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LABOR LAW

2005 CENTRALIZED BAR OPERATIONS

SELECTED QUESTIONS in LABOR LAW


LABOR STANDARDS
1. Differentiate labor standards law from labor relations law. Are the two mutually exclusive?

Labor standards law is that labor law which prescribes terms and conditions of employment
like Book III, Book IV, Title I and Book VI of the Labor Code. These books of the Labor Code deal
with working conditions, wages, working conditions for women, minors, house helpers and home-
workers, medical and dental services, occupational health and safety, termination and retirement.
On the other hand, labor relations law is that labor law which regulates the relations
between employers and workers like Book V of the Labor Code which deals with labor
organizations, collective bargaining, unfair labor practices and strikes and lockouts.
Labor standards laws and labor relations laws are not mutually exclusive; they complement
to each other. Thus the law on strikes and lockouts which is and example of labor relations law
includes some provisions on the security of tenure of workers who go on strike or who are locked
out. These provisions are clear examples of labor law relations.

2.What is the Constitutional basis of Articles 7-11 regarding emancipation of tenants?

The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers, who are landless, to own directly or collectively the lands they
till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end,
the State shall encourage and undertake the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits as the Congress may prescribe, taking into account
ecological, developmental, or equity considerations, and subject to the payment of just
compensation. In determining retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing. (Article XIII,
Section 4, 1987 Constitution)

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

NO. Art. 27 of the Labor Code explicitly requires that in order to qualify for participation in
the overseas employment program, the corporation must at least possess seventy-five percent
(75%) of the authorized and voting capital stock of which is owned and controlled by Filipino
citizens.

4. Can a recruiter be convicted of violating a POEA Circular which was implemented without
prior publication?

NO. The POEA MEMO Circular no. 2, series of 1983 was void. Where the administrative
circular in question is one of those issuances which should be published for its effectivity, since its
purpose is to enforce and implement an existing law pursuant to a valid delegation. Considering
that POEA Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with
Red Notes in Labor Law

the National Administrative Register, the same is ineffective and ma not be enforced (Philsa
International Placement and Services Corp. vs. Secretary of DOLE, G.R. No. 103144, April 4,
2001).

5. Is the absence of an employment a valid defense in a case of illegal recruitment? Explain.

NO. the law is clear on the matter. Private respondents further argue that they cannot be
held liable by petitioner because no employment contract between him and Step-Up Agency had
been approved by the POEA. They also claim that the absence of a Special Power of Attorney and
an Affidavit of Responsibility, as required under Sections 1 and 2, Rule 1, Book III of the POEA
Rules and Regulations only proves that they did not deploy petitioner to Singapore.
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Their argument is far from persuasive. Surely, they cannot expect us to utilize their non-
compliance with the POEA Rules and Regulations as a basis in absolving them. To do so would be
tantamount to giving premium to acts done in violation of established rules. At most, private
respondents act of deploying petitioner to Singapore without complying with the POEA
requirements only made them susceptible to cancellation or suspension of license as provided by
Section 2, Rule I, Book VI of POEA Rules and Regulations. (Hornales v. NLRC, G.R. No. 118943,
September 10, 2001).

6. Is there a requirement that a physician must be accredited by the POEA before he can
attend to a sick seaman?
This Court also finds no basis on (sic) the petitioners contention that the company-
designated [physician] must also be accredited with the POEA before he can engage in the medical
treatment of a sick seaman. There is nothing in the Standard Employment Contract that provides
this accreditation requirement, and even if there is, this would be absurd and contrary to public
policy as its effect will deny and deprive the ailing seaman of his basic right to seek immediate
medical attention from any competent physician. The lack of POEA accreditation of a physician
who actually treated the ailing seaman does not render the findings of such physician (declaring the
seaman permanently disabled) less authoritative or credible. To our mind, it is the competence of
the attending physician, not the POEA accreditation, that determines the true health status of the
patient-seaman, which in this instant case, is [sic] the attending physicians from the Manila Doctors
Hospital (German Marine Agencies, Inc. v. NLRC, G.R. No. 142049, January 30, 2001).
7. Martina is a clerk typist in 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.

YES. Martina is entitled to overtime compensation. She does not fall under any of the
exceptions enumerated under Art. 82 of the Labor Code. Said provision equivocally states that
Title I, Book III of the Labor Code dealing with hours of work, weekly rest periods, holidays,
service incentive leaves and service charges, covers all employees in all establishments, whether
for profit or not, except the following employees:
a. Government employees
b. Managerial employees
c. Officers and members of the managerial staff
d. Field personnel
e. Members of the family of the employer who and dependent on him for support
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f. Domestic helpers
g. Persons in the personal service of another
h. Workers paid by results.

A covered employee who works beyond eight (8) hours is entitled to overtime
compensation.

8. Krishna earns P7.00 for every manicure she does in the barbershop of a friend which has
nineteen (19) employees. At times, she takes home P175.00 a day and at other times she earns
nothing. She now claims holiday pay. Is Krishna entitled to this benefit?

NO. Nemia is not entitled to holiday pay. Art. 82 of the Labor Code provide that workers
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who are paid by results are, among others, not entitled to holiday pay. Nemia is a worker who is
paid by results. She earns P7.00 for every manicure she does.

9. As a tireman in a gasoline station, which is open twenty four (24) hours a day with only five
(5) employees, Joewa worked from 10:00 p.m. until 7:00 A.M. of the following day. He claims
to be entitled to night shift differential. Is he correct?

NO. In the Omnibus Rules Implementing the Labor Code (Book III, Rule II, dealing with night
shift differential) it is provided that its provisions on night shift differential shall NOT apply to
employees of retail and service establishments regularly employing not more that five (5)

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workers. Because of this provision, Joewa is not entitled to night shift differential because the
gasoline station where he works (being a service establishment) has only five employees.

10. A manufacturing firm with 500 employees schedules Sunday as the latters rest day. Fifty
workers who were seventh-day adventists and 200 workers who belong to the Iglesia ni Kristo
object and propose that their rest days be scheduled on Saturdays and Thursdays, respectively.
The company claims that the proposed schedule will seriously prejudice or obstruct its
manufacturing operations and refuses to re-schedule the rest day as requested.

a. Do the seventh day adventists and members of the Iglesia ni Kristo have any right to choose
their own rest days?

YES. The employer, under the law, is required to respect the preference of the employee if
the same is based on religious grounds. The employee shall make known his preference to the
employer in writing at least (7) days before the desired effectivity of the initial rest day preffered
(Sec.4, Rule III, Book I, Implementing Rules and Regulations).

b. Assuming that the claim of the employer is well-founded, can it legally refuse to re-schedule
the rest day of the employees involved?

YES. If the employer cannot resort to other remedial measures, it may schedule the rest
days of the employees involved on the days of their choice for at least 2 days in a month (Sec.4,
Rule III, Book III, Implementing Rule and Regulations).

11. This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the rest day of
Bonifacio whose daily rate is P500.00.

a. If Bonifacio is required by his employer to work on that day for eight (8) hours,
how much should he be paid for his work? Explain.

For working on his scheduled rest day, according to Art. 93(a), Bonifacio should be paid
P500.00 (his daily rate) plus P150.00 (30% of his daily rate = P650.00. This amount P650.00 should
be multiplied by 2 = P1,300.00. this is the amount that Bonifacio as employee working on his
scheduled rest day which is also a regular holiday should receive. Art. 94(c) of the Labor Code
provides that an employee shall be paid a compensation equivalent to twice his regular rate for
working on any regular holiday. The regular rate of Bonifacio on May 1,2002 with an additional
thirty percent because the day is also his scheduled rest day.

Formula:
(a) To get rest day pay

Step 1: Get hourly wage rate

Daily Basic Wage X special holiday wage rate


Number of hours worked
Red Notes in Labor Law

e.g. (P500 / 8 hrs) x 130% = P81.25 (rest day wage rate)

Step 2: Compute wage between 8:00pm 5:00 pm using rest day wage rate

Number of hours worked X special holiday wage rate

e.g. 8hrs x P81.25 = P650

(b) To get regular holiday pay

Rest day Wage rate X Regular holiday

e.g. P650 x 200% = P1300 45


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b. If he works for ten (10) hours on that day, how much should he receive for his
work? Explain.

P1,300.00 which is the amount that Bonifacio is to receive for working on May 1, 2002
should be divided by 8 to determine his hourly rate of P162.5. This hourly rate should be multiplied
by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio is entitled to
receive for his overtime work per hour on May 1, 2002 is P325.00.

Holiday wage rate + 30% of holiday rate (200%)

Step 1: Get hourly wage rate

Daily Basic Wage X special holiday wage rate


Number of hours worked

e.g. (P1300 / 8 hrs.) x 200% = P325

Step 2: Compute OT Premium Pay between 5:00 pm 10pm

[(30% X Wage Per Hour) + Wage Per Hour] No. of OT Hours = OT Premium Pay

e.g. (30 % x P325) + P325 = P422.50


no. of OT hours (5pm 10pm) = 2hrs
------------
P845.00
Step 3: COMPUTATION

8am-5pm 8hrs x P200.00 P1300


2 hours 2hrs x P260.00 845
------------
Total Take Home Pay P2,145

12. Sia, the employer, admits that Damascos work starts at 8:30 in the morning and ends up at
6:30 in the evening daily, except holidays and Sundays. However, Sia claims that Damascos
basic salary of P140.00 a day is more than enough to cover the one hour excess work which
is the compensation they allegedly agreed upon. What other evidences are required to warrant
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the award of overtime pay?

Judicial admissions made by parties in the pleadings, or in the course of the trial or other
proceedings in the same case are conclusive, no further evidence being required to prove the same,
and cannot be contradicted unless previously shown to have been made through palpable mistake
or that no such admission was made. In view of Sias formal admission that Damasco worked beyond
eight hours daily, the latter is entitled to overtime compensation. No further proof is required. Sia
already admitted she worked an extra hour daily. Thus, public respondent gravely erred in deleting
the award of overtime pay to Damasco on the pretext that the claim has no factual basis.

Still, even assuming that Damasco received a wage which is higher than the minimum
provided by law, it does not follow that any additional compensation due her can be offset by her
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pay in excess of the minimum, in the absence of an express agreement to that effect. Moreover,
such arrangement, if there be any, must appear in the manner required by law on how overtime
compensation must be determined. For it is necessary to have a clear and definite delineation
between an employees regular and overtime compensation to thwart violation of the labor
standards provision of the Labor Code (Damasco vs. NLRC, G.R. No. 115755, December 4, 2000).

13. May a Company adopt working hours beyond 8 hours a day? If the workers do not question
such an arrangement, would that scheme be considered valid?

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YES. In Interphil Laboratories Employees Union FFW v. Interphil (G.R. No. 142824,
December 19, 2001) it was held by the Court that:
Section 1. Regular Working Hours A normal workday shall consist of not more than
eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30
P.M. The schedule of shift work shall be maintained; however the company may change the
prevailing work time at its discretion, should such change be necessary in the operations of
the Company. All employees shall observe such rules as have been laid down by the
company for the purpose of effecting control over working hours.

It is evident from the foregoing provision that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company. In the case before us,
Labor Arbiter Caday found that respondent company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the demands of its clients. It was established
that the employees adhered to the said work schedule since 1988. The employees are deemed to
have waived the eight-hour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even prior thereto. The two-shift schedule
effectively changed the working hours stipulated in the CBA. As the employees assented by practice
to this arrangement, they cannot now be heard to claim that the overtime boycott is justified
because they were not obliged to work beyond eight hours.

14. Explain the principle of A FAIRS DAY WAGE FOR A FAIRS DAYS LABOR

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. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally prevented from working (Caltex Refinery
Employees Association (CREA) vs. Brillantes, 279 SCRA 218), a situation which we find is not
present in the instant case. It would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they did not render services at
the Kalibo office during the stated period (Aklan Electric Cooperative Incorporated v. NLRC,
G.R. No. 121439, January 25, 2000).

15. A Co., a tobacco manufacturing firm, is owned by Mr. X who also owned B Security Agency
(BSA). When the employees of B formed a union, As management preterminated the security
contract between A and B firms. When the guards filed a case of illegal dismissal and ULP
against both A and B, the counsel of A filed a Motion to Dismiss, alleging that that there was no
employer-employee relationship between A and the guards.

a. Should the MOTION be granted? Explain.

NO. The Motion should not be granted. The facts indicate a concerted effort on the part of
respondents to remove petitioners from the company and thus abate the growth of the union and
block its actions to enforce their demands in accordance with the Labor Standards laws. The Court
held in Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life Assurance
Red Notes in Labor Law

Co., Ltd.,37 SCRA 244 (1971), that the test of whether an employer has interfered with and
coerced employees within the meaning of section (a) (1) is whether the employer has engaged in
conduct which it may reasonably be said tends to interfere with the free exercise of employees'
rights under section 3 of the Act, and it is not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements of threats of the employer if there is a
reasonable inference that anti-union conduct of the employer does have an adverse effect on self-
organization and collective bargaining.

b. Is the doctrine of piercing the veil of corporate fiction


applicable hereto?

It is a fundamental principle in corporation law that a corporation is an entity separate and


distinct from its stockholders and from other corporations to which it is connected. However, when 45
the concept of separate legal entity is used to defeat public convenience, justify wrong, protect
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fraud or defend crime, the law will regard the corporation as an association of persons, or in case
of two corporations, merge them into one. The separate juridical personality of a corporation may
also be disregarded when such corporation is a mere alter ego or business conduit of another
person.

In the case at bar, it was shown that BSA was a mere adjunct of A Company. BSA, by virtue
of a contract for security services, provided A Co. with security guards to safeguard its premises.
However, records show that BSA and A Co. have the same owners and business address, and BSA
provided security services only to A Co. and other companies belonging to its owners. The
purported sale of the shares of the former stockholders to a new set of stockholders who changed
the name of the corporation appears to be part of a scheme to terminate the services of BSAs
security guards posted at the premises of A Co. and bust their newly-organized union which was
then beginning to become active in demanding the company's compliance with Labor Standards
laws. Under these circumstances, the Court cannot allow A Co. to use its separate corporate
personality to shield itself from liability for illegal acts committed against its employees. (De Leon
vs. NLRC, G.R. No. 112661, May 30, 2001)

16. Discuss the doctrine on the economic reality of the relations of parties test with respect
to the existence of employer-employee relationship.

The relationship of employer-employee, which determines the liability for employment


taxes under the Social Security Act was not to be determined solely by the idea of control which an
alleged employer may or could exercise over the details of the service tendered to his business by
the worker or workers. Control is characteristically associated with the employer -employee
relationship, but in the application of social legislation, employees are those who as a matter of
economic reality are dependent upon the business to which they render service, taking into
account permanency of the relations, the skills required and the investments in the facilities for
work and opportunities for profit or loss from activities. It is the total situation that controls.
(Investment Planning Corp. vs. SSS, 21 SCRA 924).

The concept of independent contractor is interminably linked with the economic reality
test when we consider the fact that such person is one who carries on a distinct and independent
business and undertakes to perform the job to do a piece of work on his own account and under his
own responsibility, according to his own manner and methods and free from the control and
direction of his principal, except as to the result of the work. Among the factors to be considered
are whether the contractor is carrying on an independent business; whether the work is part of the
employer's general business; the nature and extent of the work; the skill required; the term and
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duration of the relationship; the right to assign the performance of the work to another; the power
to terminate the relationship; the existence of a contract for the performance of a specified piece
of work; the control and supervision of the work; the employer's powers and duties with respect to
the hiring, firing, and payment of the contractor's servants-, the control of the premises; the duty
to supply the premises, tools, appliances, material and labor; and the mode, manner, and terms of
payment. (MAFINCO Corporation v. Ople, 70 SCRA 139)

17. Pandoy was an electrician who worked within the premises of Ushio's car accessory shop, in
Banawe Street, Quezon City. He filed a complaint for illegal dismissal, non-payment of overtime
pay, holiday pay, and other benefits against Ushio, which moved to dismiss the complaint
claiming that Pandoy was not an employee but a free lance operator who waited on the shop's
customers should the latter require his services. Ushio argues that in fine, the shop owner and
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the free lance operator, as an independent contractor, were partners in trade, "both benefiting
from the proceeds of their joint efforts. It further claimed that it was a recognized and
accepted trade practice peculiar to the auto spare parts shop industry operating along the
stretch of Banawe Street that shop owners would collect the service fees from its customers
and disburse the same to the independent contractor at the end of a week. Moreover, Pandoy
was free to position himself near other car accessory shops to offer his services to customers of
said shops. On the other hand, Pandoy insists that he is entitled to the benefits because he was
loyal to Ushio, as he did not perform work for anyone else. Is he correct?

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NO. In stark contrast to the Companys regular employees, there are independent,
freelance operators who are permitted by the Company to position themselves proximate to the
company premises. These independent operators are allowed by the Company to wait on Company
customers who would be requiring their services. In exchange for the privileges of favorable
recommendation by the Company and immediate access to the customers in need of their services,
these independent operators allow the Company to collect their service fee from the customer and
this fee is given back to the independent operator at the end of the week. In effect, they do not
earn fixed wages from the Company as they earn their variable fees from the customers of the
Company. The Company has no control over and does not restrict the methodology or the means
and manner by which these operators perform their work. These operators are not supervised by
any employee of the Company since the results of their work is controlled by the customers who
hire them. Likewise, the Company has no control as an employer over these operators. They are
not subject to regular hours and days of work and may come and go as they wish. They are not
subject to any disciplinary measures from the Company, save merely for the inherent rules of
general behavior and good conduct [Ushio Marketing v. NLRC, 294 SCRA 673 (1998)].

18. In the employment of workers, is there a difference between an ordinary employer-


employee relationship and independent job contracting/ subcontracting?

YES. In an ordinary employer-employee relationship, there are only two parties involved -
the employer and the employee. This relationship is established through a four-fold test, under
which the employer:
a. Directly exercises control and supervision over the employee not only as to the results of
the work but also as to the means employed to attain this result;
b. Has the power to select and hire the employee;
c. Has the obligation to pay the employees his or her wages and other benefits.
d. Has the power to transfer and dismiss or discharge employees.

The power of control is the most important factor in determining the existence of an
employer-employee relationship. The employer need not actually exercise this power. It is enough
that the employer retains the right to exercise this power, as it may deem necessary or
appropriate.

In job contracting / subcontracting, there are three parties involved:


a. The principal who decides to farm out a job or service to a subcontractor;
b. The job contractor or subcontractor which has the capacity to independently undertake
the performance of the job or service; and
c. The employees engaged by the job contractor or subcontractor to accomplish the job or
service.

In job contracting or subcontracting, the four-fold test of employer-employee relationship


should be satisfied by the contractor or subcontractor in relation to the employee it engages to
accomplish the contracted or subcontracted job or service. In such cases, the contractor or
subcontractor is also referred to as an independent contractor.

If the four-fold test is satisfied not by the job contractor or subcontractor but by the
Red Notes in Labor Law

principal, the principal then becomes the employer of the employees engaged to accomplish the
job or service. What exists is not job contracting or subcontracting but a direct employer-employee
relationship between the principal and the employees and the job contractor becomes merely the
agent of the principal or the subcontractor, the agent of his contractor, as the case may be.

19. Is there a difference between a job contractor or subcontractor and a private recruitment
and placement agency (PRPA)?

YES. A job contractor or subcontractor directly undertakes a specific job or service for a
principal, and for this purpose employs its own workers. A PRPA cannot be a subcontractor. It
simply recruits workers for the purpose of placing them with another employer so that the workers
recruited will not become the PRPA's employees.
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A job contractor or subcontractor is governed primarily by Articles 106-109 of the Labor
Code. A private recruitment and placement agency is governed by Articles 25 to 39 of the Labor
Code and the rules implementing these articles.

A job contractor or subcontractor does not need authority from the Department of Labor
and Employment (DOLE) to undertake a subcontracted job or service. A PRPA needs an authority or
license from DOLE to legally undertake recruitment and placement activities.

20. What law or rules govern job contracting or subcontracting?

The basic law governing job contracting or subcontracting is the Labor Code, particularly
Articles 106 to 109 thereof. These provisions prescribe the conditions for the regulation of job
contracting or subcontracting and the rights and obligations of parties to this arrangement.
Department Order No. 3, which took effect on 29 May 2001 was the latest set of rules released by
the DOLE implementing Articles 106 to 109.

The following laws and rules also apply in addition to Articles 106 to 109 of the Labor Code:
a. Article 248 (c) of the Labor Code, which disallows contracting out of services or functions
being performed by union members when such will interfere with, restrain or coerce employees in
the exercise of their right to self-organization;
b. Article 280, Labor Code, which classifies employees into regular, project or seasonal
employees;
c. Article 2180 of the Civil Code, under which the principal, in a civil suit for damages
instituted by an injured person, can be held liable for any negligent acts of the employees of a
labor-only contractor;
d. Republic Act No. 5487, which regulates the operation of security agencies, and its
implementing rules;
e. Jurisprudence interpreting the foregoing laws;
f. D.O. No. 19, Series of 1993, for subcontracting arrangements in the construction industry;
and
h. Contractual stipulations provided these are not in conflict with Labor Code provisions,
jurisprudence, and D.O. Nos. 3 and 19.

21. What are the important features of D.O. No. 3?

The following are the important features of D.O. No. 3:


a. It revoked Department Order No. 10, Series of 1997, which was then the implementing rules
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on Articles 106 to 109;


b. It prohibits labor-only contracting;
c. It recognizes the continuing validity of contracts entered into when D.O. No. 10 was still in
force;
d. It is a temporary measure;
e. It sets the process and mechanism, which is through consultations through the Tripartite
Industrial Peace Council, by which a new set of rules shall be formulated.

22. Is job contracting or subcontracting illegal?

NO, provided the requirements for legitimate job contracting or subcontracting are
satisfied and the prohibition against labor-only contracting or subcontracting is observed. In two
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recent cases decided by the Supreme Court, Vinoy v. NLRC, G.R. No. 126586, February 02,2000,
and Lim v. NLRC, G.R. No. 124630, February 19, 1999, the definition of legitimate
subcontracting is as follows:

Contracting or subcontracting shall be legitimate if the following conditions concur:


a. The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own responsibility,
according to its own manner and method, and free from the control and direction of the principal
in all matters connected with the performance of the work except as to the results thereof;
b. The contractor or subcontractor has substantial capital or investment;

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c. The agreement between the principal and the contractor or subcontractor assures the
contractual employees entitlement to all occupational safety and health standards, free exercise of
the right to self organization, security of tenure, and social and welfare benefits.

23. What is substantial capital? Is substantial capital sufficient to establish legitimate


subcontracting?

Substantial capital refers to such investment, whether it is in the form of money, facilities,
tools, equipment, machineries, work premises, or subscribed capital stock that would indicate the
subcontractor's capacity to undertake the contracted or subcontracted work or service
independently. For example, a contractor or subcontractor with a capital stock of P1 Million which
is fully subscribed and paid for has been deemed by the Supreme Court to be a highly capitalized
venture which satisfies the requirement of substantial capital.

Where a job contractor or subcontractor is highly capitalized, the Supreme Court has held
that it need not show evidence that it has investment in the form of tools, equipment,
machineries, work premises, among others, to be considered legitimate. However, it is still
necessary for it to show that it has the capacity to be an independent contractor. That is, it can
undertake the performance of the contract according to its own manner and method, free from the
supervision of the principal in all matters except as to the results of the work.

24. What is the basis of the State in prohibiting labor-only contracting? What is the objective
and the prohibition?

The basis of the State in prohibiting labor-only contracting are:


a. The Constitution, which provides that the State shall protect labor and promote its welfare,
and shall guarantee basic labor rights including just and humane terms and conditions of
employment and the right to self-organization.
b. Article 106 of the Labor Code, which allows the Secretary of Labor to distinguish between
labor-only contracting and job contracting to prevent any violation or circumvention of the Labor
Code.

The objective of the State in prohibiting labor-only contracting is to ensure that labor laws
are followed and to prevent the exploitation of workers. A labor-only contractor is one who
presents itself as an employer even if it does not have capital to run a business or capacity to
ensure that its workers are paid their wages and other benefits as prescribed by law. As such, it
cannot independently undertake to perform a contracted or subcontracted job or service. To allow
a labor-only contractor to operate is to give it an opportunity to circumvent the law and to exploit
workers.

25. If you are the counsel of an agency which is being charged of LABOR-ONLY CONTRACTING,
what evidence will you present to refute the charge? Explain.

I would present the same documents shown in the case of Escario vs. NLRC, G.R. No.
124055, June 8, 2000, to wit:
D.L. Admark is a legitimate independent contractor. Among the circumstances which tend
Red Notes in Labor Law

to establish the status of D.L. Admark as a legitimate job contractor are:


a. The SEC registration certificate of D.L. Admark states that it is a firm engaged in
promotional, advertising, marketing and merchandising activities.
b. The service contract between CMC and D.L. Admark clearly provides that the agreement is
for the supply of sales promoting merchandising services rather than one of manpower placement.
c. D.L. Admark was actually engaged in several activities such as advertising, publication,
promotions, marketing and merchandising. It had several merchandising contracts with companies
like Purefoods, Corona supply, Nabisco Biscuits and Licron. It was likewise engaged in the
publication business, as evidenced by its magazine, the Phenomenon.
d. It had its own capital assets to carry out its promotion business. It then had current assets
amounting to P6 million and is therefore a highly capitalized venture. It had an authorized capital
stocks of P500,000. It owned several motor vehicles and other tools, materials and equipment to 45
service its clients. It paid rentals of P30,020 for the office space it occupied.
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26. What are the effects of a labor-only contracting arrangement?

The following are the effects:


a. The contractor or subcontractor will be treated as the agent of the principal. Since the act
of an agent is the act of the principal, representations made by the contractor or subcontractor to
the employees will bind the principal.
b. The principal will become the employer as if it directly employed the workers engaged to
undertake the contracted or subcontracted job or service. It will be responsible to them for all
their entitlements and benefits under the labor laws.
c. The principal and the contractor or subcontractor will be solidarily treated as the
employer.
d. The employees will become employees of the principal, subject to the classifications of
employees under Article 28 of the Labor Code.

If the labor-only contracting activity is undertaken by a legitimate labor organization, a


petition for cancellation of union registration may be filed against it, pursuant to Article 239 (e).

27. If a legitimate independent job contractor or subcontractor cannot pay the wages of the
employees it engages to perform the job or service, will the principal automatically become the
employer of such employees?

NO. Under Article 106, a principal has two types of liability in relation to the employees of
the contractor or subcontractor. The first type of liability is limited, and is governed by the first
two paragraphs of Article 106. Thus, mere inability of the contractor or subcontractor to pay wages
will not automatically make the principal the direct employer. It will only make the principal
jointly and severally liable with the contractor or subcontractor for payment of the employees'
wages to the extent of the work performed under the contract.

The second type of liability, which arises from the third and fourth paragraphs of Article
106, is absolute and direct. This liability arises when there is labor-only contracting as defined in
D.O. No. 3. In such cases, the principal shall be held responsible to the workers in the same manner
and extent as if it directly employed these workers.
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28. Which employer should be held liable for the wages of security guards, the PRINCIPAL
EMPLOYER or the AGENCY? Explain.

There existed a contractual agreement between PTSI and EAGLE, wherein the former
availed of the security services provided by the latter. In return, the security agency collects from
its client payment for its security services. This payment covers the wages for the security guards
and also expenses for their supervision and training, the guards bonds, firearms with ammunitions,
uniforms and other equipments [sic], accessories, tools, materials and supplies necessary for the
maintenance of a security force.

Premises considered, the security guards immediate recourse for the payment of the
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increases is with their direct employer, EAGLE. However, in order for the security agency to
comply with the new wage and allowance rates it has to pay the security guards, the Wage Orders
made specific provision to amend existing contracts for security services by allowing the
adjustment of the consideration paid by the principal to the security agency concerned. What the
Wage Orders require, therefore, is the amendment of the contract as to the consideration to cover
the service contractors payment of the increase mandated. In the end therefore, the ultimate
liability for the payment of the increases rests with the principal (Security and Credit
Investigation Inc. v. NLRC, G.R. No. 114316, January 26, 2001).

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29. When is an insurance agent deemed an independent contractor of an insurance


company?

As held in Insular Life Insurance Company, Ltd. vs. NLRC, G.R. No. 84484, Nov. 15,
1989, There is no employer-employee relationship between a commission agent and an
investment company. The former is an independent contractor where said agent and others
similarly placed are:
a. paid compensation in the form of commissions based on percentages of their sales, any
balance of commissions earned being payable to their legal representatives in the event of death or
resignation;
b. required to put up performance bond;
c. subject to a set of rules and regulations governing the performance of their duties under
the agreement with the company and termination of the services for certain causes;
d. not required to report for work at any time, nor to devote their time exclusively to working
for the company nor to submit a record of their activities, and who finally shouldered their own
selling and transportation expenses.

Logically, the line should be drawn between rules that merely serve as guidelines toward
the achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aims only to promote the result, create no
employer-employee relationship unlike the second, which addresses both the result and the means
used to achieve it. The distinction acquires particular relevance in the case of an enterprise
affected with public interest, as in the business of insurance, which on that account, is subject to
regulations by the State with respect, not only to the relations between insurer and insured, but
also to the internal affairs of the insurance company.

30. When are salesmen considered independent contractors rather than regular
employees of a business establishment?

In, MAFINCO Trading Corporation v. Ople, GR No. L-37790, March 25, 1976, it was held
where, as in the case at bar, a peddler formally entered into a peddling contract with petitioner
for the purchase and sale of Cosmos softdrinks, indicating the manner of selling the goods, whereby
the petitioner provides the peddler with delivery truck and bears the cost of gasoline and
maintenance of' the truck; while on the other hand the peddler employs the driver and helpers and
take care of the latter's compensation and social security contributions, the peddlers are
independent contractors and not employees of petitioner.

31. Is the joint and several liability of the principal and the job contractor under Articles 107
and 109, in relation to Article 106 of the Labor Code, dependent upon the insolvency or
unwillingness to pay on the part of the contractor or direct employees?

NO. Nothing in Article 106 indicates that insolvency or unwillingness to pay by the
contractor or direct employer is a prerequisite for the joint and several liability of the principal or
indirect employer. This joint and several liability facilitates, if not guarantees, payment of the
workers performance of any work, task, job or project, thus giving the workers ample protection
Red Notes in Labor Law

as mandated by the 1987 Constitution (Development Bank of the Philippines vs. NLRC, June 17,
1994).

32. A taxicab company required its taxi drivers to make deposits to defray any deficiency which
the latter may incur in the remittance of their boundary and to cover car wash payments. Is
this requirement authorized under Article 114 of the Labor Code? Explain.

The requirement for deposit to defray any deficiency in the remittance of drivers
boundary is not lawful. Article 114, which provides the rule on deposits for loss or damage to
tools, materials or equipment supplied by the employer, does not apply to or permit such kind of
deposit.

But the requirement for deposit for car wash payments is lawful. There is no dispute that as 45
a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to
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restore the unit he has driven to the same clean condition when he took it out. Furthermore, the
amounts doled out were paid directly to the persons who washed the units. Finally, it will be noted
that there was nothing to prevent the drivers from cleaning the taxi units themselves, if they
wanted their car wash payments (Five J Taxi vs. NLRC, August 22, 1994).

33. Do disparity in wages between employees holding similar positions but located in different
regions of the country constitute wage distortion as contemplated by law? Explain.
NO. Varying in each region of the country are controlling facts, such as the cost of living,
supply and demand of basic goods, services and necessities; and the purchasing power of the peso.
The wages in different regions are not uniform. And the fact that a person is receiving more in one
region does not necessarily mean that he or she is better off than a person receiving less in another
region.

Wage distortion presupposes an increase in the compensation of the lower ranks in an


office hierarchy without a corresponding raise for higher-tiered employees in the same region of
the country, resulting in the elimination or the severe dimunition of the distinction between the
two groups (Prudential Bank Association vs. Prudential Bank and Trust Co., January 25, 1999).

34. Does a wage increase granted pursuant to a collective bargaining agreement constitute
compliance with a subsequently issued wage order?

NO. A collective bargaining agreement is a contractual obligation. It is distinct from an


obligation imposed by law. The terms and conditions of a collective bargaining contract constitute
the law between the parties. Beneficiaries thereof are therefore, by right, entitled to the
fulfillment of the obligation prescribed therein. Moreover, compliance with a collective bargaining
agreement is mandated by the expressed policy to give protection to labor. Unless otherwise
provided by law, said policy should be given paramount consideration.

Increments to the laborers' financial gratification, be they in the form of salary increases or
changes in the salary scale are aimed at one thing - improvement of the economic predicament of
the laborers. As such, they should be viewed in the light of the State's avowed policy to protect
labor. Thus, having entered into an agreement with its employees, an employer may not be allowed
to renege on its obligation under a collective bargaining agreement should, at the same time, the
law grant the employees the same or better terms and conditions of employment. Employee
benefits derived from law are exclusive of benefits arrived at through negotiation and agreement
unless otherwise provided by the agreement itself or by law. (Meycauayan College vs. Drilon,
G.R. No. 81144, May 7, 1990).
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35. Can a woman be employed in any kind of occupation or undertaking?

YES, she can be employed in any occupation or undertaking allowable by law, provided it is
not deleterious to her health and safety. She should not be discriminated against in employment by
reason of her age, marital status and pregnancy.

36. What are considered as acts of discrimination against women?

The following are considered acts of discrimination:


a. Payment of a lesser compensation, including wage, salary and fringe benefits, to a female
employee as against a male employee, for work of equal value;
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b. Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.

37. How much maternity leave benefit will a pregnant woman receive? Who will pay the
maternity leave benefits?

The member shall receive a maternity benefit equivalent to 100% of her average daily
salary credit multiplied by 60 days for normal delivery; or by 78 days in cases of caesarian section
delivery.

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The employer advances the maternity leave benefit to the qualified employee in full or in
two equal installments, the first to be made upon receipt of maternity leave application and the
second not later than 30-days after payment of the first installment. Upon receipt of satisfactory
proof of such payment, the SSS will reimburse the employer after the contingency for the amount
of maternity benefit legally advanced to the employee.

38. Can a maternity leave benefit be extended beyond the allowable PERIOD?

YES, a maternity leave may be extended beyond 60 days upon request of the woman
employee. Such request must be due to illness medically certified to arise out of her pregnancy,
delivery, complete abortion or miscarriage which renders her unfit to work. The extended leave
benefit shall be a hindrance to recover sickness benefit for the same period of 60 days for the same
childbirth, abortion or miscarriage.

39. What is the status of a woman permitted or suffered to work in any night club, bar, or
other similar establishment under the Labor Code?

Any woman who is permitted or suffered to work with or without compensation in any night
club, cocktail lounge, massage clinic, bar, or similar establishment shall be considered as an
employee of such establishment for purposes of labor and social legislation.

40. What other statutory benefits and services shall an employer provide the woman
employee?

The employer shall provide the following:


a. Free family planning services to employees and their spouses, if the establishment regularly
employ more than 200 workers;
b. Holiday pay during the period that the woman employee is receiving maternity or disability
benefits, equivalent to the same percentage as the benefit granted by SSS;
c. Flexible work schedule to any solo parent as defined in Republic Act No. 8972;
d. Parental leave of not more than seven days every year to the solo parent who has rendered
at least one-year service.
e. facilities for women such as seats, separate toilet rooms and nursery in the work place.
f. to determine the appropriate minimum age and other standards for retirement in special
occupations for women.

41. Who are considered young workers and working children?

Young workers are in different categories, namely:

a. The working youth who are between 15 and 30 years of age (Republic Act No. 8044);
b. Employed minors who are from 15 to below 18 years of age (Labor Code);
c. Working children who are below 15 years of age, subject to the exceptions specified by
Republic Act No. 7658;
Red Notes in Labor Law

d. Those engaged in Child Labor, which is prohibited by law.

42. What is the minimum employable age for young workers?

The minimum employable age for young workers is 18 years old. However, any person
between 15 and 18 years of age may be employed in undertakings not hazardous or deleterious in
nature.

43. What is a non-hazardous undertaking?

It refers to any kind of work or activity, in which the employee is not exposed to any risk
that constitutes an imminent danger to his or her life and limb, safety and health.
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44. What are the hazardous work and activities to persons below 18 years of age?
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Hazardous work and activities to persons below 18 years age include:

a. Work which exposes children to physical; psychological or sexual abuse;


b. Work under ground, under water, at dangerous heights or at unguarded heights of two
meters and above, or in confined spaces;
c. Work with hazardous machinery, equipment and tools, or which involves manual handling or
transport of heavy loads;
d. Work in an unhealthy environment which may expose children to hazardous processes, to
temperatures, noise levels or vibrations damaging to their health, to toxic, corrosive, poisonous,
noxious, explosive, flammable and combustible substances or composites, to harmful biological
agents, or to other dangerous chemicals including pharmaceuticals.
e. Work under particularly difficult conditions such as work for long hours or during the night,
or work where the child is unreasonably confined to the premises of the employer.

45. Can a child below 15 years of age be employed or made to work?

A child below 15 years old is NOT permitted to work in any public or private establishment
EXCEPT in these two situations:

1. When the child works directly under the sole responsibility of his or her parents or guardians
or legal guardian and where only members of the employers family are employed, on the following
conditions:
a. The employment does not endanger the childs life, safety and health and morals;
b. The employment does not impair the childs moral development
c. The employer parent or legal guardian provides the child with primary and / or
secondary education prescribed by the Department of Education, Culture and Sports
(DECS).

2. Where the childs employment or participation in public entertainment or information


through cinema, theater, radio or television is essential, provided that:
a. The employment does not involve advertisement or commercials promoting alcoholic
beverages, intoxicating drinks, tobacco and its by-products or exhibiting violence;
b. There is a written contract approved by the DOLE;
c. The employment does not endanger the childs life, safety, health and morals;
d. The employment does not interfere with his or her schooling.
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46. Once a firm validly employs a young person, is he or she entitled to the same terms and
conditions of employment accorded to an employee of legal age?

YES. An employer is prohibited by the Labor Code to discriminate against any young person
with respect to terms and conditions of employment on account of his or her being a minor.

47. Can a person between 15 and 18 years of age be allowed to engage in domestic service?

A minor, whether male or female, may be employed as a domestic servant to render


service in and about the employers home, which services are usually necessary or desirable for the
maintenance and enjoyment thereof, such as ministering to the personal comfort and enjoyment of
the employers family.
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48. Can a young worker be a member of the Social Security System (SSS) and avail of the social
security (SS) and Employees Compensation (EC) benefits?

YES. The Social Security Law provides that coverage in the SSS is compulsory upon all
employees not over 60 years of age. This law defines an employee as any person who performs
services for an employer and who receives compensation for such services, where there is an
employer-employee relationship. Self-employed young persons can also be SSS members.

49. Who are considered child laborers?

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Child laborers are persons aged below 15, or from 15 to below 18 years, performing work or
service that is hazardous or deleterious in nature, or exploitative, or unsupervised by the childs
parent or guardian, or that interferes with normal development, or deprives that childs right to
health and education.

However, not all children who work are engaged in child labor. Work performed by any
person below 15 years of age is not considered child labor if it falls under allowable situations
under Republic Act No. 7658. Light work that is occasional, legal and respects the childs right to
health and education is not child labor.

50. You were asked by a paint manufacturing company about the possible employment as a
mixer of a person, aged seventeen (17), who shall be directly under the care of the section
supervisor. What advice would you give? Explain briefly.

I will advise the paint manufacturing company that it cannot hire a person aged seventeen
(17). Art. 139 (c) of the Labor Code provides that a person below eighteen (18) years of age shall
not be allowed to work in an undertaking which is hazardous or deleterious in nature as determined
by the Secretary of Labor. The Secretary of Labor has classified paint manufacturing as hazardous
work.

51. What are the benefits provided by law to young and deserving students who want to work?

Republic Act No. 7323 provides for employment assistance to students who are at least 15
but not more than 25 years of age enrolled or intending to be enrolled in any secondary, tertiary,
vocational or technological institutions. The qualified and deserving youth can be employed during
the summer and /or Christmas vacation as aid to the pursuit of their education.

As incentives for employers, they shall pay the students only 60% of the basic wage and the
remaining 40% in the form of educational vouchers payable by the government. An employer, under
this law, can be a national or local government office or a private establishment or undertaking.

52. Are SSS benefits considered property earned by the member during his lifetime? Do they
form part of his estate? Explain.

The benefits receivable under the SSS law are in the nature of a special privilege or an
arrangement secured by the law pursuant to the policy of the State to provide social security to the
workingman. Such benefits cannot be considered as property earned by the member during his
lifetime. His contributions to the fund, it may be noted, constitute only an insignificant portion
thereof. Thus, the benefits are specifically declared not transferable and exempt from tax legal
processes and liens. Furthermore, in the settlement of claims, the procedure to be observed is
governed not by the general provisions of law, but by rules and regulations promulgated by the
Social Security Commission. And it is not the probate or regular court but the Commission that
determines the persons to whom the benefits are payable (Social Security System vs. Davac,
G.R. No. L-21642, July 30, 1966).
Red Notes in Labor Law

53. Does the delay on the part of the victim of sexual harassment to complain said act impair
his cause of action against his/her employer?

NO. The gravamen of the offense in sexual harassment is not the violation of the
employees sexuality but the abuse of power by the employer. Any employee, male or female, may
rightfully cry foul provided the claim is well substantiated. Strictly speaking there is not time
period within which he or she is expected to complain through the proper channels. The time to do
so may vary depending upon the needs, circumstances, and more importantly, the emotional
threshold of the employee (Philippine Aeolus Automotive United Corp. vs. NLRC, G.R. No.
124617, April 28, 2000).

54. The owners of FALCON Factory, a company engaged in the assembling of automotive
components, decided to have their building renovated. Fifty (50) persons, composed of 45
engineers, architects and other construction workers, were hired by the company for this
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purpose. The work is estimated to be completed in three (3) years. The employees contended
that since the work would be completed after more than one (1) year, they should be subject
to compulsory coverage under the Social Security Law. Is their contention correct?

NO. Under Section 8 (j) of RA 1161, as amended, employment of purely casual employees,
not for the purpose of the occupation or business of the employer are excepted from compulsory
coverage.

An employment is purely casual if it is not for the purpose of occupation or business of the
employer.

In the problem given, Falcon Factory is a company engaged in the assembling of automotive
components. The fifty (50) persons (engineers, architects and construction workers) were hired by
Falcon Factory to renovate its building. The work to be performed by these fifty (50) people is not
in connection with the purpose of the business of the factory. Hence, the employment of these
fifty (50) persons is purely casual. They are therefore excepted from the compulsory coverage of
the SSS law.

LABOR RELATIONS
55. PICOP's main thesis is that the positions Section Heads and Supervisors, who have been
designated as Section Managers and Unit Managers, as the case may be, were converted to
managerial employees under the decentralization and reorganization program it implemented
in 1989. Being managerial employees, with alleged authority to hire and fire employees, they
are ineligible for union membership under Article 245 of the Labor Code. Furthermore, PICOP
contends that no malice should be imputed against it for implementing its decentralization
program only after the petition for certification election was filed inasmuch as the same is a
valid exercise of its management prerogative, and that said program has long been in the
drawing boards of the company, which was realized only in 1989 and fully implemented in
1991. PICOP emphatically stresses that it could not have conceptualized the decentralization
program only for the purpose of "thwarting the right of the concerned employees to self-
organization." Is PICOPs contention tenable?

NO. The petition not being meritorious, must fail and the same should be as it is hereby
dismissed. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, we had occasion to
elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers,
Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise,
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implement and control strategic and operational policies while the task of First-Line Managers is
simply to ensure that such policies are carried out by the rank-and- file employees of an
organization. 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. Thus, the mere fact that an employee is designated manager"
does not ipso facto make him one. Designation should be reconciled with the actual job description
of the employee, for it is the job description that determines the nature of employment (PICOP vs.
Laguesma, G.R. No. 101738, April 12, 2000).

56. Do labor arbiters have jurisdiction over illegal dismissal cases that may be filed against
priests and ministers?
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YES. The fact that a case involves the church and its religious minister does not ipso facto
give the case a religious significance. Simply stated, what is involved in an illegal dismissal case is
the relationship of the church as an employer and the minister as an employeea purely secular
matter not related to the practice of faith, worship, or doctrines of the church (Austria vs. NLRC,
G.R. No. 124382, August 16, 1999).

57. Do Labor Arbiters or the NLRC have jurisdiction over criminal cases involving violations of
the penal provisions of labor laws? Explain.

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Labor Arbiters or the NLRC are not invested with the judicial power; they merely exercise
quasi-judicial functions. In the hearing and disposition of cases brought before them, they do not
adhere strictly to the technical rules of evidence. This is required in criminal cases where the guilt
of the accused must be established beyond reasonable doubt. The regular courts have jurisdiction
over criminal cases involving violations of the labor laws.

58. Explain the doctrine of forum non-conveniens. May this doctrine be invoked against the
exercise of jurisdiction by the labor arbiter?

Under the rule of forum non conveniens, a Philippine court or agency MAY assume
jurisdiction over the case if it chooses to do so, PROVIDED:
a. that the Philippine court is one to which the parties may conveniently resort to;
b. that the Philippine court is in a position to make an intelligent decision as to the law and
the facts; and
c. that the Philippine court has or is likely to have power to enforce its decision.

This doctrine may be invoked against the exercise of jurisdiction of the labor arbiters as
held in the case of Manila Hotel Corporation and Manila Hotel International limited vs. NLRC
and Marcelo Santos which ruled that the NLRC was a seriously inconvenient forum on the following
grounds:

a. The NLRC is an inconvenient forum given that all the incidents of the case- from the time
of recruitment, to employment, and to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants the Palace Hotel and MHICL
are not nationals of the Philippines. Neither are they doing business in the Philippines. Likewise,
the main witnesses are non-residents of the Philippines.

b. Neither can an intelligent decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls for the application of the principle of lex
loci contractus (the law of the place where the contract was made).

c. Even assuming that the proper decision could be reached by the NLRC, such would not have
any binding effect against the employer, the Palace Hotel. The Palace hotel is a corporation
incorporated under the laws of China and was not even served with summons, hence jurisdictions
over its person was not acquired.

59. Does the principle of Jurisdiction by Estoppel apply in labor cases?

YES, the principle of Jurisdiction by Estoppel applies to labor cases as was held by the
Supreme Court in the case of Prudential Bank and Trust Company vs. Reyes, G.Rr No. 141093,
Feb. 20, 2001.

Under this principle, a party to a labor case is estopped from raising the issue of
jurisdiction of the labor arbiter when he has participated in the proceedings from start to finish. In
this case the petitioner bank actively participated in the proceedings before the Labor Arbiter,
NLRC and Court of Appeals. It was only when the Court of Appeals made an adverse decision did it
Red Notes in Labor Law

raise the issue of jurisdiction. The Supreme Court held that it was already too late to raise the
issue of jurisdiction as the petitioner was already in estoppel. While it is true that jurisdiction over
the subject matter of a case may be raised at any time of the proceedings, this rule presupposes
that laches or estoppel has not supervened.

60. Does the Labor Arbiter have jurisdiction over disputes involving the wages and terms and
conditions of employment of COOPERATIVE employees? Explain.

YES. In the case of Perpetual Help Credit Coop Inc. vs. Faburada, G.R. No. 121498,
October 8, 2001 it was clarified that:

ART. 121. Settlement of Disputes. Disputes among members, officers, directors,


and committee members, and intra-cooperative disputes shall, as far as practicable, be 45
settled amicably in accordance with the conciliation or mediation mechanisms embodied in
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the by-laws of the cooperative, and in applicable laws. Should such a
conciliation/mediation proceeding fail, the matter shall be settled in a court of competent
jurisdiction."

Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development Authority Law)
which reads:

SEC. 8 Mediation and Conciliation. Upon request of either or both parties, the
Authority shall mediate and conciliate disputes within a cooperative or between
cooperatives: Provided, That if no mediation or conciliation succeeds within three (3)
months from request thereof, a certificate of non-resolution shall be issued by the
Commission prior to the filing of appropriate action before the proper courts.

The above provisions apply to members, officers and directors of the cooperative involved
in disputes within a cooperative or between cooperatives.

There is no evidence that private respondents are members of petitioner PHCCI and even if
they are, the dispute is about payment of wages, overtime pay, rest day and termination of
employment. Under Art. 217 of the Labor Code, these disputes are within the original and exclusive
jurisdiction of the Labor Arbiter.

61. May an execution be stopped merely because of a third party claim?

NO. The Labor Code grants the National Labor Relations Commission (NLRC) sufficient
authority and power to execute final judgments and awards. Thus, a third-party claim of ownership
on a levied property should not necessarily prevent execution, particularly where as in the
present case the surrounding circumstances point to a fraudulent claim. In fact, the disputed
contract of sale here is not merely rescissible; it is simulated or fictitious and, hence, void ab initio
(Tanongon v. Samson, G.R. No. 140089, May 9, 2002).

62. May a temporary restraining order in a labor dispute be issued ex parte?

YES. The issuance of an ex parte TRO in a labor dispute is not per se prohibited. Its
issuance, however should be characterized by care and caution for the law requires that it be
clearly justified by considerations of extreme necessity, as when the commission of unlawful acts is
causing substantial irreparable injury to company properties and the company is, for the moment,
bereft of an adequate remedy at law (Bisig ng Manggagawa sa Concrete Aggregates, Inc. vs.
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NLRC, September 16, 1993).

63. In cases involving monetary award, why does the law require an employer to post a cash or
surety bond as an indispensable condition for the perfection of an appeal?

An appeal stays the execution of an award. Such decision could be in the form of a
monetary award in favor of an employee. Thus, an appeal will mean that a monetary award will not
be executed. To ensure that an appealed monetary award is affirmed and has become final and
executory, Art. 223 requires that as an indispensable condition for the perfection of an appeal by
an employer, he must post a cash or surety bond issued by a reputable bonding company duly
accredited by the NLRC in the amount equivalent to the monetary award in the judgment appealed
from.
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64. What is the remedy in case the Regional Office or BLR verbally denies or refuses to act on
an application for registration for a considerable amount of time?

Secure a notice of denial in order to avail of the remedy of appeal. After all, the decision
of the Regional Office or the Bureau denying the application for registration shall be in writing,
stating in clear terms the reasons for such a denial. A copy of the notice of denial should be
furnished to the applicant union.

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65. What is the effect of the filing/pendency of inter/intra union and other related labor
disputes to the relationship of the party litigants?
5
The rights, relationships and obligations of the parties-litigants against each other and
other parties-in-interest prior to the institution of the petition shall continue to remain during the
pendency of the petition and until the date of finality of the decision rendered therein.
Thereafter, the rights, relationships and obligations of the parties-litigants against each other and
other parties-in-interest shall be governed by the decision so ordered.

The filing or pendency of any inter/intra-union dispute and other related labor relations
dispute is not a prejudicial question to any petition for certification election and shall not be a
ground for the dismissal of petition for certification election or suspension of proceedings for
certification election (Sections 3 and 4, RULE XI Book V, IRR 2003).

66. Can there be several unions in one enterprise?

YES. There can be several bargaining units in one employer unit, and at least one
legitimate labor organization per bargaining unit. Also, there can be several unions within one
bargaining unit, since there is no law precluding such a situation. But there can only be one
bargaining agent [to the exclusion of others] which shall be designated either by certification or
consent election, or by voluntary recognition as the case may be.

67. Can all rank and file employees join, assist, or form a labor union?

NO. Confidential employees who are ALSO rank and file employees cannot form, join, or
assist unions if they assist in a confidential capacity or have access to the confidential matters of
persons who exercise managerial functions in the field of labor relations

By the very nature of their functions, they assist and act in a confidential capacity to, or
have access to confidential matters of, persons who exercise managerial functions in the field of
labor relations. As such, the rationale for the ineligibility of managerial employees to form, assist
or join a labor union equally applies to them.

In Bulletin Publishing Co., Inc. vs. Hon. Augusta Sanchez,144 SCRA 628 [1986] the Court
elaborated on the rationale for such inhibition in that, if the managerial employees would belong
to, or be affiliated with a Union, the latter might not be assured of their loyalty to the Union in
view of evident conflict of interests. The Union can also become company-dominated with the
presence of managerial employees in Union membership."

This also holds true for confidential employees such as accounting personnel, radio and
telegraph operators, who having access to confidential information, may become the source of
undue advantage. Said employee(s) may act as a spy (ies) of either party to a collective bargaining
agreement. This is especially true in the present case where the petitioning Union is already the
bargaining agent of the rank-and-file employees in the establishment. To allow confidential
employees to join the existing Union of the rank-and file would be in violation of the terms of the
Collective Bargaining Agreement wherein this kind of employees by the nature of their
Red Notes in Labor Law

functions/positions are expressly excluded. (Philips vs. NLRC, G.R. No. 88957, June 25, 1992).

68. In what forms is company domination of a labor union made manifest?

a. Initiation of the company union idea, which may occur in three styles:
(1) Outright formation by the employer or his representative\
(2) Employee formation or outright demand or influence of the employer
(3) Managerially motivated formation by employees.

b. Financial support to the union


An employer commits unfair labor practice if he defrays the union expenses or pays the
fees of the attorney who drafted the unions constitution and by-laws.
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c. Employer encouragement and assistance
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Immediately granting the union exclusive recognition as a bargaining agent without
determining whether the union represents the majority of employees is an illegal form of assistance
amounting to unfair labor practice.

d. Supervisory assistance
This takes the form of soliciting membership, permitting union activities during working
time or coercing employees to join the union by threats of dismissal or demotion (Philippine
American Cigar & Cigarette Factory Workers Union vs. Philippine American Cigar & Cigarette
Mfg. Co. Inc., G.R. No. L-18364 February 28, 1963).

69. XYZ Co. was informed that a petition for certification election has been filed by ABC Union,
a legitimate labor organization within XYZ Co beyond the 60-day freedom period granted to the
former. By virtue of said information. XYZ Co. unilaterally suspended the on-going negotiations
for a new CBA with XYZ Co. Employees Association (XYZEA) and refused to do any further
negotiations and bargaining. Was there unfair labor practice on the part of XYZ Co.?

Yes. The duty to bargain collectively includes the mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement. In order to
allow the employer to validly suspend the bargaining process, there must be a valid petition for
Certification Election raising a legitimate representation issue. When a petition is filed OUTSIDE the
60-day freedom period, there is no legitimate representation issue and the filing of said petition do
not constitute a bar to an on-going negotiation (Colegio de San Juan de Letran v. Association of
Employees and Faculty of Letran, G.R. No. 14147, September 18, 2000).

70. What is the legal justification of a UNION SHOP provision in the CBA? Explain.

The Labor Code, as amended, recognizes the validity of a union shop agreement in Article
248 thereof, Section (e) provides, to wit:
to discriminate in regard to hire or tenure of employment or any term or condition
of employment in order to encourage or discourage membership in any labor organization.
Nothing in this Code or in any other law shall prevent the parties from requiring
membership in a recognized collective bargaining agent as a condition for employment,
except of those employees who are already members of another union at the time of the
signing of the collective bargaining agreement.

We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision
in addition to the existing maintenance of membership clause in the collective bargaining
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agreement. As the Solicitor General asserted in his consolidated Comment, the University's reliance
on the case of Victoriano vs. Elizalde Rope Workers' Union is clearly misplaced. In that case, we
ruled that "...the right to join a union includes the right to abstain from joining any union. The
right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act
is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn
by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue
of which the employer may employ only members of the collective bargaining union, and the
employees must continue to be members of the union for the duration of the contract in order to
keep their jobs (DLSU vs. Laguesma, G.R.No. 109002, 12 April 2000).

71. Union X, a local/chapter of Y Federation moved to disaffiliate from the latter. The move
was supported by almost all of its members. During the pendency of the disaffiliation
Law

proceeding, the company entered into a collective bargaining agreement with Union X. Y
federation filed an action for ULP against the company. Decide.

If the local unions move to disaffiliate is supported by almost all [majority] the members
of said union, and such fact is not disputed by the federation [mother union], the companys act of
entering into a CBA with the local union does not constitute ULP.

As held in the case of Philippine Skylanders vs. NLRC, G.R. No. 127374, January 31,
2002, as PSEA has validly severed itself from PAFLU, there would be no restrictions which could

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validly hinder it from subsequently affiliating with NCW and entering into a CBA in behalf of its
members.

Applying the principle of agency, the local union being the agent of the real principal the
union members; and the federation being merely the agent of the agent the local union, the
former which has chosen to disaffiliate from the latter as willed by majority of its members may
validly enter into a CBA with the employer without holding the employer liable for ULP.

72. What is a sweetheart contract?

Article 249 considers it an unfair labor practice for a labor organization to ask for or accept
negotiation of attorneys fees from the employer in settling a bargaining issue or a dispute. When it
happens, the resulting Collective Bargaining Agreement (CBA) will most likely be a sweetheart
contract, a CBA that does not substantially improve the employees wages and benefits. Under
Article 239 (f), one of the grounds for cancellation of union registration is entering into collective
bargaining agreements which provide terms and conditions of employment below minimum
standards established by law.

73. May an electric cooperative be held liable to pay damages for the ULP it has committed
against its employees? How much?

YES, but the amount should be tempered. For this reason, we find it proper in this case to
impose moral and exemplary damages on private respondent. However, the damages awarded by
the labor arbiter, to our mind, are excessive. In determining the amount of damages recoverable,
the business, social and financial position of the offended parties and the business and financial
position of the offender are taken into account. It is our view that herein private respondents had
not fully acted in good faith. However, we are cognizant that a cooperative promotes the welfare
of its own members. The economic benefits filter to the cooperative members. Either equally or
proportionally, they are distributed among members in correlation with the resources of the
association utilized. Cooperatives help promote economic democracy and support community
development.

Under these circumstances, we deem it proper to reduce moral damages to only P10,000.00
payable by private respondent NEECO I to each individual petitioner. We also deem it sufficient for
private respondent NEECO I to pay each individual petitioner P5,000.00 to answer for exemplary
damages, based on the provisions of Articles 2229 and 2232 of the Civil Code (NEECO I v. NLRC,
G.R. No. 116066, January 24, 2000).

74. What is [an] in-house agency?

An in-house agency is where a contractor or subcontractor is engaged in the supply of labor


which is owned, managed, or controlled by the principal and operates solely for the principal
owning, managing, and controlling it. It is prohibited by law.

75. What is the so-called HOLDOVER PRINCIPLE in a CBA?


Red Notes in Labor Law

In the case of New Pacific Timber vs. NLRC, the court had the occasion to rule that Article
253 and 253-A mandate the parties to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement during the 60-day period prior to the expiration
of the old CBHA and/or until a new agreement is reached by the parties. Consequently, the
automatic renewal clause provided by the law, which is deemed incorporated in all CBAs provides
the reason why the new CBA can only be given a prospective effect. Thus, employees hired after
the stipulated term of a CBA are entitled to the benefits provided thereunder. To exclude them
would constitute undue discrimination and deprive them of monetary benefits they would
otherwise be entitled to under a new collective bargaining contract to which they would have been
parties.

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76. Which is the better barometer of the true financial standing of a company for purposes of
resolving an economic deadlock in collective bargaining, a proposed budget or an audited
financial statement. Explain.

As we ruled in the case of Caltex Refinery Employees Association (CREA) vs. Jose S.
Brillantes, (279 SCRA 218, 1997) [w]e believe that the standard proof of a company's financial
standing is its financial statements duly audited by independent and credible external auditors."
Financial statements audited by independent external auditors constitute the normal method of
proof of profit and loss performance of a company. The financial capability of a company cannot be
based on its proposed budget because a proposed budget does not reflect the true financial
condition of a company, unlike audited financial statements, and more importantly, the use of a
proposed budget as proof of a company's financial condition would be susceptible to abuse by
scheming employers who might be merely feigning dire financial condition in their business
ventures in order to avoid granting salary increases and fringe benefits to their employees.

77. What is the controlling doctrine on the issue of RETROACTIVITY of CBA benefits? Explain.
May the Secretary of Labor order the retroactivity of a CBA?

Labor laws are silent as to when an arbitral award in a labor dispute where the Secretary
had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall retroact. In general, a
CBA negotiated within six months after the expiration of the existing CBA retroacts to the day
immediately following such date and if agreed thereafter, the effectivity depends on the
agreement of the parties. On the other hand, the law is silent as to the retroactivity of a CBA
arbitral award or that granted not by virtue of the mutual agreement of the parties but by
intervention of the government. Despite the silence of the law, the Court rules herein that CBA
arbitral awards granted after six months from the expiration of the last CBA shall retroact to such
time agreed upon by both employer and the employees or their union. Absent such an agreement as
to retroactivity, the award shall retroact to the first day after the six-month period following the
expiration of the last day of the CBA should there be one. In the absence of a CBA, the Secretary's
determination of the date of retroactivity as part of his discretionary powers over arbitral awards
shall control (MERALCO v. Quisumbing, G.R. No. 127598, February 22, 2000).

78. May the Labor Unions and the Company enter into a CBA that grants a moratorium of ten
years in collective bargaining? Is this not a novation of the unions right to collective
bargaining? Explain.

On the second issue, petitioners contend that the controverted PAL-PALEA agreement is
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void because it abrogated the right of workers to self-organization and their right to collective
bargaining. Petitioners claim that the agreement was not meant merely to suspend the existing
PAL-PALEA CBA, which expires on September 30, 2000, but also to foreclose any renegotiation or
any possibility to forge a new CBA for a decade or up to 2008. It violates the protection to labor
policy laid down by the Constitution.

Under Article 253-A of the Labor Code insofar as representation is concerned, a CBA has a
term of five years, while the other provisions, except for representation, may be negotiated not
later than three years after the execution. Petitioners submit that a 10-year CBA suspension is
inordinately long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A.
By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers constitutional right
to bargain for another CBA at the mandated time. We find the argument devoid of merit (Rivera v.
Law

Espiritu, G.R. No. 135547, January 23, 2002).

79. Is there a conflict between a CBA that grants a 10-year moratorium on CBA bargaining on
one hand, and Art. 253-A of the Labor Code, on the other? Explain.

The assailed PAL-PALEA agreement was the result of voluntary collective bargaining
negotiations undertaken in the light of the severe financial situation faced by the employer, with
the peculiar and unique intention of not merely promoting industrial peace at PAL, but preventing
the latters closure. We find no conflict between said agreement and Article 253-A of the Labor
Code. Article 253-A has a two-fold purpose. One is to promote industrial stability and

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predictability. Inasmuch as the agreement sought to promote industrial peace at PAL during its
rehabilitation, said agreement satisfies the first purpose of Article 253-A. The other is to assign
specific timetables wherein negotiations become a matter of right and requirement. Nothing in
Article 253-A prohibits the parties from waiving or suspending the mandatory timetables and
agreeing on the remedies to enforce the same.

In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground
employees that voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted
for the 10-year suspension of the CBA. Either case was the unions exercise of its right to collective
bargaining. The right to free collective bargaining, after all, includes the right to suspend it
(Rivera v. Espiritu, G.R. No. 135547, January 23, 2002).

80. Distinguish and/or explain the following terms: (1) Direct Certification; (2) Certification
Election; and (3) Consent Election.

Med-Arbiter certifies that a certain Union is the exclusive collective


bargaining representative of the employees of an appropriate
bargaining unit without holding of a certification election, but merely
on the basis of evidence presented in support of the Unions claim that
Direct Certification it is the choice of the majority of the employees. Such evidence may
consist of affidavits made by a clear majority of the employees stating
that they are members of and are supporting the Union petitioning for
direct certification to be their exclusive collective bargaining
representation (Prohibited by law under E.O. 111)
A certification election is an election ordered by Med-Arbiter for the
Certification purpose of determining the sole and exclusive bargaining agent of the
Election employees in an appropriate bargaining unit.

A consent election is an election agreed upon by the parties to


Consent Election determine the issue of majority representation of all workers of an
appropriate collective bargaining unit not for the purposes of
determining the sole and exclusive bargaining agent of the employees
of the bargaining unit but only for the purpose of administering the
existing CBA in case of massive disaffiliation of union members.

81. Can the Bureau of Labor Relations certify a union as the exclusive bargaining
representative after showing proof of majority representation through union membership cards
without conducting an election?

NO. The Bureau of Labor Relations cannot certify a union as the exclusive collective
bargaining representative after a showing of proof of majority representation through union
membership cards without conducting a certification election. The Labor Code (in Arts. 256 and
258) provides only for a certification election as the mode for determining exclusive collective
bargaining representative if there is a question on representation in an appropriate bargaining unit.

82. When is consent election a bar to a petition for certification election? When is it not a bar?
Red Notes in Labor Law

Where a petition for certification election had been filed and upon the intercession of the
med-arbiter, the parties agree to hold a consent election, the result thereof shall constitute a bar
to the holding of a certification election for one year from the holding of such consent election.
However, where the total number of valid votes cast in a consent election is less than the majority
of all the eligible employees in the bargaining unit, there shall be a failure of election. Such failure
will not bar the filing of a petition for the immediate holding of a certification election. Where no
petition for certification election had been filed but the parties themselves have agreed to hold a
consent election, the result thereof shall not constitute a bar to another certification election,
unless the winning union had been extended voluntary recognition.

83. Union X, a legitimate labor organization filed a petition for certification election during the 45
freedom period. Union Y, another union in the same company, moved to dismiss the same
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alleging among others that Union X is composed of not only rank and file employees, but also of
supervisory employees, who under the law, may not join a labor organization composed of rank
and file employees. What is the effect of such allegation upon the petition for certification
election?

There is no effect. After a certificate of registration is issued to a union, its legal


personality cannot be subject to a collateral attack. It may be questioned only in an independent
petition for cancellation in accordance with Section 5 of Rule V, Book IV of the Implementing Rules
of the Labor Code (Tagaytay Highlands International Gold Club, Inc. vs. Tagaytay Highlands
Employees Union-PTGWO GR No. 142000 January 22, 2003). Having attained such status, the
petition of the union stands unless the registration of the union is cancelled in accordance with the
aforementioned rule.
The infirmity in the membership of the respondent union can be remedied in the pre-
election conference thru the exclusion-inclusion proceedings.
Furthermore, the status of being a supervisory employee does not by itself disqualify an
employee from joining a labor organization composed of rank and file employee. A supervisory
employee to be disqualified must possess the powers similar to that of a managerial employee such
as the complete discretion to decide on matters without being under the control of or subject to
the review of some other superior.

84. May an employee who was improperly laid off be entitled to vote in a certification election?
YES. The employees who have been improperly laid off but who have a present,
unabandoned right to an expectation of reemployment, are eligible to vote in certification
election. Thus, if the dismissal is under question, whereby a case of illegal dismissal and/ or ULP
was filed, the employees could and should still qualify to vote. (Phil Fruits & Vegetables
Industries, Inc. vs. Torres)

85. Does a decision in a certification election case regarding the existence of an employer-
employee relationship foreclose all further disputes between the parties as to the existence or
non-existence of such relationship?

NO. However final it may become, the decision in a certification election case, by the very
nature of such proceeding, is not such as to foreclose all further dispute as to the existence, or
non-existence of an employer-employee relationship.

It is established doctrine that for res adjudicata to apply, the following requisites must
concur: (1) the former judgment or order must be final; (2) the court which rendered said
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judgment or order must have jurisdiction over the subject matter and the parties; (3) said
judgment or order must be on the merits; and (4) there must be between the first and second
actions identity of parties, subject matter and cause of action.

Clearly, implicit in these requisites is that the action or proceedings in which is issued the
prior Judgment that would operate in bar of a subsequent action between the same parties for
the same cause, be adversarial, or contentious, as distinguished from an ex parte hearing or
proceeding of which the party seeking relief has given legal notice to the other party and afforded
the latter an opportunity to contest it, and a certification case is not such a proceeding.

A certification proceeding is not a litigation in the sense in which this term is commonly
understood, but a mere investigation of a non-adversary, fact-finding character, in which the
Law

investigating agency plays the part of a disinterested investigator seeking merely to ascertain the
desires of the employees as to the matter of their representation. The court enjoys a wide
discretion in determining the procedure necessary to insure the fair and free choice of bargaining
representatives by the employees (Sandoval Shipyards vs. Prisco Pepito, G.R. No. 143428, June
25, 2001).

86. What is the statutory policy on certification elections? How does the law treat
managements attempts to thwart initiatives to hold certification election?

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The fact that PICOP voiced out its objection to the holding of certification election, despite
numerous opportunities to ventilate the same, only after respondent Undersecretary of Labor
affirmed the holding thereof, simply bolstered the public respondents' conclusion that PICOP raised
the issue merely to prevent and thwart the concerned section heads and supervisory employees
from exercising a right granted them by law. Needless to stress, no obstacle must be placed to the
holding of certification elections, for it is a statutory policy that should not be circumvented
(PICOP vs. Laguesma, G.R. No. 101738, April 12, 2000).

87. What is the Doctrine of Union Monopoly?

It means that once a union is chosen as the collective bargaining agent of an appropriate
bargaining unit through Certification election, it alone, can collectively bargain with management
to the exclusion of other competing unions.

88. Is there a violation of the CBAs no strike no lockout provision when workers join a
demonstration against police abuses?
NO. The demonstration held by workers would be purely and completely an exercise of
their freedom of expression in general and of their right of assembly and of petition for redress of
grievances in particular before the appropriate government agency. To regard the demonstration
against police officers, not against the employer as evidence of bad faith in collective bargaining
stretches unduly the compass of the collective bargaining agreement (Phil. Blooming Mills
Employees Org. vs. Phil. Blooming Mills Co., Inc. June 5, 1973).

89. What is a union recognition strike?

A union recognition strike is calculated to compel the employer to recognize ones union
and not the other contending group, as the employees bargaining representative despite the
striking unions doubtful majority status to merit voluntary recognition and lack of formal
certification as the exclusive representative in the bargaining unit.

90. Is the pari delicto rule applicable in strikes and lockouts?

YES. When the parties are in pari delicto the employees having staged an illegal strike
and the employer having declared an illegal lockout such situation warrants the restoration of the
status quo ante and bringing back the parties to their respective positions before the illegal strike
and illegal lockout through the reinstatement, without backwages, of the dismissed employees.
(Philippine Inter-Fashion, Inc. vs. NLRC, G.R. No. 59847, October 18, 1982).

91. Would the Unions failure to submit the STRIKE VOTE RESULTS to the NCMB cause the
illegality of the strike? Explain.

YES. The Supreme Court said so in the case of Samahan ng Manggagawa sa Moldex v.
NLRC, G.R. No. 119467, February 1, 2000. It has been shown that the results of the strike-vote
were never forwarded to the NCMB, as admitted by petitioners themselves and as attested to by a
Certification of Non-Submission of Strike Vote issued by the NCMB. There is thus no need for
additional evidence on the matter, as it would not change the fact that the results of the strike-
Red Notes in Labor Law

vote were not submitted to the NCMB. Without the submission of the results of the strike-vote, the
strike was illegal, pursuant to Article 264 of the Labor Code

92. What is the legal implication of defying the RETURN TO WORK ORDER in a strike case which
is under assumption of jurisdiction?

In the case of Telefunken Semiconductors Employees Union FFW v. CA, G.R. No.
143013-14, December 18, 2000, the Supreme Court held that the strike of the Union cannot be
viewed as anything but illegal for having been staged in open and knowing defiance of the
assumption and return-to-work orders. The necessary consequence thereof are also detailed by the
Supreme Court in its various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA 595), the
High Tribunal stated in no uncertain terms that -
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by staging a strike after the assumption of jurisdiction or certification for
arbitration, workers forfeited their right to; be readmitted to work, having abandoned
their employment, and so could be validly replaced.

Viewed in the light of the foregoing, we have no alternative but to confirm the loss of
employment status of all those who participated in the strike in defiance of the assumption order
dated 8 September 1995 and did not report back to work as directed in the Order of 16 September
1995.

93. Define the following:


a. Constructive resignation

Constructive Resignation is otherwise known as abandonment. It is present when the


following requisites concur:

(1) The worker has no intention to return to work, and


(2) The worker has manifested by overt acts such an intention.

b. Constructive retrenchment

An employee whose number of working days was reduced to just two (2) days a week due
to the financial losses suffered by the employers business, and who was rotated in such a way that
the number of working days had been substantially reduced for more than six months, and
considering further that the business was ultimately closed and sold off, the Supreme Court upheld
the ruling of the NLRC that the employee was thereby constructively dismissed or retrenched from
employment (International Hardware, Inc. vs. NLRC, et. al., G.R. No. 80770, August 10, 1989).

94. Is it within the jurisdiction of the Labor Arbiter or the NLRC to pass judgment on the
soundness of the management decision to declare that a position is no longer necessary? Why?

Similarly, in Wiltshire File Co., Inc. v. NLRC petitioner company effected some changes in
its organization by abolishing the position of Sales Manager and simply adding the duties previously
discharged by it to the duties of the General Manager to whom the Sales Manager used to report. In
that case, we held that the characterization of private respondents services as no longer necessary
or sustainable, and therefore properly terminable, was an exercise of business judgment on the
part of petitioner company. The wisdom or soundness of such characterization or decision is not
subject to discretionary review on the part of the Labor Arbiter or of the NLRC so long as no
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violation of law or arbitrary and malicious action is indicated (Ismael Santos v. CA, G.R. No.
141947, July 5, 1997).

95. What are the guidelines for the correct interpretation of the DOCTRINE OF LOSS OF
CONFIDENCE? Explain.

The Court, however, is cognizant of the fact that in numerous dismissal cases, loss of trust
and confidence has been indiscriminately used by employers to justify almost every instance of
termination and as a defense against claims of arbitrary dismissal. In the case of General Bank and
Trust Company vs. Court of Appeals, 135 SCRA 569 the Court came up with the following
guidelines for the application of the doctrine of loss of confidence:
Law

(a) loss of confidence which should not be simulated;


(b) it should not be used as a subterfuge for causes which are improper, illegal or unjustified;
(c) it should not be arbitrarily asserted in the face of overwhelming evidence to the contrary;
and
(d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.

Hence, while an employer is at liberty to dismiss an employee for loss of trust and
confidence, he cannot use the same to feign what would otherwise be an illegal dismissal
(Concorde Hotel v. Court of Appeals, G.R. No. 144089, August 9, 2001).

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96. Is the one-month notice for separation for authorized causes always required?

NO. If an employee consented to his retrenchment or voluntarily applied for retrenchment


with the employer due to the installation of labor saving devices, redundancy, closure or cessation
of operation or to prevent financial losses to the business of the employer, the required previous
notice to the DOLE is not necessary as the employee thereby acknowledged the existence of a valid
cause for termination of his employment (Ismael V. Santos vs. CA, G.R. No. 141947 July 5,
2001).

97. Is due process required before an employee may be demoted?

YES. Demotions, like dismissals, affect the employment of a worker whose right to
continued employment, under the same terms and conditions, is also protected by law. Moreover,
considering that demotion is, like dismissal, also a punitive action, the employer being demoted
should be given a chance to contest the same (Leonardo v. NLRC GR No. 125303, June 16, 2000).

98. Is MISREPRESENTATION of essential facts enough to vitiate the voluntariness of a


RESIGNATION? Explain.

Respondent company's lack of candor and good faith in informing BARQUIN that he was
being terminated due to a valid retrenchment and not because it sought to avoid compliance with
the mandated wage increases amounted to a deception which led BARQUIN to the mistaken belief
that that there was legal ground for retrenchment and prompted him to acquiesce to his
termination and sign the quitclaim. Petitioners correctly point out that such an act has been
declared by this Court in the case of Trendline Employees Association-Southern Philippines
Federation of Labor vs. NLRC, as tainted with bad faith and should not be countenanced as being
prejudicial and oppressive to labor.] Verily, had the respondent company not misled BARQUIN into
believing that there was a ground to retrench, it is not difficult to believe that he would have
thought twice before signing the quitclaim inasmuch there was no reason for the termination of his
employment.

Contrary to the assumption of both the Court of Appeals and the voluntary arbitrator, the
mere fact that BARQUIN was not physically coerced or intimidated does not necessarily imply that
he freely or voluntarily consented to the terms of the quitclaim. Under Article 1330 of the Civil
Code, consent may be vitiated not only through intimidation or violence but also by mistake, undue
influence or fraud (Barquin v. Philippine Carpet Mnufacturing Corp., G.R. No. 140269,
September 14, 2000).

99. a. Distinguish between back wages, unpaid wages, and separation pay.

Backwages is the relief given to an employee to compensate him for lost earnings during
the period of his dismissal.

Unpaid Wages are wages earned prior to the illegal dismissal but are not yet paid to the
employee.
Red Notes in Labor Law

Separation Pay is monetary amount intended to provide the employee money during the
period in which he will be looking for another employment.

b.What economic components constitute backwages for a rank and file employee? Are
these components equally applicable to a managerial employee?

The Labor Code (Art. 279) provides that an employee who is unjustly dismissed from work
is entitled to reinstatement and also 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 his actual reinstatement.

An employee is entitled to all the above benefit regardless if he is a rank and file employee
or a managerial employee. However, backwages may also include the 13th month pay which is paid 45
to rank and file employees, as well as benefits arising from the CBA given only to the employees in
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the bargaining unit. Managerial employees cannot be given the same since they are ineligible to
join the labor organization.

100. Does Republic Act No. 7641, the Retirement Law, apply to employees covered with a valid
retirement plan? Can it be given a retroactive effect?

Yes. The said law intends to give the minimum retirement benefits to employees not
entitled thereto under collective bargaining and other agreements. Its coverage applies to
establishments with existing collective bargaining, or other agreements or voluntary retirement
plans whose benefits are less than those prescribed under the proviso in question.

The said law is a curative social legislation, which, by their nature, may be given
retroactive effect, unless it will impair vested rights. It has a retroactive effect to include in its
coverage the employees services to an employer rendered prior to its effectivity. It applies to
employees in the employee of employers at the time the law took effect and who are eligible to
benefits under that statute (MLQU vs. NLRC, G.R. No. 141673, October 17, 2001).

FREQUENTLY ASKED QUESTIONS

TOPIC: LABOR; SOCIAL JUSTICE

May social justice as a guiding principle in labor law be so used by the courts in sympathy with
the working man if it collides with the equal protection clause of the Constitution? Explain.

Suggested Answer:
Yes. The State is bound under the Constitution to afford full protection to Labor; and when
conflicting interests collide and they are to be weighed on the scales of social justice, the law
should accord more sympathy and compassion to the less privileged working man (Fuentes v.
NLRC, 266 SCRA 24, 1997). However, it should be borne in mind that social justice ceases to be an
effective instrument for the equalization of the social and economic forces by the State when it
is used to shield wrongdoing (Corazan Jamer v. NLRC, 278 SCRA 632, 1997).

Alternative Answer:
No. Social justice as a guiding principle in law may not be used by the courts if it collides
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with the equal protection clause of the Constitution. Social justice is not a magic wand applicable
in all circumstances. Not all labor cases may be automatically decided in favor of the worker.
Management also has rights which are entitled to recognition and protection; justice must be
dispensed according to facts and the law; and social justice is not designed to destroy or oppress
the employer.

Another Alternative Answer:


Social justice as a guiding principle in Labor Law can be implemented side by side with the
equal protection clause of the Constitution.
In the implementation of the principle of social justice, the Constitution commands that
the State shall afford full protection to labor. Thus, Labor Law may be pro-labor in the sense that
labor is given certain benefits not given to management. But this is not necessarily violative of the
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equal protection clause of the Constitution because said clause allows reasonable classification.

TOPIC: CONSTITUTIONAL PROVISIONS RELATED TO LABOR LAW

What are the salient features of the protection to labor provision of the Constitution?

The salient features of the protection to labor provisions of the Constitution (Article XIII,
Section 3) are as follows:

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Extent of Protection - Full protection to labor;


Coverage of Protection - Local and overseas, organized and unorganized;
Employment Policy - Full employment and equality of employment opportunities for all.
Guarantees Unionisms and Method of Determination Conditions of Employment - Right of
all workers to self-organization, collective bargaining and negotiations.
Concerted Activities - Right to engage in peaceful concerted activities, including the right
to strike in accordance with law.
Working Conditions - Right to security of tenure, humane conditions of work and a living
wage.
Decision Making Processes - Right to participate in policy and decision making process
affecting their rights and benefits as way to provide by law.
Share in Fruits of Production - Recognition of right of labor to its just share in fruits of
production.

ALTERNATIVE ANSWER:
The Constitution in (Article XIII, Section 3) provides that the State shall afford protection to
labor, local and overseas, organized unorganized.
The State shall afford protection to labor by promoting full employment and equality of
employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and a living wage.
The State shall guarantee the right of all workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities, including the right to strike, in accordance by
law.
Workers shall also participate in policy and decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in setting labor disputes, including
conciliation, and shall enforce mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers recognizing the right
to its just share in the fruits of production and the right of enterprises to reasonable returns on
investments, and to expansion and growth.

1. LABOR STANDARDS
TOPIC: EMPLOYER-EMPLOYEE RELATIONSHIP
SUMMARY OF THE RULE: What determines employer-employee relationship is the power of the
employer to control the employee regarding the manner of how the work should be done.

Zapato Custom-made make shoes to customer specifications and repaired them. As a service to
customers, a shoe shine stand was operated on its premises. There were 10 shoe shine boys at
the stand. They owned their shoe shine boxes with cleaning agent polish, brushes, and rags.
Walk-in customers willing to wait were led by the shoe shine boys to a seat at the stand where
he waited while the boy asked the customer to pay to the receptionist. Customers not willing
to wait left the shoes with the stands receptionist who gave a receipt with the price for the
service and pick-up date and time indicated. The boys were free to get shoes to be shined for
Red Notes in Labor Law

the receptionist when there were no waiting walk-ins. For each pair shined, the boys got
markers corresponding to the price for their service. ZaCSIs staff did not interfere with, nor
supervise, how the boys went about their tasks. At days end, the markers held by each boy
were tallied and paid for. The boys signed a receipt to acknowledge full payment for work
done.

A labor federation organized ZaCSI and filed a petition for a consent election. The boys,
sympathizing with the workers, joined the union. At the pre-election conference, the lawyer
for ZaCSI moved to exclude the boys as voters.

As Med-Arbiter handling the case, rule on the objection. Would you ruling be different if in this
case, ZaCSI provided the boys with the shoe shine boxes and their contents? Explain. 45
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As Med-arbiter, I will rule that the shoe shine boys should be excluded as voters in the
consent election. The shoe shine boys are not employees of ZaCSI and thus could not be considered
as employees belonging to bargaining unit who will designate or select a bargaining representative.
They are not employees of ZaCSI because according to the given facts, they are not under the
control of ZaCSI which is an essential element for the existence of employer-employee relationship.
In the statement of facts, it is said that ZaCSIs staff did not interfere with, nor supervise how the
boys went about their task.
My ruling will not be different even if ZaCSI provided the boys with the shoe shine boxes
and their contents. ZaCSI, by this act, is not yet exercising control that is determinative of the
existence or non-existence of control over them. It is the existence of employer-employee
relationship.

TOPIC: MANAGEMENT PREROGATIVE


SUMMARY OF THE RULE: The management has the right to use its discretion and judgment in the
determination of policies regarding the aspects of employment. Contracting out services or
functions being performed by union members becomes illegal only when it interferes with, restrains
or coerces employees in the exercise of their right to self-organization.

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 hotels public areas. Over the protest of the Union, the Hotel contracted out the
aforementioned job to the City Service Janitorial Company, a bonafide independent contractor
which has a substantial capital in the form of janitorial tools, equipments, machineries and
competent manpower.

Is the action of the Harbor View Hotel legal and valid?

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 discipline, dismissal and recall of workers, except as provided
for, or limited by special laws.
Company policies and regulations are, unless shown to be gross oppressive or contrary to
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law, 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 vs. Ubaldo and Cruz, 218 SCRA 293).

ALTERNATIVE ANSWER:

The action of the Harbor View Hotel is legal and valid. Contracting out services or functions
being performed by union members is not illegal per se. In fact, it is the prerogative of
management to adopt cost-saving measures to ensure economy and efficiency. Contracting out
services or functions being performed by union members becomes illegal only when it interferes
with, restrains or coerces employees in the exercise of their right to self-organizations.
The action of Harbor View Hotel would, at first glance, appear to be an unfair labor
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practice under Article 248 (c) e.g. to contract out services or functions being performed by union
members if such will interfere with, restrain or coerce employees in the exercises of their right to
self-organization.
Considering, however, that in the case at bar, there is no showing that the hotels action is
a valid exercises of its management prerogatives and the right to make business judgments in
accordance with law.

TOPIC: CONTRACTOR; WAGES


SUMMARY OF THE RULE: A labor-only contract is a contract between an employer and a person
who supplies workers and does not have substantial capital or investment in the form of tools,

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equipment, machineries, work premises. The employer who contracts the services of the labor-only
contractor is directly liable to the employees of the labor-only contractor as if such employees had
been directly employed by the employer. In an independent contract, the employer who contracted
out the job is jointly and severally liable with the contractor only to the extent of the work-
performed under the contract.
An award of backwages is given to an employee who is unjustly dismissed. On the other
hand, an award of unpaid wages is given to an employee who has not been paid his salaries or
wages for services actually rendered. The cause of action here is non-payment of wages or salaries.

(a) What is a labor-only contract?

Labor-only contract is a contract between an employer and a person who supplies


workers and does not have substantial capital or investment in the form of tools, equipments,
machineries, work premises, among others, and the workers recruited and placed by such person
are perfoming activities which are directly related to the principal business of such employer. (Art.
106, Labor Code)

(b) Distinguish the liabilities of an employer who engages the services of a bona_fide
independent contractor from one who engages a labor-only contractor?

A person who engages the services of a bona_fide independent contractor for the
performance of any work, task, job or project is the indirect employer of the employees who have
been hired by the independent contractor to perform said work, task, job or project.
In the event that the independent contractor fails to pay the wages of his employees, an
indirect employer, in the same manner and extent that he is liable to employees directly employed
by him, is jointly and severally liable with the independent contractor to the employees of the
latter to the extent of the work performed under the contract.
As for the person who engages the services of a labor only contractor, the latter is
considered merely as an agent of the former who shall be responsible to the workers hired by the
labor only contractor in the same manner and extent as if the directly employed such workers.

ALTERNATIVE ANSWER:
An employer who engages the services of a bona fide independent contractor is solidarily
liable with his contractor or sub-contractor only for non-payment or under-payment of wages and
other labor standards provisions of the Labor Code, whereas an employer that it normally grants to
its regular or direct employees.
An employer who deals with a bona-fide independent contractor shall only be subsidiary
liable, if the contractor or sub-contractor fails to pay the wages to the workers in accordance with
the Labor Code.
Upon the other hand, an employer who deals with a labor-only contractor shall be
primarily responsible to the workers in the same manner and extent as if the latter were directly
employed by him. (Art 106-107, Labor Code)

(c) Distinguish between an award for back wages and an award for unpaid wages.

An award for backwages is to compensate an employee who has been illegally dismissed,
Red Notes in Labor Law

for the wages, allowances and other benefits or their monetary equivalent, which said employee
did not receive from the time he was illegally dismissed up to the time of his actual reinstatement.
On the other hand, an award for unpaid wages is for an employee who has actually worked
but has not been paid the wages he is entitled to receive for such work done. (Arts. 279 and 97 (F),
Labor Code).

ALTERNATIVE ANSWER:
An award of backwages is given to an employee who is unjustly dismissed. On the other
hand, an award of unpaid wages is given to an employee who has not been paid his salaries or
wages for services actually rendered. The cause of action here is non-payment of wages or salaries.
(General Baptist Bible College vs. NLRC 219 SCRA 549).
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TOPIC: OVERTIME PAY
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SUMMARY OF THE RULE: Undertime work on any particular day shall not be offset by overtime
work on any other day.

Danilo Flores applied for the position of driver in the motorpool of Gold Company, a
multinational corporation. Danilo was informed that he would frequently be working overtime
as he would have to drive for the companys executives even beyond the ordinary eight-hour
work day. He was provided with a contract of employment wherein he would be paid a monthly
rate equivalent to 35 times his daily wage, regular sick and vacation leaves, 5 day-leave with
pay every month and time off with pay when the companys executives using the cars do not
need Danilos service for more than eight hours a day, in lieu of overtime.

Are the above provisions of the contract of employment in conformity with, or violative of, the
law?

Except for the provision that Danilo shall have time off with pay when the companys
executives using the cars do not need Danilos service for more than eight hours a day, in lieu of
overtime, the provisions of the contract of employment of Danilo are not violative of any labor law
because the instead improve upon the present provisions of pertinent labor laws. Thus, the monthly
rate equivalent to 35 times the daily wage may be sufficient to include overtime pay.
There is no labor law requiring the payment of sick and vacation leaves except for a five-
day service incentive leave in the Labor Code.
The five-day leave with pay every month has no counterpart in Labor Law and is very
generous.
As for the provision in Danilos contract of employment that he shall receive time off with
pay in lieu of overtime, this violates the provision of the Labor Code which states that undertime
work on any particular day shall not be offset by overtime work on any other day. Permission given
to the employer to go on leave on some other day of the week shall not exempt the employer from
paying additional compensation required by the Labor Code.

TOPIC: HOUSEHELPERS; WAGES


SUMMARY OF THE RULE: No house helper shall be assigned to work in a commercial, industrial or
agricultural enterprise at a wage or salary rate lower than provided by law for agricultural or non-
agricultural workers. A family driver who drives the family van to fetch merchandise from suppliers
and delivers the same to boutique in a mall owned by the family for whom he works should be paid
the minimum daily wage of a driver in a commercial establishment.

The weekly work schedule of a driver is as follows:


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Monday, Wednesday, and Friday Drive the family car to bring them and fetch the children to
and from school.
Tuesday, Thursday, and Saturday Drive the family van to fetch merchandise from suppliers
and deliver the same to a boutique in a mall owned by the family.

(a) Is the driver a house helper?

The driver is a house helper. A person is a house helper or is engaged in domestic or


household service if he/she renders services in the employers home which are usually necessary or
desirable to the maintenance and enjoyment thereof and which includes ministering to the
personal comfort and convenience of the members of the employers household including the
services of family drivers.
Law

(b) The same driver claims that for work performed on Tuesday, Thursday and Saturday, he
should be paid to the minimum daily wage of a driver of commercial establishment. Is the
claim of the driver valid?

A family driver who drives the family van to fetch merchandise from suppliers and delivers
the same to boutique in a mall owned by the family for whom he works should be paid the
minimum daily wage of a drive in a commercial establishment.

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The Labor Code (in Article 143) provides that no house helper shall be assigned to work in a
commercial, industrial or agricultural enterprise at a wage or salary rate lower than provided by
law for agricultural or non-agricultural workers.

TOPIC: REGULAR EMPLOYEES AND PROJECT EMPLOYEES


SUMMARY OF THE RULE: An employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or
undertaking the completion of which has been determined at the time of the engagement of the
employee.

A construction group hired Engineer A as a Project Engineer in 1987. He was assigned to five
(5) Contracts of Employment he signed, specified the name of the project, its duration and the
temporary-project nature of the engagement of his services. Upon completion of the fifth
project in August 1998, his services were terminated. He worked for a total of ten (10) years
(1987-1998) in the five separate projects.

Six months after his separation, the Group won a bid for a large construction project. The
Group did not engage the services of Engineer A as a Project Engineer for this new project;
instead, it engaged the services of Engineer B. Engineer A claims that by virtue of the
nature of his functions, i.e., Engineer in a Construction Group, and his long years of service he
had rendered to the Group, he is a long years of service he had rendered to the Group, he is a
regular employee and not a project engineer at the time he was first hired. Furthermore, the
hiring of Engineer B showed that there is a continuing need for his services. Is the claim of
Engineer A correct?

The claim of Engineer A that he is a regular employee and not a project employee is not
correct. The Labor Code provides:
Art. 280. Regular and casual employment. - An employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion of which
has been determined at the time of the engagement of the employee.

In all the five (5) successive contracts of employment of Engineer A the name of the
project, its duration, and the temporary project nature of the engagement of his services are
clearly stated; hence, Engineer A falls within the exemption of Art. 280.
The fact that the petitioners worked for several projects of private respondent company is
no basis to consider them as regular employees. By the very nature of their employees business,
they will always remain project employees regardless of the number of projects in which they have
worked (Manansag v. NLRC, 218 SCRA 722, 1993)
Project employees are not considered regular employees, their services, being needed only
when there are projects to be undertaken. The rationale for this rule is that if a project has
already been completed, it would be unjust to require the employer to maintain them in the
payroll while they are doing absolutely nothing except waiting for another project (De Ocampo v.
Red Notes in Labor Law

NLRC, 186 SCRA 361, 1990).

ALTERNATIVE ANSWER:
The claim of Engineer A is not correct. The fact that he has been working for
Construction Group for a total of ten (10) years does not make him a regular employee when it is
very clear from the Contracts of Employment that he signed that he has always been engaged as a
project employee.
The tenure of project employee is co-terminus with the project in connection with which
his services were engaged. Thus, after the end of the project, the employer-employee relationship
ceases to exist. Such project employee has no legal rights to insist that the Construction Group for
a subsequent project of said Group should employ him.

TOPIC: HOURS WORKED 45


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SUMMARY OF RULE: An employee who is required to remain on call in the employers premises or
so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be
considered as working while on call.
An employee who is not required to leave word at his home or with company officials where
he may be reached is not working while on call.

Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of Line Movers, Inc.
Usually, Lito is required by the personnel manager to just stay at the head office after office
hours because he could be called to drive the trucks. While at the head office, Lito merely
waits in the managers reception room. On the other hand, Bong is allowed to go home after
office hours but is required to keep his cellular phone on so that he could be contacted
whenever his services as driver become necessary.

Would the hours that Lito and Bong are on call be considered compensable working hours?

The hours of Lito and Bong while on call can be considered compensable hours. The
applicable rule is: An employee who is required to remain on call in the employers premises or so
close thereto that he cannot use the time effectively and gainfully for his own purpose shall be
considered as working while on call. An employee who is not required to leave word at his home or
with company officials where he may be reached is not working while on call. Here Bong is
required to stay at the office after office hours so he could be called to drive the trucks of the
Company. As for Bong, he is required to keep his cellular phone so that he could be contacted
whenever his services as driver as needed. Thus, the waiting time of Lito and Bong should be
considered as compensable hours.

Note: It could be argued that in the case of Bong who is not required to stay in the
office but is allowed to go home, if he is not actually asked by cellular phone to report to the
office to drive a car, he can use his time effectively and gainfully to his own purpose, thus,
the time that he is at home may mean that they are not compensable hours.

TOPIC: JOB CONTRACTING


SUMMARY OF THE RULE: There is job contracting where (1) the contractor carries on an
independent business and undertakes the contract work on his own account, under his own
responsibility according to his own manner and method, free form the control and direction of his
employer or principal in all matters connected with the performance of the work except as to the
results thereof; and (2) the contractor has substantial capital or investment in the form of tools,
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equipment, machineries, work premises and other materials which are necessary in the conduct of
the business (Lim v NLRC, 202 SCRA 465,1991).

Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling of lumber
as well as the hauling of waste wood products. The Company provided the equipment and tools
because Arnold had neither tools and equipment nor capital for the job. Arnold, on the other
hand, hired his friends, relatives and neighbors for the job. Their wages were paid by Sta.
Monica Plywood Corporation to Arnold, based on their production or the number of workers
and the time used in certain areas of work. All work activities and schedules were fixed by the
company?

(a) Is Arnold a job contractor? Explain briefly.


Law

No. In two cases decided by the Supreme Court, it was held that there is job contracting
when (1) the contractor carries on an independent business and undertakes the contract work on
his own account, under his own responsibility according to his own manner and method, free form
the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and (2) the contractor has substantial
capital or investment in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the conduct of the business.
In the problem given, Arnold did not have sufficient capital or investment for one. For
another Arnold was not free from the control and direction of Sta. Monica Plywood Corporation

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because all the work activities and schedules were fixed by the company. Therefore, Arnold is not
job contractor He is engaged in labor-only contracting.

(b) Who is liable for the claims of the workers hired by Arnold? Explain briefly.

Sta. Monica Plywood Corp. is liable for the claims of the workers hired by Arnold. A finding
that Arnold is a labor only contractor is equivalent to declaring that there exist an employer-
employee relationship between Sta. Monica Plywood Corp. and workers hired by Arnold. This is so
because Arnold is considered a mere agent of Sta. Monica plywood Corp (Lim v NLRC, 303 SCRA
432, 1999; Baguio et. al. v. NLRC, 202 SCRA 465 1991).

TOPIC: SOCIAL SECURITY ACT OF 1997; COVERAGE


SUMMARY OF THE RULE: Coverage under the SSS is compulsory where employer-employee relations
exist. Nevertheless, integration of other benefits is allowed.

The collective bargaining agreement of the Golden Corporation Inc. and the Golden Corporation
Workers Union provides a package of welfare benefits far superior in comparison with those
provided for in the Social Security Act of 1997. The welfare plan of the company is funded
solely by the employer with no contributions from the employees. Admittedly, it is the best
welfare plan in the Philippines. The company and the union jointly filed a petition with the
Social Security System for exemption from coverage. Will the petition for exemption from
coverage prosper?

No, because coverage under the SSS is compulsory where employer-employee exists.
However, if the private plan is superior to that of SSS, the plan may be integrated with the SSS
plan. Still it is integration and not exemption from SSS law. (Philippine Blooming Mills Co. Inc. v
SSS, 17 SCRA 107)

TOPIC: COMPREHENSIVE AGRARIAN REFORM LAW

1.a. What is the foundation of the agrarian reform program under the 1987 Constitution? Who
are the direct beneficiaries of the program?

The 1987 Constitution enunciates in Article II as one of the state policies that the State
shall promote comprehensive rural development and agrarian reform.
In Article XII of the Constitution, in dealing with the national economy and patrimony, it is
also stated that the State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform.
Then in Article XIII of the Constitution, in dealing with social justice and human rights,
there is this provision, among others: the state shall, by law, undertake an agrarian reform
program founded on the right of framers and regular farm workers, who are landless, to own
directly or workers, to receive a just share of the fruits thereof. To this end, the state shall
encourage and undertake the just distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as the congress may prescribe, taking into account ecological,
developmental, or equity considerations, and subject to the payment of just compensation. In
Red Notes in Labor Law

determining the retention limits, the state shall respect the right of small landowners. The state
shall further provide incentives for voluntary landsharing.
Taken together, the above provisions could be considered as the foundation of the agrarian
reform program.
Under the Comprehensive Agrarian Reform Law, the lands covered by the CARP shall be
distributed as much as possible to landless residents of the same barangay, or in the absence
thereof, landless residents of the same municipality in the following order of priority:
1. agricultutral lessees and share tenants;
2. regular farmworkers;
3. seasonal farmworkers;
4. other farmworkers;
5. actual tillers or occupants of public lands;
6. collectives or cooperatives of the above beneficiaries; and 45
7. others directly working on the land.
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The children of landowners, who are qualified to be awardees of not more than three
hectares, shall be given preference in the distribution of the land of their parents. Actual tenant
tillers in the landholding shall not be ejected or removed therefrom.
Beneficiaries under PD 27 who have culpably sold, disposed of or abandoned their land are
disqualified to became beneficiaries under the CARP.
A basic qualification of a beneficiary shall be his willingness aptitude and ability to
cultivate and make the land as productive as possible. The DAR shall adopt a system of monitoring
the record or performance of each beneficiary, so that any beneficiary guilty of negligence or
misuse of the land or any support extended to him shall forfeit his right to continue as such
beneficiary. The DAR shall submit periodic reports on the performance of the beneficiaries to the
CARP.
If, due to the landowners retention rights or to the number o tenants, lessees, or workers
on the land, there is not enough land to accommodate any or some of them, they may be granted
ownership of other lands available for distribution under the CARL, at the option of the
beneficiaries.
Farmers already in place and those not accommodated in the distribution of privately
owned lands will be given preferential rights in the distributions of lands from the public domain.

1.b. Distinguish just compensation under the CARL of 1988 form just compensation under the
Bill of rights? How it is determined under the former?

In the Bill of Rights it is provided that private property shall not be taken for public use
without just compensation.
In the provisions of the 1987 constitution on agrarian reform, it is provided that in the just
distribution of all agricultural lands, the same shall be subject, among others, to the payment of
just compensation.
The concepts of just compensation in the Bill of Rights and in agrarian reform are similar in
the sense that in both situations, the person who is deprived of his property should be given the fir
and full equivalent value of the property that is taken from him. In both situations, ultimately, it is
the courts, which may determine ultimately just compensation.
Under the CARL, however, the Land Bank of the Philippines shall compensate the
landowner in such amount as may agreed upon by the landowner and the Department of Agrarian
Reform and the Land Bank of the Philippines.
Also, under the CARL, compensation could be in cash and in government financial instruments
like Land Bank of the Philippines bonds. At the option of the landowner, the compensation may be
in shares of stock in government owned and controlled corporations, or in tax credits. The CARL
provides that in determining just compensation, the cost of acquisition of the land the current
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value of like properties, its nature, actual use of income, the sworn valuation by the owner, the tax
declarations, and the assessment made by the government assessors shall be considered. The social
and economic benefits contributed by the farmers and the farm-owners and by the government to
the property as well as the non-payment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its valuation.

TOPIC: LABOR STANDARDS; CONDITIONS OF EMPLOYMENT. LABOR RELATIONS; ILLEGAL


DISMISSAL.
SUMMARY OF THE RULE: Any woman who is permitted or suffered to work, with or without
compensation in any nightclub, cocktail lounge, massage clinic, bar or other similar establishment,
under the effective control and supervision of the employer for a substantial period of time as
determined by the Secretary of Labor shall be considered as an employee of such establishment for
Law

purposes of labor and social legislation.

Pregnancy is not a valid cause for dismissal because, as provided under the Code, it shall be
unlawful for an employer to discharge a woman employee on account of her pregnancy.

Club Paris is an entertainment entity that operates a night club along Roxas Boulevard. The
club provides food and drinks which are served by women who are dressed like Playboy
Bunnies. In the employment contract of each woman, the ff. provisions appear:
Compensation -- All tips, commissions and other forms of payment received from
customers minus 10%

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Hours of work 6 pm to 3 am, daily, including Sundays and Holidays


Other conditions Must remain single; marriage or pregnancy is valid cause for
dismissal.

Bituin applied and was hired by the Club. She signed the employment contract, containing the
aforesaid provisions. 6 months later, she asked for a maternity leave with pay. Instead of
granting her maternity leave, the management of the club fired her. Bituin sued the Club for
illegal dismissal, backwages, OT pay, and holiday pay. Decide.

Bituin is an employee of the Club. Under Art.138, any woman who is permitted or
suffered to work, with or without compensation in any nightclub, cocktail lounge, massage clinic,
bar or other similar establishment, under the effective control and supervision of the employer
for a substantial period of time as determined by the Secretary of Labor shall be considered as an
employee of such establishment for purposes of labor and social legislation.
Bituin was illegally dismissed. Pregnancy is not a valid cause for dismissal because, as
provided under the Code, it shall be unlawful for an employer to discharge a woman employee on
account of her pregnancy.
She is entitled to backwages. The compensation given to Bituin was all tips. These cant
be considered compensation, at most, they could be considered as service charges which Bituin can
keep. She is thus entitled to be paid at least the minimum wage.
Since her working hours are from 6 pm to 3 am, She works 9 hours a day. She is also
entitled to OT pay, and also from 10 pm, to a night differential pay. She is also entitled to premium
pay since she works 7 days a week, and thus, works on her weekly rest day, and also on regular
holidays. For the latter, she should be paid at 200% of her basic rate.

2. LABOR RELATIONS

TOPIC: ASSUMPTION ORDER

In a labor dispute, the Secretary of Labor issued an Assumption Order. Give the legal
implications of such an order.

Under Art. 263(g) of the Labor Code, such assumption shall have the effect of automatically
enjoining the intended or impending strike or lockout as specified in the assumption order. If one
had already taken place at the time of assumption, all striking or lockout 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. The Secretary
of Labor and Employment may seek the assistance of law enforcement agencies to ensure
compliance with this provision as well as he may issue to enforce the same. The mere issuance of
an assumption order by the Secretary of Labor 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. Those who
violate the foregoing shall be subject to disciplinary action or even criminal prosecution.
Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the
Red Notes in Labor Law

assumption of jurisdiction by the Secretary.

TOPIC: STRIKE/LOCKOUT; COMPULSORY ARBITRATION


SUMMARY OF THE RULE: The Secretary of Labor may exercise the power of compulsory arbitration
over the labor dispute when such dispute may cause or likely cause a strike or lockout in an
industry indispensable to national interest. (Divine Word University vs. Secretary of Labor, 213
SCRA 759).

Jenson & Jenson (J&J) is a domestic corporation engaged in the manufacturing of consumer
products. Its rank-and-file workers organized the Jenson Employees Union (JEU), a duly
registered local union affiliated with PAFLU, a national union. After having been certified as
the exclusive bargaining agent of the appropriate bargaining unit, JEU_PAFLU submitted its 45
proposals for a Collective Bargaining Agreement with the company.
San Beda
College of Law
LABOR
LAW
In the meantime, a power-struggle occurred within the national union PAFLU between its
National President, Manny Pakyao, and its National Secretary General, Gabriel Miro. The
representation issue within PAFLU is pending resolution before the Office of the Secretary of
Labor.

By reason of this intra-union dispute within PAFLU, J&J obstinately and consistently refused to
offer any counter-proposal and to bargain collectively with JEU-PAFLU until the representation
issue within PAFLU shall have been resolved with finality. JEU-PAFLU filed a Notice of Strike.
The Secretary of Labor subsequently assumed jurisdiction over the labor dispute.

Can the Secretary of Labor decide the labor dispute by awarding the JEU CBA Proposals as the
Collective Bargaining Agreement of the parties? Explain briefly.

Yes. The Secretary of Labor can decide the labor dispute by awarding the JEU CBA proposals as the
Collective Bargaining Agreement of the parties because when the Secretary of Labor (Article 263
[g]) assumes jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor exercises the power of
compulsory arbitration over the labor dispute, meaning, that as an exception to the general rule,
the Secretary of Labor now has the power to set or fix wages, rates of pay, hours of work or terms
and conditions of employment by determining what should be the CBA of the parties (Divine Word
University vs. Secretary of Labor, 213 SCRA 759).

ALTERNATIVE ANSWER:
No. What is involved in the case in question is a corporation engaged in the
manufacturing of consumer products. If the consumer products that are being manufactured
are not such that a strike against the company cannot be considered a strike in an industry
indispensable for the national interest, then the assumption of jurisdiction by the Secretary of
Labor is not proper. Therefore, he cannot legally exercise the powers of compulsory arbitration
in the labor dispute.

TOPIC: PROBATIONARY EMPLOYEES; CERTIFICATION ELECTION


SUMMARY OF THE RULE: All rank-and-file employees, probationary or permanent, have substantial
interest in the selection of the bargaining representative. The Code makes no distinction as to their
employment status as bases for eligibility to vote in the petition for certification election. (Airtime
Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749).
San Beda College of

Are probationary employees entitled to vote in a certification election? Why?

In a certification election, all rank-and-file employees in the appropriate bargaining unit


are entitled to vote. This principle is clearly stated in Article 255 of the Labor Code which states
that the labor organization designated or selected by the majority of the employees in such unit
shall be the exclusive representative of the employees in such unit for the purpose of collective
bargaining. Collective bargaining covers all aspects of the employment relation and the resultant
CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank-
and-file employees, probationary or permanent, have substantial interest in the selection of the
bargaining representative. The Code makes no distinction as to their employment status as bases
for eligibility to vote in the petition for certification election. The law refers to all the
Law

employees in the bargaining unit. All they need to be eligible to vote is to belong to the bargaining
unit. (Airtime Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749).

ALTERNATIVE ANSWER:
Probationary employees may not be entitled to vote in a certification election where only
regular employees belong to a bargaining unit and probationary employees do not belong to such
bargaining unit. It is the belonging to a bargaining unit that entitles an employee to vote in a
certification election.

ANOTHER ALTERNATIVE ANSWER:

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Yes. Any employee, whether employed for a definite period or not, shall, beginning on his
first day of service, be considered an employee for purposes of membership in any labor union.
[Article 277 (c)].

TOPIC: STRIKES
SUMMARY OF THE RULE: For a strike to be legal, it should either be an economic strike, i.e.,
caused by a bargaining deadlock or an unfair labor practice strike, i.e., caused by the commission
of an unfair labor practice by an employer.

On May 24, 1989, the UKM urged its member-unions to join a Welga ng Bayan in support of
its efforts to pressure Congress to increase the daily minimum wage. Union X is a member of
the UKM and represents all the rank and the file employees of the Puritan Mining Company.
Following the call for a nationwide strike, Union X staged a strike and put a picket the
following day. As a result, the companys operations were paralyzed although company officials
and supervisory employees were allowed ingress and egress to and from the company premises.
The picket was likewise peaceful. On May 28, 1989, the UKM leadership announced the end of
the Welga ng Bayan. Union X immediately company sought your legal advice on the legality
of the strike and the liability, if any, of the union officers and the participating members. What
is your opinion? Explain.

The strike was illegal. For a strike to be legal, it should either be an economic strike, i.e.,
caused by a bargaining deadlock or an unfair labor practice strike, i.e., caused by the commission
of an unfair labor practice by an employer.
The strike by Union X was neither an economic strike or an unfair strike. Thus, it was an
illegal strike.
Because it was an illegal strike, any union officer who knowingly participated in it may be
declared to have lost his employment status, meaning such union officer could be legally
terminated.
As for the union members who participated in the strike, the facts show that no illegal acts
were committed. They allowed ingress and egress to and from the company premises. The picket
was peaceful. The mere participation of the union members, without their committing illegal acts,
does not constitute sufficient ground for the termination of their employment.

ALTERNATIVE ANSWER:
The strike is legal and the union officers and participating union members incur no liability
for calling and participating in the strike respectively. Applying the rule in Philippine Blooming Mills
to the effect that the workers only personally assembled to influence the decision making process
of the government which is a constitutionally guaranteed right.

Note: Credit should be given to answer that focus on the procedural requirement for a
strike to be legal, i.e. strike vote, notice, cooling off period.

Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All were
stockholders, directors and officers of the Pagaspas Marketing Co., Inc. (PMCI). PMCI sold office
machines and supplies. It employed 20 sales persons, 10 delivery men, 20 service personnel,
Red Notes in Labor Law

and 10 administrative employees. On December 10, 1987, 45 rank and file workers of the
company formed and registered a labor union. They sent a letter to Pagaspas demanding
recognition as bargaining agent of all workers, enclosing check-off authorization forms of the
union members, and a set of economic demands. PMCI refused to recognize the union. The
union president went to you, as labor adviser of the federation which they were planning to
affiliate with.

He wants your opinion on what the union may lawfully do to compel management to come to
the bargaining table at that point. What will your advice be?

The union president tells you that they prefer to go on strike. He wants to know the legal
requirements that the union must comply with so the strike will be legal. What advice will you
give? 45
San Beda
College of Law
LABOR
LAW
I will advice the union president to file a petition for certification so that after being
certified as the collective bargaining representative, the union could go back to PMCI and ask it to
bargain collectively with the Union. If PMCI persists in its refusal to bargain collectively, I will
advice the Union to file a case of unfair labor practice against PMCI since a refusal to bargain
collectively is a ULP.
I will tell the union president that these are the requisites that should be complied with if a
strike is to be legal: The union should file a notice of strike with the Bureau of Labor Relations
(assuming PMCI is in Metro Manila). A copy of the notice should also be served upon PMCI. The union
should not actually go on strike until after 30 days (if the strike is because of the ULP committed by
PMCI, i.e., its refusal to bargain collectively) after filing a notice of strike.
There should be a strike vote, either at a meeting or through a referendum. A majority of the union
members on the bargaining unit should approve the declaration of strike. The union should furnish
the Bureau of Labor Relations of the Notice of meeting where a strike vote will be taken. The union
should also inform the Bureau about the result of the voting at least seven (7) days before the
intended strike.

TOPIC: CONDITIONS FOR A VALID RETRENCHMENT

What conditions must prevail and what requirements, if any, must an employer comply with to
justify / effect a valid retrenchment program?

In the case of Asian Alcohol Corporation vs. NLRC, G.R. No. 131108, March 25, 1999, The SC
stated that the requirements for a valid retrenchment must be proved by clear and convincing
evidence:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses which,
if already incurred, are not merely de minimis, but substantial, serious, actual and real or if only
expected, re reasonably imminent as perceived by objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one month
pay or at least one month pay for every year of service, whichever is higher;
(4) that the employer exercises his prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right of security of
tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status (i.e., whether they are
temporary, casual, regular, or managerial employees), efficiency, seniority, physical fitness, age,
San Beda College of

and financial hardship for certain workers.

TOPIC: ILLEGAL DISMISSAL; DUE PROCESS REQUIREMENTS.


SUMMARY OF THE RULE: To meet the requirements of due process, the law requires that an
employer must furnish the workers sought to be dismissed with two written notices before
termination of employment can be legally effected, that is, (1) a notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) subsequent
notice, after due hearing, which informs the employee of the employers decision to dismiss him.

Assuming the existence of valid grounds for dismissal, what are the requirements before an
employer can terminate the services of an employee?
Law

The employer should give the employee being terminated due process. For termination of
employment based on any of the just causes for termination, the requirement of due process that
the employer must comply with are:

(1) A written notice should be served on the employer specifying the ground or grounds for
termination and giving to say employee reasonable opportunity within which to explain his
side.

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2005 CENTRALIZED BAR OPERATIONS

(2) A hearing or conference should be held during which the employee concerned, with the
assistance or counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence and present the evidence presented against him.
(3) A written notice of termination, if termination is the decision of the employer, should be
served on the employee indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination.

For termination of employment based on authorized causes, the requirements of due


process shall be deemed complied with upon service of a written notice to the Department of Labor
and Employment at least thirty (30) days before the affectivity of the termination specifying the
ground or grounds for termination.

ALTERNATIVE ANSWER:
Assuming that there is a valid ground to terminate employment, the employer must comply
with the requirement of procedural due process: written notice of intent to terminate stating the
cause of termination; hearing; and notice of termination. Art. 277 of the Labor Code reads:

xxx The employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and to defend himself with the assistance
of his representative if he so desires.

Not only must the dismissal be for a valid or unauthorized cause as provided by law but the
rudimentary requirements of due process notice and hearing must also be observed before an
employee must be dismissed (Salaw v. NLRC, 202 SCRA 7). To meet the requirements of due
process, the law requires that an employer must furnish the workers sought to be dismissed with
two written notices before termination of employment can be legally effected, that is, (1) a notice
which apprises the employee of the particular acts or omissions for which his dismissal is sought;
and (2) subsequent notice, after due hearing, which informs the employee of the employers
decision to dismiss him (Tanala v. NLRC, 252 SCRA 314).

TOPIC: JURISDICTION
SUMMARY OF THE RULE: Regular courts have jurisdiction over cases arising from slanderous
language uttered against an employee by an employer. This is a simple action for damages for
tortious acts allegedly committed by defendant-employer (Medina vs. Castro-Bartolome, 116 SCRA
597).

Mariet Demetrio was a clerk-typist in the Office of the President of a multinational corporation.
One day she was berated by the President of the company, the latter shouting invectives at her
in the presence of employees and visitors for a minor infraction she committed. Mariet was
reduced to tears out of shame and felt so bitter about the incident that she filed a civil case for
damages against the company president before the regular courts. Soon thereafter, Mariet
received a memorandum transferring her to the Office of the General Manager without
demotion in rank or diminution in pay. Mariet refused to transfer.
Red Notes in Labor Law

However, with respect to the civil suit for damages, the company lawyer filed a Motion to
Dismiss for lack of jurisdiction considering the existence of an employer-employee relationship
and therefore, it is claimed that the case should have been filed before the Labor Arbiter.
Rule on the Motion to Dismiss. Should it be granted or denied. Explain briefly.

The Motion to Dismiss should be denied. It is a regular court and not a Labor Arbiter that
has jurisdiction on the suit for damages. The damages did not arise from the employer-employee
relations which would not have placed the suit under the jurisdiction of a Labor Arbiter. The suit
arises from the fact that the President of the company shouted invectives at Mariet Demetrio in the
presence of employees and visitors. Her complaint for damages is against an officer of the Company
based on slanderous language alleged made by the latter. This falls under the jurisdiction of the
ordinary courts. There is here a simple action for damages for tortious acts allegedly committed by
the defendant. Such being the case, the governing statue is the Civil Code and not the Labor Code. 45
(Medina vs. Castro-Bartolome, 116 SCRA 597)
San Beda
College of Law
LABOR
LAW
ALTERNATIVE ANSWER:
The Motion to dismiss should be granted. According to the Labor Code (Article 217 (a)4),
the Labor Arbiter has original and exclusive jurisdiction to hear and decide, among others, claims
for actual, moral and exemplary and other forms of damages arising from the employer-employee
relations. The claim for damages in the case in question arose from the fact that the President of
the Company shouted invectives at Mariet Demetrio in the presence of employees and visitors for a
minor infraction she committed. If the infraction has something to do with her work, then, the
claim for damages could be considered as arising from employer-employee relations. Thus, the
claim is under the exclusive jurisdiction of the Labor Arbiter.

TOPIC: JURISDICTION
SUMMARY OF THE RULE: Article 223 of the Labor Code provides that: Decisions, awards, or
orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or
both parties within 10 calendar days from the receipt of such decisions, awards, or orders.

The affected members of the rank-and-file employees elevated the Labor Arbiters decision to
the NLRC via a petition for review filed after the lapse of the 10-day reglementary period for
perfecting an appeal. Should the NLRC dismiss the petition outright or may the NLRC take
cognizance thereof?

The NLRC should dismiss the appeal outright because the same was filed beyond the
reglementary period of appeal. Article 223 of the Labor Code reads: Decisions, awards, or orders
of the Labor Arbiter are final and executory unless appealed to the Commission by any or both
parties within 10 calendar days from the receipt of such decisions, awards, or orders.

ALTERNATIVE ANSWER:
The NLRC could dismiss outright the appeal for being filed out of time. But if there are
good reasons that may justifiably explain why there was a delay in the filing of the appeal,
substantial justice may be the basis for the NLRC to take cognizance of the appeal.

3. SELECTED 2004 BAR QUESTIONS AND ANSWERS


A. RS, a security guard, filed a complaint for illegal dismissal against Star Security
Agency. He alleged he was constructively dismissed after ten years of service to the agency.
Having been placed on off-detail and floating status for 6 months already, he claimed the
San Beda College of

Agency just really wanted to get rid of him because it required him to take a neuro-psychiatric
evaluation test by Mahusay Medical Center. RS said he already submitted the result of his
evaluation test by Brent Medical Clinic as precondition to a new assignment, but the report was
rejected by the Agency. RS added that Mahusay Medical Center had close ties with Stars
president. It could manipulate tests to favor oThnly guards whom the Agency wanted to retain.
Star defended its policy of reliance on Mahusay Medical Center because it has been duly
accredited by the Philippine National Police. It is not one of those dubious testing centers
issuing ready-made reports. Star cited its sad experience last year when a guard ran amuck
and shot an employee of a client-bank. Star claimed management prerogative in assigning its
guards, and prayed that RS complaint be dismissed.

What are the issues? Identify and resolve them.


Law

SUGGESTED ANSWER:

The facts in the question raise these issues:

1. When RS was placed on off detail or floating status for more than 6 months, can RS claim that he
was terminated?

2. Is there a valid reason for the termination of RS?

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2005 CENTRALIZED BAR OPERATIONS

On the first issue, RS can be considered as terminated because he has been placed on off
detail or floating status for a period which is more than 6 months.
On the second issue, it is true that disease is a ground for termination. But the neuro-
psychiatric evaluation test by Mahusay Medical Center is not the certification required for disease
to be a ground for termination. The Rules and Regulations implementing the Labor Code require a
certification by a public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of 6 months even with proper medical treatment.

ANOTHER SUGGESTED ANSWER:

The issues involved are as follows:

1. Is there constructive dismissal?

2. Is there a valid exercise of management prerogative?

On the first issue, there is constructive dismissal. RS cannot be placed on off detail or
floating status indefinitely. If it lasts for more than 6 months, RS shall be deemed to have been
constructively dismissed thus entitling him to separation benefits. (Superstar Security Agency vs.
NLRC, 184 SCRA 74)
On the second issue, there is no valid exercise of management prerogative. Stars claim of
management prerogative in assigning its guards cannot be exercised to defeat or circumvent RS
right to security of tenure.

B. A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year old
boy whose poor family could barely afford the cost of his schooling. She lives alone at her
house near the school after her housemaid left. In the afternoon, she lets the boy do various
chores as cleaning, fetching water and all kinds of errands after school hours. She gives him
rice and P30.00 before the boy goes home at 7:00 every night. The school principal learned
about it and charged her with violating the law which prohibits the employment of children
below 15 years of age. In her defense, the teacher stated that the work performed by her
pupil is not hazardous, and she invoked the exception provided in the D.O. of DOLE for the
engagement of persons in domestic and household service.
Is her defense tenable? Reason.

SUGGESTED ANSWER:
No. Her defense is not tenable. Under Art. 19 of the Labor Code on minimum employable
age, no child below 15 years of age shall be employed except when he works directly under the
sole responsibility of his parents or guardian, the provisions of the alleged D. O. of DOLE to the
contrary notwithstanding. A mere Department Order cannot prevail over the express prohibitory
provisions of the Labor Code.

[N.B. Sec. 3, RA 9231 allows a child below 15 years of age to work for not more than 20
hours a week; provided that the work shall not be more than 4 hours at any given day; provided
further, that he does not work between 8PM and 6AM of the following day; and provided, finally,
Red Notes in Labor Law

that the work is not hazardous or deleterious to his health or morals. This is a law approved only
on July 28, 2003, which is beyond the cut-off period of the then 2004 Bar Examinations.]

C. Which of the following may be considered among industries most vital to national interest as
to be subject of immediate assumption of jurisdiction by the Secretary of Labor or certification
for compulsory arbitration in case of strike or work stoppage arising from a labor dispute?

1. Bulletin daily newspaper publishing company


2. Local franchise of Jolibee and Starbucks
3. Shipping and port services in Cebu and Manila
4. Enchanted Kingdom, Elephant Island and Boracay Resort
5. LBC, DHL and FedEX centers 45
San Beda
College of Law
LABOR
LAW
Justify your answer or choice.

SUGGESTED ANSWER:
Certification of labor dispute for immediate assumption of jurisdiction by the Secretary
refers to industries indispensable to national interest:
1. Bulletin Daily Newspaper, since access to information is a requirement for an
informed citizenry.
2. Shipping and port services, since the country needs domestic sea transport due
to our topography and for the smooth flow of business and government operations.
3. LBC, DHL and FedEX centers, since couriers are essential to foreign and domestic
business and government operations.

D. Employees of ABC declared a strike after filing a Notice of Strike with the DOLE. They
barricaded company gates and damaged vehicles entering company premises. On the second
day after the strike, ABC filed a petition with the DOLE Secretary to intervene through the
issuance of an assumption of jurisdiction order that the Secretary may issue when a strike or
lockout will adversely affect national interest. ABC furnished the Secretary with evidence to
show that company vehicles had been damaged; that electric power had been cut off; and
equipment and materials were damaged because electric power was not immediately restored.
ABC forecast that the countrys supply of chlorine for water treatment (which the company
produces) would be affected adversely if ABCs operations were closed down by the strikers.
Could the DOLE Secretary intervene, assume jurisdiction and issue a TRO? Briefly justify
your answer.

SUGGESTED ANSWER:

Yes, the Secreatry can assume jurisdiction over the dispute because ABC could be
considered as an industry indispensable to the national interest since it produces the countrys
supply of chlorine for water treatment.
The assumption of jurisdiction by the Secretary has the effect of ending the strike. The
strikers will be subject to Return to Work Order by the Secretary upon his assumption of
jurisdiction.
San Beda College of

E. Because of alleged unfair labor practices by the management of GFI system, a


government-owned and controlled financial corporation, its employees walked out from their
jobs and refused to return to work until the management would grant their union official
recognition and start negotiations with them.
The leaders of the walk-out were dismissed, and the other participants were suspended
for 6o days. In arguing their case before the Civil Service Commission, they cited the principle
of social justice of workers and the right to self-organization and collective action, including
the right to strike. They claimed that the Constitution shielded them from any penalty because
their walk-out was a concerted action pursuant to their rights guaranteed by basic law.
Is the position taken by the walk-out leaders and participants legally correct? Reason
briefly.
Law

SUGGESTED ANSWER:

No. They are government employees, and as such, they do not have the right to strike.
Sec 3 of Art XIII of the Constitution states, The State shall guarantee the rights of all workers to
self-organization, collective bargaining and negotiations, and peaceful concerted activities
including the right to strike in accordance with law.

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2005 CENTRALIZED BAR OPERATIONS

The last clause is very clear; the right to strike is not constitutional. It is statutory because
the right should be in accordance with law. And there is as yet no law giving government
employees the right to strike.

ANOTHER SUGGESTED ANSWER:

No.
Assuming that what we have is a originally chartered GOCC, they cannot, under Eo 180 and
related jurisprudence, stage such walk-out which is basically a case of strike.
Even if GFI was organized under the Corporation Code, still no such walk-out is allowed
without complying with the requirements of a valid strike, among which is that said strike should
be validly grounded on a (a) deadlock in collective bargaining, or (b) ULP.

CASE DOCTRINES
BOOK ONE

POEA; POWERS AND FUNCTIONS.

APPROVAL OF OVERSEAS CONTRACTS

An agreement that changes the employees pay and benefits to make them lesser than
those contained in a POEA-approved contract is void, unless such subsequent agreement is
approved by the POEA (Chavez vs. Bonto-Perez).

REIMBURSEMENT OF OVERPAID FEES

POEA has the power to order refund or reimbursement of fees fraudulently or illegally
Red Notes in Labor Law

collected, or in excess of what is legally allowed. (Eastern Assurance & Surety Corporation vs.
Secretary of Labor).

ISSUANCE OF SEARCH AND SEIZURE ORDERS

Under the Constitution, only a judge may issue warrants of search and arrest. The labor
authorities must go through the judicial process. The Secretary of Labor, not being a judge, may no
longer issue search or arrest warrants. To that extent, Article 38, paragraph (c), of the Labor Code,
is declared of no force and effect (Salazar vs. Achacoso and Marquez).

ILLEGAL RECRUITMENT; CONCEPT.


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ILLEGAL RECRUITMENT vis--vis ESTAFA
San Beda
College of Law
LABOR
LAW
A person convicted for illegal recruitment under the Labor Code can be convicted for
violation of the Revised Penal Code provisions on estafa provided the elements of the crime are
present (People vs. Calonzo).

BOOK TWO

APPRENTICESHIP AGREEMENTS: CONCEPT.

CONCEPT

An apprenticeship program needs prior approval by the Department of Labor and


Employment. If employed without a pre-approved apprenticeship program, the apprentice is not an
apprentice but a regular employee (Nitto Enterprises v. NLRC).

APPRENTICESHIP vis--vis EMPLOYER-EMPLOYEE RELATIONSHIP

There is no employer-employee relationship between students on one hand, and schools,


colleges or universities, on the other, where there is written agreement between them under which
the former agree to work for the latter in exchange for the privilege to study free of charge,
provided, the students are given real opportunities, including such facilities as may be reasonable
and necessary to finish their chosen courses under such agreement." (Implementing Rules of Book
III, Rule X, Sec. 14)

If the student referred to in Art. 72 of the Labor Code, in the course of doing a task in
behalf of the school, causes injury to a third person, the school can be held liable. The
Implementing Rules provision that there is no employer-employee relation between the school and
the student pertains to observance of labor regulations, such as payrolls to be kept, working
conditions or rest periods. It is not the decisive law in a civil suit for damages instituted by an
injured third person. The applicable law is Article 2180 of the Civil Code (Filamer Christian
Institute v. CA).
BOOK THREE

MANAGEMENT PREROGATIVE, DEFINED.

Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work assignments, working
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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, layoff of workers and the
discipline, dismissal and recall of workers (San Miguel Brewery Sales vs. Ople).

CONDITIONS OF EMPLOYMENT; COVERAGE

INSURANCE AGENTS

An insurance company may have two classes of agents who sell its insurance policies: (1)
salaried employees who keep definite hours and work under the control and supervision of the
company; and (2) registered representatives who work on commission basis. The agents who belong
to the first category are regular employees. Those who belong to the second category are not
Law

regular employees for they do not have to devote their time exclusively to or work solely for the
company since the time and the effort they spend in their work depend entirely upon their own will
and initiative (Great Pacific Life Insurance Corporation vs. Judico).

TEACHERS

College teachers are regular employees. The principal consideration in determining


whether a workman is an employee or an independent contractor is the right to control the manner
of doing the work, and it is not the actual exercise of the right by interfering with the work, but

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the right to control, which constitutes the test (Feati University vs. Hon. Jose S. Bautista, and
Feati University Faculty Club).

JEEPNEY DRIVERS UNDER BOUNDARY SYSTEM

Employer-employee relationship exists between the owner of the jeepneys and the drivers
even if the latter work under the boundary system. Not having any interest in the business because
they did not participate in the management thereof, their service as drivers of the jeeps being
their only contribution to the business, relationship of lessor and lessee cannot be sustained
(Citizens League of Free Workers, et al. vs. Abbas, GR No. L-21212).

PIECE-RATE WORKERS

Piece-rate workers who work inside the company premises under the close supervision and
control of their employers are regular employees (Labor Congress of the Philippines vs. NLRC).

Piece-rate workers who work outside the company premises and are unsupervised or whose
time spent in their work cannot be reasonably ascertained are NOT regular employees (Makati
Haberdashery, Inc. vs. NLRC).

FISHERMEN

Fishermen who work not under the orders of the boat-owners as regards their employment;
that they go out to sea not upon directions of the boat-owners, but upon their own volition as to
when, how long, and where to go fishing; that the boat-owners do not in any way control the crew
members with whom the former have no relationship whatsoever; that they simply join the trip for
which the pilots allow them, without any reference to the owners of the vessel; and that they only
share in their own catch produced by their own efforts are NOT regular employees (Pajarillo vs.
SSS).

Fishermen who conduct fishing operations under the control and supervision of the boat-
owners operations manager are regular employees. Matters dealing on the fixing of the schedule of
the fishing trip and the time to return to the fishing port were the prerogative of the boat-owner
(Ruga, et al. vs. NLRC).

CONDITIONS OF EMPLOYMENT; HOURS OF WORK

WAITING TIME

Waiting spent by an employee shall be considered as working time if waiting is considered


an integral part of his work or if the employee is required or engaged by an employer to wait
(Zapanta v. National Alliance of Teachers and Office Workers Assoc, Sept. 5, 1980).

MEAL TIME

Meal time is NOT working time if the employee is completely freed from duties during his
Red Notes in Labor Law

meal period even though he remains in the workplace (Pan American World Airways System [Phil.]
vs. Pan American Employment Association).

Where work is continuous for several shifts, the mealtime breaks should be counted as
working time for purposes of overtime compensation (National Devt Company vs. CIR and the
National Textile Workers Union).

WORKING WHILE SLEEPING

Sleeping time may be considered working time if it subject to serious interruption or takes
place under conditions substantially less desirable than would be likely to exist at the employees
home (Skidmore vs. Swift and Co.).
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ON CALL

An employee who is required to remain on call on the employers premises or so close


thereto that he cannot use the time effectively for his own purposes is working while on call. The
time he stays in the place of work is considered hours worked (National Labor Union vs. Gotamco
Lumber Co. vs. CIR).

NIGHT SHIFT DIFFERENTIAL

Additional compensation for nighttime work is founded on public policy, hence the same
cannot be waived. It is argued that that laborer can rest during the day after having worked the
whole night. But can the repose by day produce to the human body the same complete
recuperative effects which only the natural rest at night can give him? It is believed that since time
immemorial the universal rule is that a man works at night due to some driving necessity rather
than for reasons of convenience (Mercury Drug co., Inc. vs. Nardo Dayao, et al.).

OVERTIME PAY

The right to overtime pay cannot be waived. The right is intended for the benefit of the
laborers and employees. Any stipulation in the contract that the laborer shall work beyond the
regular 8 hours without additional compensation for the extra hours is contrary to law and null and
void (Cruz vs. Yee Sing).

WAIVER OF OVERTIME PAY

Waiver may be permitted when it is in consideration of benefits and privileges which may
be more than what will accrue to the employee in overtime pay (Meralco Workers Union vs. Manila
Electric Company, et al.).

NIGHT SHIFT DIFFERENTIAL AND OVERTIME PAY

The receipt of overtime pay will not preclude the right to night differential pay. The latter
is payment for work done during the night while the other is payment for the excess of the regular
eight-hour work (Naric vs. Naric Workers Union).

OVERTIME PAY BASED ON BASIC PAY


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In the computation of overtime pay, premium pay for work done on Sundays, holidays and
at night and other fringe benefits which are occasionally, not regularly, received and not by all
employees, should not be added to the basic pay.

CONDITIONS OF EMPLOYMENT; HOLIDAY PAY AND SERVICE INCENTIVE LEAVES

ENTITLEMENT OF MONTHLY-PAID EMPLOYEES TO HOLIDAY PAY

Monthly-paid employees are not excluded from the benefits of holiday pay. The Labor Code
clearly states that every worker shall be paid his or her regular holiday pay (Insular Bank of Asia
and America Employees Union vs. Hon. Amado Inciong and Insular Bank of Asia and America).
Law

ENTITLEMENT OF PART-TIME OR CONTRACTUAL WORKERS


TO SERVICE INCENTIVE LEAVE

Bureau of Working Conditions, Advisory Opinion to Philippine Integrated Exporters, Inc. on


the query about Conditions of Employment of Part-time Workers

Part-time workers are entitled to the full benefit of the yearly 5 days service incentive
leave with pay. The reason is that the provisions of Article 95 of the Labor Code and its
implementing rules, speak of the number of months in a year for entitlement to said benefit.

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Consequently, part-time employees are also entitled to the full five days service incentive leave
benefit and not on a pro-rata basis.

CONDITIONS OF EMPLOYMENT; WAGES

SALARY EXCLUDES ALLOWANCES

Existing laws exclude allowances from the basic salary or wage in the computation of the
amount of retirement and other benefits payable to an employee. The Supreme Court will not
adopt a different meaning of the terms salaries or wages to mean the opposite, that is to include
allowances in the concept of salaries or wages (Cebu Institute of Technology vs. Ople).

BASIC WAGE AND COMMISSIONS

If the commissions are in a wage-or sales- percentage type, they may properly be
considered part of the basic salary. These commissions are not overtime payments, nor profit-
sharing payments nor any other fringe benefit. Thus, the salesmans commissions, comprising a pre-
determined percent of the selling price of the goods sold by each salesman, were properly included
in the term basic salary for purposes of computing their 13 th month pay (Philippine Duplicators,
Inc. vs. NLRC and Philippine Duplicators Employees Union).

In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the


fixed or guaranteed wage is patently the basic salary for this is what the employee receives for a
standard work period. Commissions are given for extra efforts exerted in consummating sales or
other related transactions. They are, as such, additional pay, which the Court has made clear do
not form part of the basic salary (Boie-Takeda Chemicals, Inc. vs. Dionisio Dela Serna).

PROPORTIONATE 13th MONTH PAY

An employee who has resigned or whose services were terminated at anytime before the
time of payment of the 13th month pay is entitled to 13th month pay in proportion to the length of
time he worked during the year, reckoned from the time he started working during the calendar
year up to the time of his resignation or termination from the service (International School of
Speech vs. NLRC and MC Mamuyac).

WAGES; PAYMENT OF WAGES

NON-LAWYERS NOT ENTITLED TO ATTORNEYS FEES

Although the law allows, under certain circumstances, non-lawyers to appear before the
National Labor Relations Commission or any Labor Arbiter, however, this does not mean that they
are entitled to attorneys fees. Their act of representing, appearing or defending a party litigant in
a labor case does not, by itself, confer upon them legal right to claim for attorneys fees.
Red Notes in Labor Law

Entitlement to attorneys fees presupposes the existence of attorney-client relationship. This


relationship cannot exist unless the clients representative is a lawyer (Five J Taxi, et al. vs.
NLRC).

WAGES; PROHIBITION REGARDING WAGES

WAGE DEDUCTIONS: SETTING OFF OF MONEY CLAIM OF EMPLOYEE AGAINST NONPAYMENT OF STOCK
SUBSCRIPTIONS

Article 113 of the Labor Code allows such a deduction from the wages of the employees by
the employer, only in three instances, to wit: (a) in cases where the worker is insured with his
consent by the employer, and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance; (b) for union dues, in cases where the right of the workers or his 45
union to check-off has been recognized by the employer or authorized in writing by the individual
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worker concerned; and (c) in cases where the employer is authorized by law or regulations issued
by the Secretary of Labor (Apodaca vs. NLRC, et a.).

WAGE DISTORTION

The Court summarizes the principles relating to wage distortion, namely:


(a) The concept of wage distortion assumes an existing grouping or classification of
employees which establishes distinctions among such employees on some relevant or legitimate
basis. This classification is reflected in a differing wage rate for each of the existing classes of
employees.
(b) Wage distortions have often been the result of government-decreed increases in
minimum wages. There are, however, other causes of wage distortions, like the merger of two
companies (with differing classifications of employees and different wage rates) where the
surviving company absorbs all the employees of the dissolved corporation.
(c) Should a wage distortion exist, there is no legal requirement that, in the rectification
of that distortion by readjustment of the wage rates of the differing classes of employees, the gap
which had previously or historically existed be restored in precisely the same amount. In other
words, correction of a wage distortion may be done by reestablishing a substantial or significant
gap (as distinguished from the historical gap) between the wage rates of the differing classes of
employees.
(d) The reestablishment of a significant difference in wage rates may be the result of
resort to grievance procedures or collective negotiations (National Federation of Labor vs. NLRC).

WORKING CONDITIONS; SPECIAL GROUP OF EMPLOYEES

STIPULATION AGAINST MARRIAGE (Article 136)

Article 136 is not intended to apply only to women employed in ordinary occupations, or it
should have categorically expressed so. The sweeping intendment of the law, be it on special or
ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of
nondiscrimination on the employment of women (Claudine de Castro Zialcita, et al. vs. PAL).
HOUSEHELPER

The criterion is the personal comfort and enjoyment of the family of the employer in the
home of said employer. While the nature of work of a househelper, domestic servant or laundry
woman in a home or in a company staff house may be similar in nature, the difference in their
circumstances is that in the former instance they are actually serving the family while in the latter
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case, whether it is a corporation or a single proprietorship engaged in business or industry or any


other agricultural or similar pursuit, service is being rendered in the staff houses or within the
premises of the business of the employer. In such instances, they are employees of the company or
employer in the business concerned entitled to the privileges of a regular employee (Apex Mining
Co., Inc. vs. NLRC).

BOOK FIVE

POWERS AND DUTIES; JURISDICTION OF THE LABOR ARBITERS AND THE COMMISSION

MEANING OF COMPULSORY ARBITRATION


Law

In its broad sense, arbitration is the reference of a dispute to an impartial third person,
chosen by the parties or appointed by statutory authority to hear and decide the case in
controversy. When the consent of one of the parties is enforced by statutory provisions, the
proceeding is referred to as compulsory arbitration. In labor cases, compulsory arbitration is the
process of settlement of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all parties (Philippine Airlines, Inc. vs. NLRC).
POWERS AND DUTIES; POWERS OF THE COMMISSION

CONTEMPT POWER

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The commission has the power to hold any person in contempt directly or indirectly. The
procedures and penalties thereof are provided under paragraph (d) of Art. 218. Section 2, Rule X of
the New Rules of Procedure of the NLRC provides that the Commissioner or any labor arbiter may
cite any person for indirect contempt upon grounds and in the manner prescribed under Sec. 3(b),
Rule 71 of the 1997 Rules of Civil Procedure. The said section provides that Indirect contempt is to
be punished after charge and hearing for any xxx disobedience of or resistence to a lawful writ,
process, order, or judgment of a court xxx (Industrial and transport Equipment, Inc., et al. vs.
NLRC).

COMPROMISE AGREEMENTS AND RES JUDICATA

It is true that a compromise agreement once approved by the court has the effect of res
judicata between the parties and should not be disturbed except for vices of consent and forgery.
However, The NLRC may disregard technical rules of procedure in order to give life to the
constitutional mandate affording protection to labor and to conform to the need of protecting the
working class whose inferiority against the employer has always been earmarked by disadvantage
(Principe vs. Philippine-Singapore Transport Services, Inc.,).

POWERS AND DUTIES; APPEARANCES AND FEES

APPEARANCE OF NON-LAWYERS

Non-lawyers may appear before the commission or labor arbiter only: (a) if they represent
themselves; (b) if they represent their organization or members thereof; or (c) if he is a duly-
accredited member of the legal aid office duly recognized by the department of justice or
integrated bar of the Philippines in case referred thereto by the latter.
The appearance of labor federations and local unions as counsel in labor proceedings has
been given legal sanction and we need only to cite Art. 222 of the Labor Code allowing non-lawyers
to represent their organization or members thereof (Radio Communication of the Philippines, Inc.
vs. The Secretary of Labor Employment).

ATTORNEYS FEES

There are only two kinds of cases where attorneys fees may be assessed: (1) cases arising
from unlawful withholding of wages and (2) cases arising from collective bargaining negotiations
(Reahs Corporation vs. NLRC).

PROHIBITION OF PAYMENT OF ATTORNEYS FEES

Art. 222 of the Labor Code prohibits the payment of attorneys fees only when it is effected
through forced contributions from the workers from their own funds as distinguished from the union
funds. The purpose of the provision is to prevent imposition on the workers of the duty to
individually contribute their respective shares in the fee to be paid the attorney for his services on
behalf of the union in its negotiations with the management. The obligation to pay the attorneys
fees belongs to the union and cannot be shunted to the workers as their responsibility (Bank of the
Philippine Islands vs. NLRC, et al.).
Red Notes in Labor Law

ATTORNEYS FEES ARISING FROM RECOVERY OF WAGES AND OTHER BENEFITS

Art 111 of the Labor Code regulates the amount recoverable as attorneys fees in the
nature of damages sustained by and awarded to the prevailing party. It may not be used therefore,
as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal
services he rendered. Moreover, while it provides for the maximum allowable amount of attorneys
fees, it does not direct the instantaneous and automatic award of attorneys fees in such maximum
limit (Traders Royal Bank Employees Union-Independent vs. NLRC).

FEES FOR SERVICES RENDERED BY UNION OFFICERS

Art. 222(b) prohibits attorneys fees, negotiation fees and similar charges arising out of the 45
conclusion of a bargaining agreement from being imposed on any individual union member. The
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collection of the special assessment partly for the payment services rendered by union officers,
consultants and other may not be in the category of attorneys fees or negotiations fees. But
there is no question that it is an exaction which falls within the category of a similar charge and
therefore, within the coverage of the prohibition in the aforementioned article (Palacol vs. Ferrer-
Calleja)

APPEAL; EXECUTION OF DECISIONS, ORDERS AND AWARDS

FAILURE TO COMPLY WITH A WRIT OF EXECUTION

If the employer fails or is unable to comply with a final and executory judgment for the
reinstatement of an employee, the plain and obvious remedy is simply the compulsion of the
employer by writ of execution to effect the mandated reinstatement and pay the amounts decreed
in the judgment, and disregard or overrule the employers claim of inability to reinstate the
employee. If there be valid and unsuperable cause for such inability to reinstate, this factor must
be taken into account in the process of directing and effectuating the award of relief to the
employee consistent with the judgment. The remedy is certainly not the institution of a separate
action, whether in the regular courts or the labor arbiters branch. Such recourse would violate the
well-settled principle of res judicata. It would give rise to multiplicity of actions which the law
abhors and exerts every effort to eschew (MAI Philippines Inc. vs. NLRC et al.).

The remedy for refusal of the employer to reinstate employee despite several writs of
execution is not the grant of additional backwages to serve as damages but to cite the employer in
contempt (Christian Literature Crusade v. NLRC).

EXECUTION OVER PROPERTY OWNED ONLY BY THE JUDGMENT DEBTOR

If the property under levy does not belong to the judgment debtor in the NLRC case, it
could not be validly levied upon by the sheriff for the satisfaction of the judgment therein. Even
upon a prima facie showing of the ownership by the third-party claimant, if the third-party claim
does not involve nor grows out of, a labor dispute, a separate action for injunctive relief against
such levy may be maintained in court (Penalosa v. Villanueva).

NOTIFICATION

In labor cases, both the party and its counsel must be duly served their separate copies of
the order, decision, or resolution, unlike in ordinary judicial proceeding where notice to counsel is
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deemed notice to the party (PNOC Dockyard and Engineering Corp. vs. NLRC).

BUREAU OF LABOR RELATIONS; JURISDICTION

KATARUNGANG PAMBARANGAY AND THE LABOR CODE

Art 226 of the Labor Code grants original and exclusive jurisdiction over the conciliation
and mediation of disputes, grievances or problems in the regional offices of the Department of
Labor and Employment. It is the aid bureau and its divisions and not the barangay lupong
tagapayapa which are vested by law with original and exclusive authority to conduct conciliation
and mediation proceedings on labor controversies before their endorsement to the appropriate
labor arbiter adjudication (Montoya vs. Escayo).
Law

BUREAU OF LABOR RELATIONS; COMPROMISE AGREEMENTS

OPTIONS WHEN COMPROMISE AGREEMENT IS VIOLATED

Under article 2041 of the civil code, should the party fail or refuse to comply with the
terms of a compromise agreement or amicable settlement, the other party could either: (1)
enforce the compromise by a writ of execution, or (2) regard it as rescinded and so insist upon his
original demand (Morales et al. vs. NLRC).

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LABOR ORGANIZATIONS; RIGHTS AND CONDITIONS OF MEMBERSHIP

NATURE OF RELATIONSHIP BETWEEN UNION AND ITS MEMBERS

The union has been evolved as an organization of collective strength for the protection of
labor against the unjust exactions of capital, but equally important is the requirement of fair
dealing between the union and its members, which is fiduciary in nature, and arises out of two
factors: one is the degree of dependence of the individual employee on the union organization; and
the other, a corollary of the first, is the comprehensive power vested in the union with respect to
the individual. The union to be considered but the agent for the purpose of securing for them fair
and just wages and good working conditions and is subject to the obligation of giving the members
as its principals all information relevant to union and labor matters entrusted (Heirs of Teodoro
Cruz vs. Court of Industrial Relations).

RELIEF WITHIN THE UNION

Generally, redress must first be sought within the union itself in accordance with its
constitution and by-laws (Kapisanan ng mga Mangagawa sa MRR vs. Hernandez).

CHECK-OFF

Attorneys fees may not be checked-off or deducted from any amount due to an employee
without his written consent, except for mandatory activities under the Code.(Vengco vs. Trajano).

DEDUCTIONS FOR UNION SERVICE FEE

Deductions for union service fee are authorized by law and do not require individual check-
off authorizations (Radio Communications of the Philippines Inc. vs. Sec. of Labor).

LABOR ORGANIZATIONS; RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS

COMPROMISE BINDING UPON MINORITY MEMBERS OF UNION

A compromise agreement between the union and the company, pursuant to which the
complaint in an unfair labor practice case had been withdrawn and dismissed, is binding upon the
minority members of the union (Dionela vs. Court of Industrial Relations).

RIGHT TO SELF-ORGANIZATION; COVERAGE

EMPLOYEE-MEMBERS OF A COOPERATIVE

It is the fact of ownership of the cooperative, and not the involvement in the management
thereof, which disqualifies a member from joining any labor organization within the cooperative.
Thus, irrespective of the degree of their participation I the actual management of the cooperative,
Red Notes in Labor Law

all members thereof cannot form, assist or join a labor organization for the purpose of collective
bargaining (Benguet Electric Cooperative vs. Ferrer-Calleja).

UNFAIR LABOR PRACTICES; EMPLOYERS

ACCEPTANCE OF MASS RESIGNATION

Acceptance of a voluntary resignation is not ULP. When persons voluntarily terminate their
employment relationship, they cannot claim that they were dismissed (Enriquez vs. Zamora).

FORCED VACATION LEAVE


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The forced vacation leave without pay in view of the economic crisis, being neither
malicious, oppressive or vindictive, does not constitute ULP (Philippine Graphic Arts, Inc. vs.
NLRB).

ULP EVEN BEFORE UNION ID REGISTERED

Under Art. 248 of the Labor code of the Philippines, to interfere with, restrain, or coerce
employees in their exercise of the right to self-organization is an unfair labor practice on the part
of the employer. Paragraph d of said article also considers it an unfair labor practice for an
employer to initiate, dominant, assist or otherwise interfere with the formation or administration
of any labor organization, including the giving of financial or other support to it. (Judric Canning
Corporation vs. Inciong)

ULP THROUGH VIOLENCE AND INTIMIDATION

An employer unlawfully coerced employers by directing two individuals to his office at gun
point on the day of representation election after the individuals had informed the employer that
they were on the premises to vote in the election and they did in fact vote (Holly Hill Lumber vs.
NLRB).

ULP THROUGH SURVEILLANCE

When an employer engages in surveillance or takes steps leading his employees to believe it
is going on, a violation results because the employees come under threat of economic coercion or
retaliation for their union activities (Henriz Mfg. Co vs. NLRB).

ULP THROUGH ECONOMIC INDUCEMENTS

A violation results from an employers announcement of benefits prior to a representation


election, where it is intended to induce the employees to vote against the union (Re: Hancock
Fabric Outlet).

TOTALITY OF CONDUCT DOCTRINE

The letter, exhibits A and B, should not be considered by themselves alone, but should be
read in the light of the preceding and subsequent circumstances surrounding. The letter should be
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interpreted according to the totality of conduct doctrine, whereby the culpability of an


employers remarks were to be evaluated not only on the basis of their implicit implications, but
were to be appraised against the background of and in conjunction with collateral circumstances
(The Insular Life Assurance Co., Ltd., Employees Association-ATU, et al. vs. The Insular Life
Assurance Co., Ltd.).

LOCKOUT OR CLOSURE AMOUNTING TO ULP

The rule is that it is unlawful for the employer to threaten its employees with moving or
shutting down the plant and consequent loss of employment, as the result of their support for the
union (NLRB vs. Lousiana MFG).
Law

ULP THROUGH COMPANY DOMINATION OF THE UNION

Domination of a labor union is usually manifested in the following forms:

a. Initiation of the company union idea. This may further occur in three styles: (1)
outright formation by the employer or his representatives; (2) employee formation on outright
demand or influence by employer; and (3) managerially motivated formation by employees.

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b. Financial support to the union. An employer commits unfair labor practice if he defrays
the union expenses or pays the attorneys fees to the attorney who drafted the constitution and by-
laws of the union.
c. Employer encouragement and assistance. Immediately granting he union exclusive
recognition as a bargaining agent without determining whether the union represents the majority of
the employees is an illegal form of assistance amounting to unfair labor practice.
d. Supervisory assistance. This takes form of soliciting membership permitting union
activities during working time or coercing employees to join the ion by threats of dismissal or
demotion (Philippine American Cigar & Cigarette Factory Workers Union vs. Philippine American
Cigar &Cigarette MFg. Co., Inc.).

ULP THROUGH DISCRIMINATION IN SALARY ADJUSTMENTS

There is unfair and unjust discrimination in the granting of salary adjustments where the
evidence shows that (a) the management paid the employees of unionized branch; (b) where the
salary adjustments were granted to employees of one of its non-unionized branches although it was
losing in its operations; and (c) the total salary adjustments given one employee in the non-
unionized branch (Manila Hotel Company vs. Pines Hotel Employees Association).

TEST OF DISCRIMINATION

For the purpose of determining whether or not a discharge is discriminatory, it is necessary


that the underlying reason for the discharge be established. The fact that a lawful cause for
discharge is available is not a defense where the employee is actually discharged because of his
union activities. If the discharge is actually motivated by lawful reason, the fact that the employee
is engaged in union activities at the time will not lie against the employer and prevent him from
the exercise of his business judgment to discharge an employee for cause (NLRB vs. Ace Comb Co.).

ULP THROUGH CONSTRUCTIVE DISCHARGE

An employee was held to be constructively discharged when she quit her job because of the
employees discriminatory assignment requiring heavy lifting work which the employer knew she
was physically unable to perform (NLRB vs. Vacuum).

VALIDITY OF THE CLOSED SHOP AGREEMENT

A closed shop agreement is valid form of union security, and such a provision in a collective
bargaining agreement is not a restriction of the right of freedom of association guaranteed by the
Constitution (Manila Mandarin Employees Union vs. NLRC).

ADVANTAGES AND DISADVANTAGES OF CLOSED-SHOP AGREEMENT

A closed-shop agreement is advantageous because it


a. Increases the strength and bargaining power of labor organizations.
Red Notes in Labor Law

b. Prevents nonunion workers from sharing in the benefits of the unions activities
without also sharing its obligations.
c. Prevents the weakening of labor organizations by discrimination against union
members.
d. Eliminates the lowering of standards caused by competition with nonunion
workers.
e. Enables labor organizations effectively to enforce collective agreements.
f. Facilitates the collection of dues and the enforcement of union rules.
g. Creates harmonious relations between the employer and the employee (NLU vs.
Aguinaldos Echague).

ULP IN A GIVEN PERIOD SHOULD BE INCLUDED IN SINGLE CHARGE 45


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When a labor union accuses an employer of acts of unfair labor practice allegedly
committed during a given period of time, the charges should include all acts of unfair labor
practice committed against any and all members of the union during that period. The union should
not, upon the dismissal of the charges first preferred, be allowed to split its cause of action and
harass the employer with subsequent charges, and based upon acts committed during the same
period of time (Dionela vs. Court of Industrial Relations).

COLLECTIVE BARGAINING AGREEMENT; CONCEPT

CBA DEFINED

A collective bargaining agreement (CBA), as used n Art 252 of the labor code, refers to a
contract executed upon request of either the employer or the exclusive bargaining representative
of the employees incorporating the agreement reached after negotiations with respect to wages,
hours of work and all other terms and conditions of employment, including proposals for adjusting
any grievances or questions under such agreement (Davao Integrated Port Stevedoring Services vs.
Abarquez).

PARTIES TO COLLECTIVE BARGAINING

The duty to bargain collectively arises only between the employer and its employees.
Where nether party is an employer or employee of the other no such duty would exist. Needless to
add, where there is no duty to bargain collectively, the refusal to bargain violates no rights (Allied
Free Workers Union vs. Compania Maritima).

JURISDICTIONAL PRECONDITIONS OF COLLECTIVE BARGAINING

Although bargaining is a mutual obligation of the parties, the employer is not under any
legal duty to initiate contract negotiation. The mechanics of collective bargaining is set n motion
only when the following jurisdictional preconditions namely: (1) possession of the status of majority
representation of the employees representative in accordance with any of the means of selection
or designation provided for by the labor code; (2) proof of majority representation; and (3) a
demand to bargain under Art. 250, par. (a) of the Labor Code (Loy vs. NLRC).

WAGE AGREEMENT; SOLOMONIC APPROACH IN WAGE DISPUTE

The middle ground approach employed by the secretary in this case which the Supreme
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Court does not necessarily find the best method of resolving a wage. Merely finding the midway
point between the demands of the company and the union, and splitting the difference is a
simplistic solution that fails to recognize that the parties may already be at the limits of the wage
levels they can afford. It may lead to the danger too that neither of the parties will engage
principled bargaining; the company may keep its low position while the union presents an
artificially high position, on the fear that a Solomonic solution cannot be avoided. Thus rather
than encourage agreement, a middle ground approach instead promotes a play safe attitude
that leads to more deadlocks than to successfully negotiated CBAs (Manila Electric Co vs. Hon. Sec
of Labor and Mewa).

WORK RULES
Law

Company rules relating to safety and work practices come within the meaning of the phrase
other terms and conditions of employment as used in the Act and, therefore, constitute a
mandatory subject of collective bargaining (NLRB vs. Gulf Power Co.).

BARGAINING TO POINT OF IMPASSE

The question as to what are mandatory and what are merely permissive subjects of
collective bargaining is of significance on the right of a party to insist on his position to the point of
stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective bargaining; but a refusal

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to contract in good faith that the insistence on the disputed clause was not the sole cause of the
failure to agree or that agreement was not reached with respect to other disputed clauses
(Samahang Manggagawa sa Top Form Manufacturing-United Workers of the Philippines vs. NLRC).

BARGAINING TO THE POINT OF IMPASSE: BAD FAITH

Over a non-mandatory subject, on the other hand, a party may not insist on bargaining to
the point of impasse, otherwise his insistence can be construed as bargaining in bad faith (NLRB vs.
Woorster Division of Borg-Warner Corp.).

RATIFICATION; MANDATORY REQUIREMENTS

The rules require posting of the CBA in two conspicuous places for five days. In one case,
the CBA was not posted for at east five days in two conspicuous places n the establishment before
ratification, to enable the workers to clearly inform themselves of its provisions. Moreover, the CBA
submitted to the MOLE did not carry the sworn statement of the union secretary, attested by the
union president, that the CBA had been duly posted and ratified, as required by section 1, Rule 9,
Book V of the implementing Rules and Regulations. The court ruled that these requirements being
mandatory, noncompliance there with rendered the CB ineffective (Associated Trade Unions vs.
Trajano).

UNRATIFIED BUT IMPLEMENTED CBA

The parties to a collective agreement are required to furnish copies to the appropriate
Regional Office with accompanying proof of ratification by the majority of all the workers in the
bargaining unit. This was not done in the case at bar. We do not declare the CBA invalid or void
considering that the employees have enjoyed from it. They cannot receive benefits under the
provisions favorable to them and later insist that the CBA is void simply because other provisions
turn out not to the liking of certain employees. It is iniquitous to receive benefits from a CBA and
later on disclaim its validity (Planters Products, Inc. vs. NLRC).

CERTIFICATION OF THE CBA BY THE BUREAU OF LABOR RELATIONS

Neither is the certification of the CBA by the bureau of labor relations required to put a
stamp of validity to such contract. Once it is duly entered into and signed by the parties, a
collective bargaining agreement becomes effective as between the parties regardless of whether
the same has been certified by the BLR (Liberty Flour Mills Employees vs. Liberty Flour Mills, Inc.).

COLLECTIVE BARGAINING AGREEMENT: TERMS

EFFECTIVITY OF CBA CONCLUDED AFTER SIX MONTHS


FROM EXPIRATION OF THE OLD CBA

In the absence of a new CBA, the parties must maintain status quo and must continue in
full force and effect the terms and conditions of the existing agreement until a new agreement is
Red Notes in Labor Law

reached. In this manner, the law prevents the existence of a gap in the relationship between the
collective bargaining parties. Another legal principle that should apply is that in the absence of an
agreement between the parties, then, an arbitrated CBA takes on the nature of any judicial or
quasi-judicial award; it operates and may be executed only prospectively unless there are legal
justifications for its retroactive application (Manila Electric Company vs. Quisumbing and MEWA).

AGREED BUT UNSIGNED CBA WITHIN SIX MONTHS

The renegotiated CBA retroacts if the parties reached agreement within six months from
expiry date. The determining point is the date they agreed, not the date they signed (Mindanao
Terminal vs. Confesor and ALU-TUCP).

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EMPLOYEES PARTICIPATION IN FORMULATING THE CODE OF DISCIPLINE

Verily, a line must be drawn between management prerogatives regarding business


operations pers se and those which affect the rights of the employees. In treating the latter,
management should see to it that its employees are at least properly informed of its decisions or
modes of action.
The collective bargaining agreement may not be interpreted as cession of employees right
to participate in the deliberation of matter which may affect their rights and the formulation of
policies relative thereto. And one such matter is the formulation of a code of discipline (Philippine
Airlines, Inc. vs. NLRC).

GLOBE DOCTRINE

The desires of the employees are relevant to the determination of the appropriate
bargaining unit. The relevancy of the wishes of the employees concerning their inclusion or
exclusion from a proposed bargaining unit is inherent in the basic right of self-organization. While
the desires of employees with respect to their inclusion in the bargaining unit is not controlling, it
is a factor which would be taken into consideration in reaching a decision (Globe Machine &
Stamping Co).

SINGLE OR EMPLOYER UNIT IS FAVORED

The proliferation of unions in an employer unit is discouraged as a matter of policy unless


there are compelling reasons which would deny a certain class of employees the right to self-
organization for purposes of collective bargaining (Philtranco Service Enterprises vs. Bureau of
Labor Relations).

EXCEPTIONS TO ONE-UNIT POLICY

The usual exception, of course, is where the employer unit has to give way to the other
units like the craft unit, plant unit, or a subdivision thereof; the recognition of these exceptions
takes into account the policy to assure employees of the fullest freedom in exercising their rights.
Otherwise stated, the one company-one union policy must yield to the right of the employees to
form unions or associations for purposes not contrary to law, to self-organization and to enter into
collective bargaining negotiations, among others which the Commission guarantees (Barbizon Phil.
Vs. Nagkakaisang Supervisor ng Barbizon, et.al.).
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TWO COMPANIES WITH RELATED BUSINESS

Two corporations cannot be treated as single bargaining unit even if their businesses are
related (Indophil Textile Mill Workers Union-PTGWO vs. Voluntary Arbitrator Calica and IndoPhil
Textile Mills, Inc.).

SUBSIDIARIES AND SPUN-OFF CORPORATIONS

In determining an appropriate bargaining unit, the test of grouping is mutuality or commonality


of interests. The employees sought to be represented by the collective bargaining agent must have
substantial mutual interests in terms of employment and working conditions as evinced by the type
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of work they performed. Considering the spin-offs, the companies would consequently have their
respective and distinctive concerns in terms of the nature of work, wages, hours of work and other
conditions of employment. Interests of employees in the different perforce differ. The employees
of different companies see the need to group themselves together and organize themselves into
distinctive and different groups. It would then be best to have separate bargaining units for the
different companies where the employees can bargain separately according to their needs and
according to their own working condition (San Miguel Corp. Employees Union-PTGWO, etc vs.
Confesor, San Miguel Corp., Magnolia Corp., and San Miguel Foods, Inc.).

COLLECTIVE BARGAINING AGREEMENT: CERTIFICATION ELECTION

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ULP IN RELATION TO ELECTION

It is unfair labor practice for the company to suspend the workers on the ground of
abandonment of work on the day on which the pre-election had been scheduled. It is the
employees right to hold a certification election, the exercise of which is their sole prerogative
(CLLC E. G. Gochonco Workers Union, et al. vs. NLRC).

TWELVE-MONTH BAR

No petition for a CE maybe filed within one year from the date of a valid certification,
consent, or run-off election or from the date of voluntary recognition. Suppose, for instance, that
an election has been held but not one of the unions won. The next election cannot be held within
twelve-months.
The prohibition presupposes that there was an actual conduct of election, i.e. ballots were
cast and there was a counting of votes. In case where there was no certification election conducted
precisely because the first petition was dismissed on the ground of a defective petition which did
not include all the employees who should be properly included in the collective bargaining unit, the
certification year bar does not apply (R. Tranport Corp. vs. Laguesma).

DEADLOCK BAR RULE

The Deadlock rule simply provides that a petition for certification can only be
entertained if there is no pending bargaining deadlock submitted to conciliation or arbitration or
had become the subject of a valid notice of strike or lockout. The principle purpose is to ensure
stability in the relationship of the workers and the management (National Congress of Unions in
the Sugar Industry of the Philippinines-TUCP vs. Trajano).

DEADLOCK RULE WHEN NOT APPLICABLE

The deadlock rule does not apply where there is a certification of election ordered to be
conducted (Kaisahan ng Manggagawang Pilipino vs. Trajano).

FREEDOM PERIOD UNDER 253-A AND 256

The freedom period under Arts 253-A and 256 is different from and ought not to be
mistaken for the other 60-day period mentioned in art. 253. The latter speaks of the right of the
parties to propose modifications in the existing CBA, as an exception of the rule that the CBA
cannot be modified during its lifetime. This 60-day period under Art. 253 does not and cannot refer
to the representative status of the incumbent union since the acquisition or loss of representative
status of a union is to be resolved through a certification election, and not through CBA negotiation
with the employer. Therefore, the 60-day period under 253 refers to modifying or renegotiating the
CBA provisions other than the representational. Those stipulations, in practice, are called
economic or non-political. To clarify terms, the 60-days in 253 may be called renegotiation
proposal period or simply proposal period, while under Arts 253-A and 256 is, as already
established, the freedom period. The proposal period is the last 60 days of the last year of the
Red Notes in Labor Law

nonrepresentational provisions; the freedom period is the last 60 days of the CBAs fifth year (San
Miguel Corporation vs. Trajano).

CBA SURREPTITIOUSLY REGISTERED

Even if the existing CBA is registered surreptitiously, as alleged by the petitioner union, but
no evidence is presented proving the alleged surreptitious registration, the petition for C.E. cannot
be granted. The contract bar rule applies. Whether or not the CBA was indeed surreptitiously
registered is a factual matter whose determination is outside the ambit of a petition for certiorari
(Pambansang Kapatiran ng mga Anak Pawis sa Formey vs. Sec. of Labor).

CBA SIGNED BEFORE OR WITHIN FREEDOM PERIOD


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A collective bargaining agreement which was prematurely renewed is not a bar to the
holding of a certification election. Such indecent haste in renewing the CBA despite an order
enjoining them from doing so is designed to frustrate the constitutional right of the employees to
self-organization (Associated Labor Unions vs. Calleja).

VALIDITY OF CBA SIGNED DURING REPRESENTATION DISPUTE

When a collective bargaining agreement is entered into at the time when the petition for
certification election had already been filed by a union and was then pending resolution, the said
collective bargaining agreement cannot be deemed permanent, precluding the commencement of
negotiations by another union with the management. In the meantime, however, so as not to
deprive the workers of the benefits of the said agreement, it shall be recognized and given effect
on a temporary basis, subject to the results of the certification election. The agreement may be
continued in force if the union that negotiated it is certified as the exclusive bargaining
representative of the workers or may be rejected and replaced in the event the rival union emerges
as the winner (Associated Trade Unions vs. Trajano).

CBA WHICH IS NOT AUTOMATICALLY RENEWED

A bargaining contract which provides for automatic renewal in the absence of notice by one
of the contracting parties to alter, modify or terminate it prior to a specified period preceding the
terminating date, will usually operate as a bar to a certification election. However, this rule does
not apply where the employer filed, with the Court of Industrial Relations, reasonably prior to
specified date for automatic renewal, a petition or manifestation of its intention to terminate such
contract if and when it is found that the collective bargaining agency with whom the employer had
the contract no longer represented the majority of the employers workers (PLDT Employees Union
vs. PLDT Company and Free Telephone Workers Union).

CBA THAT DOES NOT FOSTER STABILITY

Basic to the contract bar rule is the proposition that the delay of the right to select
representatives can be justified only where stability is deemed paramount. Excepted from the
contract-bar rule are certain types of contracts which do not foster industrial stability, such as
contracts where the identity of the representatives is in doubt. Any stability derived from such
contracts must be subordinated to the employees freedom of choice because it does not establish
the type of industrial peace contemplated by the law (Philippine Association of Free Labor Unions
vs. Estrella).
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EFFECT OF WITHDRAWAL OF SIGNATORIES

It appearing indisputably that the 321 union members had withdrawn their support to the
petition. It would be otherwise if the withdrawal was made after the filing of the petition for it
would then be presumed that the withdrawal was not free and voluntary. The presumption would
arise that the withdrawal was procured through duress, coercion or for valuable consideration. In
other words, the distinction must be that withdrawals made before the filing of the petition are
presumed voluntary unless there is convincing proof to the contrary, whereas withdrawals made
after the filing of the petition are deemed involuntary.
The reason for such distinction is that if the withdrawal or retraction is made before the
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filing of the petition, the names of employees supporting the petition are supposed to be held
secret to the opposite party. Logically, any such withdrawal or retraction shows voluntariness in
the absence of proof to the contrary. Moreover, it becomes apparent that such employees had not
given consent to the filing of the petition; hence the subscription requirement has not been met.
When the withdrawal or retraction is made after the petition is filed, the employees who
are supporting the petition become known to the opposite party since their names are attached to
the petition at the time of filing. Therefore, it would not be unexpected that the opposite party
would use foul means for the subject employees to withdraw their support (La Suerte Cigar and
Cigarete Factory vs. Trajano).

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DISMISSED EMPLOYEES

In Philippine jurisprudence it is now settled that employees who have been improperly laid
off but who have a present, unabandoned right to an expectation of reemployment, are eligible to
vote in certification elections. Thus, and to repeat, if the dismissal is under question, as in the case
now at bar, whereby the case of illegal dismissal and/or unfair labor practice is filed, the
employees concerned could sill qualify to vote in the elections (Phil. Fruits and Vegetables
Industries, Inc. vs. Torres).

PROBATIONARY EMPLOYEES

In certification election all rank-and-file employees in the appropriate bargaining unit are
entitled to vote. This principle is stated in Article 255 of the Labor Code, which states that the
labor organization designated or selected by the majority of the employees in an appropriate
bargaining unit shall be the exclusive representative of the employees in such unit for the purpose
of collective bargaining (Airtime Specialists, Inc. vs. Director of Labor Relations).

STRIKES AND LOCKOUTS; CONCEPT

OBJECTIVE OF STRIKE AND LOCKOUT

Ordinarily, a strike is a coercive activity resorted to by laborers to enforce their demands.


The idea behind a strike is that a company engaged in a profitable business cannot afford to have
its production or activities interrupted, much less paralyzed. Any interruption or stoppage of
production spells loss, even disaster. The capital invested in machinery, factory and other
properties connected with the business would be unproductive during a strike or stoppage of the
business. On the other hand, the overheard expenses consisting of the salaries of its officials,
including real estate taxes and licenses fees continue. Knowing this, the strikers by going on strike
seek to interrupt and paralyze the business and production of the company. The employer company
is on the defensive. It almost invariably wants the strike stopped and the strikers go back to work
so as to resume and continue production. Because of the threat or danger of loss to the company, it
does not infrequently give in to the demands of the strikers, just so it can maintain the continuity
of its production (Philippine Can Company vs. Court of Industrial Relations and Liberal Labor
Union).

NATURE OF LOCKOUT

Lockout means the temporary refusal of any employer to furnish work as a result of an
industrial or labor dispute; an employers act excluding employees who are union members from his
plant (Sta. Mesa Slipways Engineering Co. vs. CIR).
TERMS AND CONDITIONS OF GOVERNMENT EMPLOYMENT

In government employment, it is the legislature and, where properly given delegated


power, the administrative heads of government, which fix the terms and conditions of employment.
And this is effected through statutes or administrative circulars, rules, and regulations, not through
collective bargaining (Social Security System Employees Association vs. Court of Appeals).
Red Notes in Labor Law

SECOND FACTOR IN LEGALITY OF STRIKE: PROCEDURAL REQUIREMENTS

When the law says the labor union may strike should the dispute remain unsettled until
the lapse of the requisite number of days (cooling-off period) from the mandatory filing of the
notice, the unmistakable implication is that the union may not strike before the lapse of the
cooling-off period. Similarly, the mandatory character of strike ban after the report on the strike
vote is manifest in the provision that every case, the union shall furnish the MOLE with results of
the voting at least seven days before the intended strike, subject to the (prescribed) cooling-off
period and 7-day strike ban must both be complied with, although the labor union may take a strike
vote and report the same within the statutory cooling-off period (National Federation of Sugar
Workers vs. Ovejera).
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LEGALITY OF STRIKE NOT DEPENDENT UPON ABILITY OF MANAGEMENT
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TO GRANT DEMANDS

The demands that gave rise to the strike may not properly be granted under the
circumstances of this case, but the fact should not make said demands and the consequent strike
illegal. The ability of the Company to grant said demands is one thing, and the right of the laborers
to make said demands is another thing. The latter should be kept inviolate. There are adequate
instrumentalities which may be resorted to in case of excesses (Central Vegetable Oil
Manufacturing vs. Philippine Oil Industry Workers Union).

STRIKE AGAINST EMPLOYEES UNFAIR LABOR PRACTICES

Union busting, or interference with the formation of a union, constitutes an unfair labor
practice act, hence a valid ground for the declaration of strike (Zamboanga Wood Products, Inc.,
vs. NLRC).

TESTS IN DETERMINING THE EXISTENCE OF AN UNFAIR LABOR PRACTICE STRIKE

There are two tests in determining the existence of an unfair labor practice strike:
1. Objectively, when the strike is declared in protest of unfair labor practice which is
found to have been actually committed; and
2. Subjectively, when a strike is declared in protest of what the union believed to be
unfair labor practices committed by management, and the circumstances warranted such belief in
good faith, although found subsequently as not committed (Norton and Harrison Co. Labor Union v.
Norton and Harrison Co.).

MINORITY UNION STRIKE

By law, the right to be the exclusive representative of all the employees in an appropriate
collective bargaining unit is vested in the labor union designated or selected for such purpose by
the majority of the employees in the unit concerned. When a union, after winning in an election,
is certified as the exclusive bargaining representative, any other union who participated in the
election thereby becomes a minority union. A minority union cannot demand collective bargaining
with the employer. Such right properly belongs to the union that commands the majority.
Moreover, the defeated union cannot lawfully undertake a strike against the employer; if one is
being done, it must come to a halt. Neither can it picket to compel bargaining. To allow said
union to continue picketing for the purpose of drawing the employer to collective bargaining table
would obviously be to disregard the results of the consent election. To further permit the unions
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picketing activities would be to flaunt at the will of the majority. After a union has been certified
as the bargaining representative, a strike by a minority union t compel an employer to bargain with
it is unlawful. No labor dispute can exist between a minority union and an employer in such a case
(United Restaurors Employees and Labor Union v. Torres and Delta Development).

DEFIANCE OF RETURN-TO-WORK-ORDER

The return-to-work order should benefit not only those workers who comply with it and
regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for
the work they have actually performed. Conversely, those workers who refuse to obey said return-
to-work order and instead wage a strike are not entitled to be paid for work not done or to
reinstatement to the positions they have abandoned by their refusal to return thereto as ordered
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(Sarmiento vs. Tuico).

STRIKE OVER AN UNFAIR LABOR PRACTICE ACT DESPITE


A NO-STRIKE/NO-LOCKOUT PROVISION IN THE CBA

A no-strike prohibition in a collective bargaining agreement is applicable only to economic


strikes. In other words, ULP strike is not covered and workers may go on strike based on ULP
despite the no-strike provision (Philippine Metal Foundaries, Inc. vs. CIR).

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The union brands as illegal the stipulation in the collective bargaining agreements that in
case of any unfair labor practice on the part of either party, there will be no strikes, lockouts, or
any prejudicial action xxx until the question or grievance is resolved by the proper court if not
settled through a grievance procedure therein outlined.
The authorities are numerous which hold that strikes held in violation of the terms
contained in a collective bargaining agreement are illegal, especially when they provide for
conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their
ends have to be achieved (GOP-CCP Workers UNION vs. CIR).

BOOK SIX

TERMINATION OF EMPLOYMENT; JUST AND AUTHORIZED CAUSES

INTRODUCTION OF LABOR SAVING DEVICES

Reduction of the number of workers in a companys factory made necessary by the


introduction of machinery in the manufacture of its products is justified. There can be no question
as to the right of the manufacturer to use new labor saving devices with a view to effecting more
economy and efficiency in its method of production (Philippine Sheet Metal Workers Union vs.
CIR).

RETRENCHMENT

Retrenchment is one of the economic grounds to dismiss employees. It is resorted to by an


employer primarily to avoid or minimize business losses. The law recognizes this under Art 283 of
the Labor Code. However, the employer bears the burden to prove his allegation of economic or
business reverses. The employers failure to prove it necessarily means that the employees
dismissal was not justified (Precision Electronics Corporation vs. NLRC).

RETRENCHMENT: WHOM TO LAY-OFF

There must be fair and reasonable criteria to be used in selecting employees to be


dismissed, on account of retrenchment, such as (a) less preferred status (i.e., temporary
employees); (b) efficiency rating, and (c) seniority (Asiaworld Publishing House, Inc. vs. Ople).

LACK OF WORK

Lack of work is a justifiable cause for termination of employment. Protection to labor does
not mean oppression or self-destruction of capital. Where the continuation of the men in service is
patently inimical to the interest of the employer, there is no alternative but for the court to
authorize the employer to lay off such number of workers as the circumstances may warrant. But
the court may impose the condition that the employer shall not admit any new laborer in case of
available work in the future before the laid-off men who are able, willing and available to do the
same shall have been recalled to work (Mayon Engineering Workers Union vs. Mayon Engineering
and Machine Shop).
Red Notes in Labor Law

RETRENCHMENT AND CONSERVATORSHIP

The retrenchment of personnel as a consequence of conservatorship proceedings against an


insurance company in financial difficulties is a cost-saving measure resorted to by the conservator
to preserve the assets of the company for the protection of not only the policyholders and creditors
but also the investors and the public in general. Conservatorship proceedings contemplate, not the
liquidation of the company involved, but a conservation of company assets and business during the
period of stress by the commissioner of Insurance, who thereafter yields control to the regular
officers of the company (Garcia vs. NLRC).

FOUR STANDARDS OF RETRENCHMENT

Firstly, the losses expected should be substantial and not merely de minimis in extent. If 45
the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial
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and inconsequential in character, the bona fide nature of the retrenchment would appear to be
seriously in question.
Secondly, the substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and n good faith by the employer. There should, in other
words, be certain degree of urgency for the retrenchment, which is, after all, a drastic recourse
with serious consequences for the livelihood of the employees retired or otherwise laid-off.
Thirdly, there must be reasonably necessary and likely to effectively prevent the expected
losses. The employer should have taken other measures prior or parallel to retrenchment to
forestall losses, i.e., cut other costs than labor costs.
Lastly, but certainly not the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proven by sufficient and convincing
evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this ground for termination of services of
employees (Lopez Sugar Corporation vs. Federation of Free Workers, et al.)

REDUNDANCY DISTINGUISHED FROM RETRENCHMENT

Redundancy exists where the services of an employee are in the excess of what is
reasonably demanded by the actual requirements of the enterprise. A position is redundant where
it is superfluous, a superfluity of a position or positions may be the outcome of a number of factors,
such as over hiring of workers, decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term lay-off. It is the
termination of employment initiated by the employer through no fault of the employees and
without prejudice to the latter resorted to by management during periods of business recession,
industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage
of materials, conversion of the plant machinery, or of automation. Simply put, it is an act of the
employer of dismissing employees because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business a right consistently recognized and
affirmed by this court (Sebuguero, et al. vs. NLRC).

CLOSURE OF BUSINESS

Under Article 284 of the Labor Code, three requirements may be seen to be established in
respect of cessation of business operations of an employer company not due to business reverses,
namely: a) service of written notice to the employees and to the MOLE at east one month before
the intended date thereof; b) the cessation of or withdrawal from business operations must be bona
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fide in character; and c) payment to the employees of termination pay amounting to at east one-
half month pay for each year of service, or one month pay, whichever is higher (Mobil Employees
Association and Inter-Island Labor Organization).

TEMPORARY SHUTDOWN

Temporary shutdown of one of the furnaces of a glass plant is not a good reason to
terminate employees where operations continued after such repairs, and it is apparent that the
closure of the companys warehouse was merely a ploy to get rid of the employees who were then
agitating the company for benefits, reforms and collective bargaining as a union. There is no
showing that petitioners had been remiss in their obligations and inefficient in their jobs to warrant
their separation (Brotherhood Labor Unity Movement of the Philippines, et al. vs. Zamora).
Law

MERGER

By the fact of merger, succession of employment rights and obligations occurs between the
absorbing corporation and the employees of the absorbed corporation. Not only must the absorbing
corporation retain the employees, it should likewise recognize the length of service in the previous
employer. In merger, like in sale in bad faith, the successor employer principle applies (Filipinas
Port Services, Inc. vs. NLRC).

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AILMENT OR DISEASE

A medical certificate issued by the companys own physician, is not certificate by


competent public health authority (Cebu Royal Plant [San Miguel Corporation] vs. Deputy
Minister of Labor).

PREVENTIVE SUSPENSION AND INVESTIGATION


DO NOT REPLACE TWO-NOTICE REQUIREMENT OF DUE PROCESS

The notice of preventive suspension cannot be considered adequate notice since the
objectives of the petitioners preventive suspension, as stated in the notice, were merely to
ascertain the extent of the loss to the bank and to pinpoint responsibility of the arties involved,
and not to apprise the petitioner of the causes of is desired dismissal. Likewise, the subsequent
interview is not the ample opportunity to be heard contemplated by law. Ample opportunity to
be heard is especially accorded to the employee sought to be dismissed after he is informed of the
charges against him in order to give him an opportunity to refute the accusations leveled against
him, and it certainly does not consist of an inquiry conducted merely for the purpose of filing a
criminal case against another person (Norman de Vera vs. NLRC and Bank of the Philippine Islands).
The employer is mandated to furnish the employee sought to be dismissed two notices, the
written charge, and, if, after hearing, dismissal is indeed warranted.

INSUFFICIENT NOTICE: CONSULTATION WITH UNION

The employers prior consultation with the union with which the employee is affiliated is
legally insufficient. The rights of an employee whose services are sought to be terminated to be
informed beforehand of his proposed dismissal (or suspension) as well as of the reasons therefore,
and to be afforded an adequate opportunity to defend himself from the charges leveled against
him, are rights personal to the employee. Those rights are not satisfied by the employers obtaining
the consent of or consulting with the labor union. Such consultation or consent is not substitute for
actual observance of those rights of the employee. The employee can waive those rights, if he
chooses, but the union cannot waive them for him (Century Textile Mills, Inc. vs. NLRC, et. al.).

DUE PROCESS IN AUTHORIZED CAUSES

In employment termination due to authorized causes, the due process requirement is not
completely done away with. Investigation and hearing need not be done by the employer, but the
one-month advance notices to the affected employee and to the DOLE must be complied with,
otherwise the termination is illegal (Wittshire File Co. vs. NLRC).

BASIS OF COMPUTATION OF BACKWAGES

The base figure to be used in the computation of backwages due to the employee should
include not just the basic salary, but also the regular allowances that he had been receiving such as
the emergency living allowances and the 13th- month pay mandated by the law (Paramount Vinyl
Product Corporation vs. NLRC).
Red Notes in Labor Law

BACKWAGES UP TO RETIREMENT AGE ONLY

If the ordered reinstatement is no longer feasible because he employee has reached


retirement age, the court will not insist on reinstatement and even the backwages will not extend
beyond the employees retirement date (Equitable Banking Corporation vs. NLRC and R.L. Salac).

INFLATION

Regarding the argument that the inflation that has supervened justifies the imposition of
interest, the Court has held that the effects of extraordinary inflation are not to be applied without
an agreement between the parties and without an official declaration thereof by competent
authorities (Lantion, et al. vs. NLRC).
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APPLICABILITY OF THE STRAINED RELATIONS PRINCIPLE
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The rule is that strained relations may be invoked only against employees whose positions
demand trust and confidence, or whose differences with their employer are of such nature or
degree as to preclude reinstatement (Maranaw Hotels vs. CA).

REINSTATEMENT SHOULD HAVE BEEN ORDERED BY LABOR ARBITER

If the labor arbiter has not ordered reinstatement of the employee, the NLRC cannot award
backwages for the period when the appeal was pending at the NLRC. An order for reinstatement
must be specifically declared and cannot be presumed; like backwages, it is separate and distinct
relief given to an illegally dismissed employee. There being no specific order of reinstatement and
the order being for complainants separation, there can be no basis for the award of salaries/
backwages during the pendency of appeal (Filflex Industrial and MFG. Corp vs. NLRC).

DAMAGES

If the evidence adduced by the employee before the Labor Arbiter should establish that the
employer did indeed terminate the employees services without just cause or without according
him due process, the Labor Arbiters judgment shall be for the employer to reinstate the employee
and him backwages, or exceptionally, for the employee simply to receive separation pay. These are
reliefs explicitly prescribed by the labor code. But any award of moral damages by the Labor
Arbiter obviously cannot be based on the labor code but would be grounded on the Civil Code. Such
an award cannot be justified solely upon the premise (otherwise sufficient for redress under the
Labor Code) that the employer fired his employee without just cause or due process (Suario vs.
Bank of the Philippine Islands).

MORAL DAMAGES

Moral damages may be awarded to compensate one for diverse injuries such as mental
anguish, besmirched reputation, wounded feelings and social humiliation. It is however, not enough
that such injuries have arisen. It is essential that they have sprung from a wrongful act or omission
of the defendant which was the proximate cause thereof (Suario vs. BPI).

TERMINATION OF EMPLOYMENT: BY EMPLOYEE

RESIGNATION AND RESIGNATION NOTICE


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Resignation is the voluntary act of an employee who finds himself is a situation where he
believes that personal reason cannot be sacrificed in favor of the exigency of the service, then he
has no other choice but to disassociate himself from his employment The employer has no control
over resignations and so the notification requirement was devised in order to insure that no
disruption of work would be involved by reason of the resignation. Resignation, once accepted and
being the sole act of the employee may not be withdrawn without the consent of the employer
(Intertrod Maritime, Inc. vs. NLRC).

RESIGNATION PAY

The general rule is that an employee who voluntarily resigns from employment is not
entitled to separation pay, unless there is a stipulation for payment in the employment contract or
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Collective Bargaining Agreement, or payment of the amount is sanctioned by established employer


practice or policy (Travelaire & Tours Corp. vs. N. Medelyn).

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BAR-TYPE QUESTIONS
1. Does the penal provisions of RA 8042 violate the equal protection clause of the Constitution?
Red Notes in Labor Law

The equal protection clause is directed principally against undue favor and individual or
class privilege. It is not to prohibit legislation which is limited to the object to which it is directed
and by the territory in which it is to operate. It does not require absolute equality, but merely all
persons be treated under like conditions both as to privileges conferred and liabilities imposed.
(EXEC. SECRETARY VS. CA, May 25, 2004)

2. Is every controversy or money claim by an employee against the employer or vice versa
within the exclusive jurisdiction of the labor arbiter?

No. Not every controversy or money claim by an employee against the meployer or vice
versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against
the employer or vice versa is within the exclusive jurisdiction of the labor arbiter only if there is a 45
reasonable causal connection between the claim asserted and the employer-employee relation.
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Absent such link, the complaint will be cognizable by the regular courts of justice. (EVIOTA VS. CA,
July 29, 2003)

3. Natividad works with TCM College as a liaison officer with a rank of Assistant Registrar. He
was arrested by police authorities for violation of he Dangerous Drugs Act without warrant, and
a criminal complaint was filed against him. TCM College sent a Memorandum to Natividad
informing him that his employment is already terminated. The criminal case was dismissed for
lack of merit. Natividad did not, however, file any complaint to the NLRC against the college
on account of his dismissal.
Natividad was arrested anew for violation of the same Act. This time, he filed with the
NLRC a complaint for illegal dismissal. The Labor Arbiter and the NLRC denied Natividad but on
certiorari, the CA affirmed, with modification, holding that although there was a valid cause for
private respondents dismissal, the petitioner did not follow the procedure for the termination
of his employment. Was Natividad illegally dismissed so as to entitle him to backwages?

The normal consequences of finding that an employee is illegally dismissed are, firstly, the
employee becomes entitled to reinstatement without loss of seniority rights and second, payment
of backwages to the period from his illegal dismissal up to actual reinstatement. The award of
backwages is not conditioned on the employers ability or inability to pay. While it may be true
that Natividad was detained, he was not convicted by final judgement in the Criminal Case.
Indeed, he is presumed innocent until his guilt is proved beyond reasonable doubt. (TOMAS
CLAUDIO MEMORIAL COLLEGE, INC. VS. CA, February 16, 2004)

4. Is an order of execution of a final and executory judgement in a labor case still appealable?

No. Settled is the rule that after a judgemnt has become final, no additions can be made
thereto, and nothing can be done therewith except execution; otherwise, there would be no end to
litigations, thus settling at naught the main role of courts of justice, which is to assist in the
enforcement of the rule of law and the maintenance of peace and order, by setting justiceable
controversies with finality. (KING INTEGRATED SECURITY SERVICES, INC. VS. GALO S. GATAN, July
7, 2003)

5. What evidence is needed to show that employer committed ULP under the Labor Code?

Substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. In the case at bar, the complaint was made only after a deadlock was declared by the
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Union. It is clear that such ULP charge was merely an afterthought. (STANDARD CHARTERD BANK
EMPLOYEES UNION VS. CONFESOR, June 16, 2004)

6. What is surface bargaining?

It is defined as going through the motions of negotiating without any legal intent to reach
an agreement. (STANDARD CHARTERD BANK EMPLOYEES UNION VS. CONFESOR, June 16, 2004)

7. Petitioner and respondent union entered into and signed a CBA covering the period of July
10, 1988 to July 9, 1991. On September 27, 1990, the respondent union filed a notice of strike
Law

based on violation of CBA, among others. On October 16, 1990, the petitioner's general
manager, wrote the Acting Secretary of Labor and Employment (SOLE for brevity) informing
him of the petitioner's decision to retrench 171 employees on a staggered basis, spread over a
period of 60 days, to lessen the daily financial losses being incurred by the petitioner. The next
day, the respondent union informed the DOLE-NCR that the union will conduct a strike vote
referendum. The members of the respondent union voted to stage a strike. DOLE-NCR was
thereafter informed of the results of the strike vote referendum. On October 31, 1990, the
SOLE issued a status quo ante bellum order certifying the case to the NLRC for compulsory
arbitration and enjoining the parties from engaging in any strike or lockout.

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The petitioner wrote the SOLE of its decision to implement its retrenchment program to
stem its huge losses. Subsequently, the petitioner terminated the employment of 148
employees. The remaining employees were also informed that it will close in six months. The
respondent union protested the actions of the petitioner invoking Section 15, Article VI of the
CBA. By way of riposte, the respondent union filed on November 16, 1990 another notice of
strike because of what it perceived as the petitioner's continuing unfair labor practices (ULP).
On the same day, the officers of the respondent union and some members staged a picket in
the premises of the hotel, obstructing the free ingress and egress thereto. The following day,
petitioner terminated the employment of the officers and members of the respondent union.
On November 28, 1990, the SOLE issued an order certifying the labor dispute to the NLRC. The
SOLE issued a return-to-work order, which the respondent officers and members complied.

Petitioner however filed a complaint with the Regional Arbitration Office of the NLRC
for illegal strike against the respondents on the ground that the latter failed to comply with the
requirements provided under Arts. 263 and 264 of the Labor Code. In their answer, the
respondents alleged that the petitioner committed ULP prior to the filing of the November 16,
1990 notice of strike. Hence, there was no need for the respondent union to comply with Arts.
263 and 264 of the Labor Code, as the notice filed by the union on September 27, 1990 was
sufficient compliance with the law. Is the strike staged by the respondent union on November
16 legal?

NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the DOLE thirty
days before the intended date thereof or fifteen days in case of ULP; (b) strike vote approved by a
majority of the total union membership in the bargaining unit concerned obtained by secret ballot
in a meeting called for that purpose; and (c) notice given to the DOLE of the results of the voting at
least seven days before the intended strike. The requisite seven-day period is intended to give the
DOLE an opportunity to verify whether the projected strike really carries the approval of the
majority of the union members. The notice of strike and the cooling-off period were intended to
provide an opportunity for mediation and conciliation. The requirements are mandatory and failure
of a union to comply therewith renders the strike illegal. A strike simultaneously with or
immediately after a notice of strike will render the requisite periods nugatory. Moreover, a strike
that is undertaken, despite the issuance by the SOLE of an assumption or certification order,
becomes a prohibited activity and, thus, illegal pursuant to Art. 264 of the Labor Code, as
amended. Consequently, the union officers and members are deemed to have lost their
employment status for having knowingly participated in an illegal act.

In this case, the respondent union filed its notice of strike with the DOLE on November 16,
1990 and on the same day, staged a picket on the premises of the hotel, in violation of the law.
The respondents cannot argue that since the notice of strike on November 16, 1990 were for the
same grounds as those contained in their notice of strike on September 27, 1990 which complied
with the requirements of the law on the cooling-off period, strike ban, strike vote and strike vote
report, the strike staged by them on November 16, 1990 was lawful. The matters contained in the
notice of strike of September 27, 1990 had already been taken cognizance of by the SOLE when he
issued on October 31, 1990 a status quo ante bellum order enjoining the respondent union from
intending or staging a strike. Despite the SOLE order, the respondent union nevertheless staged a
strike on November 16, 1990 simultaneously with its notice of strike, thus violating Art. 264(a) of
Red Notes in Labor Law

the Labor Code, as amended, which provides that x x x No strike or lockout shall be declared
after assumption of jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout. (GRAND BOULEVARD HOTEL VS. GENUINE
LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES, July 8, 2003)

8. Respondents applied for employment in Taiwan with petitioner, Phil. Employ Services and
Resources, Inc. (PSRI for brevity). The respondents were deployed in Taiwan. When they
encountered problems, they brought their attention to the manager who told them to forget
about it and refrain to air their complaints.

Respondent Navarra and another employee, Pio Gabito, were summoned by the
management and told that they were to be repatriated, without specifying the ground or cause 45
therefor. They pleaded that they be informed of the cause or causes for their repatriation, but
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their requests were rejected. The manager of their employer summoned the police, who
arrived and escorted them to the airport. Upon respondent Navarra's arrival in Manila, the
petitioner sought to settle his complaints. After the negotiations, the petitioner agreed to pay
P49,000 to the said respondent but, in consideration thereof, the latter executed a quitclaim
releasing the petitioner from any or all liabilities for his repatriation. Were petitioners illegally
dismissed when they repatriated by their Taiwan employers? Was Navarras execution of
quitclaim and receipt of P 49, 000 sufficient to conclude his waiver of right against illegal
dismissal?

Yes. Respondents dismissal was not based on just, valid and legal grounds. As such, the
rule lex loci contractus (the law of the place where the contract is made) governs. Therefore, the
Labor Code, its implementing rules and regulations, and other laws affecting labor, apply in this
case. In order to effect a valid dismissal of an employee, the law requires that there be just and
valid cause as provided in Article 282 and that the employee was afforded an opportunity to be
heard and to defend himself. Dismissal may also be based on any of the authorized causes provided
for in Articles 283 and 284 of the Labor Code.
The petitioner failed to substantiate its claim that respondent Navarra's repatriation was
based on a valid, legal and just cause. We thus rule that the respondents were constructively
dismissed from their employment. There is constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his continued employment. It exists where
there is cessation of work because "continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay."
We rule that the deed of release executed by respondent Navarra did not completely
release the petitioner from its liability on the latter's claim. As a rule, quitclaims, waivers or
releases are looked upon with disfavor and are commonly frowned upon as contrary to public policy
and ineffective to bar claims for the measure of a worker's legal rights. If (a) there is clear proof
that the waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the
settlement are unconscionable, and on their face invalid, such quitclaims must be struck down as
invalid or illegal. (PHIL EMPLOY SERVICES VS. PARAMIO, ET AL, April 15, 2004)

9. The petitioner is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. It employed various employees,
among whom were private respondents. The petitioner came up with a Relocation and
Restructuring Program. Private respondents received separate letters from the petitioner,
giving them the option to choose the branch to which they could be transferred. Thereafter,
the private respondents and other petitioner's employees were directed to "relocate" to their
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new PT&T Branches.

The petitioner offered benefits/allowances to those employees who would agree to be


transferred under its new program. Moreover, the employees who would agree to the transfers
would be considered promoted. The private respondents rejected the petitioner's offer. Hence,
the petitioner sent letters to the private respondents requiring them to explain in writing why
no disciplinary action should be taken against them for their refusal to be
transferred/relocated. In their respective replies to the petitioner's letters, the private
respondents explained that the transfers imposed by the management would cause enormous
difficulties on the individual complainants. Dissatisfied with this explanation, the petitioner
considered the private respondents' refusal as insubordination and willful disobedience to a
lawful order; hence, the private respondents were dismissed from work. Subsequently, the
private respondents' bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a complaint
Law

against the petitioner for illegal dismissal and unfair labor practice for and in behalf of the
private respondents. Are the respective transfers of the private respondents considered
promotions? If so, is the denial of a promotion a just and authorized cause for dismissal?

Yes. With or without a corresponding increase in salary, the respective transfers of the
private respondents were in fact promotions, following the ruling enunciated in Homeowners
Savings and Loan Association, Inc. v. NLRC: Promotion, as we defined in Millares v. Subido, is the
advancement from one position to another with an increase in duties and responsibilities as
authorized by law, and usually accompanied by an increase in salary. Apparently, the

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indispensable element for there to be a promotion is that there must be an advancement from one
position to another or an upward vertical movement of the employee's rank or position. Any
increase in salary should only be considered incidental but never determinative of whether or not a
promotion is bestowed upon an employee.

However, An employee cannot be promoted, even if merely as a result of a transfer,


without his consent. A transfer that results in promotion or demotion, advancement or reduction or
a transfer that aims to 'lure the employee away from his permanent position cannot be done
without the employees' consent. There is no law that compels an employee to accept a promotion
for the reason that a promotion is in the nature of a gift or reward, which a person has a right to
refuse. Hence, the exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer. As such, there was no
valid cause for the private respondents' dismissal. (PT&T VS. CA, September 29, 2003)

10. The petitioner is a domestic corporation engaged in garments manufacturing using the
brand name KAMISETA. The petitioner employed private respondent Torno as trimmer. The
private respondent and a co-employee, Maricar Buan, were tasked to handle the inventory of
finished products. Sometime thereafter, the petitioner started to receive information from the
head of its production department that, according to other employees, Buan and the private
respondent had been stealing KAMISETA items from the factory. On the basis of a report, the
petitioner issued a disciplinary action form suspending the private respondent indefinitely
without pay. A notice of dismissal was addressed to the private respondent specifying the
charge against her, the factual basis thereof and the imposable penalties for the said charge if
proven.

The private respondent failed to appear during the scheduled hearing. Consequently,
the petitioner decided to dismiss the private respondent from her employment. When notified
of the petitioners decision, the private respondent filed a complaint for illegal dismissal with
prayer for reinstatement and payment of backwages, non-payment of service incentive leave
pay and 13th-month pay against the petitioner before the National Capital Regional Arbitration
Branch. LA rendered a decision holding that the respondent was illegally dismissed and
directed the petitioner to pay backwages and separation pay to the private respondent.
However, according to the labor arbiter, reinstatement could no longer be effected, as the
relationship between the private respondent and the petitioner had been strained and
ruptured. Aggrieved, the petitioner appealed the decision to the NLRC, alleging that it was
deprived of its right to a formal hearing before the labor arbiter rendered her decision. LAs
failure to conduct a hearing deprived the petitioner of its vested right; consequently, her
decision was null and void. Does the absence of a formal hearing amount to denial of
petitioners right to due process? Is termination of the private respondents employment based
on a just and valid cause?

We agree with the CA that the petitioner did not have a vested right to a formal hearing
simply and merely because LA Tumanong granted its motion and set the case for hearing. Pursuant
to Section 5, Rule V of the New Rules of Procedure of the NLRC, the labor arbiter has the authority
to determine whether or not there is a necessity to conduct formal hearings in cases brought before
him for adjudication. The holding of a formal hearing or trial is discretionary with the labor arbiter
Red Notes in Labor Law

and is something that the parties cannot demand as a matter of right. It is entirely within his
authority to decide a labor case before him, based on the position papers and supporting
documents of the parties, without a trial or formal hearing. The requirements of due process are
satisfied when the parties are given the opportunity to submit position papers wherein they are
supposed to attach all the documents that would prove their claim in case it be decided that no
hearing should be conducted or was necessary.
The private respondent was illegally dismissed. In order to effect a valid dismissal, the law
requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code; and
(b) the employee be afforded an opportunity to be heard and to defend himself. As stated by the
CA, the petitioner had failed to show that it had complied with the two-notice requirement: (a) a
written notice containing a statement of the cause for the termination to afford the employee
ample opportunity to be heard and defend himself with the assistance of his representative, if he
so desires; (b) if the employer decides to terminate the services of the employee, the employer 45
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must notify him in writing of the decision to dismiss him, stating clearly the reason therefor.
(SHOPPES MANILA VS. NLRC, January 14, 2004)
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