1. Differentiate labor standards law from labor relations law.

Are the
two mutually exclusive?
Labor standards law is that labor law which prescribes terms and conditions of
employment like Book III, Book IV, Title I and Book VI of the Labor Code. These
books of the Labor Code deal with working conditions, wages, working
conditions for women, minors, house helpers and home-workers, medical and
dental services, occupational health and safety, termination and retirement. On
the other hand, labor relations law is that labor law which regulates the relations
between employers and workers like Book V of the Labor Code which deals
with labor organizations, collective bargaining, unfair labor practices and strikes
and lockouts. Labor standards laws and labor relations laws are not mutually
exclusive; they complement to each other. Thus the law on strikes and lockouts
which is and example of labor relations law includes some provisions on the
security of tenure of workers who go on strike or who are locked out. These
provisions are clear examples of labor law relations.
2. What is the Constitutional basis of Articles 7-11 regarding emancipation
of tenants?
The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless,
to own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the
State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits
as the Congress may prescribe, taking into account ecological, developmental,
or equity considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary landsharing. (Article XIII, Section 4, 1987 Constitution)
3. Is a corporation, of which seventy percent (70%) of the
authorized and voting capital is owned and controlled by Filipino
citizens, allowed to engage in the recruitment and placement of workers,
locally or overseas? Explain briefly.
NO. Art. 27 of the Labor Code explicitly requires that in order to qualify for
participation in the overseas employment program, the corporation must
at least possess seventy-five percent ( 7 5 % ) o f t h e a u t h o r i z e d a n d
voting capital stock of which is owned and controlled by
F i l i p i n o citizens.
4. Can a recruiter be convicted of violating a POEA Circular which
was implemented without prior publication?
NO. The POEA MEMO Circular no. 2, series of 1983 was void.
Where the administrative circular in question is one of those issuances
which should be published for its effectivity, since its purpose is to enforce
and implement an existing law pursuant to a valid delegation.
Considering that POEA Administrative Circular No. 2, Series of 1983 has not
as yet been published or filed with the National Administrative Register,
the same is ineffective and may not be enforced

Page 2

(Philsa International Placement and Services Corp. vs. Secretary of DOLE,

G.R. No. 103144, April 4,2001)
.
5. Is the absence of an employment a valid defense in a case of illegal
recruitment? Explain.
NO. the law is clear on the matter. Private respondents further argue that
they cannot beheld liable by petitioner because no employment contract
between him and Step-Up Agency had been approved by the POEA. They
also claim that the absence of a Special Power of Attorney and an Affidavit of
Responsibility, as required under Sections 1 and 2, Rule 1, Book III of
the POEA Rules and Regulations only proves that they did not
deploy petitioner to Singapore
Their argument is far from persuasive. Surely, they cannot expect us
to utilize their non-compliance with the POEA Rules and Regulations
as a basis in absolving them. To do so would be tantamount to giving
premium to acts done in violation of established rules. At most, private
respondents
act
of
deploying
petitioner
to
S i n g a p o r e w i t h o u t c o m p l y i n g w i t h t h e P O E A requirements
only made them susceptible to cancellation or suspension of license
as provided by Section 2, Rule I, Book VI of POEA Rules and
Regulations. (Hornales v. NLRC, G.R. No. 118943, September 10, 2001)
.
6. Is there a requirement that a physician must be accredited by
the POEA before he can attend to a sick seaman?
This Court also finds no basis on the petitioners
c o n t e n t i o n t h a t t h e c o m p a n y - designated [physician] must also be
accredited with the POEA before he can engage in the medical treatment
of a sick seaman. There is nothing in the Standard Employment
Contract that provides this accreditation requirement, and even
if there is, this would be absurd and contrary to public policy as its
effect will deny and deprive the ailing seaman of his basic right to
seek immediate medical attention from any competent physician. The
lack of POEA accreditation of a physician who actually treated the ailing
seaman does not render the findings of such physician (declaring the seaman
permanently disabled) less authoritative or credible. To our mind, it is the
competence of the attending physician, not the POEA accreditation, that
determines the true health status of the patient-seaman, which in this instant
case, is the attending physicians from the Manila Doctors Hospital (German
Marine Agencies, Inc. v. NLRC, G.R. No. 142049, January 30, 2001)
7. Martina is a clerk typist in Hospicio de San Jose, a charitable
institution dependent for its existence on contributions and
donations from well wishers. She renders work eleven (11) h o u r s
a d a y b u t h a s n o t b e e n g i v e n o ve r t i m e p a y s i n c e h e r p l a c e
o f w o r k i s a c h a r i t a b l e institution. Is Socorro entitled to overtime
pay? Explain briefly.
YES. Martina is entitled to overtime compensation. She does not
fall under any of the exceptions enumerated under Art. 82 of the Labor
Code. Said provision equivocally states that Title I, Book III of the

Page 3

Labor Code dealing with hours of work, weekly rest periods, holidays,
service incentive leaves and service charges, covers all employees in
all establishments, whether for profit or not, except the following employees:
a. Government employees
b. Managerial employees
c. Officers and members of the managerial staff
d. Field personnel
e. Members of the family of the employer who and dependent on him for
support
f. Domestic helpers
g. Persons in the personal service of another
h. Workers paid by results.
A covered employee who works beyond eight (8)
h o u r s i s e n t i t l e d t o o v e r t i m e c ompensation.
8. Krishna earns P7.00 for every manicure she does in the
barbershop of a friend which has nineteen (19) employees. At times,
she takes home P175.00 a day and at other times she earns nothing. She
now claims holiday pay. Is Krishna entitled to this benefit?
NO. Nemia is not entitled to holiday pay. Art. 82 of the Labor
Code provide that workers who are paid by results are, among others,
not entitled to holiday pay. Nemia is a worker who is paid by results. She
earns P7.00 for every manicure she does.
9. As a tireman in a gasoline station, which is open twenty four (24) hours
a day with only five(5) employees, Joewa worked from 10:00 p.m. until
7:00 A.M. of the following day. He claimsto be entitled to night shift
differential. Is he correct?
NO. In the Omnibus Rules Implementing the Labor Code (Book III, Rule
II, dealing with nightshift differential) it is provided that its provisions on
night shift differential shall NOT apply to e m p l o y e e s o f r e t a i l a n d
service establishments regularly employing not more that five
( 5 ) workers. Because of this provision, Joewa is not entitled to night shift
differential because the gasoline station where he works (being a service
establishment) has only five employees.
10. A manufacturing firm with 500 employees schedules Sunday as the
latters rest day. Fifty workers who were seventh-day adventists and 200
workers who belong to the Iglesia ni Kristo object and propose that their
rest days be scheduled on Saturdays and Thursdays, respectively.
The company claims that the proposed schedule will seriously prejudice

Page 4

or obstruct its manufacturing operations and refuses to re-schedule

the rest day as requested.
a. Do the seventh day adventists and members of the Iglesia ni Kristo
have any right to choose their own rest days?
YES. The employer, under the law, is required to respect the preference
of the employee if the same is based on religious grounds. The
employee shall make known his preference to the employer in writing at
least (7) days before the desired effectivity of the initial rest day preferred
(Sec.4, Rule III, Book I, Implementing Rules and Regulations).
b. Assuming that the claim of the employer is well-founded, can it legally
refuse to re-schedule the rest day of the employees involved?
YES. If the employer cannot resort to other remedial measures, it
may schedule the rest days of the employees involved on the days of
their choice for at least 2 days in a month (Sec.4, Rule III, Book III,
Implementing Rule and Regulations).
11. This year, National Heroes Day (August 25) falls on
a Sunday. Sunday is the rest day of Bonifacio whose daily rate is
P500.00.
a. If Bonifacio is required by his employer to work on that
day for eight (8) hours, how much should he be paid for his
work? Explain.
For working on his scheduled rest day, according to Art. 93(a),
Bonifacio should be paidP500.00 (his daily rate) plus P150.00 (30% of his
daily rate = P650.00. This amount P650.00 should be multiplied by 2 =
P1,300.00. this is the amount that Bonifacio as employee working on
his scheduled rest day which is also a regular holiday should
receive. Art. 94(c) of the Labor Code provides that an employee shall
be paid a compensation equivalent to twice his regular rate for working
on any regular holiday. The regular rate of Bonifacio on May 1,2002 with an
additional thirty percent because the day is also his scheduled rest day.
Formula:
(a) To get rest day pay
Step 1: Get hourly wage rate
D a i l y B a s i c W ag e
Number of Hours worked

S p e c i a l H o l i d a y W ag e R a t e

e.g. (P500 / 8 hrs) x 130%= P81.25 (rest day wage rate)

Step 2 Compute wage between 8:00pm 5:00 pm using rest day wage
rate
Number of Hours worked

S p e c i a l H o l i d a y W ag e R a t e

Page 5

e . g .

8 h r s

P 8 1 . 2 5 =

P 6 5 0

(b) To get regular holiday pay

R e s t D a y W ag e R a t e

Regular Holiday

e.g. P650 x 200% = P1300

b. If he works for ten (10) hours on that day, how much
should he receive for his work? Explain.
P1,300.00 which is the amount that Bonifacio is to receive for
working on May 1, 2002 should be divided by 8 to determine his hourly rate
of P162.5. This hourly rate should be multiplied by 2 (the number of hours
he worked overtime). Thus, the amount that Bonifacio is entitled to
receive for his overtime work per hour on May 1, 2002 is P325.00
Holiday wage rate + 30% of holiday rate (200%)
Step 1: Get hourly wage rate
D a i l y B a s i c W ag e x
Number of Hours worked

S p e c i a l H o l i d a y W ag e R a t e

e . g . ( P 1 3 0 0 / 8 h r s . ) x 2 0 0 % = P 325
Step 2: Compute OT Premium Pay between 5:00 pm 10pm
(30% x Wage Per Hour) + Wage Per Hour x No. of OT Hours
OT premium Pay

e.g. (30 % x P325) + P325

no. of OT hours (5pm 10pm)

P422.50

2hrs
-----------P845.00

Step 3: COMPUTATION
8 am - 5 pm
2 hours

8 hrs x P200.00
2hrs x P260.00

Total Take Home Pay

P1300
845
-----------P 2,145.00

12. Sia, the employer, admits that Damascos work starts at 8:30 in the
morning and ends up at6:30 in the evening daily, except holidays
and Sundays. However, Sia claims that Damascos basic salary of
P140.00 a day is more than enough to cover the one hour excess work
which is the compensation they allegedly agreed upon. What other
evidences are required to warrant the award of overtime pay?

Page 6

Judicial admissions made by parties in the pleadings, or in the course of

the trial or other proceedings in the same case are conclusive, no further
evidence being required to prove the same, and cannot be contradicted unless
previously shown to have been made through palpable mistake or that no such
admission was made. In view of Sias formal admission that Damasco worked
beyond eight hours daily, the latter is entitled to overtime compensation. No
further proof is required. Sia already admitted she worked an extra hour daily.
Thus, public respondent gravely erred in deleting the award of overtime pay to
Damasco on the pretext that the claim has no factual basis. Still, even
assuming that Damasco received a wage which is higher than the
minimum provided by law, it does not follow that any additional compensation
due her can be offset by her pay in excess of the minimum, in the
absence of an express agreement to that effect. Moreover, such
arrangement, if there be any, must appear in the manner required by
law on how overtime compensation must be determined. For it is
necessary
to
have
a
clear
and
definite
delineation
b e t we e n a n e m p l o y e e s r e g u l a r a n d o v e r t i m e c o m p e n s a t i o n t o t
h wa r t v i o l a t i o n o f t h e l a b o r standards provision of the Labor Code
(Damasco vs. NLRC, G.R. No. 115755, December 4, 2000)
13. May a Company adopt working hours beyond 8 hours a day? If the
workers do not question such an arrangement, would that scheme be
considered valid?
YES. In Interphil Laboratories Employees Union FFW v. Interphil (G.R.
No. 142824, December 19, 2001) it was held by the Court that:
Section 1. Regular Working Hours A normal workday shall consist of
not more than eight (8) hours. The regular working hours for the Company shall
be from 7:30 A.M. to 4:30P.M. The schedule of shift work shall be maintained;
however the company may change the prevailing work time at its discretion,
should such change be necessary in the operations of t h e C o m p a n y. Al l
employees shall observe such rules as have been laid down by
t h e company for the purpose of effecting control over working hours. It is
evident from the foregoing provision that the working hours may be
changed, at the d i s c r e t i o n o f t h e c o m p a n y, s h o u l d s u c h c h a n g e
b e n e c e s s a r y f o r i t s o p e r a t i o n s , a n d t h a t t h e employees shall
observe such rules as have been laid down by the company. In the case before
us, Labor Arbiter Caday found that respondent company had to adopt a
continuous 24-hour work daily schedule by reason of the nature of its business
and the demands of its clients. It was established that the employees
adhered to the said work schedule since 1988. The employees are
deemed to have waived the eight-hour schedule since they followed, without
any question or complaint, the two-shift schedule while their CBA was still in
force and even prior thereto. The two-shift schedule effectively changed the
working hours stipulated in the CBA. As the employees assented by practiceto
this arrangement, they cannot now be heard to claim that the overtime
boycott is justified because they were not obliged to work beyond eight
hours.
14. Explain the principle of A FAIRS DAY WAGE FOR A FAIRS DAYS
LABOR

Page 7

The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining employees' wages. If there
is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but
was illegally locked out, s u s p e n d e d
or
dismissed,
or
o t h e r w i s e i l l e g a l l y p r e v e n t e d f r o m w o r k i n g (Caltex Refinery
Employees Association (CREA) vs. Brillantes, 279 SCRA 218), a situation
which we find is not present in the instant case. It would neither be fair nor
just to allow private respondents to recover something they have not earned
and could not have earned because they did not render services at the Kalibo
office during the stated period (Aklan Electric Cooperative Incorporated v.
NLRC, G.R. No. 121439, January 25, 2000)
.
15. A Co., a tobacco manufacturing firm, is owned by Mr. X who also
owned B Security Agency (BSA). When the employees of B formed a
union, As management preterminated the security contract between A
and B firms. When the guards filed a case of illegal dismissal and
ULP against both A and B, the counsel of A filed a Motion to Dismiss,
alleging that that there was no employer-employee relationship between A
and the guards.
a. Should the MOTION be granted? Explain.

NO. The Motion should not be granted. The facts indicate a concerted
effort on the part of respondents to remove petitioners from the company and
thus abate the growth of the union and block its actions to enforce their
demands in accordance with the Labor Standards laws. The Court held in
Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular
Life Assurance Co., Ltd.,37 SCRA 244 (1971), that the test of whether
an employer has interfered with and coerced employees within the
meaning of section (a) (1) is whether the employer has engaged in
conduct which it may reasonably be said tends to interfere with the
free exercise of employees' rights under section 3 of the Act, and it is
not necessary that there be direct evidence that any employee was in
fact intimidated or coerced by statements of threats of the employer if there is
areasonable inference that anti-union conduct of the employer does have an
adverse effect on self-organization and collective bargaining.
b. Is the doctrine of piercing the veil of corporate fiction applicable
hereto?

It is a fundamental principle in corporation law that a corporation is an

entity separate and distinct from its stockholders and from other corporations to
which it is connected. However, when the concept of separate legal entity
is used to defeat public convenience, justify wrong, protect fraud or
defend crime, the law will regard the corporation as an association of persons,
or in case of two corporations, merge them into one. The separate juridical
personality of a corporation may also be disregarded when such
corporation is a mere alter ego or business conduit of another person.
In the case at bar, it was shown that BSA was a mere adjunct of A
Company. BSA, by virtue of a contract for security services, provided A Co. with
security guards to safeguard its premises. However, records show that BSA
and A Co. have the same owners and business address, and BSA

Page 8

provided security services only to A Co. and other companies

b e l o n g i n g t o i t s o w n e r s . T h e purported sale of the shares of the former
stockholders to a new set of stockholders who changed the name of the
corporation appears to be part of a scheme to terminate the services
of BSAs security guards posted at the premises of A Co. and bust
their newly-organized union which was then beginning to become
active in demanding the company's compliance with Labor Standards
laws. Under these circumstances, the Court cannot allow A Co. to use
its separate corporate personality to shield itself from liability for illegal acts
committed against its employees. (De Leon vs. NLRC, G.R. No. 112661, May
30, 2001)
16. Discuss the doctrine on the economic reality of the relations of parties
test with respect to the existence of employer-employee relationship.
The relationship of employer-employee, which determines the
liability for employment taxes under the Social Security Act was not to be
determined solely by the idea of control which an alleged employer may or
could exercise over the details of the service tendered to his business by
the worker or workers. Control is characteristically associated
w i t h t h e e m p l o y e r e m p l o y e e relationship, but in the application of
social legislation, employees are those who as a matter of
economic reality are dependent upon the business to which the
y r e n d e r s e r v i c e , t a k i n g i n t o account permanency of the relations,
the skills required and the investments in the facilities for work and
opportunities for profit or loss from activities. It is the total situation
that controls. (Investment Planning Corp. vs. SSS, 21 SCRA 924).
The concept of independent contractor is interminably linked
with the economic reality test when we consider the fact that such person is
one who carries on a distinct and independent business and undertakes to
perform the job to do a piece of work on his own account and under hiso w n
r e s p o n s i b i l i t y, a c c o r d i n g t o h i s o w n m a n n e r a n d m e t h o d s a n d
f r e e f r o m t h e c o n t r o l a n d direction of his principal, except as to the result
of the work. Among the factors to be considered are whether the contractor is
carrying on an independent business; whether the work is part of the
employer's general business; the nature and extent of the work; the
skill required; the term and duration of the relationship; the right to assign
the performance of the work to another; the power to terminate the relationship;
the existence of a contract for the performance of a specified piece of work; the
control and supervision of the work; the employer's powers and duties with
respect tothe hiring, firing, and payment of the contractor's servants-, the control
of the premises; the duty to supply the premises, tools, appliances, material and
labor; and the mode, manner, and terms of payment. (MAFINCO Corporation v.
Ople, 70 SCRA 139)
17. Pandoy was an electrician who worked within the premises of Ushio's
car accessory shop, in Banawe Street, Quezon City. He filed a complaint
for illegal dismissal, non-payment of overtime pay, holiday pay, and
other benefits against Ushio, which moved to dismiss the
complaint claiming that Pandoy was not an employee but a free lance
operator who waited on the shop's customers should the latter require his
services. Ushio argues that in fine, the shop owner and the free lance

Page 9

operator, as an independent contractor, were partners in trade, "both

benefiting f r o m t h e p r o c e e d s o f t h e i r j o i n t e f f o r t s . I t f u r t h e r
c l a i m e d t h a t i t w a s a r e c o g n i z e d a n d accepted trade practice
peculiar to the auto spare parts shop industry operating along the
stretch of Banawe Street that shop owners would collect the
service fees from its customers and disburse the same to the
independent contractor at the end of a week. Moreover, Pandoy was free
to position himself near other car accessory shops to offer his services to
customers of said shops. On the other hand, Pandoy insists that he is
entitled to the benefits because he was loyal to Ushio, as he did not
perform work for anyone else. Is he correct?
NO. I n s t a r k c o n t r a s t t o t h e C o m p a n y s r e g u l a r e m p l o y e e s ,
t h e r e a r e i n d e p e n d e n t , freelance operators who are permitted by
the Company to position themselves proximate to the company
premises. These independent operators are allowed by the Company to wait on
Company c u s t o m e r s w h o w o u l d b e r e q u i r i n g t h e i r s e r v i c e s . I n
e x c h a n g e f o r t h e p r i v i l e g e s o f f a v o r a b l e recommendation by the
Company and immediate access to the customers in need of their services,
these independent operators allow the Company to collect their service fee from
the customer and this fee is given back to the independent operator at
the end of the week. In effect, they do not earn fixed wages from the
Company as they earn their variable fees from the customers of the
Company. The Company has no control over and does not restrict the
methodology
or
the
means
and
manner
by which these
operators perform
their work. These
operators
are not
supervised byany employee of the Company since the results of their
work is controlled by the customers who hire them. Likewise, the
Company has no control as an employer over these operators. They
arenot subject to regular hours and days of work and may come and
go as they wish. They are not subject to any disciplinary measures
from the Company, save merely for the inherent rules of general
behavior and good conduct [Ushio Marketing v. NLRC, 294 SCRA 673 (1998)]
.
18. In the employment of workers, is there a difference
b e t w e e n a n o r d i n a r y e m p l o y e r - employee
relationship
and
independent job contracting/ subcontracting?
YES. In an ordinary employer-employee relationship, there are only two
parties involved - the employer and the employee. This relationship is
established through a four-fold test, under which the employer:
a. Directly exercises control and supervision over the employee not only
as to the results of the work but also as to the means employed to attain this
result;
b. Has the power to select and hire the employee;
c. Has the obligation to pay the employees his or her wages and other
benefits.
d. Has the power to transfer and dismiss or discharge employees. T h e
p o we r o f c o n t r o l i s t h e m o s t i m p o r t a n t f a c t o r i n d e t e r m i n i n g t h e
e x i s t e n c e o f a n employer-employee relationship. The employer need not
actually exercise this power. It is enough t h a t t h e e m p l o y e r r e t a i n s
the right to exercise this power, as it may deem necessar

Page 10

y o r appropriate. In job contracting / subcontracting, there are three parties

involved:
a. The principal who decides to farm out a job or service to a
subcontractor;
b. The job contractor or subcontractor which has the capacity to
independently undertake the performance of the job or service; and
c. The employees engaged by the job contractor or subcontractor to
accomplish the job or service.
In job contracting or subcontracting, the four-fold test of employeremployee relationship should be satisfied by the contractor or
subcontractor in relation to the employee it engages to
accomplish the contracted or subcontracted job or service. In s
u c h c a s e s , t h e c o n t r a c t o r o r subcontractor is also referred to as
an independent contractor.
If the four-fold test is satisfied not by the job contractor
o r s u b c o n t r a c t o r b u t b y t h e principal, the principal then becomes
the employer of the employees engaged to accomplish the job or
service. What exists is not job contracting or subcontracting but a direct
employer-employee relationship between the principal and the employees and
the job contractor becomes merely the agent of the principal or the
subcontractor, the agent of his contractor, as the case may be.
19. Is there a difference between a job contractor or subcontractor and a
private recruitment and placement agency (PRPA)?
YES. A job contractor or subcontractor directly undertakes a
specific job or service for a principal, and for this purpose employs its
own workers. A PRPA cannot be a subcontractor. It simply recruits
workers for the purpose of placing them with another employer so that the
workers recruited will not become the PRPA's employees.
A job contractor or subcontractor is governed primarily by
Articles 106-109 of the Labor Code. A private recruitment and
placement agency is governed by Articles 25 to 39 of the Labor Code
and the rules implementing these articles.
A job contractor or subcontractor does not need authority
from the Department of Labor and Employment (DOLE) to undertake a
subcontracted job or service. A PRPA needs an authority or license from DOLE
to legally undertake recruitment and placement activities.
20. What law or rules govern job contracting or subcontracting?
The basic law governing job contracting or subcontracting is the
Labor Code, particularly Articles 106 to 109 thereof. These provisions
prescribe
the
conditions
for
the
regulation
of
job
contracting or subcontracting and the rights and obligations of
p a r t i e s t o t h i s a r r a n g e m e n t Department Order No. 3, which took effect
on 29 May 2001 was the latest set of rules released by the DOLE implementing
Articles 106 to 109.

Page 11

The following laws and rules also apply in addition to Articles 106 to 109
of the Labor Code:
a. Article 248 (c) of the Labor Code, which disallows contracting out of
services or functions being performed by union members when such will
interfere with, restrain or coerce employees in the exercise of their right to selforganization;
b. A r t i c l e 2 8 0 , L a b o r C o d e , w h i c h c l a s s i f i e s e m p l o y e e s
i n t o r e g u l a r, p r o j e c t o r s e a s o n a l employees;
c. A r t i c l e 2 1 8 0 o f t h e C i v i l C o d e , u n d e r w h i c h t h e
p r i n c i p a l , i n a c i v i l s u i t f o r d a m a g e s instituted by an injured
person, can be held liable for any negligent acts of the employees of a
labor-only contractor;
d. R e p u b l i c A c t N o . 5 4 8 7 , w h i c h r e g u l a t e s t h e o p e r a t i o n o f
s e c u r i t y a g e n c i e s , a n d i t s implementing rules;
e. Jurisprudence interpreting the foregoing laws;
f. D.O. No. 19, Series of 1993, for subcontracting arrangements in the
construction industry; and
h. Contractual stipulations provided these are not in conflict with
Labor Code provisions, jurisprudence, and D.O. Nos. 3 and 19.
21. What are the important features of D.O. No. 3?
The following are the important features of D.O. No. 3:
a. It revoked Department Order No. 10, Series of 1997, which was then
the implementing rules on Articles 106 to 109;
b. It prohibits labor-only contracting;
c. It recognizes the continuing validity of contracts entered into when D.O.
No. 10 was still in force;
d. It is a temporary measure;
e. It sets the process and mechanism, which is through
consultations through the Tripartite Industrial Peace Council, by which a
new set of rules shall be formulated.
22. Is job contracting or subcontracting illegal?
NO, p r o v i d e d
the
requirements
for
legitimate
job
c o n t r a c t i n g o r s u b c o n t r a c t i n g a r e satisfied and the prohibition
against labor-only contracting or subcontracting is observed. In two
recent cases decided by the Supreme Court, Vinoy v. NLRC, G.R. No. 126586,
February 02, 2000, a n d L i m v . N L R C , G . R . N o . 1 2 4 6 3 0 ,
February
19,
1999,
the
definition
of
legitimate
subcontracting is as follows:
Contracting or subcontracting shall be legitimate if the following
conditions concur:
a. T h e c o n t r a c t o r o r s u b c o n t r a c t o r c a r r i e s o n a d i s t i n c t
a n d i n d e p e n d e n t b u s i n e s s a n d undertakes to perform the job, work or
service on its own account and under its own responsibility, according to its own
manner and method, and free from the control and direction of the principal in
all matters connected with the performance of the work except as to the results
thereof;

Page 12

b. The contractor or subcontractor has substantial capital or investment;

c. The agreement between the principal and the contractor or
subcontractor assures the contractual employees entitlement to all
occupational safety and health standards, free exercise of the right to self
organization, security of tenure, and social and welfare benefits.
2 3 . What is substantial capital? Is substantial capital sufficient to establish
legitimate subcontracting?

Substantial capital refers to such investment, whether it is in the form of

money, facilities, tools, equipment, machineries, work premises, or subscribed
capital stock that would indicate the s u b c o n t r a c t o r ' s c a p a c i t y t o
undertake the contracted or subcontracted work or
s e r v i c e independently. For example, a contractor or subcontractor with a
capital stock of P1 Million which is fully subscribed and paid for has been
deemed by the Supreme Court to be a highly capitalized venture which
satisfies the requirement of substantial capital. Where a job contractor or
subcontractor is highly capitalized, the Supreme Court has held
that it need not show evidence that it has investment in t
h e f o r m o f t o o l s , e q u i p m e n t , machineries, work prem ises,
a m o n g o t h e r s , t o b e c o n s i d e r e d l e g i t i m a t e . H o w e v e r, i t i s s t i l l
necessary for it to show that it has the capacity to be an independent
contractor. That is, it can undertake the performance of the contract
according to its own manner and method, free from the supervision of the
principal in all matters except as to the results of the work.
24. What is the basis of the State in prohibiting labor-only
contracting? What is the objective and the prohibition?
The basis of the State in prohibiting labor-only contracting are:
a. The Constitution, which provides that the State shall protect labor and
promote its welfare, a n d s h a l l g u a r a n t e e b a s i c l a b o r r i g h t s
i n c l u d i n g j u s t a n d h u m a n e t e r m s a n d c o n d i t i o n s o f employment
and the right to self-organization.
b. Article 106 of the Labor Code, which allows the Secretary
of Labor to distinguish between labor-only contracting and job contracting
to prevent any violation or circumvention of the Labor Code. The objective of
the State in prohibiting labor-only contracting is to ensure that labor laws a r e
f o l l o we d a n d t o p r e v e n t t h e e x p l o i t a t i o n o f w o r k e r s . A l a b o r o n l y c o n t r a c t o r i s o n e w h o presents itself as an employer even if it
does not have capital to run a business or capacity to ensure that its
workers are paid their wages and other benefits as prescribed by law.
As such, it cannot independently undertake to perform a contracted or
subcontracted job or service. To allow a labor-only contractor to operate is to
give it an opportunity to circumvent the law and to exploit workers.
25. If you are the counsel of an agency which is being charged of LABORONLY CONTRACTING, what evidence will you present to refute the
charge? Explain.
I would present the same documents shown in the case of
Escario vs. NLRC, G.R. No.124055, June 8, 2000, to wit:

Page 13

D.L. Admark is a legitimate independent contractor. Among the

circumstances which tend to establish the status of D.L. Admark as a legitimate
job contractor are:
a. T h e S E C r e g i s t r a t i o n c e r t i f i c a t e o f D . L . A d m a r k
states
that it is a firm engaged in
promotional, advertising,
marketing and merchandising activities.
b. The service contract between CMC and D.L. Admark clearly provides
that the agreement is for the supply of sales promoting merchandising services
rather than one of manpower placement.
c. D.L. Admark was actually engaged in several activities such as
advertising, publication, promotions, marketing and merchandising. It had
several
merchandising
contracts
with
companies
l i k e P u r e f o o d s , C o r o n a s u p p l y, N a b i s c o B i s c u i t s a n d L i c r o n . I t
w a s l i k e w i s e e n g a g e d i n t h e publication business, as evidenced by its
magazine, the Phenomenon.
d. It had its own capital assets to carry out its promotion business. It then
had current assets amounting to P6 million and is therefore a highly capitalized
venture. It had an authorized capital stocks of P500,000. It owned several
motor vehicles and other tools, materials and equipment to service its
clients. It paid rentals of P30,020 for the office space it occupied.
26. What are the effects of a labor-only contracting arrangement?
The following are the effects:
a. The contractor or subcontractor will be treated as the agent of the
principal. Since the act f an agent is the act of the principal, representations
made by the contractor or subcontractor to he employees will bind the principal.
b. The principal will become the employer as if it directly
employed the workers engaged to undertake the contracted or
subcontracted job or service. It will be responsible to them for all their
entitlements and benefits under the labor laws.
c. T h e p r i n c i p a l a n d t h e c o n t r a c t o r o r s u b c o n t r a c t o r w i l l b e
s o l i d a r i l y t r e a t e d a s t h e employer.
d. The employees will become employees of the principal,
subject to the classifications of employees under Article 28 of the Labor
Code. If the labor-only contracting activity is undertaken by a
legitimate labor organization, a petition for cancellation of union registration
may be filed against it, pursuant to Article 239 (e).
27. If a legitimate independent job contractor or subcontractor
cannot pay the wages of the employees it engages to perform the job
or service, will the principal automatically become the employer of such
employees?
NO. Under Article 106, a principal has two types of liability in relation to
the employees of the contractor or subcontractor. The first type of liability is
limited, and is governed by the first two paragraphs of Article 106.
Thus, mere inability of the contractor or subcontractor to pay wages will not
automatically make the principal the direct employer. It will only make
the principal jointly and severally liable with the contractor or
subcontractor for payment of the employees' wages to the extent of the
work performed under the contract.

Page 14

The second type of liability, which arises from the third and
fourth paragraphs of Article106, is absolute and direct. This liability arises
when there is labor-only contracting as defined in D.O. No. 3. In such cases, the
principal shall be held responsible to the workers in the same manner and
extent as if it directly employed these workers.
28. Which employer should be held liable for the wages of
security guards, the PRINCIPAL EMPLOYER or the AGENCY? Explain.
There existed a contractual agreement between PTSI and
E A G L E , w h e r e i n t h e f o r m e r availed of the security services provided by
the latter. In return, the security agency collects from its client payment for its
security services. This payment covers the wages for the security guardsand
also expenses for their supervision and training, the guards bonds, firearms
with ammunitions, uniforms and other equipments [sic], accessories,
tools, materials and supplies necessary for the maintenance of a security
force.
Premises considered,
the
security
guards
immediate
recourse for the payment of the increases is with their direct employer,
EAGLE. However, in order for the security agency to comply with the
new wage and allowance rates it has to pay the security guards, the Wage
Orders m a d e s p e c i f i c p r o v i s i o n t o a m e n d e x i s t i n g c o n t r a c t s f o r
s e c u r i t y s e r v i c e s b y a l l o w i n g t h e adjustment of the consideration paid
by the principal to the security agency concerned. What the Wage Orders
require, therefore, is the amendment of the contract as to the consideration to
cover the service contractors payment of the increase mandated. In
the end therefore, the ultimate l i a b i l i t y f o r t h e p a y m e n t o f t h e
increases
rests with the principal
(Security and Credit
Investigation Inc. v. NLRC, G.R. No. 114316, January 26, 2001)
29. When is an insurance agent deemed an independent
c o n t r a c t o r o f a n i n s u r a n c e company?
A s h e l d i n Insular Life Insurance Company, Ltd. vs. NLRC, G.R. No.
84484,
Nov.
15,
1989, T h e r e i s n o e m p l o y e r - e m p l o y e e
relationship
between
a
commission
agent
and
an
i n v e s t m e n t c o m p a n y. T h e f o r m e r i s a n i n d e p e n d e n t c o n t r a c t o r
w h e r e s a i d a g e n t a n d o t h e r s similarly placed are:
a. paid compensation in the form of commissions based on
percentages of their sales, any balance of commissions earned being
payable to their legal representatives in the event of death or resignation;
b. required to put up performance bond;
c. subject to a set of rules and regulations governing the
performance of their duties under the agreement with the company and
termination of the services for certain causes;
d. not required to report for work at any time, nor to devote their time
exclusively to working for the company nor to submit a record of their
activities, and who finally shouldered their own selling and transportation
expenses.
Logically, the line should be drawn between rules that
merely serve as guidelines toward the achievement of the mutually
desired result without dictating the means or methods to be employed

Page 15

in attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which aims only
to promote the result, create no employer-employee relationship unlike the
second, which addresses both the result and the means u s e d t o a c h i e v e i t .
The distinction acquires particular relevance in the case of an
e n t e r p r i s e affected with public interest, as in the business of insurance,
which on that account, is subject to regulations by the State with respect,
not only to the relations between insurer and insured, but also to the
internal affairs of the insurance company.
30. When are salesmen considered independent
c o n t r a c t o r s r a t h e r t h a n r e g u l a r employees of a business
establishment?
In, MAFINCO Trading Corporation v. Ople, GR No. L-37790, March
25, 1976, it was held where, as in the case at bar, a peddler formally
entered into a peddling contract with petitioner for the purchase and sale
of Cosmos softdrinks, indicating the manner of selling the goods, whereby t h e
petitioner
provides
the
peddler
wi th
delivery
truck
a n d b e a r s t h e c o s t o f g a s o l i n e a n d maintenance of' the truck; while on
the other hand the peddler employs the driver and helpers and t a k e c a r e o f
the
latter's
compensation
and
social
security
c o n t r i b u t i o n s , t h e p e d d l e r s a r e independent contractors and not
employees of petitioner.
31. Is the joint and several liability of the principal and the job contractor
under Articles 107a n d 1 0 9 , i n r e l a t i o n t o Ar t i c l e 1 0 6 o f t h e
L a b o r C o d e , d e p e n d e n t u p o n t h e i n s o l v e n c y o r unwillingness
to pay on the part of the contractor or direct employees?
NO. N o t h i n g i n Ar t i c l e 1 0 6 i n d i c a t e s t h a t i n s o l v e n c y o r
u n wi l l i n g n e s s t o p a y b y t h e c ontractor or direct employer is a
prerequisite for the joint and several liability of the principal or indirect
employer. This joint and several liability facilitates, if not guarantees,
payment of the workers performance of any work, task, job or project, thus
giving the workers ample protection as mandated by the 1987 Constitution
(Development Bank of the Philippines vs. NLRC, June 17,1994)
.
32. A taxicab company required its taxi drivers to make deposits to defray
any deficiency which the latter may incur in the remittance of their
boundary and to cover car wash payments. Is this requirement
authorized under Article 114 of the Labor Code? Explain.
The requirement for deposit to defray any deficiency
i n t h e r e m i t t a n c e o f d r i v e r s boundary is not lawful. Article 114,
which provides the rule on deposits for loss or damage to tools,
materials or equipment supplied by the employer, does not apply to or permit
such kind of deposit. But the requirement for deposit for car wash payments is
lawful. There is no dispute that as a matter of practice in the taxi industry,
after a tour of duty, it is incumbent upon the driver to restore the unit he
has driven to the same clean condition when he took it out. Furthermore, the

Page 16

amounts doled out were paid directly to the persons who washed the units.
Finally, it will be noted that there was nothing to prevent the drivers from
cleaning the taxi units themselves, if they wanted their car wash
payments (Five J Taxi vs. NLRC, August 22, 1994)
.
33. Do disparity in wages between employees holding similar positions
but located in different regions of the country constitute wage distortion
as contemplated by law? Explain.
NO. Varying in each region of the country are controlling facts, such as
the cost of living, supply and demand of basic goods, services and necessities;
and the purchasing power of the peso. The wages in different regions are not
uniform. And the fact that a person is receiving more in one region does not
necessarily mean that he or she is better off than a person receiving less in
another region. Wage distortion presupposes an increase in the
compensation
of
the
lower
ranks
in
an
office hierarchy
without a corresponding
raise for
higher-tiered employees in the
same region of the country, resulting in the elimination or the severe
diminution of the distinction between the two groups (Prudential Bank
Association vs. Prudential Bank and Trust Co., January 25, 1999)
.
34. Does a wage increase granted pursuant to a collective
bargaining agreement constitute compliance with a subsequently
issued wage order?
NO. A collective bargaining agreement is a contractual obligation.
It is distinct from an obligation imposed by law. The terms and conditions of a
collective bargaining contract constitute t h e l a w b e t w e e n t h e p a r t i e s .
Beneficiaries thereof are therefore, by right, entitled to the
fulfillment of the obligation prescribed therein. Moreover, compliance with a
collective bargaining agreement is mandated by the expressed policy to
give protection to labor. Unless otherwise provided by law, said policy
should be given paramount consideration.
Increments to the laborers' financial gratification, be they
i n t h e f o r m o f s a l a r y i n c r e a s e s o r changes in the salary scale are
aimed at one thing - improvement of the economic predicament of the
laborers. As such, they should be viewed in the light of the State's
avowed policy to protect labor. Thus, having entered into an agreement with
its employees, an employer may not be allowed to renege on its obligation
under a collective bargaining agreement should, at the same time, the
law grant the employees the same or better terms and
c o n d i t i o n s o f e m p l o y m e n t . E m p l o y e e benefits derived from law are
exclusive of benefits arrived at through negotiation and agreement unless
otherwise provided by the agreement itself or by law.
(Meycauayan College vs. Drilon, G.R. No. 81144, May 7, 1990)
.
35. Can a woman be employed in any kind of occupation or undertaking?
YES, she can be employed in any occupation or undertaking allowable by
law, provided it is not deleterious to her health and safety. She should not be
discriminated against in employment by reason of her age, marital status and
pregnancy.

Page 17

36. What are considered as acts of discrimination against women?

The following are considered acts of discrimination:
a. Payment of a lesser compensation, including wage, salary and fringe
benefits, to a female employee as against a male employee, for work of equal
value;
b. Favoring a male employee over a female employee with
respect to promotion, training opportunities, study and scholarship grants
solely on account of their sexes.
3 7 . H o w m u c h m a t e r n i t y l e a ve b e n e f i t w i l l a p r e g n a n t
w o m a n r e c e i v e ? W h o w i l l p a y t h e maternity leave benefits?
The member shall receive a maternity benefit equivalent to 100%
of her average daily salary credit multiplied by 60 days for normal delivery; or
by 78 days in cases of caesarian section delivery
The employer advances the maternity leave benefit to the qualified
employee in full or in two equal installments, the first to be made upon
receipt of maternity leave application and the second not later than 30days after payment of the first installment. Upon receipt of satisfactory proof of
such payment, the SSS will reimburse the employer after the contingency for
the amount of maternity benefit legally advanced to the employee.
38. Can a maternity leave benefit be extended beyond the allowable
PERIOD?
YES, a m a t e r n i t y l e a v e m a y b e e x t e n d e d b e y o n d 6 0 d a y s
u p o n r e q u e s t o f t h e w o m a n employee. Such request must be due
to illness medically certified to arise out of her pregnancy, delivery,
complete abortion or miscarriage which renders her unfit to work. The
extended leave benefit shall be a hindrance to recover sickness benefit for
the same period of 60 days for the same childbirth, abortion or miscarriage.
39. What is the status of a woman permitted or suffered to work in
any night club, bar, or other similar establishment under the
Labor Code?
Any woman who is permitted or suffered to work with or without
compensation in any nightclub, cocktail lounge, massage clinic, bar, or
similar establishment shall be considered as an employee of such
establishment for purposes of labor and social legislation.
40. W h a t o t h e r s t a t u t o r y b e n e f i t s a n d s e r v i c e s s h a l l a n
e m p l o y e r p r o v i d e t h e w o m a n employee?
The employer shall provide the following:
a. Free family planning services to employees and their spouses, if the
establishment regularly employ more than 200 workers;
b. Holiday pay during the period that the woman employee is receiving
maternity or disability benefits, equivalent to the same percentage as the benefit
granted by SSS;

Page 18

c. Flexible work schedule to any solo parent as defined in Republic Act

No. 8972;
d. Parental leave of not more than seven days every year to the solo
parent who has rendered at least one-year service.
e. facilities for women such as seats, separate toilet rooms and nursery in
the work place.
f. to determine the appropriate minimum age and other standards
for retirement in special occupations for women.
41. Who are considered young workers and working children?
Young workers are in different categories, namely:
a. The working youth who are between 15 and 30 years of age (Republic
Act No. 8044);
b. Employed minors who are from 15 to below 18 years of age (Labor
Code);
c. Working children who are below 15 years of age, subject to
the exceptions specified by Republic Act No. 7658;
d. Those engaged in Child Labor, which is prohibited by law.
42. What is the minimum employable age for young workers?
The minim um employable age for young workers is 18
y e a r s o l d . H o w e v e r, a n y p e r s o n between 15 and 18 years of age may
be employed in undertakings not hazardous or deleterious in nature.
43. What is a non-hazardous undertaking?
It refers to any kind of work or activity, in which the employee is
not exposed to any risk that constitutes an imminent danger to his or her life
and limb, safety and health.
44. What are the hazardous work and activities to persons below 18 years
of age?
Hazardous work and activities to persons below 18 years age include:
a. Work which exposes children to physical; psychological or sexual
abuse;
b. Work under ground, under water, at dangerous heights or at
unguarded heights of two meters and above, or in confined spaces;
c. Work with hazardous machinery, equipment and tools, or which
involves manual handling or transport of heavy loads;
d. Work in an unhealthy environment which may expose children to
hazardous processes, to temperatures, noise levels
or vibrations
damaging to their health, to toxic, corrosive, poisonous,noxious,
explosive, flammable and combustible substances or composites, to
harmful biological agents, or to other dangerous chemicals including
pharmaceuticals.
e. Work under particularly difficult conditions such as work for long hours
or during the night, or work where the child is unreasonably confined to the
premises of the employer.
45. Can a child below 15 years of age be employed or made to work?

Page 19

A child below 15 years old is NOT permitted to work in any public

or private establishment EXCEPT in these two situations:
1. When the child works directly under the sole responsibility of his or her
parents or guardians or legal guardian and where only members of the
employers family are employed, on the following conditions:
a. The employment does not endanger the childs life, safety and health
and morals;
b. The employment does not impair the childs moral development
c. T h e e m p l o y e r p a r e n t o r l e g a l g u a r d i a n p r o v i d e s t h e
c h i l d w i t h p r i m a r y a n d / o r secondary education prescribed by the
Department of Education, Culture and Sports (DECS).
2. Where
the childs employment or participation
in public
entertainment or information through cinema, theater, radio or television is
essential, provided that:
a. The employment does not involve advertisement or
commercials promoting alcoholic beverages, intoxicating drinks, tobacco
and its by-products or exhibiting violence;
b. There is a written contract approved by the DOLE;
c. The employment does not endanger the childs life, safety, health and
morals;
d. The employment does not interfere with his or her schooling.
46. Once a firm validly employs a young person, is he or she
entitled to the same terms and conditions of employment accorded to
an employee of legal age?
YES. An employer is prohibited by the Labor Code to discriminate against
any young person with respect to terms and conditions of employment on
account of his or her being a minor.
47. Can a person between 15 and 18 years of age be allowed to engage in
domestic service?
A m i n o r, w h e t h e r m a l e o r f e m a l e , m a y b e e m p l o y e d a s a
d o m e s t i c s e r v a n t t o r e n d e r service in and about the employers home,
which services are usually necessary or desirable for themaintenance and
enjoyment thereof, such as ministering to the personal comfort and enjoyment
of the employers family.
48. Can a young worker be a member of the Social Security System (SSS)
and avail of the social security (SS) and Employees Compensation
(EC) benefits?
YES. The Social Security Law provides that coverage in the SSS
is compulsory upon all employees not over 60 years of age. This law
defines an employee as any person who performsservices for an
employer and who receives compensation for such services, where
there is an employer-employee relationship. Self-employed young persons
can also be SSS members.

Page 20

49. Who are considered child laborers?

Child laborers are persons aged below 15, or from 15 to below 18 years,
performing work or service that is hazardous or deleterious in nature, or
exploitative, or unsupervised by the childs parent or guardian, or that
interferes with normal development, or deprives that childs right to
health and education. However, not all children who work are engaged in
child labor. Work performed by any person below 15 years of age is
not considered child labor if it falls under allowable situations under
Republic Act No. 7658. Light work that is occasional, legal and respects the
childs right to health and education is not child labor.
50. You were asked by a paint manufacturing company about the
possible employment as a mixer of a person, aged seventeen (17),
who shall be directly under the care of the section supervisor. What
advice would you give? Explain briefly.
I will advise the paint manufacturing company that it cannot hire a person
aged seventeen (17). Art. 139 (c) of the Labor Code provides that a
person below eighteen (18) years of age shall not be allowed to work in an
undertaking which is hazardous or deleterious in nature as determined by the
Secretary of Labor. The Secretary of Labor has classified paint manufacturing
as hazardous work.
51. What are the benefits provided by law to young and deserving
students who want to work?
Republic Act No. 7323 provides for employment assistance to students
who are at least 15 but not more than 25 years of age enrolled or intending to
be enrolled in any secondary, tertiary, vocational or technological institutions.
The qualified and deserving youth can be employed during the summer and /or
Christmas vacation as aid to the pursuit of their education.
As incentives for employers, they shall pay the students only 60% of the
basic wage and the remaining 40% in the form of educational vouchers payable
by the government. An employer, under this law, can be a national or local
government office or a private establishment or undertaking.
52. Are SSS benefits considered property earned by the member
during his lifetime? Do they form part of his estate? Explain.
The benefits receivable under the SSS law are in the nature of a
special privilege or an arrangement secured by the law pursuant to the
policy of the State to provide social security to the workingman. Such
benefits cannot be considered as property earned by the member
during his lifetime. His contributions to the fund, it may be noted,
constitute only an insignificant portion thereof. Thus, the benefits are
specifically declared not transferable and exempt from tax legal
processes and liens. Furthermore, in the settlement of claims, the
procedure to be observed is governed not by the general provisions of
law, but by rules and regulations promulgated by theSocial Security
Commission. And it is not the probate or regular court but the

Page 21

Commission that determines the persons to whom the benefits are

payable (Social Security System vs. Davac, G.R. No. L-21642, July 30, 1966)
.
53. Does the delay on the part of the victim of sexual harassment to
complain said act impair his cause of action against his/her employer?
NO. T h e
gravamen
of
the
offense
in
sexual
h a r a s s m e n t i s n o t t h e v i o l a t i o n o f t h e employees sexuality but
the abuse of power by the employer. Any employee, male or female, may
rightfully cry foul provided the claim is well substantiated. Strictly
speaking there is not time period within which he or she is expected to
complain
through
the
proper
channels.
The
time
to
do
so may vary depending upon the needs, circumstances, and m
o r e i m p o r t a n t l y, t h e e m o t i o n a l
threshold
of
the
employee
(Philippine Aeolus Automotive United Corp. vs. NLRC, G.R. No.124617,
April 28, 2000)
.
5 4 . T h e o w n e r s o f FAL C O N F a c t o r y, a c o m p a n y e n g a g e d
in the assembling of automotive components, decided to
have
their
building
r e n o va t e d .
Fifty
(50)
persons,
c o m p o s e d o f engineers, architects and other construction
workers, were hired by the company for this purpose. The work is
estimated to be completed in three (3) years. The employees
contendedthat since the work would be completed after more than one (1)
year, they should be subject to compulsory coverage under the Social
Security Law. Is their contention correct?
NO. Under Section 8 (j) of RA 1161, as amended, employment of purely
casual employees, not for the purpose of the occupation or business of the
employer are excepted from compulsory coverage.
An employment is purely casual if it is not for the purpose of occupation
or business of the employer.
In the problem given, Falcon Factory is a company engaged in the
assembling of automotive components. The fifty (50) persons (engineers,
architects and construction workers) were hired by Falcon Factory to renovate
its building. The work to be performed by these fifty (50) people is not in
connection with the purpose of the business of the factory. Hence, the
employment of these fifty (50) persons is purely casual. They are
therefore excepted from the compulsory coverage of the SSS law.

LABOR RELATIONS
55. PICOP's main thesis is that the positions Section Heads and
Supervisors, who have been designated as Section Managers and
Unit Managers, as the case may be, were converted to managerial
employees under the decentralization and reorganization program it
implemented in 1989. Being managerial employees, with alleged authority
to hire and fire employees, they are ineligible for union membership under
Article 245 of the Labor Code. Furthermore, PICOP contends that no

Page 22

malice should be imputed against it for implementing its

decentralization program only after the petition for certification election
was filed inasmuch as the same is a valid exercise of its management
prerogative, and that said program has long been in the drawing
boards of the company, which was realized only in 1989 and fully
implemented in1991. PICOP emphatically stresses that it could not have
conceptualized the decentralization program only for the purpose of
"thwarting the right of the concerned employees to selforganization." Is PICOPs contention tenable?
NO. The petition not being meritorious, must fail and the same
should
be
as
it
is
hereby
dismissed. In United PepsiC o l a S u p e r v i s o r y U n i o n ( U P S U ) v. L a g u e s m a , w e h a d o c c a s i o n
t o elucidate on the term "managerial employees." Managerial employees are
ranked as Top Managers, Middle Managers and First Line Managers. Top
and Middle Managers have the authority to devise,implement and
control strategic and operational policies while the task of First-Line
Managers is si m p l y t o e n s u r e t h a t s u c h p o l i c i e s a r e c a r r i e d
o u t b y t h e r a n k - a n d - f i l e e m p l o y e e s o f a n organization. Under
this distinction, "managerial employees" therefore fall in two (2)
categories, n a m e l y, t h e " m a n a g e r s " p e r s e c o m p o s e d o f Top a n d
M i d d l e M a n a g e r s , a n d t h e " s u p e r v i s o r s " composed of First-Line
Managers. Thus, the mere fact that an employee is designated
manager" does not ipso facto make him one. Designation should be reconciled
with the actual job description of the employee, for it is the job description that
determines the nature of employment (PICOP vs.Laguesma, G.R. No. 101738,
April 12, 2000)
56. Do labor arbiters have jurisdiction over illegal dismissal cases
that may be filed against priests and ministers?
YES. The fact that a case involves the church and its religious minister
does not ipso facto give the case a religious significance. Simply stated, what is
involved in an illegal dismissal case is the relationship of the church as an
employer and the minister as an employeea purely secular matter not
related to the practice of faith, worship, or doctrines of the church (Austria vs.
NLRC,G.R. No. 124382, August 16, 1999)
.
57. Do Labor Arbiters or the NLRC have jurisdiction over criminal cases
involving violations of the penal provisions of labor laws? Explain.
Labor Arbiters or the NLRC are not invested with the judicial power; they merely
exercise quasi-judicial functions. In the hearing and disposition of cases brought
before them, they do not adhere strictly to the technical rules of evidence. This
is required in criminal cases where the guilt of the accused must be established
beyond reasonable doubt. The regular courts have jurisdiction over criminal
cases involving violations of the labor laws.
58. Explain the doctrine of forum non-conveniens. May this doctrine
be invoked against the exercise of jurisdiction by the labor arbiter?

Page 23

U n d e r t h e r u l e o f forum non conveniens, a P h i l i p p i n e

c o u r t o r a g e n c y M A Y a s s u m e jurisdiction over the case if it
chooses to do so, PROVIDED:
a. that the Philippine court is one to which the parties may conveniently
resort to;
b. that the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and
c. that the Philippine court has or is likely to have power to enforce its
decision.
This doctrine may be invoked against the exercise of jurisdiction
of the labor arbiters as held in the case of Manila Hotel Corporation and
Manila Hotel International limited vs. NLRC and Marcelo Santos which ruled
that the NLRC was a seriously inconvenient forum on the following grounds:
a. The NLRC is an inconvenient forum given that all the incidents of the
case- from the time o f r e c r u i t m e n t , t o e m p l o y m e n t , a n d t o
dismissal
occurred
outside
the
Philippines.
The
i nconvenience is compounded by the fact that the proper defendants the
Palace Hotel and MHICL are not nationals of the Philippines. Neither are they
doing business in the Philippines. Likewise, the main witnesses are nonresidents of the Philippines.
b. N e i t h e r c a n a n i n t e l l i g e n t d e c i s i o n b e m a d e a s t o t h e
l a w g o v e r n i n g t h e e m p l o y m e n t contract as such was perfected in
foreign soil. This calls for the application of the principle of lex loci contractus
(the law of the place where the contract was made).
c. Even assuming that the proper decision could be reached by the
NLRC, such would not have a n y b i n d i n g e f f e c t a g a i n s t t h e e m p l o y e r,
t h e P a l a c e H o t e l . T h e P a l a c e h o t e l i s a c o r p o r a t i o n incorporated
under the laws of China and was not even served with summons, hence
jurisdictions over its person was not acquired.
59. Does the principle of Jurisdiction by Estoppel apply in labor cases?
YES, the principle of Jurisdiction by Estoppel applies to labor
cases as was held by the Supreme Court in the case of
Prudential Bank and Trust Company vs. Reyes, G.R No. 141093,Feb. 20, 2001
Under this principle, a party to a labor case is
e s t o p p e d f r o m r a i s i n g t h e i s s u e o f jurisdiction of the labor arbiter
when he has participated in the proceedings from start to finish. In this case
the petitioner bank actively participated in the proceedings before the
Labor Arbiter, NLRC and Court of Appeals. It was only when the Court of
Appeals made an adverse decision did it raise the issue of jurisdiction. The
Supreme Court held that it was already too late to raise the issue of
jurisdiction as the petitioner was already in estoppel. While it is true that
jurisdiction over the subject matter of a case may be raised at any time
of the proceedings, this rule presupposes that laches or estoppel has not
supervened.
60. Does the Labor Arbiter have jurisdiction over disputes involving the
wages and terms and conditions of employment of COOPERATIVE
employees? Explain.

Page 24

YES. In the case of Perpetual Help Credit Coop Inc. vs. Faburada,
G.R. No. 121498, October 8, 2001 it was clarified that:
A R T. 1 2 1 .
Settlement
of Disputes.
D i s p u t e s a m o n g m e m b e r s , o f f i c e r s , d i r e c t o r s , and
committee members, and intra-cooperative disputes shall,
as far as practicable, be settled amicably in accordance with the
conciliation or mediation mechanisms embodied in the b y l a w s
o f
t h e
c o o p e r a t i v e ,
a n d
i n
a p p l i c a b l e
l a w s .
S h o u l d
s u c h
a conciliation / mediation proceeding fail, the matter shall be settled
in a court of competent jurisdiction."
Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative
Development Authority Law) which reads:
SEC. 8Mediation
and
Conciliation.
Upon
request
of
either
or
both
parties,
the
Authority shall mediate and conciliate disputes
within a cooperative or between
cooperatives:
Provided, That if no mediation or conciliation succeeds
within three (3) m o n t h s f r o m r e q u e s t t h e r e o f , a
certificate of non-resolution shall be issued by the
Commission prior to the filing of appropriate action before the
proper courts.
The above provisions apply to members, officers and directors of the
cooperative involved in disputes within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner
PHCCI and even if they are, the dispute is about payment of wages, overtime
pay, rest day and termination of employment. Under Art. 217 of the Labor Code,
these disputes are within the original and exclusivejurisdiction of the Labor
Arbiter.
61. May an execution be stopped merely because of a third party claim?
NO. The Labor Code grants the National Labor Relations
Commission (NLRC) sufficient authority and power to execute final
judgments and awards. Thus, a third-party claim of ownership on a levied
property should not necessarily prevent execution, particularly where
as in the present case the surrounding circumstances point to a
fraudulent claim. In fact, the disputed contract of sale here is not merely
rescissible; it is simulated or fictitious and, hence, void
ab initio (Tanongon v. Samson, G.R. No. 140089, May 9, 2002)
62. May a temporary restraining order in a labor dispute be issued
ex parte?
YES. T h e i s s u a n c e o f a n ex parte T R O i n a l a b o r d i s p u t e i s
n o t p e r s e p r o h i b i t e d . I t s issuance, however should be
characterized by care and caution for the law requires that it be clearly

Page 25

justified by considerations of extreme necessity, as when the commission of

unlawful acts is causing substantial irreparable injury to company properties and
the company is, for the moment, bereft of an adequate remedy at law
(Bisig ng Manggagawa sa Concrete Aggregates, Inc. vs. NLRC,
September 16, 1993)
.
63. In cases involving monetary award, why does the law require an
employer to post a cash or surety bond as an indispensable condition for
the perfection of an appeal?
An appeal stays the execution of an award. Such decision
c o u l d b e i n t h e f o r m o f a monetary award in favor of an employee. Thus,
an appeal will mean that a monetary award will notbe executed. To ensure
that an appealed monetary award is affirmed and has become final
and executory, Art. 223 requires that as an indispensable condition for the
perfection of an appeal by an employer, he must post a cash or surety
bond issued by a reputable bonding company duly accredited by the
NLRC in the amount equivalent to the monetary award in the judgment
appealed from.
64. What is the remedy in case the Regional Office or BLR verbally denies
or refuses to act on an application for registration for a considerable
amount of time?
Secure a notice of denial in order to avail of the remedy of appeal. After
all, the decision of the Regional Office or the Bureau denying the
application for registration shall be in writing, s t a t i n g i n c l e a r t e r m s
the reasons for such a denial. A copy of the notice of denial
s h o u l d b e furnished to the applicant union.
46
65. What is the effect of the filing/pendency of inter/intra
u n i o n a n d o t h e r r e l a t e d l a b o r disputes to the relationship of
the party litigants?
The rights, relationships and obligations of the parties-litigants
against each other and other parties-in-interest prior to the institution of the
petition shall continue to remain during the p e n d e n c y o f t h e p e t i t i o n
and until the date of finality of the decision rendered
t h e r e i n . Thereafter, the rights, relationships and obligations of the partieslitigants against each other and other parties-in-interest shall be governed by
the decision so ordered. The filing or pendency of any inter/intra-union
dispute and other related labor relations dispute is not a prejudicial
question to any petition for certification election and shall not be
aground for the dismissal of petition for certification election or
suspension of proceedings for certification election (Sections 3 and 4,
RULE XI Book V, IRR 2003).
66. Can there be several unions in one enterprise?
YES. T h e r e c a n b e s e v e r a l b a r g a i n i n g u n i t s i n o n e
e m p l o y e r u n i t , a n d a t l e a s t o n e legitimate labor organization
per bargaining unit. Also, there can be several unions within one
bargaining unit, since there is no law precluding such a

Page 26

s i t u a t i o n . B u t t h e r e c a n o n l y b e o n e bargaining agent [to the

exclusion of others] which shall be designated either by certification or
consent election, or by voluntary recognition as the case may be
67. Can all rank and file employees join, assist, or form a labor union?
NO. Confidential employees who are ALSO rank and file
employees cannot form, join, or assist unions if they assist in a confidential
capacity or have access to the confidential matters of persons who exercise
managerial functions in the field of labor relations
By the very nature of their functions, they assist and act in a
confidential capacity to, or have access to confidential matters
of, persons who exercise managerial functions in the field of labor
relations. As such, the rationale for the ineligibility of managerial employees to
form, assistor join a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusta Sanchez,144 SCRA 628
[1986] the Court elaborated on the rationale for such inhibition in that, if the
managerial employees would belong to, or be affiliated with a Union, the
latter might not be assured of their loyalty to the Union in view of
evident conflict of interests. The Union can also become companydominated with the presence of managerial employees in Union
membership."
This also holds true for confidential employees such as
accounting personnel, radio and telegraph operators, who having
access to confidential information, may become the source of undue
advantage. Said employee(s) may act as a spy (ies) of either party to a
collective bargaining agreement. This is especially true in the present
case
where
the
petitioning
Union
is
already
the
bargaining agent of the rank-and-file
employees
in
the
e s t a b l i s h m e n t . To a l l o w c o n f i d e n t i a l employees to join the existing
Union of the rank-and file would be in violation of the terms of the
Collective Bargaining Agreement wherein this kind of em
p l o y e e s b y t h e n a t u r e o f t h e i r functions/positions are expressly
excluded. (Philips vs. NLRC, G.R. No. 88957, June 25, 1992)
.
68. In what forms is company domination of a labor union made manifest?
a. Initiation of the company union idea, which may occur in three styles:
(1) Outright formation by the employer or his representative
(2) Employee formation or outright demand or influence of the
employer
(3) Managerially motivated formation by employees.
b.Financial support to the union

An employer commits unfair labor practice if he defrays the

union expenses or pays the fees of the attorney who drafted the unions
constitution and by-laws.
c. Employer encouragement and assistance

Page 27

Immediately granting the union exclusive recognition as a

b a r g a i n i n g a g e n t w i t h o u t determining whether the union represents the
majority of employees is an illegal form of assistance amounting to unfair labor
practice.
d. Supervisory assistance
This takes the form of soliciting membership, permitting union
activities during working t i m e o r c o e r c i n g e m p l o y e e s t o j o i n t h e
union by threats of dismissal or demotion
(Philippine American Cigar & Cigarette Factory Workers Union vs. Philippine
American Cigar & Cigarette Mfg. Co. Inc., G.R. No. L-18364 February 28, 1963)
.
69. XYZ Co. was informed that a petition for certification election has been
filed by ABC Union, a legitimate labor organization within XYZ Co beyond
the 60-day freedom period granted to the former. By virtue of said
information. XYZ Co. unilaterally suspended the on-going negotiations for
a new CBA with XYZ Co. Employees Association (XYZEA) and
refused to do any further negotiations and bargaining. Was there
unfair labor practice on the part of XYZ Co.?
Yes.
The
duty
to
bargain
collectively
includes
the mutual obligation to meet and convene promptly and expeditiously in
good faith for the purpose of negotiating an agreement. In order to allow the
employer to validly suspend the bargaining process, there must be a
valid petition for Certification Election raising a legitimate representation
issue. When a petition is filed OUTSIDE the60-day freedom period, there is no
legitimate representation issue and the filing of said petition donot constitute a
bar to an on-going negotiation (Colegio de San Juan de Letran v. Association
of Employees and Faculty of Letran, G.R. No. 14147, September 18, 2000)
.
70. What is the legal justification of a UNION SHOP provision in the
CBA? Explain.
The Labor Code, as amended, recognizes the validity of a union shop
agreement in Article248 thereof, Section (e) provides, to wit:
to discriminate in regard to hire or tenure of employment or
any term or condition of employment in order to encourage or
discourage membership in any labor organization. Nothing in this
Code or in any other law shall prevent the parties from requiring
membership in a recognized collective bargaining agent as a
condition for employment, except of those employees who are
already members of another union at the time of the signing of the
collective bargaining agreement
We affirm the ruling of the voluntary arbitrator for the inclusion of a union
shop provision i n a d d i t i o n t o t h e e x i s t i n g m a i n t e n a n c e o f
m e m b e r s h i p c l a u s e i n t h e c o l l e c t i v e b a r g a i n i n g agreement. As the
Solicitor General asserted in his consolidated Comment, the University's
reliance on the case of Victoriano vs. Elizalde Rope Workers' Union is
clearly misplaced. In that case, we ruled that "...the right to join a
union includes the right to abstain from joining any union. The right to

Page 28

refrain from joining labor organizations recognized by Section 3 of the Industrial

Peace Act is, however, limited. The legal protection granted to such right to
refrain from joining is withdrawn by operation of law, where a labor union and an
employer have agreed on a closed shop, by virtue o f w h i c h t h e e m p l o y e r
may employ only members of the collective bargaining union,
a n d t h e employees must continue to be members of the union for the duration
of the contract in order to keep their jobs (DLSU vs. Laguesma, G.R. No.
109002, 12 April 2000)
71. Union X, a local/chapter of Y Federation moved to disaffiliate
from the latter. The move w a s s u p p o r t e d b y a l m o s t a l l o f i t s
members. During
the
pendency
of the
disaffiliation
proceeding, the company entered into a collective bargaining
agreement with Union X. Y federation filed an action for ULP against
the company. Decide.
If the local unions move to disaffiliate is supported by almost
all [majority] the members of said union, and such fact is not disputed by the
federation [mother union], the companys act of entering into a CBA with the
local union does not constitute ULP.
A s h e l d i n t h e c a s e o f Philippine Skylanders vs. NLRC, G.R. No.
127374, January 31, 2002, as PSEA has validly severed itself from
PAFLU, there would be no restrictions which could validly hinder it
from subsequently affiliating with NCW and entering into a CBA in
behalf of its members.
Applying the principle of agency, the local union being the agent of the
real principal the union members; and the federation being merely the agent
of the agent the local union, the former which has chosen to disaffiliate from
the latter as willed by majority of its members may validly enter into a CBA with
the employer without holding the employer liable for ULP.
72. What is a sweetheart contract?
Article 249 considers it an unfair labor practice for a labor organization to
ask for or accept negotiation of attorneys fees from the employer in settling a
bargaining issue or a dispute. When it happens, the resulting Collective
Bargaining Agreement (CBA) will most likely be a sweetheart contract, a
CBA that does not substantially improve the employees wages and
benefits. Under Article 239 (f), one of the grounds for cancellation of union
registration is entering into collective b a r g a i n i n g a g r e e m e n t s w h i c h
provide terms and conditions of employment below minimum
standards established by law.
73. May an electric cooperative be held liable to pay damages for
the ULP it has committed against its employees? How much?
YES, but the amount should be tempered. For this reason, we find it
proper in this case to impose moral and exemplary damages
on private respondent. However, the damages awarded by the labor
arbiter, to our mind, are excessive. In determining the amount of damages
recoverable, the business, social and financial position of the offended

Page 29

parties and the business and financial position of the offender are taken
into account. It is our view that herein private respondents had not fully acted in
good faith. However, we are cognizant that a cooperative promotes the welfare
of its own members. The economic benefits filter to the cooperative
members. Either equally or p r o p o r t i o n a l l y, t h e y a r e d i s t r i b u t e d
among members in correlation with the resources of the
association utilized. Cooperatives help promote economic democracy
and support community development.
Under these circumstances, we deem it proper to reduce moral damages
to only P10,000.00 payable by private respondent NEECO I to each individual
petitioner. We also deem it sufficient for private respondent NEECO I to pay
each individual petitioner P5,000.00 to answer for exemplary
damages, based on the provisions of Articles 2229 and 2232 of the
Civil Code (NEECO I v. NLRC,G.R. No. 116066, January 24, 2000)
74. What is [an] in-house agency?
An in-house agency is where a contractor or subcontractor is engaged in
the supply of labor which is owned, managed, or controlled by the
principal and operates solely for the principal owning, managing, and
controlling it. It is prohibited by law.
75. What is the so-called HOLDOVER PRINCIPLE in a CBA?
In the case of New Pacific Timber vs. NLRC,
the court had the occasion to rule that Article253 and 253-A mandate the parties
to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period prior to the
expiration o f t h e o l d C B H A a n d / o r u n t i l a n e w a g r e e m e n t i s
r e a c h e d b y t h e p a r t i e s . C o n s e q u e n t l y, t h e automatic renewal clause
provided by the law, which is deemed incorporated in all CBAs provides the
reason why the new CBA can only be given a prospective effect. Thus,
employees hired after the stipulated term of a CBA are entitled to the
benefits provided thereunder. To exclude them w o u l d c o n s t i t u t e
undue
discrimination
and
deprive
them
of
m o n e t a r y b e n e f i t s t h e y w o u l d otherwise be entitled to under a new
collective bargaining contract to which they would have been parties
76. Which is the better barometer of the true financial standing of a
company for purposes of resolving an economic deadlock in
collective bargaining, a proposed budget or an audited
financial statement. Explain.
A s w e r u l e d i n t h e c a s e o f Caltex Refinery Employees Association
(CREA) vs. Jose S. Brillantes, (279 SCRA 218, 1997) [w]e believe that the
standard proof of a company's financial standing is its financial
statements duly audited by independent and credible external
auditors. "Financial statements audited by independent external
auditors constitute the normal method of proof of profit and loss
performance of a company. The financial capability of a company cannot be
based on its proposed budget because a proposed budget does
n o t r e f l e c t t h e t r u e f i n a n c i a l condition of a company, unlike audited

Page 30

financial statements, and more importantly, the use of a proposed

budget as proof of a company's financial condition would be
susceptible to abuse by s c h e m i n g e m p l o y e r s w h o m i g h t b e m e r e l y
f e i g n i n g d i r e f i n a n c i a l c o n d i t i o n i n t h e i r b u s i n e s s ventures in order
to avoid granting salary increases and fringe benefits to their employees.
77. What is the controlling doctrine on the issue of RETROACTIVITY of
CBA benefits? Explain. May the Secretary of Labor order the retroactivity
of a CBA?
Labor laws are silent as to when an arbitral award in a labor dispute
where the Secretary had assumed jurisdiction by virtue of Article 263 (g) of the
Labor Code shall retroact. In general, a CBA negotiated within six months
after the expiration of the existing CBA retroacts to the day
i m m e d i a t e l y f o l l o w i n g s u c h d a t e a n d i f a g r e e d t h e r e a f t e r, t h e
e f f e c t i v i t y d e p e n d s o n t h e agreement of the parties. On the other
hand, the law is silent as to the retroactivity of a CBA a r b i t r a l a w a r d
or that granted not by virtue of the mutual agreement of the
p a r t i e s b u t b y intervention of the government. Despite the silence of
the law, the Court rules herein that CBA arbitral awards granted after six
months from the expiration of the last CBA shall retroact to such time agreed
upon by both employer and the employees or their union. Absent such an
agreement as to retroactivity, the award shall retroact to the first day after the
six-month period following the expiration of the last day of the CBA should there
be one. In the absence of a CBA, the Secretary's determination of the date of
retroactivity as part of his discretionary powers over arbitral awards shall control
(MERALCO v. Quisumbing, G.R. No. 127598, February 22, 2000)
78. May the Labor Unions and the Company enter into a CBA that grants a
moratorium of ten y e a r s i n c o l l e c t i v e b a r g a i n i n g ? I s t h i s
not a novation of the unions right to collective
bargaining? Explain.
On the second issue, petitioners contend that the controverted
PAL-PALEA agreement is void because it abrogated the right of
workers to self-organization and their right to collective bargaining.
Petitioners claim that the agreement was not meant merely to suspend
the
existing
PAL-PALEA
CBA, which
expires
on September
30, 2000, but also to foreclose any renegotiation or any possibility to
forge a new CBA for a decade or up to 2008. It violates the protection to labor
policy laid down by the Constitution.
Under Article 253-A of the Labor Code insofar as representation is
concerned, a CBA has a term of five years, while the other provisions,
except for representation, may be negotiated not later than three
years after the execution. Petitioners submit that a 10-year CBA
suspension is inordinately long, way beyond the maximum statutory life of a
CBA, provided for in Article 253-A.By agreeing to a 10-year suspension,
PALEA, in effect, abdicated the workers constitutional rightto bargain for
another CBA at the mandated time. We find the argument devoid of merit
(Rivera v. Espiritu, G.R. No. 135547, January 23, 2002)
.

Page 31

79. Is there a conflict between a CBA that grants a 10-year moratorium on

CBA bargaining on one hand, and Art. 253-A of the Labor Code, on the
other? Explain.
T h e a s s a i l e d PAL - PAL E A a g r e e m e n t w a s t h e r e s u l t o f
v o l u n t a r y c o l l e c t i v e b a r g a i n i n g negotiations undertaken in the light of
the severe financial situation faced by the employer, with the peculiar and
unique intention of not merely promoting industrial peace at PAL, but preventing
the latters closure. We find no conflict between said agreement and
Article 253-A of the Labor C o d e . A r t i c l e 2 5 3 - A h a s a t w o fold purpose. One is to promote industrial stability and
predictability. Inasmuch as the agreement sought to promote industrial
peace at PAL during its rehabilitation, said agreement satisfies the
first purpose of Article 253-A. The other is to assign specific
timetables wherein negotiations become a matter of right and
requirement. Nothing in A r t i c l e 2 5 3 - A p r o h i b i t s t h e p a r t i e s f r o m
w a i v i n g o r s u s p e n d i n g t h e m a n d a t o r y t i m e t a b l e s a n d agreeing on
the remedies to enforce the same.
I n t h e i n s t a n t c a s e , i t w a s PAL E A , a s t h e e x c l u s i v e
b a r g a i n i n g a g e n t o f PALs g r o u n d employees that voluntarily entered
into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year
suspension of the CBA. Either case was the unions exercise of its right to
collective b a r g a i n i n g . T h e r i g h t t o f r e e c o l l e c t i v e b a r g a i n i n g ,
after all, includes the right to suspend it
(Rivera v. Espiritu, G.R. No. 135547, January 23, 2002)
.
80. Distinguish and/or explain the following terms: (1) Direct
Certification; (2) Certification Election; and (3) Consent Election.

Direct Certification

Direct Certification

Med-Arbiter certifies that a certain

Union is the exclusive collective
bargaining representative of the
employees
of
an
appropriate
bargaining unit without holding of a
certification election, but merely on the
basis of evidence presented in support
of the Unions claim that it is the choice
of the majority of the employees. Such
evidence may consist of affidavits
made by a clear majority of the
employees stating that they are
members of and are supporting the
Union petitioning for direct certification
to be their exclusive collective
bargaining representation (Prohibited
by law under E.O. 111)
A certification election is an election
ordered by Med-Arbiter for the purpose
of determining the sole and exclusive
bargaining agent of the employees in
an appropriate bargaining unit.

Page 32

Consent Election

A consent election is an election

agreed upon by the parties to
determine the issue of majority
representation of all workers of an
appropriate collective bargaining unit
not for the purposes of determining the
sole and exclusive bargaining agent of
the employees of the bargaining unit
but
only for
the
purpose
of
administering the existing CBA in case
of massive disaffiliation of union
members.

81. Can the Bureau of Labor Relations certify a

u n i o n a s t h e e x c l u s i v e b a r g a i n i n g representative after
showing proof of majority representation through union membership
cards without conducting an election?
NO. T h e B u r e a u o f L a b o r R e l a t i o n s c a n n o t c e r t i f y a u n i o n
as the exclusive collective bargaining representative after a
s h o wi n g o f p r o o f o f m a j o r i t y r e p r e s e n t a t i o n t h r o u g h u n i o n
membership cards without conducting a certification election. The
Labor Code (in Arts. 256 and258) provides only for a certification
election as the mode for determining exclusive collective bargaining
representative if there is a question on representation in an appropriate
bargaining unit.
82. When is consent election a bar to a petition for certification election?
When is it not a bar?
Where a petition for certification election had been filed and upon the
intercession of themed-arbiter, the parties agree to hold a consent election, the
result thereof shall constitute a bar to the holding of a certification election
for one year from the holding of such consent election. However, where
the total number of valid votes cast in a consent election is less than the
majority of all the eligible employees in the bargaining unit, there shall be a
failure of election. Such failure will not bar the filing of a petition for the
immediate holding of a certification election. Where no petition for certification
election had been filed but the parties themselves have agreed to hold a
consent election, the result thereof shall not constitute a bar to
another certification election, unless the winning union had been extended
voluntary recognition.
83. Union X, a legitimate labor organization filed a petition for certification
election during the freedom period. Union Y, another union in the
same company, moved to dismiss the same alleging among others
that Union X is composed of not only rank and file employees, but also
of supervisory employees, who under the law, may not join a labor
organization composed of rank and file employees. What is the effect
of such allegation upon the petition for certification election?

Page 33

There is no effect. After a certificate of registration

i s i s s u e d t o a u n i o n , i t s l e g a l personality cannot be subject to a
collateral attack. It may be questioned only in an independentpetition
for cancellation in accordance with Section 5 of Rule V, Book IV of the
Implementing Rules of the Labor Code (Tagaytay Highlands International
Gold Club, Inc. vs. Tagaytay Highlands Employees Union-PTGWO GR No.
142000 January 22, 2003) . Having attained such status, the petition of the
union stands unless the registration of the union is cancelled in accordance with
the aforementioned rule.
The infirmity in the membership of the respondent union can be
remedied in the pre-election conference thru the exclusion-inclusion
proceedings.
Furthermore, the status of being a supervisory employee does
not by itself disqualify an employee from joining a labor organization
composed of rank and file employee. A supervisory employee to be
disqualified must possess the powers similar to that of a managerial employee
such as the complete discretion to decide on matters without being
under the control of or subject to the review of some other superior.
84. May an employee who was improperly laid off be entitled to vote in
a certification election?
YES. T h e e m p l o y e e s w h o h a v e b e e n i m p r o p e r l y l a i d
o f f b u t w h o h a v e a p r e s e n t , unabandoned right to an
expectation of reemployment, are eligible to vote in
c e r t i f i c a t i o n election. Thus, if the dismissal is under
question, whereby a case of illegal dismissal and/ or ULP w a s f i l e d ,
the employees could and should still qualify to vote.
(Phil Fruits & Vegetables Industries, Inc. vs. Torres)
85. Does a decision in a certification election case regarding the
existence of an employer-employee relationship foreclose all further
disputes between the parties as to the existence ornon-existence of such
relationship?
NO. However final it may become, the decision in a certification election
case, by the very nature of such proceeding, is not such as to foreclose
all further dispute as to the existence, or non-existence of an employeremployee relationship.
It is established doctrine that for res adjudicate to apply, the
following
requisites
must
concur: (1)
the
former
j udgm ent or order m ust be final; (2) the court which rendered
said
judgment
or
order
must
have
jurisdiction
o v e r t h e s u b j e c t m a t t e r a n d t h e p a r t i e s ; ( 3 ) s a i d judgment or
order must be on the merits; and (4) there must be between the first
and second actions identity of parties, subject matter and cause of action.
Clearly, implicit in these requisites is that the action or proceedings in
which is issued the prior Judgment that would operate in bar of a subsequent

Page 34

action between the same parties for the same cause, be adversarial, or
contentious, as distinguished from an ex parte
hearing or proceeding of which the party seeking relief has given legal notice
to the other party and afforded the latter an opportunity to contest it, and
a certification case is not such a proceeding.
A certification proceeding is not a litigation in the sense in which this
term is commonly understood, but a mere investigation of a nonadversary, fact-finding character, in which the investigating agency plays
the part of a disinterested investigator seeking merely to ascertain the d e s i r e s
of the employees as to the matter of their representation. The
c o u r t e n j o y s a w i d e discretion in determining the procedure necessary to
insure the fair and free choice of bargaining representatives by the employees
(Sandoval Shipyards vs. Prisco Pepito, G.R. No. 143428, June25, 2001)
.
86. What is the statutory policy on certification electi
o n s ? H o w d o e s t h e l a w t r e a t managements attempts to thwart
initiatives to hold certification election?
The fact that PICOP voiced out its objection to the holding of certification
election, despite numerous opportunities to ventilate the same, only after
respondent Undersecretary of Labor affirmed the holding thereof, simply
bolstered the public respondents' conclusion that PICOP raised the issue
merely to prevent and thwart the concerned section heads and supervisory
employees from exercising a right granted them by law. Needless to stress, no
obstacle must be placed to the holding of certification elections, for it is a
statutory policy that should not be circumvented
(PICOP vs. Laguesma, G.R. No. 101738, April 12, 2000)
.
87. What is the Doctrine of Union Monopoly?
It means that once a union is chosen as the collective bargaining agent of
an appropriate bargaining unit through Certification election, it alone, can
collectively bargain with management to the exclusion of other competing
unions.
88. Is there a violation of the CBAs no strike no lockout provision when
workers join a demonstration against police abuses?
NO. The demonstration held by workers would be purely and completely
an exercise of their freedom of expression in general and of their right of
assembly and of petition for redress of grievances in particular before the
appropriate government agency. To regard the demonstration against police
officers, not against the employer as evidence of bad faith in collective
bargaining stretches unduly the compass of the collective bargaining agreement
(Phil. Blooming Mills Employees Org. vs. Phil. Blooming Mills Co., Inc. June 5,
1973)
.
89. What is a union recognition strike?
A union recognition strike is calculated to compel the employer to
recognize ones union and not the other contending group, as the employees
bargaining representative despite the striking unions doubtful majority status to

Page 35

merit voluntary recognition and lack of formal certification as the exclusive

representative in the bargaining unit.
90. Is the Pari delicto rule applicable in strikes and lockouts?
YES. When the parties are in pari delicto the employees having staged
an illegal strike and the employer having declared an illegal lockout such
situation warrants the restoration of the status quo ante and bringing back the
parties to their respective positions before the illegal strike and illegal lockout
through the reinstatement, without backwages, of the dismissed employees.
(Philippine Inter-Fashion, Inc. vs. NLRC, G.R. No. 59847, October 18, 1982)
.
91. Would the Unions failure to submit the STRIKE VOTE RESULTS to the
NCMB cause theillegality of the strike? Explain.
YES. The Supreme Court said so in the case of Samahan ng
Manggagawa sa Moldex v. NLRC, G.R. No. 119467, February 1, 2000. It has
been shown that the results of the strike-vote were never forwarded to the
NCMB, as admitted by petitioners themselves and as attested to by a
Certification of Non-Submission of Strike Vote issued by the NCMB. There is
thus no need for additional evidence on the matter, as it would not change the
fact that the results of the strike-vote were not submitted to the NCMB. Without
the submission of the results of the strike-vote, the strike was illegal, pursuant to
Article 264 of the Labor Code
92. What is the legal implication of defying the RETURN TO WORK ORDER
in a strike case which is under assumption of jurisdiction?
In the case of Telefunken Semiconductors Employees Union FFW v. CA,
G.R. No.143013-14, December 18, 2000, the Supreme Court held that the
strike of the Union cannot be viewed as anything but illegal for having been
staged in open and knowing defiance of the assumption and return-to-work
orders. The necessary consequence thereof are also detailed by the Supreme
Court in its various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA
595), the High Tribunal stated in no uncertain terms that by staging a strike after the assumption of jurisdiction or
certification for arbitration, workers forfeited their right to; be
readmitted to work, having abandoned their employment, and so
could be validly replaced.
Viewed in the light of the foregoing, we have no alternative but to confirm
the loss of employment status of all those who participated in the strike in
defiance of the assumption order dated 8 September 1995 and did not report
back to work as directed in the Order of 16 September1995.
93. Define the following:
a. Constructive resignation
Constructive Resignation is otherwise known as abandonment. It is
present when the following requisites concur:
(1) The worker has no intention to return to work, and

Page 36

(2) The worker has manifested by overt acts such an intention.

b.Constructive retrenchment
An employee whose number of working days was reduced to just two (2)
days a week due to the financial losses suffered by the employers business,
and who was rotated in such a way that the number of working days had been
substantially reduced for more than six months, and considering further that the
business was ultimately closed and sold off, the Supreme Court upheld the
ruling of the NLRC that the employee was thereby constructively dismissed or
retrenched from employment (International Hardware, Inc. vs. NLRC, et. al.,
G.R. No. 80770, August 10, 1989)
.
94. Is it within the jurisdiction of the Labor Arbiter or the NLRC to pass
judgment on the soundness of the management decision to declare that a
position is no longer necessary? Why?
Similarly, in Wiltshire File Co., Inc. v. NLRC petitioner company effected
some changes in its organization by abolishing the position of Sales Manager
and simply adding the duties previously discharged by it to the duties of the
General Manager to whom the Sales Manager used to report. In that case, we
held that the characterization of private respondents services as no longer
necessary or sustainable, and therefore properly terminable, was an exercise of
business judgment on the part of petitioner company. The wisdom or soundness
of such characterization or decision is not subject to discretionary review on the
part of the Labor Arbiter or of the NLRC so long as noviolation of law or arbitrary
and malicious action is indicated (Ismael Santos v. CA, G.R. No.141947, July 5,
1997)
95. What are the guidelines for the correct interpretation of the DOCTRINE
OF LOSS OFCONFIDENCE? Explain.
The Court, however, is cognizant of the fact that in numerous dismissal
cases, loss of trust and confidence has been indiscriminately used by
employers to justify almost every instance of termination and as a defense
against claims of arbitrary dismissal. In the case of
General Bank and Trust Company vs. Court of Appeals, 135 SCRA 569
the Court came up with the following guidelines for the application of the
doctrine of loss of confidence:
(a) loss of confidence which should not be simulated;
(b) it should not be used as a subterfuge for causes which are improper,
illegal or unjustified;
(c) it should not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and
(d) it must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.
Hence, while an employer is at liberty to dismiss an employee for loss of
trust and confidence, he cannot use the same to feign what would otherwise be
an illegal dismissal (Concorde Hotel v. Court of Appeals, G.R. No. 144089,
August 9, 2001)
.

Page 37

96. Is the one-month notice for separation for authorized causes always
required?
NO. If an employee consented to his retrenchment or voluntarily applied
for retrenchment with the employer due to the installation of labor saving
devices, redundancy, closure or cessation of operation or to prevent financial
losses to the business of the employer, the required previous notice to the
DOLE is not necessary as the employee thereby acknowledged the existence of
a valid cause for termination of his employment (Ismael V. Santos vs. CA, G.R.
No. 141947 July 5, 2001)
.
97. Is due process required before an employee may be demoted?
YES. Demotions, like dismissals, affect the employment of a worker
whose right to continued employment, under the same terms and conditions, is
also protected by law. Moreover, considering that demotion is, like dismissal,
also a punitive action, the employer being demoted should be given a chance to
contest the same (Leonardo v. NLRC GR No. 125303, June 16, 2000)
.
98. Is MISREPRESENTATION of essential facts enough to vitiate the
voluntariness of a RESIGNATION? Explain.
Respondent company's lack of candor and good faith in informing
BARQUIN that he was being terminated due to a valid retrenchment and not
because it sought to avoid compliance with the mandated wage increases
amounted to a deception which led BARQUIN to the mistaken belief that that
there was legal ground for retrenchment and prompted him to acquiesce to his
termination and sign the quitclaim. Petitioners correctly point out that such an
act has been declared by this Court in the case of Trendline Employees
Association-Southern Philippines Federation of Labor vs. NLRC ,
as tainted with bad faith and should not be countenanced as being prejudicial
and oppressive to labor.] Verily, had the respondent company not misled
BARQUIN into believing that there was a ground to retrench, it is not difficult to
believe that he would have thought twice before signing the quitclaim inasmuch
there was no reason for the termination of his employment.
Contrary to the assumption of both the Court of Appeals and the voluntary
arbitrator, the mere fact that BARQUIN was not physically coerced or
intimidated does not necessarily imply that he freely or voluntarily consented to
the terms of the quitclaim. Under Article 1330 of the CivilCode, consent may be
vitiated not only through intimidation or violence but also by mistake, undue
influence or fraud (Barquin v. Philippine Carpet Mnufacturing Corp., G.R. No.
140269,September 14, 2000)
99. a. Distinguish between back wages, unpaid wages, and separation pay.
Backwages is the relief given to an employee to compensate him for lost
earnings during the period of his dismissal.
Unpaid Wages are wages earned prior to the illegal dismissal but are not
yet paid to the employee.
Separation Pay is monetary amount intended to provide the employee

Page 38

money during the period in which he will be looking for another employment.
b. What economic components constitute backwages for a rank and
file employee? Are these components equally applicable to a managerial
employee?
The Labor Code (Art. 279) provides that an employee who is unjustly
dismissed from work is entitled to reinstatement and also 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 his
actual reinstatement.
An employee is entitled to all the above benefit regardless if he is a rank
and file employee or a managerial employee. However, backwages may also
include the 13th month pay which is paid to rank and file employees, as well as
benefits arising from the CBA given only to the employees in the bargaining
unit. Managerial employees cannot be given the same since they are ineligible
to join the labor organization.
100. Does Republic Act No. 7641, the Retirement Law, apply to employees
covered with a validretirement plan? Can it be given a retroactive effect?
Yes. The said law intends to give the minimum retirement benefits to
employees not entitled thereto under collective bargaining and other
agreements. Its coverage applies to establishments with existing collective
bargaining, or other agreements or voluntary retirementplans whose benefits
are less than those prescribed under the proviso in question.The said law is a
curative social legislation, which, by their nature, may be givenretroactive effect,
unless it will impair vested rights. It has a retroactive effect to include in its
coverage the employees services to an employer rendered prior to its
effectivity. It applies to employees in the employee of employers at the time the
law took effect and who are eligible to benefits under that statute
(MLQU vs. NLRC, G.R. No. 141673, October 17, 2001)

FREQUENTLY ASKED QUESTIONS

TOPIC: LABOR; SOCIAL JUSTICE
May social justice as a guiding principle in labor law be so used by the
courts in sympathy with the working man if it collides with the equal
protection clause of the Constitution? Explain.
Suggested Answer:
Yes. The State is bound under the Constitution to afford full protection to
Labor; and when confl icting interests collide and they are to be weighed
on the scales of social justice, the law should accord more sympathy
and compassion to the less privileged working man (Fuentes v. NLRC,
266 SCRA 24, 1997) However, it should be borne in mind that social justice
ceases to be an effective instrument for the equalization of the social and

Page 39

economic forces by the State when it is used to shield wrongdoing (Corazan

Jamer v. NLRC, 278 SCRA 632, 1997)
.
Alternative Answer:
No. Social justice as a guiding principle in law may not be used by the
courts if it collides with the equal protection clause of the Constitution. Social
justice is not a magic wand applicable in all circumstances. Not all labor
cases may be automatically decided in favor of the worker.
Management also has rights which are entitled to recognition and
protection; justice must be dispensed according to facts and the law;
and social justice is not designed to destroy or oppress the employer.
Another Alternative Answer:
Social justice as a guiding principle in Labor Law can be implemented
side by side with the equal protection clause of the Constitution. In the
implementation of the principle of social justice, the Constitution
commands that the State shall afford full protection to labor. Thus, Labor Law
may be pro-labor in the sense that labor is given certain benefits not given to
management. But this is not necessarily violative of the equal protection clause
of the Constitution because said clause allows reasonable classification.
TOPIC: CONSTITUTIONAL PROVISIONS RELATED TO LABOR LAW
What are the salient features of the protection to labor provision of the
Constitution?
The salient features of the protection to labor provisions of the
Constitution (Article XIII, Section 3) are as follows
Extent of Protection - Full protection to labor;
Coverage of Protection - Local and overseas, organized and
unorganized;
Employment Policy - Full employment and equality of employment
opportunities for all.
Guarantees Unionisms and Method of Determination Conditions of
Employment - Right of all workers to self-organization, collective bargaining and
negotiations.
Concerted Activities - Right to engage in peaceful concerted activities,
including the right to strike in accordance with law.
Working Conditions - Right to security of tenure, humane conditions of
work and a living wage.
Decision Making Processes - Right to participate in policy and decision
making process affecting their rights and benefits as way to provide by law.
Share in Fruits of Production - Recognition of right of labor to its just
share in fruits of production.

Page 40

ALTERNATIVE ANSWER:
The Constitution in (Article XIII, Section 3) provides that the State shall
afford protection to labor, local and overseas, organized unorganized.
The State shall afford protection to labor by promoting full employment
and equality of employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and
a living wage.
The State shall guarantee the right of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted activities,
including the right to strike, in accordance by law.
Workers shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in setting
labor disputes, including conciliation, and shall enforce mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between workers and employers
recognizing the right to its just share in the fruits of production and the right of
enterprises to reasonable returns on investments, and to expansion and growth.
1. LABOR STANDARDS
TOPIC: EMPLOYER-EMPLOYEE RELATIONSHIP
SUMMARY OF THE RULE: What determines employer-employee relationship
is the power of the employer to control the employee regarding the manner of
how the work should be done.
Zapato Custom-made make shoes to customer specifications and
repaired them. As a service to customers, a shoe shine stand was
operated on its premises. There were 10 shoe shine boys at the stand.
They owned their shoe shine boxes with cleaning agent polish, brushes,
and rags. Walk-in customers willing to wait were led by the shoe shine
boys to a seat at the stand wherehe waited while the boy asked the
customer to pay to the receptionist. Customers not willing to wait left the
shoes with the stands receptionist who gave a receipt with the price for
the service and pick-up date and time indicated. The boys were free to get
shoes to be shined for the receptionist when there were no waiting walkins. For each pair shined, the boys gotmarkers corresponding to the price
for their service. ZaCSIs staff did not interfere with, norsupervise, how the
boys went about their tasks. At days end, the markers held by each boy
were tallied and paid for. The boys signed a receipt to acknowledge full
payment for work done.
A labor federation organized ZaCSI and filed a petition for a consent
election. The boys, sympathizing with the workers, joined the union. At
the pre-election conference, the lawyer for ZaCSI moved to exclude the
boys as voters.
As Med-Arbiter handling the case, rule on the objection. Would you ruling
be different if in this case, ZaCSI provided the boys with the shoe shine boxes
and their contents? Explain.
As Med-arbiter, I will rule that the shoe shine boys should be excluded as voters

Page 41

in the consent election. The shoe shine boys are not employees of ZaCSI and thus
could not be considered as employees belonging to bargaining unit who will designate
or select a bargaining representative. They are not employees of ZaCSI because
according to the given facts, they are not under the control of ZaCSI which is an
essential element for the existence of employer-employee relationship. In the
statement of facts, it is said that ZaCSIs staff did not interfere with, nor supervise how
the boys went about their task.
My ruling will not be different even if ZaCSI provided the boys with the shoe
shine boxes and their contents. ZaCSI, by this act, is not yet exercising control that is
determinative of the existence or non-existence of control over them. It is the existence
of employer-employee relationship.
TOPIC: MANAGEMENT PREROGATIVE
SUMMARY OF THE RULE:
The management has the right to use its discretion and judgment in
thedetermination of policies regarding the aspects of employment. Contracting out
services orfunctions being performed by union members becomes illegal only when it
interferes with, restrains or coerces employees in the exercise of their right to selforganization.
Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with
the union of rank-and-file employees consisting, among others, of bartenders, waiters,
roomboys, housemen and stewards. During the lifetime of the CBA, Harbor View
Hotel, for reasons of economy and efficiency, decided to abolish the position of
housemen and stewards who do the cleaning of the hotels public areas. Over the
protest of the Union, the Hotel contracted out the aforementioned job to the City
Service Janitorial Company, a bonafide independent contractor which has a
substantial capital in the form of janitorial tools, equipments, machineries and
competent manpower. Is the action of the Harbor View Hotel legal and valid?
The action of Harbor View Hotel is legal and valid. The valid exercise of
management prerogative, discretion and judgment encompasses all aspects of
employment, including the hiring, work assignments, working methods, time, place and
manner of work, tools to be used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision, lay-off of workers, and
discipline, dismissal and recall of workers, except as provided for, or limited by special
laws. Company policies and regulations are, unless shown to be gross oppressive or
contrary to law, generally binding and valid on the parties and must be complied with
until finally revised or amended unilaterally or preferably through negotiation or by
competent authority (San MiguelCorporation vs. Ubaldo and Cruz, 218 SCRA 293).
ALTERNATIVE ANSWER:
The action of the Harbor View Hotel is legal and valid. Contracting out services
or functions being performed by union members is not illegal per se. In fact, it is the
prerogative of management to adopt cost-saving measures to ensure economy and
efficiency. Contracting out services or functions being performed by union members
becomes illegal only when it interferes with, restrains or coerces employees in the
exercise of their right to self-organizations. The action of Harbor View Hotel would, at
first glance, appear to be an unfair labor practice under Article 248 (c) e.g. to contract
out services or functions being performed by union members if such will interfere with,
restrain or coerce employees in the exercises of their right to self-organization.
Considering, however, that in the case at bar, there is no showing that the hotels
action is a valid exercises of its management prerogatives and the right to make
business judgments in accordance with law.

Page 42

TOPIC: CONTRACTOR; WAGES

SUMMARY OF THE RULE:
A labor-only contract is a contract between an employer and a personwho
supplies workers and does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises. The employer who contracts the
services of the labor-onlycontractor is directly liable to the employees of the labor-only
contractor as if such employees had been directly employed by the employer. In an
independent contract, the employer who contracted out the job is jointly and severally
liable with the contractor only to the extent of the work-performed under the contract.
An award of backwages is given to an employee who is unjustly dismissed. On the
other hand, an award of unpaid wages is given to an employee who has not been paid
his salaries or wages for services actually rendered. The cause of action here is nonpayment of wages or salaries.
(a) What is a labor-only contract?
Labor-only contract is a contract between an employer and a person who
supplies workers and does not have substantial capital or investment in the form of
tools, equipments, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related
to the principal business of such employer. (Art.106, Labor Code)
(b) Distinguish the liabilities of an employer who engages the services of a bona fide
independent contractor from one who engages a labor-only contractor?
A person who engages the services of a bona fide independent contractor for
the performance of any work, task, job or project is the indirect employer of the
employees who have been hired by the independent contractor to perform said work,
task, job or project. In the event that the independent contractor fails to pay the wages
of his employees, an indirect employer, in the same manner and extent that he is liable
to employees directly employed by him, is jointly and severally liable with the
independent contractor to the employees of the latter to the extent of the work
performed under the contract. As for the person who engages the services of a labor
only contractor, the latter is considered merely as an agent of the former who shall be
responsible to the workers hired by the labor only contractor in the same manner and
extent as if the directly employed such workers.
ALTERNATIVE ANSWER:
An employer who engages the services of a bona fide independent contractor
is solidarily liable with his contractor or sub-contractor only for non-payment or underpayment of wages and other labor standards provisions of the Labor Code, whereas
an employer that it normally grants to its regular or direct employees. An employer who
deals with a bona-fide independent contractor shall only be subsidiary liable, if the
contractor or sub-contractor fails to pay the wages to the workers in accordance with
the Labor Code. Upon the other hand, an employer who deals with a labor-only
contractor shall be primarily responsible to the workers in the same manner and extent
as if the latter were directly employed by him. (Art 106-107, Labor Code)
(c) Distinguish between an award for back wages and an award for unpaid wages.
An award for backwages is to compensate an employee who has been illegally
dismissed, for the wages, allowances and other benefits or their monetary equivalent,
which said employee did not receive from the time he was illegally dismissed up to the
time of his actual reinstatement. On the other hand, an award for unpaid wages is for
an employee who has actually worked but has not been paid the wages he is entitled
to receive for such work done. (Arts. 279 and 97 (F),Labor Code).

Page 43

ALTERNATIVE ANSWER:
An award of backwages is given to an employee who is unjustly dismissed. On
the other hand, an award of unpaid wages is given to an employee who has not been
paid his salaries or wages for services actually rendered. The cause of action here is
non-payment of wages or salaries. (General Baptist Bible College vs. NLRC 219
SCRA 549).
TOPIC: OVERTIME PAY
Undertime work on any particular day shall not be offset by overtime work on
any other day.
Danilo Flores applied for the position of driver in the motor pool of Gold
Company, a multinational corporation. Danilo was informed that he would frequently be
working overtime as he would have to drive for the companys executives even beyond
the ordinary eight-hour work day. He was provided with a contract of employment
wherein he would be paid a monthly rate equivalent to 35 times his daily wage, regular
sick and vacation leaves, 5 day-leave with pay every month and time off with pay when
the companys executives using the cars do not need Danilos service for more than
eight hours a day, in lieu of overtime. Are the above provisions of the contract of
employment in conformity with, or violative of, the law?
Except for the provision that Danilo shall have time off with pay when the
companys executives using the cars do not need Danilos service for more than eight
hours a day, in lieu of overtime, the provisions of the contract of employment of Danilo
are not violative of any labor law because the instead improve upon the present
provisions of pertinent labor laws. Thus, the monthly rate equivalent to 35 times the
daily wage may be sufficient to include overtime pay. There is no labor law requiring
the payment of sick and vacation leaves except for a five-day service incentive leave
in the Labor Code. The five-day leave with pay every month has no counterpart in
Labor Law and is very generous. As for the provision in Danilos contract of
employment that he shall receive time off with pay in lieu of overtime, this violates the
provision of the Labor Code which states that undertime work on any particular day
shall not be offset by overtime work on any other day. Permission given to the
employer to go on leave on some other day of the week shall not exempt the employer
from paying additional compensation required by the Labor Code.
TOPIC: HOUSEHELPERS; WAGES
SUMMARY OF THE RULE:
No house helper shall be assigned to work in a commercial, industrial or agricultural
enterprise at a wage or salary rate lower than provided by law for agricultural or nonagricultural workers. A family driver who drives the family van to fetch merchandise
from suppliers and delivers the same to boutique in a mall owned by the family for
whom he works should be paid the minimum daily wage of a driver in a commercial
establishment.
The weekly work schedule of a driver is as follows:
Monday, Wednesday, and Friday
Drive the family car to bring them and fetch the children toand from school.
Tuesday, Thursday, and Saturday
Drive the family van to fetch merchandise from suppliers and deliver the same to a
boutique in a mall owned by the family.
(a) Is the driver a house helper?
The driver is a house helper. A person is a house helper or is engaged in domestic or

Page 44

household service if he/she renders services in the employers home which are usually
necessary or desirable to the maintenance and enjoyment thereof and which includes
ministering to the personal comfort and convenience of the members of the employers
household including the services of family drivers.
(b) The same driver claims that for work performed on Tuesday, Thursday and
Saturday, he should be paid to the minimum daily wage of a driver of commercial
establishment. Is the claim of the driver valid?
A family driver who drives the family van to fetch merchandise from suppliers and
delivers the same to boutique in a mall owned by the family for whom he works should
be paid the minimum daily wage of a drive in a commercial establishment
Yes. Any employee, whether employed for a definite period or not, shall, beginning on
his first day of service, be considered an employee for purposes of membership in any
labor union.[Article 277 (c)].
TOPIC: STRIKES
SUMMARY OF THE RULE:
For a strike to be legal, it should either be an economic strike, i.e., caused by a
bargaining deadlock or an unfair labor practice strike, i.e., caused by the commission
of an unfair labor practice by an employer.
On May 24, 1989, the UKM urged its member-unions to join a Welga ng Bayan in
support of its efforts to pressure Congress to increase the daily minimum wage. Union
X is a member of the UKM and represents all the rank and the file employees of the
Puritan Mining Company. Following the call for a nationwide strike, Union X staged a
strike and put a picket the following day. As a result, the companys operations were
paralyzed although company officials and supervisory employees were allowed
ingress and egress to and from the company premises. The picket was likewise
peaceful. On May 28, 1989, the UKM leadership announced the end of the Welga ng
Bayan. Union X immediately company sought your legal advice on the legality of the
strike and the liability, if any, of the union officers and the participating members. What
is your opinion? Explain.
The strike was illegal. For a strike to be legal, it should either be an economic strike,
i.e., caused by a bargaining deadlock or an unfair labor practice strike, i.e., caused by
the commission of an unfair labor practice by an employer. The strike by Union X was
neither an economic strike or an unfair strike. Thus, it was an illegal strike. Because it
was an illegal strike, any union officer who knowingly participated in it may be declared
to have lost his employment status, meaning such union officer could be legally
terminated. As for the union members who participated in the strike, the facts show
that no illegal acts were committed. They allowed ingress and egress to and from the
company premises. The picket was peaceful. The mere participation of the union
members, without their committing illegal acts, does not constitute sufficient ground for
the termination of their employment.
ALTERNATIVE ANSWER:
The strike is legal and the union officers and participating union members incur no
liability for calling and participating in the strike respectively. Applying the rule in
Philippine Blooming Mills to the effect that the workers only personally assembled to
influence the decision making process of the government which is a constitutionally
guaranteed right.
Note: Credit should be given to answer that focus on the procedural requirement for a
strike to be legal, i.e. strike vote, notice, cooling off period.
Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All

Page 45

were stockholders, directors and officers of the Pagaspas Marketing Co., Inc. (PMCI).
PMCI sold office machines and supplies. It employed 20 sales persons, 10 delivery
men, 20 service personnel, and 10 administrative employees. On December 10, 1987,
45 rank and file workers of the company formed and registered a labor union. They
sent a letter to Pagaspas demanding recognition as bargaining agent of all workers,
enclosing check-off authorization forms of the union members, and a set of economic
demands. PMCI refused to recognize the union. The union president went to you, as
labor adviser of the federation which they were planning to affiliate with. He wants your
opinion on what the union may lawfully do to compel management to come to the
bargaining table at that point. What will your advice be? The union president tells you
that they prefer to go on strike. He wants to know the legal requirements that the union
must comply with so the strike will be legal. What advice will you give?
I will advice the union president to file a petition for certification so that after being
certified as the collective bargaining representative, the union could go back to PMCI
and ask it to bargain collectively with the Union. If PMCI persists in its refusal to
bargain collectively, I will advice the Union to file a case of unfair labor practice against
PMCI since a refusal to bargain collectively is a ULP.I will tell the union president that
these are the requisites that should be complied with if a strike is to be legal: The
union should file a notice of strike with the Bureau of Labor Relations(assuming PMCI
is in Metro Manila). A copy of the notice should also be served upon PMCI. The union
should not actually go on strike until after 30 days (if the strike is because of the ULP
committed by PMCI, i.e., its refusal to bargain collectively) after filing a notice of strike.
There should be a strike vote, either at a meeting or through a referendum. A majority
of the union members on the bargaining unit should approve the declaration of strike.
The union should furnish the Bureau of Labor Relations of the Notice of meeting where
a strike vote will be taken. The union should also inform the Bureau about the result of
the voting at least seven (7) days before the intended strike.
TOPIC: CONDITIONS FOR A VALID RETRENCHMENT
What conditions must prevail and what requirements, if any, must an employer comply
with to justify / effect a valid retrenchment program?
In the case of Asian Alcohol Corporation vs. NLRC, G.R. No. 131108, March 25, 1999,
The SC stated that the requirements for a valid retrenchment must be proved by clear
and convincing evidence:(1)that the retrenchment is reasonably necessary and likely
to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real or if only expected, re reasonably imminent as
perceived by objectively and in good faith by the employer; (2) that the employer
served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment; (3) that the
employer pays the retrenched employees separation pay equivalent to one month pay
or at least one month pay for every year of service, whichever is higher; (4) that the
employer exercises his prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right of
security of tenure; and (5) that the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be retained among the
employees, such as status (i.e., whether they are temporary, casual, regular, or
managerial employees), efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
TOPIC: ILLEGAL DISMISSAL; DUE PROCESS REQUIREMENTS.
SUMMARY OF THE RULE:
To meet the requirements of due process, the law requires that an employer must
furnish the workers sought to be dismissed with two written notices before termination
of employment can be legally effected, that is, (1) a notice which apprises the

Page 46

employee of the particular acts or omissions for which his dismissal is sought; and (2)
subsequent notice, after due hearing, which informs the employee of the employers
decision to dismiss him.
Assuming the existence of valid grounds for dismissal, what are the requirements
before an employer can terminate the services of an employee?
The employer should give the employee being terminated due process. For
termination of employment based on any of the just causes for termination, the
requirement of due process that the employer must comply with are:(1) A written notice
should be served on the employer specifying the ground or grounds for termination
and giving to say employee reasonable opportunity within which to explain his side.
(2) A hearing or conference should be held during which the employee concerned, with
the assistance or counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence and present the evidence presented against him.
(3) A written notice of termination, if termination is the decision of the employer, should
be served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. For
termination of employment based on authorized causes, the requirements of due
process shall be deemed complied with upon service of a written notice to the
Department of Labor and Employment at least thirty (30) days before the affectivity of
the termination specifying the ground or grounds for termination.
ALTERNATIVE ANSWER:
Assuming that there is a valid ground to terminate employment, the employer must
comply with the requirement of procedural due process: written notice of intent to
terminate stating the cause of termination; hearing; and notice of termination. Art. 277
of the Labor Code reads: xxx The employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires.Not only
must the dismissal be for a valid or unauthorized cause as provided by law but the
rudimentary requirements of due process notice and hearing must also be
observed before an employee must be dismissed (Salaw v. NLRC, 202 SCRA 7). To
meet the requirements of due process, the law requires that an employer must furnish
the workers sought to be dismissed with two written notices before termination of
employment can be legally effected, that is, (1) a notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2)
subsequent notice, after due hearing, which informs the employee of the employers
decision to dismiss him (Tanala v. NLRC, 252 SCRA 314)
.
TOPIC: JURISDICTION
SUMMARY OF THE RULE:
Regular courts have jurisdiction over cases arising from slanderous language uttered
against an employee by an employer. This is a simple action for damages for tortious
acts allegedly committed by defendant-employer
(Medina vs. Castro-Bartolome, 116 SCRA597)
.
Mariet Demetrio was a clerk-typist in the Office of the President of a multinational
corporation. One day she was berated by the President of the company, the latter
shouting invectives at her in the presence of employees and visitors for a minor
infraction she committed. Mariet was reduced to tears out of shame and felt so bitter
about the incident that she filed a civil case for damages against the company
president before the regular courts. Soon thereafter, Mariet received a memorandum
transferring her to the Office of the General Manager without demotion in rank or
diminution in pay. Mariet refused to transfer. However, with respect to the civil suit for
damages, the company lawyer filed a Motion to Dismiss for lack of jurisdiction

Page 47

considering the existence of an employer-employee relationship and therefore, it is

claimed that the case should have been filed before the Labor Arbiter. Rule on the
Motion to Dismiss. Should it be granted or denied. Explain briefly.
The Motion to Dismiss should be denied. It is a regular court and not a Labor Arbiter
that has jurisdiction on the suit for damages. The damages did not arise from the
employer-employee relations which would not have placed the suit under the
jurisdiction of a Labor Arbiter. The suit arises from the fact that the President of the
company shouted invectives at Mariet Demetrio in the presence of employees and
visitors. Her complaint for damages is against an officer of the Company based on
slanderous language alleged made by the latter. This falls under the jurisdiction of the
ordinary courts. There is here a simple action for damages for tortious acts allegedly
committed bythe defendant. Such being the case, the governing statue is the Civil
Code and not the Labor Code.(Medina vs. Castro-Bartolome, 116 SCRA 597)
ALTERNATIVE ANSWER:
The Motion to dismiss should be granted. According to the Labor Code (Article 217
(a)4),the Labor Arbiter has original and exclusive jurisdiction to hear and decide,
among others, claims for actual, moral and exemplary and other forms of damages
arising from the employer-employee relations. The claim for damages in the case in
question arose from the fact that the President of the Company shouted invectives at
Mariet Demetrio in the presence of employees and visitors for aminor infraction she
committed. If the infraction has something to do with her work, then, theclaim for
damages could be considered as arising from employer-employee relations. Thus, the
claim is under the exclusive jurisdiction of the Labor Arbiter
Absent such link, the complaint will be cognizable by the regular courts of justice.
(EVIOTA VS. CA, July 29, 2003)
3. Natividad works with TCM College as a liaison officer with a rank of Assistant
Registrar. He was arrested by police authorities for violation of he Dangerous Drugs
Act without warrant, and a criminal complaint was filed against him. TCM College sent
a Memorandum to Natividad informing him that his employment is already terminated.
The criminal case was dismissed for lack of merit. Natividad did not, however, file any
complaint to the NLRC against the college on account of his dismissal. Natividad was
arrested anew for violation of the same Act. This time, he filed with the NLRC a
complaint for illegal dismissal. The Labor Arbiter and the NLRC denied Natividad but
on certiorari, the CA affirmed, with modification, holding that although there was a valid
cause for private respondents dismissal, the petitioner did not follow the procedure for
the termination of his employment. Was Natividad illegally dismissed so as to entitle
him to backwages?
The normal consequences of finding that an employee is illegally dismissed are, firstly,
the employee becomes entitled to reinstatement without loss of seniority rights and
second, payment of backwages to the period from his illegal dismissal up to actual
reinstatement. The award of backwages is not conditioned on the employers ability or
inability to pay. While it may be true that Natividad was detained, he was not convicted
by final judgment in the Criminal Case. Indeed, he is presumed innocent until his guilt
is proved beyond reasonable doubt. (TOMASCLAUDIO MEMORIAL COLLEGE, INC.
VS. CA, February 16, 2004)
4. Is an order of execution of a final and executory judgment in a labor case still
appealable?
No. Settled is the rule that after a judgemnt has become final, no additions can be
madethereto, and nothing can be done therewith except execution; otherwise, there
would be no end tolitigations, thus settling at naught the main role of courts of justice,
which is to assist in theenforcement of the rule of law and the maintenance of peace
and order, by setting justiceablecontroversies with finality.
(KING INTEGRATED SECURITY SERVICES, INC. VS. GALO S. GATAN, July 7,
2003)

Page 48

5. What evidence is needed to show that employer committed ULP under the Labor
Code?
Substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion. In the case at bar, the complaint was made only after a deadlock
was declared by the Union. It is clear that such ULP charge was merely an
afterthought. (STANDARD CHARTERD BANK EMPLOYEES UNION VS.
CONFESOR, June 16, 2004)
6. What is surface bargaining?
It is defined as going through the motions of negotiating without any legal intent to
reach an agreement. (STANDARD CHARTERD BANK EMPLOYEES UNION VS.
CONFESOR, June 16, 2004)
7 Petitioner and respondent union entered into and signed a CBA covering the period
of July10, 1988 to July 9, 1991. On September 27, 1990, the respondent union filed a
notice of strikebased on violation of CBA, among others. On October 16, 1990, the
petitioner's generalmanager, wrote the Acting Secretary of Labor and Employment
(SOLE for brevity) informinghim of the petitioner's decision to retrench 171 employees
on a staggered basis, spread over aperiod of 60 days, to lessen the daily financial
losses being incurred by the petitioner. The nextday, the respondent union informed
the DOLE-NCR that the union will conduct a strike votereferendum. The members of
the respondent union voted to stage a strike. DOLE-NCR wasthereafter informed of
the results of the strike vote referendum. On October 31, 1990, theSOLE issued a
status quo ante bellum order certifying the case to the NLRC for compulsoryarbitration
and enjoining the parties from engaging in any strike or lockout.
The petitioner wrote the SOLE of its decision to implement its retrenchment program
tostem its huge losses. Subsequently, the petitioner terminated the employment of
148employees. The remaining employees were also informed that it will close in six
months. Therespondent union protested the actions of the petitioner invoking Section
15, Article VI of theCBA. By way of riposte, the respondent union filed on November
16, 1990 another notice of strike because of what it perceived as the petitioner's
continuing unfair labor practices (ULP).On the same day, the officers of the respondent
union and some members staged a picket inthe premises of the hotel, obstructing the
free ingress and egress thereto. The following day,petitioner terminated the
employment of the officers and members of the respondent union.On November 28,
1990, the SOLE issued an order certifying the labor dispute to the NLRC. TheSOLE
issued a return-to-work order, which the respondent officers and members
complied.Petitioner however filed a complaint with the Regional Arbitration Office of
the NLRCfor illegal strike against the respondents on the ground that the latter failed to
comply with therequirements provided under Arts. 263 and 264 of the Labor Code. In
their answer, therespondents alleged that the petitioner committed ULP prior to the
filing of the November 16,1990 notice of strike. Hence, there was no need for the
respondent union to comply with Arts.263 and 264 of the Labor Code, as the notice
filed by the union on September 27, 1990 wassufficient compliance with the law. Is the
strike staged by the respondent union on November16 legal?
NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the
DOLE thirtydays before the intended date thereof or fifteen days in case of ULP; (b)
strike vote approved by amajority of the total union membership in the bargaining unit
concerned obtained by secret ballotin a meeting called for that purpose; and (c) notice
given to the DOLE of the results of the voting atleast seven days before the intended
strike. The requisite seven-day period is intended to give theDOLE an opportunity to
verify whether the projected strike really carries the approval of themajority of the
union members. The notice of strike and the cooling-off period were intended toprovide
an opportunity for mediation and conciliation. The requirements are mandatory and

Page 49

failureof a union to comply therewith renders the strike illegal. A strike simultaneously
with orimmediately after a notice of strike will render the requisite periods nugatory.
Moreover, a strikethat is undertaken, despite the issuance by the SOLE of an
assumption or certification order,becomes a prohibited activity and, thus, illegal
pursuant to Art. 264 of the Labor Code, asamended. Consequently, the union officers
and members are deemed to have lost theiremployment status for having knowingly
participated in an illegal act.In this case, the respondent union filed its notice of strike
with the DOLE on November 16,1990 and on the same day, staged a picket on the
premises of the hotel, in violation of the law.The respondents cannot argue that since
the notice of strike on November 16, 1990 were for thesame grounds as those
contained in their notice of strike on September 27, 1990 which compliedwith the
requirements of the law on the cooling-off period, strike ban, strike vote and strike vote
report, the strike staged by them on November 16, 1990 was lawful. The matters
contained in the notice of strike of September 27, 1990 had already been taken
cognizance of by the SOLE when he issued on October 31, 1990 a status quo ante
bellum order enjoining the respondent union from intending or staging a strike. Despite
the SOLE order, the respondent union nevertheless staged a strike on November 16,
1990 simultaneously with its notice of strike, thus violating Art. 264(a) of the Labor
Code, as amended, which provides that x x x No strike or lockout shall be declared
after assumption of jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout.
(GRAND BOULEVARD HOTEL VS. GENUINE LABOR ORGANIZATION OF
WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES, July 8, 2003)
8. Respondents applied for employment in Taiwan with petitioner, Phil. Employ
Services and Resources, Inc. (PSRI for brevity). The respondents were deployed in
Taiwan. When they encountered problems, they brought their attention to the manager
who told them to forget about it and refrain to air their complaints. Respondent Navarra
and another employee, Pio Gabito, were summoned by the management and told that
they were to be repatriated, without specifying the ground or cause therefor. They
pleaded that they be informed of the cause or causes for their repatriation, but their
requests were rejected. The manager of their employer summoned the police, who
arrived and escorted them to the airport. Upon respondent Navarra's arrival in Manila,
the petitioner sought to settle his complaints. After the negotiations, the petitioner
agreed to pay P49,000 to the said respondent but, in consideration thereof, the latter
executed a quitclaim releasing the petitioner from any or all liabilities for his
repatriation. Were petitioners illegally dismissed when they repatriated by their Taiwan
employers? Was Navarras execution of quitclaim and receipt of P 49, 000 sufficient to
conclude his waiver of right against illegal dismissal?
Yes. Respondents dismissal was not based on just, valid and legal grounds. As such,
therule lex loci contractus (the law of the place where the contract is made) governs.
Therefore, the Labor Code, its implementing rules and regulations, and other laws
affecting labor, apply in this case. In order to effect a valid dismissal of an employee,
the law requires that there be just and valid cause as provided in Article 282 and that
the employee was afforded an opportunity to be heard and to defend himself.
Dismissal may also be based on any of the authorized causes provided for in Articles
283 and 284 of the Labor Code. The petitioner failed to substantiate its claim that
respondent Navarra's repatriation was based on a valid, legal and just cause. We thus
rule that the respondents were constructively dismissed from their employment. There
is constructive dismissal if an act of clear discrimination insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose
any choice by him except to forego his continued employment. It exists where there is
cessation of work because "continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay. "We rule that the deed of release executed by respondent Navarra did not
completely release the petitioner from its liability on the latter's claim. As a rule,

Page 50

quitclaims, waivers or releases are looked upon with disfavor and are commonly
frowned upon as contrary to public policy and ineffective to bar claims for the measure
of a worker's legal rights. If (a) there is clear proof that the waiver was wangled from
an unsuspecting or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal. (PHIL EMPLOY SERVICES VS. PARAMIO, ET AL, April 15, 2004)
9. The petitioner is a domestic corporation engaged in the business of providing
telegraph and communication services thru its branches all over the country. It
employed various employees, among whom were private respondents. The petitioner
came up with a Relocation and Restructuring Program. Private respondents received
separate letters from the petitioner, giving them the option to choose the branch to
which they could be transferred. Thereafter, the private respondents and other
petitioner's employees were directed to "relocate" to their new PT&T Branches.
The petitioner offered benefits/allowances to those employees who would agree to be
transferred under its new program. Moreover, the employees who would agree to the
transfers would be considered promoted. The private respondents rejected the
petitioner's offer. Hence, the petitioner sent letters to the private respondents requiring
them to explain in writing why no disciplinary action should be taken against them for
their refusal to be transferred/relocated. In their respective replies to the petitioner's
letters, the private respondents explained that the transfers imposed by the
management would cause enormous difficulties on the individual complainants.
Dissatisfied with this explanation, the petitioner considered the private respondents'
refusal as insubordination and willful disobedience to a lawful order; hence, the private
respondents were dismissed from work. Subsequently, the private respondents'
bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a complaint against the
petitioner for illegal dismissal and unfair labor practice for and in behalf of the private
respondents. Are the respective transfers of the private respondents considered
promotions? If so, is the denial of a promotion a just and authorized cause for
dismissal?
Yes. With or without a corresponding increase in salary, the respective transfers of the
private respondents were in fact promotions, following the ruling enunciated in
Homeowners Savings and Loan Association, Inc. v. NLRC: Promotion, as we defined
in Millares v. Subido, 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. Apparently, the indispensable element for there to be a
promotion is that there must be an advancement from one position to another or an
upward vertical movement of the employee's rank or position. Any increase in salary
should only be considered incidental but never determinative of whether or not a
promotion is bestowed upon an employee.
However, an employee cannot be promoted, even if merely as a result of a transfer,
without his consent. A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to 'lure the employee away from his permanent
position cannot be done without the employees' consent. There is no law that compels
an employee to accept a promotion for the reason that a promotion is in the nature of a
gift or reward, which a person has a right to refuse. Hence, the exercise by the private
respondents of their right cannot be considered in law as insubordination, or willful
disobedience of a lawful order of the employer. As such, there was no valid cause for
the private respondents' dismissal. (PT&T VS. CA, September 29, 2003)
10. The petitioner is a domestic corporation engaged in garments manufacturing using
the brand name KAMISETA. The petitioner employed private respondent Torno as
trimmer. The private respondent and a co-employee, Maricar Buan, were tasked to
handle the inventory of finished products. Sometime thereafter, the petitioner started to
receive information from thehead of its production department that, according to other
employees, Buan and the private respondent had been stealing KAMISETA items
from the factory. On the basis of a report, the petitioner issued a disciplinary action

Page 51

form suspending the private respondent indefinitely without pay. A notice of dismissal
was addressed to the private respondent specifying the charge against her, the factual
basis thereof and the imposable penalties for the said charge if proven. The private
respondent failed to appear during the scheduled hearing. Consequently, the petitioner
decided to dismiss the private respondent from her employment. When notified of the
petitioners decision, the private respondent filed a complaint for illegal dismissal with
prayer for reinstatement and payment of backwages, non-payment of service incentive
leave pay and 13th-month pay against the petitioner before the National Capital
Regional Arbitration Branch. LA rendered a decision holding that the respondent was
illegally dismissed and directed the petitioner to pay backwages and separation pay to
the private respondent. However, according to the labor arbiter, reinstatement could no
longer be effected, as the relationship between the private respondent and the
petitioner had been strained and ruptured. Aggrieved, the petitioner appealed the
decision to the NLRC, alleging that it was deprived of its right to a formal hearing
before the labor arbiter rendered her decision. LAs failure to conduct a hearing
deprived the petitioner of its vested right; consequently, her decision was null and void.
Does the absence of a formal hearing amount to denial of petitioners right to due
process? Is termination of the private respondents employment based on a just and
valid cause?
We agree with the CA that the petitioner did not have a vested right to a formal hearing
simply and merely because LA Tumanong granted its motion and set the case for
hearing. Pursuant to Section 5, Rule V of the New Rules of Procedure of the NLRC,
the labor arbiter has the authority to determine whether or not there is a necessity to
conduct formal hearings in cases brought before him for adjudication. The holding of a
formal hearing or trial is discretionary with the labor arbiter and is something that the
parties cannot demand as a matter of right. It is entirely within his authority to decide a
labor case before him, based on the position papers and supporting documents of the
parties, without a trial or formal hearing. The requirements of due process are satisfied
when the parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it be
decided that no hearing should be conducted or was necessary. The private
respondent was illegally dismissed. In order to effect a valid dismissal, the law requires
that (a) there be just and valid cause as provided under Article 282 of the Labor Code;
and (b) the employee be afforded an opportunity to be heard and to defend himself. As
stated by the CA, the petitioner had failed to show that it had complied with the twonotice requirement: (a) a written notice containing a statement of the cause for the
termination to afford the employee ample opportunity to be heard and defend himself
with the assistance of his representative, if he so desires; (b) if the employer decides
to terminate the services of the employee, the employer must notify him in writing of
the decision to dismiss him, stating clearly the reason therefor. (SHOPPES MANILA
VS. NLRC, January 14, 2004

The petitioner wrote the SOLE of its decision to implement its retrenchment program to
stem its huge losses. Subsequently, the petitioner terminated the employment of
148employees. The remaining employees were also informed that it will close in six
months. The respondent union protested the actions of the petitioner invoking Section
15, Article VI of the CBA. By way of riposte, the respondent union filed on November
16, 1990 another notice of strike because of what it perceived as the petitioner's
continuing unfair labor practices (ULP).On the same day, the officers of the respondent
union and some members staged a picket in the premises of the hotel, obstructing the
free ingress and egress thereto. The following day, petitioner terminated the
employment of the officers and members of the respondent union. On November 28,
1990, the SOLE issued an order certifying the labor dispute to the NLRC. The SOLE
issued a return-to-work order, which the respondent officers and members complied.
Petitioner however filed a complaint with the Regional Arbitration Office of the NLRC

Page 52

for illegal strike against the respondents on the ground that the latter failed to comply
with the requirements provided under Arts. 263 and 264 of the Labor Code. In their
answer, the respondents alleged that the petitioner committed ULP prior to the filing of
the November 16,1990 notice of strike. Hence, there was no need for the respondent
union to comply with Arts.263 and 264 of the Labor Code, as the notice filed by the
union on September 27, 1990 was sufficient compliance with the law. Is the strike
staged by the respondent union on November16 legal?
NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the
DOLE thirty days before the intended date thereof or fifteen days in case of ULP; (b)
strike vote approved by a majority of the total union membership in the bargaining unit
concerned obtained by secret ballot in a meeting called for that purpose; and (c) notice
given to the DOLE of the results of the voting at least seven days before the intended
strike. The requisite seven-day period is intended to give the DOLE an opportunity to
verify whether the projected strike really carries the approval of the majority of the
union members. The notice of strike and the cooling-off period were intended to
provide an opportunity for mediation and conciliation. The requirements are mandatory
and failure of a union to comply therewith renders the strike illegal. A strike
simultaneously with or immediately after a notice of strike will render the requisite
periods nugatory. Moreover, a strike that is undertaken, despite the issuance by the
SOLE of an assumption or certification order, becomes a prohibited activity and, thus,
illegal pursuant to Art. 264 of the Labor Code, as amended. Consequently, the union
officers and members are deemed to have lost their employment status for having
knowingly participated in an illegal act. In this case, the respondent union filed its
notice of strike with the DOLE on November 16,1990 and on the same day, staged a
picket on the premises of the hotel, in violation of the law. The respondents cannot
argue that since the notice of strike on November 16, 1990 were for the same grounds
as those contained in their notice of strike on September 27, 1990 which complied with
the requirements of the law on the cooling-off period, strike ban, strike vote and strike
vote report, the strike staged by them on November 16, 1990 was lawful. The matters
contained in the notice of strike of September 27, 1990 had already been taken
cognizance of by the SOLE when he issued on October 31, 1990 a status quo ante
bellum order enjoining the respondent union from intending or staging a strike. Despite
the SOLE order, the respondent union nevertheless staged a strike on November 16,
1990 simultaneously with its notice of strike, thus violating Art. 264(a) of the Labor
Code, as amended, which provides that x x x No strike or lockout shall be declared
after assumption of jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for the strike or lockout.
(GRAND BOULEVARD HOTEL VS. GENUINE LABOR ORGANIZATION OF
WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES, July 8, 2003)
8. Respondents applied for employment in Taiwan with petitioner, Phil. Employ
Services and Resources, Inc. (PSRI for brevity). The respondents were deployed in
Taiwan. When they encountered problems, they brought their attention to the manager
who told them to forget about it and refrain to air their complaints. Respondent Navarra
and another employee, Pio Gabito, were summoned by the management and told that
they were to be repatriated, without specifying the ground or cause therefor. They
pleaded that they be informed of the cause or causes for their repatriation, but their
requests were rejected. The manager of their employer summoned the police, who
arrived and escorted them to the airport. Upon respondent Navarra's arrival in Manila,
the petitioner sought to settle his complaints. After the negotiations, the petitioner
agreed to payP49,000 to the said respondent but, in consideration thereof, the latter
executed a quitclaim releasing the petitioner from any or all liabilities for his
repatriation. Were petitioners illegally dismissed when they repatriated by their Taiwan
employers? Was Navarras execution of quitclaim and receipt of P 49, 000 sufficient to
conclude his waiver of right against illegal dismissal?

Page 53

Yes. Respondents dismissal was not based on just, valid and legal grounds. As such,
the rule lex loci contractus (the law of the place where the contract is made) governs.
Therefore, the Labor Code, its implementing rules and regulations, and other laws
affecting labor, apply in this case. In order to effect a valid dismissal of an employee,
the law requires that there be just and valid cause as provided in Article 282 and that
the employee was afforded an opportunity to be heard and to defend himself.
Dismissal may also be based on any of the authorized causes provided for in Articles
283 and 284 of the Labor Code. The petitioner failed to substantiate its claim that
respondent Navarra's repatriation was based on a valid, legal and just cause. We thus
rule that the respondents were constructively dismissed from their employment. There
is constructive dismissal if an act of clear discrimination insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose
any choice by him except to forego his continued employment. It exists where there is
cessation of work because "continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay. "We rule that the deed of release executed by respondent Navarra did not
completely release the petitioner from its liability on the latter's claim. As a rule,
quitclaims, waivers or releases are looked upon with disfavor and are commonly
frowned upon as contrary to public policy and ineffective to bar claims for the measure
of a worker's legal rights. If (a) there is clear proof that the waiver was wangled from
an unsuspecting or gullible person; or (b) the terms of the settlement are
unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal. (PHIL EMPLOY SERVICES VS. PARAMIO, ET AL, April 15, 2004)
9. The petitioner is a domestic corporation engaged in the business of providing
telegraph and communication services thru its branches all over the country. It
employed various employees, among whom were private respondents. The petitioner
came up with a Relocation and Restructuring Program. Private respondents received
separate letters from the petitioner, giving them the option to choose the branch to
which they could be transferred. Thereafter, the private respondents and other
petitioner's employees were directed to "relocate" to their new PT&T Branches.
The petitioner offered benefits/allowances to those employees who would agree to be
transferred under its new program. Moreover, the employees who would agree to the
transfers would be considered promoted. The private respondents rejected the
petitioner's offer. Hence,the petitioner sent letters to the private respondents requiring
them to explain in writing whyno disciplinary action should be taken against them for
their refusal to be transferred/relocated. In their respective replies to the petitioner's
letters, the private respondents explained that the transfers imposed by the
management would cause enormous difficulties on the individual complainants.
Dissatisfied with this explanation, the petitioner considered the private respondents'
refusal as insubordination and willful disobedience to a lawful order; hence, the private
respondents were dismissed from work. Subsequently, the private respondents'
bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a complaint against the
petitioner for illegal dismissal and unfair labor practice for and in behalf of the private
respondents. Are the respective transfers of the private respondents considered
promotions? If so, is the denial of a promotion a just and authorized cause for
dismissal?
Yes. With or without a corresponding increase in salary, the respective transfers of the
private respondents were in fact promotions, following the ruling enunciated in
Homeowners Savings and Loan Association, Inc. v. NLRC: Promotion, as we defined
in Millares v. Subido, 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. Apparently, the indispensable element for there to be a
promotion is that there must be an advancement from one position to another or an
upward vertical movement of the employee's rank or position. Any increase in salary
should only be considered incidental but never determinative of whether or not a
promotion is bestowed upon an employee.
However, An employee cannot be promoted, even if merely as a result of a transfer,

Page 54

without his consent. A transfer that results in promotion or demotion, advancement or

reduction or a transfer that aims to 'lure the employee away from his permanent
position cannot be done without the employees' consent. There is no law that compels
an employee to accept a promotion for the reason that a promotion is in the nature of a
gift or reward, which a person has a right to refuse. Hence, the exercise by the private
respondents of their right cannot be considered in law as insubordination, or willful
disobedience of a lawful order of the employer. As such, there was no valid cause for
the private respondents' dismissal. (PT&T VS. CA, September 29, 2003)
10. The petitioner is a domestic corporation engaged in garments manufacturing using
the brand name KAMISETA. The petitioner employed private respondent Torno as
trimmer. The private respondent and a co-employee, Maricar Buan, were tasked to
handle the inventory of finished products. Sometime thereafter, the petitioner started to
receive information from the head of its production department that, according to other
employees, Buan and the privaterespondent had been stealing KAMISETA items
from the factory. On the basis of a report, thepetitioner issued a disciplinary action form
suspending the private respondent indefinitelywithout pay. A notice of dismissal was
addressed to the private respondent specifying thecharge against her, the factual
basis thereof and the imposable penalties for the said charge if proven.The private
respondent failed to appear during the scheduled hearing. Consequently,the petitioner
decided to dismiss the private respondent from her employment. When notifiedof the
petitioners decision, the private respondent filed a complaint for illegal dismissal
withprayer for reinstatement and payment of backwages, non-payment of service
incentive leavepay and 13th-month pay against the petitioner before the National
Capital Regional ArbitrationBranch. LA rendered a decision holding that the
respondent was illegally dismissed anddirected the petitioner to pay backwages and
separation pay to the private respondent.However, according to the labor arbiter,
reinstatement could no longer be effected, as therelationship between the private
respondent and the petitioner had been strained andruptured. Aggrieved, the petitioner
appealed the decision to the NLRC, alleging that it wasdeprived of its right to a formal
hearing before the labor arbiter rendered her decision. LAsfailure to conduct a hearing
deprived the petitioner of its vested right; consequently, herdecision was null and void.
Does the absence of a formal hearing amount to denial of petitioners right to due
process? Is termination of the private respondents employment basedon a just and
valid cause?
We agree with the CA that the petitioner did not have a vested right to a formal hearing
simply and merely because LA Tumanong granted its motion and set the case for
hearing. Pursuant to Section 5, Rule V of the New Rules of Procedure of the NLRC,
the labor arbiter has the authority to determine whether or not there is a necessity to
conduct formal hearings in cases brought before him for adjudication. The holding of a
formal hearing or trial is discretionary with the labor arbiter and is something that the
parties cannot demand as a matter of right. It is entirely within his authority to decide a
labor case before him, based on the position papers and supporting documents of the
parties, without a trial or formal hearing. The requirements of due process are satisfied
when the parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it be
decided that no hearing should be conducted or was necessary. The private
respondent was illegally dismissed. In order to effect a valid dismissal, the law requires
that (a) there be just and valid cause as provided under Article 282 of the Labor Code;
and(b) the employee be afforded an opportunity to be heard and to defend himself. As
stated by the CA, the petitioner had failed to show that it had complied with the twonotice requirement: (a) a written notice containing a statement of the cause for the
termination to afford the employee ample opportunity to be heard and defend himself
with the assistance of his representative, if he so desires; (b) if the employer decides
to terminate the services of the employee, the employer must notify him in writing of
the decision to dismiss him, stating clearly the reason therefor.
(SHOPPES MANILA VS. NLRC, January 14, 2004

Page 55

The petitioner wrote the SOLE of its decision to implement its

retrenchment
program
to
stem
its
huge
losses.
S u b s e q u e n t l y, t h e p e t i t i o n e r t e r m i n a t e d t h e e m p l o y m e n t o f
1 4 8 employees. The remaining employees were also informed that it will
close in six months. The respondent union protested the actions of the
petitioner invoking Section 15, Article VI of the CBA. By way of riposte,
the respondent union filed on November 16, 1990 another notice
of strike because of what it perceived as the petitioner's continuing unfair
labor practices (ULP).On the same day, the officers of the
respondent union and some members staged a picket in the
premises of the hotel, obstructing the free ingress and egress thereto. The
following day, petitioner terminated the employment of the officers and
members of the respondent union. On November 28, 1990, the SOLE
issued an order certifying the labor dispute to the NLRC. The SOLE issued
a return-to-work order, which the respondent officers and members
complied. Petitioner however filed a complaint with the Regional
Arbitration Office of the NLRC for illegal strike against the respondents on
the
ground
that the
latter
failed
to
comply
with
the
requirements provided under Arts. 263 and 264 of the
L a b o r C o d e . I n t h e i r a n s w e r, t h e respondents alleged that the
petitioner committed ULP prior to the filing of the November 16,1990
notice of strike. Hence, there was no need for the respondent union to
comply with Arts.263 and 264 of the Labor Code, as the notice filed
by the union on September 27, 1990 was sufficient compliance with
the law. Is the strike staged by the respondent union on November16
legal?
NO. The requisites for a valid strike are as follows: (a) a notice of strike filed
with the DOLE thirty days before the intended date thereof or fifteen days in
case of ULP; (b) strike vote approved by a majority of the total union
membership in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; and (c) notice given to the DOLE of the results
of the voting at least seven days before the intended strike. The requisite
seven-day period is intended to give the DOLE an opportunity to verify
whether the projected strike really carries the approval of the majority
of the
union
members.
The notice
of strike and
the coolingoff period were intended to provide an opportunity for mediation and
conciliation.
The
requirements
are
mandatory
and
failure
of a union to comply therewith renders
the
strike
illegal.
A s t r i k e s i m u l t a n e o u s l y w i t h o r immediately after a notice of strike will
render the requisite periods nugatory. Moreover, a strike that is undertaken,
despite the issuance by the SOLE of an assumption or certification
order, b e c o m e s a p r o h i b i t e d a c t i v i t y a n d , t h u s , i l l e g a l p u r s u a n t
t o Ar t . 2 6 4 o f t h e L a b o r C o d e , a s a m e n d e d . C o n s e q u e n t l y ,
the union officers and members are deemed to have
l o s t t h e i r employment status for having knowingly participated in an illegal
act. In this case, the respondent union filed its notice of strike with the DOLE on
November 16, 1990 and on the same day, staged a picket on the
premises of the hotel, in violation of the law. The respondents cannot
argue that since the notice of strike on November 16, 1990 were for
the same grounds as those contained in their notice of strike

Page 56

on September 27, 1990 which complied with the requirements of the law
on the cooling-off period, strike ban, strike vote and strike vote report, the strike
staged by them on November 16, 1990 was lawful. The matters contained in the
notice of strike of September 27, 1990 had already been taken cognizance of by
the SOLE when he issued on October 31, 1990 a status quo ante bellum
order enjoining the respondent union from intending or staging a strike.
Despite the SOLE order, the respondent union nevertheless staged a strike on
November 16, 1990 simultaneously with its notice of strike, thus violating Art.
264(a) of the Labor Code, as amended, which provides that x x x No
strike
or
lockout
shall
be
declared
after assumption of jurisdiction by the President or the Secreta
r y o r a f t e r c e r t i f i c a t i o n o r submission of the dispute to compulsory
or voluntary arbitration or during the pendency of cases involving the
same grounds for the strike or lockout. (GRAND BOULEVARD
HOTEL VS. GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL,
RESTAURANT AND ALLIED INDUSTRIES, July 8, 2003)
8. Respondents applied for employment in Taiwan with petitioner, Phil.
Employ Services and Resources, Inc. (PSRI for brevity). The
respondents were deployed in Taiwan. When they encountered
problems, they brought their attention to the manager who told
them to forget about it and refrain to air their complaints.
Respondent Navarra and another employee, Pio Gabito, w er
e s u m m o n e d b y t h e management and told that they were to be
repatriated, without specifying the ground or cause therefor. They pleaded
that they be informed of the cause or causes for their repatriation, but
their requests were rejected. The manager of their employer
summoned the police, who arrived and escorted them to the
airport. Upon respondent Navarra's arrival in Manila, the petitioner
sought to settle his complaints. After the negotiations, the petitioner
agreed to pay P49,000 to the said respondent but, in consideration
thereof, the latter executed a quitclaim releasing the petitioner from any or
all liabilities for his repatriation. Were petitioners illegally dismissed
when they
repatriated by their
Taiwan
employers? Was
Navarras execution of quitclaim and receipt of P 49, 000
sufficient to conclude his waiver of right against illegal dismissal?
Yes. Respondents dismissal was not based on just, valid and legal
grounds. As such, the rule lex loci contractus (the law of the place where the
contract is made) governs. Therefore, the Labor Code, its implementing
rules and regulations, and other laws affecting labor, apply in this
case. In order to effect a valid dismissal of an employee, the law
requires that there be just and valid cause as provided in Article
282 and that the employee was afforded an opportunity to be heard and
to defend himself. Dismissal may also be based on any of the authorized
causes provided for in Articles 283 and 284 of the Labor Code. The petitioner
failed to substantiate its claim that respondent Navarra's repatriation
was based on a valid, legal and just cause. We thus rule that the
respondents were constructively dismissed from their employment. There is
constructive dismissal if an act of clear discrimination insensibility, or disdain by
an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because "continued

Page 57

employment is rendered impossible, unreasonable or unlikely, as an offer

involving a demotion in rank and a diminution in pay. "W e r u l e t h a t t h e
deed of release executed by respondent Navarra did not
c o m p l e t e l y release the petitioner from its liability on the latter's
claim. As a rule, quitclaims, waivers or releases are looked upon with
disfavor and are commonly frowned upon as contrary to public policy and
ineffective to bar claims for the measure of a worker's legal rights. If (a) there is
clear proof that the waiver was wangled from an unsuspecting or
gullible person; or (b) the terms of the settlement are unconscionable, and
on their face invalid, such quitclaims must be struck down as invalid or illegal.
(PHIL EMPLOY SERVICES VS. PARAMIO, ET AL, April 15, 2004)
9. The petitioner is a domestic corporation engaged in the business of
providing telegraph and communication services thru its branches all
over
the
country.
It
employed
various
employees,
a m o n g w h o m w e r e p r i va t e r e s p o n d e n t s . T h e p e t i t i o n e r c a m
e u p w i t h a R e l o c a t i o n a n d Restructuring Program. Private
respondents received separate letters from the petitioner,
giving
them the option to choose the branch to which they could be transferred.
Thereafter, the private respondents and other petitioner's employees were
directed to "relocate" to their new PT&T Branches.
The petitioner offered benefits/allowances to those employees who would
agree to be transferred under its new program. Moreover, the employees who
would agree to the transfers would be considered promoted. The private
respondents rejected the petitioner's offer. Hence, the petitioner sent
letters to the private respondents requiring them to explain in writing why
no
disciplinary
action
should
be
taken
against
them
for
their
refusal
to
be
transferred/
relocated.
In
their
respective
replies
t o t h e p e t i t i o n e r ' s l e t t e r s , t h e p r i va t e
respondents explained
that the transfers imposed by the management would cause enormous
difficulties on the individual complainants. Dissatisfied with this
explanation, the petitioner considered the private respondents' refusal as
insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. Subsequently, the private
respondents' bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a
complaint against the petitioner for illegal dismissal and unfair
labor practice for and in behalf of the private respondents. Are
the respective transfers of the private respondents considered
promotions? If so, is the denial of a promotion a just and authorized cause for
dismissal?
Yes. With or without a corresponding increase in salary, the respective
transfers
of
the
private respondents
were
in
fact
promotions, following the ruling enunciated in Homeowners Savings
and Loan Association, Inc. v. NLRC: Promotion, as we defined in Millares v.
Subido, is the a d v a n c e m e n t f r o m o n e p o s i t i o n t o a n o t h e r w i t h a n
increase
in
duties
and
responsibilities
as
a u t h o r i z e d b y l a w, a n d u s u a l l y a c c o m p a n i e d b y a n i n c r e a
s e i n s a l a r y . A p p a r e n t l y , t h e indispensable element for there to be
a promotion is that there must be an advancement from one p o s i t i o n t o
another or an upward vertical movement of the employee's
r a n k o r p o s i t i o n . An y increase in salary should only be considered

Page 58

incidental but never determinative of whether or not a promotion is bestowed

upon an employee.
However, A n e m p l o y e e c a n n o t b e p r o m o t e d , e v e n i f m e r e l y a s a
r e s u l t o f a t r a n s f e r, without his consent. A transfer that results
in promotion or demotion, advancement or reduction or a t r a n s f e r t h a t
aims to 'lure the employee away from his permanent position
c a n n o t b e d o n e without the employees' consent. There is no law that
compels an employee to accept a promotion for the reason that a promotion is
in the nature of a gift or reward, which a person has a right to refuse. Hence, the
exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the
employer. As such, there was no valid cause for the private respondents'
dismissal. (PT&T VS. CA, September 29, 2003)
10. The petitioner is a domestic corporation engaged in garments
manufacturing using the brand name KAMISETA. The petitioner
employed private respondent Torno as trimmer. Theprivate respondent
and a co-employee, Maricar Buan, were tasked to handle the inventory
of finished products. Sometime thereafter, the petitioner started to receive
information from the head of its production department that,
according to other employees, Buan and the private respondent
had been stealing KAMISETA items from the factory. On the basis of a
report, the petitioner issued a disciplinary action form
suspending the private respondent indefinitely without pay. A
notice of dismissal was addressed to the private respondent
specifying the charge against her, the factual basis thereof and the
imposable penalties for the said charge if proven. The private respondent
failed to appear during the scheduled hearing. Consequently, the
petitioner decided to dismiss the private respondent from her
employment. When notified of the petitioners decision, the private
respondent filed a complaint for illegal dismissal with prayer for
reinstatement and payment of backwages, non-payment of service
incentive leave pay and 13th-month pay against the petitioner before the
National Capital Regional Arbitration B r a n c h . L A r e n d e r e d a
decision holding that the respondent was illegally
dismissed and directed the petitioner to pay backwages
a n d s e p a r a t i o n p a y t o t h e p r i v a t e r e s p o n d e n t . However,
according to the labor arbiter, reinstatement could no longer be
effected, as the r e l a t i o n s h i p b e t w e e n t h e p r i v a t e r e s p o n d e n t
and the petitioner had been strained and
ruptured.
Aggrieved, the petitioner appealed the decision to the NLRC,
alleging that it was deprived of its right to a formal hearing before
the labor arbiter rendered her decision. LAs failure to conduct a
hearing deprived the petitioner of its vested right; consequently,
her d e c i s i o n w a s n u l l a n d v o i d . D o e s t h e a b s e n c e o f a
f o r m a l h e a r i n g a m o u n t t o d e n i a l o f petitioners right to due
process? Is termination of the private respondents employment based on
a just and valid cause?
We agree with the CA that the petitioner did not have a vested right to
a formal hearingsimply and merely because LA Tumanong granted its motion
and set the case for hearing. Pursuantto Section 5, Rule V of the New Rules of
Procedure of the NLRC, the labor arbiter has the authority to determine whether

Page 59

or not there is a necessity to conduct formal hearings in cases brought before

him for adjudication. The holding of a formal hearing or trial is discretionary with
the labor arbiter and is something that the parties cannot demand as a
matter
of
right.
It
is
entirely
within
his
authority to decide a labor case before him, based on the
p o s i t i o n p a p e r s a n d s u p p o r t i n g documents of the parties, without a
trial or formal hearing. The requirements of due process are satisfied when
the parties are given the opportunity to submit position papers wherein
they are supposed to attach all the documents that would prove their
claim in case it be decided that no hearing should be conducted or
was necessary. The private respondent was illegally dismissed. In order to
effect a valid dismissal, the law requires that (a) there be just and valid cause as
provided under Article 282 of the Labor Code; and(b) the employee
be afforded an opportunity to be heard and to defend himself. As
stated by the CA, the petitioner had failed to show that it had complied with
the two-notice requirement: (a) a written notice containing a statement of
the cause for the termination to afford the employee ample opportunity
to be heard and defend himself with the assistance of his representative, if he
so desires; (b) if the employer decides to terminate the services of the
employee, the employer must notify him in writing of the decision to
dismiss him, stating clearly the reason therefor.
(SHOPPES MANILA VS. NLRC, January 14, 2004)