LABOR REVIEW (Atty.
Peter-Joey Usita)
LABOR REVIEW SYLLABUS
Atty. Peter-Joey Usita
2017-2018
II. RECRUITMENT & PLACEMENT
1. Article 13 (b): Definition of Recruitment & Placement
Art. 13. Definitions.
b."Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a
fee, employment to two or more persons shall be deemed engaged in recruitment and placement.
Art. 16. Private recruitment. Except as provided in Chapter II of this Title, no person or entity other than the public
employment offices, shall engage in the recruitment and placement of workers.
Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except through the
Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps,
international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from
this provision.
Art. 25. Private sector participation in the recruitment and placement of workers. Pursuant to national
development objectives and in order to harness and maximize the use of private sector resources and initiative in the
development and implementation of a comprehensive employment program, the private employment sector shall
participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and
regulations as may be issued by the Secretary of Labor.
Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether
for profit or not.
Art. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least seventy-
five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens
shall be permitted to participate in the recruitment and placement of workers, locally or overseas.
Art. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to have such
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substantial capitalization as determined by the Secretary of Labor.
Art. 29. Non-transferability of license or authority. No license or authority shall be used directly or indirectly by
any person other than the one in whose favor it was issued or at any place other than that stated in the license or
authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address,
appointment or designation of any agent or representative including the establishment of additional offices anywhere
shall be subject to the prior approval of the Department of Labor.
Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all
applicants for license or authority.
Art. 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as determined by the
Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms
and conditions of employment as may be appropriate.
Art. 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for
employment assistance shall not be charged any fee until he has obtained employment through its efforts or has
actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the
amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.
Art. 33. Reports on employment status. Whenever the public interest requires, the Secretary of Labor may direct
all persons or entities within the coverage of this Title to submit a report on the status of employment, including job
vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment
data.
THE FOLLOWING ARE AUTHORIZED TO RECRUIT AND PLACE WORKERS FOR LOCAL OR
OVERSEAS EMPLOYMENT
public employment offices
private recruitment entities
private employment agencies
shipping or manning agents or representatives
the POEA
construction contractors if authorized to operate by DOLE and the Construction Industry
Authority
members of the diplomatic corps although hirings done by them have to be processed through
POEA
other persons or entities as may be authorized by the DOLE secretary
2. Article 13 (b): When there is a presumption of Recruitment & Placement
People v. Panis, L-58674-77, July 11, 1986
LABOR REVIEW (Atty. Peter-Joey Usita)
[G.R. No. L-58674-77. July 11, 1986.]
PEOPLE OF THE PHILIPPINES, petitioner, vs. HON. DOMINGO PANIS, Presiding
Judge of the Court of First Instance of Zambales & Olongapo City, Branch III and
SERAPIO ABUG, respondents.
DOCTRINE
the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto
but merely to create a presumption. The presumption is that the individual or entity is engaged in
recruitment and placement whenever he or it is dealing with two or more persons to whom, in
consideration of a fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
FACTS:
Four informations were filed on January 9, 1981, in the Court of First Instance of Zambales and Olongapo
City alleging that Serapio Abug, private respondent herein, "without first securing a license from the
Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there
wilfully, unlawfully and criminally operate a private fee-charging employment agency by charging fees and
expenses (from) and promising employment in Saudi Arabia" to four separate individuals named therein, in
violation of Article 16 in relation to Article 39 of the Labor Code
Abug filed a motion to quash on the ground that the informations did not charge an offense because he was
accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article
13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner
promised or offered any employment for a fee."
Denied at first, the motion was reconsidered and finally granted in the Orders of the trial court
PRIVATE RESPONDENT: is that to constitute recruitment and placement, all the acts mentioned in this
article should involve dealings with two or more persons as an indispensable requirement.
PETITIONER argues that the requirement of two or more persons is imposed only where the recruitment
and placement consists of an offer or promise of employment to such persons and always in consideration of
a fee. The other acts mentioned in the body of the article may involve even only one person and are not
necessarily for profit.
ISSUE:
How to interpret Article 13(b) of PD 442
HELD
Article 13(b) of P. D. 442, otherwise known as the Labor Code, reading as follows:
"(b) 'Recruitment and placement' refers to any act of canvassing, 'enlisting, contracting, transporting,
hiring, or procuring workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in
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any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged
in recruitment and placement."
the proviso was intended neither to impose a condition on the basic rule nor to provide an exception
thereto but merely to create a presumption. The presumption is that the individual or entity is
engaged in recruitment and placement whenever he or it is dealing with two or more persons to
whom, in consideration of a fee, an offer or promise of employment is made in the course of the
"canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers."
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of
workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and
placement even if only one prospective worker is involved.
The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise
or offer of employment to two or more prospective workers, the individual or entity dealing with them shall
be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that
presumption
The trouble with presidential decrees is that they could be, and sometimes were, issued without previous
public discussion or consultation, the promulgator heeding only his own counsel or those of his close
advisers in their lofty pinnacle of power
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set aside and the four
informations against the private respondent reinstated. No costs.
3. Illegal Recruitment
a. Definition of Illegal Recruitment under Labor Code
Art. 38. Illegal recruitment.
a.Any recruitment activities, including the prohibited practices enumerated under Article 34 of
this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal
and punishable under Article 39 of this Code. The Department of Labor and Employment or any
law enforcement officer may initiate complaints under this Article.
b.Illegal recruitment when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage and shall be penalized in accordance with Article 39
hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal
recruitment is deemed committed in large scale if committed against three (3) or more persons
individually or as a group.
c.The Secretary of Labor and Employment or his duly authorized representatives shall have the
LABOR REVIEW (Atty. Peter-Joey Usita)
power to cause the arrest and detention of such non-licensee or non-holder of authority if after
investigation it is determined that his activities constitute a danger to national security and public
order or will lead to further exploitation of job-seekers. The Secretary shall order the search of
the office or premises and seizure of documents, paraphernalia, properties and other implements
used in illegal recruitment activities and the closure of companies, establishments and entities
found to be engaged in the recruitment of workers for overseas employment, without having
been licensed or authorized to do so.
b. Definition of Illegal Recruitment under the Migrant Workers Act (R.A.
No. 8042)
II. ILLEGAL RECRUITMENT
Sec. 6. DEFINITIONS. - For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes
referring, contact services, promising or advertising for employment abroad, whether for profit
or not, when undertaken by a non-license or non-holder of authority contemplated under Article
13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines. Provided, that such non-license or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed so engaged. It
shall likewise include the following acts, whether committed by any persons, whether a non-
licensee, non-holder, licensee or holder of authority.
(a) To charge or accept directly or indirectly any amount greater than the specified in the
schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a
worker pay any amount greater than that actually received by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in relation to recruitment
or employment;
(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his employment in order to
offer him another unless the transfer is designed to liberate a worker from oppressive terms and
conditions of employment;
(e) To influence or attempt to influence any persons or entity not to employ any worker who has
not applied for employment through his agency;
(f) To engage in the recruitment of placement of workers in jobs harmful to public health or
morality or to dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and Employment or
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by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies, remittances of
foreign exchange earnings, separations from jobs, departures and such other matters or
information as may be required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contracts approved and
verified by the Department of Labor and Employment from the time of actual signing thereof by
the parties up to and including the period of the expiration of the same without the approval of
the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement agency to become an officer or member
of the Board of any corporation engaged in travel agency or to be engaged directly on indirectly
in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before departure for monetary
or financial considerations other than those authorized under the Labor Code and its
implementing rules and regulations;
(l) Failure to actually deploy without valid reasons as determined by the Department of Labor
and Employment; and
(m) Failure to reimburse expenses incurred by the workers in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually
take place without the worker's fault. Illegal recruitment when committed by a syndicate or in
large scale shall be considered as offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or
more persons conspiring or confederating with one another. It is deemed committed in large
scale if committed against three (3) or more persons individually or as a group.
The persons criminally liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control, management or direction of
their business shall be liable.
2 KINDS OF ILLEGAL RECRUITER
1. Non-licensee or nonholder of authority not having been issued a license or authority to
recruit, commits illegal recruitment when it performs any of the acts defined in the law as
recruitment and placement such as canvassing, enlisting, contracting workers; or any of the 14
acts enumerated in Sec 6 of RA 8042
2. Licensed recruiter possesses a license or authority to recruit. It may be charged with
illegal recruitment only when it commits any of the 13 wrongful acts enumerated in Sect 6
ESSENTIAL ELEMENT: presupposes deceit or misrepresentation
LABOR REVIEW (Atty. Peter-Joey Usita)
Constitutionality Lazo v. Salac, G.R. No. 152642, November 13, 2012
Facts:
Republic Act (R.A.) 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 that, for among other
purposes, sets the Governments policies on overseas employment and establishes a higher standard of
protection and promotion of the welfare of migrant workers, their families, and overseas Filipinos in distress.
Sections 29 and 30 of the Act commanded the Department of Labor and Employment (DOLE) to begin
deregulating within one year of its passage the business of handling the recruitment and migration of overseas
Filipino workers and phase out within five years the regulatory functions of the Philippine Overseas
Employment Administration (POEA). PGMA signed into law RA9422, which expressly repealed Sec. 29 and 30
of RA8042. Hence, Salac, et. al cases were dismissed for being moot and academic.
In another case, the Court found Jasmins death not work-related or work-connected since her rape and death did
not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted
the award of actual damages but ruled that Becmens corporate directors and officers are solidarily liable with
their company for its failure to investigate the true nature of her death. The corporate directors and officers of
Becmen filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the
second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and
solidarily liable with their company for money claims filed by OFWs against their employers and the
recruitment firms. Court allowed the intervention and admitted the MR.
Issue:
Constitutionality of Sections 6, 7, 9, and 10(par.2, last sentence) of R.A. 8042.
Ruling:
1) Section 6 is clear. The RTC declared Section 6 unconstitutional after hearing on the ground that its definition
of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed recruiters. But
Section 6 is clear and unambiguous. By its terms, persons who engage in "canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring workers" without the appropriate government license or authority are
guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate
government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts
enumerated in Section 6.
2) Section 7 is clear. RTC also declared Section 7 unconstitutional on the ground that its sweeping application of
the penalties failed to make any distinction as to the seriousness of the act committed for the application of the
penalty imposed on such violation. But, in fixing uniform penalties for each of the enumerated acts under
Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible,
consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is
not within the power of the Court to question the wisdom of this kind of choice.
3) Section 9 is clear. RTC also invalidated Section 9 of R.A. 8042 on the ground of improper venue. But there is
nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A.
8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15(a), Rule
110 of the latter Rules allows exceptions provided by laws.
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4) Section 10 is clear. RTC held as unconstitutional the last sentence of the 2nd paragraph of Section 10 of R.A.
8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company
had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their
right to due process of law. But the Court has already held, pending adjudication of this case, that the liability
of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their
company, there must be a finding that they were remiss in directing the affairs of that company, such as
sponsoring or tolerating the conduct of illegal activities. 19 In the case of Becmen and White Falcon,20 while there
is evidence that these companies were at fault in not investigating the cause of Jasmins death, there is no
mention of any evidence in the case against them that intervenors Gumabay, et al., Becmens corporate officers
and directors, were personally involved in their companys particular actions or omissions in Jasmins case.
c. Article 13: License v. Authority
LICENSE AUTHORITY
means a document issued by the Department of means a document issued by the Department of
Labor authorizing a person or entity to operate Labor authorizing a person or association to
a private employment agency. engage in recruitment and placement activities
as a private recruitment entity.
d. Article 34: Prohibited Acts
Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder
of authority:
a.To charge or accept, directly or indirectly, any amount greater than that specified in the
schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any
amount greater than that actually received by him as a loan or advance;
b.To furnish or publish any false notice or information or document in relation to recruitment or
employment;
c.To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under this Code.
d.To induce or attempt to induce a worker already employed to quit his employment in order to
offer him to another unless the transfer is designed to liberate the worker from oppressive terms
and conditions of employment;
e.To influence or to attempt to influence any person or entity not to employ any worker who has
not applied for employment through his agency;
f.To engage in the recruitment or placement of workers in jobs harmful to public health or
morality or to the dignity of the Republic of the Philippines;
g.To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly
authorized representatives;
LABOR REVIEW (Atty. Peter-Joey Usita)
h.To fail to file reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as
may be required by the Secretary of Labor.
i.To substitute or alter employment contracts approved and verified by the Department of Labor
from the time of actual signing thereof by the parties up to and including the periods of
expiration of the same without the approval of the Secretary of Labor;
j.To become an officer or member of the Board of any corporation engaged in travel agency or to
be engaged directly or indirectly in the management of a travel agency; and
k.To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations other than those authorized under this Code and its implementing rules
and regulations.
e. Additional grounds (prohibited acts) added by Migrant Workers act,
apart from Art. 34
(1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent
(8%) per annum, which will be used for payment of legal and allowable placement fees
and make the migrant worker issue, either personally or through a guarantor or
accommodation party, postdated checks in relation to the said loan;
(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to avail of a loan only from specifically designated institutions, entities or
persons;
(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker
after the latter's employment contract has been prematurely terminated through no fault of
his or her own;
(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to undergo health examinations only from specifically designated medical
clinics, institutions, entities or persons, except in the case of a seafarer whose medical
examination cost is shouldered by the principal/shipowner;
(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker
is required to undergo training, seminar, instruction or schooling of any kind only from
specifically designated institutions, entities or persons, except for recommendatory
trainings mandated by principals/shipowners where the latter shoulder the cost of such
trainings;
(6) For a suspended recruitment/manning agency to engage in any kind of recruitment
activity including the processing of pending workers' applications; and
(7) For a recruitment/manning agency or a foreign principal/employer to pass on the
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overseas Filipino worker or deduct from his or her salary the payment of the cost of
insurance fees, premium or other insurance related charges, as provided under the
compulsory worker's insurance coverage
PERSONS LIABLE FOR ILLEGAL RECRUITMENT
Principals accomplices and accessories
For Juridical person officers having control, management or direction of their
business who are responsible for the commission of the offense and the responsible
employees/agents shall be liable
EMPLOYEE WHEN LIABLE
Employee may be held liable as principal if it shown that, together with his
employer, he actively and consciously participated in illegal recruitment
FOREIGN EMPLOYER in case of final and executory judgment automatically
disqualified without further proceedings from participating in the POEA and from
recruiting and hiring Filipino workers until and unless it fully satisfied the judgment
award
POEA has no power to issue search or arrest warants : Salazar vs Achacoso
A person who has committed any act that constitutes IR may be arrested after the
issuance by a judge of a WOA
f. Illegal recruitment as economic sabotage
IR shall be considered an offense involving economic sabotage if any of the
QUALIFYING CIRCUMSTANCES exists:
Committed by a syndicate
Committed in large scale
Large scale and in by a syndicate are separate or separate categories They need not
coincide in the same case
People vs. F. Hernandez - Where only one complainant filed individual complaints, there is
no illegal recruitment in large scale, but the three conspiring recruited can be held guilty of
illegal recruitment by a syndicate
People vs. Tan Tiong Meng The accused appellants act of accepting placement fees from
job applicants and representing to said applicants that he could get them jobs in Taiwan
constitute recruitment and placement under the LC. The offense committed against 6
complainants in this case is illegal recruitment in large scale punishable under Art 39 (a) of the
LC with life imprisonment and 1k fine
Hon. Patricia St. Tomas vs. Salac - Where the illegal recruitment is proved, but the elements
of large scale or syndicate are absent, the accused can only be convicted of simple IR
g. Differences: Simple Illegal recruitment, illegal recruitment in large scale,
illegal recruitment by a syndicate
SIMPLE IR Where the illegal recruitment is proved, but the elements of large scale
or syndicate are absent, the accused can only be convicted of simple
IR
LABOR REVIEW (Atty. Peter-Joey Usita)
LARGE SCALE Carried out AGAINST THREE OR MORE PERSONS,
IR individually or as a group
SYNDICATE IR Carried out BY A GROUP OF THREE OR MORE
PERSONS conspiring or confederating with one another
h. Illegal Recruitment v. Estafa
IR is a crime separate and distinct from estafa
illegal recruitment is a MALUM PROHIBITUM where criminal intent is not necessary for
conviction, while estafa is MALUM IN SE where criminal intent of the accused is necessary
for conviction
A worker who suffers pecuniary damage, regardless of amount, as a result of previous or
simultaneous false pretense resorted to by nonlicensee or or nonholder of authority may
complain of estafa under Art 315 aside from IR
The court said that a person convicted of IR under LC can be convicted for violation of
Estafa in RPC provided that the elements of the crime are present. The elements are:
1. That the accused defrauded another by abuse of confidence or by means of deceit
2. That the damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person
Estafa under Art 315, par 2 of the RPC is committed by any person who defrauds another by
using a fictitious name, or falsely pretends to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions or by means of similar deceits
executed prior to or simultaneously with the commission of the fraud. The offended party must
have relied on the false pretense, fraudulent act or fraudulent means of the accused-appellant and as a
result thereof, the offended party suffers damages
i. Liabilities of the local employment agency and the employer
Principals accomplices and accessories
For Juridical person officers having control, management or direction of their business who are
responsivle for the commission of the offense and the responsible employees/agents shall be liable
In case of a final and executory judgment against a foreign employer/principal ! it shall be
automatically disqualified without further proceedings, from participating in the POEA and from
recruiting and hiring Filipino workers until and unless it fully satisfied the judgment award
j. Theory of Imputed Knowledge
Sunace International vs. NLRC G.R. No. 161757, January 25, 2006
Facts:
Petitioner, Sunace International Management Services (Sunace), a corporation duly organized and existing FACTS
under the laws of the Philippines, deployed to Taiwan Divina A. Montehermozo (Divina) as a domestic
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helper under a 12-month contract. The deployment was with the assistance of a Taiwanese broker, Edmund
Wang, President of Jet Crown International Co., Ltd. After the expiration of her contract, Divina continued
working for her Taiwanese employer, Hang Rui Xiong, for two more years.
Divina filed a complaint before NLRC against Sunace, Adelaide Perez, the Taiwanese broker, and the
employer-foreign principal alleging that she was jailed for three months and that she was underpaid. She
claims that under her original contract, and the extended contract, is within the knowledge and consent of
Sunace, and while the amounts deducted in 1997 were refunded to her, those deducted in 1998 and 1999
were not.
Sunace alleged that the 2-year extension was without its knowledge and consent, and hence, had no liability
to any claim arising therefrom.
LA, NLRC & CA: Sunace had knowledge and consent since Sunace and Edmund Wang have not stopped
communicating with each other.
Issue: W/N Sunace had knowledge of the extended contract, and thus, shall be held liable.
Ruling:
No, the theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be
imputed to its agent Sunace. The message does not provide evidence that Sunace was privy to the new
contract executed after the expiration of the original contract. There being no substantial proof that Sunace
knew of and consented to be bound under the 2-year employment contract extension, it cannot be said to be
privy thereto. As such, it and its owner cannot be held solidarily liable for any of Divinas claims arising
from the 2-year employment extension.
k. Rule on the pre-termination of contract of a migrant worker
Serrano v. Gallant, G.R. No. 167614, March 24, 2009
ANTONIO M. SERRANO, Petitioner, vs. Gallant MARITIME SERVICES, INC. and MARLOW
NAVIGATION CO., INC., Respondents. [G.R. No. 167614 March 24, 2009]
AUSTRIA-MARTINEZ, J.:
DOCTRINE: the clause or for three months for every year of the unexpired term, whichever is less
provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the
rights of OFWs to equal protection of the laws. The subject clause contains a suspect classification in that,
in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it
imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The
subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.
Moreover, the subject clause does not state or imply any definitive governmental purpose; hence, the same
violates not just petitioners right to equal protection, but also his right to substantive due process under
Section 1, Article III of the Constitution.
LABOR REVIEW (Atty. Peter-Joey Usita)
Petitioner Antonio Serrano, a Filipino seafarer, was hired by Gallant Maritime Services, Inc. and
Marlow Navigation Co., Ltd. (respondents) under a POEA-approved Contract of Employment with
the following terms and conditions:
o Duration of Contract 12 mos
o Position Chief Officer
o Basic Monthly Salary - US$1,400
o Hours of work 48hrs/wk
o OT - US$700/month
NLRC
o Vaca Leave w/ Pay 7 days/month
On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded
employment contract for the position of Second Officer with a monthly salary of US$1,000.00,
upon the assurance and representation of respondents that he would be made Chief Officer by the end
of April 1998.
Because respondents did not deliver on their promise to make petitioner Chief Officer, petitioner
refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.
Petitioner's employment contract was for a period of 12 months (March 19, 1998 up to March 19,
1999), but at the time of his repatriation on May 26, 1998, he had served only 2 months and 7 days
of his contract, leaving an unexpired portion of 9months and 23 days.
Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for CONSTRUCTIVE
DISMISSAL and for payment of his money claims in the total amount of US$26,442.73,
LA
The LA rendered a Decision dated July 15, 1999, declaring the dismissal of petitioner illegal and
awarding him monetary benefits,
ordered the respondents to pay Serrano, jointly and severally, in Phil. Currency, based on the rate of
exchange prevailing at the time of payment;
o salary for 3 months of the unexpired portion of the aforesaid contract of employment. =
US $8,770
o Serranos claim for a salary differential = US$ 45.00
***In awarding petitioner a lump-sum salary of US$8,770.00, the LA based his computation on
the salary period of 3 months only -- rather than the entire unexpired portion of nine months and CA
23 days of petitioner's employment contract - applying the subject clause. However, the LA
applied the salary rate of US$2,590.00, consisting of petitioner's "basic salary,
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US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation
leave pay = US$2,590.00/compensation per month."***
1. Respondents appealed to the NLRC to question the finding of the LA that petitioner was illegally
dismissed.
2. Petitioner also appealed to the NLRC on the sole issue that the LA erred in not applying the
ruling of the Court in Triple Integrated Services, Inc. v. NLRC that in case of illegal dismissal,
OFWs are entitled to their salaries for the unexpired portion of their contracts.
- In a Decision dated June 15, 2000, the NLRC modified the LA Decision
- Respondents ordered to pay complainant, jointly and severally, in Philippine currency, at the
prevailing rate of exchange at the time of payment the following: (TOTAL: US$4,669.50)
o 3 months salary ($1,400 x 3) = US$4,200.00
o Salary Differential (US$4,245) = 45.00
o 10% Attys Fees = 424.50
***The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by
reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042
"does not provide for the award of overtime pay, which should be proven to have been actually
performed, and for vacation leave pay."***
(1) Petitioner filed a Motion for Partial Reconsideration, but this time he questioned the
constitutionality of the subject clause
Last clause in the Par. 5 of Section 10, R.A. NO. 8042 (MIGRANT WORKERS & OVERSEAS
FILIPINOS ACT OF 1995), to wit:
Sec. 10. Money Claims. - x x x In case of termination of overseas employment without just, valid
or authorized cause as defined by law or contract, the workers shall be entitled to the full
reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his
salaries for the unexpired portion of his employment contract OR FOR THREE (3) MONTHS
FOR EVERY YEAR OF THE UNEXPIRED TERM, WHICHEVER IS LESS.
(2) NLRC denied the motion.
(3) Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge
against the subject clause.
(4) CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the
CA skirted the constitutional issue raised by petitioner.
LABOR REVIEW (Atty. Peter-Joey Usita) 2017-2018

(5) His Motion for Reconsideration having been denied by the CA, petitioner brings his cause to Lastly, petitioner claims that the subject clause violates the due process clause, for it deprives him of
the SC by way of Petition for Review under Rule 45. the salaries and other emoluments he is entitled to under his fixed-period employment contract.
ISSUES RESPONDENTS CONTENTION: that the constitutional issue should not be entertained, for this was
1. WON the subject clause violate Section 10, Article III of the Constitution on non-impairment of belatedly interposed by petitioner in his appeal40 before the CA, and not at the earliest opportunity, which
contracts? was when he filed an appeal before the NLRC.

2. Is petitioner Serrano is entitled to his monetary claim which is the lump-sum salary for the entire ARGUMENTS OF THE SOLICITOR GENERAL:
unexpired portion of his 12-month employment contract, and not just for a period of 3 months
3. Should petitioners OT and leave pay form part of the salary basis in the computation of his
monetary award, because these are fixed benefits that have been stipulated into his contract.
PETITIONERS ARGUMENT:
that the subject clause is unconstitutional because it unduly impairs the freedom of OFWs to
negotiate for and stipulate in their overseas employment contracts a determinate employment
period and a fixed salary package. It also impinges on the equal protection clause, for it treats
OFWs differently from local Filipino workers (local workers) by putting a cap on the amount of
lump-sum salary to which OFWs are entitled in case of illegal dismissal, while setting no limit to
the same monetary award for local workers when their dismissal is declared illegal; that the
disparate treatment is not reasonable as there is no substantial distinction between the two
groups; and that it defeats Section 18, Article II of the Constitution which guarantees the
protection of the rights and welfare of all Filipino workers, whether deployed locally or overseas.
petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is
entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire
nine months and 23 days left of his employment contract, computed at the monthly rate of
US$2,590.00
Petitioner further underscores that the insertion of the subject clause into R.A. No. 8042 serves no
other purpose but to benefit local placement agencies.
Petitioner argues that in mitigating the solidary liability of placement agencies, the subject clause
sacrifices the well-being of OFWs. Not only that, the provision makes foreign employers better
off than local employers because in cases involving the illegal dismissal of employees, foreign
employers are liable for salaries covering a maximum of only three months of the unexpired
employment contract while local employers are liable for the full lump-sum salaries of their
employees. As petitioner puts it:
In terms of practical application, the local employers are not limited to the amount of backwages they
have to give their employees they have illegally dismissed, following well-entrenched and
unequivocal jurisprudence on the matter. On the other hand, foreign employers will only be limited to
giving the illegally dismissed migrant workers the maximum of three (3) months unpaid salaries
notwithstanding the unexpired term of the contract that can be more than three (3) months.
(1) OSG points out that as R.A. No. 8042 took effect on July 15, 1995, its provisions could not
have impaired petitioner's 1998 employment contract. Rather, R.A. No. 8042 having
preceded petitioner's contract, the provisions thereof are deemed part of the minimum terms
of petitioner's employment, especially on the matter of money claims, as this was not
stipulated upon by the parties.
(2) Moreover, the OSG emphasizes that OFWs and local workers differ in terms of the nature of
their employment, such that their rights to monetary benefits must necessarily be treated
differently. The OSG enumerates the essential elements that distinguish OFWs from local
workers:
a. while local workers perform their jobs within Philippine territory, OFWs perform
their jobs for foreign employers, over whom it is difficult for our courts to acquire
jurisdiction, or against whom it is almost impossible to enforce judgment; and
b. as held in Coyoca v. NLRC and Millares v. NLRC, OFWs are contractual
employees who can never acquire regular employment status, unlike local
workers who are or can become regular employees.
(1) Hence, the OSG posits that there are rights and privileges exclusive to local workers, but not
available to OFWs; that these peculiarities make for a reasonable and valid basis for the
differentiated treatment under the subject clause of the money claims of OFWs who are
illegally dismissed. Thus, the provision does not violate the equal protection clause nor
Section 18, Article II of the Constitution.
(2) Lastly, the OSG defends the rationale behind the subject clause as a police power measure
adopted to mitigate the solidary liability of placement agencies for this "redounds to the
benefit of the migrant workers whose welfare the government seeks to promote. The survival
of legitimate placement agencies helps [assure] the government that migrant workers are
properly deployed and are employed under decent and humane conditions."
HELD
1. NO, THE SUBJECT CLAUSE DOES NOT VIOLATE SECTION 10, ARTICLE III OF THE
CONSTITUTION ON NON-IMPAIRMENT OF CONTRACTS.
Petitioner's claim that the subject clause unduly interferes with the stipulations in his contract on the term
of his employment and the fixed salary package he will receive is not tenable.

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Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall The Court concludes that the subject clause contains a suspect classification in that, in the computation
be passed. of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap
The prohibition is aligned with the general principle that laws newly enacted have only a prospective on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on
operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out
their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under one classification of OFWs and burdens it with a peculiar disadvantage.
Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate The Court likewise added that the clause violates the petitioner-seafarers right to substantive due process
from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the for it deprives him of property, consisting of monetary benefits without any existing valid governmental
parties thereto. purpose. With the above ruling, the Supreme Court has reverted to the old, simple, and logical manner by
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the which claims of illegally dismissed OFWs are computed, (i.e., their basic salaries multiplied by the entire
employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. unexpired portions of their contracts, and accordingly disregarded any distinction relating to the OFWs
No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when contract periods or the unexpired portions thereof.)
the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the 3. PETITIONERS OT AND LEAVE PAY DOES NOT FORM PART OF THE SALARY BASIS IN
provisions of R.A. No. 8042. THE COMPUTATION OF HIS MONETARY AWARD.
But even if the Court were to disregard the timeline, the subject clause may not be declared Petitioner contends that his overtime and leave pay should form part of the salary basis in the computation
unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the of his monetary award, because these are fixed benefits that have been stipulated into his contract.
exercise of the police power of the State to regulate a business, profession or calling, particularly the Petitioner is mistaken.
recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and
well-being of OFWs wherever they may be employed. Police power legislations adopted by the State to The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner,
promote the health, morals, peace, education, good order, safety, and general welfare of the people are DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in
generally applicable not only to future contracts but even to those already in existence, for all private which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas
contracts must yield to the superior and legitimate measures taken by the State to promote public welfare. overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday
pay is compensation for any work "performed" on designated rest days and holidays.
2. THE SUBJECT CLAUSE BEING UNCONSTITUTIONAL, PETITIONER IS ENTITLED TO HIS
SALARIES FOR THE ENTIRE UNEXPIRED PERIOD OF NINE MONTHS AND 23 DAYS OF HIS By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay
EMPLOYMENT CONTRACT, PURSUANT TO LAW AND JURISPRUDENCE PRIOR TO THE in the computation of petitioner's monetary award, unless there is evidence that he performed work during
ENACTMENT OF R.A. NO. 8042.||| those periods. As the Court held in Centennial Transmarine, Inc. v. Dela Cruz,
Petitioner is awarded his salaries for the entire unexpired portion of his employment contract consisting of However, the payment of overtime pay and leave pay should be disallowed in light of our ruling in
9 months and 23 days at the rate of US$1,400 per month. The subject clause or for three months for Cagampan v. National Labor Relations Commission, to wit:
every year of the unexpired term, whichever is less provided in the 5th paragraph of Section 10 of R.A. The rendition of overtime work and the submission of sufficient proof that said was actually performed are
No. 8042 is unconstitutional for being violative of the rights of OFWs to equal protection of the laws. conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on
OFWs vis--vis Local Workers With Fixed-Period Employment the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to
overtime pay but the entitlement to such benefit must first be established.
In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally
discharged were treated alike in terms of the computation of their money claims: they were uniformly In the same vein, the claim for the day's leave pay for the unexpired portion of the contract is unwarranted
entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of since the same is given during the actual service of the seamen.
R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an WHEREFORE, the Court GRANTS the Petition. The subject clause "or for three months for every year
unexpired portion of one year or more in their employment contract have since been differently treated in of the unexpired term, whichever is less" in the 5th paragraph of Section 10 of Republic Act No. 8042
that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local is DECLARED UNCONSTITUTIONAL; and the December 8, 2004 Decision and April 1, 2005
workers with fixed-term employment. Resolution of the Court of Appeals are MODIFIED to the effect that petitioner is AWARDED his

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LABOR REVIEW (Atty. Peter-Joey Usita)
salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days
computed at the rate of US$1,400.00 per month. No costs.
Yap v. Thenamaris, G.R. No. 179532, May 30, 2011
Facts:
Claudio S. Yap was employed as electrician of the vessel M/T SEASCOUT for a year. However, before the
expiration of the contract, the vessel was sold, and will be scrapped. Yap received his seniority bonus,
vacation bonus, extra bonus along with the scrapping bonus.
However, with respect to the payment of his wage, he refused to accept the payment of one-month basic
wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was
illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made.
Respondent claims that there was no illegal dismissal.
LA, NLRC & CA: in favour of Yap. There was illegal dismissal.
Issue:
W/N Sec. 10 of RA8042, to the extent that it affords an illegally dismissed migrant worker the lesser benefit
of salaries for [the] unexpired portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less is constitutional (Note: at this point, the court declared the
unconstitutionality of the clause or for three months for every year of the unexpired term, whichever is
less provided in the 5th paragraph of Section 10 of R.A. No. 8042 in the case of Serrano v. Gallant Maritime
Services, Inc.[21] on March 24, 2009).
Respondents claim: Pursuant to the Civil Code, there should be no retroactive application of the law in this
case. Moreover, respondents asseverate that petitioners tanker allowance of US$130.00 should not be
included in the computation of the award as petitioners basic salary, as provided under his contract, was only
US$1,300.00. Respondents submit that the CA erred in its computation since it included the said tanker
allowance. Respondents opine that petitioner should be entitled only to US$3,900.00 and not to
US$4,290.00, as granted by the CA. Invoking Serrano, respondents claim that the tanker allowance should
be excluded from the definition of the term salary. Also, respondents manifest that the full sum
of P878,914.47 in Intermares bank account was garnished and subsequently withdrawn and deposited with
the NLRC Cashier of Tacloban City on February 14, 2007. On February 16, 2007, while this case was
pending before the CA, the LA issued an Order releasing the amount of P781,870.03 to petitioner as his
award, together with the sum of P86,744.44 to petitioners former lawyer as attorneys fees, and the amount
of P3,570.00 as execution and deposit fees. Thus, respondents pray that the instant petition be denied and
that petitioner be directed to return to Intermare the sum of US$8,970.00 or its peso equivalent.
Petitioners claim: the tanker allowance should not have been included in the computation of the award, as
this was not raised by respondent before the LA, NLRC and CA, nor in any of their pleadings.
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Ruling:
It was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by
respondents. Petitioner was correct that we cannot subscribe to respondents postulation that the tanker
allowance of US$130.00 should not be included in the computation of the lump-sum salary to be awarded to
petitioner. First. It is only at this late stage, more particularly in their Memorandum, that respondents are
raising this issue. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first
time on appeal, pass upon this question. Second. Respondents invocation of Serrano is unavailing. Indeed,
we made the following pronouncements in Serrano, to wit:
The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like
petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime,
leave pay and other bonuses; whereas overtime pay is compensation for all work performed in
excess of the regular eight hours, and holiday pay is compensation for any work performed on
designated rest days and holidays. [32]
A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a
bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of
petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioners
basic salary, pursuant to the contract, was US$1,300.00 + US$130.00 tanker allowance.[33] If respondents
intended it differently, the contract per se should have indicated that said allowance does not form part of
the basic salary or, simply, the contract should have separated it from the basic salary clause.
4. Regulation and Enforcement
a. Article 35: Suspension or cancellation of license or authority
Art. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall
have the power to suspend or cancel any license or authority to recruit employees for overseas
employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas
Employment Development Board, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.
b. Penalties of Illegal Recruitment under R.A. No. 8042
SEC. 7. PENALTIES -
(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not
less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less
than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos
(P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than five hundred thousand pesos
(P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined herein.
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Provided, however, that the maximum penalty shall be imposed if the person illegally recruited
is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.
4. Registration of Name Hires
(c) Any person found guilty of any of the prohibited acts shall suffer the penalty of imprisonment
of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine
of not less than Five hundred thousand pesos (P500,000.00) nor more than One million
pesos (P1,000,000.00).
If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be
deported without further proceedings
In every case, conviction shall cause and carry the automatic revocation of the license or
registration of the recruitment/manning agency, lending institutions, training school or medical
clinic.
c. Rule on remittance of foreign exchange earnings
Art. 22. Mandatory remittance of foreign exchange earnings. It shall be mandatory for all
Filipino workers abroad to remit a portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries in the country in accordance with rules and
regulations prescribed by the Secretary of Labor.
5. Article 18: Direct Hiring, and Rules & Regulations Governing Overseas
Employment: Exceptions
Art. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except
through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the
diplomatic corps, international organizations and such other employers as may be allowed by the
Secretary of Labor is exempted from this provision.
Rationale for the Law
- Art. 18 is intended to enable the monitoring of overseas contract workers and
- to ensure that Filipino overseas workers are afforded fair and equitable recruitment and employment
practices thereby assuring the best terms and conditions of employment and facilitating the enforcement of
employment contracts.
2. Exception to the Ban on Direct-Hiring
- prohibition against direct hiring of overseas workers does not apply to workers hired by:
a. members of the diplomatic corps;
b. international organizations; and
c. other employers who may be allowed by the Secretary of Labor and Employment to directly hire
their workers.
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ci. Name Hire : A name hire is a worker who is able to secure an overseas employment on his own
without the assistance or participation of any agency.
- Name hires should register with the POEA by submitting the following documents:
a. Employment contract
b. Valid passport
c. Employment visa or work permit, or equivalent document
d. Certificate of medical fitness
e. Certificate of attendance to the required employment orientation/ briefing.
III. LABOR STANDARDS
1. Hours of Work
a. Article 82: Who are covered and excluded from the provision
Art. 82. Coverage. The provisions of this Title shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certaint
EXCLUDED EMPLOYEES
Art 82 to 96 applies to all employees in all establishment except the following:
1. Government employees
2. Managerial employees, including officers or members of the managerial staff
3. Field personnel
4. Employers family members who depend upon his for support
5. Domestic helpers
6. Persons in the personal service of others
7. Workers who are paid by results as determined under DOLE regulations
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i. Health Workers
For public health workers, a specific provision of special law provides for an on call
pay (Sect. 15, RA 7305)
o On call pay equivalent to 50% of his/her regular wage
o On call status refers to a condition when the public health workers are called
upon to respond to urgent or immediate need for health/medical assistance or relief
working during emergencies such that he cannot devote his time for his own use
Health personnel in government service are excluded from coverage of Art 82 to 96
Their work hours, night shift differential pay and other employment benefits are specified
under RA 7305 (March 26, 1992)
Health personnel covered by 48 hour week resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, and all other hospital or clinic personnel, medical secretaries
The practice of making resident physicians work 24 hours a day = violates Art 83
x permissible even if they are given additional compensation
ii. Compressed Work Week DOLE ADVISORY NO 02-04
GR: Overtime compensation cannot be waived
E: Compressed Work Week arrangement
COMPRESSED WORK WEEK - Under this scheme, the number of work days is reduced but
the number of work hours in a day is increased to more than 8 hours, but no OT pay may be
claimed
Alternative arrangement whereby the normal workweek is reduced to less than 6 days but the total
number of work hours per week shall remain at 48 hours
DOLE ADVISORY NO. 02, series 2004 - Taking into account the emergency of new technology
and the continuing restructuring and modernization of the work process, encourages voluntary
adoption of compressed workweek schemes
VALID ONLY IF THE CONDITIONS STATED IN THE ADVISORY ARE OBSERVED,
OTHERWISE, OT PAYMENT MAY STILL BE CLAIMED
1. The scheme is expressly and voluntarily supported by majority of the
employees affected
2. In firms using substances or operating in conditions that are hazardous to
health, a certification is needed from an accredited safety organization or the firms
safety committee that work beyond 8 hours is within the limits or levels of exposure set
by DOLEs occupational safety and health standards
2. DOLE regional office is duly notified
EFFECTS
If adopted according to the preceding conditions, the CWW agreement produces the
following effects:
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1. Unless there is a more favorable practice existing in the firm, work beyond 8 hours
will not be compensable by OT premium, provided that the total no. of hours worked
per day will not exceed 12 hours. In any case, any work performed beyond 12 hours a
day or 48 hours a week shall be subject to OT premium
2. Consistent with Art 85 of the LC, employees under the CWW scheme are entitled to
meal period of not less than 60 minutes. The right of employees to rest day as well as
holiday pay, rest day or payday leaves in accordance with the law or applicable CBA or
company practice shall not be impaired
3. Adoption of the CWW scheme shall in no case result in diminution of existing
benefits. Reversion to normal eight hour work day shall not constitute diminution of
benefits. The reversion shall be considered a legitimate exercise of management
prerogatives, provided that the employer shall give the employees prior notice of such
reversion within a reasonable period of time
DOLE shall recognize only those CWW schemes that have been entered into consistent with the advisory
b. Article 83: Normal hours of work & exceptions
Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed
eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall
hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for
meals, except where the exigencies of the service require that such personnel work for six (6)
days or forty-eight (48) hours, in which case, they shall be entitled to an additional
compensation of at least thirty percent (30%) of their regular wage for work on the sixth day.
For purposes of this Article, "health personnel" shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
The normal hours of work of any employee shall not exceed eight (8) hours a day.
HOW WORK DAY IS COUNTED
8 hour labor law understood to be the 24 hour period which commences from
the time the employee regularly starts to work
It is not the same as calendar day from 12 MN to 12 MN, unless the
employee starts working at 12MN
If an employee works from 8 am to 4 pm
o 8 am to 8 am the following day = work day
o 8 to 4 pm = regular working hours
o Any work in excess of 8 hours within the 24 hour period = overtime
work regardless of whether work covers 2 calendar days
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o Any work in excess of 8 hours not falling within the 24 hour period = X
considered overtime work
PART TIME WORK is not prohibited to have less than 8 hours work a day/
WORK HOURS OF HEALTH PERSONNEL
Health personnel covered by 48 hour week resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians paramedical
technicians, psychologists, midwives, and all other hospital or clinic personnel, medical
secretaries
he practice of making resident physicians work 24 hours a day = violates Art 83
x permissible even if they are given additional compensation
E: X apply 48 hour work week if there is a training agreement between the resident
physician and the hospital and the training program is duly accredited or approved
by the appropriate government agency ! no E to E relationship on account of the
approved training program
An act prescribing 48 hours a week of labor for government and private hospitals or
clinic personnel repealed with the passage of the LABOR CODE
c. Article 84: Hours Worked
Art. 84. Hours worked. Hours worked shall include (a) all time during which an employee is
required to be on duty or to be at a prescribed workplace; and (b) all time during which an
employee is suffered or permitted to work.
Rest periods of short duration during working hours shall be counted as hours worked.
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-
off for their regular meals.
IRR states guiding principles to determine compensable or non-compensable hours
Sec. 4 Principles in Determining Hours Worked the following general principals shall
govern in determining whether the time spent by an employee is considered hours
worked for purpose of this Rule:
(a) All hours are hours worked which the employee is required to give his
employer, regardless of whether or not such hours are spent in productive labor or
involve physical or mental exertion
(b) An employee need not leave the premises of the workplace in order that his rest
period shall not be counted, it being enough that he stops working, may rest
completely and may leave his workplace, to go elsewhere, whether within or
outside the premises of his workplace
(c) If the work performed was necessary, or it benefitted the employer, or the
employee could not abandon his work at the end of his normal working hours
because he had no replacement, at all time spent for such work shall be considered
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as hours worked, if the work was with the knowledge of his employer or immediate
supervisor
(d) the time during which an employee is inactive by reason of interruptions in his
work beyond his control shall be considered time either if the imminence of the
resumption of work requires the employees presence at the place of work or if the
interval is too brief to be utilized effectively and gainfully in the employees own
interest
PRELIMINARY ACTIVITIES those done before work and after actual work
deemed to be performed during working hours where such activities are controlled or
required by the employer and are pursued necessarily and primarily for the employers
benefit.
WORKING WHILE SLEEPING
Sleeping time may be considered working time ! if it is subject to serious
interruptions or takes place under conditions substantially less desirable than would
be likely to exist in the employees home
Sleeping time is not regarded as working time ! if there is an opportunity for
comparatively uninterrupted sleep under fairly desirable conditions, even though
the employee is required to remain on or near the employers premises and must
hold himself in readiness for a call to action employment
this is dependent on the agreement between the parties
ON CALL
When the work is not continuous, the time when the laborer can leave his work
and rest completely shall = not be counted in the computation
However, if they are required to be in their place of work before or after regular
working hours and within the call of their employers ! the time they stay in the
place of work should not be discounted from their working hours
Example: Truck drivers who are required by the company to be at the place of work
before or after working hours does not do anything at work but could not leave
because he may at any time be called to work ! X prejudice time he spent not
actually working
WITH CELLULAR PHONE OR OTHER CONTACT DEVICE If employee is kept
within reach thru a cellphone or other contact device = X considered to be in work status
TRAVEL TIME
Time spent walking, riding, travelling to or from place of work = X constitute work
time
Depends upon the kind of travel involved
1. Travel from home to work
Engaged in the ordinary home-to work travel which is normal incident
of employment
Exception: When an employee receives an emergency call outside of his
regular working hours and is required to travel to his place of business or
some other work site = working time
2. Travel that is all in the days work
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Travel as part of his principal activity, such as travel from jobsite to
jobsite during the workday = counted as hours worked
Travel to a place to receive meeting report = counted as hours worked
3. Travel away from home
Travel that keeps an employee away from home overnight is travel
away from home = work time
If the employees regular working day is Monday to Friday from 9-5
Travel time during these work hours on Saturdays and Sundays is
worktime
Regular meal period is not counted
X considered as work time those spent in travel away from home
OUTSIDE of regular working hours as a passenger on an airplane, train,
boat or automobile
Any work which an employee is required to perform while traveling is
counted as hours worked (except bona fide meal periods or permitted to
sleep)
Time spent by an employee in travelling to a place outside Metro
manila to do installation jobs is considered worktime when the travel
time cuts across or coincides with his regular work hours ! hence he
should be paid his regular salary for said time
LECTURES, MEETINGS AND TRAINING PROGRAMS
Attendance at lectures, meetings and training programs, and similar activities need
not be counted as working time if the following criteria are met:
1. Attendance is outside of the employees regular working hours
2. Attendance is voluntary
3. The employee does not perform any productive work during such attendance
i. Meal Break
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless
of sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is credited as compensable hours
worked of the employee:
(a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16)
hours a day;
ii.
(c) In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss
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which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
xxx xxx xxx
not less than sixty (60) minutes time-off for their regular meals
The employee must be completely relieved from duty for the purpose of eating
regular meals
Meal time = x compensable if he is completely freed from his duties even though
he remains at his workplace
But the employee is not relieved if he is required to perform his duties whether
active or inactive, while eating = compensable
Summary:
o Non compensable meal break = free time, the employers own time
o Compensable = X free time, whether the worker is able to eat or not
NOT REQUIRED to stay within premises of work
When work is continuous for several shifts, the meal time breaks should be counted
as working time for the purpose of overtime compensation
GR: Meal period should not be less than 60 minutes, in which case it is time-off or
noncompensable time
If less than 20 minutes = rest period; working time; compensable
The situations where meal time can be less than 60 minutes but not less than
20n minutes:
1. Where the work is non-manual or does not involve serious physical
exertion
2. Establishment regularly operates not less than 16 hours a day
3. Where the is actual or impending emergencies or there is urgent work to
be performed on machineries, equipment or installations to avoid serious
loss which the employer would otherwise suffer
4. Where the work is necessary to prevent serious loss of perishable goods
Similar to the situations of emergency overtime work
SHORTENED MEAL BREAK UPON EMPLOYEES REQUEST
Employee may request that their meal period be shorted so that they can
leave earlier than previously established schedule = NOT COMPENSABLE
Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, April 15,
1998
PAN-AM v. PAN-AM Employees Association, 1 SCRA 527
Waiting Time
ENGAGED TO WAIT OR WAITING TO BE ENGAGED?
Question of fact resolved by appropriate finding of the TC
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The facts may show that the employee was engaged to wait or may show that
he waited to be engaged
Controlling factor: Whether the waiting time spent in idleness is so spent
predominantly for the employers benefit or for the employees
examples:
Firefighters who are in standby capacity who spent time in idleness playing
cards or other amusement in the facilities provided by the employer ! X render
inapplicable the overtime provisions of the act
Truck driver who has to wait at or near the jobsite for goods to be loaded is
working during the loading period ! engaged to be waiting = considered working
time
Truck driver done with task and waiting for 6 pm when he goes on duty for the
return trip Waiting to be engaged = Idle time is not working time
iii. Rule on Brownout
Work interruption due to brownouts Brownouts is not included in Hours worked
d. Night shift differential (NSD) and those not covered by NSD
Art. 86. Night shift differential. Every employee shall be paid a night shift differential of not
less than ten percent (10%) of his regular wage for each hour of work performed between ten
oclock in the evening and six oclock in the morning.
This is NOT WAIVABLE
BURDEN OF PROOF OF PAYMENT : Employer has burden of proving a clam for night
shift differential pay
Night-shift work is more onerous and burdensome, and thus deserves more remuneration than
their day time counterparts. There is no dispute that ordinary and regular normal work is
performed in the daytime, and that night work is exceptional and is only justified in
unavoidable circumstances necessary for the business of the employer. [Shell Company vs.
NLU, 81 Phil. 315 (1948)]
e. Overtime Work/Overtime Pay
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day provided that
the employee is paid for the overtime work, an additional compensation equivalent to his regular
wage plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a
holiday or rest day shall be paid an additional compensation equivalent to the rate of the first
eight hours on a holiday or rest day plus at least thirty percent (30%) thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any particular day shall not be
offset by overtime work on any other day. Permission given to the employee to go on leave on
some other day of the week shall not exempt the employer from paying the additional
compensation required in this Chapter.
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Art. 89. Emergency overtime work. Any employee may be required by the employer to
perform overtime work in any of the following cases:
a. When the country is at war or when any other national or local emergency
has been declared by the National Assembly or the Chief Executive;
b. When it is necessary to prevent loss of life or property or in case of
imminent danger to public safety due to an actual or impending emergency
in the locality caused by serious accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
c. When there is urgent work to be performed on machines, installations, or
equipment, in order to avoid serious loss or damage to the employer or some
other cause of similar nature;
d. When the work is necessary to prevent loss or damage to perishable goods;
and
e. Where the completion or continuation of the work started before the eighth
hour is necessary to prevent serious obstruction or prejudice to the business
or operations of the employer.
Any employee required to render overtime work under this Article shall be paid the additional
compensation required in this Chapter.
NIGHT SHIFT DIFFERENTIAL PAY OVERTIME PAY
payment for work done during the night payment for the excess of regular 8 hour work
i. Condition for entitlement to overtime pay
Additional pay for service or work rendered or performed in excess of 8 hours a
day by employees or laborers covered by the 8 hour labor law and not exempt from
its requirements
ii. Basis for Computation
OVERTIME RATE BASED ON REGULAR WAGE Overtime pay =
compensation added to regular wage
REGULAR BASE PAY excludes money received by the employee in different
concepts, such as Christmas bonus and other fringe benefits
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The COLA shall not be included in the computation of overtime pay.
the minimum overtime pay rates vary according to the day the overtime work is
performed
COMPUTATION:
1. For work in excess of 8 hours performed on ORDINARY WORKING
DAY Plus 25%
For work in excess of 8 hours performed on a SCHEDULED REST DAY
OR A SPECIAL DAY plus 30% of the hourly rates on said days
For work in excess of 8 hours performed on a REGULAR HOLIDA
plus 30% of the hourly rates on the said days
4. For work in excess of 8 hours performed on a REGULAR HOLIDAY
WHICH FALLS ON A SCHEDULE REST DAY! plus 30% of the hourly
rates on the said days
iii. Waiver or quitclaim
WAIVER OF QUITCLAIM; NO WAIVER OF OVERTIME PAY, GENERALLY
The right to OT pay cannot be waived
WHEN VALID; WAIVER IN EXCHANGE FOR CERTAIN BENEFITS
GR: Overtime compensation cannot be waived
E: When the alleged waiver of OT is in consideration of benefits and privileges
which may be more than what will accrue to them in OT pay, the waiver may be
permitted
2. Wages
no work no pay principle and exception to no work no pay
Facilities v. Supplements
Exempted from the rules on wages
Non-diminution rule
Wage Distortion
Rule on those paid by results
Article 113: Wage Deduction
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except:
a. In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
b.For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
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c.In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment.
3. Rest Day
a. Article 91: Right to Weekly Rest Day
Art. 91. Right to weekly rest day.
a. It shall be the duty of every employer, whether operating for profit or not, to
provide each of his employees a rest period of not less than twenty-four (24)
consecutive hours after every six (6) consecutive normal work days.
b. The employer shall determine and schedule the weekly rest day of his
employees subject to collective bargaining agreement and to such rules and
regulations as the Secretary of Labor and Employment may provide.
However, the employer shall respect the preference of employees as to their
weekly rest day when such preference is based on religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require his
employees to work on any day:
a. In case of actual or impending emergencies caused by serious accident, fire,
flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent
loss of life and property, or imminent danger to public safety;
b. In cases of urgent work to be performed on the machinery, equipment, or
installation, to avoid serious loss which the employer would otherwise suffer;
c. In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other
measures;
d. To prevent loss or damage to perishable goods;
e. Where the nature of the work requires continuous operations and the
stoppage of work may result in irreparable injury or loss to the employer; and
f. Under other circumstances analogous or similar to the foregoing as
determined by the Secretary of Labor and Employment.
b. Article 93: Compensation for Rest Day, Sunday, Holiday Work
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Art. 93. Compensation for rest day, Sunday or holiday work.
a. Where an employee is made or permitted to work on his scheduled rest day,
he shall be paid an additional compensation of at least thirty percent (30%)
of his regular wage. An employee shall be entitled to such additional
compensation for work performed on Sunday only when it is his established
rest day.
b. When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an
additional compensation of at least thirty percent (30%) of his regular wage
for work performed on Sundays and holidays.
c. Work performed on any special holiday shall be paid an additional
compensation of at least thirty percent (30%) of the regular wage of the
employee. Where such holiday work falls on the employees scheduled rest
day, he shall be entitled to an additional compensation of at least fifty per
cent (50%) of his regular wage.
d. Where the collective bargaining agreement or other applicable employment
contract stipulates the payment of a higher premium pay than that prescribed
under this Article, the employer shall pay such higher rate.
4. Holiday pay/Premium pay
a. Article 94: Coverage/ Exclusions
Art. 94. Right to holiday pay.
a. Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten
(10) workers;
b. The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate;
and
c. As used in this Article, "holiday" includes: New Years Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, the fourth of July, the thirtieth of November, the twenty-fifth and
thirtieth of December and the day designated by law for holding a general
election.
b. Article 94: Computation
c. Legal Holidays
d. Holiday Economic Rule
5. Leaves
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a. Service Incentive Leave (SIL) and Exemptions
Art. 95. Right to service incentive leave.
a. Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
b. This provision shall not apply to those who are already enjoying the benefit
herein provided, those enjoying vacation leave with pay of at least five days
and those employed in establishments regularly employing less than ten
employees or in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the viability or
financial condition of such establishment
c. The grant of benefit in excess of that provided herein shall not be made a
subject of arbitration or any court or administrative action.
b. Vacation Leave & Sick Leave
PSTMSDWO, represented by its president, Rene Soriano v. PNCC
Skyway Corp, G.R. No. 171231, February 17, 2010
c. Leaves that are required by Law (mandatory)
i. SIL
Autobus Transport System v. Bautista, May 16, 2005
ii. Paternity Leave (R.A. No. 8187)
iii. Maternity Leave (SSS Law)
iv. Solo Parent Leave (R.A. No. 8972)
v. Battered Woman Leave (R.A. No. 9262)
6. Thirteenth Month Pay (P.D. 851)
a. Value of 13th month pay
b. Coverage
7. Separation Pay
Songco v. NLRC, G.R. No. L-50999, March 23, 1990
Millares v. NLRC, G.R. No. 122827, March 29, 1999
8. Retirement Pay
9. Apprentices, Learners and Handicapped Workers
APPRENTICE
Art. 58. Definition of Terms. As used in this Title:
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a. "Apprenticeship" means practical training on the job supplemented by related
theoretical instruction.
b. An "apprentice" is a worker who is covered by a written apprenticeship agreement with
an individual employer or any of the entities recognized under this Chapter.
c. An "apprenticeable occupation" means any trade, form of employment or occupation
which requires more than three (3) months of practical training on the job
supplemented by related theoretical instruction.
d. "Apprenticeship agreement" is an employment contract wherein the employer binds
himself to train the apprentice and the apprentice in turn accepts the terms of training.
Art. 59. Qualifications of apprentice. To qualify as an apprentice, a person shall:
a. Be at least fourteen (14) years of age;
b. Possess vocational aptitude and capacity for appropriate tests; and
c. Possess the ability to comprehend and follow oral and written instructions.
Trade and industry associations may recommend to the Secretary of Labor appropriate educational
requirements for different occupations.
Art. 60. Employment of apprentices. Only employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations approved by the Secretary of Labor and
Employment. (As amended by Section 1, Executive Order No. 111, December 24, 1986)
Art. 61. Contents of apprenticeship agreements. Apprenticeship agreements, including the wage rates
of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the
legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may
be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor
and Employment. The Department shall develop standard model programs of apprenticeship. (As amended
by Section 1, Executive Order No. 111, December 24, 1986)
Art. 62. Signing of apprenticeship agreement. Every apprenticeship agreement shall be signed by the
employer or his agent, or by an authorized representative of any of the recognized organizations,
associations or groups and by the apprentice.
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An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, if the
latter is not available, by an authorized representative of the Department of Labor, and the same shall be
binding during its lifetime.
Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate
apprenticeship committees, if any, and a copy thereof shall be furnished both the employer and the
apprentice.
Art. 63. Venue of apprenticeship programs. Any firm, employer, group or association, industry
organization or civic group wishing to organize an apprenticeship program may choose from any of the
following apprenticeship schemes as the training venue for apprentice:
a. Apprenticeship conducted entirely by and within the sponsoring firm, establishment or
entity;
b. Apprenticeship entirely within a Department of Labor and Employment training center
or other public training institution; or
c. Initial training in trade fundamentals in a training center or other institution with
subsequent actual work participation within the sponsoring firm or entity during the
final stage of training.
Art. 64. Sponsoring of apprenticeship program. Any of the apprenticeship schemes recognized herein
may be undertaken or sponsored by a single employer or firm or by a group or association thereof or by a
civic organization. Actual training of apprentices may be undertaken:
a. In the premises of the sponsoring employer in the case of individual apprenticeship
programs;
b. In the premises of one or several designated firms in the case of programs sponsored
by a group or association of employers or by a civic organization; or
c. In a Department of Labor and Employment training center or other public training
institution.
Art. 65. Investigation of violation of apprenticeship agreement. Upon complaint of any interested
person or upon its own initiative, the appropriate agency of the Department of Labor and Employment or
its authorized representative shall investigate any violation of an apprenticeship agreement pursuant to
such rules and regulations as may be prescribed by the Secretary of Labor and Employment.
Art. 66. Appeal to the Secretary of Labor and Employment. The decision of the authorized agency of
the Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of
Labor and Employment within five (5) days from receipt of the decision. The decision of the Secretary of
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Labor and Employment shall be final and executory. Art. 72. Apprentices without compensation. The Secretary of Labor and Employment may authorize the
hiring of apprentices without compensation whose training on the job is required by the school or training
Art. 67. Exhaustion of administrative remedies. No person shall institute any action for the enforcement program curriculum or as requisite for graduation or board examination
of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all
available administrative remedies.
LEARNERS
Art. 68. Aptitude testing of applicants. Consonant with the minimum qualifications of apprentice-
Art. 73. Learners defined. Learners are persons hired as trainees in semi-skilled and other industrial
applicants required under this Chapter, employers or entities with duly recognized apprenticeship
occupations which are non-apprenticeable and which may be learned through practical training on the job
programs shall have primary responsibility for providing appropriate aptitude tests in the selection of
in a relatively short period of time which shall not exceed three (3) months.
apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and
Employment shall perform the service free of charge.
Art. 74. When learners may be hired. Learners may be employed when no experienced workers are
available, the employment of learners is necessary to prevent curtailment of employment opportunities,
Art. 69. Responsibility for theoretical instruction. Supplementary theoretical instruction to apprentices
and the employment does not create unfair competition in terms of labor costs or impair or lower working
in cases where the program is undertaken in the plant may be done by the employer. If the latter is not
standards.
prepared to assume the responsibility, the same may be delegated to an appropriate government agency.
Art. 75. Learnership agreement. Any employer desiring to employ learners shall enter into a learnership
Art. 70. Voluntary organization of apprenticeship programs; exemptions.
agreement with them, which agreement shall include:
a. The organization of apprenticeship program shall be primarily a voluntary undertaking
a.The names and addresses of the learners;
by employers;
b.The duration of the learnership period, which shall not exceed three (3) months;
b. When national security or particular requirements of economic development so
demand, the President of the Philippines may require compulsory training of
c.The wages or salary rates of the learners which shall begin at not less than seventy-five percent
apprentices in certain trades, occupations, jobs or employment levels where shortage of
(75%) of the applicable minimum wage; and
trained manpower is deemed critical as determined by the Secretary of Labor and
Employment. Appropriate rules in this connection shall be promulgated by the
d.A commitment to employ the learners if they so desire, as regular employees upon completion
Secretary of Labor and Employment as the need arises; and
of the learnership. All learners who have been allowed or suffered to work during the first two
(2) months shall be deemed regular employees if training is terminated by the employer before
c. Where services of foreign technicians are utilized by private companies in
the end of the stipulated period through no fault of the learners.
apprenticeable trades, said companies are required to set up appropriate apprenticeship
programs.
The learnership agreement shall be subject to inspection by the Secretary of Labor and Employment or his
Art. 71. Deductibility of training costs. An additional deduction from taxable income of one-half (1/2) of duly authorized representative.
the value of labor training expenses incurred for developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an apprenticeship program: Provided, That such
Art. 76. Learners in piecework. Learners employed in piece or incentive-rate jobs during the training
program is duly recognized by the Department of Labor and Employment: Provided, further, That such
period shall be paid in full for the work done.
deduction shall not exceed ten (10%) percent of direct labor wage: and Provided, finally, That the person
or enterprise who wishes to avail himself or itself of this incentive should pay his apprentices the
Art. 77. Penalty clause. Any violation of this Chapter or its implementing rules and regulations shall be
minimum wage.
subject to the general penalty clause provided for in this Code.

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HANDICAPPED WORKERS LEADERSHIP APPRENTICESHIP

Art. 78. Definition. Handicapped workers are those whose earning capacity is impaired by age or physical SIMILARITIES Both mean training periods for jobs requiring skills that can be
or mental deficiency or injury. acquired through actual work experience
Paid wages 25% lower than the applicable minimum wage
Art. 79. When employable. Handicapped workers may be employed when their employment is necessary
FOCUS Semi-skilled jobs or in industrial Highly technical industry
to prevent curtailment of employment opportunities and when it does not create unfair competition in labor
occupation
costs or impair or lower working standards.
TRAINING PERIOD Less than 3 months Exceeds 3 months
Art. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an DIFFICULTY Job is more easily learned Harder to learn (apprenticeable job)
employment agreement with them, which agreement shall include:
COMMITMENT OF Employer is committed to hire the No such commitment
1.The names and addresses of the handicapped workers to be employed; EMPLOYER learner-trainee as an employee after
the training period
2.The rate to be paid the handicapped workers which shall not be less than seventy five (75%)
TYPE OF Non-technical jobs Highly technical industries and only
percent of the applicable legal minimum wage; JOB/INDUSTRY in apprenticeable occupations
approved by DOLE
3.The duration of employment period; and
A learner is not an apprentice but an apprentice, is conceptually also a learner
4.The work to be performed by handicapped workers. MAGNA CARTA FOR DISABLED PERSONS (RA 7277, MARCH 24, 1992)
QUALIFIED DISABLED EMPLOYEE Equal Opportunity for Employment. No disabled
The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized person shall be denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment and the same
representative.
compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able
bodied person
Art. 81. Eligibility for apprenticeship. Subject to the appropriate provisions of this Code, handicapped QUALIFIED INDIVIDUAL WITH A DISABILITY
Shall mean an individual with a disability who, with or without reasonable accommodations, can
workers may be hired as apprentices or learners if their handicap is not such as to effectively impede the
perform the essential functions of the employment position that such individual holds or desires.
performance of job operations in the particular occupations for which they are hired. However, consideration shall be given to the employer's judgment as to what functions of a job are
essential, and if an employer has prepared a written description before advertising or interviewing
TESDA (TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY) applicants for the job, this description shall be considered evidence of the essential functions of the
IMPLEMENTS THE APPRENTICESHIP PROGRAM job
Sect 18 of TESDA Act of 1994 expressly empowers TESDA to implement and administer the Sheltered Employment If suitable employment for disabled persons cannot be found through
apprenticeship program in accordance with existing laws, rules and regulations open employment as provided in the immediately preceding Section, the State shall endeavor to
APPRENTICEABLE AGE provide it by means of sheltered employment. In the placement of disabled persons in sheltered
employment, it shall accord due regard to the individual qualities, vocational goals and
This article 14; IRR 15 (what to follow? Moot and academic question already because:)
inclinations to ensure a good working atmosphere and efficient production.
RA 7610 prohibits the employment of children below 15 years old
SHELTERED EMPLOYMENT- Refers to the provision of productive work for disabled persons
WORKING SCHOLAR, LIABILITY OF SCHOOL: There is NO employer-employee
through workshops providing special facilities, income-producing projects or homework schemes with
relationship between students and schools where there is a WRITTEN agreement between them
a view to giving them the opportunity to earn a living thus enabling them to acquire a working capacity
under which the student agree to work for the school in exchange for the privilege to study free of
required in open industry;|||
charge, provided that the students are given real opportunities, including suchfacilities as may be
DISCRIMINATION ON EMPLOYMENT No entity, whether public or private, shall discriminate
reasonable and necessary to finish their chosen coursesunder such agreement
against a qualified disabled person by reason of disability in regard to job application procedures, the
If the student injures a 3rd party, does the school become liable? YES

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hiring, promotion, or discharge of employees, employee compensation, job training, and other terms,
conditions, and privileges of employment. The following constitute acts of discrimination: casia
a) Limiting, segregating or classifying a disabled job applicant in such amanner that adversely
affects his work opportunities;
b) Using qualification standards, employment tests or other selection criteria that screen out
or tend to screen out a disabled person unless such standards, tests or other selection criteria are
shown to be job-related for theposition in question and are consistent with business necessity;
c) Utilizing standards, criteria, or methods of administration that:
1. Have the effect of discrimination on the basis of disability; or
2. 2) Perpetuate the discrimination of others who are subject to common administrative
control.
d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe
benefits, to a qualified disabled employee, by reason of his disability, than the amount to which a
non-disabled person performing the same work is entitled;
e) Favoring a non-disabled employee over a qualified disabled employee with respect to
promotion, training opportunities, study and scholarship grants, solely on account of the latter's
disability;
f) Re-assigning or transferring a disabled employee to a job or position he cannot perform by
reason of his disability;
g) Dismissing or terminating the services of a disabled employee by reason of his disability
IV. LABOR RELATIONS LAW
unless the employer can prove that he impairs the satisfactory performance of the work involved
to the prejudice of the business entity:Provided, however, That the employer first sought to 1. Right to Self-Organization
provide reasonable accommodations for disabled persons; cda
h) Failing to select or administer in the most effective manner employment tests which accurately
a. Who can join
reflect the skills, aptitude or other factor of the disabled applicant or employee that such tests La Suerte Cigar & Cigarette Factory v. Director of BLR, G.R. No. L-
purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant 55674, July 25, 1983
or employee, if any; and
i) Excluding disabled persons from membership in labor unions or similar organizations
b. Exceptions
QUALIFIED DISABLED PERONS ARE REGULAR EMPLOYEES 2. Labor Organizations
a. Classification of Labor Organizations
10. Women Workers b. Disaffiliation of a local union from the federation
a. Non-Discrimination Rule Tropical Hut Employees Union-CGW v. Tropical Hut Food Market, Inc,
b. Stipulation Against Workers G.R. No. L-43495-99, January 20, 1990
11. Minor Workers (R.A. No. 7678, R.A. No. 9231, & R.A. 7323)
12. Househelpers (Domestic Workers Act, R.A. No. 10361) 3. Bargaining Agent and Certification Election
a. Voluntary Recognition (D.O. 40-03, Rule VII)
b. Certification Election
UST Faculty Union v. Bitonio, Jr., G.R. No. 131235, November 16, 1999
Progressive Development Corporation-Pizza Hut v. Laguesma, G.R. No.
115077
i. Certification Election in an Organized v. Unorganized
Establishment

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ii. Procedure in Pre-Election Contest (D.O. 40-03)

iii. Grounds for denial of petition for certification election (contract- 7. Strikes & Lockouts
bar rule, deadlock bar-rule, charge-of-company unionism rule, a. Definition of strikes & lockouts
outside-of-the-freedom-period rule, negotiation rule, appeal bar b. Economic v. ULP Strike
rule). c. Procedural Requirements
c. Consent Election d. Liability in case of Illegal Strike/lockout
d. Run-Off Election Jackbilt Industries Inc v. Jackbilt Employees Workers Union-NAFLU-
e. Re-run Election KMU, G.R. Nos. 171618-19, March 20, 2009
i. Union Officers
4. Union Security Arrangements ii. Members
Bataan Shipyard and Engineering Co., Inc. v. NLRC, G.R. No. 78604, May 9, iii. Employer
1988
5. Unfair Labor Practice
a. Article 253 (formerly Art. 247): Unfair Labor Practice
V. TERMINATION OF EMPLOYMENT
b. Article 254 (formerly Art. 248): ULP of Employers
Complex Electronics Employees Association v. NLRC, G.R. No. 121315, 1. Employer-Employee Relationship
July 19, 1999 a. Four-Fold Test
1. The selection and engagement of the employee
Standard Chartered Bank v. Hon. Confesor, G.R. No. 114974, June 16, 2. The payment of wages
2004 3. The power of dismissal
c. Article 255 (formerly Art. 249): ULP of Labor Organization 4. The employers power to control the employee with respect to the means and methods
6. Collective Bargaining & Administration of Agreements by which the work is to be accomplished (most important, without this, there is no E-
E relationship)
a. Procedures/steps in collective bargaining
b. Article 257: Duty to Bargain Collectively in the absence of Collective Sonza v. ABS-CBN, G.R. No. 138051, June 10, 2004
Bargaining Agreements DOCTRINES:
1. Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and
c. Article 258: Duty to Bargain Collectively Definition engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to
Kiok Loy v. NLRC, 141 SCRA 179 control the employee on the means and methods by which the work is accomplished. The last element, the so-called
d. Article 259: Duty to Bargain Collectively when there exists a CBA control test, is the most important element.
2. The control test is the most important test our courts apply in distinguishing an employee from an independent
e. Article 260: Terms of CBA contractor.
i. Principle of Hold-over FACTS:
ii. Substitutionary Doctrine
In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development Corporation
iii. Deadlock in CBA renegotiation
(MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was represented by Sonza, as
Divine Word University of Tacloban v. Sec. of Labor, G.R. No. President and general manager, and Tiangco as its EVP and treasurer. Referred to in the agreement as agent, MJMDC
91995, September 11, 1992 agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to
pay Sonza a monthly talent fee of P310, 000 for the first year and P317, 000 for the second and third year.

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On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events
concerning his program and career. After the said letter, Sonza filed with the Department of Labor and Employment a
complaint alleging that ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month pay,
signing bonus, travel allowance and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN contended
that no employee-employer relationship existed between the parties. However, ABS-CBN continued to remit Sonzas
monthly talent fees but opened another account for the same purpose.
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to show
that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment to prevent
losses as provided under labor laws. Even if it suffered severe business losses, ABS-CBN could not retrench SONZA
because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This
circumstance indicates an independent contractual relationship between SONZA and ABS-CBN. SONZA admits that
even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees.

The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC D. Power of Control
affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC.
Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.
ISSUE: The control test is the most important test our courts apply in distinguishing an employee from an independent
contractor.
Whether or not there was employer-employee relationship between the parties.
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work. SONZAs
HELD: argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs. ABS-
CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How
No employer-employee relationship exists between the parties. SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. We find
that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work.ABS-
Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to format and airtime schedule for more effective programming. ABS-CBNs sole concern was the quality of the shows
and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of
control the employee on the means and methods by which the work is accomplished. ]The last element, the so-called
performance of SONZAs work.
control test, is the most important element. Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and
standards of performance. SONZA claims that this indicates ABS-CBNs control not only [over] his manner of work
A. Selection and Engagement of Employee
but also the quality of his work. The Agreement stipulates that SONZA shall abide with the rules and standards of
The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed performance covering talents of ABS-CBN. The Agreement does not require SONZA to comply with the rules and
by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement refers to the Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which
has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.
Agreement with SONZA but would have hired him through its personnel department just like any other employee.
Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-
B. Payment of Wages
CBN exercised over him. This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring
that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS- party. In the broadcast industry, exclusivity is not necessarily the same as control.
CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity
status not possessed by ordinary employees. The payment of talent fees directly to SONZA and not to MJMDC does b. Economic Reality Test
not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. TWO TIERED APPROACH; THE ECONOMIC DEPENDENCE TEST
Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee Two tiered Test
accruing under the Agreement. 1. Power of control of employer
2. Underlying economic realities of the activity of relationship
C. Power of Dismissal Totality of the circumstance depends on the circumstance of the whole economic activity
such as:

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1. Extent to which services performed are integral part of the employers business
2. Degree of control exercised by the employer
3. Workers opportunity for profit
4. Amount of initiative, skill, judgment or foresight required for the success of the
independent enterprise
5. Permanency and duration of the relationship
6. Degree of dependency of the worker upon the employer for his continued
employment in that line of business
7. Extent of workers investment in equipment andfacilities
" Economic dependence whether the worker is dependent on the alleged employer for his
continued employment in that line of business
" Respondent = employee = served for 6 years before her dismissal and received salaries =
economically dependent on corporation
" Constrictively dismissed when salary was reduced = illegal termination of employment =
entitled to fill backwages + separation pay in lieu of reinstatemen
company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the company.
In 1996, petitioner was designated Acting Manager. For five years, petitioner performed the duties of Acting Manager.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to
sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei
Corporation.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001.
Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001,
petitioner did not receive her salary from the company. On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she
was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before
the labor arbiter.

Francisco v. NLRC, G.R. No. 170087, August 21, 2006
DOCTRINES:
1. Two-tiered test: The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. This
two-tiered test would provide us with a framework of analysis, which would take into consideration the
totality of circumstances surrounding the true nature of the relationship between the parties. This is
especially appropriate in this case where there is no written agreement or terms of reference to base the
relationship on; and due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latters employment.
2. The determination of the relationship between employer and employee depends upon the circumstances of
the whole economic activity, such as: (1) the extent to which the services performed are an integral part of
the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the
nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss;
(5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.
Kasei Corporation averred that petitioner was not an employee and to prove that, they submitted a list of employees
for the years 1999 and 2000 duly received by the BIR showing that petitioner was not among the employees reported
to the BIR. Private respondent corporation also alleged that petitioner was hired as one of its technical consultants on
accounting matters and act concurrently as Corporate Secretary. Petitioners designation as technical consultant
depended solely upon the will of management. As such, her consultancy may be terminated any time considering that
her services were only temporary in nature and dependent on the needs of the corporation.
Labor Arbiter: petitioner was illegally dismissed.
NLRC: affirmed the decision of the Labor Arbiter.
CA: reversed the NLRC decision and dismissed the complaint.
ISSUE:
Whether there was an employer-employee relationship between petitioner Francisco and private respondent Kasei
Corporation.
HELD:
Yes, by applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
FACTS: corporation because she had served the company for six years before her dismissal, receiving check vouchers
In 1995, petitioner Angelina Francisco was hired by Kasei Corporation during its incorporation stage. She was indicating her salaries/ wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the Security contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in the SSS as

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LABOR REVIEW (Atty. Peter-Joey Usita)
manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and
the inclusion of her name in the online inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latters line of business.
2. Kinds of Employment
Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.
Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his engagement. An employee who is allowed
to work after a probationary period shall be considered a regular employee.
3 CATEGORIES OF EMPLOYEE'S UNDER ART 280
regular employees or those whose work is necessary or desirable to the usual business of the
employer;
Regular employees may be classified into:
(1) regular employees by nature of work Employee performs work that
is usually necessary and desirable in the usual business or trade of the
employer. A continuing need for respondents' services is sufficient
evidence of the necessity and indispensability of their services to
petitioner's business .
(2) regular employees by years of service A casual employee who has
rendered at least one (1) year of service, whether continuous or broken is
a regular employee. The status of regular employment under this category
attaches to the casual worker on the day immediately after the end of his
first year of service as such casual employee.
project employees or those whose employment has been fixed for a specific project or
25
2017-2018
undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee, or where the work or
services to be performed is seasonal in nature and the employment is for
the duration of the season;
casual employees or those who are neither regular nor project employees
a. Regular Employees
Reasonable connection rule The primary standard, therefore, of determining a regular
employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the employee
has been performing the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists.
De Leon v. NLRC, G.R. No. 70705, August 21, 1989
DOCTRINES:
1. The primary standard, therefore, of determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer.
2. What determines whether a certain employment is regular or casual is not the will and word of the employer, to
which the desperate worker often accedes, much less the procedure of hiring the employee or the manner of paying
his salary. It is the nature of the activities performed in relation to the particular business or trade considering all
circumstances, and in some cases the length of time of its performance and its continued existence.
FACTS:
Moises de Leon was employed by La Tondea Inc. on December 11, 1981, at the Maintenance Section of its
Engineering Department. His work consisted mainly of painting company building and equipment, and other odd jobs
relating to maintenance. He was paid on a daily basis through petty cash vouchers. After a service of more than one
year, De Leon requested from La Tondea that he be included in the payroll of regular workers, instead of being paid
through petty cash vouchers. La Tondea's response, however, was his dismissal from employment on January 16,
1983. Having been refused reinstatement despite repeated demands, De Leon filed a complaint for illegal dismissal,
reinstatement and payment of backwages before the LA.
De Leon: alleged that he was dismissed following his request to be treated as a regular employee; that his work
consisted of painting company buildings and maintenance chores like cleaning and operating company equipment,
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assisting Emiliano Tanque Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by La that the nature and entirety of the activities performed by the employee be considered. In the case of petitioner,
Tondea indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of La Tondea, and was the painting and maintenance work given him manifest a treatment consistent with a maintenance man and not just a
made to perform the tasks which he used to do. painter, for if his job was truly only to paint a building there would have been no basis for giving him other work
assignments In between painting activities.
La Tondea: claimed that De Leon was not a regular employee but only a casual worker hired allegedly only to paint
a certain building in the company premises, and that his work as a painter terminated upon the completion of the It is of no moment that petitioner was told when he was hired that his employment would only be casual, that he was
painting job. paid through cash vouchers, and that he did not comply with regular employment procedure. Precisely, the law
overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position needs the
LA: found the dismissal illegal; ordered La Tondea to reinstate De Leon with full backwages and other benefits. LA support of the State. What determines whether a certain employment is regular or casual is not the will and
ruled that De Leon was not a mere casual employee as asserted by La Tondea but a regular employee. He concluded word of the employer, to which the desperate worker often accedes, much less the procedure of hiring the
that the dismissal of De Leon from the service was prompted by his request to be included in the list of regular employee or the manner of paying his salary. It is the nature of the activities performed in relation to the
employees and to be paid through the payroll and is, therefore, an attempt to circumvent the legal obligations of an particular business or trade considering all circumstances, and in some cases the length of time of its
employer towards a regular employee. performance and its continued existence.

NLRC: Reversed the LA decision; ruled that De Leons job cannot be considered as necessary or desirable in the
b. Casual Employees
usual business or trade of the employer because, "Painting the business or factory building is not a part of the
respondent's manufacturing or distilling process of wines and liquors.
Philippine Geothermal, Inc. v. NLRC, G.R. No. 82643-47, August 30, 1990
ISSUE: DOCTRINE:

WON the NLRC erred in finding that De Leon was not a regular employee, and thus, was not illegally dismissed. 1. There are two kinds of regular employees, as: 1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and 2) those who have rendered at least one (1)
HELD: year of service, whether continuous or broken with respect to the activity in which they are employed. While the
actual regularization of these employees entails the mechanical act of issuing regular appointment papers and
Yes. Under Art. 281 of the Labor Code, an employment is deemed regular when the activities performed by the compliance with such other operating procedures, as may be adopted by the employer, it is more in keeping with the
employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day
the so-called "project employment" the completion or termination of which is more or less determinable at the time immediately after the end of his first year of service.
of employment, such as those employed in connection with a particular construction project and seasonal employment
which by its nature is only desirable for a limited period of time. However, any employee who has rendered at least
one year of service, whether continuous or intermittent, is deemed regular with respect to the activity he FACTS:
performed and while such activity actually exists. Petitioner is a U.S. corporation engaged in the exploration and development of geothermal energy resources as an
alternative source of energy. Private respondents are employees of herein petitioner occupying various positions
The primary standard, therefore, of determining a regular employment is the reasonable connection between ranging from carpenter to Clerk II who had worked with petitioner company under individual contracts, categorized as
the particular activity performed by the employee in relation to the usual business or trade of the employer. contractual employment, for a period of 15 to 3 months. These contracts were regularly renewed until 1983 and 1984
The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. when petitioner started terminating their employment by not renewing their individual contracts. Subsequently
petitioner entered into job contracting agreement with Dra. Gonzales who supplies it with skilled manpower. Private
In the case at bar, during De Leons period of employment, the tasks assigned to him included not only painting of respondents organized a separate labor union in view of their exclusion in the bargaining unit of the regular rank and
company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and file employees. They filed a petition for certification election. Petitioner allegedly started harassing them and replaced
other odd jobs assigned to him when he had no painting job. It is self-serving, to say the least, to isolate petitioner's them with so called "contract workers". Thus, complainant union and herein respondent employees filed a case for
painting job to justify the proposition of casual employment and conveniently disregard the other maintenance illegal lock-out and unfair labor practice for unfair labor practice and/or illegal dismissal, reinstatement backwages
activities of petitioner which were assigned by the respondent company when he was not painting. The law demands and service incentive. LA decided in favor of petitioners. NLRC affirmed. Hence, this petition.

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ISSUE: FACTS:
Petitioners did not look with favor workers having organized themselves into a union. Thus when the respondent
Whether or not private respondents may be considered regular and permanent employees due to their length of service union was certified as the collective bargaining representative in the certification elections, petitioners refused to sit
in the company despite the fact that their employment is on contractual basis. down with the respondents for the purpose of entering into a collective bargaining agreement. Moreover, the workers
were not given work for more than one month. In protest, complainants staged a strike which was however settled
HELD: upon the signing of a Memorandum of Agreement which stipulated among others that management will provide
fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority.
Petitioner alleges that it engaged the services of private respondents on a monthly basis to ensure that manpower However, in case the said workforce would not be enough, the management can hire additional workers to supplement
would be available when and where needed. Private respondents were fully aware of the nature of their employment as them.
this was clearly spelled out in the employment contracts. What happened to them was not a case of unwarranted
dismissal but simply one of expiration of the tenure of employment contracts and the completion of the phase of the However, alleging that respondents failed to load the fifteen wagons, petitioners reneged on its commitment to sit
project for which their services were hired. This Court classified the two kinds of regular employees, as: 1) those who down and bargain collectively. Instead, petitioners employed all means including the use of private armed guards to
are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the prevent the organizers from entering the premises.
employer; and 2) those who have rendered at least one (1) year of service, whether continuous or broken with respect
to the activity in which they are employed. Moreover, starting September 1991, petitioners did not any more give work assignments to the respondents forcing the
union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of
While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers Agreement was signed. However, petitioners still reneged on its commitment pursuant to the 2nd Memorandum which
and compliance with such other operating procedures, as may be adopted by the employer, it is more in keeping with prompted the respondents to file a complaint.
the intent and spirit of the law to rule that the status of regular employment attaches to the casual employee on the day
immediately after the end of his first year of service. Assuming therefore, that an employee could properly be regarded The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on
as a casual (as distinguished from a regular employee) he becomes entitled to be regarded as a regular employee of the leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security
employer as soon as he has completed one year of service. Under the circumstances, employers may not terminate the of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal.
service of a regular employee except for a just cause or when authorized under the Labor Code. It is the policy of the
state to assure the right of workers to "security of tenure." The guarantee is an act of social justice. When a person has ISSUE:
no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected
against any arbitrary deprivation of his job. Whether or not the seasonal employees have become regular employees.

c. Seasonal Employees
Hacienda Fatima v. National Federation of Sugarcane Workers, G.R. No. 149440,
January 28, 2003
DOCTRINE:
1. The primary standard of determining regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual trade or business of the employer. The connection can be
determined by considering the nature of the work performed and its relation to the scheme of the particular business
or trade in its entirety
HELD:
Yes they are regular employees. For respondents to be excluded from those classified as regular employees, it is
not enough that they perform work or services that are seasonal in nature. They must have also been employed
only for the duration of one season. The evidence proves the existence of the first, but not of the second,
condition. The fact that respondents repeatedly worked as sugarcane workers for petitioners for several years
is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore,
the general rule of regular employment is applicable.
The primary standard of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if the performance is not

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continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre
evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered protested the announced termination of his employment. He argued that although his contract did stipulate that the
regular, but only with respect to such activity and while such activity exists.
Respondents, having performed the same tasks for petitioners every season for several years, are considered the not be removed except for valid cause.
latters regular employees for their respective tasks. Petitioners eventual refusal to use their services -- even if they
were ready, able and willing to perform their usual duties whenever these were available -- and hiring of other workers Regional Director - application for clearance to terminate employment (not a report of termination), and accepting
to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter.
d. Fixed-Term
Brent School, Inc. v. Zamora, G.R. No. 48494, February 5, 1990
DOCTRINES:
1. Article 319 undertook to define "employment without a fixed period" in the following manner: Where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment is for the duration of the season.
2. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate
which needed the approval of the Department of Labor to make the termination of his services effective. In any case,
such clearance should properly have been given, not denied.
FACTS:
Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. The
contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the
agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the
original contract of July 18, 1971.
Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was
given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his
services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of
the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to
July 17, 1976 as full payment of contract.
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same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his
employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could
the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of
Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages.
ISSUE: Whether or not the contract of employment was lawfully terminated?
HELD: Yes, Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by
reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor
Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was
impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the
Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly
acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was
approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No
prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly
legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly
recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD
442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period
employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of
term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary employees and those employed
WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321
prescribed the just causes for which an employer could terminate "an employment without a definite period." And
Article 319 undertook to define "employment without a fixed period" in the following manner: where the employee
has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or service
to be performed is seasonal in nature and the employment is for the duration of the season. Subsequently, the
foregoing articles regarding employment with "a definite period" and "regular" employment were amended by
Presidential Decree No. 850, effective December 16, 1975.
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Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to DOCTRINE:
persons "employed with a fixed period," and was renumbered (becoming Article 271).
1. Article 280 of the Labor Code provides that an employment shall be deemed to be regular where the employee has
As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of employer, except where the employment has been fixed for a specific project or undertaking the completion or
his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be termination of which has been determined at the time of the engagement of the employee or where the work or
given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term services to be performed is seasonal in nature and the employment is for the duration of the season.
employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a
means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or,
more relevantly, curing a headache by lopping off the head.
FACTS:
Respondent Romago is a general contractor engaged in contracting and sub-contracting of specific building
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still
good rulea rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, construction projects or undertaking such as electrical, mechanical and civil engineering aspects in the repair of
1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the buildings and from other kindred services.
expiration of the last of three successive fixed-term employment contracts, the Court held:
Individual complainants (petitioners) are employed by the respondent in connection with particular construction
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was projects and in hiring the herein complainants to be assigned to a particular project they have to fill up an employment
probationary, contractual in nature, and one with a definitive period. At the expiration of the period application form and are subjected to a pre-hiring examination. If evaluated to be qualified they sign at the end portion
stipulated in the contract, her appointment was deemed terminated and the letter informing her of the non- of their employment application form that states that they agree to the condition that their employment was for a fixed
renewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the
employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to period and for the specific project only.
expire and that the contract would no longer be renewed. It is not a letter of termination.
Petitioners allege that they have worked on many projects by the respondent and they were hired over and over again
so they should be regarded as regular employees.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with
Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department ISSUE:
of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of
Whether or not petitioners are regular employees or project employees.
termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to
make the termination of his services effective. In any case, such clearance should properly have been given, not
HELD:
denied.
They are project employees, the NLRC is correct in ruling that said petitioners should be deemed as project
e. Project Employees employees. The fact that the complainants worked for the respondent under different project employment contracts for
PROJECT refers to a job/undertaking within the regular or usual business of the employer, so many years could not be made a basis to consider them as regular employees for they remain project employees
but which is distinct and separate and identifiable from the undertakings of the company. regardless of the number of projects in which they have worked on.
Such job/undertaking begins and ends at determined or determinable times
Principal Test for Project Employment As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from
(a) Whether one is assigned to carry out a specific project or undertaking, the duration
real estate developers and builders of buildings. Since its work depends on the availability of such contracts or
and scope of which are specified at the time of engagement for a project.
"projects," necessarily the duration of the employment of its work force is not permanent but co-terminus with the
(b) Duration of work to be performed must be defined in the employment contract, and
(c) Terms and conditions of employment must be made clear to the employee at the time projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their
of hiring employer who, like them, depends on the availability of projects, if it would have to carry them as permanent
employees and pay them wages even if there are no projects for them to work on.
Cartajenas v. Romago Electric Company, Inc., G.R. No. 82973, September 15, 1989

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3. Probationary Employment
PROBATIONARY EMPLOYEE Refers to one who, for a given period of time, is being
observed and evaluated to determine whether he is
qualified for permanent employment. [Woodridge School
vs. Pe Benito, 570 SCRA 164, October 29, 2008]
PROBATIONARY EMPLOYMENT A phase in employment where the employer is afforded
the opportunity to observe the fitness of a probationary
employee while at work, and to ascertain whether he will
become an efficient and productive employee. [Magis
Young Achievers' Learning Center vs. Manalo, G.R. No.
178835, February 13, 2009; Philippine Daily Inquirer,
Inc. vs. Magtibay, Jr., G.R. No. 164532, July 27, 2007]
Rules
Period of Probation
While there is no statutory cap on the minimum term of probation, the law sets a maximum trial
period during which the employer may test the fitness and efficiency of the employee. [Magis
Young Achievers' vs. Manalo, supra]
The computation of probationary period is made on a calendar date basis to be reckoned from the
date of appointment, NOT on a 30-days per month basis as provided for in Art. 13, Civil Code.
[Alcira vs. NLRC, 431 SCRA 508 (June 9, 2004) citing CALS Poultry Supply vs. Roco, 385
SCRA 479, 488 (2002)]
BUT,
An employer, under exceptional circumstances, can extend a probationary period of employment,
such as when the same is established by company policy, or when it is required by the nature of
the work, provided such extension was agreed upon by the parties, and exercised before the
expiration of the original period of probation. [San Miguel Corporation vs. Caroline C. Del
Rosario, 477 SCRA 604 (December 13, 2005), citing Buiser vs. Leogardo, 216 Phil. 144, 150
(1984)] In fact, length of time is immaterial in determining the correlative rights of both parties in
dealing with each other during probationary period. [Philippine Daily Inquirer vs. Magtibay, Jr.,
supra]
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the contract
is binding for the full three-year probationary period. [Magis Young Achievers' vs. Manalo, supra]
Nature of Probation
The provision on employment on probationary status under the Labor Code is a primary example
of the fine balancing of interests between labor and management. Employment on probationary
status affords management the chance to fully scrutinize the true worth of hired personnel before
the full force of the security of tenure guarantee comes into play. Management is given the
opportunity to reject during the probationary period hirees who fail to meet its own adopted but
reasonable standards.
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2017-2018
A probationary employee enjoys security of tenure while on probation. He can be dismissed only
for a just cause OR when he fails to qualify for regular employment.
Evaluation is made before expiration of the probationary period
This means that they are terminable anytime. The employer could well decide if he no longer
needed the probationary's service or his performance fell short of expectations.
International Catholic Migration Commission v. NLRCC, G.R. No. 72222, January 30,
1989
DOCTRINES:
1. Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just
cause for terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the
Labor Code.
2. An employee who was terminated during the probationary period of her employment is not entitled to her salary
for the unexpired portion of her six-month probationary employment.
FACTS:
Petitioner (ICMC) engaged the services of private respondent Bernadette Galang as a probationary cultural orientation
teacher.
After three months, private respondents services were terminated for her failure to meet the prescribed standards of
petitioner as reflected in the performance evaluation of her supervisors during the teacher evaluation program.
Subsequently, private respondent returned to the ICMC premises on to accomplish the clearance requirements. In the
evening of that same day, she was found at the Freedom Park of Morong wet and shivering from the rain and acting
bizarrely. She was then taken to petitioner's hospital where she was given the necessary medical attention.
Two days later, she was taken to her residence in Manila. Thru a letter, her father expressed appreciation to petitioner
for taking care of her daughter. On that same day, her father received, on her behalf, the proportionate amount of her
13th month pay and the equivalent of her two-week pay.
Private respondent filed a complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner
with the then Ministry of Labor and Employment, praying for reinstatement with backwages, exemplary and moral
damages.
The Labor Arbiter rendered his decision dismissing the complaint for illegal dismissal as well as the complaint for
moral and exemplary damages but ordered the ICMC to pay private respondent the sum of P6,000.00 as payment for
the last three months of the agreed employment period.
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Petitioner countered, stating that private respondent who was employed for a probationary period of three months 4. Difference between Job Contracting & Labor-Only Contracting
could not rightfully be awarded P6,000.00 because her services were terminated for failure to qualify as a regular
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person
employee in accordance with the reasonable standards prescribed by her employer.
for the performance of the formers work, the employees of the contractor and of the latters subcontractor,
if any, shall be paid in accordance with the provisions of this Code.
NLRC sustained the decision of the Labor Arbiter.

ISSUE: In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with
this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such
Whether or not an employee who was terminated during the probationary period of her employment is entitled to her employees to the extent of the work performed under the contract, in the same manner and extent that he is
salary for the unexpired portion of her six-month probationary employment liable to employees directly employed by him.

HELD:
No. Private respondent was terminated during her probationary period of employment for failure to qualify as a
regular member of petitioner's teaching staff in accordance with its reasonable standards. Records show that private
respondent was found by petitioner to be deficient in classroom management, teacher-student relationship and
teaching techniques.
Failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for
terminating a probationary employee specifically recognized under Article 282 (now Article 281) of the Labor Code.
A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial
by an employer during which the employer determines whether or not he is qualified for permanent employment. A
probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while
at work, and to ascertain whether he will become a proper and efficient employee. The word "probationary", as used to
describe the period of employment, implies the purpose of the term or period, but not its length
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

Notwithstanding the finding of legality of the termination of private respondent, the NLRC justified the award of
salary for the unexpired portion of the probationary employment on the ground that a probationary employment for six JOB CONTRACTING LABOR-ONLY CONTRACTING
(6) months is an employment for a "definite period" which requires the employer to exhaust the entireprobationary
period to give the employee the opportunity to meet the required standards. ob contracting or subcontracting refers to an Labor-only contracting is an arrangement
Article 281 of the Labor Code gives ample authority to the employer to terminate a probationary employee for a just arrangement whereby a principal agrees to put wherein the contractor merely acts as an agent
cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the out or farm out with the contractor or in recruiting and supplying the principal
employer to the employee at the time of his engagement. subcontractor the performance or completion employer with workers for the purpose of
of a specific job, work or service within a circumventing labor law provisions setting
Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, Article 281 definite or predetermined period regardless of down the rights of employees. It is not
of the Labor Code does not likewise preclude the employer from terminating the probationary employment on whether such job, work or service is to be condoned by law.
justifiable causes as in the instant case. performed or completed within or outside the
premises of the principal
The SC found unmeritorious, therefore, public respondents argument that the security of tenure of probationary In legitimate job contracting, the law creates an Where labor-only contracting exists, the Labor
employees within the period of their probation, as in the case of herein private respondent, justified the award of salary employer-employee relationship between the Code itself establishes an employer-employee
for the unexpired portion of her probationary employment. employer and the contractors employees only relationship between the employer and the

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for a limited purpose
Substantial capital or investment refers to
capital stocks and subscribed capitalization in
the case of corporations, tools, equipments
[sic], implements, machineries and work
premises, actually and directly used by the
contractor or subcontractor in the performance
or completion of the job, work or service
contracted out.
Mandaue Galleon Trade v. Andales, G.R. No. 159668, March 7, 2008
DOCTRINE:
employees of the 'labor-only' contractor in
order to prevent a circumvention of labor laws.
Here, the contractor is considered merely an
agent of the principal employer.
functions which were necessary to the business and that the independent contractors were not properly identified.
On the other hand, MGTI denied the existence of employer-employee relationship (EER) and claimed that they were
workers of independent contractors. It further claimed that, as a survival measure, the management had decided to
retrench its employees and that the complainants were jealous of the separation pay paid to retrenched employees.
LA: Ordered the petitioners to take back the complainants and to pay 13th month pay (P545K) and held that there was
no dismissal. 183 complainants were regular piece-rate employees of MGTI since they were made to perform
NLRC: Affirmed LA but there was constructive dismissal thru the unilateral transfer. Ordered to pay separation pay
in addition ot the 13th month pay. It held that labor-only contracting and not job-contracting was present since the
alleged contractors did not have substantial capital in the form of equipment, machineries and work premises. The
NLRC, however, did not agree with the LA's finding that there was no dismissal.
CA: Initially dismissed the petition for certiorari an affirmed NLRC. Upon motion, an Amended Decision was made
which ordered petitioners to pay the 183 respondents of their separation pay computed an month salary per year of
service up to the promulgation. (Reduction of sep pay)
ISSUE: WON there was EER

1. Labor-only contracting exists when the following criteria are present:
(a) Where the contractor or subcontractor supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among other things; and the workers
recruited and placed by the contractor or subcontractor are performing activities which are directly related to the
principal business of such employer; or
(b) Where the contractor does not exercise the right to control the performance of the work of the contractual
employee.
HELD: There was EER.
Based on Article 106 of the Labor Code and Sections 5 and 7 of the Implementing Rules, labor-only contracting exists
when the following criteria are present: (1) where the contractor or subcontractor supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among
other things; and the workers recruited and placed by the contractor or subcontractor are performing activities which
are directly related to the principal business of such employer; or (2) where the contractor does not exercise the right
to control the performance of the work of the contractual employee.
In this case, petitioners claimed that their contractors were independent contractors, and, therefore, this case was one
of permissible job contracting, was without basis.

FACTS:
The complainants alleged that MGTI hired them as weavers, grinders, sanders and finishers; some of them were told
that they would be transferred to a contractor, while some were told to look for work elsewhere as the company had no
work for them; some workers were not allowed to enter the company premises, while others were told that they could
no longer work since there was no work available; and they were dismissed without notice and just cause.
They further alleged that they were regular employees of MGTI because: (a) they performed their work inside the
company premises; (b) they were issued uniforms and were told to strictly follow company rules and regulations; (c)
they were under the supervision of MGTI; (d) MGTI supplied the materials, designs, tools and equipment in the
production of furniture; (e) MGTI conducted orientations; (f) MGTI issued memoranda regarding absences and waste
of materials; and (g) MGTI exercised the power to discipline them.
(1) The respondents work was directly related to MGTI's principal business. Where the employees are tasked to
undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered
as a labor-only contractor and such employees are considered as regular employees of the employer.
(2) MGTI was unable to present any proof that its contractors had substantial capital. The law casts the burden on the
contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove
that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.
Thus, the contractors were labor-only contractors since they did not have substantial capital or investment which
related to the service performed and respondents performed activities which were directly related to MGTI's main
business. MGTI, the principal employer, was solidarily liable with the labor-only contractors, for the rightful claims of
the employees. Under this set-up, labor-only contractors are deemed agents of the principal, MGTI, and the law makes
the principal responsible to the employees of the labor-only contractor as if the principal itself directly hired or

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employed the employees. In prohibiting labor-only contracting and creating an employer-employee relationship withheld from him up to the time of his actual reinstatement. (As amended by Section 34,
between the principal and the supposed contractors employees, the law intends to prevent employers from Republic Act No. 6715, March 21, 1989)
circumventing labor laws intended to protect employees.
Security of tenure is a paramount right of every employee that is held sacred by the
constitutional guarantees as an act of social justice. The right of every employee to security of
NOTES: tenure is all the more secured by the Labor Code by providing that the employer shall not
terminate the services of an employee, except for a just cause or when authorized by law
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this case of private school teachers, their entitlement to security of tenure is governed by the
purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, Manual of Regulations for Private Schools and not the Labor Code
supplies or places workers to perform a job, work or service for a principal, and any of the following elements are [is] AUTHORIZED CAUSES IN GENERAL
present: 296 just causes
297 and 298 authorized causes
i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or Others:
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are 1. Total and permanent disability
performing activities which are directly related to the main business of the principal; or 2. Disease not curable in 6 months
3. Valid application of a union security clause
ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. 4. Expiration of period in term employment
5. Completion of projct in project employment
The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as 6. Failure in probation
amended. 7. Sale amounting to closure of business
8. Relocation of business to a distant place
Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, 9. Non-feasible reinstatement
tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or 10. Floating status or off-detail beyond 6 months
subcontractor in the performance or completion of the job, work or service contracted out. 11. Resignation
12. Violation of a contractal commitment as such being a consultant to a
The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are competitor
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that 13. Retirement
end. 14. Death of the employee
Differentiation in name is not always observed
The following are the AUTHORIZED causes for termination:
5. Dismissal from Employment 1. The installation of labor-saving devices
DISMISSAL connotes permanent severance or complete separation of the worker from the service on
2. Redundancy
the initiative of the employer regardless of the reasons therefor. [Industrial & Transport Equipment,
Inc. vs. Tomas Tugade, et al., G.R. No. 158539, January 15, 2009] 3. Retrenchment to prevent losses or the closing or
SUSPENSION is a disciplinary measure that is imposed for violation by the employee of a reasonable 4. Cessation of operation of the establishment or undertaking unless the closing is for the
rule of conduct prescribed by the employer and made known to the employee. [Anonas Construction purpose of circumventing the provisions of this Title,
and Industrial Supply Corporation vs. NLRC, G.R. No. 164052, October 17, 2008] In transfer of ownership, the sale or disposition must be motivated by good faith as a
condition for exemption from liability. A change of ownership done in bad faith, or used to
a. Security of Tenure defeat the rights of labor, apart from making the successoremployer liable for the
Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate transgressions of its predecessor-employer, the displaced employees shall be deemed
the services of an employee except for a just cause or when authorized by this Title. An absorbed. [Peafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento, et al., G.R.
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of No. 178397, October 20, 2010, Nachura, J.]
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was b. Just Causes

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Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a.Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
b.Gross and habitual neglect by the employee of his duties;
c.Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
d.Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and
e.Other causes analogous to the foregoing.
a. Serious SERIOUS MISCONDUCT
misconduct or An improper and wrong conduct;
willful A transgression of some established and definite rule of
disobedience by action, a forbidden act, a dereliction of duty, willful in
the employee of character, and implies wrongful intent and not mere error in
judgment.
the lawful orders
For misconduct to be considered serious, it must be of such
of his employer or
grave and aggravated character and not merely trivial or
representative in unimportant.
connection with Elements of Serious Misconduct to be a just cause for dismissal:
his work; it must be serious;
it must relate to the performance of the employees duties;
and
it must show that the employee has become unfit to continue
working for the employer
Insubordination, as a just cause for the dismissal of an employee,
requires the concurrence of at least two requisites: (1) the employee's
assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and 92) the order violated must have
been reasonable, lawful, made known to the employee, and must pertain
to the duties which he had been engaged to discharge
Elements of Willful Disobedience
(a) the employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful
and perverse attitude; and
(b) the order violated must have been reasonable and lawful,
made known to the employee, and must pertain to the duties
which he has been engaged to discharge.
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b. Gross and GROSS NEGLIGENCE The want or absence of even slight care or
habitual neglect diligence amounting to a reckless disregard of the safety of a person or
by the employee property. In evinces a thoughtless disregard of consequences without
of his duties;
exerting any effort to avoid them. [Metro Transit Organization, Inc. vs.
NLRC, October 17, 1996; Philippine Aeolus United Corporation vs.
NLRC, supra]
HABITUAL NEGLECT The repeated failure to perform ones duties for
a period of time. [Chua vs. NLRC, G.R. No. 146780, March 11, 2005
citing JEB & Associates vs. NLRC, 254 SCRA 457 (1996)]
Under Article 282 of the Labor Code, gross and habitual neglect by
the employee of his duties is a sufficient and legal ground to
terminate employment. Gross negligence connotes want of care in
the performance of one's duties. Habitual neglect implies repeated
failure to perform one's duties for a period of time, depending upon
the circumstances.
In dismissing an employee for gross and habitual neglect of duties,
the employer must be able to identify what specific duties the
employee violated and whether the violations were gross and
habitual.
TARDINESS/ ABSENTEEISM Habitual tardiness and absenteeism are
forms of neglect of duty. Lack of initiative, diligence, and discipline to
come to work on time everyday exhibit the employees deportment
towards work, which is inimical to the general productivity and business
of the employer.
Even assuming that respondent's absenteeism constitutes willful
disobedience, such offense does not warrant respondent's dismissal.
Not every case of insubordination or willful disobedience by an
employee reasonably deserves the penalty of dismissal. There must
be a reasonable proportionality between the offense and the penalty
While management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers, pursuant to
company rules and regulations, however, such management
prerogatives must be exercised in good faith for the advancement of
the employer's interest and not for the purpose of defeating or
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circumventing the rights of the employees under special laws and There must be an actual breach; [Salas vs. Aboitiz One, Inc, G.R.
valid agreements. Nevertheless, it may terminate an employee only NO. 178236, June 27, 2008]
for a just cause, his prerogative to dismiss must be exercised
without abuse of discretion. Its implementation should be tempered (2) The loss of confidence must not be simulated;
with compassion and understanding
(3) It should not be used as a subterfuge for causes which are
c. Fraud or willful LOSS OF CONFIDENCE When the employer has reasonable ground to illegal, improper, or unjustified;
breach by the believe the employee is responsible for the misconduct, and the nature of
employee of the (4) It may not be arbitrarily asserted in the face of overwhelming
his participation renders him unworthy of the trust and confidence
trust reposed in evidence to the contrary
demanded by his position. [Caete, Jr. vs. NLRC, G.R. No. 130425,
him by his September 30, 1999; Tolentino vs. PLDT, G.R. No. 160404, June 8,
(5) It must be genuine, not a mere afterthought to justify earlier
employer or duly 2005] Applies only to an employee who holds a position of
action taken in bad faith; [Tolentino vs. PLDT, G.R. No. 160404,
authorized responsibility or trust and confidence, or a person invested with
June 8, 2005; Weh Yueh Restaurant vs. Jayona, G.R. No. 159448,
representative; confidence on delicate matters. [Sanchez vs. NLRC, G.R. No. 124348,
December 16, 2005; Perez vs. PT&T, G.R. No. 152048, April 7,
August 1999; Cruz vs. Coca-Cola Bottlers Phils., Inc., G.R. No
2009]
BREACH OF TRUST A willful violation of the trust. A breach is willful
(6) The employee involved holds a position of trust and confidence
if it is done intentionally, knowingly, and purposely without justifiable
[Molina vs. Pacific Plans, Inc., G.R. No. 165476, March 10, 2006,
excuse, as distinguished from an act done carelessly, thoughtlessly,
484 SCRA 498]
heedlessly, or inadvertently. [Pastor Dionisio Austria vs. NLRC, G.R.
No. 124382, August 16, 1999; PNCC vs. Mandagan, G.R. No. 160965,
(7) proof beyond reasonable doubt need not be established to prove
July 21, 2008
loss of trust and confidence, as reasonable ground is enough. [P.J.
Lhuillier, Inc. vs. NLRC, G.R. No. 158758, April 29, 2005; Norsk
BUT, Loss of trust and confidence can be based on gross negligence
Hydro (Phils.), Inc. vs. Rosales, Jr., G.R. No. 162871, January 31,
2007]
Loss of trust and confidence is premised on the fact that an employee
concerned holds a position where greater trust is placed by management
(8) must be grounded on facts clearly and convincingly established
and from whom greater fidelity to duty is correspondingly expected.
by the employer proving the facts and incidents upon which the loss
This includes managerial personnel entrusted with confidence on
of confidence was based [Philippine Aeolus Automotive United
delicate matters, such as custody, handling or care and protection of the
Corporation vs. NLRC, 311 SCRA 237, 247 (2000)] mere
employer's property. The betrayal of this trust is the essence of the
uncorroborated assertions and accusations will not be sufficient;
offense for which an employee is penalized
[Uniwide Sales Warehouse Club vs. NLRC, G.R. No. 154503,
February 29, 2008; Metro Eye Security, Inc. vs. Salsona, G.R. No.
In the absence of any malicious intent or fraud, an employee's
167637, September 28, 2007] and
negligence or carelessness is not a justifiable ground for the employer's
loss of trust and confidence, for the breach conceived of here should be
breach of trust and confidence as ground for dismissal must be
founded on a dishonest, deceitful or fraudulent act.
related to the performance of the duties of the employee such as
would show unfitness to continue working for the employer. [Blue
Requisites
Dairy Corp. vs. NLRC, G.R. No. 129843, September 14, 1999;

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Rentokil (Initial) Philippines vs. Sanchez, G.R. No. 176219, Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental
December 23, 2008] and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice
installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work.
f.Commission of a
Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999, the
crime or offense
by the employee Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary
against the person claims. The NLRC, however, reversed the Labor Arbiter because it found that the petitioners had abandoned their
of his employer or work, and were not entitled to backwages and separation pay. The Court of Appeals in turn ruled that the dismissal of
any immediate the petitioners was not illegal because they had abandoned their employment but ordered the payment of money
member of his claims.
family or his duly
authorized Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless
representatives;
they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on this
and
arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim
g.Other causes Termination of employment pursuant to a Union Security Clause Termination that private respondent did not comply with the twin requirements of notice and hearing.
analogous to the of employment by virtue of a union security clause embodied in a CBA is
foregoing. recognized and accepted in our jurisdiction. This practice strengthens the union Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. In
and prevents disunity in the bargaining unit within the duration of the CBA. By fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work.
preventing member disaffiliation with the threat of expulsion from the union and Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
the consequent termination of employment, the authorized bargaining about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work.
representative gains more numbers and strengthens its position as against other However, petitioners did not report for work because they had subcontracted to perform installation work for another
unions which may want to claim majority representation company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted,
petitioners stopped reporting for work and filed the illegal dismissal case.
Totality of infractions doctrine The totality of infractions or the number of violations
committed during the period of employment shall be considered in determining the penalty to be ISSUE:
imposed upon an erring employee. The offenses committed by petitioner should not be taken
singly and separately Was the dismissal of petitioners for a just cause?

Agabon v. NLRC, G.R. No. 158693, November 17, 2004 HELD:

DOCTRINE:
YES. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the
employer to give the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code
1. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of
enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the
neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of
employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b)
abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or
gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more
reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no
employee against the person of his employer or any immediate member of his family or his duly authorized
more intention to work. The intent to discontinue the employment must be shown by clear proof that it was
representative; and (e) other causes analogous to the foregoing.
deliberate and unjustified.
Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of
neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of
FACTS:

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abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or misconduct or willful disobedience". There must be reasonable proportionality between, on the one hand, the willful
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more disobedience by the employee and, on the other hand, the penalty imposed therefor.
determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more
intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and FACTS:
unjustified. Private respondent Jose Bacalso was employed as an admeasurer by the petitioner Gold City Integrated Port Services,
Inc. ("Gold City"). He was suspected by management of under measuring cargo. Hence, on 23 January 1987, the cargo
In February 1999, petitioners were frequently absent having subcontracted for an installation work for another control officer ordered two (2) other admeasurers to re-measure three (3) pallets of bananas which had already been
company. Subcontracting for another company clearly showed the intention to sever the employer-employee measured by private respondent. The re-measurement revealed that respondent had under-measured the bananas.
relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for
work because they were working for another company. Private respondent at that time warned petitioners that they Private respondent felt insulted by the re-measurement and so the next day he went to the office of the Chief
would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever Admeasurer, Rolando Guanaco, and there confronted Nigel Mabalacad, one of the two (2) admeasurers who had re-
their employer-employee relationship. The record of an employee is a relevant consideration in determining the checked his work, regarding the matter. Private respondent quarreled with Mabalacad in the presence of Guanaco,
penalty that should be meted out to him. their immediate superior, inside the latter's office. Guanaco directed private respondent to stop provoking Mabalacad
and told both that being in his office, they should behave properly. Private respondent ignored this oral directive and a
The law imposes many obligations on the employer such as providing just compensation to workers, observance of the fistfight erupted then and there between him and Mabalacad. Both were eventually pacified by their co-workers.
procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also
recognizes the right of the employer to expect from its workers not only good performance, adequate work and Private respondent Bacalso was then charged with assaulting a co-employee and falsifying reports and records of the
diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons company relative to the performance of his duties, and was preventively suspended pending investigation of his case
whose continuance in the service will patently be inimical to his interests. by the union-management grievance committee.

Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, September 21, 1990
DOCTRINES:
1. It is less than fair for management to charge an employee with one offense and then to dismiss him for having
committed another offense with which he had not been charged and against which he was therefore unable
adequately to defend himself. Correct specification of private respondent's alleged wrongdoing was obviously
important here, since the penalty that could appropriately be meted out depended upon what offense was charged and
proven. It has been stressed by the Court that the right of an employee to procedural due process consists of the twin
rights of notice and hearing. The purpose of the requirement of notice is obviously to enable the employee to defend
himself against the charge preferred against him by presenting and substantiating his version of the facts.
2. Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages
the concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful or intentional,
the wilfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to
discharge.
3. Not every case of insubordination or wilful disobedience by an employee of a lawful work-connected order of the
employer or its representative is reasonably penalized with dismissal. For one thing, Article 282 (a) refers to "serious
On 11 April 1987, private respondent received a notice of termination of services upon the grounds of assaulting a co-
employee and of insubordination.
Private respondent Bacalso filed a complaint for illegal dismissal with the Regional Arbitration Branch No. 10 of the
Department of Labor and Employment on 25 May 1987.
Labor Arbiter - In favor of private respondent Bacalso holding that the dismissal was illegal because there was no
evidence to support the charge of insubordination, and that assault on a co-employee was punishable only with fifteen
(15) days suspension under the CBA's Schedule of penalties. In view of the strained relations between the parties,
however, the Labor Arbiter did not order reinstatement and awarded Bacalso separation pay and attorney's fees
instead.
NLRC Affirmed with reinstatement with backwages. It declined to characterize the assailed conduct of Bacalso as
insubordination under Article 282 (a) of the Labor Code because Guangco's order was "not connected with" Bacalso's
work, and did not amount to wilful or gross disrespect.
In its Petition, Gold City emphasizes management's prerogative to promulgate rules of discipline and to enforce the
Schedule of disciplinary sanctions providing for dismissal of an employee who commits gross disrespect of a superior
officer. 13

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In his Comment on the Petition, private respondent Bacalso alleged that he was apprised of the charge of
insubordination only in his notice of termination, and that he was thereby denied an opportunity to be heard on this
charge before being dismissed, in violation of Sections 2 and 5 of Rule 14 of the Omnibus Rules Implementing the
Labor Code.
ISSUES:
1. Whether or not private respondent was denied due process in the course of his dismissal; and
2. Whether or not private respondent was dismissed for a just cause
HELD:
1. No.
The petitioner did not properly inform private respondent of all the infractions of company regulations which
subsequently became the justification for his dismissal. After being preventively suspended, he was charged with
assaulting a co-employee and falsifying reports and records of the company relating to the performance of his duties.
Consequently, throughout the investigation conducted at the company level, private respondent's explanations in
defense were shaped to meet only those charges.
Petitioner discovered it could not sustain the charge of falsification of company records against private respondent.
Since assault upon a co-employee, the charge admitted by private respondent, is punishable only with fifteen (15) days
suspension under the CBA's Schedule of penalties, it in effect became necessary for petitioner to characterize said
assault as an act of "insubordination or disrespect towards a superior officer", an offense punishable with dismissal
under the Schedule. So it came to pass that when private respondent received his notice of termination, the causes
therefor were stated as assault on a co-employee and insubordination.
The Court considers that there was here at least a partial deprivation of private respondent's right to procedural due
process. He could not be expected adequately to defend himself as he was not fully or correctly informed of the
charges against him which management intended to prove. Since Gold City here in effect charged private respondent
with a second offense other than falsification of company records, it was incumbent upon petitioner employer to have
given private respondent additional time and opportunity to meet the new charge against him of insubordination. Gold
City failed to do that here. In so failing, Gold City failed to accord to private respondent the full measure of his right to
procedural due process.
2. No.
Article 282 of the Labor Code provides in part:
Art. 282. Termination by Employer.-An employer may terminate an employment for any of the following causes: a)
Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work.
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Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages the
concurrence of at least two (2) requisites: the employee's assailed conduct must have been wilful or intentional, the
wilfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to
discharge. Both requisites are present in the instant case.
It does not follow, however, that private respondent Bacalso's services were lawfully terminated either under
Article 282 (a) of the Labor Code or under the CBA Schedule of penalties. We believe that not every case of
insubordination or wilful disobedience by an employee of a lawful work-connected order of the employer or its
representative is reasonably penalized with dismissal. For one thing, Article 282 (a) refers to "serious misconduct or
willful disobedience". There must be reasonable proportionality between, on the one hand, the willful disobedience by
the employee and, on the other hand, the penalty imposed therefor. Examination of the circumstances surrounding
private respondent's assault upon his co-employee shows that no serious or substantial danger had been posed by that
fistfight to the well-being of his other co-employees or of the general public doing business with petitioner employer;
and neither did such behavior threaten substantial prejudice for the business of his employer. The fistfight occurred
inside the offices of the Surveyors' Division, more particularly, Mr. Guangco's office, away from the view of
petitioner's customers or of the general public.
c. Authorized Causes
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due
to the installation of labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due
to serious business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or
to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
INSTALLATION OF Streamlining of personnel structure through the installation of
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LABOR REVIEW (Atty. Peter-Joey Usita)
LABOR-SAVING machineries and equipment, or introduction of new methods for
DEVICE purposes of achieving maximum profitability of employers business.
[Agustilo vs. CA, G.R. No. 142875, September 7, 2001]
REDUNDANCY Exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and superfluity of a
position/s may be the outcome of a number of facts, such as over hiring
of employees, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken
by the enterprise. [Coats Manila Bay, Inc. vs. Ortega, G.R. No. 172628,
February 13, 2009]
Requisites for Valid Redundancy Program (1) good faith on the part of
the employer in abolishing the redundant position; and fair and
reasonable criteria in ascertaining what positions are to be declared
redundant, and accordingly abolished.
The ground of redundancy does not require the exhibition of proof of
losses or imminent losses.
The wisdom or soundness of abolishing a position for being redundant is
CLOSURE
not subject to the discretionary review of the labor arbiter and the
NLRC, provided there is no violation of the law and no showing that it
was prompted by an arbitrary or malicious act
RETRENCHMENT One of the ways of terminating employment to preserve the viability of
the business. [Eastridge Golf Club, Inc. vs. Eastridge Golf Club, Inc.,
Labor Union-SUPER, G.R. No. 166760, August 22, 2008]
Termination of employment initiated by the employer through no fault
of the employees, and without prejudice to the latter, resorted to by
management during periods of business recession, industrial depression,
or seasonal fluctuations or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient
machinery, or of automation. [Mobilia Products, Inc. vs. Demecillo,
G.R. No. 170669, February 4, 2009; AMA Computer College vs.
Garcia, infra]
Adequate, credible and persuasive evidence of dire financial
straits from drastic business losses must be presented by the
Two (2) Types of Closure:
employer
It is a means of last resort, and justified only when all other less drastic
means have been tried and found insufficient. [FASAP vs. PAL, infra]
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2017-2018
Requisites for Valid Retrenchment
(a) the retrenchment is necessary to prevent losses and such
losses are proven;
(b) written notice to the employees and to DOLE at least one
(1) month prior to the intended date of retrenchment;
(c) payment of separation pay equivalent to one (1) month pay
or at least one-half (1/2) month pay for every year of service,
whichever is higher. [AMA Computer College, Inc. vs.
Garcia, supra; Manatad vs. PT&T, G.R. No. 172363, March 7,
2008; TPI Philippines Cement Corp vs. Cajucom VIII, 483
SCRA 494, 502- 03 (2006)]
(d) the employer exercised its prerogative to retrench in good
faith; and
(e) it uses fair and reasonable criteria ascertaining who would
be retrenched or retained. [Mendros, Jr. vs. Mitsubishi Motors
Phils. Corporation (MMPC), G.R. No. 169780, February 16,
2009]
(f) the employer must first exhaust all other means to avoid
further losses without retrenching its employees. [FASAP vs.
PAL, G.R. No. 178083, July 22, 2008]
Complete or partial cessation of the operations and/or shutdown of the
establishment of the employer. It is carried out to either stave off the
financial ruin or promote the business interest of the employer.
Requisites for Valid Closure
(a) the closure/cessation of business is bona fide its purpose
is to advance the interest of the employer and not to defeat or
circumvent the rights of employees under the law or a valid
agreement;
(b) a written notice was served on the employees and the
DOLE at least one month before the intended date of
closure/cessation of business; and
(c) IN CASE OF CLOSURE NOT DUE TO FINANCIAL
LOSSES, that the employees affected have been give
separation pay equivalent to month pay for every year of
service or one month pay, whichever is higher. [Eastridge Golf
Club, Inc., supra]
(1) Due to business losses or reverses; and
(2) NOT due to losses - Closure or cessation of business operations is allowed even
if the business is not undergoing economic losses. Just as no law forces anyone to
go into business, no law can compel anybody to continue in it.
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LABOR REVIEW (Atty. Peter-Joey Usita)
Procedural steps required :The law only requires that the employer serve a written
notice of the retrenchment on the employee concerned and the DOLE at least one
month before the intended date of retrenchment.
1-Month Notice Rule If an employee consented to his retrenchment or
voluntarily applied for retrenchment, 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.
A written notice that is short of the 30 days prior to notice rule will constitute
substantial compliance if the period not covered is compensated even if
unworked
Payment of Separation Pay under Article 283 The amount of separation pay must be
computed from the time the employee commenced employment until the cessation of
operations of the employers business
Requisites for Valid Dismissal under Art. 284 : The employer must adduce:
(a) That the employee is suffering from a disease that is:
(1) prohibited by law;
(2) prejudicial to his health; or
(3) prejudicial to his co-employees
(b) A certification from a competent public authority that the disease of the
employee is incurable within a period of 6 months even with proper treatment.
[Duterte vs. Kingswood Trading Co., Inc., G.R. No. 160325, October 4, 2007] (c)
(c) Payment of separation pay of one (1) month salary or one-half (1/2) month
salary for every year of service, whichever is higher, and a fraction of at least 6
months is considered as one (1) year.
Santos v. CA, G.R. No. 141947, July 5, 2001
DOCTRINE:
1. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet
the demands of the enterprise. Based on the facts, PEPSI wanted to restructure its organization. The soundness of
this business judgment of PEPSI is not subject to discretionary review on the part of the Labor Arbiter or of the
NLRC so long as no violation of law or arbitrary and malicious action is indicated.
FACTS:
Petitioners Ismael V. Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists
(CDS) while Hilario M. Pastrana was employed as Route Manager. In a letter dated 26 December 1994, PEPSI
informed its employees that due to poor performance of its Metro Manila Sales Operations it would restructure certain
sales distribution systems. Certain positions, including that of petitioners, were declared redundant and abolished.
Consequently, on 15 January 1995 petitioners left their respective positions, accepted their separation pays and
executed the corresponding releases and quitclaims. However, before the end of the year, petitioners learned that
PEPSI created new positions called Account Development Managers (ADM) with substantially the same duties and
40
2017-2018
responsibilities as the CDS. Aggrieved petitioners filed a complaint with the Labor Arbiter for illegal dismissal with a
prayer for reinstatement, back wages and damages.
In their complaint, petitioners alleged that the creation of the new positions belied PEPSIs claim of redundancy.
PEPSI, on the other hand, maintained that termination due to redundancy was a management prerogative the wisdom
and soundness of which were beyond the discretionary review of the courts. It further maintained that the redundancy
program was made in good faith and that a close perusal of the job descriptions of both the CDS and ADM positions
would show that the two (2) were very different in terms of the nature of their functions, areas of concerns,
responsibilities and qualifications.
LA: Dismissed the complaint for lack of merit. Furthermore, he ruled that the one (1)-month written notice prior to
termination required by Art. 283 was complied with.
NLRC: Initially affirmed LA but later on reversed the LA upon finding that the Establishment Termination Report
was only submitted to the DOLE 2 months after the termination had already taken place. onetheless, the NLRC
dismissed the appeal, citing International Hardware, Inc. v. NLRC,which held -
x x x x 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 x x x x
CA: Dismissed special civil action for certiorari upon finding that the verification and certification against forum
shopping were executed merely by petitioners counsel and not by petitioners.
ISSUE:
Whether the petitioners were illegally dismissed.
HELD:
NO. The question of whether the duties and responsibilities of the CDS and ADM positions are similar is a question
properly belonging to both the Labor Arbiter and the NLRC. In fact, the NLRC merely affirmed the finding of the
Labor Arbiter.Thus it ruled -
x x x We cannot subscribe to the complainants assertions that the positions have similar job descriptions. First, CDS
report to a CD Manager, whereas the ADMs do not report to the CD Manager, leading us to believe that the
organizational set-up of the sales department has been changed.
Second, CDS are field personnel who drive assigned vehicles and deliver stocks to dealers who, under the job
description are those who sell and deliver the same stocks to smaller retail outlets in their assigned areas. The ADMs
are not required to drive trucks and they do not physically deliver stocks to wholesale dealers. Instead, they help
dealers market the stocks through retail.
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Therefore, the two (2) positions being different, it follows that the redundancy program instituted by PEPSI was
undertaken in good faith. Redundancy exists when the service capability of the work force is in excess of what is
reasonably needed to meet the demands of the enterprise.
Based on the fact PEPSI wanted to restructure its organization. The soundness of this business judgment of PEPSI has
been assailed by petitioners but the wisdom or soundness of business judgment is not subject to discretionary review
on the part of the Labor Arbiter or of the NLRC so long as no violation of law or arbitrary and malicious action is
indicated. In the case at bar, no such violation or arbitrary action was established by petitioners.
We agree with the NLRC in its application of International Hardware v. NLRC that the mandated one (1) month
notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker
himself. Petitioners assail the voluntariness of their consent by stating that had they known of PEPSIs bad faith they
would not have agreed to their termination, nor would they have signed the corresponding releases and quitclaims.
Having established private respondents good faith in undertaking the assailed redundancy program, there is no need to
rule on this contention.
d. Procedural Due Process (Twin-notice & Hearing)
Art. 277. Miscellaneous provisions.
XXX
b. Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, 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 in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer. The Secretary of the Department
of Labor and Employment may suspend the effects of the termination pending resolution of the
dispute in the event of a prima facie finding by the appropriate official of the Department of
Labor and Employment before whom such dispute is pending that the termination may cause a
serious labor dispute or is in implementation of a mass lay-off. (As amended by Section 33,
Republic Act No. 6715, March 21, 1989)
The law mandates that the burden of proving the validity of the termination of employment for work. At the same time, he was required to report for work the following day or on May 1, 1998. Gonzales father
rests with the employer. Failure to discharge this evidentiary burden would necessarily mean Anacleto sent a telegram to Acesite stating that he was still recovering from severe stomach disorder and would report
that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, back for work on May 4, 1998. A medical certificate dated May 3, 1998 issued by a Dr. Laureano C. Gonzales, Jr.
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accusations, and conclusions of employers do not provide for legal justification for
dismissing employees
The employer is bound to furnish the employee concerned with two (2) written notices before
termination of employment can be legally effected. One is the notice apprising the employee
of the particular acts or omissions for which his dismissal is sought and this may loosely be
considered as the proper charge. The other is the notice informing the employee of the
management's decision to sever his employment. However, the decision must come only after
the employee is given a reasonable period from receipt of the first notice within which to
answer the charge. The requirement of notice is not a mere technicality but a requirement of
due process to which every employee is entitled.
REMEMBER, Article 277(b) recognizes the right to due process of all workers, without
distinction as to the cause of their termination, thus, none should be construed.
Acesite Corp v. NLRC, G.R. No. 152308, January 26, 2005
DOCTRINES:
1. Willful disobedience entails the concurrence of at least two (2) requisites: the employees assailed conduct has
been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he
had been engaged to discharge.
2. In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may be excused on
the ground of strained relations. This may be invoked against employees whose positions demand trust and
confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement.
FACTS:
Leo A. Gonzales (Gonzales) was hired as Chief of Security of Manila Pavillion Hotel. On January 1, 1995, Acesite
Corporation (Acesite) took over the operations of Manila Pavillion and renamed it Holiday Inn Manila (the hotel).
Acesite retained Gonzales as Chief of Security of the hotel.
Gonzales took a 4-day sick leave and took emergency leave on March 30, 1998. On April 16-29, 1998, he again took a
12-day vacation leave, thereby using up all leaves that he was entitled for the year. Before the expiration of his 12-day
vacation leave or on April 23, 1998, Gonzales filed an application for emergency leave for 10 days commencing on
April 30 up to May 13, 1998. The application was not, however, approved. By Acesites claim, he received a telegram
informing him of the disapproval and asking him to report back for work on April 30, 1998.
Gonzales did not report for work. On even date, he received a telegram from Acesite advising him that he was on
unauthorized leave and asking him to provide a written explanation within the next 24 hours why he was not reporting
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stating that Gonzales was under his care from April 30 to May 3, 1998 was presented to prove that he indeed was In Gonzales case, his assailed conduct has not been shown to have been characterized by a perverse attitude, hence,
treated from such sickness. the first requisite is wanting. His receipt of the telegram disapproving his application for emergency leave starting
April 30, 1998 has not been shown. And it cannot be said that he disobeyed the May 5, 1998 telegram since he
On May 4, 1998, around lunchtime, Gonzales reported for work and presented himself to Johann Angerbauer, then received it only on May 7, 1998. On the contrary, that he immediately went back to Manila upon receipt thereof
Resident Manager of the hotel. Angerbauer claims that when Gonzales went to him, he asked him to explain why he negates a perverse attitude.
had been absent despite orders for him to report back for work to which he (Gonzales) replied that it was necessary for
him to go home to his province in Abra As to Gonzales alleged concealment of his candidacy (for provincial board member) as a ground for Acesites loss of
trust and confidence in him, the same is not impressed with merit. It should be noted that Acesites ground for
Gonzales, on the other hand, claims that when he conferred with Angerbauer, he requested for leave without pay from terminating the services of Gonzales as stated in the Notice of Termination is his alleged acts of
May 5-9, 1998 which was provisionally approved on condition that he (Gonzales) would be sending his explanation insubordination/disobedience. The concealment of candidacy angle harped upon by Acesite can only thus be
through e-mail behind his absences on April 30, 1998 and May 2, 1998 so that Angerbauer could send it to the hotel considered as mere afterthought to further justify his illegal dismissal.
General Manager Phil Kennedy who was then out of the country.
With regard to Gonzales perceived feigning of illness, the same is purely speculatory. If there is anything that
Around 5:33 pm of May 4, 1998, Gonzales sent his explanation to Angerbauer through e-mail. In the evening Gonzales can be faulted for, it is his being too presumptuous that his application for leave would be approved.
Gonzales left for Abra.
2. No. Gonzales petition claims, among others, that the said court should not have given Acesite the option to
Also on May 4, 1998 Angerbauer sent another inter-office memo to Gonzales, requesting him to submit an reinstate him or not since the case at bar does not fall under circumstances for which reinstatement is no longer
explanation for failure to report to work despite the formers request. Gonzales claims that he got hold of a copy of the possible. This contention has no merit.
above-quoted memo only on May 8, 1998. Gonzales, who claims to have received the May 5, 1998 telegram only in
the afternoon of May 7, 1998, immediately repaired back to Manila on May 8, 1998 only to be humiliatingly and In illegal dismissal cases, reinstatement to an illegally dismissed employees former position may be excused on the
ignominiously barred by the guard (a subordinate of Gonzales) from entering the premises It appears that on May 7, ground of strained relations. This may be invoked against employees whose positions demand trust and confidence, or
1998, Angerbauer issued a Notice of Termination through an inter-office memo. whose differences with their employer are of such nature or degree as to preclude reinstatement.

Gonzales thus filed a complaint against Acesite, Angerbauer and Kennedy for illegal dismissal with prayer for In the case at bar, Gonzales was Chief of Security, whose duty was to manage the operation of the security areas of the
reinstatement and payment of full backwages, service incentive leave, 13th month pay, moral and exemplary damages hotel to provide and ensure the safety and security of the hotel guests, visitors, management, staff and their properties
and attorneys fees. Gonzales, however, failed to appear in 2 consecutive hearings despite notice, meriting the dismissal according to company policies and local laws. It cannot be gainsaid that Gonzales position is one of trust and
by the Labor Arbiter of his complaint. confidence, he being in charge of the over-all security of said hotel.

ISSUES:
1. Whether there has been just cause to dismiss Gonzales from employment
2. Whether Gonzales is entitled to be reinstated
HELD:
1. No. Gonzales cannot be considered to have willfully disobeyed his employer. Willful disobedience entails the
concurrence of at least two (2) requisites: the employees assailed conduct has been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.
Thus, reinstatement is no longer possible. In lieu thereof, Acesite is liable to pay separation pay of 1 month for every
year of service.
6. Abandonment
ABANDONMENT the deliberate and unjustified refusal of an employee to resume his employment,
without any intention of returning. It is a form of neglect of duty. [Sugue vs. Triumph International
(Phils.), Inc., infra]
Elements of Abandonment
1. failure to report for work or absence without valid or justifiable reason;
2. clear intention to sever the employer-employee relationship [Sugue vs. Triumph International
(Phils.), Inc., G.R. No. 164804, January 30, 2009; Fe La Rosa vs. Ambassador Hotel, G.R. No.
177059, March 13, 2009]

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3. employer should have reported such fact to the nearest Regional Office of DOLE in accordance
with Rule XXIII, Section 7, Book V, DO 9-97 [R. Transport Corporation vs. Ejandra, G.R. No.
155264, May 6, 2005] The operative act that will ultimately put an end to this relationship is the
dismissal of the employee after complying with the procedure prescribed by law. [Kams
International, Inc. vs. NLRC, G.R. No. 128806, September 28, 1999; Floren Hotel vs. NLRC,
G.R. o. 155264, May 6, 2005]
Presumption: A complaint for illegal dismissal negates allegation of abandonment. [Big AA
Manufacturer vs. Antonio, G.R. No. 160854, March 3, 2006, 484 SCRA 33] Mere failure to
report for work is not enough to amount to abandonment of work. Abandonment is the deliberate
and unjustified refusal of an employee to resume his employment.
BUT, If employer alleges that employee was never even dismissed, the presumption does
not hold.
BECAUSE, Sometimes the complaint for illegal dismissal is only made as leverage to gain
monetary benefits.
THUS, The rule is that an employee must positively prove first that he was indeed
dismissed before the burden of the employer under Article 277(b) applies.
Labor,et.al v. NLRC, G.R. No. 110388, September 14, 1995
DOCTRINE:
1. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid
or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element
as the more determinative factor and being manifested by some overt acts. Mere absence is insufficient. The
immediate filing of the complaint of illegal dismissal is proof enough of their desire to return to work.
FACTS:
Labor et. al. filed an illegal dismissal case against Gold City alleging that they were prevented from entering their
work place on 22 August 1991 to 24 August 1991, that their time cards were taken off the time card rack and they
were advised to resign. They assailed the notice of termination given to them only on 06 September 1991 and denied
having abandoned their work. They further aver that they were illegally dismissed to the violation of labor standards
they filed against private respondent. Gold City, on the other hand, avers that petitioners were not illegally dismissed
but abandoned their work. It also alleged that petitioners were under investigation for dishonest acts which they were
charged with estafa and the filing of the violation of labor standards were made to preempt action taken therein.
Furthermore, it alleged that notices of termination were given on 06 September 1991 to petitioners. However,
petitioners failed to reply and did not report for work.
LA ruled for petitioners. No abandonment as evidenced by the immediate filing of the complaint.
NLRC reversed NLRC. There is abandonment. They were given notices but failed to reply and return to work.
ISSUE:
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WON there was abandonment on the part of the petitioners.
HELD:
NO. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid
or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as
the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. Gold City did
not adduce any proof of some overt act of the petitioners that clearly and unequivocally show their intention to
abandon their posts. On the contrary, the petitioners lost no time in filing the case for illegal dismissal against them,
taking only four days from the time most of them were prevented from entering their work place from 22 August 1991
to 24 August 1991. They cannot, by any reasoning, be said to have abandoned their work, for as we have also
previously ruled, the filing by an employee of a complaint for illegal dismissal is proof enough of his desire to return
to work, thus negating the employer's charge of abandonment. Furthermore, petitioners Labor and Bonita presented
proof that during some of those days that they were supposedly on AWOL (absence without official leave), they were
actually on official leave.
7. Constructive Dismissal
Art. 286. When employment not deemed terminated. The bona-fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he indicates his desire to resume his
work not later than one (1) month from the resumption of operations of his employer or from his relief
from the military or civic duty.
CONSTRUCTIVE DISMISSAL - Termination by reason of a bonafide suspension of operation of a
business or undertaking that exceeds six months. Otherwise stated, if the employee was forced to
remain without work or assignment for a period exceeding six months, then he is in effect
constructively dismissed.
INRSELY, A bona fide suspension of the employers operation of a business or undertaking for a
period not exceeding six (6) months does not amount to termination of employment, but only a
temporary displacement of employees. The paramount consideration should be the dire exigency of the
business of the employer that compels it to put some of its employees temporarily out of work. [Pido
vs. NLRC, G.R. No. 169812, February 23, 2007]
BUT, If the operation of the business is resumed within six months, it shall be the duty of the
employer to reinstate his employees to their former positions without loss of seniority rights.
[Lagonoy Bus Co., Inc. vs. CA, G.R. No. 165598, August 14, 2007]
PROVIDED, That the employee should indicate his desire to resume his work not later than one
(1) month from resumption of operation/undertaking; or relief from military or civic duty.
Constructive dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay
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or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the 2. WON private respondent's absence from work on June 2 to June 3, 1986 constituted an abandonment of her job in
employee leaving the latter with no other option but to quit. the company resulting in the forfeiture of the benefits due her (because she believed the transfer was illegal).

Philippine Japan Active Carbon Corp. v. NLRC, G.R. No. 83239, March 8, 1989
DOCTRINE:
1. A constructive discharge is defined as: "A quitting because continued employment is rendered impossible,
unreasonable or unlikely; as, an offer involving a demotion in rank and a diminution in pay."
2. It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes,
and competence, to move them around in the various areas of its business operations in order to "ascertain where
they will function with maximum benefit to the company. An employee's right to security of tenure does not give
him such a vested right in his position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to
him, and it does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal.
FACTS:
The private respondent, who had been employed in petitioner corporation since January 19, 1982, as Assistant
Secretary/Export Coordinator, was promoted on May 20, 1983 to the position of Executive Secretary to the Executive
Vice President and General Manager. On May 31, 1986, for no apparent reason at all and without prior notice to her,
she was transferred to the Production Department as Production Secretary, swapping positions with Ester Tamayo.
Although the transfer did not amount to a demotion because her salary and workload remained the same, she believed
otherwise so she rejected the assignment and filed a complaint for illegal dismissal.
LA: The Labor Arbiter found, on the basis of the evidence of both parties, that the transfer would amount to punishment for it, as her complaint for illegal dismissal was filed in good faith .
constructive dismissal hence, her refusal to obey the transfer order was justified.
NLRC: approved the Labor Arbiter's decision but reduced to P10,000 the award of moral damages and the attorney's
fees to 10% of the judgment.
In her comment to the petition, the private respondent argued that she was dismissed without due process because she
was not given the opportunity to be heard concerning the causes of her transfer. Upon a careful consideration of the
petition and the documents annexed thereto as well as private respondent's comment.
ISSUES:
1. WON the employee was constructively discharged
HELD:
1. Employee was NOT constructively dismissed.
In this case, the private respondent's assignment as Production Secretary of the Production Department was not
unreasonable as it did not involve a demotion in rank (her rank was still that of a department secretary) nor a
change in her place of work (the office is in the same building), nor a diminution in pay, benefits, and
privileges. It did not constitute a constructive dismissal.
It is the employer's prerogative, based on its assessment and perception of its employees' qualifications, aptitudes, and
competence, to move them around in the various areas of its business operations in order to "ascertain where they will
function with maximum benefit to the company. An employee's right to security of tenure does not give him such a
vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him
where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges, the employee may
not complain that it amounts to a constructive dismissal.
2. Failure to report to work constituted mere insubordination and not abandonment,
On the other hand, we reject the petitioner's contention that the private respondent's absence from work on June 2 to
June 3, 1986 constituted an abandonment of her job in the company resulting in the forfeiture of the benefits due her.
While she was guilty of insubordination for having refused to move out of her position as Executive Secretary to the
Executive Vice-President and General Manager of the company, dismissal from the service would be a draconian
8. Floating Status
Temporary off-detail or floating status is the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a previous post until
they are transferred to a new one. It takes place when the security agency's clients decide not to
renew their contracts with the agency, resulting in a situation where the available posts under its
existing contracts are less than the number of guards in its roster. It also happens in instances
where contracts for security services stipulate that the client may request the agency for the
replacement of the guards assigned to it even for want of cause. [Bebina G. Salvaloza vs. NLRC,
et al., G.R. No. 182086, November 24, 2010, Nachura, J.]
An employee who was placed on temporary off-detail on the ground of poor performance
and inefficiency, allegations of which were never made known to him, and instead was given
to various assignments amounts to constructive dismissal. Assignment to different posts
despite repeated errors and poor performance is considered condonation, which the employer
cannot invoke to justify placing the employee on temporary off-detail.

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There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the CA were one in their
Reyes v. RP Guardians Security Agency, G.R. No. 193756, April 10, 2013
DOCTRINE:
1 Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a
security agency's client decided not to renew their service contract with the agency and no post is available for the
relieved security guard. Such situation does not normally result in a constructive dismissal. Nonetheless, when the
floating status lasts for more than six (6) months, the employee may be considered to have been constructively
dismissed.
FACTS:
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemesio M. Calanno, Rogelio A. Supe, Jr.,
Roland R. Trinidad, and Aurelio A. Duldulao (petitioners) were hired by respondent RP Guardians Security Agency,
Inc. (respondent) as security guards. They were deployed to various clients of respondent, the last of which were the
different branches of Banco Filipino Savings and Mortgage Bank (Banco Filipino).
In September 2006, respondent's security contract with Banco Filipino was terminated. Petitioners were individually
informed of the termination of the security contract with Banco de Oro. Petitioners were directed to turnover their
duties and responsibilities to the incoming security agency and were advised that they would be placed on floating
status while waiting for available post. Petitioners waited for their next assignment, but several months lapsed and
they were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a complaint for constructive dismissal. Respondent claimed that
there was no dismissal, of petitioners, constructive or otherwise, and asserted that their termination was due to the
expiration of the service contract which was coterminus with their contract of employment.
Labor Arbiter ruled in favor of petitioners ordering respondent to pay petitioners separation pay, backwages, refund of
trust fund, moral and exemplary damages, and attorneys fees. Aggrieved, respondent appealed to the NLRC. The
NLRC promulgated its sustained the finding of constructive dismissal by the LA, and the awards she made in the
decision. Respondent filed a petition for certiorari before the CA. The CA rendered a decision dismissing the petition
and affirming the assailed NLRC decision and resolution
ISSUE:
Whether or not the petitioners were constructively dismissed in view of their floating status for a period of more than 6
months.
HELD:
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conclusion that respondent was guilty of illegal dismissal when it placed petitioners on floating status beyond the
reasonable six-month period after the termination of their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in a situation where a security
agency's client decided not to renew their service contract with the agency and no post is available for the relieved
security guard. Such situation does not normally result in a constructive dismissal. Nonetheless, when the floating
status lasts for more than six (6) months, the employee may be considered to have been constructively dismissed. No
less than the Constitution guarantees the right of workers to security of tenure, thus, employees can only be dismissed
for just or authorized causes and after they have been afforded the due process of law.
9. Consequences of Illegal Dismissal
An illegally dismissed employee is entitled to twin reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct.
a. Reinstatement - Reinstatement means restoration to a state or condition from which one had
been removed or separated. The person reinstated assumes the position he had occupied prior to
his dismissal. It presupposes that the previous position form which one had been removed still
exists, or that there is an unfilled position which is substantially equivalent or of similar nature as
the one previously occupied by the employee. An order of reinstatement is immediately self-
executory without the need for the issuance of a writ of execution
i. Actual Reinstatement - Actual reinstatement is restoration of an illegally
dismissed employee the position s/he had occupied prior to the illegal dismissal. In
order that s/he may be actually reinstated to his former position, said position from
which one had been removed must still exist, or that there is an unfilled position which
is substantially equivalent or of similar nature as the one previously occupied by the
employee
ii. Payroll Reinstatement - In cases where the employer opted to
choose payroll reinstatement in compliance with the decision of the
labor arbiter, the employee reinstated in the employer's payroll is
equally entitled to receive all the benefits given to a regular employee
under the CBA
Refund Doctrine If the decision of the labor arbiter is later
reversed on appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he
received while the case was pending appeal, or it can be deducted
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from the accrued benefits that the dismissed employee was
entitled to receive
iii. Separation in lieu of Reinstatement
Strained Relation rule - Where reinstatement is not feasible, expedient or
practical, as where reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between the employer and
employee has been unduly strained by reason of their irreconcilable differences,
particularly where the illegally dismissed employee held a managerial or key
position in the company, it would be more prudent to order payment of separation
pay instead of reinstatement.
Other Instances where Separation pay is awarded
if reinstatement is no longer feasible Payment of separation pay as a
substitute for reinstatement is allowed only under exceptional circumstances,
viz.: (1) when reasons exist which are not attributable to the fault or are
beyond the control of the employer, such as when employer closes business;
(2) when he illegally dismissed employee has contracted a disease and his
reinstatement will endanger the safety of his co-employees; or (3) where a
strained relationship exists between the employer and the dismissed
employee.
as financial assistance (in cases of valid dismissal) Although by way of
exception, the grant of separation pay or some other financial assistance may
be allowed to an employee dismissed for just causes on the basis of equity as
a measure of social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting
on his moral character. The policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the
underprivileged.
Starlite Plastic Industrial Corp v. NLRC, G.R. No. 78491, March 16, 1989
DOCTRINE:
1. Loss of confidence, when adequately proven, constitutes a valid ground for dismissing an employee, however, the
right of an employer to dismiss employees on such ground must not be exercised arbitrarily and without just cause.
The basis thereof must be clearly and convincingly established and failure to do as such will caused in the illegal
dismissal of an employee. If the employee was dismissed illegally, the employer is obligated to reinstate such
employee to his former position or one reasonably equivalent thereto without loss of seniority rights, and to pay
backwages, without qualification or deduction. In the event that reinstatement is no longer feasible, or if the
employee decides not to be reinstated, the employer shall pay the employee separation pay in lieu of reinstatement.
2. Loss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper,
illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the
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contrary. It must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
3. The theft charge not having been established, the dismissal of GOMEZ on the ground of loss of trust and
confidence cannot be sustained.
FACTS:
Edgar Gomez was employed as a factory worker by Starlite sometime in March 1981. On 22 June 1984, Starlite
dismissed him on the ground that he was caught attempting to steal one ballast costing P80.00. Starlite reported the
matter to the police, after grievance meetings failed to resolve the controversy. A criminal complaint was filed against
Gomez, but the investigating fiscal dismissed the same saying that Starlite failed to establish a prima facie case against
Gomez.
Gomez then filed a complaint for illegal dismissal against Starlite. After the parties submitted their respective position
papers, the Labor Arbiter rendered his decision on dismissing the complaint for lack of merit. Gomez appealed the
decision to the NLRC which reversed the ruling of the Labor Arbiter.
Starlite filed a motion for reconsideration on the decision of the NLRC but was denied hence, the a petition for
certiorari was, with a prayer for the issuance of a writ of preliminary injunction or a temporary restraining order.
The Supreme Court issued a temporary restraining order enjoining the NLRC from enforcing its decision and the
petition was given due course.
Starlite mainly contends that it was justified in dismissing Gomez since it had lost its trust and confidence in him for
his act of attempting to steal the ballast and public respondent NLRC therefore committed grave abuse of discretion
amounting to lack of jurisdiction when it ordered the reinstatement of Gomez with full backwages.
Starlite argues that even if the fiscal dismissed the charges against Gomez, still it has reasonable ground to believe that
Gomez was responsible for the theft of the ballast and that such act of dishonesty justifies his dismissal on the ground
of loss of confidence.
ISSUE:
Whether or not Gomez was illegally dismissed by Starlite.
HELD:
Yes, Gomez was illegally dismissed by Starlite. There is no dispute that loss of confidence, when adequately proven,
constitutes a valid ground for dismissing an employee and proof beyond reasonable doubt is not required to terminate
him on this charge. It is sufficient that there is some basis for such loss of confidence and that the employer has
reasonable ground to believe or entertain the moral conviction that the employee concerned is responsible for the
misconduct and that the nature of his participation therein would render him absolutely unworthy of the trust and
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confidence demanded of his position. The doctrine goes on further to include the basic rule that the conviction of an
employee in a criminal case is not indispensable to warrant his dismissal by his employer and that the fact that a
criminal complaint against the employee has been dropped by the city fiscal is not binding and conclusive upon a
labor tribunal.
The Court, however, has time and again stressed that the right of an employer to dismiss employees on the ground that
it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause; that although the
dropping of a criminal prosecution for an employee's alleged misconduct does not bar his dismissal and proof beyond
reasonable doubt is not necessary to justify the same, still the basis thereof must be clearly and convincingly
established.
Thus, the Court in the case of General Bank and Trust Co. v. CA (1985) laid down the guidelines in the
applicability of the doctrine of loss of confidence. Loss of confidence should not be simulated. It should not be used as
a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in
the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.
Applying the foregoing in this case, the Court found that there was utter failure here to establish or substantiate the
theft charge against Gomez. The NLRC found that contrary to the Labor Arbiter's findings that Gomez failed to
present an iota of evidence to prove his innocence, Gomez indeed presented exculpatory evidence consisting of the
statements of his co-employees Tamondong and Biong, the former attesting that he was not aware of any missing
ballast from his department and the latter claiming that it was in fact Alvarez who brought out a canopy containing a
ballast, which Gomez was accused of stealing. Although Starlite subsequently submitted the recanting affidavits of
said witnesses, said recanting affidavits did not inspire belief and the NLRC disregarded the same. The NLRC also
found that the findings of the fiscal exonerating Gomez from the theft charge was entitled to great weight as these
findings reveal at once that the theft charge which is the basis for the dismissal of Gomez was not clearly and
convincingly established by petitioner.
In view of the finding that Gomez was dismissed illegally, Starlite is obligated to reinstate Gomez to his former
position or one reasonably equivalent thereto without loss of seniority rights, and to pay backwages for three years,
without qualification or deduction. In the event such reinstatement is no longer feasible, or if Gomez decides not to be
reinstated, Starlite shall pay him separation pay in lieu of reinstatement.
b. Backwages
Components of the amount of backwages An unjustly dismissed employee is entitled to
full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent, computed from the time his compensation was withheld from him up to the time
of his actual reinstatement. [Siemens Philippines, Inc. vs. Domingo, G.R. No. 150488, July
28, 2008] As a rule, backwages shall be computed from the time of illegal dismissal up to
the finality of the decision
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HOWEVER, If the dismissal was due to cessation of business operations, backwages is not
to be computed beyond the closure of operations, as it is confiscatory.
AND, An employee who was dismissed on the ground of AWOL due to incarceration, is
entitled to reinstatement, and under the principle of no work, no pay, his full backwages
shall only commence from the time he is refused work after acquittal.
Yardsticks in the computation of the final amount of liability in Illegal Dismissal Cases
(1) Employees who have been re-employed without loss of seniority rights shall be
paid backwages but only up to actual reinstatement;
(2) Employees who have been re-employed as new hires shall be restored their
seniority and other preferential rights. However, their backwages shall be computed
only to date of actual re-hiring;
(3) Employees who have reached compulsory age of retirement shall receive
backwages up to their retirement only. The same is true as regards the heirs of those
who have passed away;
(4) Employees who have not been re-employed, plus those who have executed
quitclaims and received separation pay or financial assistance, shall be reinstated
without loss of seniority rights, and paid full backwages, after deduction of whatever
amounts already received; and
(5) Employees who had obtained substantially equivalent or even more lucrative
employment elsewhere in 1998 or thereafter are deemed to have severed their
employment with their previous employer, and shall be entitled to full backwages from
the date of their retrenchment only up to the date they found gainful employment
elsewhere
10. Voluntary Resignation
VI. SOCIAL LEGISLATION
1. SSS Law
a. Coverage- Philippine Blooming Mills v. SSS
2. GSIS Law
3. Limited Portability Law (R.A. No. 7699)
4. Employees Compensation and State Insurance Fund
Belarmino v. ECC, G.R. No. 90204, May 11, 1990
Lopez v. ECC, G.R. No. 90267, December 21, 1993
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