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2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

HAND-OUTS FOR

2016 LABOR BAR EXAMS PRE-WEEK USE From the notes of Dean Ada D. Abad and additional 2015 Cases/Bar Answers of Dean Antonio H. Abad, Jr. For 2016 Bar Examinations: 1st Sunday PM, 06 November 2016 Including 2015 Bar questions, pertinent SC 2012-May 2015 and Bar Chairman SC Justice Presbiterio Velasco cases in Labor Law. 1

A. GENERAL PRINCIPLS AND CONCEPTS 1. CONSTITUTIONAL AND STATUTORY BASIS OF LABOR LAW AND SOCIAL LEGISLATION 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9

Promotion of human dignity (Art 2, sec 2) Freedom from poverty (Art 2, sec 9) Principle of distributive justice (Art. 2, sec 9) Freedom of Initiative and Self-reliance (Art. 12, sec. 2) Right to due process Right to equal protection of the law Right to self-organization Right against involuntary servitude Right against imprisonment for debt

Contrary to the concept of “laissez faire”, which is an economic theory that government should NOT interfere in business affairs, the peculiarity in Philippine labor law is that the State is mandated to balance the conflicting yet intimately intertwined interests2 between management to its profit, as against the employees’ right to self-organization and security of tenure, through the exercise of its police power, as well as the application of the social justice and protection to labor clauses in the Constitution.

Hence, under the PRINCIPLE OF INCORPORATION, the minimum labor standards and benefits in Labor Code are considered inherent in every employer-employee relationship even absent a written employment contract.

2. DISTINCTION BETWEEN LABOR LAW AND SOCIAL LEGISLATION LABOR LAW Affects directly actual employment, e.g., wages Meets the daily needs of workers Paid by the employer

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SOCIAL LEGISLATION Governs effects of employment, e.g., compensation for death Involves long range benefits Paid by government agencies

With special thanks to our Ablelaw OJTs from Lyceum Paolo Ricasio, Ana Minelle Laxamana, Rizel Sabanal-Adlawan, Hanna Almario and Gil Camaymayan, FEU’s Atty. Janeth Habana and Ablelaw researcher Rigel Villacarlos for the digests of the J. Velasco cases and 2015 latest cases. 2 Cebu Institute of Technology vs. Ople, 156 SCRA 620 (1987). Ponente: J. Irene Cortes. 1

2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

3. MEMORIZE ARTICLE 3, LABOR CODE: DECLARATION OF POLICY (Mnemonic: APE-SC-SJ) ART. 3. Declaration of basic policy. - The State shall Afford Protection to labor, promote full Employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to Self-organization, Collective bargaining, Security of tenure, and Just and humane conditions of work.

4. Principle of Social and Distributive Justice: Balancing of interests in case workers’ and management’s rights collide. -- The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be [a] refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character. (Tirazona vs. Phil. Eds Techno-Service (PET INC.), G.R. No. 169712, 20 January 2009). 5. HOW TO BALANCE CONFLICTING INTERESTS IN PROBLEM SOLVING:

REMEMBER THE BASIC PRINCIPLES OF LABOR LAW

MANAGEMENT

VS.

LABOR

Capital

Work

Profit

Equitable share in the profits

Management prerogatives - hiring, employee classification, - control of working methods - right to make rules and regulations

Worker’s rights - minimum standards - constitutional rights security of tenure, unionize and to collective bargaining, strike

STATE Police power/social justice Interpretation in favor of labor

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2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

6. GENERAL RULES TO REMEMBER FOR

THE BALANCING OF INTEREST IN ANSWERING PROBLEM SOLVING QUESTIONS 6.1. Existence of Employer-Employee relationship 6.1.1 Four tests to determine the existence of an employer-employee relationship (MEMORY AID: SOUTH WEST DISASTER CONTROL) a. Selection and hiring; b. payment of Wages; c. power of Dismissal; d. Control test. 

Of these four tests however, the most important test is the element of control, which has been defined as [MEMORIZE THIS] “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, 1 SCRA 132).

 Important VELASCO cases on the power of control Navarette vs. Manila Intl Frieght Forwarders, G.R. No. 200580, 11 Feb 2015. -- Where all the four tests are not present, or where not exercised by a single entity, the determinative factor for establishing empoyer-employee relationship is the control test. Raul Locsin et. al. vs PLDT, G.R. No. 185251, 02 October 2009. -Locsin and Tomaquin were security guards of SSCP, a security agency, who were assigned to PLDT as principal. When the security service agreement between PLDT and SSCP ended, Locsin and Tomaquin were allowed to continue working for one more year; their wages were still however paid by SSCP. Thereafter, they were eventually terminated, for which reason, Locsin and Tomaquin filed this illegal termination case plus monetary claims. Question: Did the complainants become employees of PLDT when their services were extended for a period of one year AFTER the termination of the SSCP Contract? Note: SSCP contract not renewed but SSCP still continued paying the complainants. SC Decision: Locsin and Tomaquin are employees of PLDT. While respondent and SSCP no longer had any legal relationship with the termination of the Agreement, petitioners remained at their post securing the premises of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the behest and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are indicia of control that respondent exercised over petitioners. With the conclusion that respondent directed petitioners to remain at their posts and continue with their duties, it is clear that respondent exercised the power of control over them; thus, the existence of an employer-employee relationship. 3

2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

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2015 BAR EXAMINATION QUESTION (V) Ador is a student working on his master's degree in horticulture. To make ends meet, he takes on jobs to come up with flower arrangements for friends. His neighbor, Nico, is about to get married to Lucia and needs a floral arranger. Ador offers his services and Nico agrees. They shake hands on it, agreeing that Nico will pay Ador P20,000.00 for his services but that Ador will take care of everything. As Ador sets about to decorate the venue, Nico changes all of Ador's plans and ends up designing the arrangements himself with Ador simply executing Nico's instructions. (a) Is there an employer-employee relationship between Nico and Ador? (4%) (b) Will Nico need to register Ador with the Social Security System (SSS)? (2%) ANSWER: A. Yes. By changing Ador’s plans and designing the arrangements himself with Ador merely executing his instructions, Nico exercised control over Ador in the manner by which he (Ador) will work. B. No. Casual employees are not subject to the compulsory coverage of the SSS by express provision of law. (Section 8 (-5) (3), RA1161, as amended.) The relationship between Nico and Ador is one of casual employment. This is so because employment is not permanent nor periodically regular, but occasional or by chance, and not in the usual course of the employer’s business. (Joco v. Aguilar, 55 OG 1946, cited in Philippine Law Dictionary by Moreno, 2nd Ed.) ALTERNATIVE ANSWER: A. YES. Ador is a worker paid on task basis; hence, there is employeremployee relationship between him and Nico. When the latter assumed the control of both result and manner of performance from Ador, all vestiges of independent contractorship disappeared. What replaced it was employer- employee relationship. B. Ador is a purely casual employee; hence, Nico need not report him for SSS coverage.

DISTINGUISH BETWEEN “RULES THAT FIX METHODOLOGY” VS. “RULES THAT ARE MERE GUIDELINES.”

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2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

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EXAMPLE: INSURANCE AGENTS; TWO CASES: Insurance agents are not employees of the insurance companies, in the absence of evidence that rules or regulations were promulgated or issued which effectively controlled or restricted the agent’s choice of methods — or the methods themselves — of selling insurance. (Insular Life Assurance Co., Ltd., vs. NLRC and Melecio Basiao, G.R. 84484, 15 November 1989, 179 SCRA 459).

But this is not to say that ALL insurance agents are NOT employees of the insurance company. As the Supreme Court clarified in the case of Tongko vs. Manufacturers' Life Insurance Company (Phils.) Inc. (G.R. No. 167622, 29 June 2010, En Banc; VELASCO PONENTE), the Insular Life ruling above was tempered with the qualification that had there been evidence that the company promulgated rules or regulations that effectively controlled or restricted an insurance agent's choice of methods or the methods themselves in selling insurance, an employer-employee relationship would have existed. In other words, the Court in Insular in no way definitively held that insurance agents are not employees of insurance companies, but rather made the same on a case-to-case basis. 6.1.2 Existence of an employer-employee relationship is a condition sine qua non for the application of labor laws. 

There must be a REASONABLE CAUSAL CONNECTION between the parties and the claim.

Under this rule, if there is a reasonable causal connection between the claim asserted and the employer-employee relations, then the case is within the jurisdiction of our labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction. GOOD EXAMPLE: Indophil Textile Mills Vs. Adviento, G.R. No. 171212, 04 August 2014 Facts: Adviento was hired as Civil Engineer (for maintenance of facilities) of Indophil, whose primary business is the manufacture of textiles. Adviento developed a chronic allergy on account of the textile dust. He was eventually dismissed from employment, for which reason he filed two cases against the company, viz: (a) NLRC for illegal termination; and (b) Regional Trial Court for damages arising from gross negligence and failure of company to provide a safe, workable and healthy environment. Company sought to dismiss the RTC case on account of litis pendencia and lack of jurisdiction, considering that the claim arises from an employer-employee relationship. Question: Whether or not RTC has jurisdiction? Answer: YES. No reasonable causal connection between claim and employeremployee relationship. Although Adviento contracted the occupational disease during his employment with the company, there is no reasonable causal connection between the claim asserted and the employer-employee relations. As such, the case does not fall 5

2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

within the jurisdiction of the labor courts; but rather with the regular courts that have jurisdiction. While the maintenance of a safe and healthy workplace may be a subject of a labor case, note that the cause of action is one for torts/quasidelict and that relief prayed for is the payment for damages arising from alleged gross negligence on the part of the company to provide a safe, healthy and workable environment for its employees. 

Important VELASCO case on jurisdiction to determine er-ee relationship; People’s Broadcasting Service [Bombo Radio Phils. Inc.] vs. The Secretary of Labor, etc., G.R. No. 179652, 06 March 2012 En Banc. -- In the exercise of the DOLE’s visitorial and enforcement power, the Labor Secretary or the latter’s authorized representative shall have the power to determine the existence of an employer-employee relationship to the exclusion of the NLRC. The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship.

6.2. Burden of proof is always upon employer to show validity of its exercise of management prerogatives, especially as regards termination of employment. NOTE: HOWEVER COMPLAINANT EMPLOYEE INITIALLY HAS THE BURDEN OF PROVING THAT HE IS AN EMPLOYEE OF THE COMPANY. (Danilo “Bitoy” Javier vs. CA, G.R. No. 192558, 15 February 2012) In sum, the rule of thumb remains: the onus probandi falls on petitioner (EMPLOYEE) to establish or substantiate such claim by the requisite quantum of evidence. “Whoever claims entitlement to the benefits provided by law should establish his or her right thereto x x x.” Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief. In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA. (Danilo “Bitoy” Javier vs. CA, ibid.)

6.3. There must exist SUBSTANTIAL EVIDENCE to prove valid exercise of management prerogatives, viz., just or authorized cause of termination. Proof beyond reasonable doubt not required in administrative cases. QUESTION: Are sworn statements of relatives and friends of respondent attesting to the existence of an extra-marital affair considered sufficient evidence to prove immorality, as a just cause for termination? ANSWER: YES. The employer’s evidence consists of sworn statements of either relatives or friends of Thelma and respondent. They either had direct personal knowledge of the illicit relationship or revealed 6

2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

circ*mstances indicating the existence of such relationship. (Alilem Credit Cooperative vs. Bandiola, G.R. No. 173489, 25 February 2013) Note: Failure of employer to submit documents which are presumed to be in its possession, inspite of an Order to do so, implies that the presentation of said documents is prejudicial to its case. (De Guzman vs. NLRC, 540 SCRA 210 [Dec. 2007]).

6.4 In cases of ambiguity, interpretation shall be made in favor of labor. -- “Where the contract of employment, being a contract of adhesion, is ambiguous, any ambiguity therein should be construed strictly against the party who prepared it.” (Price vs. Innodata Phils., 567 SCRA 122 [2008]) General Rule: Art. 223, Labor Code is given liberal interpretation in line with the desired objective of resolving controversies on the merits, to achieve substantial justice. (Aujero vs. Philcomsat, G.R. No. 193484, 18 January 2012.) Exception: When the Labor Arbiter’s Decision became final, the petitioner attained a vested right to said judgment. They had the right to rely fully on the immutability of said Decision. In Sofio vs. Valenzuela (666 SCRA 55 [2012]), it was amply stressed that: “The Court will not override the finality and immutability of a judgment based on the negligence of a party’s counsel in timely taking all the proper recourses from the judgment to justify an override, the counsel’s negligence must only be gross but also be shown to have deprived the party the right to due process.” (Building Care Corporation, etc. vs. Myrna Macaraeg, G.R. No. 198357, 10 December 2012.) CASES ON INTERPRETATION OF LABOR CONTRACTS: IMPORTANT J. VELASCO CASE: Land Bank of the Phils vs. Naval, G.R. No. 195687, 07 April 2015. -- Where the law is clear, then there is no need for interpretation. It is only in cases of doubt or ambiguity that there is a favorable interpretation slanted towards labor. The law remains valid, notwithstanding the nonpublication of its Implementing Rules. Facts: In this case, LBP officers and staff were previously receiving Cost of Living Allowances and Bank Equity pay monthly, the amount of which depended on their respective ranking since 1979. Ten years later in 1989, Rep. Act 6758 (Salary Standardization Law) was promulgated, which integrated all allowances for govt employees into their basic salary. The Department of Budget thereafter issued its DBM-CCC No. 10 (Implementing Rules on the Salary Standardization Act), which was later on ruled to be invalid by the Supreme Court in the caes of De Jesus vs. COA, because of lack of publication. DBM later on published the same DBM CCC No. 10 a year after. Immediately after the De Jesus case ruling came out, the LBP officers and staff demanded for the payment of their allowances which had been integrated into the basic salary. It is their position that by the nullification of DBM-CCC No. 10 which expressly named the COLA and BEP as integrated into the basic salary, LBP’s integration of the COLA and the BEP is likewise invalid. In other words, respondents equate the nullification of the implementing rules with the nullification of the very law which orders the integration of these allowances into the basic salary.

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2016 LABOR LAW BAR REVIEW HAND-OUTS FOR 2016 JOINT LYCEUM-ADAMSON BAR OPERATIONS

THE ABAD NOTES (COMPLETED 03 OCT 2016)

Question: Are the LBP officers and staff entitled to the payment of their allowances? Will the integration into the salary constitute a diminution of their benefits? Answer: NO, the LBP officers and staff are NOT entitled to the payment of the allowances, as the Salary Standardization Law which ordered the integration thereof continues to be valid. We hold that Rep. Act No. 6758 (Salary Standardization Law) can be implemented notwithstanding our ruling in De Jesus vs. Commission on Audit. While it is true that in said case, this Court declared the nullity of DBM-CCC No. 10, yet there is nothing in our decision thereon suggesting or intimating the suspension of the effectivity of Rep. Act No. 6758 pending the publication in the Official Gazette of DBM-CCC No. 10. The nullity of DBM-CCC No. 10 Implementing Rules, will not affect the validity of R.A. No. 6758. It is a cardinal rule in statutory construction that statutory provisions control the rules and regulations which may be issued pursuant thereto. Such rules and regulations must be consistent with and must not defeat the purpose of the statute. The validity of R.A. No. 6758 should not be made to depend on the validity of its implementing rules. What is more significant is that respondents and intervenors have not questioned the fact of integration. Similarly, the appellate court found there was in fact an integration of the subject allowances to the basic pay of the employees of LBP, albeit supposedly insufficient. The observation of the appellate court regarding the resulting amount notwithstanding, the actual integration of these allowances to the basic salary of the respondents and the intervenors defeats the allegation of a total deprivation and/or withholding of these allowances. As such, to order the payment of the COLA and the BEP on top of what has already been paid by LBP—the basic pay with the COLA and the BEP incorporated—will constitute a prohibited double compensation.

2014 CASE: National Union Of Workers In Hotel Restaurant And Allied Industries (NUWHRAIN) - Philippine Plaza Chapter Vs. Philippines Plaza Inc., G.R. No. 177524, 23 July 2014. – The Union anchors its claim for unpaid services charges on Sections 68 and 69 of the CBA, in relation with Article 96 of the Labor Code. Section 68 states that the sale of food, beverage, transportation, laundry and rooms are subject to service charge at the rate of ten percent (10%). Excepted from the coverage of the 10% service charge are the so-called “negotiated contracts” and “special rates.” Issue: Can the Union validly claim proportionate share of service charges from “non-sales” (example: free benefits from hotel and credit cards; and similar arrangements)? Answer: NO. Hotel does not have any obligation to the Union, inasmuch as their claims arises from “non-sale” transactions like “Westin Gold Cards Revenue” and “Maxi Media Barter” to be negotiated contracts or contracts under special rates, and the entries “Business Promotions” and “Gift Certificates” as contracts that did not involve a sale of food, beverage, etc. A collective bargaining agreement, as used in Article 252 (now Article 262), the Labor Code, is a contract executed at the request of either the employer or the employees’ exclusive bargaining representative with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions under such agreement. Jurisprudence settles that a CBA is the law between the contracting parties who are obliged under the law to comply with its provisions. Thus, if the terms of the CBA are plain, clear and leave no doubt on the intention of the contracting parties, the literal meaning of its stipulations, as they appear on the face of the contract, shall prevail. Only when the words used 8

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are ambiguous and doubtful or leading to several interpretations of the parties’ agreement that a resort to interpretation and construction is called for. CASE3. BPI vs. BPI Employees Union – Metro Manila, G.R. No. 175678 [22 August 2012]: Issue: In a CBA which provides for multipurpose loans which may be availed of by the employees, is the imposition of a “NO NEGATIVE DATA BANK (No NDB)” policy after CBA is signed and executed, violative of the CBA obligation? Position of the Union and Voluntary Arbitrator: The imposition of “No NDB” is a new condition for the implementation and availment of loans and in contravention of CBA provision. Position of BPI: “No NDB” policy is not violative of the CBA, but is a valid and reasonable requirement consistent with sound banking practice. It is meant to inculcate among both officers and employees the need for responsibility and discipline, especially in an industry where trust is paramount. SUPREME COURT DECISION: YES, it is violative of CBA. For the Union. A CBA refers to the negotiated contract between the Union and the Employer regarding terms and conditions of work. As in all other contracts,, there must be clear indications that the parties reached a meeting of the minds, as the CBA is considered the law between the parties. The CBA in this case contains no provision on the “No Negative Data Bank” policy as a prerequisite for the entitlement of the benefits it set forth for the employees. IN fact, a close reading of the CBA would show that the terms and conditions contained therein relative to the availment of the loans are plain and clear, thus all they need is thus all they need is the proper implementation in order to reach their objective. The CA was therefore correct when it ruled that, although the Bank is authorized to issue rules and regulations pertinent to the availment and administration of loans under the CBA, the additional rules and regulations must NOT impose new conditions which are not contemplated in the CBA and should be within the realm of reasonableness. The “No NDB policy” is a new condition which is NEVER contemplated in the CBA and at some points, unreasonable to the employees because it provides that before an employee or his/her spouse can avail of the loan benefits under the CBA, the said employee or his/her spouse must not be listed in the Negative Data Bank, or if previously listed therein, must obtain clearance of at least one (1) year or six months, s the case may be, prior to a loan application. If the Bank intended to include the No NDB policy in the CBA, it should have presented such proposal to the union during negotiations. To include such policy after the effectivity of the CBA is deceptive and goes beyond the original agreement between the parties.

CASE4 ON FUNERAL AND BEREAVEMENT AID FOR DEATH OF LEGAL DEPENDENTS: (Philippine Journalist Inc. vs.Journal Employees Union, G.R. No. 192601, 26 June 2013) ISSUE: In the availment of funeral and bereavement aid under the CBA, may the Company interpret “legal dependent” in accordance with the SSS definition of “beneficiary” and hence, refuse payment of the benefit? Married employee sought payment of funeral/bereavement aid under CBA when one of his parents died. Company denied the claim, based on its interpretation that a married employee’s “legal dependent” is limited only to “legitimate spouse and minor children”; while the legal dependents of a single employee are the parents and 9

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siblings 18 yrs old and below, in accordance with SSS definitions. CBA provision states: SECTION 4. Funeral/ Bereavement Aid. The COMPANY agrees to grant a funeral/bereavement aid in the following instances: a. Death of a regular employee in line of duty – P50,000 b. Death of a regular employee not in line of duty – P40,000 c. Death of legal dependent of a regular employee – P15,000. SUPREME COURT DECISION: NO, the Company cannot do so. Citing statutory definitions, the Supreme Court concluded that the civil status of the employee as either married or single is not the controlling consideration in order that a person may qualify as the employee’s legal dependent. What is rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent for support upon the employee. The Court defined a dependent as "one who derives his or her main support from another. Meaning, relying on, or subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of someone else." The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the CBA is silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set. This is because the terms of such social legislations are deemed incorporated in or adopted by the CBA. Considering that existing laws always form part of any contract, and are deemed incorporated in each and every contract, the definition of legal dependents under the aforecited social legislations applies herein in the absence of a contrary or different definition mutually intended and adopted by the parties in the CBA. Accordingly, the concurrence of a legitimate spouse does not disqualify a child or a parent of the employee from being a legal dependent, provided substantial evidence is adduced to prove the actual dependency of the child or parent on the support of the employee.” CASE5 EN CONTRA: Mitsubishi Motors Phils. Salaried Employees Union (MMPSEU) vs. Mitsubishi Motors Phils Corp., G.R. No. 175773, 17 June 2013. ISSUE: In a CBA which provides for reimbursem*nt of hospitalization benefits to dependents, is the employer company under obligation to reimburse employee if the dependent’s hospital expenses had already been covered by another Health Maintenance Organization (HMO) provider? Position of Voluntary Arbitrator: CBA has no express provision barring claims for hospitalization expenses already paid by other insurers. Hence, the covered employees can recover from both. Position of Court of Appeals and Company: The CA did not agree with Voluntary Arbitrator, saying that the conditions set forth in the CBA implied an intention of the parties to limit MMPC’s liability only to the extent of the expenses actually incurred by their dependents which excludes the amounts shouldered by other health insurance companies. SUPREME COURT DECISION: NO, Mitsubishi Company is under NO OBLIGATION to reimburse employee for hospital expenses of dependents which had already been covered by another HMO. 10

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We agree with the CA. The condition that payment should be direct to the hospital and doctor implies that MMPC is only liable to pay medical expenses actually shouldered by the employees’ dependents. It follows that MMPC’s liability is limited, that is, it does not include the amounts paid by other health insurance providers. This condition is obviously intended to thwart not only fraudulent claims but also double claims for the same loss of the dependents of covered employees. It is well to note at this point that the CBA constitutes a contract between the parties and as such, it should be strictly construed for the purpose of limiting the amount of the employer’s liability. The terms of the subject provision are clear and provide no room for any other interpretation. As there is no ambiguity, the terms must be taken in their plain, ordinary and popular sense. Consequently, MMPSEU cannot rely on the rule that a contract of insurance is to be liberally construed in favor of the insured. Neither can it rely on the theory that any doubt must be resolved in favor of labor.

6.5 In the imposition of penalty, whether suspension or termination, the same must be commensurate to the offense committed. (Sagales v. Rustan’s Commercial Corporation (G.R. No. 166554, 27 November 2008) 2012 CASE: Negros Slashers vs. Alvin Teng, G.R. No. 187122, 22 Feb 2012

Facts: Basketball player Alvin Teng had a below-par performance during Game Number 4 of Championship Round for which he was pulled out from the game, and then he untied his shoelaces and donned his practice jersey. In Game Number 5, he did not play. Case for Negros Slashers: (a) basketball organization is a "team-based" enterprise and that a harmonious working relationship among team players is essential to the success of the organization; (b) Teng "abandoned" them during a crucial Game Number 5 in the MBA championship round. Supreme Court: We find that the penalty of dismissal handed out against Teng was indeed too harsh. As an employee of the Negros Slashers, Teng was expected to report for work regularly. Missing a team game is indeed a punishable offense. Untying of shoelaces when the game is not yet finished is also irresponsible and unprofessional. However, we agree with the Labor Arbiter that such isolated foolishness of an employee does not justify the extreme penalty of dismissal from service. Petitioners could have opted to impose a fine or suspension on Teng for his unacceptable conduct.

6.6 But management prerogatives are likewise to be equally protected when circ*mstances show the validity of the exercise. MEMORIZE ELEMENTS: Valid exercise of management prerogatives The free will of the management to conduct its own affairs to achieve its purpose cannot be denied, PROVIDED THAT THE SAME IS EXERCISED: • • •

IN GOOD FAITH (BONA-FIDE IN CHARACTER), FOR THE ADVANCEMENT OF THE EMPLOYER’S INTEREST; AND NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES. (Capitol Medical Center vs. Meriz; San Miguel Brewery and Union Carbide cases). 11

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6.7 Paradigm shift towards mutual cooperation - It is high time that employer and employee cease to view each other as adversaries and instead recognize that there is a symbiotic relationship, wherein they must rely on each other to ensure the success of the business. (Toyota Motor Phils. Workers vs. NLRC, 537 SCRA 171)

B. EMPLOYER-EMPLOYEE RELATIONSHIP Vis-à-vis Issues of Jurisdiction 1. ADA’S COMMENT AS REGARDS JURISDICTION IN CASE OF ESSAY QUESTION: In determining the nature of the case, check the principal relief sought by the complainant. That is the main factor that determines jurisdiction.

2. EMPLOYEE BENEFIT: IS IT A LABOR DISPUTE OR A CIVIL DISPUTE? SMART Communications vs. Astorga, G.R. 148132, 28 Jan 2008. -- An employer’s demand for the payment of the market value of the car, or in the alternative, the surrender of a car, is not a labor dispute but a civil one. Hence, this demand properly falls within the jurisdiction of the civil courts. No reasonable causal connection between the claim to the issue of an employer-employee relationship. Contra: Car Loan Agreement with Forfeiture clause in case of resignation. – Grandteq Industrial Steel Products vs. Edna Margallo, G.R. No. 181393, 28 July 2009. – In a termination case, the claim by employee for reimbursem*nt of car loan payments under car loan agreement with employer was dismissed by Labor Arbiter, finding that the contract stipulation should be strictly followed as the law between the parties. On appeal, NLRC/CA and Supreme Court all reversed the Labor Arbiter’s decision, and declared the forfeiture provision of the car loan agreement as null and void. “Although not strictly a labor contract, a car loan agreement herein involves a benefit extended by the employers, Grandteq and Gonzeles, to their employee Margallo. It should benefit, and not unduly unburden Margallo. The court cannot, in any way, uphold a car loan agreement that threatens the employee with the forfeiture of all the car loan payments he/she had previously made, plus loss of the possession of the car, should the employee wish to resign; otherwise, said agreement can then be used by employer as an instrument to either hold said employee hostage to the job or punish him/her for resigning.”

3. CORPORATE OFFICER OR ORDINARY EMPLOYEE? Sub-issue: IS THE TERMINATION OF A HIGHER MANAGEMENT OFFICER “ASST. VICE-PRESIDENT” “EXECUTIVE VICE-PRESIDENT”, OR SIMPLY “VICEPRESIDENT” A LABOR CASE OR A CORPORATE CASE? If the complainant is named as a corporate officer per Articles and/or by-laws, then the removal of the person is an intra-corporate controversy and within the jurisdiction of the ordinary courts. If not, then the person is an ordinary employee who may only be terminated for just or authorized cause, and after due process compliance.

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Notes: 1. Who are corporate officers? Corporation Code, Section 25. Corporate officers, quorum. - Immediately after their election, the directors of a corporation must formally organize by the election of a president, who shall be a director, a treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more positions may be held concurrently by the same person, except that no one shall act as president and secretary or as president and treasurer at the same time. 2. How are corporate offices created? Corporate offices are created in two (2) distinct ways: (a) by virtue of the Charter or the By-laws of the Corporation; or (b) by resolution of the Board of Directors duly empowered under the by-laws to create additional offices as may be necessary under the circ*mstances. (WPP Communications vs. Galera, G.R. No. 169207 and Galera vs. WPP Communications, G.R. No. 169239, 25 March 2010)

3. General Rule: Under Corporation Code, the following are corporate officers: President, Treasurer and Corporate Secretary Exceptions to the above general rule are as follows:  When the articles or by-laws provide for officers other than those positions specifically mentioned in the Corporation, Articles and By-laws.  When the Board of Directors, duly empowered and authorized to create such additional corporate offices in the articles or by-laws, create said additional corporate offices by board resolution. Note further that the by-laws must itself have been amended to include such corporate office. Thus: Marc II Marketing, Inc. v. Joson, G.R.. G.R. No. 171993, 12 December 2011 [662 SCRA 35). – The Supreme Court held that an enabling clause in a corporation/s bylaws empowering its Board of Directors to create additional officers, even with the subsequently passage of a board resolution of that effect, cannot make such position a corporate office. The Board of Directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office. To allow the creation of a corporate officer position by a simple inclusion in the corporate by-laws of an enabling clause empowering the board of directors to do so can result in the circumvention of that constitutionally well-protected right of every employee to security of tenure. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, 13 October 2010. -- It is not the nature of the services performed, but on the manner of creation of the office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate employees who may only be terminated for just cause. Under Section 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to a ByLaw provision giving a president the power to create an office does not qualify as a By-Law position. In the present case, the position of Vice President for Finance and Administration which respondent held was merely created by Matling’s President pursuant to the company’s By-Laws. It is not a corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted from office at will.

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2014-2015 CASES: Raul C. Cosare vs. Broadcom Asia, Inc. and Dante Arevalo, G.R. No. 201298, 05 February 2014. -- Two circ*mstances which must concur for an a person to be considered a corporate officer, as against an ordinary employee or officer, namely; (1) the creation of the position is under the corporation’s charter or by-laws; and (2) the election of the officer is by the directors of stockholder. It is only when the officer claiming to have been illegally dismissed is classified as such corporate officer that the issue is deemed an intra-corporate dispute which falls within the jurisdiction of the trial courts. The mere fact that Cosare was a stockholder of Broadcom at the time of the case’s filing did not necessarily make the action an intra– corporate controversy. “[N]ot all conflicts between the stockholders and the corporation are classified as intra– corporate. There are other facts to consider in determining whether the dispute involves corporate matters as to consider them as intra–corporate controversies.”42 Time and again, the Court has ruled that in determining the existence of an intra–corporate dispute, the status or relationship of the parties and the nature of the question that is the subject of the controversy must be taken into account.43 Considering that the pending dispute particularly relates to Cosare’s rights and obligations as a regular officer of Broadcom, instead of as a stockholder of the corporation, the controversy cannot be deemed intra–corporate. This is consistent with the “controversy test” explained by the Court in Reyes v. Hon. RTC, Br. 142,44 to wit:ch anRoblesvirtualLawlibrary Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra–corporate. The controversy must not only be rooted in the existence of an intra–corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra–corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra–corporate controversy exists.45 (Citation omitted)chanroblesvirtualawlibrary Essencia Q. Manarpiis vs. Texan Philippines, Inc., et al., G.R. No. 197011, 28 January 2015. -- On solidary liability of corporate officers. In labor cases, the SC has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or bad faith. The Coffee Bean and Tea Leaf Philippines, Inc. vs. Rolly P. Arenas, G.R. No. 208908, 11 March 2015. -- An officer of the company may not be held liable for the corporation’s labor obligations unless he acted with evident malice and/or bad faith in dismissing an employee

4. RECAPITUATION ON CASES REGARDING JURISDICTION:

In determining the nature of the case, check the principal relief sought by the complainant. That is the main factor that determines jurisdiction. In the Smart case, the case filed was one of replevin, and hence, jurisdiction lies with the regular courts. In the Margallo case, the principal case was one of illegal 14

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termination with claim for reimbursem*nt as well as damages, and hence, properly falls within the jurisdiction of the Labor Arbiter. Same also with the Indophil case, which was a case for damages arising from alleged negligence on the part of the company to provide a safe, healthy and workable environment for its employees. As such, jurisdiction properly lies with the regular courts. As regards termination of an employee who is a corporate officer, or vice-versa: It is only when the dismissed employee is actually classified as a corporate officer, that the issue may be considered an intra-corporate dispute and hence, cognizable by the regular courts and NOT the labor courts. CASE

RELIEF

JURISDICTION

SMART VS. ASTORGA

REPLEVIN; RETURN OF THE CAR OF THE MANAGER

REGIONAL TRIAL COURT

GRANDTEQ VS. MARGALLO

ILLEGAL TERMINATION WITH PRAYER FOR REIMBURsem*nT OF DOWNPAYMENT FOR CAR

LABOR ARBITER

INDOTEXTILE VS. ADVIENTO

DAMAGES FOR COMPANY’S FAILURE TO PROVIDE SAFE AND HEALTHY WORKING ENVIRONMENT

REGIONAL TRIAL COURT

MATLING VS. COROS

TERMINATION OF VP FOR FINANCE AND ADMINISTRATION, WHICH POSITION IS NOT IN ARTICLES OR BY-LAWS

LABOR ARBITER

COSARE VS BROADCOM

TERMINATION OF ASST VICEPRESIDENT FOR SALES, WHO WAS ALSO A STOCKHOLDER. AVP-SALES NOT A CORP OFFICER

LABOR ARBITER

C. MANAGEMENT PREROGATIVES: 1.

2.

GENERAL PRINCIPLE: Management is free to regulate, according to its discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. Julie’s Bakeshop vs. Arnaiz, 666 SCRA 1010 [2012]; see also: Reyes-Rayal vs. Philippine Luen Thai Holdings, 676 SCRA 183 [2012].

MEMORIZE ELEMENTS: Valid exercise of management prerogatives The free will of the management to conduct its own affairs to achieve its purpose cannot be denied, PROVIDED THAT THE SAME IS EXERCISED: • • •

IN GOOD FAITH (BONA-FIDE IN CHARACTER), FOR THE ADVANCEMENT OF THE EMPLOYER’S INTEREST; AND NOT TO CIRCUMVENT THE RIGHTS OF THE EMPLOYEES. (Capitol Medical Center vs. Meriz; San Miguel Brewery and Union Carbide cases). 15

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3. 2013-2015 CASES: 3.1

RULES ON TRANSFER: It is the prerogative of management to transfer an employee where he can be most useful to the company; Insubordination if not followed.

Jurisprudential guidelines in the transfer of employees: [outside coverage but principles good to remember for the Bar Exam] ICT Marketing Services, Inc., etc. vs. Mariphil L. Sales, G.R. No. 202090, 09 September 2015. i. Transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary; ii. The employer has the inherent right to transfer or reassign an employee for legitimate business purposes; iii. A transfer becomes unlawful where it is motivated by discrimination or bad faith or is affected as a form of punishment or is a demotion without sufficient cause; iv. The employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee. Question: May an employee refuse to comply with transfer order of Management by raising this as a grievance issue? Manila Pavillion vs. Henry Delada, GR 189947, 25 January 2012, CJ Sereno

Supreme Court: NO!!! 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. In fact, Delada cannot hide under the legal cloak of he grievance machinery of the CBA or the voluntary arbitration proceedings to disobey a valid order of transfer from the management of the hotel. While it is true that Delada’s transfer to Seasons is the subject of the grievance machinery in accordance with the provisions of their CBA, Delada is expected to comply first with the said lawful directive while awaiting the results of the decision in the grievance proceedings.

2014 BAR QUESTION: Lionel, an American citizen whose parents migrated to the U.S. from the Philippines, was hired by JP Morgan in New York as a call center specialist. Hearing about the phenomenal growth of the call center industry in his parents’ native land, Lionel sought and was granted a transfer as a call center manager for JP Morgan’s operations in Taguig City. Lionel’s employment contract did not specify a period for his stay in the Philippines. After three years of working in the Philippines, Lionel was advised that he was being recalled to New York and being promoted to the position of director of international call center operations. However, because of certain "family reasons," Lionel advised the company of his preference to stay in the Philippines. He was dismissed by the company. Lionel now seeks your legal advice on: (6%) (A) whether he has a cause of action (B) whether he can file a case in the Philippines (C) what are his chances of winning 16

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ANSWER: (A) For illegal dismissal, Lionel has no cause of action because J.P. Morgan has the right to transfer an employee to another office in the exercise of management prerogative of sound business judgment and in accordance with pre-determined and established company policy and practice, particularly so when no illicit, improper or underhanded purpose can be ascribed to the company. (Philippine Industrial Security Agency Corp. vs. Dapiton, 320 SCRA 124 [1999].) (B) Yes, he can file a case in the Philippines because JP Morgan is doing business in the Philippines. (C) His chances of winning is NIL because the objection to the transfer was grounded solely on personal “family reasons” that will be caused to him by virtue of the transfer. (OSS Security vs. NLRC, 325 SCRA 157 [2000]; Phil. Industrial Security Agency Corp. vs. Dapiton, ibid.) 3.2 G.J.T. Rebuilders Machine Shop et al. vs. Ricardo Ambos et. al., G.R. No. 174184, 28 January 2015. – GJT Rebuilders is a single proprietorship engaged in steel works and metal fabrications which employed Ambos as machinist. A fire partially destroyed the building where GJT’s leased machine shop premises was located, for which reason the owner of the building notified them to vacate the premises “to avoid any unforeseen accidents that may arise due to the damage.” Eventually, G.J.T. Rebuilders left its rented space and closed the machine shop on December 15, 1997. It then filed an Affidavit of Closure before the Department of Labor and Employment on Febru s before the Mandaluyong City Treasurer’s Office on February 25, 1998.ary 16, 1998 and a sworn application to retire its business operation. The employees were not paid separation pay, on account of alleged closure due to serious business losses and financial reverses. Issue: WON complainants are entitled to separation pay despite closure on alleged serious business losses. Answer: Yes. Although the employer may close its business as an exercise of management prerogative that courts cannot interfere with, it failed to sufficiently prove its alleged serious business losses. Thus, it must pay respondents their separation pay equivalent to one-month pay or at least one-half-month pay for every year of service, whichever is higher. 3.3 Mirant Philippines vs. Joselito A. Caro, G.R. No. 181490, 23 April 2014. – Mirant Phils conducted a drug test where Caro was randomly chosen among its employees who would be tested for illegal drug use. Caro and the selected employees duly received an Intracompany Correspondence that the random drug testing was to be conducted after lunch on the same day. However at 11:30 a.m. of the same day, Caro received an emergency phone call from his wife’s colleague who informed him that a bombing incident occurred near his wife’s work station in Tel Aviv, Israel where his wife was then working as a caregiver. Caro thereafter informed the company that he will go to the Israeli Embassy first to attend to his wife’s concerns, and that he will submit to a drug test the following day at his own expense. On account of his alleged refusal to submit to a random drug test, the company terminated his services. During admin investigation however, the Company secured evidence that: (a) there was no such bombing; and (b) Caro did not go to the Israeli Embassy on the day of the drug test. Issue: Whether or not the failure to subject himself to a drug test may be considered as “willful refusal” to comply with the reasonable orders of the company? 17

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Decision: NO. Caro was illegally dismissed. While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is recognized as a valid exercise of its management prerogative as an employer, such exercise is not absolute and unbridled. In the exercise of its management prerogative, an employer must therefore ensure that the policies, rules and regulations on workrelated activities of the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.47 The Anti-Drugs Policy of Mirant fell short of these requirements. (a) The policy was not clear on what constitutes "unjustified refusal" when the subject drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug test shall be punishable by the penalty of termination for the first offense. To be sure, the term "unjustified refusal" could not possibly cover all forms of "refusal" as the employee’s resistance, to be punishable by termination, must be "unjustified." To the mind of the Court, it is on this area where petitioner corporation had fallen short of making it clear to its employees – as well as to management – as to what types of acts would fall under the purview of "unjustified refusal." (b) The penalty of termination is too harsh under the circ*mstances, considering that in the ten-year employment of Caro, this is his first offense. 3.4 Royal Plant Workers Union vs. Coca-Cola Bottlers Phils., G.R. 198783, 15 April 2013. QUESTION: Is the decision of Coca-Cola Bottlers to take out the chairs of employees in an assembly line in exchange for additional periods of rest/breaks, a valid exercise of management prerogatives, or is it a diminution of benefit which cannot be withdrawn without employees’ consent? UNION’S POSITION: The use of chairs by the operators had been a company practice for 34 years, and cannot be withdrawn without consent of affected employees. Having chairs are favourable to the assembly line operators who get tired and exhausted; the frequency of the break period is not advantageous to the operators because it cannot compensate for the time they are made to stand throughout their working time. MANAGEMENT POSITION: The directive to take out the chairs is in line with the “I Operate, I Maintain, I Clean” program of petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and equipment assigned to him clean and safe, and to constantly move about in the performance of their duties and responsibilities. The removal of the chairs was implemented so that the bottling operators will avoid sleeping, and thus, prevent injuries to their persons. ANSWER: For Management. Valid exercise of management prerogatives. The decision to remove the chairs was done with good intentions as Company wanted to avoid instances of operators sleeping on the job while in the performance of their duties and responsibilities and because of the fact that the chairs were not necessary considering that the operators constantly move about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, company’s exercise of its management prerogative was made in good faith without doing any harm to the workers’ rights. The rights of the Union under any labor law were not violated. There is no law that requires employers to provide chairs for bottling operators. The CA correctly ruled that the Labor Code, specifically Article 132 thereof, only requires employers to provide seats for women. No similar requirement is mandated for men or male workers. It must be stressed that all concerned bottling operators in this case are men. 18

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The Union should also not complain too much about standing and moving about for one and one-half (1 ½) hours because studies show that sitting in workplaces for a long time is hazardous to one’s health. The report of VicHealth, Australia,12 disclosed that “prolonged workplace sitting is an emerging public health and occupational health issue with serious implications for the health of our working population. Importantly, prolonged sitting is a risk factor for poor health and early death, even among those who meet, or exceed, national activity guidelines.” 3.5 NOT ASKED IN 2013, 2014 AND 2015 BAR, BUT STILL TIMELY NOW BECAUSE OF PREVIOUS ELECTIONS): Management may validly impose a prohibition against elective office as an exercise of its prerogatives. Ymbong vs. ABS-CBN, G.R. 184885, 07 March 2012.— Company policy to the effect that any employee who wishes to run for public office, must resign. On the other hand, if anyone wishes to campaign for a political person or party, he/she must file for a leave of absence. Manager misinterpreted the company policy and made his own, viz., “any person who wishes to run for public office, must file for a leave of absence.” Ymbong filed candidacy to public office and filed leave of absence, in consonance with Manager’s erroneous interpretation. ABS-CBN refused to allow him to return to work (Ymbong lost elections), as it considered him resigned. ISSUES: WON ABS-CBN bound by erroneous interpretation of manager? WON ABS-CBN may validly impose this policy, in contravention of Ymbong’s political right to seek public office? DECISION: For ABS-CBN. ABS-CBN not bound by the erroneous interpretation of the manager, considering that the latter went beyond his authority in modifying a directive from the head office. In any event, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded. ABS-CBN strongly believes that it is to the best interest of the company to continuously remain apolitical. While it encourages and supports its employees to have greater political awareness and for them to exercise their right to suffrage, the company, however, prefers to remain politically independent and unattached to any political individual or entity. (POSSIBLE BAR QUESTION: What if employer is NOT a company involved in public information? Depends if company may validly justify the same in relation to work.)

3.6 CONTRACTING OUT OF SERVICES. (See also discussion on Valid job-contracting vs. Labor-only contracting on SECTION F, PAGE __ HEREUNDER.)

GENERAL RULE: Management may contact out services in the exercise of its anagement prerogatives. Doctrinal case: Asian Alcohol Corporation vs. NLRC, 305 SCRA 416, at 435-436 [1999], cf. Serrano vs. NLRC, G.R. No. 117040 [27 Jan 2000]). – The Supreme Court has held in a number of cases that an employer's good faith in implementing a redundancy program is NOT necessarily destroyed by the availment of the services of an independent contractor, to replace the services of the terminated employees. The

reduction of employees in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Burden of proof is thus on the complaining employees to show proof that the management acted in a malicious or arbitrary manner in engaging the services of an independent contractor to do a specific activity. Absent such proof, the Supreme 19

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Court has no basis to interfere with the bona fide decision of management to effect a more economic and efficient methods of production. MERALCO vs. Quisumbing, 22 Feb 2000 -- The added requirement of consultation imposed by the Secretary of Labor in cases of contracting out for six months or more was rejected by the Supreme Court. “Suffice it to say that the employer is allowed to contract out services for six months or more. However, a line must be drawn between management prerogatives regarding business operations per se, and those which affect the rights of the employees. In treating the latter, the employer should see to it that its employees are at least properly informed of its decision or modes of action in order to attain harmonious labor-mgmt relationship. Management cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operations. It has the ultimate determination whether services should be performed by its personnel or contracted out to outside agencies. While there should be mutual consultation, eventually deference is to be paid to what management decides. Contracting out of services is an exercise of business judgment or management prerogative; Absent proof that management acted maliciously or arbitrarily, the Court will not interfere in the exercise of such judgment by the employer.”

2014 BAR QUESTION: Luisa Court is a popular chain of motels. It employs over 30 chambermaids who, among others, help clean and maintain the rooms. These chambermaids are part of the union rank-and-file employees which has an existing collective bargaining agreement (CBA) with the company. While the CBA was in force, Luisa Court decided to abolish the position of chambermaids and outsource the cleaning of the rooms to Malinis Janitorial Services, a bona fide independent contractor which has invested in substantial equipment and sufficient manpower. The chambermaids filed a case of illegal dismissal against Luisa Court. In response, the company argued that the decision to outsource resulted from the new management’s directive to streamline operations and save on costs. If you were the Labor Arbiter assigned to the case, how would you decide? (4%) ANSWER: The abolition of position of Chambermaids and outsourcing the same to a bona fide contractor in order to streamline operations and save on costs is a valid exercise of management prerogative. As such, it does not preclude Luisa Court from availing itself of the services of agency-hired employees to replace the Chambermaids who were union members. Absent proof that Luisa Court acted in a malicious or arbitrary manner in engaging the services of Malinis Janitorial Services, the bona fide decision of the company to effect more economic and efficient operation of its business, should not be interfered with by the courts. (Asian Alcohol Corporation v. NLRC, 305 SCRA 416 [1999].)

E. KINDS OF EMPLOYMENT 1.

REGULAR EMPLOYEES – those who are hired for activities which are necessary or desirable in the usual trade or business of the employer. 2014-2015 CASES: 1.1

Romeo Basau, et al., vs. Coca-Cola Bottlers Philippines, G.R. No. 174365-66, 04 February 2015. -- Route helpers are regular employees; their 20

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nature of work are necessary and desirable in the usual trade or business of the employer; hence, entitled to security of tenure. 1.2 Hacienda Leddy, et al. vs. Paquito Villegas, G.R. No. 179654, 22 September 2014. – A perusal of the records show that Villegas was employed in the hacienda while the same was still managed by Gamboa’s father until the latter’s death in 1993, which fact is undisputed as the same was even admitted by the former in his earlier pleadings. While refuting that Villegas was a regular employee, Gamboa did not categorically deny that Villegas was indeed employed in the hacienda albeit merely as a casual employee doing odd jobs and paid on a piece-rate basis. Villegas’ length of service for more than twenty (20) years is an indication of the regularity of his employment. Even assuming that he was doing odd jobs around the farm, such long period of doing odd jobs is indicative that the same is necessary and desirable to Gamboa’s trade or business. Owing to the length of service alone, Villegas became a regular employee, by operation of law, one year after he was employed. 1.3 ABS-CBN CASES: (a) ON-CAMERA TALENT IS AN INDEPENDENT CONTRACTOR: Jose Sonza vs. ABS-CBN, G.R. 138051, 10 June 2004. – Relationship of a big name talent (Jay Sonza) 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. ABSCBN 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. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZA’s work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBN’s sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZA’s work. (b) “OFF-CAMERA TALENTS” ARE EMPLOYEES. Farley Fulache et al vs. ABS-CBN, G.R. No. 183810, 21 January 2010.. – Complainants were drivers, cameramen, editors, teleprompter and VTR man who sought inclusion in the appropriate bargaining unit of the rankand-file employees and availment of CBA benefits. ABS-CBN denied employment relationship, on the ground that they were “off-camera talents” in the nature of independent contractors. Pending the regularization case filed before the NLRC, ABS-CBN dismissed the drivers for their refusal to sign up employment contracts with service contractor ABLE services. Supreme Court affirmed CA and Labor tribunals findings, re: existence of employer-employee relationship and hence, to be considered as regular employees who may be included in the CBA availments.

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(c) Nelson Begino, et al., vs. ABS-CBN , etc., G.R. No. 199166, 20 April 2015. -- The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment Forms and the terms and conditions embodied therein, petitioners are regular employees of ABSCBN. As cameraman/editors and reporters, petitioners were performing functions necessary and essential to ABS-CBN’s business of broadcasting television and radio content. It matters little that petitioners’ services were engaged for specified periods for TV Patrol Bicol and that they were paid according to the budget allocated therefor. Respondents’ repeated rehiring of petitioners for its long-running news program positively indicates that the latter were ABS-CBN’s regular employees.

2.

PROBATIONARY EMPLOYEES – those who are hired generally for regular positions but are placed on a probationary status for a period of 6 months (as a general rule). May become regular once he has qualified as such in accordance with reasonable standards made known to him at the time of hiring. They are considered regular if they are allowed to work beyond the probationary period. 2.1 2012-2014 CASES ON PROBATIONARY EMPLOYEES: Universidad de Sta. Isabel vs. Sambajon, G.R. Nos. 196280 & 196286, 02 April 2014 . – It is the Manual of Regulations for Private Schools, and not the Labor Code, that determines whether or not a faculty member in an educational institution has attained regular or permanent status. Abbot Laboratories, Philippines, et al., vs. Pearlie Ann Alcaraz, G.R. No. 192571, 22 April 2014. En Banc. - If a probationary employee was apprised of the performance standards for his regularization, his failure to perform the duties and responsibilities which have been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-regularization. The determination of “adequate performance” is not in all cases, measurable by quantitative specification. It also hinges on the qualitative assessment of the employee’s work; by its nature, this largely rests on the reasonable exercise of the employer’s management prerogative. In the ultimate analysis, the communication of performance standards should be perceived within the context of the nature of the probationary employee’s duties and responsibilities. The performance standard contemplated by law should not, in all cases, be contained in a specialized system of feedbacks or evaluation. In fact, even if a system of such kind is employed and the procedures for its implementation are NOT followed, once an employer determines that the probationary employee fails to meet the standards required for his regularization, the former is not precluded from dismissing the latter. The rule is that when a valid cause for termination exists, the procedural infirmity attending the termination only warrants the payment of nominal damages. (Agabon vs. NLRC & Jaka vs. Pacot.) Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, 06 February 2012, where Supreme Court found that probationary employee was validly dismissed after one month of employment for reasons of obstinacy and utter disregard of company policies, propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives, lack of concern for the company’s interest in refusing to attend company seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives, lack of enthusiasm toward work, and lack of interest in fostering relationship with his co-employees. 22

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QUESTION: May a probationary lineman validly claim that being a subordinate, he cannot be considered a conspirator in the commission of pilferage committed by his superior? Manila Electric Company vs. Jan Carlo Gala, G.R. No. 191288. 07 March 2012. Facts: Complainant Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006. He maintains that: • He had no direct participation in the incident • He was not aware that an illegal activity was going on as he was at some distance from the trucks when the alleged theft was being committed. • He did not call the attention of the foremen because he was a mere lineman and he was focused on what he was doing at the time. Supreme Court: Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his probationary employment agreement, viz. • non-violation of the Company Code on Employee Discipline, Safety Code, rules and regulations and existing policies. • to observe at all times the highest degree of transparency, selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest.

2.2 TERMINATION OF EMPLOYEES GUIDING PRINCIPLES:

ON

PROBATIONARY

STATUS,

2.2.1 Burden of proof upon employer to show that the employee failed to qualify as a regular employee in accordance with reasonable standards made known to him at the time of engagement. 2.2.2 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. (Philippine Daily Inquirer vs. Magtibay, 528 SCRA 355 [2007]). 2.2.3 Ruling on Probationary employment on fixed-term contract; expiration of contract NO LONGER valid ground. (Colegio del Santissimo Rosario vs. Rojo, G.R. No. 170388, 03 September 2013, reiterating Yolanda Mercado vs. AMA Computer College-Paranaque 618 SCRA 218 [2010].) Situation: High School teacher on probationary status with fixed term contracts who was able to complete three consecutive years of service. Teacher no longer rehired on the ground that with the expiration of the contract to teach, the employment contract would no longer be renewed. Issue: May the probationary teacher be validly dismissed for expiration of the contract to teach? Answer: NO! Termination of a probationary employee must be for his/her failure to comply with the reasonable standards for regular employment made known at the time of the engagement, and NOT simply because the probationary period has expired. SC rationale: The fixed-term character of employment essentially refers to the period agreed upon between the employer and the employee; employment exists only for the duration of the term and ends on its own when the term expires. In a sense, employment on probationary status also 23

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refers to a period because of the technical meaning "probation" carries in Philippine labor law – a maximum period of six months, or in the academe, a period of three years for those engaged in teaching jobs. Their similarity ends there, however, because of the overriding meaning that being "on probation" connotes, i.e., a process of testing and observing the character or abilities of a person who is new to a role or job. However, for teachers on probationary employment, in which case a fixed term contract is not specifically used for the fixed term it offers, it is incumbent upon the school to have not only set reasonable standards to be followed by said teachers in determining qualification for regular employment, the same must have also been communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period when they were to be applied. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract. The specific details of this finding of just cause must be communicated to the affected teachers as a matter of due process.42 Corollarily, should the teachers not have been apprised of such reasonable standards at the time specified above, they shall be deemed regular employees. Yolanda Mercado, et al. vs. AMA Computer College Parañaque City, Inc. 618 SCRA 218 [2010].- The Supreme Court stated that nothing is illegitimate in defining the school-teacher on fixed term basis. HOWEVER, the school should not forget that its system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew contracts simply because their terms have expired. Given the clear constitutional and statutory intents, the Supreme Court concluded that in a situation where the probationary status overlaps with a fixed-term contract not specifically used for the fixed term it offers, Article 281 should assume primacy and the fixed-period character of the contract must give way. NOTE1: In this instance therefore, the School illegally dismissed the teachers because it simply refused to renew the employment contract. Because the teachers were under a probationary period, it was incumbent upon the School to have evaluated said teachers, and to have informed them of their failure to qualify as regular employees in accordance with standards made known to them at the time of hiring. NOTE2: To highlight what the Supreme Court meant by a fixed-term contract specifically used for the fixed term it offers, a replacement teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent teacher on a one-year study leave. The expiration of the replacement teacher’s contracted term, under the circ*mstances, leads to no probationary status implications as she was never employed on probationary basis; her employment is for a specific purpose with particular focus on the term and with every intent to end her teaching relationship with the school upon expiration of this term. (Mercado, et al. vs. AMA Computer College Parañaque City, Inc. 618 SCRA 218 [2010]. Emphasis supplied.)

3.

TERM EMPLOYEES – those who are hired for a specific period, the arrival of the date specified in the contract of which automatically terminates the employer24

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employee relationship. (Brent School vs. NLRC, 181 SCRA 702 [1989], reiterated in AMA Computer – Paranaque vs. Austria, 538 SCRA 438 [November 2007]). 3.1 A contract of employment for a definite period terminates by its own terms at the end of such period 3.2 The decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and the termination of their employment relation. 3.3 Criteria for fixed term employment contracts so that the same will not circumvent security of tenure: A. 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 circ*mstances vitiating his consent; AND B. It satisfactorily appears that the employer and employee DEALT WITH EACH OTHER ON MORE OR LESS EQUAL TERMS with no moral dominance whatever being exercised by the former on the latter.(PNOC vs. NLRC [G.R. No. 97747, 31 March 1993] and Brent School vs. NRLC, 181 SCRA 702] 3.4 QUESTION: Whether or not fishing boat crew individually hired on a “por viaje” basis with contracts per trip are term employees or regular employees? Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, 01 February 2012

Answer: REGULAR EMPLOYEES, where it was established that the term contracts were used to circumvent security of tenure. Textually, the provision that: “NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang “por viaje” na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila” is for a fixed period of employment. In the context, however, of the facts that: (1) the respondents were doing tasks necessarily to Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the security of tenure of the respondents as regular employees. And respondents are so by the express provisions of the second paragraph of Article 280, thus: xxx Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.” N.B. ADA’S CRITIQUE: Do not agree with the reasoning made by the Supreme Court, viz., application of the collatilla in Par 2 of Article 280, Labor Code. Following the doctrinal case of Mercado vs. NLRC, said collatilla should only apply to casual employees, and not to the classification of project or seasonal employees in first paragraph. If at all, argument that the term contract was not entered into by the parties on equal footing, would be more appropriate.

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2014 BAR QUESTION: Lucy was one of approximately 500 call center agents at Hambergis, Inc. She was hired as a contractual employee four years ago. Her contracts would be for a duration of five (5) months at a time, usually after a one month interval. Her re-hiring was contingent on her performance for the immediately preceding contract. Six (6) months after the expiration of her last contract, Lucy went to Hambergis personnel department to inquire why she was not yet being recalled to work. She was told that her performance during her last contract was "below average." Lucy seeks your legal advice about her chances of getting her job back. What will your advice be? (4%)

ANSWER: Lucy is to be considered a regular employee, and is entitled to security of tenure. The facts of the case will readily show that Lucy had served Hambergis for an aggregate period of more than one year. The repetitive hiring of Lucy for the same position as a call center agent, is indicative of the necessity or desirability of the activities for which she was hired. Even assuming that she was hired as a casual, having rendered at least one (1) year of service, whether such service be 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. Moreover, hiring Lucy as a contractual employee for a duration of five (5) months at a time, after interval of one (1) month, was designed by Hambergis to preclude tenurial security. As such it showed be struck down as being contrary to law, good customs, public order and public policy. (Magsalin, et al. vs. NOWM, G.R. No. 148492, 09 May 2003.) In view of the following, my advice to Lucy is to file a case for illegal dismissal with a prayer for reinstatement without loss of seniority rights, payment of backwages plus interests thereon, damages and attorney’s fees.

2015 BAR QUESTION: (VII) Don Don is hired as a contractual employee of CALLHELP, a call center. His contract is expressly for a term of 4 months. Don Don is hired for 3 straight contracts of 4 months each but at 2-week intervals between contracts. After the third contract ended, Don Don is told that he will no longer be given another contract because of "poor performance." Don Don files a suit for "regularization" and for illegal dismissal, claiming that he is a regular employee of CALLHELP and that he was dismissed without cause. You are the Labor Arbiter. How would you decide the case? (4%) ANSWER: I will decide the case in favor of Don Don. While the Supreme Court in Brent School vs. Zamora upheld the validity of fixedterm employment, it has done so, however with a stern admonition that where from the circ*mstances it is apparent that the period has been imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. In the present case, Don Don was “hired for 3 straight contracts of 4 months each but at 2-week intervals between contracts”, short of the normal six-month probationary period of employment. The circ*mstances clearly show the ill intent of 26

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CALLHELP to preclude Don Don from acquiring tenurial security. The obvious circumvention of the law should not be countenanced. ALTERNATIVE ANSWER: As Labor Arbiter, I will decide the case by applying the Contract of Adhesion rule. Given the nature of Don Don’s work , which is usually necessary and desirable to the usual trade of HELPCALL, as well as the short intervals between his fixed-term contracts, there is no doubt that periods were resorted to for purposes of circumventing the law on tenure. Therefore, since it was the company that prepared the three contracts, with Don Don’s participation being limited to affixing his signature thereto only, the 4-month periods must be taken against it. Having attained tenure, therefore, Don Don cannot be dismissed for poor performance because said ground is neither a just nor authorized cause. 4. PROJECT EMPLOYEES – The principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. 4.1

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 et., al., G.R. 170181, 26 June 2008.)

4.2

Indicators of Project Employment is found in Section 2.2(e) and (f) of DOLE Department Order No. 19, Series of 1993, entitled Guidelines Governing the Employment of Workers in the Construction Industry, to wit: “2.2 Indicators of project employment. - Either one or more of the following circ*mstances, among others, may be considered as indicators that an employee is a project employee. (a) The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable. (b) Such duration, as well as the specific work/service to be performed, is defined in an employment agreement and is made clear to the employee at the time of hiring. (c) The work/service performed by the employee is in connection with the particular project/undertaking for which he is engaged. (d) The employee, while not employed and awaiting engagement, is free to offer his services to any other employer. (e) The termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on employees' terminations/dismissals/suspensions. (f) An undertaking in the employment contract by the employer to pay completion bonus to the project employee as practiced by most construction companies.

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4.3 Purely Project employees – are those employed in connection with a particular construction project. Effect: (a) not entitled to separation pay if terminated as a result of the completion of the project or any phase thereof in which they are hired; (b) no prior clearance for termination is necessary, but termination must be reported to DOLE; (c) however, if the project or phase lasts for more than one (1) year, he may not be terminated prior to completion of project or phase without previous written clearance from DOLE. 4.4 Employees from Labor Pool -- those employed by a construction company without reference to any particular project. May be further classified into probationary and regular. Effect: (a) right to organize and to collectively bargain, or join rank-and-file union of the construction company may not be curtailed; (b) completion of project or phase will not sever employer-employee relationship, as they are to be considered employees for an indefinite term. 4.5 Report of termination of project employers compulsory. – 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., 557 SCRA 124 (2007)

4.6 2012-2015 CASES ON PROJECT EMPLOYMENT: Ma. Charito C. Gadia, et al. vs. Sykes Asia, Inc. et al., G.R. No. 209499, 28 January 2015. - Requisites for an employee to be considered project-based BPO employee: (a) the employee was assigned to carry out a specific project or undertaking; and (b) the duration and scope of which were specified at the time they were engaged for such project. In this case, Sykes BPO informed the petitioner of their employment status at the time of their engagement, as evidenced by their employment contracts which provided that they were hired in connection with the Alltel Project, and that their positions were “project-based and as such is co-terminus to the project.” To the mind of the Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes would only last as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated, petitioners no longer had any project to work on, and hence, Sykes may validly terminate them from employment. Sykes duly submitted an Establishment Employment Report and an Establishment Termination Report to the DOLE Makati Field Office regarding the cessation of the Alltel Project and the list of employees affected thereby. Case law deems such submission as an indication that the employment was indeed project-based. . Omni Hauling Services, Inc., et al vs. Bernardo Bon, et al., G.R. No. 199388, 03 September 2014. - Project Employee vs. Regular Employee. A project employee is assigned to a project which begins and ends at determined or determinable times (Goma v. Pamplona Plantation, Incorporated, 579 Phil. 402, 412 [2008]). Unlike regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the 28

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services of employees who are hired as “project employees” may be lawfully terminated at the completion of the project. (GMA Network, Inc. v. Pabriga, G.R. No. 176419, November 27, 2013, 710 SCRA 690,703). According to jurisprudence, the principal test for determining whether particular employees are properly characterized as project employees” as distinguished from “regular employees,” is whether or not the employees were assigned to carry out a “specific project or undertaking,” the duration (and scope) of which were specified at the time they were engaged for that project. In order to safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees from attaining a regular status, employers claiming that their workers are project employees should not only prove that the duration and scope of the employment was specified at the time they were engaged, but also that there was indeed a project. In this case, records are bereft of any evidence to show that respondents were made to sign employment contracts explicitly stating that they were going to be hired as project employees, with the period of their employment to be coterminus with the original period of Omni’s service contract with the Quezon City government. Neither is petitioners’ allegation that respondents were duly apprised of the project-based nature of their employment supported by any other evidentiary proof. Thus, the logical conclusion is that respondents were not clearly and knowingly informed of their employment. MacArthur Malicdem and Hermenigildo Flores vs. Marulas Industrial Corporation, et al., G.R. No. 204406, 26 February 2014. -- Malicdem and Flores were hired as extruder operators (operate the machines that produces the sacks) for a period of one (1) year under a “Project Employment Contract” which stipulates a probationary period of six (6) months from its commencement, wherein they would be reclassified as project employees with respect to the remaining period of the effectivity of the contract. Every year thereafter, they would sign a Resignation/Quitclaim in favor of Marulas a day after their contracts ended, then sign another contract for another year, and so on. Malicdem and Flores are regular employees for the following reasons: a. An employee who is allowed to work after a probationary period shall be considered a regular employee. (Article 281, Labor Code.) b. A project or work pool employee, who has been continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and whose task are vital, necessary and indispensable to the usual trade or business of the employer, must be deemed a regular employee. (Maraguimot, Jr. v. NLRC, 248 Phil. 580 [1998].) c. There is no actual project; hence, Marulas cannot invoke the exception in Art. 280 of the Labor Code. Roy Pasos vs. PNCC, G.R. No. 192394, 03 July 2013. – While Pasos was unquestionably hired as a project employee for three months at the start of his engagement with PNCC, his employment thereafter was extended without subsequent contract or appointment that specified a particular duration for the extension. As such, he was then to be considered a regular employee of PNCC. His status as a regular employee was NOT affected by the fact that he was assigned to several other projects thereafter, and that there were intervals in between said project, because he enjoys security of tenure. The termination by PNCC of Pasos‘ employment by reason of contract expiration or project completion at this point therefore, is illegal because these are not the grounds for the dismissal of a regular employee. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. 07 March 2012.-- The length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon 29

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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. CONTRA: D.M. Consunji vs. Estelito Jamin, G.R. No. 192514, 18 April 2012. -- We agree with the CA. In Liganza v. RBL Shipyard Corporation where this Court held that “[a]ssuming, without granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8) years have undeniably made him a regular employee.” We find the Liganza ruling squarely applicable to this case, considering that for almost 31 years, DMCI had repeatedly, continuously and successively engaged Jamin’s services since he was hired on December 17, 1968 or for a total of 38 times — as shown by the schedule of projects submitted by DMCI to the labor arbiter[ and three more projects or engagements added by Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his engagements. Xxx While the contracts indeed show that Jamin had been engaged as a project employee, there was an almost unbroken string of Jamin’s rehiring from December 17, 1968 up to the termination of his employment on March 20, 1999. With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted termination of employment reports, pursuant to Policy Instructions No. 20 (Undated[46]), as superseded by DOLE Department Order No. 19 (series of 1993), has become academic. To set the records straight, DMCI indeed submitted reports to the DOLE but as pointed out by Jamin, the submissions started only in 1992.[48] DMCI explained that it submitted the earlier reports (1982), but it lost and never recovered the reports. It reconstituted the lost reports and submitted them to the DOLE in October 1992; thus, the dates appearing in the reports.

5.

SEASONAL EMPLOYEES -- those hired for work or services which is seasonal in nature, and the employment is for the duration of the season.

IMPORTANT NOTE ON EMERGING TREND OF SUPREME COURT CASES CIRCA 2013-2015: REGULAR SEASONAL WORKERS. -Where the seasonal employees had been hired repeatedly and continuously to perform the same tasks or activities for several seasons or even after the cessation of the season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated as “seasonal workers,” if these workers are called to work from time to time and are only temporarily laid off during the offseason, the law does not consider them separated from the service during the off-season period. The law simply considers these seasonal workers on leave until re-employed. CASE 1: Gapayao vs. Fulo and SSS, G.R. No. 193493, 13 June 2013 (Sereno, C.J.) -- Farm workers are considered seasonal employees so long as there is a reasonable causal connection between nature of employer’s business and that work should have been rendered for more than one continuous or accumulated year Jaime Fulo died due to 1st degree burns from electrocution while doing repairs at the residence of Gapayao. Due to his alleged compassion, the latter extended financial help to the heirs of Jaime Fulo. The deceased wife of Jaime then 30

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executed a document waiving her right and desisting from filing of criminal and/or civil action/s against Gapayao. Deceased’s wife then went to the SSS in order to claim her husband’s death benefits. It was however discovered that deceased was not a registered member of the SSS. After proper investigation, the SSC found an existence of employeremployee relationship between Jaime Fulo and Gapayao. It ordered the payment of deceased’s death benefits, the remittance of employer’s contributions to the SSS plus penalties for late payment of such remittances. Gapayao then appealed the case to the Court of Appeals, but the latter affirmed the decision of the SSC . Gapayao’s position: Gapayao insists that the deceased was not his employee, but that of another person. Gapayao contends that he is merely the landlord of the farm which Jaime Fulo tilled. And that it was Gapayao’s tenant, Amado Gacelo who was Fulo’s employer. Her likewise contends that the deceased was really a freelance worker Issue: Was there an employer-employee relationship between Jaime Fulo and Gapayao? Yes. Decision: YES, Fulo was Gapayao’s employee. Farm workers generally fall under the definition of seasonal employees. We have consistently held that seasonal employees may be considered as regular employees. Regular seasonal employees are those called to work from time to time. The nature of their relationship with the employer is such that during the off season, they are temporarily laid off; but reemployed during the summer season or when their services may be needed. They are in regular employment because of the nature of their job, and not because of the length of time they have worked. A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it was done for more than one harvesting season. Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or desirable in the usual business of petitioner. The other tasks allegedly done by the deceased outside his usual farm work only bolster the existence of an employer-employee relationship. As found by the SSC, the deceased was a construction worker in the building and a helper in the bakery, grocery, hardware, and piggery – all owned by petitioner. This fact only proves that even during the off season, the deceased was still in the employ of petitioner.” CASE2: Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. 15 January 2014. J Brion. Facts: The complainants hired as employees of URSUMCO, on various dates (between February 1988 and April 1996) and on different capacities,8 i.e., drivers, crane operators, bucket hookers, welders,mechanics, laboratory attendants and aides, steel workers, laborers, carpenters and masons, among others. At the start of their respective engagements, the complainants signed contracts of employment for a period of one (1) month or for a given season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every engagement, required the latter to sign new employment contracts for the same duration of one month or a given season.

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Complainants filed for regularization plus entitlement to CBA benefits. Labor Arbiter dismissed the complaints and ruled that they were project or seasonal employees. On appeal, NLRC reversed the Labor Arbiter and ruled that the complainants were regular employees entitled to the monetary benefits under the CBA. On petition for review on certiorari, CA ruled that complainants were regular – albeit seasonal -employees, but deleted the monetary CBA benefits because the CBA benefits are for regular workers only. Issue: Whether or not complainants are regular workers or seasonal workers? Are they entitled to CBA benefits accorded the regular employees? Answer: Complainants are REGULAR SEASONAL WORKER Complainants are NOT entitled to CBA benefits which are for regular workers only. The respondents are neither project, seasonal nor fixed-term employees, but regular seasonal workers of URSUMCO.xxx THEIR SEASONAL WORK, HOWEVER, DOES NOT DETRACT FROM CONSIDERING THEM IN REGULAR EMPLOYMENT since in a litany of cases, this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during the off-season are not separated from the service in said period, but are merely considered on leave until re-employment Be this as it may, REGULAR SEASONAL EMPLOYEES, LIKE THE RESPONDENTS IN THIS CASE, SHOULD NOT BE CONFUSED WITH THE REGULAR EMPLOYEES OF THE SUGAR MILL such as the administrative or office personnel who perform their tasks for the entire year regardless of the season. The NLRC, therefore, gravely erred when it declared the respondents regular employees of URSUMCO without qualification and that they were entitled to the benefits granted, under the CBA, to URSUMCO’S regular employees. CASE 3: Hacienda Cataywa, et al. vs. Rosario Lorezo, G.R. No. 179640, 18 March 2015. -- The existence of an employer-employee relationship may be proved by any competent and relevant evidence. It may entirely be testimonial. (Martinez vs. NLRC, et al. 339 Phil. 176 [1997].) If only documentary evidence is required, no scheming employer would be brought before the bar justice. (Vinoya vs. NLRC, et al., 381 Phil. 460 [2000].) Farm workers generally are seasonal workers. Seasonal employees may become regular employees when they are called to work from time to time. They acquire regular employment because of the nature of their work, not because of the length of time they have worked. However, seasonal workers who work only for one season, cannot become regular employees. (Hacienda Fatima vs. NFSW, 444 Phil. 587[2003].) Respondent performed hacienda work, such as planting sugarcane point, fertilizing, weeding, replanting dead sugarcane fields and routine miscellaneous hacienda work. Thus, he is considered a regular seasonal worker. Since cultivation of sugarcane is only for six months, he cannot be considered a regular employee during the months when there is no cultivation.

6.

CASUAL EMPLOYEES – those who are hired to perform work or service which is merely incidental to the business of the employer. Any casual employee who has rendered at least one (1) year of service, whether it be 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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2014 BAR QUESTION: Don Luis, a widower, lived alone in a house with a large garden. One day, he noticed that the plants in his garden needed trimming. He remembered that Lando, a 17-year old out-of-school youth, had contacted him in church the other day looking for work. He contacted Lando who immediately attended to Don Luis’s garden a nd finished the job in three days. (4%) (A) Is there an employer-employee relationship between Don Luis and Lando? (B) Does Don Luis need to register Lando with the Social Security System (SSS)?

ANSWER: (A) Yes, casual employment. (B) No, Lando’s employment is purely casual as it is not for the purpose of the occupation or business of the employer Don Luis. (Sec. 8 [J] [3], RA 1161, as amended.)

EMPLOYEE CLASSIFICATION AS TO RANK 7.

MANAGERIAL EMPLOYEES – those vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall employees. (Art. 212, par. m, Labor Code) 7.1 CONFIDENTIAL EMPLOYEES: Doctrine of necessary implication and/or confidential employee rule reiterated. Confidential employees are those who: (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — e.g., the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of the employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the “confidential employee rule”. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, G.R. No. 162025, 03 August 2010.; See also: San Miguel Corporation Supervisors and Exempt Employees Union vs. Laguesma, 277 SCRA 370 [1997].

8.

SUPERVISORY EMPLOYEES – those who, in the interest of management, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature, but requires use of independent judgment. (Art. 212, par. N, Labor Code). Note: Supervisory employees form part of the managerial staff, which are not covered by the rules on hours of work, viz., night shift differentials, overtime pay, etc. (See Art. 82, Labor Code cf. Art. 212 [m]).

9.

RANK-AND-FILE EMPLOYEES - All other employees not falling within the definition of “managerial” or “supervisory” employees, are considered rank-and-file employees for purposes of Book V of the Labor Code.

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FRAMEWORK: General rule: Employment is deemed regular Exception:

Probationary Term Project

Seasonal Casual

Exception to exception: Probationary employees allowed to work after probn. period Casual workers rendering service for more than one year Term employee allowed to work after term has expired/ended Project employee allowed to work after project without any contract; or project employee allowed to work project after project but no termination reports.

F. INDEPENDENT CONTRACTORSHIP ARRANGEMENTS VS. LABOR ONLY CONTRACTING Employees of an independent contractor are not your employees

Fuji Television Network, Inc. vs. Arlene S. Espiritu G.R. No. 204944-45, 03 December 2014 citing DOLE D.O. 18-A [2011], sec. 5 (b); Sonza vs. ABS-CBN, supra, see page __ hereof. -- There are different kinds of independent contractors: those engaged in legitimate job contracting, and those who have unique skills and talents that set them apart from ordinary employees. Since no employer-employee exist between independent contractors and their principals, their contracts are governed by the Civil Code provisions on contracts and other applicable laws. ADA’S NOTE: In the above 2014 case of Fuji Television Network vs. Arlene Espiritu, the Supreme Court made an exhaustive distinction between Independent Contractor vs. Fixed-term employment and/or regular employment. The main factor that distinguishes independent contracting from fixed-term or regular employment is that of CONTROL. Where the alleged “employer” has no actual control over the conduct of the work of the complainant, then there is no employer-employee relationship. However, if control over the conduct of work can be established, then this is one of fixed-term or regular employment depending on the circ*mstances of the case..

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F.1 VALID INDEPENDENT CONTRACTING OR SUB-CONTRACTING ARRANGEMENTS Article 106, LB; IRR S8R8B3;

ELEMENTS: (MEMORY AID: I ARM FREE CAPITAL TEMWORK R&B) 

There is a job-contracting permissible by law where the contractor/agency carries on an INDEPENDENT business and undertakes the contract work on

ACCOUNT,

RESPONSIBILITY, using his own MANNER AND METHODS, FREE from the control of the principal in all his

under his own

matters connected with the performance of work excepting the results thereof.

CAPITAL in the form of TOOLS, EQUIPMENT, MACHINERY, WORK PREMISES, and that the agreement between the contractor and principal assures the former’s employees of ALL RIGHTS AND BENEFITS under the law.

 He has his own

F.2 ELEMENTS OF LABOR-ONLY CONTRACTING PROHIBITED UNDER THE LAW -- Philippine Airlines vs. Ligan, 548 SCRA 181 (2008). 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.

TWO WAYS OF PROVING LABOR-ONLY CONTRACTING: (Memory Aid: No Cap Direct OR No Control) For labor-only to exist, Sec. 5 of Department Order No. 18-02 requires any two of the elements to be present, viz.: 

The

contractor

or

sub-contractor

DOES

NOT

HAVE

CAPITAL or investment to actually perform the job, work or service under its own account and responsibility; and the employees recruited, supplied or placed by such contractors are SUBSTANTIAL

performing activities which are business of the principal;

DIRECTLY

RELATED to the main

OR 

The CONTRACTOR has done by his employees.

NO CONTROL over the conduct of the work to be

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.(Industrial Timer Corp., vs. NLRC, 169 SCRA 341). This is because the labor-only contractor is considered as a mere agent of the EMPLOYER and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. (Alviado et. al. vs. Procter & Gamble, and Promm Gemm, G.R. No. 160506, 09 March 2010). 35

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F.3 EFFECT OF LABOR-ONLY CONTRACTING AND VALID JOB CONTRACTING AGREEMENTS -- San Miguel Corp. vs. MAERC Integrated Systems, 405 SCRA 579 [10 July 2003] 

If labor only contracting:

If job-contracting: LEGAL.

ILLEGAL. 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. The employer is considered an INDIRECT EMPLOYER, and is made solidarily liable with the contractor to the employees of the latter for a more limited purpose, viz.: payment of unpaid wages and other monetary claims, including 13th month pay, service incentive leave pay. (New Golden Builders case)

IMPORTANT J. VELASCO CASES: Marian B. Navarette vs. Manila International Freight Forwarders, Inc./MIFFI Logistics Company, Inc., Mr. Harada, and MBI Millennium Experts, Inc., G.R. No. 200580, 11 February 2015 (Velasco) – A finding that a contractor is engaged in labor-only contracting is then equivalent to declaring that there exists an employer-employee relationship between the supposed principal and the employee of the purported contractor. It also results in the following: (1) the subcontractor will be treated as the agent of the principal whose acts and representations bind the latter; (2) the principal, being the employer, will be responsible to the employees for all their entitlements and benefits under labor laws; and (3) the principal and the subcontractor will be solidarily treated as the employer. On the contrary, in this case, there is already a previous Supreme Court ruling in a similar case (Manlangit) finding that MBI is a legitimate job contractor. Under the doctrine of conclusiveness of judgment, the Supreme Court’s ruling on the issue of the legitimacy of MBI’s contract with respondents, must not be disturbed. Consequently, complainant Navarette is MBI's employee and not of MIFF. W.M. Manufacturing, Inc. vs. Richard R. Dalag and Golden Rock Manpower Services, G.R. No. 209418, 07 December 2015 (Velasco). -- WMM and Golden Rock engaged in labor-only contracting. 36

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The essential element in labor-only contracting is that the contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. However, the presence of this element is not enough and must, in fact, be accompanied by any one of the confirmatory elements to be considered a labor-only contractor within the contemplation of Section 5 of DO 18-02, being the applicable issuance at the time Dalag complained of his alleged illegal dismissal. As to the presence of the confirmatory elements, attention is drawn to (1) Golden Rock’s lack of substantial capital, coupled with the necessity and desirability of the job Dalag performed in WMM; and (2) Golden Rock’s lack of control over the employees it supplied WMM. The Certificate of Registration only gives rise to the disputable presumption that Golden Rock is an independent contractor with substantial capital as reflected in its financial documents. However, the basis for determining the substantiality of a company’s “capital” rests not only thereon but also on the tools and equipment it owns in relation to the job, work or service it provides. Moreover, WMM exercised control over the employees supplied by Golden Rock. The “right to control” refers to the right to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. (E.g. Dalag was supervised by WMM’s employees; furnishing Dalag with no less than 7 memos directing, him to explain his work infractions; conducting an investigation to determine Dalag’s culpability.)

2015 BAR EXAMINATION QUESTION: (VIII) Star Crafts is a lantern maker based in Pampanga. It supplies Christmas lanterns to stores in Luzon, Metro Manila, and parts of Visayas, with the months of August to November being the busiest months. Its factory employs a workforce of 2,000 workers who make different lanterns daily for the whole year. Because of increased demand, Star Crafts entered into a contractual arrangement with People Plus, a service contractor, to supply the former with I 00 workers for only 4 months, August to November, at a rate different from what they pay their regular employees. The contract with People Plus stipulates that all equipment and raw materials will be supplied by Star Crafts with the express condition that the workers cannot take any of the designs home and must complete their tasks within the premises of Star Crafts. Is there an employer-employee relationship between Star Crafts and the 100 workers from People Plus? Explain. (4%) Answer: Yes, there is an employer-employee relationship between Star Crafts and the 100 workers from People Plus. This is so because People Plus is engaged in laboronly contracting inasmuch as it appears NOT to have any capital in the form of tools, equipment machineries and work premises. Moreover, it does NOT have any control over its own employees, the control being exercised by Star Crafts. Labor-only contracting is illegal and, in this case, the principal Star Craft is deemed the direct employer of the 100 workers, while People Plus is deemed merely an agent. (Ada’s note: Memo aid – No CAP + DIRECT or No CONTROL. In both tests, Star Crafts fall within the elements of labor-only contracting under Dept Order No 18 and 18-A).

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F.4 SALIENT FEATURES OF DEPARTMENT ORDER NO. 18-02, SERIES 2002. •

MANDATORY REGISTRATION OF INDEPENDENT CONTRACTORS (D.O. 18, S11) - Establishment of a registration system to govern contracting arrangements. Registration of the contractors and sub-contractors shall be necessary for purposes of establishing an effective labor market information and monitoring. Failure to register shall give rise to a presumption that contractor is engaged in LABOR ONLY CONTRACTING

REQUIREMENTS FOR REGISTRATION (per DOLE Application Form)  Name and business address of contractor  Names and addresses of the officers of the contractor  Nature of the contractor’s business, and the industry where the contractor seeks to operate  Number of regular workers; list of clients, if any; number of personnel assigned to each client and the services provided to the client  Description of the phases of the contract, and number of employees covered in each phase, when appropriate  Copy of audited financial statements (companies/partnership/cooperative or union), or ITR (sole proprietorship)  Certified copy of the certificate of registration of firm or business name from the Securities and Exchange Commission, Department of Trade and Industry, Cooperative Development Authority or from the DOLE  Certified copy of the license or business permit issued by the local government unit or units where the contractor or subcontractor operates.  The application shall be verified, and shall contain an undertaking that the contractor or sub-contractor shall abide by all applicable labor laws and regulations • OTHER OBLIGATIONS OF INDEPENDENT CONTRACTOR:  Duty to produce copy of the contract between the principal and the contractor, if required during regular inspection; also, the contractor of employment of the contractual employee  Annual reporting of the registered contractors not later than 15th of January of every year. Report shall include: (a) list of contracts entered with principal during the subject reporting period; (b) number of workers covered by each contract with principal; and © sworn undertaking that the mandatory government-imposed benefits (SSS, HDMF, Philhealth, ECC and withholding taxes) due the contractual employees have been made during the subject reporting period. • EFFECT OF NON-COMPLIANCE – DELISTING OF CONTRACTORS. (Ada’s opinion: Logically therefore, and in conjunction with Supreme Court decisions, there arises a prima facie (rebuttable) presumption that there being no certification, the contractor is a labor-only contractor).

F.5 NEW REQUIREMENTS UNDER DEPT. ORDER NO. 18-A, SERIES 2011 (14 NOV 2011). NOTE: Dept Order No. 18-A is NOT applicable to BPO or knowledge-based outsourcing and construction industry, per DOLE Dept Order No. 1 s 2012.

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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, ONGOING 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 Three Million Pesos (P3,000,000.00) in case of corporations, partnerships, cooperatives or single proprietorship (sec 13[l]) 3. Registration fee of Twenty Five Thousand Pesos (P25,000.00) plus renewal fee of Twenty Five Thousand Pesos (P25,000.00) every three years (sections 19 and 21)

F.6 THE NEGATIVE LIST: WHAT CANNOT BE VALIDLY SUBCONTRACTED OUT? (Dept. Order No. 18-02 as amended by Dept Order No. 18-A, series of 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: i)

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;

ii)

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

iii)

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.”

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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 Art. 248 (c) of the Labor Code, as amended. NEW PROHIBITIONS TO THE ORIGINAL NEGATIVE LIST PROVIDED UNDER DEPT ORDER 18-A SERIES OF 2011 (SECTION 7): 7. REPEATED HIRING OF EMPOYEES 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. 10. Engaging or maintaining by the principal of subcontracted employees IN EXCESS OF THOSE PROVIDED FOR IN APPLICABLE COLLECTIVE BARGAINING AGREEMENTS OR SET BY THE INDUSTRY TRIPARTITE COUNCIL (ITC)

F.7 SYNTHESIS AND CLARIFICATION OF DOCTRINES ON JOB-CONTRACTING PER 2013-2015 CASES 7.1

Job contracting is a trilateral work arrangement arising out of two different contracts: a) Contract between Principal and the Agency: CIVIL CONTRACT b) Contract between Agency and its employees: LABOR CONTRACT But note – 

7.2

There should be NO CONTROL between Principal and Agency or Principal and employees of the agency; otherwise, an employer-employee relationship is established in either case.

Contracting out is valid as an exercise of management prerogative for as long as it complies with the limits and standards provided by the Labor Code. [COCA-COLA BOTTLERS VS. DELA CRUZ ET AL, G.R. No. 184977, 07 December 2009 (BRION, J)], -- Essentially, there must be proof of capitalization, and of control over his employees on the part of the independent contractor. The law allows contracting and subcontracting involving services but closely regulates these activities for the protection of workers. Thus, an employer can contract out part of its operations, provided it complies with the limits and standards provided in the Code and in its implementing rules. xxx In strictly layman’s terms, a manufacturer can sell its products on its own, or allow contractors, independently operating on their own, to sell and distribute these products in a manner that does not violate the regulations. From 40

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the terms of the above-quoted D.O. 18-02, the legitimate job contractor must have the capitalization and equipment to undertake the sale and distribution of the manufacturer’s products, and must do it on its own using its own means and selling methods.xxx” Temic Automotive Phils. Vs. Temic Automotive Phils Inc. Employees Union – FFW, G.R. No. 186965, 23 December 2009. – Company is engaged in the manufacture of electronic brake systems and comfort body electronics for automotive vehicles. Union members are regular rank-and-file employees working in warehouse receiving section, raw materials, and finished goods section. Management however contracts out forwarding, packing, loading of raw materials and finished goods to independent contractors. Issue raised on validity of contracting out of said jobs, to the detriment of the regular workers. Supreme Court ruled in favor of management, where it is shown that it is done in good faith, for the furtherance of the valid interests of the company and not for the circumvention of the rights of its employees. 7.3

IMPORTANT CASE: The right of management to outsource parts of its operations is within the purview of management prerogative, but said right may limited by law, CBA provisions or the general principles of fair play and justice. Goya Inc. vs. Goya Employees Union – FFW, G.R. No. 170054 21 January 2013. Question: May the Company however validly engage an independent contractor for such purpose, despite an explicit provision in the CBA limiting the company’s free exercise of management prerogative pertaining to the hiring of contractual employees. Short Answer: NO, it may not. The CBA is the law between the parties, and having agreed to the provision, management also agreed to limit its exercise of its prerogatives to this extent SC Rationale: The company kept on harping that both the VA and the CA conceded that its engagement of contractual workers from PESO was a valid exercise of management prerogative. It is confused. To emphasize, declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Company’s act of contracting out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that “the right of the management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA,” while the CA held that “[t]his management prerogative of contracting out services, however, is not without limitation. x x x [These] categories of employees particularly with respect to casual employees [serve] as limitation to [the Company’s] prerogative to outsource parts of its operations especially when hiring contractual employees.”

7.4

The law and its implementing rules recognize that management may rightfully exercise its prerogatives in determining what activities may be contracted out, REGARDLESS OF WHETHER SUCH ACTIVITY IS PERIPHERAL OR CORE IN NATURE. (Alviado et. al. vs. Procter & Gamble, and Promm Gemm, G.R. No. 160506, 09 March 2010, Del Castillo, J).

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7.5

HOWEVER, PRELIMINARY PRESUMPTION IS THAT CONTRACTOR IS LABOR-ONLY CONTRACTING UNLESS such contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like. IMPT 2014 CASE: Fuji Television Network, Inc. vs. Arlene S. Espiritu G.R. No. 204944-45, 03 December 2014 - The employer has the burden of proof to show that the person concerned is an independent contractor rather than a regular employee. Garden of Memories Park and Life Plan vs. NLRC 2nd Division, GR 160278, 08 Feb 2012, 665 SCRA 293 citing 7K Corporation vs. NLRC, GR 148490, 22 Nov 2006, 507 SCRA 509, 523. -- In the present case, although Garden of Memories is not the contractor, it has the burden of proving that Requizo has sufficient capita or investment since it is claiming the supposed status of REquino as independent contractor. Garden of Memories failed to adduce evidence purporting to show that Requizo had sufficient capitaliizatin. Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the completion of the service contract. NOTE: A cooperative may likewise engage in sub-contracting arrangements but it must comply with the requirements for an independent contractor. The fact that it was a duly registered cooperative does not preclude the possibility that it was engaged in labor-only contracting as confirmed by the findings of the Regional Director. (Norkis Trading Corporation vs. Buenavista et al., GR No. 182018, 10 October 2012).

7.6

WHETHER DOLE CERTIFICATION THAT ONE IS A LEGITIMATE JOB-CONTRACTOR, IS SUFFICIENT TO PROVE STATUS AS JOB CONTRACTOR.— The DOLE certification simply gives rise to a presumption that the contractor is a legitimate one. It does NOT General Rule:

prohibit the Supreme Court, in the exercise of its plenary judicial powers of review, to determine sufficiency of evidence other than the certification, in ruling that one is, or is not, an independent contractor. Thus -In the absence of evidence to the contrary presented by the complainants, then the Supreme Court had ruled that in the case of RAMY GALLEGO VS. BAYER PHILS. G.R. No. 179807, 31 July 2009, Carpio-Morales, J that “(T)he DOLE certificate having been issued by a public officer, it carries with it the presumption that it was issued in the regular performance of official duty. Petitioner’s bare assertions fail to rebut this presumption. Further, since the DOLE is the agency primarily responsible for regulating the business of independent job contractors, the Court can presume, in the absence of evidence to the contrary, that it had thoroughly evaluated the requirements submitted by PRODUCT IMAGE before issuing the Certificate of Registration.” In this case, the Supreme Court found Product Image to be an independent contractor as it had shown proof of substantial capitalization and control over the employees. Exception: COCA COLA BOTTLERS VS. RICKY DELA CRUZ, ET AL. (G.R. No. 184977, 07 December 2009) and COCA COLA BOTTLERS VS. AGITO ET AL (G.R. 179546, 13 Feb 2009, J. Chico-Nazario), However, apart and separate from the existence of said DOLE certification, and especially in instances where there are contradictory findings between the 42

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Court of Appeals and the NLRC/Labor Arbiter, the Supreme Court may consider other factors in the determination of whether or not a contractor complies with the requisite elements of a legitimate sub-contracting as enumerated in the Labor Code and the Dept. Order No. 18-02. In these cases, the Supreme Court reviewed the records and found that the so-called independent contractors had no substantial capitalization and investment, and that the workers supplied by it were performing activities which were necessary and desirable in the usual trade or business of the employer.

2014 BAR QUESTION: Linis Manpower, Inc. (LMI) had provided janitorial services to the Philippine Overseas Employment Administration (POEA) since March 2009. Its service contract was renewed every three months. However, in the bidding held in June 2012, LMI was disqualified and excluded. In 2013, six janitors of LMI formerly assigned at POEA filed a complaint for underpayment of wages. Both LMI and POEA were impleaded as respondents. Should POEA, a government agency subject to budgetary appropriations from Congress, be held liable solidarily with LMI for the payment of salary differentials due to the complainant? Cite the legal basis of your answer. (4%)

ANSWER: Yes, POEA may still be held liable. DOLE Order No. 14, Series of 2001, on Solidary Liability, provides as follows: “Government agencies or instrumentalities engaging security services from private security agencies shall likewise observe compliance with all labor laws xxx” Moreover, Article 106 of the Labor Code provides that in the event the contractor fails to pay the wages of his employees the principal shall be jointly and severally liable with the contractor.

7.7 IMPORTANT J. VELASCO CASE: Fonterra Brands Phils. Vs. Largado and Estrellado, G.R. No. 205300, 18 March 2015 QUESTION: Whether or not fixed-term employees who were repeatedly hired by a contractor, but had resigned and transferred to another contractor to work with the same principal, may claim regular employment status and illegal dismissal?

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ANSWER: NO. They cannot claim to be regular employees of the principal. As correctly held by the Labor Arbiter and the NLRC, the termination of respondents’ employment with Zytron was brought about by the cessation of their contracts with the latter. We give credence to the Labor Arbiter’s conclusion that respondents were the ones who refused to renew their contracts with Zytron, and the NLRC’s finding that they themselves acquiesced to their transfer to A.C. Sicat. By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment, done with the intention of relinquishing an office, accompanied by the act of abandonment. Here, it is obvious that respondents were no longer interested in continuing their employment with Zytron. Their voluntary refusal to renew their contracts was brought about by their desire to continue their assignment in Fonterra which could not happen in view of the conclusion of Zytron’s contract with Fonterra. Hence, to be able to continue with their assignment, they applied for work with A.C. Sicat with the hope that they will be able to continue rendering services as TMRs at Fonterra since A.C. Sicat is Fonterra’s new manpower supplier.

G. SPECIFIC ISSUES ON LABOR STANDARDS 1.

WAGES. 1.1 Article 97 (f) Labor Code, definition: Remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under the written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. Fair and reasonable value shall not include any profit to the employer or to any person affiliated with the employer. 1.2. EMPLOYEES NOT COVERED BY PROVISIONS ON WAGES:  farm tenancy / leasehold;  domestic service (household or domestic helpers);  persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law;  Barangay micro business enterprise (BMBE) under RA 9178, the BMBE Law. BMBE – any business entity or enterprise engaged in the production, processing, or manufacturing of products or commodities, including agroprocessing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall not be more than P3M. 1.3

Wages; facilities and supplements. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, 02 March 2011. --

Respondent employees alleged underpayment of their wages. Petitioner employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should be included in the computation of the wages received by 44

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respondents. The “supplements.”

Court

makes

a

distinction

between

“facilities”

and

Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers’ basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by petitioner employer for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects. Thus, the Court is of the view that the food and lodging, or the electricity and water allegedly consumed by respondents in this case were not facilities but supplements which should not be included in the computation of wages received by respondent employees. 2014 CASE: Our Haus Realty ss. Alexander Parian, et. al., G.R. No. 204651, 06 August 2014. – The requirements of law for the deductibility of facility from the wages of employees are as follows: a. proof must be shown that such facilities are customarily furnished by the trade; b. the provision of deductible facilities must be voluntarily accepted in writing by the employee; and c. The facilities must be charged at fair and reasonable value (Mabeza vs. NLRC, 338 Phil. 386 [1997]) Badges to show that a facility is customarily furnished by the trade: a. The existence of a company policy or guideline showing that provisions for a facility were designated as part of the employee’s salaries. (SLL International Cables Specialist v. NLRC, supra., 644 SCRA 411.) b. The existence of an industry-wide practice of furnishing the benefits in question among enterprises engaged in the same line of business. NOTE1: Even if a benefit is customarily provided by the trade, it must still pass the purpose test set by jurisprudence. Under this test, if a benefit or privilege granted to the employee is clearly for the employer’s convenience, it will not be considered as a facility but a supplement. Here, careful consideration is given to the nature of the employer’s business in relation to the work performed by the employee. This test is used to address inequitable situations wherein employers consider a benefit deductible from the wages even if the factual circ*mstances show that it clearly redounds to the employers’ greater advantage. NOTE2: The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. If the purpose is primarily for the employee’s gain, then the benefit is a facility; if it is mainly for the employer’s advantage, then it is a supplement. 45

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NOTE3: In the ultimate analysis, the purpose test seeks to prevent a circumvention of the minimum wage law.

1.4 PAYMENT OF WAGES    

Wages shall be paid in cash, legal tender at or near the place of work Payment may be made through a bank upon written petition of majority of the workers in establishments with 25 or more employees and within one kilometer radius to a bank Payment shall be made directly to the employees Wages shall be given not less than once every two (2) weeks or twice within a month at intervals not exceeding 16 days

2014 CASE: Hacienda Leddy, et al. vs. Paquito Villegas, G.R. No. 179654, 22 September 2014. -- Payment on a piece-rate basis does not negate regular employment. Payment by the piece is just a method of compensation and does not define the essence of the relation. (Lambo vs. NLRC, 375 Phil. 855 [1999]).

1.5 SOME GOVERNING RULES:  FAIR AND REASONABLE VALUE shall not include any profit to the employer, or to any person affiliated with the employer.  “NO WORK NO PAY” PRINCIPLE. -- If there is no work performed by the employee, there can be no wage or pay unless the laborer was able, willing, and ready to work but was prevented by management or was illegally locked out, suspended or dismissed. But where the failure of employees to work was not due to the employer’s fault, the burden of economic loss suffered by the employers should not be shifted to the employer. Each party must bear his own loss.  EQUAL PAY FOR EQUAL WORK. -- Employees who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions should be paid similar salaries (International School Alliance of Educators vs. Quisumbing, GR No.128845, June 1, 2000).  CIVIL CODE PROVISIONS: Art. 1705. The laborer’s wages shall be paid in legal currency. Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the employer. Art. 1707. The laborer’s wages shall be a lien on the goods manufactured or the work done. Art. 1708. The laborer’s wages shall not be subject to execution or attachment except for debts incurred for food, shelter, clothing, and medical attendance. Art. 1709. The employer shall neither seize nor retain any tool or other articles belonging to the laborer.  Art. 110, Labor Code. Worker’s preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid.

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IMPORTANT J. VELASCO CASE: Associated Labor Union – Divine Word University Employees’ Union vs. Court of Appeals and Divine Word University, G.R. No. 156882, 31 October 2008. -- reiterating principles of workers’ preference in case of bankruptcy. .

Bankruptcy proceedings must first be instituted for Article 110 to apply. -The application of Article 110 of the Labor Code is contingent upon the institution of bankruptcy or insolvency proceedings against the employer. Hence, preferential right given to workers under Art. 110 may be invoked only during bankruptcy or insolvency proceedings against the employer. (Development Bank of the Philippines vs. Secretary of Labor, 179 SCRA 630 [1989]).

What Article 110 of the Labor Code establishes is not a lien, but a preference of credit in favor of employees. Unlike a lien, a preference of credit does not create a charge upon any particular property of the debtor. This simply means that during bankruptcy or insolvency proceedings against the properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of certain claims which may be proved therein. (DBP vs. Secretary, ibid.; See also DBP vs. NLRC, 222 SCRA 264 [1993]; DBP vs. NLRC, 229 SCRA 350 [1994]; Hautea vs. NLRC, 230 SCRA 119 [1994]).

2015 BAR EXAM QUESTION: (III) Benito is the owner of an eponymous clothing brand that is a top seller. He employs a number of male and female models who wear Benito's clothes in promotional shoots and videos. His deal with the models is that Benito will pay them with 3 sets of free clothes per week. Is this arrangement allowed? (2%) Answer: No, the arrangement is not allowed. Under Article 102 of the Labor Code, wages of an employee are to be paid only in legal tender, even when expressly requested by the employee. Hence, no lawful deal in this regard can be entered into by and between Benito and his models. Alternative answer: No. The models are Benito’s employees. As such, their services require compensation in legal tender (Art. 102, Labor Code). The three sets of clothes, regardless of value, are in kind; hence, the former’s compensation is not in the form prescribed by law.

1.6 WAGE AND WAGE-RELATED BENEFITS 

Minimum wages must always be complied with. -- Wage Order No. NCR-19 for Metro Manila effective 04 April 2015.

SECTOR/ INDUSTRY

BASIC WAGE

COLA INTEGRA TION

NEW BASIC WAGE

NEW COLA

NEW MINIMUM WAGE RATES

Non-agricultural (Incl hospitals with 100 bed capacity or less)

P466.00

P15.00

P481.00

P10.00

P491.00

429.00

15.00

444.00

10.00

454.00

429.00

15.00

444.00

10.00

454.00

429.00

15.00

444.00

10.00

454.00

Agriculture (plantation and non-plantation Retail/Service establishmts employing 15 persons or less Manufacturing establishments regularly employing less than 10 workers

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IMPORTANT J. VELASCO CASE ON MINIMUM WAGE APPLICATION: Nasipit Integrated Arrastre vs. NAsipit Employees Labor Union – ALUTUCP, G.R. No. 162411, 30 June 2008. – As explicitly stated in the Minimum Wage Order itself, only employees who are receiving salaries below the prescribed minimum wage, are entitled to the wage increase granted under the Wage Order. This is without prejudice to any wage distortion adjustment that may be had as regards other employees that may be affected as a consequence of the application thereof. Inasmuch as the Union employees are already receiving wages higher than that prescribed by the Wage Order, there can be no argument that the company is NOT obliged to grant them any wage increase.. 

Hours of work: Hours of work shall include: (a) all time during which an employee is required to be on duty or to be at the prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. The normal working hours shall be no more than eight (8) hours a day. Meal and rest period: meal break of less than one (1) hour and short rest periods shall be considered compensable working time

Holiday pay. -- The employee is entitled to the payment of his regular daily basic wage (100%) during said holidays, even if the worker did not report for work on said days; PROVIDED THAT HE WAS PRESENT OR WAS ON LEAVE OF ABSENCE WITH PAY ON THE WORK DAY If the employee was IMMEDIATELY PRECEDING THE HOLIDAY. suffered to work during the said holidays, they will be entitled to payment of holiday premium of 200% of his basic wage (100% of basic wage PLUS 100%). 2014 CASES: Ariel L. David, doing business under the name and style “Yiels Hog Dealer” vs. John G. Macasio, G.R. No. 195466, 02 July 2014. -- General Rule: Employees on task or “pakyaw” basis are entitled to holiday pay and SIL pay; unless they qualify as field personnel. Conrado A. Lim vs. HMR Philippines, Inc., et al, G.R. No. 201483, 04 August 2014. – Will illegally dismissed employee be entitled to payment of holiday pay in the computation of backwages? Answer: It depends whether the monthly salary of the employee is inclusive or exclusive of holiday pay as shown by divisors used by the company in the computation of overtime pay and employees’ absences. To illustrate, if all nonworking days are paid, the divisor of the monthly salary to obtain daily rate should be 365. If nonworking days are not paid, the divisor is 251, which is a result of subtracting all Saturdays, Sundays, and the ten legal holidays. Hence, if the petitioner’s base pay does not yet include holiday pay, then it must be added to his monetary award. (ADA’s NOTES: If the divisor is 261, then the ten (10) legal holidays are already included in the monthly salary. In this case, the dismissed employee is no longer entitled to payment of holiday pay as it is already considered paid.)

 Premium pay for work within 8 hours on a: 1. Special or rest day: plus 30% of basic daily rate (BDR) 2. Rest day falling on a special day: plus 50% of BDR 3. Rest day falling on a regular holiday: plus 30% of 200% of BDR

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 Overtime pay for work in excess of 8 hours on: 1. Ordinary days: plus 25% of the basic hourly rate 2. Special days, rest days and holidays: plus 30% of the regular hourly rate on said days Overtime is NOT a benefit; rather it is simply compensation for services rendered AFTER the eight hours of work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. BENEFITS DO NOT REQUIRE ANY ADDITIONAL SERVICE FROM THEIR BENEFICIARIES. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code. (San Miguel Corporation vs. Numeriano Layoc, Jr., et al. G.R. No. 149640, 19 October 2007.)

2015 BAR EXAM QUESTION: (II) LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its orders, LKG requires its employees to work beyond eight (8) hours everyday, from Monday to Saturday. It pays its employees an additional 35% of their regular hourly wage for work rendered in excess of eight (8) hours per day. Because of additional orders, LKG now requires two (2) shifts of workers with both shifts working beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an employee who used to render up to six (6) hours of overtime work before the change in schedule. He complains that the change adversely affected him because now he can only earn up to a maximum of four (4) hours' worth of overtime pay. Does Carding have a cause of action against the company? (4%) Answer: No, Carding has no cause of action. There is no diminution of benefits. Overtime pay is simply additional compensation for work done beyond the eight-hour work day. In the exercise of its management prerogatives, and absent proof that the decision to create two shifts was done in circumvention of the employees’s rights, management may change schedule of its employees. (Manila Jockey Club Employees Union vs Manila Jockey Club, GR 16770, 07 March 2001) Alternative answer: No, Carding has no cause of action. Rendition of overtime is a decision within the valid exercise of management prerogatives. LKG has the right to determine whether or not the same is intended to be permanent and regular, not contingent nor temporary, and given only to remedy a situation which can change anytime. (Philippine National Bank v. Philippine National Bank Employees Association (PEMA), 115 SCRA 507 [1982]).  Nightshift differential pay: plus 10% of the basic/regular rate for work between 10PM – 6AM (For further discussions under Republic Act No 10151, Repealing the Nightshift Prohibition on Women, see page 61).  Service incentive leave: 5 days with pay per year of service .  Service charges: 85% for distribution to rank-and-file employees; 15% for losses, breakages, or distribution to managerial employees (applicable only in establishments collecting service charges) 2014 CASE: National Union of Workers In Hotel Restaurant And Allied Industries (NUWHRAIN), Philippine Plaza Chapter Vs. Philippines Plaza Inc., G.R. No. 177524, 23 July 2014. – The Union anchors its claim for 49

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unpaid services charges on Sections 68 and 69 of the CBA, in relation with Article 96 of the Labor Code. Section 68 states that the sale of food, beverage, transportation, laundry and rooms are subject to service charge at the rate of ten percent (10%). Excepted from the coverage of the 10% service charge are the so-called “negotiated contracts” and “special rates.” Supreme Court decision: Hotel does not have any obligation to the Union, inasmuch as their claims arises from “non-sale” transactions like “Westin Gold Cards Revenue” and “Maxi Media Barter” to be negotiated contracts or contracts under special rates, and the entries “Business Promotions” and “Gift Certificates” as contracts that did not involve a sale of food, beverage, etc. 1.7

GENERAL RULE: WAGE DEDUCTIONS ARE NOT ALLOWED EXCEPTIONS: ALLOWABLE DEDUCTIONS WITHOUT EMPLOYEE’S CONSENT: a. SSS, Philhealth and PAG-IBIG contributions; b. Withholding taxes on income c. Where the employer is authorized by law or regulations issued by the Secretary of Labor; d. Agency fees, where the employee who is not a member of the exclusive bargaining agent but a member of the appropriate bargaining unit, may be assessed a reasonable fee for benefits received under a CBA. ALLOWABLE DEDUCTIONS WITH THE EMPLOYEE’S CONSENT: a. b. c. d.

Reasonable value of meals and other facilities; Payment of union dues, which may or may not be under an automatic charging-off arrangement Debt payments to the employer or third persons with employee’s explicit written consent Worker’s insurance acquired by the employer with employee’s consent;

2015 CASE: Emer Milan, et al. vs. NLRC, et al., G.R. No. 202961, February 04, 2015. -- An employer can withhold terminal pay and benefits pending the employees’ return of its properties. An employer is allowed to withhold terminal pay and benefits pending the employees’ return of its properties. The return of the property’s possession became an obligation or liability on the part of the employees when the employer-employee relationship ceased. The NLRC has jurisdiction to determine, preliminarily, the parties’ right over a property, when it is necessary to determine an issue related to rights or claims arising from an employer-employee relationship. 1.8

NON-DIMINUTION OF BENEFITS, EXPLAINED: Art. 100, Labor Code. Prohibition against elimination or diminution of benefits. — Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. 

GENERAL RULE: Benefits being given to employees shall not be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten 50

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EXCEPTIONS: 1. If the employee also consents to the deduction. 2. If the deduction is made to correct an error. EXCEPTION TO THE EXCEPTION: If the error is left uncorrected for a reasonable period of time, it ripens into a company policy and employees can demand for it as a matter of right. 

Requisites for voluntary employer practice such that the same cannot be unilaterally withdrawn anymore: (a) It should have been practiced over a long period of time; and (b) It must be shown to have been consistent and deliberate. (Sevilla Trading Company vs. Semana, 428 SCRA 239 [2004], citing Globe Mackay Cable and Radio Corp. vs. NLRC, 163 SCRA 71 [1988].

As to length of time required to ripen into a corporate policy: The Supreme Court has not laid down any specific rule requiring a specific minimum number of years. Rather, the test of long practice has been enunciated thus: where the company agreed to continue giving a benefit knowing fully well that said employees are not covered by the law requiring payment of said. (Oceanic Pharmacal Employees Union (FFW) vs. Inciong, 94 SCRA 270 [1979]). Hence, the Supreme Court has ruled in specific cases as follows: a. Davao Fruits Corporation vs. Associated Labor Unions (225 SCRA 562 [1993]): six (6) years. b. Davao Integrated Port Stevedoring Services vs. Abarquez (220 SCRA 197 [1983]): three (3) years and nine (9) months c. Sevilla Trading Company vs. Semana, (428 SCRA 239 [2004]: two (2) years.

IMPORTANT 2013 CASE: Vergara vs. Coca Cola Bottlers, G.R. No. 176985, 01 April 2013 Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS). As stipulated in respondent’s existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of DSSs shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned during the year immediately preceding ÷ 12 months) × No. of Years in Service. Claiming his entitlement to an additional Php 474, 600 as Sales Management Incentives (SMI) and to the amount of Php 496, 016 which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC for “Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorney’s Fees.” Question1: Whether or not the exclusion of Sales Management Incentives in the computation of retirement benefits is a diminution of Vergara’s benefits. Answer1: NO. SMI could not be included in computation, there being no evidence that the inclusion thereof into the retirement pay has ripened into a corporate policy. General rule: Employees have a vested right over existing benefits voluntarily granted to them by their employer. Thus, any benefit and supplement being 51

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enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. Elements for diminution of benefits: (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. Question2: When can a policy be considered to have ripened into a regular company practice? Answer2: The employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time. IMPORTANT 2013 CASE: TSpic Corporation vs. TSpic Employees UnionFFW, G.R. No. 163419, 13 February 2008. – No diminution of wages where the deduction is to correct an error, and such was done within a reasonable time. Company and Union entered into a CBA with increases in wages. During the first year of the effectivity of the CBA, the Regional Wage Board issued a Wage Order prescribing increases in minimum wages. Company thereafter complied with said Wage Order and increased wages of the probationary employees. Said probationary employees received additional wage increase when they became regular. With the second wave of increase, nine employees who were senior to the recently regularized employees, received less wages. After three months from the second wave, the company HRD notified the complainant employees that due to an error in the automated payroll system, deductions will be made on their monthly salary as they had been previously overpaid. The Union protested as the deduction is a diminution of the salaries. Question: Is there diminution of salaries and benefits in this case? Answer: NO. No vested right accrued to the additional salary inasmuch as the payment was made erroneously, and more so as the company sought to correct the error as soon as it learned about it.

2014 BAR QUESTION: Lolong Law Firm (LLF), which employs around 50 lawyers and 100 regular staff, suffered losses for the first time in its history. The management informed its employees that it could no longer afford to provide them free lunch. Consequently, it announced that a nominal fee would henceforth be charged. Was LLF justified in withdrawing this benefit which it had unilaterally been providing to its employees? (1%) 52

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(A) Yes, because it is suffering losses for the first time. (B) Yes, because this is a management prerogative which is not due to any legal or contractual obligation. (C) No, because this amounts to a diminution of benefits which is prohibited by the Labor Code. (D) No, because it is a fringe benefit that has already ripened into a demandable right.

2.

THIRTEENTH MONTH PAY 2.1 How much: 1/12th of the basic salary of an employee within a calendar year. 2.2 COVERAGE 

All employers are required to pay all their rank-and-file employees a 13th month pay not later than December 24 of every year.

Such employees are entitled to the benefit regardless of their designation or employment status and irrespective of the method by which their wages are paid, provided that they have worked for at least 1 month during a calendar year;

2.3 EXCLUSIONS or EXEMPTIONS FROM COVERAGE 1. Government and any of its political subdivisions, including GOCCs. Exception: Corporations operating essentially as private subsidiaries of the Government; 2. Employers already paying their employees 13th month pay or more in a calendar year or its equivalent at the time of issuance of PD 851; 

“Its equivalent” includes Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, COLA and all other allowances regularly enjoyed by the employees as well as non-monetary benefits.

3. Employers of household helpers and persons in the personal service of another in relation to such workers; 4. Distressed employers: a. currently incurring substantial losses or b. in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance; 5. Employers of those who are paid on commission, boundary, or task basis, and those who are paid a fixed amount for performance of a specific work, irrespective of the time consumed in the performance thereof.

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Exception: Where the workers are paid on a piece-rate basis, in which case the employer shall grant the required 13th month pay to such workers. 

Piece Rate – employees who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.

3. BONUS 3.1 Nature of a bonus: a prerogative, not an obligation. -- The matter of giving a bonus over and above the worker’s lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. (Traders Royal Bank vs. NLRC, 189 SCRA 274 [1990]). EXCEPTION: When demandable under a contract. 2012-2014 CASES: a) Mega Magazine Publications, vs. Margaret Defensor, G.R. No. 162021,16 June 2014. -- Grant of bonus, rule and exception. The grant of a bonus or special incentive, being a management prerogative, is not a demandable and enforceable obligation, except when the bonus or special incentive is made part of the wage, salary or compensation of the employee, (Protacio v. Laya Mananghaya & Co., G.R. No. 168654, [March 25, 2009, 582 SCRA 417, 429]) or is promised by the employer and expressly agreed upon by the parties (Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association, G.R. No. 180866,[ March 2, 2010, 614 SCRA 63, 71]). By its very definition, bonus is a gratuity or act of liberality of the giver, and cannot be considered part of an employee’s wages if it is paid only when profits are realized or a certain amount of productivity is achieved. If the desired goal of production or actual work is not accomplished, the bonus does not accrue. Due to the nature of the bonus or special incentive being a gratuity or act of liberality on the part of the giver, the respondent could not validly insist on the schedule proposed in her memorandum of April 5, 1999 considering that the grant of the bonus or special incentive remained a management prerogative. However, the Court agrees with the CA’s ruling that the petitioners had already exercised the management prerogative to grant the bonus or special incentive. At no instance did Yap flatly refuse or reject the respondent’s request for commissions and the bonus or incentive. This is plain from the fact that Yap even “bargained” with the respondent on the schedule of the rates and the revenues on which the bonus or incentive would be pegged. What remained contested was only the schedule of the rates and the revenues. b) Eastern Telecom Phils. Vs. Eastern Telecom Employees Union, GR 185665, 08 Feb 2012. – Company has an existing collective bargaining agreement with the Union, including a Side Agreement to the effect that “14th, 15th and 16th month bonuses (other than 13th month pay) are granted." Company plan to defer payment of the 14th, 15th and 16th month bonuses due to alleged continuing deterioration of company’s financial position. ISSUE: Is Company bound to pay for the bonuses as per CBA? ANSWER: YES! A reading of the provision in the agreement reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. The wording of the provision does not allow any other interpretation. There were no conditions specified in the CBA Side Agreements 54

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for the grant of the benefits, contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. Terse and clear, the said provision does not state that the subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations. 3.2 Mid-year bonus and Christmas bonus are equivalents of 13th month pay. (Producers Bank vs. NLRC, 355 SCRA 489 [2001]). However, benefits in the form of food or free electricity are not proper substitutes for the 13th month pay. So, also, year-end rewards for loyalty and service cannot be considered in lieu of 13th month pay. (Framanlis vs. Minister of Labor, 171 SCRA 87 [1989]). 3.3 Are commissions included in computing 13th month pay? a.

If the commission form part of the employees’ basic salary, then this will likewise be included in the computation of 13th month pay. (Philippine Duplicators, Inc. vs. NLRC, 241 SCRA 380 [1995]).

b)

If the commissions were in the nature of profit-sharing bonuses (productivity bonuses), then these do not form part of the “basic salary” and should not included in the computation of the 13th month pay. (Boie-Takeda Chemicals, Inc. vs. Dela Serna 228 SCRA 329 [1993]).

2014 CASE: Philippine Spring Water Resources Inc., vs. CA and Juvenstein B. Mahilum, G.R. No. 205278, 11 June 2014. -- Petitioner Philippine Spring Water Resources, Inc. (PSWRI) was engaged in the business of manufacturing, selling and distributing bottled mineral water. It hired Mahilum as Vice-President for Sales and Marketing for the Bulacan-South Luzon Area, for a monthly salary of 15,000.00 plus 0.25% commission on every cash on delivery and another 0.25% on new accounts from July to August, 2004. It is well-established in jurisprudence that the determination of whether or not a commission forms part of the basic salary depends upon the circ*mstances or conditions for its payment. In Phil Duplicators, Inc. v. NLRC,21 the Court held that commissions earned by salesmen form part of their basic salary. The salesmen’s commissions, comprising a predetermined percentage of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The salesmen’s commissions are not overtime payments, nor profitsharing payments nor any other fringe benefit, but a portion of the salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. On the other hand, in Boie-Takeda Chemicals, Inc. v. De la Serna,22 the so-called commissions paid to or received by medical representatives were excluded from the term basic salary because these were paid to the medical representatives and rankand-file employees as productivity bonuses, which were generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and had no clear direct or necessary relation to the amount of work actually done by each individual employee. In Mahilum’s case, the case of Phil. Duplicator which ruled that commission is part of basic pay, cannot be automatically applied without considering his position as VicePresident for sales and marketing of the PSWRI’s Bulacan-South Luzon Area. This factor constrains the Court to hold that Mahilum’s 0.25% commission based on 55

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the monthly sales and 0.25% commission for cash payments must be taken to come in the nature of overriding commission, not sales commission. The latter cannot be properly included in the basic salary as it must be earned by actual market transactions attributable to the claimant. Curiously, Mahilum did not comment on the petitioners’ objection to the award. Not being a salesman who directly effected any sale of a product, the commission embodied in the agreement partook of the nature of profit-sharing business based on quota. In fine, the alleged commissions were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed. FOR SAID REASON, MAHILUM’S BACKWAGES MUST BE PEGGED AT HIS BASIC SALARY, EXCLUDING THE COMMISSIONS MENTIONED BY THE NLRC, TO BE COMPUTED FROM THE TIME OF HIS DISMISSAL UP TO THE FINALITY OF THIS DECISION. Nonetheless, the award of backwages shall earn legal interest at the rate of six percent (6%) per annum in accordance with prevailing jurisprudence.23

2015 BAR EXAM QUESTION: (IV) Far East Bank (FEB) is one of the leading banks in the country. Its compensation and bonus packages are top of the industry. For the last 6 years, FEB had been providing the following bonuses across-the-board to all its employees: (a) 13th month pay; (b) 14th to 18th month pay; (c) Christmas basket worth P6,000; (d) Gift check worth P4,000; and (e) Productivity-based incentive ranging from a 20% to 40% increase in gross monthly salary for all employees who would receive an evaluation of "Excellent" for 3 straight quarters in the same year. Because of its poor performance over-all, FEB decided to cut back on the bonuses this year and limited itself to the following: (a) 13th month pay; (b) 14th month pay; (c) Christmas basket worth P4,000; and (d) Gift check worth P2,000 Katrina, an employee of FEB, who had gotten a rating of "Excellent" for the last 3 quarters was looking forward to the bonuses plus the productivity incentive bonus. After learning that FEB had modified the bonus scheme, she objected. Is Katrina's objection justified? Explain. (3%) Answer: Katrina was correct. Having enjoyed the across-the-board bonuses for six years, Katrina’s right to them has been vested already. Hence, none of them can be withheld or reduced without violating the Principle of Non-Diminution of Benefits. Benefits can be reduced when the company is in the red, i.e., its losses are substantial and duly established with financial statements duly certified to by an independent external auditor. In the problem, the company is in the black only because it has not proven its alleged losses to be substantial losses in accordance with law. Permitting reduction of pay at the slightest indication of losses is contrary to the policy of the State to afford full protection to labor and promote full employment (Linton Commercial Co. v. Hellera, et al., 23 Feb. 2012 ). As to the withheld productivity-based bonuses, the basis of payment is not the company's performance but Katrina’s. Therefore, Katrina is deemed to have earned them because of her excellent performance ratings for three quarters. On this basis, they cannot be withheld without violating Art. 116 of the Labor Code because they are wage-type.

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Alternative answer: No, Katrina’s objection is not justified. The grant of a bonus or special incentives, being a management prerogative, is not demandable and enforceable obligation, except when the bonus or special incentive is made part of the wage, salary or compensation of the employee. (Protacio vs. Laga Mananghaya and Co., G.R. No. 168654, March 25, 2009, 582 SCRA 417, 429). FEB cannot be forced to distribute bonuses when it can no longer afford to pay. To hold otherwise would be to penalize an employer for its past generosity. (Producers Bank of the Philippines vs. NLRC, 355 SCRA 489 [2001]).

4. HOURS OF WORK. 4.1 Hours of worked shall include: (a) all time during which an employee is required to be on duty or to be at the prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. (Art. 84, Labor Code; See also Rada vs. NLRC, 205 SCRA 69 [1992].) 4.2 Rest period of short duration during working hours shall be counted as hours worked. (Art. 84, Labor Code.) Example: coffee break of 15 minutes; meal period of less than one hour, e.g., 30 minutes. 4.3 Exemptions. (See Art. 82, Labor Code.) . -- The following employees are not covered by the Labor Code provisions on hours of work: a)

b)

Government employees; Managerial employees (International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213 [1998].);

c) d) e) f)

Field Personnel; Members of the employer who are dependent upon him for support; Domestic helpers and persons in the personal service of another; Workers who are paid by results, e.g., piece workers. (Red V Coconut Products, Ltd. vs. CIR, 17 SCRA 553 [1966], citing Lara vs. del Rosario, 94 Phil. 780) (Note: Reason is that workers who are paid by the result are compensated on the basis of the work completed, and NOT in respect of the time spent working on it).

5.

EMPLOYMENT OF HOUSEHELPERS VS. HOMEWORKERS (See also KASAMBAHAY LAW) 5.1

Domestic helper or househelpers or domestic servant defined. -- shall refer to any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.” 

Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and other similar househelps. (Apex Mining Company, Inc. vs. NLRC, 196 SCRA 251 [1991]). – NOTE DISCREPANCY BETWEEN

LAW AND IMPLEMENTING RULES WHICH EXCLUDED THE DRIVERS FROM COVERAGE.

If the househelp or laundrywomen is suffered to work in staffhouses of a company to attend to the needs of the company’s guest and other persons availing of said facilities, then they are NOT household helpers as defined by law but employees of the company. (Apex Mining Company, Inc. vs. NLRC, ibid.)

 BENEFITS ACCORDED TO HOUSE-HELPERS (Book III, Title 3, Chapter III, LC) 1. Not to be assigned to non-household work; 57

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2. Reasonable compensation (minimum cash wage); 3. Lodging, food and medical attendance; 4. If under 18 years, an opportunity for elementary education (cost of which shall be part of househelper’s compensation); 5. Contract for household service shall not exceed 2 years (renewable from year to year); 6. Just and humane treatment; 7. Right not to be required to work for more than 10 hrs. a day (if the househelper agrees to work overtime and there is additional compensation, the same is permissible); 8. Right to 4 days vacation each month with pay (if the helper does not ask for the vacation, the number of vacation days cannot be accumulated, he is only entitled only to its monetary equivalent); 9. Funeral expenses must be paid by the employer if the house-helper has no relatives with sufficient means in the place where the head of the family lives; 10. Termination only for just cause; 11. Indemnity for unjust termination of service; 12. Employment certification as to nature and duration of service and efficiency and conduct of the house-helper.

5.2 Homeworker, defined.-- one who performs in or about his home any processing of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an employer and thereafter to be returned to the latter. (Book III, Rule XIV, Section 1 of the Omnibus Rules Implementing the Labor Code.) HOUSEHELPERS Minister to the personal needs and comfort of his employer in the latter’s home

HOME WORKERS Performs in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an employer and sold thereafter to the latter.

RIGHTS and BENEFITS ACCORDED TO HOMEWORKERS (Department Order No. 5, replacing Rule XIV of the Rules Implementing Book III of the Labor Code):

1) Formation and registration of labor organization of industrial homeworkers. 2) It also makes explicit the employer’s duty to pay and remit SSS, Philhealth and ECC premiums.

3) Prohibitions for Homework  explosives, fireworks and articles of like character;  drugs and poisons;  other articles, the processing of which requires exposure to toxic substance.

5.3 REPUBLIC ACT NO. 10361 OTHERWISE KNOWN AS THE “BATAS KASAMBAHAY”. Effective 18 January 2013. Implementing Rules effective on 04 June 2013 (by Atty. Enz Palmares) “For quite a time, the welfare of our poor household helpers has been overlooked and neglected not only by the government but by our society, as well. It is for this reason that this Representation filed Senate Bill No. 860, with the ardent purpose of protecting the rights and interests of this massive, yet invisible everyday army and unsung heroes of the Philippine economy.” – Sen. Jinggoy Estrada 58

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5.3.1 Applicable to the following personnel whether under a live-in or liveout arrangements, to wit: a) b) c) d) e) f)

General househelp; Yaya; Cook; Gardener; Laundry person; or Any person who REGULARLY performs domestic work in one household on an occupational basis.

5.3.2 NOT applicable to the following personnel: a) Service providers; b) Family drivers; (Ada’s note: Family drivers were NOT exempted under the law but only in the Implementing Rules. This may thus be subject to question. FOR POSSIBLE BAR PROBLEM.) c) Children under foster family arrangements; and d) Any other person who performs work occasionally or sporadically and not on an occupational basis. 5.3.3 EMPLOYMENT CONTRACT - an employment contract must be duly executed by the employer and the Kasambahay in a language or dialect known to both parties. A copy said contract shall be furnished to the Punong Barangay of the barangay where the employer lives. The employment contract must contain the following pertinent details, to wit: a) Duties and responsibilities of the Kasambahay, including the responsibility to render satisfactory service at all times; b) Period of employment; c) Compensation; d) Authorized deductions; e) Hours of work and proportionate additional payment; f) Rest days and allowable leaves; g) Board, lodging and medical attention; h) Agreements on deployment expenses, if any; i) Loan agreement, if any; j) Termination of employment; and k) Any other lawful condition agreed upon by both parties. 5.3.4 RIGHTS OF KASAMBAHAY a. MINIMUM WAGE - A minimum wage of Two Thousand Five Hundred Pesos (P2,500.00) per month shall be paid to a Kasambahay employed in the National Capital Region (minimum wage of P2,000.00 for those employed in cities and first class municipalities outside NCR, and P1,500.00 for those employed in other municipalities), which must be paid in cash at least once a month. b. DAILY AND WEEKLY REST PERIODS - The Batas Kasambahay ensures that a Kasambahay must have an aggregate daily rest period of eight (8) hours per day, and at least twenty four (24) consecutive hours of rest in a week. The employer and Kasambahay may further agree to the following: 1)

2)

Scheduled weekly rest day of the Kasambahay, wherein the latter’s preference must be respected if the same is based on religious grounds; Offsetting a day of absence with a particular rest day; or 59

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3)

Accumulating rest days not exceeding five (5) days.

c. SERVICE INCENTIVE LEAVE -- A Kasambahay who has rendered at least one (1) year of service shall be entitled to a service incentive leave of at least five (5) days with pay. Unused service incentive leave shall not be carried over to succeeding years and are not convertible to cash. d. THIRTEENTH (13th) MONTH PAY -- The Kasambahay who has rendered at least one month service shall be entitled to a thirteenth month pay of at least one-twelfth (1/12) of his total basic salary. The 13th month pay shall be paid to the Kasambahay not later than 24 December of every year or upon his/her separation from employment. e. MANDATORY GOVERNMENT CONTRIBUTIONS (SSS, PHILHEALTH, PAG-IBIG) - The Batas Kasambahay dictates upon the employers their obligation to register every Kasambahay in their employ to the SSS, PhilHealth and Pag-ibig: provided, that the Kasambahay concerned has rendered at least one (1) month of service to the employer. The mandatory premium payments or contributions shall be borne solely by the employer. However, if the Kasambahay is receiving a monthly wage of at least Five Thousand Pesos (P5,000.00), the latter shall pay the proportionate share in the premium payments or contributions in the SSS, PhilHealth and Pag-ibig.

5.3.5 2014 BAR EXAMINATION QUESTION: Linda was employed by Sectarian University (SU) to cook for the members of a religious order who teach and live inside the campus. While performing her assigned task, Linda accidentally burned herself. Because of the extent of her injuries, she went on medical leave. Meanwhile, SU engaged a replacement cook. Linda filed a complaint for illegal dismissal, but her employer SU contended that Linda was not a regular employee but a domestic househelp. Decide. (4%) (Note: This has been asked previously in the 2007 Bar examinations.) ANSWER: SU is guilty of illegal dismissal. A domestic househelp is employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of the employer’s family. The criteria are the personal comfort and enjoyment of the family of the employer in the home of said employer. Such is not the case of Linda. The work performed by Linda in the Sectarian University could not be categorized as mere domestic work as a cook for the members of a religious order who teach and live inside the campus. Linda’s work is essential and important to the operation and religious function of SU. In such a case, Linda is an employee of SU in its teaching business and Linda is thus entitled to the privileges of a regular employee. (APEX Mining Company, Inc., vs. NLRC, 196 SCRA 251 [1991]; Barcenas vs. NLRC, 187 SCRA 498 [1990]).

6.

EMPLOYMENT OF MINORS: (cf Sec. 12, R.A. 7610, as amended by R.A. 9231). Article 139. Minimum employable age. -(a) No child below fifteen (15) years of age shall be employed, except 60

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when he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling. (b) Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as determined by the Secretary of Labor in appropriate regulations. (c) The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking which is hazardous or deleterious in nature as determined by the Secretary of Labor. Article 140. Prohibition against child discrimination..-- No employer shall discriminate against any person in respect to terms and conditions of employment on account of his age.

6.1 GENERAL RULE: Employment of any child below fifteen (15) years of age is prohibited  Note1: Any person between 15 and 18 may be employed in any nonhazardous work.  Note2: Any person above 18 – NO PROHIBITION. EXCEPT: 1. When he works directly under the sole responsibility of his parents or guardian,

and his employment does not in any way interfere with his schooling. following conditions must be met: • • •

The

The employment does not endanger the child’s life, safety, health and morals; The employment does not impair the child’s normal development; The employer parent or legal guardian provides the child with the primary and/or secondary education prescribed by the Department of Education

2. Where the child’s employment or participation in public entertainment or

information through cinema, theater, radio or TV is essential provided that: • The employment does not involve ads or commercials promoting ALCOHOLIC BEVERAGES, INTOXICATING DRINKS, TOBACCO AND ITS BY-PRODUCTS OR EXHIBITING VIOLENCE;  There is a written contract approved by the DOLE; and  the following requirements are strictly complied with:  employer shall ensure protection, health, morals, and normal development of the child;  employer shall institute measures to prevent child’s exploitation / discrimination taking into account the system and level of remuneration, duration, and arrangement of working time;  employer shall formulate and implement a continuing program for training and skills acquisition of the child, subject to approval and supervision of competent authorities. (as amended by Rep. Act No. 9231) 6.2 NOTE: In the above-exceptional cases where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the Department of Labor and Employment which shall ensure observance of the above requirements. (Rep. Act. No. 9231).

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ON HAZARDOUS WORK. -- Any person between fifteen (15) and eighteen (18) years of age may be employed for NON-HAZARDOUS WORK for such number of hours and such periods of the day as determined by the Secretary of Labor in appropriate regulations. No such prohibition if eighteen (18) years old and above. PROHIBITION AGAINST CHILD DISCRIMINATION. -- No employer shall discriminate against any person in respect to terms and conditions of employment on account of his age.

6.3 Comparisons: (Rep. Act No. 9231)  Allowed to work for not more than 20 hours a week. Provided, the work shall not be more than 4 hours in a day.  Shall not be allowed to work between 8pm and 6am of the following day. A child above 15  Shall not be allowed to work for more than 8 hours years of age but a day, and in no case beyond 40 hours a week. below 18  Shall not be allowed to work between 10 pm and 6am the following day A child below 15

6.4 2015 BAR EXAMINATION QUESTION (V): Soledad, a widowed school teacher, takes under her wing one of her students, Kiko, 13 years old, who was abandoned by his parents and has to do odd jobs in order to study. She allows Kiko to live in her house, provides him with clean clothes, food, and a daily allowance of 200 pesos. In exchange, Kiko does routine housework, consisting of cleaning the house and doing errands for Soledad. One day, a representative of the DOLE and the DSWD came to Soledad's house and charged her with violating the law that prohibits work by minors. Soledad objects and offers as a defense that she was not requiring Kiko to work as the chores were not hazardous. Further, she did not give him chores regularly but only intermittently as the need may arise. Is Soledad's defense meritorious? (4%) Answer: NO. Soledad’s defense is not meritorious. Article 139 of the Labor Code provides that no child below fifteen (15) years of age shall be employed, except when he works under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling. She is neither Kiko’s parent or guardian. However, Article 107 of the Code Rules of Book III, Rule XII, Sections 2 and 3, and PD 603 on Working Children, provides that Children below sixteen (16) years of age may be employed to perform light work which is not harmful to their safety, health or normal development and which is not prejudicial to their studies. As a good Samaritan, this provision should exculpate her from liability. The Php 200.00 daily allowance Soledad gives Kiko may even allow the latter to study and grow to become a worthy member of society. Alternative Answer: No. Soledad’s defense is not meritorious because the work rendered by Kiko at her house is in the form of physical exertion requiring compensation. Hence, it is an employment which no person can contract with a minor below 15 years of age (Art. 137, Labor Code). Her defense that his occasional work did not expose him to hazardous conditions cannot take the place of the defense allowed by law, viz., the employer is either parent or guardian. She is neither. Therefore, her defense must fail. 62

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7.

APPRENTICESHIP AND LEARNER 7.1 Apprenticeship is the practical on-the-job training as supplemented by related theoretical instruction (Art. 58 (a), LC). 7.2 Learners are persons hired as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and may be learned through practical training on the job in a relatively short period of time which shall not exceed three months.

APPRENTICESHIP

LEARNERSHIP

NATURE

highly-technical

semi-skill; non-apprenticeable

PERIOD

SIX (6) months

THREE (3) months

COMITMT TO HIRE

At option of learner

At option of employer

• May be paid or not; if paid, 75% of minimum

Must always be paid; 75% of minimum

No, DOLE approval not required; inspection only.

None.

WAGES DOLE Approval

DEDUCTION for Expenses

Yes, DOLE approval is essential

Yes, expenses for training deductible from income tax

7.3 CASE ON VALIDITY OF APPRENTICESHIP Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. 187320, 26 January 2011. -- Apprenticeship agreement NOT valid where complainants were hired as employees first before execution of apprenticeship. The respondent employees were already rendering service to the company when they were made to undergo apprenticeship. The respondent were regular employees because they occupied positions such as machine operator, scaleman and extruder operator – tasks that are usually necessary and desirable in petitioner employer’s usual business or trade as manufacturer of plastic building materials. These tasks and their nature characterized the respondents as regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law. The apprenticeship agreements did not indicate the trade or occupation in which the apprentice would be trained; neither was the apprenticeship program approved by the Technical Education and Skills Development Authority (TESDA). These were defective as they were executed in violation of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the employees, the employer, to all intents and purposes, recognized the completion of their training and their acquisition of a regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was not even 63

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mentioned in the agreement itself, is a violation of the Labor Code’s implementing rules and is an act manifestly unfair to the employees.

8. ON EMPLOYEE BENEFITS; BEREAVEMENT LEAVE. CASE: Philippine Journalist Inc. vs.Journal Employees Union, G.R. No. 192601, 26 June 2013, supra. on interpretation in favor of employees; “legal dependent” defined. The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if the CBA is silent about it, is to be construed as similar to the meaning that contemporaneous social legislations have set. This is because the terms of such social legislations are deemed incorporated in or adopted by the CBA. Considering that existing laws always form part of any contract, and are deemed incorporated in each and every contract, the definition of legal dependents under the aforecited social legislations applies herein in the absence of a contrary or different definition mutually intended and adopted by the parties in the CBA. Accordingly, the concurrence of a legitimate spouse does not disqualify a child or a parent of the employee from being a legal dependent, provided substantial evidence is adduced to prove the actual dependency of the child or parent on the support of the employee.”

2015 LABOR BAR QUESTION: (IX) Din Din is a single mother with one child. She is employed as a sales executive at a prominent supermarket. She and her child live in Quezon City and her residence and workplace are a 15-minute drive apart. One day, Din Din is informed by her boss that she is being promoted to a managerial position but she is now being transferred to the Visayas. Din Din does not want to uproot her family and refuses the offer. Her boss is so humiliated by Din Din's refusal of the offer that she gives Din Din successive unsatisfactory evaluations that result in Din Din being removed from the supermarket. Din Din approaches you, as counsel, for legal advice. What would you advise her? (4%) Answer: An employee cannot be promoted without his consent. A promotion that results in the transfer of the employee that aims to lure the employee away from his present position cannot be done without his consent. (PT & T vs. CA, G.R. No. 152057, 29 Sept. 2003.) There is no law that compels a person to accept a promotion. Hence, the exercise by Din Din of her right to refuse should not be a cause for her Boss’ humiliation. For one thing, the transfer would uproot her family. For another, the transfer is unreasonable, inconvenient and prejudicial to her and her child. The vindictive actuation of her Boss in giving her successive unsatisfactory evaluation is inconsistent with his prior offer of promotion. Her boss acted in bad faith, insensibility and disdain; inflicted as a form of punishment for her. Hence, it can thereforebe said that there is no just cause in the removal of Din Din from the supermarket.

2015 LABOR BAR QUESTION: (XIII) Luisa is an unwed mother with 3 children from different fathers. In 2004, she became a member of the Social Security System (SSS). That same year, she suffered a miscarriage of a baby out of wedlock from the father of her third child. She wants to claim maternity benefits under the SSS Act. Is she entitled to claim? (3%) 64

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Answer: Maternity leave benefit applies to all female employees whether married or unmarried. She is entitled to the maternity benefit provided she has given the required notification to the SSS thru her employer, and her employer must have paid at least 3 monthly contribution to the SSS within the 12-month period immediately before the date of the miscarriage; otherwise, she would not be entitled to said benefit.

9. DISABLED WORKERS 9.1

9.2

Equal opportunity for employment.  No disabled person shall be denied access to opportunities for suitable employment. [R.A. 7277, Sec. 5: Magna Carta for Disabled Persons] 

Qualified disabled employees shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person.

A worker is not necessarily considered as a handicapped worker if he is capable, as an able-bodied worker, to function suitably in relation to the work to which he was hired. (i.e. one-legged transcriptionist)

Incentives for employment of disabled workers (Sec. 2, RA 7277). 1. Private entities that employ disabled persons who meet the required skills or qualifications either as regular employee, apprentice or learner, shall be entitled to an additional deduction from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons; Provided, that the following are complied with: a. Presentation of proof certified by DOLE that disabled persons are under their employ; and b. Disabled employee is accredited with DOLE and DOH as to his disability, skills and qualifications. 2. Private entities that improve or modify their physical facilities to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their taxable income, equivalent to 50% of the direct costs of the improvements or modifications. This does not apply to improvements required under B.P. Blg. 344.

3. REPUBLIC ACT NO. 10151 ENTITLED “AN ACT ALLOWING THE EMPLOYMENT OF NIGHT WORKERS, THEREBY REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR HUNDRED FORTY-TWO, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES” The general rule before was that women were prohibited from working the nightshift between the hours of 10:00 p.m. and 6:00 a.m. of the following day, whether with or without compensation. This prohibition has now been repealed by Republic Act No. 10151. The new law applies to all workers who shall be employed or permitted or suffered to work at night, with the exception of the following: (a) pregnant women or nursing mothers, subject to certain conditions; and (b) those workers employed in agriculture, stock raising, fishing, maritime transport and inland navigation. 65

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As defined, a night worker means “any employed person whose work requires performance of a substantial number of hours of night work which exceeds a specified limit”. The parameters and limits have yet to be fixed by the Department of Labor which is presently working on the Implementing Rules. Some salient features of this new law are as follows: 3.1 As regards women night workers, the law provides that women who are pregnant or nursing their children for a period of at least sixteen (16) weeks before or after childbirth, are to be allowed alternative to night work, such as: (a) transfer to day work where this is possible; (b) the provision of social security benefits; or (c) an extension of maternity leave. 

During the periods referred to above, a woman night worker shall NOT be dismissed or given notice of dismissal, EXCEPT for just or authorized causes provided for in this Code that are not connected with pregnancy, childbirth and childcare responsibilities.

During these instances, the women night worker shall not lose the benefits regarding her status, seniority and access to promotion which may attach to her regular night work position. These measures shall not have the effect of REDUCING the protection and benefits connected with maternity leave under existing laws.

Pregnant women and nursing mothers may be allowed to work at night only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant employees, the period of the pregnancy that they can safely work.

3.2 Rights of the Night Workers: 

Right to health assessem*nt. -- At their request, workers shall have the right to undergo a health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work on the following instances: (a) Before taking up an assignment as a night worker: (b) At regular intervals during such an assignment: and (c) If they experience health problems during such an assignment which are not caused by factors other than the performance of night work. With the exception of a finding of unfitness for night work, the findings of such assessments shall not be transmitted to others without the workers' consent and shall not be used to their detriment.

Right to safe and healthful working conditions

Right to compel employer to provide the following mandatory facilities: (a) Suitable first aid facilities (b) Adequate or reasonable facilities such as sleeping or resting quarters in the establishment (c) Adequate transportation from the work premises to the nearest point of their residence subject to the exceptions and guidelines to be provided by the DOLE

Right to transfer to similar job. -- Night workers who are certified as unfit for night work, due to health reasons, shall be transferred, whenever practicable, to a similar job for which they are unfit to work. If such transfer to a similar job is not practicable, these workers shall be granted the same benefits as other 66

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workers who are unable to work, or to secure employment during such period. A night worker certified as temporarily unfit for night work shall be given the same protection against dismissal as other workers who are prevented from working for reasons of health" 

Right to social services. -- Appropriate social services shall be provided for night workers and, where necessary, for the workers performing night work."

3.3 Consultation on Night Work Schedules. - Before introducing work schedules requiring the services of night workers, the EMPLOYER shall CONSULT the workers' representatives/labor organizations concerned on the details of such schedules and the forms of organization of night work that are best adapted to the establishment and its personnel, as well as on the occupational health measures and social services which are required. In establishments employing night workers, consultation shall take place regularly. 3.4 AS AMENDED BY DOLE Department Order No. 119-12 [24 January 2012] Implementing Rules of RA 10151 – GENERAL RULE: There should always be facilities for transportation and/or sleeping/resting quarters for the night workers. EXCEPTIONS: • When there is already an existing company policy or CBA providing for an equivalent or superior benefit i.e. there is already transportation allowance; • Start or end of work rendered does not fall between 12mn to 5am; • Where the workplace is located in an area that is accessible twenty four (24) hours to public transportation; and • Insufficient number or night workers to warrant the necessity for sleeping/resting facilities.

4. REPUBLIC ACT 9710 ENTITLED “THE MAGNA CARTA OF WOMEN”. (By Atty. Suzy Selleza) Recognizing the economic, political, and sociocultural realities affecting women’s current condition, Republic Act No. 9710, otherwise known as the Magna Carta of Women was enacted along with its Implementing Rules effective on 15 September 2009 and 10 July 2010, respectively. The promulgation of this law affirms the role of women in nation building, and recognizes the substantive equality of women and men. As such, measures have been made to promote empowerment of women, pursue equal opportunities for women and men, ensure equal access to resources and to development results and outcome, and eliminate discrimination and inequality in the economic, political, social and cultural life of women and men. 4.1. Discrimination defined: 

any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil or any other field;

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promotion of their rights and their access to and enjoyment of opportunities, benefits, or privileges; 

a measure or practice of general application that fails to provide for mechanisms to offset or address sex or gender-based disadvantages or limitations of women, as a result of which women are denied or restricted in the recognition and protection of their rights and in their access to and enjoyment of opportunities, benefits, or privileges; or women, more than men are shown to have suffered the greater adverse effects of those measures or practices; and

discrimination compounded by or intersecting with other grounds, status, or condition, such as ethnicity, age, poverty, or religion. (Section 4 [B])

4.2. Some pertinent benefits and protection granted: 

Protection from all forms of violence, including those committed by the State. -- This includes the incremental increase in the recruitment and training of women in government services that cater to women victims of gender-related offenses. It also ensures mandatory training on human rights and gender sensitivity to all government personnel involved in the protection and defense of women against gender-based violence, and mandates local government units to establish a Violence Against Women Desk in every barangay to address violence against women cases; (Section 12)

Equal access and elimination of discrimination against women in education, scholarships and training. This includes revising educational materials and curricula to remove gender stereotypes and images, and outlawing the expulsion, non-readmission, prohibiting enrollment and other related discrimination against women students and faculty due to pregnancy outside of marriage; (Section 16) ADA: POSSIBLE QUESTION FOR LABOR OR POLITICAL LAW (NOT ASKED IN 2012, 2013 2014 BAR): NOW WITH A NEW JANUARY 2015 CASE. -- Termination of pregnant employee in catholic schools. Position of school re: academic freedom and religious nature of catholic schools to impose higher standards of morality vs. strict implementation of Magna Carta of Women. CHERYLL LEUS VS ST. SCHOLASTICA – WESTGROVE, G.R. No. 187226, 28 Jan 2015 Facts: Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a Catholic educational institution, as a non-teaching personnel. Cheryll engaged in pre-marital sexual relations, got pregnant out of wedlock, married the father of her child, and was dismissed by SSCW, in that order. Issue: Whether or not Leus may be validly dismissed for pregnancy out of wedlock, on account of immorality. Supreme Court decision: Illegal dismissal. In resolving the foregoing question, the Court will assess the matter from a strictly neutral and secular point of view – the relationship between SSCW as employer and the petitioner as an employee, the causes provided for by law in the termination of such relationship, and the evidence on record. 68

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The ground cited for the petitioner’s dismissal, i.e., pre-marital sexual relations and, consequently, pregnancy out of wedlock, will be assessed as to whether the same constitutes a valid ground for dismissal pursuant to Section 94(e) of the 1992 MRPS [and the Labor Code].

As stated above, when the law refers to morality, it necessarily pertains to PUBLIC AND SECULAR MORALITY, and not religious morality. Thus, the proscription against “disgraceful or immoral conduct” under Section 94(e) of the 1992 MRPS, which is made as a cause for dismissal, must necessarily refer to public and secular morality. Accordingly, in order for a conduct to be considered as disgraceful or immoral, it must be “‘detrimental (or dangerous) to those conditions upon which depend the existence and progress of human society’ and not because the conduct is proscribed by the beliefs of one religion or the other.” As the Court held in Radam, there is no law which penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried persons; that neither does such situation contravene any fundamental state policy enshrined in the Constitution. Admittedly, the petitioner is employed in an educational institution where the teachings and doctrines of the Catholic Church, including that on pre-marital sexual relations, is strictly upheld and taught to the students. That her indiscretion, which resulted in her pregnancy out of wedlock, is anathema to the doctrines of the Catholic Church. However, viewed against the prevailing norms of conduct, the petitioner’s conduct cannot be considered as disgraceful or immoral; such conduct is not denounced by public and secular morality. It may be an unusual arrangement, but it certainly is not disgraceful or immoral within the contemplation of the law. To stress, pre-marital sexual relations between two consenting adults who have no impediment to marry each other, and, consequently, conceiving a child out of wedlock, gauged from a purely public and secular view of morality, does not amount to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS." 

Non-discrimination in employment in the field of military, police and other similar services.

GYNECOLOGICAL Leave benefits of two (2) months with full pay based on gross monthly compensation, for women employees who undergo surgery caused by gynecological disorders, provided that they have rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months; (Section 21) AS AMENDED BY DOLE Department Order No. 112-A [22 May 2012] providing for the guidelines on the Implementation of the leave benefit for Women Employees in the private sector. -- Ada

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DOLE inserted a new provision under Section 4, which provides: “The special leave benefit. – The two (2) months special leave benefit is the maximum period of leave with pay that a woman may avail of under RA 9710. For purposes of determining the period of leave with pay that will be allowed to a woman employee, the certification of a competent physician as required period for recuperation shall be controlling.” Additionally, Section 6 of the DO 112-A also provides as follows: “Frequency of availment. – A woman employee can avail of the special leave benefit for every instance of surgery due to gynecological disorder for a maximum total period of two (2) months per year.” EFFECT: The total recovery period for a woman employee is limited to two months per year regardless of the frequency of surgical operations that a female employee might undergo. 4.3. Notes: In addition to the two-month gynecological leave, please take note that the woman employee may, in certain cases, avail of additional leaves, to wit: 4.3.1

Battered Woman Leave under Republic Act No. 9262, ANTI-VIOLENCE AGAINST WOMEN AND CHILDREN:

Allows the victim of violence, which may be physical, sexual, or psychological, to apply for the issuance of a protection order that will shield her from further violence and provide her related reliefs. SECTION 43. Entitlement to Leave. – Victims under this Act shall be entitled to take a paid leave of absence up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations, extendible when the necessity arises as specified in the protection order. Any employer who shall prejudice the right of the person under this section shall be penalized in accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an employer who shall prejudice any person for assisting a co-employee who is a victim under this Act shall likewise be liable for discrimination. Conditions for entitlement • •

4.3.2

The victim must be an employee. If she is such, she is entitled to a paid leave of up to 10 days in addition to other paid leaves under the Labor Code, other laws and company policies The employee has to submit a certification from the Punong Barangay or Kagawad or prosecutor or Clerk of Court that an action under RA 9262 has been filed and is pending.

Solo Parent Leave under Republic Act No. 8972, SOLO PARENTS’ WELFARE ACT OF 2000:

SECTION 8. Parental Leave. — In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent employee who has rendered service of at least one (1) year.

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10. EMPLOYEE BENEFITS; RETIREMENT. 10.1 RETIREMENT AGE GENERAL RULE: R.A. 7641 a. OPTIONAL at 60 years with minimum 5 years of service b. MANDATORY at 65 years, no service requirement EXCEPTION: Where the company provides for a Retirement Plan with earlier retirement age, then the company’s Retirement Plan will apply 10.2 RETIREMENT BENEFITS GENERAL RULE: R.A. 7641 ½ month for every year of service (expanded concept per Sec 1, RA 7641) Expanded concept: 22.5 days (basis: Capitol Wireless vs. Confesor) 15 days + 5 days service incentive leave + 2.5 days prorated 13th month pay EXCEPTION: Where the company provides for a Retirement Plan with better benefits, then the company’s Retirement Plan will apply 10.3 CASES:

a) Question: Is an employee who was terminated for authorized causes (redundancy), also entitled to avail of early retirement benefits? Otherwise stated, may an employee be paid both retirement and separation pay benefits? Answer: YES, as a general rule. Exception: When there is an explicit provision in the company rules prohibiting the availment of both . Goodyear vs. Marina Angus, G.R. No. 185499, 14 November 2014. -Employees are legally entitled to recover both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA. In such an instance where both the company rules or CBA and the retirement plan are silent, an employee is not barred from claiming his early retirement benefits, even if he/she had already received his retrenchment pay, and has executed a Quitclaim to that effect. This must be so because he is legally entitled thereto as a general rule. “It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclusive. Retirement benefits are a form of reward for an employee's loyalty and service to an employer and are earned under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is that amount which an employee receives at the time of his severance from employment, designed to provide the employee with the wherewithal during the period that he is looking for another employment and is recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal 71

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dismissal cases when reinstatement is not feasible.” (citing Aquino v. National Labor Relations Commission,G.R. No. 87653, February 11, 1992, 206 SCRA 118, 123-125. See also: Batangas Laguna Tayabas Bus Company v. Court of Appeals, 163 Phil. 494 [1976]; and University of the East v. Hon. Minister of Labor, 236 Phil. 724 [1987]) See also: Difference between separation pay arising from termination of employment and retirement. General Milling Corporation vs. Viajar, G.R. No. 181738, 30 January 2013, Citing Quevedo vs. Benguet Electric Cooperative, Inc., 599 SCRA 438 [2009]. -- While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with varying judicial bases and resulting benefits. Retirement from the service is contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and procedure. The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits. b. DIFFERENCE BETWEEN RETIREMENT. –

VOLUNTARY

AND

INVOLUNTARY

Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause. The employee’s intent is the focal point of analysis. In determining such intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant parameters. (ibid.) 2015 CASE: Zenaida Paz vs. Northern Tobacco Redrying Co., Inc., et al., G.R. No. 199554, 18 February 2015. -- If “optional retirement” is involuntary, the employee shall be deemed to be illegally dismissed. c. RESIGNATIONS vs. TERMINATION vs STRAINED RELATIONS vs RETIREMENT 2013 CASE: IN TERMINATION OF EMPLOYMENT BY THE EMPLOYEE VIA RESIGNATION. -- The intent to relinquish must concur with the overt act of relinquishment. (Mendoza vs. HMS Credit Corp., et. al., G.R. No. 187232, 17 April 2013; citing San Miguel Properties vs. Gucaban, 654 SCRA 18 [2011])

2013 CASE: DIFFERENCE BETWEEN TERMINATION OF EMPLOYMENT AND RETIREMENT. -- While termination of employment and retirement from service are common modes of ending employment, they are mutually exclusive, with varying judicial bases and resulting benefits from the service is contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds, benefits and procedure). The benefits resulting from termination vary, depending on the cause. For retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above or floor benefits. (General Milling Corporation vs. Viajar, G.R. No. 181783, 30 January 2013; Citing Quevedo vs. Benguet Electric Cooperative, Inc., 599 SCRA 438 [2009]) 72

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RESIGNATION – It is the voluntary act of employees who are compelled by reasons to disassociate themselves from their employment. It must be done with intention of relinquishing the office, accompanied by the act of abandonment. Where evidence reveals otherwise, then illegal dismissal. STRAINED RELATIONS – Where reinstatement is no longer desirable or viable in view of strained relations between the parties, then separation pay is an acceptable alterative to reinstatement. Computation: one month for every year of service, computed from date of hiring until finality of the Decision finding for illegal termination. d. Early retirement is the option of the EMPLOYEE. Eastern Shipping Lines, Inc. vs. Ferrer D. Antonio, G.R. No. 171587, 13 October 2009. – The age of retirement is primarily determined by the existing agreement or employment contract. In the absence of such agreement, the retirement age shall be fixed by law. Under the aforecited law, the mandated compulsory retirement age is set at 65 years, while the minimum age for optional retirement is set at 60 years. Under Paragraph B of the retirement plan, a shipboard employee, upon his written request, may retire from service if he has reached the eligibility age of 60 years. In this case, the option to retire lies with the employee. Records show that respondent was only 41 years old when he applied for optional retirement, which was 19 years short of the required eligibility age. Thus, he cannot claim optional retirement benefits as a matter of right. e. IMPORTANT CASE: MAY RETIREMENT FUND FOR THE EMPLOYEES BE APPLIED TO OUTSTANDING LOANS OF THE COMPANY? Metrobank vs. Board of Trustees of Riverside Mills Provident and Retirement Fund, GR No. 17695, 08 Sept 2010. -Answer: NO. Employees trusts or benefits plans are intended to provide economic assistance to employees upon occurrence of old age, retirement, death, sickness or disability. Here, while the Plan provides for a reversion of the Fund to the employer RMC, this cannot be done until all the liabilities of the Plan have been paid. And when RMC ceased operations in 1984, the Fund became liable not only for the benefits of the qualified retirees at the time of the RMC closure, but also of those who were separated from work as a consequence of the closure, per the Retirment Plan itself. f. IMPORTANT CASE: MAY THE EMPLOYER DEDUCT COST OF TRAINING FROM THE RETIREMENT BENEFITS OF THE EMPLOYEE? Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, 16 July 2012. ANSWER: YES! By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the company’s effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PAL’s employ within a period of 3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly covered the petitioner’s obligation to render service to PAL within 3 years to enable it to recoup the costs of its investment. Further, to allow the petitioner to leave the company before it has fulfilled the reasonable expectation of service on his part will amount to unjust enrichment. 73

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H. THE RIGHT TO UNIONIZE AND THE APPROPRIATE BARGAINING UNIT (PLEASE SEE CHART “A”) 1.

Existence of ER-EE relationship is essential for the determination of whether or not one may exercise right of self-organization for purposes of collective bargaining

2. Who may unionize for purposes of collective bargaining negotiations? 2.1

General Rule: Any employee may be eligible to join and be a member of a labor union, beginning on his first day of service, whether employed for a definite period or not. (Article 277 [c], Labor Code; See also: UST Faculty Union vs. Bitonio)

2.2

Exceptions: Who may NOT unionize 2.2.1 Managerial employees (Art. 245, Labor Code.) N.B.: Supervisory employees may unionize and form labor organizations of their own, but may not join rank-and-file union. Q: Can a supervisory union affiliate with a Federation with rank-andfile unions? A: Yes. Article 245 has now been amended by Congress under Rep. Act No. 9481 to read as follows: “ART. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. Managerial employees are not eligible to join, assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-andfile employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors’ union operating within the same establishment may join the same federation or national union.”

2.2.2 Confidential employees -- Confidential employees are those who: (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — e.g., the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. The exclusion from bargaining units of the employees who, in the normal course of their duties, become aware of management policies relating to labor relations is a principal objective sought to be accomplished by the “confidential employee rule”. (Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, G.R. No. 162025, 03 August 2010)

Article 245 of the Labor Code does not directly prohibit confidential employees from engaging in union activities. However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to confidential employees. The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties they become aware of management policies relating to labor relations. It must be stressed, however, that when the employee does NOT have access to 74

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confidential labor relations information, there is no legal prohibition against confidential employees from forming, assisting, or joining a union. (Sugbuanon Rural Bank, v. Laguesma, [G.R. No. 116194. February 2, 2000)

2.2.3 Government Employees, including GOCCs WITH original charter 2.2.4 Employees who are members of a cooperative; Rationale:

A cooperative is different from an ordinary business concern, inasmuch as its owners are likewise the ones who run and operate the business themselves. Hence, incongruous situation where the owners will just bargain with themselves or their co-workers (who are also co-owners). However, this will not apply insofar as it involves employees of the cooperative WHO ARE NOT owners or members thereof. SSS VS. ASIAPRO COOPERATIVE: While members of a cooperative cannot form unions and bargain with themselves, they are to be considered as employees with respect to SSS coverage because the Cooperative acts as an independent contractor vis-à-vis principal clients they secure.

2.2.5

Employees of International Organizations or Specialized Agencies which are registered with the United Nations and which enjoys diplomatic immunity. (International Catholic Migration Commission vs. Calleja; and Kapisanan ng Manggagawa at TAC sa IRRI, etc. vs. Secretary of Labor.)

2.2.6 Aliens with valid working permits (Department Order No. 9 [1997], Rule II, Sec. 2)

2014 BAR MCQ QUESTION: Which of the following groups does not enjoy the right to self-organization? (1%) (A) those who work in a non-profit charitable institution (B) those who are paid on a piece-rate basis (C) those who work in a corporation with less than 10 employees (D) those who work as legal secretaries

3.

SALIENT FEATURES OF REPUBLIC ACT NO. 9481: “AN ACT STRENGTHENING THE WORKERS' CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, AMENDING FOR THESE PURPOSE PRES. DECREE 442, OTHERWISE KNOWN AS THE LABOR CODE” 3.1

Modified previous Supreme Court rulings prohibiting supervisors’ unions from joining with the same federation as the rank and file. New law now explicity ALLOWS for the commingling of the two. Section 8 of new law provides: “Article 245 of the Labor Code is hereby amended to read as follows -ART. 245. Ineligibility of Managerial Employees to Join any Labor Organization; Right of Supervisory Employees. - Managerial employees are not eligible to join, 75

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assist or form any labor organization. Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-and-file employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. The rank and file union and the supervisors’ union operating within the same establishment may join the same federation or national union.”

3.2 REQUIREMENTS FOR REGISTRATION 3.2.1 Independent Union or Federations/National Unions – will acquire legal personality upon issuance of certificate of registration ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or an independent union 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 based on the following requirements: (a) Fifty pesos (P50.00) registration fee; (b) The names of its officers, their addresses, the principal address of the labor organization, the minutes of the organizational meetings and the list of the workers who participated in such meetings; (c) In case the applicant is an independent union, the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate; (d) If the applicant union has been in existence for one or more years, copies of its annual financial reports; and (e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or ratification, and the list of the members who participated in it.”

3.2.2 Local or a of Chapter Federations/National Unions – will acquire legal personality only for the purpose of filing a petition for certificate of registration upon issuance of the CHARTER CERTIFICATE by the registered Federation/National Union. The Chapter/Local shall be entitled to all other rights appurtenant thereto ONLY upon submission of the following other documents. “ART. 234-A. Chartering and Creation of a Local Chapter. - A duly registered federation or national union may directly create a local chapter by issuing a charter certificate indicating the establishment of the local chapter. The chapter shall acquire legal personality only for purposes of filing a petition for certification election from the date it was issued a charter certificate. The chapter shall be entitled to all other rights and privileges of a legitimate labor organization only upon the submission of the following documents in addition to its charter certificate: (a) The names of the chapter’s officers, their addresses, and the principal office of the chapter; and (b) The chapter’s constitution and by-laws: Provided, That where the chapter’s constitution and by-laws are the same as that of the federation or the national union, this fact shall be indicated accordingly. The additional supporting requirements shall be certified under oath by the secretary or treasurer of the chapter and attested by its president.”

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ADA’S NOTES: For purposes of filing a petition for certification election, the charter certificate is already sufficient to vest the local chapter with legal personality. In short, once a charter certificate is issued by the Federation, the LLO may already file a petition for CE. However, the local chapter/union will not be considered to have legal personality for purposes of other rights and privileges (e.g., to bargain, to enter into contracts, etc.) UNLESS the other documents (a) and (b) as adverted above are SUBMITTED to the DOLE Regional Office or Bureau of Labor Relations, and a certificate of registration having been issued thereafter.

3.3

Failure to comply with reportorial requirements shall no longer be a ground for cancellation of union registration, but shall subject errant officers/members to penalty. “ART. 242-A. Reportorial Requirements. - The following are documents required to be submitted to the Bureau by the legitimate labor organization concerned: (a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the constitution and by-law or amendments thereto; (b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election; (c) Its annual financial report within thirty (30) days after the close of every fiscal year; and (d) Its list of members at least once a year or whenever required by the Bureau. Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject the erring officers or members to suspension, expulsion from membership, or any appropriate penalty.”

3.4

There are now FEWER grounds for cancellation of union registration. Under the new law, there are ONLY THREE GROUNDS allowed, whereas the old law provides for at least seventeen (17) different grounds for cancellation. Republic Act No. 9481 amended ART. 239 of the Labor Code on grounds for cancellation of union registration, as follows: “ART. 239. Grounds for cancellation of union registration. - The following may constitute grounds for cancellation of union registration: (a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; (b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; (c) Voluntary dissolution by the members. (new mode)

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3.5 WHAT CAN NO LONGER BE RECOGNIZED AS GROUNDS FOR CANCELLATION OF UNION REGISTRATION? a) VIOLATIONS UNDER ARTICLE 239 OF THE LABOR CODE CAN NO LONGER BE A GROUND FOR CANCELLATION OF UNION REGISTRATION. These are: 1. Failure to submit consti, by-laws and ratification docs within 30 days from adoption or ratification 2. Failure to submit annual financial report to Bureau; misrepresentation, false entries or fraud in preparation of financial statements 3. Acting as Labor-only contractor (Cabo) 4. Entering into a CBA with sub-minimum provisions 5. Asking/Accepting attorney’s fees or negotiation fees from employers 6. Checking-off without signed individual written authorizations 7. Failure to submit list of members yearly

b) VIOLATIONS UNDER ARTICLE 241 REFERRING TO RIGHTS AND CONDITIONS OF UNION MEMBERSHIP [EVEN WITH SIGNATURE REQUIREMENTS CONSTITUTING 30% OF UNION MEMBERSHIP], CAN NO LONGER BE A GROUND FOR CANCELLATION OF UNION REGISTRATION. These are: 1. Right to financial statements 2. Right to freely elect their officers, or determine questions on major union policy, by secret ballot 3. No labor organization shall knowingly admit as member any individual who belongs to a subversive organization; 4. Right against collection of fees without due authority; 5. Right to transparency in union finances 6. No special assessments will be made without authorization by writtten resolution of majority of members in a general membership meeting called for such purpose 7. No check-off of special assessment or negotiation fees or attys fees without individual written authorization duly signed by employee ADA’S NOTES: Implication of above is that the Union must still be allowed to exist, notwithstanding violations. If at all, Union members and concerned parties are not without any remedy, inasmuch as they may file the necessary administrative cases against the union officers (Art. 242-A, Labor Code). Note further: Nothing in law which prohibits filing criminal and civil cases in the regular courts, whenever applicable.

3.6

THE INCLUSION OF UNION MEMBERS OF EMPLOYEES OUTSIDE THE BARGAINING UNIT NO LONGER A GROUND FOR CANCELLATION OF UNION REGISTRATION. NOTE THAT THIS IS CONTARY TO THE IMPLICATION IN PREVIOUS SUPREME COURT DECISIONS IN TOYOTA MOTOR AND TAGAYTAY HIGHLANDS CASES. Republic Act No. 9481, Sec. 9. -- A new provision, Article 245-A is inserted into the Labor Code to read as follows: “ART. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation 78

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of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union.”

3.7

REQUIREMENTS FOR VOLUNTARY CANCELLATION OF UNION REGISTRATION – 2/3 VOTE OF GENERAL MEMBERSHIP “ART. 239-A. Voluntary Cancellation of Registration. - The registration of a legitimate labor organization may be cancelled by the organization itself. Provided, That at LEAST TWO-THIRDS of its general membership votes, in a meeting duly called for that purpose to dissolve the organization: Provided, further, That an application to cancel registration is thereafter submitted by the board of the organization, attested to by the president thereof.”

3.8 EXPLICIT PROVISION THAT EMPLOYER IS SIMPLY A BY-STANDER AND CAN NO LONGER OPPOSE OR PARTICIPATE IN THE CERTIFICATION PROCEEDINGS. “ART. 258-A. Employer as Bystander. - In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer’s participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition IMPORTANT 2014 CASE: Heritage Hotel Manila Vs. Secretary Of Labor and Heritage Hotel - NUHWRAIN, G.R. No. 176317, 23 July 2014. – reiteration of principle that union’s legitimacy cannot be attacked collaterally in a petition for certification election (Tagaytay Highlands case), and the Union shall continue to exercise and/or enjoy rights until a union’s registration is revoked. Question: May a petition for the cancellation of union registration based on mixed membership of supervisors and managers in a labor union, and the nonsubmission of reportorial requirements to the DOLE justify the suspension of the proceedings for the certification elections or even the denial of the petition for the certification election? Answer: NO. Petition for certification election should be granted, as a union’s legitimacy cannot be questioned collaterally. Thus, the Supreme Court stated: “Basic in the realm of labor union rights is that the certification election is the sole concern of the workers, and the employer is deemed an intruder as far as the certification election is concerned. Thus, the petitioner lacked the legal personality to assail the proceedings for the certification election, and should stand aside as a mere bystander who could not oppose the petition, or even appeal the Med-Arbiter’s orders relative to the conduct of the certification election. The petitioner’s meddling in the conduct of the certification election among its employees unduly gave rise to the suspicion that it intended to establish a company union. For that reason, the challenges it posed against the certification election proceedings were rightly denied. Under the long established rule, too, the filing of the petition for the cancellation of NUWHRAIN-HHMSC’s registration should not bar the conduct of the certification election. In 79

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that respect, only a final order for the cancellation of the registration would have prevented NUWHRAIN-HHMSC from continuing to enjoy all the rights conferred on it as a legitimate labor union, including the right to the petition for the certification election. This rule is now enshrined in Article 238-A of the Labor Code, as amended by Republic Act No. 9481, which reads: Article 238-A. Effect of a Petition for Cancellation of Registration. – A petition for cancellation of union registration shall not suspend the proceedings for certification election nor shall it prevent the filing of a petition for certification election.The allegation of mixed membership does not result in the illegitimacy of the registered labor union unless the same was done through misrepresentation, false statement or fraud according to Article 239 of the Labor Code Based on the records herein, however, the petitioner failed in that respect. To recall, it raised the issue of the mixed membership in its comment on the list of members submitted by NUWHRAINHHMSC, and in its protest. In the comment, it merely identified the positions that were either confidential or managerial, but did not present any supporting evidence to prove or explain the identification. In the protest, it only enumerated the positions that were allegedly confidential and managerial , and identified two employees that belonged to the rank-and-file, but did not offer any description to show that the positions belonged to different employee groups. Xxx. In that regard, mere allegations sans substance would not be enough, most especially because the constitutional right of workers to self-organization would be compromised.”

4. WHAT ARE THE RIGHTS APPURTENANT TO UNIONIZATION? • • • • • •

The creation of a Union is NOT an act of disloyalty to the employer right to use all LAWFUL means of communicating with employees, and to persuade them to join union may impose obligations upon its members, viz., payment of union dues right to expel members who commit acts inimical to the interests of the union right to be certified as exclusive bargaining agent right to make union security arrangements

5. 2011-2015 CASES: 5.1 IMPORTANT: Takata (Philippines) vs. Bureau of Labor Relations and Samahang Lakas Manggagawa Ng Takata (Salamat), G.R. No. 196276, 04 June 2014. -Issue: Must there be an attendance of at least 20% of the total membership in the appropriate bargaining unit during the organizational meeting; otherwise, ground for cancellation on account of fraud or misrepresentation? Answer: NO! For fraud and misrepresentation to be grounds for cancellation of union registration under Art. 239 of the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a 80

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majority of union members. There is nothing in the Labor Code that requires presence of at least 20% of the total membership in the appropriate bargaining unit during the organizational meeting. What is required for registration of a union as a legitimate labor organization is that there must be at members totaling at least twenty percent of all of the employees in the appropriate bargaining unit at the time of the application. Thus: “Petitioner's charge that respondent committed misrepresentation and fraud in securing its certificate of registration is a serious charge and must be carefully evaluated. Allegations thereof should be compounded with supporting circ*mstances and evidence. We find no evidence on record to support petitioner's accusation. Petitioner's allegation of misrepresentation and fraud is based on its claim that during the organizational meeting on May 1, 2009, only 68 member-employees attended, while respondent claimed that it has 119 members as shown in the document denominated as “Pangalan ng mga Kasapi ng Unyon.” As such, Union misrepresented on the 20% requirement of the law as to its membership. It does not appear in Article 234 (b) of the Labor Code that the attendees in the organizational meeting must comprise 20% of the employees in the bargaining unit. In fact, even the Implementing Rules and Regulations of the Labor Code does not so provide. It is only under Article 234 (c) that requires the names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining unit where it seeks to operate. Clearly, the 20% minimum requirement pertains to the employees’ membership in the union (Ada: at the time of the application, per SC Heritage case below) and not to the list of workers who participated in the organizational meeting. Indeed, Article 234 (b) and (c) provide for separate requirements, which must be submitted for the union's registration, and which respondent did submit. Here, the total number of employees in the bargaining unit was 396, and 20% of which was about 79. Respondent submitted a document entitled “Pangalan ng Mga Kasapi ng Unyon” showing the names of 119 employees as union members, thus respondent sufficiently complied even beyond the 20% minimum membership requirement. Respondent also submitted the attendance sheet of the organizational meeting which contained the names and signatures of the 68 union members who attended the meeting.”

5.2 The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied IndustriesHeritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, 12 January 2011. Question: Is a registered union required to submit financial statements and/or keep membership representing 20% of the appropriate bargaining unit throughout its lifetime, or risk cancellation of its registration? ANSWER: NO. The constitutionally guaranteed freedom of association and right of workers to self-organization outweighs respondent’s noncompliance with the statutory requirements to maintain its status as a legitimate labor organization. 81

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The amendment introduced by RA 9481 sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, which provides that “workers’ and employers’ organizations shall not be liable to be dissolved or suspended by administrative authority.” Reason behind this is that the cancellation of union registration by the BLR would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities. In this case, it is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. . There is also nothing essentially mysterious or irregular about the fact that only 127 members ratified the union’s constitution and by-laws when 128 signed the attendance sheet. It cannot be assumed that all those who attended approved of the constitution and by-laws. Any member had the right to hold out and refrain from ratifying those documents or to simply ignore the process. AT ANY RATE, THE LABOR CODE AND ITS IMPLEMENTING RULES DO NOT REQUIRE THAT THE NUMBER OF MEMBERS APPEARING ON THE DOCUMENTS IN QUESTION SHOULD COMPLETELY DOVETAIL. For as long as the documents and signatures are shown to be genuine and regular and the constitution and by-laws democratically ratified, the union is deemed to have complied with registration requirements. See also similar case of Mariwasa Siam Ceramics vs. Secretary of Labor et al., GR No. 183317, 21 Dec 2009., where a substantial number of members allegedly recanted their membership in the union and this was made a ground for cancellation of union registration. “We cannot give full credence to these affidavits which were executed under suspicious circ*mstances, and which contain allegations unsupported by evidence. At best, these affidavits are self-serving. They possess no probative value. Nevertheless, even assuming the veracity of said affidavits, the legitimacy of the respondent Union as a labor organization must be affirmed. While it is true that withdrawal of support may be considered as 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 COMPRISED MORE THAN THE REQUIRED 20% MEMBERSHIP FOR PURPOSES OF REGISTRATION AS A UNION. ART. 234 MERELY REQUIRES A MINIMUM OF 20% MEMBERSHIP DURING APPLICATION FOR UNION REGISTRATION. IT DOES NOT MANDATE THAT A UNION MUST MAINTAIN THE 20% MINIMUM MEMBERSHIP REQUIREMENT ALL THROUGHOUT ITS EXISTENCE.

I. APPROPRIATE BARGAINING UNIT 1.

Bargaining unit, defined. - A "bargaining unit" has been 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 the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. (Golden Farms vs. Calleja, supra.) 82

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2.

Rationale: The law encourages employee participation in policy and decision making, while promoting collective bargaining. Hence, it provides for election of a legitimate labor organization that will exclusively represent the employees for purposes of collective bargaining with employer, for improved terms and conditions of work.

3.

Are employees precluded from raising grievances in the absence of a labor organization certified as an exclusive bargaining representative? No. The law likewise promotes the creation of a Labor Management Council (LMC) which may exist in companies without a union, or may even co-exist with a union. Jurisdiction pertains to grievances which arise from interpretation or implementation of CBA, or of company personnel policies. In fact, Article 255 of the Labor Code provides that any individual employee or group of employees have the right, at any time, to present their grievances to the employer.

4. What is a proper bargaining unit? A proper bargaining unit may be said to be 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 of the employees indicate to be best suited to serve the reciprocal rights and duties of the parties under the Collective bargaining provisions of the law. (Golden Farms vs. Calleja, supra.) It is that group of jobs that serves as the election constituency in the enterprise.

5. Determination of the appropriate bargaining unit. --- The fundamental factors in determining the appropriate collective bargaining unit are enumerated in the case of San Miguel vs. Laguesma, 236 SCRA 595: (a) GLOBE DOCTRINE - the will of the employees; (b) COMMUNITY OF INTERESTS RULE - which takes into consideration the affinity and unity of employees’ interests, such as substantial similarity of work and duties, or similarity of compensation and working conditions; (c) Prior bargaining history; and (d) Similarity of employment status, 6. General Rule: community or mutuality of interests. The most efficacious bargaining unit is one which is comprised of workers enjoying community of interests. This is so because the basic test of a bargaining unit’s acceptability is whether it will best assure to all employees concerned of the exercise of their collective bargaining rights.

Factors to be considered:

(a) similarity in scale and manner of determining earnings; (b) similarity in employment benefits, hours of work, other terms and conditions of employment; (c) similarity in kind of work performed; (d) similarity in qualifications, skills, training of employees; (e) frequency of contact or interchange between employees; (f) geographic proximity; (g) continuity or integration of production processes; (h) common supervision and determination of collective bargaining; etc.

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J. CERTIFICATION ELECTION (FRAMEWORK) 1. Definition and nature of certification election 1.1 Definition: It is the process of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit for purposes of collective bargaining. (Sec. [n], Rule I, Book V, Implementing Rules.) 1.2

Nature of certification election: A certification election is not a litigation but merely an investigation of a non-adversarial fact-finding character in which the Bureau of Labor Relations plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation. (Airline Pilots Assn. Of the Philippines vs. CIR, 76 SCRA 274.)

2. Role of Employer during certification elections General Rule: The employer is not a party in a certification election, which activity is the sole concern of the workers. It is improper for the employer to be present at all during the proceedings, even as an observer, let alone sit and participate therein thru a representative. Thus, Republic Act No. 9481 explicitly mandates that the employer is to be a BYSTANDER in the certification election proceedings. Hence: “Art. 258-A, LC. -- In all cases, whether the petition for certification election is filed by an employer or a legitimate labor organization, the employer shall not be considered a party thereto with a concomitant right to oppose a petition for certification election. The employer’s

participation in such proceedings shall be limited to: (1) being notified or informed of petitions of such nature; and (2) submitting the list of employees during the pre-election conference should the Med-Arbiter act favorably on the petition” Exception: Where the employer has to file a petition for certification election pursuant to Art. 258 of the Labor Code because it was requested to bargain collectively. Even then, it becomes a neutral bystander.

3. Other kinds of recognition of employee representation excluding certification elections 3.1 Direct certification - not allowed Certification of an exclusive bargaining agent without need of election behing held for the purpose no longer allowed and has been discontinued under Article 257 of the Labor Code. This amendment affirms the superiority of the certification election over direct certification (Ada’s notes: Rationale for this is to prevent possible abuse thereof by employers, by certifying company union. See: Central Negros Electric Coop. vs. Sec. of Labor, 201 SCRA 584)

3.2 Voluntary recognition - This is allowed only if there is no other legitimate labor organization operating within the bargaining Unit.

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WHO HAS POWER TO RECOGNIZE? EMPLOYER may voluntarily recognize representation status of union ELEMENTS FOR VOLUNTARY RECOGNITION  Unorganized establishment  There is ONLY ONE legitimate labor organization operating within the bargaining unit If both elements are present, the employer MAY OPT to voluntarily recognize the union. 3.3 Consent election (Aligre vs. De Mesa, 237 SCRA 647) Consent election is an agreed one, the purpose merely being to determine the issue of majority representation of all of the workers in the appropriate bargaining unit. Dept. Order No. 40, Rule 8, Section 10. Consent Election; Agreement. – In case the contending unions agree to a consent election, the Med-Arbiter shall not issue a formal order calling for the conduct of certification election, but shall enter the fact of the agreement in the minutes of the hearing. The minutes of the hearing shall be signed by the parties and attested to by the MedArbiter. The Med-Arbiter shall, immediately thereafter, forward the records of the petition to the Regional Director or his/her authorized representative for the determination of the Election Officer by the contending unions through raffle. The first pre-election conference shall be scheduled within ten (10) days from the date of entry of agreement to conduct consent election. Section 23. Effects of consent election. – Where a petition for certification election had been filed, and upon the intercession of the Med-Arbiter, the parties agree to hold a consent election, the results thereof shall constitute a bar to the holding of a certification election for one (1) year from the holding of such consent election. Where an appeal has been filed from the results of the consent election, the running of the one-year period shall be suspended until the decision on appeal has become final and executory. Where no petition for certification election was filed but the parties themselves agreed to hold a consent election with the intercession of the Regional Office, the results thereof shall constitute a bar to another petition for certification election.

4. CERTIFICATION ELECTION AND PROCEDURE Art. 256-257, LC; BR R5 S1-9, IRR; Dept. Order No. 9 s1-9, Dept. Order No. 40-03 Rule VIII s1-25. (PLEASE SEE CHART “B”) 4.1

Two-fold objectives of certification election: a) To determine the appropriate bargaining unit; and b) To ascertain the majority representation of the bargaining representative, if the employees desire to be represented at all by anyone.

4.2

Who may and where to file petition for CE B5 R5 S1-2, IRR; Dept Order No. 40-03, R8, secs 1-25 

Who may file: General rule - any legitimate labor organization Exception – Employer, if requested to bargain collectively and the majority status of the labor organization is questionable 85

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Where to file: Mediation-Arbitration Branch, through the Regional Office which has jurisdiction over the principal office of the employer. Officer who will hear the petition is called the Med-Arbiter.

Form: If filed by legitimate labor organization, petition must be in writing and under oath, and must contain the following: (a) name of petitioning union, address and affiliation, if any; (b) name, address and nature of business of employer (c) description of appropriate bargaining unit, not including the supervisory employees (d) approximate number of employees in the alleged bargaining unit (e) names and addresses of othe rlegitimae labor orgns in the bargaining unit, if any (f) signature of 25% of all employees of the bargaining unit, where the establishment is organized (g) other relevant facts If filed by ER in accordance with Article 259 (a) name, address and nature of busienss (b) name, address of legitimate labor orgs in bargaining unit (c) approx. number of employees in bargaining unit (d) description of bargaining unit (e) other relevant facts

PROCEDURE IN FILING OF PETITION FOR CERTIFICATION ELECTION, Dept. Order No. 40-03, Rule 8, secs. 5-25 (a) Raffle of the case. – Upon the filing of the petition, the Regional Director or any of his/her authorized representative shall allow the party filing the petition to personally determine the Med-Arbiter assigned to the case by means of a raffle. Where there is only one Med-Arbiter in the region, the raffle shall be dispensed with and the petition shall be assigned to him/her. (b) Notice of preliminary conference. – Immediately after the raffle of the case or receipt of the petition, the same shall be transmitted to the Med-Arbiter, who shall in the same instance prepare and serve upon the petitioning party a notice for preliminary conference. The first preliminary conference shall be scheduled within ten (10) days from receipt of the petition. Within three (3) days from receipt of the petition, the Med-Arbiter shall cause the service of notice for preliminary conference upon the employer and incumbent bargaining agent in the subject bargaining unit directing them to appear before him/her on a date, time and place specified. A copy of the notice of preliminary conference and petition for certification election shall be posted in at least two conspicuous places in the establishment. [c] Preliminary Conference; Hearing. – The Med-Arbiter shall conduct a preliminary conference and hearing within ten (10) days from receipt of the petition to determine the following: o o o o o

the bargaining unit to be represented; contending labor unions; possibility of a consent election; existence of any of the bars to certification election under Section 3 of this Rule; and such other matters as may be relevant for the final disposition of the case. 86

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(d) Number of Hearings; Pleadings. – If the contending unions fail to agree to a consent election during the preliminary conference, the Med-Arbiter may conduct as many hearings as he/she may deem necessary, but in no case shall the conduct thereof exceed fifteen (15) days from the date of the scheduled preliminary conference/hearing, after which time the petition shall be considered submitted for decision. The Med-Arbiter shall have control of the proceedings. Postponements or continuances shall be discouraged. (e) Order/Decision on the petition. – Within ten (10) days from the date of the last hearing, the Med-Arbiter shall issue a formal order granting the petition or a decision denying the same. In organized establishments, however, no order or decision shall be issued by the Med-Arbiter during the freedom period. The order granting the conduct of a certification election shall state the following: o o o o o

the name of the employer or establishment; the description of the bargaining unit; a statement that none of the grounds for dismissal enumerated in the succeeding paragraph exists; the names of contending labor unions which shall appear as follows: petitioner union/s in the order in which their petitions were filed, forced intervenor, and no union; and a directive upon the employer and the contending union(s) to submit within ten (10) days from receipt of the order, the certified list of employees in the bargaining unit, or where necessary, the payrolls covering the members of the bargaining unit for the last three (3) months prior to the issuance of the order.

(f) Denial of the petition; Grounds. – The Med-Arbiter may dismiss the petition on any of the following grounds: o

the PETITIONER UNION IS NOT LISTED in the Department’s registry of legitimate labor unions or that ITS LEGAL PERSONALITY HAS BEEN REVOKED OR CANCELLED WITH FINALITY in accordance with Rule XIV of these Rules;

o

CONTRACT BAR RULE: the petition was filed before or after the freedom period of a duly registered collective bargaining agreement; provided that the sixty-day period based on the original collective bargaining agreement shall not be affected by any amendment, extension or renewal of the collective bargaining agreement; (for more detailed discussion, see notes below, page 91)

o

ONE YEAR BAR RULE: the petition was filed within one (1) year from entry of voluntary recognition or a valid certification, consent or run-off election and no appeal on the results of the certification, consent or runoff election is pending; (see notes below)

o

DEADLOCK BAR RULE: a duly certified union has commenced and sustained negotiations with the employer in accordance with Article 250 of the Labor Code within the one-year period referred to in Section 14.c of this Rule, or there exists a bargaining deadlock which had been submitted to conciliation or arbitration or had become the subject of a valid notice of strike or lockout to which an incumbent or certified bargaining agent is a party; (see notes below)

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o

in case of an organized establishment, FAILURE TO SUBMIT THE TWENTY-FIVE PERCENT (25%) support requirement for the filing of the petition for certification election.

(g) Release of Order/Decision within ten (10) days from the last hearing, – The Med-Arbiter shall release his/her order or decision granting or denying the petition personally to the parties on an agreed date and time. (h) Appeal. – The order granting the conduct of a certification election in an unorganized establishment shall not be subject to appeal. Any issue arising therefrom may be raised by means of protest on the conduct and results of the certification election. The order granting the conduct of a certification election in an organized establishment and the decision dismissing or denying the petition, whether in an organized or unorganized establishment, may be appealed to the Office of the Secretary within ten (10) days from receipt thereof. The appeal shall be verified under oath and shall consist of a memorandum of appeal, specifically stating the grounds relied upon by the appellant with the supporting arguments and evidence. Where to file appeal. – The memorandum of appeal shall be filed in the Regional Office where the petition originated, copy furnished the contending unions and the employer, as the case may be. Within twenty-four (24) hours from receipt of the appeal, the Regional Director shall cause the transmittal thereof together with the entire records of the case to the Office of the Secretary. Finality of Order/Decision. – Where no appeal is filed within the ten-day period, the Med-Arbiter shall enter the finality of the order/decision in the records of the case and cause the transmittal of the records of the petition to the Regional Director. Period to Reply. – A reply to the appeal may be filed by any party to the petition within ten (10) days from receipt of the memorandum of appeal. The reply shall be filed directly with the Office of the Secretary. (g) Decision of the Secretary. – The Secretary shall have fifteen (15) days from receipt of the entire records of the petition within which to decide the appeal. The filing of the memorandum of appeal from the order or decision of the Med-Arbiter stays the holding of any certification election. 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.

4.3

When to file petition for CE 4.3.1 If unorganized establishment (B5 R5 S3-6, IRR) 

Petition for certification election may be filed at any time by a legitimate labor organization

Note that the 25% signature requirement is not applicable. Why? Literal interpration of law in favor of labor. The Labor Code merely provides that it may be filed by any legitimate labor organization. 88

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4.3.2 If organized establishment (with existing majority union) a) No duly registered CBA – Petition for certification election may be filed at any time b) With duly registered CBA - DO 9, Rule XI, S3 1) Contract bar rule - only during freedom period (Art. 232, LC; B5 R5 S4, IRR; see previous notes) Note1: If a CBA has been duly registered in accordance with Article 231, a petition for CE or motion for intervention can only be entertained within 60 days prior to the expiry date of the CBA (freedom period). Note2: The operative phrase here is “DULY REGISTERED CBA”. Hence, if CBA has been executed, but parties did not register the CBA with the Department of Labor (Bureau of Labor Relations), then contract bar rule will not apply. A petition for certification election may still prosper in this instance. 2) One year bar rule; also known as certification year bar rule (B5 R5 S3, IRR; see previous notes) No certification election may be held within one (1) year from the date of the issuance of a final certification election result. Note1: This presupposes that the employees of the appropriate bargaining unit did not want to be represented by any union, or that having elected a majority union as exclusive bargaining representative, the latter is given one (1) year within which to negotiate with the employer. Note2: Where the one year period – known as the certification year during which the certified union is required to negotiate with the employer and the filing of a petition for CE is prohibited – has expired and the majority union fails to bring the employer to the bargaining table, the minority union may file petition for CE. (Kaisahan ng Manggagawa vs. Trajano, 201 SCRA 453) 3) Deadlock bar rule (B5 R5 S3, IRR; see previous notes) Neither may a representation question be entertained if, before the filing of a petition for certification election, a CBA deadlock to which an incumbent or certified bargaining agent is a party, had been submitted for conciliation or arbitration, or had become the subject of a Neither may a representation question be entertained if, before the filing of a petition for certification election, a CBA deadlock to which an incumbent or certified bargaining agent is a party, had been submitted for conciliation or arbitration, or had become the subject of a valid notice of strike/lock-out.

4.4 IN ANY EVENT, REGISTRATION OF UNION CANNOT BE ATTACKED COLLATERALLY DURING THE CERTIFICATION ELECTION PROCEEDINGS Dept. Order No. 40, Rule 8, sec. 15. Prohibited grounds for the denial/suspension of the petition. – All issues pertaining to the existence of 89

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employer-employee relationship, eligibility or mixture in union membership raised before the Med-Arbiter during the hearing(s) and in the pleadings shall be resolved in the same order or decision granting or denying the petition for certification election. Any question pertaining to the validity of petitioning union’s certificate of registration or its legal personality as a labor organization, validity of registration and execution of collective bargaining agreements shall be heard and resolved by the Regional Director in an independent petition for cancellation of its registration AND NOT BY THE MED-ARBITER IN THE PETITION FOR CERTIFICATION ELECTION, unless the petitioning union is not found in the Department’s roster of legitimate labor organizations or an existing collective bargaining agreement is unregistered with the Department.  LABOR ORGANIZATION; COLLATERAL PERSONALITY IS PROHIBITED.

ATTACK

ON

LEGAL

Holy Child Catholic School vs. Patricia Sto. Tomas G.R. No. 179146, 23 July 2013. (see also: Heritage Hotel vs. Secretary of Labor and NUWHRAIN, July 2014 supra). Question: May a petition for certification election be dismissed on the ground that the labor organization’s membership allegedly consists of supervisory and rank-and file employees? Answer: No. The concepts of a union and of a legitimate labor organization are different from, but related to, the concept of a bargaining unit. In case of alleged inclusion of disqualified employees in a union, the proper procedure for an employer like petitioner is to directly file a petition for cancellation of the union’s certificate of registration due to misrepresentation, false statement or fraud under the circ*mstances enumerated in Article 239 of the Labor Code, as amended. To reiterate, private respondent, having been validly issued a certificate of registration, should be considered as having acquired juridical personality which may not be attacked collaterally. Indeed, the purpose of a certification election is precisely to ascertain the majority of the employees’ choice of an appropriate bargaining unit – to be or not to be represented by a labor organization and, if in the affirmative case, by which one.  IMPORTANT J. VELASCO CASE: Eagle Ridge Golf and Country Club vs. Court of Appeals and Eagle Ridge Union, G.R. No. 178989, 18 March 2010. – Substantial compliance of the requirements for ratification of the union constitution and bylaws; will not deter holding of the certification elections Facts: Union filed a petition for certification election; company opposed on account of alleged misrepresentation and fraud in the ratification of the constitution and by-laws viz., (a) there were 30 members alleged in the application when there were only 26 members in the organizational meeting; and (b) one of the signatures for the ratification was allegedly forged. SC decision: A scrutiny of the records fails to show any misrepresentation, false statement, or fraud committed by EREU to merit cancellation of its registration. Hence, petition for certification election must be granted. The Union submitted the required documents attesting to the facts of the organizational meeting on December 6, 2005, the election of its officers, and the adoption of the Unions constitution and by-laws. It had a total of 30 employees when it applied on December 19, 2005 for registration. The Union thereby complied with the mandatory minimum 20% membership requirement under 90

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Art. 234(c). Of note is the undisputed number of 112 rank-and-file employees in Eagle Ridge, as shown in the Sworn Statement of the Union president and secretary and confirmed by Eagle Ridge in its petition for cancellation. The Union has sufficiently explained the discrepancy between the number of those who attended the organizational meeting showing 26 employees and the list of union members showing 30. The difference is due to the additional four members admitted two days after the organizational meeting as attested to by their duly accomplished Union Membership forms. Consequently, the total number of union members, as of December 8, 2005, was 30, which was truthfully indicated in its application for registration on December 19, 2005. The fact that six union members, indeed, expressed the desire to withdraw their membership through their affidavits of retraction will not cause the cancellation of registration on the ground of violation of Art. 234(c) of the Labor Code requiring the mandatory minimum 20% membership of rank-and-file employees in the employees union. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. With the withdrawal of six union members, there is still compliance with the mandatory membership requirement under Art. 234(c), for the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. Ada’s comment: Note that this case was originally filed before the promulgation of Republic Act No. 9481, and as such, the employer was then allowed to oppose any application for registration as a legitimate labor organization, or the filing of the petition for certification election. With the present prohibition, employers can no longer file any opposition in this ground. Note further the prevailing ruling of the Supreme Court that the registration of the union cannot be collaterally attacked in a petition for certification election. 

CERTIFICATION ELECTION; PENDENCY OF A PETITION FOR CANCELLATION OF UNION REGISTRATION DOES NOT PRECLUDE COLLECTIVE BARGAINING. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, 23 February 2011. -- Respondent union filed a petition for certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency of a petition for cancellation of the union’s registration. The DOLE Secretary ruled in favor of the legitimacy of the respondent as a labor organization and ordered the immediate conduct of a certification election. Pending appeal in the Court of Appeals, the petition for cancellation was granted and became final and executory. Petitioner argued that the cancellation of the union’s certificate of registration should retroact to the time of its issuance. Thus, it claimed that the union’s petition for certification election and its demand to enter into collective bargaining agreement with the petitioner should be dismissed due to respondent’s lack of legal personality. The Court ruled that 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 91

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union filed its petition, it still had the legal personality to perform such act absent an order cancelling its registration.

4.5 THE INCLUSION OF UNION MEMBERS OF EMPLOYEES OUTSIDE THE BARGAINING UNIT NO LONGER A GROUND FOR CANCELLATION OF UNION REGISTRATION 

Republic Act No. 9481, Sec. 9. A new provision, Article 245-A is inserted into the Labor Code to read as follows: “ART. 245-A. Effect of Inclusion as Members of Employees Outside the Bargaining Unit. - The inclusion as union members of employees outside the bargaining unit shall not be a ground for the cancellation of the registration of the union. Said employees are automatically deemed removed from the list of membership of said union.”

5. REQUIREMENTS FOR VALID CERTIFICATION ELECTION (Dept. Order No.9, Section 12, Rule XIII; Dept Order No. 40-03 Rule 9)

REMEMBER: DOUBLE MAJORITY RULE 5.1 TO FIND OUT IF THERE IS A VALID ELECTION: To have a valid election, a majority of all eligible voters in the appropriate bargaining unit must have CAST their votes (FIRST MAJORITY RULE -- JUST COUNT HOW MANY VOTED). 5.2 TO FIND OUT WHO WON THE ELECTIONS: The Union obtaining a majority of ALL VALID VOTES cast shall be certified as sole and exclusive bargaining representative of the workers in the appropriate bargaining unit. (SECOND MAJORITY RULE – JUST COUNT IF THERE IS A UNION THAT GARNERED A MAJORITY OF THE VALID VOTES CAST)

5.3 Note for computation of eligible voters: base number is not limited to the members of the union, but shall include both union and non-union members, as long as they are part of the bargaining unit. Example1: 100 members in the appropriate bargaining unit Election results: Union A – 40 No Union - 2 Union B – 5 Illegal/stray votes: 10 Q1: Is there a valid election? Yes. 57 members (requirement: 51 members only) cast their votes Q2: Who won? Union A. Out of 47 valid votes, Union A won majority thereof (47 divided by 2 = 23.5 + 1 = 24.5) Example2: 100 members in the appropriate bargaining unit Election results: Union A – 40 No Union - 2 Union B – 5 Illegal/stray votes: 0 Q1: Is there a valid election? No valid election. Only 47 voted. A majority of the members of the appropriate bargaining unit did not vote. Q2: Remedy: Re-run or repeat the certification election.

5.4 RUN-OFF ELECTION, REQUISITES (Dept. Order No. 9, Rule XIII): a) b)

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c) d) e)

No choice receiving a majority of the valid votes cast (SECOND MAJORITY RULE NOT COMPLIED); The total number of votes for all contending unions is at least 50% of the number of votes cast Between the two labor unions receiving the two highest number of votes.

Example: 100 members in the appropriate bargaining unit. All members cast their votes. Election results: Union A – 24 Union C - 10 Union B – 15 No Union - 5 Total number of votes: 54 valid votes, with the rest declared illegal or stray (abstentions are not valid votes either). Q1: Is the election valid? Yes, because everyone voted. Q2: Who won? None of the three unions won, because not one received a majority of the valid votes cast. (Majority is 28 votes) Q3: Is run-off election a remedy here? No. The total number of votes for all contending unions is LESS than 50% of ALL of the number of votes cast (Unions A, B and C garnered 49 votes, or at least one vote short of the requirement). Remedy: Re-election or repeat election (or re-run election, per Pascual)

6. IMPORTANT CASE: NUHWRAIN MANILA PAVILLION VS. MANILA PAVILLION HOTEL, G.R. No. 181531, 31 July 2009 citing Airtime Specialist vs. Calleja – NOT ASKED IN 2011 2012 2013 OR 2014 BAR. Issue: May the probationary employees be allowed to vote in the certification elections, in the light of a CBA provision explicitly excluding them in the vote? Answer: YES. The provision in the CBA disqualifying probationary employees from voting cannot override the Constitutionally-protected right of workers to self-organization, as well as the provisions of the Labor Code and its Implementing Rules on certification elections and jurisprudence thereon. A law is read into, and forms part of, a contract. Provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy. In a certification election, all rank and file employees in the appropriate bargaining unit, whether probationary or permanent are entitled to vote. This principle is clearly stated in Art. 255 of the Labor Code which states that the "labor organization designated or selected by the majority of the employees in an appropriate bargaining unit shall be the exclusive representative of the employees in such unit for purposes of collective bargaining." Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank and file employees, probationary or permanent, have a substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as basis for eligibility in supporting the petition for certification election. The law refers to "all" the employees in the bargaining unit. All they need to be eligible to support the petition is to belong to the "bargaining unit." 2014 BAR QUESTION: Liwayway Glass had 600 rank-and-file employees. Three rival unions – A, B, and C ‒ participated in the certification elections ordered by the Med-Arbiter. 500 employees voted. The unions obtained the following votes: A-200; B-150; C-50; 90 employees voted "no 93

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union"; and 10 were segregated votes. Out of the segregated votes, four (4) were cast by probationary employees and six (6) were cast by dismissed employees whose respective cases are still on appeal. (10%) (A) Should the votes of the probationary and dismissed employees be counted in the total votes cast for the purpose of determining the winning labor union? (B) Was there a valid election? (C) Should Union A be declared the winner? (D) Suppose the election is declared invalid, which of the contending unions should represent the rank-and-file employees? (E) Suppose that in the election, the unions obtained the following votes: A-250; B-150; C50; 40 voted "no union"; and 10 were segregated votes. Should Union A be certified as the bargaining representative? ANSWER: (A) Yes. Under Article 256 of the Labor Code, all employees in the appropriate bargaining unit cannot be denied the right to vote in the certification election. Probationary employees are entitled to vote. (NUWHRAIN – Manila Pavilion Chapter vs. Secretary of Labor, G.R. No. 181531, 31 July 2009.) Dismissed employees whose cases are still pending are qualified to vote. (Yokohama Tire Philippines Inc., vs. Yokohama Employees Union, G.R. No. 159553, 10 December 2004; 539 SCRA 556 [2007].) (B) Yes. To have a valid election, majority of all eligible voters must have cast their votes. 500 employees voted out of 600 rank-and-files employees. This is more than the majority of 301 out of the 600 eligible voters. (C) No, because Union A did not get the majority of the valid votes cast. There were 500 valid votes cast, majority of which is 251. Union A got only 200 votes. (D) None of them can be declared to represent the rank-and-file employees because none obtained a majority of the valid votes cast. (E) No. With only 250 votes, Union A still failed to get the majority of the valid votes cast. There were 500 eligible voters, the majority of which is 251. However, since the segregated votes will materially affect the result of the certification election, the same will have to be resolved and counted. In the event Union A will be able to obtain at least one (1) vote from the segregated votes, Union A will now have 251 votes, enough for it to be certified as the sole and exclusive bargaining agent of the rank-and-file employees.

K. INTER-UNION AND INTRA-UNION DISPUTES (DOLE Dept. Order No. 40-03, series of 2003) 1. WHAT ARE INTER OR INTRA-UNION DISPUTES: (sec 1&2) (a) cancellation of registration of a labor organization filed by its members or by another labor organization; (b) conduct of election of union and workers’ association officers/nullification of election of union and workers’ association officers; (c) audit/accounts examination of union or workers’ association funds; (d) deregistration of collective bargaining agreements; (e) validity/invalidity of union affiliation or disaffiliation; 94

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(f) validity/invalidity of acceptance/non-acceptance for union membership; (g) validity/invalidity of impeachment/expulsion of union and workers association officers and members; (h) validity/invalidity of voluntary recognition; (i) opposition to application for union and CBA registration; (j) violations of or disagreements over any provision in a union or workers’ association constitution and by-laws; (k) disagreements over chartering or registration of labor organizations and collective bargaining agreements; (l) violations of the rights and conditions of union or workers’ association membership; (m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining agreements; (n) such other disputes or conflicts involving the rights to self-organization, union membership and collective bargaining – (1) between and among legitimate labor organizations; (2) between and among members of a union or workers’ association. Other related labor relations disputes shall include any conflict between a labor union and the employer or any individual, entity or group that is not a labor organization or workers’ association. This includes: (1) cancellation of registration of unions and workers associations; and (2) a petition for interpleader. 2. WHAT ARE THE EFFECTS OF PENDENCY OF INTER/INTRA-UNION DISPUTE? (Sec 3)  PARTIES TO REMAIN STATUS QUO ANTE. -- “The rights, relationships and obligations of the parties litigants against each other and other parties-in-interest prior to the institution of the petition shall continue to remain during the pendency of the petition and until the date of finality of the decision rendered therein. Thereafter, the rights, relationships and obligations of the parties litigants against each other and other parties-in-interest shall be governed by the decision so ordered.  INTER/INTRA-UNION DISPUTE SHALL NOT BE CONSIDERED PREJUDICIAL QUESTION. -- The filing or pendency of any inter/intra-union dispute and other related labor relations dispute is not a prejudicial question to any petition for certification election and shall not be a ground for the dismissal of a petition for certification election or suspension of proceedings for certification election. 3. WHO MAY FILE INTER OR INTRA-UNION DISPUTE (Sec 4):  Any legitimate labor organization or member(s) thereof specially concerned may file a complaint or petition involving disputes or issues enumerated in (a) to (n) of Section 1.  Any party-in-interest may file a complaint or petition involving disputes or issues regarding cancellation of registration of unions and workers associations; and/or a petition for interpleader  Where the issue involves the entire membership of the labor organization, the complaint or petition shall be supported by at least thirty percent (30%) of its members. 4. WHERE TO FILE INTER/INTRA-UNION DISPUTES. 4.1 With Regional Office that issued the certificate of registration or certificate of creation of chartered local, for the following complaints -95

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 Complaints or petitions involving labor unions with independent registrations, chartered locals, workers’ associations, its officers or members  Petitions for cancellation of registration of labor unions with independent registration, chartered locals and workers association shall be resolved by the Regional Director. He/She may appoint a Hearing Officer from the Labor Relations Division.  petitions for deregistration of collective bargaining agreements  Other inter/intra-union disputes and related labor relations disputes shall be heard and resolved by the Med-Arbiter in the Regional Office. 4.2 With Bureau of Labor Relations, for the following complaints - Complaints or petitioners involving federations, national or industry unions, trade union centers and their chartered locals, affiliates or member organizations, its officers or member organizations. (Note, if filed with the Regional Office, the complaint/petition shall stil be heard and resolved by the Bureau). When two or more petitions involving the same parties and the same causes of action are filed, the same shall be automatically consolidated. 5.

IMPORTANT 2012 CASE: INTRA-UNION DISPUTES. --. De la Salle University vs. De la Salle University Employees Association (DLSUEA-NAFTEU), G.R. No. 169254. 23 August 2012. QUESTION: In cases where there are two contending factions of officers in an interunion dispute (of the majority union), may the employer unilaterally refuse to remit union dues to on the pretext that there is an on-going intra-union dispute between the two factions? Is the non-remittance of union dues constitutive of ULP as an interference in internal affairs of the Union? ANSWER: UNIVERSITY CANNOT REFUSE TO REMIT AND IS GUILTY OF ULP. “[T]he University [is] guilty of refusal to bargain amounting to an unfair labor practice under Article 248(g) of the Labor Code. The University is bound to comply with its obligations under the CBA, including the remittance of union dues. In unilaterally refusing to do so, it has committed ULP, as such an act constituted an intentional avoidance of a duty imposed by law. The issue of union leadership is distinct and separate from the duty to bargain. In fact, BLR Director Cacdac clarified that there was no void in [respondent’s] leadership. For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals’ finding – that petitioner erred in suspending collective bargaining negotiations with the union and in placing the union funds in escrow considering that the intra-union dispute between the Aliazas and Bañez factions was not a justification therefor — is binding herein.”

6.

IMPORTANT CASE: MAY THE UNION COMPROMISE THE INDIVIDUAL MONEY CLAIMS OF THE WORKERS? (Dusit Hotel Nikko vs. National Union of Workers in Hotel Restaurant and Allied Industries (Nuwhrain), 09 August 2005) First, even if a clear majority of the union members agreed to a settlement with the employer, the Union has no authority to compromise the individual claims of the members who did not consent to the settlement. Rule 138, Sec 23 of the Rules of Court requires a special authority before an attorney may compromise his client’s litigation. The authority to compromise cannot lightly be presumed and shold be duly established by evidence.

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In this case, the minority union members did not authorize the Union to compromise their individual claims. Absent a showing of the Union’s special authority to compromise (SPA) the individual claims of private respondents for reinstatement and backwages, there is no valid waiver of the aforesaid rights. ARE THE DISSENTING MINORITY UNION MEMBERS BOUND BY THE MAJORITY DECISION APPROVING A COMPROMISE AGREEMENT? No. Money claims due to laborers cannot be the object of settlement or compromise effected by the Union or counsel, WITHOUT THE SPECIFIC INDIVIDUAL CONSENT OF EACH LABORER CONCERNED. The beneficiaries are the individual complainants themselves. The Union to which they belong can only assist them but cannot decide for them. For a waiver thereof to be legally effective, the individual consent or ratification of the workers or employees involved must be show. Neither the officers nor the majority of the Union had any authority to waive the accrued rights pertaining to the dissenting minority members, even under a Collective Bargaining Agreement which provided for a Union shop.

L. COLLECTIVE BARGAINING: NEGOTATIONS AND AGREEMENT (PLEASE SEE CHART/DIAGRAM “C”) 1. COLLECTIVE BARGAINING DEFINED: Collective bargaining which is defined as “negotiations towards a collective agreement”, is one of the democratic frameworks under the New Labor Code, designed to stabilize the relation between labor and management, and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the union, and is characterized as a legal obligation. Labor Code, Article 252. Meaning of duty to bargain collectively. -The duty to bargain collectively means the performance of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to wages, hours of work and all other terms and conditions of employment including proposals for adjusting any grievance or question arising under such agreement and executing a contract incorporating such agreements if requested by either party, but such duty does not compel any party to agree to a proposal or to make any concession.” (Underscoring supplied.) “ Labor Code. Art. 254. Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both 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 and/or until a new agreement is reached by the parties.”

2. GENERAL PRINCIPLES IN BARGAINING: 2.1 Standard of conduct: GOOD FAITH IN BARGAINING. 97

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ADA’S NOTES: This implies earnest efforts exerted by the parties toward a reasonable compromise or agreement acceptable to both parties. Contrast this with the following concepts:

a) “surface bargaining”, which has been defined as "going through the motions of negotiating" without any legal intent to reach an agreement. Note that the Supreme Court has even noted that “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. It involves the question of whether an employer’s conduct demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.” Standard Chartered Bank Employees Union (NUBE) vs. Secretary Nieves Confesor and Standard Chartered Bank, GR No. 11497, 16 June 2004.

b) “individual bargaining”. “It is an unfair labor practice for an employer operating under a collective bargaining agreement to negotiate or to attempt to negotiate with his employees individually in connection with changes in the agreement. And the basis of the prohibition regarding individual bargaining with the strikers is that although the union is on strike, the employer is still under obligation to bargain with the union as the employees' bargaining representative.” (Insular Life Assurance Co., Ltd., Employees-NATO vs. Insular Life Ass. Co. Ltd., 76 SCRA 50 citing Melo Photo Supply Corporation vs. National Labor Relations Board, 321 U.S. 332).

c) IMPORTANT 2014 CASE: Tabangao Shell Refinery Employees Association vs. Pilipinas Shell Petroleum Corporation, G.R. No. 170007, 07 April 2014. Question: Is a lump-sum amount in lieu of wage increases during CBA negotiations tantamount to bargaining in bad faith? Answer: NO! The duty to bargain does not compel any party to accept a proposal, or make any concession, as recognized by Article 252 of the Labor Code, as amended. The laws 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. Thus, the Company’s insistence on a bargaining position to the point of stalemate does not establish bad faith. The Company’s offer[,] a lump sum of Php88,000 per year, for each covered employee in lieu of a wage increase cannot, by itself, be taken as an act of bargaining in bad faith. The minutes of the meetings of the parties, show that they both exerted their best efforts, to try to resolve the issues at hand. Many of the proposed improvements or changes, were either resolved, or deferred for further discussion. It is only on the matter of the wage increase, that serious debates were registered. However, the totality of conduct of the Company as far as their bargaining stance with the Union is concerned, does not show that it was bargaining in bad faith. 2.2 DUTY TO BARGAIN collectively does NOT compel any party to agree to any proposal nor to make any concession by virtue thereof (Article 253, Labor Code), nor are the parties obliged to reach an agreement. (Union of Filipro Employees vs. Nestle Philippines, G.R. Nos. 158930-31, 03 March 2008).

 Employer is not under obligation to bargain unless the Union shall have been certified as the exclusive bargaining agent in a certification election duly called 98

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for such purpose, and that the latter shall have forwarded to the employer its bargaining demands.  When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate or modify such agreement during its lifetime, EXCEPT during the freedom period of at least sixty (60) days prior to the expiration day (“freedom period”).

 Note AUTOMATIC RENEWAL CLAUSE as regards expired CBA. Under this clause, the terms and conditions of the existing CBA shall continue to be in full force and effect during the sixty-day freedom period (Union of Filipro Ees. vs. NLRC, 192 SCRA 414), or until a new CBA is reached. Thus, despite the lapse of the effectivity of the old CBA, the law considers the same as continuing in full force and effect until a new CBA is negotiated and entered into. (Lopez Sugar Corporation vs. FFW, G.R. Nos. 75700-01, 30 Aug. 1990).

 Mandatory provisions which must be included in the negotiations; otherwise, the CBA will not be registered: (a) no strike-no lockout clause; (b) grievance machinery. Note further that minimum standards must likewise be complied with; otherwise, the DOLE will not allow its registration. 2.3 Disclosure of information (e.g., Financial Statements). – In collective bargaining, and upon request, the parties shall make available such up-to-date financial information on the economic situation of the undertaking, which is normally submitted to relevant government agencies, as is material and necessary for meaningful negotiations. Where the disclosure of some of this information could be prejudicial to the undertaking, its communication may be made condition upon a commitment that it would be regarded as confidential to the extent required. The information to be made available may be agreed upon between the parties to collective bargaining.

3. TWO KINDS OF BARGAINING: 3.1 SINGLE ENTERPRISE BARGAINING. – One where any voluntarily recognized or certified labor union may demand negotiations with its employer for terms and conditions of work covering employees in the bargaining unit concerned. 3.2 MULTIPLE EMPLOYER BARGAINING. – One where a legitimate labor union(s) and employers may agree in writing to come together for the purpose of collective bargaining, provided: (a) only legitimate labor unions who are incumbent exclusive bargaining agents may participate and negotiate in multi-employer bargaining; (b) only employers with counterpart legitimate labor unions who are incumbent bargaining agents may participate and negotiate in multiemployer bargaining; and (c) only those legitimate labor unions who pertain to employer units who consent to multi-employer bargaining may participate in multiemployer bargaining.

4. UNION SECURITY CLAUSES. -- 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. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010). 99

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4.1 General rule on coverage of union security clause: All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. Exception: However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely: a) employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds (Elizalde Rope Workers case); b) employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect (Art. 248 [e]); c) confidential employees who are excluded from the rank and file bargaining unit; and d) employees excluded from the union shop by express terms of the agreement.

(Bank of the Philippine Islands vs. BPI Employees Union - Davao Chapter Federation of Unions in BPI Unibank, G.R. No. 164301, 10 August 2010; En Banc.).

4.2 Kinds of union security clauses: o

Closed Shop. – A form of union security whereby only union members can be hired and the workers must remain union members as a condition of continued employment. (Juat vs. Court of Industrial Relations, 122 Phil. 794, cited in Philippine Law Dictionary by Moreno, 2nd Edition.) It is one where 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. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).

o

Union Shop. — There is union shop where an employer may hire new employees, but once they become regular employees, they are required to join the union within a certain period as a condition for their continued employment. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010).

o

Modified Union Shop Agreement. -- A union shop agreement with a provision exempting certain employee groups from its operation, such as old employees already with the company at a designated date, key personnel, persons with religious scruples in joining labor unions. (Ibid.)

o

Maintenance of membership shop. -- 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. (PICOP Resources, Inc. (PRI) vs. Anacleto L. Taneca et. al., G.R. No. 160828, 09 August 2010; see also: Bank of Philippine Islands vs. BPI Employees Union – Davao Chapter – Federation of Unions in BPI Unibank, G.R, No. 164301, 10 August 2010, En Banc.)

o

Open shop -- An arrangement on recruitment whereby an employer may hire any employee, union member or not, but the new employee must join the union within a specified time and remain a member in good standing. (LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August 1997).

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o

Agency shop -- An arrangement whereby non-members of the contracting union must pay the union a sum equal to union dues known as agency fees for the benefits they received as a consequence of the bargaining negotiations effected through the efforts of the union. (LABSTAT Updates of the Department of Labor and Employment, Vol. 1 No. 12, August 1997).

IMPORTANT J. VELASCO CASE: Alabang Country Club vs. NLRC and Alabang Country Club Independent Employees Union, G.R. No. 170287, 14 February 2008 – Reiterating previous decisions on elements for a valid termination on account of union security clauses. -- 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. These requisites constitute just cause for terminating an employee based on the CBA’s union security provision. The employees were validly terminated in conformity with Union security clause, after management duly confirmed that there was basis for their union expulsion viz., malversation of union funds.

5.

ULP IN COLLECTIVE BARGAINING: a.

Bargaining in bad faith. Individual bargaining – see previous notes Surface bargaining – see previous notes.

b.

Refusal to bargain. -- The employer, by its refusal to bargain, is guilty of violating the duty to bargain collectively in good faith. Hence, the Union’s draft CBA proposal may unilaterally be imposed upon the employer as the collective bargaining agreement to govern their relationship. (Divine World vs. Secretary of Labor, 213 SCRA 759 [1992].)

c.

Gross violation of CBA provisions.

6. 2010-2015 CASES: 6.1

Philippine Electric Corporation (Philec) vs. CA, G.R. No. 168612, 10 December 2014. -- nature of collective bargaining agreements; training allowance increases. Facts: Lipio and Ignacio were rank-and-file workers, who were selected for possible promotion to supervisory positions. In accordance with company policy, they were required to go on training with payment of a training allowance, and if performance evaluation was satisfactory, then they will be promoted. While undergoing training, the Company and Union renegotiated and executed a new CBA, providing for increased training allowance among others. Union thereafter requested that the Company increase the training allowance of Lipio and Ignacio to conform with the CBA provisions. Management refused, arguing that increased training allowance was not applicable to Lipio and Ignacio, having been selected PRIOR to the execution of the new CBA, and that they were to be considered as supervisory employees already. Due to management refusal, Union alleged ULP for malicious refusal to comply with CBA provisions and raised it as a grievance, then on to voluntary arbitration. Voluntary arbitrator ruled in favor of the Union. 101

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Issue: WON management refusal is tantamount to ULP? WON Lipio and Ignacio are to be considered supervisory employees as to render the CBA provision on training allowance for rank-and-file employees inapplicable to them? Decision: For union. 1. A collective bargaining agreement is “a contract executed upon the request of either the employer or the exclusive bargaining representative of the employees incorporating the agreement reached after negotiations with respect to wages, hours of work and all other terms and conditions of employment, including proposals for adjusting any grievances or questions arising under such agreement.” 2. SC affirmed Voluntary Arbitrator’s ruling that the refusal by management of the Union’s demand for payment of training allowance is not “malicious or flagrant” refusal as to be considered as ULP. However, the schedule of training allowance stated in the memoranda served on Lipio and Ignacio, Sr. did not conform to the new collective bargaining agreement. The increased training allowance should apply to Lipio and Ignacio 3. Lipio and Ignacio are NOT to be considered “supervisory” employees. At the time that they were selected for training, Lipio and Ignacio were admittedly rank-and-file employees and as such, entitled to the payment of the increased training allowances under the new CBA. Thus, it is clear that training is a condition precedent for promotion. Selection for training does not mean automatic transfer OUT of the bargaining unit of the rank-and-file. 6.2

2014 CASE: Gross violation of CBA. University Of Santo Tomas Faculty Union vs. University Of Santo Tomas, G.R. No. 203957, 30 July 2014. – Union filed a case against University for ULP, on account of alleged gross violation of CBA, for alleged refusal by the University to pay accrued and cumulated hospitalization and medical benefits for specified years. The Supreme Court ruled that instant complaint involves an issue of underpayment of hospital and medical benefits fund under a Collective Bargaining Agreement and not unfair labor practices. As such, the case should have been forwarded to the grievance machinery and Voluntary Arbitration, as both Labor Arbiter and NLRC had no jurisdiction over the same. However, despite the lack of jurisdiction, the SC ruled on the issues presented, “in cognizance of the fact that a remand to the voluntary arbitration stage will give rise to the possibility that this case will still reach this Court through the parties’ appeals. Furthermore, it does not serve the cause of justice if We allow this case to go unresolved for an inordinate amount of time.” As regards the substantive issue on unpaid hospital and medical benefits, the Union claims that UST’s contributions should have been cumulative, with the amount appropriated for each year carried over to the succeeding years and is chargeable to the tuition fee increment. University argues that Union’s claims are not supported by the economic provisions of the 1996-2001 CBA and the 1999 Memorandum of Agreement reproduced above. We wholly agree with UST’s interpretation of the economic provisions of the 1996-2001 CBA, the 1999 Memorandum of Agreement, and the 2001-2006 and 2006-2011 CBAs, as well as its remittances to the fund for the covered periods. UST faithfully followed the clear provisions of these agreements. The 1996-2001 CBA established the fund, with an initial remittance of P2, 000, 000.00 for school year 1996-1997. UST bound itself to augment the fund by 102

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contributing P1,000,000.00 per year for school years 1997-1998 and 1998-1999. The 1999 Memorandum of Agreement merely stated that UST will deposit P4,000,000.00 to the fund. Express mention of the carryover is found only in Section 1, Article XX of the 2001-2006 CBA: "It is understood that the amount appropriated for each year is carried over to the succeeding years xx x." The 1996-2001 CBA does not have this carry-over provision. Note that the Union never questioned this alleged failure to carry over the alleged hospital and medical fund remittance during the lifetime of the 1996-2001 CBA, the 1999 Memorandum of Agreement, and the 2001-2006 CBA. It was only late 2006 that the Union raised this issue. Supreme Court said that while it recognizes Article 1702 of the Civil Code, which provides that "[i]n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the labourer; “this Court is also well aware that when the provisions of the CBA are clear and unambiguous, the literal meaning of the stipulations shall govern. In the present case, the CBA provisions pertaining to the fund are clear and should be interpreted according to their literal meaning.” 6.3 IMPT 2014 ULP CASE NOT ASKED IN 2014 BAR: WHERE THE EMPLOYER HAS ORCHESTRATED ACTIVITIES TO SUBVERT CERTIFICATION ELECTIONS. (T & H Shopfitters Corporation/ Gin Queen Corporation et. al. vs. T & H Shopfitters Corporation/Gin Queen Workers Union, et. al., G.R. No. 191714, 26 February 2014, J. Mendoza). The various questioned acts of petitioners show interference in the right to selforganization by the employees, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a rotational basis for union members. Indubitably, the various acts of petitioners, taken together, reasonably support an inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their right to self-organization. The Court is of the considered view that petitioners’ undisputed actions prior and immediately before the scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in selecting their exclusive bargaining representative. 6.4 IMPORTANT: IS SUSPENSION OF CBA NEGOTIATION AN UNFAIR LABOR PRACTICE? (Manila Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, 29 September 2010)

Answer: NO. Article 2523 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. In this case, 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.

3

Renumbered as Article 262, Labor Code. 103

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6.5

QUESTION: MAY THE PARTIES AGREE TO EXTEND THE EXCLUSIVE BARGAINING STATUS BEYOND FIVE YEAR PERIOD? -- FVC Labor UnionPhilippine Transport and General Workers Organization (FVCLU-PTGWO) Vs. Samasamang Nagkakaisang Manggagawa sa FVC-Solidarity of Independebt and General Labor Organization (SANAMA-FVC-SIGLO), G.R. No. 176249, November 27, 2009.

ANSWER: NO. While the parties may agree to extend the CBA’s original fiveyear 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 (management and union) to agree upon. In other words, despite an agreement for a CBA with a life of more than five 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. In the present case, the CBA was originally signed for a period of five years, XXX with a provision for the renegotiation of the CBA’s other provisions at the end of the 3rd year of the five-year CBA term. Thus, prior to expiration on January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003. The negotiated extension of the CBA term has no legal effect on the FVCLUPTGWO’s exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMASIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLUPTGWO’s exclusive bargaining status, was seasonably filed.

2015 LABOR BAR QUESTION: (XVII) The Collective Bargaining Agreement (CBA) between Libra Films and its union, Libra Films Employees' Union (LFEU), contains the following standard clauses: 1. Maintenance of membership; 2. Check off for union dues and agency fees; and 3. No strike, no lock-out. While Libra Films and LFEU are in re-negotiations for an extension of the CBA, LFEU discovers that some of its members have resigned from the union, citing their constitutional right to organize (which includes the right NOT to organize). LFEU demands that Libra Films institute administrative proceedings to terminate those union members who resigned in violation of the CBA' s maintenance of membership clause. Libra Films refuses, citing its obligation to remain a neutral party. As a result, LFEU declares a strike and after filing a notice of strike and taking a strike vote, goes on strike. The union claims that Libra Films grossly violated the terms of the CBA and engaged in unfair labor practice. (a) Are LFEU's claims correct? Explain. (4%) (b) Distinguish between a "closed shop" clause and a "maintenance of membership" clause. (2%) (c) Distinguish between "union dues" and "agency fees." (2%)

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Answer: (a) LFEU’s claims are not correct. Violation of the terms of the CBA, except those which are gross in character, shall no longer be treated as an unfair practice but as a grievance under the Collective Bargaining Agreement. (Labor Code; Silva v. NLRC, 274 SCRA 159 [1997]). Violations of the provisions of the CBA are gross in character when there is a flagrant and/or malicious refusal to comply with the economic provisions thereof. (Article 261, Labor Code.) What appears to be violated in this case is the security clause of the CBA on maintenance of membership, which is not an economic provision. (b) Closed shop is a form of union security whereby only union members can be hired and the workers must remain union members as a condition of continued employment. (Juat vs. CIR, 122 Phil. 794.) Whereas, Maintenance of Membership is one where the 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 of continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. (BPI vs. BPI Employees Union-Davao Chapter-Federation of Unions, G.R. No. 164301, 10 August 2010.) (c) Union dues is a levy of fees upon Union members by express provision of the (a) union constitution or (b) union by-laws or (c) resolution of a majority of the membership present at a meeting called for the purpose. On the other hand, Agency fees are a levy upon non-union members who are part of the bargaining unit who partook of the benefits of the CBA.

M. STRIKES, PICKETING AND LOCK-OUTS (PLEASE SEE GRAPHS “E2” AND “E-3”) 1.

Who may declare a strike or lock-out? (B5,R13, S2, IRR) General Rule: Any certified or duly recognized bargaining representative may declare a strike in cases of bargaining deadlocks or ULP. Exception: In the absence of a certfied or duly recognized bargaining representative, any legitimate labor organization may declare a strike, BUT ONLY ON THE GROUND OF ULP.

2.

Requisites of a valid strike: (a) Must have a lawful purpose; (b) conducted through lawful means; and (c) must be in compliance with the procedural requirements under the Labor Code

2.1 Lawful purpose The Labor Code allows only two (2) kinds of strike/lockout: (a) Economic strike - is intended to force wage and other concessions from the employer which is not required by law to grant. Usually, the consequence of a deadlock in collective bargaining negotiations; and (b) ULP strike - is called against the unfair labor practices of the employer, usually for the purpose of making him desist from further committing such practices. 105

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Note 1 - Examples of ULP under Articles 248-249, LC: (1) interference, restraint or coercion of the employees in their exercise of right to selforganization; (2) yellow-dog contracts, e.g., stipulation requiring employee not to join unions, or for employee to withdraw from union as condition for continued employment; (3) refusal to collectively bargain; (4) economic inducement and/or discrimination in regard to wages, hours of work, in order to encourage/discourage union membership; (5) contracting out of services/functions being performed by union members, where such will interfere in the exercise of right to self-org., among others. IMPORTANT J. VELASCO CASE: UST FACULTY UNION VS. UST AND FR. ROLANDO DELA GOZA, G.R. No. 180892, 07 April 2009. – Burden of proof is upon the entity alleging bad faith and ULP. UST Employees Union had two factions: one group led by former President Marino, and the other group by President Gamilla. It appears that the second group was elected during a faculty convocation, which was allegedly called for at the behest of the University. University thereafter negotiated with the new leadership under President Gamilla. Marino’s group filed a ULP case against the University, alleging that: (1) Atty. Domingo Legaspi, the legal counsel for the UST, conducted a faculty meeting in his office, supplying derogatory information about the Mario Group; (2) respondents provided the Gamilla Group with the facilities and forum to conduct elections, in the guise of a convocation; and (3) respondents transacted business with the Gamilla Group such as the processing of educational and hospital benefits, deducting USTFU dues from the faculty members without turning over the dues to the Mario Group, and entering into a CBA with them.

Question: Is UST guilty of ULP? Answer: NO. Burden of proof is upon Marino Group to establish unfair labor practice, that by the acts alleged to have been committed by the University, the Union’s rights to self-organization have been trampled. The Memorandum issued by the Secretary General of UST does not support a claim that UST organized the convocation in connivance with the Gamilla Group. In no way can the contents of this memorandum be interpreted to mean that faculty members were required to attend the convocation. Not one coercive term was used in the memorandum to show that the faculty club members were compelled to attend such convocation. And the phrase “we are allowing them to hold a convocation” negates any idea that the UST would participate in the proceedings. Lastly, the University could not be faulted for negotiating with the Gamilla Group. In the instant case, until our Decision in G.R. No. 131235 that the Gamilla Group was not validly elected into office, there was no reason to believe that the members of the Gamilla Group were not the validly elected officers and directors of USTFU. 

Note 2 - All other forms of strikes, viz.: lightning strike, sit-down strike; sympathetic strike, slowdown strike; wildcat strike; intermittent strike, are all prohibited for lack of valid purpose or failure to comply with procedural requirements (discussion below).

Note 3 - An economic strike may be converted into a ULP strike, when the employer unjustifiably dismisses the officers of the union during a strike due to deadlock in collective bargaining negotiations. 106

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Note 4 - What are non-strikeable issues? Article 263 (b); Dept. Order No. 9, Rule 12, Sec. 2 (a) Violations of CBA which are not gross in character shall be resolved via the Grievance Machinery; (b) Inter-union or intra-union disputes; (c) Labor standards cases such as wage orders (Guidelines governing Labor Relations [19 Oct. 1987] issued by Sec. Drilon; See: Appendix “Y” of Foz’s Labor Code; See also: Article 261, LC) (d) Those issues which had already been brought to voluntary or compulsory arbitration

Note 5 - Is a violation of the CBA a case for ULP? It depends. Check Article 261, LC; See also: Dept. Order No. 9, Rule 22, Sec. 1. “The voluntary arbitrator or panel xxx shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the CBA, and those arising from the interpretation of company personnel policies xxx. Accordingly, VIOLATIONS OF THE CBA, EXCEPT THOSE WHICH ARE GROSS IN CHARACTER, SHALL NO LONGER BE TREATED AS ULP AND SHALL BE RESOLVED AS GRIEVANCES UNDER THE CBA. For purposes of this Article, gross violations of the CBA shall mean flagrant and/or malicious refusal to comply with the economic provisions of the CBA.”

2.2 Lawful means 2.2.1

Article 264 (b) and (e), Labor Code; as amended Dept. Order No. 9, Rule 22, Sec. 12, pars. 1 and 2 “(b) No person shall obstruct, impede or interfere with by force, violence, coercion, threats or intimidation any peaceful picketing by employees during any labor controversy, or in the exercise of the right of selforgn., or collective bargaining, or shall aid or abet such destruction or interference. No employer shall use or employ any person to commit such acts, nor shall any person be employed for such purpose (prohibition against strike-breakers was added under Dept. Order No. 9). (e) No person engaged in picketing shall commit any act of violence, coercion or intimidation, or obstruct the free ingress to and egress from the employer’s premises for lawful purposes, or to obstruct public thoroughfares.”

2.2.2 Guidelines on Removal of Illegal Blockades at Factory Gates, DOLE Memo dated 22 October 1987 “16. Picketing as part of the freedome of expression during strikes shall be respected, provided that it is peaceful. Shanties and structures set-up to effectively block lawful ingress to, and egress from, company premises for legal purposes and the free passage to public thoroughfares may be summarily demolished in accordance with law.

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2.2.3 Guidelines for Conduct of PNP/AFP Personnel during Strikes, Lockouts and other Labor disputes, DOLE Memo dated 22 October 1987 “1. Obstructions on places and thoroughfares devoted to public use, such as the streets, sidewalks, alleys and the like are NUISANCES PER SE. As such, they may be removed summarily by the local government authorities, through their respective law enforcement authorities, and they may act independently of the DOLE even if said obstructions are placed as a result of or in connection with a pending labor strike. 2. However, obstructions on points of ingress/egress within private properties during a labor dispute, although likewise prohibited by law, cannot be summarily demolished by law enforcement authorites. Instead, these obstructions or barricades may be removed only in accordance with the proper orders issued by the DOLE Office of the Secretary, or the NLRC, with proper coordination between the said labor officials and the police authorites to ensure that no undue harm is inflicted upon any person or property.”

2.2.4 What are the consequences if any of the prohibited activities as mentioned above are committed during the conduct of the strike? The otherwise valid strike may be converted into an illegal one Association of Independent Unions in the Philippines (AIUP) vs. NLRC, March 25, 1999. -- To be valid, a strike must be pursued within legal bounds. The right to strike as a means for the attainment of social justice is never meant to oppress or destroy the employer. The law provides limits for its exercise. 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 employer’s premises for lawful purposes or c. obstruct public thoroughfares. Even if the strike is valid because its objective or purpose is lawful, the strike may still be declared invalid where the means employed are illegal.

2.2.5 What are the liabilities of the workers who participated in the commission of the prohibited activities as mentioned above are committed during the conduct of the strike? Loss of employment status 

Union officers – may lose employment status if: (a) he knowingly participates in an illegal strike, viz.: noncompliance with purpose and process; OR (b) he knowingly participates in the commission of illegal activities, whether the strike is legal or illegal

Union members – may lose employment status only if he knowingly commits an illegal act.

Note1: If the existence of force is pervasive and widespread, consistently and deliberately resorted to as a matter of union policy, 108

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responsibility is collective (meaning that all the union officers will be held liable even if did not personally commit the same). Otherwise, responsibility is only individual. (Almira vs. BF Goodrich, 58 SCRA 1290) Note2: In order to hold the labor organization liable for the unlawful acts of the individual officers, agents or members, there must be proof of actual authorization or ratification of such acts after actual knowledge thereof. Thus, where a union, through its officers, not only had knowledge of the acts of violence committed by some of its strikers, but either participated or ratified the same, the strike was held to be illegal and the dismissal of ALL active participants therein was justified. (Phil. Marine Officers Guild vs. Compania Maritima, 22 SCRA 1113).

2.2.6 IMPORTANT 2013 CASE: SIT-DOWN STRIKE. Example of a strike without lawful purpose and unlawful means; when the union is not the exclusive bargaining agent. -- Malayang Manggagawa ng Stayfast, Inc. vs. NLRC, G.R. No. 155306, 28 August 2013, FACTS: Two unions, Malayang Manggagawa and Nagkakaisang Lakas ng Manggagawa sa Stayfast, sought to be the exclusive bargaining agent of Stayfast Philippines, Inc. Petitioner Malayang Manggagawa lost the certification election and sought to appeal the decision but was later on dismissed. Meanwhile, the majority union Nagkakaisang Lakas ng Manggagawa demanded to collectively bargain with the respondent company but the company refused. Majority Union Nagkaisang Lakas went on strike but was later on restrained. Thereafter, petitioner Malayang Manggagawa filed its own notice of strike in the NCMB. The respondent company opposed the notice of strike contending that the petitioner is a minority union. The parties were able to make concessions during the conciliation proceedings and the notice of strike was later on withdrawn. However, on 21 July 1997, the petitioner’s members staged a “sit down strike” to dramatize their demand for a fair and equal treatment as respondent company allegedly continued to discriminate against them. The respondent company issued a memorandum to all participants of the “sit down strike” requiring them to explain why they should not be terminated. None of the members complied with the company directive, so they were all terminated by the respondent company. Consequently, the petitioner staged a strike and filed a complaint for unfair labor practice, union busting and illegal lockout. ISSUE: Whether or not there is an illegal strike? HELD: YES. The labor courts a quo all unanimously ruled that there were no sufficient proof of respondent company’s alleged discriminatory acts, viz. that respondent company and its General Manager committed unfair labor practice or that the termination of the employment of petitioner’s officers and members was a case of union busting. On the other hand, the “sit down strike” made by the petitioner’s officers and members was in violation of respondent company’s rules, and petitioner’s officers and members ignored the opportunity given by the respondent company for them to explain their misconduct, which resulted in the termination of their employment. In sum, there are abundance of reasons, both procedural and substantive, which are all fatal to petitioner’s cause. The instant petition for certiorari suffers from an acute scarcity of legal and factual support. 109

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2.2.7 IMPORTANT CASE. Liability of company who fails to immediately reinstate the union member for participating in an illegal strike; extent of backwages. C. Alcantara and Sons vs Court of Appeals and Nagkahiusang Mamumuo Sa Alsons-SPFL, G.R. No. 155109, 14 March 2012. The Labor Arbiter found the strike illegal and sustained the dismissal of the Union officers but ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the illegal strike. On appeal, NLRC reversed Labor Arbiter and ruled that union members may also be terminated. CA and SC sustained NLRC decision. Question: Are the striking union members who were initially ordered reinstated by the Labor Arbiter but later on, found to have been legally terminated by the NLRC, entitled to backwages from the time of the LA decision until the NLRC reversal? Answer: YES. Pursuant to Article 223 of the Labor Code and wellestablished jurisprudence, the decision of the LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending 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. If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the employee’s salaries during the period between the LA’s order of reinstatement pending appeal and the resolution of the higher court overturning that of the LA. In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period from the notice of the LA’s order of reinstatement until the reversal thereof by the NLRC.

2.3 Compliance with procedural requirements of the Labor Code Apart and separate from the lawful purposes and lawful means in the conduct of a valid strike, the third requisite is compliance with the procedural requirements of law. Thus: 2.3.1

Notice of strike or lockout - must be filed prior to the intended date of strike, taking into consideration the cooling off period Cooling off period (Art. 263, LC; B5 R8 S3, IRR) If bargaining deadlocks – 30 days If ULP – 15 days If ULP on the ground of union busting: Union may take action immediately, but note that a strike vote must have been conducted and results submitted to DOLE (Art. 263 [b]; Dept Order No. 9, Rule 22, Secs. 3 and 7)

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2.3.2

Conciliation proceedings – NCMB to immediately call parties involved to a conference within period of 48 hours from receipt of notice, using the fastest means possible (telephone, telegraph or messenger) Note1: Parties obliged to meet promptly and expeditiously in good faith, as part of their duty to bargain collectively which covers proceedings before the NCMB. If employer refuses to attend conference, may be charged with ULP. (Dept. Order No. 9, R22, S6 [2]). Note2: During the conciliation and mediation proceedings before the NCMB, parties are supposed to refrain from doing any act which will exacerbate the proceedings – re: maintenance of status quo.

2.3.3

Strike vote – approved by a majority of the TOTAL UNION MEMBERSHIP in the bargaining unit (hence: only members of the majority union may vote), via secret ballot, in a meeting or referenda specially called for the purpose Lock-out vote - approved by a majority of the Board of Directors of the employer company, by secret ballot in a meeting called for such purpose.

2.3.4

Seven Day Strike ban (Dept. Order No. 9. R22, S7[e]) - after the strike vote is taken, it is required that the union must file the result of the strike vote with the NCMB at least 7 days prior to the intended date of strike. Note: Both cooling off period and 7-day strike ban must be complied with and is mandatory. Otherwise, illegal strike. (National Federation of Sugar Workers vs. Ovejera, 114 SCRA 354)

3.

Assumption of Jurisdiction by the Secretary of Labor or Certification of the Labor Dispute to the National Labor Relations Commission for Compulsory Arbitration. (Article 264[g], Labor Code; Please see CHART/DIAGRAM “E”) 3.1

The Secretary of Labor is not precluded from assuming jurisdiction over a labor dispute in a vital industry even if there is no notice of strike or a formal complaint. He need not wait for a notice of strike or a formal complaint about a strike already in progress before he could exercise the powers given to him by law to avoid the strikes, picketing or lockouts contemplated in the grant of power. (Saulog Transit vs. Lazaro, 128 SCRA 591.) 111

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3.2

Secretary of Labor has discretion to assume jurisdiction or to certify to the NLRC on the ground that the labor dispute is one "adversely affecting the national interest", and said exercise of discretion cannot be questioned. (FEATI University vs. Bautista, 18 SCRA 1191)

3.3

Nature and Effect of Assumption and Certification

3.4

a)

Assumption and certification orders are executory in character and are strictly to be complied with by the parties even during the pendency of any petition questioning their validity.

b)

It automatically results in a return-to-work of all striking workers (if one has already taken place), or enjoins the taking place of a strike (Union of Filipro Employees vs. Nestle Philippines, Inc., 192 SCRA 396.)

c)

While termination by reason of an illegal strike requires hearing, replacement by reason of violation of a return-to-work order does not. (Free Telephone Workers Union vs. PLDT, 113 SCRA 663, 678.)

Effect of Defiance of Assumption or Certification Orders. "A Strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as amended (Zamboanga Wood Products, Inc. vs. NLRC, G.R. 82088, October 13, 1989; 178 SCRA 482). The Union, officers and members, as a

result, are deemed to have lost their employment status for having knowingly participated in an illegal act." (Union of Filipino Employees vs. Nestle Philippines, Inc. [192 SCRA 396])

3.5 2015 LABOR BAR EXAM QUESTION: (XVI) The Alliance of Independent Labor Unions (AILU) is a legitimate labor federation which represents a majority of the appropriate bargaining unit at the Lumens Brewery (LB). While negotiations were ongoing for a renewal of the collective bargaining agreement (CBA), LB handed down a decision in a disciplinary case that was pending which resulted in the termination of the AILU's treasurer and two other members for cause. AILU protested the decision, claiming that LB acted in bad faith and asked that LB reconsider. LB refused to reconsider. AILU then walked out of the negotiation and declared a strike without a notice of strike or a strike vote. AILU members locked in the LB management panel by barricading the doors and possible exits (including windows and fire escapes). LB requested the DOLE to assume jurisdiction over the dispute and to certify it for compulsory arbitration. The Secretary of Labor declined to assume jurisdiction, finding that the dispute was not one that involved national interest. LB then proceeds to terminate all of the members of the bargaining agent on the ground that it was unlawful to: (1) barricade the management panel in the building, and (2) participate in an illegal strike. (a) Was AILU justified in declaring a strike without a strike vote and a notice of strike? Why or why not? (3%) (b) Was the Secretary of Labor correct in declining to assume jurisdiction over the dispute? (2%) (c) Was LB justified in terminating all those who were members of AILU on the two grounds cited? (3%) 112

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Answer: (a) No, AILU is not justified. Article 263 (b), Labor Code, provides that in cases of dismissal of Union officers which may constitute union busting where the existence of the union is threatened, “the 15-day cooling-off period shall not apply and the union may take immediate action”. However, the strike vote and rhe seven-day strike ban must still be complied with. (Book V, Rule XIII, Section 3, IRR.) Moreover, AILU used unlawful means in the pursuit of its objectives by locking and barricading the management panel. (b) Yes, the Secretary of Labor acted within the law. This is so because Article 263 (g) of the Labor Code, provides that when in his opinion there exist a labor dispute etc., what is important is the opinion of the Secretary of Labor; and in this case, it is his opinion that the dispute was not one that involved national interest. Such an opinion cannot be questioned. (FEATI University v. Bautista, 18 SCRA 1191 [1996]). (c) No, LB was not justified. LB cannot just terminate all the members of the bargaining unit on the ground that it was unlawful to barricade the management panel and to participate in an illegal strike. In so doing, it was necessary for LB to make a distinction between union officers and ordinary union members. LB must adduce substantial evidence that the union officers knowingly participated in an illegal strike; and that the union members knowingly participated in the commission of illegal acts during the strike. That is the way to make them liable for the illegal strike, for which they may be declared to have lost their employment status.

4. "No Strike No Lockout" Clause in the CBA. “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 vs. NLRC, 219 SCRA 47.)

5. 2010-2015 CASES 5.1

2015 CASE: Club Filipino, Inc., et al. vs. Benjamin Bautista, et al., G.R. No. 168406, 04 January 2015. -- The law requires knowledge of the illegality of the strike on the part of the union officer before he can be dismissed; when second motion for reconsideration may be allowed; illegal dismissal case is not res judicata to illegal strike case. a. The law requires knowledge of the illegality of the strike as a condition sine qua non before a union officer can be dismissed for participating in an illegal strike. b. As a general rule, the filing of a second Motion for Reconsideration is prohibited. (Rule 52, Section 2 of the Rules of Court.) It is only allowed under “extraordinary persuasive reasons and only upon express leave first obtained.” (McBurnie v. Ganzon, 707 SCRA 646 [2013], En Banc.) The grant of leave to file a second motion will not toll the reglamentary period for the decision to become final and executory after 15 days. It only means that the Entry of Judgment issued may be lifted should the second motion be granted. c. The decision on the illegal dismissal case cannot be considered res judicata on the illegal strike case. The element of identity of cause of action is absent. 113

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5.2

VERY IMPORTANT 2014 CASE: Florencio Libongcogon et al vs. Phimco Industries, G.R. No. 203332, 18 June 2014. – PHIMCO and its Union PILA had a bargaining deadlock, which resulted into a strike. PHIMCO dismissed the strikers for alleged illegal acts committed during the conduct of the strike, e.g., blocking points of ingress to, and egress out of, the company. Union filed a complaint for illegal dismissal and ULP against the company, while company filed a petition to declare the strike illegal. While the cases were still pending, PILA found that seven other employees (Libongcogon etc) were inadvertently not included in the case (CASE1) and thus, filed another case for illegal dismissal (CASE2). Libongcogon et al eventually won CASE2 all the way up to the Supreme Court and, upon remand to the Labor Arbiter who originally handled the case, moved for the computation of backwages. Company now alleges that the Supreme Court decision on the illegal termination case (CASE2) notwithstanding, the backwages can no longer be awarded on account of a supervening event. Said supervening event is a Supreme Court decision on CASE1, finding the strike to be illegal, and that all strikers therein, including Libongcogon, were validly terminated. Union argues for immutability of final judgment in CASE2, and hence, backwages must be awarded. ISSUE: Who is correct – the Union or the Company? SC Decision: For the Company. “As petitioners themselves acknowledge, the doctrine of immutability of final judgments admits of certain exceptions. One of such exceptions is the existence of a supervening cause or event, which renders the enforcement of a final and executory decision unjust and inequitable. In this particular case, a supervening event transpired, which must be considered in the execution of (CASE2) in order not to create an injustice to or an inequitable treatment of workers who, like petitioners, participated in a strike were this Court found the commission of illegal acts by the strikers, among them the petitioners (Libongcogon etc). As the CA pointed out in its amended decision, the evidence in the illegal strike case (CASE1) clearly identified Libongcogon etc as among the union members who, in concert with the other identified union members, blocked the ingress and egress of the company, through a human blockade, and the mounting of physical obstructions at he main gate. The Supreme Court noted that the Court of Appeals validly nullified its final and executory decision on the ground that there was a supervening cause.

5.3 IMPORTANT CASE; CONTRA TO EXISTING DECISIONS ON DEFIANCE OF RETURN TO WORK ORDER. Solidbank vs. Gamier et al, GR 159460, 15 Nov 2010; Solidbank vs. Solidbank Union et al., GR 159461, 15 Nov 2010. – A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is a prohibited activity and thus illegal. Xxx There is no dispute that when respondent Union officers and members conducted their mass action, the proceedings before the Secretary of Labor were still pending as both parties filed Motions for reconsideration of the SOLE Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of a mass demonstration simultaneous with concerted work abandonment/boycott.

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ADA’S NOTES: General rule: Both union officers and members who defy the Secretary’s assumption and return to work order may summarily be dismissed, because this is a patent defiance of the lawful orders of government. (Union of Filipino Employees vs. Nestle Philippines, Inc. [192 SCRA 396]; Allied Banking Corporation vs. NLRC, 258 SCRA 724; and Telefunken Semiconductors Employees Union-FFW vs. Court of Appeals,348

SCRA 565 [2000]). However, in this particular Solidbank case, the Supreme Court though Justice Villarama made a distinction, paraphrased succinctly as follows: “Notwithstanding illegality of the strike, we cannot sanction petitioners’ act of indiscriminately terminating the services of individual respondents who admitted joining the mass actions and who have refused to comply with the offer of the management to report back to work. The liabilities of individual respondents must be determined under Article 264 (a) Labor Code, thus: (a) Union officers who participated in the illegal strike may be considered to have lost their employment status; BUT (b) a worker who merely participated in the illegal strike may NOT be terminated from employment if he did NOT commit any illegal act during the strike. Xxx There is no evidence that the ordinary union member had actually committed illegal acts during the strike.” DEAN TONY AND ADA ABAD position: Article 264 was misapplied, as said provision applies only to illegal strikes, and NOT to instances where there is a DEFIANCE of a Return-to-work Order as in the instant case. This is simply contradictory to all previous rulings, which we believe are better and more appropriate.

5.4 Jurisdiction; Secretary of Labor. -- Cirtek Employees Labor Union-Federation of Free Workers vs. Electronics, Inc., G.R. No. 190515, 15 November 2010. Question: May the Secretary of Labor give an award higher than what was agreed upon by the management and labor union, when he assumes jurisdiction over the labor dispute? Answer: YES. The Secretary of Labor exercises plenary discretionary powers under the concept of police power in a CBA deadlock. As such, he is not limited to considering the MOA as basis in computing the wage increases. In the exercise of his power to assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code, it is well-settled that the Secretary of Labor may resolve ALL ISSUES involved in the controversy including the award of wage increases and benefits. In the instant case, the fact that the award was higher than that which was purportedly agreed upon in the MOA between management and the labor union is of no moment because the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents submitted by respondent as well as the parties’ bargaining history and respondent’s financial outlook and improvements as stated in its website.

IMPORTANT MODIFICATION in 2013 CASE: Asia Brewery vs. Tunay na Pagkakaisa ng mga Manggagawa sa Asia (TPMA), G.R. No. 171594, 16 September 2013. However, in deciding wage increases subject matter of the labor dispute, the Secretary of Labor must NOT commit grave abuse of discretion. In cases of 115

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compulsory arbitration before the Secretary of Labor pursuant to Article 263(g) of the Labor Code, the financial statements of the employer must be properly audited by an external and independent auditor in order to be admissible in evidence for purposes of determining the proper wage award.

The Secretary of Labor gravely abused her discretion when she used the “middle ground approach” and relied on the unaudited financial statements. Said unaudited financial statements are self-serving and inadmissible, and may have resulted in a wage award that is based on an inaccurate and biased picture of petitioner corporation’s capacity to pay. Moreso, she violated her own Order dated 19 December 2003, which instructed the petitioner company to submit its complete audited financial report.

5.5

Dismissal on account of illegal strike. -- Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302, 27 September 2010. Question: Are ordinary workers who were reinstated due to dismissal for their participation in an illegal strike, entitled to payment of backwages? Answer: NO. Conformably with the long honored principle of a fair day's wage for a fair day's labor, employees dismissed for joining an illegal strike are not entitled to backwages FOR THE PERIOD OF THE STRIKE even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the employer dismisses the employee without observing due process, either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee as provided under Articles 278, 283 or 284 of the Labor Code; while procedural due process demands compliance with the twin-notice requirement.

5.6

IMPORTANT CASES ON DISMISSAL; UNFAIR LABOR PRACTICE; LIABILITY OF CORPORATE OFFICERS; MORAL AND EXEMPLARY DAMAGES. (Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012). QUESTION: May employees who have gone on mass leaves without prior authorization be presumed to have conducted an illegal strike? ANSWER: NO. It is undeniable that going on leave or absenting one’s self from work for personal reasons when they have leave benefits available is an employee’s right. The contention of Biomedica that the enjoyment of said leaves is in reality an illegal strike does not hold water in the absence of strong controverting proof to overturn the presumption that “a person is innocent of x x x wrong.” Thus, the individual leaves of absence taken by the petitioners are not such absences that can be regarded as an illegal mass action. Here, the five (5) petitioners were absent on November 7, 2006. The records are bereft of any evidence to establish how many workers are employed in Biomedica. There is no evidence on record that 5 employees constitute a substantial number of employees of Biomedica. And, as earlier stated, it is incumbent upon Biomedica to prove that petitioners were dismissed for just causes, this includes the duty to prove that the leave was large-scale in character and unauthorized. This, Biomedica failed to prove. Having failed to show that there was a mass leave, the Court concludes that there were only individual availment of their leaves by petitioners and they cannot be held guilty of any wrongdoing, much less 37 RULES 116

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OF COURT, Rule 131(a). anything to justify their dismissal from employment. On this ground alone, the petition must be granted. Petitioners did not go on strike Granting for the sake of argument that the absence of the 5 petitioners on November 7, 2006 is considered a mass leave, still, their actions cannot be considered a strike. Art. 212(o) of the Labor Code defines a strike as “any temporary stoppage of work by the concerted action of employees as a result of any industrial or labor dispute.” “Concerted” is defined as “mutually contrived or planned” or “performed in unison.”38 In the case at bar, the 5 petitioners went on leave for various reasons. Petitioners were in different places on November 7, 2006 to attend to their personal needs or affairs. They did not go to the company premises to petition Biomedica for their grievance. To demonstrate their good faith in availing their leaves, petitions reported for work and were at the company premises in the afternoon after they received text messages asking them to do so. This shows that there was NO intent to go on strike. Unfortunately, they were barred from entering the premises and were told to look for new jobs. Surely the absence of petitioners in the morning of November 7, 2006 cannot in any way be construed as a concerted action, as their absences are presumed to be for valid causes, in good faith, and in the exercise of their right to avail themselves of CBA or company benefits. Moreover, Biomedica did not prove that the individual absences can be considered as “temporary stoppage of work.” Biomedica’s allegation that the mass leave “paralyzed the company operation on that day” has remained unproved.

2014 BAR QUESTION: As a result of a bargaining deadlock between Lazo Corporation and Lazo Employees Union, the latter staged a strike. During the strike, several employees committed illegal acts. Eventually, its members informed the company of their intention to return to work. (6%) (A) Can Lazo Corporation refuse to admit the strikers? (B) Assuming the company admits the strikers, can it later on dismiss those employees who committed illegal acts? (C) If due to prolonged strike, Lazo Corporation hired replacements, can it refuse to admit the replaced strikers? ANSWER: (A) No; otherwise, Lazo Corporation can be held guilty of illegal lockout. This is assuming that the Union’s offer to return to work is unconditional; otherwise, if conditional, the company can refuse to admit the strikers. (B) No. When Lazo Corporation acceded to the peaceful settlement by agreeing to admit all strikers who had not returned to work, it waives the issue of the illegality of the strike (Reformist Union of R.B. Liner, Inc. vs. NLRC, 266 SCRA 713 [1997]); unless Lazo Corporation did so without prejudice to whatever legal action it may take against those who committed illegal acts. (Bagong Pagkakaisa ng Manggagawa na Triumph International vs. Secretary of DOLE, G.R. No. 167401, 05 July 2010.) 117

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(C) No. As a general rule, replacements take their employment as conditional, i.e., subject to the rights of strikers to return to work. However, since this is an economic strike, the strikers are entitled to reinstatement only in case Lazo Corporation has not yet hired permanent replacements. (Consolidated Labor Association vs. Marsman & Co., II SCRA 589.)

N. LAW ON TERMINATION BASIC PRINCIPLES IN DISCIPLINARY CASES 1. Code of Conduct vs. security of tenure Balancing of interests in disciplinary cases 1.1 Labor’s interests A worker’s right to labor is recognized by the Constitution as a property right. As such, an employee cannot be deprived of his work without just cause or due process. 1.2 Management’s interests On the other hand, the employer is allowed, in the exercise of its management prerogatives, to promulgate rules and regulations, and to enforce/implement them for the efficient operations of the business. Moreover, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. 1.3 Balancing of interests: Hocheng Philippines Corporation vs. Antonio M. Farrales, G.R. No. 211497, 18 March 2015; Labor law policy on termination of employment. - Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be resolved in favor of labor. Consistent with the State’s avowed policy to afford protection to labor, particularly in relation to the worker’s security of tenure, the Court held that “to be lawful, the cause for termination must be serious and grave malfeasance to justify the deprivation of a means livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor. Moreover, the penalty imposed on the erring of the employee ought to be proportionate to the offense, taking into account its nature and surrounding circ*mstances. MANAGEMENT 

VS.

LABOR 

Management prerogatives Right to discipline employee in accordance with rules and regulations

STATE Police power/social justice Interpretation in favor of labor 118

Security of tenure Right to continuous employment until termination for just or authorized cause

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Ada’s Notes: Thus, in the context of the balancing of interests relative to the conduct of human relationships and work performance within the business, certain parameters will have to be observed: a)

Burden of proof is upon the employer to show just cause for the imposition of a penalty upon the employee. HOWEVER, employee must first prove the fact of dismissal. 2014 CASE: Dionarto Q. Noblejas v. Italian Maritime Academy Phils., Inc., et al. G.R. No. 207888, 09 June 2014. -- In illegal dismissal cases, employee must prove by competent evidence the fact of dismissal. Fair evidentiary rule dictates that before employers are burdened to prove that they did not commit illegal dismissal, it is incumbent upon the employee to first establish by substantial evidence the fact of his or her dismissal. It is an age-old rule that the one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing. Mere allegation is not evidence. Let it be underscored that the fact of dismissal must be established by positive and overt acts of an employer indicating the intention to dismiss. Here, there is no sufficient proof showing that Noblejas was actually laid off from work. In any event, his filing of a complaint for illegal dismissal, irrespective of whether reinstatement or separation pay was prayed for, could not by itself be the sole consideration in determining whether he has been illegally dismissed. All circ*mstances surrounding the alleged termination should also be taken into account.

b) There must exist substantial evidence to prove just or authorized cause of termination. Proof beyond reasonable doubt not required in administrative cases. Note1: Failure of employer to submit documents which are presumed to be in its possession, inspite of an Order to do so, implies that the presentation of said documents is prejudicial to its case. (De Guzman vs. NLRC, 540 SCRA 210 [Dec. 2007]). Note2: IMPORTANT CASE ON SUBSTANTIAL EVIDENCE. (Alilem Credit Cooperative vs. Bandiola, G.R. No. 173489, 25 February 2013.) Question: Whether or not sworn statements of relatives and friends of respondent attesting to the existence of an extra-marital affair is sufficient to prove immorality, as a just cause for termination? Answer: YES. The employer’s evidence consists of sworn statements of either relatives or friends of Thelma and respondent. They either had direct personal knowledge of the illicit relationship or revealed circ*mstances indicating the existence of such relationship. While respondent’s act of engaging in extra--marital affairs may be considered personal to him and does not directly affect the performance of his assigned task as bookkeeper, aside from the fact that the act was specifically provided for by petitioner’s Personnel Policy as one of the grounds for termination of employment, said act raised concerns to petitioner as the Board received numerous complaints and petitions from the cooperative members themselves asking for the removal of respondent because of his immoral conduct. c)

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2012 CASE: Negros Slashers vs. Alvin Teng, G.R. No. 187122, 22 Feb 2012. See page 7 hereof.)

d)

Thus: for valid termination, there must both be JUST CAUSE AND DUE PROCESS. (exception: Agabon ruling, see Section 4 hereunder)

2. GROUNDS FOR TERMINATION 2.1 JUST CAUSES FOR TERMINATION (Art. 282, LC) 2.1.2

SERIOUS MISCONDUCT Colegio de San Juan de Letran – Calamba vs. Tardeo G.R. No. 190303, 09 July 2014. – serious misconduct, definition and elements; see below. 

Defined as improper or wrong conduct, a transgression of a definite rule of action, a forbidden act or dereliction of duty which is willful in character and implies wrongful intent, and not mere error in judgment.

Elements of serious misconduct: 1. Must be serious, of grave and aggravated character, and not merely trivial or unimportant 2. Must be related to the performance of the employee’s duties; and 3. must show that he has become unfit to continue working for the employer.

2012-2015 CASES ON SERIOUS MISCONDUCT a) Roque B. Benitez, et al., vs. Santa Fe Moving and Relocation Services, et al., G.R. No. 208163, 20 April 2015. -- Serious misconduct wherein employee went up the stage and confronted the Managing Director with verbal abuse (putang na mo VK, gago ka!) during the Company’s Christmas party. He even attempted to throw a beer bottle at said Managing Director but was restrained by other employees. This caused grave embarrassment for the audience who witnessed the incident, including company officials, employees, their families, as wells as company clients and guests. Benitez’s offense constituted a serious misconduct as defined by law. His display of insolent and disrespectful behavior, in utter disregard of the time and place of its occurrence, had very much to do with his work. (ADA’S NOTE: The Supreme Court further noted that this case is not parallel to the 2007 case of Samson v. NLRC, where there was illegal termination. In that case, the employee made the abusive utterances [Sabihin mo kay EDT, bullsh*t yan! -- while making a dirty finger] in an informal office Christmas party. The Samson case was not considered serious misconduct, because the officer referred to was not in the party, and that the utterances were not actually directed to EDT’s person. Moreover, Samson was inebriated at that time.) b) St. Luke’s Medical Center vs. Ma. Theresa Sanchez, G.R. No. 212054, 11 March 2015; on dishonesty viz., theft of medical supplies. – 120

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Question: Whether or not employee may validly set up as a defense that there was no real intention to bring out unused hospital supplies left by patients (syringe, micropore, cotton balls, gloves, etc), to avoid termination? Answer: NO. Sanchez was validly dismissed by SLMC for dishonesty, i.e., “theft, pilferage of hospital or co-employee property, x x x or its attempt in any form or manner from the hospital, co-employees, doctors, visitors, [and] customers (external and internal)” with termination from employment. Such act is obviously connected with Sanchez’s work, who, as a staff nurse, is tasked with the proper stewardship of medical supplies. Significantly, records show that Sanchez made a categorical admission in her handwritten letter – i.e., “[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng gamit” – that despite her knowledge of its express prohibition under the SLMC Code of Discipline, she still knowingly brought out the subject medical items with her. It is apt to clarify that SLMC cannot be faulted in construing the taking of the questioned items as an act of dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner) considering that the intent to gain may be reasonably presumed from the furtive taking of useful property appertaining to another. Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage. While damage aggravates the charge, its absence does not mitigate nor negate the employee’s liability. Neither is SLMC’s non-filing of the appropriate criminal charges relevant to this analysis. c) IMPORTANT DOCTRINAL 2015 CASE: Cheryll Santos Leus vs. St. Scholastica’s College Westgrave, et al., G.R. No. 187226, 28 January 2015. - Pregnancy out of wedlock between two consenting adults with no impediment to marry each other, is not necessarily disgraceful or immoral under Sec. 94 (e) of the 1992 MRPS. (See previous notes on page 18). d) IMPORTANT DOCTRINAL 2014 CASE: Northwest Airlines vs. Concepcion Del Rosario, GR. 157633, 10 September 2014. – New clarification of the definition of FIGHTING within company premises. Two flight stewardesses verbally argued over a wine bottle opener, while passengers were boarding the flight. They were both off-loaded as a result. Question: Whether or not a verbal altercation between two employees falls within the purview of the infraction “fighting” as to merit termination? Supreme Court: NO. Fighting to be interpreted strictly, and must be more than more than just an exchange of words that usually succeeded the provocation by either party, to merit termination. Rationale: In several rulings where the meaning of fight was decisive, the Court has observed that the term “fight” was considered to be different from the term argument. In People v. Asto, for instance, the Court characterized fight as not just a merely verbal tussle but a physical combat between two opposing parties. Similarly, in Pilares, Sr. v. People,14 a fight was held to be more than just an exchange of words that usually succeeded the provocation by either party. Based on the foregoing, the incident involving Del Rosario and Gamboa could not be justly considered as akin to the fight contemplated by Northwest. In the eyes of the NLRC, Del Rosario and Gamboa were arguing but not fighting. Moreover, even assuming arguendo that the incident was 121

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the kind of fight prohibited by Northwest's Rules of Conduct, the same could not be considered as of such seriousness as to warrant Del Rosario's dismissal from the service. The gravity of the fight, which was not more than a verbal argument between them, was not enough to tarnish or diminish Northwest's public image. e) Colegio de San Juan de Letran vs. Isidra Dela Rosa-Meris, G.R. No. 178837, 01 September 2014. -- Tampering of school records/altering grades constitute serious misconduct punishable with termination under the Labor Code and under the Manual of Regulations for Private Schools. f) CONTRA.: WHEN NOT SERIOUS MISCONDUCT OR SERIOUS DISHONESTY Light Rail Transit vs. Salvana, G.R. No. 192074, 10 June 2015 [Leonen]. – In this instance, falsification of a document cannot be classified as serious dishonesty meriting termination since the information which was falsified had no direct relation to her employment,. Whether or not she was suffering from hypertension is a matter that has NO relatioin to the functions of her office. f) IMPORTANT CASE NOT ASKED IN 2013 2014 and 2015 BAR: Samahan Ng Manggagawa Sa Hyatt-NUHWRAIN Vs. Magsalin, GR No. 164939, 06 June 2011 Question: May a company validly terminate an employee under a provision in the employee handbook which states “committing offenses penalized with three suspensions within a twelve-month period”? Answer: Yes, in this case where a union officer was found guilty of several infractions during negotiations stand-off. The company terminated the union officer on the basis of a specific provision in their employees handbook, which provided that an employee may be terminated for the commission of offenses meriting three suspensions within a twelve-month period. The Supreme Court ruled that a

series of irregularities, when put together, may constitute serious misconduct and hence, a just cause for termination. (See also: Mapili vs. Phil Rabbit Bus Lines, 27 July 2011)

However, while Voluntary Arbitrator Magsalin found valid ground for termination, he awarded the employee P100,000.00 for and as financial assistance. Supreme Court overruled VA Magsalin and deleted financial assistance, noting that if there is just cause for termination, then the employee is not entitled to the said award. Thus: The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best, it may mitigate the penalty but it certainly will not condone it. Social justice cannot be permitted to be a refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean, and their motives blameless, and not simply because they happen to be poor. xxx” – Samahan ng Manggagawa sa Hyatt-NUHWRAIN ibid., citing PLDT vs. NLRC, No. L-80609, 23 Aug 1998.

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2015 LABOR BAR EXAM QUESTION: (XI) Rico has a temper and, in his work as Division Manager of Matatag Insurance, frequently loses his temper with his staff. One day, he physically assaults his staff member by slapping him. The staff member sues him for physical injuries. Matatag Insurance decides to terminate Rico, after notice and hearing, on the ground of loss of trust and confidence. Rico claims that he is entitled to the presumption of innocence because he has not yet been convicted. Comment on Matatag's action in relation to Rico's argument. (4%) Answer: Matatag may still validly terminate Rico because Rico’s argument is not valid. The quantum of evidence required for crime and administrative offense are different: criminal prosecutions require proof beyond reasonable doubt; whereas, administrative investigations only require substantial evidence, or that kind of evidence that a reasonable mind can accept to support a conclusion. Hence, the criminal case and the administrative case can proceed independently of each other. The acquittal in the criminal case will not necessarily mean the dismissal of the administrative complaint.

2.1.2

GROSS INSUBORDINATION Elements: 1. employee’s assailed conduct must be willful or intentional; 2. willfulness characterized by wrongful or perverse attitude; 3. the order violated must be reasonable, lawful and made known to the employee; and 4. the order must pertain to the duties which the employee has been engaged to discharge. (The Coffee Bean and Tea Leaf Philippines, Inc. vs. Rolly P. Arenas G.R. No. 208908, 11 March 2015)

2012-2015 SC CASES ON GROSS INSUBORDINATION: a) St. Luke’s Medical Center vs. Maria Theresa V. Sanchez, G.R. No. 212054, 11 March 2015. - Violation of Company Rules as Wilfull Disobedience; see discussion above, page 104) b) The Coffee Bean and Tea Leaf Philippines, Inc. vs. Rolly P. Arenas, G.R. No. 208908, 11 March 2015. -- Willful disobedience – Company official cannot be held liable for the dismissal of an employee unless he acted with malice or bad faith. c) Joel N. Montallana vs. La Consolacion College Manila, et al., G.R. No. 208890, 08 December 2014. - What is “willfulness” in willful disobedience? In order for willful disobedience under Art. 296 (a) [formerly Article 282 (a) of the Labor Code] to be properly invoked as a just cause for dismissal, the conduct must be willful or intentional, willfulness being characterized by a wrongful and perverse mental attitude. (Nissan Motors Phil., Inc. vs. Angelo, G.R. No. 164181, 14 September 2011, 657 SCRA 520.) Moreover, “willfulness” was described as “attended by a wrongful and perverse mental attitude rendering the employees’ act inconsistent with proper subordination.” (Dongon v. Rapid Movers and Forewarders Co., Inc. G.R. No. 163431, 28 August 2013, 704 SCRA 56)

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d) IMPORTANT: NOT ASKED IN PREVIOUS BARS. - ePacific Global Contact Center vs. Cabansay, 538 SCRA 498 [23 Nov. 2007]. QUESTION: MAY A MANAGER BE TERMINATED FOR GROSS INSUBORDINATION IF THE COMPLAINED ACT WAS WITHIN MANAGER’S DISCRETIONARY POWER? Answer: Yes. Although a managerial employee is clothed with discretion to determine what was in the best of the company, said managerial discretion is not without limits. Its parameters were contained the moment the discretion was exercised, and then opposed by the immediate superior/officer for being against the policies and welfare of the company. Hence, any action in pursuit of the discretion thus opposed had ceased to be discretionary and could be considered as willful disobedience. See also CONTRA: Prudential Bank vs. Antonio Mauricio et al., GR 183350, 18 Jan 2012. QUESTION: MAY A MANAGER BE TERMINATED FOR LOSS OF TRUST AND CONFIDENCE FOR AN ACT WITHIN HIS DISCRETIONARY POWERS? Prudential Bank terminated Manager Mauricio for allegedly repeatedly allowing the withdrawals of dollar check transactions by a valued customer prior to clearing without sufficient balance or funding, and in the course of time after due audit, caused the loss of approx US $775,000.00. Manager’s defense: This was within his discretionary powers. Is this a valid termination for loss of trust and confidence? ANSWER: NO. The Supreme Court ruled that on the basis of evidence, it appears that the manager’s act in allowing the immediate withdrawal by the valued customers is well within his functions as branch manager. A person occupying such position exercises a certain degree of discretion with respect to accommodations to valued clients. No evidence that Manager was prompted by any malicious motive in approving the encashment or to have abused the discretion he was clothed with, absent some semblance of parameters. Note that Manager reported all the transactions to the Head Office; if such a transaction was irregular or prohibited, the Head Office of Prudential should have immediately called the manager’s attention to the same. Instead, Prudential continued to credit the account of the clients for the value of the returned checks. ADA’S NOTES: Aside from the grounds used in the termination of the two managers, another difference between this case and that of ePacific Global is that the Manager in Prudential Bank had exercised discretionary powers and was not prohibited nor questioned in doing so until much later after the audit findings. In ePacific Global, the Manager’s superior had already prohibited her from proceeding with the presentation, and she insisted on continuing the same.

2.1.3 GROSS AND HABITUAL NEGLECT OF DUTIES a) gross negligence: connotes want of care in the performance of one’s duties, or absence of even slight care or diligence as to amount to a reckless disregards of the safety of the person or property

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2014 CASE: Dr. Phylis C. Rio vs. Colegio De Sta. Rosa Makati, G.R. No. 189629, 06 Aug 2014. - Gross inefficiency and incompetence, and negligence in the keeping of school or student records, or tampering with or falsification of records. “As we already held, gross inefficiency is closely related to gross neglect because both involve specific acts of omission resulting in damage to another (Lim v. NLRC, 328 Phil., 843,858 [1996]). Gross neglect of duty or gross negligence refers to negligence characterized by the want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected (Brucal v. Hon. Desierto, 501 Phil. 453,465-466 [2005]).

As borne by the records, petitioner’s actions fall within the purview of the above-definitions. Petitioner failed to diligently perform her duties. It was unrefuted that: (1) there were dates when a medical examination was supposed to have been conducted and yet the dates fell on weekends; (2) failure to conduct medical examination on all students for two (2) to five (5) consecutive years; (3) lack of medical records on all students; and (4) students having medical records prior to their enrollment.” b) habitual neglect: implies repeated failure to perform one’s duties over a period of time c) willful neglect of duties: imply bad faith on the part of the employee in failing to perform his job, to the detriment of the employer and the latter’s business d) Totality of infractions ruling: where the employee has been found to have repeatedly incurred several suspensions or warnings on account of violations of company rules and regulations, the law warrants their dismissal as it is akin to “habitual delinquency”. It is the totality, not the compartmentalization of company infractions that the employee had consistently committed, which justified the penalty of dismissal. (Meralco vs. NLRC, 263 SCRA 531 [24 Oct 1996]).

2012 CASE ON TOTALITY OF INFRACTIONS: Mansion Printing Center and Clement Cheng vs Diosdado Bitara, Jr. , G.R. No. 168120, 15 January 2012. -- “The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other.” In the present case, petitioners have repeatedly called the attention of respondent concerning his habitual tardiness. The Memorandum dated 23 June 1999 of petitioner Cheng required him to explain his tardiness. Also in connection with a similar infraction, respondent even wrote petitioner Cheng a letter dated 29 November 1999 where he admitted that his tardiness has affected the delivery schedules of the company, offered an apology, and undertook to henceforth report 125

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for duty on time. Despite this undertaking, he continued to either absent himself from work or report late during the first quarter of 2000 e) Absences: Habitual absenteeism and excessive tardiness are forms of neglect of duty on the part of the employee and constitute just and sufficient cause for termination. f) Abandonment of work: the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, and hence, a just cause for termination by the employer. For a valid finding of abandonment, two factors must be present:: (a) the failure to report for work or absence without valid or justifiable reason; and (b) a clear intention to sever the employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

2013-2015 SC CASES ON ABANDONMENT:

.

Vicente C. Tatel vs. JLFP Investigation Security Agency, Inc., et al., G.R. No. 206942, 25 Feb 2015; see also: Essencia Q. Manarpiis vs. Texan Philippines, Inc., et al. G.R. No. 197011, 28 Jan 2015. -- . The filing by an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of his desire to return to work; thus, negating the employer’s charge of abandonment. An employee who takes steps to protest his dismissal cannot logically be said to have abandoned his work.

Stanley Fine Furniture, et al. vs. Victor T. Gallano, et al. G.R. 190486, 26 Nov 2014. -- To terminate the employment of workers simply because they asserted their legal rights is illegal. It violates their right to security of tenure and should not be tolerated. To prove abandonment, two elements must concur: a) Failure to report for work or absence without valid or justifiable reason; and b) A clear intention to sever the employer-employee relationship. Absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. The filing of a complaint for illegal dismissal negates the allegation of abandonment.

Concrete Solutions vs. Cabusas, G.R. No. 177812, 19 June 2013. Settled is the rule that mere absence or failure to report for work is not tantamount to abandonment of work. Even the failure to report for work after a notice to return to work has been served does not necessarily constitute abandonment. In fact, when respondent received petitioners' telegram stating that “he was absent without official leave and to notify CSI as soon as possible”, he went to petitioners premises but was refused entry for reason that he was AWOL. There is no showing of respondent's intent to sever the employeremployee relationship. It is also notable that when respondent was refused entry to petitioners' premises and the letter of former's counsel was refused acceptance by the latter, there is already 126

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constructive dismissal which led respondent to seek recourse by filing an illegal dismissal case against petitioners. Because Cabusas was a project employee, he could not be reinstated because the project was already completed. However, since he was terminated PRIOR to the completion of the project, he is entitled to be paid salaries for the unexpired portion from time of illegal termination to the date of the completion of the project. 

MZR Industries vs. Colambot, G.R. No. 179001, 28 August 2013. -In this case, the company issued a notice of suspension to the employee, with directive to report to work on a given date. Company claims that it never heard from employee until company received a subpoena from the NLRC because employee had already filed a case for illegal dismissal. Employee on the other hand claims constructive termination, as he was allegedly made to choose between resigning or termination. Issues: Whether there was illegal dismissal? abandonment?

Whether there was

Decision: There was no illegal dismissal; however, there was no abandonment either. 1. There was no illegal dismissal; documentary evidence reveals that the employee was merely suspended with a directive to return to work. However, employee could not be considered to have abandoned his work because mere absence is not enough to amount to abandonment, as in fact, he filed a case a few days after he was supposed to have reported back to work. 2. REMEDY: These circ*mstances, taken together, the lack of evidence of dismissal and the lack of intent on the part of the respondent to abandon his work, the remedy is reinstatement but without backwages. However, considering that reinstatement is no longer applicable due to the strained relationship between the parties and that Colambot already found another employment, each party must bear his or her own loss, thus, placing them on equal footing

2014 BAR QUESTION: Luisa was hired as a secretary by the Asian Development Bank (ADB) in Manila. Luisa’s first boss was a Japanese national whom she got along with. But after two years, the latter was replaced by an arrogant Indian national who did not believe her work output was in accordance with international standards. One day, Luisa submitted a draft report filled with typographical errors to her boss. The latter scolded her, but Luisa verbally fought back. The Indian boss decided to terminate her services right then and there. Luisa filed a case for illegal dismissal with the Labor Arbiter claiming arbitrariness and denial of due process. If you were the Labor Arbiter, how would you decide the case? (4%) ANSWER: I will decide the case in favor of Luisa, that she was illegally dismissed without just cause or due process.

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For one, the dismissal was arbitrary because it was whimsical in that it was based on the Indian’s belief that Luisa’s output was not in accordance with international standards without informing her priorily what these standards are. For another, when Luisa verbally fought back, the same cannot be considered as a serious misconduct that would merit termination because it can be denominated as trivial as an employee can be expected to answer when scolded. Moreover, the typographical errors cannot be used as basis for her termination as constituting neglect of duty because neglect of duties as a ground for termination must not only be gross but also habitual. And finally, when her Indian boss terminated her right then and there, the same is violate of due process, depriving Luisa to the twin requirements of notice and hearing.

2.1.4 FRAUD OR WILLFUL BREACH OF TRUST a) Fraud: the deliberate and false representation of fact, despite knowledge of its falsehood, in order to induce another who relied upon it and benefit therefrom. b) Elements of willful breach of trust leading to loss of trust and confidence: (1) the breach must be willful and not ordinary breach [hence, done knowingly and intentionally]; (2) employee holds a position of trust and confidence; (3) must be in relation to the work performed; and (4) there must exist substantial evidence, and should not be based on mere surmises, speculations and conjectures. c) IMPORTANT CASE: TWO CLASSES OF POSITIONS OF TRUST. Abelardo Abel vs. Philex Mining Corporation, G.R. No. 178976, 31 July 2009. The first class consists of managerial employees. They are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The second class consists of cashiers, auditors, property custodians, etc.. They are defined as those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. As a general rule, employers are allowed a wide latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence. Higher standards expected of management vis ordinary rank-and-file. d) Examples of Position of Trust, Non-Managerial 1. Coca Cola Route Salesman. - A route salesman falls under the second class of position holding trust, inasmuch as he regularly handled significant amounts of money and property in the normal and routine exercise of his functions. There was a high degree of trust and confidence reposed on him so that when this confidence was breached, the employer was justified in taking the appropriate disciplinary action. Moreover, the court ruled that Hormillosa’s act of tampering sales invoices and issuing one with non-accredited store could not have been performed without intent and knowledge on his 128

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part; hence the breach of trust was willful. (Hormillosa vs. Coca Cola, G.R. No. 198699, 09 September 2013). 2. Dining attendant.-- As may be readily gleaned from the records, Episcope was employed by Philippine Plaza Hotel as a service attendant in its Café Plaza. In this regard, she was tasked to attend to dining guests, handle their bills and receive their payments for transmittal to the cashier. It is also apparent that whenever discount cards are presented, she maintained the responsibility to take them to the cashier for the application of discounts. Being therefore involved in the handling of company funds, Episcope is undeniably considered an employee occupying a position of trust and confidence and as such, was expected to act with utmost honesty and fidelity. In the instant case, it is clear that Episcope was remiss in her duty to carefully account for the money she received from the cafe's guests. (Philippine Plaza Holdings vs. Episcope, G.R. No. 192826, 27 Feb 2013.)

e) Examples of those not considered positions of trust and confidence. -Inventory comptroller or clerk. – An inventory clerk who is not routinely charged with the care and custody of Century Iron’s money or property is not occupying a position of trust and confidence. As such, he could not be held responsible for the shortages of gas cylinders and therefore, he cannot be terminated on the ground of loss and trust and confidence. (Century Iron Works Inc. vs. Bañas, G.R. 184116, 19 June 2013.)

2012-2015 SC CASES ON FRAUD/LOSS OF TRUST: 1. IMPORTANT J. PRESBITERIO VELASCO CASE: Wesleyan University Philippines v Nowella Reyes, G.R. No. 208321, 30 July 2014 Facts: Reyes was a highly confidential employee who handled significant amounts of money as University Treasurer and that the irregularities attributed to her in the performance of her duties justify her dismissal on the basis of loss of trust and confidence. University placed her on extended suspension of 60-days, for which reason she claimed to have been constructively dismissed. Issue: Whether or not she was validly dismissed Decision: YES. In termination on account of loss of trust and confidence, the the first requisite is that the employee concerned must be one holding a position of trust and confidence, thus, one who is either: (1) a managerial employee; or (2) a fiduciary rank-and-file employee, who, in the normal exercise of his or her functions, regularly handles significant amounts of money or property of the employer. The second requisite is that the loss of confidence must be based on a willful breach of trust and founded on clearly established facts. An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of the employer. A company has the right to dismiss its employees if only as a measure of self-protection. Respondent was not an ordinary rank-and-file employee as she was no less the Treasurer who was in charge of the coffers of the University. It would be oppressive to require petitioner to retain in their management an officer who has admitted to knowingly and intentionally committing acts which jeopardized its finances and who was untrustworthy in the handling and custody of University funds. 129

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2.

Unilever vs. Ma. Ruby Rivera, G.R. No. 201701, 03 June 2013, where Unilever’s internal auditor conducted a random audit and found out that there were fictitious billings and fabricated receipts supposedly from Ventureslink amounting to P11,200,000.00. It was also discovered that some funds were diverted from the original intended projects. Upon further verification, Ventureslink reported that the fund deviations were upon the instruction of Rivera. The employee admitted the fund diversion but explained that such actions were mere resourceful utilization of budget because of the difficulty of procuring funds from the head office. Supreme Court decision: “In this case, Rivera was dismissed from work because she intentionally circumvented a strict company policy, manipulated another entity to carry out her instructions without the company’s knowledge and approval, and directed the diversion of funds, which she even admitted doing under the guise of shortening the laborious process of securing funds for promotional activities from the head office. These transgressions were serious offenses that warranted her dismissal from employment and proved that her termination from work was for a just cause. Hence, she is not entitled to a separation pay.”

3. When NOT breach of trust and confidence; duties of employee. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011. -- Petitioner was employed as Assistant VicePresident in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent bank. The Supreme Court held that petitioner was illegally dismissed because the act of betrayal of trust, if any, must have been committed by the employee in connection with the performance of his function or position. The court found that the element of ‘workconnection’ was not present in this case since petitioner was assigned under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards, which was under a different department altogether.

4. QUESTION: MAY LENGTH OF SERVICE BE USED TO MITIGATE PENALTY OF DISMISSAL FOR A FIRST TIME-OFFENDER OF AN INFRACTION INVOLVING LOSS OF TRUST AND CONFIDENCE? (Reynaldo Moya vs. First Solid Rubber, G.R. No. 184011, 18 September 2013) ANSWER: NO. Where the infraction involves dishonesty and pilferage, length of service is immaterial. The general rule is that an employee terminated for just causes is not entitled to separation pay except on grounds of “equity and social justice”. Where the dismissal is based on willful breach by the employee of the trust reposed in him by the employer, the supervisory employee Moya is outside the protective mantle of the principle of social justice as his act of concealing the truth from the company4 is a clear disloyalty to the company which has long employed him. The defense of the infraction being his first offense, and that he had no willful intention to conceal the truth or cover up the mistake of his employee, is unavailing. His length of service should be taken against him. Length of service is not a 4

Failure to report five tires damaged as a result of undercuring brought about by negligence of another employee. 130

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bargaining chip that can simply be stacked against the employer. If an employer has treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. To be sure, length of service is taken into consideration in imposing the penalty to be meted an erring employee. However, the case at bar involves dishonesty and pilferage by petitioner which resulted in respondent’s loss of confidence in him. Unlike other just causes for dismissal, trust in an employee, once lost is difficult, if not impossible, to regain. The infraction that she committed, vis-à-vis her long years of service with the company, reflects a regrettable lack of loyalty which ought to have been strengthened, rather than betrayed. (Bago vs. NLRC, Standard Insurance Co. Inc., G.R. No. 17000, 04 April 2007). 5. IMPORTANT CASES ON TERMINATION OF MANAGERS 5.1 IMPORTANT J. VELASCO CASE: Marilou Genuino vs. NLRC and Citibank, G.R. No. 142732-33, 04 December 2007. – While Citibank miserably did not comply with due process in failing to identify with particularity the irregular transations involving Global Pacific and Citibank, as well as bank clients, the Supreme Court found that she was validly terminated for just cause, for loss of trust and confidence reposed upon her. As Asst Vice President of Citibank’s Treasury Department, Genuino was tasked to solicit investments and to create peso/dollar deposits in relation thereto. She cannot feign ignorance of bank policies, and the concomitant duty on her part to protect both the Bank and its clients’ interests. As was found by the Supreme Court, Genuino did not even dissuade the depositors from withdrawing their monies from Citibank, and was even instrumental in the transfer of money to a competing bank, using client companies in the transfer.. 5.2 MAY A BANK VALIDLY TERMINATE AN ASSISTANT BANK MANAGER FOR LOSS OF TRUST AND CONFIDENCE ARISING FROM GROSS NEGLIGENCE? (De Leon Cruz vs. BPI, G.R. No. 173357, 13 February 2013). “After 13 years of continuous service, BPI terminated the Assistant Bank Manager on grounds of gross negligence and breach of trust, for her failure to verify genuineness of a forged Letter of Instructions allegedly issued by three depositors, resulting in illegal and spurious withdrawals on their respective bank accounts. In that regard, petitioner was remiss in the performance of her duty to approve the pre-termination of certificates of deposits by legitimate depositors or their duly-authorized representatives, resulting in prejudice to the bank, which reimbursed the monetary loss suffered by the affected clients. Hence, respondent was justified in dismissing petitioner on the ground of breach of trust. As long as there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of her participation therein renders her unworthy of the trust and confidence demanded of his position, a managerial employee may be dismissed.” 131

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5.3 MANAGER WHO ALLEGES THAT HE IS MEDICALLY UNFIT TO RETURN TO WORK AS YET, HAS TO PROVE THE SAME BY COMPETENT EVIDENCE. FAILURE TO DO SO MAY LEAD TO HIS VALID TERMINATION. (Wuerth Philippines. Vs Ynson, G.R. No. 175932, 15 Feb 2012). Respondent alleged in his letters dated July 21, 2003 and August 12, 2003 that he is not capable of returning to work, because he is still undergoing medications and therapy. However, apart from the clearance of respondent's doctors allowing him to return to work, he has failed to provide competent proof that he was actually undergoing therapy and medications. It is puzzling why despite respondent's submission that he was still undergoing treatment in July and August 2003, he failed to submit official receipts showing the medical expenses incurred and physician’s professional fees paid by reason of such treatment. This casts serious doubt on the true condition of the respondent during the prolonged period he was absent from work and investigations, and as to whether he is still suffering from any form of illness from July to August 2003. Being the National Sales Manager, respondent should have reported back to work or attended the investigations conducted by petitioner immediately upon being permitted to work by his doctors, knowing that his position remained vacant for a considerable length of time. During his absence, nobody was performing the duties of NSM, which included, among others, supervising and monitoring of respondent's sales area which is vital to the company’s orderly operation and viability. He did not even show any sincere effort to return to work. Since there is no more hindrance for him to return to work and attend the investigations set by petitioner, respondent's failure to do so was without any valid or justifiable reason. Respondent's conduct shows his indifference and utter disregard of his work and his employer's interest, and displays his clear, deliberate, and gross dereliction of duties. 5.4 MANAGER VALIDLY TERMINATED ON ACCOUNT OF LOSS OF TRUST AND CONFIDENCE ARISING FROM HUGE BUSINESS LOSSES. MANAGER WAS GROSSLY NEGLIGENT IN ALLOWING 2,130 PCS OF CHICKEN JOY REJECTS TO BE KEPT INSIDE FREEZER WITH OTHER PRODUCTS, CAUSING FOOD CONTAMINATION AND THREAT TO FOOD SAFETY. (Cecilia Manese vs. Jollibee Foods, G.R. No. 17-454, 11 October 2012.)

6. QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD IF THE COMPANY DID NOT SUFFER FROM IT? Answer: YES. In the case of Panuncillo vs. CAP, G.R. No. 161305, 09 February 2007 (Carpio-Morales), the employee caused the double sale of her own child’s CAP educational plan to different customers. Employee argued that she cannot be terminated for loss of trust and confidence, because CAP was not itself defrauded or been damaged by her actuations relative to the multiple sale of her child’s educational plan to customers. The Supreme Court ruled that she may still be terminated for loss of trust and confidence, because deliberate disregard or disobedience of rules by the employees cannot be countenanced. The lack of resulting damage was unimportant. Xxx. Damage aggravates the charge but its absence does not mitigate nor negate the employee’s liability.” 132

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7. QUESTION: MAY AN EMPLOYEE BE DISMISSED FOR FRAUD AND/OR DISHONESTY, EVEN IF HE DID NOT PERSONALLY BENEFIT FROM IT? Answer: YES. Pecuniary gain is not a necessary element for terminations due to loss of trust and confidence. Even the return of misappropriated funds will not negate valid dismissal for breach of trust. This Court has held that misappropriation of company funds, although the shortages had been fully restored, is a valid ground to terminate the services of an employee of the company for loss of trust and confidence. (Santos vs. San Miguel Corp., 254 SCRA 673 [1996]). In the case of Dela Cruz V. Coca-Cola Bottlers (31 July 2009), an employee was involved in a motor vehicle accident while driving CocaCola vehicle without authorization. He was hospitalized in San Fernando, La Union, where he was observed to have been under the influence of alcohol. This was evidenced by a medical certificate and police report secured by Coca-cola. Two friends of the employee (one was a supervisor) secured a police report and medical certificate omitting any reference to employee being drunk, for which they were charged with DISHONESTY. After due process, they were dismissed and they thereafter questioned the termination on the ground that: (a) they did not occupy positions of trust and confidence; and (b) they did not benefit from the fraud. The Supreme Court ruled that the supervisor and friend were VALIDLY TERMINATED. ‘“By obtaining an altered police report and medical certificate, petitioners deliberately attempted to cover up the fact that Sales was under the influence of liquor at the time of accident. In so doing, they committed acts inimical to company interest – work-related wilful breach of trust and confidence.

2.1.5 COMMISSION

OF CRIME BY EMPLOYEE AGAINST

EMPLOYER Torreda vs. Toshiba Info Equipment Phils. 515 SCRA 133 [Feb 2007]). -This will also include false accusation by the employee of his immediate superior of a crime such as robbery, as such is tantamount to serious misconduct Concepcion vs. Minex Import Corporation, etc., G.R. No. 153569, 24 January 2012, En Banc).-- Conviction of an employee in a criminal case is not indispensable to warrant his dismissal by his employer (Mercury Drug Corp. vs. NLRC, 177 SCRA 580 [1989], and the fact that a criminal complaint against the employees has been dropped by the city fiscal is not binding and conclusive upon a labor tribunal. (See also: Starlight Plastic Industrial Corporation vs. NLRC, 171 SCRA 315 [1989].)

2.1.6 OTHER ANALOGOUS CAUSES 

INCOMPETENCE – IMPORTANT 2014 CASE: International School Manila vs. International School Alliance Of Educators (ISAE), G.R. No. 167286, 05 February 2014. -- Complainant taught Spanish classes for 12 years, and took a one year break. Upon return to school, there was only one class of Spanish available so she agreed to teach Filipino subjects. For three consecutive years, her performance evaluation ranged from “poor”, 133

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to “needs improvement”, to mixed (poor and “needs improvement”), respectively. Thirty evaluations over three years were made on the teacher, showing unsatisfactory performance. As such, School terminated her services. Ruling: In all cases involving termination of employment, the burden of proving the existence of the just causes rests upon the employer. What can be gathered from a thorough review of the records of this case is that the inadequacies of the respondent as a teacher did not stem from a reckless disregard of the welfare of her students or of the issues raised by the School regarding her teaching. Far from being tainted with bad faith, respondent’s failings appeared to have resulted from her lack of necessary skills, in-depth knowledge, and expertise to teach the Filipino language at the standards required of her by the School. The Court finds that the petitioners had sufficiently proved the charge of gross inefficiency, which warranted the dismissal of Santos from the School. 2014 CASE: Dr. Phylis C. Rio vs. Colegio De Sta. Rosa Makati, G.R. No. 189629, 06 Aug 2014. - Gross inefficiency and incompetence, and negligence in the keeping of school or student records, or tampering with or falsification of records. (See discussion on page 107).

IMMORALITY This has been defined as such conduct which conflicts with generally or traditionally held moral principles. It is akin to the phrase “moral turpitude”, the term implying something immoral in itself, regardless of whether it is punishable by law or not. IMPORTANT JANUARY 2015 CASE; CHERYLL LEUS VS ST. SCHOLASTICA – WESTGROVE, G.R. No. 187226, 28 Jan 2015 -Termination of pregnant employee in Catholic schools. Position of school re: academic freedom and religious nature of catholic schools to impose higher standards of morality vs. strict implementation of Magna Carta of Women. Supreme Court will decide in the light of secular morality, and not religious morality. (See discussion of case on page 18). Toledo vs. Toledo, 544 SCRA 27 [06 February 2008]; case on common live-in relationships. – The Court has previously defined immoral conduct as that conduct which is “willful, flagrant or shameless, and which shows a moral indifference to the opinion of the good and respectable members of the community.” In disbarment cases however, this Court has ruled that the mere fact of sexual relations between two unmarried adults is not sufficient to warrant administrative sanction for such illicit behavior. Whether a lawyer’s sexual congress with a woman not his wife or without benefit of marriage should be characterized as “grossly immoral conduct” will depend on the surrounding circ*mstances. The Supreme Court further ruled that intimacy between a man and a woman who are not married, where both suffer from no impediment to marry, voluntarily carried on and devoid of any deceit on the part of the respondent, is neither so corrupt as to constitute a criminal act nor so unprincipled as to warrant disbarment or disciplinary against a member of the Bar. As such, the Court cannot conclude that this act of cohabiting with a woman and betting children by her without benefit of marriage falls within the category of “grossly immoral conduct”.

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CONSTRUCTIVE DISMISSAL IMPORTANT J. PRESBITERIO VELASCO CASE ON SECURITY GUARDS ON FLOATING STATUS: Exocet Security and Allied Services Corporation and/or Ma. Teresa Marcelo vs Armando D. Serrano, G.R. No. 198538; 29 September 2014 The “floating status” or temporary “off-detail” of security guards employed by private security agencies is a form of temporary retrenchment or lay-off. Temporary “off-detail” or the period of time security guards are made to wait until they are transferred or assigned to a new post or client does not constitute constructive dismissal as their assignments primarily depend on the contracts entered into by the security agencies with third parties. “Offdetailing” is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time; when such a “floating status” lasts for more than six months, the employee may be considered to have been constructively dismissed. The concept of “off-detail” has been defined as that period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when the security agency’s clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it, even for want of cause, such that the replaced security guard may be placed on temporary “off-detail” if there are no available posts under the agency’s existing contracts. As the circ*mstance is generally outside the control of the security agency or the employer, the Court has ruled that when a security guard is placed on a “floating status,” he or she does not receive any salary or financial benefit provided by law. The placement of the employee on a floating status should not last for more than six months. After six months, the employee should be recalled for work, or for a new assignment; otherwise, he is deemed terminated. To validly terminate a security guard for lack of service assignment for a continuous period of six months under Secs. 6.5 and 9.3 of DO 14-01, the security agency must comply with the provisions of Article 289 (previously Art. 283) of the Labor Code, which mandates that a written notice should be served on the employee on temporary off-detail or floating status and to the DOLE one (1) month before the intended date of termination. In every case, the Court has declared that the burden of proving that there are no posts available to which the security guard may be assigned rests on the employer. If after the period of 6 months, the security agency/employer cannot provide work or give assignment to the reserved security guard, the latter can be dismissed from service and shall be entitled to separation pay (viz., ½ month for every year of service, but not less than 1 month pay). Security guards on reserved status who accept employment in other security agencies or employers before the end of the above six- month period may not be given separation pay. 135

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An employee has the right to security of tenure, but this does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client. Girly G. Ico vs. Systems Technology Institute, Inc., G.R. No. 185100, 09 July 2014. -- Transfer as illegal constructive dismissal. When another employee is soon after appointed to a position which the employer claims to have been abolished, while the employee who had to vacate the same is transferred against her will to a position which does not exist in the corporate structure, there is evidently a case of illegal constructive dismissal. In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal. (citing Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012; 664 SCRA 110.)

McMer Corporation, Inc., et al. vs. NLRC, et al. G.R. No. 193421; 04 June 2014 - Constructive dismissal, Re: hostile and unreasonable working conditions. The test of constructive dismissal is whether a reasonable person in the employees’ position would have felt compelled to give up his position under the circ*mstances. Based on the factual consideration in the instant case, we hold that the hostile and unreasonable working conditions of petitioner justified the finding of the Labor Arbiter and the NLRC that petitioner was constructively dismissed. (Aguilar vs. Burger Machine Holdings Corporation, 536 Phil. [2006]; underlining supplied.) In fact, the employee who is constructively dismissed may be allowed to keep on coming to work. (CRC Agricultural Trading vs. NLRC, G.R. No. 177664, 23 December 2009; 609 SCRA 138.)

Emeritus Security and Maintenance Systems, Inc. vs. Dailig, G.R. No. 204761, 02 April 2014. -- A floating status of a security guard for more than 6 months constitutes constructive dismissal. The temporary inactivity or “floating status” of security guards should continue only for 6 months. Otherwise, the security agency concerned could be liable for constructive dismissal. The failure of petitioner to give respondent a work assignment beyond the reasonable six-month period makes it liable for constructive dismissal. (citing Nationwide Security and Allied Services, Inc. v. Valderama, GR No 186614, 23 February 2011). Article 279 of the Labor Code mandates the reinstatement of an illegally dismissed employee. Thus, reinstatement is the general rule, while an award of separation pay is the exception. Gan vs. Galderma Phils. G.R. No. 177167, 17 January 2013. -Constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits. It exists 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. There is involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the employer. The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his employment/position under the circ*mstances. 136

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On the other hand, resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or her employment.

Burden of proof upon the employee who resigned, to prove that it was NOT voluntary but forced upon him. Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear, positive, and convincing evidence that his resignation was not voluntary but was actually a case of constructive dismissal; that it is a product of coercion or intimidation. He has to prove his allegations with particularity. What the records of this case reveal is that Gan deliberately wrote and filed a resignation letter that is couched in a clear, concise, and categorical language. Its content confirmed his unmistakable intent to resign. He was a managerial employee holding a responsible position and receiving more than the mandated minimum wage. At the time he resigned, he had more than a decade of experience in sales and marketing with expertise in product management. Indeed, it would be absurd to assume that he did not understand the full import of the words he used in his resignation letter and the consequences of executing the same. 

PREVENTIVE SUSPENSION: Preventive suspension is a disciplinary measure for the protection of the company’s property pending investigation of any alleged malfeasances or misfeasance committed by the employee. While the Omnibus Rules limits the period of preventive suspension to thirty (30) days, such time frame pertains only to one offense by the employee. For an offense, it cannot go beyond 30 days. IMPORTANT J, VELASCO CASE: Smart Communications, Inc. , Mr. Napoleon L. Nazareno, and Mr. Ricky P. Isla and Mr. Ricky P. Isla, vs. Jose Leni Z. Solidum, G.R. No. 197763, 07 December 2015 Question: May a second preventive suspension be imposed on the employee, on account of additional charges found against him? Answer: YES. If the employee is charged with another offense, then the employer is entitled to impose a preventive suspension not to exceed 30 days specifically for the new infraction. Indeed, a fresh preventive suspension can be imposed for a separate or distinct offense. Thus, an employer is well within its rights to preventively suspend an employee for other wrongdoings that may be later discovered while the first investigation is ongoing. Smart was able to uncover other wrongdoings committed by Solidum during the investigation for the initial charges against him. These newly discovered transgressions would, thus, require an additional period to investigate.

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As earlier pointed out, the transactions covered by the 30-day preventive suspension are different from that covered by the 20-day preventive suspension. The latter suspension is not an "extension" and, consequently, it is a miscue to award Solidum the payment of back salaries and benefits corresponding to the 20-day preventive suspension of Solidum.

2015 LABOR BAR QUESTION: (X) Karina Santos is a famous news anchor appearing nightly in the country's most watched newscast. She is surprised, after one newscast, to receive a notice of hearing before the station's Vice-President for Human Resources and calls the VP immediately to ask what was wrong. Karina is told over the phone that one of her crew filed a complaint against her for verbal abuse and that management is duty-bound to investigate and give her a chance to air her side. Karina objects and denies that she had ever verbally assaulted her crew. The VP then informed her that pending the investigation she will be placed on a 30-day preventive suspension without pay and that she will not be allowed to appear in the newscast during this time. Is the preventive suspension of Karina valid? Discuss the reasons for your answer. (4%) Answer: No, the preventive suspension of Karina is not valid. The employer may place an employee under preventive suspension if his/her continued employment would pose a serious and imminent threat to the life or property of the employer or of his/her co-employees. In this case, these requirements are not present and hence, there appears to be no sufficient basis to justify Karina’s preventive suspension. Alternative answer: Yes, the preventive suspension of Karina is justified where Karina’s continued employment poses serious and imminent threat to the life or property of the employer or of Karina’s co-workers. Considering that the crew member had filed a case for verbal abuse against Karina, it may be imposed so that the crew member may be protected from further verbal abuse in the light of the impending administrative investigation of Karina.

RESIGNATION Voluntary resignation is defined as the act of an employee, who finds himself in a situation in which he belies that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but to disassociate himself from his employment. (Alfaro vs. Court of Appeals, 363 SCRA 799 [2001]).

General rule:

An employee who voluntarily resigns is not entitled to separation pay.

Exception:

Unless stipulated in an employment contract or CBA or sanctioned by established employer practice or policy. (CJC Trading, Inc. vs. NLRC, 246 SCRA 724 [1995]; Alfaro vs. Court of Appeals, 363 SCRA 799 [2001]).

2014 CASE: Chiang Kai Shek College v. Rosalinda M. Torres, G.R. No. 189456, 02 April 2014 on voluntary resignation. -- Respondent Torres was a grade school teacher at Chiang Kai Shek College. She was terminated after being found guilty of leaking a copy of a quiz given to 138

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Grade 5 students. To save face, respondent then requested the school that she be suspended instead, and then allowed to finish the school year. She promised in exchange that she will voluntarily resign thereafter. School agreed, but after the school year ended, Torres filed an illegal termination case with the NLRC, alleging constructive dismissal. The Supreme Court decided in favor of the School, and noted that academic dishonesty is the worst offense a teacher can make because teachers caught committing academic dishonesty lose their credibility as educators and cease to be role models for their students. The leaking and selling of test questions is classified as a grave offense punishable by termination. In imposing a lower penalty, the school should not be punished for being compassionate and granting respondent’s request for a lower penalty.

TERMINATION DUE TO UNION SECURITY CLAUSE: 1. For valid termination on this ground, the following must be proven by the employer -a) the union security clause is applicable; b) the union is requesting for the enforcement of the union security provision in the CBA; and c) there is sufficient evidence to support the Union’s decision to expel the employee from the union or company. (Inguillo vs. First Philippines Scales, Inc., 588 SCRA 471 [2009]; See also: PICOP Resources, Inc. (PRI) vs. Anacleto Taneca et. al, G.R. No. 160828, 09 August 2010).

2. May a union member be terminated from employment by the company upon demand by the incumbent union pursuant to a union security clause for "acts of disloyalty" for having signed an authorization letter to file a petition for certification election in favor of a rival union during the freedom period while the CBA is still subsisting? (PICOP Resources, Inc. vs. Tanega, et al., G.R. No. 160828, 09 August 2010).

Answer: NO. The mere signing of the authorization in support of the Petition for Certification Election of FFW on March 19, 20 and 21, or before the "freedom period," is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. Nothing in the records would show that respondents failed to maintain their membership in good standing in the Union. Respondents did not resign or withdraw their membership from the Union to which they belong. Respondents continued to pay their union dues and never joined the FFW. Significantly, petitioner's act of dismissing respondents stemmed from the latter's act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. However, we are constrained to believe that an "authorization letter to file a petition for certification election" is different from an actual "Petition for Certification Election." Likewise, as per records, it was clear that the actual Petition for Certification Election of FFW was filed only on May 18, 2000. Thus, it was within the ambit of the freedom period which commenced from March 21, 2000 until May 21, 2000. Strictly speaking, what is prohibited is the filing of a petition for certification election outside the 60-day freedom period. This is not 139

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the situation in this case. If at all, the signing of the authorization to file a certification election was merely preparatory to the filing of the petition for certification election, or an exercise of respondents’ right to self-organization

3. AUTHORIZED CAUSES FOR TERMINATION (Art. 283-284, LC) Memory aid: DIRe2C

1 MO PAY OR ½ MONTH FOR EVERY YEAR OF SERVICE MO PAY OR 1 MONTH INSTALLATION OF LABOR 1FOR EVERY YEAR OF SAVING DEVICES SERVICE 1 MO PAY OR ½ MONTH RETRENCHMENT FOR EVERY YEAR OF SERVICE 1 MO PAY OR 1 MONTH REDUNDANCY FOR EVERY YEAR OF SERVICE MO PAY OR ½ MONTH CLOSURE NOT DUE TO 1FOR EVERY YEAR OF SERIOUS BUSINESS LOSSES SERVICE

DISEASE

3.1

DISEASE

(separation pay of 1/2 month pay for every year of

service)   

Employee must be suffering from a disease, and continued employment is prohibited by law and/or is prejudicial to his health and/or that of his co-employees; Disease cannot cannot be cured within a period of six (6) months, and said fact is certified by a competent public health authority If curable, then employer cannot terminate but may ask employee to take a leave; immediately upon restoration of normal health, employer must reinstate employee to former position.

IMPORTANT NOTE: EMPLOYER MUST FURNISH EMPLOYEE TWO (2) WRITTEN NOTICES ON TERMINATIONS DUE TO DISEASE Marlo A. Deoferio v. Intel Technology Philippines, Inc.. And/Or Mike Wentling, G.R. No. 202996, 18 June 2014. -- The Labor Code and its IRR are silent on the procedural due process required in terminations due to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states that the employee should be afforded procedural due process in ALL CASES OF DISMISSALS. Al In Sy v. Court of Appeals (446 Phil. 404 [2003]) and Manly Express, Inc. v. Payong, Jr., (510 Phil. 818 [2005]), the Court finally pronounced the rule that the employer must furnish the employee two written notices in terminations due to disease, namely: (1) the notice to apprise the employee of the ground for which his dismissal is sought; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer 140

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and to be heard on his defense. These rulings reinforce the State policy of protecting the workers from being terminated without cause and without affording them the opportunity to explain their side of the controversy.

INSTALLATION

3.2

OF LABOR SAVING DEVICES (sepn pay:

1

mo/yr of service) 

3.3

Example: computerization of accounting and payroll system; mechanization of assembly line, etc. Presumption is that the employer does not have any serious business losses, as to afford the purchase of labor-saving devices.

RETRENCHMENT

(Sepn. Pay: 1/2 month pay for every year of

service) Retrenchment is the termination of employment by the employer through no fault of the employees, and is usually resorted to by the employer primarily to avoid or minimize economic or business reverses during periods of business recession, industrial depression, seasonal fluctuations, re-organization or automation of the company operations.5 Where the employer suffers serious and actual business losses, management has the final say as to whether it will continue to risk its capital or not.6 However, the employer bears the burden to prove his allegation of business losses.7 Elements for valid retrenchment: Under Article 283 of the Labor Code, in conjunction with Section 2, Rule XXIII of the Implementing Rules of the Labor Code, the following elements must be strictly complied with in order that the retrenchment may be considered as valid: a) The losses expected should be substantial and not merely de minimis in extent. -b) The substantial losses apprehended must be reasonably imminent; c) The retrenchment must be reasonable necessary and likely to effectively prevent the expected losses; and d) The alleged losses, if already incurred and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.8 This means that retrenchment must be reasonably necessary and is likely to prevent business losses which, if already incurred, must be substantial, serious, actual and real, OR if only expected , are reasonably imminent as perceived objectively and in good faith by the employer. In addition, the employer should have taken other measures prior or parallel to retrenchment to forestall losses, e.g., cut other costs. Thus, the Supreme Court has ruled that the retrenchment undertaken by a company to be invalid where it was shown that the company likewise continued to dispense fat executive bonuses to its officers. 5

See: Sebuguero vs. NLRC, 248 SCRA 533 [1995]. San Pedro Hospital of Digos, Inc. vs. Secretary of Labor, 263 SCRA 98 [1996]. 7 Guerrero vs. NLRC, 261 SCRA 301 [1996] 8 San Miguel Jeepney Services vs. NLRC, 265 SCRA 35 [1996] 141 6

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2012-2015 SC CASES ON RETRENCHMENT 

IMPORTANT LEONARDO-DE CASTRO 2012 CASE ON RETRENCHMENT. Mindanao Terminal and Brokerage Service, Inc. vs. Nagkahiusang Mamumuo sa Minterbo – Southern Philippines Federation of Labor, et al., G.R. No. 174300, 05 Dec 2012. -- The NLRC and the Court of Appeals found that the union members/employees were not given work for more than six months have elapsed. In Sebuguero vs NLRC, the Court noted that there is no specific provision of law which treats of a temporary retrenchment or layoff and provides for the requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation of a business or undertaking may he suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. Layoff is essentially retrenchment and under Article 283 of the Labor Code, a retrenched employee is entitled to separation pay equivalent to one (1) month salary or one-half (12) month salary per year of service, whichever is higher.

Crispin B. Lopez vs. Irvine Construction Corp., et al.,G.R. No. 207253, 20 August 2014.; Retrenchment; temporary lay-off; constructive dismissal. -- It is defined as the severance of employment, through no fault of and without prejudice to the employee, resorted to by management during the periods of business recession, industrial depression, or seasonal fluctuations, or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new production program or the introduction of new methods or more efficient machinery, or of automation. Elsewise, stated, lay-off is an act of the employer of dismissing employees because of losses in the operation, lack of work, and considerable reduction on the volume of its business, a right recognized and affirmed by the Court. However, a lay-off would be tantamount to a dismissal only if it is permanent. When a lay-off is only temporary, the employment status of the employee is not deemed terminated, but merely suspended. Temporary lay-off: Pursuant to Article 286 of the Labor Code, the suspension of the operation of business or undertaking in a temporary lay-off situation must not exceed six (6) months. Within the six-month period, the employee should either be recalled or permanently retrenched. Otherwise, the employee would be deemed to have been dismissed, and the employer held liable therefore. In invoking Article 286 of the Labor Code, the paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work This means that the employer should be able to prove that it is faced with a clear and compelling economic reason which reasonably forces it to temporarily shut down its business operations or a particular 142

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undertaking, incidentally resulting to the temporary lay-off of its employees. Absent any dire exigency justifying failure to give the employee further assignment, the only logical conclusion is that he has been constructively dismissed. 

G.J.T. Rebuilders Machine Shop, et al. vs. Ricardo Ambos, et al., G.R. No. 174186, 28 Jan 2015; Proving serious business reverses. -- To prove serious business losses, employer must present in evidence financial statements showing the net losses suffered by the business within a sufficient period of time. Generally, it cannot be based on a single financial statement showing losses. Absent this proof, employers closing their business must pay the dismissed employees separation pay equivalent to one-month pay or at least one-half-month pay for every year of service, whichever is higher. Should employer fail to comply with Article 283 of the Labor Code on the notice requirement, employer must also pay the dismissed employees nominal damages.

Virgilio Anabe vs. AsiaKonstruct, G.R. No. 183233, 23 December 2009; financial statements as proof of serious business losses. -Anabe was a radio technician operator who was retrenched on account of alleged serious business reversal. Labor Arbiter for complainant, on account of failure of company to prove serious business losses. On appeal to NLRC, company submitted financial statement, and as such, NLRC reversed the Labor Arbiter’s ruling. . Supreme Court ruling as to financial statement. – While NLRC may receive evidence on appeal, note that the burden of proof is upon the employer. Company inexplicably submitted financial statements TWO YEARS after the case was filed and pending, and ONLY AFTER it had received the adverse decision of the Labor Arbiter. The delay in the submission of the evidence should be clearly explained and should adequately prove the employer’s allegations of the cause of termination. In this case, Asiakonstruct proferred no explanation behind the belated submission. Moreover, the financial statements covering period 1998-2000 was prepared only in 2001 – which begs the question of how the management knew at such date of the company’s huge losses to justify Anabe’s retrenchment in 1999. Lastly, SEC certification that no financial statements were submitted for the period 1998-2000, and 2003-2005, thereby lending credence to Anabe;s theory that the financial statements submitted on appeal may have been fabricated. Indeed, AsiaKonstruct could have easily submitted its financial statements during the pendency of the proceedings at the arbitral level.

3.4

REDUNDANCY

(Sepn pay: 1 mo/yr of service)

Redundancy is akin to retrenchment and is another authorized cause for the termination of employees under Article 283 of the Labor Code, through no fault of the latter. Under this circ*mstance, the employer may thus validly terminate the employee because he has no legal obligation to keep in his payroll more employees than are necessary for the economical operation of the business.9 Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the business operations. Succinctly stated otherwise, a position may be declared 9

Wiltshire File Co. Inc. vs. NLRC, G.R. No. 82249 [07 February 1991]. 143

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redundant and the employee terminated where his position has become superfluous or is a duplication of work, viz., caused by overhiring of workers, decreased volume of business, dropping of a particular product line or service activity. IMPORTANT LEONARDO-DE CASTRO CASE on redundancy. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, 09 February 2011. -- Respondent-company, due to business troubles and losses, implemented a Right-Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or abolition of certain departments of the company. As a result, respondent-company terminated the services of petitioner on account of redundancy. Petitioner filed a complaint against respondentcompany and its officers for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly dismissed. The Court has been consistent in holding that the determination of whether or not an employee’s services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC. However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, such as but not limited to: preferred status, efficiency, and seniority. The Court also held that the following evidence may be proffered to substantiate redundancy: adoption of a new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring. However, it failed to provide the Department of Labor and Employment with a written notice regarding petitioner’s termination. The notice of termination was also not properly served on the petitioner. Further, a reading of the notice shows that respondentcompany failed to properly inform the petitioner of the grounds for his termination. While employers have the right to terminate employees it can no longer sustain, our laws also recognize the employee’s right to be properly informed of the impending termination of his employment. Though the failure of respondent-company to comply with the notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner is however entitled to nominal damages in addition to his separation pay.

3.5

CESSATION

OR CLOSURE OF EMPLOYER’S BUSINESS (1/2

month pay for every year of service) An employer is not prevented from exercising its prerogatives to close shop so long as it is done in good faith to advance its interests, and not for the purpose of defeating or circumventing the rights of the employees. (Angeles vs. Polytex Design, 536 SCRA 159 [Oct 2007]).

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Where the closure of business was done in bad faith, viz., no actual sale transpired, then there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents. In this case, there was no change of ownership and continuously operated under the same name, franchises and routes and under the same circ*mstances as before the alleged sale. (Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, 20 October 2010).

IMPORTANT BUSINESS:

CASE

ON

GUIDELINES

IN

CLOSURE

OF

The Supreme Court made the following summary of principles and guidelines in the case of Manila Polo Club Employees Union (MPCEUFUR-TUCP) vs. Manila Polo Club, G.R. No. 172846, 24 July 2013, as follows: 1. Closure or cessation of operations of establishment or undertaking may either be partial or total. 2. Closure or cessation of operations of establishment or undertaking may or may not be due to serious business losses or financial reverses. However, in both instances, proof must be shown that: (1) it was done in good faith to advance the employer's interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement; and (2) a written notice on the affected employees and the DOLE is served at least one month before the intended date of termination of employment. 3. The employer can lawfully close shop even if not due to serious business losses or financial reverses but separation pay, which is equivalent to at least one month pay as provided for by Article 283 of the Labor Code, as amended, must be given to all the affected employees. 4. If the closure or cessation of operations of establishment or undertaking is due to serious business losses or financial reverses, the employer must prove such allegation in order to avoid the payment of separation pay. Otherwise, the affected employees are entitled to separation pay. 5. The burden of proving compliance with all the above-stated falls upon the employer. Guided by the foregoing, the Court shall refuse to dwell on the issue of whether respondent was in sound financial condition when it resolved to stop the operations of its F & B Department. As stated, an employer can lawfully close shop anytime even if not due to serious business losses or financial reverses. Furthermore, the issue would entail an inquiry into the factual veracity of the evidence presented by the parties, the determination of which is not Our statutory function. Indeed, petitioner is asking Us to sift through the evidence on record and pass upon whether respondent had, in truth and in fact, suffered from serious business losses or financial reverses.

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2012-2015 SC CASES ON CLOSURE 

Navotas Shipyard Corporation Vs. Innocencio Montallana et.al., G.R. No. 190053, 2014. -- Closure due to serious business reverses: the right of employees to procedural due process; otherwise, nominal damages DOCTRINE: In case of closure or cessation of operation of

establishments or undertaking due to serious business losses or financial reverses, a company is NOT legally bound to give the employees separation pay. But the right of employees to procedural due process should always be complied with. Failure to comply with any legal requirements shall be valid reason for the Court to render the company liable for nominal damages, the amount of which is left to the Courts sound discretion. The company failed to comply with the legal requirement of providing individual written notices of the company’s temporary shutdown or of its closure. Such failure does not invalidate the termination but it does make them liable for nominal damages for violation of the right of the employees to procedural due process. The amount is address to the sound discretion of the court. (NOTE: Agabon vs. NLRC, Jaka Food Processing Corp. vs. Pacot and Industrial Timber Corp. vs. Ababon). 

2014 CASE: Benson Industries Employees Union-ALU-TUCP et al vs. Benson Industries, G.R. No. 200746, 06 August 2014. – Closure due to serious business reverses, no separation pay; unless otherwise provided for by contract (CBA). Question: May the Benson company refuse payment of Separation pay per CBA, in the light of serious business reverses? Answer: NO. Even if Company experienced serious business reverses, it has agreed to pay separation pay in the CBA. It is therefore bound by its contractual obligation.  While serious business losses generally exempt the employer from paying separation benefits, it must be pointed that the exemption only pertains to the obligation of the employer under Article 297 of the Labor Code. This is because of the law’s express parameter that mandates payment of separation benefits “in case of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses.” To reiterate, an employer which closes shop due to serious business losses is exempt from paying separation benefits under Article 297 of the Labor Code for the reason that the said provision explicitly requires the same only when the closure is not due to serious business losses; conversely, the obligation is maintained when the employer’s closure is not due to serious business losses. For a similar exemption to obtain against a contract, such as a CBA, the tenor of the parties’ agreement ought to be similar to the law’s tenor.  When the obligation to pay separation benefits, however, is not sourced from law (particularly, Article297 of the Labor Code), but from contract, such as an existing collective bargaining agreement between the employer and its employees, an examination of the latter’s 146

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provisions becomes necessary in order to determine the governing parameters for the said obligation.  In this case, the Whereas clauses of the MOA indicate that BENSON KNEW OF ITS DISTRESSED FINANCIAL CONDITION AS EARLY AS THE PREVIOUS CBA. It even admits in its Comment that it was saddled with bank loans as early as 1997 and unable to service its loan obligations. The above distressed financial condition notwithstanding, Benson still executed the CBA with the Union and as such, will be bound by it.  Thus, when the parties, however, agree to deviate therefrom, and unqualifiedly covenant the payment of separation benefits irrespective of the employer’s financial position, then the obligatory force of that contract prevails and its terms should be carried out to its full effect. Verily, it is fundamental that obligations arising from contracts have the force of law between the contracting parties and thus should be complied with in good faith; and parties are bound by the stipulations, clauses, terms and conditions they have agreed to, the only limitation being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy. Hence, if the terms of a CBA are clear and there is no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail.

2014 CASE: Eric Godfrey Stanley Livesey vs. Binswanger Philippines, Inc., G.R No. 177493, 19 March 2014. -- Where closure is done in bad faith; doctrine of piercing veil of corporate fiction used. Where a new corporation is formed and used for a nonlegitimate purpose (viz., evasion of a just and due obligation of the old corporation to pay its employee Livesey his monetary entitlements under a compromise agreement), then the wrongful intent should not be condoned. The new corporation should be held liable for the closed corporation’s unfulfilled obligations to the latter’s employee Livesey. It has long been settled that the law vests a corporation with a personality distinct and separate from its stockholders or members. In the same vein, a corporation, by legal fiction and convenience, is an entity shielded by a protective mantle and imbued by law with a character alien to the persons comprising it. Nonetheless, the shield is not at all times impenetrable and cannot be extended to a point beyond its reason and policy. Circ*mstances might deny a claim for corporate personality, under the “doctrine of piercing the veil of corporate fiction.” In the present case, we see an indubitable link between CBB’s closure and Binswanger’s incorporation. CBB ceased to exist only in name; it re–emerged in the person of Binswanger for an urgent purpose — to avoid payment by CBB of the last two installments of its monetary obligation to Livesey, as well as its other financial liabilities. Freed of CBB’s liabilities, especially that owing to Livesey, Binswanger can continue, as it did continue, CBB’s real estate brokerage business.

2013 CASE: SKM Arts vs. Bauca, G.R. No. 171272,17 November 2013. -- temporary suspension of operations (Art. 286, Labor Code). The bona fide suspension of operations of a business or undertaking for a period not exceeding six (6) months or the fulfillment by employee of military or civic duty shall not terminate employment. 147

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Employer may validly suspend operations for a period not exceeding 6 months, as in this case, where a fire caused the total destruction of the company premises and company incurred in damage amouting to P22 Million. Employees are on no-work, no-pay during this 6-month period. However, at the end of the said 6-month period, the employer is obliged to recall employees back to work. Failing such, the employees are deemed to been constructively dismissed, for which reason they are thus entitled to payment of separation pay in accordance with law. 

IMPORTANT CASE: What is the effect of corporate rehabilitation upon monetary claims. Philippine Airlines, Inc. vs. Reynaldo V. Paz, G.R. No. 192924, 26 Nov 2014. -- In the light of the fact that PAL’s failure to comply with the reinstatement order was justified by the exigencies of corporate rehabilitation, the respondent may no longer claim salaries which he should have received during the period that the LA decision ordering his reinstatement is still pending appeal until it was overturned by the NLRC. Thus, the CA committed a reversible error in recognizing the respondent’s right to collect reinstatement salaries albeit suspending its execution while PAL is still under corporate rehabilitation.

2015 LABOR BAR QUESTION: (XII) Blank Garments, Inc. (BLANK), a clothing manufacturer, employs more than 200 employees in its manufacturing business. Because of its high overhead, BLANK decided to sell its manufacturing business to Bleach Garments, Inc. (BLEACH) lock, stock and barrel which included goodwill, equipment, and personnel. After taking on BLANK's business, BLEACH reduces the workforce by not hiring half the workers specifically the ones with seniority. BLANK and BLEACH are still discerned to be sister companies with identical incorporators. The laid-off employees sue both BLANK and BLEACH for unlawful termination. (a) How would you decide this case? (4%) (b) What is the "successor employer" doctrine? (2%) Answer: (a) I will decide the case by using the doctrine of piercing the corporate veil, and uphold the employees. I will adduce evidence to show that BLEACH is merely an alter ego of BLANK; that the former is merely a farce since it is merely an alter ego or business conduit of the latter. Considering that BLANK and BLEACH are sister companies with identical incorporators, it can be said that latter is so organized and controlled and it’s merely an instrumentally, agency, conduit or adjunct of the former. (Sarona vs. NLRC, G.R. No. 185280, 18 January 2012.) (b) The successor employer doctrine is one where the transferee or acquirer of an enterprises assumes the latter’s obligations and liabilities in case the transferee or acquiror: 1) Expressly assumes such obligations and liabilities; or 2) Where the transaction between the parties is clothed or colored with bad faith. (Sundowner Development Corp. vs. Drilon, 180 SCRA 141 [1989]). Otherwise, the general rule is that the successor is not bound to recognize the predecessor’s bargaining agent nor is it liable under previous contracts, which are in personam. (E. Razon, Inc. vs. Secretary of Labor, G.R. No. 85867, May 13, 1993)

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5. PROCEDURE FOR TERMINATION: 5.1

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 IMPORTANT J. VELASCO CASE: NOTICE REQUIREMENT, MUST SUBSTANTIATE INFRACTION, GENERAL NARRATIVE NOT SUFFICIENT. King of Kings Transport vs. Mamac, 526 SCRA116 (29 Jun 2008. -(a) Employee must be given FIVE (5) CALENDAR DAYS within which to explain, as reasonable opportunity within which the employee may adequately study and prepare for his defense, seek legal counsel or union representation, gather evidence and look for witnesses to testify in his behalf. (b) In order to intelligently prepare the employees for their explanation and defenses, the notice should contain a detailed narration of the facts & circ*mstances that will serve as the basis for the charge against the employee – a general description of the change will not suffice. EXCEPTION: If no due process but with just cause, then Agabon ruling to apply. The denial of the fundamental right to due process being apparent, the dismissal order in disregard of that right is void for lack of jurisdiction. The cardinal precept is that where there is a violation of basic constitutional rights, courts are ousted from their jurisdiction. The violation of a party’s right to due process raises a serious jurisdictional issue which cannot be glossed over or disregarded at all. It is well settled that a decision rendered without due process is void ab initio and may be attacked at any time directly or collaterally be means of a separate action, or by resisting such decision in any action or proceeding where is it invoked. (Salva vs. Valle, G.R. No. 193773, 02 April 2013; En Banc, citations omitted.)

5.2 ILLEGALITY OF THE ACT OF DISMISSAL - DISMISSAL

WITHOUT JUST CAUSE: Remedies under the Labor Code: 1.

Reinstatement to his former position without loss of seniority rights. If no longer available nor any equivalent position, then separation pay to be given in lieu or reinstatement computed 1 month pay for every year of service.

2.

Payment of FULL backwages corresponding to the period from his illegal dismissal up to actual reinstatement.

3.

Damages plus attorney’s fees.

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5.3 ILLEGALITY IN THE MANNER OF DISMISSAL - DISMISSAL

WITHOUT DUE PROCESS: AGABON RULING)

(WENPHIL,

SERRANO

AND

In any event, NO REINSTATEMENT. However, as regards penalty for non-compliance with due process requirements, the newest Supreme Court ruling circa November 2004 is that the employer shall be sanctioned with penalty of P30,000.00 in accordance with the Agabon vs. NLRC case, which now affirms the Wenphil doctrine and abandoning the Serrano ruling. Agabon vs. NLRC ruling, G.R. No. 158693, 11/17/2004 (for terminations occurring after 17 November 2004) – The Supreme Court has apparently abandoned the Serrano ruling and reverted to the Wenphil ruling, insofar as it ruled that in cases where there was substantial evidence proving just cause BUT that due process was not followed, the termination will be UPHELD (considered valid and effective) but the employee will be penalized the amount of P30,000.00-50,000.00 (see discussion on difference below). The Supreme Court stated that “it would not be right to order either reinstatement of the dismissed employee or the payment of backwages to the employee. But for failing to comply with the procedure prescribed by law in terminating the services of the employee, the employer should be made liable for the payment of separation pay.” Difference in separation pay.-- (Jaka Food Processing v. Pacot, G.R. No. 151378; 28 March 2005) 

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. Hence: P30,000.00 nominal damages for non-compliance with due process, because employee has committed an infraction

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. Hence, P50,000.00 nominal damages for noncompliance with due process, because employee did not commit anything wrong but that the termination was due to an exercise of management prerogatives.

Should employee seek damages on this account, may file with regular court. [Governed exclusively by the Civil Code. (Shoemart vs. NLRC, supra.)]

2014 CASES ON DISMISSALS FOR JUST CAUSE BUT WITHOUT DUE PROCESS 

Libcap Marketing Corp., et al, v. Lanny Jean B. Baquial, G.R. No. 192011, 30 June 2014. -- Valid cause for dismissal but no due process (prejudged guilty of embezzlement as amount deducted each payday even prior to investigation).

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The CA, the NLRC and the Labor Arbiter are correct in concluding that respondent was denied due process, but their reasons for arriving at such conclusion are erroneous. What they seem to have overlooked is that respondent’s case has been pre-judged even prior to the start of the investigation on July 28, 2003. By pre-judging respondent’s case, petitioners clearly violated her right to due process from the very beginning, and from then on it could not be expected that she would obtain a fair resolution of her case. In a democratic system, the infliction of punishment before trial is fundamentally abhorred. What petitioners did was clearly illegal and improper. The only issue that remains to be tackled is the correctness of the award of nominal damages. Petitioners claim that respondent is not entitled to financial assistance given that she is guilty of theft or embezzlement. The law and jurisprudence, on the other hand, allow the award of nominal damages in favor of an employee in a case where a valid cause for dismissal exists but the employer fails to observe due process in dismissing the employee. Financial assistance is granted as a measure of equity or social justice, and is in the nature or takes the place of severance compensation. 

6.

Nancy S. Montinola vs. Philippine Airlines, G.R. No. 198656, 08 September 2014. - llegally suspended employees, similar to illegally dismissed employees, are entitled to moral damages when their suspension is attended with mental anguish, fright, serious anxiety, besmirched reputation, and wounded feelings (Article 2217, Civil Code); exemplary damages when the suspension is effected in a wanton, oppressive or malevolent manner; and attorney’s fees when the employee is compelled to litigate and incur expenses to protect his interest (Article 2208, Civil Code).

ON NOTICE AND HEARING Dept. Order No. 10, Article V; IRR B5 R14 S1-11 6.1 TWO NOTICES REQUIRED: 1ST NOTICE: NOTICE OF APPRAISAL, which is a written notice served on the employee specifying the ground or grounds of termination, and giving the employee reasonable opportunity within which to explain his side 

The first notice should contain a detailed narration of facts and circ*mstances 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, 526 SCRA 116 [29 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, 526 SCRA 408 [04 July 2007])

 QUESTION: HOW SPECIFIC SHOULD THE CAUSE/CHARGE SHEET (PLEASE EXPLAIN MEMO) BE?

SHOW

Answer: It should be specific enough to allow the employee to be informed of the charges against her.

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Hence, in the case of Unilever vs. Ma. Ruby Rivera (ibid., G.R. 201701, 03 June 2013) where the Supreme Court found that there were valid grounds to terminate her from employment, the Court still awarded nominal damages to the employee for failure of the employer Unilever to comply with the procedural requirements of due process. Thus: “In this case, Unilever was not direct and specific in its first notice to Rivera. The words it used were couched in general terms and were in noway informative of the charges against her that may result in her dismissal from employment. Evidently, there was a violation of her right to statutory due process warranting the payment of indemnity in the form of nominal damages.  QUESTION: Is the employer required to inform the employee in the appraisal/charge sheet that he may be terminated for the infraction? ANSWER: NO. Contrary to Esguerra’s allegation, 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 during the second notice that

the intention to terminate one’s employment should be explicitly stated. Dolores T. Esguerra vs. Valle Verde Country Club et. al., G.R. No. 173012, 13 June 2012  ON “REASONABLE OPPORTUNITY”:

This means 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, ibid.)

2ND NOTICE: NOTICE OF TERMINATION, which is a written notice of termination served upon the employee, indicating that upon due consideration of all the circ*mstances, grounds have been established to justify his termination.

6.2 HEARING: The existence of a formal trial-type hearing, ALTHOUGH PREFERRED, is NOT absolutely necessary to satisfy an employee’s right to be heard. (Esguerra vs. Valle Verde Country Club, 672 SCRA 177 [2012]). - a hearing or a conference during which the employee concerned, with the assistance of counsel if he so desires, is given the opportunity to respond to the charge, to present his evidence, or to rebut the evidence presented against him.  note that a formal hearing (as in the manner of regular courts) is not required; only substantial evidence is necessary.

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 There is no necessity for a formal hearing where an employee admits responsibility for the alleged misconduct. It is sufficient that she be informed of the findings of management and the basis of its decision to dismiss her. 6.3 Right to counsel on the part of the employee – is this mandatory and indispensable as part of due process? NO. In the case of Lopez vs. Alturas Group, 11 April 2011, the Supreme Court ruled that 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.”

7. BURDEN OF PROOF RESTS UPON THE EMPLOYER The employer must show that the dismissal of the employee is for just cause. Failure to do so means that the dismissal is not justified and the employee is entitled to reinstatement. In fact, as early as the case of Century Textile Mills vs. NLRC [G.R. No. 77859, 25 May 1988], a finding of the employee’s participation in the criminal conspiracy cannot be made to rest solely on the unilateral declaration of one who is himself a confirmed “co-conspirator.” The coconspirator’s confession must be corroborated by other competent and convincing evidence.

8. ON REINSTATEMENT: 

Reinstatement means the admission of an employee back to work prevailing prior to his dismissal; restoration to a state or position from which one had been removed or separated, which presupposes that there shall be no demotion in rank and/or diminution of salary, benefits and other privileges; if the position previously occupied no longer exists, the restoration shall be to a substantially equivalent position in terms of salary, benefits and other privileges (Banares vs. Tabaco Transport [Velasco case see below] citing Pfizer, Inc. vs. Velasco, G.R. No. 177467, March 9, 2011).

 Where the former position is no longer available, the employee must be reinstated to an equivalent position.  Where the reinstatement is no longer viable in view of the strained relations between the employer and employee, or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of reinstatement

IMPORTANT J. VELASCO CASE ON REINSTATEMENT: Banares vs. Tabaco Women’s Transport Service Cooperative, G.R. No. 197353, 01 April 2013. – Where the reinstatement of the employee (as general manager of TAWTRASCO) was not a real, bona fide reinstatement in the context of the Labor Code and pertinent decisional law, then the employee is entitled to backwages from the time that he was allegedly “reinstated” to the finality of the decision PLUS separation pay in view of strained relations and damages. Facts: General Manager had already previously won his illegal termination case with the Labor Arbiter when TWTSC did not appeal case to the NLRC anymore. Company agreed to pay backwages but due to strained relationship, offered to pay General Manager separation. General Manager 153

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rejected the offer, and in a Compromise Agreement, both parties agreed to reinstatement and payment of backwages in installment. Upon reinstatement however, General Manager was required to report to Virac Catanduanes field office, purportedly to fix its flagging operations and management problems. General Manager went ahead despite his misgivings, and gave a written report making recommendations for rehabitiliation and improvemet of Virac terminal facilities and operations PLUS request for monthly allowance of P1,700 for lodging and food for the duration of the stay in Virac. Company approved rehabilitation plan but denied monthly allowance. General Manager was given only an allocation of P3,000.00 subject to liquidation. Upon inspection by a company officer and a Board Director in Virac, it was found out that General Manager was no longer reporting for work. Company asked General Manager to explain; and General Manager raised his various grievances that his reinstatement to the position was NOT bona fide but “artificial, fake, fictitious and a sham kind of return to work order. I regret to say it so on the following grounds: x x x (4) The place of work x x x was completely devoid of any office materials and equipments needed in the nature of my work. To put in details there was no office table and chairs, no filing cabinets for safekeeping of important documents, no ball-pens, no bond papers etc. x x x [T]here is nothing at all in said place of work for me to say that there was really an office of the General Manager.” Questions: Was there a proper and genuine reinstatement of petitioner to his former position of General Manager of TAWTRASCO without loss of seniority rights and privileges? Was the petitioner’s refusal to report in the Virac terminal constitutive of abandonment? Answer: NO for both issues . The reinstatement of petitioner as general manager of TAWTRASCO, was not a real, bona fide reinstatement in the context of the Labor Code and pertinent decisional law. As such, Petitioner’s refusal, during the period material, to report for work at the Virac terminal does not, without more, translate to abandonment. Ratio Decidendi: The shabby and unfair treatment accorded him or her by the management of TAWTRASCO was made apparent when TAWTRASCO veritably directed petitioner to work under terms and conditions prejudicial to him, the most hurtful cut being that he was required to work without a decent office partly performing a checker’s job. And this embarrassing work arrangement is what doubtless triggered the refusal to work, which under the premises appears very much justified. TAWTRASCO admitted petitioner back to work under terms and conditions adversely dissimilar to those prevailing before his illegal dismissal, which conditions entailed a demotion in rank and diminution of perks and standard privileges. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. In lieu of reinstatement, petitioner is entitled to separation pay equivalent to one (1) month salary for every year of service reckoned from the time he commenced his employment with TAWTRASCO until finality of this Decision. In addition, petitioner is entitled to backwages and other emoluments due him from the time he did not report for work until the finality of this Decision. Said backwages and emoluments shall earn 12% interest from finality of this Decision until fully paid. The payment of legal interest becomes a necessary consequence of the finality of the Court’s Decision, because, reckoned from that time, the said decision becomes a judgment for money which shall earn interest at the rate of 12% per annum.

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 NATURE OF THE REINSTATEMENT. --

ORDER

OF

THE

LABOR

ARBITER

ON

The reinstatement order of the Labor Arbiter is immediately executory even pending appeal. (Article 223 (3), Labor Code; cf Pioneer Texturizing vs. NLRC (280 SCRA 806 [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 (International Container Terminal Services, Inc. vs. NLRC, 360 Phil. 527 [1998]), up to the date of employees actual or payroll reinstatement. Thus, it was held in Garcia vs. Philippine Airlines, Inc. (531 SCRA 574 [2007]), that failure on the part of the employer to exercise the options in the alternative, the employer must pay the employee’s salaries. ADA’S NOTE: Situation: Labor Arbiter dismisses complaint and rules that dismissal is valid, but NLRC reverses on appeal and rules that there is illegal termination, with reinstatement and backwages. Note that in this instance, THE NLRC ORDER OF REINSTATEMENT IS NOT IMMEDIATELY EXECUTORY . The employer need not immediately reinstate the employee, who must first file a Motion for Execution.  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., 401 SCRA 424 [2003], cited in Garcia vs. PAL, G.R. No. 164856, 20 January 2009; En Banc). 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. Phlippine Airlines, G.R. No. 164856, 20 January 2009; En Banc). The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay (or non-execution) must not be due to the employer’s unjustified act or omission. (ibid.) 2015 CASE: Smart Communications, Inc., et al. vs. Jose Leni Z. Solidum, G.R. No. 204646, 15 April 2015. -- In illegal dismissal cases, if the LA ordered reinstatement, and the employer failed to reinstate the employer either actually or in the payroll, and the NLRC on appeal reversed the decision of the LA, the employee is entitled to the accrued salaries and other benefits from the date of the LA’s decision up to the date the NLRC decision becomes final and executory. 155

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9. LIABILITY OF CORPORATE OFFICERS IS JOINT, UNLESS THERE IS

AN EXPRESS PRONOUNCEMENT OF SOLIDARY LIABILITY General Rule 1: Director or corporate officer is not personally liable for the debts of the corporation. Presumption of good faith prevails. Exception: When director or corporate officer is found to be in bad faith in the discharge of the duties and responsibilities. 2014-2015 SC CASES ON LIABILITY OF CORPORATE OFFICIALS 

Essencia Q. Manarpiis vs. Texan Philippines, Inc., et al. G.R. No. 197011, 28 January 2015. -- In labor cases, the SC has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees if done with malice or bad faith.

Ma. Consolacion M. Nahas, doing business as Personnel Employment And Technical Recruitment Agency vs. Juanita L. Olarte, G.R. No. 169247, 02 June 2014. -- Under Section 64 of the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of1995 (RA 8024), the liability of the principal/employer and the recruitment placement agency on any and all claims under this Rule shall be joint and solidary. 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. Hence, Petra Agency/Royal Dream International Services/Consolacion "Marla" Nahas were held jointly and severally ordered to pay complainant Olarte her unpaid salaries.

Carmen Dy-Dumalasa Vs. Domingo Sabado S. Fernandez, et. al., G.R. No. 178760 [23 July 2009]. -- Thus, in order to hold a a director personally liable for debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed. Bad faith does not connote bad judgment or negligence. Bad faith imports a dishonest purpose. Bad faith means breach of a known duty through some ill motive or interest. Bad faith partakes of the nature of fraud. Ineluctably, absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that can be individually attributed to petitioner as an officer thereof, and without the pronouncement in the Decision that she is being held solidarily liable, petitioner is only jointly liable.

General Rule 2: If there is a finding of bad faith, then corporate officer to be held jointly liable with the company for the damages. Exception: When Decision explicitly pronounces solidary liability. In labor cases, the corporate directors and officers are solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. The term “bad faith” contemplates a “state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose.” -- Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, 01 February 2012 156

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The Supreme Court reiterated its ruling in Industrial Management Int’l. Development Corp v. NLRC (G.R. No. 101723, May 11, 2000), and Carag vs. NLRC (G.R. No. 147590, April 2, 2007) that as an elementary principle of procedure, the resolution of the court in a given issue as embodied in the dispositive part of a decision or order is the controlling factor as to settlement of rights of the parties. In the instant case, notwithstanding the finding of bad faith on the part of the management, the dispositive portion of the Labor Arbtier’s Decision did not expressly mention the solidary liability of the officers and Board members, including petitioner. As such, solidary obligation cannot lightly be inferred. There is a solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires. (Carmen Dy-Dumalasa case, ibid.)

10. ON BACKWAGES 10.1 FULL BACKWAGES For termination effected after effectivity of RA 6715 ‘FULL” backwages to be computed from the time of termination to the time of actual reinstatement. “With the passage of RA 6715 which took effect on 21 March 1989, Article 2709 of the Labor Code was thus amended to include payment of “full” backwages. The Mercury drug rule which limited the award of backwages of illegally dismissed workers to three (3) years without deduction or qualification, is no longer applicable.” (Ferrer vs. NLRC) 10.2 BASIS FOR COMPUTING BACKWAGES: The workers are to be paid their backwages fixed as of the time of the dismissal, i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers. Awards including salary differentials are not allowed. (Central Azucarrera de Tarlac vs. Sampang) 10.3 QUESTION: CAN YOU DEDUCT SALARIES EARNED BY EMPLOYEE FROM ANOTHER EMPLOYER DURING THE PENDENCY OF THE CASE? ANSWER: NO. Backwages to be awarded to an illegally dismissed employee should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of illegal dismissal. (Bustamante vs. NLRC) 10.4 2014-2015 SC CASES ON COMPUTATION OF WAGES/BACKWAGES: 

Metroguards Security Agency Corporation etc., vs. Alberto N. Hilongo, G.R. No. 215630, 09 March 2015. -- Separation and back wages must be computed up to that point of the finality of the decision. It is settled that the computation of the monetary awards due to the illegally dismissed employee must continue to run until the final termination of the case on appeal. The recomputation of the monetary awards is a necessary consequence that flows from the nature of the illegal dismissal. Hence, separation pay and backwages must be computed up to that point of the finality of the decision to the account for the time the illegally dismissed employee should have been paid his salary and benefit entitlements. 157

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Concepcion A. Villena vs. Batangas II Electric Cooperative, Inc. et al., G.R. No. 205735, 04 Feb 2015. -- A decision which calls for the payment of “other benefits” should include in the computation all the fringe benefits that the dismissed employee are entitled to receive at the time.

Monachito R. Ampeloquio vs. Jaka Distribution, Inc., G.R. NO. 196936, 02 July 2014; Scope of wages reinstatement “without loss of seniority rights and other privileges.” – The issue in this case is the scope viz-a-viz wages reinstatement “without loss of seniority rights and other privileges.” Seniority rights refer to the creditable years of service in the employment record of the illegally dismissed employee as if he or she never ceased working for the employer. In other words, the employee’s years of service is deemed continuous and never interrupted. Such is likewise the rationale for reinstatement’s twin relief of full backwages. (Labor Code, Article 279.)

10.5 IMPORTANT CASE CLARIFYING FULL BACKWAGES: Nacar vs. Gallery Frames, G.R. No. 189871, 13 August 2013 Labor Arbiter ruled for illegal termination, and ordered payment of backwages and separation pay. Gallery Frames appealed all the way to Supreme Court, which affirmed the decision of the Labor Arbiter. Upon finality of decision, complainant Nacar moved for recomputation of backwages up to the finality of SC judgment. Labor Arbiter refused, stating that the computation of backwages is only up to the time of the Labor Arbiter’s decision because Nacar did NOT appeal and hence, as to Nacar, the decision has become final and executory. Question: Did the Labor Arbiter err in not recomputing backwages all the way to finality of SC decision? Answer: YES, Labor Arbiter’s position is very incorrect. By the nature of an illegal dismissal case, the reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code. The recomputation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected, and this is not a violation of the principle of immutability of final judgments. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where the dismissed employee wins, or loses but wins on appeal). The first part is the ruling that the employee was illegally dismissed. This is immediately final even if the employer appeals – but will be reversed if employer wins on appeal. The second part is the ruling on the award of backwages and/or separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the decision of the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the day when the appellate court’s decision shall become final. That the amount respondents shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it 158

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continued to seek recourses against the Labor Arbiter’s decision. Article 279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point. 11. ATTORNEY’S FEES, TWO CONCEPTS: (Tangga-an vs. Phil. Transmarin Carriers, Inc., et. al., G.R. No. 180636, 13 March 2013.)

a) Ordinary concept An attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. b) Extra-ordinary concept Attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. In Article 2208 of the Civil Code on actions for recovery of wages, it is payable not to the lawyer but to the client, unless there is an agreement between them to the contrary. Article III of the Labor Code is an exception to the declared policy of strict construction in the award of attorney’s fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withhold the wages. Hence, as a result of illegal dismissal, wages are withheld without valid and legal basis. Consequently, complainant is entitled to an award of attorney’s fees in his favor. 2013 CASE: Czarina Malvar s. Krafts Foods Phils, G.R. No. 183952, 09 September 2013. QUESTION: MAY THE COMPLAINANT’S LAWYER (JUSTICE BELLOSILLO), WHO HAD ACCEPTED THE CASE ON CONTINGENCY BASIS BUT WAS TERMINATED PRIOR TO THE SETTLEMENT OF THE CASE, MAY STILL CLAIM ATTORNEY’S FEES? Case for lawyer: It was certain that the compromise agreement was authoried by respondents to evade a possible loss of P182 Million or more as a result of the labor litigation. As counsel, he did everything legally possible to serve and protet her interest. Case for client: No such intention to defraud intervenor of his professional fees. However, the law firm had already ceased after a partner resigned and another partner was appointed to a government position. Supreme Court: For lawyer (Ret. Justice Bellosillo). Intervenor lawyer is still entitled to recover from the Petitioner the full compensation he deserves as 159

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stipulated in the contract. Note that all the elements for full recovery of the Intervenor’s compensation are present:  

Contract between intervenor lawyer and client was reduced in writing Intervenor was dismissed without justifiable cause, and at that stage of proceedings where there is NOTHING left to be done but to await the Decision or Resolution of the case.

It is basic that an attorney is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client. The attorney who had acted in good faith and honesty in representing and serving the interests of the client should be reasonably compensated for his service.

M. RECRUITMENT AND PLACEMENT 1. DISTINCTION BETWEEN LICENSE AND AUTHORITY:  LICENSE means a document issued by the Department of Labor, authorizing a person or entity to operate a private employment agency.  AUTHORITY means a document issued by the Department of Labor, authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. 2. DISTINCTION BETWEEN “PRIVATE EMPLOYMENT AGENCY” VS. “PRIVATE RECRUITMENT AGENCY” VS. “SHIPPING OR MANNING AGENCY”  PRIVATE EMPLOYMENT AGENCY: Refers to any person or entity engaged in the recruitment and placement of workers FOR A FEE, which is charged directly or indirectly, from the workers, or employers, or both. A licensed employment agency may charge and collect fees for employment assistance if the worker has obtained employment through the agency's efforts.  PRIVATE RECRUITMENT AGENCY: Refers to any person or entity engaged in the recruitment and placement of workers, locally or overseas, WITHOUT CHARGING ANY FEE directly or indirectly, from the workers, or employers. Submission by Private Recruitment agency of a VERIFIED UNDERTAKING to the POEA that it will assume JOINT AND SOLIDARY LIABILITY with the employer for all claims and liabilities which might arise in connection with the implementation of employment  MANNING OR SHIPPING AGENCY: Refers to any person, partnership or corporation duly licensed by DOLE to recruit seafarers for vessels plying international waters and for related maritime activities.

3. TYPES OF ILLEGAL RECRUITMENT  SIMPLE (BY LICENSEE): illegal recruitment committed by a licensee or holder of authority against one or two persons only if they commit any of the acts enumerated under Section 6 of Republic Act No. 8042. 160

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 NON-LICENSEE: committed by a person who has neither a license nor authority.  SYNDICATED: that carried out by a group of three (3) or more persons in conspiracy or confederation with one another.  LARGE SCALE or qualified: that committed against 3 or more persons, individually or as a group. 4. ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE, if any of the qualifying circ*mstances exist or when committed: 

BY A SYNDICATE – If it is carried out by a group of 3 or more persons conspiring and/or confederating with one another;

IN LARGE SCALE – If it is committed against 3 or more persons individually or as a group.

5. ILLEGAL RECRUITMENT; elements: Recruitment and placement refers to the act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, LOCALLY OR ABROAD, whether for profit or not. When a person or entity, in any manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. 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. And 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. IMPORTANT J. VELASCO CASE ON ILLEGAL RECRUITMENT: People of the Philippines vs. Gloria Bartolome, G.R. No. 129486, 04 July 2008. – Reiteration of elements of illegal recruitment in large scale. Gloria Bartolome was accused of conspiring with another accused, with grave abuse of trust and confidence reposed on them, and deliberate intent to defraud, to have falsely representing themselves to have the capacity to contract, enlist and recruit four (4) workers for employment in Bahrain abroad, without first obtaining the required license and/or authority from the Department of Labor and Employment, thereby resulting damage and prejudice. Illegal recruitment is committed when two (2) elements concur: First, the offender does not have the required license or authority to engage in the recruitment and placement of workers. Second, the offender undertook (1) recruitment and placement activity defined under Article 13(b) of the Labor Code or (2) any prohibited practice under Art. 34 of the same code. Illegal recruitment is qualified into large scale, when three or more persons, individually or as group, are victimized. 161

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Art. 13(b) of the Labor Code defines recruitment and placement, as follows: x x x [A]ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. After a circ*mspect review of the records, the Court is fully convinced as to accusedappellants guilt of the crime of illegal recruitment in large scale. The first element is present. Accused-appellant had not shown any license to recruit or engage in placement activities. As found by the trial court, the POEA no less initiated the filing of the complaints against accused-appellant, a reality which argues against the existence of such license or authority. Accused-appellant cannot plausibly escape liability for her criminal acts by conveniently pointing to and passing the blame on Capawan as the illegal recruiter. Like the trial court, we entertain serious doubts on this self-serving and gratuitous version of accused-appellant. What is more, her denials cannot prevail over the positive declaration of the prosecution witnesses. It is basic that affirmative testimony of persons who are eyewitnesses of the events or facts asserted easily overrides negative testimony IMPORTANT J. VELASCO CASE ON ILLEGAL RECRUITMENT: People of the Philippines vs. Rodolfo Gallot, G.R. No. 187730, 29 June 2010. – Reiteration of elements of syndicated illegal recruitment. Accused-appellant Gallo and eleven others, were charged with syndicated illegal recruitment and eighteen (18) counts of estafa committed against eighteen complainants, for “having represented themselves to have the capacity to contract, enlist and transport Filipino workers for employment abroad, in exchange for varying fees (from P25,000.00 to P100,000.00 each), as placement fees in connection with their overseas employment, which amounts are in excess of or greater than those specified in the schedule of allowable fees prescribed by the POEA Board Resolution No. 02, Series 1998, and without valid reasons and without the fault of the said complainants failed to actually deploy them and failed to reimburse the expenses incurred by the said complainants in connection with their documentation and processing for purposes of their deployment.” Accused-appellant avers that he cannot be held criminally liable for illegal recruitment because he was neither an officer nor an employee of the recruitment agency. According to him, even assuming that he was an employee, such cannot warrant his outright conviction sans evidence that he acted in conspiracy with the officers of the agency. We disagree. To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity within the meaning of recruitment and placement defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers, and (3) the illegal recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another. When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually or as a group, it is considered an offense involving economic sabotage. Under Art. 13(b) of the Labor Code, recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, 162

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and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. After a thorough review of the records, we believe that the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment. 6. Illegal recruitment as distinguished from estafa A person convicted for illegal recruitment under Labor Code can be convicted for violation of the Revised Penal Code provisions on estafa provided the elements of the crime are present. Estafa under Article 315, par.2 of the RPC is committed by any person who defrauds another by using fictitious name, or falsely pretends to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or by means of similar deceits executed prior to or simultaneously with the commission of the fraud. The offended party must have relied on the false pretense, fraudulent act or fraudulent means of the accused-appellant and as a result thereof, the offended party suffered damages.

7. Persons criminally liable for the above offenses: [R.A. 10022, Sec.4] 

Individuals: principals, accomplices and accessories.

Juridical Persons: the officers having ownership, control, management or direction of their business that are responsible for the commission of the offense and the responsible employees/agents thereof shall be liable.

Where illegal recruitment is proved but the elements of “large scale” or “syndicate” are absent, the accused can be convicted only of “simple illegal recruitment”. (People v. Sagun, G.R. No. 110554, 19 February 1999)

8. Nature of liability of local recruitment agency vs. foreign principal:  

Local Agency is solidarily liable with foreign principal. Severance of relations between local agent and foreign principal does not affect liability of local recruiter.

9. IMPORTANT CASE: Bright Maritime Corporation Vs. Fantonial, G.R. No. 165935, 08 February 2012 Contract of Employment was executed by petitioner Bright Maritime Corporation (BMC) and respondent Ricardo B. Fantonial, which contract was verified and approved by the Philippine Overseas Employment Administration (POEA) on January 17, 2000. The employment contract provided that respondent shall be employed as boatswain of the foreign vessel M/V AUK for one year, with a basic monthly salary of US$450, plus an allowance of US$220. Respondent was made to undergo a medical examination and was issued a Medical Certificate dated January 17, 2000, which certificate had the phrase “FIT TO WORK” stamped on its lower and upper portion. However, he was never deployed because the company said he was not fit to work. Question: Was the contract of employment perfected? 163

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Answer: YES. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by respondent on board the vessel for which service he would be paid the salary agreed upon. Hence, in this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties, respondent and petitioners, who entered into the contract in behalf of their principal, Ranger Marine S.A., thereby signifying their consent to the terms and conditions of employment embodied in the contract, and the contract was approved by the POEA on January 17, 2000. However, the employment contract did not commence, since petitioners did not allow respondent to leave on January 17, 2000 to embark the vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day of departure, although his Medical Certificate dated January 17, 2000 proved that respondent was fit to work. Note that petitioners failed to prove with substantial evidence that they had a valid ground to prevent respondent from leaving on the scheduled date of his deployment. While the POEA Standard Contract must be recognized and respected, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason. Court awarded moral damages in the amount of P30,000.00, plus exemplary damages and attys fees, as petitioners’ act was tainted with bad faith, considering that respondent’s Medical Certificate stated that he was fit to work on the day of his scheduled departure, yet he was not allowed to leave allegedly for medical reasons.

10. IMPORTANT CASE: DO THE PROVISIONS OF THE LABOR CODE STILL APPLY TO FILIPINO OFWS WHO HAVE BEEN DEPLOYED ABROAD AND ARE RETRENCHED BY THE FOREIGN PRINCIPAL? (International Management Services vs. Logarta, G.R. No. 163657, 18 April 2012) Answer: YES. In the case at bar, despite the fact that respondent was employed by

Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code. Foreign employer must comply with all requirements for retrenchment, separation pay and notice requirements. Having failed to comply with procedures (1 month notice), termination is merely procedurally infirm in the light of a valid authorized cause (decrease in need of services as piping designer in the work project requirements).

2012-2015 CASES ON MIGRANT WORKERS  IMPORTANT LEONARDO-DE CASTRO CASE ON SIDE AGREEMENTS: Santosa B. Datuman vs. First Cosmopolitan Manpower and Promotion Services, Inc., G.R. No. 156029, 14 Nov 2008. The subsequently executed side agreement of an OFW with her foreign employer, reducing the salary below the amount approved by the POEA, is void for being contrary to laws, morals and public policy. The said side agreement cannot supersede the terms of the standard employment contract approved by the POEA. Consequently, the solidary liability of respondent with petitioner’s foreign employer for the money claims continues although she was forced to sign another contract. It is the terms of the original POEA164

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approved employment contract that shall govern the relationship of petitioner with the respondent recruitment agency and the foreign employer.  IMPORTANT DOCTRINAL CASE: OFW & Lex loci contractus; “whichever is less” in RA 10022 (as reinstated from RA 8042) is unconstitutional. Sameer Overseas Placement Agency vs. Joy C. Cabiles, G.R. NO. 170139, 05 Aug 2014; En Banc. Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With respect to the rights of overseas Filipino workers, we follow the principle of lex loci contractus. The principle of lex loci contractus (the law of the place where the contract is made) governs in this jurisdiction. There is no question that the contract of employment in this case was perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor apply in this case. By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after compliance with procedural due process requirements. On Section 7, RA 10022 re the clause “or for three (3) months for every year of the unexpired term, whichever is less”. -- Having been illegally dismissed, she is entitled to her salary for the unexpired portion of the employment contract that was violated together with attorney’s fees and reimbursem*nt of amounts withheld from her salary. In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., (601 Phil. 245 (2009) [Per J. Austria-Martinez, En Banc]), this Court ruled that the clause “or for three (3) months for every year of the unexpired term, whichever is less” is unconstitutional for violating the equal protection clause and substantive due process. The clause “or for three (3) months for every year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010. The law passed incorporates the exact clause already declared as unconstitutional, without any perceived substantial change in the circ*mstances. When a law or a provision of law is null because it is inconsistent with the Constitution, the nullity cannot be cured by reincorporation or reenactment of the same or a similar law or provision. A law or provision of law that was already declared unconstitutional remains as such unless circ*mstances have so changed as to warrant a reverse conclusion.  Three (3) requirements that must concur for the complete termination of the employment contract of seafarers. APQ Ship Management Co., Ltd., et al vs. Angelito L. Caseñas, et al. G.R. No. 197303, 04 June 2014 There are three (3) requirements that must concur for the complete termination of the employment contract of seafarers: a) Termination due to expiration or other reasons/ causes; b) Signing off from the vessels; and c) Arrival at the point of hire. The obligations and liabilities of the local agency and its foreign principal do not end upon the expiration of the contracted period as they were duty bound to repatriate the seaman to the point of hire to effectively terminate the contract of employment. The original POEA-approved employment contract subsisted and, thus, the solidary liability of the agent with the principal continued. Any side agreement of an overseas contract worker with her foreign employer is void as against public policy. The said side agreement cannot supersede the POEA-SEC, and the solidary liability subsists in accordance with section 10 of RA8042. Note: CONTRA to theory of imputed knowledge, when it can bind the agency vis-à-vis liability of principal employer; on liability of recruitment agency – (Sunace International Mgmt Services vs. NLRC, GR No. 161757, 25 January 2006).

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The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer Xiong, AND NOT THE OTHER WAY AROUND. The knowledge of the principal-foreign 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 2year employment contract extension of the domestic helper Divina, 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.

 To substitute POEA-certified contract constitutes illegal recruitment. Princess Joy Placement and General Services vs. Binalla, G.R. No. 197005, 04 June 2014 The POEA–certified contract –for all intents and purposes and despite his claim that his signature on the certified contract was forged – was the contract that governed Binalla’s employment with Al Adwani as it was the contract that the Philippine government officially recognized and which formed the basis of his deployment to Saudi Arabia. Clearly, the four-year contract signed by Binalla was substituted for the POEA–certified contract. To substitute or alter employment contracts approved and verified by DOLE is a prohibited practice under Article 34 (i) of the Labor Code. Further, contract substitution constitutes illegal recruitment under Article 38 (I) of the Code.  On solidary liability of principal and agency; Ma. Consolacion M. Nahas, doing business under the name and style Personnel Employment and Technical Recruitment Agency vs. Juanita L. Olarte, G.R. No. 169247, 02 June 2014. Under Section 64 of the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of1995 (RA 8024), the liability of the principal/employer and the recruitment placement agency on any and all claims under this Rule shall be joint and solidary. 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. Hence, Petra Agency/Royal Dream International Services/Consolacion "Marla" Nahas were held jointly and severally ordered to pay complainant Olarte her unpaid salaries.  When contract is deemed perfected; Abosta Ship Management vs. Wilhilm M. Hilario, G.R. No. 195792, 24 Nov 2014. – The contract was already perfected on the date of its execution, which occurred when Abosta and Hilario agreed on the object and the cause, as well as on the rest of the terms and conditions therein. Naturally, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, a breach of which may give rise to a cause of action against the erring party. Also, the POEA Standard Contract must be recognized and respected. Thus, neither the manning agent nor the employer can simply prevent a seafarer from being deployed without a valid reason.

 Where seafarer’s contract expired while vessel was still at sea. Antonio E. Unica vs. Anscor Swire Ship Management Corp., G.R. No. 184318, 12 Feb 2014. -- Unica under his contract was deployed for a period of nine (9) months from January 29, 2000 to October 25, 2000. When his contract expired, the vessel was still at sea. Hence, he was repatriated only on November 14, 2000. Unica contends that since he was allowed to stay in the vessel for another twenty (20) days, there was an implied renewal of his contract of employment. Thus, when he was repatriated without a valid cause, he was illegally dismissed. Issue: Was there an implied renewal of the contract of employment? Answer: No. Seafarers are contractual employees. Thus, when his contract expired, his employment is automatically terminated, there being no mutually agreed renewal. However, he is entitled to be paid his wages after the expiration of his contract 166

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until the vessels arrival at a convenient port. Section 19 of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on-Board Ocean Going Vessels provides as follows: “REPATRIATION. A. If the vessel is outside the Philippines upon the expiration of the contract, the seafarer shall continue his service on board until the vessel’s arrival at a convenient port and/or after arrival of the replacement crew; provided that, in any case, the continuance of such service shall not exceed three months. The seafarer shall be entitled to earned wages and benefits as provided in his contract.”

2014 BAR QUESTION: Lina has been working as a steward with a Miami, U.S.A.-based Loyal Cruise Lines for the past 15 years. She was recruited by a local manning agency, Macapagal Shipping, and was made to sign a 10-month employment contract every time she left for Miami. Macapagal Shipping paid for Lina’s round-trip travel expenses from Manila to Miami. Because of a food poisoning incident which happened during her last cruise assignment, Lina was not re-hired. Lina claims she has been illegally terminated and seeks separation pay. If you were the Labor Arbiter handling the case, how would you decide? (4%) ANSWER: I will dismiss the case. Lina as a seafarer is a contractual employee for a fixed term, governed by the contract she signed. She cannot be considered a regular employee despite the fact that she had been continually rehired and his contract renewed for fifteen (15) years. Her case falls under the exception of Article 280 whose employment has been fixed for a specific project or undertaking. (Millares, et al. vs. NLRC, 385 SCRA 306 [2002].)

N. COMPENSABILITY OF DISABILITY (See Chart on POEA PROCEDURE) 1. IMPORTANT J VELASCO CASES ON COMPENSABILITY: Transocean Ship Management, et al. v. Vedad, G.R. No. 194490-91, 194518 & 194524; 20 March 20, 2013. Facts: Vedad was a seafarer employed as second engineer by Transocean. Before the expiry of his 10-month contract, Vedad was, however, repatriated for medical reasons. On board M/V lnvicta he fell ill and experienced fever, sore throat and pain in his right ear. He underwent medical examination with the finding of “chronic suppurative otitis media right [CSOM(R)] with acute pharyngitis[, with mild] maxillary sinusitis," for which he was prescribed antibiotics and ear drops with the recommendation of a follow-up examination of the CSOM(R). He underwent a follow-up examination on his illness in Tanjung Priok, Indonesia, and consequently, his eventual repatriation for further evaluation and treatment. Vedad immediately reported to the company-designated doctor, Dr. Cruz. The final histopathologic diagnosis reports: "undifferentiated carcinoma (CANCER), right tonsil; and chronic follicular tonsillitis with actinomycosis, left tonsil." The company physician issued his assessment and medical certification that Vedad's cancer was not work-related or work-aggravatedl; he then advised Vedad to undergo chemotherapy and linear treatment at an estimated cost of PhP 500,000, which Transocean and General Marine promised to shoulder. Vedad started with the procedure but could not continue due to the failure of Transocean and General Marine to provide the necessary amount. This constrained Vedad to file, on July 17, 2006, a Complaint before the LA for, among others, total permanent disability benefits and sickness allowance. 167

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Labor Arbiter ruled in favor of Vedad and awarded permanent total disability benefits to Vedad. NLRC REVERSED Labor Arbiter’s decision, and awarded only sickness allowance, on the ground that Vedad was NOT able to prove that the illness was workrelated. CA affirmed the NLRC decision but ordered Transocean to reimburse Vedad’s medical expenses. Question: Is Vedad entitled to permanent total disability benefits on account of an illness while on board ship? Answer: NO. Supreme Court found no compelling reason to deviate from the factual findings of the NLRC Decision that Vedad failed to establish that his illness was workrelated. As such, he is NOT entitled to claim total permanent disability benefits. Ratio decidendi: To be entitled to permanent total disability benefits, it must be established that the illness was work- related. Tonsil cancer or tonsillar carcinoma is, indeed, not work-related, as it is not included in the list of occupational diseases. Moreover, the company physician had even made the same assessment, and as such, Vedad carried the burden of showing by substantial evidence that his cancer developed or was aggravated from work-related causes. It is on this account that Vedad is given the option by the POEA-SEC to seek a second opinion from his preferred physician. And the law has anticipated the possibility of divergence in the medical findings and assessments by incorporating a mechanism for its resolution wherein a third doctor selected by both parties decides the dispute with finality, as provided by Sec. 20(B)(3) of the POEA-SEC. Vedad, however, failed to seek a second opinion from a physician of his choice. Since Vedad did not present any proof of work-relatedness other than his bare allegations, the SC has no option but to declare that the company-designated doctor's certification is the final determination that must prevail. However, the award granted by the NLRC and the CA for payment or reimbursem*nt of the medical expenses of Vedad relative to the required treatment for his cancer is proper. In fact, Transocean, et al. acknowledged offering to shoulder these expenses, and having obliged themselves to shoulder the medical treatment of Vedad, Transocean must be held answerable to said obligation. 2. OFW Re: work-related illness as listed under Sec. 32-A, POEA-SEC; otherwise, proof of reasonable causal connection between work and illness. 2.1

For a seaman’s illness to be compensable; mandatory 3-day rule on postemployment medical examination. Interorient Maritime Enterprises, Inc., vs. Victor M. Creer III, G.R. No. 181921, 17 Sept 2014. For an illness to be compensable, Section 20(B)(6) of the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (2000 Amended Standard Terms and Conditions), deemed incorporated in the POEA Contract, requires the concurrence of two elements: first, that the illness must be work-related; and second, that the work- related illness must have existed during the term of the seafarer’s employment contract (citing: Jebsens Maritime, Inc. v. Undag, G.R. No. 191491, December 14, 2011, 662 SCRA 670, 677); See also Pedro Libang, Jr. vs. Indochina Shipmanagement, Inc., et al, G.R. No. 189863, Sept. 17, 2014.)

2.2

Teekay Shipping Philippines, Inc., v. Exequiel O. Jarin, G.R. No. 195598, 25 June 2014. – Under the 2000 POEA- Standard Employment Contract (SEC), a work-related illness is “any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A with the conditions set therein satisfied.” 168

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The Court has held, however, that the enumeration in Section 32-A does not preclude other illnesses/diseases not so listed from being compensable. The POEA-SEC cannot be presumed to contain all the possible injuries that render a seafarer unfit for further sea duties (Maersk Filipinas Crewing Inc./Maersk Services Ltd., and/or Mr. Jerome Delos Angeles v. Mesina, G.R. No. 200837, [June 5, 2013, 697 SCRA 601]). This is in view of Section 20(B)(4) of the POEA-SEC which states that “(t)hose illnesses not listed in Section 32 of this Contract are disputably presumed as work-related.” Concomitant with such presumption is the burden placed upon the claimant to present substantial evidence that his working conditions caused or at least increased the risk of contracting the disease. It is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted. It is well to note that in resolving disputes on disability benefits, the fundamental consideration has been that the POEA-SEC was designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment onboard ocean-going vessels. As such, its provisions must be construed and applied fairly, reasonably and liberally in their favor because only then can its beneficent provisions be fully carried into effect. ADA’S NOTES:  General rule: If sickness resulting in death or disability is among those listed in POEASEC Sec 32-A, then this is compensable. Exception: If not listed in POEA SEC Sec 32-A, then sickness is disputably presumed to be work-related. Burden is upon OFW (or heirs) to prove reasonable causal connection between work and sickness. POEA SEC, as well as the laws of the Republic of the Philippines, international conventions, treaties and covenants where the Philippines is a signatory, are deemed automatically incorporated into any employment contract entered into by a Filipino OFW.

3. No compensation and benefits are payable for injury, incapacity, disability or death from OFW’s own willful act. 3.1 Wallen Maritime Services, Inc., et. al. vs. Pedrajas, G.R. No. 192993, 11 August 2014 -- The death of a seaman during the term of his employment makes the employer liable to the former’s heirs for death compensation benefits. This rule, however, is not absolute. The employer may be exempt from liability if it can successfully prove that the seaman’s death was caused by an injury directly attributable to his deliberate or willful act. The burden of proof rests on his employer. Thus, Section 20 (D) of the POEA-SEC provides: “No compensation and benefits shall be payable in respect of any injury, incapacity, disability or death of seafarer resulting from his willful or criminal act or intentional breach of his duties x x x.” 3.2 Crewlink vs. Editha Teringterring, G.R. No. 166803, 11 October 2012. -- Where death was due to willful act of the OFW (who jumped into sea twice) even if arising out of alleged mental illness (psychotic disorder, viz., mood disorder bipolar type), then this is NOT compensable. In the instant case, petitioner was able to substantially prove that Jacinto's death was attributable to his deliberate act of killing himself by jumping into the sea. Meanwhile, respondent, other than her bare allegation that her husband was suffering from a mental disorder, no evidence, witness, or any medical report was given to support her claim of Jacinto's insanity. The record does not even 169

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show when the alleged insanity of Jacinto did start. Homesickness and/or family problems may result to depression, but the same does not necessarily equate to mental disorder. The issue of insanity is a question of fact; for insanity is a condition of the mind not susceptible of the usual means of proof.

4. How to establish that disability is compensable; effect of non-disclosure of preexisting ailment. Martin K. Ayungo vs. Beamko Shipmanagement Corp., et al. G.R. No. 203161, 26 Feb 2014. -- For disability to be compensable, the seafarer must establish that there exists “a reasonable linkage between the disease suffered by the employee and his work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing condition he might have had.” (Magsaysay Maritime Services vs. Laurel, G.R. No. 195518, March 20, 2013, 694 SCRA 225.) In other words, not only must the seafarer establish that his injury or illness rendered him permanently or partially disabled, it is equally pertinent that he shows a causal connection between such injury or illness and the work for which he had been contracted. (Magsaysay Maritime Corp. vs. NLRC, G.R. No. 186180, March 22, 2010, 616 SCRA 362.) Non-disclosure of a pre-existing ailment, constitute, fraudulent misrepresentation which, pursuant to Section 20 (E) of the 2000 POEA-SEC, would disqualify a seafarer from claiming any disability benefits from his employer. 5. Medical expenses, sickness allowance and disability benefits are separate and distinct from one another. The late Alberto B. Javier, etc., vs. Philippine Transmarine Carriers, Inc., et al., G.R. no. 204101, 02 July 2014. -- The seafarer is entitled to medical treatment at cost to the employer apart from disability benefits and sickness allowance. The medical treatment is provided him until such time he is declared fit or the degree of his disability has been determined by the company-designated physician. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of his disability has been assessed by the company-designated physician. Medical expenses, sickness allowance and disability benefits are separate and distinct from one another. As a matter of law, the benefit of medical treatment at the employer’s expense is separate and distinct from the disability benefits and sickness allowance to which the seafarer is additionally entitled. 6. Any of these conditions may allow a seafarer to pursue an action for total and permanent disability benefits. Rommel B. Daraug vs. KGJS Fleet Management Manila, Inc., et al., G.R. No. 211211, 14 Jan 2015. See also: See also: Veritas Maritime Corporation, et al. vs. Ramon A. Gepanaga, Jr., G.R. No. 206285, 04 Feb 2015; Alone Amar P. Tagle vs. Anglo-Eastern Crew Management Phils., Inc., et al., G.R. No. 209302, 09 July 2014 A seafarer may have basis to pursue an action for total and permanent disability benefits only if any of the following conditions are present: (a) The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability, hence, justify an extension of the period to 240 days; (b) 240 days had lapsed without any certification issued by the company designated physician; (Pedro Libang, Jr. vs. Indochina Ship Management , Inc., et al., G.R. No. 189863, 17 Sept. 2014.) 170

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(c) The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of choice and the doctor chosen under Section 20-B(3) of the POEA-SEC are of a contrary opinion; (d) The company-designated physician acknowledged that he is partially permanently disabled but other doctors who he consulted, on his own and jointly with his employer, believed that his disability is not only permanent but total as well; (e) The company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability grading; (f) The company-designated physician determined that his medical condition is not compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Section 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work; (g) The company-designated physician declared him totally and permanently disabled but the employer refuses to pay him the corresponding benefits; and (h) The company-designated physician declared him partially and permanently disabled within the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said periods. (C.F. Sharp Crew Management, Inc. vs. Taok, G.R. No. 193679, July 18, 2012; 677 SCRA 296.)

7. GUIDELINES IN DISABILITY CLAIMS: “The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows: 1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel; 2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to repatriated. 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days. For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor’s decision shall be final and binding on both parties. 171

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4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related. 5. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full cost of repatriation in the event the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite earnest efforts. 6. In case of permanent total or partial disability of the seafarer caused by either injury or illness the seafarer shall be compensated in accordance with the schedule of benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was contracted. 8. WHEN NO DECLARATION IS MADE AS TO ILLNESS; PROCEDURE AND EFFECT: Ricardo A. Dalusong Vs. Eagle Clarc Shipping Philippines, Inc., G.R. No. 204233, 03 Sept 2014  OFW contracts sickness or sustains injury resulting in his disability  Upon sign-off, OFW seafarer is required report within 3 days to designated company physician for treatment of injury (considered temporary total disability) up to a period of 120 days. o OFW is to be paid compensation as he is totally unable to work o How much compensation: Basic wage o For how long: From sign-off until he is declared fit to work, or until declaration by physician of his disability (e.., permanent partial or permanent total disability)  If no declaration is made because OFW requires further medical attention, the temporary total disability compensation MAY be extended to a period of 240 days, the compensation extended up to 240 days; subject to the right of the employer to declare within this period that a “permanent partial or total disability already exists”. Alone Amar P. Tagle vs. Anglo-Eastern Crew Management, Phil., Inc., G.R. 209302, 09 July 2014.; see also: See also DSG Shipmanagement Manila, Inc., et al. vs. Joselito B. Pellazar, G.R. No. 198367, 06 Aug 2014; Fil-Pride Shipping Company, Inc., et al. vs. Edgar A. Balasta, G.R. No. 193047, 03 March 2014

 After 240 days and no declaration is made as to the seafarer’s medical condition, then his disability shall be deemed total and permanent. (Dean Tony Abad opinion.)

9.

For a seaman’s illness to be compensable; mandatory 3-day rule on postemployment medical examination. Interorient Maritime Enterprises, Inc., vs. Victor M. Creer III, G.R. No. 181921, 17 Sept 2014. “For a seaman’s claim for disability to prosper, it is mandatory that within three days from his repatriation, he is examined by a company-designated physician. Noncompliance with this mandatory requirement results in the forfeiture of the right to claim for compensation and disability benefits”. SECTION 32-A OCCUPATIONAL DISEASES. -- For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied: 1. The seafarer’s work must involve the risks describe herein; 2. The disease was contracted as a result of the seafarer’s exposure to the describe[d] risks; 172

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3. The disease was contracted within a period of exposure and under such other factors necessary to contract it; 4. There was no notorious negligence on the part of the seafarer. x x x In fine, Victor's claim for disability benefits must be denied for failure to comply with the mandatory three-day rule on post-employment medical examination without any valid or justifiable reason, and for being non-compensable there being no showing that the illness existed during the term of his employment contract or that it is work-related. 10.

IMPORTANT 2013 CASE ON DISABILITY BENEFITS. – Distinction of Supreme Court rulings on whether independent physician’s opinion or company physician’s opinion will be upheld as to work-related disability benefits. (Nazareno vs. Maersk Filipinas, G.R. No. 168703, 26 February 2013, J. Peralta). Principle: Giving of disability benefits to Filipino seafarers is in keeping with the avowed policy of the State to give maximum aid and full protection to labor, holding that the notion of disability is intimately related to the worker’s capacity to earn, and what is compensated is the employee’s inability to work resulting in the impairment of his earning capacity. Disability should be understood less on its medical significance but more on the loss of earning capacity. Further, the Court held that where the evidence may be reasonably interpreted in two divergent ways, one prejudicial and the other favorable to the employee, the balance must be titled in favor of the employee, consistent with the principle of social justice. General rule in seafarer’s disability claims: The company-designated physician initially determines compensability. However, the seafarer may dispute such an assessment by seasonably exercising his prerogative to seek a second opinion and consult a doctor of his choice. (Millan vs. Wallan Maritime Services, Inc. 685 SCRA [2012])  If the independent doctor appointed by the seafarer disagrees with the findings of the company-designated doctor, a third doctor may be agreed jointly between the Employer and the seafarer.  The third doctor’s decision shall be final and binding on both parties In such instance, the independent doctors’ evaluations confirming payment for workrelated injuries will be upheld in cases where their findings contradict the diagnosis of the company-designated physician. PROVIDED, That employee timely questioned the competence of the company-designated physician by immediately consulting two independent doctors. (Nazareno vs. Maersk Filipinas, G.R. No. 168703, 26 February 2013, J. Peralta). When the company-designated physician’s opinion vis-à-vis the contrary opinion of independent doctors will be upheld by the Supreme Court. Vergara vs. Hammonia Maritime Services, Inc., G.R. No. 172933, 06 Oct 2008, cited in Nazareno vs. Maersk Filipinas, G.R. No. 168703, 26 Feb 2013. -- Where it appears that the seafarer failed to follow the procedure outlined in the Standard Employment Contract (SEC) he signed, and said seafarer NEVER questioned the companydesignated doctor’s competence until he filed a petition with the courts. On the contrary, he accepted the company doctor’s assessment of his fitness and even executed a certification to this effect.

11. 2014-2015 CASES 11.1 Dario A. Carcedo, etc. vs. Maine Marine Phil., Inc., et al. G.R. No. 203804,

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15 April 2015. -- Upon notification that the seafarer disagrees with the company doctor’s assessment, the company has the burden of initiating the referral to the third doctor agreed by the parties. 11.2 Wilhelmsen-Smith Bell Manning / Wilhelmsen Ship Management, Ltd. / Fausto R. Preysler, Jr., vs. Allan Suarez, G.R. No. 207328, 20 April 2015. – Compensation benefits for seafarer under POEA-SEC; gradings of disability by company physician; 120-day rule vs. 140 day rule; referral to third doctor by the parties. 11.3 Nicanor Ceriola vs. NAESS Shipping Phil., Inc., et al. G.R. No. 193101, 20 April 2015. – Parameters of work-related illness in resolving seafarer’s claim for disability benefits for the employer to be liable. 11.4 Asmara International Placement Agency, Inc. vs. Mary Ann T. Cancel, G.R. No 616772, 20 April 2015 (Resolution) -- Failure of employment agency to lend succor to OFW from oppressive conditions of employment 11.5 The Heirs of the late Delfin dela Cruz, etc. vs. Philippines Transmarine Carriers, Inc., et al., G.R. No. 196357, 20 April 2015. -- Prescriptive period for filing complaint for disability benefits is three (3) years

12.

2015 LABOR BAR QUESTION: (XV) Victor was hired by a local manning agency as a seafarer cook on board a luxury vessel for an eight-month cruise. While on board, Victor complained of chronic coughing, intermittent fever, and joint pains. He was advised by the ship's doctor to take complete bed rest but was not given any other medication. His condition persisted but the degree varied from day to day. At the end of the cruise, Victor went home to Iloilo and there had himself examined. The examination revealed that he had tuberculosis. (a) Victor sued for medical reimbursem*nt, damages and attorney's fees, claiming that tuberculosis was a compensable illness. Do you agree with Victor? Why or why not? (2%) (b) Due to his prolonged illness, Victor was unable to work for more than 120 days. Will this entitle him to claim total permanent disability benefits? (2%) Answer: (a) For a seaman’s claim for disability to prosper, it is mandatory that within three (3) days from his repatriation, he is examined by a company-designated physician. Noncompliance with this mandatory requirement results in the forfeiture of the right to claim for compensation and disability benefits. Although tuberculosis is an occupational disease and, therefore, compensable, but because Victor failed to comply with the above mandatory requirement, his complaint for disability benefits must perforce be dismissed. (b) By virtue of the above consideration, Victor has forfeited his entitlements. However, it must be noted that the passage of 120 days will not automatically mean that the seafarer is immediately entitled to total permanent disability benefits. It would depend upon the date of the filing of the complaint. If the maritime complaint was filed prior to 6 October 2008, the 120-day rule applies; if, on the other, the complaint was filed from 06 October 2008 onwards, the 240-day rule applies. (Crystal Shipping vs. Natividad, 510 Phil. 332).

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N. PROCEDURES AND REMEDIES (See Charts “F” and “G” on jurisdiction and procedure) 1.

2015 CASES: 1.1. Purisimo M. Cabaobas, et al. vs. Pepsi-Cola Products Phil., Inc., G.R. No. 176908, 25 March 2015. -- If the factual circ*mstances between two cases are substantially the same, the principle of stare decisis shall apply. 1.2. Smart Communications, Inc., et al. vs. Jose Leni Z. Solidum, G.R. No. 204646, 15 April 2015. -- In illegal dismissal cases, if the LA ordered reinstatement, and the employer failed to reinstate the employee either actually or in the payroll, and the NLRC on appeal reversed the decision of the LA, the employee is entitled to the accrued salaries and other benefits from the date of the LA’s decision up to the date the NLRC decision becomes final and executory. 1.3. Manila Mining Corp., vs. Lowito Amor, et al., G.R. No. 182800, 20 April 2015. -Motion to reduce bond; effect of dishonored check. In its motion to reduce bond in the appealed case, the company’s provisional bond in the form of a check was dishonored for payment, thereby rendering the tender thereof ineffectual. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter. Since it is the posting of a cash or surety bond which confers jurisdiction upon the NLRC, non-compliance is fatal and has the effect of rendering the award of the LA final and executory. 1.4. Litex Glass and Aluminum Supply, et al., vs. Dominador B. Sanchez, G.R. No. 198465, 22 April 2015. - Where separation pay not prayed in the complaint or strained relation not raised in the proceedings; when granted. Even if separation pay was not prayed for in the complaint, but if there is enough basis to conclude that there exist an apparent strained relation between the parties, the award of separation pay is an equitable disposition. Even if the issue of strained relation was not raised in the proceedings before the Labor Arbiter, it was nonetheless discussed and argued by the parties in their respective pleadings submitted to the NLRC when the case was brought on appeal. Clearly, there is sufficient basis for the grant of separation pay in lieu of reinstatement.

2.

Teekay Shipping vs. Concha, , GR 185463, 22 Feb 2012 -PRESCRIPTIVE PERIOD FOR TERMINATION CASES.

FOUR YEAR

“One’s employment, profession, trade or calling is a “property right,” within protection of a constitutional guaranty of due process of law. Clearly then, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an action predicated “upon an injury to the rights of the plaintiff,” as contemplated under Art. 1146 of the New Civil Code, which must be brought within FOUR (4) YEARS” . Hence this is the reason why termination cases have a prescriptive period of four (4) years, viz: injury upon rights of plaintiff under art 1146 of Civil Code Onofre V. Montero, et al. vs. Times Transportation Co., Inc., et al., G.R. No. 190828, 16 March 2015. -- Article 1155 of the Civil Code on prescription of action is applicable to labor cases. Hence, the withdrawal of the complaint effectively erased the tolling of the reglementary period. 175

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In the case of Intercontinental Broadcasting Corporation vs. Panganiban (543 Phil. 371 [2007]), the Court held that “although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all.” In like manner, while the filing of the complaint for illegal dismissal before the LA interrupted the running of the prescriptive period, its voluntary withdrawal left the petitioners in exactly the same position as though no complaint had been filed at all. The withdrawal of their complaint effectively erased the tolling of the reglementary period.

2. IMPORTANT CASE: PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.), vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT (G.R. No. 179652, March 6, 2012); Jurisdiction of DOLE on its visitorial power The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer-employee relationship. If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee relationship has already been terminated, or it appears, upon review, that no employer-employee relationship existed in the first place.

TO RECAPITULATE: a. 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 exercises jurisdiction to the exclusion of the NLRC. b. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. c. 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. d. 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.

3. REQUISITES TO PERFECT AN APPEAL FROM LABOR ARBITER TO NLRC. Sarah Lee Philippines, Inc. vs. Macatlang, et al. etc., G.R. Nos. 180147, 180148, 180149, 180150, 180319 and 180685; 04 June 2014.

The requisites for perfection of appeal as embodied in Article 223, as amended, are: (1) payment of appeal fees; 176

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(2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond (equivalent to the monetary award less damages and attorney’s fees) (4) Requisites 1-3 must be satisfied within ten (10) days from receipt of the decision or order appealed from. As a rule, an appeal is perfected only upon the posting of a cash or surety bond. The said posting within the period provided by law is not merely mandatory but jurisdictional. CASES ON POSTING OF APPEAL BOND; 3.1 On Motion to Reduce Bond. -- Andi D. Balite, et al. vs. SS Ventures International, Inc., et al., G.R. No. 195109, 04 Feb 2015; see also: Philippine Touristers, Inc., et al vs. Mas Transit Workers Union-Anglo KMU, etc., G.R. No. 201237, 03 Sept 2014. The NLRC New Rules of Procedure only allow the filing of a motion to reduce bond on two conditions: (1) that there is meritorious ground; and (2) a bond in a reasonable amount is posted. Compliance with the two conditions stops the running of the period to perfect an appeal provided that they are complied within the 10-day reglementary period. In McBurnie vs. Ganzon (G.R. Nos. 178034 & 178117 & 186984 to 85, 17 Oct. 2013) it was held that 10% of the monetary award that is subject of the appeal shall provisionally be deemed the reasonable amount of the bond, in the meantime that the appellant’s motion is pending resolution by the Commission. The appeal bond ought to be reduced in such an amount that the employees would still be assured of at least substantial compensation, in case a judgment award is affirmed. On the other hand, management will not be effectively denied of its statutory privilege of appeal. 3.2 IMPORTANT CASE: Government’s exemption from the posting of appeal bond. -Banahaw Broadcasting Corporation vs. Cayetano Pacana III, et al, G.R. No. 171673, 30 May 2011. -- The Supreme Court, held that as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds. An appeal is only a statutory privilege and it may only be exercised in the manner provided by law. Nevertheless, in certain cases, we had occasion to declare that while the rule treats the filing of a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving monetary awards is sometimes given a liberal interpretation in line with the desired objective of resolving controversies on the merits. The rationale for the appeal bond is to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent. This exemption, however, does not, as a general rule, apply to governmentowned and controlled corporations (GOCCs) for the reason that the latter has a personality distinct from its shareholders. In this case, BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latter’s exemption from the posting of appeal bonds. 3.3 Substantial compliance with cash bond requirement, where bond posted in a previously decided case may be applied to the present case . Lepanto Consolidated Mining Corporation vs. Belio Icao, G.R. No. 196047, 15 January 2014. -177

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Lepanto substantially complied with the appeal bond requirement under the Labor Code and the NLRC Rules. It filed a Consolidated Motion to release the cash bond it posted in another case, which had been decided with finality in its favor with a view to applying the same cash bond to the present case. The decision is based on the following reasons: a. The appeal was filed within the 10-day reglementary period; b. Lepanto has an unencumbered amount of money in the form of cash in the custody of the NLRC; c. The amount of the cash bond posted in the other case is more than enough to cover the appeal bond in the present case; and d. This ruling remains faithful to the spirit behind the appeal bond requirement which is to ensure the workers will receive the money awarded in their favor when the employer’s appeal eventually fails. 3.4 IMPORTANT CASE: contra; no substantial compliance of bond requirement -Philux, Inc. vs. NLRC and Patricia Perjes, G.R. No. 151854, 03 Sept 2008. While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the NLRC Rules of Procedure or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond or where the failure to comply with the requirements for perfection of appeal was justified. Here, the negligence and/or ignorance of the rules of petitioners’ former counsel is not sufficient justification for their failure to comply with the posting of the bond within the reglementary period. Neither can petitioners argue that subsequent but belated posting of the bond be considered as substantial compliance warranting the relaxation of the rules in the interest of justice.

4. VERIFICATION AND CERTIFICATION; 4.1

Forum shopping; Failure to state material dates in petition for certiorari; Appeal from LA to NLRC, requisites; Motion to reduce bond. Sarah Lee Philippines, Inc. vs. Macatlang, et al. etc.,G.R. Nos. 180147, 180148, 180149, 180150, 180319 and 180685; 04 June 2014. -The strict requirements of the law may be dispensed with in the interest of justice. In Acaylar Jr., vs. Harayo (582 Phil. 600 [2008]), it was held that failure to state the material dates is not fatal to the causes of action provided the date of the receipt of the Resolution denying the Motor for Reconsideration is alleged in the petition. It may be said therefore that the failure to state the other material dates may be excused since said dates are evident in the records (Authors’ Opinion.) Of course, it goes without saying that the appeal should be filed within the reglementary period.

4.2 Effect of failure to sign. Emmanuel Babas et al. vs. Lorenzo Shipping Corporation, G.R. No. 186091, 15 Dec 2010.-- A petition satisfies the formal requirements only with regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other petitioners to sign it on their behalf. In the case at bar, only seven (7) of the nine petitioners signed the verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to such non-conforming petitioners. 4.3

Who can sign for the company without need of board resolution. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, et al, G.R. No. 173326, 15 Dec 2010. – 178

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The following can sign the verification and certification against forum shopping without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized signatories, the determination of the sufficiency of the authority was done on a case to case basis. In the foregoing cases the authority of said corporate representatives to sign the verification or certificate is justified in their being in a position to verify the truthfulness and correctness of the allegations in the petition. However, the better procedure is still to append a board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the verification and certification. 4.4 Philtranco Service Enterprises, Inc., et al. vs. Philtranco Workers Union – AGLO, G.R. No. 180962, 26 February 2014. -- Even if a governments office prohibits the filing of a motion for reconsideration, such motion must still be filed for purposes of the filing of a petition for certiorari.

5. COMPUTATION OF MONETARY AWARDS University of Pangasinan, et al. v. Florentino Fernandez, et al., G.R. No. 2111228, 12 November 2014. -- Updating computation of monetary awards is not a violation of the principle of immutability of final judgment; imposable rate of interest Updating the computation of awards to include as well backwages and separation pay corresponding to the period after the rendition of the labor Arbiter’s decision up to its finality is not violative of principle of immutability of a final and executor judgment. (see also session Delights Ice Cream and Fast Foods vs. Court of Appeals, G.R. No. 172149, February 08, 2010; 612 SCRA 10); (Gonzales v. Solid Cement Corporation, G.R. No. 198423, October 23, 2012; 684 SCRA 344.)

While the dispositive portion of the CA decision did not explicitly refer to the 13 th month pay, its inclusion in the computation approved by the Labor Arbiter is proper. (See also Nacar vs. Gallery Frames, G.R. No. 189871, August 13, 2013; 703 SCRA 439; Gonzales vs. Solid Cement, ibid). Rate of interest at 6% imposable upon the total adjudged monetary award. (Nacar vs. Gallery Frames, ibid).

6. IMPORTANT CASE ON QUITCLAIMS: GOODRICH VS. ATIVO, 01 FEB 2010. GENERAL RULE: Courts look with disfavor on quitclaims and releases made by employees who have been pressured into signing them by unscrupulous employers seeking to evade legal responsibilities and frustrate just claims fo employees. EXCEPTION: However, quitclaims will be considered as valid and binding if the employer is able to prove the following:    

Employee executes the quitclaim voluntarily There is no fraud or deceit on the part of the employer Consideration for the quitclaim is credible and reasonable Contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law.

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In this case, employer was able to prove all of the above. The consideration is not grossly inadequate vis-à-vis what they should receive in full. The difference in the anounts expected from those that were received may be considered as a fair and reasonable bargain on the part of the both parties. 7. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012. – NLRC’s Jurisdiction, Probationary Employees, Security of Tenure Issue: WHETHER OR NOT THE NLRC HAS JURISDICTION TO REVIEW ON APPEAL CASES DECIDED BY THE POEA ON MATTERS PERTAINING TO DISCIPLINARY ACTIONS AGAINST PRIVATE RESPONDENTS. Answer: NLRC HAS NO JURISDICTION. Petitioners’ adamant insistence that the NLRC should have appellate authority over the POEA’s decision in the disciplinary action because their complaint against respondents was filed in 1993 was unwarranted. 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. It is clear to us, therefore, that the NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers.The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting overseas workers. Section 28. Jurisdiction of the POEA. – The POEA shall exercise original and exclusive jurisdiction to hear and decide: (a) all cases, which are administrative in character, involving or arising out of violations or rules and regulations relating to licensing and registration of recruitment and employment agencies or entities; and (b) disciplinary action cases and other special cases, which are administrative in character, involving employers, principals, contracting partners and Filipino migrant workers.

8. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.) vs. Philippine National Bank. G.R. No. 171132, August 15, 2012. – Lien on unpaid wages; As to petitioner's argument on the right of first preference as regards unpaid wages, the Court has elucidated in the case of Development Bank of the Philippines v. NLRC that a distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 of the Labor Code, does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted pursuant to PNB 's right as a secured creditor to enforce its lien on specific properties of its debtor, ARCAM. 9. Piercing corporate veil; Liability of corporate officers; Moral and exemplary damages; Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012. – 180

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To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed. In the case at bar, respondents utterly failed to prove by competent evidence that Park Hotel was a mere instrumentality, agency, conduit or adjunct of Burgos, or that its separate corporate veil had been used to cover any fraud or illegality committed by Burgos against the respondents. Accordingly, Park Hotel and Burgos cannot be considered as one and the same entity, and Park Hotel cannot be held solidary liable with Burgos. Nonetheless, although the corporate veil between Park Hotel and Burgos cannot be pierced, it does not necessarily mean that Percy and Harbutt are exempt from liability towards respondents. Verily, a corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. However, corporate officers may be deemed solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith. In the present case, the lower tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously in terminating the services of respondents without any valid ground and in order to suppress their right to self-organization. 10. IMPORTANT CASE: MAY THE ISSUE OF ABSENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BE RAISED FOR THE FIRST TIME ON APPEAL? ANSWER: NO. The alleged absence of employer-employee relationship cannot be raised for the first time on appeal. In its Position Paper, petitioner highlighted respondent’s complicity and involvement in the alleged “fake condemnation” of damaged cigarettes as found by the DFPDC. This, according to petitioner, was a just cause for terminating an employee. With the pleadings submitted by petitioner, together with the corresponding pleadings filed by respondent, the LA and the NLRC declared the dismissal of respondent illegal. These decisions were premised on the finding that there was an employer-employee relationship. Nowhere in said pleadings did petitioner deny the existence of said relationship. Rather, the line of its defense impliedly admitted said relationship. The issue of illegal dismissal would have been irrelevant had there been no employer-employee relationship in the first place. In this case, petitioner insisted that respondent was dismissed from employment for cause and after the observance of the proper procedure for termination. Consequently, petitioner cannot now deny that respondent is its employee. While indeed, jurisdiction cannot be conferred by acts or omission of the parties, petitioner’s belated denial that it is the employer of respondent is obviously an afterthought, a devise to defeat the law and evade its obligations. (Duty Free Phils vs. Tria, G.R. No. 174809, 27 June 2012)

2014 BAR MCQ QUESTION: Non-lawyers can appear before the Labor Arbiter if: (1%) (A) they represent themselves (B) they are properly authorized to represent their legitimate labor organization or member thereof (C) they are duly-accredited members of the legal aid office recognized by the DOJ or IBP (D) they appear in cases involving an amount of less than Php5,000

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2014 BAR QUESTION: Luisito has been working with Lima Land for 20 years. Wanting to work in the public sector, Luisito applied with and was offered a job at Livecor. Before accepting the offer, he wanted to consult you whether the payments that he and Lima Land had made to the Social Security System (SSS) can be transferred or credited to the Government Service Insurance System (GSIS). What would you advice? (4%) ANSWER: Yes, the portability of benefits under RA 7699 would allow the transfer of the payments made by Luisito and Lima Land from SSS to GSIS.

2014 BAR MCQ QUESTION: The jurisdiction of the National Labor Relations Commission does not include: (1%) (A) exclusive appellate jurisdiction over all cases decided by the Labor Arbiter (B) exclusive appellate jurisdiction over all cases decided by Regional Directors or hearing officers involving the recovery of wages and other monetary claims and benefits arising from employer-employee relations where the aggregate money claim of each does not exceed five thousand pesos (Php5,000) (C) original jurisdiction to act as a compulsory arbitration body over labor disputes certified to it by the Regional Directors (D) power to issue a labor injunction

O. SUPREME COURT CASES AFFECTING THE SSS/SSC 1. The Social Security System and the Social Security Commission’s findings of fact regarding the existence of an employer-employee relationship for purposes of coverage under social security laws, are given weight and credence by the Supreme Court. -- GAPAYAO VS. FULO AND SSS, G.R. NO. 193493, 13 JUNE 2013. “At the outset, it is settled that the Supreme Court is NOT a trier of acts, and will not weigh evidence all over again. 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 also finality when affirmed by the Court of Appeals. For as long as these findings are supported by substantial evidence, they must be upheld. A reading of the records reveals that the deceased was indeed a farm worker who was in the regular employ of petitioner. From year to year, starting January 1983 up until his death, the deceased had been working on petitioner’s land by harvesting abaca and coconut, processing copra, and clearing weeds. His employment was continuous in the sense that it was done for more than one harvesting season. Moreover, no amount of reasoning could detract from the fact that these tasks were necessary or desirable in the usual business of petitioner. Lastly, the private respondent was subject to the control of the petitioner company. Xxx We do not give credence to the allegation that the deceased was an independent contractor. Xxx The right of an employee to be covered by the Social Security Act is premised on the existenceof an employer-employee relationship – that having been established, the Court rules in favor of private respondent.” (Gapayao, ibid.; Emphasis supplied.) 182

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2. IMPORTANT J. PRESBITERIO VELASCO CASE: Whether biological parents are precluded from being a beneficiary of an adopted child, when adoptive parent predeceases the adopted child? -- Bartolome vs. SSS And Scanmar Maritime Services, G.R. No. 192531, 12 Nov 2014. Answer: NO. Adoptive parent’s death at the time of the adopted’s minority resulted in the restoration of the biological parent’s parental authority over the adopted child. Facts: John Corcol was employed as an electrician by Scanmar Maritime Services on board vessel Maersk Dansell, and duly enrolled under the government’s Employees’ Compensation Program (ECP). While onboard ship, steel plates fell upon him causing his untimely death in 2008. Subsequently, John’s biological mother Bernardina filed a claim for death benefits as John was still single and childless at the time of his death at age 25. SSS and ECC denied claim upon finding that John was legally adopted by Cornelio Colcol, Bernardina’s grandfather, by virtue of a decree of adoption. Even assuming that Cornelio had predeceased John on October 1987, Bernardina could NOT qualify as John’s secondary beneficiary because “dependent parent” referred to under Article 167 (j) of P.D. No. 626 refers to “legitimate parent” of the covered member, as provided for by Rule XV, Section 1[ c] [1] of the Amended Rules on Employees’ Compensation. Bernardina could not be considered a legitimate parent of John, having given up the latter for adoption to Mr. Cornelio Colcol. Issue: May the biological parent Bernardina be considered a lawful beneficiary of the deceased John Colcol, notwithstanding having given him up for adoption previously? Decision: YES, biological parent may be a beneficiary in this case. Rule XV, Sec. 1(c)(1) of the Amended Rules on Employees’ Compensation deviates from the clear language of Art. 167 (j) of the Labor Code, as amended. Examining the Amended Rules on Employees’ Compensation in light of the Labor Code, as amended, it is at once apparent that the ECC indulged in an unauthorized administrative legislation. In net effect, the ECC read into Art. 167 of the Code an interpretation not contemplated by the provision. Xxx Administrative or executive acts, orders and regulations shall be valid only when they are not contrary to the laws or the Constitution. Thus, the word "relatives" is a general term and when used in a statute it embraces not only collateral relatives but also all the kindred of the person spoken of, unless the context indicates that it was used in a more restrictive or limited sense — which as already discussed earlier, is not so in the case at bar. (Emphasis supplied) In the same vein, the term "parents" in the phrase "dependent parents" in the afore-quoted Article 167 (j) of the Labor Code is used and ought to be taken in its general sense and cannot be unduly limited to "legitimate parents" as what the ECC did. The phrase "dependent parents" should, therefore, include all parents, whether legitimate or illegitimate and whether by nature or by adoption. When the law does not distinguish, one should not distinguish. Plainly, "dependent parents" are parents, whether legitimate or illegitimate, biological or by adoption,who are in need of support or assistance. 183

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Moreover, the same Article 167 (j),as couched, clearly shows that Congress did not intend to limit the phrase "dependent parents" to solely legitimate parents.

3.

REITERATION ENTITLEMENT BENEFITS

OF PRINCIPLES TO DISABILITY

REGARDING OR DEATH

3.1 Burden of proof is upon the claimant to establish that the illness (hypertension) is work-related before he may avail of disability benefits. Employee Gomera has failed to present competent evidence, such as medical records of physician’s reports to objectively substantiate his claim that there is a reasonable link between his work and his ailment. His bare allegations do not, by themselves, make his illness compensable. -- Edilberto Gomera vs. Social Security System, G.R. No. 183264, 26 Jan 2015. 3.2 In order for a beneficiary of an employee to be entitled to death benefits under the SSS, the cause of death of the employee must be a sickness listed as an occupation disease by the ECC; or any other illness caused by employment, subject to proof that the risk of contracting the same is increased by the working conditions. In this case, Systempic Lupus Erythematosus (SLE) is NOT listed as an occupational disease, and hence, Estrella has to prove by substantial evidence the causal relationship between her husband’s illness and his working conditions. Despite having submitted a toxicology report, there is nothing on record proving the causal relationship between Baylon’s work as a laboratory technician at the Chemistry Department of De La Salle University. Having failed that, the claim must perforce be denied. – Estrella D.S. Banez Vs. Social Security System and Dela Salle University, G.R. No. 189574, 18 July 2014.

2015 LABOR BAR QUESTION: (XIV) Luis, a PNP officer, was off duty and resting at home when he heard a scuffle outside his house. He saw two of his neighbors fighting and he rushed out to pacify them. One of the neighbors shot Luis by mistake, which resulted in Luis's death. Marian, Luis's widow, filed a claim with the GSIS seeking death benefits. The GSIS denied the claim on the ground that the death of Luis was not service-related as he was off duty when the incident happened. Is the GSIS correct? (3%) Answer: No. The GSIS is not correct because Luis was just off-duty. A policeman, just like a soldier, is covered by the 24-Hour Duty Rule. He is deemed on round-the-clock duty unless on official leave, in which case his death outside performance of official peace-keeping mission will bar death claim. In this case, Luis was not on official leave and he died in the performance of a peace-keeping mission. Therefore, his death is compensable.

FOR THE BAR EXAMINEES: GOOD LUCK AND GOD BLESS YOU ALL!! ADAMSON FALCONS: SOARING HIGH, DEFYING GRAVITY! VERITAS ET FORTITUDO. PRO DEO ET PATRIA. ONE LYCEUM FIGHT!!!

ADA D. ABAD, 03 OCTOBER 2016 184

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