LABORLAW

Q&A
Oct. 24, 2020

Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In
the illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Article 4 of the
Labor Code, ruled in favor of Clarito upon finding Juan’s testimony doubtful. On
appeal, the NLRC reversed the Labor Arbiter holding that Article 4 applies only when
the doubt involves “implementation and interpretation” of the Labor Code provisions.
The NLRC explained that the doubt may not necessarily be resolved in favor of labor
since this case involves the application of the Rules on Evidence, not the Labor Code. Is
the NLRC correct? Reasons. (2009)

SUGGESTED ANSWER:

The NLRC is not correct. It is a well settled doctrine that if doubts exist between the
evidence presented by the employer and the employee, the scale of justice must be tilted
in favor of the latter. It is a time honored rule that in controversies between laborer and
master, doubts necessarily arising from the evidence, or in the implementation of the
agreement and writing should be resolved in favor of the laborer.

II

Amaya was employed as a staff nurse by St. Francis Hospital (SFH) on July 08 2014 on a
probationary status for six months. Her probationary contract required, among others,
strict compliance with SFH’s Code of Discipline.

On October 16, 2014, Dr. Ligaya, filed a complaint with the SFH Board of Trustees
against Amaya for uttering slanderous remarks against the former. Attached to the
complaint was a letter of Minda, mother of a patient, who confirmed the following
remarks against Dr. Ligaya:

“Bakit si Dr. Ligaya pa ang napili mong ‘pedia’ eh ang tanda tanda na n’un? E
makakalimutin na yun x x x Alam mob a, kahit wala naming diperensya yung baby,
ipinapa- isolate niya?”

The SFH President asks you, being the hospital’s counsel, which of these two (2) options
is the legal and proper way of terminating Amaya: (a) terminate her for a just cause
under Art. 228 of the Labor Code (termination by Employer); or (b) terminate her for
violating her probationary contract. Explain (2016 Bar)
SUGGESTED ANSWER:

I will advise the President of SFH to terminate Amaya for violating her probationary
contract. Part and parcel of the standards of her employment is to strictly follow the
Code of Conduct of SFH. The act of defaming Dr. Ligaya is certainly a misdemeanor
that is usually not acceptable in any work environment. With such attitude Amaya
displayed, she cannot pass the company standard of SFH.

I will not suggest the dismissal of Amaya under Art. 297. Though she displayed
misconduct, the same is not work-related, as spreading a rumor against a Doctor does
not go into the duties and responsibilities of a staff nurse.

ALTERNATIVE ANSWER: I will advise the President of SFH to terminate Amaya for a
just cause under Art. 297 of the Labor Code in relation Art. 296. The Labor Code assigns
a separate provision, Art. 296, and provides a different set of grounds for the dismissal
of probationary employees.

The law does not preclude the employer from terminating the probationary
employment, if the employer finds that the probationary employee is not qualified for
regular employment. As long as the termination was made for reasons provided under
Art. 296 of the Labor Code before the expiration of the six-month probationary period,
the employer is well within its rights to sever the employer- employee relationship
(Pasamba v. NLRC, G.R. No. 168421, June 8, 2007).

III

Company C, a toy manufacturer, decided to ban the use of cell phones in the factory
premises. In the pertinent Memorandum, management explained that too much texting
and phone-calling by employees disrupted company operations. Two employees-
members of Union X were terminated from employment due to violation of the
memorandum-policy. The union countered with a prohibitory injunction case (with
prayer for the issuance of a temporary restraining order) filed with the Regional Trial
Court, challenging the validity and constitutionality of the cell phone ban. The company
filed a motion to dismiss, arguing that the case should be referred to the grievance
machinery pursuant to an existing Collective Bargaining Agreement with Union X, and
eventually to Voluntary Arbitration. Is the company correct?

Explain. (2010 Bar)

SUGGESTED ANSWER:
Yes. Termination cases arising in or resulting from the interpretation and
implementation of collective bargaining agreements, and interpretation and
enforcement of company personnel policies which were initially processed at the
various steps of the plant-level Grievance Procedures under the parties collective
bargaining agreements, fall within the original and exclusive jurisdiction of the
voluntary arbitrator pursuant to Article 217 (c) and Article 261 of the Labor Code.

IV
Nayon Federation issued a charter certificate creating a rank-and-file Neuman
Employees Union. On the same day, New Neuman Employees Union filed a petition
for certification election with the Department of Labor and Employment (DOLE)
Regional Office, attaching the appropriate charter certificate.

(a) The employer, Neuman Corporation, filed a motion to dismiss the petition
for lack of legal personality on the part of the petitioner union. Should the
motion be granted?

SUGGESTED ANSWER:

(a) No. The motion should be denied. Under Article 240 of the Labor Code
(LC), a petition for certification election may be filed on the basis of a
valid charter certificate issued to a chartered local by a duly registered
federation.

(b)The employer likewise filed a petition for cancellation of union registration

against New Neuman Employees Union, alleging that Nayon Federation already
had a chartered local rank-and-file union, Neuman Employees Union, pertaining
to the same bargaining unit within the establishment. Should the petition for
cancellation prosper?

SUGGESTED ANSWER:

(b) No. The existence of another chartered local under the same federation
within the same bargaining unit is not among the grounds to cancel
union registration under Article 247 LC, as amended by RA 9481.

ALTERNATIVE ANSWER:
(b) Petition for cancellation of union registration filed by employer
Neuman Corporation may prosper. While the employer may file
a case as it is considered a party-in-interest in cancellation
proceedings (Del Castillo, Asian Institute of Management v Asian
Institute of Management Faculty Association, G.R. No. 207971,
 January 23, 2017), the union’s certification may be revoked or
cancelled if it appears that there are sufficient grounds for its
cancellation viz., fraud or misrepresentation in the election of
officers xxx; fraud or misrepresentation in the ratification of
constitution and by-laws.

Due to his employer's dire financial situation, Nicanor was prevailed upon by his
employer to voluntarily resign. In exchange, he demanded payment of salary
differentials, 13th month pay, and financial assistance, as promised by his employer.
Management promised to pay him as soon as it is able to pay off all retrenched rank-
and-file employees. Five years later, and before management was able to pay Nicanor
the amount promised to him, Nicanor died of a heart attack. His widow, Norie. filed a
money claim against the company before the National Labor Relations Commission
(NLRC), including interest on the amount of the unpaid claim. She also claimed
additional damages arguing that the supposed resignation letter was obtained from her
spouse through undue pressure and influence. The employer filed a motion to dismiss
on the ground that (A) the NLRC did not have jurisdiction over money claims, and (8)
the action has prescribed.

(a) Does the NLRC have jurisdiction to award money claims including
interest on the amount unpaid?

SUGGESTED ANSWER:

(a) The NLRC has jurisdiction over money claims arising from an
employer-employee relationship where the amount claimed is in excess
of PhP 5,000, including interest, regardless of whether or not there is a
claim for reinstatement. (Sec. 10, RA 8042, as amended by RA 10022.

(b) Assuming that the NLRC has jurisdiction, has the action prescribed?

SUGGESTED ANSWER:
(b) In Accessories Specialists, Inc. v. Alabama, (G.R. No. 168985, July 23, 2008),
the Supreme Court held that the principle of promissory estoppel can
apply as a recognized exception to the three-year prescriptive period under
Article 291 (now 306) of the Labor Code. Nicanor relied on the promise of
the employer that he would be paid as soon as the claims of retrenched
employees were paid. If not for this promise, there would have been no
reason why Nicanor would delay the filing of the complaint. Great
injustice would be committed if the employee’s claim were brushed aside
 on mere technicality, especially when it was the employer’s action that
prevented Nicanor from filing the claims within the required period.

ALTERNATIVE ANSWER:
(b) Yes, the action has unfortunately prescribed as there is only a three-year
prescriptive period for monetary claims under the Labor Code as
in the case of retirement benefits.

(c) May Nicanor's spouse successfully claim additional damages as a result of

the alleged undue pressure and influence?

SUGGESTED ANSWER:

(c) Norrie failed to establish that Nicanor’s consent was vitiated when he filed his
resignation letter. In BMG Record v. Aparecio, (G.R. No. 153290,
September 5, 2007), the SC ruled that the matter of “financial assistance”
was an act of generosity on the part of management. Under the
circumstances, Nicanor had the intention to resign. Once management
had accepted the resignation, Nicanor could not unilaterally withdraw
this voluntary act of termination of employment.

ALTERNATIVE ANSWER:

(c) No. In this case Nicanor voluntarily resigned. Burden of proof of the fact of
dismissal, and of the alleged undue pressure and influence, is upon
Nicanor’s wife as claimant. Absent such proof, the claim of damages
must fail (Del Castillo, Malixi v. Mexicali Philippines, G.R. No. 205061,
June 8, 2016).

VI

Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the
union of rank-and-file employees consisting, among others, of bartenders, waiters,
roomboys, housemen and stewards. During the lifetime of the CBA, Harbor View
Hotel, for reasons of economy and efficiency, decided to abolish the position of
housemen and stewards who do the cleaning of the hotel’s public areas. Over the
protest of the Union, the Hotel contracted out the aforementioned job to the City Service
Janitorial Company, a bona fide independent contractor which has a substantial capital
in the form of janitorial tools, equipment, machineries and competent manpower. Is the
action of the Harbor View Hotel legal and valid?(1994 Bar)

SUGGESTED ANSWER:
The action of Harbor View Hotel is legal and valid. The valid exercise of management
prerogative, discretion and judgment encompasses all aspects of employment,
including the hiring, work assignments, working methods, time, place and manner of
work, tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and the
discipline, dismissal and recall of workers, except as provided for, or limited by special
laws.

Company policies and regulations, unless shown to be grossly oppressive or contrary to

law, are generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiation or by
competent authority (San Miguel Corporation v. Reynaldo R. Ubaldo and Emmanuel
Noel A. Cruz, Chairman and Member respectively of the Voluntary Arbitration Panel,
et al,G.R. No. 92859, 1 February 1993).

VII

Discuss briefly the instances when noncompliance by the employer with a

reinstatement order of an illegally dismissed employee is allowed. (2007 Bar)

SUGGESTED ANSWER:

Despite a reinstatement order, an employer may not reinstate an employee in the

following instances: (a) when the position or any substantial equivalent thereof no
longer exists; (b) when reinstatement has been rendered moot and academic by
supervening events, such as insolvency of the employer as declared by the court or
closure of the business; (c) the existence of strained relations between the employer and
the illegally dismissed employee, provided the matter is raised before the Labor Arbiter.
In the event that reinstatement is no longer feasible, or if the employee chooses not to be
reinstated, the employer shall pay him separation pay in lieu of reinstatement pending
Appeal (Article 223, Labor Code).

VIII

Alfredo was dismissed by management for serious misconduct. He filed suit for illegal
dismissal, alleging that although there may be just cause, he was not afforded due
process by management prior to his termination. He demands reinstatement with full
backwages.

What are the twin-requirements of due process which the employer must observe in
terminating or dismissing an employee? Explain. (2009 Bar)

SUGGESTED ANSWER:
The twin requirements of due process are notice and hearing to be given to the worker.
There is likewise a two- notice requirement rule, with the first notice pertaining to
specific causes or grounds for termination and a directive to submit a written
explanation within a reasonable period. “The second notice pertains to notice of
termination. Pursuant to Perez v. Philippine Telegraph and Telephone Company (G.R.
No. 152048, 7 April 2009), the Court held that a hearing or conference is not mandatory,
as long as the employee is given “ample opportunity to be heard”, i.e. any meaningful
opportunity (verbal or written) to answer the charges against him or her and submit
evidence in support of the defense, whether in a hearing, conference, or some other fair,
just and equitable way

IX

The rank-and-file union staged a strike in the company premises which caused the
disruption of business operations. The supervisors union of the same company filed a
money claim for unpaid salaries for the duration of the strike, arguing that the
supervisors' failure to report for work was not attributable to them. The company
contended that it was equally faultless, for the strike was not the direct consequence of
any lockout or unfair labor practice. May the company be held liable for the salaries of
the supervisor? Decide (2008 Bar)

SUGGESTED ANSWER:

No, I will apply the “No work, No pay” principle. The supervisors are not entitled to
their money claim for unpaid salaries, as they should not be compensated for services
skipped during the strike of the rank-and-file union. The age-old rule governing the
relation between labor and capital, or management and employee of a “fair day’s wage
for a fair day’s labor” remains as the basic factor in determining employees’ wages
(Aklan Electric Cooperative, Inc. v. NLRC, G.R. No.121439, January 25, 2000).

As a tireman in a gasoline station, open twenty four (24) hours a day with only five (5)
employees, Goma worked from 10:00 P.M. until 7:00 A.M. of the following day. He
claims he is entitled to night shift differential. Is he correct? Explain briefly. (2002 Bar)

SUGGESTED ANSWER:

Yes. Under Art. 86 of the Labor Code, night shift differential shall be paid to every
employee for work performed between 10:00 o’clock in the evening to six o’clock in the
morning. Therefore, Goma is entitled to night shift differential for work performed from
10:00 pm until 6:00 am of the day following, but not from 6:00 am to 7:00 am of the same
day.

ALTERNATIVE ANSWER:

No. The Omnibus Rules Implementing the Labor Code (In Book III, Rule II dealing with
night shift differential) provides that its provisions on night shift differential shall NOT
apply to employees of “retail and service establishments regularly employing not more
than five (5) workers”. Because of this provision, Goma is not entitled to night shift
differential because the gasoline station where he works has only five employees.

XI

The Ang Sarap Kainan Workers Union appointed Juan Javier, a law student, as
bargaining representative. Mr. Javier is neither an employee of Ang Sarap Kainan
Company nor a member of the union. Is the appointment of Mr. Javier as a bargaining
representative in accord with law? Explain. (2000 Bar)

SUGGESTED ANSWER:

Yes, the law does not require that the bargaining representative be an employee of the
company nor an officer or member of the union (Art 212 (j), Labor Code).

XII
Upon compliance with the legal requirements on the conduct of a strike, Navarra
Union staged a strike against Newfound Corporation on account of a collective
bargaining deadlock. During the strike, some members of Navarra Union broke the
windows and punctured the tires of the company-owned buses. The Secretary of Labor
and Employment assumed jurisdiction over the dispute.

(a) Should all striking employees be admitted back to work upon the
assumption of jurisdiction by the Secretary of Labor and Employment?
Will these include striking employees who damaged company properties?

SUGGESTED ANSWER:

(a) Yes. Under Article 278(g) of the Labor Code, all striking employees shall
immediately return to work and the employer shall immediately resume
operations and re-admit all workers under the same terms and
conditions prevailing before the strike or lockout.
 Regarding the striking union members who damaged company
property, the employer should still reinstate them, but after their
reinstatement, the employer may institute the appropriate disciplinary
proceedings, or raise the matter on the illegality of the strike on the
ground of violence and illegal acts committed during the strike before
the Secretary of Labor and Employment assumed jurisdiction.

ALTERNATIVE ANSWER:
(a) Yes, all striking employees should be admitted to work upon
assumption of jurisdiction by the Secretary of DOLE. The mere
issuance of an assumption order by the Secretary automatically carries
with it a return-to-work order, even if the directive to return to work is
not expressly stated in the assumption order (Telefunken Semiconductors
Employees Union-FFW v Court of Appeals, 348 SCRA 565 [2000]).

(b) May the company readmit strikers only by restoring them to the payroll?

SUGGESTED ANSWER:

(b) As a general rule the answer is no, as actual reinstatement is envisioned

by Article 278(g) of the Labor Code. The purpose of the law is to bring
back the workers to their original work under the same terms and
conditions prevailing before the strike.

ALTERNATIVE ANSWER:

(b) Yes, payroll reinstatement is acceptable, if there are compelling reasons

like in the Nuwhrain Dusit Hotel case (G.R. No. 163942, November 11, 2008)
where the employees were not physically reinstatement for they shaved
their heads bald, or in the UST v. NLRC case (G.R. No. 89920, October 18,
1990) where reinstatement was not possible because it was already the
middle of the semester.
XIII

Martillo and other similarly-situated project workers demanded that the increases be
extended to them, inasmuch as they should now be considered regular employees and
members of the bargaining unit. If you were ABC's legal counsel, how would you
respond to this demand? (2005 Bar)

SUGGESTED ANSWER:

As legal counsel for ABC, I would argue that the employment of Martillo was fixed for
a specific project or undertaking, the completion or termination of which has been
determined at the time of his engagement. Rendering 14 months of work does not make
him a regular employee, when to begin with, he was employed for a specific project,
i.e., which is the construction of a particular 40-storey building. The rule on more than 1
year of service making the employment regular applies only to casual employees,
hence, Mariano does not belong to the bargaining unit of regular employees.

XIV

Lanz was a strict and unpopular Vice- President for Sales of Lobinsons Land. One day,
Lanz shouted invectives against Lee, a poor performing sales associate, calling him,
among others, a “brown monkey.” Hurt, Lee decided to file a criminal complaint for
grave defamation against Lanz. The prosecutor found probable cause and filed an
information in court. Lobinsons decided to terminate Lanz for committing a potential
crime and other illegal acts prejudicial to business. Can Lanz be legally terminated by
the company on these grounds? (2014 Bar)

SUGGESTED ANSWER:

No. The grounds relied upon by Lobinsons are not just causes for dismissal under the
Labor Code. Defamation is not a crime against person which is a ground to dismiss
under Article 282, now Article 295, (d) of the Labor Code.

XV

Nathaniel has been a salesman assigned by Newmark Enterprises (Newmark) for

nearly two years at the Manila office of Nutrition City, Inc. (Nutrition City). He was
deployed pursuant to a service agreement between Newmark and Nutrition City, the
salient provisions of which were as follows:

(a) the Contractor (Newmark) agrees to perform and provide the Client
(Nutrition City), on a non-exclusive basis, such tasks or activities that are
considered contractible under existing laws, as may be needed by the
Client from time to time;

(b) the Contractor shall employ the necessary personnel like helpers,
salesmen, and drivers who are determined by the Contractor to be
efficiently trained;

(c) the Client may request replacement of the Contractor's personnel if

quality of the desired result is not achieved;

(d) the Contractor's personnel will comply with the Client's policies, rules,
and regulations; and
 (e) the Contractor's two service vehicles and necessary equipment will be
utilized in carrying out the provisions of this Agreement.

When Newmark fired Nathaniel, he filed an illegal dismissal case against the
wealthier company, Nutrition City, Inc., alleging that he was a regular employee of the
same. Is Nathaniel correct?

SUGGESTED ANSWER:
Yes, Nathaniel is correct. Similar to the case of Coca-Cola Bottlers Philippines, Inc. v.
Agito, (G.R. No. 179546, February 13, 2009), the lack of control by the Contractor
(Newmark) over the worker Nathaniel can be gleaned from the Service Agreement. It is
apparent that Newmark has to comply with Nutrition City’s regulations, and that
Nutrition City has the right to request the replacement of Newmark’s personnel. It is
likewise apparent that the Agreement did not identify the work needed to be performed
and the final result to be accomplished, pointing to the conclusion that Newmark did
not obligate itself to perform an identifiable job, work, or service. Nathaniel, thus,
was under the control of Nutrition City.

With respect to the service vehicles and equipment, these may not be considered as
substantial capital on the part of Newmark, as the facts do not establish their sufficiency
to carry out the Agreement. The presence of Newmark’s vehicles and equipment did
not necessarily preclude the use of Nutrition City’s own capital and assets.

ALTERNATIVE ANSWER:

Nathaniel’s contention is not correct. He is not a regular employee of Nutrition but

rather of Newmark Enterprises. Assuming that Newmark has a DO 174 certification,
this is a valid job contracting arrangement especially so that the Newmark has
sufficient capitalization in the form of tools, equipment, machineries xxx and that
Nutrition has no control over the manner and means by which Newmark and its
employees are to do the work.

XVI

Your favorite relative, Tita Nilda, approaches you and seeks your advice on her
treatment of her kasambahay, Noray. Tita Nilda shows you a document called a
"Contract of Engagement" for your review. Under the Contract of Engagement, Noray
shall be entitled to a rest day every week, provided that she may be requested to work
on a rest day if Tita Nilda should need her services that day. Tita Nilda also claims that
this Contract of Engagement should embody all terms and conditions of Noray's work
as the engagement of a kasambahay is a private matter and should not be regulated by
the State.

(a) Is Tita Nilda correct in saying that this is a private matter and should not
 be regulated by the State?

SUGGESTED ANSWER:

(a) Tita Nilda is incorrect. The relationship between Tita Nilda and Noray
is an employer-employee arrangement that is

regulated by the police power of the State. Through the Batas Kasambahay
(R.A. 10361), the State recognizes this employment relationship and
establishes minimum labor standards for domestic workers, toward decent
employment and income, enhanced coverage of social protection and
respect for human rights, and strengthened social dialogue. Also, since
domestic workers are generally working women in vulnerable working
conditions, the State regulates domestic worker employment to prevent
abuse and exploitation and uphold the gender rights of domestic workers.

(b) Is the stipulation that she may be requested to work on a rest day legal?

SUGGESTED ANSWER:

(b) Yes. Such a stipulation is legal as it states that Noray may only
be “requested” to work on a rest day, thereby recognizing that
the consent of Noray is needed in order to waive her right to a
weekly rest day. Section 21 of the Kasambahay Law allows both
the employer and domestic worker to agree on certain
arrangements to offset, waive, or accumulate rest days, subject to
payment of appropriate wages and benefits.

(c) Are stay-in family drivers included under the Kasambahay Law?

SUGGESTED ANSWER:

(c)No. Family drivers are not included under the Kasambahay Law. A “Kasambahay”
refers to any person engaged in domestic work within an employment
relationship such as, but not limited to, the following: general
househelp, nursemaid or “yaya”, cook, gardener, or laundry person, but
shall exclude any person who performs domestic work only
occasionally or sporadically and not on an occupational basis.

ALTERNATIVE ANSWER:
(c)The Republic Act No. 10361 does not exclude family drivers from the
coverage of the Kasambahay law. It is only in the Implementing Rules
that the family drivers were excluded. Note that the Labor Code
 explicitly includes “family drivers and other persons in the personal
service of another in the coverage of the Labor Code, and hence, it is
believed that the family drivers should fall within the ambit of the
Kasambahay Law. The exclusion of driver in the Implementing Rules
is without basis.

Domestic helper or househelper or domestic servant shall refer to any

person, whether male or female, who renders services in and about the
employer’s home and which services are usually necessary or desirable
for the maintenance and enjoyment thereof, and ministers exclusively
to the personal comfort and enjoyment of the employers’ family. Such
definition covers family drivers, domestic servants, laundry women,
yayas, gardeners, houseboys and other similar househelps (Apex Mining
Company, Inc. v. NLRC, 196 SCRA 251 [1991]).

XVII

Nicodemus asserted that wearing shorts and sneakers made him more productive, and
cited his above-average output. When he came to work still in violation of the uniform
policy, the company sent him a letter of termination of employment. Nicodemus filed
an illegal dismissal case. The Labor Arbiter ruled in favor of Nicodemus and ordered
his reinstatement with backwages. Network Corporation, however, refused to reinstate
him. The NLRC 1st Division sustained the Labor Arbiter's judgment. Network
Corporation still refused to reinstate Nicodemus. Eventually, the Court of Appeals
reversed the decision of the NLRC and ruled that the dismissal was valid. Despite the
reversal, Nicodemus still filed a motion forexecution with respect to his accrued
backwages.

(a) Were there valid legal grounds to dismiss Nicodemus from his
employment?

SUGGESTED ANSWER:

(a) Yes. Nicodemus clearly committed willful disobedience of lawful

orders issued by the Network Corporation, with respect to the uniform
policy. This is a ground for termination under Article 288(a) of the
Labor Code.

ALTERNATIVE ANSWER:
(a) The “dismissal too harsh” doctrine may be invoked which means the
illegal dismissal case filed by Nicodemus may prosper. It may be
argued that the “uniform policy” need not warrant dismissal as penalty
for violation, as it may have no direct bearing on company operations.
 This is in the context of Nicodemus’ above-average performance as an
employee.

(b) Should Nicodemus' motion for execution be granted?

SUGGESTED ANSWER:

(b) Yes. In Garcia v. Philippine Airlines, Inc.,( G.R. No. 164856, January 20,
2009), the employer who did not reinstate an employee pending appeal
may be held liable for wages of the dismissed employee covering the
period from the time he was ordered reinstated by the Labor Arbiter to
the reversal of the NLRC’s decision by the Court of Appeals.

XVIII

Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent

for its existence on contributions and donations from well wishers. She renders work
eleven (11) hours a day but has not been given overtime pay since her place of work is a
charitable institution. Is Socorro entitled to overtime pay? Explain briefly. (2002 Bar)

SUGGESTED ANSWER:

Yes. Socorro is entitled to overtime compensation. She does not fall under any of the
exceptions to the coverage of Article 82 (Hours of Work). The Labor Code is equally
applicable to non-profit institutions. A covered employee who works beyond eight (8)
hours is entitled to overtime compensation.

XIX

Gabriela Liwanag has been working as a bookkeeper at Great Foods, Inc. which
operates a chain of high-end restaurants throughout the country, since 1970 when it was
still a small eatery at Binondo. In the early part of the year 2003, Gabriela, who was
already 50 years old, reported for work after a week-long vacation in her province. It
was the height of the SARS (Severe Acute Respiratory Syndrome) scare, and
management learned that the first confirmed SARS death case in the Philippines, a
“balikbayan” nurse from Canada, is a townmate of Gabriela. Immediately, a
memorandum was issued by management terminating the services of Gabriela on the
ground that she is a probable carrier of SARS virus and that her continued employment
is prejudicial to the health of her co-employees. Is the action taken by the employer
justified? (2004 Bar)

SUGGESTED ANSWER:

The employer’s act of terminating the employment of Gabriela is not justified. There is
no showing that said employee is sick with SARS, or that she associated or had contact
with the deceased nurse. They are merely townmates. Furthermore, there is no
certification by a competent authority that the disease is of such a nature or such a stage
that it cannot be cured within a period of six months even with proper medical
treatment (Implementing Rules, Book VI, Rule 1, Sec. 8, Labor Code).

XX

Arnaldo, President of “Bisig” Union in Femwear Company, readied himself to leave

exactly at 5:00 p.m. which was the end of his normal shift to be able to send off his wife
who was scheduled to leave for overseas. However, the General Manager required him
to render overtime work to meet the company's export quota. Arnaldo begged off,
explaining to the General Manager that he had to see off his wife who was leaving to
work abroad. The company dismissed Arnaldo for insubordination. He filed a case for
illegal dismissal. Decide. (2008 Bar)

SUGGESTED ANSWER:

Arnaldo cannot be dismissed for insubordination. This is so because one of the

requisites for insubordination is absent. It cannot be said that Arnaldo’s conduct was
characterized by a “wrongful and perverse attitude.” Arnaldo can be said to have been
motivated by his honest belief that the order was unreasonable because he had to send
off his wife who was scheduled to leave for overseas.
 LABORLAW
Q&A
Oct. 25, 2020

Jose and Erica, former sweethearts, both worked as sales representatives for Magna, a
multinational firm engaged in the manufacture and sale of pharmaceutical products.
Although the couple had already broken off their relationship, Jose continued to have
special feelings for Erica.

One afternoon, Jose chanced upon Erica riding in the car of Paolo, a co-employee and
Erica's ardent suitor; the two were on their way back to the office from a sales call on
Silver Drug, a major drug retailer. In a fit of extreme jealousy, Jose rammed Paolo's car,
causing severe injuries to Paolo and Erica. Jose's flare up also caused heavy damage to
the two company-owned cars they were driving.

a. ) As lawyer for Magna, advise the company on whether just and valid grounds exist
to dismiss Jose.

SUGGESTED ANSWER:

Jose can be dismissed for serious misconduct, violation of company rules and
regulations, and commission of a crime against the employer’s representatives. Article
282 of the Labor Code provides that an employer may terminate an employment for any
serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or his representatives in connection with his work.

Misconduct involves “the transgression of some established and definite rule of action,
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error in judgment.” For misconduct to be serious and therefore a valid
ground for dismissal, it must be:

1. Of grave and aggravated character and not merely trivial or unimportant and;
2. Connected with the work of the employee
b.) Assuming this time that Magna dismissed Jose from employment for cause and you
are the lawyer of Jose, how would you argue the position that Jose's dismissal was
illegal? (2013 Bar)

SUGGESTED ANSWER:

The offense committed by Jose did not relate to the performance of his duties. For
misconduct or improper behavior to be a just cause for dismissal, it (a) must be serious;
(b) must relate to the performance of the employee’s duties; and (c) must show that the
employee has become unfit to continue working for the employer.

On the basis of the forgoing guidelines, it can be concluded that Jose was not guilty of
serious misconduct; Jose was not performing official work at the time of the incident
(Lagrosas v. Bristol Myers Squibb, G.R. No. 168637/170684 [2008]).

Additionally, there was no compliance with the rudimentary requirements of due

process.

II

Samahang East Gate Enterprises (SEGE) is a labor organization composed of the rank-
and-file employees of East Gate Enterprises (EGE), the leading manufacturer of all types
of gloves and aprons. EGE was later requested by SEGE to bargain collectively for
better terms and conditions of employment of all the rank- and-file employees of EGE.
Consequently, EGE filed a petition for certification election before the Bureau of Labor
Relations (BLR).

During the proceedings, EGE insisted that it should participate in the certification
process. EGE reasoned that since it was the one who filed the petition and considering
that the employees concerned were its own rank-and-file employees, it should be
allowed to take an active part in the certification process. Is the contention of EGE
proper? Explain. (2014 Bar)

SUGGESTED ANSWER:

No. Under Article 258-A of the Labor Code, an employer is a mere bystander in
certification elections, whether the petition for certification election is filed by said
employer or a legitimate labor organization. The employer shall not be considered a
party thereto with a concomitant right to oppose a petition for certification election.

III

The Collective Bargaining Agreement (CBA) between Libra Films and its union, Libra
Films Employees' Union (LFEU), contains the following standard clauses:
1. Maintenance of membership;
2. Check off for union dues and agency fees; and
3. No strike, no lock-out.

While Libra Films and LFEU are in re- negotiations for an extension of the CBA, LFEU
discovers that some of its members have resigned from the union, citing their
constitutional right to organize (which includes the right NOT to organize). LFEU
demands that Libra Films institute administrative proceedings to terminate those union
members who resigned in violation of the CBA's maintenance of membership clause.
Libra Films refuses, citing its obligation to remain a neutral party. As a result, LFEU
declares a strike and after filing a notice of strike and taking a strike vote, goes on strike.
The union claims that Libra Films grossly violated the terms of the CBA and engaged in
unfair labor practice. Are LFEU's claims correct? Explain. (2015 Bar)

SUGGESTED ANSWER:

LFEU’s claim that Libra Films committed ULP based on its violation of the CBA is not
correct. For violation of a CBA to constitute ULP, the violation must be violation of its
economic provisions. Moreover, said violation must be gross and flagrant. Based on the
allegation of the union, what was violated was the maintenance of membership clause
which was a political or representational provision; hence, no ULP was committed (BPI
Employees Union-Davao City v. BPI, 702 SCRA 42).

IV

A division manager of a company taunted a union officer two days after the union
submitted to the Department of Labor and Employment (DOLE) the result of the strike
vote. The division manager said: “Your union threat of an unfair labor practice strike is
phony or a bluff. Not even ten percent (10%) of your members will join the strike.’' To
prove union member support for the strike, the union officer immediately instructed its
members to cease working and walk out. Two hours after the walkout, the workers
voluntarily returned to work.

a.) Was the walkout a strike? And if so, was it a valid activity?

SUGGESTED ANSWER:

Yes, it was a strike because there was a work stoppage by concerted action and there is
an existing labor dispute. It was not a valid activity because the requisites for a valid
strike were not observed [Art. 212, (o), (i) Labor Code].

b) Can the union officer who led the short walk-out, but who likewise voluntarily
led the workers back to work, be disciplined by the employer? (2000 Bar)
SUGGESTED ANSWER:

Yes, the employer may discipline the union officer. An Illegal strike is a cause for the
union officer to be declared to have lost his employment status [Art. 263 (c), (d),( e)-(j);
Art. 264 (a), Labor Code].

Is a corporation, seventy percent (70%) of the authorized and voting capital of which is
owned and controlled by Filipino citizens, allowed to engage in the recruitment and
placement of workers, locally or overseas? Explain briefly. (2002 Bar)

SUGGESTED ANSWER:

No. A corporation, seventy percent (70%) of the authorized and voting capital stock of
which is owned and controlled by Filipino citizens cannot be permitted to participate in
the recruitment and placement of workers, locally or overseas, because Art 27 of the
Labor Code requires at least seventy-five percent (75%).

VI

Can the Bureau of Labor Relations certify a union as the exclusive bargaining
representative after showing proof of majority representation thru union membership
cards without conducting an election? (1998 Bar)

SUGGESTED ANSWER:

The Bureau of Labor Relations cannot certify a union as the exclusive collective
bargaining representative after showing of proof of majority representation thru union
membership cards without conducting a certification election. The Labor Code (in Arts.
256, 257 and 258) provides only for a certification election as the mode for determining
the exclusive collective bargaining representative if there is a question of representation
in an appropriate bargaining unit.

VII

Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In
the illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Article 4 of the
Labor Code, ruled in favor of Clarito upon finding Juan’s testimony doubtful. On
appeal, the NLRC reversed the Labor Arbiter holding that Article 4 applies only when
the doubt involves “implementation and interpretation” of the Labor Code provisions.
The NLRC explained that the doubt may not necessarily be resolved in favor of labor
since this case involves the application of the Rules on Evidence, not the Labor Code. Is
the NLRC correct? Reasons. (2009)

SUGGESTED ANSWER:

The NLRC is not correct. It is a well settled doctrine that if doubts exist between the
evidence presented by the employer and the employee, the scale of justice must be tilted
in favor of the latter. It is a time honored rule that in controversies between laborer and
master, doubts necessarily arising from the evidence, or in the implementation of the
agreement and writing should be resolved in favor of the laborer.

VIII

Under what conditions may a "compressed work week" schedule be legally authorized
as an exception to the "eight-hour a day" requirement under the Labor Code? (2005 Bar)

SUGGESTED ANSWER:

“Compressed work week" is resorted to by the employer to prevent serious losses due
to causes beyond his control, such as when there is a substantial slump in the demand
for his goods or services or when there is lack of raw materials (Explanatory Bulletin on
the Reduction of Workdays on Wages Issued by DOLE, July 23, 1985). The conditions
for an allowable "compressed work week" are the following: the workers agree to the
temporary change of work schedule and they do not suffer any loss of overtime pay,
fringe benefits or their weekly or monthly take-home pay (DOLE Explanatory Bulletin
on the Reduction of Workdays on Wages issued on July 23, 1985).

IX

Natasha Shoe Company adopted an organizational streamlining program that

resulted in the retrenchment of 550 employees in its main plant. After having been paid
their separation benefits, the retrenched workers demanded payment of retirement
benefits under a CBA between their union and management. Natasha Shoe Company
denied the workers' demand.

(a) What is the most procedurally peaceful means to resolve this dispute?

SUGGESTED ANSWER:
The parties may resolve this through plant-level mechanisms such as a labor-
management committee or a grievance machinery under a collective bargaining
agreement.
 (b) Can the workers claim both separation pay and retirement benefits?

SUGGESTED ANSWER:

In Santos v. Senior Philippines, (G.R. No. 166377, November 28, 2008), the Supreme
Court held that retirement benefits and separation pay are not mutually exclusive,
and both benefits may be paid in the absence of a contrary stipulation in the
retirement plan and/or in the CBA.

ALTERNATIVE ANSWER:
Yes. In the absence of any express or implied prohibition against it, collection of both
retirement benefits and separation pay upon severance from employment is allowed.
This is grounded on the social justice policy that doubts should always be resolved
in favor of labor (Goodyear Philippines, Inc. v. Angus, G.R. No. 185449, November 12,
2014).

Sgt. Nemesis was a detachment non-commissioned officer of the Armed Forces

of the Philippines in Nueva Ecija. He and some other members of his detachment
sought permission from their Company Commander for an overnight pass to Nueva
Vizcaya to settle some important matters. The Company Commander orally approved
their request and allowed them to carry their firearms as the place they were going to
was classified as a "critical place." They arrived at the place past midnight; and as they
were alighting from a tricycle, one of his companions accidentally dropped his rifle,
which fired a single shot, and in the process hit Sgt. Nemesis fatally. The shooting was
purely accidental. At the time of his death, he was still legally married to Nelda, but
had been separated de facto from her for 17 years. For the last 15 years of his life, he was
living in with Narda, with whom he has two minor children. Since Narda works as a
kasambahay, the two children lived with their grandparents, who provided their daily
support. Sgt. Nemesis and Narda only sent money to them every year to pay for their
school tuition.

Nelda and Narda, both for themselves and the latter, also on behalf of her minor
children, separately filed claims for compensation as a result of the death of Sgt.
Nemesis. The line of Duty Board of the AFP declared Sgt. Nemesis' death to have been
"in line of duty", and recommended that all benefits due to Sgt. Nemesis be given to his
dependents. However, the claims were denied by GSIS because Sgt. Nemesis was not in
his workplace nor performing his duty as a soldier of the Philippine Army when he
died.

(a) Are the dependents of Sgt. Nemesis entitled to compensation as a result of

his death?
SUGGESTED ANSWER:
The death of Sgt. Nemesis arose out of and in the course of his employment as a
soldier on active duty in the AFP and hence, compensable. The concept of a
“workplace” cannot always be literally applied to a soldier on active duty. Sgt.
Nemesis had permission to go to Nueva Vizcaya and he and his companions had
permit to carry their firearms which they could use to defend themselves when
attacked. A soldier on active duty is really on duty 24 hours a day since he can be
called upon anytime by his superiors, except when he is on vacation leave status,
which Sgt. Nemesis was not, at the time of his death (Hinoguin v. ECC, G.R. No. 8430,
April 17, 1989).

(b) As between Nelda and Narda, who should be entitled to the benefits?

SUGGESTED ANSWER:
To be considered as a beneficiary, the spouse must be the legal spouse and living
with the employee at the time of his death. Nelda, as the surviving spouse who has
been separated de facto from the deceased employee, may still however be entitled if
the separation was due to the covered employee’s abandonment of the spouse
without valid reason, or for other justifiable reasons. Narda, not being a legitimate
spouse, is not entitled to the benefits; however, the ECC may act as referee and
arbitrator between two (2) claimants to help each other reach a mutually acceptable
compromise settlement of allocating the compensation among themselves and their
dependent children (Samar Mining Co. Inc. v. WCC, G.R. No. L-29938-39, March 31,
1971).

(c) Are the minor children entitled to the benefits considering that they were
not fully dependent on Sgt. Nemesis for support?

SUGGESTED ANSWER:
Being a dependent does not mean absolute dependency for the necessities of life, but
rather, that the claimant looked up to and relied on the contribution of the covered
employee for his
means of living as determined by his position in life. One need not be in the
deceased’s household in order to be a dependent. (Malate Taxicab v. Del Villar G.R.
No. L-7489, Feb. 29, 1956).

XI

The day following the workers' voluntary return to work, the Company Production
Manager discovered an unusual and sharp drop in workers' output. It was evidently
clear that the workers are engaged in a work slowdown activity. Is the work slowdown
a valid form of strike activity? (1998 Bar)

SUGGESTED ANSWER:

A work slowdown is not a valid form of strike activity. If workers are to strike, there
should be temporary stoppage of work by the concerted action of employees as a result
of an industrial or labor dispute (See Article 212(o) of the Labor Code).

XII

Philippine News Network (PNN) engages the services of Anya, a prominent news
anchor from a rival station, National News Network (NNN). NNN objects to the
transfer of Anya claiming that she is barred from working in a competing company for
a period of three years from the expiration of her contract. Anya proceeds to sign with
PNN which then asks her to anchor their nightly newscast. NNN sues Anya and PNN
before the National Labor Relations Commission (NLRC), asking for a labor injunction.
Anya and PNN object claiming that it is a matter cognizable by a regular court and not
the NLRC.

a. Is NNN's remedy correct? Why or why not?

SUGGESTED ANSWER:

The NLRC has no jurisdiction. As to PNN, there is no employer-employee relationship

between itself and NNN; hence, the NLRC cannot hear and resolve their dispute
(Reasonable Causal Connection Rule). As to Anya, the injunctive power of the NLRC is
ancillary in nature; hence, it requires a principal case, which is absent. Besides, the
dispute between her and PNN is not resolvable solely through the application of Labor
Code, other labor statutes, CBA or employment contract (Reference to Labor Law Rule).

b. What are the grounds for a labor injunction to issue?

SUGGESTED ANSWER:

The NLRC may issue an injunctive writ to enjoin an illegal activity under Art. 264 (old)
of the Labor Code; as an ancillary remedy to avoid irreparable injury to the rights of a
party in an ordinary labor dispute pursuant to Rule X, 2011 NLRC Rules of Procedure,
as amended; and to correct the Labor Arbiter’s grave abuse of discretion pursuant to
Rule XII of the 2011 NLRC Rules of Procedure, as amended. Moreover, for labor
injunction to issue, it must be proven under Art. 218(e) Labor Code:
 1. That the prohibited or unlawful acts have been threatened and will be committed
and will be continued unless restrained;
2. That substantial and irreparable injury to the complainant’s property will follow;
3. That greater injury will be inflicted upon

complainant by the denial of relief than will be inflicted upon defendants by the
granting of relief;

4. That complainant has no adequate remedy at law; and

5. That public officers charged with the duty to protect complainant’s property are
unable or unwilling to furnish adequate protection

XIII

Johnny is the duly elected President and principal union organizer of the Nagkakaisang
Manggagawa ng Manila Restaurant (NMMR), a legitimate labor organization. He was
unceremoniously dismissed by management for spending virtually 95% of his working
hours in union activities. On the same day Johnny received the notice of termination,
the labor union went on strike. Management filed an action to declare the strike illegal,
contending that:

a. The union did not observe the “cooling-off period” mandated by the Labor Code; and

b. The union went on strike without complying with the strike-vote requirement under
the Labor Code. (2009 Bar)

Rule on the foregoing contentions with reasons.

SUGGESTED ANSWER:

a. Yes. The conduct of a strike action without observing the cooling-off period is a
violation of one of the requirements of law which must be observed. The cooling- off
periods required by Articles 263 (c) and 263 (f) of the Labor Code are to enable the
DOLE to exert efforts to amicably settle the controversy, and for the parties to review
and reconsider their respective positions during the cooling- off periods. But the Labor
Code also provides that if the dismissal constitutes union busting, the union may strike
immediately.

b. Yes. The conduct of the strike action without a strike vote violates Art. 263 (f) - In
every case, the union or the employer shall furnish the [DOLE] the results of the voting
at least seven days before the intended strike...” to enable the DOLE and the parties to
exert the last effort to settle the dispute without strike action.
 XIV

The projected bonus for the employees of Suerte Co. was 50% of their monthly
compensation. Unfortunately, due to the slump in the business, the president reduced
the bonus to 5% of their compensation. Can the company unilaterally reduce the
amount of bonus? Explain briefly. (2002 Bar)

SUGGESTED ANSWER:

Yes. The granting of a bonus is a management prerogative, something given in addition

to what is ordinarily received by or strictly due the recipient. An employer, like Suerte
Co., cannot be forced to distribute bonuses when it can no longer afford to pay. To hold
otherwise would be to penalize the employer for his past generosity [Producers Bank of
the Phil. V. NLRC, 355 SCRA 489, (2001)].

XV

“A”, an employee of Company “B” was found to have been illegally dismissed and was
ordered to be reinstated and paid backwages from the time of dismissal until actual
reinstatement. The case was elevated all the way to the Supreme Court. By the time the
Supreme Court’s decision became final and executory, B had closed down and was in
the process of winding up. Nonetheless, B paid A his backwages and separation pay. A
complained that B’s computation was erroneous in that A’s allowances was not
included. Is A correct in his claim? For what reasons? (2001 Bar)

SUGGESTED ANSWER:

A is correct. Article 279 provides that an employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement. Clearly, based from the foregoing
provision, A is entitled to his allowances.

XVI

Distinguish between the substantive and the procedural requirements for the dismissal
of an employee (1994 Bar)

SUGGESTED ANSWER:
This is the substantive requirement for the valid dismissal of an employee: There should
be a just cause for the termination of an employee or that the termination is authorized
by law.

This is the procedural requirement: The employer should furnish the employee whose
employment is sought to be terminated a written notice containing a statement of the
causes for termination and the employer should afford the employee to be terminated
ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires (Arts. 279 and 277 (b). Labor Code).

XVII

Determine whether the following minors should be prohibited from being hired and
from performing their respective duties indicated hereunder: (2006 Bar)

a. A 17-year old boy working as a miner at the Walwaldi Mining Corporation.

SUGGESTED ANSWER:

Yes, he should be prohibited from being hired and from performing the duties of a
miner because such constitutes hazardous work under D.O. No. 04 Series of 1999. Art.
139 (c) of the Labor Code expressly prohibits the employment of persons below 18 years
of age in an undertaking which is hazardous or deleterious in nature as determined by
the Secretary of Labor .

b. An 11-year old boy who is an accomplished singer and performer in different

parts of the country.

SUGGESTED ANSWER:

No, he should not be prohibited from being hired and from performing as a singer.
Under Art. VIII Sec. 12 par. 2 of RA 7610 as amended by RA 7658, this constitutes an
exception to the general prohibition against the employment of children below 15
years of age, provided that the following requirements are strictly complied with: (a)
the employer shall ensure the protection, health, safety and morals of the child; (b)
the employer shall institute measures to prevent the child’s exploitation or
discrimination taking into account the system and level of remuneration, and the
duration and arrangement of working time; and (c) the employer shall formulate
and implement, subject to the approval and supervision of competent authorities, a
continuing program for training and skill acquisition of the child. Moreover, the
child must be directly under the sole responsibility of his parents or guardian and
his employment should not in any way interfere with his schooling.

c. A 15-year old girl working as a library assistant in a girls’ high school.

SUGGESTED ANSWER:

No, she should not be prohibited from working as a library assistant because the
prohibition in the Labor Code against employment of persons below 18 years of age
merely pertains to employment in an undertaking which is hazardous or deleterious in
nature as identified in the guidelines issued by the DOLE Secretary. Working as a
library assistant is not one of undertakings identified to be hazardous under D.O. No.
04 Series of 1999.

d. A 16-year old girl working as model promoting alcoholic beverages.

SUGGESTED ANSWER:

Yes, she should be prohibited from working as a model promoting alcoholic beverages.
RA 7610 categorically prohibits the employment of child models in all commercials or
advertisements promoting alcoholic beverages and intoxicating drinks, among other
things.

e. A 17 -year old boy working as dealer in a casino

SUGGESTED ANSWER:

Yes, he should be prohibited from working as a dealer in a casino, because Art. 140 of
the Labor Code prohibits the employment of persons below 18 years of age in an
undertaking which is hazardous or deleterious in nature as identified in the guidelines
issued by the DOLE Secretary. Working as a dealer in a casino is classified as hazardous
under D.O. No. 04 Series of 1999 as it exposes children to physical, psychological or
sexual abuses.

XVIII

Nexturn Corporation employed Nini and Nono, whose tasks involved directing
and supervising rank-and-file employees engaged in company operations. Nini and
Nono are required to ensure that such employees obey company rules and regulations,
and recommend to the company's Human Resources Department any required
disciplinary action against erring employees. In Nexturn Corporation, there are two
independent unions, representing rank-and-file and supervisory employees,
respectively.

(a) May Nini and Nono join a union?

SUGGESTED ANSWER:
 (a) Yes. Nini and Nono, in effect, are supervisors as defined under Article
219(m) who may join a supervisory union pursuant to Article 255 of the
Labor Code.

ALTERNATIVE ANSWER:
(a) No. Nini and Nono are confidential employees as they have access to
confidential labor relations information. The broad rationale behind
this rule is that employees should not be placed in a position involving
a potential conflict of interest (San Miguel Corp. Supervisors and Exempt
Employees Union v. Laguesma, 277 SCRA 370 [1997]).

(b) May the two unions be affiliated with the same Union Federation?

SUGGESTED ANSWER:

(b) Yes. Article 255, as amended by Republic Act 9481, allows a rank-and-
file union and a supervisors’ union operating within the same
establishment to join one and the same federation or national union as
affiliates thereof.

XIX

D, one of the sales representatives of OP, Inc., was receiving a basic pay of P50,000.00 a
month, plus a 1 % overriding commission on his actual sales transactions. In addition,
beginning three (3) months ago, or in August 2019, D was able to receive a monthly gas
and transportation allowance of P5,000.00 despite the lack of any company policy
therefor.

In November 2019, D approached his manager and asked for his gas and transportation
allowance for the month. The manager declined his request, saying that the company
had decided to discontinue the aforementioned allowance considering the increased
costs of its overhead expenses. In response, D argued that OP, Inc.' s removal of the gas
and transportation allowance amounted to a violation of the rule on non- diminution of
benefits.

Is the argument of D tenable? Explain.

SUGGESTED ANSWER:

No, the argument of D is not tenable. The principle of non- diminution of benefits,
which has been incorporated in Article 100 of the Labor Code, forbids an employer
from unilaterally reducing, diminishing, discontinuing or eliminating compensation or
privilege which are given as a company practice. In Netlink v. Delmo (G.R. No. 160827,
June 18, 2014), the Supreme Court said that the length of time has not been laid out on
what constitutes a company practice. However, there are Supreme Court decisions that
say a period of two years, more or less, is deemed a company practice (Sevilla Trading
Company v. Semana, G.R. No. 152456, April 28, 2004).

In the question, the monthly gas and transportation allowance was given to D for three
months only. Such a short period appears not to fall under the category of company
practice using the above decisions as a basis.

ALTERNATIVE ANSWER:

No, D’s argument is not tenable. The Principle of Non-Diminution of Benefits [Labor
Code, Article 100] strictly pertains to the pre- promulgation benefits and not to post-
promulgation benefits such as subject allowance [Insular Hotel Employees Union-
NFL v. Waterfront Insular Hotel Davao, G.R. No. 174040, September 22, 2010]. If what
is diminished is a post-promulgation benefit, the rule violated is the Principle of
Grants. At any rate, the subject allowance has not yet ripened to a demandable right
since its enjoyment was for a few months only and the company did not intend to
grant it permanently.

XX

Nagrab Union and Nagrab Corporation have an existing CBA which contains the
following provision: "New employees within the coverage of the bargaining unit who
may be regularly employed shall become members of Nagrab Union. Membership in
good standing with the Nagrab Union is a requirement for continued employment with
Nagrab Corporation." Nagrab Corporation subsequently acquired all the assets and
rights of Nuber Corporation and absorbed all of the latter's employees. Nagrab Union
immediately demanded enforcement of the above-stated CBA provision with respect to
the absorbed employees. Nagrab Corporation refused on the ground that this should
not apply to the absorbed employees who were former employees of another
corporation whose assets and rights it had acquired.

(a) Was Nagrab Corporation correct in refusing to enforce the CBA provision
with respect to the absorbed employees?

May a newly-regularized employee of Nagrab Corporation (who is not

part of the absorbed employees) refuse to join Nagrab Union?

SUGGESTED ANSWER:
 (a) Nagrab Corporation’s argument that the union security clause should
not apply to absorbed employees resulting from the acquisition is
untenable. In BPI Employees Union-Davao City-FUBU (BPIEU-Davao
City-FUBU) v. Bank of the Philippine Islands, (G.R. No. 174912, July
24, 2013), the Supreme Court ruled that the subject union security clause
does not make a distinction as to how a regular employee should attain
such status as a “new employee” in order to be covered by the clause.
Absorbed employees as a result of merger or acquisition of assets and
rights between two corporations, therefore, should be considered as
“new employees” of the surviving or acquiring corporation.

(b) How would you advise the human resources manager of Nagrab
Corporation to proceed?

SUGGESTED ANSWER:

(b) The HR Manager should heed the Supreme Court’s proscription in

Alabang Country Club, Inc. v. NLRC, (G.R. No. 170287, February 14,
2008), in cases involving termination of employment due to
enforcement of a union security clause. The following requirements
must be observed:
1) The union security clause is applicable;
2) The certified bargaining agent is requesting for enforcement of
such clause; and
3) There is sufficient evidence to support the sole and exclusive
bargaining agent’s decision to expel the employee from
membership.