and with other people present, in the instant case, Rayalas acts of holding
and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, and the
inappropriate comments, were all made in the confines of Rayalas office when no other members of his
staff were around.More importantly, and a circumstance absent in Aquino, Rayalas acts, as already
adverted to above, produced a hostile work environment for Domingo, as shown by her having reported
the matter to an officemate and, after the last incident, filing for a leave of absence and requesting
transfer to another unit.
IV Termination of Employment
Employer-Employee Relationship
Four-fold test
In determining the existence of an employer-employee relationship, this Court has generally relied on
the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished. 29 Among the four, the most determinative
factor in ascertaining the existence of employer-employee relationship is the "right of control test". 30 "It
is deemed to be such an important factor that the other requisites may even be disregarded." 31 This
holds true where the issues to be resolved is whether a person who performs work for another is the
latter’s employee or is an independent contractor, 32 as in this case. For where the person for whom the
services are performed reserves the right to control not only the end to beachieved, but also the means
by which such end is reached, employer-employee relationship is deemed to exist.
Power of Control: - Most important, determinative factor
1. Over the results
2. Over the means and methods to achieve the results
-
Look into the written contract, but it is a matter of law and does not depend on what the parties
characterize their relationship. Characterization of the parties, however, may not be set aside
and can be an aid as to their intention
Royale Homes v. Alcantara, G.R. No. 195190, July 28, 2014 – Independent
Contractor
Alcantara is not an employee but a mere independent contractor.
In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and periodic
evaluation alluded to by Alcantara do not involve control over the means and methods by which he was
to perform his job. Understandably, Royale Homes has to fix the price, impose requirements on
prospective buyers, and lay down the terms and conditions of the sale, including the mode of
payment, which the independent contractors must follow. It is also necessary for Royale Homes to
allocate its inventories among its independent contractors, determine who has priority in selling the
same, grant commission or allowance based on predetermined criteria, and regularly monitor the
result of their marketing and sales efforts. But tothe mind of this Court, these do not pertain to the
means and methods of how Alcantara was to perform and accomplish his task of soliciting sales. They do
not dictate upon him the details of how he would solicit sales or the manner as to how he would
transact business with prospective clients. In Tongko, this Court held that guidelines or rules and
regulations that do notpertain to the means or methods to be employed in attaining the result are not
indicative of control as understood inlabor law.
Notably, Alcantara was not required to observe definite working hours. 39 Except for soliciting sales,
RoyaleHomes did not assign other tasks to him. He had full control over the means and methods of
accomplishing his tasks as he can "solicit sales at any time and by any manner which [he may] deem
appropriate and necessary." He performed his tasks on his own account free from the control and
direction of Royale Homes in all matters connected therewith, except as to the results thereof
As provided in the contract, Alcantara’s remunerations consist only of commission override of 0.5%,
budget allocation, sales incentive and other forms of company support. There is no proof that he
received fixed monthly salary. No payslip or payroll was ever presented and there is no proof that
Royale Homes deducted from his supposed salary withholding tax or that it registered him with the
Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint
merely states a ballpark figure of his alleged salary of P100,000.00, more or less.
Do not expect the employer not to exercise some form of control, they will exercise a degree of control
in order to protect their interests.
FACTS:
Legend Hotel v. Realuyo, G.R. No. 153511, July 18, 2012 – Power of Control
over a Pianist
petitioner denied the existence of an employer-employee relationship with respondent, insisting that he
had been only a talent engaged to provide live music at Legend Hotel’s Madison Coffee Shop for three
hours/day on two days each week; and stated that the economic crisis that had hit the country
constrained management to dispense with his services.
A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was
undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant.
First of all, petitioner actually wielded the power of selection at the time it entered into the service
contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence
that respondent had only offered his services to provide live music at petitioner’s Tanglaw Restaurant,
and despite petitioner’s position that what had really transpired was a negotiation of his rate and time
of availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioner’s restaurant manager, for
the increase of his remuneration
Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent
fees that were not included in the definition of wage under the Labor Code; and that such talent fees
were but the consideration for the service contract entered into between them.
The argument is baseless.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six
nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager
Velazco’s recommendation. There is no denying that the remuneration denominated as talent fees
was fixed on the basis of his talent and skill and the quality of the music he played during the hours of
performance each night, taking into account the prevailing rate for similar talents in the
entertainment industry.16
Respondent’s remuneration, albeit denominated as talent fees, was still considered as included in the
term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate
the remuneration.
Power of Control
Petitioner submits that it did not exercise the power of control over respondent and cites the following
to buttress its submission, namely: (a) respondent could beg off from his nightly performances in the
restaurant for other engagements; (b) he had the sole prerogative to play and perform any musical
arrangements that he wished; (c) although petitioner, through its manager, required him to play at
certain times a particular music or song, the music, songs, or arrangements, including the beat or tempo,
were under his discretion, control and direction; (d) the requirement for him to wear barong Tagalog to
conform with the Filipiniana motif of the venue whenever he performed was by no means evidence of
control; (e) petitioner could not require him to do any other work in the restaurant or to play the piano
in any other places, areas, or establishments, whether or not owned or operated by petitioner, during
the three hour period from 7:00 pm to 10:00 pm, three to six times a week; and (f) respondent could not
be required to sing, dance or play another musical instrument.
A review of the records shows, however, that respondent performed his work as a pianist under
petitioner’s supervision and control. Specifically, petitioner’s control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the following, to wit:
a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00
pm, three to six times a week;
b. He could not choose the place of his performance;
c. The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or
to wear barong Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees’ representation check and chits, a privilege granted to
other employees.
Relevantly, it is worth remembering that the employer need not actually supervise the performance of
duties by the employee, for it sufficed that the employer has the right to wield that power.
See Tan v. Lagrama, G.R. No. 151228, August 15, 2002 – Power of Control
over a Painter
In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent
contractor and never his employee, the evidence shows that the latter performed his work as painter
under the supervision and control of petitioner. Lagrama worked in a designated work area inside the
Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the
observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place
other than the toilet or the rest rooms. 9 Petitioner's control over Lagrama's work extended not only to
the use of the work area, but also to the result of Lagrama's work, and the manner and means by which
the work was to be accomplished.
Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the
materials used for the paintings, because he admitted that he paid Lagrama only for the latter's
services.10
Private respondent Lagrama claimed that he worked daily, from 8 o'clock in the morning to 5 o'clock in
the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per
week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one
week.11 Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week
proves regularity in his employment by petitioner.
Employer admitted power to fire Lagrama in his Position Paper
That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the
NLRC, the pertinent portions of which stated:
Complainant did not know how to use the available comfort rooms or toilets in and about his work
premises. He was urinating right at the place where he was working when it was so easy for him, as
everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had
to make a virtual urinal out of his work place! The place then stunk to high heavens, naturally, to the
consternation of respondents and everyone who could smell the malodor.
...
Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him
from his painting job upon discovery and his admission of such acts. Nonetheless, though thoroughly
scolded, he was not fired. It was he who stopped to paint for respondents. 12
By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his
employee. For the right to hire and fire is another important element of the employer-employee
relationship.13 Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work
but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an
employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which,
unless satisfactorily explained, can bring about some disciplinary action on the part of the employer.
Wages
That Lagrama worked for Tan on a fixed piece-work basis is of no moment. Payment by result is a
method of compensation and does not define the essence of the relation. 15 It is a method of computing
compensation, not a basis for determining the existence or absence of employer-employee relationship.
One may be paid on the basis of results or time expended on the work, and may or may not acquire an
employment status, depending on whether the elements of an employer-employee relationship are
present or not.16
SSS
The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of
whether he was an employee of petitioner. 21 Otherwise, an employer would be rewarded for his failure
or even neglect to perform his obligation.22
Kinds of employment
Probationary
GMA Network v. Pabriga, G.R. No. 176419, November 27, 2013
Five Kinds of Employment:
1.
2.
3.
4.
5.
Regular – Art 280
Casual – Art 280
Probationary
Project or Seasonal – Art 280
Fixed term – from jurisdprudence - Brent School, Inc. v. Zamora, 8 that such a contract, which
specifies that employment will last only for a definite period
Probationary – what are the grounds for termination of probationary employment
1. Just cause
2. Authorized Cause
3. Failure to qualify as regular employment
Art. 281, Labor Code
Book VI, Rule I, Sec. 6, Implementing Rules (Labor Code)
Carvajal v. Luzon Development Bank, G.R. No. 186169, August 1, 2012
Dismissed for chronic tardiness.
Was Carvajal informed of the standard of punctuality?
YES. At the time of her engagement and as mandated by law, petitioner was informed in writing of the
standards necessary to qualify her as a regular employee.
Punctuality is a reasonable standard imposed on every employee, whether in government or private
sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or
habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not
apprised of the standards concomitant to her job, it is but common sense that she must abide by the
work hours imposed by the bank. As we have aptly stated in Aberdeen Court, Inc. v. Agustin, Jr., 23 the
rule on reasonable standards made known to the employee prior to engagement should not be used to
exculpate a probationary employee who acts in a manner contrary to basic knowledge and common
sense, in regard to which there is no need to spell out a policy or standard to be met.
Due Process Complied with by Respondent
As we have underscored, respondent complied with the basic requirements of due process as defined in
Magtibay, Jr. Petitioner had more than sufficient knowledge of the standards her job entails.
Respondent had not been remiss in reminding petitioner, through memoranda, of the standards that
should be observed in aspiring for regularization.
Petitioner was even notified in two (2) memoranda regarding the bank’s displeasure over her chronic
tardiness. Every memorandum directed petitioner to explain in writing why she should not be subjected
to disciplinary action. Each time, petitioner acknowledged her fault and assured the bank that she
would, in her daily schedules, make adjustments to make amends. This certainly is compliance with due
process. Taken together with her low performance rating and other infractions, petitioner was called by
the head of Human Resources who discussed with her the reasons for the discontinuance of her
probationary appointment before she was formally served the termination letter on that very same day.
There was, in this case, full accordance to petitioner of the opportunity to be heard.
San Miguel v. Del Rosario, G.R. Nos. 168194 & 168603, December 13, 2005
And while it is true that by way of exception, the period of probationary employment may exceed six
months when the parties so agree, such as when the same is established by company policy, or when it
is required by the nature of the work, 20 none of these exceptional circumstance were proven in the
present case. Hence, respondent whose employment exceeded six months is undoubtedly a regular
employee of petitioner.
Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3, 2000,
is only temporary, and that the reckoning period of her probationary employment is September 4,
2000,21 she should still be declared a regular employee because by the time she was dismissed on March
12, 2001, her alleged probationary employment already exceeded six months, i.e., six months and eight
days to be precise. Thus, inCebu Royal Plant v. Deputy Minister of Labor,22 a worker was found to be a
regular employee notwithstanding the presentation by the employer of a Payroll Authority indicating
that said employee was hired on probation, since it was shown that he was terminated four days after
the 6th month of his purported probationary employment.
GR: After the lapse of six months still suffered or permitted to work – regular employment
EXCEPTIONS there is no regular employment even if employee continued to work after 6 months
1. Highly technical training – academics, teaching
Probationary employment contract – Include standards, company policy, letter
If no employment contract was ever furnished – regular otherwise
When probationary employment permissible:
2.
3.
4.
5.
When work requires special qualfications, training, experience
When work job position Involves permanent, stable, regular, permanent and not merely casual
When work not intended to circumvent employees right to security of tenure
When necessary or customary to the job involved
Regular
Art. 280, Labor Code
MEMORIZE
Article 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.
Common to regular, casual, project– work is necessary and desirable means regular employemnt
But even if work is necessary but only for limited time or for a season – project, seasonal, not regular
Casual becomes regular if work continues to exist
Book VI, Rule I, Sec. 5, a, Implementing Rules (Labor Code)
MacArthur Malicdem v. Marulas, G.R. No. 204406, February 26, 2014
Test
The test to determine whether employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer.
If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity, if not indispensability of that activity to the business
BUT – regular seasonal employee
Article 280 (now Article 294) 23 of the Labor Code governs the determination of whether an employee is a
regular or a project employee.24
Under this provision, there are two kinds of regular employees, namely: (1) those who were engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who became regular after one year of service, whether
continuous or broken, but only with respect to the activity for which they have been hired.
We distinguish these two types of regular employees from a project employee, or one whose
employment was fixed for a specific project or undertaking, whose completion or termination had been
determined at the time of engagement.
A careful look at the factual circumstances of this case leads us to the legal conclusion that the
respondents are regular and not project employees.
The primary standard in determining regular employment is the reasonable connection between the
particular activity performed by the employee and the employer's business or trade. This connection can
be ascertained by considering the nature ofthe work performed and its relation to the scheme of the
particular business, or the trade in its entirety. 25
FVR Skills v. Seva, G.R. No. 200857, October 22, 2014
Project employment
Omni Hauling v. Bon, G.R. No. 199388, September 3, 2014
A project employee is assigned to a project which begins and ends at determined or determinable
times.31 Unlike regular employees who may only be dismissed for just and/or authorized causes under
the Labor Code, the services of employees who are hired as "project employees" may be lawfully
terminated at the completion of the project. 32
According to jurisprudence, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees,"is whether or
not the employees were assigned to carry out a "specific project or undertaking," the duration (and
scope) of which were specified at the time they were engaged for that project. The project could either
be (1) a particular job or undertaking that is within the regular or usual business ofthe employer
company, but which is distinct and separate, and identifiable as such, from the other undertakings of
the company; or (2) a particular job or undertaking that is not within the regular business of the
corporation. In order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining a regular status, employers claiming that their workers are project
employees should not only prove that the duration and scope of the employment was specified at the
time they were engaged, but also that there was indeed a project.
Grounds for termination:
1. Just
2. Authorized
3. Completion of the project
Example: Construction industry
The best way to prove project employment: CONTRACT which defines specific project which is either
distinct and separate or a project not within the regular business
Project employment v. Fixed Term Employment
When fixed-term employment possible: 1. Fixed term 2. Employer and Employee agree in equal footing
Asos v. PNCC, G.R. No. 192394, July 3, 2013
3 months only for a project but worked for 2 years.
In the case at bar, petitioner worked continuously for more than two years after the supposed threemonth duration of his project employment for the NAIA II Project. While his appointment for said
project allowed such extension since it specifically provided that in case his "services are still needed
beyond the validity of the contract, the Company shall extend his services," there was no subsequent
contract or appointment that specified a particular duration for the extension. His services were just
extended indefinitely until "Personnel Action Form – Project Employment" dated July 7, 1998 was issued
to him which provided that his employment will end a few weeks later or on August 4, 1998. While for
first three months, petitioner can be considered a project employee of PNCC, his employment
thereafter, when his services were extended without any specification of as to the duration, made him a
regular employee of PNCC. And his status as a regular employee was not affected by the fact that he was
assigned to several other projects and there were intervals in between said projects since he enjoys
security of tenure.
For every termination of project employee – MUST BE REPORTED TO DOLE. Most IMPORTANT
REQUIREMENT
WHEN CAN A PROJECT EMPLOYEE BECOME REGULAR?
The Supreme Court ruled that a project employee or a member of a work pool may acquire the status of
a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project; and
2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the
usual business or trade of the employer.
See GMA Network v. Pabriga, G.R. No. 176419, November 27, 2013
The terms regular employment and project employment are taken from Article 280 of the Labor Code,
which also speaks of casual and seasonal employment:
ARTICLE 280. Regular and casual employment. – The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity actually exist.
A fifth classification, that of a fixed term employment, is not expressly mentioned in the Labor Code.
Nevertheless, this Court ruled in Brent School, Inc. v. Zamora, 8 that such a contract, which specifies that
employment will last only for a definite period, is not per se illegal or against public policy.
Whether respondents are regular or project employees
Pursuant to the above-quoted Article 280 of the Labor Code, employees performing activities which are
usually necessary or desirable in the employer’s usual business or trade can either be regular, project or
seasonal employees, while, as a general rule, those performing activities not usually necessary or
desirable in the employer’s usual business or trade are casual employees. The reason for this distinction
may not be readily comprehensible to those who have not carefully studied these provisions: only
employers who constantly need the specified tasks to be performed can be justifiably charged to uphold
the constitutionally protected security of tenure of the corresponding workers. The consequence of the
distinction is found in Article 279 of the Labor Code, which provides:
ARTICLE 279. Security of tenure. – In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
On the other hand, the activities of project employees may or may not be usually necessary or desirable
in the usual business or trade of the employer, as we have discussed in ALU-TUCP v. National Labor
Relations Commission,9 and recently reiterated in Leyte Geothermal Power Progressive Employees
Union-ALU-TUCP v. Philippine National Oil Company-Energy Development Corporation. 10 In said cases,
we clarified the term "project" in the test for determining whether an employee is a regular or project
employee:
It is evidently important to become clear about the meaning and scope of the term "project" in the
present context. The "project" for the carrying out of which "project employees" are hired would
ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project"
undertaking might not have an ordinary or normal relationship to the usual business of the employer. In
this latter case, the determination of the scope and parameters of the "project" becomes fairly easy. It is
unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship
to the usual business of the company; thus, for instance, it would be an unusual steel-making company
which would undertake the breeding and production of fish or the cultivation of vegetables. From the
viewpoint, however, of the legal characterization problem here presented to the Court, there should be
no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish
culture or the production of vegetables as "project employees," as distinguished from ordinary or
"regular employees," so long as the duration and scope of the project were determined or specified at
the time of engagement of the "project employees." For, as is evident from the provisions of Article 280
of the Labor Code, quoted earlier, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees," is whether or
not the "project employees" were assigned to carry out a "specific project or undertaking," the duration
(and scope) of which were specified at the time the employees were engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or the other of at least
two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking
that is within the regular or usual business of the employer company, but which is distinct and separate,
and identifiable as such, from the other undertakings of the company. Such job or undertaking begins
and ends at determined or determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A construction company ordinarily
carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in
Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City.
Employees who are hired for the carrying out of one of these separate projects, the scope and duration
of which has been determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully terminated at completion of
the project.
The term "project" could also refer to, secondly, a particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the employer. The job or undertaking also
begins and ends at determined or determinable times. x x x. 11 (Emphases supplied, citation omitted.)
Thus, in order to safeguard the rights of workers against the arbitrary use of the word "project" to
prevent employees from attaining the status of regular employees, employers claiming that their
workers are project employees should not only prove that the duration and scope of the employment
was specified at the time they were engaged, but also that there was indeed a project. As discussed
above, the project could either be (1) a particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and separate, and identifiable as such, from the
other undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. As it was with regard to the distinction between a regular and casual
employee, the purpose of this requirement is to delineate whether or not the employer is in constant
need of the services of the specified employee. If the particular job or undertaking is within the regular
or usual business of the employer company and it is not identifiably distinct or separate from the other
undertakings of the company, there is clearly a constant necessity for the performance of the task in
question, and therefore said job or undertaking should not be considered a project.
Brief examples of what may or may not be considered identifiably distinct from the business of the
employer are in order. In Philippine Long Distance Telephone Company v. Ylagan, 12 this Court held that
accounting duties were not shown as distinct, separate and identifiable from the usual undertakings of
therein petitioner PLDT. Although essentially a telephone company, PLDT maintains its own accounting
department to which respondent was assigned. This was one of the reasons why the Court held that
respondent in said case was not a project employee. On the other hand, in San Miguel Corporation v.
National Labor Relations Commission,13 respondent was hired to repair furnaces, which are needed by
San Miguel Corporation to manufacture glass, an integral component of its packaging and
manufacturing business. The Court, finding that respondent is a project employee, explained that San
Miguel Corporation is not engaged in the business of repairing furnaces. Although the activity was
necessary to enable petitioner to continue manufacturing glass, the necessity for such repairs arose only
when a particular furnace reached the end of its life or operating cycle. Respondent therein was
therefore considered a project employee.
GMA CASE:
These jobs and undertakings are clearly within the regular or usual business of the employer company
and are not identifiably distinct or separate from the other undertakings of the company. There is no
denying that the manning of the operations center to air commercials, acting as transmitter/VTR men,
maintaining the equipment, and acting as cameramen are not undertakings separate or distinct from the
business of a broadcasting company.
Petitioner’s allegation that respondents were merely substitutes or what they call pinch-hitters (which
means that they were employed to take the place of regular employees of petitioner who were absent
or on leave) does not change the fact that their jobs cannot be considered projects within the purview
of the law. Every industry, even public offices, has to deal with securing substitutes for employees who
are absent or on leave. Such tasks, whether performed by the usual employee or by a substitute, cannot
be considered separate and distinct from the other undertakings of the company. While it is
management’s prerogative to device a method to deal with this issue, such prerogative is not absolute
and is limited to systems wherein employees are not ingeniously and methodically deprived of their
constitutionally protected right to security of tenure. We are not convinced that a big corporation such
as petitioner cannot device a system wherein a sufficient number of technicians can be hired with a
regular status who can take over when their colleagues are absent or on leave, especially when it
appears from the records that petitioner hires so-called pinch-hitters regularly every month.
Carpenter works for a bank. Not regular because work is not necessary or desirable. But if work
continues for more than 1 year, regular provided the work continues to exist
See MacArthur Malicdem v. Marulas, G.R. No. 204406, February 26, 2014
Seasonal
Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season. 25 As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic in nature,
the employment itself is not automatically considered seasonal so as to prevent the employee from
attaining regular status. To exclude the asserted "seasonal" employee from those classified as regular
employees, the employer must show that: (1) the employee must be performing work or services that
are seasonal in nature; and (2) he had been employed for the duration of the season. 26 Hence, when the
"seasonal" workers are continuously and repeatedly hired to perform the same tasks or activities for
several seasons or even after the cessation of the season, this length of time may likewise serve as
badge of regular employment. 27 In fact, even though denominated as "seasonal workers," if these
workers are called to work from time to time and are only temporarily laid off during the off-season, the
law does consider them separated from the service during the off-season period. The law simply
considers these seasonal workers on leave until re-employed.
Art. 280, Labor Code
Universal Robina v. Acibo, G.R. No. 186439, January 15, 2014
Similarity of Seasonal and Project – Season v. Project
Regular seasonal employment
Second, the respondents were regularly and repeatedly hired to perform the same tasks year after year.
This regular and repeated hiring of the same workers (two different sets) for two separate seasons has
put in place, principally through jurisprudence, the system of regular seasonal employment in the sugar
industry and other industries with a similar nature of operations.
Under the system, the plantation workers or the mill employees do not work continuously for one whole
year but only for the duration of the growing of the sugarcane or the milling season. Their seasonal
work, however, does not detract from considering them in regular employment since in a litany of cases,
this Court has already settled that seasonal workers who are called to work from time to time and are
temporarily laid off during the off-season are not separated from the service in said period, but are
merely considered on leave until re-employment. 34 Be this as it may, regular seasonal employees, like
the respondents in this case, should not be confused with the regular employees of the sugar mill such
as the administrative or office personnel who perform their tasks for the entire year regardless of the
season. The NLRC, therefore, gravely erred when it declared the respondents regular employees of
URSUMCO without qualification and that they were entitled to the benefits granted, under the CBA, to
URSUMCO’S regular employees.
Off season – can work for another employer because no EER during off season but once season begins,
can demand for work because he is a regular seasonal worker
Gapayao v. Fulo, G.R. No. 193493, June 13, 2013
Farm workers may be considered regular seasonal employees.
Farm workers generally fall under the definition of seasonal employees. We have consistently held that
seasonal employees may be considered as regular employees. 56 Regular seasonal employees are those
called to work from time to time. The nature of their relationship with the employer is such that during
the off season, they are temporarily laid off; but reemployed during the summer season or when their
services may be needed.57 They are in regular employment because of the nature of their job,and not
because of the length of time they have worked. 58
A reading of the records reveals that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been
working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His
employment was continuous in the sense that it was done for more than one harvesting season.
Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or
desirable in the usual business of petitioner.
The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of
an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the
building and a helper in the bakery, grocery, hardware, and piggery – all owned by petitioner. 63 This fact
only proves that even during the off season, the deceased was still in the employ of petitioner. – NOT
just regular seasonal but regular employee
Casual
When are you a casual employee?
Work not usually necessary or desirable
BUT if work more than 1 year – already regular
Art. 280, Labor Code
Book VI, Rule I, Sec. 5, b, Implementing Rules (Labor Code)
See Tan v. Lagrama, G.R. No. 151228, August 15, 2002
Fixed-term
Fixed term recognized in Brent School v Zamora
What are two requirements for fixed term agreement to be legal? Voluntarily entered into by the
parties 2. Parties dealt with each other on equal terms
But from jurisprudence “Equal footing” was found when employees were: delivery men, mixers, packers,
etc
Independent contractors – trilateral relationship
Or independent contractors who are individuals with high degree of skills, talents etc.
Referee in basketball team – independent contractor (case ni)
Fuji Television v. Espiritu, G.R. No. 204944-45, December 3, 2014
See GMA Network v. Pabriga, G.R. No. 176419, November 27, 2013
See Universal Robina v. Acibo, G.R. No. 186439, January 15, 2014
Colegio del Santisimo v. Rojo, G.R. No. 170388, September 4, 2013
In the same case, this Court has definitively pronounced that "in a situation where the probationary
status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281
should assume primacy and the fixed-period character of the contract must give way." 40
An example given of a fixed-term contract specifically used for the fixed term it offers is a replacement
teacher or a reliever contracted for a period of one year to temporarily take the place of a permanent
teacher who is on leave. The expiration of the reliever’s fixed-term contract does not have probationary
status implications as he or she was never employed on probationary basis. This is because his or her
employment is for a specific purpose with particular focus on the term. There exists an intent to end his
or her employment with the school upon expiration of this term. 41
However, for teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied. These
terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the
termination of the probationary contract.1âwphi1 The specific details of this finding of just cause must
be communicated to the affected teachers as a matter of due process. 42 Corollarily, should the teachers
not have been apprised of such reasonable standards at the time specified above, they shall be deemed
regular employees.
Job contracting
Effects of Labor-only contracting
Trilateral relationship in job contracting
Articles 106 to 109, Labor Code
Department Order No. 18-A
Department Circular No. 01-12
Alilin v. Petron, G.R. No. 177592, June 9, 2014
First Philippine Industrial v. Calimbas, G.R. No. 179256, July 10, 2013
Aviado v. Procter and Gamble, G.R. No. 160506, June 6, 2011
Dismissal from employment
Just Causes
Arts. 282, 264, 263, 248, Labor Code
Imasen Phil. v. Alcon, G.R. No. 194884, October 22, 2014
Realda v. New Age, G.R. No. 192190, April 25, 2012
International School v. I.S. Alliance, G.R. No. 167286, February 5, 2014
School of the Holy Spirit v. Taguiam, G.R. No. 165565, July 14, 2008
Fernandez v. Newfield Staff, G.R. No. 201979, July 10, 2013
Sanden Aircon v. Rosales, G.R. No. 169260, March 23, 2011
Lhuillier v. Velayo, G.R. No. 198620, November 12, 2014
Aliling v. Feliciano, G.R. No. 185829, April 25, 2012
Reyes-Rayel v. Phil. Luen, G.R. No. 174893, July 11, 2012
Authorized Causes
Edge Apparel v NLRC
FACTS: Pursuing its retrenchment program, petitioner Edge Apparel, Inc., dismissed private respondents.
Respondents received their separation pay equivalent to 1/2 month pay per year of service but
questioned their dismissal nonetheless. The charge averred that the retrenchment program was a mere
subterfuge used by Edge Apparel to give a semblance of regularity and validity to the dismissal of the
complainants.
Edge Apparel countered that its financial obligations, amounting to about P8 Million, had begun to eat
up most of its capital outlay and resulted in unabated losses of P681,280.00 in 1989, P262,741.00 in
1990, P162,170.00 in 1991 and P749,294.00 in 1992.
LA: Upheld retrenchment
NLRC: Found redundancy and ordered additional separation pay equivalent to 1/2 month pay for every
year of service:
We note however that these 27 workers were assigned to row #8 of the sewing line for simple garments
which was phased out due in fact to the dropping of this particular line of business.
Termination of an employee's services because of a reduction of work force due to a decrease in the
scope or volume of work of the employer is synonymous to, or a shade of termination because of
redundancy under Article 283 (formerly 284) of the Labor Code. Redundancy exist where the services of
an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.
A position is redundant where it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or undertaken by the
enterprise. (Tierra International Construction Corporation vs. NLRC, 77 SCRA Vol. 211)
In case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to at least one (1) month pay or to at least one month pay for every year of
service, which ever is higher. (Art. 283, Labor Code).
ISSUE: Does retrenchment due to business losses constitute redundanct if the employer phased out a
particular LOB?
HELD: No
The Court agrees with the Solicitor General that here the NLRC has gravely abused its discretion. The law
acknowledges the right of every business entity to reduce its work force if such measure is made
necessary or compelled by economic factors that would otherwise endanger its stability or
existence. 25 In exercising its right to retrench employees, the firm may choose to close all, or a part of,
its business to avoid further losses or mitigate expenses. 26
Clearly, the fact alone that a mere portion of the business of an employer, not the whole of it, is shut
down does not necessarily remove that measure from the ambit of the term "retrenchment" within the
meaning of Section 283(c) of the Labor Code.
PRINCIPLES:
The employer has a right to dismiss employees for valid causes after proper observance of due
process. 4 These valid causes are categorized into two groups, i.e., "just" causes under Article 282 of the
Labor Code and "authorized" causesunder Articles 283 and 284 of the same code.
The just causes for termination of employment, enumerated in Article 282, include —
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative relative to his work; 5
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative; 6
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; 7 and
(e) Other causes analogous to the foregoing.
An employee who is terminated from employment for a just cause is not entitled to payment of
separation benefits. 8Section 7, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code
provides, thus:
Sec. 7. Termination of employment by employer. — The just causes for terminating the services of an
employee shall be those provided in Article 282 of the Code. The separation from work of an employee
for a just cause does not entitle him to the termination pay provided in Code, without prejudice,
however, to whatever rights, benefits and privileges he may have under the applicable individual or
collective bargaining agreement with the employer or voluntary employer policy or practice.
Article 283, in turn, specifies the authorized causes for the termination of employment, viz:
(a) installation of labor-saving devices;
(b) redundancy;
(c) retrenchment to prevent losses; and
(d) closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of law. 9
In addition, Article 284 provides that an employer would be authorized to terminate the services of an
employee found to be suffering from any disease if the employee's continued employment is prohibited
by law or is prejudicial to his health or to the health of his fellow employees.
The installation of labor-saving devices contemplates the installation of machinery to effect economy
and efficiency in its method of production. 10
Redundancy exists where the services of an employee are in excess of what would reasonably be
demanded by the actual requirements of the enterprise. 11 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 as
the overhiring of workers, a decrease in the volume of business or the dropping of a particular line or
service previously manufactured or undertaken by the enterprise. 12 An employer has no legal
obligation to keep on the payroll employees more than the number needed for the operation of the
business. 13
Retrenchment, in contrast to redundancy, is an economic ground to reduce the number of employees.
In order to be justified, the termination of employment by reason of retrenchment must be due to
business losses or reverses which are serious, actual and real. 14 Not every loss incurred or expected to
be incurred by the employer will justify retrenchment, 15 since, in the nature of things, the possibility of
incurring losses is constantly present, in greater or lesser degree, in carrying on the business
operations. 16 Retrenchment is normally resorted to by management during periods of business
reverses and economic difficulties occasioned by such events as recession, industrial depression, or
seasonal fluctuations. 17 It is an act of the employer of reducing the work force because of losses in the
operation of the enterprise, lack of work, or considerable reduction on the volume of
business. 18 Retrenchment is, in many ways, a measure of last resort when other less drastic means have
been tried and found to be inadequate. 19 A lull caused by lack of orders or shortage of materials must
be of such nature as would severely affect the continued business operations of the employer to the
detriment of all and sundry if not properly addressed. The institution of "new methods or more
efficient machinery, or of automation" is technically a ground for termination of employment by
reason of installation of labor-saving devices but where the introduction of these methods is resorted
to not merely to effect greater efficiency in the operations of the business but principally because of
serious business reverses and to avert further losses, the device could then verily be considered one
of retrenchment.
The payment of separation pay would be due when a dismissal is on account of an authorized cause. The
amount of separation pay depends on the ground for the termination of employment. A dismissal due to
the installation of labor saving devices, redundancy (Article 283) or disease (Article 284), entitles the
worker to a separation pay equivalent to "one (1) month pay or at least one (1) month pay for every
year of service, whichever is higher." When the termination of employment is due to retrenchment to
prevent losses, or to closure or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay is only an equivalent of "one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher." In the
above instances, a fraction of at least six (6) months is considered as one (1) whole year.
In this case, the Labor Arbiter and the NLRC both concluded that there had been a valid ground for the
retrenchment of private respondents. The documents presented in evidence were found to
"conclusively show that (petitioner) suffered serious financial losses." 20 The general standards or
elements needed for the retrenchment to be valid — i.e., that the losses expected are substantial and
not merely de minimis in extent; that the expected losses are reasonably imminent such as can be
perceived objectively and in good faith by the employer; that the retrenchment is reasonably
necessary and likely to effectively prevent the expected losses; and that the imminent losses sought
to be forestalled are substantiated 21 — were adequately shown in the present case. The findings of
the Labor Arbiter and the NLRC would negate any impression that petitioner was guilty of bad faith or
misdoing in its retrenchment policy; the NLRC stated:
The complainants questioned the firm's financial statements which were made the bases to support the
validity of the retrenchment. The complainants pointed out in their appeal that while the gross profit on
sales increased by about 26% in 1989, expenses on representation and entertainment increased by
45.65% in 1989. These expenses were manipulated, according to the complainants, to justify the
retrenchment of these 27 employees.
A perusal of the financial statements show that the company incurred recreation and entertainment
expenses as follows: 1988 — P385,711; 1989 — P561,816; 1990 — P261,120; 1991 — P327,081; and
1992 — P374,290 for a total of P1,910,018 in five (5) years or at an average of P382,003.60 per year.
These 27 retrenched employees received a daily wage of P105 in 1992. Multiplying this daily wage by
314 days will result in a yearly income of P32,970 per retrenched worker. To retain the services of these
27 workers would cost the company P964,372.50 per annum just to pay their basic wages & 13th month
pay.
It is therefore very clear, that the deletion of this annual entertainment & representation expense of
P382,003.60 and reallocate it for the budget on salaries and wages would not be sufficient to pay the
salaries of the 27 retrenched workers amounting to P964,372.50 as of 1992. 22
Procedurally, in order to validly effect retrenchment, the employer must observe two other
requirements, viz: (a) service of a prior written notice of at least one month on the workers and the
Department of Labor and Employment, and (b) payment of the due separation pay. 23 In the decision
of Labor Arbiter Nicasio C. Aniñon, affirmed by the NLRC, petitioner has been found to have complied
with the above requirements of the law, including the payment of separation pay equivalent to at least
one month pay or to one-half (1/2) month pay for every year of service, whichever is higher, with a
fraction of at least six months being considered one whole year. 24
Magnolia Dairy v. NLRC
FACTS: JENNY A. CALIBO works for Skillpower, a manpower agency. She was assigned to Magnolia "(i)
to remove "bulgings" (damaged goods) from dilapidated cartons; (ii) to replace damaged goods and repaste the carton thereof; (iii) to dispose the damaged goods or returned goods from Magnolia's
warehouse to avoid bad odors; and (iv) to clean leftovers of leaking tetra pack by mopping or washing
the contaminated premises.
She was pulled out from Magnolia but later reassigned to the same job. When her contract with
Skillpower expired, she applied with Lippercon, another manpower agency and was again assigned to
Magnolia.
However, Jenny was terminated from service due to petitioner's installation of automated machines.
She filed an illegal dismissal complaint against Magnolia. Magnolia denied EER.
LA ruled that Skillpower and Lippercon were LOCs and Magnolia was Jenny’s employer. The installation
of labor saving devices was also ruled a valid ground for the termination of private respondent's
employment, but the Labor Arbiter emphasized that this did not exculpate petitioner from the charge of
illegal dismissal for its failure to observe the due process of law in terminating from service its
employee. LA ordered backwages and separation pay in lieu of reinstatement
NLRC ordered backwages and reinstatement
Petitioner contends that private respondent was not illegally dismissed since the termination of her
employment was due to a cause expressly authorized by the Labor Code and the absence of notice
therefor did not make it so. Petitioner cites Wenphil Corp. v. NLRC, et al. (170 SCRA 69 [1989]) in support
of its claim that private respondent is only entitled to an indemnity of P1,000.00, but not backwages or
separation pay. The NLRC, on the other hand, insists that termination without the benefit of any
investigation or notice makes an employee's dismissal from service illegal.
ISSUE: Is Jenny entitled to backwages and separation pay or reinstatement?
HELD: LOC finding upheld but Dismissal legal just no due process. Not entitled to backwages. Separation
pay only. Nominal Damages 5,000
The law authorizes an employer, like the herein petitioner, to terminate the employment of any
employee due to the installation of labor saving devices. The installation of these devices is a
management prerogative, and the courts will not interfere with its exercise in the absence of abuse of
discretion, arbitrariness, or maliciousness on the part of management, as in this case. Nonetheless, this
did not excuse petitioner from complying with the required written notice to the employee and to the
Department of Labor and Employment (DOLE) at least one month before the intended date of
termination. This procedure enables an employee to contest the reality or good faith character of the
asserted ground for the termination of his services before the DOLE. 11
The failure of petitioner to serve the written notice to private respondent and to the DOLE, however,
does not ipso facto make private respondent's termination from service illegal so as to entitle her to
reinstatement and payment of backwages. 12 If at all, her termination from service is merely defective
because it was not tainted with bad faith or arbitrariness and was due to a valid cause.
The well settled rule is that the employer shall be sanctioned for non-compliance with the requirements
of, or for failure to observe due process in terminating from service its employee. In Wenphil
Corp. v. NLRC,13 we sanctioned the employer for this failure by ordering it to indemnify the employee the
amount of P1,000.00. Similarly, we imposed the same amount as indemnification in Rubberworld
(Phils.), Inc. v. NLRC,14 and, in Aurelio v. NLRC.15The indemnity was raised to P10,000.00 in Reta
v. NLRC16 and Alhambra Industries, Inc. v. NLRC.17 Subsequently, the sum of P5,000.00 was awarded to
an employee in Worldwide Papermills, Inc. v. NLRC,18 and P2,000.00 inSebuguero, et al. v. NLRC, et
al.19 Recently, the sum of P5,000.00 was again imposed as indemnity against the employer. 20 We see no
valid and cogent reason why petitioner should not be likewise sanctioned for its failure to serve the
mandatory written notice. Under the attendant facts, we find the amount of P5,000.00, to be just and
reasonable.
Lastly, the NLRC's grant of backwages and order of reinstatement are untenable. These awards are
proper for illegally dismissed employees which obviously is not the situation in this case. The
appropriate award is separation pay pursuant to the ruling of this Court in Philippine Long Distance
Telephone Co., Inc. v. NLRC
Arabit v Jardine Pacific
FACTS: On the claim of financial losses, Jardine decided to reorganize and implement a redundancy
program among its employees. The petitioners were among those affected by the redundancy program.
Jardine thereafter hired contractual employees to undertake the functions these employees used to
perform.
The petitioners alleged before the LA that their dismissal was illegal and was tainted with bad faith as
their positions were not superfluous. They argued that if their positions had really been redundant, then
Jardine should have not hired contractual workers to replace them. 8
Jardine argued in its defense that the company had been incurring substantial business losses from 1996
to 1998. According to Jardine, its audited financial statements reflect that for 1996, it suffered a net loss
of P5,538,960.00; for 1997,11 a net loss in the amount of P57,274,018.00;12 and a net loss
of P95,529,527.00 for 1998.13
Jardine, however, admitted that it hired contractual employees to replace petitioners in their previous
posts. Jardine reasoned out that no bad faith took place since the hiring of contractual employees was a
valid exercise of its management prerogative. 15 Jardine argued that the distinction between redundancy
and retrenchment is not material; an employer resorts to retrenchment or redundancy for the same
reason, namely the economics of business. 16 Since Jardine successfully established that it incurred
serious business losses, then termination of employment of the petitioners was valid for all intents and
purposes.17
LA: LA held that the hiring of contractual employees to replace the petitioners directly contradicts the
concept of redundancy which involves the trimming down of the workforce because a task is being
carried out by too many people.21 The LA explained that the company’s action was a circumvention of
the right of the petitioners to security of tenure
LA further held that it was not enough for Jardine to simply focus on its losses. According to the LA, it
was error for Jardine to simply lump together the seven petitioners as employees whose positions have
become redundant without explaining why their respective positions became superfluous in relation to
the other positions and employees of the company
NLRC: Affirmed LA
CA: Reversed LA and NLRC:
According to the CA, the hiring of contractual employees is a management prerogative that Jardine has
the right to exercise.30 In the absence of any showing of malice or arbitrariness on the part of Jardine in
implementing its redundancy program, the courts must not interfere with the company’s exercise of a
bona fide management decision.31 The CA cited for this purpose the case of De Ocampo v. National
Labor Relations Commission
ISSUE: May regular employees performing allegedly redundant functions be replaced by contractual
employees who perform the same function?
HELD: NO
It is illogical for Jardine to terminate the petitioners’ employment and replace them with contractual
employees. The replacement effectively belies Jardine’s claim that the petitioners’ positions were
abolished due to superfluity. Redundancy could have been justified if the functions of the petitioners
were transferred to other existing employees of the company.
To dismiss the petitioners and hire new contractual employees as replacements necessarily give rise to
the sound conclusion that the petitioners’ services have not really become in excess of what Jardine’s
business requires. To replace the petitioners who were all regular employees with contractual ones
would amount to a violation of their right to security of tenure. For this, we affirm the NLRC’s ruling,
citing the LA’s decision, when it ruled:
In the case at bench, respondents did not dispute that after laying-off complainants herein, they
engaged the services of an agency to perform the tasks use (sic) to be done by complainants. This is [in
direct] contradiction to the concept of redundancy which precisely requires the trimming down of the
[workforce] because a task is being carried out by just too many people. The subsequent contracting out
to an agency the functions or duties that used to be the domain of individual complainants herein is a
circumvention of their right to security of tenure.
Redundancy in contrast with retrenchment
Jardine, in its petition for certiorari with the CA, posited that the distinction between redundancy and
retrenchment is not material.48 It contended that employers resort to these causes of dismissal for
purely economic considerations.49Jardine further argued that the immateriality of the distinction
between these two just causes for dismissal is shown by the fact that redundancy and retrenchment are
found and lumped together in just one single provision of the Labor Code (Article 283 thereof).
We cannot accept Jardine’s shallow understanding of the concepts of redundancy and retrenchment in
determining the validity of the severance of an employer-employee relationship. The fact that they are
found together in just one provision does not necessarily give rise to the conclusion that the difference
between them is immaterial. This Court has already ruled before that retrenchment and redundancy are
two different concepts; they are not synonymous; thus, they should not be used interchangeably. 50 The
clear distinction between these two concepts was discussed in Andrada, et al., v. NLRC, 51 citing the case
of Sebuguero v. NLRC,52 where this Court clarified:
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by
the actual requirements of the enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of
workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination
of employment initiated by the employer through no fault of the employee’s and without prejudice to
the latter, resorted to by management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of
the plant for a new production program or the introduction of new methods or more efficient
machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of
losses in the operation of a business, lack of work, and considerable reduction on the volume of his
business, a right consistently recognized and affirmed by this Court.
These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in
the business. Primarily, employers resort to redundancy when the functions of an employee have
already become superfluous or in excess of what the business requires. Thus, even if a business is doing
well, an employer can still validly dismiss an employee from the service due to redundancy if that
employee’s position has already become in excess of what the employer’s enterprise requires.
Guidelines in implementing redundancy
In Golden Thread Knitting Industries, Inc. v. NLRC, 59 this Court laid down the principle that the employer
must use fair and reasonable criteria in the selection of employees who will be dismissed from
employment due to redundancy. Such fair and reasonable criteria may include the following, but are
not limited to: (a) less preferred status (e.g. temporary employee); (b) efficiency; and (c) seniority. The
presence of these criteria used by the employer shows good faith on its part and is evidence that the
implementation of redundancy was painstakingly done by the employer in order to properly justify the
termination from the service of its employees. 60
Aside from the guidelines for the selection of employees who will be terminated, the Court, in Asian
Alcohol Corp. v. NLRC,61 also laid down guidelines for redundancy to be characterized as validly
undertaken by the employer. The Court ruled:
For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of Labor
and Employment at least one month prior to the intended date of retrenchment; (2) payment of
separation pay equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared redundant and accordingly
abolished.62
Jardine’s case:
As the petitioners pointed out, the records are bereft of indications that Jardine employed clear criteria
when it decided who among its employees, who held similar positions as the petitioners, should be
removed from their posts because of redundancy. Jardine never bothered to explain how and why the
petitioners were the ones dismissed. Jardine’s acts became more suspect given that the petitioners
were all union officers and some of them were panel members in the scheduled CBA negotiations
between Jardine and the Union.
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol. Jardine informed
the Department of Labor and Employment of the petitioners’ separation from the service due to
redundancy on April 30, 1999, one month before their termination’s effectivity. Also, the petitioners
were given their individual separation packages, composed of their severance pay, plus their grossed up
transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines are
interrelated to ensure good faith in abolishing redundant positions; the employer must clearly show that
it used fair and reasonable criteria in ascertaining what positions are to be declared redundant.
Jardine lumped together the seven petitioners into one group whose positions had become redundant.
This move was despite the fact that not all of them occupied the same positions and performed the
same functions
To sum up, based on the guidelines set by the Court in the cases of Golden Thread and Asian Alcohol, we
find that at two levels, Jardine failed to set the required fair and reasonable criteria in the termination
of the petitioners’ employment, leading to the conclusion that the termination from the service was
arbitrary and in bad faith.
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per position
basis. At this level, Jardine failed to explain why among all of the existing positions in its organization,
Jardine chose the petitioners’ posts as the ones which have already become redundant and
terminable.
The second level, derived from Golden Thread, is more specific. Here the distinction narrows down to
the particular employees occupying the same positions which were already declared to be redundant.
At this level, Jardine’s lapse is shown by its failure to explain why among all of its employees whose
positions were determined to be redundant, the petitioners were the ones selected to be dismissed
from the service.
Manila Polo Club Employees v Manila Polo Club
FACTS: The Board of Directors of respondent unanimously resolved to completely terminate the entire
operations of its Food and Beverage (F & B) outlets, except the Last Chukker, and award its operations to
a qualified restaurant operator or caterer
ISSUE: Is there closure of business or retrenchment?
HELD: We summarize:
1. Closure or cessation of operations of establishment or undertaking may either be partial or total.
2. Closure or cessation of operations of establishment or undertaking may or may not be due to serious
business losses or financial reverses. However, in both instances, proof must be shown that: (1) it was
done in good faith to advance the employer's interest and not for the purpose of defeating or
circumventing the rights of employees under the law or a valid agreement; and (2) a written notice on
the affected employees and the DOLE is served at least one month before the intended date of
termination of employment.
3. The employer can lawfully close shop even if not due to serious business losses or financial reverses
but separation pay, which is equivalent to at least one month pay as provided for by Article 283 of the
Labor Code, as amended, must be given to all the affected employees.
4. If the closure or cessation of operations of establishment or undertaking is due to serious business
losses or financial reverses, the employer must prove such allegation in order to avoid the payment of
separation pay. Otherwise, the affected employees are entitled to separation pay.
5. The burden of proving compliance with all the above-stated falls upon the employer.
Guided by the foregoing, the Court shall refuse to dwell on the issue of whether respondent was in
sound financial condition when it resolved to stop the operations of its F & B Department. As stated, an
employer can lawfully close shop anytime even if not due to serious business losses or financial reverses.
Furthermore, the issue would entail an inquiry into the factual veracity of the evidence presented by the
parties, the determination of which is not Our statutory function. Indeed, petitioner is asking Us to sift
through the evidence on record and pass upon whether respondent had, in truth and in fact, suffered
from serious business losses or financial reverses.
That task, however, would be contrary to the well-settled principle that this Court is not a trier of facts,
and cannot re-examine and re-evaluate the probative value of the evidence presented to the VA and the
CA, which formed the basis of the questioned decision.
Respondent correctly asserted in its Memorandum that the instant case is similar to Alabang Country
Club Inc.When it decided to cease operating its F & B Department and open the same to a
concessionaire, respondent did not reduce the number of personnel assigned thereat; instead, it
terminated the employment of all personnel assigned at the department and those who are directly and
indirectly involved in its operations. The closure of the F & B Department was due to legitimate business
considerations, a resolution which the Court has no business interfering with. We have already resolved
that the characterization of the employee's service as no longer necessary or sustainable, and therefore,
properly terminable, is an exercise of business judgment on the part of the employer; the determination
of the continuing necessity of a particular officer or position in a business corporation is a management
prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion
or arbitrary or malicious action on the part of the employer is shown. 32 As recognized by both the VA
and the CA, evident proofs of respondent’s good faith to arrest the losses which the F & B Department
had been incurring since 1994 are: engagement of an independent consulting firm to conduct
manpower audit/organizational development; institution of cost-saving programs, termination of the
services of probationary employees, substantial reduction of a number of agency staff and personnel,
and the retrenchment of eight (8) managers. After the effective date of the termination of employment
relation, respondent even went on to aid the displaced employees in finding gainful employment by
soliciting the assistance of respondent’s members, Makati Skyline, Human Resource Managers of some
companies, and the Association of Human Resource Managers. 33 These were not refuted by petitioner.
Only that, it perceives them as inadequate and insists that the operational losses are very well covered
by the other income of respondent and that less drastic measures could have been resorted to, like
increasing the membership dues and the prices of food and beverage. Yet the wisdom or soundness of
the Management decision is not subject to discretionary review of the Court for, even the VA admitted,
it enjoys a pre-eminent role and is presumed to possess all relevant and necessary information to guide
its business decisions and actions.
Further, unlike in the case of Eastridge Golf Club, Inc., there is nothing on record to indicate that the
closure of respondent’s F & B Department was made in bad faith. It was not motivated by any specific
and clearly determinable union activity of the employees; rather, it was truly dictated by economic
necessity. Despite petitioner’s allegations, no convincing and credible proofs were presented to
establish the claim that such closure qualifies as an act of union-busting and ULP. No evidence was
shown that the closure is stirred not by a desire to avoid further losses but to discourage the workers
from organizing themselves into a union for more effective negotiations with the
management.34 Allegations are not proofs and it is incumbent upon petitioner to substantiate the same.
On the contrary, respondent continued to negotiate with petitioner even after April 30, 2002. In fact, a
Memorandum of Agreement was executed before the NCMB between petitioner and respondent on
June 10, 2002 whereby the parties agreed, among others, to maintain the existing provisions of the CBA,
except those pertaining to wage increases and signing bonus. 35
Finally, even if the members of petitioner are not considered as illegally dismissed, they are entitled to
separation pay pursuant to Article 283 of the Labor Code, as amended. Per respondent's information,
however, the separation packages of all 117 union members were already paid during the pendency of
the case.36 Petitioner did not oppose this representation;
hence, We shall treat the fact of receipt of separation pay as having been voluntarily entered into, with a
full understanding of its import, and the amount received as credible and reasonable settlement that
should be respected by the Court as the law between the parties are valid and binding between them.
PRINCIPLES:
It is apparent from the records that this case involves a closure of business undertaking, not
retrenchment. The legal requirements and consequences of these two authorized causes in the
termination of employment are discernible. We distinguished, in Alabang Country Club Inc. v. NLRC: 22
x x x While retrenchment and closure of a business establishment or undertaking are often used
interchangeably and are interrelated, they are actually two separate and independent authorized causes
for termination of employment.
Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in
terms of salaries and wages resorted to by an employer because of losses in operation of a business
occasioned by lack of work and considerable reduction in the volume of business.
Closure of a business or undertaking due to business losses is the reversal of fortune of the employer
whereby there is a complete cessation of business operations to prevent further financial drain upon an
employer who cannot pay anymore his employees since business has already stopped.
One of the prerogatives of management is the decision to close the entire establishment or to close or
abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce
capitalization.
While the Labor Code provides for the payment of separation package in case of retrenchment to
prevent losses, it does not obligate the employer for the payment thereof if there is closure of business
due to serious losses.
Likewise, the case of Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor-Union, Super 24 stressed
the differences:
Retrenchment or lay-off is the termination of employment initiated by the employer, through no fault of
the employees and without prejudice to the latter, during periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the introduction of new methods or more
efficient machinery, or of automation. It is an exercise of management prerogative which the Court
upholds if compliant with certain substantive and procedural requirements, namely:
1. That retrenchment is necessary to prevent losses and it is proven, by sufficient and convincing
evidence such as the employer's financial statements audited by an independent and credible external
auditor, that such losses are substantial and not merely flimsy and actual or reasonably imminent; and
that retrenchment is the only effective measure to prevent such imminent losses;
2. That written notice is served on to the employees and the DOLE at least one (1) month prior to the
intended date of retrenchment; and
3. That the retrenched employees receive separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher.
The employer must prove compliance with all the foregoing requirements. Failure to prove the first
requirement will render the retrenchment illegal and make the employer liable for the reinstatement of
its employees and payment of full backwages. However, were the retrenchment undertaken by the
employer is bona fide, the same will not be invalidated by the latter's failure to serve prior notice on the
employees and the DOLE; the employer will only be liable in nominal damages, the reasonable rate of
which the Court En Banc has set at P50,000.00 for each employee.
Closure or cessation of business is the complete or partial cessation of the operations and/or shut-down
of the establishment of the employer. It is carried out to either stave off the financial ruin or promote
the business interest of the employer.
Unlike retrenchment, closure or cessation of business, as an authorized cause of termination of
employment, need not depend for validity on evidence of actual or imminent reversal of the
employer's fortune. Article 283 authorizes termination of employment due to business closure,
regardless of the underlying reasons and motivations therefor, be it financial losses or not. 25
To be precise, closure or cessation of an employer’s business operations, whether in whole or in part, is
governed by Article 283 of the Labor Code, as amended. It states:
Article 283.Closure of establishment and reduction of personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1) whole year. 26
In Industrial Timber Corporation v. Ababon, 27 the Court explained the above-quoted provision in this
wise:
A reading of the foregoing law shows that a partial or total closure or cessation of operations of
establishment or undertaking may either be due to serious business losses or financial reverses or
otherwise. Under the first kind, the employer must sufficiently and convincingly prove its allegation of
substantial losses, while under the second kind, the employer can lawfully close shop anytime as long as
cessation of or withdrawal from business operations was bona fide in character and not impelled by a
motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees
their termination pay in the amount corresponding to their length of service. Just as no law forces
anyone to go into business, no law can compel anybody to continue the same. It would be stretching the
intent and spirit of the law if a court interferes with management's prerogative to close or cease its
business operations just because the business is not suffering from any loss or because of the desire to
provide the workers continued employment.
In sum, under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of
business operations: (a) service of a written notice to the employees and to the DOLE at least one
month before the intended date thereof; (b) the cessation of business must be bona fide in character;
and (c) payment to the employees of termination pay amounting to one month pay or at least onehalf month pay for every year of service, whichever is higher. 28
Deoferio v Intel Technology
FACTS: (Intel)employed Deoferio as a product quality and reliability engineer. Intel assigned him to the
United States as a validation engineer for an agreed period of two years and with a monthly salary of
US$3,000.00. On January 27, 2002, Deoferio was repatriated to the Philippines after being confined at
Providence St. Vincent Medical Center for major depression with psychosis. 4 In the Philippines, he
worked as a product engineer with a monthly salary ofP23,000.00.
Deoferio was found to have schizophrenia and not fit for employment. Pursuant to these findings, Intel
issued Deoferio a notice of termination on March 10, 2006. 9 Deoferio questioned his dismissal.
Intel’s defense:
Deoferio’s dismissal was based on Dr. Lee’s certification that: (1) his schizophrenia was not curable
within a period of six months even with proper medical treatment; and (2) his continued employment
would be prejudicial to his and to the other employees’ health. 11 The respondents also insisted that
Deoferio’s presence at Intel’s premises would pose an actual harm to his co-employees as shown by his
previous acts. On May 8, 2003, Deoferio emailed an Intel employee with this message: "All soul’s day
back to work Monday WW45.1." On January 18, 2005, he cut the mouse cables, stepped on the
keyboards, and disarranged the desks of his co-employees. 12 The respondents also highlighted that
Deoferio incurred numerous absences from work due to his mental condition, specifically, from January
31, 2002 until February 28, 2002,13 from August 2002 until September 2002, 14 and from May 2003 until
July 2003.15 Deoferio also took an administrative leave with pay from January 2005 until December
2005.16
The respondents further asserted that the twin-notice requirement in dismissals does not apply to
terminations under Article 284 of the Labor Code. 17 They emphasized that the Labor Code’s
implementing rules (IRR) only requires a competent public health authority’s certification to effectively
terminate the services of an employee.
Intel denied liability for separation pay because it was offset by Deoferio’s car loan.
LA, NLRC and CA ruled in favor of Intel: That Deoferio was suffering from schizophrenia and that his
continued employment at Intel would be prejudicial to his health and to those of his co-employees. It
ruled that the only procedural requirement under the IRR is the certification by a competent public
health authority on the non-curability of the disease within a period of six months even with proper
medical treatment. It also concurred with the lower tribunals that Intel was justified in not paying
Deoferio separation pay as required by Article 284 of the Labor Code because this obligation had already
been offset by the matured car loan that Deoferio owed Intel
HELD:
In the current case, we agree with the CA that Dr. Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his disease was not curable within a period of six
months even with proper medical treatment, and that his continued employment would be prejudicial
to his mental health. This conclusion is further substantiated by the unusual and bizarre acts that
Deoferio committed while at Intel’s employ.
The twin-notice requirement applies
to terminations under Article 284 of
the Labor Code
The Labor Code and its IRR are silent on the procedural due process required in terminations due to
disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states that
the employee should be afforded procedural due process in all cases of dismissals. 38
In Sy v. Court of Appeals39 and Manly Express, Inc. v. Payong, Jr., 40 promulgated in 2003 and 2005,
respectively, the Court finally pronounced the rule that the employer must furnish the employee two
written notices in terminations due to disease, namely: (1) the notice to apprise the employee of the
ground for which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to
be issued after the employee has been given reasonable opportunity to answer and to be heard on his
defense. These rulings reinforce the State policy of protecting the workers from being terminated
without cause and without affording them the opportunity to explain their side of the controversy.
From these perspectives, the CA erred in not finding that the NLRC gravely abused its discretion when it
ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code. This conclusion
is totally devoid of any legal basis; its ruling is wholly unsupported by law and jurisprudence. In other
words, the NLRC’s unprecedented, whimsical and arbitrary ruling, which the CA erroneously affirmed,
amounted to a jurisdictional error.
Nominal Damages
With respect to Article 284 of the Labor Code, terminations due to disease do not entail any wrongdoing
on the part of the employee. It also does not purely involve the employer’s willful and voluntary exercise
of management prerogative – a function associated with the employer's inherent right to control and
effectively manage its enterprise. 44 Rather, terminations due to disease are occasioned by matters
generally beyond the worker and the employer's control.
In fixing the amount of nominal damages whose determination is addressed to our sound discretion, the
Court should take into account several factors surrounding the case, such as: (1) the employer’s
financial, medical, and/or moral assistance to the sick employee; (2) the flexibility and leeway that the
employer allowed the sick employee in performing his duties while attending to his medical needs; (3)
the employer’s grant of other termination benefits in favor of the employee; and (4) whether there
was a bona fide attempt on the part of the employer to comply with the twin-notice requirement as
opposed to giving no notice at all.
We award Deoferio the sum of P30,000.00 as nominal damages for violation of his statutory right to
procedural due process. In so ruling, we take into account Intel’s faithful compliance with Article 284 of
the Labor Code and Section 8, Rule 1, Book 6 of the IRR. We also note that Deoferio’s separation pay
equivalent to one-half month salary for every year of service 45 was validly offset by his matured car loan.
Under Article 1278 of the Civil Code, in relation to Article 1706 of the Civil Code 46 and Article 113(c) of
the Labor Code,47 compensation shall take place when two persons are creditors and debtors of each
other in their own right. We likewise consider the fact that Intel exhibited real concern to Deoferio when
it financed his medical expenses for more than four years. Furthermore, prior to his termination, Intel
liberally allowed Deoferio to take lengthy leave of absences to allow him to attend to his medical needs.
PRINCIPLES:
The present case involves termination due to disease – an authorized cause for dismissal under Article
284 of the Labor Code. As substantive requirements, the Labor Code and its IRR 33 require the presence
of the following elements:
(1) An employer has been found to be suffering from any disease.
(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health
of his co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a stage
that it cannot be cured within a period of six months even with proper medical treatment.
With respect to the first and second elements, the Court liberally construed the phrase "prejudicial to
his health as well as to the health of his co-employees" to mean "prejudicial to his health or to the
health of his co-employees." We did not limit the scope of this phrase to contagious diseases for the
reason that this phrase is preceded by the phrase "any disease" under Article 284 of the Labor Code,
to wit:
Art. 284. Disease as ground for termination. – An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1)
whole year. [underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in resolving illegal dismissal cases due to
non-contagious diseases such as stroke, heart attack, osteoarthritis, and eye cataract, among others. In
Baby Bus, Inc. v. Minister of Labor, 34 we upheld the labor arbitration’s finding that Jacinto Mangalino’s
continued employment – after he suffered several strokes – would be prejudicial to his health. In
Duterte v. Kingswood Trading Co., Inc., 35 we recognized the applicability of Article 284 of the Labor Code
to heart attacks. In that case, we held that the employer- company’s failure to present a certification
from a public health authority rendered Roque Duterte’s termination due to a heart attack illegal. We
also applied this provision in Sy v. Court of Appeals 36 to determine whether Jaime Sahot was illegally
dismissed dueto various ailments such as presleyopia, hypertensive retinopathy, osteoarthritis, and
heart enlargement, among others. In Manly Express, Inc. v. Payong, Jr., 37 we ruled that the employercompany’s non-presentment of a certification from a public health authority with respect to Romualdo
Payong Jr.’s eye cataract was fatal to its defense.
The third element substantiates the contention that the employee has indeed been suffering from a
disease that: (1) is prejudicial to his health as well as to the health of his co-employees; and (2) cannot
be cured within a period of six months even with proper medical treatment. Without the medical
certificate, there can be no authorized cause for the employee’s dismissal. The absence of this element
thus renders the dismissal void and illegal.
Simply stated, this requirement is not merely a procedural requirement, but a substantive
one.1âwphi1 The certification from a competent public health authority is precisely the substantial
evidence required by law to prove the existence of the disease itself, its non-curability within a period of
six months even with proper medical treatment, and the prejudice that it would cause to the health of
the sick employee and to those of his co-employees.
Due Process
Twin-notice requirement
Hearing; meaning of opportunity to be heard
King of Kings Transport v Mamac
Unilever Phils. V Rivera
Perez v Phil Telegraph
Esguerra v Valle Verde
Jaka Food v Pacot
Reliefs for Illegal Dismissal
Reinstatement
Pending appeal
Mt Carmel College v Resuena
Wenphil v Abing
Bergonio v South East Asian Airline
Alcantara v CA
Lansangan v Amkor
Pfizer v Velasco
Separation Pay in lieu of Reinstatement
Backwages
Computation
 Wenphil v. Abing, G.R. No. 207983, April 7, 2014
 See Bani Rural Bank v. Guzman, G.R. No. 170904, November 13, 2013
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013
FACTS: The LA ruled in favor of the employee in a constructive dismissal case. The total award was
P158,919.92 as of October 15, 1998. The decision already provided for the computation of the payable
separation pay and backwages due and did not further order the computation of the monetary awards
up to the time of the finality of the judgment.
Respondents exhausted their remedies up to the Supreme Court which ultimately denied their petition
and the decision became final an executory on May 27, 2002.
On November 5, 2002, petitioner filed a Motion for Correct Computation, praying that his backwages be
computed from the date of his dismissal on January 24, 1997 up to the finality of the Resolution of the
Supreme Court on May 27, 2002.11 Upon recomputation, the Computation and Examination Unit of the
NLRC arrived at an updated amount in the sum of P471,320.31.12
On December 2, 2002, a Writ of Execution was issued and respondent filed a Motion to Quash Writ of
Execution, arguing, among other things, that since the Labor Arbiter awarded separation pay
of P62,986.56 and limited backwages ofP95,933.36, no more recomputation is required to be made of
the said awards. They claimed that after the decision becomes final and executory, the same cannot be
altered or amended anymore.
The LA denied the motion to quash but the NLRC granted the appeal in favor of the respondents and
ordered the recomputation of the judgment award.
LA Ruling:
The Labor Arbiter reasoned that it is the October 15, 1998 Decision that should be enforced considering
that it was the one that became final and executory. However, the Labor Arbiter reasoned that since the
decision states that the separation pay and backwages are computed only up to the promulgation of the
said decision, it is the amount ofP158,919.92 that should be executed.
Petitioner appealed all the way to the CA.
CA Ruling:
The CA opined that since petitioner no longer appealed the October 15, 1998 Decision of the Labor
Arbiter, which already became final and executory, a belated correction thereof is no longer allowed.
The CA stated that there is nothing left to be done except to enforce the said judgment. Consequently, it
can no longer be modified in any respect, except to correct clerical errors or mistakes.
ISSUE:
Whether or not a re-computation in the course of execution of the labor arbiter's original computation
of the awards is a violation of the doctrine of immutability of judgment
HELD: NO
A source of misunderstanding in implementing the final decision in this case proceeds from the way the
original labor arbiter framed his decision. The decision consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it has been confirmed with
finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of
reinstatement, backwages, attorney's fees, and legal interests.
The second part is the computation of the awards made. On its face, the computation the labor arbiter
made shows that it was time-bound as can be seen from the figures used in the computation. This part,
being merely a computation of what the first part of the decision established and declared, can, by its
nature, be re-computed. This is the part, too, that the petitioner now posits should no longer be re-
computed because the computation is already in the labor arbiter's decision that the CA had affirmed.
The public and private respondents, on the other hand, posit that a re-computation is necessary
because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is
to be made, or up to the finality of the decision, if separation pay is to be given in lieu reinstatement.
That the labor arbiter's decision, at the same time that it found that an illegal dismissal had taken
place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the
then NLRC Rules of Procedure which requires that a computation be made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far as practicable,
shall embody in any such decision or order the detailed and full amount awarded.
Clearly implied from this original computation is its currency up to the finality of the labor arbiter's
decision. As we noted above, this implication is apparent from the terms of the computation itself, and
no question would have arisen had the parties terminated the case and implemented the decision at
that point.
However, the petitioner disagreed with the labor arbiter's findings on all counts - i.e., on the finding of
illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to the
NLRC which, in turn, affirmed the labor arbiter's decision. By law, the NLRC decision is final, reviewable
only by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a
timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in
affirming the payment of 13th month pay and indemnity, lapsed to finality and was subsequently
returned to the labor arbiter of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the
original labor arbiter's decision, the implementing labor arbiter ordered the award re-computed; he
apparently read the figures originally ordered to be paid to be the computation due had the case been
terminated and implemented at the labor arbiter's level. Thus, the labor arbiter re-computed the award
to include the separation pay and the backwages due up to the finality of the CA decision that fully
terminated the case on the merits. Unfortunately, the labor arbiter's approved computation went
beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards the
final CA decision had deleted - specifically, the proportionate 13th month pay and the indemnity awards.
Hence, the CA issued the decision now questioned in the present petition.
We see no error in the CA decision confirming that a re-computation is necessary as it essentially
considered the labor arbiter's original decision in accordance with its basic component parts as we
discussed above. To reiterate, the first part contains the finding of illegality and its monetary
consequences; the second part is the computation of the awards or monetary consequences of the
illegal dismissal, computed as of the time of the labor arbiter's original decision. 28
Consequently, from the above disquisitions, under the terms of the decision which is sought to be
executed by the petitioner, no essential change is made by a recomputation as this step is a necessary
consequence that flows from the nature of the illegality of dismissal declared by the Labor Arbiter in
that decision.29 A recomputation (or an original computation, if no previous computation has been
made) is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence
on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs
continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code. The
recomputation of the consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being implemented. The illegal dismissal
ruling stands; only the computation of monetary consequences of this dismissal is affected, and this is
not a violation of the principle of immutability of final judgments.30
That the amount respondents shall now pay has greatly increased is a consequence that it cannot avoid
as it is the risk that it ran when it continued to seek recourses against the Labor Arbiter's decision.
Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by
jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that
happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the
reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares
that the employment relationship ended so that separation pay and backwages are to be computed up
to that point.31
THUS:
(1) backwages computed from the time petitioner was illegally dismissed on January 24, 1997 up to May
27, 2002, when the Resolution of this Court in G.R. No. 151332 became final and executory;
(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month pay per
year of service; and
(3) interest of twelve percent (12%) per annum of the total monetary awards, computed from May 27,
2002 to June 30, 2013 and six percent (6%) per annum from July 1, 2013 until their full satisfaction.
BPI Employees v. BPI, G.R. No. 178699, September 21, 2011
FACTS: Uys services as a bank teller in BPIs Escolta Branch was terminated on grounds of gross
disrespect/discourtesy towards an officer, insubordination and absence without leave. Uy, together with
the Union, thus filed a case for illegal dismissal.
On December 31, 1997, the Voluntary Arbitrator rendered a Decision finding Uy's dismissal as illegal
and ordering BPI to immediately reinstate Uy and to pay her full back wages, including all her other
benefits under the Collective Bargaining Agreement (CBA) and attorneys fees.
The CA affirmed the decision but deleted the CBA benefits and limited the backwages to 3 years.
The SC affirmed but modified the decision awarding full backwages without limiting it to 3 years,
In the execution of the judgment, Uy’s computation is as follows: she based the amount of her back
wages on the current wage level and included all the increases in wages and benefits under the CBA that
were granted during the entire period of her illegal dismissal. These include the following: Cost of Living
Allowance (COLA), Financial Assistance, Quarterly Bonus, CBA Signing Bonus, Uniform Allowance,
Medicine Allowance, Dental Care, Medical and Doctors Allowance, Tellers Functional Allowance,
Vacation Leave, Sick Leave, Holiday Pay, Anniversary Bonus, Burial Assistance and Omega watch.
BPI disputed Uy's/Unions computation arguing that it contains items which are not included in the term
back wages and that no proof was presented to show that Uy was receiving all the listed items therein
before her termination. It claimed that the basis for the computation of back wages should be the
employees wage rate at the time of dismissal.
The Voluntary Arbitrator agreed with Uys/Unions contention that full back wages should include all
wage and benefit increases, including new benefits granted during the period of dismissal and just
excluded the claims for uniform allowance, anniversary bonus and Omega watch.
ISSUE: Is the inclusion of the CBA Benefits in the award for full backwages proper?
HELD: NO
Uys and the Unions contention that the March 31, 2005 Decision of this Court in G.R. No. 137863 in
effect reinstated the December 31, 1997 Decision of the Voluntary Arbitrator awarding full back wages
including the CBA benefits, is without basis. What is clear is that the March 31, 2005 Decision modified
the October 28, 1998 Decision of the CA by awarding full back wages instead of limiting the award to a
period of three years. This interpretation is further bolstered by the Courts discussion in the main body
of March 31, 2005 Decision as to the meaning of full back wages in view of the passage of Republic Act
No. 6715[31] on March 21, 1989 which amended Article 279 of the Labor Code, as follows:
ART. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by the Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. (Italics supplied)
Jurisprudence dictates that such award of back wages is without qualifications and deductions, [32] that
is, unqualified by any wage increases or other benefits that may have been received by co-workers
who were not dismissed.[33] It is likewise settled that the base figure to be used in the computation of
back wages is pegged at the wage rate at the time of the employees dismissal unqualified by deductions,
increases and/or modifications.[34]
We thus fully agree with the observation of the CA in its Amended Decision that the back wages as
discussed in the March 31, 2005 Decision in G.R. No. 137863 did not include salary increases and CBA
benefits, viz:
There is no ambiguity or omission in the dispositive portion of the SC decision but Public Respondent
erroneously concluded that said SC decision effectively reinstated Public Respondent's December 31,
1997 Decision. There is a need to read the findings and conclusions reached by the Supreme Court in the
subject decision to understand what was finally adjudicated.
In the dispositive portion of Its Decision of March 31, 2005, the Supreme Court expressly awarded Uy
full backwages from the time of her dismissal up to the time of her actual reinstatement. The full
backwages, as referred to in the body of the decision pertains to backwages as defined in Republic Act
No. 6715. Under said law, and as provided in numerous jurisprudence, full backwages means
backwages without any deduction or qualification, including benefits or their monetary equivalent the
employee is enjoying at the time of his dismissal.
Clearly, it is the intention of the Supreme Court to grant unto Private Respondent Uy full backwages as
defined under RA 6715. Consequently, any benefit or allowance over and above that allowed and
provided by said law is deemed excluded under said SC Decision. The CBA benefits awarded by Public
Respondent is not within the benefits under RA 6715. Said benefits are not to be included in the
backwages. x x x[35]
The CA correctly deleted the award of CBA benefits.
Thus, we find that the CA properly disregarded the salary increases and correctly computed Uys back
wages based on the salary rate at the time of Uys dismissal plus the regular allowances that she had
been receiving likewise at the time of her dismissal. [36] The CA also correctly deleted the signing bonus,
medicine allowance, medical and doctors allowance and dental care allowance, as they were all not
proven to have been granted to Uy at the time of her dismissal from service.
Limited Backwages
Integrated Microelectronics v. Pionilla, G.R. No. 200222, August 28, 2013
PRINCIPLE: REINSTATEMENT BUT WITHOUT BACKWAGES
FACTS: Pionilla is a production worker. When his relative applied in IMI, he let her borrow his ID so she
can ride the company shuttle bus for free. IMI found Pionilla guilty of violating Article 6.12 of the
Company Rules and Regulations (CRR) which prohibits the lending of one’s ID since the same is
considered a breach of its security rules and carries the penalty of dismissal.
The LA ruled in favor of Pionilla and ordered reinstatement and backwages. The NLRC reversed the LA
and found his dismissal valid. The CA reversed the NLRC and ruled that while IMI’s regulations on
company IDs were reasonable, the penalty of dismissal was too harsh and not commensurate to the
misdeed committed considering Pionilla’s unblemished 9 years of service.
IMI disputes the CA decision to award Pionilla reinstatement and full backwages would not only be
excessive and unfair, but would be contrary to existing principles of law and jurisprudence.
ISSUE: Can an employee who was dismissed for an infraction be reinstated with backwages because the
penalty of dismissal is too harsh a penalty?
HELD: Reinstatement only but no backwages.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if
reinstatement is not viable) and payment of full backwages. In certain cases, however, the Court has
carved out an exception to the foregoing rule and thereby ordered the reinstatement of the employee
without backwages on account of the following: (a) the fact that dismissal of the employee would be too
harsh of a penalty; and (b) that the employer was in good faith in terminating the employee.
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty to be
imposed against Pionilla for his infractions; and (b) IMI was in good faith when it dismissed Pionilla as his
dereliction of its policy on ID usage was honestly perceived to be a threat to the company's security. In
this respect, since these concurring circumstances trigger the application of the exception to the rule on
backwages, the Court finds it proper to accord the same disposition and consequently directs the
deletion of the award of back wages in favor of Pionilla, notwithstanding the illegality of his dismissal.
Victory Liner v. Race, G.R. No. 164820, December 8, 2008
FACTS:
Pablo Race was a bus driver for Victory Liner. The bus Race was driving was bumped by another bus and
due to the accident, he fractured his left leg. While recuperating, Race received his wages with the
company paying for his hospital expenses. He was paid his salary from 1994-1998. When he returned to
work, still limping heavily, he was told he was considered resigned. Race sent a letter to the bus
company asking to be reinstated as a conductor or dispatcher.
Race filed a complaint wherein he stated that he no longer wanted to be reinstated.
The LA dismissed Race’s complaint on the ground of prescription. The NLRC reversed the LA and ordered
the reinstatement of the respondent to his former position without loss of seniority rights and other
privileges and benefits with full back-wages. The CA affirmed the NLRC.
Victory Liner contends that the order for the reinstatement of the respondent as bus driver was
unconstitutional for being tantamount to involuntary servitude; that when the respondent filed his
complaint for illegal dismissal, the latter no longer desired to be reinstated to his former position as bus
driver; that the respondent’s unwillingness to be reinstated as bus driver was also evident from his letter
to the petitioner where the respondent manifested his intention to be hired as a dispatcher or
conductor; and that to reinstate the respondent as bus driver despite the fact that it is against his will is
involuntary servitude.
Petitioner also argued that the order for the reinstatement was contrary to law; that as a common
carrier, it is obliged under the law to observe extra-ordinary diligence in the conduct of its business; that
it will violate such obligation if it will reinstate the respondent as bus driver; that to allow the
respondent to drive a bus, despite the fact that the latter sustained a fractured left leg and was still
limping, would imperil the lives of the passengers and the property of the petitioner; and that the award
of backwages to the respondent was unjustified.
ISSUE: Can the NLRC order reinstatement even if it is not the relief prayed for?
HELD:
In view of the fact that the petitioner neglected to observe the substantial and procedural due process
in terminating the employment of respondent, we rule that the latter was illegally dismissed from work
by the petitioner.
Consequently, the respondent is entitled to reinstatement without loss of seniority rights, full
backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement as provided for
under Article 279 of the Labor Code.
It appears, however, that respondent was not seeking reinstatement. In his complaint for illegal
dismissal against petitioner, respondent stated:
RELIEF
Complainant/s pray/s for the following:
Reinstatement: No More.36
Respondent also sent to the petitioner a letter applying for the position of a dispatcher or
conductor.37 In the said letter, the respondent explained that since he cannot drive anymore due to his
leg injury, he was willing to be hired as a dispatcher or conductor. The abovestated facts obviously show
that respondent was unwilling to be reinstated as a bus driver.
Even assuming that respondent is willing to be reinstated as petitioner’s bus driver, the reinstatement is
still unwarranted. There is a serious doubt as to whether the respondent is physically capable of driving
a bus based on the following undisputed facts: (1) respondent was operated on and confined twice in
two different hospitals for a fractured left leg; (2) steel plates were attached to his fractured leg; 38 (3)
each confinement lasted for a month; (4) after his discharge from the second confinement, respondent
was still limping heavily; (5) when respondent had reported for work to the petitioner in January 1998,
he was also limping;39 and (6) respondent does not have a medical certificate which guarantees that his
leg injury has already healed and that he is now physically capable of driving a bus.
It should be stressed that petitioner is a common carrier and, as such, is obliged to exercise extraordinary diligence in transporting its passengers safely. 40 To allow the respondent to drive the
petitioner’s bus under such uncertain condition would, undoubtedly, expose to danger the lives of the
passengers and the property of the petitioner. This would place the petitioner in jeopardy of violating its
extra-ordinary diligence obligation and, thus, may be subjected to numerous complaints and court suits.
It is clear therefore that the reinstatement of respondent not only would be deleterious to the riding
public but would also put unreasonable burden on the business and interest of the petitioner. In this
regard, it should be remembered that an employer may not be compelled to continue to employ such
persons whose continuance in the service will patently be inimical to his interests. 41
Based on the foregoing facts and circumstances, the reinstatement of the respondent is no longer
feasible. Thus, in lieu of reinstatement, payment to respondent of separation pay equivalent to one
month pay for every year of service is in order.
Preventive Suspension
Book V, Rule XXIII, Secs. 8-9, Implementing Rules (Labor Code)
Sections 8 and 9 of Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code
provides:
SEC. 8. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of
the employer or of his co-workers.
SEC. 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days.The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker.In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker.
See Bluer Than Blue v. Esteban, G.R. No. 192582, April 7, 2014
FACTS: Respondent Glyza Esteban was employed as Sales Clerk, and assigned at Bluer Than Blue Joint
Ventures Company's (petitioner) EGG boutique in SM City Marilao, Bulacan.
In 2006, petitioner received a report that several employees have access to its point-of-sale (POS)
system through a universal password given by Elmer Flores. Upon investigation, it was discovered that it
was Esteban who gave Flores the password.
Esteban was placed on 10-days preventive suspension while an investigation was conducted.
Esteban admitted that she used the universal password three times on the same day in December 2005,
after she learned of it from two other employees who she saw browsing through the petitioner’s sales
inquiry. She inquired how the employees were able to open the system and she was told that they used
the "123456" password.
Esteban was then dismissed for loss of trust and confidence.
LA Ruling: he Labor Arbiter (LA) ruled in favor of Esteban and found that she was illegally dismissed. The
LA also awarded separation pay, backwages, unpaid salary during her preventive suspension and
attorney’s fees.
The NLRC reversed the LA and dismissed the complaint.
The CA reinstated the LA decision and found that the suspension was unwarranted.
The petitioner maintains that it was justified in imposing the same despite that the acts were committed
almost a year before the investigation since it did not have any prior knowledge of the infraction.
ISSUE: Was the preventive suspension valid although the infraction was committed a year before the
actual investigation?
HELD: YES
Preventive suspension during
investigation
Preventive suspension is a measure allowed by law and afforded to the employer if an employee’s
continued employment poses a serious and imminent threat to the employer’s life or property or of his
co-workers.32 It may be legally imposed against an employee whose alleged violation is the subject of an
investigation.33
In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive
suspension on Esteban. While it may be that the acts complained of were committed by Esteban almost
a year before the investigation was conducted, still, it should be pointed out that Esteban was
performing functions that involve handling of the petitioner’s property and funds, and the petitioner
had every right to protect its assets and operations pending Esteban’s investigation.
But the dismissal was illegal.
In this case, the Court finds that the acts committed by Esteban do not amount to a wilful breach of
trust. She admitted that she accessed the POS system with the use of the unauthorized "123456"
password. She did so, however, out of curiosity and without any obvious intention of defrauding the
petitioner. As professed by Esteban, "she was acting in good faith in verifying what her co-staff told her
about the opening of the computer by the use of the "123456" password, x x x. She even told her costaff not to open again said computer, and that was the first and last time she opened said computer."
Moreover, the petitioner even admitted that Esteban has her own password to the POS system. If it was
her intention to manipulate the store’s inventory and funds, she could have done so long before she had
knowledge of the unauthorized password. But the facts on hand show that she did not. The petitioner
also failed to establish a substantial connection between Esteban’s use of the "123456" password and
any loss suffered by the petitioner. Indeed, it may be true that, as posited by the petitioner, it is the fact
that she used the password that gives cause to the loss of trust and confidence on Esteban. However, as
ruled above, such breach must have been done intentionally, knowingly, and purposely, and without any
justifiable excuse, and not simply something done carelessly, thoughtlessly, heedlessly or inadvertently.
To the Court’s mind, Esteban’s lapse is, at best, a careless act that does not merit the imposition of the
penalty of dismissal.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Labor Arbiter are AFFIRMED.
Insofar as it affirmed respondent Glyza Esteban's preventive suspension, the same are hereby
REVERSED. The Labor Arbiter is hereby ORDERED to re-compute the monetary award in favor of Glyza
Esteban and to exclude the award of backwages during such period of preventive suspension, if any.
Artificio v. NLRC, G.R. No. 172988, July 26, 2010
FACTS: Artificio works as security guard for RP Guardians Security Agency. Due to arguments with his
fellow security guards, a confidential report against him was submitted to the management requesting
that Artificio be investigated for maliciously machinating Edus hasty relief from his post and for leaving
his post during night shift duty to see his girlfriend at a nearby beerhouse. Another report was submitted
wherein Artificio was reported as reporting for work under the influence of liquor. When Artificio
learned that no salaries would be given that day, he bad-mouthed the employees of RP Guardians
Security Agency, Inc. and threatened to arson their office.
On even date, Andres issued a Memorandum [8] temporarily relieving Artificio from his post and placing
him under preventive suspension pending investigation for conduct unbecoming a security guard, such
as, abandonment of post during night shift duty, light threats and irregularities in the observance of
proper relieving time.
Without waiting for the hearing to be held, Artificio filed on 5 August 2002, a complaint for illegal
dismissal and illegal suspension.
Artificio maintains that he was illegally suspended since his preventive suspension was for an indefinite
period and was imposed without investigation. He also argues that he was illegally dismissed because
the charges against him were couched in general and broad terms. Further, he was not given any notice
requiring him to explain his side.
Respondents counter that Artificio was not dismissed but merely placed under preventive suspension
pending investigation of the charges against him.
ISSUE: Was the suspension valid?
HELD: YES
Sections 8 and 9 of Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code
provides:
SEC. 8. Preventive suspension. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of
the employer or of his co-workers.
SEC. 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker.
As succinctly stated above, preventive suspension is justified where the employees continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employees co-workers. Without this kind of threat, preventive suspension is not proper. [19]
In this case, Artificios preventive suspension was justified since he was employed as a security guard
tasked precisely to safeguard respondents client. His continued presence in respondents or its clients
premises poses a serious threat to respondents, its employees and client in light of the serious
allegation of conduct unbecoming a security guard such as abandonment of post during night shift
duty, light threats and irregularities in the observance of proper relieving time.
Besides, as the employer, respondent has the right to regulate, according to its discretion and best
judgment, all aspects of employment, including work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-off of workers and the
discipline, dismissal and recall of workers. Management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers pursuant to company rules and regulations.
This Court has upheld a companys management prerogatives so long as they are exercised in good faith
for the advancement of the employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws or under valid agreements
Mandapat v. Add Force Personnel, G.R. No. 180285, July 6, 2010
FACTS:
Employee: Ma. Socorro Mandapat was hired as Sales and Marketing Manager
Charge: gross and habitual neglect of duties and willful breach of trust
ACTS: Respondent claims that during her five-month stint as sales manager, petitioner failed to close a
single deal or contract with any client. In addition, petitioner issued several proposals to clients which
were either grossly disadvantageous to respondent or disregarded the clients budget ceiling. Petitioner
also sent out several communications to clients containing erroneous data and computations; submitted
fictitious daily activity reports and reimbursement slips; and consistently failed to submit her reports,
such as the daily activity report, expense report, weekly sales call plan and internet-based calendar
system on time.
PREVENTIVE SUSPENSION: 1 day.
Mandapat argues she was constructively dismissed because she was illegally suspended.
Petitioner reiterates that she was constructively dismissed. She harps on the alleged pattern of
harassment committed by respondent as tantamount to constructive dismissal, such as, illegally placing
her under preventive suspension, the disconnection of her internet account, and the pressure exerted
by respondent to force her to resign. Petitioner claims that the preventive suspension meted upon her is
illegal for being indefinite, as the duration of her suspension was not stated in the companys
memorandum.
On the other hand, respondent employer argues that petitioners preventive suspension for one day can
hardly be considered indefinite, given the fact that petitioner immediately resigned one day after the
suspension.
ISSUE: When does illegal suspension amount to constructive dismissal?
HELD:
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving him with no option but to forego with his continued
employment.
We find that there was no act of discrimination committed against petitioner that would render her
employment unbearable.
Preventive suspension may be legally imposed against an employee whose alleged violation is the
subject of an investigation. The purpose of his suspension is to prevent him from causing harm or injury
to the company as well as to his fellow employees.
The pertinent rules dealing with preventive suspension are found in Section 8 and Section 9 of Rule XXIII,
Book V of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9,
Series of 1997, which read as follows:
Section 8. Preventive suspension. The employer may place the worker concerned under preventive
suspension only if his continued employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.
Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or
the employer may extend the period of suspension provided that during the period of extension, he
pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker.
When preventive suspension exceeds the maximum period allowed without reinstating the employee
either by actual or payroll reinstatement [18] or when preventive suspension is for indefinite period,
[19]
only then will constructive dismissal set in.
While no period was mentioned in the show-cause memorandum, it was wrong for petitioner to infer
that her suspension was for an indefinite period. It must be pointed out that the inclusion of the phrase
during the course of investigation would lead to a reasonable and logical presumption that said
suspension in fact has a duration which could very well be not more than 30 days as mandated by
law. And, as the Court of Appeals correctly observed, the suspension has been rendered moot by
petitioners resignation tendered a day after the suspension was made effective.
Petitioner contests the grounds for her suspension as she denies posing a danger on the lives of the
officers or employees of respondent or of their properties. Petitioner adds that she was not in a position
to bind respondent to any contract, therefore, she could not and would not be able to sabotage the
operations of respondent.[20] Upon the other hand, respondent asserts that preventive suspension was
necessary in order to protect the assets and operations of the company pending investigation of the
alleged infractions committed by the employee concerned. [21]
Respondent is correct. Indeed, as sales manager, petitioner had the power and authority to enter into
contracts that would bind respondent, regardless of whether these contracts would prove to be
beneficial or prejudicial to the interest of respondent. Respondent has every right to protect its assets
and operations pending investigation of petitioner.
Neither could we consider the acts of disconnection of computer and internet access privileges as
harassment. Respondent clearly explained that the cessation of her internet and network privileges
were but a consequence of the investigation against her and not for the purpose of harassment.
Maricalum Mining v. Decorion, G.R. No. 158637, April 12, 2006
FACTS:
EMPLOYEE: Decorion was a regular employee of Maricalum Mining who started out as a Mill Mechanic
and was later promoted to Foreman I.
ACT: A Supervisor called a meeting which Decorion failed to attend as he was then supervising the
workers under him.
CHARGE: INSUBORDINATION
SUSPENSION: He was suspended the same day as the meeting he failed to attend. He was not allowed to
report to work the next day. A month after Decorion was served a Notice of Infraction and Proposed
Dismissal to enable him to present his side. On May 15, 1996, he submitted to the Personnel
Department his written reply to the notice.
A grievance meeting was held upon Decorions request on June 5, 1996, during which he manifested that
he failed to attend the meeting on April 11, 1996 because he was then still assigning work to his men. He
maintained that he has not committed any offense and that his service record would show his efficiency.
On July 23, 1996, Decorion filed before the National Labor Relations Commission (NLRC) Regional
Arbitration Branch VI of Bacolod City a complaint for illegal dismissal and payment of moral and
exemplary damages and attorneys fees.
Maricalum Minings Chief and Head of Legal and Industrial Relations issued a memorandum on August
13, 1996, recommending that Decorions indefinite suspension be made definite with a warning that a
repetition of the same conduct would be punished with dismissal. Maricalum Minings Resident Manager
issued a memorandum on August 28, 1996, placing Decorion under definite disciplinary suspension of
six (6) months which would include the period of his preventive suspension which was made to take
effect retroactively from April 11, 1996 to October 9, 1996.
But on September 4, 1996, Decorion was served a memorandum informing him of his temporary lay-off
due to Maricalum Minings temporary suspension of operations and shut down of its mining operations
for six (6) months, with the assurance that in the event of resumption of operations, he would be
reinstated to his former position without loss of seniority rights.
The mining company argues that at the time of the filing of Decorion’s complaint, there was as yet no
illegal dismissal as he was dismissed after the filing of the complaint because of the temporary
suspension of mining operations
ISSUE: Was Decorion constructively dismissed at the time he filed his complaint?
HELD: YES
The Rules are explicit that preventive suspension is justified where the employee's continued
employment poses a serious and imminent threat to the life or property of the employer or of the
employee's co-workers. Without this kind of threat, preventive suspension is not proper.
There is no evidence to indicate that his failure to attend the meeting prejudiced his employer or that
his presence in the company's premises posed a serious threat to his employer and co-workers. The
preventive suspension was clearly unjustified.
Similarly, from the time Decorion was placed under preventive suspension on April 11, 1996 up to the
time a grievance meeting was conducted on June 5, 1996, 55 days had already passed. Another 48 days
went by before he filed a complaint for illegal dismissal on July 23, 1996. Thus, at the
time Decorion filed a complaint for illegal dismissal, he had already been suspended for a total of 103
days.
Maricalum Minings contention that there was as yet no illegal dismissal at the time of the filing of the
complaint is evidently unmeritorious. Decorions preventive suspension had already ripened into
constructive dismissal at that time. While actual dismissal and constructive dismissal do take place in
different fashion, the legal consequences they generate are identical.
Decorions employment may not have been actually terminated in the sense that he was not served
walking papers but there is no doubt that he was constructively dismissed as he was forced to quit
because continued employment was rendered impossible, unreasonable or
unlikely by Maricalum Minings act of preventing him from reporting for work.
Petitioners reliance on Valdez v. NLRC, supra, is misplaced. The legal basis of the ruling in that case is
the principle underlying Article 286 of the Labor Code which provides that the bona fide suspension of
the operation of a business or undertaking for a period not exceeding six (6) months shall not terminate
employment. In contrast, the instant case involves the preventive suspension of an employee not by
reason of the suspension of the business operations of the employer but because of the employees
failure to attend a meeting. The allowable period of suspension in such a case is only 30 days as
provided by the Implementing Rules.
Constructive Dismissal
Norkis Trading v. Gnilo, G.R. No. 159730, Feb. 11, 2008
FACTS:
EMPLOYEE: Melvin R. Gnilo (respondent) was initially hired by Norkis Trading Co., Inc. (petitioner Norkis)
as Norkis Installment Collector (NIC)
ACT: it was found out that respondent forwarded the monthly collection reports of the NICs under his
supervision without checking the veracity of the same resulting in overstated collection efficiency
reports for six consecutive months.
CHARGE: with negligence of basic duties and responsibilities resulting in loss of trust and confidence and
laxity in directing and supervising his own subordinates.
TRANSFER OF POSITION: Credit and Collection Manager to Marketing Assistant to the Senior Vice
President
COMPLAINT: constructive dismissal,
EMPLOYEE’S DEFENSE:
Petitioners submit that the positions of Credit and Collection Manager and Marketing Assistant are coequal and of the same level of authority; that the scope of work of a Marketing Assistant is wider, since
he has access to confidential informations and has the chance to communicate directly with higher
officers of the company; that his area of responsibility as Credit and Collection Manager was limited to
branches located in Legaspi City and Virac, Catanduanes; whereas as Marketing Assistant, he is
responsible for analyzing and coordinating all marketing information relevant to the company's
motorcycles from all over Luzon, and his reports are necessary for the planning and decision-making
activities of petitioners' top management; and that there is no demotion, since respondent's position is
more encompassing and vital to the company and he is receiving the same salary.
ISSUE: When does transfer to another position amount to constructive dismissal?
HELD: There is constructive dismissal when an employee's functions, which were originally supervisory
in nature, were reduced; and such reduction is not grounded on valid grounds such as genuine business
necessity even if there is no reduction in salary. Constructive dismissal shown by:
-
reduction in his duties and responsibilities which amounted to a demotion tantamount to a
constructive dismissal – from managerial to clerical
his service car was taken from him = reduction of benefit
his work became unbearable when Albos, in a very uncouth manner, hurled expletives at the
private respondent, calling him bobo, gago and screaming putang ina moin front of him, at
the same time crumpling (his) report and throwing it into his face. Such undignified and
boorish deeds perpetrated against private respondent directly caused him to forthwith leave
the employ of petitioner corporation, which he served loyally for some twelve (12) years
Constructive dismissal is defined as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or a diminution of pay. [20] Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee, leaving him with no option but to forego his continued
employment.[21]
A transfer is defined as a movement from one position to another which is of equivalent rank, level or
salary, without break in service.[22] Promotion, on the other hand, is the advancement from one position
to another with an increase in duties and responsibilities as authorized by law, and usually accompanied
by an increase in salary.[23] Conversely, demotion involves a situation in which an employee is relegated
to a subordinate or less important position constituting a reduction to a lower grade or rank, with a
corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.
[24]
In this case, while the transfer of respondent from Credit and Collection Manager to Marketing Assistant
did not result in the reduction of his salary, there was a reduction in his duties and responsibilities
which amounted to a demotion tantamount to a constructive dismissal as correctly held by the NLRC
and the CA.
A comparison in the nature of work of these two positions shows a great difference. As Credit and
Collection Manager, respondent was clothed with all the duties and responsibilities of a managerial
employee. He could devise and implement action plans to meet his objectives and exercise independent
judgment in resolving problem accounts. He had power and control over NICs, Branch Control
Officers (BCOs) and Cashiers under his supervision, and he provided them training in the performance of
their respective works. Further, he had the authority to ensure reserves in the NICs, BCOs and Cashiers
in case of expansion, reassignment and/or termination. There is no doubt that said position of Credit
and Collection Manager entails great duties and responsibilities and involves discretionary powers. In
fact, even in petitioners pleadings, they repeatedly stated that the position involved a high degree of
responsibility requiring trust and confidence as it relates closely to the financial interest of the company.
On the other hand, the work of a Marketing Assistant is clerical in nature, which does not involve the
exercise of any discretion. Such job entails mere data gathering on vital marketing informations relevant
to petitioners' motorcycles and making reports to his direct supervisor. He is a mere staff member in the
office of the Senior Vice-President for Marketing. While petitioners claim that the position of a
Marketing Assistant covers a wide area as compared with the position of Credit and Collection Manager,
the latter is reposed with managerial duties in overseeing petitioners business in his assigned
area, unlike the former in which he merely collates raw data. These two positions are not of the same
level of authority.
There is constructive dismissal when an employee's functions, which were originally supervisory in
nature, were reduced; and such reduction is not grounded on valid grounds such as genuine business
necessity.[25]
We quote with approval the findings of the CA on the matter of respondent's demotion in his functions,
thus:
x x x Studying minutely the proof proffered by both sides, our considered ruling is that there is more
than the requisite quantum of evidence in support of the NLRC's conclusion that indeed, private
respondent was constructively dismissed. This is evident, not only from the much reduced powers and
prerogatives of the private respondent when his position was changed from Credit and Collection
Manager to Marketing Assistant to the Senior Vice President; the variance in the duties between the
two, as may be gleaned from the definition of functions made of record, in this case, are glaring and
indubitable. As Credit and Collection Manager, private respondent had the authority to devise and
implement action plans x x x, manage and control the security and safety of collections and repossessed
units x x x, effectively supervise, teach and train BCO and cashiers x x x, discipline NIC's, BCO's and
cashiers, x x x, among others. In other words, he was part of management, or was at the supervisory
level, to say the least. On the other hand, as Marketing Assistant to the Senior Vice President, private
respondent was stripped of all management and oversize wherewithal, and became an appendage of his
immediate supervisor, confined to such mundane functions as to analyze monthly LTO data x x x,
coordinate with Sales Engineers x x x, and make quarterly reports x x x, give inputs on such dreary
information such as prices of rice and copra, tobacco and gasoline, sources of people's income, peace
and order situation, prepare brochures, etc., which are humdrum clerical tasks requiring little or no
discretion. Worse, he lost all the people under him, and had no staff, and was relegated to a mere rank
and file employee who had no one under his supervision and whose duties were merely routinary and
clerical in nature which did not require the use of independent judgment. [26]
Moreover, petitioners failed to refute respondents claim that as Credit and Collection Manager, he was
provided with a service car which was no longer available to him as Marketing Assistant; thus, such was
a reduction in his benefit.
There is also constructive dismissal when an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee as to foreclose any choice on his part
except to resign from such employment. [27] As aptly observed by the CA, to wit:
While we may allow petitioners the leeway of disciplining its employees, which is why we uphold the
finding of the NLRC that the fifteen-day suspension of private respondent was legal and proper, We
cannot countenance the barbaric treatment suffered by the latter in the hands of his bosses. Undisputed
it is that not only was private respondent made to look like an idiot when he was not given work in his
new assignment, but that he was humiliated and debased when petitioner Albos, in a very uncouth
manner, hurled expletives at the private respondent, calling him bobo, gago and screaming putang
ina moin front of him, at the same time crumpling (his) report and throwing it into his face. Such
undignified and boorish deeds perpetrated against private respondent directly caused him to forthwith
leave the employ of petitioner corporation, which he served loyally for some twelve (12) years. [28]
Respondents demotion in the nature of his functions coupled with petitioner Alboss act of insensibility
no doubt amounts to his constructive dismissal.
Hechanova v. Atty. Matorre, G.R. No. 198261, October 16, 2013
FACTS:
Atty. Matorre claimed that on August 1, 2008, she was employed by HBV Law Firm as a Senior Associate
Attorney. As the managing partner of HBV Law Firm, Atty. Hechanova was the one who supervised Atty.
Matorre and gave her work assignments.
On August 11, 2008, Atty. Matorre, orally or through e-mails, started to express her feelings of being
harassed by Atty. Hechanova.
VERBAL RESIGNATION: During a meeting between Atty. Matorre and Atty. Hechanova on August 19,
2008,9 Atty. Matorre told Atty. Hechanova that since she (Atty. Hechanova) was not satisfied with her
work and because they were frequently arguing with each other, it would be best if she (Atty. Matorre)
resigns from the firm.10 Atty. Matorre requested that her resignation be made effective on September
30, 2008, but thinking that the said date was too far off, Atty. Hechanova accepted the resignation, with
the condition that it be made effective on September 15, 2008. 11
On September 1, 2008, Atty. Matorre received a letter 14 from Atty. Hechanova conveying the latter’s
acceptance of her oral resignation. Atty. Hechanova’s secretary, Gladies Nepomuceno, attested 15 that
when Atty. Matorre received the aforementioned letter, Atty. Matorre merely said "okay" without
displaying any sign of protest. On September 1, 2008, Atty. Matorre filed a complaint for constructive
constructive dismissal.
LA Ruling: She resigned verbally
NLRC: a written resignation is the proper proof of her alleged voluntary resignation. 24 The NLRC also
reasoned that Atty. Hechanova’s act of moving Atty. Matorre’s last day of employment with HBV Law
Firm from September 30, 2008 to September 15, 2008 is an act of harassment. 25 This act, according to
the NLRC, pushed Atty. Matorre, leaving her with no other option or time to save her job or look for
another one.26 The NLRC stated that this, along with Atty. Hechanova’s refusal to give Atty. Matorre any
assignment, her assignment of a subordinate to perform Atty. Matorre’s function while the latter was
still in the office, Atty. Hechanova’s continuing harassment are "all clear acts constituting constructive
dismissal."
CA: No voluntary resignation took place.
ISSUE: Does voluntary resignation negate constructive dismissal?
HELD: YES. To reiterate, in line with settled jurisprudence, 43 since Atty. Matorre admittedly resigned, it
was incumbent upon her to prove that her resignation was not voluntary, but was actually a case of
constructive dismissal, with clear, positive, and convincing evidence.
It should be noted that the fact of resignation is now undisputed. What remains to be determined is
whether Atty. Matorre voluntarily resigned or was constructively dismissed by petitioners.
We agree with the Court of Appeals that it was grave error on the part of the NLRC to rely on the
allegation that Mr. Tecson threatened and forced petitioner to resign. Other than being unsubstantiated
and self-serving, the allegation does not suffice to support the finding of force, intimidation, and
ultimately constructive dismissal.
Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be
given credence.
First, Atty. Matorre was not able to present a single witness to corroborate her claims of verbal abuse
and insults from Atty. Hechanova. She was only able to adduce transcriptions 39 of what she claims were
conversations between her and Atty. Hechanova, and nothing more. These are indeed self-serving and
uncorroborated and should not be given evidentiary weight.
On the other hand, the body of evidence presented by HBV Law Firm would show affidavits
demonstrating that the other personnel in the said law firm neither heard nor saw any inappropriate
behavior on the part of Atty. Hechanova towards Atty. Matorre.
The Affidavit of Gladies Nepomuceno,40 the secretary of HBV Law Firm, states that the said affiant did
"not believe that Atty. Matorre was treated like a slave" by the firm, as Atty. Matorre argued.
The Affidavit of Gladys C. Vilchez,41 a partner at HBV Law Firm, states that Atty. Vilchez, whose room was
near Atty. Matorre’s, never heard Atty. Hechanova shout at Atty. Matorre nor speak to her in an
offensive manner.
Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation from
September 30, 2008 to September 15, 2008 is not an act of harassment, as Atty. Matorre would have us
believe. The 30-day notice requirement for an employee’s resignation is actually for the benefit of the
employer who has the discretion to waive such period. Its purpose is to afford the employer enough
time to hire another employee if needed and to see to it that there is proper turn-over of the tasks
which the resigning employee may be handling.
Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation to an
earlier date cannot be seen as a malicious decision on the part of the firm in order to deprive Atty.
Matorre of an opportunity to seek new employment. This decision cannot be viewed as an act of
harassment but rather merely the exercise of the firm’s management prerogative. Surely, we cannot
expect employers to maintain in their employ employees who intend to resign, just so the latter can
have continuous work as they look for a new source of income.
Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre after her
resignation is not an act of harassment, but is also an exercise of management prerogative. Expecting
that Atty. Matorre would no longer be working for HBV Law Firm after three to four weeks, she was no
longer given additional assignments to ensure a smooth turn-over of duties and work. Indeed, having an
employee focus on her remaining tasks and not assigning new ones to her would be beneficial on the
part of HBV Law Firm as there would in fact be less tasks to be turned over to Atty. Matorre’s
replacement. Said actuation is well within the ambit of the firm’s management prerogative, and is
certainly not an act of harassment.
To reiterate, in line with settled jurisprudence, 43 since Atty. Matorre admittedly resigned, it was
incumbent upon her to prove that her resignation was not voluntary, but was actually a case of
constructive dismissal, with clear, positive, and convincing evidence.
Peckson v. Robinsons, G.R. No. 198534, July 3, 2013
FACTS: Category Buyer to Provincial Coordinator – She was reassigned because she was habitually tardy
and absent and punctuality was required of a category buyer who meets with clients daily
Claiming that her new assignment was a demotion because it was non-supervisory and clerical in nature,
the petitioner refused to turn over her responsibilities to the new Category Buyer, or to accept her new
responsibilities as Provincial Coordinator.
the petitioner argued before the LA that the true organizational chart of the RSC showed that the
position of Category Buyer was one level above that of the Provincial Coordinator, and that moreover,
the job description of a Provincial Coordinator was largely clerical and did not require her to analyze
stock levels and order points, or source new local and international suppliers, or monitor stock level per
store and recommend items for replenishment, or negotiate better items and discounts from suppliers,
duties which only a Category Buyer could perform
Robinsons maintained that her transfer was not a demotion since the Provincial Coordinator occupied a
"Level 5" position like the Category Buyer, with the same work conditions, salary and benefits. But while
both positions had no significant disparity in the required skill, experience and aptitude, the position of
Category Buyer demanded the traits of punctuality, diligence and attentiveness because it is a frontline
position in the day-to-day business operations of RSC which the petitioner, unfortunately, did not
possess.
The LA upheld the reassignment. After the ruling, Peckson claimed she was placed on floating status for
7 months until she was forced to resign…that the company deliberately embarrassed her when it cut off
her email access; that they sent memoranda to her clients that she was no longer a Category Buyer, and
to the various Robinsons branches that she was now a Provincial Coordinator, while Milo Padilla (Padilla)
was taking over her former position as Category Buyer; that for seven (7) months, they placed her on
floating status and subjected her to mockery and ridicule by the suppliers and her co-employees; that
not only was there no justification for her transfer, but the respondents clearly acted in bad faith and
with discrimination, insensibility and disdain to make her stay with the company intolerable for her.
ISSUE: Did the new assignment amount to constructive dismissal?
HELD: NO
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is
a movement from one position to another of equivalent rank, level or salary without break in the service
or a lateral movement from one position to another of equivalent rank or salary; (b) the employer has
the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a transfer
becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of
punishment or is a demotion without sufficient cause; (d) the employer must be able to show that the
transfer is not unreasonable, inconvenient, or prejudicial to the employee. 23 (Citations omitted)
In Philippine Japan Active Carbon Corporation v. NLRC, 24 it was held that the exercise of management’s
prerogative concerning the employees’ work assignments is based on its assessment of the
qualifications, aptitudes and competence of its employees, and by moving them around in the various
areas of its business operations it can ascertain where they will function with maximum benefit to the
company.1âwphi1
It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications,
aptitudes, and competence, to move them around in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the company. An employee’s right
to security of tenure does not give him such a vested right in his position as would deprive the company
of its prerogative to change his assignment or transfer him where he will be most useful. When his
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a
demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal. 25
As a privilege inherent in the employer’s right to control and manage its enterprise effectively, its
freedom to conduct its business operations to achieve its purpose cannot be denied. 26 We agree with
the appellate court that the respondents are justified in moving the petitioner to another equivalent
position, which presumably would be less affected by her habitual tardiness or inconsistent attendance
than if she continued as a Category Buyer, a "frontline position" in the day-to-day business operations of
a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not
involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee
may not complain that it amounts to a constructive dismissal.
BURDEN OF PROOF THAT TRANSFER IS VALID IS WITH THE EMPLOYER - As we have already noted, the
respondents had the burden of proof that the transfer of the petitioner was not tantamount to
constructive dismissal, which as defined in Blue Dairy Corporation v. NLRC, 27 is a quitting because
continued employment is rendered impossible, unreasonable or unlikely, or an offer involving a
demotion in rank and diminution of pay:
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 that right is exercised. Thus, it cannot be used as a subterfuge by the employer to
rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer
is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank
or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this
burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been
defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely;
as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists
when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to
the employee leaving him with no option but to forego with his continued employment.
LIMITATIONS: But like all other rights, there are limits to the exercise of managerial prerogative to
transfer personnel, and on the employer is laid the burden to show that the same is without grave abuse
of discretion, bearing in mind the basic elements of justice and fair play. 30 Indeed, management
prerogative may not be used as a subterfuge by the employer to rid himself of an undesirable worker. 31
Interestingly, although the petitioner claims that she was constructively dismissed, yet until the
unfavorable decision of the LA on May 30, 2007, for seven (7) months she continued to collect her salary
while also adamantly refusing to heed the order of Sarte to report to the Metroeast Depot. It was only
on June 22, 2007, after the LA’s decision, that she filed her "forced" resignation. Her deliberate and
unjustified refusal to assume her new assignment is a form of neglect of duty, and according to the LA,
an act of insubordination. We saw how the company sought every chance to hear her out on her
grievances and how she ignored the memoranda of Sarte asking her to explain her refusal to accept her
transfer. All that the petitioner could say was that it was a demotion and that her floating status
embarrassed her before the suppliers and her co-employees.
The respondents have discharged the burden of proof that the transfer of the petitioner was not
tantamount to constructive dismissal.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 32 a machinist who had been employed with the
petitioner company for 16 years was reduced to the service job of transporting filling materials after he
failed to report for work for one (1) day on account of an urgent family matter. This is one instance
where the employee’s demotion was rightly held to be an unlawful constructive dismissal because the
employer failed to show substantial proof that the employee’s demotion was for a valid and just cause:
In case of a constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for valid and legitimate grounds such as genuine business necessity.
Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to
show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Failure of the
employer to overcome this burden of proof, the employee’s demotion shall no doubt be tantamount to
unlawful constructive dismissal. x x x.33 (Citation omitted)
In the case at bar, we agree with the appellate court that there is substantial showing that the transfer
of the petitioner from Category Buyer to Provincial Coordinator was not unreasonable, inconvenient, or
prejudicial to her. The petitioner failed to dispute that the job classifications of Category Buyer and
Provincial Coordinator are similar, or that they command a similar salary structure and responsibilities.
We agree with the NLRC that the Provincial Coordinator’s position does not involve mere clerical
functions but requires the exercise of discretion from time to time, as well as independent judgment,
since the Provincial Coordinator gives appropriate recommendations to management and ensures the
faithful implementation of policies and programs of the company. It even has influence over a Category
Buyer because of its recommendatory function that enables the Category Buyer to make right decisions
on assortment, price and quantity of the items to be sold by the store. 34
Gemina v. Bankwise, G.R. No. 175365, October 23, 2013
FACTS: Hired as Marketing Officer with the rank of Senior Manager
Employment Contract stipulated for a fund level commitment of P100,000,000.00 for the first six (6)
months of employment.
After 3 months, Gemina failed to deliver the fund level commitment. Thereafter, he claims he was
subjected to several forms of harassment by some officers of Bankwise by forcing him to file an
indefinite leave of absence, demanding for the return of his service vehicle and intentionally delaying
the release of his salaries and allowances.
Bankwise defense: inability to perform his commitment under the employment contract constitutes a
breach or violation of his contractual obligation.
Gemina stopped reporting for work and then filed a constructive dismissal complaint.
ISSUE: Was there constructive dismissal
HELD: NO
There was no constructive dismissal.
There is constructive dismissal when "there is cessation of work, because ‘continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution
in pay’ and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made
to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment." 30
As correctly held by the NLRC and the CA, Gemina’s claim of constructive dismissal is not supported by
the facts of the case. Both tribunals ruled that the circumstances mentioned by Gemina do not partake
of discriminatory acts calculated to force him to leave employment. The acts complained of merely
pertain to the legitimate exercise of management prerogatives. "Settled is the rule that factual findings
of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts when supported by substantial
evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."31 "The factual findings of the NLRC, when affirmed by the CA, are generally
conclusive on this Court."32
A close scrutiny of the facts of the case will bear out that Gemina indeed failed to state circumstances
substantiating his claim of constructive dismissal. To begin with, he does not claim to have suffered a
demotion in rank or diminution in pay or other benefits. What he claims is that he had been subjected to
several acts of harassment by some of the officers of Bankwise by way of (1) asking him to take a forced
leave of absence, (2) demanding for the return of his service vehicle, and (3) delaying the release of his
salaries and allowances in order to compel him to quit employment.
EMPLOYEE MUST PROVE FACT OF DISMISSAL FIRST BEFORE THE BURDEN OF PROVING THE VALIDITY
OF THE DISMISSAL SHIFTS TO EMPLOYER. It is a well-settled rule, however, that before the employer
must bear the burden of proving that the dismissal was legal, the employee must first establish by
substantial evidence the fact of his dismissal from service. Bare allegations of constructive dismissal,
when uncorroborated by the evidence on record, cannot be given credence.
In the instant case, the records are bereft of substantial evidence that will unmistakably establish a case
of constructive dismissal. An act, to be considered as amounting to constructive dismissal, must be a
display of utter discrimination or insensibility on the part of the employer so intense that it becomes
unbearable for the employee to continue with his employment. Here, the circumstances relayed by
Gemina were not clear-cut indications of bad faith or some malicious design on the part of Bankwise
to make his working environment insufferable.
Moreover, Bankwise was able to address the allegations of harassment that Gemina failed to submit his
attendance report promptly, hence, the delay in the release of his salary.
The Court also finds Bankwise’s order to return the service vehicle assigned to Gemina inadequate to
warrant his claim of constructive dismissal. It bears noting that the service vehicle was only temporarily
assigned for Gemina’s use. Nonetheless, it remains the property of the Bank and therefore may be
disposed of or utilized by the company in the manner that it deems more beneficial for its interests.
This is plainly an exercise of management prerogative. The employer’s right to conduct the affairs of its
business, according to its own discretion and judgment, is well-recognized. An employer has a free reign
and enjoys wide latitude of discretion to regulate all aspects of employment and the only criterion to
guide the exercise of its management prerogative is that the policies, rules and regulations on workrelated activities of the employees must always be fair and reasonable. 35
Verdadero v. Barney Autolines, G.R. No. 195428, August 29, 2012
FACTS: Works as bus conductor. Verdadero had a dispute with Atty Gimenez, the bus company’s
disciplinary officer. Atty Gimenez, together with his wife, boarded the bus where Verdadero was
assigned. The company provided free rides to employees and their wives but Verdadero charged them.
Verdadero claims he did not know who Atty Gimenez was while Gimenez claims he was rude to his wife
and threatened to kill him. Atty Gimenez sought a letter of apology but Verdadero submitted a counteraffidavit instead, refuting all allegations against him.
Thereafter, Verdadero furtively reported for work for fear of having another confrontation with
Gimenez. Rosela sent Verdadero a letter, dated February 25, 2008, requiring him to immediately report
for work and finish the pending disciplinary proceedings against him. On March 28, 2008, Verdadero
submitted his Letter-Reply, explaining that he had been receiving threats. He likewise believed he was
already illegally dismissed as he was not given any work assignment since January 28, 2008. Rosela
responded to Verdadero's letter and reminded him of the letter of apology which he was yet to submit
as compliance. On April 15, 2008, however, Verdadero filed a complaint for illegal dismissal
ISSUE: Did the incident with the disciplinary officer render Verdadero’s work unbearable amounting to
constructive dismissal?
HELD: NO. Gimenez was only a co-employee, not the management.
Constructive dismissal exists where there is cessation of work, because "continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution
in pay" and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made
to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment. 26
In this case, Verdadero cannot be deemed constructively dismissed. Records do not show any demotion
in rank or a diminution in pay made against him. Neither was there any act of clear discrimination,
insensibility or disdain committed by BALGCO against Verdadero which would justify or force him to
terminate his employment from the company.
To support his contention of constructive dismissal, Verdadero considers the verbal abuse by Gimenez
against him as an act which rendered his continued employment impossible, unreasonable or unlikely.
The claimed abuse was corroborated by the sworn written statement executed by Mascariña, which was
given credence by the NLRC and the CA. With the alleged threats of Gimenez, Verdadero believed that
he could no longer stay and work for BALGCO.
It is to be emphasized that the abovementioned acts should have been committed by the employer
against the employee. Unlawful acts committed by a co-employee will not bring the matter within the
ambit of constructive dismissal.
Assuming arguendo that, Gimenez did commit the alleged unlawful acts, still, this fact will not suffice to
conclude that constructive dismissal was proper. Contrary to the arguments of Verdadero, Gimenez is
not the employer. He may be the "disciplinary officer," but his functions as such, as can be gleaned from
the BALGCO Rules and Regulations,27 do not involve the power or authority to dismiss or even suspend
an employee. Such power is exclusively lodged in the BALGCO management. Gimenez remains to be a
mere employee of BALGCO and, thus, cannot cause the dismissal or even the constructive dismissal of
Verdadero. The employers are BALGCO and its owners, Barney and Rosela.
Bar Questions Constructive Dismissal
Dismissal; Constructive Dismissal; Transfer (2013) No. IV. b.
Bobby, who was assigned as company branch accountant in Tarlac where his family also lives, was
dismissed by Theta Company after anomalies in the company's accounts were discovered in the branch
Bobby filed a complaint and was ordered reinstated with full backwages after the Labor Arbiter found
that he had been denied due process because no investigation actually took place. Theta Company
appealed to the National Labor Relations Commission (NLRC) and at the same time wrote Bobby,
advising him to report to the main company office in Makati where he would be reinstated pending
appeal Bobby refused to comply with his new assignment because Makati is very far from Tarlac and he
cannot bring his family to live with him due to the higher cost of living in Makati. Advise Bobby on the
best course of action to take under the circumstances. (4%)
SUGGESTED ANSWER:
The best course of action for Bobby to take under the circumstances is to allege constructive dismissal in
the same case, and pray for separation pay in lieu of reinstatement.
Dismissal; Constructive Dismissal; Floating Status (2004)
RS, a security guard, filed a complaint for illegal dismissal against Star Security Agency. He alleged he
was constructively dismissed after ten years of service to the Agency. Having been placed on “off-detail”
and “floating status” for 6 months already, he claimed the Agency just really wanted to get rid of him
because it required him to take a neuro-psychiatric evaluation test by Mahusay Medical Center. RS said
he already submitted the result of his evaluation test by Brent Medical Clinic as precondition to a new
assignment, but the report was rejected by the Agency. RS added that Mahusay Medical Center had
close ties with Star’s president. It could manipulate tests to favor only those guards whom the Agency
wanted to retain. Star defended its policy of reliance on Mahusay Medical Center because it has been
duly accredited by the Philippine National Police. It is not one of those dubious testing centers issuing
ready-made reports. Star cited its sad experience last year when a guard ran amuck and shot an
employee of a client-bank. Star claimed management prerogative in assigning its guards, and prayed
that RS’ complaint be dismissed.
What are the issues? Identify and resolve them.
(5%)
SUGGESTED ANSWER:
The facts in the question raise these issues:
1. When RS was placed on "off-detail" or "floating status" for more than six months, can RS claim that he
was terminated?
2. Is there a valid reason for the termination of RS?
On the first issue, based on prevailing jurisprudence, RS can be considered as terminated because he has
been placed on "off detail" or "floating status" for a period which is more than six (6) months.
On the second issue, it is true that disease is a ground for termination. But the neuro-psychiatric
evaluation test by the Mahusay Medical Center is not the certification required for disease to be a
ground for termination. The Rules and Regulations implementing the Labor Code require a certification
by a public health authority 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.
ANOTHER SUGGESTED ANSWER:
The issues involved are as follows:
1. Is there constructive dismissal?
2. Is there a valid exercise of management prerogative?
On the first issue, there is constructive dismissal.
RS cannot be placed on "off-detail" and "floating status" indefinitely. If it lasts for more than six (6)
months, RS shall be deemed to have been constructively dismissed thus entitling him to separation
benefits. (Superstar Security Agency v. NLRC, 184 SCRA 74, [1990]).
On the second issue, there is no valid exercise of management prerogative. Star's claim of management
prerogative in assigning its guards cannot be exercised to defeat or circumvent RS' right to security of
tenure.
Dismissal; Constructive Dismissal; Transfer (1996)
Mansueto was hired by the Philippine Packing Company (PPC) sometime in 1960 as an hourly paid
research field worker at its pineapple plantation in Bukidnon. In 1970, he was transferred to the general
crops plantation in Misamis Oriental.
Mansueto was promoted to the position of a monthly paid regular supervisor four years after.
Subsequently, research activity in Misamis Oriental was phased out to March of 1982 for having become
unnecessary. Mansueto thereafter received a written memorandum from the PPC, reassigning him to
the Bukidnon plantation effective April 1, 1982, with assurance that his position of supervisor was still
there for him to hold.
Mansueto tried to persuade the PPC management to reconsider his transfer and if this was not possible,
to at least consider his position as redundant so that he could be entitled to severance pay. PPC did not
accept Mansueto's proposal.
When Mansueto continuously failed to report for work at the Bukidnon plantation, PPC terminated his
employment by reason of his refusal to accept his new assignment.
Mansueto claims that his reassignment is tantamount to an Illegal constructive dismissal. Do you agree
with Mansueto? Explain.
SUGGESTED ANSWER:
There is no constructive dismissal by the mere act of transferring an employee. The employee's
contention cannot be sustained simply because a transfer causes inconvenience. There is no onstructive
dismissal where, as in Philippine Japan Active Carbon Corp., vs. NLRC, 171 SCRA 164 (1989), the Court
ruled that constructive dismissal means:
A quitting because continued employment is rendered impossible, unreasonable or unlikeable; as an
offer involving a demotion in rank and a diminution in pay.
The transfer will not substantially alter the terms and conditions of employment of the Supervisor. The
right to transfer an employee is part of the employer's managerial function.
Furthermore, the Court ruled that an employee has no vested right to a position, and in justifiable cases
employment may be terminated.
An employer's right to security of tenure does not give him such a vested right to his position as would
deprive the Company of its prerogative to change his assignment or transfer him where he will be most
useful. When his transfer is not unreasonable, not inconvenient, nor prejudicial to him, and it does not
involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee
may not complain that it amounts to a constructive dismissal.
V Management Prerogative
Discipline
Leus v. St. Scholastica’s College, G.R. No. 187226, January 28, 2015
Q: Can a single teacher in a Catholic school be dismissed because she got pregnant out of wedlock by a
man who himself is single?
ANS: NO
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 A Disgraceful Or Immoral Conduct Under Section 94(e) Of The
1992 Manual of Regulations for Private School (MRPS).
 Thus, in contemplation of the law, disgraceful or immoral conduct specifically refers to acts which are
“detrimental or dangerous to those conditions upon which depend the existence and progress of human
society,” and not to those conducts prohibited by the beliefs of one religion. The Supreme Court noted
that there is no law which prohibits consensual sexual activity between two unmarried persons, or
otherwise penalizes an unwed mother for her sexual conduct. Hence, even though it is not in accord
with the doctrines of the Catholic Church, the employee’s act was deemed not disgraceful or immoral
within the contemplation of the law.
Disgraceful conduct is viewed in two ways, the “public and secular view” and “religious view”. Our
laws concern the first view. Disgraceful conduct per se will not amount to violation of the law – the
conduct must affect or poses a danger to the conditions of society, for example, the sanctity of
marriage, right to privacy and the like.
The petitioner’s dismissal is not a valid exercise of SSCW’s management prerogative.
The Court has held that “management is free to regulate, according to its own discretion and judgment,
all aspects of employment, including hiring, work assignments, working methods, time, place and
manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be exercised in good faith
and with due regard to the rights of labor.” Management cannot exercise its prerogative in a cruel,
repressive, or despotic manner.
SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss them if
there is a valid cause to do so. However, as already explained, there is no cause to dismiss the
petitioner. Her conduct is not considered by law as disgraceful or immoral. Further, the respondents
themselves have admitted that SSCW, at the time of the controversy, does not have any policy or rule
against an employee who engages in pre-marital sexual relations and conceives a child as a result
thereof. There being no valid basis in law or even in SSCW’s policy and rules, SSCW’s dismissal of the
petitioner is despotic and arbitrary and, thus, not a valid exercise of management prerogative.
In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for the
termination of her employment. SSCW failed to adduce substantial evidence to establish that the
petitioner’s conduct, i.e., engaging in pre-marital sexual relations and conceiving a child out of wedlock,
assessed in light of the prevailing norms of conduct, is considered disgraceful or immoral. The labor
tribunals gravely abused their discretion in upholding the validity of the petitioner’s dismissal as the
charge against the petitioner lay not on substantial evidence, but on the bare allegations of SSCW. In
turn, the CA committed reversible error in upholding the validity of the petitioner’s dismissal, failing to
recognize that the labor tribunals gravely abused their discretion in ruling for the respondents.
Transfer of Employees
Peckson v. Robinsons, G.R. No. 198534, July 3, 2013
FACTS: Transfer from Category Buyer to Provincial Coordinator
Petitioner argued that the true organizational chart of the RSC showed that the position of Category
Buyer was one level above that of the Provincial Coordinator, and that the job description of a Provincial
Coordinator was largely clerical and did not require her to analyze stock levels and order points, or
source new local and international suppliers, or monitor stock level per store and recommend items for
replenishment, or negotiate better items and discounts from suppliers, duties which only a Category
Buyer could perform.
The respondents denied petitioner’s allegations maintaining that her transfer was not a demotion since
both positions have the same work conditions, salary and benefits. However, the position of Category
Buyer demanded the traits of punctuality, diligence and attentiveness because it is a frontline position in
the day-to-day business operations of RSC which the petitioner, unfortunately, did not possess. The
respondents also raised the petitioner’s record of habitual tardiness as well as poor performance rating.
She was also suspended for deliberately violating a company policy after she was seen having lunch with
a company supplier.
Employee did not report for work as Provincial Coordinator
ISSUE: Was there a demotion amounting to constructive dismissal?
HELD: NO
In the case at bar, we agree with the appellate court that there is substantial showing that the transfer
of the petitioner from Category Buyer to Provincial Coordinator was not unreasonable, inconvenient, or
prejudicial to her. The petitioner failed to dispute that the job classifications of Category Buyer and
Provincial Coordinator are similar, or that they command a similar salary structure and responsibilities.
We agree with the NLRC that the Provincial Coordinator’s position does not involve mere clerical
functions but requires the exercise of discretion from time to time, as well as independent judgment,
since the Provincial Coordinator gives appropriate recommendations to management and ensures the
faithful implementation of policies and programs of the company. It even has influence over a Category
Buyer because of its recommendatory function that enables the Category Buyer to make right decisions
on assortment, price and quantity of the items to be sold by the store.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer
is a movement from one position to another of equivalent rank, level or salary without break in the
service or a lateral movement from one position to another of equivalent rank or salary; (b) the
employer has the inherent right to transfer or reassign an employee for legitimate business purposes;
(c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a
form of punishment or is a demotion without sufficient cause; (d) the employer must be able to show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.
In Philippine Japan Active Carbon Corporation v. NLRC, it was held that the exercise of management’s
prerogative concerning the employees’ work assignments is based on its assessment of the
qualifications, aptitudes and competence of its employees, and by moving them around in the various
areas of its business operations it can ascertain where they will function with maximum benefit to the
company.
It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications,
aptitudes, and competence, to move them around in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the company. An employee’s right
to security of tenure does not give him such a vested right in his position as would deprive the company
of its prerogative to change his assignment or transfer him where he will be most useful. When his
transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a
demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal.
As a privilege inherent in the employer’s right to control and manage its enterprise effectively, its
freedom to conduct its business operations to achieve its purpose cannot be denied. We agree with the
appellate court that the respondents are justified in moving the petitioner to another equivalent
position, which presumably would be less affected by her habitual tardiness or inconsistent attendance
than if she continued as a Category Buyer, a "frontline position" in the day-to-day business operations of
a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him, and it does not
involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee
may not complain that it amounts to a constructive dismissal.
Interestingly, although the petitioner claims that she was constructively dismissed, yet until the
unfavorable decision of the LA on May 30, 2007, for seven (7) months she continued to collect her salary
while also adamantly refusing to heed the order of Sarte to report to the Metroeast Depot. It was only
on June 22, 2007, after the LA’s decision, that she filed her "forced" resignation. Her deliberate and
unjustified refusal to assume her new assignment is a form of neglect of duty, and according to the LA,
an act of insubordination. We saw how the company sought every chance to hear her out on her
grievances and how she ignored the memoranda of Sarte asking her to explain her refusal to accept her
transfer. All that the petitioner could say was that it was a demotion and that her floating status
embarrassed her before the suppliers and her co-employees.
Morales v. Harbour Center, G.R. No. 174208, January 25, 2012
FACTS: Division Manager of the Accounting Department to Operations Cost Accounting, tasked with the
duty of "monitoring and evaluating all consumables requests, gears and equipment".
Employee protested that his reassignment was a clear demotion since the position to which he was
transferred was not even included in HCPTI’s plantilla and he was thus placed on floating status.
HCPTI argues that Morales’ transfer was brought about by the reorganization of its corporate structure
in 2003 which was undertaken in the exercise of its management prerogative to regulate every aspect of
its business
ISSUE: Is the transfer valid?
HELD: NO
The claim of reorganization is, however, considerably at odds with HCPTI’s assertions before the Labor
Arbiter to the effect, among other matters, that Morales erroneously and negligently authorized the
repeated payments of realty taxes from which the corporation was exempt as a PEZA-registered
company; that confronted by Filart (VP Finance) regarding his poor work performance which resulted in
losses amounting to P3,350,000.00, Morales admitted his inability to handle his job at the accounting
department; and, that as a consequence, HCPTI decided to reassign him to the Operations Cost
Accounting.49 Without so much as an affidavit from Filart to prove the same, this purported reason for
the transfer was, moreover, squarely refuted by Morales’ 31 March 2003 protest against his
reassignment.50
By itself, HCPTI’s claim of reorganization is bereft of any supporting evidence in the record. Having
pointed out the matter in his 31 March 2003 written protest, Morales was able to prove that HCPTI’s
existing plantilla did not include an Operations Cost Accounting Department and/or an Operations
Cost Accountant.51 As the party belatedly seeking to justify the reassignment due to the supposed
reorganization of its corporate structure, HCPTI, in contrast, did not even bother to show that it had
implemented a corporate reorganization and/or approved a new plantilla of positions which included
the one to which Morales was being transferred. Since the burden of evidence lies with the party who
asserts the affirmative of an issue, the respondent has to prove the allegations in his affirmative
defenses in the same manner that the complainant has to prove the allegations in the complaint.52 In
administrative or quasi-judicial proceedings like those conducted before the NLRC, the standard of proof
is substantial evidence which is understood to be more than just a scintilla or such amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion.
Admittedly, the right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their assignments or to
transfer them.42 By management prerogative is meant the right of an employer to regulate all aspects
of employment, such as the freedom to prescribe work assignments, working methods, processes to be
followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline,
and dismissal and recall of workers.43 Although jurisprudence recognizes said management prerogative,
it has been ruled that the exercise thereof, while ordinarily not interfered with,44 is not absolute and is
subject to limitations imposed by law, collective bargaining agreement, and general principles of fair
play and justice.45 Thus, an employer may transfer or assign employees from one office or area of
operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other
privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.46 Indeed, having the right should not be confused
with the manner in which that right is exercised.47
Best Wear Garments v. Lemos, G.R. No. 191281, December 5, 2012
FACTS: hired as sewers on piece-rate basis but transferred to other areas of operation which resulted in
lesser earnings for them because it took longer to finish the by-products.
ISSUE: Is there constructive dismissal when a piece rate worker is transferred to another operation
resulting in lesser earnings?
HELD: NO
Being piece-rate workers assigned to individual sewing machines, respondents’ earnings depended on
the quality and quantity of finished products. That their work output might have been affected by the
change in their specific work assignments does not necessarily imply that any resulting reduction in
payis tantamount to constructive dismissal. Workers under piece-rate employment have no fixed
salaries and their compensation is computed on the basis of accomplished tasks. As admitted by
respondent De Lemos, some garments or by-products took a longer time to finish so they could not earn
as much as before. Also, the type of sewing jobs available would depend on the specifications made by
the clients of petitioner company. Under these circumstances, it cannot be said that the transfer was
unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to work on
different types of garments as dictated by present business necessity is within the ambit of management
prerogative which, in the absence of bad faith, ill motive or discrimination, should not be interfered with
by the courts.
The records are bereft of any showing of clear discrimination, insensibility or disdain on the part of
petitioners in transferring respondents to perform a different type of sewing job.It is unfair to charge
petitioners with constructive dismissal simply because the respondents insist that their transfer to a new
work assignment was against their will. We have long stated that “the objection to the transfer being
grounded on solely upon the personal inconvenience or hardship that will be caused to the employee by
reason of the transfer is not a valid reason to disobey an order of transfer.”19That respondents
eventually discontinued reporting for work after their plea to be returned to their former work
assignment was their personal decision, for which the petitioners should not be held liable particularly
as the latter did not, in fact, dismiss them.
Bar Question Transfer
Dismissal; Constructive Dismissal; Transfer (2013) No. IV. b.
Bobby, who was assigned as company branch accountant in Tarlac where his family also lives, was
dismissed by Theta Company after anomalies in the company's accounts were discovered in the branch
Bobby filed a complaint and was ordered reinstated with full backwages after the Labor Arbiter found
that he had been denied due process because no investigation actually took place. Theta Company
appealed to the National Labor Relations Commission (NLRC) and at the same time wrote Bobby,
advising him to report to the main company office in Makati where he would be reinstated pending
appeal Bobby refused to comply with his new assignment because Makati is very far from Tarlac and he
cannot bring his family to live with him due to the higher cost of living in Makati.
Is Bobby's reinstatement pending appeal legally correct? (4%)
SUGGESTED ANSWER:
No, it is not legally correct. The transfer of an employee ordinarily lies within the ambit of management
prerogatives. But like other rights, there are limits thereto. This managerial prerogative to transfer
personnel must be exercised without grave abuse of discretion, bearing in mind the basic element of
justice and fair play. Thus, the transfer of Bobby form Tarlac to Makati must be done in good faith, and it
must not be unreasonable, inconvenient or prejudicial to the employee. For another, the reinstatement
of Bobby ought to be to his former position, much akin to return to work order, i.e., to restore the status
quo in the work place (Composite Enterprises v. Capamaroso, 529 SCRA 470 [2007]).
ALTERNATIVE ANSWER: No, under article 223 of the Labor Code, the reinstatement order of the Labor
Arbiter is immediately executor even pending appeal, should pertain to restoration to status quo ante.
Productivity Standard
Aliling v. Feliciano, G.R. No. 185829, April 25, 2012
FACTS: Armando Aliling (Aliling) was hired as Account Executive (Seafreight Sales). Training then started.
However, instead of a Seafreight Sale assignment, WWWEC asked Aliling to handle Ground Express (GX),
a new company product launched on June 18, 2004 involving domestic cargo forwarding service
for Luzon. Marketing this product and finding daily contracts for it formed the core of Alilings new
assignment.
After a month, Aliling received a letter from the Sales and Marketing Director expressing dissatisfaction
that he had expected GX Shuttles sales to be 80% by the 3 rd week of Aliling’s employment.
On September 25, Aliling was made to explain his absences. Aliling complied.
On September 27, 2004,[13] Aliling wrote a letter tendering his resignation effective October 15, 2004.
While WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and a written
apology, claiming in a subsequent letter dated October 1, 2004 [14] to management that San Mateo had
forced him to resign. The company responded to Aliling that his case was still in the process of being
evaluated.
On Ocotber 4, Aliling filed a complaint.
On October 6, 2004,[16] Lariosa again wrote, this time to advise Aliling of the termination of his services
effective as of that date owing to his non-satisfactory performance during his probationary period.
In its Position Paper, the company attached a memo dated September 20, 2004 [21] in which San Mateo
asked Aliling to explain why he should not be terminated for failure to meet the expected job
performance, considering that the load factor for the GX Shuttles for the period July to September was
only 0.18% as opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004. According
to WWWEC, Aliling, instead of explaining himself, simply submitted a resignation letter.
ISSUE: Was the sales quota communicated to Aliling as a standard for his employment? Is failure to meet
a sales quota a valid ground for dismissal
HELD: Failure to meet quota is a valid cause for dismissal but Aliling was not informed that it is a
standard for his employment
The June 2, 2004 letter-offer for Aliling states that the regularization standards or the performance
norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC has failed to prove
that an agreement as regards thereto has been reached. Clearly then, there were actually no
performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX trucking sales,
an activity entirely different to the Seafreight Sales he was originally hired and trained for. Thus, at the
time of his engagement, the standards relative to his assignment with GX sales could not have plausibly
been communicated to him as he was under Seafreight Sales. Even for this reason alone, the conclusion
reached in Alcira is of little relevant to the instant case.
At any event, assuming for argument that the petitioner indeed failed to achieve his sales quota, his
termination from employment on that ground would still be unjustified.
In Lim v. National Labor Relations Commission,[35] the Court considered inefficiency as an analogous just
cause for termination of employment under Article 282 of the Labor Code:
We cannot but agree with PEPSI that gross inefficiency falls within the purview of other causes
analogous to the foregoing, this constitutes, therefore, just cause to terminate an employee under
Article 282 of the Labor Code. One is analogous to another if it is susceptible of comparison with the
latter either in general or in some specific detail; or has a close relationship with the latter. Gross
inefficiency is closely related to gross neglect, for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court
ruled that failure to observed prescribed standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National Labor Relations Commission [36] on the following rationale:
An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance
may be visited with a penalty even more severe than demotion. Thus,
[t]he practice of a company in laying off workers because they failed to make the work quota has
been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned
to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary
status of their employment. Failure to observe prescribed standards of work, or to fulfill reasonable
work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by failing to complete the same
within the allotted reasonable period, or by producing unsatisfactory results. This management
prerogative of requiring standards may be availed of so long as they are exercised in good faith for the
advancement of the employer's interest. (Emphasis supplied.)
In fine, an employees failure to meet sales or work quotas falls under the concept of gross inefficiency,
which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 282 of
the Code. However, in order for the quota imposed to be considered a valid productivity standard and
thereby validate a dismissal, managements prerogative of fixing the quota must be exercised in good
faith for the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as
part of its burden to show that the dismissal was for a just cause. WWWEC must show that such quota
was imposed in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the
matter is that the alleged imposition of the quota was a desperate attempt to lend a semblance of
validity to Alilings illegal dismissal. It must be stressed that even WWWECs sales manager, Eve Amador
(Amador), in an internal e-mail to San Mateo, hedged on whether petitioner performed below or above
expectation:
Could not quantify level of performance as he as was tasked to handle a new product (GX). Revenue
report is not yet administered by IT on a month-to-month basis. Moreover, this in a way is an
experimental activity. Practically you have a close monitoring with Armand with regards to his
performance. Your assessment of him would be more accurate.
Being an experimental activity and having been launched for the first time, the sales of GX services
could not be reasonably quantified. This would explain why Amador implied in her email that other
bases besides sales figures will be used to determine Alilings performance. And yet, despite such a
neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event, WWWEC
failed to demonstrate the reasonableness and the bona fides on the quota imposition.
See Sameer Overseas v. Cabiles, G.R. No. 170139, August 5, 2014
FACTS: Cabiles hired for quality control job in Taiwan and was deployed to work for Taiwan Wacoal. In
Taiwan, she was asked to work as a cutter. 12cralawred
Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal
informed Joy, without prior notice, that she was terminated and that “she should immediately report to
their office to get her salary and passport.” 13 She was asked to “prepare for immediate repatriation.” 14
Sameer Overseas Placement Agency alleged that respondent's termination was due to her inefficiency,
negligence in her duties, and her “failure to comply with the work requirements [of] her foreign
[employer].”
ISSUE: Was the failure to comply with work requirements a valid cause for dismissal
HELD: NO, it was not communicated to Cabiles.
Indeed, employers have the prerogative to impose productivity and quality standards at work. 58They
may also impose reasonable rules to ensure that the employees comply with these standards. 59Failure
to comply may be a just cause for their dismissal. 60 Certainly, employers cannot be compelled to retain
the services of an employee who is guilty of acts that are inimical to the interest of the
employer.61 While the law acknowledges the plight and vulnerability of workers, it does not “authorize
the oppression or self-destruction of the employer.” 62 Management prerogative is recognized in law and
in our jurisprudence.
This prerogative, however, should not be abused. It is “tempered with the employee’s right to security
of tenure.”63 Workers are entitled to substantive and procedural due process before termination. They
may not be removed from employment without a valid or just cause as determined by law and without
going through the proper procedure.
Security of tenure for labor is guaranteed by our Constitution. 64cralawred
Employees are not stripped of their security of tenure when they move to work in a different
jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of lex loci
contractus.
Thus, in Triple Eight Integrated Services, Inc. v. NLRC, 65 this court noted: established is the rule that lex
loci contractus (the law of the place where the contract is made) governs in this jurisdiction. There is
no question that the contract of employment in this case was perfected here in the Philippines.
Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor
apply in this case. Furthermore, settled is the rule that the courts of the forum will not enforce any
foreign claim obnoxious to the forum’s public policy. Here in the Philippines, employment agreements
are more than contractual in nature. The Constitution itself, in Article XIII, Section 3, guarantees the
special protection of workers.
By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and
after compliance with procedural due process requirements.
Petitioner’s allegation that respondent was inefficient in her work and negligent in her duties 69 may,
therefore, constitute a just cause for termination under Article 282(b), but only if petitioner was able to
prove it.
The burden of proving that there is just cause for termination is on the employer. “The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.” 70Failure
to show that there was valid or just cause for termination would necessarily mean that the dismissal was
illegal.71cralawred
To show that dismissal resulting from inefficiency in work is valid, it must be shown that: 1) the
employer has set standards of conduct and workmanship against which the employee will be judged; 2)
the standards of conduct and workmanship must have been communicated to the employee; and 3) the
communication was made at a reasonable time prior to the employee’s performance assessment.
This is similar to the law and jurisprudence on probationary employees, which allow termination of the
employee only when there is “just cause or when [the probationary employee] fails to qualify as a
regular employee in accordance with reasonable standards made known by the employer to the
employee at the time of his [or her] engagement.”72cralawred
However, we do not see why the application of that ruling should be limited to probationary
employment. That rule is basic to the idea of security of tenure and due process, which are guaranteed
to all employees, whether their employment is probationary or regular.
The pre-determined standards that the employer sets are the bases for determining the probationary
employee’s fitness, propriety, efficiency, and qualifications as a regular employee. Due process requires
that the probationary employee be informed of such standards at the time of his or her engagement so
he or she can adjust his or her character or workmanship accordingly. Proper adjustment to fit the
standards upon which the employee’s qualifications will be evaluated will increase one’s chances of
being positively assessed for regularization by his or her employer.
Assessing an employee’s work performance does not stop after regularization. The employer, on a
regular basis, determines if an employee is still qualified and efficient, based on work standards.
Based on that determination, and after complying with the due process requirements of notice and
hearing, the employer may exercise its management prerogative of terminating the employee found
unqualified.
The regular employee must constantly attempt to prove to his or her employer that he or she meets
all the standards for employment. This time, however, the standards to be met are set for the purpose
of retaining employment or promotion. The employee cannot be expected to meet any standard of
character or workmanship if such standards were not communicated to him or her. Courts should
remain vigilant on allegations of the employer’s failure to communicate work standards that would
govern one’s employment “if [these are] to discharge in good faith [their] duty to
adjudicate.”73cralawred
In this case, petitioner merely alleged that respondent failed to comply with her foreign employer’s
work requirements and was inefficient in her work. 74No evidence was shown to support such allegations.
Petitioner did not even bother to specify what requirements were not met, what efficiency standards
were violated, or what particular acts of respondent constituted inefficiency.
There was also no showing that respondent was sufficiently informed of the standards against which her
work efficiency and performance were judged. The parties’ conflict as to the position held by
respondent showed that even the matter as basic as the job title was not clear.
The bare allegations of petitioner are not sufficient to support a claim that there is just cause for
termination. There is no proof that respondent was legally terminated.
Book III, Rule VII-A, Sec. 5, Implementing Rules (Labor Code)
Grant of Bonus
Eastern Telecom v. Eastern Telecom Union, G.R. No. 185665, February 8,
2012
FACTS: the existing Collective Bargaining Agreement for the period 2001-2004 between ETPI and ETEU
which stated as follows:
4. Employment Related Bonuses. The Company confirms that the 14th, 15th and 16th month bonuses
(other than 13th month pay) are granted.
The companys main ground in postponing the payment of bonuses is due to allege continuing
deterioration of companys financial position which started in the year 2000. However, ETPI while
postponing payment of bonuses sometime in April 2004, such payment would also be subject to
availability of funds.
HELD:
A reading of the above provision reveals that the same provides for the giving of 14th, 15th and 16th
month bonuses without qualification. The wording of the provision does not allow any other
interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the
benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by
the company. Terse and clear, the said provision does not state that the subject bonuses shall be made
to depend on the ETPIs financial standing or that their payment was contingent upon the realization of
profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the
employees. In fine, the payment of these bonuses was not related to the profitability of business
operations.
Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th
month bonuses has become more than just an act of generosity on the part of ETPI but a contractual
obligation it has undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union
members from 1998 to 2002 by virtue of the Side Agreements evidently negates its argument that the
giving of the subject bonuses is a management prerogative
Change of Working Hours
Manila Jockey Club Union v. Manila Jockey Club, G.R. No. 167760, March 7,
2007
Respondent, as employer, cites the change in the program of horse races as reason for the adjustment
of the employees work schedule. It rationalizes that when the CBA was signed, the horse races started
at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but
to change the employees' work schedule as there was no work to be done in the morning. Evidently, the
adjustment in the work schedule of the employees is justified.
We are not unmindful that every business enterprise endeavors to increase profits. As it is, the Court
will not interfere with the business judgment of an employer in the exercise of its prerogative to
devise means to improve its operation, provided that it does not violate the law, CBAs, and the
general principles of justice and fair play. We have thus held that management is free to regulate,
according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods,time, place and manner of work, processes to be followed, supervision
of workers, working regulations, transfer of employees, work supervision, layoff of workers and
discipline, dismissal, and recall of workers. [5]
While it is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00
a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI,
however, expressly reserves on respondent the prerogative to change existing methods or facilities to
change the schedules of work. As aptly ruled by the CA:
x x x. Such exact language lends no other meaning but that while respondent may have allowed the
initial determination of the work schedule to be done through collective bargaining, it expressly retained
the prerogative to change it.
Moreover, it cannot be said that in agreeing to Section 1 of Article IV, respondent already waived that
customary prerogative of management to set the work schedule. Had that been the intention, Section 2
of Article XI would not have made any reference at all to the retention by respondent of that
prerogative. The CBA would have instead expressly prohibited respondent from exercising it. x x x As it
were, however, the CBA expressly recognized in respondent the prerogative to change the work
schedule. This effectively rules out any notion of waiver on the part of respondent of its prerogative to
change the work schedule.
The same provision of the CBA also grants respondent the prerogative to relieve employees from duty
because of lack of work. Petitioners argument, therefore, that the change in work schedule violates
Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular
monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of
the CBA does not guarantee overtime work for all the employees but merely provides that "all work
performed in excess of seven (7) hours work schedule and on days not included within the work week
shall be considered overtime and paid as such."
Respondent was not obliged to allow all its employees to render
overtime work everyday for the whole year, but only those employees
whose services were needed after theirregular working hours and only
upon the instructions of management. The overtime pay was not given to each employee consistently,
deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime
pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition
against elimination or diminution of benefits.
Rules on Marriage between employees of competitor-employers
Art. 136, Labor Code
See Philippine Telegraph v. NLRC, G.R. No. 118978, May 23, 1997
See Duncan v. Glaxo, G.R. No. 162994, September 17, 2004
See Star Paper v. Simbol, G.R. No. 164774, April 12, 2006
Post-employment ban
Tiu v. Platinum Plans, G.R. No. 163512, February 28, 2007
FACTS:
8. NON INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her engagement
with EMPLOYER and in case of separation from the Company, whether voluntary or for cause, he/she
shall not, for the next TWO (2) years thereafter, engage in or be involved with any corporation,
association or entity, whether directly or indirectly, engaged in the same business or belonging to the
same pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall render the
EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos (P100,000.00) for
and as liquidated damages.5
Petitioner countered that the non-involvement clause was unenforceable for being against public order
or public policy: First, the restraint imposed was much greater than what was necessary to afford
respondent a fair and reasonable protection. Petitioner contended that the transfer to a rival company
was an accepted practice in the pre-need industry. Since the products sold by the companies were more
or less the same, there was nothing peculiar or unique to protect. Second, respondent did not invest in
petitioner’s training or improvement. At the time petitioner was recruited, she already possessed the
knowledge and expertise required in the pre-need industry and respondent benefited tremendously
from it. Third, a strict application of the non-involvement clause would amount to a deprivation of
petitioner’s right to engage in the only work she knew.
Respondent counters that the validity of a non-involvement clause has been sustained by the Supreme
Court in a long line of cases. It contends that the inclusion of the two-year non-involvement clause in
petitioner’s contract of employment was reasonable and needed since her job gave her access to the
company’s confidential marketing strategies. Respondent adds that the non-involvement clause merely
enjoined her from engaging in pre-need business akin to respondent’s within two years from
petitioner’s separation from respondent. She had not been prohibited from marketing other service
plans.
HELD:
A contract in restraint of trade is valid provided there is a limitation upon either time or place and the
restraint upon one party is not greater than the protection the other party requires. a noninvolvement clause is not necessarily void for being in restraint of trade as long as there are reasonable
limitations as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the time petitioner’s
employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from
engaging in any pre-need business akin to respondent’s.
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations
Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and
highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business
soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly
competitive marketing environment. In sum, we find the non-involvement clause not contrary to public
welfare and not greater than is necessary to afford a fair and reasonable protection to respondent. 13
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
Article 115914 of the same Code also provides that obligations arising from contracts have the force of
law between the contracting parties and should be complied with in good faith. Courts cannot stipulate
for the parties nor amend their agreement where the same does not contravene law, morals, good
customs, public order or public policy, for to do so would be to alter the real intent of the parties, and
would run contrary to the function of the courts to give force and effect thereto. 15 Not being contrary to
public policy, the non-involvement clause, which petitioner and respondent freely agreed upon, has the
force of law between them, and thus, should be complied with in good faith. 16
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay
respondent P100,000 as liquidated damages. While we have equitably reduced liquidated damages in
certain cases,17 we cannot do so in this case, since it appears that even from the start, petitioner had not
shown the least intention to fulfill the non-involvement clause in good faith.
Rivera v. Solidbank, G.R. No. 163269, April 19, 2006 Post-retirement
competitive employment ban
FACTS: Rivera retired and availed of the bank’s Special Retirement Program. To receive the retirement
benefits, petitioner made two undertakings. The first is incorporated in the Release, Waiver and
Quitclaim that he signed, to wit:
4. I will not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity
prejudicial to the interest of the BANK, its parent, affiliate or subsidiary companies, their stockholders,
officers, directors, agents or employees, and their successors-in-interest and will not disclose any
information concerning the business of the BANK, its manner or operation, its plans, processes or data
of any kind.[40]
The second undertaking is incorporated in the Undertaking following petitioners execution of the
Release, Waiver and Quitclaim which reads:
4. That as a supplement to the Release and Quitclaim, I executed in favor of Solidbank on FEBRUARY 28,
1995, I hereby expressly undertake that I will not seek employment with any competitor bank or
financial institution within one (1) year from February 28, 1995.[41]
But he worked for another bank within the prohibited period.
The trial court held that the ban was reasonable because it was only for one year.
ISSUE: Is a post-retirement competitive employment ban against public policy?
HELD:
In the Release, Waiver and Quitclaim, petitioner declared that respondent may bring an action for
damages which may include, but not limited to the return of whatever sums he may have received from
respondent under said deed if he breaks his undertaking therein. [42] On the other hand, petitioner
declared in the Undertaking that any breach on his part of said Undertaking or the terms and conditions
of the Release, Waiver and Quitclaim will entitle respondent to a cause of action against [petitioner] for
protection before the appropriate courts of law. [43]
Article 1306 of the New Civil Code provides that the contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order or public policy. The freedom of contract is both a constitutional and
statutory right.[44] A contract is the law between the parties and courts have no choice but to enforce
such contract as long as it is not contrary to law, morals, good customs and against public policy.
The well-entrenched doctrine is that the law does not relieve a party from the effects of an unwise,
foolish or disastrous contract, entered into with full awareness of what he was doing and entered into
and carried out in good faith. Such a contract will not be discarded even if there was a mistake of law or
fact. Courts have no jurisdiction to look into the wisdom of the contract entered into by and between
the parties or to render a decision different therefrom. They have no power to relieve parties from
obligation voluntarily assailed, simply because their contracts turned out to be disastrous deals. [45]
On the other hand, retirement plans, in light of the constitutional mandate of affording full protection
to labor, must be liberally construed in favor of the employee, it being the general rule that pension or
retirement plans formulated by the employer are to be construed against it.[46] Retirement benefits,
after all, are intended to help the employee enjoy the remaining years of his life, releasing him from the
burden of worrying for his financial support, and are a form of reward for being loyal to the employer.
On the face of the Undertaking, the post-retirement competitive employment ban is unreasonable
because it has no geographical limits; respondent is barred from accepting any kind of employment in
any competitive bank within the proscribed period. Although the period of one year may appear
reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained
with finality solely from the terms and conditions of the Undertaking, or even in tandem with the
Release, Waiver and Quitclaim.
Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent. However,
petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement competitive
employment ban since under Article 1409 of the New Civil Code, those contracts whose cause, object or
purpose is contrary to law, morals, good customs, public order or public policy are inexistent or void
from the beginning. Estoppel cannot give validity to an act that is prohibited by law or one that is against
public policy.[51]
EMPLOYER HAS THE BURDEN OF PROVING THE POST-EMPLOYMENT BAN IS REASONABLE Respondent, as employer, is burdened to establish that a restrictive covenant barring an employee from
accepting a competitive employment after retirement or resignation is not an unreasonable or
oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to
public policy. As the Court stated in Ferrazzini v. Gsell,[52] cases involving contracts in restraint of trade
are to be judged according to their circumstances, to wit:
REASON WHY POST-EMPLOYMENT BAN IN RESTRAINT OF TRADE ARE AGAINST PUBLIC POLICY - x x x
There are two principal grounds on which the doctrine is founded that a contract in restraint of trade is
void as against public policy. One is, the injury to the public by being deprived of the restricted partys
industry; and the other is, the injury to the party himself by being precluded from pursuing his
occupation, and thus being prevented from supporting himself and his family.
And in Gibbs vs. Consolidated Gas Co. of Baltimore, supra, the court stated the rule thus:
Public welfare is first considered, and if it be not involved, and the restraint upon one party is not
greater than protection to the other party requires, the contract may be sustained.The question is,
whether, under the particular circumstances of the case and the nature of the particular contract
involved in it, the contract is, or is not, unreasonable. [53]
In cases where an employee assails a contract containing a provision prohibiting him or her from
accepting competitive employment as against public policy, the employer has to adduce evidence to
prove that the restriction is reasonable and not greater than necessary to protect the employers
legitimate business interests.[54] The restraint may not be unduly harsh or oppressive in curtailing the
employees legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy.
[55]
The Court reiterates that the determination of reasonableness is made on the particular facts and
circumstances of each case.[58] In Esmerson Electric Co. v. Rogers,[59] it was held that the question of
reasonableness of a restraint requires a thorough consideration of surrounding circumstances, including
the subject matter of the contract, the purpose to be served, the determination of the parties, the
extent of the restraint and the specialization of the business of the employer. The court has to consider
whether its enforcement will be injurious to the public or cause undue hardships to the employee, and
whether the restraint imposed is greater than necessary to protect the employer. Thus,the court must
have before it evidence relating to the legitimate interests of the employer which might be protected in
terms of time, space and the types of activity proscribed.[60]
Consideration must be given to the employees right to earn a living and to his ability to determine with
certainty the area within which his employment ban is restituted. A provision on territorial limitation is
necessary to guide an employee of what constitutes as violation of a restrictive covenant and whether
the geographic scope is co-extensive with that in which the employer is doing business. In considering a
territorial restriction, the facts and circumstances surrounding the case must be considered. [61]
Thus, in determining whether the contract is reasonable or not, the trial court should consider the
following factors: (a) whether the covenant protects a legitimate business interest of the employer; (b)
whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious
to the public welfare; (d) whether the time and territorial limitations contained in the covenant are
reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.[62]
Not to be ignored is the fact that the banking business is so impressed with public interest where the
trust and interest of the public in general is of paramount importance such that the appropriate
standard of diligence must be very high, if not the highest degree of diligence. [63]
We are not impervious of the distinction between restrictive covenants barring an employee to accept
a post-employment competitive employment or restraint on trade in employment contracts and
restraints on post-retirement competitive employment in pension and retirement plans either
incorporated in employment contracts or in collective bargaining agreements between the employer
and the union of employees, or separate from said contracts or collective bargaining agreements which
provide that an employee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the employer. The strong
weight of authority is that forfeitures for engaging in subsequent competitive employment included in
pension and retirement plans are valid even though unrestricted in time or geography .The raison detre is
explained by the United States Circuit Court of Appeals in Rochester Corporation v. W.L. Rochester, Jr.:[64]
x x x The authorities, though, generally draw a clear and obvious distinction between restraints on
competitive employment in employment contracts and in pension plans. The strong weight of
authority holds that forfeitures for engaging in subsequent competitive employment, included in
pension retirement plans, are valid, even though unrestricted in time or geography. The reasoning
behind this conclusion is that the forfeiture, unlike the restraint included in the employment contract, is
not a prohibition on the employees engaging in competitive work but is merely a denial of the right to
participate in the retirement plan if he does so engage. A leading case on this point is Van Pelt v.
Berefco, Inc., supra, 208 N.E.2d at p. 865, where, in passing on a forfeiture provision similar to that here,
the Court said:
A restriction in the contract which does not preclude the employee from engaging in competitive activity,
but simply provides for the loss of rights or privileges if he does so is not in restraint of trade. (emphasis
added)[65]
A post-retirement competitive employment restriction is designed to protect the employer against
competition by former employees who may retire and obtain retirement or pension benefits and, at the
same time, engage in competitive employment.[66]
We have reviewed the Undertaking which respondent impelled petitioner to sign, and find that in case
of failure to comply with the promise not to accept competitive employment within one year from
February 28, 1995, respondent will have a cause of action against petitioner for protection in the courts
of law. The Undertaking and the Release, Waiver and Quitclaim do not provide for the automatic
forfeiture of the benefits petitioner received under the SRP upon his breach of said deeds. Thus, the
post-retirement competitive employment ban incorporated in the Undertaking of respondent does not,
on its face, appear to be of the same class or genre as that contemplated in Rochester.
On the assumption that the competitive employment ban in the Undertaking is valid, petitioner is not
automatically entitled to return the P963,619.28 he received from respondent. To reiterate, the terms
of the Undertaking clearly state that any breach by petitioner of his promise would entitle respondent to
a cause of action for protection in the courts of law; as such, restitution of the P963,619.28 will not
follow as a matter of course. Respondent is still burdened to prove its entitlement to the aforesaid
amount by producing the best evidence of which its case is susceptible.
Bar Question
Employment; Employment Contract; Prohibiting Employment in a Competing Company (2009) No. I. a.
An employment contract prohibiting employment in a competing company within one year from
separation is valid. (5%)
SUGESTED ANSWER:
True. An employment contract prohibiting employment in a competing company within a reasonable
period of one year from separation is valid. The employer has the right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and informations.
VI Social Welfare and Legislation
A. SSS Law (R.A. No. 8282)
1. Coverage
R.A. 8282
"SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon
1. all employees not over sixty (60) years of age and their employers:
a. Provided, That in the case of domestic helpers, their monthly income shall not be less
than One thousand pesos (P1,000.00) a month:
i. Kasambahay Law: A domestic worker who has rendered at least one (1) month
of service shall be covered by the Social Security System (SSS)….Premium
payments or contributions shall be shouldered by the employer. However, if the
domestic worker is receiving a wage of Five thousand pesos (P5,000.00) and
above per month, the domestic worker shall pay the proportionate share in the
premium payments or contributions, as provided by law.
2. (b) Spouses who devote full time to managing the household and family affairs, unless they are
also engaged in other vocation or employment which is subject to mandatory coverage, may be
covered by the SSS on a voluntary basis.
3. "(c) Filipinos recruited by foreign-based employers for employment abroad may be covered by
the SSS on a voluntary basis.
4. "SEC. 9-A. Compulsory Coverage of the Self-Employed. - Coverage in the SSS shall also be
compulsory upon such self-employed persons as may be determined by the Commission under
such rules and regulations as it may prescribe, including but not limited to the following:
"1. All self-employed professionals;
"2. Partners and single proprietors of businesses;
"3. Actors and actresses, directors, scriptwriters and news correspondents who do not
fall within the definition of the term "employee" in Section 8 (d) of this Act;
"4. Professional athletes, coaches, trainers and jockeys; and
"5. Individual farmers and fishermen.
"Unless otherwise specified herein, all provisions of this Act applicable to covered
employees shall also be applicable to the covered self-employed persons.
R.A. 10361, Art. IV, Sec. 30
A domestic worker who has rendered at least one (1) month of service shall be covered by the Social
Security System (SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home
Development Mutual Fund or Pag-IBIG, and shall be entitled to all the benefits in accordance with the
pertinent provisions provided by law.
Premium payments or contributions shall be shouldered by the employer. However, if the domestic
worker is receiving a wage of Five thousand pesos (P5,000.00) and above per month, the domestic
worker shall pay the proportionate share in the premium payments or contributions, as provided by law.
The domestic worker shall be entitled to all other benefits under existing laws.
SSS v. Rizal Poultry, G.R. 167050, June 1, 2011
FACTS: NLRC ruled that there was no EER between Angeles and Rizal Poultry. Angeles also filed a
separate complaint with the Social Security Commission for the non-payment of his SSS contributions.
Rizal Poultry filed a motion to dismiss invoking the ruling on no EER by the NLRC. SSC denied the motion
to dismiss. Rizal Poultry invokes res judicata to bar the SSC from deciding the case.
ISSUE: Are the findings of the NLRC on EER conclusive upon the SSC?
HELD: YES
The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the
decision must have been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the
first and second action, identity of parties, subject matter, and causes of action. Should identity of
parties, subject matter, and causes of action be shown in the two cases, then res judicata in its aspect as
a bar by prior judgment would apply. If as between the two cases, only identity of parties can be shown,
but not identical causes of action, then res judicata as conclusiveness of judgment applies.[18]
Verily, the principle of res judicata in the mode of conclusiveness of judgment applies in this case. The
first element is present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a
judicial affirmation through a decision duly promulgated and rendered final and executory when no
appeal was undertaken within the reglementary period. The jurisdiction of the NLRC, which is a quasijudicial body, was undisputed. Neither can the jurisdiction of the Court of Appeals over the NLRC
decision be the subject of a dispute. The NLRC case was clearly decided on its merits; likewise on the
merits was the affirmance of the NLRC by the Court of Appeals.
With respect to the fourth element of identity of parties, we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional
respondent in the SSC case. Jurisprudence however does not dictate absolute identity but only
substantial identity.[19] There is substantial identity of parties when there is a community of interest
between a party in the first case and a party in the second case, even if the latter was not impleaded
in the first case.[20]
BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the
NLRC and the SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous indications
that all the while, Rizal Poultry was also an employer of Angeles together with BSD Agro and San
Diego. Angeles admitted before the NLRC that he was employed by BSD Agro and San Diego from 1985
until 1997.[21] He made a similar claim in his Petition before the SSC including as employer Rizal Poultry
as respondent.[22] Angeles presented as evidence before the SSC his Identification Card and a Job Order
to prove his employment in Rizal Poultry. He clarified in his Opposition to the Motion to Dismiss [23] filed
before SSC that he failed to adduce these as evidence before the NLRC even if it would have proven his
employment with BSD Agro. Most significantly, the three respondents, BSD Agro, Rizal Poultry and San
Diego, litigated as one entity before the SSC. They were represented by one counsel and they submitted
their pleadings as such one entity. Certainly, and at the very least, a community of interest exists among
them. We therefore rule that there is substantial if not actual identity of parties both in the NLRC and
SSC cases.
As previously stated, an identity in the cause of action need not obtain in order to apply res judicata by
conclusiveness of judgment. An identity of issues would suffice.
The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997, viz:
SEC. 22. Remittance of Contributions. - (a) The contributions imposed in the preceding Section shall be
remitted to the SSS within the first ten (10) days of each calendar month following the month for which
they are applicable or within such time as the Commission may prescribe. Every employer required to
deduct and to remit such contributions shall be liable for their payment and if any contribution is not
paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty thereon of three
percent (3%) per month from the date the contribution falls due until paid. x x x.
The mandatory coverage under the Social Security Act is premised on the existence of an employeremployee relationship.[24] This is evident from Section 9(a) which provides:
SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60)
years of age and their employers: Provided, That in the case of domestic helpers, their monthly income
shall not be less than One thousand pesos (P1,000.00) a month x x x.
Section 8(d) of the same law defines an employee as any person who performs services for an employer
in which either or both mental or physical efforts are used and who receives compensation for such
services, where there is an employer-employee relationship. The illegal dismissal case before the NLRC
involved an inquiry into the existence or non-existence of an employer-employee relationship. The very
same inquiry is needed in the SSC case. And there was no indication therein that there is an essential
conceptual difference between the definition of employee under the Labor Code and the Social Security
Act.
In the instant case, therefore, res judicata in the concept of conclusiveness of judgment applies. The
judgment in the NLRC case pertaining to a finding of an absence of employer-employee relationship
between Angeles and respondents is conclusive on the SSC case.
A case in point is Smith Bell and Co. v. Court of Appeals[25] which, contrary to SSC, is apt and proper
reference. Smith Bell availed of the services of private respondents to transport cargoes from the pier to
the company's warehouse. Cases were filed against Smith Bell, one for illegal dismissal before the NLRC
and the other one with the SSC, to direct Smith Bell to report all private respondents to the SSS for
coverage. While the SSC case was pending before the Court of Appeals, Smith Bell presented the
resolution of the Supreme Court in G.R. No. L-44620, which affirmed the NLRC, Secretary of Labor, and
Court of Appeals finding that no employer-employee relationship existed between the parties, to
constitute as bar to the SSC case. We granted the petition of Smith Bell and ordered the dismissal of the
case. We held that the controversy is squarely covered by the principle of res judicata, particularly under
the rule on conclusiveness of judgment. Therefore, the judgment in G.R. No. L-44620 bars the SSC case,
as the relief sought in the latter case is inextricably related to the ruling in G.R. No. L-44620 to the effect
that private respondents are not employees of Smith Bell.
The fairly recent case of Co v. People,[26] likewise applies to the present case. An information was filed
against Co by private respondent spouses who claim to be employees of the former for violation of the
Social Security Act, specifically for non-remittance of SSS contributions. Earlier, respondent spouses had
filed a labor case for illegal dismissal.The NLRC finally ruled that there was no employer-employee
relationship between her and respondent spouses. Co then filed a motion to quash the information,
arguing that the facts alleged in the Information did not constitute an offense because respondent
spouses were not her employees. In support of her motion, she cited the NLRC ruling. This Court
applied Smith Bell and declared that the final and executory NLRC decision to the effect that respondent
spouses were not the employees of petitioner is a ruling binding in the case for violation of the Social
Security Act. The Court further stated that the doctrine of conclusiveness of judgment also applies in
criminal cases.[27]
Applying the rule on res judicata by conclusiveness of judgment in conjunction with the aforecited cases,
the Court of Appeals aptly ruled, thus:
In SSC Case No. 9-15225-01, private respondent Angeles is seeking to compel herein petitioners to remit
to the Social Security System (SSS) all contributions due for and in his behalf, whereas in NLRC NCR CA
018066-99 (NLRC RAB-IV-5-9028-97 RI) private respondent prayed for the declaration of his dismissal
illegal. In SSC No. 9-15225-01, private respondent, in seeking to enforce his alleged right to compulsory
SSS coverage, alleged that he had been an employee of petitioners; whereas to support his position in
the labor case that he was illegally dismissed by petitioners BSD Agro and/or Benjamin San Diego, he
asserted that there was an employer-employee relationship existing between him and petitioners at the
time of his dismissal in 1997. Simply stated, the issue common to both cases is whether there existed an
employer-employee relationship between private respondent and petitioners at the time of the acts
complaint of were committed both in SSC Case No. 9-15225-01 and NLRC NCR CA 018066-99 (NLRC RABIV-5-9028-977-RI).
The issue of employer-employee relationship was laid to rest in CA GR. SP. No. 55383, through this
Courts Decision dated October 27, 2000 which has long attained finality. Our affirmation of the NLRC
decision of May 18, 1999 was an adjudication on the merits of the case.
Considering the foregoing circumstances, the instant case falls squarely under the umbrage of res
judicata, particularly, under the rule on conclusiveness of judgment. Following this rule, as enunciated
in Smith Bell and Co. and Carriaga, Jr. cases, We hold that the relief sought in SSC Case No. 9-15225-01 is
inextricably related to Our ruling in CA GR SP No. 55383 to the effect that private respondent was not an
employee of petitioners.[28]
The NLRC decision on the absence of employer-employee relationship being binding in the SSC case, we
affirm the dismissal by Court of Appeals of the SSC case.
Corporal v. NLRC, G.R. No. 129315, October 2, 2000
FACTS: Petitioners are barbers for New Look Barber Shop which used to be a single proprietorship
owned and managed by Mr. Vicente Lao. In or about January 1982, the children of Vicente Lao
organized a corporation and took over the barber shop. They continued working for the corporation
until the building where the barber shop was operating were sold and they were all dismissed.
The company denied they were the employers of the barbers and averred that they were joint venture
partners and were receiving fifty percent commission of the amount charged to customers and that
private respondents had no control over petitioners who were free to come and go as they
wished. Respondents explained that some of the petitioners were allowed to register with the Social
Security System as employees of Lao Enteng Company, Inc. only as an act of accommodation. All the SSS
contributions were made by petitioners.
The NLRC ruled that the barbers were independent contractors.
The barbers fault the NLRC for arbitrarily disregarding substantial evidence on record showing that
petitioners Pedro Tolentino, Manuel Caparas, Simplicio Pedelos, and Patricia Nas were registered with
the Social Security System as regular employees of the respondent company.
ISSUE: Is the remittance by the company of the SSS contributions of the barbers indicative of EER?
HELD: YES
While it is no longer true that membership to SSS is predicated on the existence of an employeeemployer relationship since the policy is now to encourage even the self-employed dressmakers,
manicurists and jeepney drivers to become SSS members, we could not agree with private respondents
that petitioners were registered with the Social Security System as their employees only as an
accommodation. As we have earlier mentioned private respondent showed no proof to their claim that
petitioners were the ones who solely paid all SSS contributions. It is unlikely that respondents would
report certain persons as their workers, pay their SSS premium as well as their wages if it were not true
that they were indeed their employees. [13]
Bar Questions
SSS; Compulsory Coverage; Cooperative Member (2009) No. X. b.
Can a member of a cooperative be deemed an employee for purposes of compulsory coverage under
the Social Security Act? Explain. (2%)
SUGGESTED ANSWER: Yes, an employee of a cooperative, not over sixty (60) years of age, under the
SSS Law, subject to compulsory coverage. The Section 8(d) SSS Law defines an employee as –
―Sec. 8(d) – any person who performs services for an employer in which either or both mental and
physical efforts are used and who receives compensation for such service, where there is an
employer-employee relationship.‖
2. Exclusions from coverage
(j) Employment - Any service performed by an employee for his employer except:
"(1) Employment purely casual and not for the purpose of occupation or business of the employer;
"(2) Service performed on or in connection with an alien vessel by an employee if he is employed when
such vessel is outside the Philippines;
"(3) Service performed in the employ of the Philippine Government or instrumentality or agency
thereof;
"(4) Service performed in the employ of a foreign government or international organization, or their
wholly-owned instrumentality: Provided, however, That this exemption notwithstanding, any foreign
government, international organization or their wholly-owned instrumentality employing workers in the
Philippines or employing Filipinos outside of the Philippines, may enter into an agreement with the
Philippine Government for the inclusion of such employees in the SSS except those already covered by
their respective civil service retirement systems: Provided, further, That the terms of such agreement
shall conform with the provisions of this Act on coverage and amount of payment of contributions and
benefits: Provided, finally, That the provisions of this Act shall be supplementary to any such agreement;
and
"(5) Such other services performed by temporary and other employees which may be excluded by
regulation of the Commission. Employees of bona fide independent contractors shall not be deemed
employees of the employer engaging the service of said contractors.
3. Benefits
retirement, death, funeral, disability, injury or sickness and maternity
4. Beneficiaries
"(k) Beneficiaries - The dependent spouse until he or she remarries, the dependent legitimate,
legitimated or legally adopted, and illegitimate children, who shall be the primary beneficiaries of the
member: Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of
the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the
absence of the dependent legitimate, legitimated children of the member, his/her dependent
illegitimate children shall be entitled to one hundred percent (100%) of the benefits. In their absence,
the dependent parents who shall be the secondary beneficiaries of the member. In the absence of all
the foregoing, any other person designated by the member as his/her secondary beneficiary.
(e) Dependents - The dependents shall be the following:
"(1) The legal spouse entitled by law to receive support from the member;
"(2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully
employed, and has not reached twenty-one (21) years of age, or if over twenty-one (21) years of age, he
is congenitally or while still a minor has been permanently incapacitated and incapable of self-support,
physically or mentally; and
"(3) The parent who is receiving regular support from the member.
SSS v. Favila, G.R. No. 170195, March 28, 2011
FACTS: Member died. Separated spouse claims the benefit. Her claim is opposed because she was
allegedly cohabiting with another man and was not dependent on the member. Spouse claims that
being the legal wife, she is presumed dependent upon Florante for support.
ISSUE: Is dependency presumed?
HELD: Depends.
A spouse who claims entitlement to death benefits as a primary beneficiary under the Social Security
Law must establish two qualifying factors, to wit: (1) that he/she is the legitimate spouse; and (2) that
he/she is dependent upon the member for support. 1
In Re: Application for Survivor’s Benefits of Manlavi, 28 this Court defined "dependent" as "one who
derives his or her main support from another [or] relying on, or subject to, someone else for support;
not able to exist or sustain oneself, or to perform anything without the will, power or aid of someone
else." Although therein, the wife’s marriage to the deceased husband was not dissolved prior to the
latter’s death, the Court denied the wife’s claim for survivorship benefits from the Government Service
Insurance System (GSIS) because the wife abandoned her family to live with other men for more than 17
years until her husband died. Her whereabouts was unknown to her family and she never attempted to
communicate with them or even check up on the well-being of her daughter with the deceased. From
these, the Court concluded that the wife during said period was not dependent on her husband for any
support, financial or otherwise, hence, she is not a dependent within the contemplation of RA 8291 29 as
to be entitled to survivorship benefits. It is worthy to note that under Section 2(f) RA 8291, a legitimate
spouse dependent for support is likewise included in the enumeration of dependents and under Section
2(g), the legal dependent spouse in the enumeration of primary beneficiaries.
Under this premise, we declared in Aguas that "the obvious conclusion is that a wife who is already
separated de facto from her husband cannot be said to be ‘dependent for support’ upon the husband,
absent any showing to the contrary. Conversely, if it is proved that the husband and wife were still living
together at the time of his death, it would be safe to presume that she was dependent on the husband
for support, unless it is shown that she is capable of providing for herself."30 Hence, we held therein that
the wife-claimant had the burden to prove that all the statutory requirements have been complied with,
particularly her dependency on her husband at the time of his death. And, while said wife-claimant was
the legitimate wife of the deceased, we ruled that she is not qualified as a primary beneficiary since she
failed to present any proof to show that at the time of her husband’s death, she was still dependent on
him for support even if they were already living separately.
In this case, aside from Teresa’s bare allegation that she was dependent upon her husband for support
and her misplaced reliance on the presumption of dependency by reason of her valid and then
subsisting marriage with Florante, Teresa has not presented sufficient evidence to discharge her burden
of proving that she was dependent upon her husband for support at the time of his death. She could
have done this by submitting affidavits of reputable and disinterested persons who have knowledge that
during her separation with Florante, she does not have a known trade, business, profession or lawful
occupation from which she derives income sufficient for her support and such other evidence tending to
prove her claim of dependency.
Esmarialino v. ECC, SSS, G.R. No. 192352, July 23, 2014
FACTS: Member was a security guard who died of leukemia. On account of his ailment, Edwin was
granted the following medical benefits under the SSS law: a) SSS Temporary Total Disability (TTD)
benefits of 120 days effective September 19, 2004; b) SSS Permanent Partial Disability (PPD) benefits of
twenty-three (23) months effective February 11, 2005; and c) SSS Death with Funeral Benefits effective
March 20, 2005 granted to his beneficiaries.
The SSS, however, denied the claim for EC death benefits on the ground that "there is no causal
relationship leukemia and his work as a guard”.
Rosemarie argued that Edwin’s employment regularly required him to take either straight 12 or 24
hours of duty, with only a 24-hour rest period on the last day of each month. Edwin was thus constantly
sleep-deprived and his immune system became weak. Eventually, he succumbed to leukemia. The Social
Security System (SSS) and the ECC, on the other, averred that Rosemarie failed to offer substantial
evidence to prove that Edwin’s working conditions increased the risk of contracting leukemia.
Under the Rules Implementing PD626, for the sickness and the resulting disability or death to be
compensable, the sickness must be the result of an occupational disease listed under Annex "A",
otherwise, proof must be shown that the risk of contracting the disease is increased by the working
conditions.
Stated otherwise, if an ailment or sickness is not listed as an occupational disease, the claimant
mustprove that the risk of contracting the illness suffered was increased by his or her working
conditions. The degree of proof required is substantial evidence or that amount of relevant evidence
which a reasonable mind mightaccept as adequate to justify the conclusion.
Leukemia is considered as an occupational disease if the nature of employment involved exposure to Xrays, ionizing particles of radium or other radioactive substances or other forms of radiant energy, or it is
contracted by operating room personnel due to exposure to anesthetics.
xxxx
[Rosemarie] claims that Edwin’s weakened immune system brought about by sleep loss due to his
round-the-clock hour duty as a security guard, contributed largely to his illness. In other words, the risk
of contracting acute myelogenous leukemia was increased by Edwin’s work or working conditions.
xxxx
The causes of leukemia are the following:
1. Acute Myeloid Leukemia
- Chromosomal or hereditary abnormalities such as Down Syndrome and Klinefelter’s Syndrome
- Drugs like chloramphenicol, phenylbutazone and chloroquine; anti[-]cancer drugs like procarbazine,
melphalan and etoposide
- Chemical and Occupational exposure like exposure to benzene which isused as a solvent in the
chemical, plastic, rubber and drug industries. Smoking and exposure to petroleum products, paint,
embalming fluids, ethylene oxide herbicides, and pesticides have been associated with leukemia.
- Radiation exposure
xxxx
Other than [Rosemarie’s] allegation that Edwin suffered sleep deprivation due to his work scheduleand
which resultantly weakened his immune system, [Rosemarie] has not adduced any single proof, in fact,
she claimed, that, as a security guard, Edwin was exposed to cancer-causing chemicals in the place/s
where he was assigned. x x x.
Much as we commiserate with [Rosemarie], our sympathy cannot justify an award which is not
authorizedby law.1âwphi1 If diseases not intended by the law to be compensated are inadvertently or
recklessly included, the integrity of the State Insurance Fund is endangered. x x x. 6
Kua v. Sacupayo, G.R. No. 191237, September 24, 2014
FACTS: Petitioners are the BOD of a company which did not remit the SSS contributions they deducted
for 2 years. The employees filed a complaint before the fiscal who found probable cause and filed an
information in court. After the filing of the court case, the company then remitted the contributions and
moved to dismiss the criminal case on the ground that there was no non-remittance but only delayed
remittance.
The trial court dismissed the complaint upon the recommendation of the fiscal. But the CA reversed the
trial court.
ISSUE: Is there probable cause for violation of Sec 22 of the SSS Law?
HELD: Yes
The ruling of the appellate court is sound and backed by jurisprudence.
Sections 22 (a) and (d) and 28 (e) of R.A. No. 8282 read:
SEC. 22. Remittance of Contributions. ‐(a) The contribution imposed in the preceding section shall be
remitted to the SSS within the first ten (10) days of each calendar month following the month for which
they are applicable or within suchtime as the Commission may prescribe. Every employer required to
deduct and to remit such contributions shall be liable for their payment and if any contribution is not
paid to the SSS as herein prescribed, he shall pay besides the contribution a penalty thereon of three
percent (3%) per month from the date the contribution falls due until paid. If deemed expedient and
advisable by the Commission, the collection and remittance of contributions shall be made quarterly or
semi‐ annually in advance, the contributions payable by the employees to be advanced by their
respective employers: Provided, That upon separation of an employee, any contribution so paid in
advance but not due shall be credited or refunded to his employer.
xxxx
(d) The last complete record of monthly contributions paid by the employer or the average of the
monthly contributions paid during the past three (3) years as of the date of filing of the action for
collection shall be presumed to be the monthly contributions payable by and due from the employer to
the SSS for each of the unpaid month, unless contradicted and overcome by other evidence: Provided,
That the SSS shall not be barred from determining and collecting the true and correct contributions due
the SSS even after full payment pursuant to this paragraph, nor shall the employer be relieved of his
liability under Section Twenty‐eight of this Act.
SEC. 28. Penal Clause. ‐x x x
(e) Whoever fails or refuses to complywith the provisions of this Act or with the rules and regulations
promulgated by the Commission, shall be punished by a fine of not less thanFive thousand pesos
(P5,000.00) nor more than Twenty thousand pesos (P20,000.00), or imprisonment for not less than six
(6) years and one (1) day nor more than twelve (12) years or both, at the discretion of the court:
Provided, That where the violation consists in failure or refusal to register employees or himself, in case
of the covered self‐employed, or to deduct contributions from the employees' compensation and remit
the same to the SSS, the penalty shall be a fine of not less than Five thousand pesos (P5,000.00) nor
more than Twenty thousand pesos (P20,000.00) and imprisonment for not less than six (6) years and
one (1) day nor more than twelve (12) years.
The elements of criminal liability under Section 22 (a) are:
1. The employer fails to register its employees with the SSS;
2. The employer fails to deduct monthly contributions from the salaries and/or wages of its employees;
and
3. Having deducted the SSS contributions and/or loan payments to SSS, the employer fails to remit these
to the SSS.
In this case, petitioners split hairs that they "did not fail to remit the SSS contributions of respondents;"
they "fully paid the same, albeit belatedly."
We affirm the finding of a prima facie case of petitioners’ failure to remit the SSS contributions and loan
amortization of respondents for a period of approximately two (2) years, in 2003 and 2004. In October
2004, after respondents were successively dismissed from employment by Vicmar in August 2004, they
separately filed for SSS benefits, relating to sickness and procurement of a loan, which were both denied
outright for lack of contributions or payments twelve months (12) prior to the semester of confinement
and failure to pay a prior loan. After respondents filed criminal complaints against petitioners, the latter
then remitted their SSS wage deductions and loan payments to the SSS.
The factual milieu obtaining herein does not denote a simple delay in payment. Again, petitioners
initially failed to remit the SSS contributions and payments of respondents such that respondents were
denied benefits under the SS Law which they wanted to avail of. It was only under threat of criminal
liability that petitioners subsequently remitted what they had long deducted from the wages of
respondents.
Indeed, the affidavit of Vicmar’s Plant Manager, Juanito Pagcaliwagan, admits the fact of non-payment
of contributions:
x x x "[W]hen funds became available, as Plant Manager, I immediately caused the payment to SSS [of]
the contributions of the employees and the employer’s share, together with the payment of loans of the
employees,"12 x x x.
In Tan, et al. v. Ballena, et al.13 likewise involving the determination of probable cause to indict
petitioners therein for failing to remit SSS contributions and loan payments of their employees, we
affirmed the Court of Appeals’ and our power to intervene and exercise our own powers of review with
respect to the DOJ’s finding. We ruled that in the exceptional case in which grave abuse of discretion is
committed, as when a clear sufficiency or insufficiency of evidence to support a finding of probable
cause is ignored, the Court of Appeals may take cognizance of the case viaa petition under Rules 65 of
the Rules of Court.
Bartolome v. SSS, G.R. No. 192531, November 12, 2014
FACTS: Claimant is a housekeeper who gave up her son for adoption. But after 3 years, the adopter died.
Her son then returned living with the claimant. Her son named petitioner as his dependent. When her
son died in a work-related death, she filed for death benefits with the ECC. The ECC denied her claim
because only the legitimate parents of the member are entitled to be secondary beneficiaries.
ART. 167, Labor Code defines: (j) 'Beneficiaries' means the dependent spouse until he remarries and
dependent children, who are the primary beneficiaries. In their absence, the dependent parents and
subject to the restrictions imposed on dependent children, the illegitimate children and legitimate
descendants who are the secondary beneficiaries; Provided, that the dependent acknowledged natural
child shall be considered as a primary beneficiary when there are no other dependent children who are
qualified and eligible for monthly income benefit.
The ECC Rules however, provides: (c) The following beneficiaries shall be considered secondary: (1) The
legitimate parents wholly dependent upon the employee for regular support;
ISSUE: are the biological parents included as a beneficiary of an adopted child who does not have any
other dependents?
HELD: YES
We find that Rule XV of the Amended Rules on Employees’ Compensation is patently a wayward
restriction of and a substantial deviation from Article 167 (j) of the Labor Code when it interpreted the
phrase "dependent parents" to refer to "legitimate parents."
the above-cited rule promulgated by the ECC that limits the claim of benefits to the legitimate parents
miserably failed the test of reasonableness since the classification is not germane to the law being
implemented. We see no pressing government concern or interest that requires protection so as to
warrant balancing the rights of unmarried parents on one hand and the rationale behind the law on the
other. On the contrary, the SSS can better fulfill its mandate, and the policy of PD 626 – that employees
and their dependents may promptly secure adequate benefits in the event of work-connected disability
or death - will be better served if Article 167 (j) of the Labor Code is not so narrowly interpreted.
There being no justification for limiting secondary parent beneficiaries to the legitimate ones, there can
be no other course of action to take other than to strikedown as unconstitutional the phrase
"illegitimate" as appearing in Rule XV, Section 1(c)(1) of the Amended Rules on Employees’
Compensation.
Petitioner qualifies as John’s dependent parent
True, when Cornelio, in 1985, adoptedJohn, then about two (2) years old, petitioner’s parental authority
over John was severed. However, lest it be overlooked, one key detail the ECC missed, aside from
Cornelio’s death, was that when the adoptive parent died less than three (3) years after the adoption
decree, John was still a minor, at about four (4) years of age.
John’s minority at the time of his adopter’s death is a significant factor in the case at bar. Under such
circumstance, parental authority should be deemed to have reverted in favor of the biological parents.
Otherwise, taking into account Our consistent ruling that adoption is a personal relationship and that
there are no collateral relatives by virtue of adoption, 21 who was then left to care for the minor adopted
child if the adopter passed away?
We hold that Cornelio’s death at the time of John’sminority resulted in the restoration of petitioner’s
parental authority over the adopted child.
On top of this restoration of parental authority, the fact of petitioner’s dependence on John can be
established from the documentary evidence submitted to the ECC. As it appears in the records,
petitioner, prior to John’s adoption, was a housekeeper. Her late husband died in 1984, leaving her to
care for their seven (7) children. But since she was unable to "give a bright future to her growing
children" as a housekeeper, she consented to Cornelio’s adoption of Johnand Elizabeth in 1985.
Following Cornelio’s death in 1987, so records reveal, both petitioner and John repeatedly reported
"Brgy. Capurictan, Solsona, Ilocos Norte" as their residence. In fact, this veryaddress was used in John’s
Death Certificate25 executed in Brazil, and in the Report of Personal Injury or Loss of Life accomplished
by the master of the vessel boarded by John. 26 Likewise, this is John’s known address as per the ECC’s
assailed Decision.27Similarly, this same address was used by petitioner in filing her claim before the SSS
La Union branch and, thereafter, in her appeal with the ECC. Hence, it can be assumed that aside from
having been restored parental authority over John, petitioner indeed actually execised the same, and
that they lived together under one roof.
Moreover, John, in his SSS application,28 named petitioner as one of his beneficiaries for his benefits
under RA 8282, otherwise known as the "Social Security Law." While RA 8282 does not cover
compensation for work-related deaths or injury and expressly allows the designation of beneficiaries
who are not related by blood to the member unlike in PD 626, John’s deliberate act of indicating
petitioner as his beneficiary at least evinces that he, in a way, considered petitioner as his dependent.
Consequently, the confluence of circumstances – from Cornelio’s death during John’s minority, the
restoration ofpetitioner’s parental authority, the documents showing singularity of address, and John’s
clear intention to designate petitioner as a beneficiary - effectively made petitioner, to Our mind,
entitled to death benefit claims as a secondary beneficiary under PD 626 as a dependent parent.
B. GSIS Law (R.A. No. 8291)
1. Coverage
2. Exclusions from coverage
3. Benefits
4. Beneficiaries
R.A. 8291
Implementing Rules, R.A. 8291
GSIS v. De Leon, G.R. No. 186560, November 17, 2010
GSIS v. Alcaraz, G.R. No. 187474, February 6, 2013
R.A. 10154