Wages – Renumeration or earnings, capable of being expressed in terms of money, whether fixed or ascertained on time,

task, piece or commission basis or other method of calculating the same.

Employees NOT covered by provisions on wages (A. 98, LC):

1. Government employees including GOCCs with original charters;
2. Farm tenancy/leasehold;
3. Domestic service (household or domestic helpers);
4. Persons in the personal service of another; and,
5. Barangay Micro Business enterprise under RA 9178 – Any business entity or enterprise engaged in the
production, processing, or manufacturing of products or commodities including agroprocessing, trading and
services, whose total assets including those arising from loans but exclusive of the land on which the particular
business entity’s office, plant and equipment are situated, shall not be more than P3M.

Two Component Parts:

1. Cash Wage – Takes the form of ready money paid by employer for services rendered by the employee.
2. Facilities – Articles or services customarily given for the benefit of the employee and are voluntarily accepted by
him.

NO WORK NO PAY PRINCIPLE

 Fair day’s wage for a fair day’s labor remains as the basic factor in determining employees’ wages and back
wages.
 If there is no work performed by the employee, there can be no wage or pay unless the laborer was able, willing
and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from
working.

ARTICLE 1708 OF THE CIVIL CODE OF THE PHILIPPINES

The laborer’s wage shall not be subject to execution or attachment, except for debts incurred for food, shelter,
clothing and medical attendance.
WAGES SALARY
Manual labor, skilled or unskilled, paid at stated times Higher degree of employment or a superior grade of
and measured by the day, week or month or season services and implies a position of office
Pay for a lower and less responsible character of Suggestive of a larger and more important service
employment
Why?
 To favor those who are laboring men or women in the sense that their work is manual;
 Persons belonging to this class usually look forward to their reward of a day’s labor for immediate or present
support and such person are more in need of exemption.

FACILITIES as part of wages – include articles or services for the benefit of the employee or his family but exclude tools
of the trade or articles for the benefit of the employer or necessary to the conduct of the employer’s business.

Requisites for DEDUCTION

1. There must be a proof that such facilities are customarily furnished by the trade;
2. The provision of deductible facilities must be voluntarily accepted in writing (this would prove that the employer
was authorized by the employee to make said deduction) by the employee; and
3. Facilities must be charged at fair and reasonable value.

 If not furnished, employee would spend and pay for them just the same.
 Do not include profits – fair and reasonable value.
 To be deductible or chargeable = necessary that he must receive them and written acceptance as voluntary.
Charged at fair and reasonable value.
 FACILITIES VS. SUPPLEMENTS
Articles or services for the benefits of the employee or his Extra renumeration or benefits received by wage earners
family but exclude tools of the trade or articles for the from their employers.
benefit of the employer or necessary to the conduct of
the employer’s business.
Items or expenses necessary for the laborer’s and his Include but are not limited to pay for the vacation and
family’s existence and subsistence. holidays not worked; paid sick leave or maternity leave;
overtime rate in excess of what is required by law; sick,
pension, retirement, and death benefits; profit-sharing;
family allowances; Christmas, war risk and cost-of-living
bonuses; or bonuses other than those paid as a reward
for extra output or time spent on the job.
Deductible from the employee’s wage, since if they are Constitute renumeration or special privileges received by
not so furnished, the laborer would spend and pay for the employees over and above their ordinary earnings.
them just the same.

GUIDE QUESTIONS
First, for whose benefit or convenience were those items furnished? Facilities are for the benefit of the
employees. Supplements are for the benefit of the employers.
Second, are the items furnished part of the wage? Facilities are part of the wage. Supplements are not.
Lastly, are those items furnished deductible from the wage? Facilities are deductible. Supplements are not.

DEMANDABLE? NO. It is a voluntary undertaking and entirely dependent on the financial capability of the employer. Not
demandable and enforceable obligation of employer.

MINIMUM WAGE RATES

 Employer may be tempted to economically squeeze or exploit his workers by paying them less.
 To set barrier below which wages may not fall, in order to develop competition on a high level of efficiency rather
than competition on a low level of wages.
Basic Wage – All renumerations or earnings paid by an employer for services rendered on a normal working day/hour.
Does not include COLA, profit sharing, premiums.
Statutory Minimum Wage – Lowest wage rate fixed by law than an employer can pay his workers.
Monthly Paid Employees – Paid everyday of the month including rest days, special days and regular holidays.
Daily Paid Employees – Paid on the days they actually worked.

EXEMPTIONS FROM MINIMUM WAGE:

1. Workers and Employees in retail/ service establishment regularly employing not more than 10 workers.
2. Employees of Barangay Micro Business Enterprise
3. Homeworkers engaged in needlework.
4. Workers in establishments duly registered with the National Cottage Industries and Development Authority.
5. Workers in duly registered cooperatives when so recommended by the CDA and upon approval by the SOLE –
only for making the cooperative viable and upon finding

METHODS IN DETERMINING WAGES

A. FLOOR WAGE METHOD – Fixing of determinate amount that would be added to the prevailing statutotry
minimum wage
B. SALARY – CEILING METHOD – Involves a wage adjustment applied to employees receiving a certain
denominated salary ceiling
 Workers already being paid more than the existing minimum wage are also given wage increase.

METHODS OF PAYMENT
A. TIME WAGES – Pay by the hour, day, or month without specifying the amount of work to be done.
B. PRODUCTION WAGES – Refer to pay related to the amount of work the individual or group performs regardless
of the time involved in its performance (workers paid by results).

DO NO. 118 – 12 (Rules and Regulations Governing the Employment and Working Conditions of Drivers and Conductors
in the Public Utility Bus Transport Industry.)
Compensation Scheme – Bus owners and/or operators shall adopt a mutually-agreed upon “PART – FIXED, PART –
PERFORMANCE” based compensation scheme for their drivers and conductors.
Methods how to:
1. Fixed component shall be based on an amount mutually agreed upon by the ridership requirement and in no
case be lower than the applicable minimum wage for work during normal hours/day. They shall also be entitled
to wage related benefits such as overtime pay, premium pay and holiday pay, among others.
 2. The performance – based component shall be based on safety performance such as ridership,
revenues/profitability, and other related parameters.
 Reference Amount of Performance Incentive = Current Average Daily – Fixed Wage, where the current average
daily earnings shall be estimated based on the agreed average daily earnings in the last two years.
Principles:
 Business performance may consider among others, revenue/ridership.
 Safety performance shall consider safety records based on traffic violations and expenses for payment of
government fines/charges, among others. For this purpose, the Safety and Health Committee shall discuss the
safety performance component to ensure compliance with the Occupational Safety and Health Standards.
 The public utility bus owners and/or operators and drivers/conductors may modify or use other formula for their
compensations scheme, provided it is in accordance with the part fixed, part performance-based compensation
scheme as provided herein.

Elimination or Diminution
General Rule
Employees have a vested interest right over existing benefits voluntarily granted to them by their employer.
Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.
Benefits being given to employees shall not be taken back or reduced unilaterally by the employer because the
benefit has become part of the employment contract, whether written or unwritten.
Exceptions
1. If the employee also consents to the deduction;
2. If the deduction is made to correct an error and such was done within a reasonable time.
Exception to the Exception
If the error is left uncorrected for a reasonable period of time, it ripens into a company policy and a company
policy and employees can demand for it as a matter of right.
NOTE:
Piece – rate – paid a standard amount for a very piece or unit of work produced regardless of the time expended in
producing the same
Emphasis is on the unit or quantity and not on the hours spent:
 Wage rates of worker paid by results
 Based on the performance of an ordinary worker of minimum skill or ability
 They shall not receive less than the minimum wage
 GR. Entitled to holiday and SIL
 If they fall under the definition of field personnel – not entitled.

Payment of Wages:
FORM OF PAYMENT
 Legal Tender – currency sufficient under the law to effect payment of a debt or obligation
 Check is not legal tender – allowed only if stipulated upon and bank requirements are met (within 1km radius)
 Payment through ATM is ok provided that:
- ATM system is with written consent of employee
- Employees are given reasonable time to withdraw their wages from the bank facility
- There is bank or ATM facility within a radius of 1km from the workplace
- Employer shall issue a record evidencing payment of wages
PLACE OF PAYMENT
 GR. Near or at the place of undertaking
 Instances when payment may be made at another place
a. Bank – upon written petition of majority of the workers in establishments with 25 or more employees and
within 1 km radius to a bank.
b. War, emergencies.
c. Employer provides free transportation (back and forth).
 PAYMENT IN RECREATIONAL AREAS = PROHIBITED
NOTE:
 Payment shall be made directly to the employees.
 Wages shall be given NOT LESS THAN once every two weeks or twice a month at intervals not exceeding 16 days.
 Payment on a piece – rate basis does not negate regular employment. Payment by the piece is just a method of
compensation and does not define the essence of the relation.

WAGE DEDUCTIONS
GR. Wage Deductions are not allowed!
Allowable Deductions: (Without Employees Consent)
1. SSS, PhilHealth and PAG-IBIG Contributions;
2. Withholding taxes on income;
 3. Where the employer is authorized by law or regulations issued by the SOLE;
4. Agency fees where the employee who is not a member of the exclusive bargaining agent but a member of the
appropriate bargaining unit, may be assessed a reasonable fee for benefits received under a CBA.
5. Reasonable value of meals and other facilities;
6. Payment of union dues, which may or may not be under an automatic charging – off arrangement;
7. Debt payments to the employer or third persons with employee’s explicit written consent;
8. Worker’s insurance acquires by the employer with employee’s consent.

WAGE DISTORTION
A situation where the application of a mandated wage increases results in the elimination or severe contraction
of existing salary differentials among employee groups in an establishment.
Elements:
a. Existing hierarchy of positions with corresponding salary rate;
b. Significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a
higher one;
c. Elimination of the distinction between the two levels; and,
d. Existence of the distortion in the same region of the country.
Basis:
Wage differentiation within a company occurs because of a difference in the level of education and/or training
required, responsibilities undertaken, strain or work, and hazards, etc., across job families and job levels within a
company.

When can a company say there has been a severe contraction of the intended pay gap as a result of the
implementation of a Wage Order? – There is severe contraction of the intended pay gap when such gap has been
reduced by more than 50%.

Are differences in regional assignment between workers occupying the same position within a company considered
wage distortion? – No. Wage Distortion involves comparison of salary rates between workers within a company located
within the same region.

Is correcting wage distortion, is there a legal requirement to restore the gap in precisely the same amount that
previously existed. – No. The restoration of a substantial or significant gap is acceptable. Suggested Formulae in
Correcting Wage Distortion:
DISTINCTIONS: (TAKE NOTE FOR EXAMS/QUIZ)
1. For ORGANIZED FIRMS, the employer and the workers’ union shall negotiate through the grievance procedures
incorporated in their Collective Bargaining Agreement. If still unresolved, the parties may push through with the
process of voluntary arbitration.
2. For UNORGANIZED FIRMS, the management and labor sector shall discuss and agree on the method to correct
wage distortion. Any dispute arising thereof shall be settled through the National Conciliation and Mediation
Board. If negotiations fail, the National Labor Relations Commission may intervene through compulsory
arbitration.

Are disputes arising from wage distortion strikable? – No. Strikes, lock outs and other concerted action made by either
the union or management are considered illegal.

Will the pendency of a dispute arising from a wage distortion prevent minimum wage earners from receiving the wage
increase? – No. A dispute should not, in any way, prevent or delay the application of a Wage Order.

THE PHILIPPINE LABOR CODE: Working Conditions for special Groups of Employees
 WOMEN WORKERS – Magna Carta of Women. Signed into Law on August 14, 2009. IRR was in effect on July 10,
2010.
- Discrimination Against Women – Gender-based distinction, exclusion or restriction, payment of lesser
compensation including wage, stipulation against marriage and discharging woman on account of her
pregnancy.
- Protection from all forms of violence including those committed by the State.
- Protection and security in times of disaster, calamities and other crisis situations.
- Participation and representation.
- Equal treatment before the law.
- Equal access and elimination against women in education, scholarships and training.
- Equal participation in sports.
- Non-discrimination in employment in the field of military, police and other similar services.
- Equal rights in all matters relating to marriage and family relations.
- Food security and resources for food production.
- Localized, accessible, secure and affordable housing.
- Employment, livelihood, credit, capital and technology.
- Skills training, scholarships, especially in research and development aimed towards women friendly farm
technology.
- Representation and participation in policy – making or decision – making.
 HEALTH AND SAFETY PROTECTION OF WOMEN
 NIGHTWORK PROHIBITION (Night Shift)
- No woman, regardless of age, shall be employed or permitted or suffered to work with or without
compensation.
a. In any industrial undertaking or branch between 10pm and 6am the following day.
b. In any commercial or non – industrial undertaking and branch, other than agricultural, between midnight
and 6am of the following day.
c. In any agricultural undertaking at night times unless she is given a period of rest of not less than nine
consecutive hours.
- EXCEPTIONS:
a. In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disasters or calamity, to prevent loss of life or property, or in cases of
force majeure or imminent danger to public safety.
b. In case of urgent work to be performed on machineries, equipment or installation to avoid serious loss
which the employer would otherwise suffer.
c. Where the work is necessary to prevent serious loss of perishable goods.
d. Where the woman employee holds a responsible position managerial or technical nature, or where the
woman employee has been engaged to provide health and welfare services.
e. Where the nature of the work requires the manual skill and dexterity of women workers and the same
cannot be performed with equal efficiency by male workers.
f. Where the women employees are immediate members of the family operating the establishment or
undertaking.
g. Under other analogous cases exempted by the DOLE.
 RA NO. 10151: EMPLOYMENT OF NIGHT WORKERS – An act allowing the employment of night workers, thereby
repealing articles 130 and 131 of PD 442, as amended otherwise known as the Labor Code of the Philippines.
- During the periods, a woman worker shall not be dismissed or given notice of dismissal, except for just or
authorized causes provided for in the Labor Code that are not connected to pregnancy, childbirth and
childcare responsibilities. She shall not also lose her access to promotion, seniority and status attach to her
regular night work position.
 - Pregnant woman and nursing mothers may be allowed to work at night only if a competent physician, other
than company physician, shall certify their fitness.
 HEALTH AND SAFETY FACILITIES (HSE)
- Provides seats proper for women and permit them to use such seats when they are free from work and
during working hours.
- To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room
for women.
- To establish a nursery in a workplace for the benefit of the women employees therein.
- To determine the appropriate minimum age and other standards for retirement or termination in special
occupation such as those of flight attendants and the like.
 RA NO. 7877 – Anti – sexual harassment act of 1995.
- Keep a log or diary of the dates, time, place, names, what happened, etc
- Seek advice and support from trusted friends.
- Take a formal action and file a case; administrative with the company’s CODI, or independent civil action.
- Action must be filed within 3 years from the time it is committed.
- Keep a record of efficiency or merit citations in case of demotions or firings because of refusal from sexual
advances.
- DO NOT COVER SEXUAL ACTS OF HARASSMENT OF CO-EMPLOYEE OF EQUAL OR LOWER RANK! Instead,
refer to RPC.
- What is sexual harassment? It is an unwarranted sexual attention. Can be verbal, visual, gestural, or physical
from sexist remark or sexual assault. Offender’s intention is irrelevant, victim’s perception is what
determines harassment.
- Who commits sexual harassment and how it is committed? Any person who, having authority, influence or
moral ascendancy over another demands, requests or otherwise requires sexual favor from the other, and
the sexual favor is made as a condition in the following: hiring or employment, granting favorable
compensation such as terms, conditions, promotions or privilege
- What are the duties of the employer? Prevent or deter the commission of acts of sexual harassment,
provide procedure for resolution by guideline on proper decorum in the workplace and procedure for
investigation of cases, creation of CODI (Committee on Decorum and Investigation) and dissemination of a
copy of the RA7877.
- What to do if sexually harassed? Be prepared. Object or resist.
 RA NO. 11313 – Safe Spaces Act – Gender – based Sexual Harassment in the Workplace.
- A conduct of sexual nature and other conduct based on sex affecting the dignity of a person, which is
unwelcome, unreasonable, and offensive to the recipient, whether done verbally, physically or through the
use of technology such as text messaging or electronic mail or through any other forms of information and
communication systems.
- What you should do? If you experience GBH in the workplace, Criminal Case. File an administrative
complaint with the Committee on Decorum and Investigation (CODI) and/or file a civil and/or criminal case
before the courts
- Duties of Employers to prevent Gender – Based Sexual Harassment in the Workplace?
a. Disseminate the law to all persons in the workplace or post a copy in a conspicuous place
b. Provide measures to prevent gender – based sexual harassment in the workplace, such as the conduct of
anti -sexual harassment seminars.
c. Create an independent internal mechanism or a committee on decorum and investigation to investigate
and address complaints of gender – based sexual harassment.
- The Committee on Decorum and Investigation (CODI)
a. Adequately represent the management, the employees from the supervisory rank, the rank-and-file
employees, and the union if any.
b. Designate a woman as its head and not less than half of its members should be women.
c. Be composed of members who should be impartial and not connected or related to the alleged
perpetrator.
d. Investigate and decide on the complaints within 10 days or less upon receipt thereof.
e. Observe due process.
f. Protect the complainant from retaliation.
g. Guarantee confidentiality to the greatest extent possible.
- Employers shall be fined when they fail to implement their duties under the Safe Spaces Act (not less than
P5,000 but not more than P10,000), or do not take action on reported ats of GBSH in the workplace (not less
than P10,000 but not more than P15,000).

APPLICABILITY (Article 6) – All rights and benefits granted to workers under this code shall, except as may otherwise be
provided herein, apply alike to all workers, whether agricultural or non – agricultural.
Elements to Determine Jurisdiction of Labor Courts
 There exists an employer – employee relationship; and,
 There must be a reasonable causal connection between the parties’ employer – employee relations, as well as
the claim asserted, in order for labor courts to have jurisdiction.

Is the Termination of a higher management officer (Asst. VP, Exec. VP, or simply a VP) a labor case or a corporate case?
 If the complainant is named as a corporate officer per Articles and/or by-laws, then the removal of the person is
an intra-corporate controversy and within the jurisdiction of the ordinary courts.
 If not, then the person is an ordinary employee who may only be terminated for just or authorized cause, and
after due process compliance with the provisions of the labor code.

Legitimate Sub – Contracting vs Labor -Only Contracting

 The purpose of the Law
- To prevent unscrupulous employers who engage in the practice of labor – only contracting in order to escape
liability for benefits and privileges accruing to one holding a regular employment.
Contracting/Sub – Contracting Labor – Only Contracting
Arrangement whereby a principal agrees to put out or Arrangement where the contractor or subcontractor
farm out with a contractor the performance or merely recruits, supplies or places workers to perform a
completion of a specific job or work within a definite or job or work for a principal and the following elements are
pre – determined period, regardless of whether such job present:
or work is to be performed or completed within or a. The contractor or subcontractor does not exercise
outside the premises of the principal. the right to control over the performance of the
work of the employee; OR

b. 1.The contractor or subcontractor does not have

investments in the form of tools, equipment,
machineries, supervision, work premises, among
others; and,
2.The contractor’s or subcontractor’s employees
recruited and placed are performing activities
which are directly related to the main business
operation of the principal.

 Test of Determining Job Contracting

1. C/SC is duly registered with DOLE – Failure to is presumed to be a labor – only contracting.
2. C/SC is engaged in a distinct and independent business and undertakes to perform the job or work on its
own responsibility, according to its own manner and method;
3. C/SC has substantial capital to carry out the job farmed out by the principal on his account, manner and
method, investment in the form of tools, equipment machinery and supervision – P5M Paid – up Capital or
net worth;
4. In performing the work farmed out, the C/SC is free from the control and/or direction of the principal in all
matters connected with the performance of the work except as to the result thereto; and,
5. The service Agreement ensures compliance with all the rights and benefits for all the employees of the C/SC
under the labor laws.
 Trilateral Relationship
- Contractor – (Job Contract) – Principal - - - - - Worker – (Employment Contract) – Contractor
 Liability
- In the event of violation of any of the provision of the Labor Code, including the failure to pay wages, there
exists a solidary liability on the part of the principal and the contractor for purposes of enforcing the
provisions of the Labor Code and other social legislations to the extent of the work performed under the
employment contract. (S. 9, DO 174 – 17)
- In case of violation of the provisions on the rights of contractor’s employees and required contracts, it shall
render the principal the direct employer of the employees of the contractor or subcontractor. (S. 12, DO 174
– 17)
- Section 10. Rights of Contractors/ Subcontractor’s Employees. All contract’s/subcontractor’s employees,
shall be entitled to security of tenure and all the rights and privileges as provided for in the Labor Code, as
amended, to include the following:
a. Safe and healthful working conditions;
b. Labor standards such as but not limited to service incentive leave, rest days, overtime pay, holiday pay,
13th month pay, and separation pay;
c. Retirement benefits under the SSS or retirement plans of the contractor/subcontractor;
d. Social Security and welfare benefits; and,
e. Self-organization, collective bargaining and peaceful concerted activities including the right to strike.
 - Contractor under obligation to re-deploy the employee within three (3) months. If contractor fails to
redeploy its employee, then separation pay should be paid to its employee. The mere expiration of the
Service Agreement shall not be deemed as a termination of employment of the contractor’s/subcontractor’s
employees who are regular employees of the Latter. (S.13, DO 174 – 17)
 If there is a valid job – contracting arrangement
- There is no employment contract between the principal/company and the independent contractor. It is
simply a civil contract for services, subject only to specific LC provisions and Dos regarding liability of
principal with respect to independent contractor.
- The employees of an independent contractor are NOT the principal’s employees.
- The principal is considered an indirect employer, and is made solidarily liable with the contractor to the
employees of the latter for a more limited purposes, viz: payment of unpaid wages and other monetary
claims, including 13th month pay, service incentive leave pay.
 If there is Labor – Only Contracting Arrangement
- The so – called contractor is deemed merely an agent of the principal
- The principal is deemed the direct employer of all the employees of the contractor, and liable to the latter as
if the principal directly hired them
- The principal is deemed the direct employer and is made liable to the employees of the contractor for a
more comprehensive purpose (wages, monetary claims, and all other benefits in the LC such as
SSS/Medicare/Pag-ibig). The labor – only contractor is deemed merely an agent.

THE NEGATIVE LIST

 When the principal farms out work to a Cabo. A Cabo is a person or group of persons or to alabor group which,
under the guise of a labor organization, cooperative or any entity, supplies workers to an employer, with or
without any monetary or other consideration, whether in the capacity of an agent of the employer or as an
ostensible independent contractor.
 Contracting out of job or work through an in-house agency. An in-house agency is a contractor which is owned,
managed, or controlled directly or indirectly by the principal or one where the principal owns/represents any
share of stock, and which operates solely or mainly for the principal.
 Contracting out of job or work through an in-house cooperative which merely supplies workers to the principal.
An in-house cooperative is managed, or controlled directly or indirectly by the principal or one where the
principal or any of its officers owns/represents any equity or interest, and which operates solely or mainly for the
principal.
 Contracting out of a job or work by reason of a strike or lockout whether actual or imminent.
 Contracting out of a job or work being performed by union members and such will interfere with, restrain or
coerce employees in the exercise of their rights to self-organization as provided in Article 259 of the LC, as
amended.
 Requiring the C/SC’s employees to perform functions which are currently being performed by the regular
employees of the principal.
 Requiring the C/SC’s employees to sign, as a precondition to employment or continued employment, an
antedated resignation letter, bank payroll, a waiver of labor standards including minimum wages and social or
welfare benefits, or a quitclaim releasing the principal or contractor from liability as to payment of future claims,
or require the employee to become a member of a cooperative.
 Repeated hiring by the contractor/subcontractor of employees under an employment contract of short duration.
 Requiring employees under a contracting/subcontracting arrangement to sign a contract fixing the period of
employment to a term shorter than the term of service agreement, unless the contract is divisible into phases
for which substantially different skills are required and this is made known to the employee at the time of
engagement.
 Such other practices, schemes or employment arrangements designed to circumvent the right of workers to
security of tenure.

CASES
 Coca – cola Bottlers v. Dela Cruz, et. Al. GR No. 184977
The law allows contracting and subcontracting involving services but closely regulates these activities for
the protection of workers. Thus, an employer can contract out part of its operations, provided it complies with
the limits and standards provided in the Code and in it implementing rules.
 Will a DOLE Certification that one is a legitimate job-contractor suffice to prove the status as a job contractor?
The DOLE certificate having been issued by a public officer carries with it the presumption that it was
issued in the regular performance of official duty. Petitioner’s bare assertions fail to rebut this presumption.
Further, since the DOLE is the agency primarily responsible for the regulating the business of independent job
contractors, the Court can presume, in the absence of evidence to the contrary, that it had thoroughly evaluated
the requirements submitted before issuing the Certificate of Registration.
NOTE: The DOLE Registration simply gives rise to a disputable presumption that the contractor is a legitimate
one.
 Ramy Gallego V. Bayer Phils., GR No. 179807
 They cannot claim to be regular employees of the principal, where they voluntarily resigned from the
contractor and transferred of their own volition to the third-party contractor who won the contract with the
principal. Their voluntary refusal to renew their contracts with their employer/independent contractor was
brough about by their desire to continue their assignment with the principal which could not happen in view of
the conclusion of principal’s contract with their employer.
 Nestle Phils., Inc. v. Puedan, et. Al., GR No. 220617
A closer examination of the Distributorship Agreement reveals that the relationship of NPI and ODSI is
not that of a principal and a contractor (regardless of whether labor-only or independent), but that of a seller
and a buyer/re-seller. As stipulated in the Distributor Agreement, NPI agreed to sell its products to ODSI at
discounted prices, which in turn will be re-sold to identified customers, ensuring in the process the integrity and
quality of the said products based on the standards agreed upon by the parties. As aptly explained by NPI, the
goods it manufactures are distributed to the market through various distributors, eg., ODSI, that in turn, re-sell
the same to designated outlets through its own employees such as the respondents. Therefore, the reselling
activities allegedly performed by the respondents properly pertain to ODSI, whose principal business consists of
the ‘buying, selling, distributing, and marketing goods and commodities of every kind’ and ‘(entering) into all
kinds of contracts for the acquisition os such goods land commodities.’
Thus, contrary to the CA’s findings, the aforementioned stipulations in the DA hardly demonstrate
control on the part of NPI over the means and methods by which ODSI performs its business, nor were they
intended to dictate how ODSI shall conduct its business as a distributor. Otherwise stated, the stipulations in the
DA do not operate to control or fix the methodology on how ODSI should do its business as a distributor of NPI
products, but merely provide rules of conduct or guidelines towards the achievement of a mutually desired
result – which in this case is the sale of NPI products to the end consumer. In Steelcase, Inc. v. Design
International Selections, Inc., the court held that the imposition of minimum standards concerning sales,
marketing, finance and operations are nothing more than an exercise of sound business practice to increase
sales and maximize profits.

KINDS OF EMPLOYMENT
 Regular Employee: Basic Rights
- One who has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of employer.
- One who has rendered at least one (1) year of service , whether such service is continuous or broken, with
respect to the activity in which he is employed.
- One who has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer.
 Probationary Employees
- Those who are hired generally for regular positions but are placed on a probationary status for a period of six
(6) months (as a general rule).
- May become regular once he has qualified as such in accordance with reasonable standards made known to
him at the time of hiring.
- They are considered regular if they are allowed to work beyond the probationary period.
 Fixed – Term Employment
- Employees are hired for a specific period, the arrival of the date specified in the contract of which
automatically terminates the employer – employee relationship.
- Criteria:
a. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any
force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; and
b. It satisfactorily appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the latter.
 Project Employees
- Employees assigned to carry out specific project or undertaking, duration and scope of which were specified
at the time the employees were engaged for that project.
- Indicators of Project Employment:
a. The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable;
b. Such duration, as well as the specific work/service to be performed, is defined in an employment
agreement and is made clear to the employee at the time of hiring;
c. The work/service performed by the employee is in connection with the particular project/undertaking
for which she is engaged;
d. The employee, while not employed and awaiting engagement, is free to offer his services to any other
employer;
e. The termination of his employment in the particular project/undertaking is reported to the DOLE
Regional office having jurisdiction over the workplace within 30 days following the date of his separation
from work, using the prescribed form on the employee’s terminations/dismissals/suspensions.
 f. An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies.
Purely Project Employees Employees from Labor Pool
Those employed in connection with a particular Those employed by a construction company
construction project. without reference to any particular project.
May be further classified into probationary and
regular.
 Seasonal Employees
- Those hired for work or services in nature, and the employment is for the duration of the season.
 Regular Seasonal Workers
- Those called to work from time to time. The nature of their relationship with the employer is such that
during the off season, they are temporarily laid off; be re-employed during the summer season or when their
services may be needed.
- They are in regular employment because of the nature of their job, and not because of the length of time
they have worked.
- If an employee is regular seasonal employee, will he be entitled to CBA benefits given to regular
employees? Regular seasonal workers should not be confused with regular workers. The are not entitled to
CBA benefits given to regular employees who performs tasks for the entire year, regardless of the season.
 Casual Employees
- Those who are hired to perform work or service which is merely incidental to the business of the employer.
- Any casual employee who has rendered at least one year of service, whether it be continuous or broken,
shall be considered a regular employee with respect to the activity for which he is employed, and his
employment shall continue while such activity exists.

CASE STUDIES:
Petitioner Respondents
Respondent Workers were merely hired on a Respondent workers were repeatedly rehired for
per-project basis, as evidenced by numerous various positions (as laborer, mason, tinsmith,
Contractual Employee Appointments (CEAs) painter, electrician, welder, carpenter) in the nature
signed by them. of maintenance workers from 1990 – 1999 thus
should be deemed regular employees.
The respondents’ workers termination was
validly made due to the completion of the Their services are necessary and desirable to the
specific projects for which they were hired. business of petitioner.
Labor Arbiter
Respondents’ workers should be deemed as petitioner’s regular employees considering that:
a. They have rendered at least ONE year of service to petitioner as its employees;
b. The activities for which they were hired for a re vital or inherently indispensable to the maintenance of the
buildings or classrooms where the petitioner’s classes were held; and,
c. Their CEAs were contrived to preclude them from obtaining security of tenure.
NLRC
Respondent workers cannot be considered regular employees as they knowingly and voluntarily entered into
fixed term contracts of employment with petitioner. As such, they could not have been illegally dismissed upon
the expiration of their respective last valid and binding fixed term employment contracts with the petitioner. This
notwithstanding, the NLRC rejected petitioner’s contention that the respondent workers should be deemed
project employees, ratiocinating that their work were not usually necessary and desirable to petitioner’s main
business or trade, which is to provide elementary, secondary, tertiary and post – graduate education. As such,
the NLRC classified said worker as mere fixed term casual employees.
Court of Appeals
It held that respondents’ workers cannot be considered as merely fixed term or project employees, considering
that:
a. They performed work that is necessary and desirable to petitioner’s business, as evidenced by their repeated
rehiring and petitioner’s continuous need for their services; and,
b. The specific undertaking or project for which they were employed were not clear as the project description
set forth in their respective CEAs were either too general or too broad. Thus, the CA classified respondent
workers as regular employees, who are entitled to security of tenure and cannot be terminated without any
just or authorized caused.
What is the PRIMARY STANDARD of determining regular employment?
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 business or trade of the employer. The
connection can be determined by considering the nature of 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.
Principal Test for determining whether particular employees are properly characterized as “project-based
employees” who may be terminated at the completion of the project according to jurisprudence.
According to jurisprudence, the principal test for determining whether particular employees are properly
characterized as “project-based employees” as distinguished from “regular employees” is whether or not the
employees were assigned to carry out a specific project or undertaking, the duration and scope of which were
specified at the time they were engaged for that project. The project could either be:
1. A particular job or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other undertaking of the company; or
2. A particular job or undertaking that is not within the regular business of the corporation.
In order to safeguard the rights of workers against the arbitrary use of the word “project” to prevent employees
from attaining a regular status, employers claiming that their workers are project-based employees should not
only prove that the duration and scope of the employment was specified at the time they were engaged, but
also, that there was indeed a project.
Supreme Court
As aptly held by the CA, Pontesor, et al. could not be considered as project employees because the
specific undertakings or projects for which they were employed were not clearly delineated. This is evidenced by
the vagueness of the project descriptions set forth in their respective CEA’s, which states that they were tasked
“to assist” in various carpentry, electrical, and masonry work. In fact, when the aforesaid CEAs are pieced
together, it appears that during the years 1990 to 1999, Pontesor, et al. were each engaged to perform all-around
maintenance services throughout the various facilities/installations in petitioner’s campus. Thus, it seems that
petitioner, through the CEAs, merely attempted to compartmentalize Pontesor, et al.’s various tasks into
purported ‘projects’ so as to make it appear that they were hired on a per-project basis. Verily, the Court cannot
countenance this practice as to do so would effectively permit petitioners to avoid hiring permanent and regular
employees by simply hiring them on a temporary or casual basis, thereby violating the employees’ security of
tenure relative to their jobs.
Lest it be misunderstood, there are instances when the validity of project or fixed term employments
were upheld on the ground that it 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.”
However, if its apparent from the circumstances of the case “that perios have been imposed to preclude
acquisition of tenurial security by the employee,” such project or fixed term contracts are disregarded for being
contrary to public policy, as in this case.
TOTALITY OF CIRCUMSTANCES – If it is apparent from the circumstances of the case “that periods have been
imposed to preclude acquisition of tenurial security by the employee,” such project or fixed term contracts are
disregarded for being contrary to public policy.
DECISION
In view of the foregoing, Pontesor, et al. should, as discussed earlier, be considered regularized casual employees
who enjoy, inter alia, security of tenure. Accordingly, they cannot be terminated from employment without any
just and/or authorized cause, which unfortunately, petitioner was guilty of doing in this case. Hence, Pontesor, et
al. must be reinstated to their former or equivalent positions, with full backwages and without loss of seniority
rights. As pointed out by the LA, the NLRC Computation and Examination Unit should be directed to compute the
monetary awards that petitioner should be ordered to pay Pontesor, et al. as a consequence of this ruling.

Petitioner Fallarme Petitioner Gacos

Appointment was effective at the start of the first Taught at respondent college from the start of SY 2003-
semester of SY 2003-2004 as signified by a memorandum 2004 and continued to do so for a total of six semesters
issued by the school informing her that she had been and one summer. Her engagement as a faculty member
hired. The memorandum did not specify whether she was was signified by a memorandum issued by the school,
being employed on a regular or a probationary status. which informed her that she had been hired. The
Asie from being appointed to a faculty position, she was memorandum, which was similar tot hat issued to
also appointed to perform administrative work for the Fallarme, did not specify whether Gacos was being
school as personnel officer and to serve as head of the employed on a regular or a probationary status.
Human Development Counseling Services.
Despite having served as a faculty member since SY 2003- Like Fallarme, even though Gacos had been employed as
2004, Fallarme was asked only on 1March2006 to sign a faculty member since SY 2003-2004, it was only on
and submit to respondent Hernandez, Dean of General 1March2006 that the latter was ordered by respondent
Education, a written contract on the nature of the Valeriano to sign and submit a written contract on the
former’s employment and corresponding obligations. The nature of her employment and corresponding obligations.
 contract was denominated as ‘Appointment and Contract The terms of the contract were similar to those of
for Faculty on Probation’ (Appointment Contract), and its Fallarme. Under the appointment contract, the
effectivity period covered the second semester of SY probationary status of Gacos was likewise specified for
2005-2006 – specifically from 4 November 2005 to 18 the first time.
March 2006.
 After the lapse of their contract’s effectivity, they were informed that their contracts would not be renewed for
the first semester of SY 2006 – 2007. Both were told that the nonrenewal of their contract was made on the
basis of “administrative prerogative”.
 Respondents claimed that petitioners had been remiss in their duties. Specifically, both of them reportedly sold
computerized final examination sheets to their students without prior school approval. Allegedly, Fallarme also
told sociology books to students, while Martinez-Gacos served as part-time faculty in another school and
organized out-of-campus activities, all without the permission of respondent college. These infractions
supposedly prevented it from considering their services satisfactory.
 Petitioners were regular employees who were entitled to security of tenure. The former cited the 1992 Manual
of Regulations for Private Schools, which provides that regularization must be given to a teacher who:
a. Is employed as a full-time teacher;
b. Has rendered three consecutive years of service; and,
c. Has performed satisfactorily within that period.
 Labor Arbiter
The labor arbiter held that petitioners had complied with these requisites for their regularization and contrary to
respondents’ contention, performed satisfactorily within the years of their probationary employment. Thus, the
labor arbiter ordered respondent college to reinstate petitioners and pay them back wages as well as their 13 th
month pay.
 NLRC
Petitioners had failed to meet the third requirement for the regularization as prescribed by the 1992 Manual;
that is, they had not served respondent college satisfactorily. The NLRC found that certain actions they had done
without the requisite approval of respondent college brought about their unsatisfactorily performance during
their probationary period. However, given the failure of respondent to observe due process, the NLRC ordered it
to pay them P20,000 each as indemnity.
 Court of Appeals
It upheld respondent college’s administrative prerogative to determine whether or not petitioners were entitled
to regularization on the basis of respondents’ academic freedom. Furthermore, the award of P20,000 as
indemnity to each of the petitioners was upheld.
 PRINCIPLES
- It is established that while the Labor Code provides general rules as to probationary employment, these rules
are supplemented by the Manual of Regulations for Private Schools with respect to the period of
probationary employment of private school teachers
- As prescribed by the 1992 Manual, a teacher must satisfy the following requisites to be entitled to regular
faculty status:
1. Must be a full-time teacher;
2. Must have rendered three years of service (or six consecutives’ semesters of service for teachers on the
tertiary level); and,
3. That service must have been satisfactory.
 DECISION
Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of
service and its date of effectivity, and such other terms and conditions of employment as may be consistent with
laws and the rules, regulations and standards of the school. A copy of the contract shall be furnished the
personnel concerned.
The appointment contracts invoked by respondents appear to be an afterthought, as they asked petitioners to
sign the contracts only when the latter’s three-year probationary period was about to expire. Apparently, this act
was an effort to put a stamp of validity on respondents’ refusal to renew petitioners’ contracts.
Respondents were clearly remiss in their duty under the Labor Code to inform petitioners of the standards for
the latter’s regularization. Consequently, petitioners ought to be considered as regular employees of respondent
college right from the start.

TERMINATION OF EMPLOYMENT

SECURITY OF TENURE (A. 279, LC)

 In cases of regular employment, the employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of
 allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.
 Section 3, Article XIII, 1987 Philippine Constitution
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law.
 Gonzales v. NLRC, GR No. 125735
Employment is not merely a contractual relationship; it has assumed the nature of property right. It may spell
the difference whether or not a family will have food on their table, roof over their heads and education for their
children. It is for this reason that the State has taken up measures to protect employees from unjustified
dismissals because the right to security of tenure is not only a statutory right but, more so, a constitutional right.

BALANCING OF INTERESTS: LABOR’S INTERESTS V. MANAGEMENT’S INTERESTS

Parameters:
a. Burden of proof is upon employer to show just cause for the imposition of a penalty upon the employee.
However, the employee must first prove the fact of dismissal;
b. There must exist substantial evidence to prove just or authorized cause of termination;
c. In the imposition of penalty, whether suspension or termination, the same must be commensurate to the
offense committed;
d. Thus, for valid termination, there must be both just cause and due process.
e. Grounds for Termination.
JUST CAUSES AUTHORIZED CAUSES
Instances enumerated under A. 297 (Termination by Instances enumerated under A. 298 (Closure of
Employer) of the Labor Code, as amended. Establishment and Reduction of Personnel and 299
1. Serious Misconduct Disease as a Ground for Termination) of the Labor
2. Willful Disobedience or Insubordination Code, as amended.
3. Gross and Habitual Neglect of Duties 1. Installation of Labor – saving Devices
4. Fraud or Willful Breach of Trust 2. Redundancy
5. Loss of Confidence 3. Retrenchment or Downsizing
6. Commission of a Crime or Offense 4. Closure or Cessation of Operation
5. Disease
These are causes directly attribute to the fault or These are causes brought by the necessity and
negligence of the employee. exigencies of business, changing economic conditions
and illness of the employee.
Implies that the employee concerned has committed, Does not necessarily imply delinquency or culpability
or is guilty of, some violation against the employer. on the part of the employee. Instead, the dismissal
Thus, it can be said that the employee himself initiated process is initiated by the employer’s exercise of his
the dismissal process. management prerogatives.
If the employer failed to comply with the notice If the employer failed to comply with the notice
requirement, the sanction to be imposed upon him requirement, the sanction should be stiffer because the
should be tempered because the dismissal was, in dismissal process was initiated by the employer’s
effect, initiated by an act imputable to the employee. exercise of his management prerogative.
f. Valid Grounds for Termination of Employment (Just Causes) Requisites
JUST CAUSES REQUISITES
Serious Misconduct 1. There must be misconduct.
2. The misconduct must be of such grave and
aggravate character.
3. It must relate to the performance of the
employees’ duties, and
4. There must be showing that the employee
becomes unfit to continue working for the
employer
Willful Disobedience or Insubordination 1. There must be disobedience or insubordination.
2. The disobedience or insubordination must be
willful or intentional characterized by a
wrongful and perverse attitude.
3. The order violated must be reasonable, lawful,
and made known to the employee, and
4. The order must pertain to the duties which he
has been engaged to discharge.
Gross and Habitual Neglect of Duties 1. There must be neglect of duty.
2. The negligence must be both gross and habitual
 in character.
Fraud or Willful Breach of Trust 1. There must be an act, omission or concealment.
2. The act, omission or concealment involves a
breach of legal duty, trust or confidence justly
reposed.
3. It must be committed against the employer or
his/her representative, and
4. It must be in connection with the employees’
work.
Loss of Confidence 1. There must be an act, omission or concealment.
2. The act, omission or concealment justifies the
loss of trust and confidence of the employer to
the employee.
3. The employee concerned must be holding a
position of trust and confidence.
4. The loss of trust and confidence should not be
simulated.
5. IT should not be used as a subterfuge for causes
which are improper, illegal, or unjustified, and
6. It must be genuine and not a mere afterthought
to justify an earlier action taken in bad faith
Commission of a Crime or Offense 1. There must be an act or omission
punishable/prohibited by law, and
2. The act or omission was committed by the
employee against the person or employer, any
immediate member of his/her family, or his/her
duly authorize representative.
Analogous Causes 1. There must be act or omission similar to those
specified just causes, and
2. The act or omission must be voluntary and/or
willful on the part of the employees.
No act or omission shall be considered as analogous
cause unless expressly specified in the company rules
and regulations or policies.
 Article 297: Termination by Employer
- An employer may terminate an employment for any of the following causes:
 JUST CAUSES
 Serious Misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
Misconduct
o 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 judgement.
o Improper or wrong conduct.
Case Study (A)
Petitioner manufactures metal parts and motor vehicle components. It hired the Private Respondent and
assigned him to its Shearing Line together with DEE and EMM was the line’s team leader. EMM was
confronted by PR and DEE when he went to Surf City regarding EMM’s report about Ps’s and DEE’s
questionable behavior at work that resulted in a fistfight. PR and DEE were sent a notice of preventive
suspension/notice of discharge by mgmt. advising them that their fistfight with EMM violated the
company’s policy. They were given 48 hours to explain why no disciplinary action should be taken against
them and placed under preventive suspension for 30 days. PR submitted a written statement. PR was
informed that an administrative hearing will be conducted. One day before the hearing, PR filed a
complaint for illegal suspension/constructive dismissal with prayer for damages. PR failed to attend the
administrative hearing so he was dismissed. PR in his statement said that EMM challenged them in a
fistfight and then punched him so he punched EMM in return that led to a full-blown fistfight.
Accordingly, PR, EMM and DEE talked with each other and settled their misunderstandings.
Labor Arbiter
PR’s preventive suspension and subsequent dismissal is illegal as it was based solely on unsubscribed
written statements executed by EMM and two other witnesses and that EMM, PR and DEE had settled
their differences before PR was placed under preventive suspension. The fistfight happened 200-300
meters away from the workplace and it happened after office hours. LA awarded damages to PR
NLRC
Affirmed the LA’s ruling. PR was unfairly treated and subjected to discrimination because he was the only
one served with the notice to explain and placed under preventive suspension. Petitioner moved for
reconsideration but was denied.
Court of Appeals
No grave of abuse of discretion on the part of NLRC in affirming the LA’s ruling. While there is a ground
of serious misconduct on the part of PR, petitioner failed to comply with the jurisprudential guidelines
that misconduct warranting a dismissal (requisites). Also, the mauling incident ovvurred outside office
premises and after office hours and did not disrupt company operations nor pose a threat to the safety
or peace of mind of Petitioner’s workers nor cause prejudice to the company. Thus, the dismissal was too
harsh and evidently disproportionate to the act committed.
Supreme Court
There was a work connection in the fistfight because the motivation behind the confrontation was
rooted on workplace dynamics in the performance of their duties. DEE appeared to have cooperated
with pr in the confrontation. However, DEE resigned before the filing of the complaint. The statement of
PR incidentally and just wanting to clear some matters with EMM was a clear distortion of what actually
happened. It was actually a planned encounter. Under this circumstance, PR clearly committed a
misconduct or improper behavior that constituted a valid cause of dismissal under the law and
jurisprudential standards. Also, PR was not discriminated as both he and DEE received their notice of
preventive suspensions. Thus, PR was not illegally dismissed but was dismissed for just cause.
Case Study (B)
Ricardo Escanlar, herein petitioner, was dismissed from his work for gross misconduct when he uttered
offensive words such as “Gago Ka,” and threatening his supervisor with hysical harm as he aalso uttered
the words, “Bakit anong gusto mo, Tangina mo.” Ricardo then filed a complaint of illegal dismissal against
Autobus, the company where he was dismissed from. It was said that he violated Sec. 6 of Rule No. 28 of
the Code of Discipline of Autobus Company in which any act of intentional disrespect or threat towards
their supervisor or an officemate is a valid ground for terminating an employee in accordance with
article 282 of the labor code.
The transfer of Ricardo by his supervisor from the Cutting Section to the Washer’s Section triggered the
former to commit such disrespectful acts. Knowing that he is the President of the workers’ union in the
company, It hurts his ego and pride when he was transferred to operate in a lower position when
formerly he was in a higher position. However, the Arbitration Branch still declared Ricardo’s dismissal to
be valid and this was supported by the NLRC.
Issue:
Whether or not the Escanlar committed serious misconduct which constitutes a valid cause for dismissal
under the law.
Ruling:
The repeated utterances by Escanlar of obscene, insulting or offensive words against a supervisor were
not only destructive of the morale of his co-employees and a violation of the company rules and
regulations, but also constitute gross misconduct which is one of the grounds provided for by law to
terminate the services of an employee. His attitude toward his supervisor, RTA, amounted to
insubordination and conduct unbecoming of an employee which merited the penalty of dismissal.
Issues:
Whether or not fabrication of time records constitutes serious misconduct.
Whether or not use of company property for personal use constitutes serious misconduct.
Palapag v. NLRC
Where the records clearly show that the employee has not been charged with the offense of hig-grading
but also has been warned 21 times for absences without official leave, these repeated acts of
misconduct and willful breach of trust by an employee justify his dismissal and forfeiture of his right to
security of tenure.
Case Study (C)
The employee (asst. news director) had been late in reporting for work for twelve consecutive days
through punctuality was demanded from him because of the deadlines to be met in putting to be a daily
newspaper; and he also refused to follow the style of writing set down by the editor in several
memoranda to the senior editors since he considered the memoranda being merely personal opinion of
the editor on the English grammar, and thus under the premises his termination is justified.
Club Filipino Inc. v. Sebastian
Destroying the properties of the company, assaulting the company’s House Officer while under the
influence of liquor, within the company premises during working hours, constitutes just cause for the
dismissal of the pin boy on the ground of serious misconduct.
Aguilar v. NLRC
Where the accounting clerk continued signing the restaurant and bar grill bills or chits chargeable to the
patronage fees of certain club members, even after she had been investigated for such misconduct and
after she was already made aware that non-members like her cannot sign chits for and in behalf of the
club members, her acts in defiantly disobeying the rules of the company even after investigation, shows
 her cavalier attitude which leaves the management no other recourse but to terminate her services on
the ground of serious misconduct.
Lopez v. Chronicle Publications
The act of an employee in publishing his suspicion in a union newspaper that his employer is exerting
political pressure on a public official to thwart some legitimate activities of the employees, effects
employer’s reputation and is an act inimical to the employers’ interest. Although printed in a union
newspaper, its deleterious character is not altered; such act constitutes misconduct which is a just cause
for dismissal. Also, unfounded accusation against the employer constitutes serious misconduct.
Asian Design v. Hon. Deputy Minister of Labor
An employee was dismissed for making the following remarks against his foreman inside company
premises: a. If you don’t give a goat to the foreman, you will be terminated; b. You render overtime work
so that you can buy a coffin; and c. Those who want to remain in this company, you must give anything
to the foreman. His acts which were made the grounds for his dismissal were not only destructive of the
morale of his co-employees and a violation of the company rules and regulations, but also constitute
gross misconduct which is one of the grounds provided by law to terminate services of an employee.
PAAUC vs. NLRC
The act of an employee in throwing a stapler and uttering abusive language upon the person of a plant
manager may be considered as a serious misconduct;
Golden Thread Knitting Industries vs NLRC
However, the dismissal will not be upheld where it appears that the employees act of disrespect was
provoked by the employer.
Zamboanga City Water District v. Bartolome
Theft constitutes gross misconduct which is a ground for dismissal under the law. The fact that the theft
case against him was dismissed would not preclude his dismissal. The conviction of an employee in a
criminal case is not a condition precedent to his dismissal by his employer. The dropping by the city
prosecutor of the criminal complaint is not binding upon a labor tribunal.
PAAUC v. NLRC
The act of an employee in asking a co-employee to punch in her time record although a violation of
company rules, does not constitute serious misconduct.
Libres v. NLRC
Touching a female subordinate’s hand and shoulder, caressing her nape constitute sexual harassment
which is serious misconduct for she was placed in a hostile, intimidating or offensive environment. It is
the right of an employer to protect its employees from oversexed superiors.
Case Study (D)
Although we have recognized that fighting within company premises may constitute serious misconduct,
we have also held that not every fight within company premises in which an employee is involved would
automatically warrant dismissal from service.
Respondent’s actuations were not entirely baseless. To begin with, it is certain that the verbal tussle
between him and Barrios did not start due to alleged violent temper and tendency to violate company
rules and regulations of respondent the incident was primarily due to Barrios provoking attitude. Other
than the self-serving allegation of the petitioner SSPC that Barrios politely advised respondent to remove
his green long-sleeved shirt and to wear the company issued uniform., no competent and credible
evidence was shown to support the claim. In fact, even the handwritten statements of the three security
guards, including that of Barrios himself, did not dwell on the manner by which petitioner was
instructed. On the other hand, petitioner’s narrations, as corroborated by the duly notarized affidavit of
fellow warehousemen revealed how insulting and arrogant Barrios was. This, aside from the petitioners
feeling, that he was being singled out from other warehousemen, who were similarly clothed while on
duty, sufficiently explained why he challenged Barrios to a fight. We agree with the LA’s conclusion that
respondent’s misconduct does not warrant the imposition of the ultimate sanction of dismissal.
Undeniably, the altercation between respondent and Barrios was nipped in the bud by the timely
intervention of other employees. The momentary work stoppage did not pose a threat to the safety or
peace of mind of the workers. Neither did such disorderly behavior cause substantial prejudice to the
business of respondent SSPC.
 The determination of whether a conduct is disgraceful or immoral involves a TWO-STEP PROCESS:
1. A consideration of the totality of the circumstances surrounding the conduct; and,
2. An assessment of the said circumstance vis-à-vis the prevailing norms of conduct, i.e. what the society
generally considers moral and respectable.
Ex. DILG: 6 months suspension for Disgraceful and Immoral Conduct implemented against Gov. Tallado.
 Is the dismissal of a classroom teacher because of her marriage to her student, who was fourteen years her
junior, justified as a form of immoral conduct?
To constitute immorality, the circumstances of each particular case must be holistically considered and evaluated
in the light of prevailing norms of conduct and the applicable law.
With the finding that there is no substantial evidence of the imputed immoral acts, it follows that the alleged
violation of the Code of Ethics governing school teachers would have no basis. Private respondent utterly failed
 to show that petitioner took advantage of her position to court the student. If the two eventually fell in love
despite the disparity in their ages and academic levels, this only lends substance to the truism that the heart has
reasons of its own which reason does not know. But, definitely, yielding to this gentle and universal emotion is
not to be so casually equated with immorality. The deviation of the circumstances of their marriage from the
usual societal pattern cannot be considered as a defiance of contemporary social mores.
 Willful Disobedience to a Lawful Order
Requisites:
1. There must be disobedience or insubordination;
2. The disobedience or insubordination must be willful or intentional characterized by a wrongful and perverse
attitude;
3. The order violated must be reasonable, lawful, and made known to the employee; and,
4. The order must pertain to the duties which he has been engaged to discharge.
 TAKE NOTE.
- Where an order or rule is not reasonable in view of the terms of the contract of employment and the general
rights of the parties, a refusal to obey does not constitute a just cause for the employee’s discharge. As to
what is a reasonable rile or order will depend on the circumstances of each case. Reasonableness, however,
has reference not only to the kind and character of directions and commands, but also the manner in which
they are made. The employee’s disobedience, in order to justify his dismissal under this provision must relate
to substantial matters, not merely trivial or unimportant matters. Furthermore, disobedience to be
considered willful must be resorted to without regard to its consequences.
 Jurisprudential Guidelines
- Employee’s refusal to carry on legitimate orders which would prejudice reputation and goodwill of the
company constitutes a conspiracy against its existences and is a just case for dismissal. One of the
fundamental duties of an employee is to yield to all reasonable rules, orders, and instructions of the
employer. Any willful and intentional disobedience thereof justifies recission of the contract of service and
the peremptory dismissal of the employee. (BLTB Co. v. CA)
- The unauthorized use of company vehicle constitutes a just cause for termination, it being the second
infraction despite previous warning and reminder. Worse, he allowed the use of the vehicle for personal
purposes while he and his companions were under the influence of liquor resulting in substantial harm on
the part of the employer when they met a vehicular accident due to such misconduct. (Family Planning Org.
of the Phils. V. NLRC)
- Non compliance with an order requiring that the food requirements be brought from and supplied by a
single source. (St. Luke’s Hospital v. Hon. Minister of Labor)
- Insubordination or acts of disobedience is not insubordination when it is sufficiently explained. (Union of
Supervisors v. SEC. of Labor)
 Whether or not Refusal to transfer constitutes willful disobedience or insubordination.
- The transfer of an employee involves a lateral movement within the business or operation of the employer,
without demotion in rank, diminution of benefits or, worse, suspension of employment even if temporary.
The recall and transfer security guards require reassessment to another post and are not equivalent to their
placement on floating status. Off detailing security guards for a reasonable period of six months is justified
only in Bonafide cases of suspension of operation, business or undertaking. (Sentinel Security Agency v.
NLRC)
 Is the refusal to be promoted can be a basis of dismissal from service?
- For promotion to occur, there must be an advancement from one position to another or an upward vertical
movement of the employees rank or position. Any increase in salary should only be considered incidental
but never determinative of whether or not promotion is bestowed upon an employee.
- An employee is not bound to accept promotion, which is in the nature of a gift or reward. Refusal to be
promoted is a valid exercise of a right. Such exercise cannot be considered in law as insubordination, or
willful disobedience of a lawful order of the employer, hence, it cannot be the basis of an employee’s
dismissal from service.
 Gross and Habitual Neglect of Duty
 Gross Negligence – Absence of that diligence that an ordinary prudent man would use in his own affairs.
Connotes want of care in the performance of one’s duties.
 What is considered as Habitual Neglect? – Repeated failure to perform one’s duties over a period of time,
depending upon the circumstances.
 Jurisprudential Guidelines
- Habitual absenteeism without leave is sufficient to justify termination of an employee. Habitual or prolonged
absences constitute gross negligence or abandonment. (Club Filipino, Inc. v. Sebastian)
- Anent the charge of habitual neglect for petitioner’s absences without leave, jurisprudence provides that in
order to constitute a valid cause for dismissal, the neglect of duties must be both gross and habitual.
(Villanueva v. Gano)
- A company guard was found sleeping at his post and warned not to repeat the offense on pain of dismissal.
When caught sleeping again, the employer lawfully dismissed him. (Ormoc Sugar Co. v. Osco Workers)
 - As a general concept, poor performance is tantamount to inefficiency and incompetence in the performance
of official duties. An unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and
habitual neglect of duties. Poor or unsatisfactory performance of an employee does not necessarily mean
that he is guilty of gross and habitual neglect of duties. (INC Shipmanagement, Inc. v. Camporedondon)
 Can dismissal be sustained for gross negligence even if not habitual? Generally, No, but
- In School of the Holy Spirit v. Tuguiam, the respondent’s dismissal was affirmed although her negligence was
gross but not habitual. This is in view of the considerable resultant damage as far as claiming the life of a
child by drowning. As a teacher who stands in loco parentis to her pupils, respondent should have made sure
that the children were protected from all harm while in their company. Respondent should have known that
leaving the pupils in the swimming pool area all by themselves may result in an accident.
- In PAL v. NLRC, the SC ruled that PAL cannot be legally compelled to continue with the employment of a
person admittedly guilty of gross negligence in the performance of his duties although it was his first offense.
In that case, it was noted that a mere delay on PAL’s flight schedule due to aircraft damage entails problem
like hotel accommodations for its passengers, re-booking, the possibility of lawsuits, and payment of special
landing fees not to mention the soaring costs of replacing aircraft parts. Thus, the SC considered the
sufficiency of the evidence surrounding the employee’s dismissal and the resultant damage to PAL.
- In Fuentes v. NLRC, the SC held that it would be unfair to compel the Philippine Banking Corporation to
continue employing its bank teller. In that case, the SC observed that although the teller’s infraction was not
habitual, a substantial amount of money was lost. The deposit slip had already been validated prior to its loss
and the amount reflected thereon is already considered a current liability in the bank’s balance sheet.
Indeed, the sufficiency of the evidence as well as the resultant damage to the employer should be
considered in the dismissal of the employee.
 What is abandonment?
- Abandonment requires the deliberate, unjustified refusal of the employee to resume his employment,
without any intention of returning.
- Elements of Abandonment:
1. Failure to report for work or absence without valid or justifiable reason;
2. A clear intention to sever employer-employee relationship.
NOTE: The second element, being manifested by overt acts, is the more determinative factor.
 Absence without Leave?
- 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.
 REMEMBER:
In no case shall a witness be removed from or demoted in work because or on account of his absences due to his
attendance before any judicial or quasi-judicial body or investigating authority, including legislative investigation
in aid of legislation, in going thereto and in coming therefrom: Provided, that his employer is notified through a
certification issued by the DOJ within a period of 30 days from the date the witness last reported for work:
Provided further, that in the case of prolonged transfer or permanent relocation, the employer shall have the
option to remove the witness from employment after securing clearance from the DOJ upon the
recommendation of the DOLE.

 Fraud or Willful Breach of Trust (November 24, 2024)

Dismissal – connotes a permanent severance or complete separation of the worker from the service on the initiative of
the employer regardless of the reasons therefor. (Jo Cinema Corp v. Abellana)
Note. Trust is like a paper, once it’s crumbled it can’t be perfect.
Article 297. Termination of Employee. An employer may terminate an employment for any of the ff. reasons:
(c) FRAUD OR WILLFULL BREACH BY THE EMPLOYEE OF THE TRUST REPOSED IN HIM BY HIS EMPLOYER OR DULY
AUTHORIZED REPRESENTATIVE.
* Fraud – Any act, omission or concealment which involves a breach of legal duty, trust, or confidence justly reposed and
is injurious to another.
* Requisites:
1. There must be an act, omission, or concealment;
2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed;
3. It must be committed against the employer or his/her representative; and,
4. It must be in connection with the employee’s work.
* Jurisprudential Guidelines:
1. The failure of a cashier to account for the shortage of company funds constitutes just cause for his dismissal.
(San Miguel Corp v. NLRC)
2. Complicity in the attempt to cover up the pilferage of the company’s toll collections constitutes just cause for
dismissal. (CDCP Tollways EW Union v. NLRC)
3. The fact that the employee had worked for the company for 21 years should be taken against him, as the
infraction of using an illegal electric meter, he committed vis-à-vis his long years of service with the company
reflects a regrettable lack of loyalty. Loyalty that he should have strengthened instead of betrayed and if his
 length of service is to be regarded as a justifying circumstance in moderating the penalty of dismissal. It will
actually become a prize for disloyalty perverting the meaning of social justice and undermining the efforts of
labor to cleanse its ranks of all undesirables. (Flores v. NLRC)
4. Length of service (23 years) does not help an employee who commits an act which constitutes a breach of
trust and confidence. However, the SC deems it proper to afford him some equitable relief, that is, payment of
separation pay in the amount of ½ month pay for every year of service. It was reasoned out that it did not
necessarily follow that no award of separation pay could be made if there was legal dismissal. (Sanchez vs. NLRC)
5. The acquittal of an employee in the criminal case for frustrated high-grading filed against him by his employer
does not guarantee his reinstatement where the employer has lost confidence in him. (Palapag v. NLRC)
6. The worker was separated for cause after being caught in flagrante stealing company property. (Zamboanga
WD v. Bartolome)
7. However, dismissal was too severe a penalty for an employee who was caught trying to slip out a lead material
whose cost was negligible and which after all was retrieved. It was his first offense in 17 years of service. (PAL
INC. v. Palea)
8. The dismissal of the employee was proper when he was caught using double or fictitious requisition slips in
order to withdraw company materials. (PLDT v. NLRC)
9. Laxity of employer’s accounting procedures is of no excuse for dishonesty. (SMC v. NLRC)
10. The basic premise for a valid dismissal on account of willful trust is that the employee concerned holds a
position of trust and confidence, and it his breach of this trust that results in the employer’s loss of confidence in
the employee. (Estiva v. NLRC)
11. The act complained of must be work-related to show that the employee is unfit to continue working for the
employer. (Gonzales v. NLRC)

The just causes of serious misconduct, willful disobedience of an employer’s lawful order, and fraud all imply
the presence of willfulness or wrongful intent on the part of the employee.
Hence, serious misconduct and willful disobedience of an employer’s lawful order may only be appreciated when
the employee’s transgression of a rule, duty or directive has been the product of a wrongful and perverse attitude but
not when the transgression results from simple negligence or mere error of judgment.
In the same vein, fraud and dishonesty can only be used to justify the dismissal of an employee when the latter
commits a dishonest act that reflects the disposition to deceive, defraud and betray his employer.
The requirement of willfulness or wrongful intent in the appreciation of the aforementioned just causes, in turn,
underscores the intent of the law to reserve only to the gravest infractions the ultimate penalty of dismissal.
It is essential that the infraction committed by an employee is serious, not merely trivial, and be reflective of a
certain degree of depravity or ineptitude on the employee’s part in order for the same to be a valid basis for the
termination of the employment.

 LOSS OF TRUST and CONFIDENCE

 Requisites:
1. There must be an act, omission or concealment;
2. The act, omission or concealment justifies the loss of trust and confidence of the employer to the employee;
3. The employee concerned must be holding a position of trust and confidence;
4. The lost of trust and confidence should not be simulated;
5. It should not be used as a subterfuge for causes which are improper, illegal, or unjustified; and,
6. It must be genuine and not a mere afterthought to justify an earlier action taken in bad faith.
 Jurisprudential Guidelines:
1. The act of the head supervisor in initiating and leading the boycott thereby disrupting and impairing
company operations, is sufficient reason for the company to lose its trust and confidence on her considering
that she was a managerial employee whose position carries the corresponding highest degree of
responsibility of improving and upholding the interest of the company and in exemplifying the utmost
standard of discipline and good conduct among her co-employees, thereby justifying the termination of her
employment. (Top Form Mfg. Inc. v. NLRC)
2. An employer has the right to dismiss a managerial employees for breach of trust and loss of confidence
where the latter become a habitual absentee from his job, neglected his duties and responsibilities, became
lax in directing and supervising the workforce, used company property for his business outfit, gave
instructions to company staff to give priority to his job orders printed regular customers of the company and
manipulated price quotations during the canvassing of bids to favor his outfit. (GT Printers v. NLRC)
 Position of Trust and Confidence – One where a person is entrusted with confidence on delicate matters, or with
the custody, handling, or care and protection of the employer’s property and or funds. (Panday v. NLRC)
- Bookkeeper/Accounting Clerk
The position involves a high degree of responsibility requiring trust and confidence. It carries with it the duty
to observe the proper company procedures in the fulfillment of her job as it relates closely to the financial
interests of the company. Her failure to observe the required accounting procedure in the preparations of
the vouchers which resulted in the commission of anomalies is sufficient to breach the trust and confidence
 of her employer. Hence, it would be most unfair for the company to continue employing her if the former
believes that the latter’s continuance in the service will be patently inimical to its interest. (Kwik-way Engg.
Works v. NLRC)
- Purchaser
A purchaser in the procurement department who converted the company’s money to her personal use can
be legally dismissed. It is unfair to require an employer to accept back an employee in whom he has lost
confidence because his dishonesty has been clearly demonstrated, and whose moral character is deemed to
be so far suspect that even his own defenders concede the inexpedience and unwisdom of reinstating him to
other than a non-sensitive position. The law allows an employer to dismiss an employee on account of loss
of confidence, provided that the loss of confidence arises from particular proven facts. (Ocean Terminal
Services, Inc. v. NLRC)
- Accountant
The position of an accountant being of a high degree of responsibility requiring trust and confidence and
relating to the financial interests of the company, her non-observance of normal company procedures with
respect to the fund under her control and custody constitutes breach of trust and confidence authorizing the
employer to dismiss her. (Inter-capitol v. NLRC)
- Cashier
The position of a cashier calls for utmost trust and confidence. An employer therefore has the right to
wholehearted loyalty from whoever it employs as a cashier. (Metro Drug Corp v. NLRC)
Misappropriation is a specie of dishonesty. (SMC v. NLRC)
Thus, the decision of a school administrator to terminate the services of a cashier for dishonesty despite her
19 years of service is valid. (Garcia v. NLRC)
- Salesman
The position of a salesman is one involving trust and confidence for he is charged with the distribution of
company products. He deals primarily with the buyer. Thus, the goodwill and the acceptance of the products
by the buying public depends on the behavior of the salesman. (Filipro v. NLRC)
- Counter Teller (?)
The relationship between the bank and teller is fiduciary. Thus, the teller is expected to possess a higher
degree of fidelity, trust and confidence.
- Ship Captain
The captain of a vessel is a confidential and managerial employee. (Inter-orient v. NLRC)
- Managerial Employees
The interpretation of the phrase “trust and confidence” should be restricted to managerial employees under
article 218 of the Labor Code., who are entrusted with the sensitive duties of safekeeping and safeguarding
confidential matters. i.e. company policies, management instructions and company secrets such as operation
devices. It should not be construed to cover positions held by security guards which are limited to the
physical tasks and ministerial function of securing and protecting the property of the employer and its
clients. (Marina Port Services v. NLRC)
 Jurisprudential Guidelines
1. Thus, employers are generally allowed a wider latitude of discretion in terminating the employment of
managerial personnel or those of similar rank, performing functions which by their nature require the
employer’s trust and confidence than in the case of ordinary rank-and-file employees. (Palapag v. NLRC)
2. The less-harsher rule applies to ordinary rank and file employees whose termination requires a higher proof
of involvement in the events in question., mere uncorroborated accusations by the employer will not suffice.
(Gonzales vs. NLRC.
3. Where the bus conductor disclosed the uncollected amount with the intention of remitting it directly but he
was advised by the administrative officer that the payroll for the preceding day had already been prepared
and so the corresponding deduction would just be made in the next payroll. Under the premises, he was not
liable for the misappropriation or dishonesty meriting the company’s loss of trust and confidence of him but
rather only for simple negligence not deserving the severe penalty of dismissal from service. (Caraan v. NLRC)
4. Where it was the former branch manager who introduced the scheme of reflecting in the original receipt of
the branch purchases made by customers in other branches, the scheme having been continued even after
the branch manager left the company and the Pharmacy assistant merely followed his directive thinking it
would work for the advantage of the company as goodwill to the buying public and at the same time helping
costumers collect reimbursement of medicinal expenses and the company incurred no losses when the
employee issued said receipt, neither was there any showing of prejudice or intent to cause to the same on
the part of the employee there is no just cause for her dismissal. (Mercury v. NLRC)
5. Where the maintenance manager was by-passed and ignored in the task of rehabilitating the soaker machine
and the hired contractor and the management’s favored supervisor failed to make the machine work that
thereafter the maintenance manager with the assistance of a few men made the machine operational and
functioning at an efficiency rate of 65% and I appears that has subsequent dismissal (for alleged failure to
undertake preventive measures to avoid a breakdown) was merely an afterthought to cover the
management’s embarrassment and there was no showing that he was remiss in his duties, there is no
sufficient basis to justify his dismissal on the ground of loss of trust and confidence. (Pepsi-Cola v. NLRC)
 6. Where the employee was acquitted in the criminal case because his actual involvement or participation in
the burglary was not proven. His dismissal based on trust is illegal. (SMC v. NLRC)
7. Since fraud implies willfulness or wrongful intent, the innocent non-disclosure of facts by the employee to
the employee will not constitute just cause for the dismissal of the employee. Loss of confidence on the
employee based on valid grounds has been held to be a just cause for the dismissal of the employee, for the
discharge of the employee as when the merchandise entrusted by the employer to an employee is lost and
the loss was reasonably attributed to said employee. (Phil. Educ. Co. v. Union of PEC)
Is a conviction or acquittal in a criminal case determinative of the existence of just or authorized causes?
- NO. An employee’s guild or innocent in a criminal case is not determinative of the existence of just or
authorized cause for his or her dismissal. It is well-settled that conviction in aa criminal case is not necessary
to find just cause in termination of employment. Criminal and labor cases involving an employee arising from
the same infraction are separate and distinct proceedings which should not arrest any judgement from on to
the other.
- The conviction of an employee in a criminal case is not indispensable to warrant his dismissal by his
employer. If there is sufficient evidence to show that the employee has been guilty of breach of trust, or that
the employer has ample reason to distrust him, it cannot justly deny to the employer that authority to
dismiss the employee. All that is incumbent upon the CIR to determine whether the proposed dismissal is for
just cause. It is not necessary for said court to find an employee has been guilty of a crime beyond
reasonable doubt in order to authorize his dismissal.
- Fraud or willful breach of trust reposed upon an employee by his employer is a recognized cause for
termination of employment and it is not necessary that the employer should await the employee’s final
conviction in the criminal case involving such fraud or breach of trust before it can terminate the employee’s
services. In fact, even the dropping of charges or an acquittal of the employee therefrom does not preclude
the dismissal of an employee for such acts inimical to the interests of the employer.
- The criminal charges initiated by the company against private respondents and the finding after the
preliminary investigation of their prima facie guilt of the offense charged constitute substantial evidence
sufficient to warrant a finding by the labor tribunal of the existence of a just cause for their termination
based on loss of trust and confidence. The Labor Tribunal need not have gone further as to require private
respondent’s conviction of the crime charged, or inferred innocence on their part from their release from
detention, which was mainly due to their posting of bail.
Is the failure to reach sales quota considered a willful breach of trust?
- To our mind, the failure to reach the monthly sales quota cannot be considered an intentional and
unjustified act of respondent amounting to a willful breach on is part that would call for his termination
based on loss of confidence. This is simply not the willful breach of trust and confidence. Indeed, the low
sales performance could be attributed to several factors which are beyond respondent’s control. To be avalid
ground for the employee’s dismissal, it must be based on a willful breach. To repeat, a breach is wilfull if it is
done intentionally, knowingly and purposely, without justifiable cause.

 COMMISSION OF CRIME
Requisites:
1. There must be an act or omission punishable/prohibited by law; and,
2. The act or omission was committed by the employee against the person of employer, any immediate member of
his family, or his duly authorized representatives.
 Jurisprudential Guideline
1. Conviction of a crime involving moral turpitude is not one of the justifiable causes under the law. (JISSCOR Union
v. Hon Torres)
2. The commission of crime by the employee under the law refers to an offense against the person of his employer
or any immediate member of his family or his duly authorized representative, and thus the conviction of a crime
involving moral turpitude is not analogous thereto as the element of relation to his work or to his employer is
lacking. (JISSCOR v. Hon. Torres)

 ANALOGOUS CASES
Requisites:
1. There must be act of omission similar to those specified just causes; and,
2. The act or omission must be voluntary and/or willful on the part of the employees.
 Jurisprudential Guidelines
1. No act or omission shall be considered as analogous cause unless expressly specified in the company rules
and regulations or policies.
2. (Company rules and regulations and policies) For an employee to be validly dismissed on the ground for
violation of company rules and regulations, the employer’s orders, regulations, and instructions must be:
a. Reasonable and lawful,
b. Sufficiently known to the employee, and
c. In connection with the duties which the employee has been engaged to discharge. (ST Lukes v. Sanchez)
 3. Stealing of Co-employee’s credit cards.
4. Theft committed by an employee against a person other than his employer, if proven by substantial
evidence, is a cause analogous to serious misconduct.
5. Theft committed by an employee against a person other than his employer, if proven by substantial
evidence, is a cause analogous to serious misconduct.
6. Failure to gain quota may be considered as gross inefficiency of an employee. This is a ground analogous to
neglect of duties.
7. Failure to comply with weight standards of employer. This constitutes failure to meet the employer’s
reasonable qualifying standards. (inefficiency)

INEFFICIENCY
Requisites:
1. The employer has set standards of conduct and workmanship against which the employee will be
judged;
2. The standards of conduct and workmanship must have been communicated to the employee;
3. The communication was made at a reasonable time prior to the employee’s performance assessment.
Analogous Causes Rule:
A dismissal can be justified with an unlisted cause, provided it is fault-based and it is similar to any of the
listed causes.
Use of shabu is not an Art. 297 crime, Crime under said provision has for its victim the employer,
immediate member of his family, or authorized representative. But, since it is similar to serious misconduct, it
justifies termination of employment.
Cognate Offenses Rule:
Although previously punished, prior infractions can be combined with the present offense to justify a
dismissal as long as all the offenses are cognate offenses, i.e., they are of the same nature or classifications. If the
punished, past offenses belong to gross and habitual neglect of duty and the present offense belongs to
insubordination, combination is not allowed. (McDonalds v. Alba)
Totality of Infractions Rule:
For purposes of determining the penalty to impose, totalizations of the employee’s infractions is allowed
for the reason that fitness for continued employment cannot be compartmentalized into tight little cubicles of
aspects of character, conduct or ability taken separately and independently of each other. (Realda v. New Age)
Substantial Identity Rule:
The substantial identity of the two grounds stated in the first notice and four grounds stated in the
second notice (first 2 stted in the first notice and the second 2 are implied), bars and award of nominal damages.
There is no violation of due process because the first notice gives ample opportunity to the employee to explain
the implied offenses.

 AUTHORIZED CAUSES
Refers to:
1. Installation of labor-saving devices
2. Redundancy
3. Retrenchments
4. Closure or Cessations of business
5. Disease
I. INSTALLATION OF LABOR – SAVING DEVICES
Contemplates the installation of machinery to effect economy and efficiency in its method of production.
Requisites:
1. There must be introduction of machinery equipment or other devices;
2. The introduction must be done in good faith;
3. The purpose of such introduction must be valid such as to save cost, enhance efficiency and other justifiable
economic reasons;
4. There is no other option available to the employer than the introduction of machinery, equipment or device
and the consequent termination of employment of those affected thereby; and,
5. There must be fair and reasonable criteria in selecting employees to be terminated.
 Jurisprudential Guidelines
1. It appearing that there has been fair hearing and that there is ample evidence to support the conclusions of
fact of the lower court, we would have no grounds for interfering with those conclusions. And these make it
clear that there was real justification for reducing the number of workers in respondent company’s factory,
such a measure having been made necessary by the introduction of machinery in the manufacture of its
products, and that the company cannot be charged with discrimination in recommending the dismissal of
the 15 laborers since their selection was made by a committee composed of both an officers and employees
who took no account of the laborers affiliation to the unions and only considered their proven record.
 There can be no questions as to the right of the manufacturer to use new labor – saving devices with a view
to affecting more economy and efficiency in its method of production as the lower court observes in its
order. (Phil. Sheet Metal Workers Union v. Court of Industrial Relations)
2. The law authorizes an employer like the petitioner to terminate the employment of any employee due to the
installation of labor – saving devices. It is a management prerogative and the court will not interfere with its
exercise in the absence of abuse of discretion, arbitrariness, or maliciousness on the part of management as
is in this case. Nonetheless, this did not excuse petitioner from complying with the required written notice to
the employee and to the DOLE at least 1-month before the intended date of termination. This procedure
enables the employee to contest the reality or good faith character of the asserted ground for the
termination of his services before the DOLE. (Magnolia v. NLRC)
II. REDUNDANCY
Requisites:
1. There must be superfluous positions or services of employees;
2. The positions or services are in excess of what is reasonably demanded by the actual requirements by the
enterprise to operate in all economical and efficient manner;
3. There must be good faith in abolishing redundant positions;
4. There must be fair and reasonable criteria in selecting the employees to be terminated; and,
5. There must be an adequate proof of redundancy such as but not limited to the new staffing pattern,
feasibility studies/proposal on the viability of the newly created positions, job descriptions and the approval
by the management of the restructuring.
 Jurisprudential Guidelines
1. Reorganization as a cost-saving device is acknowledge by jurisprudence. An employer is not precluded from
adopting a new policy conducive to a more economical and effective management and the law does not
require that the employer should be suffering financial losses before he can terminate the services of the
employee on the ground of redundancy. (Dole Phils. V. NLRC)
2. Private respondent Amacio was among the ten mechanics who manned the shop at the plant site. At their
current production level, the new management found out that it was most cost efficient to maintain only 9
mechanics. In choosing, the management examined the employment records and reports to determine the
least efficient among them. It was private respondent Amacio because of his poor health condition.
Not one refuted the foregoing facts. They only contend that the new management should have followed the
policy of “FIRST IN LAST OUT” in choosing which positions to declare as redundant or whom to retrench to
prevent further business losses. NO LAW MANDATES SUCH A POLICY. And the reason is simple enough. A
host of relevant factors come into play in determining cost efficient measures and in choosing the employees
who will be retained or separated to save the company from closing shop. In determining these issues,
management has to enjoy a pre-eminent role. The characterizations of positions as redundant is an exercise
of business judgement on the part of the employers. It will be upheld as long as it passes the test of
arbitrariness. The reduction of the number of workers in a company made necessary by the introduction of
an independent contractor is justified when the latter is undertaken in order to effectuate more economic
and efficient methods of production. In the case at bar, private respondents failed to proffer any proof that
the management acted in a malicious or arbitrary manner in engaging the services of an independent
contractor to operate the Laura wells. Absent such proof, the court has no basis to interfere with the bona
fide decision of management to effect more economic and efficient methods of production. (Asian Alcohol
Corp. v. NLRC)
3. With no other client aside from BGCC for the building management side of its business, we find that NHPI
was acting well within its prerogatives when it eventually terminated Leynes services on the ground of
redundancy. One of the recognized authorized causes for the termination of employment. Redundancy exists
when the service when the service capability of the workforce is in excess of what is reasonably needed to
meet the demands of the business enterprise. A redundant position is one rendered superfluous by any
number of factors, such as over hiring of workers, decreased volume of business, dropping of a particular
product line previously manufactured by the company or phasing out of service activity priorly undertaken by
the business. It has been held that the exercise of business judgment to characterize an employee’s service
as no longer necessary or sustainable is not subject to discretionary review whereas here, it is exercised
there is no showing of violation of the law or arbitrariness or malice on the part of the employer. An
employer has no legal obligation to keep more employees than are necessary for the operation of its
business. (Nippon Housing Phil. V. Maiah Angela Leynes)
4. While declaration of redundancy is ultimately a management decision in exercising its business judgment,
and the employer is not obligated to keep in its payroll more employees than are needed for its day-to-day
operations, management must not violate the law nor declare redundancy without sufficient basis. To
establish good faith, the company must provide substantial proof that the services of the employees are in
excess of what is required of the company and that fair and reasonable criteria were used to determine the
redundant positions. (Manggagawa ng Komunikasyon sa Pilipinas v. PLDT
III. RETRENCHMENTS
Requisites:
 1. The retrenchment must be reasonably necessary and likely to prevent business losses;
2. The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent;
3. The expected or actual losses must be proved by sufficient and convincing evidence;
4. The retrenchment must be in good faith for the advancement of its interest and not to defeat or circumvent
the employees right of security of tenure; and,
5. There must be fair and reasonable criteria in ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency, seniority, physical fitness, age and financial
hardship for certain workers.
 Jurisprudential Guidelines
1. Under Article 283 of the Labor Code, the closure of a business establishment or reduction of personnel is a
ground for the termination of the services of any employee unless the closing or retrenching is for the
purpose of circumventing the provision of the law. But while business reverses can be a just cause for
terminating employees, these must be sufficiently proved by the employer.
The case of Sugar Lopez Corporation v. Federation of free workers lays down the general standards under
which an employer may retrench or reduce the number of his employees:
A. 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 bona fide nature of the retrenchment would appear to be seriously in question.
B. The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There should, in other words, be a certain degree of
urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the
livelihood of the employees retired or otherwise laid-off.
C. Because of the far-reaching nature of the retrenchment, it must, be reasonably necessary and likely to
effectively prevent the expected losses.
D. Lastly but certainly not the least important, the alleged losses if already incurred and the expected
imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.
In the case at bar, there is a dearth of sufficient and convincing documentary evidence to bolster the claim of
the respondent company that it is indeed suffering from business losses of such magnitude as to impel the
retrenchment of the petitioner. Interestingly, the records, however show that immediately after the
petitioner’s termination, the company advertised and hired another employee for the position indubitable
proof that the alleged retrenchment was merely a cover-up to ease out the petitioner. (Balasbas v. The CIR)
2. Retrenchment is a management prerogative a means to protect and preserve the employer’s viability and
ensure his survival. When confronted by trying times, this court should respect and uphold such prerogative
subject, however, to faithful compliance by management with the substantive and procedural requirements
laid down by law and jurisprudence. On the substantive aspect, the employer should comply with the so-
called ‘four standard’s retrenchment” enumerated and elucidated in the case of Lopez Sugar Corp. v.
Federation of Free Workers. As fairly observed by the Office of Solicitor General, petitioner has not shown
that alleged decrease in its production has correspondingly reduced its income resulting in some serious
business losses. It has likewise failed to show how the dismissal of an office clerk would effectively avert
further losses and improve its financial condition. Petitioner even admitted that it did not present evidence
to prove its business losses. Its rational that because of the timely retrenchments to prevent losses, these
losses were avoided and therefore cannot be proven to have been incurred is simply absurd. We have always
emphasized that it is essentially required that the alleged losses in business operations must be proven.
Otherwise, said ground for termination would be susceptible to abuse by scheming employers who might be
merely feigning business losses or reverses in their business ventures in order to ease out employees.
(Central Azucarerra dela Carlota v. NLRC)
3. Retrenchment is the termination of employment initiated by the employer through no fault of the
employees and without prejudice to the latter resorted 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. Retrenchment is a valid management prerogative. It is, however,
subject to faithful compliance with the substantive and procedural requirements laid down by law and
jurisprudence.
Retrenchment is one of the economic grounds to dismiss employees. It is resorted to by an employer
primarily to avoid or minimize business losses. The law recognizes this under Article 283 of the Labor Code.
However, the employer bears the burden to prove his allegation of economic or business reverses. The
employer’s failure to prove it necessarily means that the employee dismissal was not justified. (JJ Marine
Corp. v. Hon. 2nd Division, NLRC)

Is the employer required to wait for substantial losses to materialize before effecting retrenchment?
It bears to state that A. 283 of the code uses the phrase retrenchment to prevent losses. The phrase necessarily
implies that retrenchment may be effected even in the event only of imminent, impending, or expected losses. The
employer need not wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such
losses.

Installation of Labor-Saving Device vs. Retrenchment

The installation 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 reverses and to avert
further losses, the device could then verily be considered one of retrenchment.
Take Note:
In cases of installation of labor-saving devices, redundancy and retrenchment, the last-in, first-out rule shall
apply except when an employee volunteers to be separated from employment.
Last-in, First-out Rule – when there are two employees occupying the same position in the company affected by
the retrenchment program, the last one employed will necessarily be the first to go.
IV. CLOSURE OR CESSATION OF OPERATION
Requisites:
1. There must be a decision to close or cease operation of the enterprise by the management;
2. The decision was made in good faith; and,
3. There is no other option available to the employer except to close or cease operations.
V. Jurisprudential Guidelines
1. Broadly speaking, there appears no complete dissolution of petitioner’s business undertaking but the relocation
of petitioner’s plant to Batangas, in our view amounts to cessation of business operations in Makati. It must be
stressed that the phrase closure or cessation of operation of an establishment or undertaking not due to serious
business losses or reverses under A. 283 of the code includes both he complete cessation of all business
operations and the cessation of only part of a company’s business. (Cheniver v. NLRC)
2. Closure or cessation of business is the complete or partial cessation of the operations and/or shut down of the
establishment of the employer. It is carried out to either stave off the financial ruin or promote the business
interest of the employer. Unlike retrenchment, closure or cessation of business, as an authorized cause of
termination of employment, need not depend for validity on evidence of actual or imminent reversal of the
employer’s fortune. Article 283 authorizes termination of employment due to business closure regardless of the
underlying reasons and motivations therefor, be it financial losses or not. (Eastridge Golf v. Eastridge Union)
Is suspension of business operation allowed?
Under A. 283 of the LC, an employer may bona fide suspend the operation of its business for a period of not
exceeding 6 months. In such case, there is no termination of the employment of the employees but only a temporary
displacement. When the suspension of the business operations exceeds 6 months, then the employment of the
employees would be deemed terminated. On the other hand, if the operation of the business is resumed within 6
months from the bona fide suspension thereof, it shall be the duty of the employer to reinstate his employees to their
former positions without loss of seniority rights, if the latter would indicate their desire to resume work within one
month from such resumption of operations.
When is an employment deemed NOT terminated?
The employer-employee relationship shall be deemed suspended incase of suspension of operation of the
business or undertaking of the employer for a period not exceeding six months and in case of mandatory fulfillment by
the employee of a military or civic duty. (Part 1, Rule 1, Section 12, IRR, Bokk V, DO No. 215-2020)
Wages, benefits and privileges during period of suspension.
The payment of wages of the employee as well as the grant of other benefits and privileges while he is on
suspended employment or on a military or civil duty shall be subject to existing laws and decrees and to the applicable
individual or CBA and voluntary employer practice or policy.
May the period of suspension be extended beyond 6 months?
In case of declaration of war, pandemic, and similar national emergencies.
For a period not exceeding 6 months.
Will the employees be deemed terminated if they find alternative employment during the extended period of
suspension?
The employees shall not lose employment if they find alternative employment during the extended suspension
of employment except in cases of written, unequivocal and voluntary resignation.
V. DISEASE AS GROUND FOR TERMINATION
Requisites:
1. The employee must be suffering from any disease;
2. The continued employment of the employee is prohibited by law or prejudicial to his health as well as to the
health of his co-employees; and
3. There must be a certification by a competent public health authority that the disease is incurable within a period
of 6 months even with proper medical treatment.
 Jurisprudential Guidelines
1. Non-submission of a fit-to-work certificate after illness does not justify denial of work. The ORILC allows medical
termination on the basis only of aa medical certificate issued by a competent public health authority that the
 employee’s disease is of such nature or at such stage that it is incurable in 6 months even with adequate medical
attention. (Marina’s v. Romeo Ancheta)
 Take note:
1. An employee shall not be terminated from work based on actual, perceived or suspected HIV status.
2. An employee shall not be terminated on basis of actual perceived or suspected hepatitis B status.
3. An employee who has or had tuberculosis shall not be discriminated against. He shall be entitled to work for as
long as they are certified by the company’s accredited health provider as medically fit and shall be restored to
work soon as his illness is controlled.

FIRE AN EMPLOYEE THE LEGAL WAY!

Facets of Dismissal
Substantive Due Process Procedural Due Process
The legality of the act of dismissal The legality of the manner of dismissal
Termination must be based on just/authorized causes for Requires the employer to effect the dismissal in a manner
dismissal specified in the LC and its IRR

How to terminate an employee in the Philippines?

Termination of an Employee
Just Cause Authorized Cause
Employee’s wrongful behavior or negligence Business Reasons or employee’s health condition
1. Written notice of dismissal: explaining the Written Notice of Dismissal: explaining the grounds for
reasons. termination, submitted at least 30 days before
termination
2. Hearing: giving the employee the opportunity to Copy of the Notice: to the Regional DOLE.
defend themselves or disprove charges.
3. Notice of decision: justifying the termination

JUST CAUSE:
1. Written Notice of dismissal – 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 or at least 5 calendar days.
Pre-notice and Notice of Appraisal
- The requirement of notice is not a mere technicality but a requirement of due process.
- The mere posting of notice to terminate one’s employment on the employee’s bulletin board is not sufficient
compliance with the statutory requirement.
Jurisprudential Guidelines:
- In the case, JMC sent Iguiz the first notice -a memo dated 8 February 2007 asking him to explain why he
should not be reprimanded for loss of trust and confidence for receiving payments of P15,300 and 29 usd
without issuing OR. He receives the notice on 9 February and he was able to file a reply on 12 February
denying the allegation. JMC then sent him another notice – a memo dated 7March terminating his
employment. He received the termination notice on 12 March. First, JMC only gave Iguiz 24 hours to explain
which is not enough time and in violation of the IRR of the Labor Code of at least 5 days. An investigation
report requiring Iguiz to sign was sent on 9 February which could not have been participated by Iguiz. On the
second notice, an additional offense previously for shortage in collection was mentioned. However, JMC
cannot invoke this because Iguiz was not censured, reprimanded or even investigated for that shortage after
he had explained his side and tendered full payment. It cannot be made as corroborating evidence for
another supposed infraction absent the requirement of a procedural due process. (JMC v. Iguiz)
2. Hearing – After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to:
a. Explain and clarify their defenses to the charge against them;
b. Present evidence in support of their defenses;
c. Rebut the evidence presented against them by the management.
General Rule: Administrative investigation is not essential for due process. What is required for compliance with
due process is that the employee is given an opportunity t be heard.
Exception: When an employee requests for an administrative investigation, then the company must conduct
one.
General Rule: Presence of a lawyer is not required in administrative investigation.
Exception: When employee requests for one.
Jurisprudential Guidelines:
- When an employee admits the acts complained of, no formal hearing is even necessary.
 - Mere interrogations or inquiries conducted primarily for the purpose of eliciting facts or information, cannot
take the place of an investigation and due hearing wherein the employee is given the opportunity to prepare
for his defense.
Preventive Suspension – The employer may place the worker concerned under preventive suspension if his
continued employment poses a serious and imminent threat to the life of the employer or of his co-workers.
Period of Preventive Suspension – No preventive suspension shall last longer than 30 days. The employer shall
thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend
the period of suspension period provided that during the period of extension, he pays the wages and other
benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid o him
during the extension if the employer decides, after completion of the hearing, to dismiss the worker.
Take note: To suspend an employee for absences or tardiness, there being no serious threat to the life or
property of the employer or his employees, is not proper.
3. Notice of Decision – After determining that termination of employment is justified, the employers shall serve the
employee’s a written notice of termination indicting that:
a. All circumstances involving the charge against the employees have been considered; and
b. Grounds have been established to justify the severance of their employment.
Post-notice and Notice of Termination
- The decision to dismiss should be in writing and should clearly state the reasons. Therefore, however, the
employee has the right to contest the validity or legality of the dismissal by filing the proper complain for
illegal dismissal with the regional arbitration branch of the NLRC.
- Where the letter of termination contains no statement of the cause of dismissal, and there is a marked
omission to serve the required notice, and it is admitted that the basis of the termination was the
unconfirmed reports that the chief executive was shunting clients to other entities, his dismissal is held
illegal.
Separation Pay
Disease 1 month pay or ½ month pay for every year of service.
Installation of Labor-saving 1 month pay or 1 month pay for every year of service.
devices
Retrenchment 1 month pay or ½ month pay for every year of service.
Redundancy 1 month pay or 1 month pay for every year of service.
Closure not due to serious 1 month pay or ½ month pay for every year of service.
business losses
Closure due to serious business No separation pay.
losses

FAILURE TO COMPLY WITH DUE PROCESS

Substantive Due Process
ILLEGAL DISMISSAL Remedies:
1. Reinstatement to his former position without loss of seniority rights. If no longer available nor any equivalent
position, then separation pay to be given in lieu for reinstatement computed at 1 month pay for every year of
service.
2. Payment of full back wages corresponding to the period from his illegal dismissal up to actual reinstatement.
3. Damages plus attorney’s fees.
 Means admission of an employee back to work prior to his dismissal
 Restoration to a state of position from which one had been removed or separated, which presupposes that there
shall no demotion in rank and/or diminution of salary, benefits and other privileges
 If the position previously occupied no longer exists, the restoration shall be to a substantially equivalent position
in terms of salary, benefits and privileges
 Where reinstatement is no longer viable in view of the strained relations between the employer and employee,
or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of
reinstatement.
 The reinstatement order of LA is immediately executory even pending appeal
Exception: After the LA’s decision is reversed by a higher tribunal, the employee may be barred from collecting
the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault
on the part of the employer.
 Basis for Computing Back Wages: The workers are to be paid their back wages fixed as of the time of dismissal,
i.e., unqualified by any wage increases or other benefits that may have been received by their co-workers.
Awards including salary differentials are not allowed.
 Back wages to be awarded to an illegally dismissed employee should not, as a general rule, be diminished or
reduced by the earnings derived by him elsewhere during the period of illegal dismissal. The underlying reason
for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living
to support himself and family, while full back wages have to be paid by the employer as part of the price or
penalty, he has to pay for illegally dismissing his employees.
  Two Concepts:
1. Ordinary Concept – An attorney’s fee is the reasonable compensation paid to a lawyer by his client for the
legal services the former renders; compensation is paid for the cost and/or results of legal services per
agreement or as may be assessed.
2. Extra-Ordinary Concept – Attorney’s fees are deemed indemnity for damages ordered by the court to be
paid by the losing party to the winning party.
- In Article 2208 of the Civil Code, on actions for recovery of wages, it is payable, not tot the lawyer but to the
client, unless there is an agreement between them to the contrary.
Procedural Due Process
Sanction – Nominal Damages
 Jurisprudential Guidelines
1. The filing of a complaint does not necessarily translate to strained relations between the parties. Such filing
of a complaint includes the prayer of the complainant, and in the case, the prayer of D that DV be held
solidarily liable, which is for the labor tribunals and the courts to decide. As a rule, no strained relations
should arise form a valid and legal act asserting one’s right. Although litigation may engender a certain
degree of hostility, the understandable strain in the parties’ relation would not necessarily rule out
reinstatement which would otherwise become the rule, rather the exception, in illegal dismissal cases.
The doctrine of strained relations should not be applied indiscriminately to cause the non-reinstatement of
a supervisory employee who is dismissed without just cause and without due process by the employer due
to an altercation caused by its senior officer who by-passed the dismissed employee. An employee’s
occupation is his means of livelihood, which is a precious economic right, hence, it should not just be taken
away from the employee by applying the exceptions of strained relations that is not justified. The state
guarantees security of tenure to workers, thus all efforts must be extended to protect a worker from unjust
deprivation of his job. Further, the NEPC contends that the reinstatement of D is inconsistent with her
motion for partial writ of execution. The contention is without merit. The NEPC manifested on a motion that
it was willing to pay said monetary award to amicably settle the issue and advised D to collect the amount
any time but D did not do so. In fine, the CA correctly ordered the immediate reinstatement of respondent D
to the previous position without loss of seniority rights and payment of her full back wages inclusive of all
allowances and other benefits computed from the time her compensation was withheld up to the time of
her reinstatement. (Nippon Express v. Daguiso)
 Labor Law Doctrines on Violation of Procedural Due Process
1. SC declared the termination valid BUT the employer should pay indemnity for not respecting the employee’s
right to due process. (Wenphil 1989)
2. SSC modified Wenphil; stiffened the penalty to full back wages; The employee, dismissed for a valid reason,
remains dismissed, but the employer who disregarded proper procedure, must pay full back wages in
addition to the separation pay, if applicable and indemnity. (Serrano 2000)
3. SC imposed both back wages and indemnity. (Viernes 2003)
4. SC adjusted that the termination is valid, the employee remains dismissed, but the employer must pay an
indemnity (penalty for not observing due process) heavier than that imposed in Wenphil but lighter that full
back wages; fixed the amount to P30,000. (Agabon 2004)
5. SC fixed nominal damages at P50,000 and further adjudged that:
a. If the dismissal is based on a just cause under Article 282 but the employer failed to comply with the
notice requirement, the sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee;
b. If the dismissal is based on an authorized cause under A 283 but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the dismissal was initiated by the employer’s
exercise of his management prerogative. (Jaka 2005)
6. SC subdivided the authorized causes into:
a. Due to losses;
b. Not due to losses.
If the authorized cause that terminates employment arises from losses, the penalty to the employer who
disregarded due process may be lighter than if the authorized cause has no relation to losses. (The court
awarded P10,000 instead of P50,000. (Industrial Timber 2006)
The court enumerated other factors to consider in assessing the penalty to the employer, which are:
a. The authorized cause invoked, whether it was a retrenchment or a closure or cessation of operation of
the establishment due to serious business losses or financial reverses or otherwise;
b. The number of employees to be awarded;
c. The capacity of the employers to satisfy the awards, taking into account their prevailing financial status
as borne by the records;
d. The employer’s grants of other termination benefits in favor of the employees; and
e. Whether there was a Bonafide attempt to comply with the notice requirements as opposed to giving no
notice at all.
LIABILITY
GENERAL RULE – Director or Corporate Officer is not personally liable for the debts of the corporation; the presumption
of good faith prevails.
EXCEPTION – When director or corporate officer is found to be in bad faith in the discharge of the duties and
responsibilities.
GENERAL RULE – If there is a finding of bad faith, then corporate officer to be held jointly liable with the company for the
damages.
EXCEPTION – When decision explicitly pronounces solidary liability.

CIRCUMSTANCES AFFECTING VALIDITY OF DISMISSAL

1. Gravity of offense
2. Employment position
3. Length of service
4. Totality of infractions
5. Nature of the business
6. First offense Rule
7. Principle of Equity
8. Principle of compassion and understanding
9. Principle of commensurate penalty or proportionality rule

CHANGE OF OWNERSHIP
 PRINCIPLE OF ABSORPTION
- In the exercise of its management prerogative, the employer may merge or coordinate its business with
another, or sell or dispose all or substantially all of its assets and properties which may bring about the
dismissal or termination of its employees in the process. (Central v. CA)
- There is no law that requires the purchaser to absorb the employees of the selling corporation, and thus
when the absorbing employer absorbed the terminated employees of the previous employer, the former had
all the right to consider them as new ones. (E. Razon v. SOLE)
- Employees absorbed by a successor-employer enjoy the continuity of their employment status and their
rights and privileges survive so as to be operative against such successor-employer. (ICTSI v. NLRC)
- Although a purchase of the assets or enterprise is not legally bound to absorb in its employ the employees of
the seller of such assets or enterprise, the parties are liable to the employees if the transaction between the
parties is colored or clothed with bad faith. (ALU v. NLRC)
 SUCCESSOR EMPLOYER DOCTRINE
- This doctrine involves a transfer of ownership of the business to a new employer. Where the change of
ownership is in bad faith or is used to defeat the rights of labor, the successor-employer is deemed to have
absorbed the employees and is held liable for the transgressions of his predecessor. (PAL v. NLRC)

CIRCUMSTANCES THAT WILL WARRANT TERMINATION OF EMPLOYMENT

1. Just Cause under A297
2. Authorized causes under A 298
3. Termination due to disease under A 299
4. Termination by the employee or resignation under A 300
5. Dismissal from employment due to the enforcement of a union security clause in the CBA
a. Union Security clause is applicable
b. Union is requesting for the enforcement of a union security clause
c. There is sufficient evidence to support the decision of the union to expel the employee from the union.
6. Defiance of the assumption or certification order under A 278(g) – Article 278(g) of the LC provides that the
assumption and certification of the Secretary of Labor and Employment shall automatically enjoin the intended
or impending strike.
7. For participation in illegal strike (in case of union officers and commission of illegal acts during a strike under A
279 par 3)
8. Retirement

ELEMENTS TO DETERMINE JURISDICTION OF LABOR COURTS

There exists an employer – employee relationship
AND
There must be a reasonable causal connection between the parties’ employer – employee relations, as well as the claim
asserted, in order for labor courts to have jurisdiction.
REASONABLE CAUSAL CONNECTION
  While we have upheld the present trend to refer worker – employer controversies to labor courts in light of the
afore quoted provision, we have also recognized that not all claims involving employees can be resolved solely by
our labor courts specially when the law provides otherwise. For this reason, we have formulated the ‘reasonable
causal connection rule’, wherein if there is a reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of the labor courts and in the absence
thereof, it is the regular courts that have jurisdiction. (Tamaodos v. San Miguel)
 Not every controversy or money claim by an employee against the employer or vice versa is within the exclusive
jurisdiction of the labor arbiter. Actions between employees and employer where the employer-employee
relationship is merely incidental and the cause of action precedes from a different source of obligation is within
the exclusive jurisdiction of the regular court. Here, the employer-employee relationship between the parties is
merely incidental and the cause of action ultimately arose from different sources of obligation, i.e. the
Constitution and CEDAW. (Halaguena v. PAL)

LABOR DISPUTES
Any controversy or matter concerning terms and conditions of employment or the association or representation
of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless
of whether the disputants stand in the proximate relation of employer and employee.
 Jurisprudential Guidelines
While it is SMB’s submission that no employer-employee relationship exists between itself, on the other hand,
and the contractual workers of Lipercon and D’rite on the other, a labor dispute can nevertheless exist “regardless of
whether the disputants stand in the proximate relationship of employer and employee”. A 212 of the LC provided the
controversy concerns, among others, the terms and conditions of employment or a change or arrangement thereof. Put
differently and as defined by law, the existence of a labor dispute is not negative by the fact that the plaintiffs and
defendants do not stand in the proximate relation of employer and employee.

LABOR STANDARDS DISPUTES VS. LABOR RELATIONS DISPUTES

Labor Standards Disputes Labor Relations Disputes
Compensation Organizational Right/Dispute/ULP
Benefits Representation Dispute
Working Conditions Bargaining Dispute
Contract Administration or Personnel Policy Disputes
Employment Tenure Disputes

Remedies in LABOR DISPUTES:

 Grievance Procedure
 Enforcement or compliance order
 Certification of bargaining representatives
 Assumption of jurisdiction
 Certification to NLRC
 Injunction
 Judicial Action
 Appeal
 Review by Court

Settlement Processes:
 CONCILIATION
 MEDIATION
 ARBITRATION

COMPROMISE AGREEMENT
In any stage any of these settlement processes, the labor dispute may be resolved by the parties through a
compromise agreement, provided that the agreement is freely entered into and is not contrary to law, moral or public
policy. A compromise agreement is also subject to approval of the authority before whom the case is pending. Even a
Labor Standards case can be settled through a compromise.

LABOR DISPUTE CASE FLOW and JURISDICTION

1. LABOR ARBITER – Original and Exclusive Jurisdiction
a. Unfair Labor Practice
b. Termination Disputes
c. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment
d. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations
 e. Cases arising from any violations of A 279 including questions involving legality of strikes and lockouts
f. Except claims for employees’ compensation not included in the next succeeding paragraph, social security,
medicare, and maternity benefits. All other claims arising from employer-employee relations, including those
of persons in domestic or household service, involving an amount exceeding P5k whether or not
accompanied with a claim for reinstatement.
g. Wage distortions disputes in unorganized establishments not voluntarily settled by the parties pursuant to
RA6727
h. Exception clause under A 128b
i. Enforcement of compromise agreements where there is non compliance by any parties pursuant to A233
j. Money claims arising out of employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary, and other forms of
damages as provided in S19 of RA8042 as amended by RA10022
k. Other cases as may be provided by law.
JURISDICTION:
 All cases which the LAs have the authority to hear and decide may be filed in the Regional Arbitration Branch
RAB having jurisdiction over the workplace of the complainant or petitioner.
Workplace – Place or locality where the employee is regularly assigned at the time the cause of action arose.
Include the place where the employee is supposed to report back after temporary detail, assignment or travel. In
the case field employees, as well as ambulant or itinerant workers, there workplace is where they are supposed
to regularly receive their salaries and wages or work instruction form, and report the results of their assignment
to their employers.
 Where two or more RABs have jurisdiction over the workplace of the complainant or petition, the branch that
first acquired jurisdiction over the case shall exclude the others.
 When venue is not objected to before the filing of positions papers, such issue shall be deemed waived.
 The venue of an action may be changed or transferred to a different RAB other than where the complaint was
filed by written agreement of the parties or when the commission or LA before whom the case is pending so
orders, upon motion of the proper party in meritorious cases.
 Cases involving OFWs may be filed before the RAB having jurisdiction over the place where the complainant
resides or where the principal office of any of the respondents is situated, at the option of the complainant.
JURISPRUDENTIAL GUIDELINES
 Where is the workplace of the complainant if the vessel plying the Manila and Cotabato route?
- Section 1, Rule IV of the 1990 NLRC Rules (as well as the 2005 Rules) additionally provides that, “ for
purposes of venue, workplace shall be understood as the place or locality where the employee is regularly
assigned when the cause of action arose”. Since the private respondent’s regular place of assignment is the
vessel which plies the Manila-Cotabato route, we are of the opinion that LA was correct in concluding that
Manila could be considered part of the complainant’s territorial workplace. (Sulpicio Lines v. NLRC)
 What are the aspects of unfair labor practices that are within the jurisdiction of labor arbiters?
- The civil and administrative aspects of unfair labor practices are within the jurisdiction of the labor arbiters
under A 25 of the LC. Further, the said article provides that the civil aspects include claims of actual, moral,
exemplary and other forms of damages, attorney’s fees and other affirmative relief. (Par 3, A258, LC)
 Are there other quasi-judicial bodies that can exercise jurisdiction over unfair labor practices?
a. Voluntary arbitrator or panel of voluntary arbitrators can exercise jurisdiction over to hear and decide all
other labor disputes, including ULP’s, upon agreement of the parties. (A275, LC)
b. Those cases (which may refer to ULP) that are subsumed or absorbed in the SOLE’s assumption of
jurisdiction or certified labor dispute to the NLRC (A278g, LC and S3b, Rule VIII NLRC Rule)
 Is the termination of a higher management officer (Asst. VP, Exec. VP, or simply a VP) a labor case or a corporate
case?
- If the complainant is named as a corporate officer per Articled or by-laws, then the removal of the person is
an intra-corporate controversy and within the jurisdiction of the ordinary courts.
- If not, then the person is an ordinary employee who may only be terminated for just or authorized cause,
and after due process compliance with the provisions of the Labor Code.
INTRA-CORPORATE CONTROVERSY
- An intra-corporate controversy is understood as a suit arising from intra – corporate relaations or between or
among stockholders or between any or all of them and the corporation.
- Applying what has come to be known as the RELATIONSHIP TEST, the types of actions embraced by the
foregoing definition include the following suits:
1. Between the corporation, partnership or association and the public;
2. Between the corporation, partnership or association and its stockholders, partners, members or officers;
3. Between the corporation, partnership or association and the State insofar as its franchise, permit, or
license to operate is concerned; and,
4. Among stockholders, partners or associates themselves.
- To determine whether or not a case involves intra-corporate controversy, two tests are applied:
1. The Relationship Test
2. The Nature of Controversy Test
 In accordance with the nature of controversy test, an intra corporate controversy arises when the
controversy is not only rooted in the existence of intra-corporate controversy, but also in the
enforcement of the parties’ correlative rights and obligations under the Corporation Code and the
internal and intra-corporate regulatory rules of the corporation.
 Whether or not a bank officer who rose through the ranks (Asst. VP) is a regular employee or a corporate officer?
- As assistant VP of the foreign department of the bank, she performs tasks integral to the operations of the
bank and her length of service with the bank totaling to 28 years speaks volumes of her status as a regular
employee of the bank. In fine, as a regular employee, she is entitled to security of tenure, that is, her
services may be terminated only for a just or authorized cause. This being in truth a case of illegal dismissal,
it is no wonder then that the bank endeavored to the very end to establish loss of trust and confidence and
serious misconduct on the part of the private respondent but to no avail. The NLRC’s jurisdiction over the
case is upheld. (Prudential Bank v. Reyes)
CORPORATE OFFICER
- A corporate officer derives its character either from the corporation code or the corporation’s by-laws. Under
section 25 of the corporation code, the corporate officers are the president, secretary, treasurer, and such
other officers as may be provided in the by-laws.
- The dismissal issue is deemed an intra-corporate dispute and falls within jurisdiction of trial court if the
complainant is a corporate officer. He is a corporate officer if these circumstances concur:
1. His positions a creation of the corporate charter or by laws;
2. His position is elective;
3. His election is the act of the directors or stockholders.
- An office is created by the charter of the corporation and the officer is elected by the directors or
stockholders. An employee occupies no office and generally is employed not by the action of the directors or
stockholders but by the managing officer of the corporation who also determines the compensation to be
paid to such employee.
 Is the dismissal of a manager of a cooperative within the jurisdiction of the NLRC?
- The GM of an electric cooperative is a corporate officer. His dismissal is an intra-cooperative controversy,
jurisdiction over which belongs to the regional trial courts. It is well to recall that a copperative, as defined in
PD 269 is a corporation organized under RA60388. Organization under PD 269 vests upon electric
cooperatives juridical personality enjoying corporate powers. A non-stock electric cooperative may convert
and register with SEC as a stock corporation, but even without such conversion, electric cooperatives already
enjoy powers and corporate existence akin to a corporation. If the complainant is determined to be a
corporate officer (of the cooperative), then jurisdiction over his complaint for illegal dismissal is to be treated
as an intra-corporate dispute, hence jurisdiction belongs to the regional trial courts, applying the transfer of
jurisdiction by RA 8799 from the SEC to the RTC. (Ang v. PNB)
 Exceptions to LAs jurisdiction over termination disputes:
1. Jurisdiction over the labor disputes of the VA or panel of VA’s upon agreement of the parties;
2. Termination cases arising or resulting from interpretation and implementation of CBA and interpretation and
enforcement of company personal policies which were initially process at the various steps of the plant level.
Grievance procedures under the parties’ CBA or termination dispute in the application, interpretation,
implementation or enforcement stage of the CBA/company personal polices;
3. Those cases that are subsumed or absorbed in national interests’ cases (SOLE’s assumption of jurisdiction or
certified labor dispute to the NLRC)
MECHANISM FOR SETTLEMENT OF DISPUTES (s37, Batas Kasambahay RA10361)
- All labor-related disputes shall be elevated to the DOLE RO having jurisdiction over the workplace without
prejudice to the filing of a civil or criminal action in appropriate cases. The DOLE RO shall exhaust all
conciliation and mediation efforts before a decision shall be rendered.
 May a money claim arising from implementation of the CBA be filed with a LA?
- Yes.
- The original and exclusive jurisdiction of the LA under Article 224c for money claims is limited only to those
arising from statutes or contracts other than a collective bargaining agreement CBA. The voluntary Arbitrator
or Panel of VA will have original and exclusive jurisdiction over money claims, ‘arising from the interpretation
or implementation of the CBA and those arising from the interpretation or enforcement of company
personnel policies. (San Jose v. NLRC)
- Money Claims of workers which do not arise out of or in connection with their employer-employee
relationship fall within the general jurisdiction of regular courts of justice. Hence, “money claims of workers”
referred to in par 3 of A 224 embraces money claims which arise out of or in connection with the employer -
employee relationship, or some aspect or incident of such relationship. (SMC v. NLRC)
 May an employer’s claim for damages be filed before the Labor Arbiter?
- An employer’s claim for damages against an employee may be filed as a counterclaim in the illegal dismissal
case filed by the employee. Such claim for damages, arising from employment relationship, is outside the
jurisdiction of the regular court. (Banez v. Hon Valdevilla)
MONEY CLAIMS WITHIN LA’S JURISDICTION
 1. Money claims which arise out of or in connection with the employer-employee relationship, or some aspect
or incident of such relationship;
2. Money claims (under Art. 224(a)(3) arising out of an illegal dismissal case. Thus, those cases that workers
may file involving wages, rates of pay, hours of work, and other terms and conditions of employment,
regardless of the amount if accompanied with a claim for reinstatement;
3. Money claims exceeding P5k regardless of whether accompanied with a claim for reinstatement or it arising
out of an illegal dismissal case;
4. Money claims arising out of an employer-employee relationship or by virtue of any law; or contract involving
Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of
damages under Section 10 of RA 8042, amended by RA 10022.

Labor Arbiters Jurisdiction: Wage distortion disputes in unorganized establishments not voluntarily settled by the
parties pursuant to RA 6727.

WAGE DISTORTION
IRR, Wage Rationalization Act (RA 6727)
- A situation where an increase in prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation
WAGE RATIONALIZATION ACT
RA 6727 Section 4. XXX
- Where the application of the increases in the wage rates under this Section results in distortions as defined
under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such
dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be
finally resolved through compulsory arbitration by the regional branches of the National Labor Relations
Commission (NLRC) having no jurisdiction over the workplace.
Principles
A salary distortion case is resolved either through the CBA mechanism or, in unorganized establishments,
through the NCMB. If the NCMB fails to resolve the dispute in 10 days of conciliation conferences, it shall be
referred to the appropriate branch of the NLRC.
VISITORIAL AND ENFORCEMENT POWER
Article 128, LC
- (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where
the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his
duly authorized representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
Jurisprudential Guidelines
- This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of
employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the
"exception clause, rovides an instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case. (METEORO ET.AL. VS. CREATIVE CREATURES, INC.)
- Under prevailing jurisprudence, the so-called "exception clause" has the following elements, all of which
must concur:
a. that the employer contests the findings of the labor regulations officer and raises issues thereon;
b. that in order to resolve such issues, there is a need to examine evidentiary matters; and,
c. that such matters are not verifiable in the normal course of inspection. (METEORO ET.AL. VS.
CREATIVE CREATURES, INC.)
Labor Arbiter's Jurisdiction: Enforcement of compromise agreements where there is non-compliance by any parties
pursuant to Article 233 LC, as amended.
Principles
- Because labor law policy encourages voluntary resolution of disputes, compromise settlements are ordinarily
final and binding upon the parties. But a compromise settlement may itself become the subject of a dispute.
If there is noncompliance with the compromise agreement or if there is a prima facie evidence that the
settlement was obtained through fraud, misrepresentation, or coercion, then the NLRC through the LA may
assume jurisdiction over such dispute.
LA Jurisdiction: Money claims arising out of employer-employee relationship or by virtue of any law or contract,
involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and other forms of
damages as provided by S. 19 of RA 8042, as amended by RA 10022.

MIGRANT WORKER Section 3, Republic Act No. 8042

Refers to a person who is to be engaged, is engaged or has been engaged in a renumerated activity in a state of
which he or she is not a legal resident to be used interchangeably with overseas Filipino worker.
Principles
The phrases "to be engaged" refers to an applicant worker who has been promised or assured of employment
overseas and acting on such promise or assurance, sustains damage and/or injury. Therefore, RA No. 8042
allows claims for money or damages sustained during the period of deployment or before departure for abroad.
Hence, even an applicant OFW may file a money claim with the labor arbiter. Aside from this, RA No. 8042
allows recovery of actual, moral, exemplary and other forms of damages.

 If the employment contract has been signed by employer-employee relationship did not commence because
the seafarer was not actually deployed, can he complain of "unpaid salary"?
- There is no question that the parties entered into an employment contract on 3 February 1998, whereby
petitioner was contracted by respondent to render services on board "MSV Seaspread" for the consideration
of US$515.00 per month for nine (g) months, plus overtime pay. However, respondent failed to deploy
petitioner from the port of Manila to anada. Considering that petitioner was not able to depart from the
airport or seaport in the point of hire, the employment contract did not commence, and no employer-
employee relationship was created between the parties. SANTIAGO VS. CF SHARP GR NO. 162419, JULY 10,
2007
- However, a distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this case
coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object
and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-
employee relationship would have taken ce had petitioner been actually deployed from the point of hire.
Thus, even before the start of any employer-employee relationship. contemporaneous with the perfection of
the employment contract was the birth of certain rights and obligations, the breach of which may give rice to
a cause of action against the erring party. SANTIAGO VS. CF SHARP GR NO. 162419, JULY 10, 2007
- The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide
for damages and money claims recoverable by aggrieved employees because it is not the POEA, but the
NLRC, which has jurisdiction over such matters.
Despite the absence of an employer-employee relationship between petitioner and respondent. the Court
rules that the NLRC has jurisdiction over petitioner's complaint. The jurisdiction of abor arbiters is not limited
to claims arising from employer-employee relationships. SANTIAGO VS. CF SHARP CR NO. 162419, JULY 10,
2007

MONEY CLAIMS
Section 10, Republic Act No. 8042
- The liability of the principal/employer and the recruitment/placement agency for any and all claims under
this section shall be joint and several. This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that
may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid claims and damages