LABOR LAW 1 JUSTICE VICENTE S.E.

VELOSO

GENERAL CONCEPTS It shall guarantee the rights of all workers to self-

organization, collective bargaining and
LABOR LAW – set of laws and principles which negotiations, and peaceful concerted activities,
protect and promote the interests of labor and including the right to strike in accordance with law.
regulate relations between capital and labor They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall
LABOR STANDARDS – laws which set out the also participate in policy and decision-making
minimum terms, conditions and benefits of processes affecting their rights and benefits as may
employment that employers must provide or be provided by law.
comply with and to which employees are entitled to
as a matter of legal right The State shall promote the principle of shared
responsibility between workers and employers and
LABOR RELATIONS – laws which regulate the the preferential use of voluntary modes in settling
institutional relationship between the employers disputes, including conciliation, and shall enforce
and workers (usually organized into a union) their mutual compliance therewith to foster
industrial peace.
SOCIAL LEGISLATION – the promotion of the
welfare of all the people, the adoption by the The State shall regulate the relations between
government of measures calculated to insure workers and employers, recognizing the right of
economic stability of all the component elements of labor to its just share in the fruits of production and
society thru the maintenance of proper economic the right of enterprises to reasonable returns to
and social equilibrium in the interrelations of the investments, and to expansion and growth.
members of the community, constitutionally, thru
the adoption of measures legally justifiable, or ART. 3. DECLARATION OF BASIC POLICY
extra-constitutionally, thru the exercise of powers Afford protection to labor
underlying the existence of all governments, on the Promote full employment
time honored principle of salus populi esta suprema Ensure equal work opportunities regardless of
lex (Calalang v. Williams) sex, race, or creed
Regulate the relations between workers and
SOCIAL JUSTICE – humanization of laws and the employers
equalization of social and economic forces by the Assure worker’s rights to self-organization,
State so that justice in its rational and objective collective bargaining, security of tenure, and
secular conception may at least be approximated just and humane conditions of work

WELFARE STATE DOCTRINE – state promotes 7 Basic Rights of Workers

cause for the welfare of the society Organize
Bargain collectively
Sources of Labor Law: Conduct peaceful concerted activities
1. Constitution (including strike in accordance with law)
2. Statutes Security of tenure
3. SC Decisions Work under humane conditions
4. Opinions of DOJ Secretary Living wage
5. Implementing Rules & Regulations Participate in policy and decision making
6. Interpretations of DOLE / NLRC processes affecting their rights and benefits

Constitutional Policy for Labor (Art. XIII, Sec. 3) Policy of Social Justice not meant to countenance
wrongdoing.
The State shall afford full protection to labor, local Separation pay shall be allowed as a measure of
and overseas, organized and unorganized, and social justice only in those instances where the
promote full employment and equality of employee is validly dismissed for causes other
employment opportunities for all. than serious misconduct or those reflecting on
his moral character. Where the reason for the
valid dismissal is, for example, habitual

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intoxication or an offense involving moral 2. Supervisory – effectively recommend laying

turpitude, like theft or illicit sexual relations down of policies, and hiring, firing, etc.
with a fellow worker, the employer may not be 3. Rank and file – all others not covered above
required to give the dismissed employee
separation pay, or financial assistance, or Management Prerogative
whatever other name it is called, on the ground Except as limited by special laws, an employer
of social justice. is free to regulate, according to his own
Separation pay therefore, depends on the cause discretion and judgment, all aspects of
of dismissal, and may be accordingly awarded employment, including hiring, work
provided that the dismissal does not fall under assignments, working methods, time, place and
either of 2 circumstances: (1) there was serious manner of work, tools to be used, processes to
misconduct, or (2) the dismissal reflected on the be followed, supervision of workers, working
employee’s moral character. (Ha Yuan v. NLRC, regulations, transfer of employees, work
February 2006) supervision, lay-off of workers and the
discipline, dismissal and recall of workers.
Right to strike not included in the Labor Code (LC) As long as the company’s exercise of the same
because LC is martial law legislation. During is exercised in good faith for the advancement
martial law, strikes were not allowed. of the employer’s interest, and not for the
Strike – temporary refusal to continue work due to purpose of defeating or circumventing the
an industrial or labor dispute rights of the employees under special laws or
Picketing – an expression of free speech valid agreements, the courts will uphold them
(Capitol Medical Center, Inc. v. Meris, September
Right of Labor to Participate in Policy-Making 16, 2005).
affecting their rights and benefits
In PAL v. NLRC, the SC invalidated the rules and NOTES:
regulations issued by PAL because such were not Right to labor is a property right. (Sibal case)
consulted with the employees. Police power of the State is invoked by SC in
cases regarding regulating relations between
ART. 4. CONSTRUCTION IN FAVOR OF LABOR labor and capital. (Primicias v. Fugoso)
All doubts in the implementation and Property Rights vs. Human Rights: Human
interpretation of the provisions of this Code, rights prevail in case of conflict (Phil. Blooming
including its implementing rules and regulations, Mills case)
shall be resolved in favor of labor.
ART. 5. RULES AND REGULATIONS
Rational / Basis: Those who have less in life should The Department of Labor and other government
have more in law. In case of conflict between the agencies charged with the administration and
interests of labor and capital, the heavier influence enforcement of this Code or any of its parts shall
of the latter should be counterbalanced by the promulgate the necessary implementing rules and
sympathy and compassion the law must accord to regulations. Such rules and regulations shall
the underprivileged worker. (Eastern ShippingLines become effective fifteen (15) days after
v. POEA, 166 SCRA 523) announcement of their adoption in newspapers of
general circulation.
Can this provision be invoked in matters of
evidence? NOTES:
YES. When the subject matter is covered by the Laws cannot be implemented without IRRs.
Labor Code, doubts which involve implementation IRRs have force and effect of law.
and interpretation of labor laws should be resolved The rules must not exceed the authority of the
in favor of labor, even if the question involves Rules law. The spring cannot rise higher than the
of Evidence. source.
EO 200: Laws shall take effect 15 days after the
Classification of Employees under RA 6715: publication in the OG and/or newspaper of
1. Managerial – lay down policies general circulation.
hire, fire, transfer employees, etc. DOLE, POEA, NLRC issues IRRs.

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2 rule making powers 1. payment of PAG-IBIG Fund contributions

- IRR 2. payment / remittance of contributions to the
- Procedures relating to quasi-judicial State Insurance Fund
functions 3. deduction of withholding fund
4. deduction / remittance of SSS contributions
ART. 6. APPLICABILITY
All rights and benefits granted to workers under EEE exists:
this Code shall, except as may otherwise be Drivers paid on boundary basis are employees.
provided herein, apply alike to all workers, Columbus case (2001): Bus collector hired on a
whether agricultural or non-agricultural. first-come-first-served basis is an employee.
Sir says what’s the difference between a
NOTES: jeepney collector and a bus collector?
Provision speaks of “workers” and not Ruga case: Crew members hired directly by the
“employees.” Worker is broader owner of the vessel are employees.
GR: LC applies to ALL workers. Owner of the vessel has radio devise and
However, not all employees are necessarily directs manner of fishing (i.e. dropping of net,
covered. going back, etc.): there is control so EER exists
LC covers workers such as handicapped (Art. Cosmopolitan Funeral Homes case: Supervisor of a
80), apprentices (Art. 61), and learners (Art. 75). funeral parlor prohibited from engaging in
LC applies to employees unless a particular funeral-related jobs (i.e. embalming) is an
provision provides otherwise. Even if particular employee.
rights and benefits are accorded to be given by Barber who shares in the proceeds of the shop
the employer, not all employees can enjoy the is an employee and not a partner because
same. Always look at the specific provisions of control is present.
LC. Caretakers are employees.
Maraguinod case: Movie producers are
EMPLOYER – EMPLOYEE RELATIONSHIP (EER) employees.
Primary Tests of EER: There is no such thing as a “talent,” they are
1. hiring employees also.
2. payment of wages Felix v. Buenaceda: Resident physicians are noy
3. firing employees. BUT: Art. 83 of LC includes a
4. control resident physician as an employee. VELOSO: A
(Chavez v. NLRC, 2005) resident physician is an employee.
Night club workers / GROs are employees.
Control not only over the end product/RESULT of
the work, but more importantly, control over the EER does not exist:
MEANS through which the work is accomplished. If one is paid only commission, no EER.
- controlling aspect that determines EER Grepalife: If paid with salary and commission,
- interfering with means, there is presumption or there is EER because of the salary paid, not
interest in the result because of the commission.
- Insular Life case: not every form of control Collection agents are not employees.
establishes EER San Miguel Jeepney Operators v. NLRC: Jeepney
- Sevilla v. CA: No control if one is paid based on collectors are independent contractors; they are
result. agents.
Pajarillo case: Crew members of a fishing vessel
Badges of Control (Abante case) allowed to work in other vessels are not
SC held that there is no EER because: employees because they have no obligation to
- Abante was not required to report. remain with the vessel for a particular time.
- Not required to sell at a particular place Sevilla case: those paid by results
- No interference from company Philamlife v. Ansaldo: registered representatives
- Abante used his resources of insurance companies are mere agents
Shoe-shine boy is not an employee because he
Secondary Tests of EER: is paid by the customer and only shares in the

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proceeds with the factory. The factory does not Governmental instrumentalities immune from
have control. suit cannot be made to answer for labor claims
unless there is a waiver (i.e. entering into a
Security guards: GR: employees of contractor contract in a commercial or proprietary
E: if directly hired by company capacity).

Janitor: If supplied by janitorial agency, employee DEPARTMENT ORDER NO. 18-02:

of the agency. JOB CONTRACTING VS. LABOR-ONLY
If asked to work in a business concern, he is
CONTRACTING
an employee of the company.
* rules implementing Arts. 106-109 of the LC
Paid by results: supervised – employee
Contracting / Subcontracting – an arrangement
unsupervised – not an employee
whereby a principal agrees to put out or farm out
Payment by result is a method of compensation and
with contractor or subcontractor the performance or
does not define the essence of the relation. It is a
completion of a specific job, work or service within
method of computing compensation, not a basis for
a definite predetermined period, regardless of
determining the existence or absence of employer-
whether such job, work or service is to be
employee relationship. One may be paid on the
performed or completed within or outside the
basis of results or time expended on the work, and
premises of the principal
may or may not acquire an employment status,
depending on whether the elements of an
Contractor / Subcontractor – any person or entity
employer-employee relationship are present or not.
engaged in a legitimate contracting and
(Tan v. Lagrama, G.R. No. 151228)
subcontracting arrangement
Corporate officers: not employees. Thus, illegal
Contractual Employee – one employed by a
dismissal cases involving corporate officers are
contractor and subcontractor to perform or
cognizable by the regular courts, not by NLRC.
complete a job, work or service pursuant to an
arrangement between the latter and a principal
Government employees:
GR: Civil Service laws apply
Principal – any employer who puts out or farms
GOCC which have original charters – governed by
out a job, service or work to a contractor or
civil service laws
subcontractor
GOCC organized under Corp. Code – LC applies
Phil. Tuberculosis Society case: Even if PSTI
Labor-only Contracting (LOC) - an arrangement
employees are given benefits by the GSIS, the
where the contractor or subcontractor merely
fact remains that PSTI was created under the
recruits, supplies or places workers to perform a
Corp. Code. Thus, LC applies.
job, work or service for a principal, and any of the
LRTA has an original charter, Civil Service laws
following elements are present:
apply. LRTA bought Metro Transit (created
1. no substantial capital or investment relating to
under Corp. Code). Employees of Metro Transit
the job, work or service to be performed
do not become employees of LRTA, except in
2. employees recruited, supplied or placed by
case of merger and consolidation.
such contractor or subcontractor are
performing activities directly related to the
Employees of government agencies
main business of the principal
A government agency is a means by which a
3. contractor does not exercise the right to control
government acts or a government act or
over the performance of the work of the
function is performed.
contractual employee
An employee of a gov’t agency is an employee
under the LC. Art. 244 says that they can
What is “substantial capital or investment” as
exercise self-organization for purposes of
used in the definition of labor-only contracting?
collective bargaining. Art. 276 says that their
It refers to capital stocks and subscribed
salaries shall be fixed by Congress.
capitalization in the case of corporations, tools,

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equipment, implements, machineries and work utilizing, hiring or procuring workers, and includes
premises, actually and directly used by the referrals, contract services, promising or advertising
contractor and subcontractor in the performance or for employment, locally or abroad, whether for
completion of the job, work or service contracted profit or not
out
The presumption is that the individual or entity is
What is the “right to control” as used in the engaged in recruitment and placement whether dealing
definition of labor-only contracting? with two or more persons to whom an offer or promise of
It refers to the right reserved to the person for employment is made in the course of “canvassing,
whom the services of the contractual workers are enlisting, contracting, transporting, utilizing, or
performed, to determine: procuring of workers. The number of persons dealt with
1. the end to be achieved, and is not an essential ingredient of the act of recruitment
2. the manner and means to be used in and placement of workers. [People v. Panis, 142 SCRA
reaching that end. 664 (1986)]

In case of illegal dismissal, is the indirect Who has authority to recruit and place employees?
employer liable for backwages? GR: Only government agencies can engage in
NO. Articles 106, 107, and 109 hold an employer recruitment and placement.
jointly and severally liable with its contractor or E: Arts. 16 & 25 allows agencies belonging to the
subcontractor, as if it were the direct employer. The private sector authorized by DOLE.
liability under these articles, however, does not
extend to the payment of backwages and separation Is direct-hiring allowed?
pay of employees who were constructively or GR: No employer may hire a Filipino worker for
illegally dismissed by the contractor, where it is not overseas employment.
shown that the principal/indirect employer had E: Members of the diplomatic corps, international
conspired with the contractor in effecting the illegal organizations, and others allowed by DOLE is
dismissal. (Rosewood Processing, Inc. v NLRC, et. al. exempted from the ban on direct-hiring.
May 21, 1998)
Migrant Worker - A person who is to be engaged,
NOTES: is engaged, is engaged, or has been engaged in a
LOC is prohibited by law. remunerated activity in a state of which he or she is
When there is LOC, the worker is an employee not a legal resident
of the principal. The labor-only contractor is an
agent of the principal. In case of non-payment Seafarers are considered contractual employees
of wages by the agent, the principal is solidarily because their employment is contractually fixed for
liable. a certain period. (Millares & Lagda v. NLRC, 29 July
Presence of 1 handicap (either no substantial 2002)
capital or no sufficient investment) makes the
contractor a labor-only contractor. Licensing & Regulation of Recruitment &
Meralco v. Delamira: involves security guards of Placement Agencies
MERALCO; since there is no LOC, the guards Domestic – DOLE Secretary / Regional Director
are employees of the agency Overseas – POEA Administrator

Closure of non-licensed recruitment agencies

RECRUITMENT & PLACEMENT OF WORKERS
NCR: DOLE Secretary / POEA Administrator
RA 8042: MIGRANT WORKERS & OVERSEAS Outside NCR: DOLE Regional Director
FILIPINOS ACT OF 1995
Lifting of closure or suspension order
Worker – any member of the labor force, whether POEA Administrator
employed or unemployed • Decision appealable to DOLE Secretary
• DOLE Regional Director cannot lift closure
Recruitment and Placement – any act of order
canvassing, enlisting, contracting, transporting,

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NOTES: who has not applied for employment through

The Labor Arbiters of the NLRC have his agency;
jurisdiction over money claims arising out of an 6. To engage in the recruitment or placement of
employer-employee relationship or by virtue of workers in jobs harmful to public health or
any law or contract involving Filipino workers morality or to the dignity of the Republic of the
for overseas deployment. Philippines;
Overseas employment contracts must be 7. To obstruct or attempt to obstruct inspection
approved by the POEA; otherwise, they are by the Secretary of Labor or by his duly
void. After the expiration of a POEA-approved authorized representatives;
contract, any subsequent negotiation is not 8. To fail to file reports on the status of
binding. employment, placement vacancies, remittance
A repatriated seafarer must report to the of foreign exchange earnings, separation from
principal or recruitment agency for post- jobs, departures and such other matters or
employment medical examination in order to information as may be required by the
be allowed to claim compensation due to illness Secretary of Labor.
(related to work). 9. To substitute or alter employment contracts
Gaoshieng Phils. case: An OFW was repatriated approved and verified by the Department of
28 days after leaving. Died 8 months after Labor from the time of actual signing thereof
repatriation. SC held that if the death is 8 by the parties up to and including the periods
months after repatriation, one cannot claim that of expiration of the same without the approval
the illness was related to work. of the Secretary of Labor;
10. To become an officer or member of the Board
Illegal Recruitment - any act of canvassing, of any corporation engaged in travel agency or
enlisting, contracting, transporting, utilizing, hiring, to be engaged directly or indirectly in the
or procuring workers and includes referring management of a travel agency;
contract services, promising or advertising for 11. To withhold or deny travel documents from
employment abroad, whether for profit or not, applicant workers before departure for
when undertaken by a non-licensee or non-holder monetary or financial considerations other
of authority than those authorized under this Code and its
implementing rules and regulations
Acts which are considered as illegal recruitment: 12. Failure to actually deploy without valid
1. To charge or accept, directly or indirectly, any reason as determined by DOLE
amount greater than that specified in the 13. Failure to reimburse expenses incurred by the
schedule of allowable fees prescribed by the worker in connection with his documentation
Secretary of Labor, or to make a worker pay and processing for purposes of deployment, in
any amount greater than that actually received cases where the deployment does not actually
by him as a loan or advance; take place without the worker’s fault
2. To furnish or publish any false notice or
information or document in relation to Who are criminally liable for illegal recruitment?
recruitment or employment; Principals, accomplices, and accessories. In case of
3. To give any false notice, testimony, juridical persons, the officers having control,
information or document or commit any act of management, or direction of their business shall be
misrepresentation for the purpose of securing a liable.
license or authority under this Code;
4. To induce or attempt to induce a worker An employee of a recruitment agency may also be
already employed to quit his employment in held liable as a principal where it is shown that he
order to offer him to another unless the actively and consciously participated in illegal
transfer is designed to liberate the worker from recruitment.
oppressive terms and conditions of
employment; Private employment agencies are held jointly and
5. To influence or to attempt to influence any severally liable with the foreign-based employer for
person or entity not to employ any worker any violation of the recruitment agreement or

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contract of employment. (Sevillana vs. I.T. Corp.; Jurisprudence / Doctrines related to illegal
April 16, 2001) recruitment:
Presumption of innocence
What are the circumstances qualify illegal No requirement as to what type of evidence
recruitment to an offense involving economic must be presented
sabotage? One can be convicted of both illegal recruitment
1. By a syndicate - carried out by a group of 3 or and estafa (if all elements of estafa are present)
more persons confederating with one another DOLE Secretary / POEA cannot issue warrants
2. In large scale – committed against 3 or more (Art. 38 (c) declared unconstitutional in Salazar
persons individually or as a group v. Achacoso)
Illegal recruitment exists where one shows
These categories are separate or independent categories. another that he has capacity to have the latter
If there is only one complainant in several complaints, employed for work abroad.
there is no illegal recruitment in large. But where there
are three conspiring recruiters, there is illegal REGULAR, CASUAL, PROBATIONARY
recruitment by a syndicate. (People v. Fernandez, et. al.,
07 March 2002)
EMPLOYMENT
ART. 280. REGULAR AND CASUAL EMPLOYMENT
The provisions of written agreement to the contrary
May the Secretary of Labor or the POEA
notwithstanding and regardless of the oral
Administrator issue warrants of arrest or search
and seizure warrants? agreement of the parties, an employment shall be
NO. They have to go through the judicial process. deemed to be regular where the employee has been
Only a judge may issue warrants. engaged to perform activities which are usually
necessary or desirable in the usual business or trade
• Illegal recruiters may, however, be arrested
of the employer, except where the employment has
without warrant under Sec. 5, Rule 113 of
been fixed for a specific project or undertaking the
the 1985 Rules on Criminal Procedure.
completion or termination of which has been
(citizen’s arrest)
determined at the time of the engagement of the
Where is the venue of an illegal recruitment case? employee or where the work or service to be
RTC of the province or city where the offense was performed is seasonal in nature and the
committed or where the offended party actually employment is for the duration of the season.
resides at the time of the commission of the offense.
The court where the case is first filed acquires An employment shall be deemed to be casual if it is
jurisdiction to the exclusion of all other courts. not covered by the preceding paragraph: Provided,
That any employee who has rendered at least one
What is the prescriptive period of illegal year of service, whether such service is continuous
recruitment cases? or broken, shall be considered a regular employee
5 years. with respect to the activity in which he is employed
and his employment shall continue while such
Illegal recruitment involving economic sabotage activity exists.
prescribes in 20 years.
ART. 281. PROBATIONARY EMPLOYMENT
How is illegal recruitment proved? Probationary employment shall not exceed six (6)
It must be shown that the accused gave the months from the date the employee started
complainants the distinct impression that he had working, unless it is covered by an apprenticeship
the ability to send the complainants abroad for agreement stipulating a longer period. The services
work such that the latter were convinces to part of an employee who has been engaged on a
with their money in order to be employed. There probationary basis may be terminated for a just
must at least be a promise or offer of an cause or when he fails to qualify as a regular
employment from the person posing as a recruiter. employee in accordance with reasonable standards
(People v. Angeles, 11 April 2002) made known by the employer to the employee at
the time of his engagement. An employee who is

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allowed to work after a probationary period shall granted by law to regular employees during the
be considered a regular employee. period of their actual employment.

Regular Employment Fixed-Term Employment

Regular employees: usual and desirable to the Period is agreed upon knowingly and
business of the employer voluntarily by the parties without force, duress,
Regular employment does not mean permanent or improper pressure exerted on the employee
employment Brent case: fixed-term employment repealed by
- a probationary employee is considered LC. But the Civil Code, a general law, allows
regular fixed-term employment
- after 6 months, becomes regular SM-style contractual supposed to be illegal but
- Veloso says that this is a situation where a Brent case says that the general law (NCC) can
regular employee becomes regular again be made to apply.
and this is permanence. Philips case: Employee hired on a fixed-term is
May be terminated only for just / authorized regular if job is necessary and desirable to
causes business of employer

Test to determine regular employment Project Employment

Universal Robina Corporation v. Catapang, G.R. No. One whose employment has been fixed for a
164736. October 14, 2005. specific project or undertaking the completion
The primary standard of determining regular of which has been determined at the time of
employment is the reasonable connection engagement of the employee; the period is not
between the particular activity performed by the determining factor, so that even if the
the employee to the usual trade or business of period is more than 1 year, employee does not
the employer. The test is whether the former is necessarily become regular
usually necessary or desirable in the usual Maraguinot case: Repeated hiring on a project to
business or trade of the employer. project basis is considered necessary and
Also, the performance of a job for at least a year desirable to the business of the employer. Thus,
is sufficient evidence of the job’s necessity if not employee is regular.
indispensability to the business. This is the rule Cioco case (2004) and Philsystems case: repeated
even if its performance is not continuous and hiring does not necessarily mean regular
merely intermittent. The employment is employment
considered regular, but only with respect to - According to SC, for “practical
such activity and while such activity exists. considerations” of hiring competent or skilled
The practice of entering into employment workers.
contracts which would prevent the workers “Day Certain” Rule – project employment ends
from becoming regular should be struck down on a certain date does not end on an exact date,
as contrary to public policy and morals. but on the completion of the project
Phil. Global Communication case: usual and
Casual Employment desirable does not matter because employer
Activity performed is not usually necessary or hires without intent of making them regular
desirable in the usual business or trade of the VELOSO: Cioco and Philsystems are correct.
employer, not project and not seasonal Art. 280 does not ensure permanency.
Except: if he has rendered at least 1 year of PAL v. Pascua: Regularization is not a
service, whether such service is continuous or management prerogative. It is a mandate of
broken, he is considered a REGULAR employee law.
with respect to the activity in which he is Nature of employment determines regular
employed and his employment shall continue employment.
while such activity exists Art. 280 does not apply to OFWs. (LC does not
Despite the distinction between regular and apply to migrant workers, RA 8042 does.)
casual employment, every employee shall be Poseidon Fishing case: if engaged in deep-sea
entitled to the same rights and privileges, and fishing, locally-hired employees, 280 applies
shall be subject to the same duties as may be

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Probationary Employment YES. Such an extension may be lawfully agreed

GR: Not to Exceed 6 mos. upon, despite the seeming restrictive language of
Exceptions: Article 281. A voluntary agreement extending the
a. covered by an apprenticeship agreement original probationary period to give the employee a
stipulating a longer period second chance to pass the probation standards
b. voluntary agreement of parties (especially constitutes a lawful exception to the statutory limit.
when nature of work requires a longer period) (Mariwasa Manufacturing, Inc. v Leogardo, Jr., Jan. 26,
c. the employer gives the employee a second 1989)
chance to pass the standards set
May be terminated: For private school teachers, what are the legal
a. for just / authorized causes requirements for acquisition of permanent
b. when he fails to qualify as a regular employee employment?
in accordance with reasonable standards made (1) The teacher is a full-time teacher; (2) the teacher
known by the employer to employee at the time must have rendered three consecutive years of
of his engagement service; and (3) such service must have been
If allowed to work after the probationary satisfactory. (UST v NLRC, Feb. 15, 1990)
period, he shall be considered a REGULAR
employee Seasonal Employment
But Art. 281 apploes to OFWs. Veloso says this work or services to be performed is seasonal in
is wrong. It is senseless if you cannot give the nature and the employment is for the duration
OFWs the reliefs accorded by Art. 279. of the season
Voyeur Visage case (2005): After lapse of The fact that seasonal workers do not work
probationary period (6 months), the employee continuously for one (1) whole year but only for
becomes regular. the duration of the season does not detract from
Probationary employee may be dismissed considering them in regular employment since
before end of the probationary period. in a litany of cases, the Court has already
settled that seasonal workers who are called to
Aberdeen Court, Inc. v. Agustin,G.R. No. 149371. work from time to time and are temporarily
April 13, 2005 laid off during off-season are not separated
There is probationary employment where the from service in said period, but merely
employee, upon his engagement, is made to considered on leave until re-employed.
undergo a trial period during which the Workers who have performed the same tasks
employer determines his fitness to qualify for every season for several years are considered
regular employment, based on reasonable regular employees for their respective tasks.
standards made known to him at the time of (Hacienda Fatima v. National Foundation of
engagement. Sugarcane Workers-Food and General Trade)
The services of an employee who has been
engaged on probationary basis may be SECURITY OF TENURE
terminated only for a just cause, when he fails ART. 279. SECURITY OF TENURE
to qualify as a regular employee in accordance In cases of regular employment, the employer shall
with the reasonable standards prescribed by the not terminate the services of an employee except for
employer. a just cause or when authorized by this Title. An
In all cases of probationary employment, the employee who is unjustly dismissed from work
employer shall make known to the employee shall be entitled to reinstatement without loss of
the standards under which he will qualify as a seniority rights and other privileges and to his full
regular employee at the time of his backwages, inclusive of allowances, and to his other
engagement. Where no standards are made benefits or their monetary equivalent computed
known to the employee at that time, he shall be from the time his compensation was withheld from
deemed a regular employee. him up to the time of his actual reinstatement.

May the employer and the employee validly agree NOTES:

to extend the probationary period beyond six Applies to all establishment or undertakings
months? whether for profit or not

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Project employees have no security of tenure. 1. employee’s assailed conduct was willful or
(see how full backwages are computed) intentional, the willfulness being
Full backwages are computed from the time characterized by a wrongful and perverse
wages are withheld up to the time the attitude;
employee is actually reinstated. 2. the order violated must have been
In the case of project employees, you cannot reasonable, lawful, made known to the
demand wages for the time when there is no employee and must pertain to the duties
project. Thus, 279 does not apply to project which he has been engaged to discharge
employees. (Micro Sales Operation Network v NLRC,
October 11, 2005)
JUST CAUSES, AUTHORIZED CAUSES, GROSS and HABITUAL must concur together.
CONSTRUCTIVE DISMISSAL - Implies a want or absence of or failure to
ART. 282.. JUST CAUSES FOR TERMINATION BY exercise slight care or diligence, or the entire
EMPLOYER
absence of care. It evinces a thoughtless
Grounds: SoMe WiD GAN FWeT CO disregard of consequences without exerting
1. Serious Misconduct or Willful Disobedience by any effort to avoid them.
the employee of the lawful orders of his - Previous infractions by the employee should
employer or representative in connection with have been acted upon appropriately by the
his work (work-related) employer before terminating the former.
2. Gross And habitual Neglect by the employee of Fraud or willful breach of trust
his duties - can be committed only by confidential and
3. Fraud or Willful breach by employee of the managerial employees
Trust reposed in him by his employer or duly - confidential employees – charged with
authorized representative (not mere suspicion) custody and protection of employer’s
4. Commission of a Crime or offense by the property like a cashier (this is different from
employee against the person of his employer or the “confidential employees” in labor
any immediate member of his family or duly relations)
authorized representative A criminal case need not be actually filed.
5. Other analogous cases Commission of acts constituting a crime is
sufficient.
NOTES: Examples of Analogous Cases:
Serious misconduct - improper or wrong - violation of safety rules
conduct; the transgression of some established - gross inefficiency
and definite rule of action, a forbidden act, a - wrongful acts of employee against the
dereliction of duty, willful in character, and company
implies wrongful intent and not mere error in - violation of code of discipline
judgment. To be serious within the meaning - failure to heed an order not to join an illegal
and intendment of the law, the misconduct picket
must be of such grave and aggravated character - immorality
and not merely trivial or unimportant (Villamor - sexual harassment
Golf Club v Pehid, October 4, 2005)
Elements of Misconduct as a just cause for ART. 283. AUTHORIZED CAUSES FOR TERMINATION
dismissal: Grounds:
1. serious; 1. Introduction of labor-saving devices
2. relate to the performance of the employee’s 2. Redundancy
duties; 3. Retrenchment
3. employee has become unfit to continue 4. Closure of business as a result of grave financial
working for the employer (Phil. Aeolus v loss
NLRC, 2000) 5. Closure not due to losses
Elements of Willful Disobedience as a just cause
for dismissal: NOTES:
Redundancy exists where the services of an
employee are in excess of what is reasonably

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LABOR LAW 1 JUSTICE VICENTE S.E. VELOSO

demanded by the actual requirements of the 4) fair and reasonable criteria in ascertaining
enterprise. what positions are to be declared
A position has become superfluous as an redundant and accordingly abolished.
outcome of a number of factors such as If the dismissal is based on a just cause under
overhiring of workers, decreased volume of Article 282 but the employer failed to comply
business, dropping of a particular product line with the notice requirement, the sanction to be
or service activity previously manufactured or imposed upon him should be tempered
undertaken by the enterprise (thus it only because the dismissal process was, in effect,
requires superfluity not duplication of work) initiated by an act imputable to the employee.
The redundancy SHOULD NOT have been If the dismissal is based on an authorized cause
created by the EMPLOYER. under Article 283 but the employer failed to
Resorted primarily to avoid or minimize comply with the notice requirement, the
business losses. sanction should be stiffer because the dismissal
Standards to justify retrenchment: process was initiated by the employer’s exercise
1. The losses expected should be substantial of his management prerogative
and not merely de minimis in extent.
2. The substantial loss apprehended must be CONSTRUCTIVE DISMISSAL
reasonably imminent a.) No formal dismissal
3. It be reasonably necessary and likely to b.) The employee is placed in a situation by the
effectively prevent the expected losses. The employer such that his continued employment
employer should have taken other has become UNBEARABLE.
measures prior or parallel to retrenchment
to forestall losses. Veterans Security Agency v. Vargas, G.R. No. 159293.
4. The alleged losses if already realized, and December 16, 2005.
the expected imminent losses must be Constructive dismissal exists when an act of
proved by sufficient and convincing clear discrimination, insensibility or disdain on
evidence (Oriental Petroleum & Minerals the part of the employer has become so
Corp. v Fuentes, October 14, 2005). unbearable as to leave an employee with no
In cases of closure not due to losses, it must choice but to forego continued employment.
NOT be in BAD FAITH. Abandonment, as a just and valid cause for
Difference between redundancy and termination, requires a deliberate and
retrenchment: In reducndancy, company has no unjustified refusal of an employee to resume
financial problems; in retrenchment, company his work, coupled with a clear absence of any
suffers from financial problems. intention of returning to his or her work.
Abandonment is incompatible with
Validity of a Redundancy Program constructive dismissal.
DAP v. CA, G.R. No. 165811. December 14, 2005. Article 286 applies only when there is a bona
The employer must comply with the following fide suspension of the employer’s operation of
requisites to ensure the validity of the a business or undertaking for a period not
redundancy program: exceeding 6 months.
1) a written notice served on both the In security agency parlance, being placed “off
employees and the Department of Labor detail” or on “floating” status means “waiting
and Employment (DOLE) at least one to be posted.”
month prior to the intended date of It is the inherent prerogative of an employer to
retrenchment; transfer and reassign its employees to meet the
2) payment of separation pay equivalent to at requirements of its business. Be that as it may,
least one month pay or at least one month the prerogative of the management to transfer
pay for every year of service, whichever is its employees must be exercised without grave
higher; abuse of discretion. The exercise of the
3) good faith in abolishing the redundant prerogative should not defeat an employee's
positions; right to security of tenure. The employer’s
privilege to transfer its employees to different

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LABOR LAW 1 JUSTICE VICENTE S.E. VELOSO

workstations cannot be used as a subterfuge to voluntarily entered into and represented a

rid itself of an undesirable worker. reasonable settlement, it is binding on the
parties and may not later be disowned, simply
ART. 284. DISEASE AS GROUND FOR TERMINATION because of a change of mind.
When his continued employment is prohibited
by law or prejudicial to his health or to the ART. 286. WHEN EMPLOYMENT NOT DEEMED
health of his co-employees TERMINATED
There is a certification by a competent public The bona-fide suspension of the operation of a
health authority that the disease is of such business or undertaking for a period not exceeding
nature or at such stage that it cannot be cured six (6) months, or the fulfillment by the employee of
within a period of 6 months even with proper a military or civic duty shall not terminate
medical treatment employment. In all such cases, the employer shall
The requirement for a medical certificate cannot reinstate the employee to his former position
be dispensed with; otherwise, it would sanction without loss of seniority rights if he indicates his
the unilateral and arbitrary determination by desire to resume his work not later than one (1)
the employer of the gravity or extent of the month from the resumption of operations of his
employee’s illness and thus defeat the public employer or from his relief from the military or
policy on the protection of labor. (Manly Express civic duty.
v Payong, October 25, 2005)
Temporary Lay-off must not exceed 6 months.
ART. 285. TERMINATION BY EMPLOYEE
a. WITHOUT JUST CAUSE Options of employer (i.e. security agency) in case of
1. at least 1 month prior notice pull out by client:
2. employee may be held liable for damages 1. retrenchment – must give notice 1 month before
for failure to give notice retrenchment; pay separation pay
b. WITH JUST CAUSE 2. closure – must comply with 1 month advanced
1. Grounds notice; no need to pay separation pay
a. serious insult on the honor and person
of employee by the employer or his Abandonment
representative means the deliberate, unjustified refusal of an
b. inhumane and unbearable treatment employee to resume his/her employment.
accorded to the employee Two elements must be proved:
c. commission of a crime against person 1) the intention to abandon; and
of the employee or any of the 2) an overt act from which it may be inferred
immediate members of his family that the employee has no more intent to
d. other causes analogous to the foregoing resume his/her work.
2. Notice not necessary This is negated by immediate filing of an action
for ILLEGAL DISMISSAL.
Resigning employee not entitled to separation pay,
unless company policy gives it. Employment NOT Deemed Terminated
a. bona fide suspension of the operation of a
No separation pay in resignation; Exceptions; business/undertaking for a period of not more
Waivers and quitclaims, when valid than 6 months
Candido Alfaro v. CA, et al., G.R. No. 140812 August b. fulfillment by the employee of a military or
28, 2001 civic duty
Generally, separation pay need not be paid to
an employee who voluntarily resigns. Employer shall reinstate the employee to his
However, an employer who agrees to expend former position without loss of seniority rights
such benefit as an incident of the resignation IF employee indicates his desire to resume his
should not be allowed to renege in the work not later than 1 month from resumption
performance of such commitment. of operations of his employer or his relief from
Not all waivers and quitclaims are invalid as the military or civic duty
against public policy. If the agreement was

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LABOR LAW 1 JUSTICE VICENTE S.E. VELOSO

Preventive Suspension
justified where the employee’s continued NOTES:
employment poses a serious and imminent In cases of dismissal, employer has the burden
threat to the life or property of the employer or of proof to show that the dismissal falls under
of his co-workers (there is a REASONABLE the just and authorized causes. (Tolentino v.
POSSIBILITY of the employee posing such a PLDT)
threat). Due process refers to the process to be
must not exceed 1 month followed; burden of proof refers to the amount
only for the purpose of investigating the of proof to be adduced
offense to determine whether he is to be In money claims, the burden of proof as to the
dismissed or not. IT IS NOT A PENALTY. amount to be paid the employee rests upon the
if more than 1 month, the employee must be employer since he is in custody of documents
actually reinstated or reinstated in the payroll that would be able to prove the amount due,
officers liable only if with malice and bad faith such as the payroll.
In cases of just and authorized causes, due
Floating Status process must be observed
It is legal, such as in the case of security guards Due process requirements under Art. 277 (b)
who have no assignment. Just Causes (282) Authorized Causes (283)
Such a status should not exceed six-months; if it Twin Notice Twin Notice
does, it amounts to a dismissal. - notice of the charge - notice to employee1
- notice that employee month before
DUE PROCESS is guilty (after installation of LSD,
ART. 277. MISCELLANEOUS PROVISIONS investigation) retrenchment, or
b. Subject to the constitutional right of workers to closure
security of tenure and their right to be protected Investigation - 1 month advanced
against dismissal except for a just and authorized notice to DOLE
cause and without prejudice to the requirement of
notice under Article 283 of this Code, the employer Non-compliance with due process requirements
shall furnish the worker whose employment is Serrano (G.R. 117040, January 27,2000)
sought to be terminated a written notice containing Termination due to authorized cause without
a statement of the causes for termination and shall giving the notice required under the Labor Code is
afford the latter ample opportunity to be heard and not a violation of due process. It is valid although
to defend himself with the assistance of his declared irregular/ineffectual. He shall however be
representative if he so desires in accordance with entitled to SEPARATION PAY AND BACKWAGES
company rules and regulations promulgated subject to the following rules:
pursuant to guidelines set by the Department of When the dismissal is for a cause, the
Labor and Employment. Any decision taken by the employee, whether dismissed for just cause or
employer shall be without prejudice to the right of authorized cause but without prior notice, is
the worker to contest the validity or legality of his entitled to full backwages from the time he was
dismissal by filing a complaint with the regional terminated until the decision finding cause
branch of the National Labor Relations becomes final.
Commission. The burden of proving that the When the dismissal is without just or
termination was for a valid or authorized cause authorized cause, backwages shall be
shall rest on the employer. The Secretary of the computed from the time of his dismissal until
Department of Labor and Employment may his actual reinstatement.
suspend the effects of the termination pending
resolution of the dispute in the event of a prima N.B. Serrano, although a case of termination for
facie finding by the appropriate official of the authorized cause also covers termination due to just
Department of Labor and Employment before cause; if termination is due to just causes, no
whom such dispute is pending that the termination separation pay is due.
may cause a serious labor dispute or is in
implementation of a mass lay-off. Agabon v. NLRC, Nov. 17, 2004 modifies Serrano

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LABOR LAW 1 JUSTICE VICENTE S.E. VELOSO

Dismissal for an authorized or just cause, w/o from the time his compensation was withheld from
procedural due process is not an illegal him up to the time of his actual reinstatement.
dismissal which warrants backwages; employee
entitled only to nominal damages Where reinstatement is ordered, but the
The Court interpreted Art. 279 to the effect that position is already filled up, the dismissed
termination is illegal only if it is not for any of employee must still be reinstated if it is still
the justified or authorized causes provided by possible.
law. Payment of backwages and other benefits, Cases where reinstatement is impossible:
including reinstatement, is justified only if the - In case of strained relations (applies to
employee was unjustly dismissed. confidential and managerial employees only)
The Court decided to follow Wenphil that - In case of position has been abolished
where the dismissal is for a just cause, the lack (applies to both managerial and rank and file)
of statutory due process should not nullify the Moral and exemplary damages may also be
dismissal or render it illegal. However, the awarded.
employer should indemnify the employee for Computation of separation pay
the violation of his rights. The indemnity Installation of labor- • 1 month pay or 1
should be stiffer than that provided in Wenphil saving devices month pay for every
to discourage the abhorrent practice of “dismiss year of service
now, pay later.” The indemnity should be in the Redundancy whichever is higher.
form of nominal damages, which is adjudicated
in order that a right of plaintiff, which has been 1 month pay for every year
violated by the defendant, may be vindicated. is always higher if the
employee has served for
Jaka Foods case (2004) more than 1 year.
SC distinguished between non-compliance of Retrenchment to • 1 month pay or at
due process requirements in just and prevent losses least 1/2 month pay
authorized causes. for every year of
Authorized causes – Php 50,000 nominal Closures or cessation of service whichever is
damages operations of higher
Just causes – Php 30,000 nominal damages establishments or
(because in just causes, employee is being undertaking NOT due
dismissed due to his fault) to serious business
losses or financial
International Timber Corp. case (2006) reverses
SC reduced the nominal damages from Php
30,000 to Php 10,000. Disease
VELOSO: There is no hard and fast rule in Closures or cessation of • no separation pay
terms of the amount of damages to be awarded. operations due to
serious business losses
Why is Agabon not given retroactive effect? or financial reverses
The principle in law giving retroactive effect where * a fraction of at least 6 months is considered 1 year
the subsequent law is corrective in character does
not necessarily apply to judicial decisions. Unless If the retrenchment is later declared illegal,
the SC provides otherwise, the ruling would have separation pay of 1 month for every year shall
no retroactive effect. be paid. Such computation is because the
retrenchment was illegal and the employee was
RELIEFS FOR ILLEGAL DISMISSAL entitled to reinstatement.
ART. 279
An employee who is unjustly dismissed from work Reinstatement; payment of backwages
shall be entitled to reinstatement without loss of Triad Security & Allied Services, Inc, et al. v Ortega,
seniority rights and other privileges and to his full G.R. NO. 160871. February 6, 2006
backwages, inclusive of allowances, and to his other An order of reinstatement by the labor arbiter is
benefits or their monetary equivalent computed not the same as actual reinstatement of a

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LABOR LAW 1 JUSTICE VICENTE S.E. VELOSO

dismissed or separated employee. Thus, until (Marsaman Manning Agency v. NLRC, 25 August
the employer continuously fails to actually 1999)
implement the reinstatement aspect of the
decision of the labor arbiter, their obligation to RETIREMENT
the illegally dismissed employee, insofar as ART. 287. RETIREMENT
accrued backwages and other benefits are (as amended by the Retirement Pay Law – RA 7641)
concerned, continues to accumulate. It is only
when the illegally dismissed employee receives Exempted:
the separation pay (in case of strained relations) retail, service, agricultural establishments
that it could be claimed with certainty that the operations employing not more than 10
EER has formally ceased thereby precluding the employees
possibility of reinstatement. In the meantime,
the illegally dismissed employee’s entitlement Kinds
to backwages, 13th month pay, and other OPTIONAL – 60 years old / 5 years in service
benefits subsists. Until the payment of (includes authorized absences/vacations/regular
separation pay is carried out, the employer holidays/mandatory military or civic service). This
should not be allowed to remain unpunished depends on the stipulations in the CBA, company
for the delay, if not outright refusal, to retirement plan, or employment contract.
immediately execute the reinstatement aspect COMPULSARY – 65 years old/ regardless or years
of the labor arbiter’s decision. of service (company not bound to dismiss
Further, the employer cannot refuse to reinstate employee)
the illegally dismissed employee by claiming
that the latter had already found a job Benefits
elsewhere. Minimum wage earners are left with 1/2 month salary per year of service which shall
no choice after they are illegally dismissed from include:
their employment, but to seek new 1. 15-day basic wage, plus
employment in order to earn a decent living. 2. 1/12 of the 13th month pay, plus
Surely, we could not fault them for their 3. 5-day Service incentive leave pay plus
perseverance in looking for and eventually 4. other benefits as maybe agreed upon by
securing new employment opportunities employer and employee
instead of remaining idle and awaiting the (a fraction of at least 6 months considered as 1 year)
outcome of the case.
Minimum benefits to be received =
Reliefs of local workers vs. migrant workers (no. 1 + no. 2 + no. 3) x years of service
Art. 279, LC Sec. 10, RA 8042
(local workers) (migrant workers) If CBA / retirement plan has no prohibition, an
Reinstatement Full reimbursement of employee can get pay under the law, CBA, and
his placement fee with the retirement plan.
interest of 12% per If what is provided in the CBA is lower that
annum what is provided for in law, the employee is
Full backwages from the Salaries for the entitled to the higher amount.
time his compensation unexpired portion of his
was withheld from him employment contract or Õ END OF MIDTERM REVIEWER Õ
up to the time of his for 3 months for every
This reviewer is based on the sequence of topics discussed by Justice
actual reinstatement year of the unexpired Veloso in class. Some, if not most, of the case titles are not accurate as
term, whichever is less they are the cases being randomly cited by Justice Veloso in class.
* without valid, just, or authorized cause This is in no way complete. Reading book/s in addition to this is
highly recommended.

The option of “three months for every year” is ACKNOWLEDGEMENTS

available only if the employment is for at least one Parts of this reviewer were taken from the Labor Law Reviewers of
the Ateneo Central Bar Operations 2006 and from Doranne Lim’s
year. If the contract is shorter, the salary to be paid reviewer for Justice Veloso’s Labor Law Review class.
should be that for the unexpired portion.
Thanks to Lea Mateo for the help and friendship. ☺

Ryan Quan 3C ’06-’07 15