Basic principles

1. Labor is a protected class because there is a presumption of Inherent Inequality between

employer and employee.However, a laborer who is highly qualified, who has an expertise
is not entitled to the presumption of inherent inequality. (Fuji Television Network, Inc. v.
Espiritu, G.R. No. 204944- 45, 03 Dec. 2016)

2. 7 CARDINAL LABOR RIGHTS IN THE 1987 CONSTITUTION are Rights to (a) Self
Organization ; (b) collective bargaining and negotiation ; (c) peaceful concerted activities,
including the right to strike ; (d) security of tenure ; (e) humane conditions of work ; (f) a
living wage ; (g) participate in policy and decision making. (Art. XIII, Sec. 3 1987 Const.)

3. Construction in Favor of Labor does not apply when there is clear and unambiguous
language. (Art. 4 Labor Code)

4. The Labor Code applies to all workers, whether agricultural or non-agricultural. ALL
Government employees, including GOCC with original charter are under the CIVIL
SERVICE, and not under the Labor Code. (Art. 6 & Art. 291 Labor Code)

5. The standard of proof in labor cases is substantial evidence that means such relevant
evidence that a reasonable mind might accept as adequate to support a conclusion even
if other equally reasonable minds might opine otherwise. (South East International Rattan,
Inc. v. J.J. Coming, G.R. No. 186621, 12 Mar. 2014; 718 SCRA 658 (2014))

Existence of employer-employee relationship; tests

1. The four-fold test in determining employer-employee relationship is (a) The Selection and
engagement of the employee ; (b) Payment of Wages ; (c) Power of Dismissal; and (d)
Employer’s power to Control the employee’s conduct, not only as to result but also as to
means and methods of work. (Legend Hotel (Manila) v. Realuyo, G.R. No. 153511, 18 Jul.
2012 )

2. The evidence of employee status cannot be based on mere allegations. It has to be

supported by documentary or testimonial evidence. The burden of proof is with the one
asserting an affirmative relief – therefore with the party asserting that there is an Employer-
Employee Relationship. (Bernard A. Tenazas, et al., v. R. Villegas Taxi Transport, G.R.
No. 192998, 02 Apr. 2014; 720 SCRA 467 (2014))

Termination of employment

1. The employee may terminate the employment by resignation. To constitute a resignation:

(a) It must be unconditional and with the intent to operate as such; and (b) There must be
an intention to relinquish a portion of the term of office accompanied by an act of
relinquishment. [Cervantes v. PAL Maritime Corp., G.R. No. 175209 (2013)]

2. The notice of resignation is required when termination is without just cause. Written notice
to resign must be submitted one (1) month in advance. The following are just causes that
do not require notice (a) Serious insult by the employer or his representative on the honor
 and person of the employee; (b) Inhuman and unbearable treatment accorded the
employee by the employer or his representative; (c) Commission of a crime or offense by
the employer or his representative against the person of the employee or any of the
immediate members of his family; and (d) Other causes analogous to any of the foregoing.
(Art. 300, Labor Code)

3. In order to validly dismiss an employee, the employer is required to observe both

substantive and procedural aspects—the termination of employment must be based on a
just or authorized cause of dismissal and the dismissal must be effected after due notice
and hearing. Procedural due process entails compliance with the two-notice rule in
dismissing an employee, to wit: (1) the employer must inform the employee of the specific
acts or omissions for which his dismissal is sought; and (2) after the employee has been
given the opportunity to be heard, the employer must inform him of the decision to
terminate his employment. [Ang v. San Joaquin, Jr., GR No. 182249 (2013)]

4. Constructive dismissal is cessation of work because continued employment is either (a)

rendered impossible, unreasonable or unlikely; (b) when there is a demotion in rank or
diminution in pay or both; or (c) when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee. It is an act amounting to dismissal but
made to appear as if it were not. Constructive dismissal is, therefore, a dismissal in
disguise. [Dusit Hotel Nikko v. NUHWRAIN-Dusit Hotel Chapter, G.R. No. 160391 (2005)]

5. 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. The employer has the inherent right to transfer or reassign an
employee for legitimate business purposes. 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. The employer must be able to show that the transfer is
not unreasonable, inconvenient or prejudicial to the employee. [The Philippine American
Life and General Insurance Co. v. Angelita S. Gramaje, G.R. No. 156963 (2004)]

6. Preventive suspension is a disciplinary measure for the protection of the company’s

property pending investigation of any alleged malfeasance or misfeasance committed by
the employee. Preventive suspension is not a penalty, but a part of a process to investigate
a questioned action of an employee. Preventive suspension does not in itself prove that
the employer already finds the employee guilty of the charges he is asked to answer and
explain. The purpose is to prevent him from causing harm or injury to the company as well
as to his fellow employees. [Soriano v. NLRC et. al., G.R. No. 75510, (1987)]

7. The following are Business-related Causes or Authorized Causes of termination. (a) The
installation of labor-saving devices ; (b) Redundancy ; (c) Retrenchment to prevent losses
or (d) The closing or cessation of operation of the establishment or undertaking not due to
serious losses. (Art. 298 Labor Code)

8. An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees. The requisites are
(a) The employee must be suffering from a disease which cannot be cured within 6 month,
even with proper medical treatment; (b) Continued employment is either: (i) Prohibited by
law or (ii) Prejudicial to his health or (iii) Prejudicial to the health of his co-employees; and
(c) A certification to that effect issued by a competent public health authority, which must
state that the disease is of such nature or at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. (Art. 299 Labor Code)
 9. In effecting procedural due process, the first written notice to be served on the employees
should contain the specific causes or grounds for termination against them, and a directive
that the employees are given the opportunity to submit their written explanation within a
reasonable period. The requirement of a hearing is complied with as long as there was an
opportunity to be heard, and not necessarily an actual hearing was conducted. After
determining that termination of employment is justified, the employers shall serve the
employees a written notice of termination indicating that: All circumstances involving the
charge against the employee have been considered, and The grounds have been
established to justify the severance of the employment. [King of Kings Transport v.
Mamac, GR No. 166208 (2007); Puncia v. Toyota Shaw/Pasig, GR No. 214399 (2016)]

10. If dismissal was for just cause but if due process is not met, the dismissal is valid, but
liable for nominal damages (30k/50k tempered by the circumstances of each case). gabon
v. NLRC, 442 SCRA 573 (2004)

Requirements for labor-only contracting

1. There is labor-only contracting when the (a) Person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others ; (b) Workers recruited and placed by such
person are performing activities which are directly related to the principal business of such
employer ; and (c) The contractor has no right to control performance of employee.
The effect of a finding of a labor-only contracting is that the person or intermediary shall
be considered merely as an agent of the employer. The principal employer is responsible
to the workers in the same manner and extent as if the latter were directly employed by
him. (Art. 106, Labor Code)

2. In legitimate and permissible contracting or subcontracting, there exists (a) An employer-

employee relationship between the contractor and the employees it engaged to perform
the specific job, work or service being contracted ; (b) A contractual relationship between
the principal and the contractor as governed by the provisions of the Civil Code ; (c) The
contractor or subcontractor has substantial capital (5 Million Pesos) to carry out the job
farmed out by the principal on his account, manner and method, investment in the form of
tools, equipment, work premises, machinery and supervision ; and (d) The contractor or
subcontractor is engaged in a distinct and independent business and undertakes to
perform the job or work on its own responsibility, according to its manner and method.
(DOLE Dept. Order 174-17)

3. Failure to register with the DOLE as an independent contractor shall give rise to the
presumption that the contractor is engaged in labor-only contracting. Such registration is
not conclusive of the status of a legitimate contractor; rather, it merely prevents the
presumption of being a labor-only contractor from arising. To determine whether labor-
only contracting exists, the totality of the facts and circumstances of the case must be
considered. (Sec. 14 DOLE Dept. Order 174-17)

4. The rules on labor-only contracting do not apply to (a) IT Industries/ BPOS ; (b)
Construction Industry ; (c) Contracts governed by Civil Law ; (d) Security Services ; (e)
Janitors. (Sec. 2, DOLE Dept. Circular 01-17)
Rights of employees and of labor organizations; membership in unions

1. A local labor union is a separate and distinct unit primarily designed to secure and maintain
an equality of bargaining power between the employer and their employee-members. A
local union does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of its members.
The mere act of affiliation does not divest the local union of its own personality, neither
does it give the mother federation the license to act independently of the local union. It
only gives rise to a contract of agency where the former acts in representation of the latter.
[NUBE v. PEMA GR 17487]

2. Requisites for a valid levy and check-off of special assessments:

(1) An authorization by a written resolution of the majority of all the union
members at the general membership meeting duly called for the purpose;
(2) Secretary's record of the minutes of the meeting; and
(3) Individual written authorization for check-off duly signed by the employee
concerned. [Eduardo Marino v. Gil Y. Gamilla, GR No. 149763, 7 July 2009]

3. The legal basis of the union’s right to agency fees is neither contractual nor statutory, but
quasi-contractual, deriving from the established principle that non-union employees may
not unjustly enrich themselves by benefiting from employment conditions negotiated by
the bargaining union. [Peninsula Employees Union v. Michael Esquivel plus 66 others, GR
No. 218454, 1 December 2016]

4. Under Art. 250 (formerly 241) of the Labor Code, attorney’s fees may not be deducted or
checked off from any amount due to an employee without his written consent except for
mandatory activities under the Code. A mandatory activity has been defined as a judicial
process of settling dispute laid down by the law. [Ambrocio Vengco v. Hon. Trajano and
Emmanuel Timbungco, GR No. 74453, 5 May 1989]

5. No check-offs from any amounts due employees may be effected without individual written
authorizations duly signed by the employee specifically stating the amount, purpose and
beneficiary of the deduction.
Compulsory arbitration is not a "mandatory activity" under the Labor Code which
dispenses with individual written authorizations for check-offs, notwithstanding its
"compulsory" nature. It is a judicial process of settling disputes laid down by law.
[Carlos Galvadores v. Hon. Trajano, Manggagawa ng Komunikasyon sa Pil.
(FIWU), PLDT & Jose Espinas, GR No. 70067, 15 September 1986]

6. The right to self-organization is not limited to unionism. Workers may also form or join an
association for mutual aid and protection and for other legitimate purposes.

The right to form a union or association or to self- organization comprehends two notions:
 The liberty or freedom, that is, the absence of restraint which guarantees that
the employee may act for himself without being prevented by law
 The power, by virtue of which an employee may, as he pleases, join or refrain
from joining an association.
 The right to self-organization, however, is subject to certain limitations as
provided by law.
 Labor Code specifically disallows managerial employees from joining,
assisting, or forming any labor union.
 Meanwhile, supervisory employees, while eligible for membership in labor
organizations, are proscribed from joining the collective bargaining unit of the
rank-and-file employees

A union refers to any labor organization in the private sector organized for collective
bargaining and for other legitimate purpose.

A workers' association is an organization of workers formed for the mutual aid and
protection of its members or for any legitimate purpose other than collective
 bargaining. [Samahan ng Manggagawa sa Hanjin Shipyard rep. by Pres. Alfie Alipio
v. BLR & Hanjin Heavy Ind. & Construction Co., GR No. 211145, 14 October 2015]

7. While the right to self-organization is absolute, the right of government employees to

collective bargaining and negotiation is subject to limitations. Relations between private
employers and their employees are subject to the minimum requirements of wage laws,
labor, and welfare legislation. Beyond these requirements, private employers and their
employees are at liberty to establish the terms and conditions of their employment
relationship. In contrast with the private sector, the terms and conditions of employment
of government workers are fixed by the legislature; thus, the negotiable matters in the
public sector are limited to terms and conditions of employment that are not fixed by law.
[GSIS Family Bank Employees Union v. Sec. Cesar Villanueva (Chair of the Governance
Commission for GOCCs under the OP), et al., GR No. 210773, 23 January 2019]

8. After a labor organization has been registered, it may exercise all the rights and privileges
of a legitimate labor organization and any mingling cannot affect its legitimacy since it isn’t
among the grounds for cancellation of its registration unless such mingling was brought
about by misrepresentation, false statement, fraud. The alleged inclusion of supervisory
employees in a labor organization seeking to represent the bargaining unit of rank-and-
file employees does not divest it of its status as a legitimate labor organization. [Holy Child
Catholic School v. Hon. P. Sto. Tomas & HCC-TELU-PIGLAS, GR No. 179146, 23 July
2013]

9. Under this distinction, "managerial employees" therefore fall in two (2) categories, namely,
the "managers" per se composed of Top and Middle Managers, and the "supervisors"
composed of First-Line Managers. The mere fact that an employee is designated
“manager" does not ipso facto make him one. Designation should be reconciled with the
actual description of the employee for it is the description that determines the nature of
employment. [Paper Industries Corp. v. Hon. Laguesma, PICOP BISLIG, Supervisory and
Technical Staff Employees Union, ALU & FFW, GR No. 1017313, 12 April 2000]

10. The test of ‘supervisory’ or ‘managerial status’ depends on whether a person possesses
authority to act in the interest of his employer in the matter specified in Article 212 (k) of
the Labor Code and Section 1 (m) of its Implementing Rules AND whether such authority
is not merely routinary or clerical in nature, but requires the use of independent judgment.
Thus, where such recommendatory powers as in the case at bar, are subject to evaluation,
review and final action by the department heads and other higher executives of the
company, the same, although present, are not exercise of independent judgment as
required by law.”

It has also been established that in the determination of whether or not certain employees
are managerial employees, this Court accords due respect and therefore sustains the
findings of fact made by quasi-judicial agencies which are supported by substantial
evidence considering their expertise in their respective fields. [AD Gothong Mfg. Corp.
Employee Union - ALU v. Sec. Confessor, GR No. 113638, 16 November 1999]

11. Confidential employees or those who by reason of their positions or nature of work are
required to assist or act in a fiduciary manner to managerial employees and hence,
are likewise privy to sensitive and highly confidential records, are disqualified from
joining a bargaining unit for rank-and-file employees.[Standard Chartered Bank
Employees Union v. SCB, GR No. 161933, 22 April 2008]
12. Membership in the cooperative is on a voluntary basis. Hence, withdrawal cannot be
restricted unnecessarily.
 The right to join an organization necessarily includes the equivalent right not to
join the same
 The right of the employees to self-organization is a compelling reason why their
withdrawal from the cooperative must be allowed

● Membership in an electric cooperative, which merely vests in the member a right to vote
during the annual meeting, becomes too insubstantial compared to the more important
constitutional right of an employee to join a union of his choice. [CENECO v. DOLE Sec.
& CURE, GR No. 94045, 13 September 1991]

13. "Union security is a generic term, which is applied to and comprehends 'closed shop,
"union shop,’ ‘maintenance of membership,' or any other form of agreement which
imposes upon employees the obligation to acquire or retain union membership as a
condition affecting employment.

There is union shop when all new regular employees are required to join the union within
a certain period as a condition for their continued employment.
There is maintenance of membership shop when employees, who are union members as
of the effective date of the agreement, or who thereafter become members, must maintain
union membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit, or the agreement is terminated.

A closed shop, on the other hand, may be defined as an enterprise in which, by agreement
between the employer and his employees or their representatives, no person may be
employed in any or certain agreed departments of the enterprise unless he or she is,
becomes, and, for the duration of the agreement, remains a member in good standing of
a union entirely comprised of or of which the employees in interest are a part."

Before an employer terminates an employee pursuant to the union security clause, it

needs to determine and prove that:
(1) The union security clause is applicable;
(2) The union is requesting the enforcement of the union security provision in
the CBA; and
(3) There is sufficient evidence to support the decision of the union to expel
the employee from the union. [Ergonomic Systems Phil., Inc. v. Emerita
Enaje, GR No. 195163, 13 December 2017]

14. The purpose of affiliation of the local unions into a common enterprise is to increase the
collective bargaining power in respect of the terms and conditions of labor. To avoid
conflict of interest, the supervisory union is not allowed to affiliate with the national
federation of unions of rank-and-file employees where that federation actively participates
in the union activity within the company. When there is commingling of officers of a rank-
and-file union with a supervisory union, the constitutional policy on labor is circumvented.
[Coastal Subic Bay Terminal v. DOLE & CSBTI-SU-APSOTEU & CSBTIRAFU-ALU-
TUCP, GR No. 157117, 20 November 2006]

15. The legitimacy of a labor organization’s registration may be challenged on grounds of

fraud, misrepresentation and/or falsification, as enumerated under Art. 239 LC. This may
be effected through filing a petition for cancellation of registration or challenging the
disputed organization’s petition for certification election. [Progressive Dev. Corp. - Pizza
Hut v. Han. Laguesma & NLMKatipunan, GR No. 115077, 18 April 1997]
Management prerogative

1. MANAGEMENT PREROGATIVE is the right to regulate all aspects of employment, work

processes, how it will be accomplished. The Management Prerogative must be (a)
Reasonable and Lawful ; (b) Sufficiently Known to the employee ; and (c) In connection
with the duties the employee must discharge. [Automatic Appliances, Inc., v. Deguidoy,
G.R. No. 228088, 04 Dec. 2019]

2. Among the employer’s management prerogatives is the right to prescribe reasonable rules
and regulations for the conduct of its business. Employee has the corollary duty to obey.
Willful disobedience justifies dismissal. [St. Luke’s Medical Center, Inc. v. Ma. Theresa v.
Sanchez, G.R. No. 212054, 11 Mar. 2015; 753 SCRA 218 (2015)]

3. A bonus is an act of gratuity on the part of the employer, and is a management prerogative
which cannot be forced upon the employer. For a bonus to be enforceable: (a) It must
have been promised by the employer and expressly agreed upon by the parties; or (b) It
must have had a fixed amount and had been a long and regular practice on the part of the
employer. [American Wire and Cable Union v. American Wire, G.R. No. 155059, April 29,
2005]

4. The requisites for the valid invocation of management prerogative affecting security of
tenure are it must be (a) Exercised in good faith for the advancement of employer’s
interest, and (b) Not for the purpose of defeating or circumventing the rights of the
employees under special laws or valid agreements. [San Miguel Brewery Sales Force
Union v. Ople, GR No. 52515 (1989)]

Illegal recruitment of overseas Filipino workers

1. Illegal recruitment is any act of canvassing, enlisting, contracting, transporting, utilizing,

hiring, or procuring workers and includes referring, contract services, promising or
advertising for employment abroad, whether for profit or not, when undertaken by a non-
licensee or non-holder of authority contemplated under Art. 13 of the Labor Code. [Sec.
5, R.A. No. 10022]

2. For simple illegal recruitment, the following are the types of illegal recruitment of local
workers and the elements for each type: Firstly, by a licensee/holder of authority: (a)
Offender has a valid license or authority required by law to enable one to lawfully engage
in the recruitment and placement of workers; (b) Offender undertakes any of the prohibited
acts under Art. 34 of the Labor Code. Secondly, by a non-licensee/non-holder of authority
(a) Offender has no valid license or authority required by law to enable one to lawfully
engage in the recruitment and placement of workers; (b) Offender undertakes either (i)
Any activity within the meaning of recruitment and placement under Art. 13(b) of the Labor
Code or (ii) Any of the prohibited practices under Art. 34 of the Labor Code. [People v.
Sadiosa [G.R. No. 107084 (1998)]

3. The elements of illegal recruitment by a syndicate are (a) Offender does not have the valid
license or authority required by law to engage in recruitment and placement of workers ;
(b) Offender undertakes either: (i) Any of the "recruitment and placement" activities
defined in Art. 13(b) of the Labor Code; or (ii) Any of the prohibited practices under Sec.
6 of R.A. No. 8042 ; and (c) Illegal recruitment is carried out by a group of 3 or more
persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme. [People v. Sison, G.R. No. 187160 (2017)]
 4. The elements of illegal recruitment in large scale are (a) Offender does not have the valid
license or authority required by law to engage in recruitment and placement of workers
(b) Offender undertakes either: (i) Any of the "recruitment and placement" activities
defined in Art. 13(b) of the Labor Code; or (ii) Any of the prohibited practices under Sec.
6 of R.A. No. 8042 ; and (c) Offender committed the same against 3 or more persons
individually or as a group. [People v. De los Reyes, G.R. No. 198795 (2017)]

5. A person who commits illegal recruitment may be charged and convicted separately of
illegal recruitment under the Labor Code and estafa under Art. 315(2a), RPC. The offense
of illegal recruitment is malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the criminal intent of the
accused is crucial for conviction. As such, the filing of criminal cases for both does not
constitute double jeopardy. In illegal recruitment, profit is immaterial; on the other hand, a
conviction for estafa requires a clear showing that the offended party parted with his
money or property upon the offender’s false pretenses, and suffered damage thereby. The
two are then completely different and distinct crimes. [People v. Ochoa, G.R. No. 173792
(2011); People v. Ocden, G.R. No. 173198 (2011)]

Remedies (labor standards violations)

1. An employee who is unjustly dismissed from work shall be entitled to (a) Reinstatement
without loss of seniority rights, and other privileges, (b) Full backwages inclusive of
allowance, and (c) Other benefits or their monetary equivalent. (Art. 294 Labor Code)

2. Reinstatement means restoration to a state or condition from which one had been
removed or separated. The person reinstated assumes the position he had occupied prior
to his dismissal. [Asian Terminals, Inc. v. Villanueva, G.R. No. 143219 (2006)]

3. The general rule as remedy for illegal dismissal are Reinstatement and backwages.
Exceptions are payment of separation pay, Closure of business, Economic business
conditions, Employee’s unsuitability, Employee’s retirement/ overage, Antipathy and
antagonism, Job with a totally different nature, Long passage of time, Inimical to the
employer's interest, and When supervening facts have transpired which make execution
on that score unjust or inequitable or, to an increasing extent.

4. In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, pending appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation or, at the option
of the employer, merely reinstated in the payroll. The posting of a bond by the employer
shall not stay the execution for reinstatement provided herein. (Art. 229, Labor Code)

5. The doctrine of strained relations is where reinstatement is not feasible, expedient or

practical, as where reinstatement would only exacerbate the tension and strained relations
between the parties or where the relationship between the employer and employee has
been unduly strained by reason of their irreconcilable differences, particularly where the
illegally dismissed employee held a managerial or key position in the company, it would
be more prudent to order payment of separation pay instead of reinstatement. [Quijano v.
Mercury Drug Corp., G.R. No. 126561 (1998)]

6. Separation pay as a statutory requirement is computed by integrating the basic salary with
regular allowances employee has been receiving and allowances include transportation
 and emergency living allowances. [Planters Products, Inc. v. NLRC, G.R. No. 78524,
78739 (1989)]

7. If termination is due to Just Causes, there shall be no award of separation pay. If the
termination is due to Installation of labor-saving devices or redundancy, separation pay is
Equivalent to at least 1 month pay or 1 month pay for every year of service, whichever is
higher. If termination is due to Retrenchment to prevent losses or closure or cessations of
operations of establishments or undertaking not due to serious business losses or financial
reverses, separation pay is equivalent to at least 1 month pay or 1⁄2 month pay for every
year of service, whichever is higher. If termination is due to disease, separation pay is
equivalent to at least 1 month pay or 1⁄2 month pay for every year of service*, whichever
is higher. If termination is due to employee’s severance, there is no award of separation
pay. (Art 297, 298, 299 Labor Code)

8. Backwages are (a) Earnings lost by a worker due to his illegal dismissal; (b) A form of
relief that restores the income lost by reason of such unlawful dismissal; and (c) In the
nature of a command to the employer to make a public reparation for illegally dismissing
an employee. It is not private compensation or damages; Nor is it a redress of a private
right. [St. Theresa's School of Novaliches Foundation v. NLRC, G.R. No.122955 (1998)]