100 Notes on Labor Law / 2007 / Marlon J.

Manuel
EMPLOYER-EMPLOYEE RELATIONSHIP 1. It is possible for a dual juridical relationshi
p to exist that of employer-employee and vendor-vendee, or that of employeremploy
ee and corporation-stockholder. Control of the employees conduct is the most cruc
ial and determinative indicator of the presence or absence of an employer-employ
ee relationship. The existence of a different kind of juridical relationship bet
ween the parties does not necessarily extinguish the employer-employee relations
hip. In the same way, the existence of an employer-employee relationship cannot
be negated by expressly repudiating it in a contract. 2. The submission of repor
ts and recommendations regarding work progress on a regular basis does not amoun
t to control over the means and methods of work. Not all rules are equivalent to
control, that gives rise to an employer-employee relationship. There is a diffe
rence between rules and guidelines towards the achievement of the mutually desir
ed result without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the party hi
red to the use of such means. The first create no employer-employee relationship
. 3. Exclusivity of service does not necessarily mean that the purported employe
r exercised control over the means and methods of the purported employees work. T
his feature is not meant to change the nature of the relationship between the pa
rties, no r does it necessarily imbue such relationship with the quality of cont
rol envisioned by law as giving rise to an employer-employee relationship. 4. A
person may be paid on the basis of results or time expended on the work, and may
or may not acquire an employment status. Payment by results is merely a method
of computing compensation and not a basis for determining the existence of emplo
yeremployee relationship. Hence, payment by commission or on per-trip basis will
not negate the existence of an employer-employee relationship. 5. A party may r
ender services for another, no matter how necessary for the latters business, eve
n without being hired as an employee. The fact that the worker performs work tha
t is usually necessary and desirable to the business of the employer is not dete
rminative of the existence of an employer-employee relationship. Article 280 of
the Labor Code is not the yardstick for determining the existence of an employer
-employee relationship. The provision merely distinguishes between the two (2) k
inds of employees (regular and non-regular), in an employment relationship that
is not in dispute. 6. The mere presence of the contractors supervisor in the work
premises does not necessarily mean that the contractor had control over the wor
k of the employees. The test to determine the existence of independent contracto
rship is whether one claming to be an independent contractor has contracted to d
o the work on its own account, under its own responsibility, according to its ow
n methods and without being subject to the control of the principal, except only
as to the results. 7. It is not enough to show substantial capitalization or in
vestment in the form of tools and equipment, to be considered as an independent
contractor. In determining the existence of an independent contractor relationsh
ip, several factors might be considered such as: whether the contractor is carry
ing on an independent business; the nature and extent of the work; the skill req
uired; the term and duration of the relationship; the right to assign the perfor
mance of specified pieces of work, the control and supervision of the workers; t
he power of the employer with respect to hiring, firing and payment of the worke
rs of the contractor; the control of the premises; the duty to supply premises,
tools, appliances, materials and labor; and the mode, manner and terms of paymen
t. 8. In legitimate job-contracting, the law creates an employer-employee relati
onship for a limited purpose, i.e., to ensure that the employees are paid their
wages. The principal employer becomes jointly and severally liable with the job
contractor, only for the payment of the employees wages whenever the contractor f
ails to pay the same. In labor -only contracting, the law creates an employer-em
ployee relationship for a comprehensive purpose: to prevent a circumvention of l
abor laws. The contractor is considered merely an agent of the principal employe
r and the latter is responsible to the employees of the contractor as if such em
ployees had been directly employed by the principal. 9. For employees in a contr
acting arrangement, the actual source of the payment of their wage does not matt
er as long as they are paid. As creditors, the employees may collect from anyone

of the solidary debtors. Solidary liability does not mean that two solidary deb
tors are liable for only half of the payment. The employees immediate recourse, h
owever, is with their direct employer. 10. The Constitution declares that the St
ate affirms labor as a primary social economic force. It shall protect the right
s of workers and promote their welfare. The State shall afford full protection t
o labor, local and overseas, organized and unorganized, and promote full employm
ent and equality of employment opportunities for all.
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100 Notes on Labor Law / 2007 / Marlon J. Manuel

CLASSES OF EMPLOYEES 1. What determines whether a certain employment is regular
or not is not the will and word of the employer but the nature of the activities
performed by the employee. The primary standard of determining regular employme
nt is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The test i
s whether the former is usually necessary or desirable in the usual trade or bus
iness of the employer. 2. Whether ones employment is regular is not determined by
the number of hours one works. Hence, part-time work does not necessarily negat
e regular employment. Regular employment status is likewise not determined by th
e manner of compensation. Hence, an employee whose mode of compensation is on a p
er-piece basis can still be a regular employee. 3. The law does not provide the q
ualification that the employee must first be issued a regular appointment or mus
t first be formally declared as such before s/he can acquire a regular status. A
person becomes a regular employee by operation of law. Thus, the status of regu
lar employment attaches to a casual employee on the day immediately after the en
d of his first year of service. 4. For seasonal employees to be excluded from th
ose classified as regular employees, it is not enough that they perform work tha
t is seasonal in nature. They must have been employed only for the duration of o
ne season. If seasonal workers perform the same tasks for the employer every sea
son for several years, they will be considered regular employees for their respe
ctive tasks. Seasonal workers who are called to work from time to time and are t
emporarily laid off during off-season are not separated from service, but merely
considered on leave until re-employed. 5. Project employment contemplates an ac
tivity which is not commonly or habitually performed or such type of work which
is not done on a daily basis but only for a specific duration of time or until c
ompletion, in which case, the services of an employee are necessary and desirabl
e in the employers usual business only for the period of time it takes to complet
e the project. A project could also refer to a particular job or undertaking tha
t is within the regular or usual business of the employer, but which is distinct
and separate, and identifiable as such, from the other undertakings of the empl
oyer. 6. Length of service of a project employee is not the controlling test of
employment classification. Whether one is employed as a project employee or not
would depend on whether s/he was hired to carry out a specific project or undert
aking, the duration and scope of which were specified at the time his/her servic
es were engaged. If there is no specification of the duration and scope, and the
work to be undertaken is usually necessary or desirable in the usual business o
r trade of the employer, then it is regular employment. In project employment, t
he employment is coterminous with the project. 7. A project employee may acquire
the status of a regular employee when the following concur: (a) there is a cont
inuous rehiring of project employees even after the cessation of a project for t
he same tasks or nature of tasks; and (b) the tasks performed by the employees a
re vital, necessary and indispensable to the usual trade or business of the empl
oyer. The length of time during which the employee was continuously rehired is n
ot controlling, but serves as a badge of regular employment. 8. For fixed-term e
mployment to be valid: (a) the fixed period of employment must be knowingly and
voluntarily agreed upon by the parties without any force, duress, or improper pr
essure brought to bear upon the employee and absent any other circumstances viti
ating his/her consent; (b) it satisfactorily appears that the employer and the e
mployee dealt with each other on more or less equal terms with no moral dominanc
e exercised by the former on the latter; and (c) the fixed-term employment is no
t used by the employer to circumvent the employees right to security of t enure.
Utilizing a series of employment contracts of short duration can be considered c
ircumvention. 9. The essence of probationary employment lies in the purpose or o
bjective sought to be attained, i.e., primarily for the employer to determine wh
ether or not the employee is qualified for permanent employment. The word probati
onary implies the purpose of the term, but not its length. The probationary emplo
yee is not entitled to the completion of the probationary period and can be term
inated prior to that completion for a just cause or for failure to qualify as a
regular employee in accordance with reasonable standards made known to the emplo

yee at the time of engagement. 10. A part-time teacher cannot acquire permanent
status despite the length of service. Only when a teacher has served as a full-t
ime employee can such teacher acquire permanent or regular status. Semesters ser
ved as part-time lecturer cannot be credited in computing the number of years th
e teacher has served to qualify for regular status.
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100 Notes on Labor Law / 2007 / Marlon J. Manuel

LABOR STANDARDS 1. The floor wage method involves the fixing of a determinate amou
nt to be added to the prevailing statutory minimum wage rates. The salary-ceiling
method mandates a wage adjustment that will be applied to employees rece iving a
certain denominated salary ceiling. In the salary-ceiling method, workers already
receiving more than the existing minimum wage (up to a certain amount stated in
the Wage Order the ceiling) are also to be given a wage increase. 2. The cause of
action of an entitled employee to claim the service incentive leave pay (SIL) a
ccrues from the moment the employer refuses to remunerate its monetary equivalen
t if the employee did not make use of said leave credits but instead chose to av
ail of its commutation. Accordingly, if the employee wishes to accumulate the le
ave credits and opts for its commutation upon his/her resignation or separation,
the cause of action to claim the whole amount of the SIL shall arise when the e
mployer fails to pay such amount at the time of the resignation or separation fr
om employment. The 3 year prescriptive period commences from the time when the e
mployer refuses to pay its monetary equivalent after demand of commutation or up
on termination of the employees services. 3. The criterion in making a distinctio
n between a supplement and a facility does not so much lie in the kind but the p
urpose. Food or snacks or other convenience provided by the employers are deemed
as supplements if they are granted for the convenience of the employer. 4. Earn
ings and other remunerations which are not part of the basic salary shall not be
included in the computation of the 13th month pay. Managements practice of inclu
ding non-basic benefits in the computation of the 13th month pay for two years,
despite the clarity of the law on this, constitutes voluntary employer practice
which cannot be unilaterally withdrawn by the employer. 5. The mere factual exis
tence of a wage distortion does not ipso facto result to an obligation to rectif
y it absent a law or other source of obligation which requires rectification. Th
e Labor Codes mandate for the correction of a wage distortion contemplates a wage
distortion due to a prescribed law or wage order. It does not cover voluntary a
nd unilateral increases by the employer in fixing hiring rates. 6. The granting
of a bonus is basically a management prerogative which cannot be forced upon the
employer who may not be obliged to assume the onerous burden of granting bonuse
s or other be nefits aside from the employees basic salaries or wages, especially
so if it is incapable of doing so. As an exception, a bonus is demandable only
when there is clear proof that it is made part of the wage or salary or compensa
tion (e.g., salary is partly fixed amount and partly incentive bonus). 7. A poli
cy requiring employees to remain single and providing that they will be separate
d from the service once they marry was declared void, it being violative of the
Labor Codes policy with regard to discri mination against marriage. A policy proh
ibiting employees from marrying co-employees, and requiring one of the spouses t
o resign from the company, was likewise held invalid. However, a policy prohibit
ing employees from marrying employees of a competitor company was upheld. 8. Fiel
d personnel are non-agricultural employees who regularly perform their duties awa
y from the principal place of business or branch office of the employer and whos
e actual hours of work in the field cannot be determined with reasonable certain
ty. If required to be at specific places at specific times, the employees cannot
be considered to be field personnel. The definition is not merely concerned wit
h the location where the employee regularly performs his duties but also with th
e fact that the employees performance is unsupervised by the employer. 9. Fixing
of the work schedule of employees is the employers prerogative. Absent discrimina
tion, as in a situation where the change effected by management with regard to w
orking time is made to apply to all employees whether or not they are members of
the union, it cannot be said that the new schedule prejudices the right to self
-organization. 10. Transfer of employees is within the inherent right of employe
rs to manage their business. This is subject to the condition that it must not b
e motivated by discrimination or bad faith. Furthermore, the transfer may amount
to constructive dismissal when the transfer is unreasonable, inconvenient, or p
rejudicial to the employee, and involves a demotion in rank or diminution of sal
aries, benefits, and other privileges. An act of clear discrimination, insensibi
lity, or disdain by an employer may become so unbearable on the part of the empl

oyee that it will force the employee to quit work.

3

100 Notes on Labor Law / 2007 / Marlon J. Manuel

RECRUITMENT & SSS 1. The term migrant worker includes a Filipino who is hired by a
Philippine corporation to work for its branch abroad, even when the hiring was
done through the branch office while the employee was on a tourist status in the
foreign country. Whether employed locally or overseas, all Filipino workers enj
oy the protective mantle of Philippine labor and social legislation, contract st
ipulations to the contrary notwithstanding. Obtaining a work permit in a foreign
country does not necessarily mean a waiver of ones national laws on labor. That
permit does not automatically mean that the non -citizen is thereby bound by loc
al laws only, i.e., by the laws of the country of work. 2. The obligation of the
recruitment agency and the foreign principal to the employee does not end upon
the expiration of their contract (manning agreement between agency and principal
) but continues up to the termination of the employment contract. In fact, such
liability does not necessarily end upon the termination of employment but upon t
he repatriation of the employee to the Philippines. 3. When after the terminatio
n of the original employment contract, the foreign principal directly negotiated
with the migrant worker and entered into a new and separate employment contract
, without the knowledge and consent of the recruitment agency, the agency cannot
be held liable for the workers claims arising from the contract extension. 4. Th
e solidary nature of the relationship between the local recruitment agency and t
he foreign principal makes them solidarily liable for any violation of the recru
itment agreement or the employment contract. 5. In illegal recruitment, the recr
uiter gives the impression that s/he has the power to send workers abroad. The n
umber of persons dealt with is not an essential ingredient of the act of recruit
ment and placement. There can be recruitment even if only one prospective worker
is involved. Recruitment is deemed committed in large scale, however, if commit
ted against three (3) or more persons individually or as a group. 6. Under the co
untry-team approach, all officers, representatives and personnel of the Philippin
e government posted abroad regardless of their mother agencies shall, on a per c
ountry basis, act as one country-team with a mission under the leadership of the
ambassador. 7. Total disability means the disablement of an employee to earn wa
ges in the same kind of work or similar nature that s/he was trained for, or acc
ustomed to perform, or any kind of work which a person of his/her mentality and
attainment could do. It does not mean absolute helplessness. In disability compe
nsation, it is not the injury which is compensated, but rather it is the incapac
ity to work resulting in the impairment of ones earning capacity. The fact that t
he employee was able to work again after a few years will not negate total disab
ility. It is of no consequence that the employee was cured after a couple of yea
rs. The law does not require that the illness should be incurable. 8. The mandat
ory coverage of SSS is premised on the existence of an employer-employee relatio
nship. Regardless of the nature of employment, whether it is regular or project,
employees are subject of the compulsory coverage under the SSS law, unless thei
r employment falls under the specific exceptions provided by the law. By express
provision of law, casual employees are not subject to compulsory coverage of SS
S. 9. The term primary beneficiaries as of the date of his retirement should inclu
de a dependent spouse who was married to the member after the retirement of the
latter. Classifying dependent spouses and determining their entitlement to survi
vo rs pension based on whether the marriage was contracted before or after the re
tirement of the other spouse, regardless of the duration of the said marriage, b
ears no relation to the achievement of the policy objective of the law. 10. Volu
ntary coverage of the SSS includes Filipinos recruited in the Philippines by for
eign-based employers for employment abroad, and spouses who devote full time to
managing the household and family affairs.
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100 Notes on Labor Law / 2007 / Marlon J. Manuel

RIGHT TO SELF-ORGANIZATION 1. The inclusion in a union of disqualified employees
cannot be used as a ground for a petition for cancellation of union registratio
n, unless such inclusion is due to misrepresentation, false statement or fraud,
in connection with the adoption or ratification of the constitution and by-laws,
the minutes of ratification, and the list of members who took part in the ratif
ication; or in connection with the election of officers, minutes of the election
, and the list of voters. The alleged misrepresentation of a union by making it
appear that its membership was composed purely of rank-and-file employees is not
the misrepresentation that amounts to a ground for cancellation of registration
. 2. The test of supervisory or managerial status depends on whether a person po
ssesses authority to act in the interest of his/her employer and whether such au
thority is not merely routinary or clerical in nature but requires the use of in
dependent judgment. Policy-determining refers to policy-determination in matters t
hat may be the subject of negotiation between management and labor. 3. The prohi
bition in Art. 245 is not confined to a case of individual employees (rank-and-f
ile and supervisors) co-mingling in the same union. The prohibition extends to a
supervisors union joining a national federation the members of which includ e un
ions of rank-and-file employees of the same employer unit. For this extension of
the prohibition in Article 245 to apply, however, two conditions must concur: (
a) the rank-and-file employees are directly under the authority of the superviso
ry employees; and (b) the national federation is actively involved in union acti
vities in the company. Even the membership of a rank-and-file union and a superv
isory union of the same company in two separate federations with a common set of
officers was held to be prohibited co-mingling. 4. The prohibition to join labo
r organizations extends to confidential employees or those who by reason of thei
r positions or nature of work are required to assist or act in a fiduciary manne
r to managerial employees. Two criteria must concur for an employee to be consid
ered a confidential employee: (a) the confidential relationship must exist betwe
en the employee and his superior officer; and (b) the officer must handle respon
sibilities relating to labor relations. A key element that must be considered is
the employees necessary access to confidential labor relations information - acc
ess must not only be incidental but must be necessary in the performance of the
employees duties. 5. False statements made by union officers before and during a
certification election that the union is independent and not affiliated with a n
ational federation interfere with the free choice of the employees, and can be a
valid ground for a protest. A certification election may be set aside for misst
atements made during the campaign, where (1) a material fact has been misreprese
nted; (2) an opportunity for reply has been lacking; and (3) the misrepresentati
on has had an impact on the free choice of the employees in the election. 6. Aft
er a certificate of registration is issued to a union, its legal personality can
not be subject to collateral attack. It may be questioned only in an independent
petition for cancellation. 7. The pendency of a petition for cancellation of a
unions registration will not suspend an ongoing certification election case. Neit
her will such petition for cancellation preclude or suspend collective bargainin
g. The pendency of a petition for cancellation is not a ground for the employer
to refuse to bargain with the certified bargaining agent. 8. The test of whether
an employer has interfered with and coerced employees in the exercise of their
rights to selforganization is whether the employer has engaged in conduct which
it may reasonably be said tends to interfere with the free exercise of the emplo
yees rights. It is not necessary that there be direct evidence that any employee
was in fact coerced. It is only necessary that there is a reasonable inference t
hat anti-union conduct of the employer does have an adverse effect on selforgani
zation and collective bargaining. Under the totality of conduct doctrine, the culp
ability of the employer should be evaluated against the background of and in con
junction with all collateral circumstances. 9. Report of violations of rights an
d conditions of union membership does not always require the support of 30% of t
he union membership. A report of a violation of rights and conditions of members
hip in a labor organization may be made by any member or members especially conc
erned. 10. The State shall regulate the relations between workers and employers,

recognizing the right of labor to its just share in the fruits of production an
d the right of enterprises to reasonable returns on investments. Workers shall p
articipate in policy and decision-making processes affecting their rights and be
nefits as may be provided by law.
5

100 Notes on Labor Law / 2007 / Marlon J. Manuel

COLLECTIVE BARGAINING 1. Collective bargaining is a mutual responsibility of the
employer and the union and is characterized as a legal obligation. The employers
refusal to make a counter-proposal to the unions proposed CBA is an indication o
f bad faith and constitutes an unfair labor practice. As a result of the employe
rs refusal to bargain, the unions proposal shall be considered as the CB A between
the parties. This principle applies to a situation where there is no existing C
BA, and the parties are required to negotiate one, and also, to a situation wher
e there is an existing CBA, and the parties are mandated to renegotiate its prov
isions not later than 3 years from the start of its effectivity. 2. The choice o
f a collective bargaining agent is the sole concern of the employees. The only e
xception to this rule is where the employer has to file the petition for certifi
cation election because it was requested to bargain collectively. The employer h
as no legal standing in a certification election as it cannot oppose the petitio
n or appeal the Med-Arbiter/Secretarys orders related thereto. 3. The law has fix
ed the term of CBAs to a period of five years, in so far as the representation a
spect is concerned. There is no fixed period for the other provisions of the CBA
but the parties are mandated to renegotiate the non-representation provisions n
ot later than 3 years from the start of the CBA. In case of expiration of a CBA,
the hold -over principle applies, i.e., the CBA that has expired shall continue i
n full force and effect until a new CBA is reached by the parties. 4. If an empl
oyer interferes in the selection of the unions negotiators or coerces the union t
o exclude from it s panel of negotiators a representative of the union, and if i
t can be inferred that the employer adopted the said act to yield adverse effect
s on the free exercise of the right to self-organization and to collective barga
ining, the employer commits an unfair labor practice. Substantial evidence of th
e coercion is necessary. 5. The employees sought to be represented by the collec
tive bargaining agent must have substantial mutual interests in terms of employm
ent and working conditions. The express exclusion of certain groups of employees
from the bargaining unit in a previous CBA does not bar any renegotiation for t
he future inclusion of said employees in the unit. 6. A certified bargaining age
nt has the right to be furnished by the employer with the annual audited financi
al statements, including the balance sheet and the profit and loss statement, wi
thin thirty (30) calendar days from the date of receipt of the request. The law
requires a written request from the union as a precondition for this right. 7. T
he terms and conditions of a CBA constitute the law between the parties. A unila
teral policy of the employer that is contrary to the CBA cannot prevail over the
provisions of the CBA. 8. Under D.O. 40-03, a petition for certification electi
on is barred when the duly certified bargaining agent has commenced negotiations
in good faith with the employer within one year from the certification election
and has sustained such negotiations (even beyond one year), also in good faith.
9. The intention of the law is to limit the grounds for appeal that may stay th
e holding of a certification election. Interlocutory orders of the Med-Arbiter a
re not appealable. The Med-Arbiters order granting the conduct of a certification
election in an unorganized establishment shall not be subject to appeal. Any is
sue arising therefrom may be raised by means of protest on the conduct and resul
ts of the certification election. All other orders of the Med-Arbiter granting o
r denying a petition for certification election shall be subject to appeal. 10.
Where a petition for certification election has been filed and upon the Med-Arbi
ters intercession, the parties agree to hold a consent election, the results ther
eof shall constitute a bar to future petitions for certification election, in th
e same manner as a certification election. The same principle applies to a conse
nt election conducted with the intercession of the Regional Office, even if no p
etition for certification election was filed. If an election is conducted upon a
greement by the parties but without the participation of the Regional Office, su
ch election will not serve as a bar to future petitions for certification electi
on.
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100 Notes on Labor Law / 2007 / Marlon J. Manuel

STRIKES 1. A strike is a temporary stoppage of work by the concerted action of t
he employees, as a result of a labor dispute. A picket may be considered a strike
if it causes a work stoppage (such as when the picketers block the delivery of s
upplies o r prevents other employees from reporting for work). Even if the emplo
yer had shut down the operation of one department prior to the picket, if the ot
her departments that were still operating were adversely affected by the picket
in such a way that there was work stoppage, the picket amounted to a strike. An ove
rtime boycott or the concerted refusal of the union members to render overtime wo
rk, after years of regularly having the said arrangement, was also considered a
strike. 2. To be valid, a strike must have as ground either ULP or bargaining de
adlock. As an exception, even if no ULP is committed by the employer, if the emp
loyees believe in good faith that ULP acts exist so as to constitute a valid gro
und to strike, then the strike held pursuant to that belief may be legal as a goo
d faith strike. A mere claim of good faith, however, will not be enough. In addit
ion to such good faith, circumstances must have warranted such belief. 3. In add
ition to the existence of a valid ground, the strike must likewise comply with t
he procedural requirements (notice of strike, notice of the conduct of strike vo
te, actual strike vote, notice of results of vote, cooling-off period, 7-day str
ike ban). The procedural requirements are mandatory and the failure of a union t
o comply with the requirements will render the strike illegal. This strict polic
y applies even to the 24-hour notice to the NCMB of the conduct of the strike vo
te. 4. When the NCMB issues a notice converting the dispute into a preventive me
diation case, the said conversion has the effect of dismissing the notice of str
ike that has been filed. If the union still proceeds with the strike, after such
conversion, then the strike is an illegal strike because the union, at that tim
e, has already lost the notice of strike. 5. As a general rule, the Labor Code p
rohibits the issuance of injunctions or restraining orders in any case growing o
ut of labor disputes. Exceptions to these are the following: (a) the NLRCs power
to enjoin or restrain actual and threatened commission of any or all prohibited
or unlawful acts, or to require the performance of a particular act which, if no
t restrained or performed forthwith, may cause grave or irreparable damage to an
y party or render ineffectual any decision in favor of such party; and (b) the S
ecretary of Labors (and the Presidents) powers to issue assumption or certificatio
n orders. In some cases, the Court has said that the coercive measure of injunct
ion may also be used to restrain an actual or threatened unlawful strike, not ju
st the illegal acts attendant to the strike. 6. When an assumption order (or cer
tification order) is issued, it should mandate the return to work of the striker
s, and the actual reinstatement of the returning strikers. Payroll reinstatement
is not contemplated by the law. Reinstatement must be to the same position of t
he strikers before the strike and this order acts as a limitation on the manager
ial prerogative to transfer and reassign employees. The order to reinstate the r
eturning strikers must cover all strikers and must not be limited to a group of
strikers. In one case, the Court even allowed the assumption order to cover stri
king employees whose membership in the bargaining unit was in question. 7. The m
ere posting of an assumption order in conspicuous places in the picket area does
not satisfy the rigid requirement for proper service. The union affected could
not be adjudged to have defied such order since it was not properly apprised the
reof. 8. Mere finding of the illegality of a strike should not be automatically
followed by wholesale dismissal of the strikers from employment. A union officer
who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during the strike
may be declared to have lost their employment status. An ordinary striking emplo
yee cannot be terminated for mere participation in an illegal strike. 9. The Sec
retary has the prerogative to temper the consequence of the defiance of an assum
ption order. The Secretary may merely suspend rather than dismiss the employees
involved. Labor laws frown upon dismissal. Where a penalty less punitive would s
uffice, an employee should not be sanctioned with a consequence so severe. 10. A
n innocent bystander who seeks an injunction from the regular court against a labo
r strike must show that it is entirely different from, without any connection wh

atsoever to, either party to the dispute, and, therefore, its interests are tota
lly foreign to the context thereof.
7

100 Notes on Labor Law / 2007 / Marlon J. Manuel

TERMINATION DISPUTES (Causes) 1. Gross misconduct is improper or wrong conduct,
the transgression of some established and definite rule of action, a forbidden a
ct, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment. The misconduct must be of such a grave and aggravat
ed character and not merely trivial and unimportant. The misconduct must be work
-related. Failure to formally inform the employer of the employees pregnancy cann
ot be considered grav e misconduct. 2. Willful disobedience, to justify terminat
ion, requires the concurrence of two factors: (a) the employees conduct must have
been willful or intentional, the willfulness being characterized by a wrongful
and perverse attitude; and (b) the order violated must have been reasonable, law
ful, made known to the employee and must pertain to the duties of the employee.
3. Gross negligence implies a want or absence of or failure to exercise slight c
are or diligence, or the entire absence of care. It is a thoughtless disregard o
f consequences without exerting any effort to avoid them. To constitute a valid
ground for dismissal, the negligence must not only be gross, it should also be h
abitual in character. A first time infraction will not justify termination. Poor
performance does not necessarily amount to gross and habitual negligence. 4. Lo
ss of trust and confidence applies only when the employee concerned holds a posi
tion of trust and confidence. It is the breach of this trust that results in the
employers loss of confidence. The breach of trust must be related to the perform
ance of the employees function and must be willful. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as oppo
sed to an act done carelessly or inadvertently. The allegation of breach of trus
t must rest on substantial ground and cannot be dependent on the employers arbitr
ariness. It should be genuine and not simulated; not a mere afterthought to just
ify earlier termination or a subterfuge for causes which are improper, illegal,
unjustified. 5. There is a difference in the treatment of managerial employees f
rom that of rank-and-file employees, insofar as the application of loss of trust
and confidence is concerned. For rank-and-file employees, loss of trust require
s proof of involvement in the events in question. As regards managerial employee
s, mere existence of reasonable basis for believing that the employee has breach
ed the trust of the employer would suffice. 6. Abandonment means the deliberate,
unjustified refusal of the employee to resume his/her employment. For abandonme
nt to be a valid ground for termination, two elements must concur: (a) the emplo
yees intention to abandon; and (b) overt act from which it may be inferred that t
he employee has no more intent to resume his/her work. The immediate filing of a
n illegal dismissal complaint generally negates the employers claim of abandonmen
t. As an exception, this principle does n ot apply when the employee does not as
k for reinstatement in his/her complaint for illegal dismissal. 7. Retrenchment
is a management prerogative resorted to by employers to avoid or minimize busine
ss losses. To justify retrenchment, the employer must prove by sufficient and co
nvincing evidence: (a) the losses expected, which must be substantial; (b) the r
easonable imminence of the losses and the urgency of the retrenchment; and (c) o
ther measures taken by the employer prior or parallel to the retrenchment. For r
etrenchment to be valid, there must be fair and reasonable criteria in the selec
tion of employees who will be affected by the retrenchment program. 8. Redundanc
y is a situation where the personnel complement of the employer is in excess of
the needs of its operations. Mere allegation of redundancy will not suffice. The
re must be adequate proof of the redundancy. Like in retrenchment, the employer
must also prove that it applied fair and reasonable criteria in the implementati
on of the redundancy program. Possible criteria include: (a) less preferred stat
us, e.g. temporary employee; (b) efficiency; and (c) seniority. If the employer
violates its own criteria, then the redundancy cannot be considered valid. 9. Re
signation is defined as the voluntary act of an employee who finds himself/herse
lf in a situation where he/she believes that personal reasons cannot be sacrific
ed in favor of the exigency of the service, and he/she has no other choice but t
o disassociate himself/herself from employment. As a general rule, voluntary res
ignation is inconsistent with the filing of a complaint for illegal dismissal. 1
0. For termination on the ground of disease to be valid, two requisites must con

cur: (a) the disease cannot be cured within 6 months and the continued employmen
t of the concerned employee is prohibited by law or prejudicial to his/her healt
h or to the health of the co-employees; and (b) a certification to that effect m
ust be issued by a competent public health authority.
8

100 Notes on Labor Law / 2007 / Marlon J. Manuel

TERMINATION DISPUTES (Procedure and Effects) 1. Termination for a just cause req
uires two notices to the employee: (a) the show-cause letter requiring the emplo
yee to explain; and (b) the final notice informing the employee of the terminati
on. The first notice must apprise the employee that his/her termination is being
considered due to the acts stated in the notice. The notice must clearly indica
te the possibility of termination. 2. Retrenchment, even if temporary (based on
the employers own program), must still comply with the 30-day prior notice requir
ement. The law does not speak of temporary or permanent retrenchment, hence, the
re is no need to qualify the term. When the law does not distinguish, we must no
t distinguish. 3. Preventive suspension is justified where the employees continue
d employment poses a serious and imminent threat to the life or property of the
employer or the employees co-workers. Without this kind of threat, preventive sus
pension is not proper. No preventive suspension shall last longer than 30 days.
An extension of the suspension beyond 30 days shall be with pay. Any violation o
f this requirement amounts to constructive dismissal. 4. Even if the dismissal o
f an employee is conditioned not on the grounds for termination under the Labor
Code, but pursuant to the provisions of a CBA (eg., a union-security clause), it
is still necessary to observe substantive due process in order to validate the
dismissal. As applied to the Labor Code, adherence to substantive due process is
a requisite for a valid determination that just or authorized causes existed to
justify dismissal. As applied to the dismissals grounded on violations of the C
BA, observance of substantial due process is indispensable in establishing the p
resence of the cause or causes for dismissal as provided for in the CBA. 5. Rein
statement is intended by law as the general rule, i.e., the primary remedy for a
n illegally dismissed employee. It is only when reinstatement is not possible th
at payment of separation pay is awarded to the employee. Payment of separation p
ay in lieu of reinstatement is allowed due to: (a) reasons not attributable to t
he fault of the employer, e.g., closure of the company; (b) the position has alr
eady been abolished and reinstatement to an equivalent position is also not feas
ible; or (c) strained relationship exists between the parties. 6. Substantial ev
idence is required to show that the relationship was indeed strained as a necess
ary consequence of the judicial controversy. The principle of strained relations
should not be used so indiscriminately as to bar the reinstatement of illegally
dismissed workers. It must be alleged and proved during trial. Furthermore, the
strained relationship must be between the dismissed employee and the employer,
not between the dismissed employee and his/her co-employees. 7. The payment of b
ackwages is generally granted on the ground of equity. It is a form of relief th
at restores the income that was lost by reason of the unlawful dismissal. It is
not private compensation or damages but is awarded in furtherance of the public
objective of the law. It is not redress of a private right but rather in the nat
ure of a command to the employer to make public reparation for dismissing an emp
loyee either due to the formers unlawful act or bad faith. Hence, the award of ba
ckwages is not conditioned on the employees ability or inability to, in the inter
im, earn any income. Income earned by the employee during the pendency of the ca
se will not be deducted from the backwages that the employee should receive. The
employees inability to earn during the period (e.g., due to imprisonment) will n
ot negate the award of full backwages. 8. In computing full backwages, the base
figure to be used is pegged at the wage rate at the time of the employees dismiss
al, inclusive of regular allowances that the employee had been receiving. Salary
increases, unless mandated by law or wage order, are a mere expectancy. Such pr
ospective salary increases cannot be included in the computation of the backwage
s. 9. If the dismissal is for just or authorized cause (proved during the trial)
, the procedural infirmity in the termination, i.e., failure of the employer to
comply with the procedural requirements of termination, will not invalidate the
dismissal. The employer should be held liable, however, for non-compliance with
the procedural requirements of due process. Reinstatement will not be ordered. N
o backwages will be awarded. The employee will only be awarded nominal damages.
The amount of nominal damages should be higher in dismissals due to authorized c
auses, compared to dismissals due to just causes. 10. Separation pay as financial

assistance may be granted to a legally dismissed employee on the grounds of equi

ty and social justice. This is not allowed, however, when the dismissal is for s
erious misconduct or some other cause reflecting on the moral character of the e
mployee.
9

100 Notes on Labor Law / 2007 / Marlon J. Manuel

DISPUTE SETTLEMENT 1. Under Article 128 of the Labor Code, the Secretary of Labo
r or his/her duly authorized representatives shall have the power to issue compl
iance orders to give effect to the labor standards provisions of the Code and ot
her labor legislation based on findings of the labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The ex
ercise of this visitorial and enforcement powers can be exercised regardless of
the amount of monetary claims of the employee/s concerned. The P5,000 jurisdicti
onal limitation applicable to employee complaints for simple money claims under
Article 129 does not apply. 2. Where the dispute is just in the interpretation,
implementation or enforcement stage, it may be referred to the grievance machine
ry set up in the CBA or by voluntary arbitration. But where there is already an
actual termination, it becomes a termination dispute that is already cognizable
by the Labor Arbiter. If there is a clear agreement between the parties that a t
ermination dispute will be submitted to voluntary arbitration, then the voluntar
y arbitrator shall have jurisdiction since Article 262 states that all other disp
utes can be referred by agreement to voluntary arbitration. 3. The original and e
xclusive jurisdiction of the Labor Arbiter for money claims is limited only to t
hose arising from statutes or contracts other than a CBA. The Voluntary Arbitrat
or will have original and exclusive jurisdiction over money claims arising from
the interpretation or implementation of the CBA. Of course, this assumes that th
e dispute should be submitted first to the grievance machinery before it can be
brought to voluntary arbitration. 4. The civil aspect of ULP including claims fo
r damages can be within the jurisdiction of the Labor Arbiter. The civil implica
tions thereof do not necessarily defeat its nature as a fundamental labor offens
e. The damages suffered only form part of the civil component of the injury aris
ing from ULP. 5. The holding of an adversarial trial is discretionary on the Lab
or Arbiter and the parties cannot demand it as a matter of right. In administrat
ive proceedings, technical rules of procedure and evidence are not strictly appl
ied; administrative due process cannot be fully equated with due process in its
strict judicial sense. The requirements of due process are deemed to have been s
atisfied when parties are given the opportunity to submit position papers. 6. A
corporate officers dismissal is always a corporate act, or an intra -corporate co
ntroversy, and the nature is not altered by the reason or wisdom with which the
Board of Directors may have in taking such action. Thus, a question involving th
e remuneration of a person who is not a mere employee but a stockholder and offi
cer, is not a simple labor problem but a matter that comes within the area of co
rporate affairs and management. It is a corporate controversy in contemplation o
f the Corporation Code. An office is created by the charter of the corporation and
the officer is elected by the directors or stockholders. 7. The right to appeal
is a statutory right and one who seeks to avail of the right must comply with t
he statute or rules. The requirements for perfecting an appeal within the reglem
entary period must be strictly followed as they are considered indispensable int
erdictions against needless delays. The posting of a cash or surety bond is mand
atory for an appeal by the employer of the Labor Arbiters decision. It was intend
ed to discourage the employer from using an appeal to delay or evade its obligat
ion, and to assure the workers that they will receive the money judgment upon th
e dismissal of the appeal. The perfection of an appeal in the manner and within
the period prescribed by law is not only mandatory but jurisdictional. 8. Legiti
mate waivers that represent a voluntary and reasonable settlement of a worker cla
im should be respected as the law between the parties. Not all quitclaims are pe
r se invalid or against public policy, except: (a) where there is clear proof th
at the waiver was wangled from an unsuspecting or gullible persons, or (b) where
the terms of settlement are unconscionable on their faces. In these cases, the
law will step in to annul the questionable transactions. Such quitclaims are reg
arded as ineffective to bar the workers from claiming their full measure of thei
r legal rights. 9. The authority of the Secretary of Labor to assume jurisdictio
n over a labor dispute necessarily includes and extends to all questions and con
troversies arising therefrom, including cases over which the labor arbiter has e
xclusive jurisdiction (like dismissal of employees and illegality of the strike)

. 10. The decision of the Bureau of Labor Relations, which is made in the exerci
se of its original jurisdiction, may be appealed to the Secretary of Labor. The
BLRs decision, which is made in the exercise of its appellate jurisdiction over d
ecisions of the Regional Director, shall be final and executory.
10