PRE WEEK NOTES IN LABOR LAW

Concern for the lowly worker, reaffirmed.

We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of his employers,
must look up to the law for his protection. Fittingly, that law regards him with tenderness and even favor and always
with faith and hope in his capacity to help in shaping the nation's future. It is error to take him for granted. He
deserves our abiding respect. How society treats him will determine whether the knife in his hands shall be a caring
tool for beauty and progress or an angry weapon of defiance and revenge. The choice is obvious, of course. If we
cherish him as we should, we must resolve to lighten "the weight of centuries" of exploitation and disdain that bends
his back but does not bow his head. Cebu Royal Plant vs. Deputy Minister of Labor, 153 SCRA 38, No. L-58639 August
12, 1987

Illegal Recruitment, defined.

Given the broad definition of recruitment and placement, even the mere act of referring someone for placement
abroad can be considered recruitment. Such act of referral, in connivance with someone without the requisite
authority or POEA license, constitutes illegal recruitment. In its simplest terms, illegal recruitment is committed by
persons who, without authority from the government, give the impression that they have the power to send workers
abroad for employment purposes. People vs. Lalli, 659 SCRA 105, G.R. No. 195419 October 12, 2011

Layoff, defined.

Layoff is defined as the severance of employment, through no fault of and without prejudice to the employee,
resorted to by management during the periods of business recession, industrial depression, or seasonal fluctuations,
or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a new production program
or the introduction of new methods or more efficient machinery, or of automation. However, a layoff would be
tantamount to a dismissal only if it is permanent. Hence, when a layoff is only temporary, the employment status of
the employee is not deemed terminated, but merely suspended. Pasig Agricultural Development and Industrial
Supply Corporation vs. Nievarez, 773 SCRA 52, G.R. No. 197852 October 19, 2015

How long can an employer place an employee in a temporary retrenchment/layoff?

There is no specific provision of law which treats of a temporary retrenchment or layoff and provides for the
requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off.
To remedy this situation or fill the hiatus, Article 286 (now Article 301) of the Labor Code may be applied but only
by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. Pursuant to
Article 286 (now Article 301), the suspension of the operation of business or undertaking in a temporary layoff
situation must not exceed six (6) months. Within this six-month period, the employee should either be recalled or
permanently retrenched. Otherwise, the employee would be deemed to have been dismissed, and the employer
held liable therefor. Pasig Agricultural Development and Industrial Supply Corporation vs. Nievarez, 773 SCRA 52,
G.R. No. 197852 October 19, 2015

POEA-Standard Employment Contract, explained.

Akin to the death benefits under the Labor Code, these benefits under the POEA-SEC are given when the employee
dies due to a work-related cause during the term of his contract. The liability of the shipowner or agent under the
POEA-SEC has likewise nothing to do with the provisions of the Code of Commerce regarding maritime commerce.
The death benefits granted under the POEA-SEC is not due to the death of a passenger by or through the misconduct
of the captain or master of the ship; nor is it the liability for the loss of the ship as result of collision; nor the liability
for wages of the crew. It is a liability created by contract between the seafarers and their employers, but secured
through the State’s intervention as a matter of constitutional and statutory duty to protect Filipino overseas workers

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and to secure for them the best terms and conditions possible, in order to compensate the seafarers’ heirs and
dependents in the event of death while engaged in the performance of their work or employment. The POEA-SEC
prescribes the set of standard provisions established and implemented by the POEA containing the minimum
requirements prescribed by the government for the employment of Filipino seafarers. While it is contractual in
nature, the POEA-SEC is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their
employment onboard ocean-going vessels. As such, it is deemed incorporated in every Filipino seafarers’ contract
of employment. It is established pursuant to POEA’s power “to secure the best terms and conditions of employment
of Filipino contract workers and ensure compliance therewith” and “to protect the well-being of Filipino workers
overseas” pursuant to Article 17 of the Labor Code as amended by Executive Order (EO) Nos. 797 and 247. Phil-
Nippon Kyoei, Corp. vs. Gudelosao, 796 SCRA 508, G.R. No. 181375 July 13, 2016

Applicability of Limited Liability Rule to POEA-SEC

But while the nature of death benefits under the Labor Code and the POEA-SEC are similar, the death benefits under
the POEA-SEC are intended to be separate and distinct from, and in addition to, whatever benefits the seafarer is
entitled to under Philippine laws, including those benefits which may be claimed from the State Insurance Fund.
Thus, the claim for death benefits under the POEA-SEC is the same species as the workmen’s compensation claims
under the Labor Code — both of which belong to a different realm from that of Maritime Law. Therefore, the limited
liability rule does not apply to petitioner’s liability under the POEA-SEC. Phil-Nippon Kyoei, Corp. vs. Gudelosao, 796
SCRA 508, G.R. No. 181375 July 13, 2016

Who has exclusive and original jurisdiction over claims arising out of a contract involving Filipino workers for
overseas deployment?

The Migrant Workers and Overseas Filipinos Act of 1995 gives the Labor Arbiters of the NLRC the original and
exclusive jurisdiction over 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 damage. It further creates a joint and several liability among the principal or employer, and the
recruitment/placement agency, for any and all claims involving Filipino workers. Phil-Nippon Kyoei, Corp. vs.
Gudelosao, 796 SCRA 508, G.R. No. 181375 July 13, 2016
In Finman General Assurance Corp. v. Inocencio, 179 SCRA 480 (1989), we upheld the jurisdiction of the POEA to
determine a surety’s liability under its bond. We ruled that the adjudicatory power to do so is not vested with the
Insurance Commission exclusively. The POEA (now the NLRC) is vested with quasi-judicial powers over all cases,
including money claims, involving employer-employee relations arising out of or by virtue of any law or contract
involving Filipino workers for overseas employment. Here, the award of the insurance proceeds arose out of the
personal accident insurance procured by petitioner as the local principal over the deceased seafarers who were
Filipino overseas workers. The premiums paid by petitioner were, in actuality, part of the total compensation paid
for the services of the crew members. Put differently, the labor of the employees is the true source of the benefits
which are a form of additional compensation to them. Undeniably, such claim on the personal accident cover is a
claim under an insurance contract involving Filipino workers for overseas deployment within the jurisdiction of the
NLRC. Phil-Nippon Kyoei, Corp. vs. Gudelosao, 796 SCRA 508, G.R. No. 181375 July 13, 2016

When may the employees be required by the employer to perform overtime work?

ART. 89. Emergency overtime work. - Any employee may be required by the employer to perform overtime work in
any of the following cases:

(a) When the country is at war or when any other national or local emergency has been declared
by the National Assembly or the Chief Executive;

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(b) When it is necessary to prevent loss of life or property or in case of imminent danger to public
safety due to an actual or impending emergency in the locality caused by serious accidents, fire,
flood, typhoon, earthquake, epidemic, or other disaster or calamity;

(c) When there is urgent work to be performed on machines, installations, or equipment, in order
to avoid serious loss or damage to the employer or some other cause of similar nature;

(d) When the work is necessary to prevent loss or damage to perishable goods; and

(e) Where the completion or continuation of the work started before the eighth hour is necessary
to prevent serious obstruction or prejudice to the business or operations of the employer.

Any employee required to render overtime work under this Article shall be paid the additional compensation
required in this Chapter.

Project Employee, defined.

A project employee is assigned to a project which begins and ends at determined or determinable times. Unlike
regular employees who may only be dismissed for just and/or authorized causes under the Labor Code, the services
of employees who are hired as “project employees” may be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining if particular employees are properly characterized as
“project employees,” as distinguished from “regular employees,” is whether or not the employees are assigned to
carry out a “specific project or undertaking,” the duration (and scope) of which are specified at the time they are
engaged for that project. The project can 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
undertakings of the company; or (2) a particular job or undertaking that is not within the regular business of the
corporation. Felipe vs. Danilo Divina Tamayo Konstract, Inc. (DDTKI), 804 SCRA 128, G.R. No. 218009 September 21,
2016

DDTKI hired Felipe as Formworks Aide on December 19, 2005, and Velasco as Warehouse Aide on March 14, 2007.
Felipe and Velasco claimed regular employment status for having continuously worked for DDTKI until September
2010 when they were no longer given working assignments. They wrote a letter, dated September 28, 2010, to
the respondents inquiring about their employment status and why they were not transferred to the Glorietta
Project which supposedly started on September 17, 2010, based on a document denominated as a Manpower
Requisition Form (MRF). The respondents, however, did not reply to their letter.
On October 12, 2010, Felipe and Velasco filed their complaint for illegal dismissal and nonpayment of service
incentive leave and 13th month pay against the respondents before the arbitration branch of the NLRC. Will the
case prosper?

No. On their contention that they were regular employees due to their uninterrupted service for DDTKI for four (4)
years and the continuous employment contract renewal every month, petitioners are mistaken. In Aro v. NLRC, 667
SCRA 637 (2012), the Court explained: [T]he length of service or the rehiring of construction workers on a project-
to-project basis does not confer upon them regular employment status, since their, rehiring is only a natural
consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying
out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been
determined and made known to the employees at the time of the employment, are properly treated as project
employees and their services may be lawfully terminated upon the completion of a project. x x x. [Emphasis supplied]
Therefore, being project employees who have been validly terminated by reason of the completion of the specific
project, MNOX-1, for which they were hired, petitioners Felipe and Velasco are not entitled to reinstatement and
backwages. Felipe vs. Danilo Divina Tamayo Konstract, Inc. (DDTKI), 804 SCRA 128, G.R. No. 218009 September 21,
2016

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Who are exempted from paying 13th month pay?

With respect to the payment of 13th month pay, however, We find that respondents are not entitled to such benefit.
Again, as We ruled in the case of David v. Macasio, 729 SCRA 67 (2014): The governing law on 13th month pay is
Presidential Decree No. 851. As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an
employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations
Implementing P.D. No. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under
Section 3(e), “employers of those who are paid on x x x task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance thereof” are exempted. A. Nate
Casket Maker vs. Arango, 805 SCRA 169, G.R. No. 192282 October 5, 2016

Labor-only contracting, defined.

There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a) The
person supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others; and (b) The workers recruited and placed by such person
are performing activities which are directly related to the principal business of the employer.” Sy vs. Fairland
Knitcraft Co., Inc., 662 SCRA 67, G.R. No. 182915 December 12, 2011

Article 106 of the Labor Code provides that “There is ‘labor-only’ contracting where the person supplying workers
to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of the employer. In such cases, the person or intermediary shall be
considered merely an agent of the employer who shall be responsible to the workers in the same manner and extent
as if the latter were directly employed by him.” (emphasis supplied) Sec. 5, Department Order No. 18-02, S. of 2002,
implementing Articles 106 to 109 of the Labor Code, prohibits labor-only contracting and defines it as “an
arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and any of the following is present: (i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job, work or service to be performed and the workers recruited,
supplied or placed by such contractor or subcontractor are performing activities which are directly related to the
principal business of the employer; or (ii) the contractor does not exercise the right to control over the performance
of the work of the contractual employee. x x x ‘substantial capital or investment’ refers to capital stocks and
subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work, actually
and directly used by the contractor or subcontractor in the performance or completion of the job, work or service
contracted out.” Cusap vs. Adidas Philippines, Inc. (Adidas), 764 SCRA 193, G.R. No. 201494 July 29, 2015

Example of serious misconduct.

Despite his denial, there is substantial evidence that Benitez maligned the company’s managing director and the
company itself during their Christmas Party on December 18, 2010. Substantial evidence is such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable
might conceivably opine otherwise. Benitez presented the affidavits of four company employees — Bulan, Elib,
Morata and Ramirez — who stated under oath that Benitez was seated with them at one table and that he did not
cause any disturbance during the party. The testimony of these four employees were belied by their co-employees
Afos and Atienza who executed a joint affidavit, stating that Benitez was seated with them at a different table and
that they witnessed him going to the stage where he lost his temper and verbally abused Kurangil in connection with
the conduct of the Christmas raffle. Delavin, a company employee and guest Urmeneta corroborated Kurangil’s
statement regarding Benitez’s outburst on the stage, particularly the invectives he threw at him “Putang ina mo ka
VK, gago ka.” Urmeneta, for instance, deposed that when Benitez left the stage angrily and walked past her and

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others sitting at the table, she heard him say “Putang ina mo ka VK, gago ka.” Benitez vs. Santa Fe Moving and
Relocation Services, 756 SCRA 334, G.R. No. 208163 April 20, 2015

Is gross inefficiency equivalent to gross neglect of duty?

In the instant case, records reveal that as a Marketing Professional for Toyota, Puncia had a monthly sales quota of
seven (7) vehicles from March 2011 to June 2011. As he was having trouble complying with said quota, Toyota even
extended him a modicum of leniency by lowering his monthly sales quota to just three (3) vehicles for the months
of July and August 2011; but even then, he still failed to comply. In that six (6)-month span, Puncia miserably failed
in satisfying his monthly sales quota, only selling a measly five (5) vehicles out of the 34 he was required to sell over
the course of said period. Verily, Puncia’s repeated failure to perform his duties — i.e., reaching his monthly sales
quota — for such a period of time falls under the concept of gross inefficiency. In this regard, case law instructs that
“gross inefficiency” is analogous to “gross neglect of duty,” a just cause of dismissal under Article 297 of the Labor
Code, for both involve specific acts of omission on the part of the employee resulting in damage to the employer or
to his business. Puncia vs. Toyota Shaw/Pasig, Inc., 795 SCRA 32, G.R. No. 214399 June 28, 2016

Constructive dismissal, defined.

Constructive dismissal has often been defined as a “dismissal in disguise” or “an act amounting to dismissal but made
to appear as if it were not.” It exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. In some cases,
while no demotion in rank or diminution in pay may be attendant, constructive dismissal may still exist when
continued employment has become so unbearable because of acts of clear discrimination, insensibility or disdain by
the employer, that the employee has no choice but to resign. Under these two definitions, what is essentially kicking
is the voluntariness in the employee’s separation from employment. Galang vs. Boie Takeda Chemicals, Inc., 797
SCRA 501, G.R. No. 183934 July 20, 2016

What are the grounds for cancellation of union registration?

Article 239. Grounds for cancellation of union registration.- The following may constitute grounds for cancellation of
union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members
who took part in the ratification;

(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes
of the election of officers, and the list of voters;

(c) Voluntary dissolution by the members. (As amended by Section 5, Republic Act No. 9481 which
lapsed into law on May 25, 2007 and became effective on June 14, 2007).

Can government employees resort to concerted mass actions?

DCWD argues that since the concerted or mass action was done within government office hours, such act was not
permissible, therefore prohibited. Otherwise stated, a concerted activity done within the regular government office
hours is automatically a violation of Section 6 of the Resolution. Notably, however, a prohibited concerted mass
action is defined not in Sec. 6 of Resolution No. 021316 but in Sec. 5 thereof. Thus: Section 5. Definition of Prohibited
Concerted Mass Action.—As used in this Omnibus Rules, the phrase ‘‘prohibited concerted activity or mass action’’
shall be understood to refer to any collective activity undertaken by government employees, by themselves or
through their employees organizations, with the intent of effecting work stoppage or service disruption in order to
realize their demands of force concession, economic or otherwise, from their respective agencies or the government.

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It shall include mass leaves, walkouts, pickets and acts of similar nature. (Emphasis ours) The operative phrases are
“any collective activity” and “work stoppage or service disruption.” Without the intent at work stoppage or service
disruption, the concerted activity is not prohibited. The time and place of the activity are not determinative of the
prohibition. Whether done within government hours, a concerted activity is allowed if it is without any intent at
work stoppage. Davao City Water District vs. Aranjuez, 758 SCRA 235, G.R. No. 194192 June 16, 2015

Can the employees in government-owned and controlled corporation also resort to concerted mass actions?

Employees of government-owned and -controlled corporation can freely exercise their right to freedom of
expression, subject to law, including Civil Service Commission issuances that prohibit mass actions causing work
stoppage. Government employees must uphold their commitment to public interest and act in accordance with the
Code of Conduct and Ethical Standards of Public Officials and Employees. This level of limitation or regulation also
applies to governmental financial institutions, often grouped with government-owned and -controlled corporations.
Davao City Water District vs. Aranjuez, 758 SCRA 235, G.R. No. 194192 June 16, 2015

Who has jurisdiction over cases of unfair labor practice?

It is true that some of petitioner’s causes of action constitute intra-union cases cognizable by the BLR under Article
226 of the Labor Code. An intra-union dispute refers to any conflict between and among union members, including
grievances arising from any violation of the rights and conditions of membership, violation of or disagreement over
any provision of the union’s constitution and bylaws, or disputes arising from chartering or disaffiliation of the union.
Sections 1 and 2, Rule XI of Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following
circumstances as inter/intra-union disputes x x x. However, petitioner’s charge of unfair labor practices falls within
the original and exclusive jurisdiction of the Labor Arbiters, pursuant to Article 217 of the Labor Code. In addition,
Article 247 of the same Code provides that “the civil aspects of all cases involving unfair labor practices, which may
include claims for actual, moral, exemplary and other forms of damages, attorney’s fees and other affirmative relief,
shall be under the jurisdiction of the Labor Arbiters.” Mendoza vs. Officers of Manila Water Employees Union
(MWEU), 781 SCRA 631, G.R. No. 201595 January 25, 2016

No strike, no lockout provision can only be invoked by the employer if the strike is economic in nature.

Indeed, the parties through their CBA, agreed to a “no strike, no lockout” policy and to resolve their disputes through
grievance machinery and voluntary arbitration. Despite these, respondents were justified in filing a notice of strike
in light of the facts of this case. It is settled that a “no strike, no lockout” provision in the CBA “may [only] be invoked
by [an] employer when the strike is economic in nature or one which is conducted to force wage or other agreements
from the employer that are not mandated to be granted by law. It [is not applicable when the strike] is grounded on
unfair labor practice.” Here, while respondents enumerated four grounds in their notice of strike, the facts of the
case reveal that what primarily impelled them to file said notice was their perception of bad faith bargaining and
violation of the duty to bargain collectively by GNC — charges which constitute unfair labor practice under Article
248(g) of the Labor Code. Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union, 796 SCRA
609, G.R. No. 204693 July 13, 2016

Express stipulation needed for ULP to be referred to voluntary arbitration.

Plainly, a charge of unfair labor practice does not fall under the first three definition of grievance as above quoted.
Neither can it be considered as embraced by the fourth which at first blush, appears to be a “catch-all” definition of
grievance because of the phrase “[a]ny other matter or dispute.” It has been held that while the phrase “all other
labor dispute” or its variant “any other matter or dispute” may include unfair labor practices, it is imperative,
however, that the agreement between the union and the company states in unequivocal language that the parties

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conform to the submission of unfair labor practices to voluntary arbitration. It is not sufficient to merely say that
parties to the CBA agree on principle that “all disputes” or as in this case, “any other matter or dispute,” should be
submitted to the grievance machinery and eventually to the voluntary arbitrator. There is a need for an express
stipulation in the CBA that unfair labor practices should be resolved in the ultimate by the voluntary arbitrator or
panel of voluntary arbitrators since the same fall within a special class of disputes that are generally within the
exclusive original jurisdiction of the Labor Arbiter by express provision of the law. “Absent such express stipulation,
the phrase ‘all disputes’ [or ‘any other matter or dispute’ for that matter] should be construed as limited to the areas
of conflict traditionally within the jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-
interpretation, contract-implementation, or interpretation or enforcement of company personnel policies. [Unfair
labor practices cases] — not falling within any of these categories — should then be considered as a special area of
interest governed by a specific provision of law.” Guagua National Colleges vs. Guagua National Colleges Faculty
Labor Union, 796 SCRA 609, G.R. No. 204693 July 13, 2016

Compulsory arbitration, defined.

As expounded by both the NLRC and the CA, the Secretary of Labor and Employment’s certification for compulsory
arbitration of a dispute over which he/she has assumed jurisdiction is but an exercise of the powers granted to
him/her by Article 263(g) of the Labor Code as amended. “[These] powers x x x have been characterized as an
exercise of the police power of the State, aimed at promoting the public good. When the Secretary exercises these
powers, he[/she] is granted ‘great breadth of discretion’ to find a solution to a labor dispute.” The Court therefore
cannot subscribe to GNC’s contention since to say that compulsory arbitration may only be resorted to in instances
agreed upon by the parties would limit the power of the Secretary of Labor and Employment to certify cases that
are proper subject of compulsory arbitration. The great breadth of discretion granted to the Secretary of Labor and
Employment for him/her to find an immediate solution to a labor dispute would unnecessarily be diminished if such
would be the case. Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union, 796 SCRA 609, G.R.
No. 204693 July 13, 2016

Consequence of bargaining in bad faith.

Anent GNC’s claim that it was suffering from financial difficulties which according to it was one of the reasons why
it saw the need to submit a counter-proposal, suffice it to say that GNC should have squarely raised this early on in
the negotiations. After all, the employer’s duty to negotiate in good faith with its employees consists of matching
the latter’s proposals, if unacceptable, with counterproposals, and of making every reasonable effort to reach an
agreement. There must be common willingness among the parties to discuss freely and fully their respective claims
and demands and, when these are opposed, to justify them on reason. However, instead of laying all its card on the
table, GNC for reasons only known to it, chose to forego the opportunity of discussing its claimed financial
predicament with respondents as shown by the following: (1) GNC did not submit a reply/counterproposal within
10 calendar days from its receipt of respondents’ proposed CBA on April 3, 2009 as required by law; (2) while it later
manifested through a letter dated May 27, 2009 that it is not inclined to grant the economic provisions in
respondents’ proposal, it did not fully discuss or explain to respondents its claimed opposition; (3) Atty. Sampang
did not make good on the promise he made in the meeting of June 16, 2009 that GNC would submit its
counterproposal to respondents’ economic provisions with the corresponding explanation; and (4) as shown by the
minutes of the meetings, the members of the management panel simply made general statements that GNC was
having financial difficulties but failed to elaborate on the same. As it is, GNC allowed itself to go through the process
of negotiating with respondents without fully discussing its financial status and despite this, knowingly entered into
an agreement with them. It cannot, therefore, be allowed to later interpose an opposition to the terms of the CBA
based on financial incapacity by belatedly submitting a counterproposal, which from the circumstances, is an obvious
attempt to stall what would have been the last step of the process — the execution of the CBA. The Court cannot be
expected to affix its imprimatur to such a dubious maneuver. Guagua National Colleges vs. Guagua National Colleges
Faculty Labor Union, 796 SCRA 609, G.R. No. 204693 July 13, 2016

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In the cases of Kiok Loy v. National Labor Relations Commission, 141 SCRA 179 (1986), Divine Word University of
Tacloban v. Secretary of Labor and Employment, 213 SCRA 759 (1992), and General Milling Corporation v. Court of
Appeals, 422 SCRA 514 (2004), the Court unilaterally imposed upon the employers the CBAs proposed by the unions
after the employers were found to have violated their duty to bargain collectively. This is on the premise that the
said employers, by their acts which bespeak of insincerity, had lost their statutory right to negotiate or renegotiate
the terms and conditions contained in the unions’ proposed CBAs. Here, the Court finds nothing wrong in the
pronouncement of the NLRC that the final CBA draft submitted by respondents to the NCMB should serve as the
parties’ CBA for the period June 1, 2009 to May 31, 2014. More than the fact that GNC is the erring party in this case,
records show that the said draft is actually the final CBA draft of the parties which incorporates their agreements.
Indeed and as held by the NLRC, fairness, equity and social justice are best served if the said final CBA draft shall
govern their industrial relationship. Guagua National Colleges vs. Guagua National Colleges Faculty Labor Union,
796 SCRA 609, G.R. No. 204693 July 13, 2016

Technical rules not applied rigidly in labor cases.

Procedural rules are designed to facilitate the orderly administration of justice. In labor cases, however, procedural
rules are not to be applied “in a very rigid and technical sense” if its strict application will frustrate, rather than
promote, substantial justice. Liberality favors the laborer. However, this case is also brought against a government
entity. If the government entity is found liable, its liability will necessarily entail the dispensation of public funds.
Thus, its basis for liability must be subjected to strict scrutiny. Republic vs. National Labor Relations Commission
(Third Division), 787 SCRA 90, G.R. No. 174747 March 9, 2016

Insubordination, defined.

Willful disobedience or insubordination, as a just cause for the dismissal of an employee, necessitates the
concurrence of at least two (2) requisites, namely: (a) the employee’s assailed conduct must have been willful, that
is, characterized by a wrongful and perverse attitude; and (b) the order violated must have been reasonable, lawful,
made known to the employee, and must pertain to the duties which he had been engaged to discharge. Sta. Isabel
vs. Perla Compañia de Seguros, Inc., 807 SCRA 162, G.R. No. 219430 November 7, 2016

Refusal to bargain collectively and interference with the workers’ right to self-organization are considered unfair
labor practice

Violation of the duty to bargain collectively is an unfair labor practice under Article 258(g) of the Labor Code. An
instance of this practice is the refusal to bargain collectively as held in General Milling Corp. v. CA, 422 SCRA 514
(2004). In that case, the employer anchored its refusal to bargain with and recognize the union on several letters
received by the former regarding the withdrawal of the workers’ membership from the union. We rejected the
defense, saying that the employer had devised a flimsy excuse by attacking the existence of the union and the status
of the union’s membership to prevent any negotiation. It bears stressing that Ren Transport had a duty to bargain
collectively with SMART. Under Article 263 in relation to Article 267 of the Labor Code, it is during the freedom
period — or the last 60 days before the expiration of the CBA — when another union may challenge the majority
status of the bargaining agent through the filing of a petition for a certification election. If there is no such petition
filed during the freedom period, then the employer “shall continue to recognize the majority status of the incumbent
bargaining agent where no petition for certification election is filed.” Ren Transport Corp. vs. National Labor
Relations Commission (2nd Division), 794 SCRA 498, G.R. No. 188020, G.R. No. 188252 June 27, 2016

Interference with the employees’ right to self-organization is considered an unfair labor practice under Article 258(a)
of the Labor Code. In this case, the labor arbiter found that the failure to remit the union dues to SMART and the
voluntary recognition of RTEA were clear indications of interference with the employees’ right to self-organization. It
must be stressed that this finding was affirmed by the NLRC and the CA; as such, it is binding on the Court, especially
when we consider that it is not tainted with any blatant error. As aptly pointed out by the labor arbiter, these acts
were ill-timed in view of the existence of a labor controversy over membership in the union. Ren Transport Corp. vs.
National Labor Relations Commission (2nd Division), 794 SCRA 498, G.R. No. 188020, G.R. No. 188252 June 27, 2016

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Judicial economy, defined.

It is well to note that addressing every one of the errors assigned would not be in keeping with the policy of judicial
economy. Judicial economy refers to “efficiency in the operation of the courts and the judicial system; especially the
efficient management of litigation so as to minimize duplication of effort and to avoid wasting the judiciary’s time
and resources.” In Salud v. Court of Appeals, 233 SCRA 384 (1994), the Court remarked that judicial economy is a
“strong [norm] in a society in need of swift justice.” Now, more than ever, the value of brevity in the writing of a
decision assumes greater significance, as we belong to an age in which dockets of the courts are congested and their
resources limited. Ren Transport Corp. vs. National Labor Relations Commission (2nd Division), 794 SCRA 498, G.R.
No. 188020, G.R. No. 188252 June 27, 2016

Voluntary Arbitration, defined.

In the context of labor law, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound themselves to
accept the decision of the arbitrator as final and binding. However, in view of the nature of their functions, voluntary
arbitrators act in a quasi-judicial capacity; hence, their judgments or final orders which are declared final by law are
not so exempt from judicial review when so warranted. “Any agreement stipulating that ‘the decision of the
arbitrator shall be final and unappealable’ and ‘that no further judicial recourse if either party disagrees with the
whole or any part of the arbitrator’s award may be availed of’ cannot be held to preclude in proper cases the power
of judicial review which is inherent in courts.” Coca-Cola Femsa Philippines, Inc. vs. Bacolod Sales Force Union-
Congress of Independent Organization-ALU, 804 SCRA 139, G.R. No. 220605 September 21, 2016

How to appeal a decision of a Voluntary Arbitrator?

Case law holds that the proper remedy to reverse or modify a Voluntary Arbitrators’ or a Panel of Voluntary
Arbitrators’ decision or award is to appeal the award or decision before the CA under Rule 43 of the Rules on
questions of fact, of law, mixed questions of fact and law, or a mistake of judgment. However, in several cases, the
Court allowed the filing of a petition for certiorari from the VA’s judgment to the CA under Rule 65 of the same Rules,
where the VA was averred to have acted without or in excess of his jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction. Coca-Cola Femsa Philippines, Inc. vs. Bacolod Sales Force Union-Congress
of Independent Organization-ALU, 804 SCRA 139, G.R. No. 220605 September 21, 2016

What is the effect of merger or consolidation of corporations with regard to their respective employees?

This Court found it necessary to interpret Section 80 of the Corporation Code and the constitutional provisions on
labor as to strengthen the “judicial protection of the right to security of tenure of employees affected by a merger
and [avoid] confusion regarding the status of various benefits.” Thus, this Court ruled that the surviving corporation
automatically assumes the employment contracts of the absorbed corporation. The absorbed corporation’s
employees are not impliedly dismissed, but become part of the manpower complement of the surviving corporation.
The merger of Unocal Corporation with Blue Merger and Chevron does not result in an implied termination of the
employment of petitioner’s members. Assuming respondent is a party to the merger, its employment contracts are
deemed to subsist and continue by “the combined operation of the Corporation Code and the Labor Code under the
backdrop of the labor and social justice provisions of the Constitution.” Philippine Geothermal, Inc. Employees Union
vs. Unocal Philippines, Inc. (now known as Chevron Geothermal Philippines Holdings, Inc.), 804 SCRA 286, G.R. No.
190187 September 28, 2016

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Effect of voluntary resignation from the merged corporations.

Assuming respondent is a party to the merger, the merger still does not operate to effect a termination of the
employment of respondent’s employees. Should they be unhappy with the surviving corporation, the employees
may retire or resign from employment. Given these considerations, we rule that petitioner is not entitled to the
separation benefits it claims from respondent. Separation benefits are not granted to petitioner by law in case of
voluntary resignation, or by any contract it entered into with respondent. Philippine Geothermal, Inc. Employees
Union vs. Unocal Philippines, Inc. (now known as Chevron Geothermal Philippines Holdings, Inc.), 804 SCRA 286, G.R.
No. 190187 September 28, 2016

Regular Employment, defined.

A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the nonconcurrence, of
the following factors (a) the manner of selection and engagement of the putative employee; (b) the mode of
payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of the
power to control the conduct of the putative employee or the power to control the employee with respect to the
means or methods by which his work is to be accomplished. The “control test” assumes primacy in the overall
consideration. Under this test, an employment relation obtains where work is performed or services are rendered
under the control and supervision of the party contracting for the service, not only as to the result of the work but
also as to the manner and details of the performance desired. A. Nate Casket Maker vs. Arango, 805 SCRA 169, G.R.
No. 192282 October 5, 2016

When are pakyaw workers considered regular employees?

Pakyaw workers are considered regular employees for as long as their employers exercise control over them. Thus,
while respondents’ mode of compensation was on a per-piece basis, the status and nature of their employment was
that of regular employees. As regular employees, respondents were entitled to security of tenure and could be
dismissed only for just or authorized causes and after the observance of due process. The right to security of tenure
is guaranteed under Article XIII, Section 3 of the 1987 Constitution. A. Nate Casket Maker vs. Arango, 805 SCRA 169,
G.R. No. 192282 October 5, 2016

Does the employee’s right to due process violated if he was dismissed based on a ground different from what was
indicated in the notice?

A reading of the Notice of Termination shows that Puncia was dismissed not for the ground stated in the Notice to
Explain, but for gross insubordination on account of his nonappearance in the scheduled October 17, 2011 hearing
without justifiable reason. In other words, while Toyota afforded Puncia the opportunity to refute the charge of
gross inefficiency against him, the latter was completely deprived of the same when he was dismissed for gross
insubordination — a completely different ground from what was stated in the Notice to Explain. As such, Puncia’s
right to procedural due process was violated. Puncia vs. Toyota Shaw/Pasig, Inc., 795 SCRA 32, G.R. No. 214399 June
28, 2016

Unfair Labor Practice, defined.

Article 249. Unfair labor practices of labor organizations. - It shall be unfair labor practice for a labor organization,
its officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their right to self-organization. However, a
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership;

(b) To cause or attempt to cause an employer to discriminate against an employee, including

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been denied or to terminate an employee on any ground other than the usual terms and conditions
under which membership or continuation of membership is made available to other members;

(c) To violate the duty, or refuse to bargain collectively with the employer, provided it is the
representative of the employees;

(d) To cause or attempt to cause an employer to pay or deliver or agree to pay or deliver any money
or other things of value, in the nature of an exaction, for services which are not performed or not to
be performed, including the demand for fee for union negotiations;

(e) To ask for or accept negotiation or attorney’s fees from employers as part of the settlement
of any issue in collective bargaining or any other dispute; or

(f) To violate a collective bargaining agreement.

The provisions of the preceding paragraph notwithstanding, only the officers, members of governing boards,
representatives or agents or members of labor associations or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable. (As amended by Batas Pambansa Bilang
130, August 21, 1981).

Certificate of Registration of a union not subject to collateral attack.

The petition fails. After a certificate of registration is issued to a union, its legal personality cannot be subject to
collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5
of Rule V, Book IV of the “Rules to Implement the Labor Code” (Implementing Rules) which section reads: Sec. 5.
Effect of registration. The labor organization or workers’ association shall be deemed registered and vested with
legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be
subject to collateral attack, but may be questioned only in an independent petition for cancellation in accordance
with these Rules. Tagaytay Highlands International Golf Club Incorporated vs. Tagaytay Highlands Employees Union-
PTGWO, 395 SCRA 699, G.R. No. 142000 January 22, 2003

Disqualified employees not a ground to cancel registration, exemption.

The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion
is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of
Article 239 of above-quoted Article 239 of the Labor Code. THEU, having been validly issued a certificate of
registration, should be considered to have already acquired juridical personality which may not be assailed
collaterally. Tagaytay Highlands International Golf Club Incorporated vs. Tagaytay Highlands Employees Union-
PTGWO, 395 SCRA 699, G.R. No. 142000 January 22, 2003

Procedure for the registration of local chapter of a labor organization.

The Labor Code itself does not lay down the procedure for the registration of a local or chapter of a labor
organization. Such has been traditionally provided instead in the Implementing Rules, particularly in Book V thereof.
However, in the last decade or so, significant amendments have been introduced to Book V, first by Department
Order No. 9 which took effect on 21 June 1997, and again by Department Order No. 40 dated 17 February 2003. The
differences in the procedures laid down in these various versions are significant. However, since the instant petition
for certification was filed in 1998, the Implementing Rules, as amended by Department Order No. 9, should govern
the resolution of this petition. San Miguel Corp. (Mandaue Packaging Products Plants) vs. Mandaue Packing Products
Plants-San Miguel Packaging Products–San Miguel Corp. Monthlies Rank-and-File Union-FFW, 467 SCRA 107, G.R.
No. 152356 August 16, 2005

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Preliminarily, we should note that a less stringent procedure obtains in the registration of a local or chapter than
that of a labor organization. Undoubtedly, the intent of the law in imposing lesser requirements in the case of a
branch or local of a registered federation or national union is to encourage the affiliation of a local union with a
federation or national union in order to increase the local union’s bargaining powers respecting terms and conditions
of labor. This policy has remained consistent despite the succeeding amendments to Book V of the Omnibus
Implementing Rules, as contained in Department Orders Nos. 9 and 40. San Miguel Corp. (Mandaue Packaging
Products Plants) vs. Mandaue Packing Products Plants-San Miguel Packaging Products–San Miguel Corp. Monthlies
Rank-and-File Union-FFW, 467 SCRA 107, G.R. No. 152356 August 16, 2005

When does a local chapter acquire legal personality?

It is evident based on this rule that the local/chapter acquires legal personality from the date of the filing of the
complete documentary requirements, and not from the issuance of a certification to such effect by the Regional
Office or Bureau. On the other hand, a labor organization is deemed to have acquired legal personality only on the
date of issuance of its certificate of registration, which takes place only after the Bureau of Labor Relations or its
Regional Offices has undertaken an evaluation process lasting up until thirty (30) days, within which period it
approves or denies the application. In contrast, no such period of evaluation is provided in Department Order No. 9
for the application of a local/chapter, and more importantly, under it such local/chapter is deemed to acquire legal
personality “from the date of filing” of the documents enumerated under Section 1, Rule VI, Book V. San Miguel
Corp. (Mandaue Packaging Products Plants) vs. Mandaue Packing Products Plants-San Miguel Packaging Products–
San Miguel Corp. Monthlies Rank-and-File Union-FFW, 467 SCRA 107, G.R. No. 152356 August 16, 2005

Local chapters have separate and distinct personality from their officers

In its Memorandum, petitioner alleges that the bargaining unit that respondent sought to represent is no longer the
same because of the dynamic nature of petitioner’s business, a lot of changes having occurred in the work
environment, and that four of respondent’s officers are no longer connected with petitioner. Assuming that these
manifestations are true, they have no effect on the Court’s ruling that a certification election should be immediately
conducted with respondent as one of the available choices. Petitioner’s bare manifestations adduce no reason why
the certification election should not be conducted forthwith. If there are matters that have arisen since the filing of
the petition that serve to delay or cancel the election, these can be threshed out during the pre-election conferences.
Neither is the fact that some of respondent’s officers have since resigned from petitioner of any moment. The
local/chapter retains a separate legal personality from that of its officers or members that remains viable
notwithstanding any turnover in its officers or members. San Miguel Corp. (Mandaue Packaging Products Plants) vs.
Mandaue Packing Products Plants-San Miguel Packaging Products–San Miguel Corp. Monthlies Rank-and-File Union-
FFW, 467 SCRA 107, G.R. No. 152356 August 16, 2005

A government-owned and controlled corporation can be subject to NLRC jurisdiction on monetary obligations to
workers.

The NLRC acquired jurisdiction over LRTA not because of the employer-employee relationship of the respondents
and LRTA (because there is none) but rather because LRTA expressly assumed the monetary obligations of Metro to
its employees. In the Agreement, LRTA was obligated to reimburse Metro for the latter’s Operating Expenses which
included the salaries, wages and fringe benefits of certain employees of Metro. Moreover, the Board of Directors of
LRTA issued Resolution No. 00-44 where again, LRTA assumed the monetary obligations of Metro more particularly
to update the Metro, Inc. Employees Retirement Fund and to ensure that it fully covers all the retirement benefits
payable to the employees of Metro. It is clear from the foregoing, and it is also not denied by LRTA, that it has
assumed the monetary obligations of Metro to its employees. As such, the NLRC may exercise jurisdiction over LRTA
on the issue of the monetary obligations. To repeat, NLRC can exercise jurisdiction over LRTA not because of the
existence of any employer-employee relationship between LRTA and the respondents, but rather because LRTA
clearly assumed voluntarily the monetary obligations of Metro to its employees. We therefore find no error on the
part of NLRC when it exercised jurisdiction over LRTA which solidarily obligated itself to pay the monetary obligations
of Metro. Light Rail Transit Authority vs. Pili, 792 SCRA 534, G.R. No. 202047 June 8, 2016

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When may the employer terminate the employment?

ART. 282. Termination by employer. - An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

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