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Case Doctrines in Labor Relations

Kiok Loy v. NLRC


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. So much so that Article 249, par.
(g) of the Labor Code makes it an unfair labor practice for an employer
to refuse 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 an agreement and executing a contract
incorporating such agreement, if requested by either party.
While it is a mutual obligation of the parties to bargain, the
employer, however, is not under any legal duty to initiate contract
negotiation. The mechanics of collective bargaining is set in motion
only when the following jurisdictional preconditions are present,
namely, (1) possession of the status of majority representation of the
employees representative in accordance with any of the means of
selection or designation provided for by the Labor Code; (2) proof of
majority representation; and (3) a demand to bargain under Article
251, par. (a) of the Labor Code.
A Companys refusal to make counter proposal if considered in
relation to the entire bargaining process, may indicate bad faith and
this is specially true where the Unions request for a counter proposal
is left unanswered.

certiorari to the Supreme Court are allowed would not subserve, but
would subvert, the intention of Congress.
General Milling Corp. v. CA
The relation between labor and management should be undisturbed
until the last 60 days of the fifth year.
For refusing to send a counter-proposal to the union and to bargain
anew on the economic terms of the CBA, the company committed an
unfair labor practice under Article 248 of the Labor Code
Under Article 252, both parties are required to perform their mutual
obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement.
The procedure in collective bargaining prescribed by the Code is
mandatory because of the basic interest of the state in ensuring
lasting industrial peace.
Failure by the employer to make a timely reply to the proposals
presented by the union is indicative of its utter lack of interest in
bargaining with the union.
An employers refusal to make a counter-proposal to the unions
proposal for CBA negotiation is an indication of its bad faith. Where
the employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty
to bargain collectively.

Unfair labor practice is committed when it is shown that the


employer, after having been served with a written bargaining proposal
by the petitioning Union, did not even bother to submit an answer or
reply to the said proposal.

Art. 253 mandates the parties to keep the status quo while they are
still in the process of working out their respective proposal and
counter proposal. The general rule is that when a CBA already exists,
its provision shall continue to govern the relationship between the
parties, until a new one is agreed upon.

St. Martin Funeral Home v. NLRC


Ever since appeals from the NLRC to the Supreme Court were
eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of
decisions of the NLRC. The use of the word appeal in relation thereto
could have been a lapsus plumae because appeals by certiorari and
the original action for certiorari are both modes of judicial review
addressed to the appellate courts. The important distinction between
them, however, is that the special civil action of certiorari is within the
concurrent original jurisdiction of the Supreme Court and the Court of
Appeals; whereas to indulge in the assumption that appeals by

Under ordinary circumstances, it is not obligatory upon either side


of a labor controversy to precipitately accept or agree to the proposals
of the other. But an erring party should not be allowed to resort with
impunity to schemes feigning negotiations by going through empty
gestures.
Mindanao Steel Corp. v. Minsteel Free Workers Organization
(MINFREWO-NFL) Cagayan De Oro
Any doubt or ambiguity in the contract between management and
the union members should be resolved in the light of Article 1702 of

Case Doctrines in Labor Relations


the Civil Code which provides: (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 laborer.
The terms and conditions of a collective bargaining contract
constitute the law between the parties. Those who are entitled to its
benefits can invoke its provisions. In the event that an obligation
therein imposed is not fulfilled, the aggrieved party has the right to go
to court for redress.
A wage increase granted by an employer to its employees under the
CBA cannot be considered as creditable benefit or compliance with a
Wage Order because such was intended as a CBA or negotiated wage
increase.
Capitol Medical Center, Inc. v. Trajano
Issue: petition for the cancellation of certificate of registration
involves a prejudicial question that should first be settled before the
Secretary of Labor could order the parties to bargain collectively
Held: No. That there is a pending cancellation proceedings is not a
bar to set in motion the mechanics of collective bargaining. If a
certification election may still be ordered despite the pendency of a
petition to cancel the unions registration certificate, more so should
the collective bargaining process continue despite its pendency.
The majority status of a union is not affected by the pendency of
the Petition for Cancellation pending against it. Unless its certificate of
registration and its status as the certified bargaining agent are
revoked, the Hospital is, by express provision of the law, duty bound
to collectively bargain with the Union.
The discretion to assume jurisdiction may be exercised by the
Secretary of Labor and Employment without the necessity of prior
notice or hearing given to any of the parties. The rationale for his
primary assumption of jurisdiction can justifiably rest on his own
consideration of the exigency of the situation in relation to the
national interests.
Belyca Corp. v. Calleja
The factors in determining the proper constituency of a collective
bargaining unit are (1) will of employees (Glove Doctrine); (2) affinity
and unity of employees interest, such as substantial similarity of work
and duties or similarity of compensation and working conditions; (3)

prior collective bargaining history; and (4) employment status, such as


temporary, seasonal and probationary employees.
community and mutuality of interest test: the test of proper
grouping which calls for the determination of positions and categories
of work to which workers belong, and the unity of employees interest
such as substantial similarity of work and duties
The basic test of an asserted bargaining units acceptability is
whether or not it is fundamentally the combination which will best
assure to all employees the exercise of their collective bargaining
rights.
The employees withdrawal from union membership taking place
after the filing of the petition for certification election will not affect
said petition. On the contrary, the presumption arises that the
withdrawal was not free but was procured through duress, coercion or
for a valuable consideration.
Until a decision, final in character, has been issued declaring the
strike illegal and the mass dismissal or retrenchment valid, the strikers
cannot be denied participation in the certification election
notwithstanding, the vigorous condemnation of the strike and the fact
that the picketing were attended by violence. Under the foregoing
circumstances, it does not necessarily follow that the strikers in
question are no longer entitled to participate in the certification
election on the theory that they have automatically lost their jobs.
The duty of the employer to bargain collectively is nullified if the
purpose of the dismissal of the union members is to defeat the union
in the consent requirement for certification election.
As a general rule, a certification election is the sole concern of the
workers. The only exception is where the employer has to file a
petition for certification election pursuant to Art. 259 of the Labor
Code because the latter was requested to bargain collectively. But
thereafter the role of the employer in the certification process ceases.
The employer becomes merely a bystander
PAL v. NLRC (Aug. 13, 1993)
Issue: whether management may be compelled to share with the
union or its employees its prerogative of formulating a code of
discipline
Held: Yes. Industrial peace cannot be achieved if the employees are
denied their just participation in the discussion of matters affecting

Case Doctrines in Labor Relations


their rights. Thus, even before Article 211 of the labor Code (P.D. 442)
was amended by Republic Act No. 6715, it was already declared a
policy of the State, (d) To promote the enlightenment of workers
concerning their rights and obligations . . . as employees. This was, of
course, amplified by Republic Act No 6715 when it decreed the
participation of workers in decision and policy making processes
affecting their rights, duties and welfare.
St. Scholasticas College v. Torres
Issue: whether the Labor Secretary has the power to assume
jurisdiction over a labor dispute and its incidental controversies,
causing or likely to cause a strike or lockout in an industry
indispensable to the national interest
Held: Yes. The Labor Secretary was explicitly granted by Article 263
(g) of the Labor Code the authority to assume jurisdiction over a labor
dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over the
said labor dispute must include and extend to all questions and
include and extend to all questions and controversies arising
therefrom, including cases over which the Labor Arbiter has exclusive
jurisdiction.
Article 217 of the Labor Code did contemplate of exceptions thereto
where the Secretary is authorized to assume jurisdiction over a labor
dispute otherwise belonging exclusively to the Labor Arbiter.
Article 263 (g) of the Labor Code was broad enough to give the
Secretary of Labor and Employment the power to take jurisdiction over
an issue involving unfair labor practice.
Before the Secretary of Labor and Employment may take
cognizance of an issue which is merely incidental to the labor dispute,
therefore, the same must be involved in the labor disputed itself, or
otherwise submitted to him for resolution. If it was not, and he
nevertheless acted on it, that assumption of jurisdiction is tantamount
to a grave abuse of discretion.
The submission of an incidental issue of a labor dispute, in
assumption and/or certification cases, to the Secretary of Labor and
Employment for his resolution is thus one of the instances referred to
whereby the latter may exercise concurrent jurisdiction together with
the Labor Arbiters.

Issue: whether striking union members, terminated for abandonment


of work after failing to comply strictly with a return-to-work order,
should be reinstated
Held: Article 263 (g) of the Labor Code provides that if a strike has
already taken place at the time of assumption, all striking . . .
employees shall immediately return to work. This means that by its
very terms, a return-to-work order is immediately effective and
executory notwithstanding the filing of a motion for reconsideration. It
must be strictly complied with even during the pendency of any
petition questioning its validity. After all, the assumption and/or
certification order is issued in the exercise of respondent SECRETARYs
compulsive power of arbitration and, until set aside, must therefore be
immediately complied with.
The respective liabilities of striking union officers and members who
failed to immediately comply with the return-to-work order is outlined
in Art. 264 of the Labor Code which provides that any declaration of a
strike or lockout after the Secretary of Labor and Employment has
assumed jurisdiction over the labor dispute is considered an illegal.
act. Any worker or union officer who knowingly participates in a strike
defying a return-to-work order may, consequently, be declared to
have lost his employment status.
Section 6 Rule IX, of the 1990 Rules of Procedure of the NLRC, which
provides the penalties for defying a certification order of the Secretary
of Labor or a return-to-work order of the Commission, also reiterates
the same penalty. It specifically states that non-compliance with the
aforesaid orders, which is considered an illegal act, shall authorize
the Secretary of Labor and Employment or the Commission . . . to
enforce the same under pain of loss of employment status. Under the
Labor Code, assumption and/or certification orders are similarly
treated.
By insisting on staging the restrained strike and defiantly picketing
the company premises to prevent the resumption of operations, the
strikers have forfeited their right to be readmitted, having abandoned
their positions, and so could be validly replaced.
A strike 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. The union officers and members, as a result,
are deemed to have lost their employment status for having
knowingly participated in an illegal act.

Case Doctrines in Labor Relations


The moment a worker defies a return-to-work order, he is deemed
to have abandoned his job. It is already in itself knowingly
participating in an illegal act.
Phimco Industries, Inc. v. Brillantes
The Labor Code vests in the Secretary of Labor the discretion to
determine what industries are indispensable to the national interest.
Accordingly, upon the determination by the Secretary of Labor that
such industry is indispensable to the national interest, he will assume
jurisdiction over the labor dispute in the said industry. This power,
however, is not without any limitation. It covers only strikes or
lockouts adversely affecting the national interest.
The Secretarys assumption of jurisdiction grounded on the alleged
obtaining circumstances and not on a determination that the
industry involved in the labor dispute is one indispensable to the
national interest, the standard set by the legislature, constitutes
grave abuse of discretion amounting to lack of or excess of
jurisdiction.
Caltex refinery Employees Assn. v. Brillantes
The labor secretary should take cognizance of an issue which is not
merely incidental to but essentially involved in the labor dispute itself,
or which is otherwise submitted to him for resolution.
No particular setup for a grievance machinery is mandated by law.
Rather, Article 260 of the Labor Code, as incorporated by RA 6715,
provides for only a single grievance machinery in the company to
settle problems arising from interpretation or implementation of their
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies.
The parties will decide on the number of arbitrators who may hear a
dispute only when the need for it arises. Even the law itself does not
specify the number of arbitrators. In effect, the parties are afforded
the latitude to decide for themselves the composition of the grievance
machinery as they find appropriate to a particular situation.
Assn. of Independent Unions in the Phils. v. NLRC
A union-recognition-strike is calculated to compel the employer to
recognize ones union, and not the other contending group, as the
employees bargaining representative to work out a collective
bargaining agreement despite the striking unions doubtful majority

status to merit voluntary recognition and lack of formal certification as


the exclusive representative in the bargaining unit.
When a collective bargaining agreement has been duly registered in
accordance with Article 231 of the Labor Code, a petition for
certification election or motion for intervention may be entertained
only within 60 days prior to the expiry date of the said agreement.
Outside the said period, the petition for certification election or motion
for intervention cannot be allowed.
To be valid, a strike must be pursued within legal bounds. 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 employers 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.
Union officers are duty bound to guide their members to respect the
law. If instead of doing so, the officers urge the members to violate the
law and defy the duly constituted authorities, their dismissal from the
service is a just penalty or sanction for their unlawful acts.
An ordinary striking employee cannot be terminated for mere
participation in an illegal strike. There must be proof that he
committed illegal acts during the strike 17 and the striker who
participated in the commission of illegal act must be identified. But
proof beyond reasonable doubt is not required. Substantial evidence
available under the attendant circumstances, which may justify the
imposition of the penalty of dismissal, may suffice.
Substantial evidence is more than a mere scintilla. It means such
relevant evidence that a reasonable mind might accept as sufficient to
support a conclusion.
For the severest administrative penalty of dismissal to attach, the
erring strikers must be duly identified. Simply referring to them as
strikers, AIU strikers complainants in this case is not enough to
justify their dismissal.
MSF Tire and Rubber, Inc. v. CA
innocent bystander rule: The right to picket as a means of
communicating the facts of a labor dispute is a phase of the freedom
of speech guaranteed by the constitution. If peacefully carried out, it

Case Doctrines in Labor Relations


cannot be curtailed even in the absence of employer-employee
relationship.
The right is, however, not an absolute one. While peaceful picketing is
entitled to protection as an exercise of free speech, we believe the
courts are not without power to confine or localize the sphere of
communication or the demonstration to the parties to the labor
dispute, including those with related interest, and to insulate
establishments or persons with no industrial connection or having
interest totally foreign to the context of the dispute. Thus the right
may be regulated at the instance of third parties or innocent
bystanders if it appears that the inevitable result of its is to create an
impression that a labor dispute with which they have no connection or
interest exists between them and the picketing union or constitute an
invasion of their rights.
An innocent bystander, who seeks to enjoin a labor strike, must
satisfy the court that aside from the grounds specified in Rule 58 of
the Rules of Court, it is entirely different from, without any connection
whatsoever to, either party to the dispute and, therefore, its interests
are totally foreign to the context thereof.
Art. 279
Pheschem Industrial Corp. v. Moldez
The legal consequences of an illegal dismissal are reinstatement of
the employee without loss of seniority rights and other privileges, and
payment of his full backwages, inclusive of allowances, and other
benefits or their monetary equivalent. The law intended reinstatement
to be the general rule. It is only when reinstatement is no longer
feasible that payment of separation pay is awarded to an illegally
dismissed employee.
Reinstatement is the restoration to a state or condition from which
one had been removed or separated. Payment of separation pay as a
substitute for reinstatement is allowed only under exceptional
circumstances, viz: (1) when reasons exist which are not attributable
to the fault or beyond the control of the employer, such as, when the
employer, who is in severe financial strait and has suffered serious
business losses, has ceased operations, implemented retrenchment,
or abolished the position due to the installation of labor-saving
devices; (2) when the illegally dismissed employee has contracted a
disease and his reinstatement will endanger the safety of his coemployees; or, (3) where strained relationship exists between the
employer and the dismissed employee.

The doctrine of strained relations cannot be used recklessly


or applied loosely to deprive an illegally dismissed employee of his
means of livelihood and deny him reinstatement. While in the natural
course of events, a certain degree of hostility is engendered by
litigation, it will not by itself constitute sufficient proof of the existence
of strained relations to rule out the possibility of reinstatement.
Omission to pray for reinstatement in a position paper before the
labor arbiter cannot be considered as an implied waiver to be
reinstated. It is a mere procedural lapse which should not affect an
employees substantive right to reinstatement.
Bustamante v. NLRC
Art. 280 enumerates two (2) kinds of employees, the regular
employees and the casual employees. The regular employees consist
of the following: (1) those engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of
service whether such service is continuous or broken.
The act of hiring and re-hiring employees over a period of time
without considering them as regular employees evidences bad faith
on the part of an employer. The subsequent rehiring of employees on
a probationary may be a convenient subterfuge on the part of
management to prevent employees from becoming regular
employees.
Asian Terminals, Inc. v. NLRC
To justify the dismissal of an employee for abandonment, an
employer should establish by concrete evidence the concurrence of
two elements: first, that the employee had the intention to
deliberately and without justification abandon his employment or
refuse to resume his work; and second, that the employee performed
overt acts from which it may be deduced that he no longer intended
to work.
Absences incurred by an employee who is prevented from reporting
for work due to his detention to answer some criminal charge is
excusable if his detention is baseless, in that the criminal charge
against him is not at all supported by sufficient evidence.
The fact that the NLRC did not award backwages to the respondents
or that the respondents themselves did not appeal the NLRC decision
does not bar the Court of Appeals from awarding backwages. While as
a general rule, a party who has not appealed is not entitled to

Case Doctrines in Labor Relations


affirmative relief other than the ones granted in the decision of the
court below, the Court of Appeals is imbued with sufficient authority
and discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a
complete and just resolution of the case or to serve the interests of
justice or to avoid dispensing piecemeal justice.
Article 279 of the Labor Code, as amended, mandates that an
illegally dismissed employee is entitled to the twin reliefs of (a) either
reinstatement or separation pay, if reinstatement is no longer viable,
and (b) backwages. Both are distinct reliefs given to alleviate the
economic damage suffered by an illegally dismissed employee and,
thus, the award of one does not bar the other. Both reliefs are rights
granted by substantive law which cannot be defeated by mere
procedural lapses. Substantive rights like the award of backwages
resulting from illegal dismissal must not be prejudiced by a rigid and
technical application of the rules.
Carlos v. CA
The filing of the complaint for illegal dismissal is inconsistent with
resignation. Resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate themselves from their
employment. It must be done with the intention of relinquishing an
office, accompanied by the act of abandonment.
An employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges
and to full back wages, inclusive of allowances, and to other benefits
or their monetary equivalents computed from the time compensation
was withheld up to the time of actual reinstatement.
The grant of back wages allows the unjustly and illegally dismissed
employee to recover from the employer that which the former lost by
way of wages as a result of his dismissal from employment. However,
where reinstatement is no longer feasible due to strained relations
between the parties, separation pay equivalent to one months salary
for every year of service shall be granted.
Issue: When is the period for computation of backwages and
separation pay supposed to end?
Held: The award for separation pay equivalent to one-month pay for
every year of service shall be computed from the time of illegal
dismissal up to the finality of the courts decision.
2005 Revised Rules of Procedure of the National Labor Relations
Commission provides:

Rule VII
Proceeding Before the Commission
xxxx
Section 14. Finality of Decision of the Commission and Entry of
Judgment.
a) Finality of the Decisions, Resolutions or Orders of the Commission.
Except as provided in Section 9 of Rule X, the decisions, resolutions or
orders of the Commission shall become final and executory after ten
(10) calendar days from receipt thereof by the parties.
b) Entry of Judgment. Upon the expiration of the ten (10) calendar
day period provided in paragraph (a) of this Section, the decision,
resolution, or order shall be entered in a book of entries of judgment.
The Executive Clerk or Deputy Executive Clerk shall consider the
decision, resolution or order as final and executory after sixty (60)
calendar days from the date of mailing in the absence of return cards,
certifications from the post office, or other proof of service to parties.
SECTION 15. MOTIONS FOR RECONSIDERATION. Motion for
reconsideration of any decision, resolution or order of the Commission
shall not be entertained except when based on palpable or patent
errors; provided that the motion is under oath and filed within ten (10)
calendar days from receipt of decision, resolution or order, with proof
of service that a copy of the same has been furnished, within the
reglementary period, the adverse party; and provided further, that
only such motion from the same party shall be entertained.
Should a motion for reconsideration be entertained pursuant to this
section, the resolution shall be executory after ten (10) calendar days
from receipt thereof.
RULE XI
Execution Proceedings
xxxx
SECTION 10. Effect of Petition for Certiorari on Execution. A petition
for certiorari with the Court of Appeals or the Supreme Court shall not
stay the execution of the assailed decision unless a restraining order is
issued by said courts.
A prevailing party has a right to move for the execution of the
monetary award of the NLRC pending appeal.

Case Doctrines in Labor Relations


Johnson & Johnson (Phils.), Inc. v. Johnson Office & Sales
Union-Federation of Free Workers
An illegally dismissed employee is entitled to reinstatement as a
matter of right. Where reinstatement is not feasible, expedient or
practical, as where reinstatement would only exacerbate the tension
and strained relations between the parties, or where the relationship
between the employer and employee has been unduly strained by
reason of their irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the
company, it would be more prudent to order payment of separation
pay instead of reinstatement. In other words, the payment of
separation compensation in lieu of the reinstatement of an employee
who was illegally dismissed from work shall be allowed if and only if
the employer can prove the existence of circumstances showing that
reinstatement will no longer be for the mutual benefit of the employer
and employee.
Neither party (employer and employee) can claim that it has the
categorical right to choose between reinstatement and the payment of
the monetary award. Ultimately, the NLRC has the authority to
execute its judgment and to settle any issue that may arise pertaining
to the manner or details of implementing its judgment.
Having been illegally dismissed, complainants-appellants are
normally entitled to reinstatement to their respective former positions
without loss of seniority rights and privileges and to payment of
backwages and other benefits. However, inasmuch, as they are not
entirely faultless as they did not follow exact procedures in the
performance of their duties complainants-appellants should thus be
reinstated to their former position without loss of seniority rights and
privileges but without any backwages whatsoever or in the
alternative, should thus be paid separation pay each equivalent to 1/2
month pay for every year of service.
NYK Intl Knitwear Corp. Phils. v. NLRC
Issue: whether refusal to render night work is tantamount to
abandonment of duties which constitutes a just ground for termination
of service
Held: No. (see requisites of abandonment)
Manager and other responsible officers of the corporation fall within
the meaning of an employer as contemplated by the Labor Code
who may be held jointly and severally liable for the obligations of the
corporation to its dismissed employees.

Restaurante las Conchas v. Llego


Although as a rule, the officers and members of a corporation are
not personally liable for acts done in the performance of their duties,
this rule admits of exceptions, one of which is when the employer
corporation is no longer existing and is unable to satisfy the judgment
in favor of the employee, the officers should be held liable for acting
on behalf of the corporation.
Christian Literature Crusade v. NLRC
In case of defiance or non-compliance with the writ of execution, the
remedy is not for the grant in another writ of execution of continuing
backwages up to the time of actual reinstatement. The remedy is to
file a motion to cite the erring party in contempt.
Solidbank Corp. v. CA
In termination cases, the burden of proof rests upon the employer to
show that the dismissal is for just and valid cause; failure to do so
would necessarily mean that the dismissal was illegal.
As a rule, employees who are illegally dismissed are entitled to full
backwages and reinstatement to their former positions without loss of
seniority rights. There are instances, however, where reinstatement is
no longer viable as where the business of the employer has closed, or
where the relations between the employer and the employee have
been so severely strained that it is not advisable to order
reinstatement, or where the employee decides not to be reinstated.
When an employee explicitly prayed for an award of separation pay in
lieu of reinstatement, he forecloses reinstatement as a relief by
implication.
Art. 280
Francisco v. NLRC
There has been no uniform test to determine the existence of an
employer-employee relation. Generally, courts have relied on the socalled right of control test where the person for whom the services
are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, can help in determining the existence of an
employer-employee relationship.

Case Doctrines in Labor Relations


However, in certain cases the control test is not sufficient to give a
complete picture of the relationship between the parties, owing to the
complexity of such a relationship where several positions have been
held by the worker. There are instances when, aside from the
employers power to control the employee with respect to the means
and methods by which the work is to be accomplished, economic
realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other
capacity.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employers power to control the employee
with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity
or relationship.
broader economic reality test: The determination of the
relationship between employer and employee depends upon the
circumstances of the whole economic activity, 22 such as: (1) the
extent to which the services performed are an integral part of the
employers business; (2) the extent of the workers investment in
equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers opportunity for profit and
loss; (5) the amount of initiative, skill, judgment or foresight required
for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and
the employer; and (7) the degree of dependency of the worker upon
the employer for his continued employment in that line of business.
In a business establishment, an identification card is provided not
only as a security measure but mainly to identify the holder thereof as
a bona fide employee of the firm that issues it. Together with the cash
vouchers covering an employees salaries for the months stated
therein, these matters constitute substantial evidence adequate to
support a conclusion that one is really an employee.
A corporation who registers its workers with the SSS is proof that
the latter were the formers employees. The coverage of Social
Security Law is predicated on the existence of an employer-employee
relationship.
A diminution of pay is prejudicial to the employee and amounts to
constructive dismissal. Constructive dismissal is an involuntary
resignation resulting in cessation of work resorted to when continued
employment becomes impossible, unreasonable or unlikely; when
there is a demotion in rank or a diminution in pay; or when a clear

discrimination, insensibility or disdain by an employer becomes


unbearable to an employee. Where an employee ceases to work due
to a demotion of rank or a diminution of pay, an unreasonable
situation arises which creates an adverse working environment
rendering it impossible for such employee to continue working for his
employer. Hence, his severance from the company was not of his own
making and therefore amounted to an illegal termination of
employment.
Lambo v. NLRC
There are two categories of employees paid by results: (1) those
whose time and performance are supervised by the employer. (Here,
there is an element of control and supervision over the manner as to
how the work is to be performed. A piece-rate worker belongs to this
category especially if he performs his work in the company premises.);
and (2) those whose time and performance are unsupervised. (Here,
the employers control is over the result of the work. Workers on
pakyao and takay basis belong to this group.) Both classes of workers
are paid per unit accomplished. Piece-rate payment is generally
practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in sugar plantations
where the work is performed in bulk or in volumes difficult to quantify.
In determining the existence of an employer-employee relationship,
the following elements must be considered: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employees
conduct. Of these elements, the most important criterion is whether
the employer controls or has reserved the right to control the
employee not only as to the result of the work but also as to the
means and methods by which the result is to be accomplished.
The mere fact that employees are paid on a piece-rate basis does
not negate their status as regular employees. The term wage is
broadly defined in Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed
or ascertained on a time, task, piece or commission basis. Payment by
the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that employees are not
covered by the SSS affect the employer-employee relationship.
To justify a finding of abandonment of work, there must be proof of
a deliberate and unjustified refusal on the part of an employee to
resume his employment. The burden of proof is on the employer to
show an unequivocal intent on the part of the employee to discontinue

Case Doctrines in Labor Relations


employment. Mere absence is not sufficient. It must be accompanied
by manifest acts unerringly pointing to the fact that the employee
simply does not want to work anymore.
Not all quitclaims are per se invalid or against public policy. But
those (1) where there is clear proof that the waiver was wangled from
an unsuspecting or gullible person or (2) where the terms of
settlement are unconscionable on their face are invalid. In these
cases, the law will step in to annul the questionable transaction.
The subordinate position of the individual employee vis-a-vis
management renders him especially vulnerable to its blandishments,
importunings, and even intimidations, and results in his improvidently
waiving benefits to which he is clearly entitled. Thus, quitclaims,
waivers or releases are looked upon with disfavor for being contrary to
public policy and are ineffective to bar claims for the full measure of
the workers legal rights. An employee who is merely constrained to
accept the wages paid to him is not precluded from recovering the
difference between the amount he actually received and that amount
which he should have received.
Brent School, Inc. v. Zamora
There is nothing essentially contradictory between a definite period
of an employment contract and the nature of the employees duties
set down in that contract as being usually necessary or desirable in
the usual business or trade of the employer. The concept of the
employees duties as being usually necessary or desirable in the
usual business or trade of the employer is not synonymous with or
identical to employment with a fixed term. Logically, 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 termination of their
employment relationship, a day certain being understood to be that
which must necessarily come, although it may not be known when.
Seasonal employment, and employment for a particular project
are merely instances employment in which a period, where not
expressly set down, necessarily implied.
Art. 280 impliedly acknowledged the propriety of term employment:
it listed the just causes for which an employer may terminate
employment without a definite period, thus giving rise to the
inference that if the employment be with a definite period, there need
be no just cause for termination thereof if the ground be precisely the
expiration of the term agreed upon by the parties for the duration of
such employment.

Article 280 of the Labor Code has no application to instances where


a fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent, or where 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 over the latter.
Rada v. NLRC
While it is true that the payment of the supersedeas bond is an
essential requirement in the perfection of an appeal, however, where
the fee had been paid although payment was delayed, the broader
interests of justice and the desired objective of resolving controversies
on the merits demands that the appeal be given due course.
Project employees work is coterminous with the project or which
they were hired. Project employees, as distinguished from regular or
non-project employees, are mentioned in section 281 of the Labor
Code as those where the employment has been fixed for a specific
project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee.
Project employees are those employed in connection with a
particular construction project. Non-project (regular) employees are
those employed by a construction company without reference to any
particular project.
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of
projects in which they have been employed by a particular
construction company. Moreover, the company is not required to
obtain clearance from the Secretary of Labor in connection with such
termination.
A non-project employee is different in that the employee is hired for
more than one project. When a project to which they are individually
assigned is completed, they would be assigned to the next project or a
phase thereof. In other words, they belonged to a work pool from
which the company would draw workers for assignment to other
projects at its discretion.
Imbuido v. NLRC

Case Doctrines in Labor Relations


The principal test for determining whether an employee is a project
employee or a regular employee is whether the project employee was
assigned to carry out a specific project or undertaking, the duration
and scope of which were specified at the time the employee was
engaged for that project. A project employee is one whose
employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time
of the engagement of the employee or where the work or service to
be performed is seasonal in nature and the employment is for the
duration of the season.
A project employee or a member of a work pool may acquire the
status of a regular employee when the following concur: (1) There is a
continuous rehiring of project employees even after [the] cessation of
a project; and (2) The tasks performed by the alleged project
employee are vital, necessary and indispensable to the usual
business or trade of the employer.
Low volume of work and belatedly, completion of project are not
valid causes for dismissal under Articles 282 and 283 of the Labor
Code. Thus, petitioner is entitled to reinstatement without loss of
seniority rights and other privileges, and to her full backwages,
inclusive of allowances, and to her other benefits or their monetary
equivalent computed from the time her compensation was withheld
from her up to the time of her actual reinstatement. However,
complying with the principles of suspension of work and no
work, no pay between the end of one project and the start of a new
one, in computing petitioners backwages, the amounts corresponding
to what could have been earned during the periods from the date
petitioner was dismissed until her reinstatement when private
respondent was not undertaking any project, should be deducted.
Fatima v. Natl Federation of Sugarcane WorkersFood and
General Trade
For employees to be excluded from those classified as regular
employees, it is not enough that they perform work or services that
are seasonal in nature. They must have also been employed only for
the duration of one season.
The primary standard of determining regular employment is the
reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the
employer. The test is whether the former is usually necessary or
desirable in the usual trade or business of the employer. The
connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or

trade in its entirety. Also if the employee has been performing the job
for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for
its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such
activity and while such activity exists.
The fact that workers do not work continuously for one whole year
but only for the duration of the season does not detract from
considering them in regular employment since seasonal workers who
are called to work from time to time and are temporarily laid off during
off-season are not separated from service in said period, but merely
considered on leave until re-employed.
Where there is no showing of clear, valid and legal cause for the
termination of employment, the law considers the matter a case of
illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause.
Millares v. NLRC
Article 280 of the Labor Code does not apply to overseas
employment.
C-E Construction Corp. v. NLRC
Even after a judgment has become final and executory, an appellate
court may still modify or alter it when intervening circumstances
render execution of that decision unjust and inequitable. This principle
does not apply, however, when the basis for modification is previously
existing evidence that a party fails to adduce during the hearing on
the merits, despite ample opportunity to do so.
Except for correction of clerical errors, final and executory
judgments can neither be amended nor altered, even if the purpose is
to correct erroneous conclusions of fact or of law.
The payment of full back wages must be given without diminution
of income earned during the no-work status of an illegally dismissed
employee.
Sonza v. ABS-CBN Broadcasting Corp.
The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor. This test
is based on the extent of control the hirer exercises over a worker. The

10

Case Doctrines in Labor Relations


greater the supervision and control the hirer exercises, the more likely
the worker is deemed an employee. The converse holds true as well
the less control the hirer exercises, the more likely the worker is
considered an independent contractor.
A radio broadcast specialist who works under minimal supervision is
an independent contractor. Being an exclusive talent does not by itself
mean that a TV/radio talent is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to
the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted
practice in the entertainment industry.46 This practice is not designed
to control the means and methods of work of the talent, but simply to
protect the investment of the broadcast station. The broadcast station
normally spends substantial amounts of money, time and effort in
building up its talents as well as the programs they appear in and thus
expects that said talents remain exclusive with the station for a
commensurate period of time. Normally, a much higher fee is paid to
talents who agree to work exclusively for a particular radio or
television station. In short, the huge talent fees partially compensates
for exclusivity.
In a labor-only contract, there are three parties involved: (1) the
labor-only contractor; (2) the employee who is ostensibly under the
employ of the labor-only contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the labor-only
contractor is the agent of the principal. The law makes the
principal responsible to the employees of the labor-only contractor
as if the principal itself directly hired or employed the employees.
Viernes v. NLRC
Reinstatement means restoration to a state or condition from
which one had been removed or separated. In case of probationary
employment, Article 281 of the Labor Code requires the employer to
make known to his employee at the time of the latters engagement of
the reasonable standards under which he may qualify as a regular
employee.
Under Article 280 of the Labor Code, a regular employee is one who
is engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer, or a casual employee
who has rendered at least one year of service, whether continuous or
broken, with respect to the activity in which he is employed.

The primary standard, therefore, of determining regular


employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or
business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of the
work performed and its relation to the scheme of the particular
business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity and while such activity exists.
An employer becomes liable to pay indemnity to an employee who
has been dismissed if, in effecting such dismissal, the employer fails
to comply with the requirements of due process. The indemnity is in
the form of nominal damages intended not to penalize the employer
but to vindicate or recognize the employees right to procedural due
process which was violated by the employer. Under Article 2221 of the
Civil Code, nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
Indemnity is not incompatible with the award of backwages. These
two awards are based on different considerations. Backwages are
granted on grounds of equity to workers for earnings lost due to their
illegal dismissal from work. On the other hand, the award of
indemnity, as we have earlier held, is meant to vindicate or recognize
the right of an employee to due process which has been violated by
the employer.
Article 283 of the Labor Code requires an employer to serve a notice
of dismissal upon the employees sought to be terminated and to the
Department of Labor, at least one month before the intended date of
termination. Failure of the employer to comply therewith renders him
liable to pay indemnity to the dismissed employee.
Remington Industrial Sales Corp. v. Castaeda
A househelper in the staff houses of an industrial company is a
regular employee of the said firm.
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as
amended, the terms househelper or domestic servant are

11

Case Doctrines in Labor Relations


defined as follows: The term househelper as used herein is
synonymous to the term domestic servant and shall refer to any
person, whether male or female, who renders services in and about
the employers 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 employers
family.
Such househelper or domestic servant is employed in the
employers home to minister exclusively to the personal comfort and
enjoyment of the employers family. Such definition covers family
drivers, domestic servants, laundry women, yayas, gardeners,
houseboys and similar househelps.
The criteria is the personal comfort and enjoyment of the family of
the employer in the home of said employer. While it may be true that
the nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be similar
in nature, the difference in their circumstances is that in the former
instance they are actually serving the family while in the latter case,
whether it is a corporation or a single proprietorship engaged in
business or industry or any other agricultural or similar pursuit,
service is being rendered in the staffhouses or within the premises of
the business of the employer. In such instance, they are employees of
the company or employer in the business concerned entitled to the
privileges of a regular employee.
The mere fact that the househelper or domestic servant is working
within the premises of the business of the employer and in relation to
or in connection with its business, as in its staffhouses for its guest or
even for its officers and employees, warrants the conclusion that such
househelper or domestic servant is and should be considered as a
regular employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII, Section
1(b), Book 3 of the Labor Code, as amended.
A regular employee enjoys the right to security of tenure under
Article 279 of the Labor Code and may only be dismissed for a just or
authorized cause, otherwise the dismissal becomes illegal and the
employee becomes entitled to reinstatement and full backwages
computed from the time compensation was withheld up to the time of
actual reinstatement.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty;
hence, a just cause for termination of employment by the employer
under Article 282 of the Labor Code, which enumerates the just

causes for termination by the employer. For a valid finding of


abandonment, these two factors should be present: (1) the failure to
report for work or absence without valid or justifiable reason; and (2) a
clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt
acts from which it may be deduced that the 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.
An employee who loses no time in protesting her layoff cannot by
any reasoning be said to have abandoned her work. The filing of an
employee of a complaint for illegal dismissal with a prayer for
reinstatement is proof enough of her desire to return to work, thus,
negating the employers charge of abandonment.
Duterte v. Kingswood Trading Co., Inc.
Issue: For purposes of Article 284 of the Labor Code, would the
dismissal of an employee on the ground of disease under the said
Article 284 still require the employer to present a certification from a
competent public health authority that the disease is of such a nature
that it could not be cured within a period of six months even with
proper medical treatment?
In order to validly terminate employment on the basis of disease,
Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the
Labor Code requires:
Disease as a ground for dismissal. Where the employee suffers from
a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment unless there is a
certification by a competent public health authority that the
disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the
period, the employer shall not terminate the employee but shall ask
the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of
his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)
The employer, before it can legally dismiss its employee on the
ground of disease, must adduce a certification from a competent
public authority that the disease of which its employee is suffering is
of such nature or at such a stage that it cannot be cured within a
period of six months even with proper treatment.

12

Case Doctrines in Labor Relations


Coca Cola Bottlers (Phils.), Inc. v. Climaco
A provision in a Retainer Agreement that a worker is on call during
emergency cases did not make him a regular employee.
The schedule of work and the requirement to be on call for
emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
Villamaria, Jr. v. CA
The boundary-hulog scheme creates both employer-employee
and vendor-vendee relationship. The boundary system is a scheme
by an owner/operator engaged in transporting passengers as a
common carrier to primarily govern the compensation of the driver,
that is, the latters daily earnings are remitted to the owner/operator
less the excess of the boundary which represents the drivers
compensation. Under this system, the owner/operator exercises
control and supervision over the driver. The management of the
business is still in the hands of the owner/operator, who, being the
holder of the certificate of public convenience, must see to it that the
driver follows the route prescribed by the franchising and regulatory
authority, and the rules promulgated with regard to the business
operations. The fact that the driver does not receive fixed wages but
only the excess of the boundary given to the owner/operator is not
sufficient to change the relationship between them. Indubitably, the
driver performs activities which are usually necessary or desirable in
the usual business or trade of the owner/operator.

sought to be attained by both the employer and the employee during


said period. The length of time is immaterial in determining the
correlative rights of both in dealing with each other during said period.
While the employer, observes the fitness, propriety and efficiency of a
probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other, seeks to prove to the
employer, that he has the qualifications to meet the reasonable
standards for permanent employment.
The employer has the right or is at liberty to choose who will be
hired and who will be denied employment. In that sense, it is within
the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test
and observe the conduct of the former before hiring him permanently.
Article 281 of the Labor Code gives ample authority to the employer
to terminate a probationary employee for a just cause or when he fails
to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time
of his engagement. There is nothing under Article 281 of the Labor
Code that would preclude the employer from extending a regular or a
permanent appointment to an employee once the employer finds that
the employee is qualified for regular employment even before the
expiration of the probationary period. Conversely, if the purpose
sought by the employer is neither attained nor attainable within the
said period, Article 281 of the Labor Code does not likewise preclude
the employer from terminating the probationary employment on
justifiable causes as in the instant case.

Art. 281
ICMC v. NLRC
Failure to qualify as a regular employee in accordance with the
reasonable standards of the employer is a just cause for terminating a
probationary employee specifically recognized under Article 281.

Cagayan Capitol College v. NLRC


The legal requisites for a teacher to acquire permanent employment
and security of tenure are as follows: (1) The teacher is a full time
teacher; (2) The teacher must have rendered three (3) consecutive
years of service; and (3) Such service must have been satisfactory.

A probationary employee is one who is on trial by an employer


during which the employer determines whether or not he is qualified
for permanent employment. A probationary appointment is made to
afford the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will become a
proper and efficient employee. The word probationary, as used to
describe the period of employment, implies the purpose of the term or
period, but not its length.

The employer is the one who is to set the standards and determine
whether or not the services of an employee are satisfactory. It is the
prerogative of an employer to determine whether or not the said
standards have been complied with. In fact, it is the right of the
employer to shorten the probationary period if he is impressed with
the services of the employees.

Being in the nature of a trial period the essence of a probationary


period of employment fundamentally lies in the purpose or objective

This prerogative of a school to provide standards for its teachers and


to determine whether or not these standards have been met is in
accordance with academic freedom and constitutional autonomy

13

Case Doctrines in Labor Relations


which give educational institution the right to choose who should
teach.
Mitsubishi Motors Phils. Corp. v. Chrysler Phils. Labor Union
An employer, in the exercise of its management prerogative, may
hire an employee on a probationary basis in order to determine his
fitness to perform work. Under Article 281 of the Labor Code, the
employer must inform the employee of the standards for which his
employment may be considered for regularization. Such probationary
period, unless covered by an apprenticeship agreement, shall not
exceed 6 months from the date the employee started working. The
employees services may be terminated for just cause or for his failure
to qualify as a regular employee based on reasonable standards made
known to him.
The probationary period of 6 months consists of 180 days.
The following grounds would justify the dismissal of an employee:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of the employer or representative in connection with his
work; (b) Gross and habitual neglect by the employee of his duties; (c)
Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative; (d) Commission of a
crime or offense by the employee against the person of his employer
or of any immediate member of his family or his duly authorized
representative; and (e) Other causes analogous to the foregoing.
Under Article 282 of the Labor Code, an unsatisfactory rating can be
a just cause for dismissal only if it amounts to gross and habitual
neglect of duties. Gross negligence has been defined to be the want
or absence of even slight care or diligence as to amount to a reckless
disregard of the safety of person or property. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them.
The normal consequences of illegal dismissal are reinstatement
without loss of seniority rights and the payment of backwages
computed from the time the employees compensation was withheld
from him.
Retrenchment is an authorized cause for termination of
employment which the law accords an employer who is not making
good in its operations in order to cut back on expenses for salaries
and wages by laying off some employees. The purpose of
retrenchment is to save a financially ailing business establishment
from eventually collapsing.

Art. 282
Serrano v. NLRC
The requirement to give a written notice of termination at least 30
days in advance is a requirement of Art. 283 of the Labor Code.
What the law requires is a written notice to the employees
concerned and that requirement is mandatory. The notice must also
be given at least one month in advance of the intended date of
retrenchment to enable the employees to look for other means of
employment and therefore to ease the impact of the loss of their jobs
and the corresponding income.
The purpose of such previous notice is to give the employee some
time to prepare for the eventual loss of his job as well as the DOLE the
opportunity to ascertain the verity of the alleged authorized cause of
termination. Such purpose would not be served by the simple
expedient of paying 30 days salary in lieu of notice of an employees
impending dismissal, as by then the loss of employment would have
been a fait accompli.
The order to pay full backwages is a consequence of the employers
action in dismissing an employee without notice which makes said
dismissal ineffectual. The employee is considered not to have been
terminated from his employment until it is finally determined that his
dismissal/termination of employment was for cause and, therefore, he
should be paid his salaries in the interim.
Agabon v. NLRC
To dismiss an employee, the law requires not only the existence of a
just and valid cause but also enjoins the employer to give the
employee the opportunity to be heard and to defend himself. Article
282 of the Labor Code enumerates the just causes for termination by
the employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters
representative in connection with the employees work; (b) gross and
habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or
his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative;
and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty,
hence, a just cause for termination of employment by the employer.

14

Case Doctrines in Labor Relations


For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employeremployee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent
to discontinue the employment must be shown by clear proof that it
was deliberate and unjustified.
Subcontracting for another company clearly shows the intention
to sever the employer-employee relationship.
An employee who deliberately absented from work without leave or
permission from his employer, for the purpose of looking for a job
elsewhere, is considered to have abandoned his job.
The procedure for terminating an employee is found in Book VI, Rule
I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. In all
cases of termination of employment, the following standards
of due process shall be substantially observed:
I. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his
side;
(b) A hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served
on the employees last known address.
Dismissals based on just causes contemplate acts or omissions
attributable to the employee while dismissals based on authorized
causes involve grounds under the Labor Code which allow the
employer to terminate employees. A termination for an authorized
cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are
mandated under Article 279. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written notices and a

hearing or opportunity to be heard if requested by the employee


before terminating the employment: a notice specifying the grounds
for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision
to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee
and the Department of Labor and Employment written notices 30 days
prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1)
the dismissal is for a just cause under Article 282 of the Labor Code,
for an authorized cause under Article 283, or for health reasons under
Article 284, and due process was observed; (2) the dismissal is
without just or authorized cause but due process was observed; (3)
the dismissal is without just or authorized cause and there was no due
process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
In the first situation, the dismissal is undoubtedly valid and the
employer will not suffer any liability.
In the second and third situations where the dismissals are illegal,
Article 279 mandates that the employee is entitled to reinstatement
without loss of seniority rights and other privileges and full
backwages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time the compensation was
not paid up to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the
dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process.
Wenphil or Belated Due Process Rule: Where the employer had
a valid reason to dismiss an employee but did not follow the due
process requirement, the dismissal may be upheld but the employer
will be penalized to pay an indemnity to the employee.
Wenphil abandoned the Serrano doctrine (dismiss now, pay
later rule): The violation by the employer of the notice requirement
in termination for just or authorized causes was not a denial of due
process that will nullify the termination. However, the dismissal is
ineffectual and the employer must pay full backwages from the time
of termination until it is judicially declared that the dismissal was for a
just or authorized cause.
In cases involving dismissals for cause but without observance of
the twin requirements of notice and hearing, the better rule is to
abandon the Serrano doctrine and to follow Wenphil by holding that
the dismissal was for just cause but imposing sanctions on the
employer. Such sanctions, however, must be stiffer than that imposed
in Wenphil.

15

Case Doctrines in Labor Relations


Where the dismissal is for a just cause, he lack of statutory due
process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for
the violation of his statutory rights. The indemnity to be imposed
should be stiffer to discourage the abhorrent practice of dismiss now,
pay later. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into
special consideration the gravity of the due process violation of the
employer.
An employer is liable to pay indemnity in the form of nominal
damages to an employee who has been dismissed if, in effecting
such dismissal, the employer fails to comply with the requirements of
due process.
Viernes v. NLRC
see supra
Austria v. NLRC
The provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations. Article 278 of
the Labor Code on post-employment states that the provisions of this
Title shall apply to all establishments or undertakings, whether for
profit or not. Section 1, Rule 1, Book VI on the Termination of
Employment and Retirement, categorically includes religious
institutions in the coverage of the law, to wit: Sec. 1. Coverage.
This Rule shall apply to all establishments and undertakings, whether
operated for profit or not, including educational, medical, charitable
and religious institutions and organizations, in cases of regular
employment with the exception of the Government and its political
subdivisions including government-owned or controlled corporations.
The requisites for a valid dismissal are: (a) the employee must be
afforded due process, i.e., he must be given an opportunity to be
heard and to defend himself, and; (b) the dismissal must be for a valid
cause as provided in Article 282 of the Labor Code. Without the
concurrence of this twin requirements, the termination would, in the
eyes of the law, be illegal.
Before the services of an employee can be validly terminated,
Article 277 (b) of the Labor Code and Section 2, Rule XXIII, Book V of
the Rules Implementing the Labor Code further require the employer
to furnish the employee with two (2) written notices, to wit: (a) a
written notice served on the employee specifying the ground or

grounds for termination, and giving to said employee reasonable


opportunity within which to explain his side; and, (b) a written notice
of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established
to justify his termination.
The first notice, which may be considered as the proper charge,
serves to apprise the employee of the particular acts or omissions for
which his dismissal is sought. The second notice on the other hand
seeks to inform the employee of the employers decision to dismiss
him. This decision, however, must come only after the employee is
given a reasonable period from receipt of the first notice within which
to answer the charge and ample opportunity to be heard and defend
himself with the assistance of a representative, if he so desires.
A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently. It must
rest on substantial grounds and not on the employers arbitrariness,
whims, caprices or suspicion.
Misconduct has been defined as improper or wrong conduct. It is
the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. For misconduct to be
considered serious it must be of such grave and aggravated character
and not merely trivial or unimportant.
San Miguel Corp. v. Ubaldo
Regulation of manpower by the company clearly falls within
management prerogative. A valid exercise of management
prerogative encompasses hiring, work assignments, working
methods, time, place and manner of work, tools to be used, processes
to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and the discipline,
dismissal and recall of workers. Except as provided for, or limited by,
special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment.
The employer may terminate an employment on the ground of
serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work. 9Infractions of company rules and regulations have been
declared to belong to this category and thus are valid causes for
termination of employment by the employer.

16

Case Doctrines in Labor Relations


Willful disobedience of the employers lawful orders, as a just cause
for the dismissal of an employee, envisages the concurrence of at
least two requisites: (1) the employees assailed conduct must have
been willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; (2) the order violated must have
been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge. 11
Both requisites are present in the instant case.

regulations, or instructions of the employer must be: (1) reasonable


and lawful;
(2) sufficiently known to the employee; and (3) in connection with the
duties which the employee has been engaged to discharge.

Garcia v. NLRC
Mere absence or failure to report for work, after notice to return, is
not enough to amount to such abandonment. For a valid finding of
abandonment, two factors must be present, viz; (1) the failure to
report for work or absence without valid or justifiable reason; and (2) a
clear intention to sever the employer-employee relationship, with the
second element as the more determinative factor being manifested by
some overt acts. There must be a concurrence of the intention to
abandon and some overt acts from which an employee may be
deduced as having no more intention to work. Such intent to
discontinue the employment must be shown by clear proof that it was
deliberate and unjustified.

prior clearance rule: Art. 278 (b): (b) With or without a collective
agreement, no employer may shut down his established or dismiss or
terminate the employment of employees with at least one year of
service during the last two years, whether such service is continuous
or broken, without prior written authority issued in accordance with
such rules and regulations as the Secretary may promulgate. Rule
XIV Section 2 of the Rules Implementing the Labor Code which was
still in force at that time, likewise provides: Sec. 2 Shutdown or
dismissal without clearance. Any shutdown or dismissal without
prior clearance shall be conclusively presumed to be termination of
employment without a just cause. The Regional Director shall, in such
case, order the immediate reinstatement of the employee and the
payment of his wages from the time of the shutdown or dismissal until
the time of reinstatement.

Strict compliance by the employer with the demands of both


procedural and substantive due process is a condition sine qua non for
the termination to be declared valid. The law requires that the
employer must furnish the worker sought to be dismissed with two
written notices before termination of employment can be legally
effected: 1. notice which apprises the employee of the particular acts
or omissions for which his dismissal is sought; and 2. the subsequent
notice which informs the employee of the employers decision to
dismiss him.
An illegally dismissed employee is entitled to 1) either
reinstatement or separation pay if reinstatement is no longer viable,
and 2) backwages.
Family Planning Org. of the Phils. v. NLRC
It is one of the fundamental duties of the employee to yield
obedience to all reasonable rules, orders, and instructions of the
employer, and willful or intentional disobedience thereof, as a general
rule, justifies recission of the contract of service and the peremptory
dismissal of the employee.
In order that the willful disobedience by the employee may
constitute a just cause for terminating his employment, the orders,

Not every case of willful disobedience by an employee of a lawful


order of the employer can be reasonably penalized with dismissal.
There must be reasonable proportionality between the willful
disobedience by the employee and the penalty imposed therefore.

Edge Apparel, Inc. v. NLRC


The employer has a right to dismiss employees for valid causes
after proper observance of due process. 4 These valid causes are
categorized into two groups, i.e., just causes under Article 282 of
the Labor Code and authorized causes under Articles 283 and 284 of
the same code.
The just causes for termination of employment, enumerated in
Article 282, include (a) Serious misconduct or willful disobedience
by the employee of the lawful orders of his employer or representative
relative to his work; (b) Gross and habitual neglect by the employee of
his duties; (c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized representative; (d)
Commission of a crime or offense by the employee against the person
of his employer or any immediate member of his family or his duly
authorized representative; and (e) Other causes analogous to the
foregoing.
An employee who is terminated from employment for a just cause is
not entitled to payment of separation benefits.8 Section 7, Rule I,
Book VI, of the Omnibus Rules Implementing the Labor Code provides,

17

Case Doctrines in Labor Relations


thus: Sec. 7. Termination of employment by employer. The just
causes for terminating the services of an employee shall be those
provided in Article 282 of the Code. The separation from work of an
employee for a just cause does not entitle him to the termination pay
provided in Code, without prejudice, however, to whatever rights,
benefits and privileges he may have under the applicable individual or
collective bargaining agreement with the employer or voluntary
employer policy or practice.
Article 283, in turn, specifies the authorized causes for the
termination of employment, viz: (a) installation of labor-saving
devices; (b) redundancy; (c) retrenchment to prevent losses; and (d)
closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of
law.
Article 284 provides that an employer would be authorized to
terminate the services of an employee found to be suffering from any
disease if the employees continued employment is prohibited by law
or is prejudicial to his health or to the health of his fellow employees.
The installation of labor-saving devices contemplates the
installation of machinery to effect economy and efficiency in its
method of production.
Redundancy exists where the services of an employee are in
excess of what would reasonably be demanded by the actual
requirements of the enterprise. A position is redundant when it is
superfluous, and superfluity of a position or positions could be the
result of a number of factors, such as the overhiring of workers, a
decrease in the volume of business or the dropping of a particular line
or service previously manufactured or undertaken by the enterprise.
An employer has no legal obligation to keep on the payroll employees
more than the number needed for the operation of the business.
Retrenchment is an economic ground to reduce the number of
employees. In order to be justified, the termination of employment by
reason of retrenchment must be due to business losses or reverses
which are serious, actual and real. Retrenchment is normally resorted
to by management during periods of business reverses and economic
difficulties occasioned by such events as recession, industrial
depression, or seasonal fluctuations. It is an act of the employer of
reducing the work force because of losses in the operation of the
enterprise, lack of work, or considerable reduction on the volume of
business. The institution of new methods or more efficient machinery,
or of automation is technically a ground for termination of
employment by reason of installation of labor-saving devices but

where the introduction of these methods is resorted to not merely to


effect greater efficiency in the operations of the business but
principally because of serious business reverses and to avert further
losses, the device could then verily be considered one of
retrenchment.
The payment of separation pay would be due when a dismissal is on
account of an authorized cause. The amount of separation pay
depends on the ground for the termination of employment. A dismissal
due to the installation of labor saving devices, redundancy (Article
283) or disease (Article 284), entitles the worker to a separation pay
equivalent to one (1) month pay or at least one (1) month pay for
every year of service, whichever is higher. When the termination of
employment is due to retrenchment to prevent losses, or to closure or
cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay is
only an equivalent of one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher. In the
above instances, a fraction of at least six (6) months is considered as
one (1) whole year.
In order to validly effect retrenchment, the employer must observe
two other requirements, viz: (a) service of a prior written notice of at
least one month on the workers and the Department of Labor and
Employment, and (b) payment of the due separation pay.
Ha Yuan Restaurant v. NLRC
Separation pay shall be allowed as a measure of social justice only
in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the
ground of social justice.
Separation pay therefore, depends on the cause of dismissal, and
may be accordingly awarded provided that the dismissal does not fall
under either of two circumstances: (1) there was serious misconduct,
or (2) the dismissal reflected on the employees moral character.
Misconduct is improper or wrongful conduct. It is the transgression
of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and

18

Case Doctrines in Labor Relations


not mere error of judgment. To be a valid cause for termination, the
misconduct must be serious.
Asian Terminals, Inc. v. NLRC
see supra
King of Kings Transport, Inc. v. Mamac
For termination of employment based on just causes as defined in
Article 282 of the Code: (a) A written notice served on the employee
specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side. (b)
A hearing or conference during which the employee concerned, with
the assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence, or rebut the evidence
presented against him. (c) A written notice of termination served on
the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served on the
employees last known address.
The following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
Reasonable opportunity under the Omnibus Rules 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 at least five (5) calendar days from receipt of
the 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. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being charged against the
employees.

(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and
(3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been
established to justify the severance of their employment.
Art. 283
Wiltshire File Co., Inc. v. NLRC
Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of
the enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the
enterprise. The employer has no legal obligation to keep in its payroll
more employees than are necessarily for the operation of its business.
It is of no legal moment that the financial troubles of the company
were not of an employees making. An employee cannot insist on the
retention of his position upon the ground that he had not contributed
to the financial problems of the company where he works. The
characterization of an employees services as no longer necessary or
sustainable, and therefore properly terminable, is an exercise of
business judgment on the part of a company. The wisdom or
soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC
so long, of course, as violation of law or merely arbitrary and malicious
action is not shown.
The determination of the continuing necessity of a particular officer
or position in a business corporation is managements prerogative,
and the courts will not interfere with the exercise of such so long as no
abuse of discretion or merely arbitrary or malicious action on the part
of management is shown.

19

Case Doctrines in Labor Relations


Termination of an employees services because of retrenchment to
prevent further losses or redundancy, is governed by Article 283 of the
Labor Code.
Termination of services under Art. 283 should be distinguished from
termination of employment by reason of some blameworthy act or
omission on the part of the employee, in which case the applicable
provision is Article 282 of the Labor Code.
Sections 2 and 5 of Rule XIV entitled Termination of Employment:
of the Rules to Implement the Labor Code read as follows:
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or
omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the workers last
known address.

Polymart Paper Industries, Inc. v. NLRC


Retrenchment is a management prerogative, a means to protect
and preserve the employers viability and ensure his survival. It is one
of the economic grounds to dismiss an employee resorted to by an
employer primarily to avoid or minimize business losses. In this
regard, the employer bears the burden to prove his allegation of
economic or business reverses, otherwise, it necessarily means that
the dismissal of an employee was not justified.
Retrenchment or lay-off is the termination of employment
initiated by the employer through no fault of the employees and
without prejudice to the latter, resorted to by management during
periods of business recession, industrial depression, or seasonal
fluctuations or during lulls occasioned by lack of orders, shortage of
materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of
automation. Simply put, it is an act of the employer of dismissing
employees because of losses in the operation of a business, lack of
work, and considerable reduction on the volume of his business.

xxx xxx xxx


Sec. 5. Answer and hearing. The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable
period from receipt of such notice. The employer shall afford the
worker ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires.
Where the ground for dismissal or termination of services does not
relate to a blameworthy act or omission on the part of the employee,
there is no need for an investigation and hearing to be conducted by
the employer who does not allege any malfeasance or nonfeasance on
the part of the employee. In such case, there are no allegations which
the employee should refute and defend himself from.
The employee may contest the reality or good faith character of the
retrenchment or redundancy asserted as grounds for termination of
services. The appropriate forum for such controversion would,
however, be the Department of Labor and Employment and not an
investigation or hearing to be held by the employer itself. It is
precisely for this reason that an employer seeking to terminate
services of an employee or employees because of closure of
establishment and reduction of personnel, is legally required to give
a written notice not only to the employee but also to the Department
of Labor and Employment at least one month before effectivity date of
the termination.

Art. 283 of the Labor Code, as amended, recognizes retrenchment


as a mode of terminating an employment relationship. Under this
provision, there are three basic requisites for a valid retrenchment.
These are: (a) the retrenchment is necessary to prevent losses and
such losses are proven; (b) written notice to the employees and to the
DOLE at least one month prior to the intended date of retrenchment,
and (c) payment of separation pay equivalent to one month pay or at
least 1/2 months pay for every year of service, whichever is higher.
To justify retrenchment, the loss referred to in Art. 283 cannot be
just any kind or amount of loss. The following standard which a
company must meet to justify retrenchment: Firstly, the losses
expected should be substantial and not merely de minimis in extent. If
the loss purportedly sought to be forestalled by retrenchment is
clearly shown to be insubstantial and inconsequential in character, the
bonafide nature of the retrenchment would appear to be seriously in
question. Secondly, the substantial loss apprehended must be
reasonably imminent, as such imminence can be perceived objectively
and in good faith by the employer. Because of the consequential
nature of retrenchment, it must, thirdly, be reasonably necessary and
likely to effectively prevent the expected losses. The employer should
have taken other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs other than labor costs. An
employer who, for instance, lays off substantial numbers of workers
while continuing to dispense fat executive bonuses and perquisites or
so-called golden parachutes, can scarcely claim to be retrenching in
good faith to avoid losses.

20

Case Doctrines in Labor Relations


The employer bears the burden of proving an allegation of the
existence or imminence of substantial losses, which by its nature is an
affirmative defense. It is the duty of the employer to prove with clear
and satisfactory evidence that legitimate business reasons exist to
justify retrenchment. Failure to do so inevitably results in a finding that
the dismissal is unjustified.
North Davao Mining Corp. v. NLRC
Art. 283 governs the grant of separation benefits in case of
closures or cessation of operation of business establishments NOT
due to serious business losses or financial reverses . . . Where,
however, the closure was due to business losses the Labor Code does
not impose any obligation upon the employer to pay separation
benefits
Art. 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses.

dismissal to be valid, (a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.
Article 284 of the Labor Code authorizes an employer to terminate
an employee on the ground of disease. However, in order to validly
terminate employment on this ground, Book VI, Rule I, Section 8 of the
Omnibus Implementing Rules of the Labor Code requires: Sec. 8.
Disease as a ground for dismissal- Where the employee suffers from a
disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment unless there is a
certification by competent public health authority that the disease is
of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall
not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
The requirement for a medical certificate under Article 284 of the
Labor Code cannot be dispensed with.

Natl Federation of Labor v. NLRC


Issue: whether or not an employer that was compelled to cease its
operation because of the compulsory acquisition by the government of
its land for purposes of agrarian reform, is liable to pay separation pay
to its affected employees
Held: No. The closure contemplated under Article 283 of the Labor
Code is a unilateral and voluntary act on the part of the employer to
close the business establishment as may be gleaned from the wording
of the said legal provision that The employer may also terminate the
employment of any employee due to. . . The use of the word may,
in a statute, denotes that it is directory in nature and generally
permissive only. In other words, Article 283 of the Labor Code does not
contemplate a situation where the closure of the business
establishment is forced upon the employer and ultimately for the
benefit of the employees.
Art. 284
Sy v. CA
In termination cases, the burden is upon the employer to show by
substantial evidence that the termination was for lawful cause and
validly made. Article 277(b) of the Labor Code puts the burden of
proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the
employer admits or does not admit the dismissal. For an employees

Since the burden of proving the validity of the dismissal of the


employee rests on the employer, the latter should likewise bear the
burden of showing that the requisites for a valid dismissal due to a
disease have been complied with. In the absence of the required
certification by a competent public health authority, the validity of the
employees dismissal cannot be upheld.
Art. 285
Intertrod Maritime, Inc. v. NLRC
Resignation is the voluntary act of an employee who finds himself
in a situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, then he has no other
choice but to disassociate himself from his employment. The
employer has no control over resignations and so, the notification
requirement was devised in order to ensure that no disruption of work
would be involved by reason of the resignation.
Resignations, once accepted and being the sole act of the
employee, may not be withdrawn without the consent of the
employer.
Once an employee resigns and his resignation is accepted, he no
longer has any right to the job. If the employee later changes his
mind, he must ask for approval of the withdrawal of his resignation

21

Case Doctrines in Labor Relations


from his employer, as if he were re-applying for the job. It will then be
up to the employer to determine whether or not his service would be
continued. If the employer accepts said withdrawal, the employee
retains his job. If the employer does not the employee cannot claim
illegal dismissal for the employer has the right to determine who his
employees will be.
Reyes v. CA
Acceptance of a resignation tendered by an employee is necessary
to make the resignation effective.
A request for benefits granted to retrenched employees during a
time when an employer is in the process of retrenching its employees
is tantamount to a recognition of the existence of a valid cause for
retrenchment.
Alfaro v. CA
Generally, an employee who voluntarily resigns from employment is
not entitled to separation pay. An exception is when the employer and
the employee agreed to a scheme hereby the former would receive
separation pay despite having resigned voluntarily.
Voluntary resignation is defined as the act of an employee, who
finds himself in a situation in which he believes 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.
Art. 286
Globe Telecom, Inc. v. Florendo-Flores
Constructive dismissal exists where there is cessation of work
because
continued
employment
is
rendered
impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay.
The unauthorized absence of an employee should not lead to the
drastic conclusion that he has chosen to abandon his work. To
constitute abandonment, there must be: (a) failure to report for work
or absence without valid or justifiable reason; and, (b) a clear
intention, as manifested by some overt act, to sever the employeremployee relationship. A charge of abandonment is totally
inconsistent with the immediate filing of a complaint for illegal
dismissal; more so, when it includes a prayer for reinstatement.

In constructive dismissal, the employer has the burden of proving


that the transfer and demotion of an employee are for just and valid
grounds such as genuine business necessity. The employer must be
able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee. It must not involve a demotion in rank or
a diminution of salary and other benefits. If the employer cannot
overcome this burden of proof, the employees demotion shall be
tantamount to unlawful constructive dismissal.
Phil. Industrial Security Agency Corp. v. Dapiton
Constructive dismissal is defined as a quitting because
continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in
pay. On the other hand, abandonment of work means a clear,
deliberate and unjustified refusal of an employee to resume his
employment and a clear intention to sever the employer-employee
relationship. Abandonment is incompatible with constructive
dismissal.
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 nor does it bar reinstatement.
An employer has the prerogative to transfer and reassign its
employees to meet the requirements of its business. 17 For instance,
where the rotation of employees from the day shift to the night shift
was a standard operating procedure of management, an employee
who had been on the day shift for sometime may be transferred to the
night shift. Similarly, transfers can be effected pursuant to a company
policy to transfer employees from one place of work to another place
of work owned by the employer to prevent connivance among them.
Likewise, an employer has the right to transfer an employee to
another office in the exercise of what it took to be sound business
judgment and in accordance with pre-determined and established
office policy and practice. In security services, the transfer connotes a
changing of guards or exchange of their posts, or their reassignment
to other posts. However, all are considered given their respective
posts.
The prerogative of the management to transfer its employees must
be exercised without grave abuse of discretion. The exercise of the
prerogative should not defeat an employees right to security of
tenure. The employers privilege to transfer its employees to different
workstations cannot be used as a subterfuge to rid itself of an
undesirable worker.

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Case Doctrines in Labor Relations


Philippine Wireless , Inc. v. NLRC
Dismissal is an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank and/or a diminution in pay;
or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.
Voluntary resignation is defined as the act of an employee who
finds himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service and he has
no other choice but to disassociate himself from his employment.
There is no demotion where there is no reduction in position, rank or
salary as a result of such transfer.
Globe Telecom v. Crisologo
Resignation is the voluntary act of an employee who finds herself
in a situation where she believes that personal reasons cannot be
sacrificed in favor of the exigency of the service and that she has no
other choice but to disassociate herself from employment.
Art. 287
Lopez v. Natl Steel Corp.
For an employee to validly claim retirement benefits under Art. 287
of the Labor Code, petitioner must have complied with the
requirements for eligibility under the statute for such retirement
benefits.
No retirement benefits are payable in instances of resignations or
termination for a cause.
Art. 290
Callanta v. Carnation Philippines, Inc.
The dismissal without just cause of an employee from his
employment constitutes a violation of the Labor Code and its
implementing rules and regulations. Such violation, however, does not
amount to an offense as understood under Article 291 of the Labor
Code. In its broad sense, an offense is an illegal act which does not
amount to a crime as defined in the penal law, but which by statute
carries with it a penalty similar to those imposed by law for the
punishment of a crime. It is in this sense that a general penalty clause
is provided under Article 289 of the Labor Code which provides that
... any violation of the provisions of this code declared to be unlawful

or penal in nature shall be punished with a fine of not less than One
Thousand Pesos [P1,000.00] nor more than Ten Thousand Pesos
[10,000.00], or imprisonment of not less than three [3] months nor
more than three [3] years, or both such fine and imprisonment at the
discretion of the court.
Unlike in cases of commission of any of the prohibited activities
during strikes or lockouts under Article 265, unfair labor practices
under Article 248, 249 and 250 and illegal recruitment activities under
Article 38, among others, which the Code itself declares to be
unlawful, termination of an employment without just or valid cause is
not categorized as an unlawful practice.
The reliefs principally sought by an employee who was illegally
dismissed from his employment are reinstatement to his former
position without loss of seniority rights and privileges, if any,
backwages and damages, in case there is bad faith in his dismissal. As
an affirmative relief, reinstatement may be ordered, with or without
backwages. While ordinarily, reinstatement is a concomitant of
backwages, the two are not necessarily complements, nor is the
award of one a condition precedent to an award of the other. And, in
proper cases, backwages may be awarded without ordering
reinstatement . In either case, no penalty of fine nor imprisonment is
imposed on the employer upon a finding of illegality in the dismissal.
By the very nature of the reliefs sought, therefore, an action for illegal
dismissal cannot be generally categorized as an offense as used
under Article 291 of the Labor Code.
Backwwages sought by an illegally dismissed employee may be
considered, by reason of its practical effect, as a money claim.
However, it is not the principal cause of action in an illegal dismissal
case but the unlawful deprivation of the ones employment committed
by the employer in violation of the right of an employee. Backwages is
merely one of the reliefs which an illegally dismissed employee prays
the labor arbiter and the NLRC to render in his favor as a consequence
of the unlawful act committed by the employer. The award thereof is
not private compensation or damages but is in furtherance and
effectuation of the public objectives of the Labor Code.
prescriptive period for illegal dismissal cases: When one is
arbitrarily and unjustly deprived of his job or means of livelihood, the
action instituted to contest the legality of ones 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.

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Case Doctrines in Labor Relations


Art. 291
Texon Manufacturing v. Millena
prescriptive period for money claims: General rule: All money claims
arising from employer-employee relations accruing during the
effectivity of this Code shall be filed within three years from the time
the cause of action accrued; otherwise they shall be forever barred.
Ludo & Luym Corp. v. Saornido
Exception: If complainant-employees cause of action has not yet
accrued, as when negotiations are still ongoing, then the 3-year
prescriptive period does not set.

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