PALS Labor Law

Labor Law

I. CONSTITUTIONAL PROVISIONS A. Construction in favor of Labor Moreover, it is a well-settled doctrine that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a timehonored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former’s favor. The policy is to extend the doctrine to a greater number of employees who can avail themselves of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. (Lepanto Consolidated Mining Co. vs. Moreno Dumapis, et. al., G.R. No. 163210 August 13, 2008).

B. Protection to Labor Art. XIII, Sec. 3: "The State shall afford full protection to labor...." In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the law is to apply the Labor Code to a greater number of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development. (Angelina Francisco vs NLRC. G.R. No. 170087 August 31, 2006).

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment under the fundamental law is that the cause of labor does not prevent us from sustaining the employer when the law is clearly on its side. (Estrellita G. Salazar vs Philippine Duplicators, Inc, G.R. No. 154628 December 6, 2006).

Dismissal is the ultimate penalty that can be meted to an employee. The Constitution does not condone wrongdoing by an employee; nevertheless, it urges a moderation of the sanction that may be applied to him. Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker ought not to be visited with a consequence so severe such as dismissal from employment. For the Constitution guarantees the right of the workers to “security of tenure.” The misery and pain attendant to the loss of jobs then could be avoided if there is acceptance of the view that under certain circumstances of the case the workers should not be deprived of their means of livelihood. Indeed, the consistent rule is that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. (Marival Trading Inc. vs NLRC. G.R. No. 169600 June 26, 2007).

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Labor Law

II. ILLEGAL RECRUITMENT A. Elements of illegal recruitment In order to hold a person liable for illegal recruitment, the following elements must concur: (1) the offender undertakes any of the activities within the meaning of “recruitment and placement” under Article 13(b)20 of the Labor Code, or any of the prohibited practices enumerated under Article 34 of the Labor Code (now Section 6 of RA 8042) and (2) the offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers. In the case of illegal recruitment in large scale, a third element is added: that the offender commits any of the acts of recruitment and placement against three or more persons, individually or as a group. All three elements are present in the case at bar. (People of the Philippines v. Melissa Chua and Clarita NG Chua. G.R. No. 187052 September 13, 2012)

Inarguably, appellant Chua engaged in recruitment when she represented to private complainants that she could send them to Taiwan as factory workers upon submission of the required documents and payment of the placement fee. The four private complainants positively identified appellant as the person who promised them employment as factory workers in Taiwan for a fee of P80,000. The Senior Labor Employment Officer of the POEA presented a certification to the effect that appellant Chua is not licensed by the POEA to recruit workers for overseas employment. The prosecution witnesses were positive and categorical in their testimonies that they personally met appellant and that the latter promised to send them abroad for employment. Appellant cannot escape liability by conveniently limiting her participation as a cashier of Golden Gate. The provisions of Article 13(b) of the Labor Code and Section 6 of RA 8042 are unequivocal that illegal recruitment may or may not be for profit. It is immaterial, therefore, whether appellant remitted the placement fees to “the agency’s treasurer” or appropriated them. (People of the Philippines v. Melissa Chua and Clarita NG Chua. G.R. No. 187052 September 13, 2012).

Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. When the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed. It is important that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. (People of the Philippines vs. Teresita “Tessie” Laogo. G.R. No. 176264 January 10, 2011).

1. Simple illegal recruitment The Supreme Court defines 4 types of illegal recruitment: (a) Simple or licensee: illegal recruitment committed by a licensee or holder of authority against one or two persons only;

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(b) Non-licensee: illegal recruitment committed by any person who is neither a licensee nor holder of authority (c) Syndicated; (d) Large scale or qualified People vs. Sadiosa

2. Illegal recruitment by a syndicate or committed in large scale Accused-appellants posits that the prosecution failed to prove that there were more than two persons involved in the alleged crime of illegal recruitment for it to be qualified as syndicated illegal recruitment, since the trial court held only two of the accused liable for the crime. The Supreme Court however dismissed accused-appellants’ contention. In this case, the prosecution was able to establish that accused-appellants’ Bernadette and Franz were not the only ones who had conspired to bring the victims to Malaysia. It was also able to establish at the very least, through the credible testimonies of the witnesses, that (1) Jun and Macky were the escorts of the women to Malaysia; (2) a certain Tash was their financier; (3) a certain Bunso negotiated with Macky for the price the former would pay for the expenses incurred in transporting the victims to Malaysia; and (4) Mommy Cindy owned the prostitution house where the victims worked. The concerted efforts of all these persons resulted in the oppression of the victims. Clearly, it was established beyond reasonable doubt that accused-appellant, together with at least two other persons, came to an agreement to commit the felony and decided to commit it. The accused appellants were convicted of the crime of illegal recruitment committed by a syndicate. (People of the Philippines v. Nurfrashir Hashim y Saraban, et al. G.R. No. 194255 June 13, 2012).

In the case at bar, the foregoing elements are present. Appellant, in conspiracy with her co-accused, misrepresented to have the power, influence, authority and business to obtain overseas employment upon payment of a placement fee which was duly collected from complainants Rogelio Legaspi, Dennis Dimaano, Evelyn Estacio, Soledad Atle and Luz Minkay. Further, the certification issued by the Philippine Overseas Employment Administration (POEA) and the testimony of Ann Abastra Abas, a representative of said government agency, established that appellant and her co-accused did not possess any authority or license to recruit workers for overseas employment. And, since there were five (5) victims, the trial court correctly found appellant liable for illegal recruitment in large scale. (People of the Philippines vs Beth Temporada. G.R. No. 173473 December 17, 2008).

The appellant is guilty of large scale illegal recruitment. The essential elements of large scale illegal recruitment are: a) the offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers; b) the offender undertakes any of the activities within the meaning of “recruitment and placement” under Article 13(b) of the Labor Code, or any of the prohibited practices enumerated under Article 34 of the said Code (now Section 6 of RA 8042); and c) the offender committed the same against three (3) or more persons, individually or as a group, are present in this case. The prosecution adduced proof beyond reasonable doubt

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that the appellant enlisted the three (3) complainants for overseas employment without any license to do so. (People of the Philippines v. Mariavic Espenilla y Mercado. G.R. No. 193667 February 29, 2012).

3. Liabilities The above provisions are clear that the private employment agency shall assume joint and solidary liability with the employer. This Court has, time and again, ruled that private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. This is in line with the policy of the state to protect and alleviate the plight of the working class. (Santosa B. Datuman vs. First Cosmopolitan Manpower and Promotion Services Inc. G.R. No. 156029 November 14, 2008).

Private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. (Becmen Service Exporter vs. Spouses Simplicio and Mila Cuaresma. G.R. Nos. 182978-79, G.R. Nos. 184298-99, April 7, 2009).

4. Theory of imputed knowledge 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 principalforeign employer cannot, therefore, be imputed to its agent Sunace. 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 Divina’s claims arising from the 2-year employment extension. (Sunance International Management Services, Inc. vs NLRC. G.R. No. 161757 January 25, 2006).

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III. LABOR STANDARDS A. Hours of work The philosophy underlying the exclusion of piece workers from the Eight-Hour Labor Law is that said workers are paid depending upon the work they do "irrespective of the amount of time employed" in doing said work. Such freedom as to hours of work does not obtain in the case of the laborers herein involved, since they are assigned by the employer to work in two shifts for 12 hours each shift. Thus it cannot be said that for all purposes these workers fall outside the law requiring payment of compensation for work done in excess of eight hours. At least for the purpose of recovering the full differential pay stipulated in the bargaining agreement as due to laborers who perform 12 hours of work under the night shift, said laborers should be deemed pro tanto or to that extent within the scope of the afore-stated law. (Red Coconut Products, Ltd. vs CIR. G.R. No. L-21348 June 30, 1966).

The Court reiterated that the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on 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. Realistically speaking, a seaman, by the very nature of his job, stays on board a shipor vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable. (StoltNielsen Marine Services (Phils.) Inc. vs. NLRC. G.R. No. 109156. July 11, 1996).

Petitioner did not submit to the secretary of labor a proposed wage rate — based on time and motion studies and reached after consultation with the representatives from both workers' and employers' organization — which would have applied to its piece-rate workers. Without those submissions, the labor arbiter had the duty to use the daily minimum wage rate for nonagricultural workers prevailing at the time of private respondent's dismissal, as prescribed by the Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in the computation of private respondent's separation pay. In fact, it acted and ruled correctly and legally in the premises. It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for the computation of the separation pay of piece-rate workers like private respondent. The computed daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours were less than eight. Aside from its bare assertion, petitioner presented no clear proof that private respondent's regular working day was less than eight hours. (Pulp and Paper, Inc. vs NLRC. G.R. No. 116593 September 24, 1997).

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private

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Labor Law respondent’s act, therefore, of going home to take his dinner does not constitute abandonment. (Philippine Airlines vs. NLRC. G.R. No. 132805 Feb. 2, 1999).

There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised employees.(Avelino Lambo vs NLRC. G.R. No. 111042 October 26, 1999).

In any event, the parties stipulated: Section 1. Regular Working Hours - A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours. It is evident from the foregoing provision that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that the employees shall observe such rules as have been laid down by the company. In the case before us, Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eight-hour schedule since they followed, without any question or complaint, the two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours. (Interphil Laboratories Employees Union vs Interphil Laboratories. G.R. No. 142824. December 19, 2001) With respect, however, to the award of overtime pay, the correct criterion in determining whether or not sailors are entitled to overtime pay is not whether they were on board and cannot leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. In the present case, the Court finds that private respondent is not entitled to overtime pay because he failed to present any evidence to prove that he rendered service in excess of the regular eight working hours a day. (PCL Shipping Philippine, Inc. and U-Ming Marine Transport Corporation, vs NLRC. G.R. No. 153031,December 14, 2006).

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Labor Law Apropos the monetary claims, there is insufficient evidence to prove petitioners’ entitlement thereto. As crew members, petitioners were required to stay on board the vessel by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of our law to require their employers to give them overtime pay or night shift differential, even when they are not actually working. Thus, the correct criterion in determining whether they are entitled to overtime pay or night shift differential is not whether they were on board and cannot leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. In this case, petitioners failed to submit sufficient proof that overtime and night shift work were actually performed to entitle them to the corresponding pay. (Lazaro V. Dacut, et al. vs CA, et al., G.R. No. 169434 March 28, 2008).

Hence, it being improbable that respondent rendered overtime work during the unexpired term of his contract, the inclusion of his “guaranteed overtime” pay into his monthly salary as basis in the computation of his salaries for the entire unexpired period of his contract has no factual or legal basis and the same should have been disallowed. (Bahia Shipping Services, Inc. vs. Reynaldo Chua. G.R. No. 162195 April 8, 2008).

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus: The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees. Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace.( Bisig Manggawa sa Tryco, et al. vs. NLRC, et al., G.R. No. 151309 October 15, 2008).

In the absence of any concrete proof that additional service beyond the normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized computations are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein.(AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. G.R. No. 173648, January 16, 2011).

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A claim for overtime pay will not be granted in the absence of any factual and legal basis. In this respect, the records indicated that the labor arbiter granted Menese’s claim for holiday pay, rest day and premium pay on the basis of payrolls. There is no such proof in support of Menese’s claim for overtime pay other than her contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was working during the entire one hour meal break. The Supreme Court thus found the NLRC’s deletion of the overtime pay award in order. (Emirate Security and Maintenance Systems, Inc. vs. Glenda M. Menese. G.R. No. 182848 October 5, 2011). However, the Court decided that they are not entitled to overtime and premium pays. The burden of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the employee because these are not incurred in the normal course of business. In the present case, the petitioners failed to adduce any evidence that would show that they actually rendered service in excess of the regular eight working hours a day, and that they in fact worked on holidays and rest days. (Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013).

B. Wages The term "wages" differs from the term "salary." Wages apply to compensation for manual labor, skilled or unskilled, paid at stated times and measured by the day, week, month or season; while salary denotes a higher grade of employment or a superior grade of services and implies a position or office. By contrast, the term "wages" indicates a considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service) The distinction between salary and wage in Gaa vs CA was only for the purpose of Art. 1708 of the Civil Code which provides that "the laborers' wage shall not be subject to execution or attachment except for debts incurred for food, shelter, clothing, and medical attendance. (Rosario A. Gaa vs CA G.R. No. L-44169 Dec. 3, 1985).

Every worker should, according to the Labor Code, "be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers;" this, of course, even if the worker does no work on these holidays. The regular holidays include: "New Year's 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 of December, and the day designated by law for holding a general election (or national referendum or plebiscite). (Wellington Investment and Manufacturing Corp. vs. Cresenciano B. Trajano G.R. No. 114698 July 3, 1995).

The Labor Arbiter accepted hook, line and sinker the private respondent’s bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than the minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and the water she received during the period in her computations. Granting that means and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these

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Labor Law requirements, the employer simply cannot deduct the value from the employee’s wages. First proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instance case. More significantly, the food and lodging or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the king (food, lodging) but the purpose. Considering therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is necessary matter in the operations of a small hotel, such as the private respondent’s hotel. (Norma Mabeza vs. NLRC. G.R. No. 118506. April 18, 1997).

Second, by nature, commissions are given to employees only if the employer receives income. Employees, as a reward, receive a percentage of the earnings of the employer, which they, through their efforts, helped produce. Commissions are also given in the form of incentives or encouragement so that employees will be inspired to put a little more industry into their tasks. Commissions can also be considered as direct remunerations for services rendered. All these different concepts of commissions are incongruent with the claim that an employee can continue to receive them indefinitely after reaching his mandatory retirement age. (International Broadcasting Corp. vs Reynaldo Benedicto. G.R. No. 152843, July 20, 2006).

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. In Globe Telecom, Inc. v. Florendo-Flores, we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment. (Angelina Francisco, vs. National Labor Relations Commission, G.R. No. 170087, August 31, 2006).

Respecting petitioner’s claim for holiday pay, Forest Hills contends that petitioner failed to prove that she actually worked during specific holidays. Article 94 of the Labor Code provides, however, that (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. The provision that a worker is entitled to twice his regular rate if he is required to work on a holiday implies that the provision entitling a worker to his regular rate on holidays applies even if he does not work. (Lilia P. Labadan vs. Forest Hills Academy. G.R. No. 172295 December 23, 2008).

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Labor Law The term “basic salary” of an employee for the purpose of computing the thirteenth-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. (Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949, July 26, 2010).

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error. (Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949, July 26, 2010).

As correctly observed by the CA and the LA, these duties clearly pertained to "Division Managers/Department Managers/ Supervisors," which respondent was not, as he was merely a team supervisor. Petitioners themselves described respondent as "the superior of a call center agent; he heads and guides a specific number of agents, who form a team." From the foregoing, respondent is thus entitled to his claims for holiday pay, service incentive leave pay, overtime pay and rest day pay, (Clientologic Philippines Inc. vs Benedict Castro. G.R. No. 186070 April 11, 2011).

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer. (Ricardo E. Vergara, Jr. vs Coca-Cola Bottlers Philippines Inc. G.R. No. 176985 April 1, 2013).

C. Wage distortion It is therefore opportune to re-state the general principles enunciated in that case, summarized in Metro Transit Organization, Inc. vs. NLRC, et al., as follows: (a) The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate

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basis. This classification is reflected in a differing wage rate for each of the existing classes of employees. (b) Wage distortions have often been the result of government- decreed increases in minimum wages. There are, however, other causes of wage distortions, like the merger of two (2) companies (with differing classification of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation. (In the present Metro case, as already noted, the wage distortion arose because the effectivity dates of wage increases given to each of the two (2) classes of employees (rank-and-file and supervisory) had not been synchronized in their respective CBAs.). (c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by re-adjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed be restored in precisely the same amount. In other words, correction of a wage distortion may be done by re-establishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees. (d) The re-establishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective bargaining negotiations. (Manilia Mandarin Employees Union vs NLRC. G.R. No. 108556 November 19, 1996). The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus: (p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or severe contradiction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage distortion, 15 to well be the appropriate measure to balance the respective contentions of the parties in this instance. We also view it as being just and equitable Minimum Wage = % x Prescribed = Distortion —————— Increased Adjustment Actual Salary

(Metropolitan Bank and Trust Company Employees Union-ALU-TUCP vs NLRC G.R. No. 102636 September 10, 1993)

Even assuming that there is a decrease in the wage gap between the pay of the old employees and the newly hired employees, to Our mind said gap is not significant as to obliterate or result in severe contraction of the intentional quantitative differences in the salary rates between the

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employee group. As already stated, the classification under the wage structure is based on the rank of an employee, not on seniority. For this reason, ,wage distortion does not appear to exist. (Bankard Employees Union-Workers Alliance Trade Unions vs NLRC. G.R. No. 140689 February 17, 2004).

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D. 13 month pay It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission. Instead, they were receiving a commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year. On the other hand, in his Complaint, respondent admitted that he was paid on commission only. Moreover, this fact is supported by his pay slips which indicated the varying amount of commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month pay benefit. (King of Kings Transport Inc. vs Santiago O. Mamac. G.R. No. 166208,June 29, 2007).

Insofar as what constitutes “basic salary,” the foregoing discussions equally apply to the computation of petitioner’s 13th month pay. As held in San Miguel Corporation v. Inciong: Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus. Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174; b) Profit sharing payments; c) All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. (Rogelio Reyes vs NLRC. G.R. No. 160233, August 8, 2007)

The practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. The petitioner cannot claim that the practice arose from an erroneous application of the law since no doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. (Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU G.R. No. 188949, July 26, 2010).

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The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith. (Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949, July 26, 2010)

E. Separation pay However, the circumstances obtaining in this case do not warrant the reinstatement of respondents. Antagonism caused a severe strain in the parties’ employer-employee relationship. Thus, a more equitable disposition would be an award of separation pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher, (with a fraction of at least six (6) months being considered as one (1) whole year), in addition to their full backwages, allowances and other benefits. (Grandspan Development Corporation, vs. Ricardo Bernardo, et. al. G.R. No. 141464,September 21, 2005).

We hold that henceforth separation pay shall be allowed 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. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. (Ha Yuan Restaurant vs National Labor Relations Commission and Juvy Soria G.R. No. 147719 January 27, 2006).

But still, petitioners insist that since respondent already received her separation benefits, she can no longer claim that they coerced her to retire. On this point, the Court of Appeals ruled that employees who receive their separation pay are not barred from contesting the legality of their dismissal from the service and their acceptance of those benefits would not amount to estoppel. We agree. Otherwise, employees who have been forced to resign and accept their separation pay can no longer resort to legal remedies. (Amkor Technology Philippines, Inc. vs Nory A. Juangco. G.R. No. 166507, September 27, 2006).

Since the circumstances obtaining in this case do not warrant private respondent’s reinstatement in the light of the antagonism generated by this litigation which must have caused a severe strain in the parties' employer-employee relationship, an award of separation pay in lieu of reinstatement, equivalent to one month pay for every year of service, in addition to full backwages, allowances, and other benefits or the monetary equivalent thereof, is in order. The

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Labor Law award of attorney’s fees is sanctioned by law and must be upheld.(Petron Corporation vs National Labor Relations Commission. G.R. No. 154532 October 27, 2006).

Considering, however, the supervening event that SMC’s Magnolia Division has been acquired by another entity, it appears that private respondent’s reinstatement is no longer feasible. Instead, he should be awarded separation pay as an alternative. Likewise, owing to petitioner’s bad faith, it should be held liable to pay damages for causing undue injury and inconvenience to the private respondent in its contractual hiring-firing-rehiring scheme. (San Miguel Corporation, vs. NLRC G.R. No. 147566 December 6, 2006).

At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. For this reason, we grant her separation pay in lieu of reinstatement. It is also for this reason that we modify the award of backwages in her favor, to be computed from the time of her illegal dismissal on November 18, 1993 up to her compulsory retirement age. (Alpha C. Jaculbe vs Siliman University. G.R. No. 156934 March 16, 2007).

Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination, this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. The fact that private respondent served petitioner for more than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. (Central Pangasinan Electric Cooperative Inc. vs NLRC. G.R. No. 163561, July 24, 2007).

The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right to termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however, is entitled to “whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective bargaining agreement with the employer or voluntary employer policy or practice or under the Labor Code and other existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to receive from the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits granted by the CBA provisions and voluntary management policy or practice, the entitlement of the dismissed employees to the benefits depends on the stipulations of the CBA or the company rules and policies. (Toyota Motor Phils. Corp. Workers Association (TMPCWA) vs NLRC/ G.R. Nos. 158786 &158789, G.R. Nos. 158798-99, October 19, 2007).

Petitioner’s separation pay is pegged at the amount equivalent to petitioner’s one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from his first day of employment up to finality of this decision. Full backwages, on the other hand, should be

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computed from the date of his illegal dismissal until the finality of this decision. (Bienvenido D. Goma vs. Pamplona Plantation, Inc., G.R. No. 160905, July 4, 2008).

We hold that henceforth separation pay shall be allowed 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. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. (Central Philippines Bandag Retreaders. Inc. vs. Prudencio Diasnes G.R. No. 163607, July 14, 2008).

Since petitioner was not faultless in regard to the offenses imputed against her, we hold that the award of separation pay only, without backwages, is proper. (Elizabeth D. Palteng vs UCPB G.R. No. 172199, February 27, 2009).

We thus find the dismissal to be illegal. Consequently, respondent is entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time of the withholding of the employee's compensation up to the time of actual reinstatement. If reinstatement is not possible due to the strained relations between the employer and the employee, separation pay should instead be paid the employee equivalent to one month salary for every year of service, computed from the time of engagement up to the finality of this decision. (M+W Zander Philippines Inc. and Rolf Wiltschek vs Trinidad M. Enriquez G.R. No. 169173, June 5, 2009).

Above all, the intention to sever the employer-employee relationship was not duly established by respondents. The prior submission of a medical certificate that petitioner is fit to resume work negates the claim of respondents that the former demanded for separation pay on account of her failing health. Certainly, petitioner cannot demand for separation benefits on the ground of illness while at the same time presenting a certification that she is fit to work. Respondents could have denied petitioner’s demand at that instance and ordered her to return to work had it not been their intention to sever petitioner from their employ. Hence, we find the allegation that petitioner presented herself for work but was refused by respondents more credible. (Concepcion Faeldonia vs. Tong Yak Groceries, Jayme Go and Merlita Go. G.R. No. 182499, October 2, 2009).

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees’ right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other. (Philippine Hoteliers Inc., Dusit Hotel Nikko-Manila vs National Union of Workers in Hotel, Restaurant,

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and Allied Industries (NUWHRAIN-APL-IUF)-Dusit Hotel Nikko Chapter. G.R. No. 181972, August 25, 2009).

In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service reckoned from the first day of employment until the finality of the decision. Payment of separation pay is in addition to payment of backwages. And if separation pay is awarded instead of reinstatement, backwages shall be computed from the time of illegal termination up to the finality of the decision. (Agricultural and Industrial Supplies Corp. et al vs. Jueber P. SiazarG.R. No. 177970 August 25, 2010).

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen began his service. Technically the computation of his separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September 22, 2008, the computation of his separation pay should also end on that date. (Daniel P. Javellana, Jr. vs Albino Belen. G.R. No. 181913. Albino Belen vs. Daniel P. Javellana Jr. and Javellana Farms Inc. G.R. No. 182158, March 5, 2010).

The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. The basis for computing backwages is usually the length of the employee’s service while that for separation pay is the actual period when the employee was unlawfully prevented from working. (Golden Ace Builders vs. Jose A. Talde. G.R. No. 187200 May 5, 2010). F. Retirement pay For the purpose of computing retirement pay, “one-half month salary” shall include all of the following: 15 days salary based on the latest salary rate; cash equivalent of 5 days of service incentive leave (or vacation leave); 1/12 of the 13th month pay; other benefits as may be agreed upon by employer and employee for inclusion. But, it shall not include the following: cost of living allowance; profit-sharing payments; and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. (Rogelio Reyes vs NLRC, G.R. No. 160233. August 8, 2007).

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Labor Law Moreover, it is worthy to note that Bolso applied for benefits under PLDT’s early retirement/redundancy program. Bolso’s counsel even wrote PLDT for the withdrawal of the administrative complaint against Bolso and for the release of the benefits under this program. Therefore, Bolso’s plea for reinstatement in this case conflicts with his application for early retirement, which PLDT denied due to the then pending complaint against him. Reinstatement is plainly irreconcilable with retirement. (Philippine Long Distance Telephone Company vs The Late Romeo F. Bolso. G.R. No. 159701 August 17, 2007).

R.A. No. 7641, otherwise known as “The Retirement Pay Law,” only applies in a situation where (1) there is no collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a collective bargaining agreement or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirements set for by law. The reason for the first situation is to prevent the absurd situation where an employee, who is otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason for the second situation is expressed in the latin maxim pacta privata juri publico derogare non possunt. Private contracts cannot derogate from the public law. Alberto Oxales vs. United Laboratories, Inc., G.R. No. 152991 July 21, 2008). There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The two retirement schemes are alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits. Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots’ Retirement Benefit Plan, which will be further added to the ₱125,000.00 to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioner’s advantage that PAL’s retirement plans were applied in the computation of his retirement benefits. (Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012).

As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence of an applicable retirement agreement shall Article 287 of the Labor Code apply. There is a proviso however, that an employee’s retirement benefits under any agreement shall not be less than those provided in the said article. The Rules of the Banco Filipino Retirement Fund do not provide for benefits lower than those in the Labor Code. In fact, the bank offers a retirement pay equivalent to one andone-half month salary for every year of service, a rate over and above the one-half month salary threshold provided by the law. Although the Rules of the Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide that prorated credit shall be given for incomplete years, regardless of the fraction of months in the retiree’s length of service. Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay, together with the prorated crediting, cannot be deemed to be less favorable than that provided for by the law. Ultimately, the more important threshold to be considered in construing whether the retirement agreement provides lesser benefits, compared to those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement should at least amount to one-half of the employee’s monthly salary. (Banco Filipino Savings and Mortgage Bank vs.

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Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al .G.R. No. 185346 & G.R. No. 185442 June 27, 2012)

IV. TERMINATION OF EMPLOYMENT A. Employer-Employee Relationship The issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of fact. The factors that determine the issue include who has the power to select the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished. Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. (Legend Hotel v. Realuyo G.R. No. 153511 July 18, 2012).

1. Four-Fold Test (Indicia of Employment); Economic or Economic Readity Test

a. The power of selection and engagement of the employee b. payment of wages c. power of dismissal d. power to control the employees' conduct To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished. The so-called "control test" is the most important indicator of the presence or absence of an employer-employee relationship. (Sycip, Gorres, Velayo & Company vs. Carol De Raedt. G.R. No. 161366; June 16, 2009). Among these four tests however, the most important test is the element of control, which has been defined as "one where the employer has reserved the right to control not only the work to be achieved, but the manner and method by which such work is to be achieved. (LVN Pictures vs LVN Musician's Guild. G.R. No. L-12582. January 28, 1961). It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the employer actually supervises the performance of duties of the employee. It is enough that the former has a right to wield the power. (Manila Water Company, Inc. vs. Jose J. Dalumpines. G.R. No. 175501; October 4, 2010). Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. (Television and Production Exponents, Inc. vs. Roberto C. Servaña. G.R. No. 167648; January 28, 2008). It is sufficient if the task or activity, as well as the means of accomplishing it, is dictated, as in this case where the objectives and activities were laid out, and the specific time for performing them was fixed by the controlling party. (Coca Cola Bottlers, Inc. vs. Dr. Dean N. Climaco. G.R. No. 146881; February 5, 2007).

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Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. From the quoted scope of petitioner’s professional services, there is no showing of a power of control over petitioner. The services to be performed by her specified what she needed to achieve but not on how she was to go about it. (Corazon Almirez vs. Infinite Loop Technology. G.R. 162401; January 31, 2006). To bolster the payment of wages and control test, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, submission of his name with the SSS, Pag-ibig, Philhealth, otherwise known as economic test, are also applied in determining employer-employee relationship. (Sevilla vs CA, G.R. No. 44182-3, April 15, 1988). It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. (Insular Life Assurance Co. Ltd. G.R. No. 84484 November 15, 1989).

In the present case, the power to control is missing. Pamana tasked Consulta to organize, develop, manage, and maintain a sales division, submit a number of enrollments and revenue attainments in accordance with company policies and guidelines, and to recruit, train and direct her Supervising Associates and Health Consultants.[12] However, the manner in which Consulta was to pursue these activities was not subject to the control of Pamana. Consulta failed to show that she had to report for work at definite hours. The amount of time she devoted to soliciting clients was left entirely to her discretion. The means and methods of recruiting and training her sales associates, as well as the development, management and maintenance of her sales division, were left to her sound judgment.(Raquel P. Consulta G.R. No. 145443. March 18, 2005). 2. Kinds of Employment

a. Probationary 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

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word "probationary", as used to describe the period of employment, implies the purpose of the term or period, but not its length. Being in the nature of a "trial period" the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment. (International Catholic Migration Commission vs. NLRC and Bernadette Galang. G.R. No. 72222 ; January 30, 1989). They are considered regular if they are allowed to work beyond the probationary period. Probationary employees enjoy security of tenure in the sense that during their probationary employment, they cannot be dismissed except for cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known to him or her at the time of engagement. But the probationary employee’s security of tenure is limited to the period of probation. (Woodbridge School vs. Pe Benito. G.R. No. 160240; October 28, 2008).

A probationary employee, like a regular employee, enjoys security of tenure. The services of an employee who has been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an authorized cause and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. (Mylene Carvajal vs. Luzon Development Bank G.R. No. 186169; August 1, 2012).

Completion of probationary period does not automatically qualify a teacher to become a permanent employee of the University. (Lacuesta vs. Ateneo De Manila University. G.R. No. 152777; December 9, 2005).

While the probationary employee is required to be appraised of the standards against which his performance shall be assessed, there is however no need to inform the probationary employee that he has to follow company rules and regulations – such requirement strains credulity. Due process in failure to qualify as regular employee does not mean “notice and hearing." (Philippine Daily Inquirer vs. Magtibay. G.R. No. 164532; July 24, 2007).

b. Regular The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. (Macarthur Malicdem and Hermenigildo Flores vs. Marulas Industrial Corporation. G.R. No. 204406; February 26, 2014).

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

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regular, but only with respect to such activity and while such activity exists. (De Leon vs. NLRC. G.R. No. 70705; August 21, 1989). The practice of entering into employment contracts which would prevent the workers from becoming regular should be struck down as contrary to public policy and morals. (Universal Robina Corporation v. Catapang. G.R. No. 164736; October 14, 2005).

Television-radio talent is not an employee. Relationship of a big name talent and a television-radio broadcasting company is one of an independent contracting arrangement. ABS-CBN engaged Sonza’s 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 Sonza delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. Sonza did not have to render eight hours of work per day. The Agreement required Sonza to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of Sonza’s script. (Jose Y. Sonza vs. ABS-CBN Broadcasting Corporation. G.R. No. 138051; June 10, 2004). But production assistants called “talents” and drivers, cameramen, editors, tele-prompters called “off-camera talents” are actually regular employees, there being control on the part of ABS-CBN. Their nomenclature as such “talents” or “off-camera talents” to make it appear that they are independent contractor, cannot override the fact that they are not actors/actresses/radio specialists but are mere clerks or utility employees. (ABS-CBN vs. Nazareno (2006); and, Farley Fulache vs. ABS-CBN (2010)).

c. Project Employment The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project. (Goma v. Pamplona Plantation, Inc.G.R. No. 160905; July 4, 2008).

A project employee is assigned to a project which begins and ends at determined or determinable times. Employees who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of service is not a controlling factor in determining the nature of one’s employment. Their rehiring is only a natural consequence of the fact that experienced construction workers are preferred. In fact, employees who are members of a "work pool" from which a company draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has consistently held that members of a "work pool" can either be project employees or regular employees. (Dacuital vs. L.M. Camus Engineering Corporation. G.R. No. 176748; September 1, 2010).

A project or work pool employee, who has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) those tasks are vital, necessary and indispensable to the usual business or trade of the employer, must be deemed a regular employee. (Maraguinot, Jr. v. NLRC.348 Phil. 580 (1998).

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The length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees. (Hanjin Heavy Industries vs. Ibanez. G.R. No. 170181; June 26, 2008). However, a project or work pool employee who has been continuously rehired by the same employer for the same tasks that are necessary to the usual business of the employer must be deemed a regular employee (Alcatel Phils. vs Relos, G.R. No. 164315. July 3, 2009). Failure to file termination reports, particularly on the cessation of petitioner’s employment, was an indication that the petitioner was not a project employee but a regular employee. (Goma vs. Pamplona Plantation, Inc. G.R. No. 160905. July 4, 2008).

In cases where the employees were hired without any mention of a specific project to which they will be assigned, and that there were no termination reports at the end of each alleged project, then they are regular. Moreover, the employees ceased to be coterminous with a specific project when the employee was continuously rehired due to the demands of the employer’s business and re-engaged for many more “projects” without interruption. (Cocomangas Hotel Beach Resort vs. Visca. G.R. No. 167045; August 29, 2008).

d. Seasonal Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in that period, but merely considered on leave until re-employed. (Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade. G.R. No. 149440; January 28, 2003).

One-year duration on the job is pertinent in deciding whether a casual employee has become regular or not, but it is not pertinent to a seasonal or project employee. Passage of time does not make a seasonal worker regular or permanent. (Mercado v. NLRC. G.R. No. 79869; September 5, 1991). However, he may acquire a regular status if he is repeatedly engaged from season to season performing the same tasks. (Hacienda Fatima vs NFSWFGT. G.R. 149440. Jan. 28, 2003).

e. Casual Any casual employee who has rendered at least one (1) year of service, whether it is continuous or broken, shall be considered a regular employee with respect to the activity for which he is employed, and his employment shall continue while such activity exists.

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The status of regular employment attaches to the casual employee on the day immediately after the end of his first year of service. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. (Aurora Land Projects Corp. vs. NLRC. G.R. No. 114733 (1997)). A casual employee is only casual for one year, and it is the passage of time that gives him a regular status. (KASAMMA-CCO v. Court of Appeals. G.R. No. 159828; April 19, 2006).

f. Fixed-Term A kind of employment, wherein workers are hired for a specific period and upon the arrival of the date specified in the contract - the employer-employee relationship is automatically terminated. Such a contract, which specifies that employment will last only for a definite period, is not per se illegal or against public policy. (Brent School vs. Zamora. G. R. No. 48494; February 5, 1990).

The Court thus laid down the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. (Caparoso v. Court of Appeals. G.R. No. 155505; February 15, 2007). While this Court has upheld the legality of fixed-term employment, where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. (Manila Water Company, Inc. vs. Pena. G.R. No. 158255; July 8, 2004).

3. Job Contracting a. Pertinent Labor Code provisions (Art. 106-109) Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. 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 employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. 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

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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. Article 107. Indirect employer. - The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Article 108. Posting of bond. - An employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same. Article 109. Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. The joint and several liability of the contractor and the principal is mandated by the Labor Code to ensure compliance with its provisions, including the statutory minimum wage. The contractor is made liable by virtue of his status as direct employer, while the principal becomes the indirect employer of the former's employees for the purpose of paying their wages in the event of failure of the contractor to pay them. (Alpha Investigation and Security Agency, Inc. vs. NLRC. G.R. No. 111722; May 27, 1997). In legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's employees. The principal is responsible to the job contractor's employees only for the proper payment of wages. But in labor-only contracting, an employer-employee relation is created by law between the principal and the labor-only contractor's employees, such that the former is responsible to such employees, as if he or she had directly employed them. (Philippine Airlines, Inc. vs. NLRC. G.R. No. 125792; November 9, 1998).

b. Department Order No. 18-A When is there legitimate contracting or subcontracting?  Contracting or subcontracting shall be legitimate if all the following circumstances concur: (a) The contractor must be registered in accordance with these Rules and carries a distinct and independent business and undertakes to perform the job, work or service on its own responsibility, according to its own manner and method, and free from control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor has substantial capital and/or investment; and

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(c)

The Service Agreement ensures compliance with all the rights and benefits under Labor Laws (Sec. 4 of D.O. No. 18-A, S. 2011).

What is “substantial capital”?  “Substantial capital” refers to paid-up capital stocks/shares of at least P3,000,000.00 in the case of corporations, partnerships and cooperatives; in the case of single proprietorship, a net worth of at least P3,000,000.00. What constitutes “substantial capital” previously vary, as fixed by the court, as there was no specific threshold provided under the law or the implementing guidelines.  It is also important to note that the registration fee is P25,000.00. Rights of Contractor’s Employees: All contractor’s employees, whether deployed or assigned as reliever, seasonal, weekender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as provided for in the Labor Code, as amended, to include the following: (a) (b)

(c) (d) (e) (f)

Safe and healthful working conditions; Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday pay, 13th month pay, and separation pay as may be provided in the Service Agreement or under the Labor Code; Retirement benefits under the SSS or retirement plans of the contractor, if there is any; Social security and welfare benefits; Self-organization, collective bargaining and peaceful concerted activities; and Security of tenure.

Security of Tenure of Contractor’s Employees: It is understood that all contractor’s employees enjoy security of tenure regardless of whether the contract of employment is co-terminus with the service agreement, or for a specific job, work or service, or phase thereof (Sec. 11, D.O. 18-A, S. 2011). Additional Terms and Conditions in the Employment Contract: Notwithstanding any oral or written stipulations to the contrary, the contract between the contractor and its employee shall be governed by the provisions of Articles 279 and 280 of the Labor Code, as amended. It shall include the following terms and conditions: (a) (b) (c)

The specific description of the job, work or service to be performed by the employee; The place of work and terms and conditions of employment, including a statement of the wage rate applicable to the individual employee; and The term or duration of employment that must be co-extensive with the Service Agreement or with the specific phase of work for which the employee is engaged.

Contents of the Service Agreement between the Principal and the Contractor The Service Agreement shall include the following: 1. The specific description of the job, work or service being subcontracted. 2. The place of work and terms and conditions governing the contracting arrangement, to include the agreed amount of the services to be rendered, the standard administrative fee of not less than ten percent (10%) of the total contract cost. 3. Provisions ensuring compliance with all the rights and benefits of the employees under the Labor Code and these Rules on: provision for safe and healthful working conditions; labor standards such as, service incentive leave, rest days,

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4. 5. 6. 7.

overtime pay, 13th month pay and separation pay; retirement benefits; contributions and remittance of SSS, Philhealth, Pag-Ibig Fund, and other welfare benefits; the right to self-organization, collective bargaining and peaceful concerted action; and the right to security of tenure. A provision on the Net Financial Contracting Capacity of the contractor, which must be equal to the total contract cost. A provision on the issuance of the bond/s as defined in Section 3(m) renewable every year. The contractor or subcontractor shall directly remit monthly the employers’ share and employees’ contribution to the SSS, ECC, Philhealth and Pag-Ibig Fund. The term or duration of engagement. The Service Agreement must conform to the DOLE Standard Computation and Standard Service Agreement, which form part of these Rules as Annexes “A” and “B”.

Mandatory Registration and Registry of Legitimate Contractors: Consistent with the authority of the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor to protect the rights of workers, it shall be mandatory for all persons or entities, including cooperatives, acting as contractors, to register with the Regional Office of the Department of Labor and Employment (DOLE) where it principally operates. Effect of Failure to Register by the Independent Contractor with DOLE: A Certificate of Registration is good for 3 years. Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting (Section 14, D.O. No. 18-A, Series 2011). Appeal: The Order of the Regional Director is appealable to the Secretary within ten (10) working days from receipt of the copy of the Order. The appeal shall be filed with the Regional Office which issued the cancellation Order. The Office of the Secretary shall have thirty (30) working days from receipt of the records of the case to resolve the appeal. The Decision of the Secretary shall become final and executory after ten (10) days from receipt thereof by the parties. No motion for reconsideration of the Decision shall be entertained (Sec. 25, supra). New Requirements Under Department Order No. 18-A, Series 2011: 1. Declaration of the Independent Contractor’s Net Financial Contracting Capacity (NFCC) to be incorporated in the service contract (Sec. 3 (G)): “Current Assets Less Current Liabilities x K (Contract Duration) Equivalent, Minus Value of All Outstanding, On-Going or Starting Projects” Where K = 10, if contract is one year or less; = 15, for more than one (1) year up to two (2) years; = 20, for more than two (2) years. 2. Substantial capital of at least P3,000,000.00 in case of corporations, partnerships, cooperatives or single proprietorship (Sec. 13(L)). 3. Registration fee of P25,000.00 plus renewal fee of twenty five thousand pesos every three years (Sections 19 and 21). The Negative List: What Cannot Be Validly Sub-Contracted Out

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(D.O. No. 18-02 as amended by D.O. No. 18-A, Series 2011) 1. Contracting out of a job, work or service when not done in good faith and not justified by the exigencies of the business and the same results in the termination of regular employees and reduction of work hours or reduction or splitting of the bargaining unit 2. Contracting out to a “Cabo.” Under the “cabo” system, (a) the union is the independent contractor that engages the services of its members who are seconded to the principal; (b) the charges against the principal are made by the Union; and © the workers are paid on union payroll without intervention of the principal. 3. Taking undue advantage of the economic situation or lack of bargaining strength of the contractual employee, or undermining his security of tenure or basic rights, or circumventing the provisions of regular employment, in any of the following instances: (a)

(b)

(c)

In addition to his assigned functions, requiring the contractual employee to perform functions which are currently being performed by the regular employees of the principal or of the contractor or subcontractor; Requiring him to sign, as a precondition to employment or continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards including minimum wages and social or welfare benefits; or a quitclaim releasing the principal, contractor or subcontractor from any liability as to payment of future claims; and Requiring him to sign a contract fixing the period of employment to a term shorter than the term of the contract between the principal and the contractor or subcontractor, unless the latter contract is divisible into phases for which substantially different skills are required and this is made known to the employee at the time of engagement.”

4. Contracting out of a job, work or service through an in-house agency; 5. Contracting out of a job, work or service directly related to the business or operation of the principal by reason of a strike or lockout whether actual or imminent; 6. Contracting out of a job, work or service being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization as provided in A. 248 (C), Labor Code, as amended. New Prohibitions to the Original Negative List Provided Under D.O. 18-A Series of 2011 (Section 7): 7. Repeated hiring of employees under an employment contract of short duration or under a service agreement of short duration with the same or different contractors, which circumvents the Labor Code provisions on security of tenure; 8. Requiring employees under a sub-contracting arrangement to sign a contract fixing the period of employment to a term shorter than the term of the service agreement, except when the contract is divisible into phases xxx and this is made known to the employee; 9. Refusal to provide a copy of the Service Agreement and employment contracts between the contractor and employees, to the principal’s certified bargaining agent;

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Engaging or maintaining by the principal of subcontracted employees in excess of those provided for in applicable CBA or set by the Industry Tripartite Council (ITC). c. Department Circular No. 01-12 Salient Provisions: Clarifying the Applicability of D.O. No. 18-A, S. 2011 to Business Processing Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the Construction Industry Are BPOs and KPOs covered by D.O. No. 18-A?  No. DO 18-A, Series of 2011, clearly speaks of a trilateral relationship that characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee relationship for entire business processes covered by the applicable provisions of the Civil Code on Contracts is excluded. Note: DO 18-A, Series of 2011, contemplates generic or focused singular activity in one contract between the principal and the contractor (for example: janitorial, security, merchandising, specific production work) and does not contemplate information technology-enabled services involving an entire business processes (for example: business process outsourcing, knowledge process outsourcing, legal process outsourcing, hardware and/or software support, medical transcription, animation services, back office operations/support). These companies engaged in business processes ("BPOs") may hire employees in accordance with applicable laws, and maintain these employees based on business requirements, which may or may not be for different clients of the BPOs at different periods of the employees’ employment. Are contractors licensed by the Philippine Contractors Accreditation Board (PCAB) required to register under D.O. 18-A? No. Licensing and the exercise of regulatory powers over the construction industry is lodged with the PCAB and not with the DOLE or any of its regional offices. Moreover, findings of violation/s on labor standards and occupational health and safety standards by the contractors shall be coordinated with the PCAB for its appropriate action, including the possible cancellation/suspension of the contractor's license. d. Effects of Labor-Only Contracting The employer is deemed the direct employer and is made liable to the employees of the contractor for a more comprehensive purpose (wages, monetary claims, and all other benefits in the Labor Code such as SSS/Medicare/Pag-Ibig). The labor-only contractor is deemed merely an agent. A finding that a contractor is a “labor-only” contractor is equivalent to declaring that there is an ER-EE relationship between the principal and the employees of the “labor-only” contractor. (San Miguel Corp. vs. MAERC Integrated Systems. G.R. No. 144672; July 10, 2003).

e. Trilateral Relationship in Job Contracting “Trilateral Relationship” refers to the relationship in a contracting or subcontracting arrangement where there is a contract for a specific job, work or service between the principal and the contractor, and a contract of employment between the contractor and its workers. There are 3 parties involved in these arrangements: the principal who decides to farm out a job, work or service to a contractor; the contractor who has the capacity to independently undertake the performance of the job, work or service; and the contractual

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workers engaged by the contractor to accomplish the job, work or service (Sec. 3(m), D.O. 18-A). Trilateral Relationship in Contracting Arrangements; Solidary Liability. In the event of any violation of any provision of the Labor Code, including the failure to pay wages, there exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the provisions of the Labor Code and other social legislation, to the extent of the work performed under the employment contract. When is the principal be deemed the direct employer of the contractor’s employee?  In cases where: a. There is a finding by a competent authority of labor-only contracting, or b. Commission of prohibited activities as provided in Sec. 7, D.O. 18-A; or, c. A violation of either Secs. 8 or 9, D.O. 18-A. (Sec. 5, D.O. 18-A, 2011). When is there job contracting or subcontracting?  It is an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. (IRR, Book III, VIII-A, Section 4) Elements of a Valid Independent Contracting a. The contractor/agency carries on an independent business; and b. Undertakes the contract work on his account under his own responsibility using his own manner and methods; c. Free from the control of the principal in all matters connected with the performance of work excepting the results thereof. d. He has his own substantial capital in the form of; e. Tools, equipment, machinery; f. Work premises and other materials which are necessary in the conduct of his business. The preceding elements, enunciated in D.O. No. 10 (now revoked) are no longer available in D.O. No. 18-02. However, it is enough for D.O. No. 18-02 to enumerate what it prohibits, and it does not have to itemize what it allows. (This is to avoid any confusion created by D.O. No. 10 where the prohibitions overlapped with the permissions) The validity of job contracting is already recognized, implicitly though, in Article 106 par. 3 as well as in Article 1713 of the Civil Code, and in numerous judicial rulings. When is there labor-only contracting? • There is labor-only contracting where the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. For labor-only to exist, Sec. 6 of Department Order No. 18-A requires any two of the elements to be present: 1. No Cap Direct. The contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and placed are performing activities which are usually necessary or desirable to the operation of the company, or directly related to the main business of the principal within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal; or,

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Note: Directly related means, the work performed by the workers are dependent and integral steps in all aspects relating to the essential operations of the principal. If not directly related to, then it should be allowed as job-contracting. 2. No Control. The contractor does not exercise the right to control over the performance of the work of the employee. To emphasize, a finding that a job contractor is a labor-only contractor is equivalent to declaring that there is an employer-employee relationship between the company and the employees of the labor-only contractor. This is because the labor-only contractor is considered as a mere agent of the employer. A mere statement in a contract with a company that laborers who are paid according to the amount and quality of work are independent contractors does not change their status as mere employees in contemplation of labor laws. •

Contractor vis-à-vis Employees If the nature or character of the work passes the control test, then it is job-contracting. Otherwise, if it fails the control test, then it is labor-only contracting.

Note: In job-contracting, the principal has no right of control over the conduct of the employees as to the means employed to achieve an end.

B. Dismissal from employment 1. General Principles in illegal dismissal cases, the employer is burdened to prove just cause for terminating the employment of its employees with clear and convincing evidence. This principle is designed to give flesh and blood to the guaranty of security of tenure granted by the constitution to employees under the Labor Code. (Duty Free Philippines Service,Inc. vs. Tria. G.R. No. 174809. June 27, 2012). 2. Just Causes a. Serious Misconduct Improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant.( Villamor Golf Club vs. Pehid. G.R. No. 166152. October 4, 2005).

Although fighting within company premises may constitute serious misconduct (possible ground for disciplinary actions), not every fight with in company premises in which an employee is involved automatically warrant dismissal from service. (Supreme Steel Pipe Corp. vs. Bardaje G.R. No. 170811; April 24, 2007).

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The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. But transfer should not result to demotion of rank which is tantamount to constructive dismissal. (Manila Pavilion Hotel vs. Henry Delada. G.R. No. 189947; January 25, 2012). Halloween invitation sent out by employee for office trick-or-treating without clearance from higher management is considered misbehavior. The circumstances in the case were differentiated from Samson vs. NLRC where the offensive remarks were verbally made during informal Christmas gathering. (Punzal vs. ETSI Technologies. G.R. No. 170384-85. March 9, 2007) Manager’s stubbornness, arrogance, hostility & uncompromising stance, reading confidential letter not intended for her (but about her). When an employee accepts promotion to a managerial position, or to a position requiring full trust and confidence, she gives up some of the rigid guarantees available to ordinary workers – infractions, which if committed by other would be overlooked or condoned / penalties mitigated, may visited with more severe disciplinary action life committed by managerial employee.( Sim vs. NLRC (October 2, 2007) & Tirazona vs. CA (G.R. No. 169712; March 14, 2008)

When an employee, despite repeated warnings from the employer, obstinately reuses to curtail a bellicose inclination such that it erodes the morale of the coemployees, the same may be a ground for dismissal for serious misconduct. Acts destructive of co-employees’ morale may be considered serious misconduct. (Citibank vs NLRC. G.R. No. 159302. February 6, 2008) The Supreme Court has taken judicial notice of scientific findings that drug abuse can damage the mental faculties of the user. It is beyond question that any employee under the influence of drugs cannot possibly continue doing his duties without posing a serious threat to the lives and property of his co-workers, and even his employer. An employee’s statements given to the police during investigation is evidence which can be considered by the employer against another employee, especially so if the latter did not appear in the scheduled admin hearing to present his side. ( Bughaw Jr. vs. Treasure Island. G.R. No. 173151. March 28, 2008). A teacher engaging in an extra-marital affair with another married person is a serious misconduct, if not an immoral act. But a teacher falling in love with her pupil and, subsequently, contracting a lawful marriage with him, though there is a disparity in their ages and academic level cannot be considered as a defiance of contemporary social mores. (Chua-Qua vs. Clave. G.R. No. 49549; August 30, 1990).

Generally, it is not a valid ground for dismissal. However, a security guard found sleeping on the job is doubtless subject to dismissal on the ground of serious misconduct. (PLDT vs. NLRC and Abucay. August 23, 1988).

Gross Insubordination

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The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. But transfer should not result to demotion of rank which is tantamount to constructive dismissal. (Manila Pavilion Hotel vs. Henry Delada (2012)

Contra I. It has been judicially affirmed as justification for an employee’s refusal to follow an employer’s transfer order if the transfer deters the employee from exercising his right to self-organization. Contra II. Lores Realty Enterprises, Inc. v. Virginia E. Pacia March 2011 Petitioner employer ordered the respondent employee to prepare checks for payment of petitioner’s obligations. Respondent did not immediately comply with the instruction since petitioner employer had no sufficient funds to cover the checks. Petitioner employer dismissed respondent employee for willful disobedience. The Court held that respondent employee was illegally dismissed. Though there is nothing unlawful in the directive of petitioner employer to prepare checks in payment of petitioner’s obligations, respondent employee’s initial reluctance to prepare the checks, although seemingly disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner employer from liability under the Bouncing Checks Law was foremost in her mind. It was not wrongful or willful. Neither can it be considered an obstinate defiance of company authority. The Court took into consideration that respondent employee, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it. b. Gross and Habitual Neglect of Duties; Gross Negligence It has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. (NBS vs. Court of Appeals. G.R. No. 146741; February 27, 2002)

Labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employee’s dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family - grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the liberality of the law. (Quiambao vs. Manila Electric Company. G.R. No. 171023; December 18, 2009).

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An employee who was grossly negligent in the performance of his duty, though such negligence committed was not habitual, may be dismissed especially if the grossly negligent act resulted in substantial damage to the company. (LBC Express vs. Mateo. G.R. No. 168215; June 9, 2009).

c. Fraud or Willful Breach of Trust (Loss of Trust and Confidence) Employees routinely charged with the care and custody of the employer's money or property – to this class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Mabeza vs. NLRC. G.R. No. 118506. April 18, 1997). A breach is willful if it is done intentionally, knowingly, and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. (De la Cruz vs. NLRC. G.R. No. 119536; February 17, 1997). The act constituting the breach must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. (Gonzales vs. NLRC. G.R. No. 131653; March 26, 2001). It must be substantial and founded on clearly established facts sufficient to warrant the employee’s separation from employment. (Sulpicio Lines Inc. vs. Gulde. G.R. No. 149930; February 22, 2002).

d. Commission of a Crime or Offense

e. Other Analogous Cases For abandonment to constitute a valid cause for termination of employment there must be a deliberate unjustified refusal of the employee to resume his employment. This refusal must be clearly shown. Mere absence is not sufficient; it must be accompanied by overt acts pointing to the fact that the employee simply does not want to work anymore. (Jardine Davies vs. NLRC. G.R. No. 106915; August 31, 1993). Abandonment is negated by the immediate filing of an action for illegal dismissal.( Del Monte Philippines vs. NLRC. G.R. No. 126688; March 5, 1998).

To constitute abandonment, there must be a clear and deliberate intent to discontinue one’s employment without any intention of returning back. (Flores vs. Funeraria Neustro. G.R. No. L-66890.April 15, 1988).

The employer is not guilty of unfair labor practice if it merely complies in good faith with the request of the certified union for the dismissal of employees expelled from the union pursuant to the union security clause in the collective bargaining agreement. (Soriano vs. Atienza. G.R. No. 68619. March 16, 1989).

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3. Authorized causes a. Introduction of labor saving device: Reduction of the number of workers in a company’s factory made necessary by the introduction of machinery in the manufacture of its products is justified. There can be no question as to the right of the manufacturer to use new labor-saving devices with a view to effecting more economy and efficiency in its method of production. (Philippine Sheet Metal Workers’ Union vs. CIR. G.R. No. L-2028; April 28, 1949).

b. Redundancy: Requirements for a valid Redundancy Program: 1. A written notice served on both the employees and DOLE at least one month prior to the intended date of retrenchment; 2. Payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; 3. Good faith in abolishing the redundant positions; 4. Fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished such as but not limited to: a. Preferred status b. Efficiency c. Seniority (DAP v. Court of Appeals. G.R. No. 165811; December 14, 2005). It does not necessarily or even ordinarily refer to duplication of work. A position is redundant if it is a superfluity. (Almodiel vs NLRC. G.R. No. 100641. June 14, 1992). c. Retrenchment (Downsizing); Delayering The phrase “to prevent losses” means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. Evidently, actual losses need not set in prior to retrenchment. (Cajucom VII vs. TPI Philippines Cement Corporation. February 11, 2005). Standards to Justify Retrenchment: 1. The losses expected should be substantial and not merely de minimis in extent; 2. The substantial loss apprehended must be reasonably imminent. It be reasonably necessary and likely to effectively prevent the expected losses; 3. The employer should have taken other measures prior or parallel to retrenchment to forestall losses; 4. The alleged losses if already realized, and the expected imminent losses must be proved by sufficient and convincing evidence. (Oriental Petroleum & Minerals Corp. vs. Fuentes. G.R. No. 151818. October 14, 2005) The employer must have used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age and financial hardship for certain workers. (Asian Alcohol Corp. v. NLRC. G.R. No. 131108. March 25, 1999).

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d. Closure of business Where closure is due to serious business losses, no separation pay is required (North Davao Mining Corp. v. NLRC; G.R. No. 112546. March 13, 1996); Where closure was due to an act of the government, the workers are not entitled to separation pay (National Federation of Labor v. NLRC; G.R. No. 127718. March 2, 2000). Article 283 includes both the complete cessation of all business operation of an establishment and the cessation of only part of a company’s business. (Cheniver Deco Print Technics Corp. vs. NLRC. G.R. No. 122876. February 17, 2000).

There must be fair and reasonable criteria to be used in selecting employees to be dismissed, on account of retrenchment, such as: (a) less preferred status (i.e., temporary employees); (b) efficiency rating; and (c) seniority. (Asiaworld Publishing House Inc. vs. Ople. G.R. No. 56398; July 23, 1987).

When there is need to reduce the workforce, the management has the right to choose who to lay off, depending on the work still required to be done and the qualities of the workers to be retained. (Almoite vs. Pacific Architects. G.R. No. 73680; July 10, 1986).

Labor contracts being in personam in nature, are binding only between the parties. Moreover, there is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the employees of the latter. (Sundowner Development Corp. vs. Drilon. G.R. No. 82341. Dec. 6, 1989).

However, although the purchaser of the assets or enterprise is not legally bound to absorb in its employ the employees of the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. The sale or disposition must be motivated by good faith as an element of exemption from liability (Associated Labor Unions – VIMCONTU vs. NLRC. G.R. No. 74841 December 20, 1991). In case of mergers, where the transferee is merely an alter-ego of the different merging firms. In such instance, the transferee has the obligation not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former employers as well. To rule otherwise would be manifestly less than fair, certainly, less than just and equitable. (Filipinas Port Services, Inc. vs. NLRC. G.R. No. 97237 August

16, 1991).

e. Disease: When his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees. There is a certification by a competent public health authority that the disease is of such nature or at such stage that it cannot be cured within a period of 6 months even with proper medical treatment.

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The requirement for a medical certificate cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy on the protection of labor. (Manly Express vs. Payong. G.R. No. 167462. Oct. 25, 2005).

f. Other Authorized Causes: a. Total and permanent disability of the employee; b. Valid application of union security clause; c. Expiration of period in term of employment; d. Completion of project in project employment; e. Failure in prohibition; f. Relocation of business to a distant place; g. Defiance of return-to-work order; h. Commission of illegal acts in a strike; i. Violation of contractual commitment; j. Retirement. 4. Totality of Infractions Doctrine Where the employee has been found to have repeatedly incurred several suspensions or warnings on account or violations of the company rules and regulations, the law warrants their dismissal as it is akin to “habitual delinquency”. 1. Due Process a. Twin-notice requirement (Villeno vs. NLRC. G.R. No. 108153; December 26, 1995).

5. Due process in termination General Rule: The twin requirements of notice and hearing are the essential elements of due process in termination cases, which cannot be dispensed with without violating the constitutional right to due process. a. Notice In order to intelligently prepare the employees for their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as the basis for the charge against the employee – a general description of the change will not suffice.( (King of Kings Transport vs. Mamac. G.R. No. 166208. June 29, 2007).

The first notice should contain a detailed narration of facts and circumstances that will serve as basis for the charge against the employee. A general description of the charge will not suffice. The notice should specifically mention which company rules, if any, are violated (King of Kings Transport vs. Mamac; June, 2007), and that the employer seeks dismissal for the act or omission charged against the employee; otherwise; the notice does not comply with the rules (Magro Placement vs. Hernandez. G.R. No. 156964. July 04, 2007). The law does not require that an intention to terminate one’s employment should be included in the first notice. It is enough that employees are properly apprised of the charges brought against them so they can properly prepare their defenses; it is only

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Labor Law during the second notice that the intention to terminate one’s employment should be explicitly stated (Esguerra vs. Valle Verde Country Club. G.R. No. 173012. June 13, 2012). Every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of Five (5) Calendar Days from receipt of notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint (King of Kings Transport; June, 2007). Second Notice: Notice of Termination (Post-Notice), which is a written notice of termination served upon the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. Note: The twin-notice rule should be complied with. b.

Hearing; meaning of opportunity to be heard The new revolutionized doctrine of due process in termination cases: hearing or conference not necessary. Petitioner’s insistence on a hearing cannot be given merit. The Supreme Court ruled that there is no need for a hearing or conference, and noted: “There is a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. The Omnibus Rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him … At the outset, it must be stated that the time-honored doctrine is that, in case of conflict, the law prevails over the administrative regulations implementing it. The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute. As such, it cannot amend the law either by abridging or expanding its scope”. (Perez vs. Philippine Telegraph and Telephone Company. G.R. No. 152048. April 7, 2009). The “right to counsel and the assistance of one in investigations involving termination cases is neither indispensable nor mandatory, except when the employee himself requests for one or that he manifests that he wants a formal hearing on the charges against him.” (Lopez vs. Alturas Group. G.R. No. 191008. April 11, 2011).

A hearing or conference should be held during which the employee concerned, with the assistance of counsel, if the employee so desires, is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. (Lavador vs. “J” Marketing Corporation and Soyao. G.R. No. 157757; June 28, 2005).

c. Agabon Doctrine: Belated Due Process Rule It abandoned Serrano Ruling. Dismissal for an authorized or just cause, without procedural due process is not an illegal dismissal which warrants back wages; the employee is entitled only to nominal damages.

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The Court interpreted Art. 279 to the effect that: termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of back wages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed.  The Court decided to follow Wenphil that where the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal or render it illegal. However, the employer should indemnify the employee for the violation of his rights. The indemnity should be stiffer than that provided in Wenphil to discourage the abhorrent practice of “dismiss now, pay later.” The indemnity should be in the form of nominal damages, which is adjudicated in order that a right of plaintiff, which has been violated by the defendant, may be vindicated. If the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee. On the other hand, if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative. (Jaka Food Processing v. Pacot. G.R. No. 151378.March 28, 2005). Factors to be taken into account in determining the amount of nominal damages in dismissal cases: 1. The authorized cause invoked, whether it was a retrenchment or a closure or cessation of operation of the establishment due to serious business losses or financial reverses or otherwise; 2. The number of employees to be awarded; 3. The capacity of the employers to satisfy the awards, taken into account their prevailing financial status as borne by the records; 4. The employer's grant of other termination benefits in favor of the employees; 5. Whether there was a bona fide attempt to comply with the notice requirements as opposed to giving no notice at all. SC reduced the nominal damages from P 30,000 to P 10,000. (Industrial Timber Corp. v. Agabon. G.R. No. 164518. March 30, 2006).

C. Reliefs for Illegal Dismissal 1. Reinstatement Payroll reinstatement in lieu of actual reinstatement is a departure from the rule and there must be showing of special circumstances rendering actual reinstatement impracticable, or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the Secretary of Labor and Employment in a labor dispute that affects the national interest. (Manila Diamond Hotel Employees Union vs. Secretary. G.R. No. 140518; December 16, 2004).

a.

Pending Appeal (Art. 223, Labor Code) The reinstatement order of the Labor Arbiter is immediately executory even pending appeal (Article 223 (3), Labor Code). In fact, it is self-executory, without need of the complainant filing a Motion for Execution to effect the reinstatement (Pioneer Texturizing vs. NLRC; G.R. No. 118651. October 16, 1997). Hence, it is the obligation of the employer to immediately admit the employee back to work or reinstate him in the payroll at his option. Otherwise, the employer will be held liable for backwages from the date of notice of the order up to the date of employees

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actual or payroll reinstatement. (International Container Terminal Services, Inc. vs. NLRC; G.R. No. 115452. December 21, 1998) Failure on the part of the employer to exercise the options in the alternative, the employer must pay the employee’s salaries (Garcia vs. Philippine Airlines, Inc. G.R. No. 164856. August 29, 2007). Where the order of reinstatement by the labor arbiter is reversed on appeal. Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Roquero vs. Philippine Airlines, Inc. G.R. No. 152329. April 22, 2003). Note (Poquiz): He should not refund the salaries he received pending appeal for the principle of social justice renders inapplicable the civil law doctrine of unjust enrichment.

Exception: After the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer (Garcia vs. Philippine Airlines; 2009).

2. Separation pay in lieu of reinstatement a. Doctrine of Strained Relations: When the employer can no longer trust the employee and vice-versa, or there were imputations of bad faith to each other, reinstatement could not effectively serve as a remedy. This doctrine applies only to positions which require trust and confidence. (Globe Mackay v. NLRC. G.R. No. 82511; March 3, 1992).

b. Separation Pay in lieu of Reinstatement 1.

Full Backwages

Entitlement to backwages of the illegally dismissed employee flows from law. Even if he does not ask for it, it may be given. The failure to claim backwages in the complaint for illegal dismissal is a mere procedural lapse which cannot defeat a right granted under substantive law. (St. Michael’s Institute v. Santos. G.R. No. 145280; December 4, 2001).

(a) Computation The backwages to be awarded should not be diminished or reduced by earning elsewhere during the period of his illegal dismissal. The reason is that the employee while litigating the illegality of his dismissal must still earn a living to support himself and his family. (Bustamante vs. NLRC (March 15, 1996), and Buenviaje v. CA (2002)).

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The award of backwages is computed on the basis of a 30-day month. (JAM Trans Co. v. Flores. G.R. No. L-68555; March 19, 1993). When the order of the labor arbiter approving reinstatement was reversed on appeal, the employee is not required to reimburse the backwages or other salaries received during the pendency of the appeal except when there is delay in the execution of the order of reinstatement prior to the reversal and the delay or non-execution was not due to employer’s fault. (Garcia vs. PAL. G.R. No. 164856; January 20, 2009).

(b) Limited Backwages D.

Preventive Suspension When an employee resigns or executes a quitclaim in favor of the employer, he is thereby stopped from filing any money claims against the employer arising from his employment. (Philippine National Construction Corporation vs. NLRC. G.R. No. 117240; October 2, 1997).

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represented a reasonable settlement, it is binding on the parties and may not later be disowned, simply because of a change of mind. (Candido Alfaro v. Court of AppealsG.R. No. 140812; August 28, 2001).

E.

Constructive Dismissal Constructive Dismissal is defined as quitting because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving demotion in rank and a diminution in pay. (Jo Cinema Corporation v. Abellana. G.R. No. 132837; June 28, 2001).

There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.( Hyatt Taxi Services, Inc. v. Catinoy. G.R. No. 143204. June 26, 2001).

V. MANAGEMENT PREROGATIVE This prerogative flows from the established rule that labor laws do not authorize the substitution of judgment of the employer in the conduct of his business. The employer can exercise this prerogative without fear of liability as long as it is done in good faith for the advancement of his interests, and not for the purpose of defeating or circumventing the rights of the employees under special laws or valid agreements. It is valid as long as it is not performed in a malicious, harsh, oppressive, vindictive or wanton manner, or out of malice or spite.( Great Pacific Employees Union vs. Great Pacific Life Assurance. G.R. No. 126717; February 11, 1999). As long as the company’s exercise of the same is exercised in good faith for the advancement of the employer’s interest, and not for the purpose of defeating or circumventing the rights of the employees under special laws or valid agreements, the courts will uphold them (also: San Miguel Brewery Sales Force Union (PTGWO) vs. Ople | G.R. No. L-53515; February 8, 1989). (Capitol Medical Center, Inc. v. Meris. G.R. No. 155098; September 16, 2005)

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A.

Discipline The employer has the prerogative to instill discipline in his employees and to impose reasonable penalties, including dismissal, on erring employees pursuant to company rules and regulations. (San Miguel Corp. vs. NLRC. G.R. No. 78277. May 12, 1989).

It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal. It will demoralize the rank-and-file if the undeserving, if not undesirable, remains in the service. (Shoemart, Inc. vs. NLRC. G.R. No. 74229. August 11, 1989).

B.

Transfer of Employees This is a privilege inherent in the employer’s right to control and manage its enterprise effectively. (Yuco Chemical Industries vs. Ministry of Labor. G.R. No. L-75656 May 28, 1990). It is the inherent prerogative of an employer to transfer and reassign its employees to meet the requirements of its business. Be that as it may, the prerogative of the management to transfer its employees must be exercised without grave abuse of discretion. The exercise of the prerogative should not defeat an employee's right to security of tenure. The employer’s privilege to transfer its employees to different workstations cannot be used as a subterfuge to rid itself of an undesirable worker. (Veterans Security Agency v. Vargas. G.R. No. 159293; December 16, 2005).

An employer has the right to transfer, reduce or lay-off personnel in order to minimize expenses and to insure the stability of the business, and even to close the business, and this right has been consistently upheld even in the present era of multifarious reforms in the relationship of capital and labor, provided the transfer or dismissal is not abused but is done in good faith and is due to causes beyond control. ((Gregorio Araneta Employees Union vs. Roldan. G.R. No. L-6846

July 20, 1955). It is the employers’ 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. When an employee’s transfer is not unreasonable, nor inconvenient or prejudicial to him, and it does not involve a demotion in rank or diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal. (Philipiine Telegraph vs. Laplana. G.R. No. 76645; July 23, 1991).

It cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor when the real reason is to penalize an employee for his union activities and thereby defeat his right to self-organization. But the transfer can be upheld when there is no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee. (Pocketbell Phils., Inc. vs. NLRC and Arthur Alinas. G.R. No. 106843; January 20, 1995).

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C.

Productivity Standard Failure to observe prescribed standards of work; or to fulfill reasonable work assignments due to insufficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the employer’s interest. (Buiser vs. Leogardo . G.R. No. L-63316 July 31,

1984). D.

Grant of Bonus General Rule: Bonus is not demandable as a matter of right. It is a management prerogative, given in addition to what is ordinarily received by or strictly due to the recipient (Producers Bank v. NLRC. G.R. No. 100701. March 28, 2001). Exceptions 1. When it was promised to be given without any conditions imposed for its payment in which case it is deemed part of the wage; 2. When it has ripened into practice. (Marcos v. NLRC; G.R. No. 111744. September 8, 1995):

E. Change of Working Hours The working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that employees shall observe such rules as have been laid down by the company.(Interphil Laboratories Union-FFW vs. Interphil Laboratories, Inc.

G.R. No. 142824. December 19, 2001). F. Rules on Marriage between employees of competitor-employers The failure of the employer to prove legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company… Thus, for failure of the employer to present undisputed proof of a reasonable business necessity, we rule that the questioned policy is an invalid exercise of management prerogative. (Star Paper Corp. vs. Simbol. G.R. No. 164774 April 12, 2006).

Prohibition of marriage or existing or future relationships between employees of competing companies is not violative of the equal protection clause. (Duncan vs. Glaxo Wellcome. G.R. No. 162994; September 17, 2004). A woman worker may not be dismissed on the ground of dishonesty for having written “single” on the space for civil status on the application sheet, contrary to the fact that she was married. (PT&T Co. v. NLRC. G.R. No. 118978. May 23, 1997).

G. Post-employment Ban Non-involvement Clause: A non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place. It was also stated in this case that the

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validity of a non-involvement clause depends upon the nature of work of the subject employee. “Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hong Kong and ASEAN operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find the non-involvement clause not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent.” (Daisy Tiu vs. Platinum Plans. G.R. No. 163512. February 28, 2007).

VI. SOCIAL WELFARE LEGISLATION A.

Social Security Service Law (R.A. No. 8282) The policy objective in the enactment of SSS law is the policy of the State to establish, develop, promote and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice and provide meaningful protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden (RA 8282, Section 2). The enactment of SSS law is a legitimate exercise of the police power. It affords protection to labor and is in full accord with the constitutional mandate on the promotion of social justice. (Roman Catholic Archbishop of Manila vs. SSS. G.R. L-15045. January 20, 1961). “The right of an employee to be covered by the SSS is premised on the existence of an employeremployee relationship” (Gapayao vs. Fulo. G.R. No. 193493 June 13, 2013). A wife who is already separated de facto from her husband cannot be said to be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his death, it would be safe to presume that she was dependent on the husband for support, unless it is shown that she is capable of providing for herself. (SSS v. Aguas. G.R. No. 165546; February 27, 2006)

Effect of Non-Remittance of Contributions by the Employer: “An employee is still entitled to social security benefits even if his employer fails/refuses to remit the contribution to the SSS” (Gapayao v. Fulo. G.R. No. 193493 June 13, 20132013).

B.

GSIS Law (R.A. No. 8291) The compulsory retirement of government officials and employees upon their reaching the age of 65 years is founded on public policy which aims by it to maintain efficiency in the government service and at the same time give to the retiring public servants the opportunity to enjoy during the remainder of their lives the recompense, inadequate perhaps for their long service and devotion to the government, in the form of a comparatively easier life, freed from the rigors of civil service discipline and the exacting demands that the nature of their work and their relations with their superiors as well as the public would impose upon them. (Beronilla v. GSIS. G.R. No. L21723; November 26, 1970).

Retirement benefits given to government employees in effect reward them for giving the best years of their lives to the service of their country. This is especially true with those in government

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service occupying positions of leadership or positions requiring management skills because the years they devote to government service could be spent more profitably in lucrative appointments in the private sector. In exchange for their selfless dedication to government service, they enjoy security of tenure and are ensured of a reasonable amount of support after they leave the government. The basis for the provision of retirement benefits is, therefore, service to government. (GSIS vs. CSC. G.R. No. 98395-102449; June 19, 1995).

Thus, where the employee retires and meets the eligibility requirements, he acquires a vested right to benefits that is protected by the due process clause. Retirees enjoy a protected property interest whenever they acquire a right to immediate payment under pre-existing law. Thus, a pensioner acquires a vested right to benefits that have become due as provided under the terms of the public employees’ pension statute. No law can deprive such person of his pension rights without due process of law, that is, without notice and opportunity to be heard. (GSIS vs. De Leon. G.R. No. 186560; November 17, 2010). Note (Poquiz): Coverage of GSIS Law Membership is compulsory for all employees:  Appointee or elective  whether temporary, counsel, permanent or contractual with employer-employee relationship  who are receiving basic pay or salary but not per diems, honoraria or allowances, and  who have not reached the compulsory retirement age of 65 years old Who are not covered: The following are excluded from the compulsory membership of the GSIS  Uniformed members of the AFP and PNP  Those who are not receiving basic pay or salary (per diems, honoraria or allowances are excluded)  members of the judiciary and constitutional commissions. (they are only covered by life insurance)  Purely casual employees C. Limited Portability Law (R.A. No. 7699) 2011 Bar Exam Question: Under the Limited Portability law, funds from the GSIS and the SSS maybe transferred for the benefit of a worker who transfers from one system to the other. For this purpose, overlapping periods of membership shall be credited only once. D. Employee’s Compensation – coverage and when compensable Under the present law, in order for the employee to be entitled to sickness or death benefits, the claimant must show: (1) that the disability or death is the result of an occupational disease listed under Annex “A” of the ECC Rules with the conditions set therein satisfied; or, (2) that the risk of contracting the disease is increased by the working conditions. (Lorenzo v. GSIS. G.R. No. 188385; October 2, 2013).

Where the primary injury is shown to have arisen in the course of employment, every natural consequence that flows from the injury likewise arises out of the employment, unless it is the result of an independent intervening cause attributable to complainants own negligence or

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misconduct. Simply stated, all the medical consequences and sequels that flow from the primary injury are compensable. (Belarmino vs. ECC. G.R. No. 90204; May 11, 1990).

1. Direct Premises Rule a. General Rule: The accident of the employee should have occurred at the place of work in order to be compensable. b. Exceptions: (The accident is still compensable even if it occurred outside the work premises) (1) Proximity Rule: When the injury is sustained when the employee is proceeding to or from his work on the premises of the employer, the injury is compensable.( Iloilo Dock & Engineering Co. vs. ECC. G.R. No. L-26341. Nov. 27, 1968). (2). Going To or Coming From Work when the injury is sustained when the employee is proceeding to or from his work on the premises of the employer, the injury is compensable. a. The act of the employee of going to, or coming from, the work place, must have been a continuing act, that is, he had not been diverted therefrom by any other activity and he had not departed from his usual route to, or from, his workplace; and, b. An employee on a special errand must have been official and in connection with his work. c.

Extra Premises Rule: The company which provides the means of transportation in going to, or coming from the place of work, is liable to the injury sustained by the employees while on board said means of transportation. (Enao v. ECC G.R. No. L-46046; April 5, 1985).

d. Special Errand Rule: Injury sustained outside the company premises is compensable if his being out is covered by an office order or a locator slip or a pass for official business. The special errand must be official and in connection to the employee’s work. e. Dual Purpose Doctrine allows compensation where a special trip would have to be made for the employer if the employee had not combined the service for the employer with his going or coming trip even if in the course of the trip, the employee also pursues a personal purpose. f.

Special Engagement Rule covers field trips, outings, intramurals, and picnics when initiated and sanctioned by the employer.

g. Positional and Local Risks Doctrine: If an employee by reason of his duties is exposed to a special or peculiar danger from the elements, that is, one greater than that to which other persons in the community are exposed and an unexpected injury occurs, the injury is compensable

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2. 24 Hour Duty Doctrine “The 24 Hour Duty Doctrine” applies to both policemen and firemen. The policemen and firemen are technically on duty 24 hours a day except when they are on vacation leave, they may be “on-call” anytime. However, to be compensable, the injury should be caused by an activity which is police or firemen services in character (reasonable connection between the injury and the work or service). (Hinoguin v. ECC. G.R. No. 84307; April 17, 1989).

The 24-hour duty doctrine should not be sweepingly applied to all acts and circumstances causing the death of a police officer but only to those which, although not on official line of duty, are nonetheless basically police service in character. (GSIS vs. Court of Appeals. G.R. No. 128524; April 20, 1999).

VII. LABOR RELATIONS A. Right to self-organization 1. Who may unionize for purposes of collective bargaining Article 212(g) of the Labor Code defines a labor organization as “any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.” Upon compliance with all the documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant labor organization a certificate indicating that it is included in the roster of legitimate labor organizations. Any applicant labor organization shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009).

2. Bargaining unit a. Test to determine the constituency of an appropriate bargaining unit An appropriate bargaining unit is defined as “a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law”. The test of grouping is community or mutuality of interest. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees. The positions of Human Resource Assistant and Personnel

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Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment and selection of employees, access to employees’ personal files and compensation package, and human resource management. As regards a Personnel Assistant, one’s work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioner’s team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. (San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011). A bargaining unit is a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicated to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.” The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009

Under Article 245 of the Labor Code, supervisory employees are not eligible for membership in a labor union of rank-and-file employees. The supervisory employees are allowed to form their own union but they are not allowed to join the rank-and-file union because of potential conflicts of interest. Further, to avoid a situation where supervisors would merge with the rank-and-file or where the supervisors’ labor union would represent conflicting interests, a local supervisors’ union should not be allowed to affiliate with the national federation of unions of rank-and-file employees where that federation actively participates in the union activity within the company. Thus, the limitation is not confined to a case of supervisors wanting to join a rank-and-file union. The prohibition extends to a supervisors’ local union applying for membership in a national federation the members of which include local unions of rank-and-file employees. (Coastal Subic Bay Terminal, Inc., vs DOLE. G.R. No. 157117,November 20, 2006 ).

There are two classes of rank and file employees in the university that is, those who perform academic functions such as the professors and instructors, and those whose functions are non-academic who are the janitors, messengers, clerks etc. Thus, not much reflection Is needed to perceive that the mutuality of interest which justifies the formation of a single bargaining unit is lacking between the two classes of employees. (U.P. v Ferrer-Calleja. G.R. No. 96189. July 14, 1992).

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While the existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of interests. This is so because the basic test of an asserted bargaining unit’s acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their Collective Bargaining rights. (Democratic Labor Assocation v Cebu Stevedorin Company, Inc.G.R. No. L-10321, Feb 28, 1958). The attempt to make the security agencies appear as two separate entities, when in reality they were but one, was a devise to defeat the law and should not be permitted. Although respect for corporate personality is the general rule, there are exceptions. In appropriate cases, the veil of corporate fiction may be pierced as when it is used as a means to perpetrate a social injustice or as a vehicle to evade obligations. Petitioner was thus correctly ordered to pay respondent’s retirement under RA 7641, computed from January 1979 up to the time he applied for retirement in July 1997. (Enriquez Security Services,Inc. vs. Victor A. Cabotaje G.R. No. 147993,July 21, 2006). b. Voluntary recognition c. Certification election (i) In an unorganized establishment (ii) In an organized establishment The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even the allegation that some employees participating in a petition for certification election are actually managerial employees will give an employer legal personality to block the certification election. The employer’s only right in the proceeding is to be notified or informed thereof. (Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation G.R. No. 169717, March 16, 2011). The general rule is that an employer has no standing to question the process of certification election, since this is the sole concern of the workers. Law and policy demand that employers take a strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. The only exception is where the employer itself has to file the petition pursuant to Article 258 of the Labor Code because of a request to bargain collectively. (San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union. G.R. No. 146206. August 1, 2011). A certification election is not a litigation but merely an investigation of a non‐adversarial fact‐ finding character in which BLR plays a part of a disinterested investigator seeking merely to ascertain the desire of the

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Labor Law employees as to the matter of their representation. (Airline Pilots Ass’n of the Philippines v. CIR. G.R. No. L‐33705, April 15, 1977). The bargaining deadlock-bar rule was not applied because the duly certified exclusive bargaining agent of all rank-and-file employees did not, for more than four (4) years, take any action to legally compel the employer to comply with its duty to bargain collectively, hence, no CBA was executed; nor did it file any unfair labor practice suit against the employer or initiate a strike against the latter. Under the circumstances, a certification election may be validly held. (Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] vs. Trajano, G. R. No. 75810, September 9, 1991). This is what is strikingly different between the Kaisahan case and the case at bench for in the latter case, there was proof that the certified bargaining agent, respondent union, had taken an action to legally coerce the employer to comply with its statutory duty to bargain collectively, i.e., charging the employer with unfair labor practice and conducting a strike in protest against the employer’s refusal to bargain. It is only just and equitable that the circumstances in this case should be considered as similar in nature to a ‘bargaining deadlock’ when no certification election could be held. This is also to make sure that no floodgates will be opened for the circumvention of the law by unscrupulous employers to prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3, Rule V, Book V of the Implementing Rules should be interpreted liberally so as to include a circumstance, e.g., where a CBA could not be concluded due to the failure of one party to willingly perform its duty to bargain collectively. (Capitol Medical Center Alliance of Concerned Employees-Unified Filipino Service Workers vs. Laguesma. G. R. No. 118915, February 4, 1997).

The pendency of a petition for cancellation of union registration does not preclude collective bargaining, and that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the union’s registration because at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order cancelling its registration. The legitimacy of the legal personality of respondent cannot be collaterally attacked in a petition for certification election proceeding but only through a separate action instituted particularly for the purpose of assailing it. The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration is issued to a union, its legal personality cannot be subject to a collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules. (Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda. G.R. No. 169754, February 23, 2011). d) Run-off election e) Re-run election f) Consent election It is well‐settled that under the “double majority rule” for there to be a valid certification election, majority of the bargaining unit must have voted and the winning union must

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have garnered majority of the valid votes cast. Following the ruling that all the probationary employees’ votes should be deemed valid votes while that of the supervisory Ees should be excluded, it follows that the number of valid votes cast would increase. Under Art. 256 of the LC, the union obtaining the majority of the valid votes cast by the eligible voters shall be certified as the sole exclusive bargaining agent of all the workers in the appropriate bargaining unit. This majority is 50% + 1. (NUWHRAIN ‐ MPHC v. SLE. G.R. No. 181531, July 31, 2009).

g) Affiliation and disaffiliation of the local union from the mother union A local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rules. Such disaffiliation, however, does not result in it losing its legal personality. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. In the present case, whether the FFW went against the will of its principal (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent employer to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at the instance of either or both the FFW and the union or a rival labor organization, but not the employer as in this case. (Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011).

Under the LC and the rules, the power granted to LOs to directly create a chapter or local through chartering is given to a federation or national union only, not to a trade union center. (SMCEU v. San Miguel Packaging Products Ees Union G.R. No. 171153, Sep. 12, 2007). It becomes mandatory for the BLR to check if the requirements under Art. 234 of the LC have been sedulously complied with. If its application for registration is vitiated by falsification and serious irregularities, especially those appearing on the face of the application and the supporting documents, a LO should be denied recognition as a LLO. (Progressive Dev’t Corp.‐Pizza Hut v. Laguesma. G.R. No. 115077, April 18, 1997). This happens when there is a substantial shift in allegiance on the part of the majority of the members of the union. In such a case, however, the CBA continues to bind the members of the new or disaffiliated and independent union up to determine the union which shall administer the CBA may be conducted. (ANGLO‐KMU v. Samahan ng Manggagawang Nagkakaisa sa Manila Bay Spinning Mills at J.P. Coats G.R. No.118562, July 5, 1996).

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Disaffiliation should be in accordance with the rules and procedures stated in the constitution and by‐laws of the federation. A local union may disaffiliate with its mother federation provided that there is no enforceable provision in the federation’s constitution preventing disaffiliation of a local union. (Tropical Hut Ees Union v. Tropical Hut G.R. Nos. L‐43495‐99, Jan. 20, 1990). Disaffiliation should always carry the will of the majority. It cannot be effected by a mere minority group of union members. The obligation to check-off federation dues is terminated with the valid disaffiliation of the local union from the federation with which it was previously affiliated. Once a Local Chapter disaffiliates from the federation, it ceases to be entitled to the rights and privileges granted to a legitimate labor organization. It cannot file a petition for certification election. (Villar vs. Inciong. 121 SCRA 444, April 20, 1983). The Supreme Court upheld the right of local unions to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for themselves. (Liberty Cotton Mills Workers Union Vs. Liberty Cotton Mills, Inc. G.R. No. L-33987, September 4, 1975).

(i)

Substitutionary doctrine

The Er cannot revoke the validly executed CB contract with their Er by the simple expedient of changing their bargaining agent. The new agent must respect the contract. It cannot be invoked to support the contention that a newly certified CB agent automatically assumes all the personal undertakings of the former agent‐like the “no strike clause” in the CBA executed by the latter. (Benguet Consolidated Inc. v. BCI Ees and Worker’s Union‐PAFLU. G.R. No. L‐24711, April 1968).

(h) Union dues and special assessments (i) Requirements for validity It shall invalidate the questioned special assessments. Substantial compliance of the requirements is not enough in view of the fact that the special assessment will diminish the compensation of union members. i) Agency fees. (Palacol v. Ferrer‐ Calleja G.R. No. 85333, Feb. 26, 1990).

B. Right to collective bargaining Jurisdictional preconditions in collective bargaining 1. Possession of the status of majority representation of the employees representative in accordance with any of the means of selection or designation provided for the Labor Code 2. Proof of majority representation 3. A demand to bargain under Art. 250 (a) of the LC.( Kiok Loy v. NLRC.

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G.R. No. L‐ 54334, Jan.22, 1986)

1. Duty to bargain collectively a. When there is absence of a CBA b. When there is a CBA Where there is a legitimate representation issue, there is no duty to bargain collectively on the part of the Employer. (Lakas ng mga Manggagawang Makabayan v. Marcelo Enterprises. G.R. No. L‐38258, Nov. 19, 1982).

There is no perfect test of good faith (GF) in bargaining. The GF or BF is an inference to be drawn from the facts and is largely a matter for the NLRC’s expertise. The charge of BF should be raised while the bargaining is in progress. With the execution of the CBA, BF can no longer be imputed upon any of the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein by the parties. This is not a case where private respondent exhibited an indifferent attitude towards CB because the negotiations were not the unilateral activity of petitioner union. The CBA is good enough that private respondent exerted “reasonable effort of GF bargaining.( Samahang Manggagawa sa Top Form Manufacturing‐United Workers of the Phils v. NLRC. G.R. No. 113856, Sept. 7, 1998).

This is no different from a bargaining representative’s perseverance to include one that they deem of absolute necessity. Indeed, an adamant insistence on a bargaining position to the point where the negotiations reach an impasse does not establish bad faith. Obviously, the purpose of CB is the reaching of an agreement resulting in a contract binding on the parties; but the failure to reach an agreement after negotiations have continued for a reasonable period does not establish a lack of good faith. The statutes invite and contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an agreement. While the law makes it an obligation for the Er and the Ees to bargain collectively with each other, such compulsion does not include the commitment to precipitately accept or agree to the proposals of the other. All it contemplates is that both parties should approach the negotiation with an open mind and make reasonable effort to reach a common ground of agreement. (Union of Filipro Ees v. Nestle Phils. G.R. Nos. 158930‐31, Mar. 3, 2008).

2. Collective Bargaining Agreement (CBA). (Law of the Plant) As regular employees, petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded categories. Most importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way to the CA – ruled against the company’s submission that they are independent contractors.

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Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBA’s express terms, they are entitled to its benefits. CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the petitioners are regular rank-and-file employees of the company. The tribunals below uniformly answered this question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the petitioners’ regular employment. (Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation. G.R. No. 183810, January 21, 2010). The certification of the CBA by the BLR is not required to make such contract valid. Once it is duly entered into and signed by the parties, a CBA becomes effective as between the parties whether or not it has been certified by the BLR. (Liberty Flour Mills Ee’s Association v. Liberty Flour Mills. G.R. Nos. 58768‐70, Dec. 29, 1989). A CBA is not an ordinary contract but one impressed with public interest, only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation. (SMTFM‐UWP v. NLRC. G.R. No. 113856, Sept. 7, 1998). A pending cancellation proceeding is not a bar to set mechanics for collective bargaining (CB). If a certification election may still be held even if a petition for cancellation of a union’s registration is pending, more so that the CB process may proceed. The majority status of the union is not affected by the cancellation proceedings. (Capitol Medical Center v. Trajano. G.R. No. 155690, June 30, 2005). Although a CBA has expired, it continues to have legal effects as between the parties until a new CBA has been entered into. (Pier & Arrastre Stevedoring Services, Inc. v. Confessor. G.R. No. 110854, February 13, 1995). a. Mandatory provisions of CBA i. Grievance procedure CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. (Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012)

ii. Voluntary arbitration Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and

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bargaining deadlocks. For the exception to apply, there must be agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence on record showing the parties have agreed to resort to voluntary arbitration. (The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011).

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution. Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to be bound by said arbitrator's decision. (Luzon Dev’t Bank v. Ass’n of Luzon Dev’t Bank Ees G.R. No. 120319, Oct. 6, 1995). iii. No strike-no lockout clause The “no strike‐no lockout” clause in the CBA applies only to economic strikes. It does not apply to ULP strikes. Hence, if the strike is founded on an unfair labor practice of the employer, a strike declared by the union cannot be considered a violation of the no strike clause. (Master Iron Labor Union v. NLRC. G.R. No. 92009, Feb. 17, 1993). Note (Poquiz): A strike can be waived under this clause b. Labor management council c. Duration Article 253 of the Labor Code mandates the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA. The provisions of the imposed CBA continues to have full force and effect until a new CBA is entered into by the parties. (General Milling CorporationIndependent Labor Union [GMC-ILU] vs. General Milling Corporation G.R. Nos. 183122/183889, June 15, 2011). While the parties may agree to extend the CBA’s original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the union’s exclusive collective bargaining status. By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than five

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Labor Law years, either as an original provision or by amendment, the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBA’s first five years.( FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) Vs. Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor Organization (SANAMA-FVC-SIGLO. G.R. No. 176249, November 27, 2009) Under the principle of hold over, until a new CBA has been executed by and between the parties, they are duty bound to keep the status quo and must continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception or qualification as to which of the economic provisions of the existing agreement are to retain force and effect. Therefore, it must be encompassing all the terms and condition in the said agreement. (New Pacific Timber v. NLRC. G.R. No. 124224, Mar. 17, 2000).

The signing of the CBA does not determine whether the agreement was entered into within the 6 month period from the date of expiration of the old CBA. In the present case, there was already a meeting of the minds between the company and the union prior to the end of the 6 month period after the expiration of the old CBA. Hence, such meeting of the mind is sufficient to conclude that an agreement has been reached within the 6 month period as provided under Art. 253‐A of the LC. (Mindanao Terminal and Brokerage Services Inc., v. Confessor. G.R. No. 111809, May 5, 1997).

The CBA arbitral awards granted 6 months from the expiration of the last CBA shall retroact to such time agreed upon by both the Er and the union. Absent such agreement as to retroactivity, the award shall retroact to the 1st day after the 6 month period following the expiration of the last day of the CBA should there be one. In the absence of a CBA, the SLE’s determination of the date of retroactivity as part of his discretionary powers over arbitral award shall control. (Manila Electric Company v. Quisumbing. G.R. No. 127598, Feb. 22 and Aug. 1, 2000). There is no conflict between the agreement and Art. 253‐A of the LC for the latter has a 2‐fold purpose namely: a) to promote industrial stability and predictability and b) to assign specific time tables wherein negotiations become a matter of right and requirement. In so far as the first purpose, the agreement satisfies the first purpose. As regard the second purpose, nothing in Art. 253‐A prohibits the parties from waiving or suspending the mandatory timetables and agreeing on the remedies to enforce the same. For under the said article, the representation limit of the exclusive bargaining agent applies only when there is an existing CBA in full force and effect. In this case, the parties agreed to suspend the CBA and put in abeyance the limit on representation. (Rivera v. Espiritu. G.R. No. 135547, Jan. 23, 2002). 3. Union Security a. Union security clauses; closed shop, union shop, maintenance of membership shop, etc. b. Check-off; union dues, agency fees

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What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner’s new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment. (Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter G.R. No. 164301. October 19, 2011). In terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.( Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828, August 9, 2010). GMC completely missed the point that the expulsion of Casio, et al. by the union and the termination of employment of the same employees by GMC, although related, are two separate and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose upon GMC the obligation to accord Casio, et al. substantive and procedural due process before complying with the union’s demand to dismiss the expelled union members from service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et al. (General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010). While it is true that the withdrawal of support may be considered as a resignation from the union, the fact remains that at the time of the union’s application for registration, the affiants were members of the union and they comprised more than the required 20% membership for purposes of registration as a labor union. Article 234 of the Labor Code merely requires a 20% minimum membership during the application for union registration. It does not mandate that a union must maintain the 20% minimum membership requirement all throughout its existence. (Mariwasa Siam Ceramics, Inc. vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 183317, December 21, 2009). Article 222(b) of the Labor Code, as amended, prohibits the payment of attorney’s fees only when it is effected through forced contributions from the employees from their own funds as distinguished from union funds. Hence, the general rule is that attorney’s fees, negotiation fees, and other similar charges may only be collected from union funds, not from the amounts that pertain to individual union members. As an exception to the general rule, special assessments or other extraordinary fees may be levied upon or checked off from any amount due an employee for as long as there is proper authorization by the employee. A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from the latter’s wages and remits them directly to the Union. Its desirability in a labor organization is quite evident. The Union is assured thereby of continuous funding. The system of check-off is primarily for the benefit of the Union and, only indirectly, for the individual employees. These requisites are: (1) an authorization by a written resolution of the majority of all the union members at the general membership meeting duly called for the purpose; (2) secretary’s record of the minutes of the meeting; and (3) individual written authorization for check-off duly signed by the employee concerned. (Eduardo J. Mariño, Jr. et al. vs. Gil Y. Gamilla, et al.. G.R. No. 149763, July 7, 2009).

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A shop steward leads to the conclusion that it is a position within the union, and not within the company. A shop steward is appointed by the union in a shop, department, or plant and serves as representative of the union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer. He is the representative of the union members in a building or other workplace. Black’s Law Dictionary defines a shop steward as a union official elected to represent members in a plant or particular department. His duties include collection of dues, recruitment of new members and initial negotiations for the settlement of grievances. A judgment of reinstatement of the petitioner to the position of union Shop Steward would have no practical legal effect since it cannot be enforced. Based on the requirements imposed by law and the APCWU-ATI CBA, and in the nature of things, the subsequent separation of the petitioner from employment with respondent ATI has made his reinstatement to union Shop Steward incapable of being enforced. (Teodoro S. Miranda, Jr. vs. Asian Terminals, Inc. and Court of Appeals, G.R. No. 174316, June 23, 2009). “Union security” is a generic term, which is applied to and comprehends “closed shop,” “union shop,” “maintenance of membership” or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part. In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union’s decision to expel the employee from the union or company. (Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al. G.R. No. 165407, June 5, 2009

4. Unfair Labor Practice in collective bargaining a. Bargaining in bad faith The act of the employer in refusing to comply with the terms and conditions of a CBA constitutes bargaining in bad faith and is considered an unfair labor practice. (Oceanic Pharmacal Employees Union vs. Inciong. G. R. No. L-50568, Nov. 7, 1979).

b. Refusal to bargain

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c. Blue sky bargaining Whether or not the union is engaged in blue‐sky bargaining is determined by the evidence presented by the union as to its economic demands. Thus, if the union requires exaggerated or unreasonable economic demands, then it is guilty of ULP. In order to be considered as unfair labor practice, there must be proof that the demands made by the union were exaggerated or unreasonable. In the minutes of the meeting show that the union based its economic proposals on data of rank-and-file employees and the prevailing economic benefits received by bank employees from other foreign banks doing business in the Philippines and other branches of the bank in the Asian region. Hence, it cannot be said that the union was guilty of ULP for blue-sky bargaining.(Standard Chartered Bank v. Confessor. G.R. No. 114974, June 16, 2004).

d. Surface bargaining Surface bargaining” is defined as “going through the motions of negotiating” without any legal intent to reach an agreement. The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the bargaining table. Whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining. There can be no surface bargaining, absent any evidence that management had done acts, both at and away from the bargaining table, which tend to show that it did not want to reach an agreement with the union or to settle the differences between it and the union. Here, admittedly, the parties were not able to agree and reached a deadlock. However, it must be emphasized that the duty to bargain “does not compel either party to agree to a proposal or require the making of a concession.” Hence, the parties’ failure to agree does not amount to ULP under Article 248 [g] for violation of the duty to bargain. (Standard Chartered Bank Employees Union [NUBE] vs. Confesor. G. R. No. 114974, June 16, 2004).

e. Unfair Labor Practice (ULP) 1. Nature of ULP Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form an association. In order to show that the employer committed unfair labor practice under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at bar, respondents were indeed unceremoniously dismissed from work by reason of their intent to form and organize a union. (Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012). Unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be

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Labor Law shown that his acts interfere with his employees’ right to self-organization. Since there is no showing that the respondent company’s implementation of the Right-Sizing Program was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organization, there is no unfair labor practice to speak of in this case. (Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011). Unfair labor practice refers to “acts that violate the workers’ right to organize.” The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices. (General Santos Coca Cola Plant Free Workers Union-Tupas vs. COCA-COLA BOTTLERS PHILS., INC. G.R. No. 178647. Feb. 13, 2007).

2. ULP of employers For a charge of unfair labor practice to prosper, it must be shown that respondent CAB’s suspension of negotiation with CABEU-NFL and its act of concluding a CBA with CABELA, another union in the bargaining unit, were motivated by ill will, “bad faith, or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy…” However, the facts show that CAB believed that CABEU-NFL was no longer the representative of the workers. It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA.” Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices. (Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc. G.R. No. 186605, November 17, 2010). Unfair labor practice cannot be imputed to MMC since the call of MMC for a suspension of the CBA negotiations cannot be equated to “refusal to bargain.” Article 252 of the Labor Code defines the phrase “duty to bargain collectively.” For a charge of unfair labor practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith or fraud, or was oppressive to labor. The employer must have acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded feelings or grave anxiety. It cannot be said that MMC deliberately avoided the negotiation. It merely sought a suspension and even expressed its willingness to negotiate once the mining operations resume. There was valid reliance on the suspension of mining operations for the suspension of the CBA negotiation. The Union failed to prove bad faith. (Manila Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al.,G.R. Nos. 178222-23, September 29, 2010). We found it proper to award moral and exemplary damages to illegally dismissed employees as their dismissal was tainted with unfair labor practice. The Court said: Unfair labor practices violate the constitutional rights of workers and employees to selforganization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. As the conscience of the government, it is the Court’s sworn duty to ensure that none trifles with labor rights. (Geronimo Q. Quadra vs. Court of Appeals G.R. No. 147593, July 31, 2006). To constitute ULP, however, violations of the CBA must be gross. Gross violation of the CBA, under Article 261 of the Labor Code, means flagrant and/or malicious refusal to

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comply with the economic provisions thereof. Evidently, the University can not be faulted for ULP as it in good faith merely heeded the above-said request of Union members. (Arellano University Employees and Workers Union vs Court of Appeals, G.R. No. 139940, September 19, 2006). Direct evidence that an Ee was in fact intended or coerced by the statements of threats of the Er is not necessary if there is a reasonable interference that the anti‐union conduct of the Er does have an adverse effect on self‐organization and CB. (The Insular Life Assurance‐NATU v. The Insular Life Co. Ltd. G.R. No.L‐25291, Jan. 30, 1971). A company’s refusal to make counter‐proposal, if considered in relation to the entire bargaining process, may indicate BF and this is especially true where the union’s request for a counter proposal is left unanswered. (Kiok Loy v. NLRC. G.R. No. L‐54334, Jan. 22, 1986). ALU is the certified exclusive bargaining representative after winning the certification election. The company merely relied on the letter of disaffiliation by BFEA’s president without proof and consequently refusing to bargain collectively constitutes ULP. Such refusal by the company to bargain collectively with the certified exclusive bargaining representative is a violation of its duty to collectively bargain which constitutes ULP. ( Balmar Farms v. NLRC. G.R. No.73504, Oct. 15, 1991)

(a) ULP of labor organizations A union member may not be expelled from the union, and consequently from his job, for personal and impetuous reasons or for causes foreign to the closed shop agreement. (Manila Mandarin Ees Union v. NLRC. G.R. No. 76989, Sep. 29, 1987). Labor unions are not entitled to arbitrarily exclude qualified applicants for membership and a closed‐ shop applicants provision will not justify the employer in discharging, or a union in insisting upon the discharge of an employee whom the union thus refuses to admit to membership without any reasonable ground thereof. (Salunga v. CIR. G.R. No. L‐22456, Sep. 27, 1967). Note (Poquiz): ULP's committed in the absence of employer-employee relationship: a) Agents of the employer or union who are non-employees may commit ULP b) In the case of yellow-dog contract, where ULP is committed by the employer against an applicant to the job, and c) In case of the application of the doctrine of innocent by-stander

C. Right to peaceful concerted activities The law does not look with favor upon strikes and lockouts because of their disturbing and pernicious effects upon the social order and the public interests; to prevent or avert them and to implement Sec. 6, Art. XIV of the Constitution, the law has created several agencies, namely: the

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Labor Law BLR, the DOLE, the Labor Management Advisory Board, and the CIR. (Luzon Marine Dev’t Union v. Roldan. G.R. No. L‐2660, May 30, 1950). Assuming that they acted in their individual capacities when they wrote the letter, they were nonetheless protected, for they were engaged in a concerted activity, in their right of self‐organization that includes concerted activity for mutual aid and protection. Any interference made by the company will constitute as ULP. The joining in protests or demands, even by a small group of Ees, if in furtherance of their interests as such is a concerted activity protected by the Industrial Peace Act. It is not necessary that union activity be involved or that collective bargaining be contemplated. (Republic Savings Bank v. CIR. G.R. No. L‐20303, Oct. 31, 1967).

It shall comprise not only concerted work stoppages, but also slowdowns, mass leaves, sitdowns, attempt to damage, destroy or sabotage plant equipment and facilities, and similar activities. (Samahang Manggagawa sa Sulpicion Lines v. Sulpicio Lines, Inc. G.R. No. 140992, Mar. 25, 2004).

A coercive measure resorted to by laborers to enforce their demands. The idea behind a strike is that a company engaged in a profitable business cannot afford to have its production or activities interrupted, much less, paralyzed. (Phil. Can Co. v. CIR. G.R. No. L‐3021, July 13, 1950). The concept of a slowdown is a "strike on the installment plan." It is a willful reduction in the rate of work by concerted action of workers for the purpose of restricting the output of the employer (Er), in relation to a labor dispute; as an activity by which workers, without a complete stoppage of work, retard production or their performance of duties and functions to compel management to grant their demands. Such a slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees (Ees) "continue to work and remain at their positions and accept the wages paid to them," they at the same time "select what part of their allotted tasks they care to perform of their own volition or refuse openly or secretly, to the Er's damage, to do other work;" in other words, they "work on their own terms. (Interphil Laboratories Ees Union‐FFW v. Interphil Laboratories, Inc.G.R. No. 142824, Dec. 19, 2001). An Ee has no inherent right to seniority. He has only such rights as may be based on a contract, statute, or an administrative regulation relative thereto. Seniority rights which are acquired by an Ee through long‐time employment are contractual and not constitutional. The discharge of an Ee thereby terminating such rights would not violate the Constitution. When the pilots tendered their respective retirement or resignation and PAL immediately accepted them, both parties mutually terminated the contractual employment relationship between them thereby curtailing whatever seniority rights and privileges the pilots had earned through the years. The pilots’ mass action was not a strike because Ees who go on strike do not quit their employment. Ordinarily, the relationship of Er and Ee continues until one of the parties acts to sever the relationship or they mutually act to accomplish that purpose. As they did not assume the status of strikers, their “protest retirement/resignation” was not a concerted activity which was protected by law. (Enrique v. Zamora. G.R. No. L‐51382, Dec. 29, 1986).

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Any controversy or matter concerning terms or conditions or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether or not the disputants stand in the proximate relation of Ers and Ees. (Gold City Integrated Port Services, Inc. v. NLRC. G.R. No. 103560, July 6, 1995) Liwayway Publication Inc. is not in anyway related to the striking union except for the fact that it is the sub‐ lessee of a bodega in the company’s compound. The business of Liwayway is exclusively the publication of magazines which has absolutely no relation or connection whatsoever with the cause of the strike of the union against their company, much less with the terms, conditions or demands of the strikers. Liwayway is merely a 3rd person or aninnocent by‐stander. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union. G.R. No. L‐25003, Oct. 23, 1981). The concerted efforts of the members of the union and its supporters caused a temporary work stoppage. The allegation that there can be no work stoppage because the operation in the division had been shut down is of no consequence. It bears stressing that the other divisions were fully operational. (Bukluran ng Manggagawa sa Clothman Knitting Corp. v. CA. G.R. No. 158158, Jan.17, 2005).

1. Forms of concerted activities Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employers and employees. The term “strike” shall also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities and similar activities. In the instant case, about 712 employees absented themselves from work in a concerted fashion for three continuous days. Considering that these mass actions stemmed from a bargaining deadlock and an order of assumption of jurisdiction had already been issued by the Secretary of Labor to avert an impending strike, all the elements of strike are evident in the Union-instigated mass actions. (Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010).

2. Who may declare a strike or lockout? NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members was declared illegal. (Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al., G.R. No. 196156, January 15, 2014).

3. Requisites for a valid strike/lockout Article 263 of the Labor Code, as amended by Republic Act (R.A.) No. 6715, and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code outline the following procedural requirements for a valid strike:

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1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice. However, in the case of union busting where the union’s existence is threatened, the cooling-off period need not be observed. xxx xxx xxx 3) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secret-ballot approval of majority of the total union membership in the bargaining unit concerned. 4) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to the cooling-off period. It is settled that these requirements are mandatory in nature and failure to comply therewith renders the strike illegal.

The requisites for a valid strike are: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7) days before the intended strike. The requirements are mandatory and failure of a union to comply therewith renders the strike illegal. (Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009).

Article 212 of the Labor Code defines strike as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A valid strike therefore presupposes the existence of a labor dispute. The strike undertaken by respondents took the form of a sit-down strike, or more aptly termed as a sympathetic strike, where the striking employees have no demands or grievances of their own, but they strike for the purpose of directly or indirectly aiding others, without direct relation to the advancement of the interest of the strikers. It is indubitable that an illegal strike in the form of a sit-down strike occurred in petitioner’s premises, as a show of sympathy to the two employees who were dismissed by petitioner. Apart from the allegations in its complaint for illegal strike filed before the Labor Arbiter, petitioner presented the affidavits and testimonies of their other employees which confirm the participation of respondents in the illegal strike. Petitioner has sufficiently established that respondents remained in the work premises in the guise of waiting for orders from management to resume operations when, in fact, they were actively participating in the illegal strike. (G & S Transport Corporation, vs Tito S. Infante, G. R. No. 160303, September 13, 2007).

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It is undisputed that the notice of strike was filed by the union without attaching the counter-proposal of the company. This, according to petitioners and the labor arbiter, made the ensuing strike of respondents illegal because the notice of strike of the union was defective.The Implementing Rules use the words “as far as practicable.” In this case, attaching the counter-proposal of the company to the notice of strike of the union was not practicable. It was absurd to expect the union to produce the company’s counter-proposal which it did not have. One cannot give what one does not have. Indeed, compliance with the requirement was impossible because no counter-proposal existed at the time the union filed a notice of strike. The law does not exact compliance with the impossible. Nemo tenetur ad impossible. (Club Filipino, Inc. and Atty. Roberto F. De Leon vs. Benjamin Bautista, et al., G.R. No. 168406, July 13, 2009). There is no question that the May 6, 2002 strike was illegal, first, because when Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual union and its members. And second, similarly, when KMLMS conducted the strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS only acquired legal personality as an independent legitimate labor organization only on April 9, 2002 or the day after it conducted the strike-vote. Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been filed and conducted before KMLMS acquired legal personality as a legitimate labor organization, violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. It is, thus, clear that KMLMS did not comply with the mandatory requirement of law and implementing rules on possession of a legal personality as a legitimate labor organization. (Magdala Multipurpose & Livelihood, et al. vs. KMLMS, et al.,G.R. No. 191138-39. October 19, 2011).

In fine, the legality of a strike is determined not only by compliance with its legal formalities but also by the means by which it is carried out. (Biflex Phils. Inc. Labor Union (NAFLU) vs Filflex Industrial & Manufacturing Corporation. G.R. No. 155679, December 19, 2006). In the event the result of the strike/lockout ballot is filed within the cooling‐off period, the 7‐day requirement shall be counted from the day following the expiration of the cooling‐off period. (NSFW vs. Ovejera. G.R. No. 59743, May 31, 1982).

Ees, who have no labor dispute with their Er but who, on a day they are scheduled to work, refuse to work and instead join a welga ng bayan commit an illegal work stoppage. There being no showing that the two unions notified the corporations of their intention, or that they were allowed by the corporations, to join the welga ng bayan, their work stoppage is beyond legal protection. (BIFLEX Phils. Inc. Labor Union (NAFLU) vs. FILFLEX Industrial and Manufacturing Corp. G.R. No. 155679, Dec. 19, 2006).

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The failure of the union to serve the company a copy of the notice of strike is a clear violation of Section 3, Rule XXII, Book V of the Rules Implementing the LC. The Constitutional precepts of due process mandate that the other party be notified of the adverse action of the opposing party. (Filipino Pipe and Foundry Corp. v. NLRC. G.R. No. 115180, Nov.16, 1999).

To give DOLE an opportunity to verify whether the projected strike really carries the imprimatur of the majority of the union members in addition to the cooling‐off period before the actual strike. (Lapanday Workers’ Union, et.al. v. NLRC. G.R. Nos. 95494‐97, Sep. 7, 1995). A no strike/lockout clause is legal, but it is applicable only to economic strikes, not ULP strikes. As a provision in the CBA, it is a valid stipulation although the clause may be invoked by an employer (Er) only when the strike is economic in nature or one which is conducted to force wage or other concessions from the Er that are not mandated to be granted by the law itself. It would be inapplicable to prevent a strike which is grounded on ULP. (Malayang Samahan ng mga Manggagawa sa Greenfield v. Ramos. G.R. No. 113907, Feb. 28, 2000).

In cases of ULP, the notice of strike shall as far as practicable, state the acts complained of and the efforts to resolve the dispute amicably. (Tiu v. NLRC. G.R. No. 123276, Aug. 18, 1997).

The cooling‐off period in Art. 264(c) and the 7‐day strike ban after the strike‐vote report prescribed in Art. 264 (f) were meant to be mandatory. The law provides that “the labor union may strike” should the dispute “remain unsettled until the lapse of the requisite number of days from the filing of the notice”, this clearly implies that the union may not strike before the lapse of the cooling‐off period. The cooling‐off period is for the Ministry of Labor and Employment to exert all efforts at mediation and conciliation to effect a voluntary settlement. The mandatory character of the 7‐day strike ban is manifest in the provision that “in every case” the union shall furnish the MOLE with the results of the voting “at least 7 days before the intended strike.” This period is to give time to verify that a strike vote was actually held. (NFSW v. Ovejera. G.R. No. L‐ 59743, May 31, 1982). There is no evidence to show that a strike vote had in fact been taken before a strike was called. Even if there was a strike vote held, the strike called by the union was illegal because of non‐observance by the union of the mandatory 7‐ day strike ban counted from the date the strike vote should have been reported to the DOLE. (First City Interlink Transportation Co., Inc. v. Confessor. G.R. No. 106316, May 5, 1997).

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When the workers who staged a voluntary ULP strike offered to return to work unconditionally but the Er refused to reinstate them.( Manila Diamond Hotel vs. Manila Diamond Hotel Ees’ Union, G.R. No. 158075, June 30, 2006). 4. Requisites for lawful picketing To strike is to withhold or to stop work by the concerted action of employees as a result of an industrial or labor dispute. The work stoppage may be accompanied by picketing by the striking employees outside of the company compound. While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its incidents to inform the public of what is happening in the company struck against. A picket simply means to march to and from the employer’s premises, usually accompanied by the display of placards and other signs making known the facts involved in a labor dispute. It is a strike activity separate and different from the actual stoppage of work. (PHIMCO Industries, Inc. v. PHIMCO Industries Labor Association (PILA), et al, G.R. No. 170830, August 11, 2010). The right to picket as a means of communicating the facts of a labor dispute is a phase of the freedom of speech guaranteed by the Constitution. If peacefully carried out, it can not be curtailed even in the absence of Er‐Ee relationship. (PAFLU v. Cloribel. G.R. No. L‐25878, Mar. 28, 1969). While peaceful picketing is entitled to protection as an exercise of free speech, the courts are not without power to confine or localize the sphere of communication or the demonstration to the parties to the labor dispute, including those with related interests, and to insulate establishments or persons with no industrial connection or having interest totally foreign to the context of the dispute. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union. G.R. No. L‐25003, Oct. 23, 1981).

5. Assumption of jurisdiction by the DOLE Secretary or Certification of the labor dispute to the NLRC for compulsory arbitration The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout, including cases over which the labor arbiter has exclusive jurisdiction. (Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010). Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the police power of the State. The grant of plenary powers to the Secretary of Labor makes it incumbent upon him to bring about soonest, a fair and just solution to the differences between theramiemployer and the employees, so that the damage such labor dispute might cause upon the national interest may be minimized as much as possible, if not totally averted, by avoiding stoppage of work or any lag in

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the activities of the industry or the possibility of those contingencies that might cause detriment to the national interest. In order to effectively achieve such end, the assumption or certification order shall have the effect of automatically enjoining the intended or impending strike or lockout. Moreover, if one has already taken place, all striking workers shall immediately return to work, and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. Assumption and certification orders are executory in character and are to be strictly complied with by the parties, even during the pendency of any petition questioning their validity. (YSS Employees Union-Philippine Transport and General Organization vs. YSS Laboratories, Inc., G.R. No. 155125, December 4, 2009).

Automatically enjoins the intended or impending strike/lockout but if one has already taken place, all striking or locked out Ees shall immediately return to work and the Er shall immediately resume operations and re‐admit all workers under the same terms and conditions prevailing before the strike or lockout. (Trans‐ Asia Shipping Lines, Inc.‐Unlicensed Crews Ee’s Union v. CA. G.R. No. 145428, July 7, 2004). Payroll reinstatement in lieu of actual reinstatement but there must be showing of special circumstances rendering actual reinstatement impracticable, or otherwise not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the SLE in a labor dispute that affects the national interest. (Manila Diamond Hotel Ees Union v. SLE G.R. No. 140518, Dec. 16, 2004). Mere issuance of an assumption order automatically carries with it a return‐to‐work order although not expressly stated therein. (TSEU‐FFW v. CA. G.R. Nos. 143013‐14, Dec.18, 2000).

a. Issues that the SLE may resolve when he assumes jurisdiction over a labor dispute SLE may subsume pending labor cases before LAs which are involved in the dispute and decide even issues falling under the exclusive and original jurisdiction of LAs such as the declaration of legality or illegality of strike. (Int’l. Pharmaceuticals v. SLE G.R. Nos. 92981‐83, Jan. 9, 1992). Power of SLE is plenary and discretionary.( St. Luke’s Medical Center v. Torres G.R. No. 99395, June29, 1993). Where the return to work order is issued pending the determination of the legality of the strike, it is not correct to say that it may be enforced only if the strike is legal and may be disregarded if illegal. Precisely, the purpose of the return to work order is to maintain the status quo while the determination is being made. (6. Nature of assumption order or certification order. (Sarmiento v. Tuico. G.R. Nos. 75271‐73, June 27, 1988). The assumption of jurisdiction is in the nature of a police power measure. This is done for the promotion of the common good considering that a prolonged strike or lockout can be inimical to the national economy. The SLE acts to maintain industrial peace. Thus, his certification for compulsory arbitration is not intended to impede the worker’s right to strike but to obtain a speedy settlement of the dispute. (Philtread Workers Union v. Confesor. G.R. No. 117169, Mar. 12, 1997).

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Art. 263(g) does not interfere with the workers right to strike but merely regulates it, when in the exercise of such right national interest will be affected. The LC vests upon the SLE the discretion to determine what industries are indispensable to national interest. The underlying principle embodied in Art. 263 (g) on the settlement of labor disputes is that assumption and certification orders are executor in character and are strictly complied with by the parties even during the pendency of any petition questioning their validity. This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful and speedy solution to labor disputes, without jeopardizing national interests. Art. 263(g) is clear and unequivocal in stating that all striking or lock‐out Ees shall immediately return to work and the Er shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. Records of the case would show that the strike occurred one day before the members of the union were dismissed due to alleged redundancy. Thus the abovementioned article directs that the Er must readmit all workers under the same terms and conditions prevailing before the strike. (PLDT v. Manggagawa ng Komunikasyon sa Pilipinas G.R. No. 162783, July 14, 2005).

7. Effect of defiance of assumption or certification orders Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is illegal. So is a declaration of a strike during the pendency of cases involving the same grounds for the strike. In the present case, there is no dispute that when respondents conducted their mass actions on April 3 to 6, 2000, the proceedings before the Secretary of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000 Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass demonstration.( Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010). It shall be considered an illegal act committed in the course of the strike or lockout and shall authorize the SLE or the NLRC, as the case may be, to enforce the same under pain or loss of employment status or entitlement to full employment benefits from the locking‐out Er or backwages, damages and/or other positive and/or affirmative reliefs, even to criminal prosecution against the liable parties. (St. Scholastica’s College v. Torres. G.R. No. 100158, June 2, 1992).

8. Illegal strike The Supreme Court also cited the 6 categories of illegal strikes which are: 1. When it is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or 2. When it violates a specific requirement of law, [such as Article 263 of the Labor Code on the requisites of a valid strike]; or 3. When it is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or

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4. When it employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or 5. When it is declared in violation of an existing injunction, [such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or 6. When it is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.(Toyota v Toyota Workers Association. G.R. Nos. 158786 & 158789 October 19, 2007). What is more, the strike had been attended by the widespread commission of prohibited acts. Well-settled is the rule that even if the strike were to be declared valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal.[ Among such limits are the prohibited activities under Article 264 of the Labor Code, particularly paragraph (e), which states that no person engaged in picketing shall: a) commit any act of violence, coercion, or intimidation or b) obstruct the free ingress to or egress from the premises for lawful purposes, or c) obstruct public thoroughfares.

employer's

The following acts have been held to be prohibited activities: where the strikers shouted slanderous and scurrilous words against the owners of the vessels; where the strikers used unnecessary and obscene language or epithets to prevent other laborers to go to work, and circulated libelous statements against the employer which show actual malice;] where the protestors used abusive and threatening language towards the patrons of a place of business or against coemployees, going beyond the mere attempt to persuade customers to withdraw their patronage; where the strikers formed a human cordon and blocked all the ways and approaches to the launches and vessels of the vicinity of the workplace and perpetrated acts of violence and coercion to prevent work from being performed; and where the strikers shook their fists and threatened non-striking employees with bodily harm if they persisted to proceed to the workplace. Permissible activities of the picketing workers do not include obstruction of access of customers. (Sukhothai Cuisine and Restaurant vs. Court of Appeals,G.R. No. 150437 .July 17, 2006).

A strike may be regarded as invalid although the labor union has complied with the strict requirements for staging one as provided in Article 263 of the Labor Code when the same is held contrary to an existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the CBA between the parties contained a “no strike, no lockout” provision that enjoined both the Union and the Company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes. No law or public policy prohibits the Union and the Company from mutually waiving their respective right to strike and lockout, which are otherwise available to them under the law, in favor of voluntary arbitration. (C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa AlsonsSPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc. G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010).

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Article 264(e) of the Labor Code prohibits any person engaged in picketing from obstructing the free ingress to and egress from the employer’s premises. Since respondent was found in the July 17, 1998 decision of the NLRC to have prevented the free entry into and exit of vehicles from petitioner’s compound, respondent’s officers and employees clearly committed illegal acts in the course of the March 9, 1998 strike. The use of unlawful means in the course of a strike renders such strike illegal. Therefore, pursuant to the principle of conclusiveness of judgment, the March 9, 1998 strike was ipso facto illegal. The filing of a petition to declare the strike illegal was thus unnecessary. (Jackbilt Industries, Inc. Vs. Jackbilt Employees Workers Union-Naflu-KMU, G.R. No. 171618-19, March 13, 2009). A strike may be considered legal where the union believed that the company committed ULP and the circumstances warranted such belief in GF, although subsequently such allegations of ULP are found out as not true.( Bacus v. Ople. G.R No. L‐56856, Oct. 23, 1984). Even if no ULP acts are committed by the Er, if the Ees believe in GF that ULP acts exist so as to constitute a valid ground to strike, then the strike held pursuant to such belief may be legal. Where the union believed that the Er committed ULP and the circumstances warranted such belief in GF, the resulting strike may be considered legal although, subsequently, such allegations of ULP were found to be groundless. (NUWHRAIN‐Interim Junta v. NLRC. G.R. No. 125561, Mar. 6, 1998) The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact acts that the company considers as constituting an illegal strike or violative of company policies. Such allegation falls short of the requirement in King of Kings Transport, Inc. of “a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees.” A bare mention of an “illegal strike” will not suffice. Further, while Biomedica cites the provisions of the company policy which petitioners purportedly violated, it failed to quote said provisions in the notice so petitioners can be adequately informed of the nature of the charges against them and intelligently file their explanation and defenses to said accusations.( Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et al. G.R. No. 193789. September 19, 2012).

(a) Liability of Officers and Ordinary Workers The law makes a distinction between union members and union officers. A union member who merely participates in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status. In contrast, a union officer may be terminated from employment for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service. (Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al., G.R. No. 196156, January 15, 2014).

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A distinction exists between the ordinary workers’ liability for illegal strike and that of the union officers who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There must be proof that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated upon mere proof that he knowingly participated in the illegal strike. Moreover, the participating union officers have to be properly identified. In the present case, with respect to those union officers whose identity and participation in the strike having been properly established, the termination was legal. (Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011) As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts. The rule, however, is subject to exceptions. Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as the Court has concluded in other cases it has previously decided, such Union officers are not entitled to the award of separation pay in the form of financial assistance. (C. Alcantara & Sons, Inc. vs. Court of Appeals, G.R. No. 155109/G.R. No. 155135/G.R. No. 179220. March 14, 2012). Since the Union’s strike has been declared illegal, the Union officers can be terminated from employment for their actions. This includes the shop stewards who cannot be shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and placed them in positions of leadership and power over the men in their work units. As regards the rank and file Union members, Article 264 provides that termination from employment is not warranted by the mere fact that a union member has taken part in an illegal strike. It must be shown that such union member, clearly identified, performed an illegal act or acts during the strike. The striking Union members allegedly committed the following prohibited acts: a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress to and egress from the company premises; and c. They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers. The mere fact that the criminal complaints against them were subsequently dismissed does not extinguish their liability under the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and photos presented to establish their identity and guilt during the hearing of the petition to declare the strike illegal. (C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc. G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010).

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No backwages will be awarded to union members as a penalty for their participation in the illegal strike. As for the union officers, for knowingly participating in an illegal strike, the law mandates that a union officer may be terminated from employment and they are not entitled to any relief. (Gold City Integrated Port Services, Inc. v. NLRC. G.R. No. 86000, Sep. 21, 1990). Those union members who have joined an illegal strike but have not committed any illegal act shall be reinstated but without back wages.The responsibility for the illegal acts committed during the strike must be on an individual and not on a collective basis. (First City Interlink Transportation Co., Inc. v. Confesor G.R. No. 106316, May 5, 1997). A mere finding of the illegality of a strike should not be automatically followed by wholesale dismissal of the strikers from their employment. While it is true that administrative agencies exercising quasi‐judicial functions are free from the rigidities of procedure, it is equally well‐settled that avoidance of technicalities of law or procedure in ascertaining objectively the facts in each case should not, however, cause denial of due process. (Bacus v. Ople. G.R. No. L‐56856, Oct. 23, 1984). To exclude union officers, shop stewards and those with pending criminal charges in the directive to the company to accept back the striking workers without first determining whether they knowingly committed illegal acts would be tantamount to dismissal without due process of law. (Telefunken Semiconductors Ees Union‐FFW v. SLE. G.R. No. 122743 & 127215, Dec. 12, 1997).

b) Waiver of illegality of strike When an employer accedes to the peaceful settlement brokered by the NLRC by agreeing to accept all employees who had not yet returned to work, it waives the issue of the illegality of the strike. (Reformist Union v. NLRC. G.R. No. 120482, Jan. 27, 1997). When management and union are in pari delicto, the contending parties must be brought back to their respective positions before the controversy; that is, before the strike. In this case, management’s fault arose from the fact that a day after the union filed a petition for certification election before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug test. Indeed, the timing of the drug test was suspicious. Moreover, management engaged in a runaway shop when it began pulling out machines from the main building (AER building) to the compound (AER-PSC premises) located on another street on the pretext that the main building was undergoing renovation. On the other hand, like management, the union and the affected workers were also at fault for resorting to a concerted work slowdown and walking out of their jobs in protest of their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC premises to try to bring out the boring machines. Adding to the injury was the fact that the picketing employees prevented the entry and exit of nonparticipating employees and possibly AER’s clients to the premises. Thus, the Supreme Court affirmed the ruling of the Court of Appeals favoring the

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reinstatement of all the complaining employees, including those who tested positive for illegal drugs, without backwages. (Automotive Engine Rebuilders, Inc. et al. v. Progresibong Unyon ng mga Manggagawa sa AERG.R. No. 160138/G.R. No. 160192. July 13, 2011).

9. Injunctions a) Requisites for labor injunctions b) “Innocent bystander rule” The innocent by stander must show: 1. Compliance with the grounds specified in Rule 58 of the Rules of Court, and 2. That it is entirely different from, without any connection whatsoever to, either party to the dispute and, therefore, its interests are totally foreign to the context thereof. (MSF Tire & Rubber v. CA, G.R. 128632, Aug. 5, 1999). A party, by filing its 3rd party claim with the deputy sheriff, it submitted itself to the jurisdiction of the NLRC acting through the LA. The broad powers granted to the LA and to the NLRC by Art. 217, 218 and 224 of the LC can only be interpreted as vesting in them jurisdiction over incidents arising from, in connection with or relating to labor disputes, as the controversy under consideration, to the exclusion of the regular courts. The RTC, being a co‐equal body of the NLRC, has no jurisdiction to issue any restraining order or injunction to enjoin the execution of any decision of the latter. (Deltaventures v. Cabato. G.R. No. 118216, Mar. 9, 2000). The concerted action taken by the members of the union in picketing the premises of the department store, no matter how illegal, cannot be regarded as acts not arising from a labor dispute over which the RTCs may exercise jurisdiction. (Samahang Manggagawa ng Liberty Commercial v. Pimentel G.R. No. L‐78621, Dec. 2, 1987).

VII. PROCEDURE AND JURISDICTION A. Labor Arbiter 1. Jurisdiction a. Jurisdiction of the NLRC and LA The jurisdiction of labor arbiters, as well as of the NLRC, is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement. U-Bix's complaint was one to collect sum of money based on civil laws – on obligations and contract, not to enforce rights under the Labor Code, other labor statutes, or the collective bargaining agreement. (U-Bix Corporation, et al. vs. Valerie Anne H. Hollero. G.R. No. 177647, October 31, 2008)

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Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers. (Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012).

b. Jurisdiction, intra-corporate dispute It is a settled rule that jurisdiction over the subject matter is conferred by law. The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intracorporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case. (Lesli Okol v. Slimmers World International. G.R. No. 160146, December 11, 2009). Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues that the Labor Arbiter has jurisdiction over the case. One of the corporate officers provided for in the by-laws of ETPI is the Vice-President. It can be gathered from Atty. Garcia’s complaint-affidavit that he was Vice President for Business Support Services and Human Resource Departments of ETPI when his employment was terminated effective 16 April 2000. It is therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate officer. One who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. Being a corporate officer, his removal is deemed to be an intra-corporate dispute cognizable by the SEC and not by the Labor Arbiter. (Atty. Virgilio Garcia v. Eastern Telecommunications Philippines, Inc. G.R No. 173115April 16, 2009).

c. Jurisdiction over interpretation or implementation of the CBA R.A. 8042 is a special law governing overseas Filipino workers. However, there is no specific provision thereunder which provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042 simply speaks, in general, of “claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.” On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining agreements. In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. This issue clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern. CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be

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settled through negotiation, conciliation or voluntary arbitration. The provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that for OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code. With respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration. (Estate of Nelson R. Dulay, vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012).

d. Jurisdiction, how acquired The NLRC acquires jurisdiction over parties in cases before it either by summons served on them or by their voluntary appearance before its Labor Arbiter. Here, while the Union insists that summons were not properly served on the impleaded Union members with respect to the Company’s amended petition that sought to declare the strike illegal, the records show that they were so served. The Return of Service of Summons indicated that 74 out of the 81 impleaded Union members were served with summons. But they refused either to accept the summons or to acknowledge receipt of the same. Such refusal cannot of course frustrate the NLRC’s acquisition of jurisdiction over them. Besides, the affected Union members voluntarily entered their appearance in the case when they sought affirmative relief in the course of the proceedings like an award of damages in their favor. (C. ALCANTARA & SONS, INC. v. COURT OF APPEALS, et al.G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September 29, 2010).

i. NLRC, LA Jurisdiction vis-à-vis DOLE jurisdiction The Court ruled that no limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRC. x x x The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts themselves use. The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employer’s power to control the employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC. x x x If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the

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Labor Law Rules of Court. (People’s Broadcasting Service vs. The Secretary of Labor and Employment. G.R. No. 179652, March 6, 2012). The mere disagreement by the employer with the findings of the labor officer, or the simple act of presenting controverting evidence, does not automatically divest the DOLE Secretary or any of his authorized representatives such as the regional directors, of jurisdiction to exercise their visitorial and enforcement powers under the Labor Code. Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of the Labor Code has the following elements, which must all concur to divest the regional director of jurisdiction over workers' claims: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. Thus, in SSK Parts Corporation v. Camas in which the employer contested the Regional Director's finding of violations of labor standards, but such issue was resolved by an examination of evidentiary matters which were verifiable in the ordinary course of inspection, it was held that there was no more need to indorse the case to the arbitration branch of the NLRC. Thus, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters are not verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the employer, the Regional Director, and later the DOLE Secretary, may still examine them; and these officers are not divested of jurisdiction to decide the case. (Bay Haven, Inc. et. Al. vs. Florentino Abuan, et. al. G.R. No. 160859, July 30, 2008).

ii. Reinstatement pending appeal (a) Reinstatement, immediately executory The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration. Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution should not be countenanced. After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. (Juanito A. Garcia and Alberto Dumago v. PAL. G.R No. 164856, January 20, 2009).

The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of reinstatement. In the

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case at bar, no restraining order was granted. Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the NLRC until the finality of the decision of this Court. (Milagros Panuncillo v. CAP Philippines, Inc.G.R No. 161305, February 9, 2007). (b) Implementation of reinstatement order, ministerial Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent’s non-compliance with the reinstatement order. Respondent’s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach. (Juanito Garcia v. Philippine Airlines. G.R No. 164856, January 20, 2009). (c) When reinstatement ordered by NLRC Art. 223 of the Labor Code provides that reinstatement is immediately executory even pending appeal only when the Labor Arbiter himself ordered the reinstatement. In this case, the original Decision of Labor Arbiter Drilon did not order reinstatement. Reinstatement in this case was actually ordered by the NLRC, affirmed by the Court of Appeals. The order of Labor Arbiter Pura on 31 January 2005 directing reinstatement was issued after the Court of Appeals Decision dated 17 March 2004 which affirmed the NLRC’s order of reinstatement. Thus, Art. 223 finds no application in the instant case. Considering that the order for reinstatement was first decided upon appeal to the NLRC and affirmed with finality by the Court of Appeals in CA-G.R. SP 80369 on 17 March 2004, petitioner rightly invoked Art. 224 of the Labor Code. As contemplated by Article 224 of the Labor Code, the Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory. Consequently, under Rule III of the NLRC Manual on the Execution of Judgment, it is provided that if the execution be for the reinstatement of any person to a position, an office or an employment, such writ shall be served by the sheriff upon the losing party or upon any other person required by law to obey the same, and such party or person may be punished for contempt if he disobeys such decision or order for reinstatement (Mt. Carmel College v. Jocelyn Resuena et al. G.R No. 173076, October 10, 2007). . 2. Requirements to perfect appeal to NLRC a. Appeal, requisites to perfect

Evident it is from the foregoing that an appeal from rulings of the Labor Arbiter to the NLRC must be perfected within ten (10) calendar days from receipt thereof, otherwise the same shall become final and executory. In a judgment involving a monetary award, the appeal shall be perfected only upon (1) proof of payment of the required appeal fee and (2) posting of a cash or surety bond issued by a reputable bonding company and (3) filing of a memorandum

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of appeal. A mere notice of appeal without complying with the other requisites mentioned shall not stop the running of the period for perfection of appeal. (Stolt-Nielsen Marine Services Inc. (now Stolt-Nielsen Transportation Group Inc.) vs. NLRC. G.R. No. 147623,December 13, 2005). b, Appeal, when there is substantial compliance There was substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under Oath, which is required when an employer appeals from the Labor Arbiter’s decision granting a monetary award and posts a surety bond. Under the NLRC rules, the following requisites are required to perfect the employer’s appeal: (1) it must be filed within the reglementary period; (2) it must be under oath, with proof of payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the appealed decision, with proof of service on the other party of said appeal. If the employer posts a surety bond, the NLRC rules further require the submission by the employer, his or her counsel, and the bonding company of a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until the final disposition of the case. In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the notice of appeal and the appeal memorandum within the reglementary period. When the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the respondents immediately complied with the said order. There was only a late submission of the Joint Declaration. Considering that there was substantial compliance with the rules, the same may be liberally construed. The application of technical rules may be relaxed in labor cases to serve the demands of substantial justice. (Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies. G.R. No. 175209. January 16, 2013)

c. Effect of failure to perfect appeal Failure to perfect an appeal renders the decision final and executory. The right to appeal is a statutory right and one who seeks to avail of the right must comply with the statute or the rules. The rules, particularly the requirements for perfecting an appeal within the reglementary period specified in the law, must be strictly followed as they are considered indispensable interdictions against needless delays and for the orderly discharge of judicial business. It is only in highly meritorious cases that this Court will opt not to strictly apply the rules and thus prevent a grave injustice from being done. The exception does not obtain here. Thus, we are in agreement that the decision of the Labor Arbiter already became final and executory because petitioner failed to file the appeal within 10 calendar days from receipt of the decision. (Nationwide Security and Allied Services, Inc. vs. CA, et al. G.R. No. 155844, July 14, 2008). d. When party does not appeal As a rule, a party who does not appeal from the decision may not obtain any affirmative relief from the appellate court other than what he has obtained from the lower tribunal, if any, whose decision is brought up on appeal. Due process prevents the grant of additional awards to parties who did not appeal. As an exception, he may assign an error where the purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed or filed a separate petition. (Aklan College, Inc. v. Perpetuo Enero, et al.G.R No. 178309, January 27, 2009).

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e. Rules on perfection of appeal, when strictly construed Rules on perfection of an appeal, particularly in labor cases, must be strictly construed because to extend the period of the appeal is to delay the case, a circumstance which would give the employer the chance to wear out the efforts and meager resources of the worker to the point that the latter is constrained to give up for less than what is due him. This is to assure the workers that if they finally prevail in the case the monetary award will be given to them upon dismissal of the employer’s appeal. It is further meant to discourage employers from using the appeal to delay or evade payment of their obligations to the employees. (Colby Construction and Management Corporation v. NLRC. GR No. 170099, November 28, 2007). f. Rules on perfection of appeal, when may be relaxed In any case, even if the appeal was filed one day late, the same should have been entertained by the NLRC. Indeed, the appeal must be perfected within the statutory or reglementary period. This is not only mandatory, but also jurisdictional. Failure to perfect the appeal on time renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has, time and again, ruled that, in exceptional cases, a belated appeal may be given due course if greater injustice will be visited upon the party should the appeal be denied. The Court has allowed this extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity. (Government Service Insurance System v. NLRC, G.R No. 180045, November 17, 2010). g. Completeness of service by registered mail The Supreme Court also overruled the respondents’ contention that UE filed its appeal to the NLRC beyond the required ten (10)-day period. For completeness of service by registered mail, the reckoning period starts either from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she received the first notice from the postmaster. In this case, the respondents averred that, on March 17, 2005, the postmaster gave UE’s counsel a notice to claim the mail containing the Labor Arbiter’s decision. The respondents claimed that UE’s counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on March 22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on April 14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court, however, ruled that there must be conclusive proof that the registry notice was received by or at least served on the addressee. In this case, the records did not show that UE’s counsel in fact received the alleged registry notice requiring him to claim the mail. On the other hand, UE was able to present a registry return receipt showing that its counsel actually received a copy of the Labor Arbiter’s decision on April 4, 2005. Reckoned from this date, the 10-day reglementary period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005. (University of the East, et al. v. Analiza F. Pepanio and Mariti D. Bueno. G.R No. 193897, January 23, 2013).

h. Bond The second paragraph of Article 223 of the Labor Code states that when a judgment involving monetary award is appealed by the employer, the appeal may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment. This is to assure the workers that if they finally prevail in the case, the monetary award will be given to them upon dismissal of the employer’s appeal, and is meant to

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discourage employers from using the appeal to delay or evade payment of their obligations to the employees. However, as provided for in Section 6, Rule VI of the New Rules of Procedure of the NLRC, such amount of the bond may be reduced in meritorious cases, upon motion of the appellant. The exercise of this authority is not a matter of right on the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds. Indeed, an unreasonable and excessive amount of bond would be oppressive and unjust, and would have the effect of depriving a party of his right to appeal. (Ronaldo B. Casimiro, et. al. vs. Stern Real Estate Inc. Rembrandt Hotel and/or Grace Kristin Meehan (General Manager), and Eric Singson (Owner),G.R. No. 162233, March 10, 2006).

i. Filing of bond, jurisdictional Paragraph 2, Article 223 of the Labor Code provides that “[i]n case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award in the judgment appealed from.” Contrary to the respondents’ claim, the issue of the appeal bond’s validity may be raised for the first time on appeal since its proper filing is a jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay or evade the employees’ just and lawful claims. It is intended to assure the workers that they will receive the money judgment in their favor if the employer’s appeal is dismissed. (Wilgen Loon, et al. v. Power Master, Inc., et al. G.R. No. 189404, December 11, 2013).

ii. Revocation of bond, prospective application The respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked its accreditation on February 16, 2003. This subsequent revocation should not prejudice the respondents who relied in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine Journalists, Inc. it was held that a bonding company’s revocation of authority is prospective in application. Nonetheless, the respondents should post a new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure, which states that “[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated or the award satisfied. (Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013).

iii. Period of effectivity of bond A cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond, and shall be binding on the appellants and the bonding company. (Ciudad Fernandina Food Corporation Employees Union-Associated Labor Unions v. CA. G.R. No. 166594, July 20, 2006).

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iv. Bank Certification, not valid compliance with bond requirement

In the case at bar, the respondents cannot be excused from making a substantial compliance with the bond requirement. The law does not require outright payment of the appealed monetary award, but only the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC or this Court, and not a mere bank certification which only states the total amount of deposit existing in such bank as of a certain date. The cash or surety bond will ensure that the award will be eventually paid in case the appeal fails. A mere bank certification of the type submitted by respondents will not. What respondents have to pay is a moderate and reasonable sum for premiums for such bond. (Emma Cordova, et. al. v. KEYSA’S Boutique G.R. No. 156379,September 16, 2005). v. When bond may be reduced All told, the bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. (Ronaldo Nicol, et al. v. Footjoy Industrial Corp.G.R No. 159372, July 27, 2007). vi. What constitutes “reasonable amount”; the Mcburnie Rule To ensure the provisions of Section 6, Rule VI of the NLRC Rules that give parties the chance to seek a reduction of the appeal bond are effectively carried out, without however defeating the benefits of the bond requirement in favor of a winning litigant, all motions to reduce bond that are filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime that an appellant’s motion is pending resolution by the Commission. Only after the posting of a bond in the required percentage shall an appellant’s period to perfect an appeal under the NLRC Rules be deemed suspended. The percentage of the bond that is set by this guideline is merely provisional. The NLRC retains its authority and duty to resolve the motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards of “meritorious grounds” and “reasonable amount”. Should the NLRC after considering the motion’s merit, determine that a greater amount or the full amount of the bond needs to be posted by the appellant, then the party shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond. (Andrew Mcburnie v. Eulalio Ganzon. GR Nos. 178034, 178117 and GR No. 186984-85, 2013).

vi. When bond is invalid In a nutshell, the rules are explicit that the filing of a bond for the perfection of an appeal is mandatory and jurisdictional. The requirement that employers post a cash or surety bond to perfect their appeal is apparently intended to assure workers that if they prevail in the case, they will receive the money judgment in their favor upon the

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Labor Law dismissal of the former’s appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligations to satisfy their employees' just and lawful claims. However, the whole essence of requiring the filing of bond is defeated if the bond issued turned out to be invalid due to the surety company's expired accreditation. After being informed of the expired accreditation of Intra Strata, respondents should have refrained from allowing Intra Strata to transact business or to post a bond in favor of Bacman. It is not within respondent's discretion to allow the filing of the appeal bond issued by a bonding company with expired accreditation regardless of its pending application for renewal of accreditation. Respondents cannot extend Intra Strata's authority or accreditation. Neither can it validate an invalid bond issued by a bonding company with expired accreditation, or give a semblance of validity to it pending this Court's approval of the application for renewal of accreditation. (Rolando E. Cawaling et al. v. Napoleon M. Menese. AC No. 9698, November 13, 2013).

i. Verification, formal requisite and not jurisdictional Neither the laws nor the rules require the verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended to give assurance that the matters alleged in the pleading are true and correct and not of mere speculation. Also, a supplemental appeal is merely an addendum to the verified memorandum on appeal that was earlier filed in the case; hence, the requirement for verification has been substantially complied. (Wilgen Loon, et al. v. Power Master, Inc., et al.G.R. No. 189404, December 11, 2013).

The Court has consistently held that the requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of the pleading, non-compliance with which does not necessarily render the pleading fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court may order the correction of the pleading if verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. (LDP Marketing Inc. vs. Erlinda Dyolde, G.R. No. 159653,January 25, 2006). j. Corporation’s Verification and Certification It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-in-interest themselves. The purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and have been filed in good faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development Corporation as the employer. A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be considered as the “appellant” and “employer” referred to by the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal.

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(Antonio B. Salenga, et al. vs. Court of Appeals, et al.mG.R. No. 174941, February 1, 2012). k. Exception to general rule regarding a corporation’s verification and certification of nonforum shopping Anent UE’s failure to comply with the general rule that the Board of Directors or Board of Trustees of a corporation must authorize the person who shall sign the verification and certification of non-forum shopping accompanying a petition, the Supreme Court held that such authorization is not necessary when it is self-evident that the signatory is in a position to verify the truthfulness and correctness of the allegations in the petition. The Supreme Court declared that Dean Eleanor Javier, who signed UE’s verification and certification, was in such a position, since she knew the factual antecedents of the case and she actually communicated with the respondents regarding the required postgraduate qualification. (University of the East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno G.R. No. 193897. January 23, 2013).

B.

National Labor Relations Commission (NLRC) 1. Jurisdiction In sum, respondent contested the findings of the labor inspector during and after the inspection and raised issues the resolution of which necessitated the examination of evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional Director was divested of jurisdiction and should have endorsed the case to the appropriate Arbitration Branch of the NLRC. Considering, however, that an illegal dismissal case had been filed by petitioners wherein the existence or absence of an employer-employee relationship was also raised, the CA correctly ruled that such endorsement was no longer necessary. (Victor Meteoro, et al. v. Creative Creatures, Inc. G.R No. 171275, July 13, 2009).

When petitioner surety company cancelled the surety bond because Radon Security failed to pay the premiums, it gave due notice to the latter but not to the NLRC. By its failure to give notice to the NLRC, AFPGIC failed to acknowledge that the NLRC had jurisdiction not only over the appealed case, but also over the appeal bond. This oversight amounts to disrespect and contempt for a quasi-judicial agency tasked by law with resolving labor disputes. Until the surety is formally discharged, it remains subject to the jurisdiction of the NLRC. (AFP General Insurance Corporation vs. Noel Molina.G.R. No. 151133, June 30, 2008).

2. Effect of NLRC reversal of Labor Arbiter’s order of reinstatement Even if the order of reinstatement is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of the appeal until reversal by the higher court. On the other hand, if the employee has been reinstate during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. (Pfizer v. Geraldine Velasco GR No. 177467, March 9, 2011).

3. Remedies

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a. Motion for Reconsideration, not Petition for Certiorari On the issue of the propriety of entertaining the Petition for Certiorari despite the prescribed Motion for Reconsideration with the NLRC, the SC found that the CA committed error when it entertained the petition for certiorari and explained that when respondent failed to file a Motion for Reconsideration of the NLRC’s 30 November 2006 Resolution within the reglementary period, the Resolution attained finality and could no longer be modified by the Court of Appeals. Untimeliness in filing motions or petitions is not a mere technical or procedural defect, as leniency regarding this requirement will impinge on the right of the winning litigant to peace of mind resulting from the laying to rest of the controversy. (AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag. G.R. No. 195033, October 12, 2011).

b. Injunction

Section 1, Rule 58 of the Rules of Court, as amended, defines a preliminary injunction as an order granted at any stage of an action prior to the judgment or final order requiring a party or a court, agency or a person to refrain from a particular act or acts. Injunction is accepted as the strong arm of equity or a transcendent remedy to be used cautiously as it affects the respective rights of the parties, and only upon full conviction on the part of the court of its extreme necessity. As an extraordinary remedy, injunction is designed to preserve or maintain the status quo of things and is generally availed of to present actual or threatened acts until the merits of the case can be heard. It may be resorted to only by a litigant for the preservation or protection of his rights or interests and for no other purpose during the pendency of the principal action. It is resorted to only when there is a pressing necessity to avoid injurious consequences, which cannot be remedied under any standard compensation. The resolution of an application for a writ of preliminary injunction rests upon the existence of an emergency or of a special recourse before the main case can be heard in due course of proceedings. (Nagkahiusang Mamumuo sa Picop Resources Inc et al. vs Court of Appeals. G.R. Nos. 148839-40, November 2, 2006). c. Contempt Under Article 218 of the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. The petitioners, therefore, have not improperly brought the indirect contempt charges against the respondents before the NLRC. (Federico Robosa, et al. v. NLRC, et al. GR No. 176085, February 18, 2012).

4. Certified Cases

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a. Function of NLRC in Certified Cases When sitting in compulsory arbitration certified to by the Secretary of Labor, the NLRC is not sitting as a judicial court but as an administrative body charged with the duty to implement the order of the Secretary. As an implementing body, its authority did not include the power to amend the Secretary’s order. (UST v. NLRC and UST Faculty Union. GR No. 89920, 1990).

b. Compulsory arbitration The very nature of compulsory arbitration makes the settlement binding upon the private respondents, for compulsory arbitration has been defined both as "the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties," and as a mode of arbitration where the parties are "compelled to accept the resolution of their dispute through arbitration by a third party." Clearly then, the legality of the strike could no longer be reviewed by the Labor Arbiter, much less by the NLRC, as this had already been resolved. It was the sole issue submitted for compulsory arbitration by the private respondents, as is obvious from the portion of their letter quoted above. The case certified by the Labor Secretary to the NLRC was dismissed after the union and the company drew up the agreement mentioned earlier. This conclusively disposed of the strike issue. (Reformist Union of RB Liner, et al. v. NLRC, et al. GR No. 120482, January 27, 1997).

C. Bureau of Labor Relations – Med-Arbiters 1. Jurisdiction (original and appellate) The BLR shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts. As already held by the Court in La Tondena Workers Union v. Secretary of Labor, intra-union conflicts such as examinations of accoutns are under the jurisdiction of the BLR. However, the Rules of Procedure on Mediation-Arbitration purpose and expressly separated or distinguished examinations of union accounts from the genus of intra-union conflict and provided a different procedure for the resolution of the same. Original jurisdiction over complaints for examinations of union accounts is vested on the Regional Director and appellate jurisdiction over decisions of the former is lodged with the BLR. This is apparent from Sections 3 and 4 of the Med-Arbitration Rules as already mentioned. Contrast these two sections from Section 2 and Section 56 of the same rules. Section 2 expressly vests upon Med-Arbiters original and exclusive jurisdiction to hear and decide inter alia “all other inter-union or internal union disputes.” Section 5 states that the decisions of the Med-Arbiter shall be appealable to the DOLE Secretary. Without a doubt, the rules of Procedure on Mediation-Arbitration did not amend or supplant substantive law but implemented and filled in details of procedure left vacuous or ambiguous by the Labor Code and its Implementing Rules. (Manolito Barles, et al. v. Hon. Benedicto Bitonio, et al. GR No. 120270, June 16, 1999).

D. National Conciliation and Mediation Board 1. Nature of Proceedings

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Arbitration is the reference of a labor dispute to an impartial third person for determination on the basis of evidence and arguments presented by such parties who have bound themselves to accept the decision of the arbitrator as final and binding. Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory or voluntary. Compulsory arbitration is a system whereby the parties to a dispute are compelled by the government to forego their right to strike and are compelled to accept the resolution of their dispute through arbitration by a third party. The essence of arbitration remains since a resolution of a dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the parties, but in compulsory arbitration, such a third party is normally appointed by the government. Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final and binding resolution. Ideally, arbitration awards are supposed to be complied with by both parties without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done by both parties but to comply with the same. After all, they are presumed to have freely chosen arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually agreed to de bound by said arbitrator's decision. (Luzon Development Bank v. Association of Luzon Development Bank Employees. GR No. 120319, October 6, 1995).

E. DOLE Regional Directors 1. Jurisdiction If a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercise jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. (People’s Broadcasting Service (Bombo Radyo Phils.,Inc. v. Secretary of Labor GR No. 179652, March 6, 2012).

F. DOLE Secretary 1. Visitorial and enforcement powers It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship is still

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Labor Law primarily lodged with the NLRC. This is the meaning of the clause “in cases where the relationship of employer-employee still exists” in Art. 128(b). Thus, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercise jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE , and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employeremployee relationship, the jurisdiction is purely with the DOLE. The findings of the DOLE, however may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court. (People’s Broadcasting (Bombo Radyo Phils) v. Secretary of Labor, et al. GR No. 179652, May 8, 2009).

The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional Director, have jurisdiction to enforce compliance with labor standards laws under the broad visitorial and enforcement powers conferred by Article 128 of the Labor Code, and expanded by R.A. No. 7730. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment and Employment in the amount equivalent to the monetary award in the order appealed from. The Court has held that the visitorial and enforcement powers of the Secretary, exercised through his representatives, encompass compliance with all labor standards laws and other labor legislation, regardless of the amount of the claims filed by workers. This has been the rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b) of the Labor Code, to expand the visitorial and enforcement powers of the DOLE Secretary. Under the former rule, the DOLE Secretary had jurisdiction only in cases where the amount of the claim does not exceed P5,000.00. (Bay Haven, Inc. v. Florentino Abuan, et al.GR No. 160859, July 30, 2008).

Pursuant to Section 1 of Republic Act 7730 [Approved on June 2, 1994] which amended Article 128 (b) of the Labor Code, the Secretary of Labor and Employment or his duly authorized representative, in the exercise of their visitorial and enforcement powers, are now authorized to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on findings of labor employment and enfocement officers or industrial safety engineers made in the course of inspection, sans any restriction with respect to the jurisdictional amount of P5,000.00 provided under Article 129 and Article 217 of Code. (Cirineo Bowling Plaza v. Gerry Sensing, et al.GR No. 146572, January 14, 2005).

2. Power to suspend/effects of termination When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the termination of the individual respondents, the Secretary did not exceed her jurisdiction, nor

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did the Secretary gravely abuse the same. It must be pointed out that one of the substantive evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor dispute to the further detriment of the national interest. In her Order dated March 28, 1995, the Secretary of Labor rightly held: It is well to remind both parties herein that the main reason or rationale for the exercise of the Secretary of Labor and Employment’s power under Article 263(g) of the Labor Code, as amended, is the maintenance and upholding of the status quo while the dispute is being adjudicated. Hence, the directive to the parties to refrain from performing acts that will exacerbate the situation is intended to ensure that the dispute does not get out of hand, thereby negating the direct intervention of this office. The University’s act of suspending and terminating union members and the Union’s act of filing another Notice of Strike after this Office has assumed jurisdiction are certainly in conflict with the status quo ante. By any standards[,] these acts will not in any way help in the early resolution of the labor dispute. It is clear that the actions of both parties merely served to complicate and aggravate the already strained labor-management relations. (University of Immaculate Concepcion, Inc. v. Secretary of Labor, et al.GR No. 151379, January 14, 2005).

3. Assumption of jurisdiction a. Assumption by the Secretary More to the point, the Court has consistently ruled in a long line of cases spanning several decades that once the SOLE assumes jurisdiction over a labor dispute, such jurisdiction should not be interfered with by the application of the coercive processes of a strike or lockout. Defiance of the assumption order or a return-to work order by a striking employee, whether a union officer or a member, is an illegal act and, therefore, a valid ground for loss of employment status. The assumption of jurisdiction by the SOLE over labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest is in the nature of a police power measure. In this case, the SOLE sufficiently justified the assumption order, thus: The Hotel is engaged in the hotel and restaurant business and one of the de luxe hotels operating in Metro Manila catering mostly to foreign tourist groups and businessmen. It serves as venue for local and international conventions and conferences. The Hotel provides employment to more than 700 employees as well as conducts business with entities dependent on its continued operation. It also provides substantial contribution to the government coffers in the form of foreign exchange earnings and tax payments. Undoubtedly, a work stoppage thereat will adversely affect the Hotel, its employees, the industry, and the economy as a whole. (Manila Hotel Employees Association and its members v. Manila Hotel Corporation. GR No. 154591, March 5, 2007). The Secretary’s assumption of jurisdiction power necessarily includes matters incidental to the labor dispute, that is, issues that are necessarily involved in the dispute itself, not just to those ascribed in the Notice of Strike; or, otherwise submitted to him for resolution. As held in the case of International Pharmaceuticals, Inc. v. Sec. of Labor and Employment, “x x x [t]he Secretary was explicitly granted by Article 263 (g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a

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strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute must include and extend to all questions and controversies arising therefrom, including cases over which the Labor Arbiter has exclusive jurisdiction.” Accordingly, even if not exactly on the ground upon which the Notice of Strike is based, the fact that the issue is incidental to the resolution of the subject labor dispute or that a specific issue had been submitted to the Secretary of the DOLE for her resolution, validly empowers the latter to take cognizance of and resolve the same. (Skippers Pacific Inc and J.P. Samartzsis Maritime Enterprises Co., S.A., vs. Jerry Maguad and Porfero Ceudadano G.R. No. 166363,August 15, 2006).

The moment the Secretary of Labor assumes jurisdiction over a labor dispute in an industry indispensable to national interest, such assumption shall have the effect of automatically enjoining the intended or impending strike. It was not even necessary for the Secretary of Labor to issue another order directing a return to work. The mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return-to-work order, even if the directive to return to work is not expressly stated in the assumption order. (Steel Corp. of the Phils. vs. SCP Employees Union-National Federation of Labor Unions, G.R. No. 169829-30, April 16, 2008). Again, we spell out what encompass the Secretary’s assumption of jurisdiction power. The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, and decide the same accordingly. And, as a matter of necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise submitted to him for resolution. ( UFE-DFA-KMU vs. Nestlé Philippines, Incorporated.G.R. No. 158930-31, March 3, 2008).

4. Appellate jurisdiction a. DOLE Secretary has appellate jurisdiction over POEA disciplinary cases

Perusal of the POEA rules and the IRR of RA 8042 show that NLRC has no jurisdiction to review disciplinary cases decided by the POEA. Petitioners should have appealed the adverse decision of the POEA to the Secretary of Labor instead of to the NLRC. Consequently, the CA being correct in its conclusions, committed no error in upholding that appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. (Eastern Mediterranean Maritime Ltd v. Estanislao Surio, et al.GR No. 154213, August 23, 2012).

b. No appellate jurisdiction over review of BLR in cancellation proceedings The Secretary of Labor and Employment has no jurisdiction to entertain the appeal of Abbott. The appellate jurisdiction of the Secretary of Labor and Employment is limited only to a review of cancellation proceedings decided by the Bureau of Labor Relations in the exercise of its exclusive and original jurisdiction. The Secretary of Labor and Employment has no jurisdiction over decisions of the Bureau of Labor Relations rendered in the exercise of its appellate power to review the decision of the Regional Director in a

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petition to cancel the union's certificate of registration, said decisions being final and inappealable. (Abbot Laboratories Philippines v. Abbott Laboratories Employees Union. G.R No. 131374, 2000).

5. Voluntary arbitration powers

G. Grievance Machinery and Voluntary Arbitration 1. Subject matter of grievance Art. 217(c) of the Labor Code provides that “cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enfocement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. This provision requires labor arbiters to refer cases involving the implementation of CBAs to the grievance machinery provided therein and to voluntary arbitration. Moreover, Art. 260 of the Labor Code clarifies that such disputes must be referred first to the grievance machinery and, if unresolved within seven days, they shall automatically be referred to voluntary arbitration. Under Art. 261, violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the CBA. Under this provision, voluntary arbitrators have original and exclusive jurisdiction over matters which have not been resolved by the grievance machinery. Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the matter to the grievance machinery provided in the CBA. Because the labor arbiter did not have jurisdiction over the subject matter, his decision was void. (Miguel Santuyo, et al. v. Remerco Garments Manufacturing, Inc. GR. 174420, March 22, 2010).

2. Voluntary Arbitrator a)

Jurisdiction

i. Voluntary arbitration, plenary authority and jurisdiction of VA Goya, Inc.’s contention that the Voluntary Arbitrator (VA) exceeded his power in ruling on a matter not covered by the sole issue submitted for voluntary arbitration is untenable. In a prior case, the Supreme Court has ruled that, in general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. The VA has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her own authority. Subject to judicial review, this leeway of authority and adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice. In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence. The Union claimed that the hiring of contractual workers from PESO violated the CBA provision that prescribes only three categories of workers in the company, namely: the probationary, the regular, and the casual employees. Instead of hiring contractual workers, Goya,

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Inc. should have hired probationary or casual employees, who could have become additional Union members, pursuant to the union security clause in the CBA. The VA ruled that while Goya, Inc. was not guilty of any unfair labor practice, it still committed a violation of the CBA, though such violation was not gross in character. The Supreme Court held that the VA’s ruling is interrelated and intertwined with the sole issue submitted for arbitration. The ruling was necessary to make a complete and final adjudication of the dispute between the parties. (Goya Inc. v. Goya Inc. Employees Union-FFW. GR No. 170054, January 21, 2013).

In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority – subject only, in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over the related issue. In Ludo & Luym Corporation v. Saornido, the Supreme Court recognized that voluntary arbitrators are generally expected to decide only those questions expressly delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary power to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of disputes. Thus, the Supreme Court ruled that even if the specific issue brought before the arbitrators merely mentioned the question of “whether an employee was discharged for just cause,” they could reasonably assume that their powers extended beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor justice. (Manila Pavilion Hotel, etc. vs. Henry Delada. G.R. No. 189947, January 25, 2011).

Under Art. 217, it is clear that a LA has original and exclusive jurisdiction over termination disputes. However, under Art. 261, a VA has original and exclusive jurisdiction over grievances arising from the interpretation or enforcement of company policies. As a general rule then, termination disputes should be brought before the LA, except when the parties unmistakably express that they agree to submit the same to voluntary arbitration. (Negros Metal Corporation v. Armelo Lamayo. GR No. 186557, August 25, 2010).

b) Labor Arbiters may act as voluntary arbitrators The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. This is what the parties did in this case. After the Board failed to resolve the bargaining deadlock between parties, the union filed a petition for compulsory arbitration in the Arbitration Branch of the NLRC. Petitioner joined the petition and the case was submitted for decision. Although the union’s petition was for “compulsory arbitration,” the subsequent agreement of petitioner to submit the matter for arbitration in effect made the arbitration a voluntary one. The essence of voluntary arbitration, after all is that it is by

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agreement of the parties, rather than compulsion of law, that a matter is submitted for arbitration. It does not matter that the person chosen as arbitrator is a labor arbiter who, under Art 217 of the Labor Code, is charged with the compulsory arbitration of certain labor cases. There is nothing in the law that prohibits these labor arbiters from also acting as voluntary arbitrators as long as the parties agree to have him hear and decide their dispute. (Manila Central Line Corporation v. Manila Central Line Free Workers Union – National Federation of Labor GR No. 109383, June 15, 1998).

c) Remedies Art. 262-A deleted the word “unappealable” from Art. 263. It makes the VA award final and executory after 10 calendar days from receipt of the copy of the award or decision by the parties. Presumably, the decision may still be reconsidered by the va on the basis of a motion for reconsideration duly field during that period. ( Albert Teng v. Alfredo Pahagac. GR No. 169704, November 17, 2010).

As the Voluntary Arbitrator acts in a quasi-judicial capacity, there is no reason why the VA’s decisions involving interpretation of law should be beyond the Supreme Court’s review. Administrative officials are presumed to act in accordance with law, yet the Court will not hesitate to pass upon their work where a question of law is involved or where a showing of abuse of authority or discretion in their officials acts is properly raised in petitions for certiorari. (Continental Marble Corporation v. NLRC, GR No. L-43825, 1988).

H. Court of Appeals 1. Rule 65, Rules of Court Rule 65, mode of judicial review of NLRC decisions

It has long been settled in the landmark case of St. Martin Funeral Home v. National Labor Relations Commission, that the mode for judicial review of decisions of the NLRC is by a petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The different modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be availed of because there is no provision on appellate review of the NLRC decisions in the Labor Code, as amended. Although the same case recognizes that both the Court of Appeals and the Supreme Court have original jurisdiction over such petitions, it has chosen to impose the strict observance of the hierarchy of courts. Hence, a petition for certiorari of a decision or resolution of the NLRC should first be filed with the Court of Appeals; direct resort to the Supreme Court shall not be allowed unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify an availment of a remedy within and calling for the exercise by the Supreme Court of its primary jurisdiction. (Marival Trading, Inc. v. NLRC GR No. 169600, June 26, 2007).

As correctly explained by the CA, judicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is confined only to issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the NLRC. The CA does not assess and weigh the sufficiency of evidence upon which the LA and the NLRC based their conclusions. The issue is limited to the determination of whether or not the NLRC acted

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without or in excess of its jurisdiction, or with grave abuse of discretion in rendering the resolution, except if the findings of the NLRC are not supported by substantial evidence. (Anonas Construction and Industrial Supply Corporation, et al. vs. NLRC, et al. G.R. No. 164052, October 17, 2008).

2. Petition for Review as mode of appeal vis-à-vis Special Civil Action for Certiorari There are, of course, settled distinctions between a petition for review as a mode of appeal and a special civil action for certiorari, thus: a. In appeal by certiorari, the petition is based on questions of law which the appellant desires the appellate court to resolve. In certiorari as an original action, the petition raises the issue as to whether the lower court acted without or in excess of jurisdiction or with grave abuse of discretion. b. Certiorari, as a mode of appeal, involves the review of the judgment, award or final order on the merits. The original action for certiorari may be directed against an interlocutory order of the court prior to appeal from the judgment or where there is no appeal or any other plain, speedy or adequate remedy. c. Appeal by certiorari must be made within the reglementary period for appeal. An original action for certiorari may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed. d. Appeal by certiorari stays the judgment, award or order appealed from. An original action for certiorari, unless a writ of preliminary injunction or a temporary restraining order shall have been issued, does not stay the challenged proceeding. e. In appeal by certiorari, the petitioner and respondent are the original parties to the action, and the lower court or quasi-judicial agency is not to be impleaded. In certiorari as an original action, the parties are the aggrieved party against the lower court or quasi-judicial agency and the prevailing parties, who thereby respectively become the petitioner and respondents. f. In certiorari for purposes of appeal, the prior filing of a motion for reconsideration is not required (Sec. 1, Rule 45); while in certiorari as an original action, a motion for reconsideration is a condition precedent (Villa-Rey Transit vs. Bello, L-18957, April 23, 1963), subject to certain exceptions. g. In appeal by certiorari, the appellate court is in the exercise of its appellate jurisdiction and power of review for, while in certiorari as an original action, the higher court exercises original jurisdiction under its power of control and supervision over the proceedings of lower courts. (San Miguel Corporation v. Numeriano Layoc, Jr. GR No. 149640, October 19, 2007).

3. Dates must be stated in Petition for Certiorari There are three essential dates that must be stated in a petition for certiorari brought under Rule 65. First, the date when notice of the judgment or final order or resolution was received; second, when a motion for new trial or reconsideration was filed; and third, when notice of the denial thereof was received. Failure of petitioner to comply with this requirement shall be sufficient ground for the dismissal of the petition. Substantial compliance will not suffice in a matter involving strict observance with the Rules. (Dr. Rey C. Tambong, vs R. Jorge Development Corporation. G.R. No. 146068, August 31, 2006).

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4. Effect of receipt of award pending outcome of Petition for Certiorari The prevailing party’s receipt of the full amount of the judgment award pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with the Court of Appeals. (Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011).

I.

Supreme Court 1. Rule 45, Rules of Court General rule: It is a settled rule in this jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Court’s power of review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case, the Court examines the CA decision in the context that it determined whether or not there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether the NLRC decision on the merits of the case was correct. (Universal Robina Sugar Milling Corporation v. Ferdinand Acibo. GR No. 186439, January 15, 2014).

Exception to the general rule: The Court’s jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard, there is therefore a need to review the records to determine which of them should be preferred as more conformable to evidentiary facts. (INC Shipmanagement, Inc. et al. v Alexander L. Moradas. GR No. 178564, January 15, 2014).

While generally, only questions of law can be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. The illegality of petitioner’s dismissal was an issue that was squarely raised before the NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation where “the findings of facts are conflicting”. The petition for review filed by the Petitioner comes within the purview of exception (5) and by analogy, exception (7). (Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012).

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As a general rule, the Supreme Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oft-repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate from what are clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented. (Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011).

Writ of Certiorari will not issue where appeal is available Additionally, the general rule is that a writ of certiorari will not issue where the remedy of appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative. Time and again this Court reminded members of the bench and bar that the special civil action of Certiorari cannot be used as a substitute for a lost appeal where the latter remedy is available. Such a remedy will not be a cure for failure to timely file a Petition for Review on Certiorari under Rule 45. Nor can it be availed of as a substitute for the lost remedy of an ordinary appeal, especially if such loss or lapse was occasioned by one’s own negligence or error in the choice of remedies. (Cathay Pacific Steel Corporation vs Court of Appeals. G.R. No. 164561, August 30, 2006).

Indeed there are instances when certiorari was granted despite the availability of appeal such as: (a) when public welfare and the advancement of public policy dictates; (b) when the broader interest of justice so requires; (c) when the writs issued are null and void; or (d) when the questioned order amounts to an oppressive exercise of judicial authority. None of these recognized exceptions, however, is present in the case at bar. Petitioner failed to show circumstances that would justify a deviation from the general rule, and make available a petition for certiorari in lieu of taking an appeal. (Iloilo La Filipina Uygongco Corporation v. CA. GR No. 170244, November 28, 2007).

J. Prescription of actions Under Article 261 of the Labor Code, the Voluntary Arbitrator has original and exclusive jurisdiction to decide all grievances arising from either the interpretation or implementation of the Collective Bargaining Agreement; violations of the CBA shall no longer be treated as an unfair labor practice but instead should be resolved as grievance under the CBA, and the Department of Labor and Employment shall not entertain any matter under the exclusive and original jurisdiction of the Voluntary Arbitrator. All money claims arising from an employeremployee relation are covered by the three-year prescriptive period mandated by Article 291 of the Labor Code, and not by Article 1144 of the Civil code which provides for a ten-year prescriptive period for written agreements. Thus, Article 291 of the Labor Code applies to

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The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. He, however only filed the complaint for constructive dismissal and monetary claims four years later or on March 29, 2004. As correctly held by the LA, complainant's cause of action has already prescribed. Respondent's contention that the prescriptive period was interrupted when he made followups is also untenable. Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision for determining whether the said period may be interrupted, Art. 1155 provides that the prescription of an action is interrupted by (a) the filing of an action, (b) written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor. In this case, respondent Pingol never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed "follow-ups" could not have validly tolled the running of the prescriptive period. It is worthy to note that respondent never presented any proof to substantiate his allegation of follow-ups. (Philippine Long Distance Telephone Company v. Roberto Pingol. GR No. 182622, September 8, 2010). In the present case, the day came when petitioner learned of Asiakonstrukt’s deduction from his salary of the amount of advances he had received but had, by his claim, been settled, the same having been reflected in his payslips, hence, it is assumed that he learned of it at the time he received his monthly paychecks. As thus correctly ruled by both the NLRC and the appellate court, only those illegal deductions made from 1997 to 1999 when he was dismissed can be claimed, he having filed his complaint only in February 2000. Per his own computation and as properly adopted by the NLRC in its assailed Resolution dated March 10, 2004, petitioner is thus entitled to reimbursement of P88,000.00. To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers’ right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.( Virgilio Anabe v. Asian Construction. GR No. 183233, December 23, 2009).

Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.

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Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may be. (Auto Bus Transport System v. Antonio Baustista, GR No. 156367, May 16, 2005).

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