notes on labor law-1

L A B O R I I : C A S E S A N D P O W E R P O I N T P R E S E N T A T I O N P a g e | 1

LABOR RELATIONS Note:The Labor Code articles cited here are those that are numbered according to the Codal of Rex Bookstore, 2013 edition. The renumbering accommodated the revisions introduced to the Code by RA 10151. If you are using an older codal version, just subtract six from the article number (e.g., ULP of employers in the 2013 Rex codal is Art. 254. Old number is Art. 248)

Preliminary Discussions: Constitutional Mandates on Labor, Labor

Law, Labor Legislation, Social Legislation What is Labor?

As an act: Exertion by human beings of physical or mental efforts, or both, towards the production of goods and services.

As a sector of society: That sector or group in a society, which derives its livelihood chiefly from rendition of work or services in exchange for compensation under managerial direction (Mendoza, 2001).

Refers to workers, whether agricultural or non-agricultural Constitutional Mandates on Labor

The State shall protect and promote the interests of the Filipino Laborer:

Art. II, Sec. 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living and improved quality of life for all. Art. II, Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights, of workers and promote their welfare.

Art. XII, Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive. Art XIII, Sec. 14. The State shall protect women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. Art. XV, Sec. 8. The State shall, from time to time, review to upgrade the pensions and other benefits due to retirees of both the government and the private sectors

Rights of Workers

Art. Ill, Sec. 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law, shall not be abridged. (formation of labor organizations) Art. Ill, Sec. 18(2). No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted.

Protection to Labor Clause

Art. XIII, Sec. 3 The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. 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 process affecting their rights and benefits as may be


provided by law. Art. XIII, Sec. 3 , cont. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production' and the right of enterprises to reasonable returns of investments, and to expansion and growth. Participation in Policy and Decision Making Processes

Phrase included in the 1987 constitution to highlight workers participation in policy-making;

Added in the Labor Code o Article 217, Declaration of Policy o Article 261, Exclusive Bargaining Representation

and Workers Participation in Policy and Decision-Making

Defines rights of workers under Labor Standards and Labor Relations: Under Labor Standards Under Labor Relations Security of Tenure; Self-organization Living wage; Collective bargaining and

negotiations Share in the fruits of production; Peaceful concerted activities,

including strike; Humane conditions of work. Participation in policy and

decision-making processes. Social, Labor and Welfare Legislation

Constitutional provisions on labor are not self-executory, hence the need for Social Legislation, Labor Legislation and Welfare Legislation

Social Legislation - Laws that provide particular kinds of protection or benefits to society or segments thereof in furtherance of social justice.

Labor Legislation - Statutes, regulations and jurisprudence governing the relations between capital and labor. It provides for certain employment standards and a legal framework for negotiating, adjusting and administering those standards and other incidents of employment.

Welfare Legislation - Provides for the minimum economic security, of the worker and his family in case, of loss of earnings due to death, old age, disability, dismissal, injury or disease.

Social Legislation and Labor Legislation, Distinguished

Social legislation encompasses labor legislation, thus is broader in scope than the latter. All labor laws are social legislations but not all social legislations are labor laws.

Labor Law, defined.


The law governing the rights and duties of employers and employees with respect to Labor Standards and Labor Relations.

Labor Standards Law deals with the minimum standards as to wages, hours of work and other terms and conditions of employment that employers must provide their employees.

Labor Relations Law defines the status, rights and duties as well as the institutional mechanisms that govern the individual and collective interactions between employers, employees and their representatives.

The Philippine Labor Code, and Other Laws

Presidential Decree No. 442 o Deals with Labor Standards and Labor Relations o Became effective November 1, 1974

Special Laws: 1. Laws on Social Security (SSS Law, GSIS Law, Limited

Portability Law (RA 7699) 2. National Health Insurance Act 3. Paternity Leave Act 4. Retirement Pay Law 5. Home Mutual Development Fund Law 6. Anti-Sexual Harassment Act 7. Anti-Child Labor Act 8. 13th Month Pay Law 9. Migrant Workers and Overseas Filipinos Act of 1995

(R.A. No. 8042, as amended by RA 10151) 10. Expanded Comprehensive Agrarian Reform Law 11. Magna Carta for Public Health Workers

Labor-related provisions in Other Laws

Civil Code a. Art. 1700. The relation between capital and labor

are not merely contractual. They are so impressed

with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

b. Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public.

c. Art. 1702. In case of doubt, all labor legislations and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

d. Art. 1703. No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid.

Revised Penal Code a. Art. 289. Formation, maintenance and prohibition

of combination of capital or labor through violence or threats. The penalty of arresto mayor and a fine not exceeding 300 pesos shall be imposed upon any person who, for the purpose of organizing, maintaining or preventing coalitions of capital or labor, strike of laborers or lock-out of employees, shall employ violence or threats in such a degree as to compel or force the laborers or employers in the free and legal exercise of their industry or work, if the act shall not constitute a more serious offense in accordance with the provisions of this Code.

The Aim and Basis of Labor Laws

Attainment of Social Justice o Balance the interest of labor and capital (eliminate

oppression) o Labor is afforded a greater measure of protection


There is greater supply of labor than demand for their services;

Those who have less in life should have more in law;

The need for employment by labor comes from vital, and even desperate necessity (survival);

Social Justice Social justice is the humanization of laws and the

equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the PROMOTION OF THE WELFARE of all people, the adoption by the government of measures calculated to ensure economic stability of all the component elements of the society through the maintenance of proper economic and social equilibrium in the interrelations of- the members of the community, constitutionally, through the adoption of measures, legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments, on the time-honored principle of salus populi est suprema lex. (Calalang v. Williams, No. 47800, December 2, 1940).

MAXIMO CALALANG vs A. D. WILLIAMS, ET AL.,

FACTS: The National Traffic Commission, in its resolution of July 17,

1940, resolved to recommend to the Director of the Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along the following for a period of one year from the date of the opening of the Colgante Bridge to traffic:

1) Rosario Street extending from Plaza Calderon de la Barca

to Dasmarias Street from 7:30Am to 12:30 pm and from 1:30 pm to 530

pm; and 2) along Rizal Avenue extending from the railroad crossing

at Antipolo Street to Echague Street from 7 am to 11pm The Chairman of the National Traffic Commission on July 18,

1940 recommended to the Director of Public Works with the approval of the Secretary of Public Works the adoption of thethemeasure proposed in the resolution aforementioned in pursuance of the provisions of theCommonwealth Act No. 548 which authorizes said Director with the approval from the Secretary of the Public Works and Communication to promulgate rules and regulations to regulate and control the use of and traffic on national roads.

On August 2, 1940, the Director recommended to the Secretary the approval of the recommendations made by the Chairman of the National Traffic Commission with modifications. The Secretary of Public Works approved the recommendations on August 10,1940. The Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above mentioned to the detriment not only of their owners but of the riding public as well. ISSUES:

1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or trade and abridged the right to personal liberty and freedom of locomotion?

2) Whether the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all


the people? RULING:

1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on national roads in the interest and convenience of the public. In enacting said law, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by the desire to relieve congestion of traffic, which is a menace to the public safety. Public welfare lies at the bottom of the promulgation of the said law and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subject to all kinds of restraints and burdens in order to secure the general comfort, health, and prosperity of the State. To this fundamental aims of the government, the rights of the individual are subordinated. Liberty is a blessing which should not be made to prevail over authority because society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its preserving.

2) No. Social justice is neither communism, nor despotism, nor atomism, nor anarchy, but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principles of salus populi estsuprema lex.

Social justice must be founded on the recognition of the

necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting health, comfort and quiet of all persons, and of bringing about the greatest good to the greatest number.

Basic Principles: Preliminary Discussions on the Labor Code What are the basic principles in the constitution and labor-related laws on protection to labor?

The state shall afford full protection to labor, promote full employment, equal work opportunities without bias or discrimination, regulate the relations of employers and employees, and assure workers rights (refer to protection to labor clause Art. XIII, Sec. 3, 1987 Const. & Art. 3, Labor Code);

The relation of capital and labor are impressed with public interest, hence employment contracts are not ordinary contracts (Art. 1700, NCC);

In case of doubt or ambiguity, labor laws and rules are to be construed in favor of labor (Art. 4, Labor Code, Art. 1702, Civil Code)

o IF THERE IS DOUBT as to the meaning of the legal and contractual provision, the above-mentioned applies.

o IF THE PROVISION IS CLEAR AND UNAMBIGUOUS, it must be applied in accordance with its express terms. (Meralco v. NLRC, GR No. 78763, July 12, 1989).

Manila Electric Company vs National Labor Relations Commission

& Apolinario Signo


FACTS: Signo was employed in Meralco as supervisor-leadman

since Jan 1963.In 1981, he supervised the installation of electricity in de Laras house in Antipolo. De Laras house was not yet within the required 30-meter distance from the Meralco facility hence he is not yet within the service scope of Meralco. As a workaround, Signo had it be declared that a certain sarisari store nearer the facility be declared as de Laras so as to facilitate the installation. Evertything would have been smooth thereafter but due to fault of the Power Sales Division of Meralco, de Lara was not billed for a year. Investigation was conducted and Meralco found out the irregularity in Signos work on de Laras electricity installation. Signo was dismissed on May 18, 1983. Signo filed a case for illegal dismissal and for backwages. The Lanor Arbiter ruled that though there is a breach of trust in the actuations of Signo dismissal is a harsh penalty as Signo has been employed for more than 20 years by Meralco and has been commended twice before for honesty. The NLRC affirmed the Labor Arbiter. Meralco appealed. ISSUE:

Whether or not there has been due process in the dismissal of Signo. RULING: The SC sustained the decision of the NLRC. Well-established is the principle that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited to issues of jurisdiction or grave abuse of discretion.Notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time in the service of his employer.

Reinstatement of respondent Signo is proper in the instant case, but without the award of backwages, considering the good faith of the employer in dismissing the respondent.

o The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play (St. Luke's Medical Center Employee's Assoc, v. NLRC, GR No. 162053, March 7, 2007).

St. Lukes Medical Center Employees Association vs. NLRC FACTS:

Maribel S. Santos was an X-Ray Technician in the Radiology department of St. Lukes. Subsequently, Congress passed and enacted Republic Act No. 7431 known as the Radiologic Technology Act of 1992, which required that a person must obtain the proper certificate of registration from the Board of Radiologic Technology for the practice or offer to practice as a radiology and/or x-ray technologist in the Philippines. In turn, the Director of the Institute of Radiology issued a final notice to Santos requiring her to comply by taking and passing the examination; otherwise St. Lukes may be compelled to retire her from employment should there be no other position available where she may be absorbed. Despite extensions of time within which she could comply, Santos failed to comply with the requirement for her continued employment. ISSUE:

Whether or not Santos was validly dismissed for failure to secure a certificate of registration from the Board of Radiologic Technology. RULING:

While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably regulated pursuant to the police power of the State to safeguard


health, morals, peace, education, order, safety, and the general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring scientific or technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers. The most concrete example of this would be in the field of medicine, the practice of which in all its branches has been closely regulated by the State. It has long been recognized that the regulation of this field is a reasonable method of protecting the health and safety of the public to protect the public from the potentially deadly effects of incompetence and ignorance among those who would practice medicine. The same rationale applies in the regulation of the practice of radiologic and x-ray technology. The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the States inherent police power. It should be noted that the police power embraces the power to prescribe regulations to promote the health, morals, educations, good order, safety or general welfare of the people. The state is justified in prescribing the specific requirements for x-ray technicians and/or any other professions connected with the health and safety of its citizens. St. Lukes being engaged in the hospital and health care business, is a proper subject of the cited law; thus, having in mind the legal requirements of these laws, the latter cannot close its eyes and [let] complainant-appellants private interest override public interest. Why the preference for labor over capital?

Comes from acknowledgement that capital wields more power than labor; (Sanchez v. Harry Lyons Construction Inc., GR No. L-2779, October 18, 1950).

DANIEL SANCHEZ, ET AL. vs. HARRY LYONS CONSTRUCTION, INC.,

ET AL. FACTS:

Enrique Ramirez and Juan Ramirez were employed by Material Distributors, Inc. on December 16, 1966 as warehousemen. Enrique receives a salary of P450/month which was reduced to P360/month while Juan receives a salary of 250/month. Daniel Sanchez was employed by the Harry Lyons Construction, Inc. on January 1, 1947 as a foreman with a salary of P250/month. Mariano Javier, Venancio Diaz, Esteban Bautista, Faustino Aquillo, Godofredo Diamante, Marcial Lazaro, Ambrosio de la Cruz, and Marcelino Macada were employed as guards by the Harry Lyons Construction, Inc. on January 1, 1947 with a salary of P5/day.

All the employees agreed that such employment may be terminated at any time, without previous notice, and they further agree that salary and wages, shall be computed and paid at the rate specified up to the date of such termination. They also expressly waive the benefit of article 302 of the Code of Commerce and that of any other law, ruling, or custom which might require notice of discharge or payment of salary or wages after date of the termination of such employment.

The employees were dismissed by the corporations on December 31, 1947 without one months' previous notice. ISSUE:

Whether or not both those paid on a monthly and daily basis are entitled to the benefit granted in article 302 of the Code of Commerce.

Whether or not their waiver of such benefits legal and valid. RULING: Article 302 of the Code of Commerce reads as follows:

ART. 302. In cases in which no special time is fixed in the contracts of service, any one of the parties thereto may cancel it, advising the other party thereof one month in advance. The factor or shop clerk shall be entitled, in such case, to the salary due for said month.

It is a clear doctrine, as gleaned from the provision of the law and settled jurisprudence, that in a mercantile contract of service in


which no special time is fixed, any one of the parties may cancel said contract upon giving of a one-month notice, called a mesada, to the other party. The law gives an added proviso that in the case of factors or shop clerks, these shall be entitled to salary during this one month of standing notice. In any case, the one-month notice must be given to any employee, whether factor, shop clerk or otherwise, so long as the two conditions concur, namely, that no special time is fixed in the contract of service, and that said employee is a commercial employee. And when such notice is not given under these conditions, not only the factor or shop clerk but any employee discharged without cause, is entitled to indemnity which may be one month's salary.

In the instant case, there lies no doubt that plaintiffs are commercial employees of appellant corporations, rendering service as warehousemen, carpenter-foreman and guards. There is likewise no doubt as can be seen from the contracts of employment submitted as exhibits, that no special time has been fixed in the contracts of services between plaintiffs-appellees and defendants-appellants. The stated computation or manner of payment, whether monthly or daily, does not represent nor determine a special time of employment. Thus, a commercial employee may be employed for one year and yet receive his salary on the daily or weekly or monthly or other basis.

Now, as the second question, namely, the validity of plaintiffs' waiver of the benefits given them by said article 302. This court holds that such a waiver, made in advance, is void as being contrary to public policy. Granting that the "mesada" given in article 302 of the Code of Commerce, is for the bilateral benefit of both employer and employee, nevertheless, this does not preclude the finding that a waiver of such "mesada" in advance by the employee is contrary to public policy. Public policy, with regard to labor, is clearly stated in article II, section 5, of the Philippine Constitution, which reads

The promotion of social justice to insure the well-being and

economic security of all the people should be the concern of the State.

and article XIV, section 6, which reads The State shall afford protection to labor, especially to working women and minors, and shall regulate the relations between land-owner and tenant, and between labor and capital in industry and in agriculture. . . .

Article 302 of the Code of Commerce must be applied in consonance with these provisions of our constitution. In the matter of employment bargaining, there is no doubt that the employer stands on higher footing than the employee. First of all, there is greater supply than demand for labor. Secondly, the need for employment by labor comes from vital and even desperate, necessity. Consequently, the law must protect labor, at least, to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. It is safe to presume therefore, that an employee or laborer who waives in advance any benefit granted him by law does so, certainly not in his interest or through generosity but under the forceful intimidation of urgent need, and hence, he could not have so acted freely and voluntarily.

o There is greater supply than demand for labor; o Those who have less in life should have more in law;

and o The need for employment by labor comes from

vital, and even desperate necessity (survival) To whom does the Labor Code apply?

General Rule: The Code applies to all workers, whether agricultural or non-agricultural, including employees in a government corporation incorporated under the corporation code;

Exceptions:


1. Government employees; 2. Employees of government Corporations created by

special or original charter; 3. Foreign governments; 4. International Agencies, employees of

intergovernmental or international organizations; 5. Corporate officers/Intra-corporate disputes which fall

under PD 902-A and now fall under the jurisdiction of, the Regular Courts pursuant to the Securities Regulation Code; and

6. Local water districts except where NLRC jurisdiction is invoked.

Cases: Government employees

Employees of government Corporations created by special or original charter (Juco v. NLRC, GR No. 98107, August 18, 1997);

Foreign governments (JUSMAG-Philippines v. NLRC, GR No. 108813, December 15, 1994);

International Agencies (Lasco v. UNRFNRE, GR Nos. 109095-109107, February 23, 1995), employees of intergovernmental or international organizations (SEAFDEC-AQD v. NLRC, GR No. 86773, February 14, 1992);

Corporate officers / Intra-corporate disputes which fall under PD 902-A and now fall under the jurisdiction of, the Regular Courts pursuant to the Securities Regulation Code (Nacpil v. IBC, GR No. 144767, March 21, 2002); and

Local water districts (Tanjay Water District v. Gabaton, GR Nos. 63742 and 84300, 17 April 1989) except where NLRC jurisdiction is invoked (Zamboanga City Water District v. Buat, GR No. 104389, May 27, 1994).

Who is a worker/employee?

Article 13 A worker is any member of the labor force, whether employed or unemployed.

A person who works for an employer for a fee; a person working for salary or wages.

Note the term employee under Article 218 of the Labor Code: Not limited to the employees of a particular employer, it shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent or regular employment.

Protection to labor should not come at the expense of oppressing capital!

Law recognizes management rights. The employer has the right to

o Conduct business; o Prescribe rules; o Select and hire employees; o Transfer or discharge employees; o Discipline of employees, and o Return of investment and expansion of business.

Management Prerogatives

Rural Bank of Cantilan . v. Julve, GR No. 169750, February 27, 2007.

o Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work" assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees


RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III vs.

ARJAY RONNEL H. JULVE FACTS:

The Rural Bank hired Julve as a management trainee. Later, he was appointed as planning and marketing officer. Then, Hotchkiss, the president of the bank, sent Julve a memorandum appointing him as bookkeeper I at the banks branch in Madrid, Surigao del Sur. Initially, Julve agreed to accept the appointment, but eventually, he changed his mind and withdraw from the appointment because he feels that it is a demotion.

Still, Hotchkiss appointed Julve as bookkeeper I and assistant branch head of the Madrid branch. However, Julve did not report for work. Hotchkiss directed Julve to explain why he should not be sanctioned for his failure to assume his new post at the Madrid branch. Julve explained that he is not accepting the position for the reason that he was not given the opportunity to examine the newly created position before he could make a decision to accept it.

On September 14, 2001, Julve filed with the Regional Arbitration Branch No. XIII, National Labor Relations Commission (NLRC), Butuan City, a complaint for constructive dismissal against the Bank and Hotchkiss.

The Labor Arbiter rendered a decision declaring Julve was contractively dismissed. On appeal, the NLRC reversed the finding s of the Labor Arbiter, since the appointment was not a demotion. On appeal at the CA, the court reversed the decision of the NLRC and affirmed the decision of the Labor Arbiter ISSUE:

Whether or not there was a contractive illegal dismissal. RULING:

Under the doctrine of management prerogative, every employer has the inherent right to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and

manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to the exercise of this prerogative are those imposed by labor laws and the principles of equity and substantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also protects the employers right to expect from its employees not only good performance, adequate work, and diligence, but also good conduct and loyalty. In fact, the Labor Code does not excuse employees from complying with valid company policies and reasonable regulations for their governance and guidance.

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a movement from one position to another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank or salary; (b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause; (d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee.

Constructive dismissal is defined as "quitting when continued employment is rendered impossible, unreasonable, or unlikely as the offer of employment involves a demotion in rank and diminution of pay."

In light of the above guidelines, we agree with the NLRC in ruling that respondent was not constructively dismissed from employment.

Mendoza v. Rural Bank of Lucban, GR No. 155421, July 7, 2004.

o Management prerogatives, however, are subject to limitations provided by


law, contract or collective bargaining

agreements and general principles of fair play and justice

ELMER M. MENDOZA, petitioner, vs. RURAL BANK OF LUCBAN,

respondent. FACTS:

Respondent bank issued a resolution effecting a reshuffling of employees to further strengthen the existing internal control system of all offices and employees. Petitioner was one of those included for reshuffling. In a letter to his manager, petitioner expressed his refusal to be assigned to another branch and his request to be excluded from its implementation. Said request was answered in the negative. Petitioner then requested for a twenty-day sick leave due to his illness. While on leave, petitioner filed a complaint before the RAB IV for illegal dismissal, underpayment, separation pay and damages against respondent bank. ISSUE:

Whether petitioner was constructively dismissed from his employment

RULING:

The SC ruled that it find no reason to disturb the conclusion of the NLRC and the CA that there was no constructive dismissal.

Constructive dismissal is defined as an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. Petitioner argues that he was compelled to file an action for constructive dismissal, because he had been demoted from appraiser to clerk and not given any work to do, while his table had been placed near the toilet and eventually removed. He adds that

the reshuffling of employees was done in bad faith, because it was designed primarily to force him to resign.

Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline to interfere in legitimate business decisions of employers. Indeed, labor laws discourage interference in employers' judgments concerning the conduct of their business. The law must protect not only the welfare of employees, but also the right of employers. In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right of employers to control and manage their enterprise effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee's transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible,


unreasonable or unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment."

Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with the various phases of bank operations and further strengthen the existing internal control system" of all officers and employees. We have previously held that employees may be transferred based on their qualifications, aptitudes and competencies to positions in which they can function with maximum benefit to the company. 34 There appears no justification for denying an employer the right to transfer employees to expand their competence and maximize their full potential for the advancement of the establishment. Petitioner was not singled out; other employees were also reassigned without their express consent. Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits.

Viewpoints on Labor Relations: The Whys and Hows State Policy on Labor Relations

Article 217, Labor Code o Promote and emphasize the primacy of free

collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes;

o Promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development;

o Foster the free and voluntary organization of a strong and united labor movement;

o Promote the enlightenment of workers concerning their rights and obligations as union members and as employees;

o Provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes;

o Ensure a stable but dynamic and just industrial peace; and

o Ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare.

o Prohibit courts or administrative agencies or officials from setting or fixing wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under the Labor Code.


Self Organization Workers organize as a union or some other form of

association (registered or unregistered) Effect of registration with the State: Acquisition of legally

demandable rights, e.g. right to demand collective bargaining

Organization must have rules and mechanisms that respect member rights

No employer influence or interference (See Article 261, Labor Code)

Why Workers Organize

Self Advancement Job Security Upholding the rule of law over arbitrary exercise of power

by capital Provide employees a sense of participation in the enterprise

Self Organization

There can be many labor organizations in the workplace, but

o Only one recognized representative for workers in Collective Bargaining

o Selected by the workers themselves by way of election (with or without intervention of the government)

Who may exercise right to self-organization

All persons employed in commercial, industrial and in religious, charitable, medical or educational institutions (profit or non-profit)

Includes the right to o Form o Join

o Assist - Labor organizations of their own choosing Collective Bargaining

Presentation of proposals and counter-proposals by the parties

If capital and labor agree on substantially all points, a labor contract is forged (Collective Bargaining Agreement)

If both parties do not agree on material points, this results in a deadlock

o Parties are obliged to avoid or break the impasse o Failure to resolve a deadlock may result in work

stoppage Strike Lockout

While a legal right, strike or lockout is not an ideal solution to compel a party to agree to a proposal

Considered as measures of last resort Strikes and lockouts are heavily regulated

o Purpose o Manner of implementation o Violation of established rules will merit sanctions

(admin, civil and criminal) Parties are allowed to introduce means and methods that

will expedite bargaining o Subject to compliance to legal standards

Parties are primarily responsible for dealing with problems arising out of their relations (Inter-party relationship)

o Voluntary modes of settling disputes are preferred over compulsory processes

o Grievance machinery: In-house problem solving structure

o State steps in only when Parties fail to agree Rights are violated


States Intervention

SSS Employees Association vs. CA, 175 SCRA 686: The principle behind labor unionism in private industry is that industrial peace cannot be secured through compulsion by law. Relations between private employers and their employees rest on an essentially voluntary basis. the terms and conditions of employment in the unionized private sector are settled through the process of collective bargaining

SSS Employee Asso. v CA FACTS:

The petitioners went on strike after the SSS failed to act upon the unions demands concerning the implementation of their CBA. SSS filed before the court action for damages with prayer for writ of preliminary injunction against petitioners for staging an illegal strike. The court issued a temporary restraining order pending the resolution of the application for preliminary injunction while petitioners filed a motion to dismiss alleging the courts lack of jurisdiction over the subject matter. Petitioners contend that the court made reversible error in taking cognizance on the subject matter since the jurisdiction lies on the DOLE or the National Labor Relations Commission as the case involves a labor dispute. The SSS contends on one hand that the petitioners are covered by the Civil Service laws, rules and regulation thus have no right to strike. They are not covered by the NLRC or DOLE therefore the court may enjoin the petitioners from striking. ISSUES:

Whether or not SSS employers have the right to strike Whether or not the CA erred in taking jurisdiction over the

subject matter RULING:

The Constitutional provisions enshrined on Human Rights and Social Justice provides guarantee among workers with the right to organize and conduct peaceful concerted activities such as strikes. On one hand, Section 14 of E.O No. 180 provides that the Civil Service law and rules governing concerted activities and strikes in the government service shall be observed, subject to any legislation that may be enacted by Congress referring to Memorandum Circular No. 6, s. 1987 of the Civil Service Commission which states that prior to the enactment by Congress of applicable laws concerning strike by government employees enjoins under pain of administrative sanctions, all government officers and employees from staging strikes, demonstrations, mass


leaves, walk-outs and other forms of mass action which will result in temporary stoppage or disruption of public service. Therefore in the absence of any legislation allowing govt. employees to strike they are prohibited from doing so.

In Sec. 1 of E.O. No. 180 the employees in the civil service are denominated as government employees and that the SSS is one such government-controlled corporation with an original charter, having been created under R.A. No. 1161, its employees are part of the civil service and are covered by the Civil Service Commissions memorandum prohibiting strikes.

Neither the DOLE nor the NLRC has jurisdiction over the subject matter but instead it is the Public Sector Labor-Management Council which is not granted by law authority to issue writ of injunction in labor disputes within its jurisdiction thus the resort of SSS before the general court for the issuance of a writ of injunction to enjoin the strike is appropriate.

But, when dispute transgresses legal boundaries, the injuctive powers of the state may be invoked, especially when national interest is involved.

Definitions

Employer: Includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as an employer.

Employee: Includes any person in the employ of an employer. The term shall not be limited to the employees of a particular employer, unless the Labor Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment.

Categories of employees

Managerial employees Supervisory employees Rank-and-file employees

Existence of Er-Ee Relationship is Vital in Labor Relations

If there is no such relationship, there is no basis for exercising the right of self-organization for purposes of collective bargaining.

Note also that Labor Arbiters cannot exercise jurisdiction where Er-Ee Relationship does not exist. (subj. to exception)

Employer-Employee Relationship

Four-Fold Test 1. the selection and engagement of the employee; 2. the payment of wages; 3. the power of dismissal; and 4. the power to control the employees conduct, or

the so-called control test. Two-tiered test of employment relation ship

1. Control test the employers power to direct the employee (the manner, means and methods) by which work is accomplished;

2. Economic reality test economic reality of the relationship; the question of economic dependency of the worker on his employer. (Read Orozco vs. CA, GR 155207, April 29, 2005)

Orozco vs CA, PDI and Magsanoc

FACTS: Orozco was hired as a writer by the Philippine Daily Inquirer

in 1990. She was the columnist of Feminist Reflections under the Lifestyle section of the publication. She writes on a weekly basis and


on a per article basis (P250-300/article). In 1991, Magsanoc as the editor-in-chief sought to improve the Lifestyle section of the paper. She said there were too many Lifestyle writers and that it was time to reduce the number of writers. Orozcos column was eventually dropped.

Orozco filed for a case for Illegal Dismissal against PDI and Magsanoc. Orozco won in the Labor Arbiter. The LA ruled that there exists an employer-employee relationship between PDI and Orozco hence Orozco is entitled to receive backwages, reinstatement, and 13th month pay. PDI appealed to the National Labor Relations Commission. The NLRC denied the appeal because of the failure of PDI to post a surety bond as required by Article 223 of the Labor Code. The Court of Appeals reversed the NLRC. ISSUE:

Whether or not there exists an employer-employee relationship between PDI and Orozco. Whether or not PDIs appeal will prosper. RULING:

Under Article 223 of the Labor Code: ART. 223. Appeal. Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers appeal. It was intended to discourage employers from using an appeal to

delay, or even evade, their obligation to satisfy their employees just and lawful claims.

But in this case, this principle is relaxed by the Supreme Court considering the fact that the Labor Arbiter, in ruling that the Orozco is entitled to backwages, did not provide any computation. The case is then remanded to the Labor Arbiter for the computation. This necessarily pended the resolution of the other issue of whether or not there exists an employer-employee relationship between PDI and Orozco. Existence of Er-Ee Relationship in the following instances:

A stipulation stating expressly that there is no Er-Ee relationship is not controlling (Chavez vs. NLRC, GR No. 146530, Jan. 2005)

Jeepney and taxi drivers (Paguio Transport Corp. vs. NLRC GR No. 119500, August 1998)

Bus, auto-calesa drivers (R. Transport Corp. vs. Ejandra, GR No. 148508, May 2004)

Fishermen (Ruga vs. NLRC, Jan. 1990) Stevedores Lawyers, doctors, nurses, dentists, public relations

practioners, other professionals Employees of cooperatives Insurance agents (salaried)

No Er-Ee Relationship in the following instances:

Commission salesmen Agents of prinicipal (who are not employees in other

respects) Working scholars (See Section 14, Rule X, Book III, IRR,

Labor Code) Consultants Visiting Physicians Independent contractors


Definitions

Labor disputes: Includes any controversy or matter concerning terms or 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.

Labor Disputes

Nature: arises from Er-Ee relationship, regardless of whether the disputants stand in the proximate relation of employer and employee;

o SMCEU-PTGWO vs. Bersamira & SMC, GR No. 87700, June 1990)

Involves issue of SMCs exclusion of temporary, probationary & contractual employees in scope of CBA with union

SMC Employees Union vs. Bersamira

FACTS: SMC entered into contracts for merchandising

services with Lipercon and D'Rite (L&D), independent contractors duly licensed by DOLE. In said contracts, it was expressly understood and agreed that the EEs employed by the contractors were to be paid by the latter and that none of them were to be deemed EEsor agents of San Mig. There was to be no employer-employee relation between the contractors and/or its workers, on the one hand, and SMC on the other.

SMCEU-PTWGO (Union) is duly authorized representative of the monthly paid rank-and-file EEs of SMC. Their CBA provides that temporary, probationary, or contract EEs are excluded from the bargaining unit and outside the scope of CBA. Union

advised SMC that some L&D workers had signed up for union membership and sought the legalization of their employment with SMC. Union alleged that this group of EEs, while appearing to be contractual workers of supposedly independent contractors, have been continuously working for SMC for a period of 6 months to 15 years and that their work is neither casual nor seasonal as they are performing work or activities necessary desirable in the usual business or trade of SMC, and that there exists a lobor-only{ contracting situation.It was then demanded that the employment status of these workers be regularized.

This was not acted upon by SMC, and so Union filed a notice of strike, and then a second notice. Series of pickets were staged by L&D workers in various SMC plants and offices. SMC filed an action at the RTC to enjoin the Union from representing and or acting for and in behalf of the employees of L&D for the purposes of collective bargaining; calling for and holding a strike vote to compel plaintiff to hire the employees or workers of L&D, among others. Union filed a Motion to Dismiss SMC's Complaint on the ground of lack of jurisdiction over the case/nature of the action which motion was opposed by SMC, which was denied by respondent Judge. And after several hearings, the RTC issued Injunction. RTC reasoned that the absence of ER-EE relationship negates the existence of labor dispute, so court has jurisdiction to take cognizance of SMC's grievance. Hence, this action. ISSUE:

Whether or not the RTC correctly assumed jurisdiction over the controversy and properly issued the writ of preliminary injunction. RULING:

NO A labor dispute can nevertheless exist regardless

of whether the disputants stand in the proximate


relationship of employer and employee, provided the controversy concerns among other, the terms and conditions of employment or a change or arrangement thereof. The existence of a labor dispute is not negated by the fact that the plaintiffs and defendants do not stand in the proximate relation of employer and employee

Crucial to the resolution of the question on jurisdiction is the matter of whether or not the case at bar involves, or in connection with, or relates to a labor dispute. An affirmative answer would bring the case within the original and exclusive jurisdiction of labor tribunals to the exclusion of the regular Courts. In this case, the matter re terms, tenure and conditions of EEs employment and the arrangement of those terms as well as the matter of representation bring these issue within the scope of a labor dispute. Hence, it is the labor tribunal that have jurisdiction and not the regular courts

As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor tribunals. So, Labor Arbiters have original and exclusive jurisdiction to hear and decide the following cases involving all workers including: [a] unfair labor practice cases; [b] those that workers may file involving wages, hours of work and other terms and conditions of employment; and [c] cases arising from any violation of A265 LC, including questions involving the legality of striker and lockouts.

SMCs claim that the action is for damages under A19, 20 and 21 of the Civil Code is not enough to keep the case within the jurisdictional boundaries of regular Courts. That the claim for damages is interwoven with a labor dispute, to allow the action filed below to prosper would bring about "split jurisdiction" which is obnoxious to the orderly administration of justice. SC recognizes the proprietary right of SMC to exercise an inherent management prerogative and its best business judgment to determine whether it should contract out the performance of some of its work to

independent contractors. However, 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 equally call for recognition and protection. Those contending interests must be placed in proper perspective and equilibrium.

Subject Matter o Terms and conditions of employment o Association or Representation of persons

Labor Disputes, Kinds

Standards-related o Compensation o Benefits o Working Conditions

Relations Disputes o Organizational rights/ULP o Representation o Bargaining o Contract administration o Personnel policy o Employment tenure disputes

Resolving Labor Disputes

Grievance procedure CBA-prescribed, in-house mechanism for addressing complaints.

Conciliation involves third person who meets with both parties and, by assuaging hurt feelings and cooling tempers, aids in reaching agreement.

Mediation third person offers suggested solutions to dispute.


Arbitration dispute is submitted to impartial third person who renders decision based on evidence, law and jurisprudence. Decision is enforceable.

o Voluntary by agreement of parties o Compulsory directed by law. Primarily done by

labor arbiters of the NLRC Enforcement/Compliance Order dispute arises from

concern uncovered by the exercise of enforcement/visitorial power of SOLE, or adjudicatory powers of the DOLE Regional Directors (Articles 128, 129, Labor Code)

In case of labor disputes that may affect an industry indispensable to the national interest, the following apply:

o Assumption of jurisdiction by DOLE o Certification to the NLRC for compulsory arbitration

The National Labor Relations Commission: Jurisdiction, Case Flow,

Appeals, Cases The National Labor Relations Commission

Precursor: Court of Industrial Relations NLRC was created by the Labor Code

o attached to the DOLE o Under EO 204, s. 2005, DOLE exercises

administrative supervision over the commission o Under RA 9347, several changes to the composition

of the divisions, rank equivalence, and reverted to the old version of NLRCs attachment to DOLE (program and policy coordination)

o Equal representation from workers, employers & public sector

Jurisdiction of Labor Arbiters

Original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether agricultural or non-agricultural (Art. 223, LC, Rule V Section 1, 2011 NLRC Rules):

1. Unfair labor practice cases; ULP Means "Unfair labor practice" means any unfair labor practice as expressly defined by the Code (Art. 218(K), Art. 254, Art. 255).

2. Termination disputes; 3. 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;

The National Labor Relations Commission

NLRC exercises adjudicatory powers and other functions through its divisions (not the individual commissioners);

En banc decisions pertain only to o Promulgation of rules governing hearing and

disposition of cases in the divisions (e.g., 2011 NLRC Rules);

o Recommending Labor Arbiters to the President o Allowing a division to hear and decide a case under

the jurisdiction of another division Jurisdiction of Labor Arbiters

4. Claims for actual, moral, exemplary and other forms of Damages arising from the employer-employee relations;

5. Cases arising from any Violation of Article 270 of this Code, including questions involving the legality of strikes and lockouts; and

6. Except claims for Employees Compensation, 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 five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement (Article 223, Labor Code, as amended).

7. Original and exclusive jurisdiction over 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 (Section 10, Republic Act No. 8042, as amended by Republic Act No. 10022).

8. Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to Republic Act No. 6727.

9. Enforcement of compromise agreements when there is non-compliance by any of the parties or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation or coercion (Article 233, Labor Code, as amended).

10. Other cases as may be provided by law. Cases

The jurisdiction of labor arbiters, as well as of the NLRC, is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement. U-Bix's complaint was one to collect sum of money based on civil laws on obligations and contract, not to enforce rights under the Labor Code, other labor statutes, or the collective bargaining agreement. (U-Bix Corporation, et al. vs. Valerie Anne H. Hollero, G.R. No. 177647, October 31, 2008)

U-BIX CORPORATION and EDILBERTO B. BRAVO vs. VALERIE ANNE

H. HOLLERO

FACTS: Valerie Anne H. Hollero was hired as a management trainee

and was eventually promoted to facilities manager by U-Bix Corporation (U-Bix). Hollero and three other employees were later sent to the United States for two months of training for a newly acquired franchise. Before she left, she signed a contract with U-Bix which reads that VALERIE ANNE H. HOLLERO shall remain in the employ of U-BIX CORPORATION for a period of five (5) years from completion of her U.S. Training otherwise she shall reimburse U-BIX CORPORATION for all costs (prorated) and expenses which U-BIX CORPORATION incurred for her (Hollero's) training in the U.S

U-Bix, citing Holleros supposed pattern of tardiness, absences, neglect of duties and lack of interest, terminated her employment for loss of trust and confidence. U-Bix then filed against Hollero before the Labor Arbiter for the reimbursement of training expenses and damages. Subsequently, Hollero also filed a complaint against U-Bix for illegal dismissal.

The Labor Arbiter (LA) rendered a decision declaring that the dismissal of Hollero is valid and legal and ordered her to pay U-Bix the reimbursement of her training. It dismissed Holleros complaint for lack of merit. On appeal before the National Labor Relations Commission (NLRC), the NLRC reversed the LAs decision. A Motion for Reconsideration was filed but subsequently denied by NLRC. The Court of Appeals affirmed the lower courts decision.

ISSUES: Whether or not Hollero was illegally dismissed by U-Bix. RULING: An employer who seeks to dismiss an employee must afford

the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires.

U-Bix failed to discharge the burden of proof that Holleros dismissal is for a valid and just cause.

In termination cases, the employer has the burden of proving that the dismissal is for a valid and just cause. While an


employer enjoys a wider latitude of discretion in terminating the employment of managerial employees, managerial employees are also entitled to security of tenure and cannot be arbitrarily dismissed at any time and without cause as reasonably established in an appropriate investigation.

In the case at bar, U-Bix failed to substantiate their allegations of Holleros habitual absenteeism, habitual tardiness, neglect of duties, and lack of interest. Daily time records, attendance records, or other documentary evidence attesting to these grounds could have readily been presented to support the allegations but none was.

The merits of a complaint for illegal dismissal do not depend on its prayer but on whether the employer discharges its burden of proving that the dismissal is valid.

U-Bix failed to comply with the procedural due process of dismissing an employee In another vein, the Court finds that U-Bix and Bravo failed to comply with the procedural requirements for a valid dismissal. Hollero being a manager did not excuse them from observing such procedural requirements.

The notice does not inform outright the employee that an investigation will be conducted on the charges particularized therein which, if proven, will result to her dismissal. It does not contain a plain statement of the charges of malfeasance or misfeasance nor categorically state the effect on her employment if the charges are proven to be true. It does not apprise Hollero of possible dismissal should her explanation prove unsatisfactory. Besides, the U-Bix and Bravo did not even establish that Hollero received the memorandum.

Neither did U-Bix and Bravo show that they conducted a hearing or conference during which Hollero, with the assistance of counsel if she so desired, had opportunity to respond to the charge, present her evidence, or rebut the evidence presented against her. The meeting with Hollero on December 23, 1996 did not satisfy the hearing requirement, for Hollero was not given the opportunity to

avail herself of counsel. Article 277(b) of the Labor Code mandates that an employer

who seeks to dismiss an employee must afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Expounding on this provision, the Court held that '[a]mple opportunity' connotes every kind of assistance that management must accord the employee to enable him to prepare adequately for his defense including legal representation.

The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists. (Jaguar Security & Investigation Agency vs. Rodolfo Sales, et. al., G.R. No. 162420, April 22, 2008)

JAGUAR SECURITY AND INVESTIGATION AGENCY vs. RODOLFO A.

SALES FACTS:

Jaguar Security and Investigation Agency (Jaguar) is a private corporation engaged in the business of providing security services to its clients, one of whom is Delta Milling Industries, Inc. (Delta).

Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron and Daneth Fetalvero were hired as security guards by Jaguar. They were assigned at the premises of Delta in Libis, Quezon City. Caranyagan and Tamayo were terminated by Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with Jaguar. All the guard-employees, claim for monetary benefits such as underpayment, overtime pay, rest day and holiday premium pay, underpaid 13th month pay, night shift differential, five days service and incentive leave pay. In addition to these money claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the time they were


illegally dismissed until finality of the decision. Furthermore, all respondents claim for moral and exemplary damages. On September 18, 1998, respondent security guards instituted the instant labor case before the labor arbiter. The labor arbiter rendered a decision in favor of private respondents Sales, et al On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards.

In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having jurisdiction over the subject matter, for the purpose of proving the liability of Delta. Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its Resolution dated November 9, 2001. Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002 and Resolution dated February 13, 2004, dismissed the petition for lack of merit. ISSUE:

Whether or not the regular court has a jurisdiction over the collection of sum of money. RULING:

We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case. It is well-settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of

money and damages on account of petitioners alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over the following:

1. Unfair labor practices; 2. Termination disputes; 3. 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;

4. Claims for actual, moral exemplary and other forms of damages arising from employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and

6. Except claims for Employees Compensation, 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 five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite; and there is none in this case.

The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists.

In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its cross-claim, petitioner is not seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be


paid to the guard employees. There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta Milling. Petitioners cross-claim is within the realm of civil law, and jurisdiction over it belongs to the regular courts.

Exception to the rule that Er-Ee relationship is necessary for Labor Arbiters to acquire jurisdiction: The jurisdiction of Labor Arbiters is not limited to claims

arising from Employer-Employee relationships under Sec. 10 of RA 8042, which cover 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 fordamages. Santiago vs. CF Sharp Crew Management, Inc. (GR No. 162419, July 2007)

PAUL V. SANTIAGO, vs. CF SHARP CREW MANAGEMENT, INC., FACTS:

Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years. He signed a new contract of employment with the duration of 9 months on Feb 3 1998 and he was to be deployed 10 days after. This contract was approved by POEA. A week before the date of departure, the respondent received a phone call from petitioners wife and some unknown callers asking not to send the latter off because if allowed, he will jump ship in Canada.

Because of the said information, petitioner was told that he would not be leaving for Canada anymore. This prompted him to file a complaint for illegal dismissal against the respondent. The LA held the latter responsible. On appeal, the NLRC ruled that there is no employer-employee relationship between petitioner and respondent, hence, the claims should be dismissed. The CA agreed with the NLRCs finding that since

petitioner had not departed from the Port of Manila, no employer-employee relationship between the parties arose and any claim for damages against the so-called employer could have no leg to stand on. ISSUE:

When does the employer-employee relationship involving seafarers commence? RULING:

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, as earlier discussed, would have taken place 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 rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages.

Respondents act of preventing petitioner from departing the port of Manila and boarding "MSV Seaspread" constitutes a breach of contract, giving rise to petitioners cause of action. Respondent unilaterally and unreasonably reneged on its obligation to deploy petitioner and must therefore answer for the actual damages he suffered.

Corporate Officers

Nacpil vs. IBC (GR No. 144767, March 21, 2002) Officers designated by the board are corporate officers


Nacpil vs. International Broadcasting Corporation

FACTS: Dily Dany Nacpil states that he was Assistant General

Manager for Finance/Administration and Comptroller of Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997. According to Nacpil, when Emiliano Templo was appointed to replace IBC President Tomas Gomez III sometime in March 1997, the former told the Board of Directors that as soon as he assumes the IBC presidency, he would terminate the services of Nacpil. Apparently, Templo blamed Nacpil, along with a certain Mr. Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of the IBC presidency, Templo allegedly harassed, insulted, humiliated and pressured Nacpil into resigning until the latter was forced to retire. However, Templo refused to pay him his retirement benefits, allegedly because he had not yet secured the clearances from the Presidential Commission on Good Government (PCGG) and the Commission on Audit (COA). Furthermore, Templo allegedly refused to recognize Nacpil's employment, claiming that Nacpil was not the Assistant General Manager/Comptroller of IBC but merely usurped the powers of the Comptroller. Hence, in 1997, Nacpil filed with the Labor Arbiter a complaint for illegal dismissal and non-payment of benefits. Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor Arbiter had no jurisdiction over the case.

IBC contended that Nacpil was a corporate officer who was duly elected by the Board of Directors of IBC; hence, the case qualities as an intra-corporate dispute falling within the jurisdiction of the Securities and Exchange Commission (SEC). However, the motion was denied by the Labor Arbiter in an Order dated 22 April 1998. On 21 August 1998, the Labor Arbiter rendered a Decision stating that Nacpil had been illegally dismissed. IBC was ordered (1) to reinstate Nacpil to his former position without diminution of salary or loss of seniority rights, and with full backwages computed

from the time of his illegal dismissal on May 16, 1997 up to the time of his actual reinstatement which is tentatively computed as of the date of this decision on August 21, 1998 in the amount of P1,231,750.00; and that should Nacpil be not reinstated within 10 days from receipt of this decision, he shall be entitled to additional backwages until actually reinstated; and (2) to pay Nacpil P2 Million as and for moral damages, P500,000.00 as and for exemplary damages, and 10% thereof as and for attorney's fees. IBC appealed to the NLRC, but the same was dismissed in a Resolution dated 2 March 1999, for its failure to file the required appeal bond in accordance with Article 223 of the Labor Code. IBC then filed a motion for reconsideration that was likewise denied in a Resolution dated 26 April 1999. IBC then filed with the Court of Appeals a petition for certiorari under Rule 65, which petition was granted by the appellate court in its Decision dated 23 November 1999. Nacpil then filed a motion for reconsideration, which was denied by the appellate court in a Resolution dated 31 August 2000. Nacpil filed the petition for review on certiorari. ISSUE:

1. Whether the SEC or the NLRC has jurisdiction over the Nacpils alleged illegal dismissal. 2. Whether the inclusion of money claims in Nacpils complaint for illegal dismissal removes the case from the ambit of the Corporation Code.

RULING: 1. As Nacpil's appointment as comptroller required the

approval and formal action of the IBC's Board of Directors to become valid, 17 it is clear therefore holds that Nacpil is a corporate officer whose dismissal may be the subject of a controversy cognizable by the SEC under Section 5(c) of PD 902-A which includes controversies involving both election and appointment of corporate directors, trustees, officers, and managers Had Nacpil been an ordinary employee, such board action would not have been


required. Thus, since Nacpil is considered a corporate officer and his claim of illegal dismissal is a controversy that falls under the jurisdiction of the SEC as contemplated by Section 5 of PD 902-A. The rule is that dismissal or non-appointment of a corporate officer is clearly an intra-corporate matter and jurisdiction over the case properly belongs to the SEC, not to the NLRC. As to the argument that the nature of his functions is recommendatory thereby making him a mere managerial officer, the Court has previously held that the relationship of a person to a corporation, whether as officer or agent or employee is not determined by the nature of the services performed, but instead by the incidents of the relationship as they actually exist.

2. It is of no consequence that Nacpil's complaint for illegal dismissal includes money claims, for such claims are actually part of the perquisites of his position in, and therefore linked with his relations with, the corporation. The inclusion of such money claims does not convert the issue into a simple labor problem. Clearly, the issues raised by Nacpil against the IBC are matters that come within the area of corporate affairs and management, and constitute a corporate controversy in contemplation of the Corporation Code.

Prudential Bank and Trust Company (GR No. 141093, Feb. 20, 2001) - One rising from the ranks is not a mere corporate officer

Prudential Bank and Trust Company vs. Reyes

FACTS: Reyes was appointed Accounting Clerk by the Bank on July

14, 1963. From that position she rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991. ISSUE:

Whether or not the illegal dismissal is correctly brought at the NLRC

RULING: The banks contention that she merely holds an elective

position and that in effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her employment in 1991. As Assistant Vice President of the Foreign Department of the Bank, she is tasked, among others, to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that 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. Additionally, an employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them. As Assistant Vice-President 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 totalling 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 endeavoured to the very end to establish loss of trust and confidence and serious misconduct on the part of private respondent but, as will be discussed later, to no avail.

Rural Bank of Coron vs. Cortes, (GR No. 164888, Dec. 6, 2006) A corporate officer who is also an employee may file an illegal dismissal case with the labor arbiter.


RURAL BANK OF CORON vs. ANNALISA CORTES, Respondent. FACTS:

Respondent Annalisa Cortes was hired as of the Rural Bank of Coron. Later, she married a member of the family which ran the corporation. Respondent later on became the Financial Assistant, Personnel Officer and Corporate Secretary of The Rural Bank of Coron and some other sensitive positions in the sister companies of the Bank.

On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, she found out that respondent was involved in several anomalies, drawing petitioners to terminate respondents services on November 23, 1998 in petitioner corporations.

Respondent filed a complaint for illegal dismissal and non-payment of salaries and other benefits with the NLRC.

Petitioners moved for the dismissal of the complaint on the ground of lack of jurisdiction, contending that the case was an intra-corporate controversy involving the removal of a corporate officer, respondent being the Corporate Secretary of the Rural Bank of Coron, Inc., hence, cognizable by the Securities and Exchange Commission (SEC) pursuant to Section 5 of PD 902-A. ISSUE:

Whether or not the NLRC had jurisdiction over the case. RULING:

The SC held that Labor Arbiter has jurisdiction over respondents complaint.

While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was also its Financial Assistant and the Personnel Officer of the two other petitioner corporations.

Mainland Construction Co., Inc. v. Movilla instructs that a corporation can engage its corporate officers to perform services under a circumstance which would make them employees.

The Labor Arbiter has thus jurisdiction over respondents complaint.

Cases: See also

Okol vs. Slimmers World International (GR No. 160146, December 11, 2009)

Okol v. Slimmers

FACTS: Leslie Okol, a Vice President of Slimmers World, was

terminated from employment after an incident with the Bureau of Customs regarding equipment belonging to/consigned to Slimmers World. As such, Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World for illegal suspension, illegal dismissal, unpaid commissions, damages, and attorneys fees, with prayer for reinstatement and payment of back wages. Slimmers World filed a Motion to Dismiss the case, asserting that the NLRC had no jurisdiction over the subject matter of the complaint. Slimmers Worlds motion was sustained, with the labor arbiter ruling that since Okol was the vice president at the time of her dismissal, being a corporate officer, the dispute was an intra-corporate controversy falling outside the jurisdiction of the arbitration branch. On appeal, the NLRC reversed the LA decision and ordered Slimmers World to reinstate Okol. The CA subsequently set aside the NLRC decision and ruled that the case was an intra-corporate controversy, and falls within the jurisdiction of the regular courts pursuant to RA 8799. ISSUES:

1. Whetheror not Okol was an employee or corporate officer of Slimmers World.

2. Whether or not the NLRC has jurisdiction over the illegal dismissal case filed by Okol.

RULING: 1. Okol was a corporate officer at the time of her dismissal.

According to the Amended By-Laws of Slimmers World which


enumerate the power of the board of directors as well as the officers of the corporation, the general management of the corporation shall be vested in a board of five directors who shall be stockholders and who shall be elected annually by the stockholders and who shall serve until the election and qualification of their successors and Like the Chairman of the Board and the President, the Vice President shall be elected by the Board of Directors from [its] own members. The Vice President shall be vested with all the powers and authority and is required to perform all the duties of the President during the absence of the latter for any cause. The Vice President will perform

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