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NEW LABOR LAWS

R.A. No. 10911 [Lapsed into law on July 21, 2016], otherwise known as the ANTI-AGE DISCRIMINATION
ACT, prohibiting discrimination against any individual in employment on account of age and providing
penalties therefor.

R.A. No. 10395 [March 14, 2013], strengthening tripartism, amending for the purpose Article 290 [275]
of the Labor Code, otherwise known as the “Tripartism Law.”

➢ Tripartism in labor relations is hereby declared a State policy. Towards this end, workers and
employers shall, as far as practicable, be represented in decision and policy-making bodies of the
government.

R.A. No. 10396 [March 14, 2013], strengthening conciliation-mediation as a voluntary mode of dispute
settlement for all labor cases, amending for this purpose Article 234 [228] of the Labor

Code, otherwise known as the “Mandatory Conciliation-Mediation Law.”

R.A. No. 10361 [January 18, 2013], instituting policies for the protection and welfare of domestic
workers, otherwise known as the “Domestic Workers Act” or “Batas Kasambahay.”

R.A. No. 10151 [June 21, 2011], allowing the employment of night workers, thereby repealing Articles
130 and 131 of Presidential Decree Number Four Hundred Forty-Two, as amended, otherwise known as
the Labor Code of the Philippines.

R.A. No. 10022 [March 8, 2010], amending R.A. No. 8042, otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995, as amended, further improving the standard of protection and
promotion of the welfare of migrant workers, their families and overseas Filipinos in distress and for
other purposes.

NEW LABOR ISSUANCES

o Department Order No. 174, Series of 2017 (Issued on March 16, 2017) – Rules Implementing Articles
106 to 109 of the Labor Code, as Amended.

o Department Circular No. 01, Series of 2017 (Issued on June 09, 2017) – Clarifying the Applicability of
Department Order No. 174, Series of 2017.

- Not applicable to BPO, KPO, LPO, IT Infrastructure Outsourcing, Application Development, Hardware
and/or Software Support, Medical Transcription, Animation Services, Back Office Operations/Support,
and CONSTRUCTION INDUSTRY

o Labor Advisory No. 10, Series of 2016 (on July 25, 2016) - Prohibition Against Labor-Only Contracting.

o Department Order No. 40-I-15, Series of 2015 (Issued on September 07, 2015) - REPEALING
“Voluntary Recognition” as a mode of designating a SEBA and replacing it with the mode known as
“Request for SEBA Certification.”

ISSUANCES ON OVERSEAS EMPLOYMENT


1. Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as Amended by Republic Act No. 10022, issued on July 8, 2010;1

1 Formerly, Omnibus Rules and Regulations Implementing R.A. No. 8042 jointly issued by the Secretary
of Foreign Affairs and Secretary of Labor and Employment on February 29, 1996;

2. Revised POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Filipino Workers of 2016;1 and

3. 2016 Revised POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers
issued on February 26, 2016.2

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SYLLABUS

MAJOR TOPIC 1

FUNDAMENTAL PRINCIPLES AND CONCEPTS

A. CONSTITUTIONAL PROVISIONS

• What are the important labor-related constitutional principles?

• Under Article II (Declaration of Principles and State Policies):

a. FIRST OF TWO PROTECTION-TO-LABOR CLAUSES: “Section 18. The State affirms labor as a primary
social economic force. It shall protect the rights of workers and promote their welfare.

• Under Article III (Bill of Rights):

a. Due process and equal protection of the law.

NOTE: THIS CANNOT BE INVOKED BY EMPLOYEES AGAINST THEIR EMPLOYERS IN

CASES OFTERMINATION OF THEIR EMPLOYMENT.

b. Freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble
and petition the government for redress of grievances.

NOTE: THIS FREEDOM IS RELEVANT ONLY IN PICKETING AND NOT IN STRIKE.

c. Right of public and private sector employees to form unions, associations, or societies for purposes
not contrary to law shall not be abridged.

NOTE: THIS IS KNOWN AS “FREEDOM OF ASSOCIATION.” THIS PROVISION IS THE BASIS FOR THE
EMPLOYEES’ RIGHT TO SELF-ORGANIZATION.

d. Non-impairment of obligations of contracts.

NOTE: THE CONCEPT OF THIS RIGHT IN POLITICAL LAW IS SIMILAR IN LABOR LAW.

e. Right to speedy disposition of cases in judicial, quasi-judicial or administrative bodies.

NOTE: THIS CAN BE INVOKED IN LABOR CASES AT ALL LEVELS.


f. Prohibitions against involuntary servitude.

NOTE: THIS PRINCIPLE IS RELEVANT ONLY IN TWO (2) SITUATIONS: NAMELY: (1) RESIGNATION AND (2)
RETURN-TO-WORK ORDER IN NATIONAL INTEREST CASES. THIS MEANS THAT:

(1) AN EMPLOYEE HAS THE RIGHT TO RESIGN SINCE HE CANNOT BE FORCED TO WORK AGAINST HIS
WILL;

(2) A STRIKER CAN BE ORDERED TO RETURN TO WORK EVEN AGAINST HIS WILL IN NATIONAL INTEREST
CASES. ACCORDINGLY, IT IS NOT IN VIOLATION OF THE INVOLUNTARY SERVITUDE PRINCIPLE.

• Under Article XIII (Social Justice and Human Rights):

a. SECOND OF TWO PROTECTION-TO-LABOR CLAUSES:

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law.

1 Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based
Overseas Workers issued on February 4, 2002.

2 Formerly, POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers
issued on May 23, 2003.2

They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall
also participate in policy and decision-making 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 settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable returns to
investments, and to expansion and growth.

• May cases be filed for violation of the foregoing constitutional provisions?

The labor-related provisions of the Constitution are merely statements of principles and are all NOT
selfexecuting provisions. They are used only as guides for judicial decisions or legislative enactments.
Being mere statement of principles and policies, no case can be filed for their violation. Only violation of
the laws passed to implement these principles and policies can be proper subject of court litigation.

• What are the kinds of procedural due process that may be asserted in labor cases?

The following are the kinds of procedural due process that may be invoked in labor cases, to wit:

(1) Procedural due process that may be invoked against the employer during the investigation of the
employee’s administrative case at the company-level that may lead to his dismissal:
a. Statutory due process per Agabon doctrine which refers to the due process provision in the Labor
Code (Article 277[b]); and

b. Contractual due process per Abbott Laboratories doctrine which refers to the due process prescribed
in the Company Rules and Regulations or Code of Conduct or Code of Discipline.

NOTE: CONSTITUTIONAL DUE PROCESS UNDER ARTICLE III, SECTION 1 OF THE CONSTITUTION CANNOT
BE INVOKED AGAINST A PRIVATE PARTY LIKE THE EMPLOYER. IT CAN ONLY BE ASSERTED AGAINST THE
STATE OR GOVERNMENT.

HENCE, THE EMPLOYEE BEING INVESTIGATED CANNOT INVOKE CONSTITUTIONAL DUE PROCESS BUT
ONLY STATUTORY AND CONTRACTUAL DUE PROCESS.

(2) Procedural due process that may be invoked once a case has already been filed in the labor court,
such as the Labor Arbiter or the NLRC, and/or brought to higher courts:

a. Constitutional due process under Section 1, Article III of the Constitution since this right cannot be
invoked against the private employer but only against the State or government as represented by Labor
Arbiters, NLRC, CA and SC.

The rule since Agabon is that compliance with the statutorily-prescribed procedural due process under
Article 292(b) [277(b)] of the Labor Code would suffice. It is not important in determining the validity of
the termination whether there is an existing company policy which also enunciates the procedural due
process in termination cases. However, under the latest doctrinal en banc ruling in the 2013 case of
Abbott Laboratories,

Philippines v. Pearlie Ann F. Alcaraz, it is now required that in addition to compliance with the
statutory due process, the employer should still comply with the due process procedure prescribed in its
own company rules now called CONTRACTUAL DUE PROCESS. The employer’s failure to observe its own
company-prescribed due process, IN ADDITION TO STATUTORY DUE PROCESS, will make it liable to pay
an indemnity in the form of nominal damages, the amount of which is similar to the P30,000.00
awarded under the Agabon doctrine.

• When can an employee invoke constitutional due process and right to equal protection of the laws?

As distinguished from company-level investigation conducted by the employer where only STATUTORY
and CONTRACTUAL DUE PROCESS can be invoked, a dismissed employee can invoke constitutional due
process only when he files an illegal dismissal case in the labor court and he is deprived due process by a
government functionary like the Labor Arbiter or the Commission (NLRC), or Court of Appeals on Rule 65
certiorari petition. The reason is that, at this stage, the government is now involved through said labor
tribunals.

• Is right to counsel mandatory?

No. Per the prevailing Lopez doctrine (see 2011 case of Lopez v. Alturas Group of Companies), the right
to counsel is neither indispensable nor mandatory. It becomes mandatory only in two (2) situations:

(1) When the employee himself requests for counsel; or


(2) When he manifests that he wants a formal hearing on the charges against him, in which case, he
should be assisted by counsel.

B. NEW CIVIL CODE

• Is Article 1700 of the Civil Code applicable to labor cases?

Yes, Article 1700 of the Civil Code provides:

“Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop,
wages, working conditions, hours of labor and similar subjects.”

In Davao Integrated Port Stevedoring Services v. Abarquez, March 19, 1993. It was held that a CBA, as
a labor contract within the contemplation of Article 1700 of the Civil Code, is not merely contractual in
nature but impressed with public interest, thus, it must yield to the common good.

Similarly, an employment contract or any other labor contract is treated as not merely contractual in
nature similar to an ordinary contract like a lease contract because it is impressed with public interest.
Consequently, all labor laws are deemed incorporated therein even if not so expressly provided or
stipulated in its provisions.

• How is Article 1702 of the Civil Code correlated with Article 4 of the Labor Code?

Both Article 1702 of the Civil Code and Article 4 of the Labor Code speak of the rule on interpretation
and construction provisions of law and labor contracts.

Article 1702 of the Civil Code provides:

“Article 1702. In case of doubt, all labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.”

Article 4 of the Labor Code states:

“Article 4. Construction in Favor of Labor. – All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.”

Article 1700 applies to doubts and ambiguities in

(1) Labor legislations;

(2) Labor contracts such as an employment contract or a CBA;

(3) evidence presented in labor cases.

Article 1700 applies to doubts and ambiguities:

(1) In the Labor Code; and

(2) In the Implementing Rules of the Labor Code.


C. THE LABOR CODE

• What are the distinctions between Labor Relations and Labor Standards?

“Labor standards law” is that part of labor law which prescribes the minimum terms and conditions of
employment which the employer is required to grant to its employees.

“Labor relations law” is that part of labor law (Book V of the Labor Code) which deals with unionism,
collective bargaining, grievance machinery, voluntary arbitration, strike, picketing and lockout.

Labor relations and labor standards laws are not mutually exclusive. They are complementary to, and
closely interlinked with, each other. For instance, the laws on collective bargaining, strikes and lockouts
which are covered by labor relations law necessarily relate to the laws on working conditions found in
Book III.

• What is a SEBA?

An “exclusive bargaining representative” or “exclusive bargaining agent” or Sole and Exclusive


Bargaining Agent (SEBA), refers to a legitimate labor organization duly certified as the sole and exclusive
bargaining representative or agent of all the employees in a bargaining unit.

Note must be made of the latest innovative amendment of the Labor Code’s Implementing Rules
introduced by Department Order No. 40-I-15, Series of 2015, which has expressly repealed the entire
provision on “Voluntary Recognition” of the Implementing Rules on Book V and replaced it with the
freshly-minted mode of securing the status of a sole and exclusive bargaining agent through a “Request
for SEBA Certification” or “Request.”

Voluntary recognition is therefore no longer allowed and is effectively replaced by the Request mode.

(NOTE: This is extensively discussed in Major Topic No. 7 (Labor Relations, infra)

• Can individual employee or group of employees bring grievable issues directly to their employer
without the participation of the SEBA?

Yes. The designation of a SEBA does not deprive an individual employee or group of employees to
exercise their right at any time to present grievances to their employer, with or without the
intervention of the SEBA.

• Can individual employee or group of employees bring grievable issues to voluntary arbitration
without the participation of the SEBA?

No, as held in the 2009 case of Tabigue v. International Copra Export Corporation, where the Supreme
Court clarified that an individual employee or group of employees cannot be allowed to submit or refer
unsettled grievances for voluntary arbitration without the participation of the SEBA. The reason is that
it is the SEBA which is a party to the CBA which contains the provision on voluntary arbitration. Being a
party thereto, the SEBA cannot be disregarded when a grievable issue will be submitted for voluntary
arbitration.

In order to have legal standing, the individual members should be shown to have been duly
authorized to represent the SEBA. (NOTE: Insular Hotel Employees Union-NFL v. Waterfront Insular
Hotel Davao, Sept. 22, 2010, reiterated Tabigue).
• What is the principle of co-determination?

The principle of co-determination refers to the right given to the employees to co-determine or share
the responsibility of formulating certain policies that affect their rights, benefits and welfare.

In PAL v. NLRC, it was held that the formulation of a Code of Discipline among employees is a shared
responsibility of the employer and the employees. It affirmed the decision of the NLRC which ordered
that the New Code of Discipline should be reviewed and discussed with the union, particularly the
disputed provisions and that copies thereof be furnished each employee.

• Does the grant of the right of participation mean co-management of business or intrusion into
management prerogatives?

No. This principle does not mean that workers should approve management policies or decisions.

• What is Labor-Management Council (LMC)?

The establishment of Labor-Management Council (LMC) is mandated under the said constitutional
principle of co-determination.

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SYLLABUS

MAJOR TOPIC 2

RECRUITMENT AND PLACEMENT

A. ILLEGAL RECRUITMENT

• Who may commit illegal recruitment?

Illegal recruitment may be committed by any of the following

(1) By Non-Licensee or Non-holder of authority; or

(2) By ANY PERSON, regardless of whether a non-licensee, non-holder, licensee or holder of authority,

• What are illegal recruitment acts that can be committed by No. 1 above (NON-LICENSEE or NON
HOLDER OF AUTHORITY)?

When what is committed by such NON-LICENSEES or NON-HOLDERS OF AUTHORITY is any of the acts of
recruitment allowed only to be done by licensees or holders of authority such as the act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring,
contract services, promising or advertising for employment abroad, whether for profit or not.

In other words, had they possessed of license or authority, their commission of any of the foregoing acts
could have been valid and not constitutive of illegal recruitment.

NOTE: The non-licensee or non-holder of authority is presumed to be engaged in such recruitment if he


in any manner, offers or promises for a fee employment abroad to two or more persons.
• What are acts of illegal recruitment when committed by ANY PERSON, whether a NON-LICENSEE,
NON-HOLDER OF AUTHORITY or even by a LICENSEE or HOLDER OF AUTHORITY?

(a) To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of
allowable fees prescribed by the DOLE Secretary, or to make a worker pay or acknowledge any amount
greater than that actually received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to recruitment or
employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the
purpose of documenting hired workers with the POEA, which include the act of reprocessing workers
through a job order that pertains to non-existent work, work different from the actual overseas work, or
work with a different employer whether registered or not with the POEA;

(d) To induce or attempt to induce a worker already employed to quit his employment in order to offer
him another unless the transfer is designed to liberate a worker from oppressive terms and conditions
of employment;

(e) To influence or attempt to influence any person or entity not to employ any worker who has not
applied for employment through his agency or who has formed, joined or supported, or has contacted
or is supported by any union or workers' organization;

(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or
to the dignity of the Republic of the Philippines;

(g) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and such other matters or information as may be
required by the Secretary of Labor and Employment;

(h) To substitute or alter to the prejudice of the worker, employment contracts approved and verified
by the DOLE from the time of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the DOLE;

(i) For an officer or agent of a recruitment or placement agency to become an officer or member of the
Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the
management of travel agency;

(j) To withhold or deny travel documents from applicant workers before departure for monetary or
financial considerations, or for any other reasons, other than those authorized under the Labor Code
and its implementing rules and regulations;

(k) Failure to actually deploy a contracted worker without valid reason as determined by the
Department of Labor and Employment;

(l) Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage; and
(m) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.”

PROHIBITED ACTIVITIES

IN RELATION TO ILLEGAL RECRUITMENT

• What are the PROHIBITED ACTIVITIES in connection with recruitment for overseas employment?

Besides illegal recruitment, the law additionally provides that it shall also be unlawful for any person or
entity to commit the following prohibited acts:

(1) Grant a LOAN to an overseas Filipino worker with interest exceeding eight percent (8%) per annum,
which will be used for payment of legal and allowable placement fees and make the migrant worker
issue, either personally or through a guarantor or accommodation party, post-dated checks in relation
to the said loan;

(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
avail of a LOAN only from specifically designated institutions, entities or persons;

(3) Refuse to condone or renegotiate a LOAN incurred by an overseas Filipino worker after the latter's
employment contract has been prematurely terminated through no fault of his or her own;

(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
undergo HEALTH EXAMINATIONS only from specifically designated medical clinics, institutions,
entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by
the principal/ shipowner;

(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to
undergo TRAINING, SEMINAR, INSTRUCTION OR SCHOOLING of any kind only from specifically
designated institutions, entities or persons, except for recommendatory trainings mandated by
principals/shipowners where the latter shoulder the cost of such trainings;

(6) For a SUSPENDED RECRUITMENT/MANNING AGENCY to engage in any kind of recruitment activity
including the processing of pending workers' applications; and

(7) For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment of the cost of INSURANCE fees, premium or other
insurance related charges, as provided under the compulsory worker's INSURANCE coverage.

LICENSE VS. AUTHORITY

• What is a “license” for overseas recruitment?

“License” refers to the document issued by the DOLE Secretary authorizing a person, partnership or
corporation to operate a private recruitment or manning agency.

• What is an “authority” for overseas employment?

“Authority” refers to the document issued by the DOLE Secretary authorizing the officers, personnel,
agents or representatives of a licensed recruitment or manning agency to conduct recruitment and
placement activities in a place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT

• What are the elements of illegal recruitment?

The essential elements of illegal recruitment vary in accordance with the following classifications:

(1) Simple illegal recruitment;

(2) When committed by a syndicate; or

(3) When committed in large scale.

When illegal recruitment is committed under either Nos. 2 or 3 above or both, it is considered an
offense involving economic sabotage.

SIMPLE ILLEGAL RECRUITMENT

• What are the 2 elements of simple illegal recruitment?

(1) The offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and

(2) He undertakes either any activity within the meaning of “recruitment and placement” defined under
Article 13(b), (see above enumeration) or any prohibited practices (see above enumeration) under
Article 34 of the Labor Code.

• Can a recruiter be a natural or juridical person?

Yes.

• What are some relevant principles on illegal recruitment?

1. Mere impression that a person could deploy workers overseas is sufficient to constitute illegal
recruitment. But if no such impression is given, the accused should not be convicted for illegal
recruitment.

2. Mere promise or offer of employment abroad amounts to recruitment.

3. There is no need to show that accused represented himself as a licensed recruiter.

4. Referrals may constitute illegal recruitment.

5. It is illegal recruitment to induce applicants to part with their money upon false misrepresentations
and promises in assuring them that after they paid the placement fee, jobs abroad were waiting for
them and that they would be deployed soon.

6. Recruitment whether done for profit or not is immaterial.

7. The act of receiving money far exceeding the amount as required by law is not considered as
“recruitment and placement” as this phrase is contemplated under the law.

8. Actual receipt of fee is not an element of the crime of illegal recruitment.

9. Conduct of interviews amounts to illegal recruitment.


10.Absence of receipt is not essential to hold a person guilty of illegal recruitment.

11. Conviction for illegal recruitment may be made on the strength of the testimonies of the
complainants.

12.Absence of documents evidencing the recruitment activities strengthens, not weakens, the case for
illegal recruitment.

13.Only one person recruited is sufficient to convict one for illegal recruitment.

14.Non-prosecution of another suspect is immaterial.

15.Execution of affidavit of desistance affects only the civil liability but has no effect on the criminal
liability for illegal recruitment.

16.Defense of denial cannot prevail over positive identification. Positive identification where categorical
and consistent and not attended by any showing of ill motive on the part of the eyewitnesses on the
matter prevails over alibi and denial. Between the categorical statements of the prosecution witnesses,
on the one hand, and bare denials of the accused, on the other hand, the former must prevail.

ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC SABOTAGE

• When is illegal recruitment considered a crime involving economic sabotage?

1. when committed by a syndicate; or 2. when committed in large scale.

• When is illegal recruitment committed by a syndicate?

If it is carried out by a group of three (3) or more persons conspiring or confederating with one another.

• Elements of illegal recruitment by a syndicate.

The essential elements of the crime of illegal recruitment committed by a syndicate are as follows:

1. There are at least three (3) persons who, conspiring and/or confederating with one another, carried
out any unlawful or illegal recruitment and placement activities as defined under Article 13(b) or
committed any prohibited activities under Article 34 of the Labor Code; and

2. Said persons are not licensed or authorized to do so, either locally or overseas.

The law does not require that the syndicate should recruit more than one (1) person in order to
constitute the crime of illegal recruitment by a syndicate. Recruitment of one (1) person would suffice
to qualify the illegal recruitment act as having been committed by a syndicate.

• When is illegal recruitment considered in large scale?

If committed against three (3) or more persons individually or as a group.

• Elements of illegal recruitment in large scale.

The elements of illegal recruitment in large scale, as distinguished from simple illegal recruitment, are as
follows:
1. The accused engages in the recruitment and placement of workers as defined under Article 13(b) or
committed any prohibited activities under Article 34 of the Labor Code; and

2. The accused commits the same against three (3) or more persons, individually or as a group.

• Distinguished from illegal recruitment by a syndicate.

As distinguished from illegal recruitment committed by a syndicate, illegal recruitment in large scale may
be committed by only one (1) person. What is important as qualifying element is that there should be at
least three (3) victims of such illegal recruitment, individually or as a group.

• What are some relevant principles on illegal recruitment involving economic sabotage?

1. The number of persons victimized is determinative of the crime. A conviction for large scale illegal
recruitment must be based on a finding in each case of illegal recruitment of three (3) or more persons
having been recruited, whether individually or as a group.

2. Failure to prove at least 3 persons recruited makes the crime a case of simple illegal recruitment.

3. There is no illegal recruitment in large scale based on several informations filed by only one
complainant.

4. The number of offenders is not material in illegal recruitment in large scale.

5. Recruitment in large scale or by a syndicate is malum prohibitum and not malum in se.

ILLEGAL RECRUITMENT VS. ESTAFA

• Can a person be charged and convicted separately for illegal recruitment and estafa involving one
and the same act of recruitment?

Yes. It is clear that conviction under the Labor Code does not preclude conviction for estafa or other
crimes under other laws.

Some relevant principles:

▪ Same evidence to prove illegal recruitment may be used to prove estafa.

▪ Conviction for both illegal recruitment and estafa is not double jeopardy.

NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER

• What is the nature of the liability between local recruiter and its foreign principal?

The nature of their liability is “solidary” or “joint and several” for any and all claims arising out of the
employment contract of OFWs.

• Is the solidary liability of corporate officers with the recruitment agency “automatic” in character?

No. In order to hold the officers of the agency solidarily liable, it is required that there must be proof of
their culpability therefor. Thus, it was held in the 2013 case of Gagui v. Dejero, that while 1 it is true that
R.A. 8042 and the Corporation Code provide for solidary liability, this liability must be so stated in the
decision sought to be implemented. Absent this express statement, a corporate officer may not be
impleaded and made to personally answer for the liability of the corporation.

• What are some relevant principles on the persons liable for illegal recruitment?

1. Employees of a licensed recruitment agency may be held liable for illegal recruitment as principal by
direct participation, together with his employer, if it is shown that he actively and consciously
participated in illegal recruitment.

2. Good faith and merely following orders of superiors are not valid defenses of an employee.

3. A manager of a recruitment/manning agency is not a mere employee. As such, he receives job


applications, interviews applicants and informs them of the agency’s requirement of payment of
performance or cash bond prior to the applicant’s deployment. As the crewing manager, he was at the
forefront of the company’s recruitment activities.

THEORY OF IMPUTED KNOWLEDGE

• What is meant by this theory?

Knowledge of the agent is deemed knowledge of the principal but not the other way around. The theory
of imputed knowledge is a rule that any information material to the transaction, either possessed by the
agent at the time of the transaction or acquired by him before its completion, is deemed to be the
knowledge of the principal, at least insofar as the transaction is concerned, even though the knowledge,
in fact, is not communicated to the principal at all.

Sunace International Management Services, Inc. v. NLRC2 - The High Court here has the opportunity to
discuss the application of the theory of imputed knowledge. The OFW (Divina), a domestic helper in
Taiwan, has extended her 12-month contract, after its expiration, for two (2) more years after which she
returned to the Philippines. It was established by evidence that the extension was without the
knowledge of the local recruitment agency, petitioner Sunace. The Court of Appeals, however, affirmed
the Labor Arbiter’s and NLRC’s finding that Sunace knew of and impliedly consented to the extension of
Divina’s 2-year contract. It went on to state that “It is undisputed that [Sunace] was continually
communicating with [Divina’s] foreign employer.” It thus concluded that “[a]s agent of the foreign
principal, ‘petitioner cannot profess ignorance of such extension as obviously, the act of the principal
extending complainant (sic) employment contract necessarily bound it.’”

In finding that the application by the CA of this theory of imputed knowledge was misplaced, the High
Court ruled that this theory ascribes the knowledge of the agent, Sunace, to the principal, employer
Xiong, not the other way around. The knowledge of the principal-foreign employer cannot, therefore, be
imputed to its agent, Sunace. There being no substantial proof that Sunace knew of and consented to be
bound under the 2-year 1 G.R. No. 196036, Oct. 23, 2013. 2 G.R. No. 161757, Jan. 25, 2006. employment
contract extension, it cannot be said to be privy thereto. As such, Sunace and its owner cannot be held
solidarily liable for any of Divina’s claims arising from the 2-year employment extension. As the New Civil
Code provides: “Contracts take effect only between the parties, their assigns, and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law.”

TERMINATION OF CONTRACT OF MIGRANT WORKER WITHOUT JUST OR VALID CAUSE


• Can an OFW acquire regularity of employment?

No. The prevailing rule is that OFWs are contractual (fixed-term only), not regular, employees. In fact,
they can never attain regularity of employment. Theirs is always fixed-term in nature.

• What are some relevant principles?

1. Indefinite period of employment of OFWs is not valid as it contravenes the explicit provision of the
POEA Rules and Regulations on fixed-period employment.

2. OFWs do not become regular employees by reason of nature of work, that is, that they are made to
perform work that is usually necessary and desirable in the usual business or trade of the employer. The
exigencies of their work necessitate that they be employed on a contractual basis. This notwithstanding
the fact that they have rendered more than twenty (20) years of service.

3. Regular employment does not result from the series of re-hiring of OFWs.

4. The fixed-period employment of OFWs is not discriminatory against them nor does it favor foreign
employers. It is for the mutual interest of both the seafarer and the employer why the employment
status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea
and understandably, they cannot stay for a long and an indefinite period of time at sea. Limited access
to shore society during the employment will have an adverse impact on the seafarer. The national,
cultural and lingual diversity among the crew during the contract of employment is a reality that
necessitates the limitation of its period.

5. The expiration of the employment contracts of OFWs marks its ending.

• What is the effect of hiring a seafarer for overseas employment but assigning him to local vessel?

As held in OSM Shipping Philippines, Inc. v. NLRC, the non-deployment 1 of the ship overseas did not
affect the validity of the perfected employment contract. After all, the decision to use the vessel for
coastwise shipping was made by petitioner only and did not bear the written conformity of private
respondent. A contract cannot be novated by the will of only one party. The claim of petitioner that it
processed the contract of private respondent with the POEA only after he had started working is also
without merit. Petitioner cannot use its own misfeasance to defeat his claim.

• What is the effect of non-deployment of OFW to overseas employment?

Petitioner-seafarer, in Santiago v. CF Sharp Crew Management, Inc.2 was not deployed overseas
despite the signing of a POEA-approved employment contract. One of his contentions is that such failure
to deploy was an act designed to prevent him from attaining the status of a regular employee. The
Supreme Court, however, disagreed and ruled that “seafarers are considered contractual employees and
cannot be considered as regular employees under the Labor Code. Their employment is governed by the
contracts they sign every time they are rehired and their employment is terminated when the contract
expires. The exigencies of their work necessitate that they be employed on a contractual basis.”

• What is the doctrine of processual presumption?

“Presumed-identity approach” or “processual presumption” is an International Law doctrine which


dictates that where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is
that foreign law is the same as Philippine law. Thus, under this situation, Philippine labor laws should
apply in determining the issues presented in a case.

• Is due process under Philippine law applicable to termination of employment of OFWs?

Yes. In the absence of proof of applicable foreign law, OFWs are entitled to due process in accordance
with Philippine laws.

• Is the Agabon doctrine applicable to OFWs who are dismissed for cause but without due process?

Yes. The Agabon doctrine of awarding indemnity in the form of nominal damages in cases of valid
termination for just or authorized cause but without procedural due process also applies to termination
of OFWs.

• Who has the burden of proof to show that the dismissal of the OFW is legal?

Burden of proof devolves on both recruitment agency and its foreign principal.

• Are OFWs entitled to the reliefs under the Labor Code?

No. They are not entitled to such reliefs under Article 279 as reinstatement or separation pay in lieu of
reinstatement or full backwages.

• What are the reliefs to which OFWs are entitled?

They are entitled to the reliefs provided under Section 10 of R.A. No. 8042, as amended, to wit:

(1) All salaries for the unexpired portion of the contract;

(2) Full reimbursement of placement fees and deductions made with interest at 12% per annum.

All the reliefs available to an illegally dismissed OFW are always monetary in nature.

It must be noted that under the 2009 Serrano doctrine, (Serrano v. Gallant Maritime Services, Inc.,),1
an illegally dismissed OFW is now entitled to all the salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated term or duration thereof. The underlined phrase
in Section 10 below has been declared unconstitutional in this case:

“In case of termination of overseas employment without just, valid or authorized cause as defined by
law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be
entitled to the full reimbursement of his placement fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.”

However, R.A. No. 10022 (March 8, 2010), which amended R.A. No. 8042 (Migrant Workers and
Overseas Filipinos Act of 1995), has replicated and re-enacted the same unconstitutional provision
exactly as above quoted.

The question is: was the unconstitutionality of the above-underlined part of the provision cured by
such replication or re-enactment in the amendatory law?
The 2014 en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles, answered this in
the negative. The said provision was thus declared still unconstitutional and null and void despite its
replication in R.A. No. 10022.

• What are some principles in regard to monetary awards to OFWs?

1. Monetary award to OFW is not in the nature of separation pay or backwages but a form of indemnity.

2. Only salaries are to be included in the computation of the amount due for the unexpired portion of
the contract.

Overtime, holiday and leave pay and allowances are not included. However, this rule on exclusion of
allowance does not apply in case it is encapsulated in the basic salary clause.

3. Entitlement to overtime pay of OFWs. - As far as entitlement to overtime pay is concerned, the
correct criterion in determining whether or not sailors are entitled to overtime pay is not whether they
were on board and cannot leave ship beyond the regular eight (8) working hours a day, but whether
they actually rendered service in excess of said number of hours. An OFW is not entitled to overtime
pay, even if guaranteed, if he failed to present any evidence to prove that he rendered service in excess
of the regular eight (8) working hours a day.

4. In case of unauthorized deductions from OFW’s salary, he shall be entitled to the full reimbursement
of the deductions made with interest at 12% per annum. This is in addition to the full reimbursement of
his placement fee with the same interest of 12% per annum plus his salaries for the unexpired portion of
his employment contract if he is terminated without just, valid or authorized cause as defined by law or
contract.

CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs

• Which/Who has jurisdiction over an OFW’s claims for disability and death benefits?

a) The Labor Arbiters, NOT the SSS, have jurisdiction over claims for disability, death and other benefits
of OFWs.

b) Labor Arbiters have jurisdiction even if the case is filed by the heirs of the deceased OFW.

• Is the Labor Code’s concept of permanent total disability similar to that of OFWs?

Yes. The concept of this kind of disability under Article 192 of the Labor Code is applicable to them as
reiterated lately in the 2013 case of Kestrel Shipping Co., Inc. v. Munar.

• What are the requisites for compensability of injury or illness of seafarers?

1. It should be work-related; and

2. The injury or illness existed during the term of the seafarer’s employment contract.

The foreign employer alleged in this case that respondent’s dismissal was due to inefficiency in her work
and negligence in her duties.

▪ What is direct hiring?


“Direct Hiring” refers to the process of directly hiring workers by employers for overseas employment as
authorized by the DOLE Secretary and processed by the POEA, including:

1. Those hired by international organizations;

2. Those hired by members of the diplomatic corps;

3. Name hires or workers who are able to secure overseas employment opportunity with an employer
without the assistance or participation of any agency.

▪ Does the POEA Administrator or the DOLE Secretary or DOLE Regional Director have the power to
issue closure order?

Yes. If upon preliminary examination or surveillance, the DOLE Secretary, the POEA Administrator or
DOLE Regional Director is satisfied that such danger or exploitation exists, a written order may be issued
for the closure of the establishment being used for illegal recruitment activity.

• Does the DOLE Secretary have the power to issue warrant of arrest and search and seizure orders?

No. Salazar v. Achacoso, declared that the exercise by the DOLE Secretary 1 of his twin powers to issue
arrest warrant and search and seizure orders provided under Article 38[c] of the Labor Code is
unconstitutional.

Only regular courts can issue such orders.

REMITTANCE OF FOREIGN EXCHANGE EARNINGS

• Is remittance of foreign exchange earnings by OFWs mandatory?

Yes. It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange
earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and
regulations prescribed by the DOLE Secretary. It should be made through the Philippine banking system.

B. EMPLOYMENT OF NON-RESIDENT ALIENS

• What is an ALIEN EMPLOYMENT PERMIT (AEP)?

AEP - a document issued by the DOLE Secretary through the DOLE-Regional Director who has jurisdiction
over the intended place of work of the foreign national, authorizing the foreign national to work in the
Philippines.

• Who are required to procure AEP?

All foreign nationals who intend to engage in gainful employment in the Philippines are required to
apply for AEP.

“Gainful employment” refers to a state or condition that creates an employer-employee relationship


between the Philippine-based company and the foreign national where the former has the power to
hire or dismiss the foreign national from employment, pays the salaries or wages thereof and has
authority to control the performance or conduct of the tasks and duties.

• What are the categories of foreign nationals EXEMPTED from securing AEP?
a) All members of the diplomatic service and foreign government officials accredited by and with
reciprocity arrangement with the Philippine government;

b) Officers and staff of international organizations of which the Philippine government is a member, and
their legitimate spouses desiring to work in the Philippines;

c) All foreign nationals granted exemption by law;

d) Owners and representatives of foreign principals whose companies are accredited by the POEA, who
come to the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants
for employment abroad;

e) Foreign nationals who come to the Philippines to teach, present and/or conduct research studies in
universities and colleges as visiting, exchange or adjunct professors under formal agreements between
the universities or colleges in the Philippines and foreign universities or colleges; or between the
Philippine government and foreign government: provided that the exemption is on a reciprocal basis;
and

f) Permanent resident foreign nationals and probationary or temporary resident visa holders under
Section 13 of the Philippine Immigration Act of 1940.

• What are the categories of foreign nationals EXCLUDED from securing AEP?

a) Members of the governing board with voting rights only and do not intervene in the management of
the corporation or in the day-to-day operation of the enterprise.

b) Corporate officers as provided under the Corporation Code of the Philippines, Articles of
Incorporation, and By-laws of the Corporation such as President, Secretary and Treasurer.

c) Those providing consultancy services who do not have employers in the Philippines.

d) Intra-corporate transferee who is a manager, executive or specialist as defined below in accordance


with Trade Agreements and an employee of the foreign service supplier for at least one (1) year prior to
deployment to a branch, subsidiary, affiliate or representative office in the Philippines:

(i) an EXECUTIVE: a natural person within the organization who primarily directs the management of the
organization and exercises wide latitude in decision making and receives only general supervision or
direction from higher level executives, the board of directors or stockholders of the business; an
executive would not directly perform tasks related to the actual provision of the service or services of
the organization;

(ii) a MANAGER: a natural person within the organization who primarily directs the organization/
department/ subdivision and exercises supervisory and control functions over other supervisory,
managerial or professional staff; does not include first-line supervisors unless employees supervised are
professionals; does not include employees who primarily perform tasks necessary for the provision of
the service; or

(iii) a SPECIALIST: a natural person within the organization who possesses knowledge at an advanced
level of expertise essential to the establishment/provision of the service and/or possesses proprietary
knowledge of the organization's service, research equipment, techniques or management; may include,
but is not limited to, members of a licensed profession.

e) Contractual service supplier who is a manager, executive or specialist and an employee of a foreign
service supplier which has no commercial presence in the Philippines:

(i) who enters the Philippines temporarily to supply a service pursuant to a contract between his/her
employer and a service consumer in the Philippines;

(ii) must possess the appropriate educational and professional qualifications; and

(iii) must be employed by the foreign service supplier for at least one (1) year prior to the supply of
service in the Philippines.

• What is the validity of an AEP?

One (1) year is the validity of an AEP.

Exception: When employment contract provides otherwise but not to exceed three (3) years.

The AEP may be renewed subject to the conditions imposed by law.

C. TRAINING AND EMPLOYMENT OF SPECIAL WORKERS

1. APPRENTICES AND LEARNERS

• What are the distinctions between learnership and apprenticeship?

The following are the distinctions:

1. Practical training. Both learnership and apprenticeship involve practical training on-the-job.

2. Training agreement. Learnership is governed by a learnership agreement; while apprenticeship is


governed by an apprenticeship agreement.

2. Occupation. Learnership involves learnable occupations consisting of semi-skilled and other industrial
occupations which are non-apprenticeable; while apprenticeship concerns apprenticeable occupations
or any trade, form of employment or occupation approved for apprenticeship by the DOLE Secretary.

3. Theoretical instructions. Learnership may or may not be supplemented by related theoretical


instructions; while apprenticeship should always be supplemented by related theoretical instructions.

4. Ratio of theoretical instructions and on-the-job training. For both learnership and apprenticeship,
the normal ratio is one hundred (100) hours of theoretical instructions for every two thousand (2,000)
hours of practical or on-the-job training. Theoretical instruction time for occupations requiring less than
two thousand (2,000) hours for proficiency should be computed on the basis of such ratio.

5. Competency-based system. Unlike in apprenticeship, it is required in learnership that it be


implemented based on the TESDA-approved competency-based system.

6. Duration of training. Learnership involves practical training on the job for a period not exceeding
three (3) months; while apprenticeship requires for proficiency, more than three (3) months but not
over six (6) months of practical training on the job.
7. Qualifications. The law does not expressly mention any qualifications for learners; while the following
qualifications are required to be met by apprentices under Article 59 of the Labor Code:

(a) Be at least fourteen (14) years of age;

(b) Possess vocational aptitude and capacity for appropriate tests; and

(c) Possess the ability to comprehend and follow oral and written instructions.

CONFLICT IN THE AGE REQUIREMENT FOR APPRENTICES:

Under the Labor Code as stated above – 14 years of age

Under the Labor Code’s Implementing Rules – “Be at least 15 years of age, provided those who are at
least 15 years of age but less than 18 may be eligible for apprenticeship only in non-hazardous
occupations.”

CONFLICT, HOW RESOLVED:

It should be 15 years of age but the more appropriate basis is not the Labor Code’s Implementing Rules
(which cannot amend the Labor Code) but another law, R.A. No. 9231, (“AN ACT PROVIDING FOR THE
ELIMINATION OF THE WORST FORMS OF CHILD LABOR AND AFFORDING STRONGER PROTECTION FOR
THE WORKING CHILD“) where it is provided that:

(1) All persons under eighteen (18) years of age shall be considered as a “child”; and

(2) Children below fifteen (15) years of age shall not be employed EXCEPT if he/she falls under any of
the exceptions mentioned and enumerated in the law.

8. Circumstances justifying hiring of trainees. Unlike in apprenticeship, in learnership, the law, Article
74 of the Labor Code, expressly prescribes the pre-requisites before learners may be validly employed,
to wit:

(a) When no experienced workers are available;

(b) The employment of learners is necessary to prevent curtailment of employment opportunities; and

(c) The employment does not create unfair competition in terms of labor costs or impair or lower
working standards.

9. Limitation on the number of trainees. In learnership, a participating enterprise is allowed to take in


learners only up to a maximum of twenty percent (20%) of its total regular workforce. No similar cap is
imposed in the case of apprenticeship.

10. Option to employ. In learnership, the enterprise is obliged to hire the learner after the lapse of the
learnership period; while in apprenticeship, the enterprise is given only an “option” to hire the
apprentice as an employee.

11. Wage rate. The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of the
statutory minimum wage.

2. DISABLED WORKERS
(PERSONS WITH DISABILITY)

(R.A. No. 7277, as Amended by R.A. No. 9442)

• Who are persons with disability (PWDs)?

“Persons with Disability” are those suffering from restriction or different abilities, as a result of a
mental, physical or sensory impairment, to perform an activity in the manner or within the range
considered normal for a human being.

• What is impairment?

“Impairment” refers to any loss, diminution or aberration of psychological, physiological, or anatomical


structure or function.

• What is disability?

“Disability” means (1) a physical or mental impairment that substantially limits one or more
psychological, physiological or anatomical functions of an individual or activities of such individual; (2) a
record of such an impairment; or (3) being regarded as having such an impairment.

• What is handicap?

“Handicap” refers to a disadvantage for a given individual, resulting from an impairment or a disability
that limits or prevents the function or activity that is considered normal given the age and sex of the
individual.

a. EQUAL OPPORTUNITY

• What are the rights of PWDs?

Under the law, PWDs are entitled to equal opportunity for employment. Consequently, no PWD shall be
denied access to opportunities for suitable employment. A qualified employee with disability shall be
subject to the same terms and conditions of employment and the same compensation, privileges,
benefits, fringe benefits, incentives or allowances as a qualified able-bodied person.

• What is the wage rate of PWDs?

The wage rate of PWDs is 100% of the applicable minimum wage.

• What is the wage rate of PWD if hired as apprentice or learner?

A PWD hired as an apprentice or learner shall be paid not less than seventy-five percent (75%) of the
applicable minimum wage.

b. DISCRIMINATION ON EMPLOYMENT

• What is the rule on discrimination against employment of PWDs?

No entity, whether public or private, shall discriminate against a qualified PWD by reason of disability in
regard to job application procedures, the hiring, promotion, or discharge of employees, employee
compensation, job training, and other terms, conditions and privileges of employment. The following
constitute acts of discrimination:
(a) Limiting, segregating or classifying a job applicant with disability in such a manner that adversely
affects his work opportunities;

(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to
screen out a PWD unless such standards, tests or other selection criteria are shown to be job-related for
the position in question and are consistent with business necessity;

(c) Utilizing standards, criteria, or methods of administration that:

(1) have the effect of discrimination on the basis of disability; or

(2) perpetuate the discrimination of others who are subject to common administrative control.

(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe
benefits, to a qualified employee with disability, by reason of his disability, than the amount to which a
nondisabled person performing the same work is entitled;

(e) Favoring a non-disabled employee over a qualified employee with disability with respect to
promotion, training opportunities, study and scholarship grants, solely on account of the latter’s
disability;

(f) Re-assigning or transferring an employee with a disability to a job or position he cannot perform by
reason of his disability;

(g) Dismissing or terminating the services of an employee with disability by reason of his disability unless
the employer can prove that he impairs the satisfactory performance of the work involved to the
prejudice of the business entity; provided, however, that the employer first sought to provide
reasonable accommodations for persons with disability;

(h) Failing to select or administer in the most effective manner employment tests which accurately
reflect the skills, aptitude or other factor of the applicant or employee with disability that such tests
purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or
employee, if any; and

(i) Excluding PWD from membership in labor unions or similar organizations.

------------oOo------------

MAJOR TOPIC 3

LABOR STANDARDS

A. CONDITIONS OF EMPLOYMENT

1. SCOPE

• Who are covered by the labor standards provisions of the Labor Code?

Employees in ALL establishments, whether operated for profit or not, are covered by the law on labor
standards.

• Who are excluded?


The following are excluded from the coverage of the law on labor standards:

a. Government employees;

b. Managerial employees;

c. Other officers or members of a managerial staff;

d. Domestic workers or kasambahay and persons in the personal service of another;

e. Workers paid by results;

f. Non-agricultural field personnel; and

g. Members of the family of the employer.

2. HOURS OF WORK

a. PRINCIPLES IN DETERMINING HOURS WORKED

• What are compensable hours worked?

The following shall be considered as compensable hours worked:

a) All time during which an employee is required to be on duty or to be at the employer’s premises or to
be at a prescribed workplace; and

b) All time during which an employee is suffered or permitted to work.

“Fair day’s wage for a fair day’s labor,” remains the basic factor in determining the employees’ wages
and backwages.

b. NORMAL HOURS OF WORK

• What is the total normal hours of work per day?

Eight (8) hours daily.

• What is overtime work?

Any work in excess of said eight (8) normal hours is considered overtime work.

• May normal working hours be reduced?

Yes, provided that no corresponding reduction is made on the employee’s wage or salary equivalent to
an 8- hour work day. In instances where the number of hours required by the nature of work is less than
8 hours, such number of hours should be regarded as the employee’s full working day.

• What are flexible working hours?

“Flexible work arrangements” refer to alternative arrangements or schedules other than the traditional
or standard work hours, workdays and workweek. The effectivity and implementation of any of the
flexible work arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as “The Solo Parents’ Welfare Act of 2000,” solo parents are
allowed to work on a flexible schedule. The phrase “flexible work schedule” is defined in the same law as
the right granted to a solo parent employee to vary his/her arrival and departure time without affecting
the core work hours as defined by the employer.

i. COMPRESSED WORK WEEK

• What is compressed work week?

“Compressed Workweek” or “CWW” refers to a situation where the normal workweek is reduced to less
than six (6) days but the total number of work-hours of 48 hours per week remains. The normal workday
is increased to more than eight (8) hours but not to exceed twelve (12) hours, without corresponding
overtime premium. This concept can be adjusted accordingly in cases where the normal workweek of
the firm is five (5) days.

• What are the conditions for its validity?

The CWW scheme is undertaken as a result of an express and voluntary agreement of majority of the
covered employees or their duly authorized representatives.

• How should compensation be made under a valid CWW?

Unless there is a more favorable practice existing in the firm, work beyond eight (8) hours will not be
compensable by overtime premium provided the total number of hours worked per day shall not
exceed twelve (12) hours. In any case, any work performed beyond twelve (12) hours a day or forty-
eight (48) hours a week shall be subject to overtime pay.

ii. POWER INTERRUPTIONS/BROWNOUTS

• What are the effects of power interruptions/brownouts?

The following are the effects of work interruption due to brownouts:

a. Brown-outs of short duration but not exceeding twenty (20) minutes shall be treated as worked or
compensable hours whether used productively by the employees or not.

b. Brown-outs running for more than twenty (20) minutes may not be treated as hours worked provided
any of the following conditions are present:

1. The employees can leave their workplace or go elsewhere whether within or without the work
premises; or

2. The employees can use the time effectively for their own interest.

c. In each case, the employer may extend the working hours of his employees outside the regular
schedules to compensate for the loss of productive man-hours without being liable for overtime pay.

c. MEAL BREAK

(Article 85, Labor Code)

• What is the rule on time-off for regular meal?


Every employer is required to give his employees, regardless of sex, not less than one (1) hour (or 60
minutes) time-off for regular meals.

• Is meal break compensable?

Being time-off, it is not compensable hours worked. In this case, the employee is free to do anything he
wants, except to work. If he is required, however, to work while eating, he should be compensated
therefor.

d. WAITING TIME

(Article 84, Labor Code)

•When is waiting time compensable?

Waiting time spent by an employee shall be considered as working time if waiting is an integral part of
his work or the employee is required or engaged by the employer to wait. Time spent waiting for work is
compensable if it is spent “primarily for the benefit of the employer and [its] business.”

e. OVERTIME

(Article 87, Labor Code)

• What are some basic principles on overtime work?

1. Work rendered after normal eight (8) hours of work is called “overtime work.”

2. In computing overtime work, "regular wage" or "basic salary" means "cash" wage only without
deduction for facilities provided by the employer.

3. "Premium pay" means the additional compensation required by law for work performed within eight
(8) hours on non-working days, such as regular holidays, special holidays and rest days.

4. "Overtime pay" means the additional compensation for work performed beyond eight (8) hours.

5. Illustrations on how overtime is computed:

a. For overtime work performed on an ORDINARY DAY, the overtime pay is plus 25% of the basic hourly
rate.

b. For overtime work performed on a REST DAY OR ON A SPECIAL DAY, the overtime pay is plus 30% of
the basic hourly rate which includes 30% additional compensation as provided in Article 93 [a] of the
Labor Code.

c. For overtime work performed on a REST DAY WHICH FALLS ON A SPECIAL DAY, the overtime pay is
plus 30% of the basic hourly rate which includes 50% additional compensation as provided in Article 93
[c] of the Labor Code.

d. For overtime work performed on a REGULAR HOLIDAY, the overtime pay is plus 30% of the basic
hourly rate which includes 100% additional compensation as provided in Article 94 [b] of the Labor Code.

e. For overtime work performed on a REST DAY WHICH FALLS ON A REGULAR HOLIDAY, the overtime
pay is plus 30% of the basic hourly rate which includes 160% additional compensation.
•What is the distinction between PREMIUM PAY and OVERTIME PAY?

“Premium pay” refers to the additional compensation required by law for work performed within the
eight (8) normal hours of work on non-working days, such as rest days and regular and special holidays.

“Overtime pay” refers to the additional compensation for work performed beyond the eight (8) normal
hours of work on a given day. An employee is entitled to both premium pay and overtime pay if he
works on a nonworking day and renders overtime work on the same day.

•What is built-in overtime pay?

In case the employment contract stipulates that the compensation includes built-in overtime pay and
the same is duly approved by the DOLE, the non-payment by the employer of any overtime pay for
overtime work is justified and valid.

• What is emergency overtime work? (Article 89, Labor Code).

a. General rule.

The general rule is that no employee may be compelled to render overtime work against his will. The
reason is that this will constitute involuntary servitude.

b. Exceptions when employee may be compelled to render overtime work:

1. When the country is at war or when any other national or local emergency has been declared by the
National Assembly or the Chief Executive;

2. When overtime work is necessary to prevent loss of life or property or in case of imminent danger to
public safety due to actual or impending emergency in the locality caused by serious accident, fire,
floods, typhoons, earthquake, epidemic or other disasters or calamities;

3. When there is urgent work to be performed on machines, installations or equipment, or in order to


avoid serious loss or damage to the employer or some other causes of similar nature;

4. When the work is necessary to prevent loss or damage to perishable goods;

5. When the completion or continuation of work started before the 8th hour is necessary to prevent
serious obstruction or prejudice to the business or operations of the employer; and

6. When overtime work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.

• May an employee validly refuse to render overtime work under any of the afore-said circumstances?

No. When an employee refuses to render emergency overtime work under any of the foregoing
conditions, he may be dismissed on the ground of insubordination or willful disobedience of the lawful
order of the employer.

•Can overtime pay be waived?

No. The right to claim overtime pay is not subject to a waiver. Such right is governed by law and not
merely by the agreement of the parties.
f. NIGHT SHIFT DIFFERENTIAL

(ARTICLE 86, LABOR CODE)

• How is it reckoned and computed?

Night shift differential is equivalent to 10% of employee's regular wage for each hour of work performed
between 10:00 p.m. and 6:00 a.m. of the following day.

• What is the distinction between night shift differential pay and overtime pay?

When the work of an employee falls at night time, the receipt of overtime pay shall not preclude the
right to receive night differential pay. The reason is the payment of the night differential pay is for the
work done during the night; while the payment of the overtime pay is for work in excess of the regular
eight (8) working hours.

• How is Night Shift Differential Pay computed?

1. Where night shift (10 p.m. to 6 a.m.) work is regular work.

a. On an ordinary day: Plus 10% of the basic hourly rate or a total of 110% of the basic hourly rate.

b. On a rest day, special day or regular holiday: Plus 10% of the regular hourly rate on a rest day, special
day or regular holiday or a total of 110% of the regular hourly rate.

2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.

a. On an ordinary day: Plus 10% of the overtime hourly rate on an ordinary day or a total of 110% of the
overtime hourly rate on an ordinary day.

b. On a rest day or special day or regular holiday: Plus 10% of the overtime hourly rate on a rest day or
special day or regular holiday.

3. For overtime work in the night shift. Since overtime work is not usually eight (8) hours, the
compensation for overtime night shift work is also computed on the basis of the hourly rate.

a. On an ordinary day. Plus 10% of 125% of basic hourly rate or a total of 110% of 125% of basic hourly
rate.

b. On a rest day or special day or regular holiday. Plus 10% of 130% of regular hourly rate on said days
or a total of 110% of 130% of the applicable regular hourly rate.

g. REST PERIODS

1. WEEKLY REST DAY

• What is the duration of weekly rest period?

It shall be the duty of every employer, whether operating for profit or not, to provide each of his
employees a rest period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.

• Is the employer’s prerogative to determine the rest period of its employees subject to limitations?
Yes. The employer shall determine and schedule the weekly rest day of his employees subject to CBA
and to such rules and regulations as the DOLE Secretary may provide. However, the employer shall
respect the preference of employees as to their weekly rest day when such preference is based on
religious grounds.

2. EMERGENCY REST DAY WORK

• When can an employer require work on a rest day?

The employer may require any of its employees to work on their scheduled rest day for the duration of
the following emergency and exceptional conditions:

a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon,
earthquake, epidemic or other disaster or calamity, to prevent loss of life and property, or in case of
force majeure or imminent danger to public safety;

b. In case of urgent work to be performed on machineries, equipment, or installations, to avoid serious


loss which the employer would otherwise suffer;

c. In the event of abnormal pressure of work due to special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;

d. To prevent serious loss of perishable goods;

e. Where the nature of the work is such that the employees have to work continuously for seven (7)
days in a week or more, as in the case of the crew members of a vessel to complete a voyage and in
other similar cases; and

f. When the work is necessary to avail of favorable weather or environmental conditions where
performance or quality of work is dependent thereon.

h. HOLIDAY PAY/PREMIUM PAY

1. COVERAGE, EXCLUSIONS

• Who are covered by the law on holiday pay?

Generally, all employees are entitled to and covered by the law on holiday pay.

• Who are EXCLUDED from its coverage?

The following are excluded:

a. Those of the government and any of the political subdivisions, including government-owned and
controlled corporations;

b. Those of retail and service establishments regularly employing less than ten (10) workers;

c. Domestic workers or Kasambahays;

d. Persons in the personal service of another;

e. Managerial employees as defined in Book III of the Labor Code;


f. Field personnel and other employees whose time and performance is unsupervised by the employer;

g. Those who are engaged on task or contract basis or purely commission basis;

h. Those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof;

i. Other officers and members of the managerial staff;

j. Members of the family of the employer who are dependent on him for support.

• What are REGULAR and SPECIAL HOLIDAYS?

A. Regular Holidays

New Year’s Day - 1 January (Wednesday)

Araw ng Kagitingan- 9 April (Wednesday)

Maundy Thursday - 17 April

Good Friday - 18 April

Labor Day - 1 May (Thursday)

Independence Day - 12 June (Thursday)

National Heroes Day- 25 August (Last Monday of August)

Bonifacio Day - 30 November (Sunday)

Christmas Day - 25 December (Thursday)

Rizal Day - 30 December (Tuesday)

B. Special (Non-Working) Days

Chinese New Year - 31 January (Friday)

Black Saturday - 19 April

Ninoy Aquino Day - 21 August (Thursday)

All Saints Day - 1 November (Saturday)

C. Special Holiday (for all schools)

EDSA Revolution

Anniversary – 25 February (Tuesday)

Not included in the enumeration above on regular holidays are (1) Eid’l Fitr and (2) Eidul Adha. The
reason is that proclamations declaring the observance of these national holidays are issued after the
approximate dates of the Islamic holidays have been determined in accordance with the Islamic
calendar (Hijra) or the lunar calendar, or upon Islamic astronomical calculations, whichever is possible or
convenient. To this end, the National Commission on Muslim Filipinos

(NCMF) shall inform the Office of the President on which days the holidays shall respectively fall.

• What is the total number of regular holidays?

The total number of regular holidays is twelve (12) days per year. This is important for purposes of
reckoning certain divisors and computation of employee benefits.

• What is the principal distinction between regular and special (non-working) days?

The said 12 regular holidays are considered GUARANTEED WITH PAY since employees should be paid
their wages during regular holidays regardless of whether they work or not on those days.

As far as special (non-working) days are concerned, the principle of ‘NO WORK, NO PAY” applies, which
means that if workers do not work on special (non-working) days, they do not receive any wages for
those days, unlike in the case of regular holidays as above discussed.

• What is premium pay for holidays (and also for rest days)?

“Premium pay” refers to the additional compensation required by law to be paid for work performed
within the regular eight (8) normal working hours on non-working days, such as rest days, regular and
special holidays.

• How is premium pay for holidays computed?

a. Regular Holidays

• If the employee did not work, he/she shall be paid 100 % of his/her salary for that day. Computation:

(Daily rate + Cost of Living Allowance) x 100%. The COLA is included in the computation of holiday pay.

• If the employee worked, he/she shall be paid 200 % of his/her regular salary for that day for the first
eight hours. Computation: (Daily rate + COLA) x 200%. The COLA is also included in computation of
holiday pay.

• If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional 30
percent of his/her hourly rate on said day. Computation: Hourly rate of the basic daily wage x 200% x
130% x number of hours worked.

• If the employee worked during a regular holiday that also falls on his/her rest day, he/she shall be paid
an additional 30 % of his/her daily rate of 200 %. Computation: (Daily rate + COLA) x 200%] + (30% [Daily
rate x 200%)].

• If the employee worked in excess of eight hours (overtime work) during a regular holiday that also falls
on his/her rest day, he/she shall be paid an additional 30 % of his/her hourly rate on said day.

Computation: (Hourly rate of the basic daily wage x 200% x 130% x 130% x number of hours worked);

b. Special (Non-Working) Days


• If the employee did not work, the “no work, no pay” principle shall apply, unless there is a favorable
company policy, practice, or CBA granting payment on a special day.

• If the employee worked, he/she shall be paid an additional 30 % of his/her daily rate on the first eight
hours of work. Computation: [(Daily rate x 130%) + COLA).

• If the employee worked in excess of eight hours (overtime work), he/she shall be paid an additional 30
% of his/her hourly rate on said day. Computation: (Hourly rate of the basic daily wage x 130% x 130% x
number of hours worked).

• If the employee worked during a special day that also falls on his/her rest day, he/she shall be paid an
additional 50% of his/her daily rate on the first eight hours of work. Computation: [(Daily rate x 150%) +
COLA].

• If the employee worked in excess of eight hours (overtime work) during a special day that also falls on
his/her rest day, he/she shall be paid an additional 30 % of his/her hourly rate on said day.

Computation: (Hourly rate of the basic daily wage x 150% x 130% x number of hours worked).

c. Special Holiday for all schools

• For private establishments, 25 February 2014 is an ordinary workday and no premium is required to be
paid for work on said day.

• On the other hand, employees in private schools, whether academic or administrative personnel, shall
be paid in accordance with the rules for pay on special (non-working) days as stated above.

• What are the effects of absences on the computation of holiday pay?

1. Employees on leave of absence with pay - entitled to holiday pay when they are on leave of absence
with pay.

2. Employees on leave of absence without pay on the day immediately preceding the regular holiday -
may not be paid the required holiday pay if they have not worked on such regular holiday.

3. Employees on leave while on SSS or employee’s compensation benefits - Employers should grant the
same percentage of the holiday pay as the benefit granted by competent authority in the form of
employee’s compensation or social security payment, whichever is higher, if they are not reporting for
work while on such benefits.

4. When day preceding regular holiday is a non-working day or scheduled rest day - should not be
deemed to be on leave of absence on that day, in which case, employees are entitled to the regular
holiday pay if they worked on the day immediately preceding the non-working day or rest day.

2. HOLIDAY PAY/PREMIUM PAY OF TEACHERS, PIECE WORKERS, TAKAY, SEASONAL WORKERS,


SEAFARERS

• Are private school teachers entitled to holiday pay during semestral vacations? What about
Christmas vacation”

No, as far as regular holidays during semestral vacations are concerned.


Yes, as far as regular holidays during Christmas vacation are concerned.

• Are hourly-paid teachers entitled to holiday pay?

A school is exempted from paying hourly-paid faculty members their pay for regular holidays, whether
the same be during the regular semesters of the school year or during semestral, Christmas, or Holy
Week vacations.

However, it is liable to pay the faculty members their regular hourly rate on days declared as special
holidays or if, for some reason, classes are called off or shortened for the hours they are supposed to
have taught, whether extensions of class days be ordered or not; and in case of extensions, said faculty
members shall likewise be paid their hourly rates should they teach during said extensions.

•Are piece-workers, takay and others paid by results entitled to holiday pay?

Yes. Where a covered employee is paid by results or output such as payment on piece-work, his holiday
pay should not be less than his average daily earnings for the last seven (7) actual working days
preceding the regular holiday. In no case, however, should the holiday pay be less than the applicable
statutory minimum wage rate.

• What are the distinctions between “supervised” and “unsupervised” workers paid by results to
determine their entitlement to holiday pay?

The principal test to determine entitlement to holiday pay is whether the employees’ time and
performance of the work are “supervised” or “unsupervised” by their employer. If supervised, the
employee is entitled to holiday pay. If unsupervised, he is not.

The distinctions between supervised and unsupervised workers paid by results are as follows:

(1) Those whose time and performance are supervised by the employer. Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises; and

(2) Those whose time and performance are unsupervised. Here, the employer’s control is over the result
of the work. Workers on pakyao and takay basis belong to this group. Both classes of workers are paid
per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is
done in the company premises, while payment on pakyao and takay basis is commonly observed in the
agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes,
hence, difficult to quantify.

•Are seasonal workers entitled to holiday pay?

Yes. Seasonal workers are entitled to holiday pay while working during the season. They may not be paid
the required regular holiday pay during off-season where they are not at work.

• Are seafarers entitled to holiday pay?

Yes. Any hours of work or duty including hours of watch-keeping performed by the seafarer on
designated rest days and holidays shall be paid rest day or holiday pay accordingly.

• What are important principles on holiday pay?


• In case of two (2) regular holidays falling on the same day, the worker should be compensated as
follows:

o If unworked – 200% for the two regular holidays;

o If worked – 200% for the two regular holidays plus premium of 100% for work on that day.

• “Monthly-paid” employees are not excluded from the coverage of holiday pay.

i. 13TH MONTH PAY

• Who are covered by the 13th month pay law?

Only rank-and-file employees, regardless of their designation or employment status and irrespective of
the method by which their wages are paid, are entitled to the 13th month pay benefit. Managerial
employees are not entitled to 13th month pay.

• What is the minimum period of service required in a calendar year to be entitled to 13th month pay?

To be entitled to the 13th month pay benefit, it is imposed as a minimum service requirement that the
employee should have worked for at least one (1) month during a calendar year.

• When should 13th month pay be paid?

It must be paid not later than December 24 of every year.

• Who are excluded from its coverage?

The following employers are not covered by the 13th month pay law:

1. The government and any of its political subdivisions, including government-owned and controlled
corporations, except those corporations operating essentially as private subsidiaries of the government.

2. Employers already paying their employees 13th month pay or more in a calendar year or its
equivalent at the time of the issuance of the Revised Guidelines.

3. Employers of those who are paid on purely commission, boundary, or task basis, and those who are
paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis, in which case, the
employer shall be covered by the Revised Guidelines insofar as such workers are concerned. Workers
paid on piece-rate basis shall refer to those who are paid a standard amount for every piece or unit of
work produced that is more or less regularly replicated without regard to the time spent in producing
the same.

• Are domestic workers or Kasambahays covered?

Yes. They are now covered under the Kasambahay Law.

• Are extras, casuals and seasonal employees entitled to 13th month pay?

Yes, they are entitled thereto.

•Is 13th month pay part of wage?


13th month pay which is in the nature of additional income, is based on wage but not part of wage.

• What is the minimum amount of the 13th month pay?

The minimum 13th month pay should not be less than one-twelfth (1/12) of the total basic salary
earned by an employee within a calendar year.

• What is meant by “basic salary” or “basic wage”?

“Basic salary” or “basic wage” contemplates work within the normal eight (8) working hours in a day.
This means that the basic salary of an employee for purposes of computing the 13th month pay should
include all remunerations or earnings paid by the employer for services rendered during normal working
hours.

For purposes of computing the 13th month pay, “basic salary” should be interpreted to mean not the
amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their
length of service within a given calendar year.

j. SERVICE CHARGE

• What are the kinds of establishment covered by the law on service charge?

The rules on service charge apply only to establishments collecting service charges, such as hotels,
restaurants, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling
houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the
government.

• Who are the employees covered by this law?

The same rules on service charges apply to all employees of covered employers, regardless of their
positions, designations or employment status, and irrespective of the method by which their wages are
paid except those receiving more than P2,000.00 a month.

• Who are not covered?

Specifically excluded from coverage are employees who are receiving wages of more than P2,000.00 a
month. However, it must be pointed out that the P2,000.00 ceiling is no longer realistic considering the
applicable minimum wages prevailing in the country. Hence, it must be disregarded.

•How is the service charge distributed?

a. Percentage of sharing.

All service charges collected by covered employers are required to be distributed at the following rates:

1. 85% to be distributed equally among the covered employees; and

2. 15% to management to answer for losses and breakages and distribution to employees receiving
more than P2,000.00 a month, at the discretion of the management.

b. Frequency of distribution.
The share of the employees referred to above should be distributed and paid to them not less often
than once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.

• Can the service charge be integrated into the wages of covered employees?

Yes. In case the service charge is abolished, the share of covered employees should be considered
integrated in their wages, in accordance with Article 96 of the Labor Code. The basis of the amount to be
integrated is the average monthly share of each employee for the past twelve (12) months immediately
preceding the abolition or withdrawal of such charges.

• What are some principles on service charge?

• Tips and services charges are two different things. Tips are given by customers voluntarily to waiters
and other people who serve them out of recognition of satisfactory or excellent service. There is no
compulsion to give tips under the law. The same may not be said of service charges which are
considered integral part of the cost of the food, goods or services ordered by the customers.

• Service charges are not in the nature of profit share and, therefore, cannot be deducted from wage.

B. WAGES

1. WAGE VS. SALARY

•What is the basic distinction between wage and salary?

The term “wage” is used to characterize the compensation paid for manual skilled or unskilled labor.

“Salary,” on the other hand, is used to describe the compensation for higher or superior level of
employment.

• What is the distinction in respect to execution, attachment or garnishment?

In cases of execution, attachment or garnishment of the compensation of an employee received from


work issued by the court to satisfy a judicially-determined obligation, a distinction should be made
whether such compensation is considered “wage” or “salary.” Under Article 1708 of the Civil Code, if
considered a “wage,” the employee’s compensation shall not be subject to execution or attachment or
garnishment, except for debts incurred for food, shelter, clothing and medical attendance. If deemed a
“salary,” such compensation is not exempt from execution or attachment or garnishment. Thus, the
salary, commission and other remuneration received by a managerial employee (as distinguished from
an ordinary worker or laborer) cannot be considered wages. Salary is understood to relate to a position
or office, or the compensation given for official or other service; while wage is the compensation for
labor.

2. PAYMENT OF WAGES

• What are the attributes of wage?

“Wage” has the following attributes:

1) It is the remuneration or earnings, however designated, for work done or to be done or for services
rendered or to be rendered;
2) It is capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece
or commission basis, or other method of calculating the same;

3) It is payable by an employer to an employee under a written or unwritten contract of employment for


work done or to be done or for services rendered or to be rendered; and

4) It includes the fair and reasonable value, as determined by the DOLE Secretary, of board, lodging, or
other facilities customarily furnished by the employer to the employee. “Fair and reasonable value” shall
not include any profit to the employer or to any person affiliated with the employer.

• What is basic wage?

“Basic wage” means all the remuneration or earnings paid by an employer to a worker for services
rendered on normal working days and hours but does not include cost-of-living allowances, profit-
sharing payments, premium payments, 13th month pay or other monetary benefits which are not
considered as part of or integrated into the regular salary of the workers.

Further, as held in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, the following
should be excluded from the computation of “basic salary,” to wit: payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days
and special holidays.

• What is minimum wage?

The minimum wage rates prescribed by law shall be the basic cash wages without deduction therefrom
of whatever benefits, supplements or allowances which the employees enjoy free of charge aside from
the basic pay.

• What is statutory minimum wage?

The term “statutory minimum wage” refers simply to the lowest basic wage rate fixed by law that an
employer can pay his workers.

• What is regional minimum wage rate?

The term “regional minimum wage rates” refers to the lowest basic wage rates that an employer can
pay his workers, as fixed by the Regional Tripartite Wages and Productivity Boards (RTWPBs), and
which shall not be lower than the applicable statutory minimum wage rates.

• What are included/excluded in the term “wage rate”?

The term "wage rate" includes cost-of-living allowances as fixed by the RTWPB, but excludes other
wage-related benefits such as overtime pay, bonuses, night shift differential pay, holiday pay, premium
pay, 13th month pay, premium pay, leave benefits, among others.

• Can COLA be integrated into the minimum wage?

Yes. The cost-of-living allowance (COLA) may be ordered integrated into the minimum wage by the
Regional Tripartite Wages and Productivity Board (“RTWPB” or “Regional Board”).

• What is COLA?
COLA is not in the nature of an allowance intended to reimburse expenses incurred by employees in the
performance of their official functions. It is not payment in consideration of the fulfillment of official
duty. As defined, “cost of living” refers to “the level of prices relating to a range of everyday items” or
“the cost of purchasing the goods and services which are included in an accepted standard level of
consumption.” Based on this premise, COLA is a benefit intended to cover increases in the cost of living.

• What is the “NO WORK, NO PAY” principle?

The “no work, no pay” or “fair day’s wage for fair day’s labor” means that if the worker does not work,
he is generally not entitled to any wage or pay. The exception is when it was the employer who unduly
prevented him from working despite his ableness, willingness and readiness to work; or in cases where
he is illegally locked out or illegally suspended or illegally dismissed, or otherwise illegally prevented
from working, in which event, he should be entitled to his wage.

3. FACILITIES VERSUS SUPPLEMENTS

• What are facilities?

The term “facilities” includes articles or services for the benefit of the employee or his family but does
not include tools of the trade or articles or services primarily for the benefit of the employer or
necessary to the conduct of the employer’s business. They are items of expense necessary for the
laborer’s and his family’s existence and subsistence which form part of the wage and when furnished by
the employer, are deductible therefrom, since if they are not so furnished, the laborer would spend and
pay for them just the same.

•What are supplements?

The term “supplements” means extra remuneration or special privileges or benefits given to or received
by the laborers over and above their ordinary earnings or wages.

• What are the distinctions between facilities and supplements?

The benefit or privilege given to the employee which constitutes an extra remuneration over and above
his basic or ordinary earning or wage is supplement; and when said benefit or privilege is made part of
the laborer’s basic wage, it is a facility. The criterion is not so much with the kind of the benefit or item
(food, lodging, bonus or sick leave) given but its purpose. Thus, free meals supplied by the ship operator
to crew members, out of necessity, cannot be considered as facilities but supplements which could not
be reduced having been given not as part of wages but as a necessary matter in the maintenance of the
health and efficiency of the crew during the voyage.

• What is the rule on deductibility of facilities and supplements?

Facilities are deductible from wage but not supplements.

4. NON-DIMINUTION OF BENEFITS

• What is the applicability of the non-diminution rule in Article 100 of the Labor Code?

Albeit Article 100 is clear that the principle of non-elimination and non-diminution of benefits apply only
to the benefits being enjoyed “at the time of the promulgation” of the Labor Code, the Supreme Court
has consistently cited Article 100 as being applicable even to benefits granted after said promulgation. It
has, in fact, been treated as the legal anchor for the declaration of the invalidity of so many acts of
employers deemed to have eliminated or diminished the benefits of employees.

The 2014 case of Wesleyan University-Philippines v. Wesleyan University-Philippines Faculty and Staff
Association, succinctly pointed out that the Non-Diminution Rule found 1 in Article 100 of the Labor
Code explicitly prohibits employers from eliminating or reducing the benefits received by their
employees. This rule, however, applies only if the benefit is based on any of the following:

(1) An express policy;

(2) A written contract; or

(3) A company practice.

There is not much controversy if the benefit involved is provided for under Nos. 1 and 2 above. Thus, if it
is expressly laid down in a written policy unilaterally promulgated by the employer, the employer is
duty-bound to adhere and comply by its own policy. It cannot be allowed to renege from its
commitment as expressed in the policy.

If the benefit is granted under a written contract such as an employment contract or a collective
bargaining agreement (CBA), the employer is likewise under legal compulsion to so comply therewith.

On No. 3 above, please see discussion below.

4.1. COMPANY PRACTICE

• What is company practice?

Company practice is a custom or habit shown by an employer’s repeated, habitual customary or


succession of acts of similar kind by reason of which, it gains the status of a company policy that can no
longer be disturbed or withdrawn.

To ripen into a company practice that is demandable as a matter of right, the giving of the benefit
should not be by reason of a strict legal or contractual obligation but by reason of an act of liberality
on the part of the employer.

• What are the criteria that may be used to determine existence of company practice?

Since there is no hard and fast rule which may be used and applied in determining whether a certain act
of the employer may be considered as having ripened into a practice, the following criteria may be used
to determine whether an act has ripened into a company practice:

(1) The act of the employer has been done for a considerable period of time;

(2) The act should be done consistently and intentionally; and

(3) The act should not be a product of erroneous interpretation or construction of a doubtful or difficult
question of law or provision in the CBA.

(See the 2013 case of Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc.1)

1. THE ACT OF THE EMPLOYER HAS BEEN DONE FOR A CONSIDERABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance Corporation (Philacor) v. CA,2 where the CBA
signing bonus was granted only once during the 1997 CBA negotiation, the same cannot be considered
as having ripened into a company practice.

In the following cases, the act of the employer was declared company practice because of the
considerable period of time it has been practiced:

(a) Davao Fruits Corporation v. Associated Labor Unions.3 - The act of the company of freely and
continuously including in the computation of the 13th month pay, items that were expressly excluded by
law has lasted for six (6) years, hence, was considered indicative of company practice.

(b) Sevilla Trading Company v. A. V. A. Semana.4 - The act of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of the employees’ 13th month pay
for at least two (2) years was considered a company practice.

(c) The 2010 case of Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union- NLU,5 also
ruled as company practice the act of petitioner of granting for thirty (30) years, its workers the
mandatory 13th month pay computed in accordance with the following formula: Total Basic Annual
Salary divided by twelve (12) and Including in the computation of the Total Basic Annual Salary the
following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/ special holiday;
night premium pay; and vacation and sick leaves for each year.

2. THE ACT SHOULD BE DONE CONSISTENTLY AND INTENTIONALLY.

The following cases may be cited to illustrate this principle:

(a) Tiangco v. Leogardo, Jr.,6 where the employer has consistently been granting fixed monthly
emergency allowance to the employees from November, 1976 but discontinued this practice effective
February, 1980 insofar as non-working days are concerned based on the principle of “no work, no pay.”
The Supreme Court ruled that the discontinuance of said benefit contravened Article 100 of the Labor
Code which prohibits the diminution of existing benefits.

3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS INTERPRETATION OR CONSTRUCTION OF A


DOUBTFUL OR DIFFICULT QUESTION OF LAW OR PROVISION IN THE CBA.

The general rule is that if it is a past error that is being corrected, no vested right may be said to have
arisen therefrom nor any diminution of benefit may have resulted by virtue of the correction thereof.
The error, however, must be corrected immediately after its discovery; otherwise, the rule on non-
diminution of benefits would still apply.

The following cases would illuminate this principle:

(a) Globe Mackay Cable and Radio Corporation v. NLRC,7 where the Supreme Court ruled on the proper
computation of the cost-of-living allowance (COLA) for monthly-paid employees. Petitioner corporation,
pursuant to Wage Order No. 6 (effective October 30, 1984), increased the COLA of its monthly-paid
employees by multiplying the P3.00 daily COLA by 22 days which is the number of working days in the
company. The union disagreed with the computation, claiming that the daily COLA rate of P3.00 should
be multiplied by 30 days which has been the practice of the company for several years. The Supreme
Court, however, upheld the contention of the petitioner corporation. It held that the grant by the
employer of benefits through an erroneous application of the law due to absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally discontinued.

(b) TSPIC Corp. v. TSPIC Employees Union [FFW], where the Supreme 1 Court reiterated the rule
enunciated in Globe-Mackay, that an erroneously granted benefit may be withdrawn without violating
the prohibition against non-diminution of benefits. No vested right accrued to individual respondents
when TSPIC corrected its error by crediting the salary increase for the year 2001 against the salary
increase granted under Wage Order No. 8, all in accordance with the CBA. Hence, any amount given to
the employees in excess of what they were entitled to, as computed above, may be legally deducted by
TSPIC from the employees’ salaries.

But if the error does not proceed from the interpretation or construction of a law or a provision in the
CBA, the same may ripen into a company practice.

Example:

(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,2 where the act of the employer in
granting separation pay to resigning employees, despite the fact that the Labor Code does not grant it,
was considered an established employer practice.

5. PROHIBITIONS REGARDING WAGES

(See Articles 112 to 119 of the Labor Code)

(1) NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY EMPLOYEES OF THEIR WAGES.

Article 112 of the Labor Code - No employer is allowed to limit or otherwise interfere with the freedom
of any employee to dispose of his wages and no employer shall in any manner oblige any of his
employees to patronize any store or avail of the services offered by any person.

(2) WAGES NOT SUBJECT TO EXECUTION OR ATTACHMENT; EXCEPTION.

The general rule is that laborer’s wages are not subject to execution or attachment. The exception is
when such execution or attachment is made for debts incurred for food, shelter, clothing and medical
attendance.

(3) PROHIBITION ON DEDUCTIONS FROM WAGES.

• May employer deduct from wage of employees?

The general rule is that an employer, by himself or through his representative, is PROHIBITED from
making any deductions from the wages of his employees. The employer is not allowed to make
unnecessary deductions without the knowledge or authorization of the employees.

• Are there EXCEPTIONS to this rule?

Yes.

(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 worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the DOLE Secretary.

(d) Deductions for loss or damage under Article 114 of the Labor Code;

(e) Deductions made for agency fees from non-union members who accept the benefits under the CBA
negotiated by the bargaining union. This form of deduction does not require the written authorization of
the non-bargaining union member concerned;

(f) Deductions for value of meal and other facilities;

(g) Deductions for premiums for SSS, PhilHealth, employees’ compensation and Pag-IBIG;

(h) Withholding tax mandated under the National Internal Revenue Code (NIRC);

(i) Withholding of wages because of the employee’s debt to the employer which is already due;

(j) Deductions made pursuant to a court judgment against the worker under circumstances where the
wages may be the subject of attachment or execution but only for debts incurred for food, clothing,
shelter and medical attendance;

(k) When deductions from wages are ordered by the court;

(4) PROHIBITION AGAINST DEPOSIT REQUIREMENT.

Article 114 of the Labor Code prohibits the employer to require that workers should make a deposit
from which deductions shall be made for the reimbursement of loss of tools, materials or equipment
supplied by him, or any damages thereto.

PERMISSIBLE DEDUCTIONS FOR LOSS OR DAMAGES.

If the employer is engaged in a trade, occupation or business where there is such practice of making
deductions or requiring deposits to answer for the reimbursement of loss of or damage to tools,
materials or equipment supplied by the employer to the employee.

(5) PROHIBITION ON WITHHOLDING OF WAGES.

Article 116 of the Labor Code prohibits any person, whether employer or not, directly or indirectly, to
withhold any amount from the wages of a worker.

Under Article 1706 of the Civil Code, withholding of the wages, except for a debt due, is not allowed to
be made by the employer.

Moreover, under Article 1709 of the same Code, the employer is not allowed to seize or retain any tool
or other articles belonging to the laborer.

(6) KICKBACKS.

Article 116 of the Labor Code also prohibits “kickback” which consists in the act of any person, whether
employer or not, directly or indirectly, to induce a worker to give up any part of his wages by force,
stealth, intimidation, threat or by any other means whatsoever, without the worker’s consent.
(7) PROHIBITION AGAINST DEDUCTION TO ENSURE EMPLOYMENT.

Article 117 of the Labor Code prohibits any person, whether the employer himself or his representative
or an intermediary, to require that a deduction be made or to actually make any deduction from the
wages of any employee or worker, for the benefit of such employer or his representative or an
intermediary, as consideration of a promise of employment or, when already employed, for the
continuation of such employment or retention therein.

(8) RETALIATORY ACTIONS BY EMPLOYER.

Article 118 of the Labor Code prohibits the employer:

(a) to refuse to pay the wages and benefits of an employee; or

(b) to reduce his wages and benefits; or

(c) to discharge him from employment; or

(d) to discriminate against him in any manner;

on account and by reason of said employee’s:

(1) act of filing any complaint or institution of any proceeding under Title II [Wages], Book III of the Labor
Code; or

(2) act of testifying in said proceedings or when he is about to testify therein.

(9) FALSE STATEMENT, REPORT OR RECORD.

Article 119 of the Labor Code prohibits any person, whether employer or not, to make any false
statement, report or record required to be filed or kept in accordance with and pursuant to the
provisions of the Labor Code, knowing such statement, report or record to be false in any material
respect.

Examples: Payrolls, time records, employment records and production records, among others.

6. WAGE ORDER

• What is a Wage Order?

The term “Wage Order” refers to the order promulgated by the Regional Tripartite Wages and
Productivity Board (Regional Board) pursuant to its wage fixing authority.

• When is it proper to issue a Wage Order?

Whenever conditions in the region so warrant, the Regional Board shall investigate and study all
pertinent facts and based on the prescribed standards and criteria, shall proceed to determine whether
a Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its
complete publication in at least one

(1) newspaper of general circulation in the region.

• What are the standards/criteria for minimum wage fixing?


In the determination of regional minimum wages, the Regional Board shall, among other relevant
factors, consider the following:

(1) Needs of workers and their families

1) Demand for living wages;

2) Wage adjustment vis-à-vis the consumer price index;

3) Cost of living and changes therein;

4) Needs of workers and their families;

5) Improvements in standards of living.

(2) Capacity to pay

1) Fair return on capital invested and capacity to pay of employers;

2) Productivity.

(3) Comparable wages and incomes

1) Prevailing wage levels.

(4) Requirements of economic and social development

1) Need to induce industries to invest in the countryside;

2) Effects on employment generation and family income;

3) Equitable distribution of income and wealth along the imperatives of economic and social
development.

• What are the methods of fixing the minimum wage rates?

There are two (2) methods, to wit:

1. “Floor-Wage” method which involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates. This was applied in earlier wage orders; and

2. “Salary-Cap” or “Salary-Ceiling” method where the wage adjustment is to be applied to employees


receiving a certain denominated salary ceiling. In other words, workers already being paid more than
the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a
wage increase.

The “Salary-Cap” or “Salary-Ceiling” method is the preferred mode.

The distinction between the two (2) methods is best shown by way of an illustration. Under the “Floor

Wage Method,” it would be sufficient if the Wage Order simply set P15.00 as the amount to be added to
the prevailing statutory minimum wage rates; while in the “Salary-Ceiling Method,” it would be
sufficient if the Wage Order states a specific salary, such as P250.00, and only those earning below it
shall be entitled to the wage increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS

• What are the minimum wage rates of workers paid by results?

According to Article 124 of the Labor Code:

“All workers paid by results, including those who are paid on piecework, takay, pakyaw or task basis,
shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or a proportion
thereof for working less than eight (8) hours.”

• Who are workers paid by results?

They are workers who are engaged on pakyao, piecework, task and other non-time work. They are so
called because they are paid not on the basis of the time spent on their work but according to the
quantity, quality or kind of job and the consequent results thereof.

• What are the categories of workers paid by results?

Workers paid by results may be classified into:

a) Supervised workers; and

b) Unsupervised workers.

As the term clearly connotes, supervised workers are those whose manner of work is under the control
of the employer; while unsupervised workers are those whose work is controlled more in the results
than in the manner or method of performing it.

The law does not make any categorical differentiation among the workers paid by results. Thus, the
workers may be on pakyao (sometimes spelled “pakyaw”), takay or piece-rate or output basis. All of
them are similar in character in that they are all paid on the basis of the results of their work. When the
law does not distinguish, we should not distinguish.

WAGE RATE OF APPRENTICES AND LEARNERS

• What is the wage rate of apprentices and learners?

The wage rate of a learner or an apprentice is set at seventy-five percent (75%) of the statutory
minimum wage.

WAGE RATE OF PERSONS WITH DISABILITY (PWDs)

•What is the wage rate of PWD?

Under R.A. No. 7277, the wage rate of PWDs had been increased to and fixed at 100% of the applicable
minimum wage.

6.1. WAGE DISTORTION

• What is wage distortion?

“Wage distortion” contemplates a situation where an increase in prescribed wage rates results in either
of the following:
1. Elimination of the quantitative differences in the rates of wages or salaries; or

2. Severe contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage
structure based on the following criteria:

a. Skills;

b. Length of service; or

c. Other logical bases of differentiation.

Wage distortion presupposes a classification of positions and ranking of these positions at various levels.

One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other
emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage
without a corresponding change in the other level in the hierarchy of positions, negating as a result
thereof the distinction between one level of position from the next higher level, and resulting in a parity
between the lowest level and the next higher level or rank, between new entrants and old hires, there
exists a wage distortion. xxx. 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.

• What are the elements of wage distortion?

The four (4) elements of wage distortion are as follows:

(1) An existing hierarchy of positions with corresponding salary rates;

(2) A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one;

(3) The elimination of the distinction between the two levels; and

(4) The existence of the distortion in the same region of the country.

Normally, a company has a wage structure or method of determining the wages of its employees. In a
problem dealing with “wage distortion,” the basic assumption is that there exists a grouping or
classification of employees that establishes distinctions among them on some relevant or legitimate
bases.

Involved in the classification of employees are various factors such as the degrees of responsibility, the
skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The
differing wage rate for each of the existing classes of employees reflects this classification.

•What is the formula for rectifying or resolving wage distortion?

Following is the formula for the correction of wage distortion in the pay scale structures:

Minimum Wage = % x Prescribed Increase = Distortion Adjustment Actual Salary


The above formula was held to be just and equitable.

C. LEAVES

1. SERVICE INCENTIVE LEAVE

• What is service incentive leave?

Every covered employee who has rendered at least one (1) year of service is entitled to a yearly service
incentive leave of five (5) days with pay.

The term “at least one year of service” should mean service within twelve (12) months, whether
continuous or broken, reckoned from the date the employee started working, including authorized
absences and paid regular holidays, unless the number of working days in the establishment as a matter
of practice or policy, or that provided in the employment contract, is less than twelve (12) months, in
which case, said period should be considered as one (1) year for the purpose of determining entitlement
to the service incentive leave benefit.

• Who are excluded from its coverage?

All employees are covered by the rule on service incentive leave except:

a. Those of the government and any of its political subdivisions, including government-owned and
controlled corporations;

b. Domestic workers or kasambahays;

c. Persons in the personal service of another;

d. Managerial employees as defined in Book III of the Labor Code;

e. Field personnel and other employees whose performance is unsupervised by the employer;

f. Those who are engaged on task or contract basis, purely commission basis, or those who are paid in a
fixed amount for performing work irrespective of the time consumed in the performance thereof;

g. Those who are already enjoying the benefit provided in the law;

h. Those enjoying vacation leave with pay of at least five (5) days;

i. Those employed in establishments regularly employing less than ten (10) employees;

j. Other officers and members of the managerial staff; and

k. Members of the family of the employer who are dependent on him for support.

• Are unavailed service incentive leaves commutable to cash?

Yes. The service incentive leave is commutable to its money equivalent if not used or exhausted at the
end of the year.

2. MATERNITY LEAVE

• What is maternity leave?


“Maternity leave” is the period of time which may be availed of by a woman employee, married or
unmarried, to undergo and recuperate from childbirth, miscarriage or complete abortion during which
she is permitted to retain her rights and benefits flowing from her employment.

• What is the period of leave?

60 days – for normal delivery

78 days – for caesarian delivery

• What is the amount granted?

Daily maternity benefit equivalent to 100% of her average daily salary credit for sixty (60) days or
seventy-eight (78) days in case of caesarian delivery/

• What is the number of delivery or miscarriage covered?

The maternity benefits shall be paid only for the first four (4) deliveries or miscarriages/

• Is an unmarried woman entitled to maternity leave benefit?

Yes. For as long as a woman is pregnant, she is entitled to maternity leave benefit regardless of whether
she is married or unmarried.

3. PATERNITY LEAVE

• What is paternity leave benefit?

“Paternity leave” covers a married male employee allowing him not to report for work for seven (7)
calendar days but continues to earn the compensation therefor, on the condition that his spouse has
delivered a child or suffered miscarriage for purposes of enabling him to effectively lend support to his
wife in her period of recovery and/or in the nursing of the newly-born child.

“Delivery” includes childbirth or any miscarriage.

“Spouse” refers to the lawful wife. For this purpose, “lawful wife” refers to a woman who is legally
married to the male employee concerned.

“Cohabiting” refers to the obligation of the husband and wife to live together.

•What is the covered total number of deliveries?

Every married employee in the private and public sectors is entitled to a paternity leave of seven (7)
calendar days with full pay for the first four (4) deliveries of the legitimate spouse with whom he is
cohabiting.

Paternity leave benefits are granted to the qualified employee after the delivery by his wife, without
prejudice to an employer allowing an employee to avail of the benefit before or during the delivery,
provided that the total number of days should not exceed seven (7) calendar days for each delivery.

• Is an unavailed paternity leave benefit convertible to cash?


No. In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to
cash.

4. PARENTAL LEAVE FOR SOLO PARENTS

(R.A. No. 8972)

• What is parental leave?

“Parental leave” is the leave benefit granted to a male or female solo parent to enable him/her to
perform parental duties and responsibilities where physical presence is required.

• How many days may be availed of as parental leave?

The parental leave shall not be more than seven (7) working days every year to a solo parent who has
rendered service of at least one (1) year, to enable him/her to perform parental duties and
responsibilities where his/ her physical presence is required. This leave shall be non-cumulative.

It bears noting that this leave privilege is an additional leave benefit which is separate and distinct from
any other leave benefits provided under existing laws or agreements.

• Who is a solo parent?

The term "solo parent" refers to any individual who falls under any of the following categories:

(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final
conviction of the offender: Provided, That the mother keeps and raises the child;

(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;

(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is
serving sentence for a criminal conviction for at least one (1) year;

(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental
incapacity of spouse as certified by a public medical practitioner;

(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto
separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the
children;

(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or
annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the
custody of the children;

(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at
least one (1) year;

(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of
having others care for them or give them up to a welfare institution;

(9) Any other person who solely provides parental care and support to a child or children;
(10) Any family member who assumes the responsibility of head of family as a result of the death,
abandonment, disappearance or prolonged absence of the parents or solo parent.

• What is the effect of change of status of the solo parent?

A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is
no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these
benefits.

• Who are considered children under this law?

"Children" refer to those living with and dependent upon the solo parent for support who are
unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years
but are incapable of selfsupport because of mental and/or physical defect/disability.

• Is an unavailed parental leave convertible to cash?

No. In the event that the parental leave is not availed of, said leave shall not be convertible to cash
unless specifically agreed upon previously.

5. SPECIAL LEAVES FOR WOMEN WORKERS

(MAGNA CARTA OF WOMEN)

• What is this special leave benefit [GYNECOLOGICAL SURGERY LEAVE]?

A special leave benefit for women was granted under R.A. No. 9710, otherwise known as “The Magna

Carta of Women” [August 14, 2009]. Thus, any female employee in the public and private sector
regardless of age and civil status shall be entitled to a special leave of two (2) months with full pay
based on her gross monthly compensation subject to existing laws, rules and regulations due to surgery
caused by gynecological disorders under the following terms and conditions:

1. She has rendered at least six (6) months continuous aggregate employment service for the last twelve
(12) months prior to surgery;

2. In the event that an extended leave is necessary, the female employee may use her earned leave
credits; and

3. This special leave shall be non-cumulative and non-convertible to cash.

“Gynecological disorders” refer to disorders that would require surgical procedures such as, but not
limited to, dilatation and curettage and those involving female reproductive organs such as the vagina,
cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent
physician. Gynecological surgeries shall also include hysterectomy, ovariectomy, and mastectomy.

• Is this leave similar to maternity leave?

No. This leave should be distinguished from maternity leave benefit, a separate and distinct benefit,
which may be availed of in case of childbirth, miscarriage or complete abortion.
A woman, therefore, may avail of this special leave benefit in case she undergoes surgery caused by
gynecological disorder and at the same time maternity benefit as these two leaves are not mutually
exclusive.

6. LEAVE FOR VICTIMS OF VIOLENCE AGAINST WOMEN AND CHILDREN (R.A. No. 9262)

• What is this kind of leave?

This special leave is granted to a woman employee who is a victim under this law. It is for a total of ten
(10) days of paid leave of absence, in addition to other paid leaves under the law. It is extendible when
the necessity arises as specified in the protection order. Its purpose is to enable the woman employee to
attend to the medical and legal concerns relative to said law. This leave is not convertible to cash.

• What is the requirement for its entitlement?

At any time during the application of any protection order, investigation, prosecution and/or trial of the
criminal case, a victim of Violence Against Women and their Children (VAWC) who is employed shall be
entitled to said paid leave of up to ten (10) days. The Punong Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, shall issue a certification at no cost to the woman that such an action
is pending, and this is all that is required for the employer to comply with the 10-day paid leave.

D. SPECIAL GROUPS OF EMPLOYEES

1. WOMEN

a. DISCRIMINATION

• What are acts of discrimination under the Labor Code?

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe
benefits, to a female employee as against a male employee, for work of equal value; and

(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.

• What are acts of discrimination under the Magna Carta of Women?

R.A. No. 9710, otherwise known as “The Magna Carta of Women,” is a comprehensive women’s human
rights law that seeks to eliminate discrimination against women by recognizing, protecting, fulfilling and
promoting the rights of Filipino women, especially those in marginalized sector.

Based on the definition of the term “Discrimination Against Women” in R.A. No. 9710, the following are
considered discriminatory acts:

1. Any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or
nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a
basis of equality of men and women, of human rights and fundamental freedoms in the political,
economic, social, cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative measure, or practice, that directly or
indirectly excludes or restricts women in the recognition and promotion of their rights and their access
to and enjoyment of opportunities, benefits or privileges;

3. A measure or practice of general application that fails to provide for mechanisms to offset or address
sex or gender-based disadvantages or limitations of women, as a result of which women are denied or
restricted in the recognition and protection of their rights and in their access to and enjoyment of
opportunities, benefits, or privileges; or women, more than men, are shown to have suffered the
greater adverse effects of those measures or practices; and

4. Discrimination compounded by or intersecting with other grounds, status, or condition, such as


ethnicity, age, poverty or religion. Additionally, women are guaranteed their right to decent work. The
State shall progressively realize and ensure decent work standards for women that involve the creation
of jobs of acceptable quality in conditions of freedom, equity, security and human dignity.

b. STIPULATION AGAINST MARRIAGE

• Is the prohibition against marriage valid?

Article 136 of the Labor Code considers as an unlawful act of the employer to require as a condition for
or continuation of employment that a woman employee shall not get married or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed resigned or separated. It is
likewise an unlawful act of the employer, to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.

• What are the relevant pieces of jurisprudence on marriage?

1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC. - It was 1 declared here that the
company policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination afforded all women
workers by our labor laws and by no less than the Constitution.

2. Star Paper Corp. v. Simbol.2 - The following policies were struck down as invalid for violating the
standard of reasonableness which is being followed in our jurisdiction, otherwise called the “Reasonable
Business Necessity Rule”:

“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree
of relationship, already employed by the company.

“2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one of
them should resign to preserve the policy stated above.”

3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.3 In this case, the
prohibition against marriage embodied in the following stipulation in the employment contract was held
as valid:

“10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose
a possible conflict of interest in management discretion, you agree to resign voluntarily from the
Company as a matter of Company policy.”

The Supreme Court ruled that the dismissal based on this stipulation in the employment contract is a
valid exercise of management prerogative. The prohibition against personal or marital relationships with
employees of competitor companies upon its employees was held reasonable under the circumstances
because relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, the employer only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.

c. PROHIBITED ACTS

• What are the prohibited acts against women under the Labor Code?

Article 137 of the Labor Code and its implementing rule consider unlawful the followings acts of the
employer:

1. To discharge any woman employed by him for the purpose of preventing such woman from enjoying
maternity leave, facilities and other benefits provided under the Labor Code;

2. To discharge such woman on account of her pregnancy, or while on leave or in confinement due to
her pregnancy;

3. To discharge or refuse the admission of such woman upon returning to her work for fear that she may
again be pregnant;

4. To discharge any woman or any other employee for having filed a complaint or having testified or
being about to testify under the Labor Code; or

5. To require as a condition for or continuation of employment that a woman employee shall not get
married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of marriage.

d. SEXUAL HARASSMENT

(ANTI-SEXUAL HARASSMENT ACT) (R.A. No. 7877)

• What are the 3 situations contemplated under this law?

R.A. No. 7877 declares sexual harassment unlawful only in three (3) situations, namely:

(1) employment;

(2) education; and

(3) training environment.

• Can sexual harassment be committed also against a man?

Yes. Sexual harassment is not the sole domain of women as men may also be subjected to the same
despicable act. Said law does not limit the victim of sexual harassment to women.
• Who are the persons who may be held liable for sexual harassment?

Work, education or training-related sexual harassment is committed by any employer, employee,


manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over another in a work or training or
education environment, demands, requests or otherwise requires any sexual favor from another,
regardless of whether the demand, request or requirement for submission is accepted by the object of
said act.

Further, any person who directs or induces another to commit any act of sexual harassment as defined
in the law, or who cooperates in the commission thereof by another without which it would not have
been committed, shall also be held liable under the law.

•How is sexual harassment committed in a work-related or employment environment?

In a work-related or employment environment, sexual harassment is committed when:

1. The sexual favor is made a condition in the hiring or in the employment, re-employment or continued
employment of said individual or in granting said individual favorable compensation, terms, conditions,
promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or
classifying the employee which in any way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;

2. The above acts would impair the employee’s rights or privileges under existing labor laws; or

3. The above acts would result in an intimidating, hostile, or offensive environment for the employee.

• What are duties of the employer in regard to sexual harassment complaints?

It is the duty of the employer to prevent or deter the commission of acts of sexual harassment and to
provide the procedures for the resolution or prosecution of acts of sexual harassment.

The employer or head of office is required to:

1. promulgate appropriate rules and regulations, in consultation with and jointly approved by the
employees or students or trainees, through their duly designated representatives, prescribing the
procedure for the investigation of sexual harassment cases and the administrative sanctions therefor.
The said rules and regulations issued shall include, among others, guidelines on proper decorum in the
workplace and educational or training institutions.

2. create a committee on decorum and investigation of cases on sexual harassment. The committee
shall conduct meetings, as the case may be, with officers and employees, teachers, instructors,
professors, coaches, trainors and students or trainees to increase understanding and prevent incidents
of sexual harassment. It shall also conduct the investigation of alleged cases constituting sexual
harassment.

2. MINORS

(Labor Code and R.A. No. 7678, R.A. No. 9231)

• Who is a “child” or “working child”?


For legal purposes, the term “child” refers to any person less than eighteen (18) years of age.

A “working child” refers to any child engaged as follows:

i. when the child is below eighteen (18) years of age, in work or economic activity that is not “child
labor;” and

ii. when the child below fifteen (15) years of age:

(a) in work where he/she is directly under the responsibility of his/her parents or legal guardian and
where only members of the child’s family are employed; or

(b) in “public entertainment or information” which refers to artistic, literary, and cultural performances
for television show, radio program, cinema or film, theater, commercial advertisement, public relations
activities or campaigns, print materials, internet, and other media.

• What are the working hours of a child?

The term “hours of work” includes (1) all time during which a child is required to be at a prescribed
workplace, and (2) all time during which a child is suffered or permitted to work. Rest periods of short
duration during working hours shall be counted as hours worked.

The following hours of work shall be observed for any child allowed to work under R.A. No. 9231 and its

Implementing Rules:

(a) For a child below 15 years of age, the hours of work shall not be more than twenty (20) hours per
week, provided that the work shall not be more than four (4) hours at any given day;

(b) For a child 15 years of age but below 18, the hours of work shall not be more than eight (8) hours a
day, and in no case beyond forty (40) hours a week; and

(c) No child below 15 years of age shall be allowed to work between eight (8) o’clock in the evening and
six (6) o’clock in the morning of the following day and no child 15 years of age but below 18 shall be
allowed to work between ten (10) o’clock in the evening and six (6) o’clock in the morning of the
following day.

• What is the prohibition of employing minors in certain undertakings and advertisements?

No child below 18 years of age is allowed to be employed as a model in any advertisement directly or
indirectly promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products, gambling or
any form of violence or pornography.

3. KASAMBAHAY (FORMERLY CALLED “HOUSEHELPERS”)

(R.A. No. 10361, otherwise known as “Domestic Workers Act” or “Batas Kasambahay” Approved on
January 18, 2013).

• What is the coverage of the Kasambahay Law?


R.A. No. 10361 applies to all domestic workers employed and working within the country. It shall cover
all parties to an employment contract for the services of the following Kasambahay, whether on a live-in
or live-out arrangement, such as, but not limited to:

(a) General househelp;

(b) Yaya;

(c) Cook;

(d) Gardener;

(e) Laundry person; or

(f) Any person who regularly performs domestic work in one household on an occupational basis.

• Who are excluded from its coverage?

The following are not covered:

(a) Service providers;

(b) Family drivers;

(c) Children under foster family arrangement; and

(d) Any other person who performs work occasionally or sporadically and not on an occupational basis.

• Who is a domestic worker or kasambahay?

“Domestic worker” or “kasambahay” refers to any person engaged in domestic work within an
employment relationship, whether on a live-in or live-out arrangement, such as, but not limited to,
general househelp, "yaya", cook, gardener, or laundry person, but shall exclude service providers, family
drivers, children who are under foster family arrangement, or any person who performs domestic work
only occasionally or sporadically and not on an occupational basis.

This term shall not include children who are under foster family arrangement which refers to children
who are living with a family or household of relative/s and are provided access to education and given
an allowance incidental to education, I.e., "baon", transportation, school projects, and school activities.
Because of these new terminologies prescribed in the law, the use of the term “househelper” may no
longer be legally correct.

• Is the employment contract required to be in writing?

Yes. The employment contract must be in writing and should contain the conditions set by law.

• What are the rights and privileges of a kasambahay?

The rights and privileges of the Kasambahay are as follows:

(a) Minimum wage;

(b) Other mandatory benefits, such as the daily and weekly rest periods, service incentive leave, and 13th
month pay;
(c) Freedom from employers' interference in the disposal of wages;

(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;

(e) Standard of treatment;

(f) Board, lodging and medical attendance;

(g) Right to privacy;

(h) Access to outside communication;

(i) Access to education and training;

(j) Right to form, join, or assist labor organization;

(k) Right to be provided a copy of the employment contract;

(I) Right to certificate of employment;

(m) Right to terminate the employment; and

(n) Right to exercise their own religious beliefs and cultural practices.

The foregoing rights and privileges are discussed below.

• What is the minimum wage of kasambahay?

Under the Kasambahay Law, the following are the minimum wages of kasambahays:

(a) P2,500.00 a month for those employed in the National Capital Region (NCR);

(b) P2,000.00 a month for those employed in chartered cities and first class municipalities; and

(c) P1,500.00 a month for those employed in other municipalities.

• Are the minimum wages subject to review by the RTWPBs or Regional Boards?

Yes. After one (1) year from the effectivity of the Kasambahay Law, and periodically thereafter, the

Regional Tripartite and Productivity Wage Boards (RTPWBs) shall review, and if proper, determine and
adjust the minimum wage rates of domestic workers.”

• What are some important principles on wage of kasambahay?

• Frequency of payment of wages. - The wages of the Kasambahay shall be paid at least once a month.
This is so because the minimum wage rates are on a monthly basis.

• The equivalent minimum daily wage rate of the Kasambahay shall be determined by dividing the
applicable minimum monthly rate by thirty (30) days.

• The amount of the minimum wage depends on the geographical area where the Kasambahay works.

• Payment of wages:
1. To whom paid. - It should be made on time directly to the Kasambahay to whom they are due in cash
at least once a month.

2. Deductions, prohibition; when allowed. - The employer, unless allowed by the Kasambahay through
a written consent, shall make no deductions from the wages other than that which is mandated by law
such as for SSS, PhilHealth or Pag-IBIG contributions.

3. Mode of payment. - It should be paid in cash and not by means of promissory notes, vouchers,
coupons, tokens, tickets, chits, or any object other than the cash wage as provided for under this Act.

4. Pay slip. – The employer shall at all times provide the Kasambahay with a copy of the pay slip
containing the amount paid in cash every pay day, and indicating all deductions made, if any. The copies
of the pay slip shall be kept by the employer for a period of three (3) years.

5. Prohibition on Interference in the disposal of wages. – It shall be unlawful for the employer to
interfere with the freedom of the Kasambahay in the disposition of his/her wages, such as:

(a) Forcing, compelling, or obliging the Kasambahay to purchase merchandise, commodities or other
properties from the employer or from any other person; or

(b) Making use of any store or services of such employer or any other person.

6. Prohibition against withholding of wages. – It shall be unlawful for an employer, directly or indirectly,
to withhold the wages of the Kasambahay. If the Kasambahay leaves without any justifiable reason, any
unpaid salary for a period not exceeding fifteen (15) days shall be forfeited. Likewise, the employer shall
not induce the Kasambahay to give up any part of the wages by force, stealth, intimidation, threat or by
any other means whatsoever.

• What are important terms and conditions of employment of kasambahay?

The following is a rundown of the basic terms and conditions that should be observed in the
employment of a Kasambahay:

a. Employable age. - Children whose age is below 15 years are absolutely prohibited to work as
Kasambahay.

b. Normal daily hours of work. – Because R.A. No. 10361 does not contain any provision on the number
of normal hours of work that a Kasambahay should render in a day but merely prescribes said daily rest
period of eight (8) hours per day, it may be concluded that the Kasambahay should work for at least a
total of sixteen (16) hours per day as normal hours of work. However, it must be noted that the Labor
Code does not contain any provision on the normal hours of work of househelpers. Article 1695 of the
Civil Code, however, specifically provides that househelpers shall not be required to work for more than
ten (10) hours a day. Since R.A. No. 10361, a special law, is the most recent piece of legislation, it should
prevail over the general provision of the Civil Code.

c. Normal daily hours of work for working child-kasambahay is eight (8) hours per day.

d. 13th month pay. - The Kasambahay who has rendered at least one (1) month of service is entitled to
a 13th month pay which shall not be less than one-twelfth (1/12) of his/her total basic salary earned in a
calendar year. The 13th month pay shall be paid not later than December 24 of every year or upon
separation from employment.

e. Daily rest period. – The Kasambahay shall be entitled to an aggregate daily rest period of eight (8)
hours.

f.Weekly rest period. - The Kasambahay shall be entitled to at least twenty-four (24) consecutive hours
of rest in a week. The employer and the Kasambahay shall agree in writing on the schedule of the
weekly rest day but the preference of the Kasambahay, when based on religious grounds, shall be
respected.

g. Service incentive leave. - A Kasambahay who has rendered at least one (1) year of service shall be
entitled to an annual service incentive leave of at least five (5) days with pay. Any unused portion of said
annual leave shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be
convertible to cash.

h. Social security benefits. - A Kasambahay who has rendered at least one (1) month of service shall be
covered by the Social Security System (SSS), Employees Compensation Commission (ECC), Philippine
Health Insurance Corporation (PhilHealth), and Home Development Mutual Fund or Pag-IBIG, and shall
be entitled to all the benefits in accordance with their respective policies, laws, rules and regulations.

i. Obligation of employer to register and enroll with SSS, PhilHealth, and Pag-IBIG. - As employer of the
Kasambahay, he/she shall register himself/herself with, and enroll the latter as his/her employee to the
SSS, PhilHealth, and Pag-IBIG.

j. Deposits for loss or damage. - It shall be unlawful for the employer or any other person to require a
Kasambahay to make deposits from which deductions shall be made for the reimbursement of loss or
damage to tools, materials, furniture and equipment in the household.

k. Standard of treatment. - The Kasambahay shall be treated with respect by the employer or any
member of the household. He/she shall not be subjected to any kind of abuse, including repeated verbal
or psychological, nor be inflicted with any form of physical violence or harassment or any act tending to
degrade his/her dignity, as defined under the Revised Penal Code, Violence Against Women and their
Children Law (R.A. No. 9262), Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act (R.A. No. 7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003
(R.A. No. 9208), and other applicable laws.

l. Board, lodging and medical attendance. - The employer shall provide for the basic necessities of the
Kasambahay, to include the following:

(1) At least three (3) adequate meals a day, taking into consideration the Kasambahay's religious beliefs
and cultural practices;

(2) Humane sleeping condition that respects the person's privacy for live-in arrangement; and

(3) Appropriate rest and medical assistance in the form of first-aid medicines, in case of illnesses and
injuries sustained during service without loss of benefits.

m. Opportunities for education and training. - The Kasambahay shall be afforded the opportunity to
finish basic education, which shall consist of elementary and secondary education. He/she may be
allowed access to alternative learning systems and, as far as practicable, higher education or technical
vocational education and training.

n. Membership in labor organization. - The Kasambahay shall have the right to join a labor organization
of his/her own choosing for purposes of mutual aid and collective negotiation.

r. Health and safety. - The employer shall safeguard the safety and health of the Kasambahay in
accordance with the standards which the DOLE shall develop through the Bureau of Working Conditions
(BWC) and the Occupational Safety and Health Center (OSHC) within six (6) months from the
promulgation of this IRR.

The said standards shall take into account the peculiar nature of domestic work.

s. Prohibition on debt bondage. - It shall be unlawful for the employer or any person acting on his/her
behalf to place the Kasambahay under debt bondage. “Debt bondage” refers to the rendering of service
by the Kasambahay as security or payment for a debt where the length and nature of service is not
clearly defined or when the value of the service is not reasonably applied in the payment of the debt.

t. Assignment to non-household work. - The employer shall not assign the Kasambahay to work,
whether in full or part-time, in a commercial, industrial or agricultural enterprise at a wage rate lower
than that provided for agricultural or non-agricultural workers.

If so assigned, the Kasambahay will no longer be treated as such but as a regular employee of the
establishment.

• What are the rules on termination of Kasambahay?

a. Pre-termination of employment. – The following rules shall be observed:

(1) In case the duration of employment is specified in the contract, the Kasambahay and the employer
may mutually agree upon notice to terminate the contract of employment before the expiration of its
term.

(2) In case the duration is not determined by stipulation or by nature of service, the employer or the
Kasambahay may give notice to end the employment relationship five (5) days before the intended
termination of employment.

b. Termination of employment initiated by the Kasambahay. - The Kasambahay may terminate the
employment relationship at any time before the expiration of the contract for any of the following
causes:

(1) Verbal or emotional abuse of the Kasambahay by the employer or any member of the household;

(2) Inhuman treatment including physical abuse of the Kasambahay by the employer or any member of
the household;

(3) Commission of a crime or offense against the Kasambahay by the employer or any member of the
household;

(4) Violation by the employer of the terms and conditions of the employment contract and other
standards set forth in the law;
(5) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the
household; and

(6) Other causes analogous to the foregoing.

If the Kasambahay leaves without cause, any unpaid salary due, not exceeding the equivalent of 15 days’
work, shall be forfeited. In addition, the employer may recover from the Kasambahay deployment
expenses, if any, if the services have been terminated within six (6) months from employment.

c. Termination of employment initiated by the employer. - An employer may terminate the


employment of the Kasambahay at any time before the expiration of the contract for any of the
following causes:

(1) Misconduct or willful disobedience by the Kasambahay of the lawful order of the employer in
connection with the former's work;

(2) Gross or habitual neglect or inefficiency by the Kasambahay in the performance of duties;

(3) Fraud or willful breach of the trust reposed by the employer on the Kasambahay;

(4) Commission of a crime or offense by the Kasambahay against the person of the employer or any
immediate member of the employer's family;

(5) Violation by the Kasambahay of the terms and conditions of the employment contract and other
standards set forth under the law;

(6) Any disease prejudicial to the health of the Kasambahay, the employer, or members of the
household; and

(7) Other causes analogous to the foregoing. If the employer dismissed the Kasambahay for reasons
other than the above, he/she shall pay the Kasambahay the earned compensation plus indemnity in the
amount equivalent to fifteen (15) days’ work.

d. Invalid ground for termination. - Pregnancy and marriage of the Kasambahay are not valid grounds
for termination of employment.

e. Employment Certification. - Upon the termination of employment, the employer shall issue the
Kasambahay, within five (5) days from request, a certificate of employment indicating the nature,
duration of the service and work description.

4. HOMEWORKERS

• What are important terms that should be noted in employment of homeworkers?

a. “Industrial homeworker.” – It refers to a worker who is engaged in industrial homework.

b. “Industrial homework.” – It refers to a system of production under which work for an employer or
contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by
the employer or contractor. It differs from regular factory production principally in that, it is a
decentralized form of production where there is ordinarily very little supervision or regulation of
methods of work.
c. “Home.” - It means any nook, house, apartment or other premises used regularly, in whole or in part,
as a dwelling place, except those situated within the premises or compound of an employer,
contractor/subcontractor and the work performed therein is under the active or personal supervision by
or for the latter.

d. “Field personnel.” – It refers to a non-agricultural employee who regularly performs his duties away
from the principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.

e. “Employer.” – It refers to any natural or artificial person who, for his own account or benefit, or on
behalf of any person residing outside the Philippines, directly or indirectly, or through any employee,
agent, contractor, subcontractor or any other person:

1. delivers or causes to be delivered any goods, articles or materials to be processed or fabricated in or


about a home and thereafter to be returned or to be disposed of or distributed in accordance with his
direction; or

2. sells any goods, articles or materials for the purpose of having such goods or articles processed in or
about a home and then repurchases them himself or through another after such processing.

f. “Contractor” or “subcontractor.” - It refers to any person who, for the account or benefit of an
employer, delivers or causes to be delivered to a homeworker, goods or articles to be processed in or
about his home and thereafter to be returned, disposed of or distributed in accordance with the
direction of the employer.

g. “Processing.” - It refers to manufacturing, fabricating, finishing, repairing, altering, packing, wrapping


or handling in any way connected with the production or preparation of an article or material.

•How is homework paid?

Immediately upon receipt of the finished goods or articles, the employer is required to pay the
homeworker or the contractor or subcontractor, as the case may be, for the work performed less the
corresponding homeworker’s share of SSS, PhilHealth and ECC premium contributions which should be
remitted by the contractor or subcontractor or employer to the SSS with the employer’s share.
However, where payment is made to a contractor or subcontractor, the homeworker should likewise be
paid immediately after the goods or articles have been collected from the workers.

•What are prohibited homeworks?

No homework shall be performed on the following:

1. Explosives, fireworks and articles of like character;

2. Drugs and poisons; and

3. Other articles, the processing of which requires exposure to toxic substances.

5 NIGHT WORKERS (R.A. NO. 10151)

• What is the new law on night work?


R.A. No. 10151 [JUNE 21, 2011].

a. Significance of the law.

R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and Article 131 [Exceptions] of the
Labor Code and accordingly renumbered the same articles. Additionally, it has inserted a new Chapter V
of Title III of Book III of the Labor Code entitled “Employment of Night Workers” which addresses the
issue on nightwork of all employees, including women workers. Chapter V covers newly renumbered
Articles 154 up to 161 of the Labor Code.

b. Coverage of the law.

The law on nightwork applies not only to women but to all persons, who shall be employed or
permitted or suffered to work at night, except those employed in agriculture, stock raising, fishing,
maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours,
including the interval from midnight to five o'clock in the morning, to be determined by the DOLE
Secretary, after consulting the workers’ representatives/labor organizations and employers.

c. Night worker, meaning.

"Night worker" means any employed person whose work covers the period from 10 o'clock in the
evening to 6 o'clock the following morning provided that the worker performs no less than seven (7)
consecutive hours of work.

d. Mandatory facilities.

(1) Suitable first-aid and emergency facilities as provided for under Rule 1960 (Occupational Health
Services) of the Occupational Safety and Health Standards (OSHS);

(2) Lactation station in required companies pursuant to R.A. No. 10028 (The Expanded Breastfeeding
Promotion Act of 2009);

(3) Separate toilet facilities for men and women;

(4) Facility for eating with potable drinking water; and

(5) Facilities for transportation and/or properly ventilated temporary sleeping or resting quarters,
separate for male and female workers, shall be provided except where any of the following
circumstances is present:

i. Where there is an existing company guideline, practice or policy, CBA or any similar agreement
between management and workers providing for an equivalent or superior benefit; or

ii. Where the start or end of the night work does not fall within 12 midnight to 5 o'clock in the morning;
or

iii. Where the workplace is located in an area that is accessible 24 hours to public transportation;

iv. Where the number of employees does not exceed a specified number as may be provided for by the
DOLE Secretary in subsequent issuances.

e. Maternity leave benefits under existing laws cannot be diminished.


MAJOR TOPIC 4

POST EMPLOYMENT

A. EMPLOYER-EMPLOYEE RELATIONSHIP

1. TESTS TO DETERMINE EMPLOYER-EMPLOYEE RELATIONSHIP

Four-Fold Test

• What is the 4-fold test of existence of employer-employee relationship?

1. Selection and engagement of the employee;

2. Payment of wages or salaries;

3. Exercise of the power of dismissal; or

4. Exercise of the power to control the employee’s conduct.

These tests, however, are not fool-proof as they admit of exceptions.

• What is the control test?

The 4th test above, the control test, is the controlling test which means that the employer controls or
has reserved the right to control the employee not only as to the result of the work to be done but also
as to the means and methods by which the same is to be accomplished.

The three (3) terms: (1) means, (2) methods and (3) results are the critical elements of the control test,
thus:

Situation 1: If the employer controls the means and methods of performing the job, work or service,
including the results thereof, then the arrangement is one of employer-employee relationship.

Situation 3: If the so-called employer does not control such means and methods but is only interested in
the results thereof, then the arrangement is called “independent job contracting” or
“contractualization”, the party controlling the means and methods is called the independent contractor
and the party interested only in the results is called the principal/client/indirect employer/statutory
employer.

Two-Tiered Test

• What is the 2-tiered test of employment relationship?

The two-tiered test enunciated in Francisco v. NLRC, is composed of:

(1) The putative employer’s power to control the employee with respect to the means and methods by
which the work is to be accomplished [control test]; and

(2) The underlying economic realities of the activity or relationship [broader economic reality test].

Employment relationship under the control test is determined under the same concept as discussed
above, that is, by asking whether “the person for whom the services are performed reserves the right to
control not only the end to be achieved but also the manner and means to be used in reaching such
end.”

Under the economic reality test, the proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of business.

These 2-tiered test applies to cases where there are several parties alleged to be employers of one
individual. The determinant factor is economic dependency of such individual. In other words, under the
economic reality test, the question to ask is - among the parties alleged to be the employer, to whom is
the individual economically dependent?

Following the broader economic reality test, the Supreme Court found petitioner in Orozco v. The Fifth
Division of the Hon. CA, who is a columnist in the Philippine Daily Inquirer (PDI), not an employee of PDI
but an independent contractor. Thus:

“Petitioner’s main occupation is not as a columnist for respondent but as a women’s rights advocate
working in various women’s organizations. Likewise, she herself admits that she also contributes articles
to other publications. Thus, it cannot be said that petitioner was dependent on respondent PDI for her
continued employment in respondent’s line of business.

“The inevitable conclusion is that petitioner was not respondent PDI’s employee but an independent
contractor, engaged to do independent work.”

• Is it necessary to have a written contract of employment in order to establish employer-employee


relationship?

No. It may be an oral or written contract. A written contract is not necessary for the creation and validity
of the relationship.

The only exception is in the case of Kasambahay where, under the Kasambahay Law, it is required that
the contract of employment should be in writing.

2. KINDS OF EMPLOYMENT

• What is the general classification of employment?

There are five (5) classifications of employment:

(a) Regular employees referring to those who have been “engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer”;

(b) Project employees referring to those “whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee”;

(c) Seasonal employees referring to those who work or perform services which are seasonal in nature,
and the employment is for the duration of the season;

(d) Casual employees referring to those who are not regular, project, or seasonal employees;
(e) Fixed-term employees whose term is freely and voluntarily determined by the employer and the
employee. NOTE: This is not provided in the Labor Code.

• What is the default employment?

The default employment is regular employment. This means that generally, in the absence of any
specific agreement to the contrary, the employer-employee relationship is deemed to be regular in
nature. Therefore, in order to make the employment some other kind of employment, such as project,
seasonal, casual, fixed-term or probationary, there must be a written contract of employment
stipulating the specific kind of employment.

So, therefore, if there is no written employment contract, the employment should be deemed REGULAR.

However, even if there is a written employment contract, if it is not clear that the parties have
stipulated such other kinds of employment (such as project, seasonal, casual, fixed-term or
probationary), the employment relationship will still be considered REGULAR employment which, as
earlier stated, is the default employment.

a. PROBATIONARY EMPLOYMENT

• Is the period of 6 months in the law on probationary employment (Article 296 [281], LC) the
minimum or maximum period?

The answer is it is neither the minimum nor the maximum period of probationary employment. The 6-
month period is mentioned in the law for purposes of setting the standard period. Proof that it is not the
maximum is the case of Buiser v. Leogardo where the probationary period of 18 months was considered
reasonable. In other words, probationary period may be for a day, a week, a month or several months,
depending on the reasonable discretion of management.

• How is probationary period, say, of 6 months computed?

The 6-month probationary period should be reckoned “from the date of appointment up to the same
calendar date of the 6th month following.”

• May probationary period be extended?

Yes, but only upon the mutual agreement in writing by the employer and the probationary employee.

• What is the effect of allowing a probationary employee to work beyond the probationary period?

He is considered a regular employee.

• What is the effect if there is no written contract providing for probationary employment?

If there is no written contract, the employee is considered a regular employee from day one of his
employment. And even if there is one, he is deemed regular if there is no stipulation on probationary
period.

• What are the grounds to terminate probationary employment?

Under Article 281, a probationary employee may be terminated only on three (3) grounds, to wit:
1. For a just cause; or

2. For authorized cause; or

3. When the probationary employee fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the start of the employment.

• Is procedural due process required in termination of probationary employment?

Yes, but only in the case of Numbers 1 and 2 above.

However, procedural due process is not required if the 3rd ground above is invoked, except when the
employer prescribes in its company rules, a procedure for such termination, in which case, such should
be followed in accordance with the Abbott Laboratories doctrine (Contractual Due Process). Generally,
in the case of No. 3 above, the probationary employment is terminated by merely serving a notice of
termination setting forth the results of the performance evaluation conducted on the employee which
forms as the basis for deciding to terminate the probationary employment.

• When should termination of probationary employment be made?

Termination to be valid must be done prior to lapse of probationary period. Termination a few days
after lapse of probationary period cannot be done without due process as he has already become a
regular employee by that time.

b. REGULAR EMPLOYMENT

• How does one become a regular employee?

Under the Labor Code, regular employment may be attained in either of three (3) ways, namely:

1. By nature of work. - The employment is deemed regular when the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade of the
employer.

2. By period of service. - The employment is reckoned as regular when the employee has rendered at
least one (1) year of service, whether such service is continuous or broken, with respect to the activity in
which he is employed and his employment shall continue while such activity exists.

3. By probationary employment. - The employment is considered regular when the employee is allowed
to work after a probationary period.

• Is the manner or method of paying wage material in determining regularity of employment?

No. The manner and method of payment of wage or salary is immaterial to the issue of whether the
employee is regular or not. So, the fact that an employee is paid on a daily basis or monthly basis is
inconsequential on the regularity issue.

c. PROJECT EMPLOYMENT

• What is the litmus test of project employment?


The litmus test of project employment, as distinguished from regular employment, is whether or not the
project employees were assigned to carry out a specific project or undertaking, the duration and scope
of which were specified at the time the employees were engaged for that project.

A true project employee should be assigned to a project which begins and ends at determined or
determinable times and be informed thereof at the time of hiring.

• What are the indicators of project employment?

Either one or more of the following circumstances, among others, may be considered as indicator/s that
an employee is a project employee:

1. The duration of the specific/identified undertaking for which the worker is engaged is reasonably
determinable.

2. Such duration, as well as the specific work/service to be performed, are defined in an employment
agreement and is made clear to the employee at the time of hiring.

3. The work/service performed by the employee is in connection with the particular project or
undertaking for which he is engaged.

4. The employee, while not employed and awaiting engagement, is free to offer his services to any
other employer.

5. A report of the termination of employment in the particular project/undertaking is submitted to the


DOLE Regional Office having jurisdiction over the workplace, within thirty (30) days following the date of
his separation from work.

6. An undertaking in the employment contract by the employer to pay completion bonus to the project
employee as practiced by most construction companies.

• Is length of service material in determining validity of project employment? No. Length of service is
not a controlling determinant of employment tenure.

• What are some principles on project employment?

1. Project employees should be informed of their status as such at inception of the employment
relationship.

2. There must be a written contract of project employment stating the duration of the project
employment as well as the particular work or service to be performed. A written project employment
contract is an indispensable requirement.

3. Intervals in employment contracts indicate project employment.

4. Continuous, as opposed to intermittent, rehiring shows that employee is regular.

5. “Project-to-project” basis of employment is valid.

On termination of project employment.

1. Project employees enjoy security of tenure only during the term of their project employment.
2. Project employees have presumably become regular employees if they are allowed to work beyond
the completion of the project or any phase thereof to which they were assigned or after the “day
certain” which they and their employer have mutually agreed for its completion. Having become regular
employees, they can no longer be terminated on the basis of the completion of the project or any phase
thereof to which they were deployed.

d. SEASONAL EMPLOYMENT

• Can a seasonal employee become a regular seasonal employee?

Yes, provided the following requisites are complied with:

1. The seasonal employee should perform work or services that are seasonal in nature; and

2. They must have also been employed for more than one (1) season.

• Can a regular seasonal worker file an illegal dismissal case in the event he is not hired for the next
season?

Yes. The reason is, being a regular seasonal employee, the employer should re-hire him in the next
season.

During off-season, his employment is deemed suspended and he is considered as being on leave of
absence without pay.

e. CASUAL EMPLOYMENT

• What is the most important distinguishing feature of casual employment?

The most important distinction is that the work or job for which he was hired is merely incidental to the
principal business of the employer and such work or job is for a definite period made known to the
employee at the time of engagement.

Capule v. NLRC, Yakult Philippines, Inc., G.R. No. 90653, Nov. 12, 1990.

Private respondent company is engaged in the manufacture of cultured milk which is sold under the
brand name “Yakult.” Petitioners were hired to cut cogon grass and weeds at the back of the factory
building used by private respondents. They were not required to work on fixed schedule and they
worked on any day of the week on their own discretion and convenience. They were held to be casual
employees because cutting cogon grass and weeds is but incidental to the principal business of the
company.

• When does a casual employee become regular?

Casual employee becomes regular after one year of service by operation of law. The one (1) year period
should be reckoned from the hiring date. Repeated rehiring of a casual employee makes him a regular
employee.

f. FIXED-TERM EMPLOYMENT

• What are the requisites in order for fixed-term employment to be valid?


The two (2) requisites or criteria for the validity of a fixed-term contract of employment are as follows:

1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or

2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the latter.

• Is fixed-term employment valid if the job is directly related to the principal business of the employer?

Yes. Fixed-term employment is the only exception to the rule that one becomes regular if he is made to
perform activities directly related to the principal business of the employer (Regularity by virtue of
nature of work)

Thus, it was ruled in Philippine Village Hotel v. NLRC, that the fact that private 1 respondents were
required to render services necessary or desirable in the operation of petitioner’s business for the
duration of the one-month dryrun operation period, did not in any way impair the validity of their
contracts of employment which specifically stipulated that their employment was only for one (1)
month.

▪ When does a fixed-term employee become regular?

1.When he is allowed to work beyond the agreed fixed term.

2.When there are successive renewals of fixed-period contracts.

NOTE: The practice of hiring of employees on a uniformly fixed 5-month basis and replacing them upon
the expiration of their contracts with other workers with the same employment status circumvents their
right to security of tenure.

3. JOB CONTRACTING

▪ What is the latest Implementing Rules on contractualization issued by the DOLE Secretary?

Department Order No. 174, Series of 2017 (issued on March 16, 2017) – Rules Implementing Articles
106 to 109 of the Labor Code, as Amended. Shortly after its issuance, Department Circular No. 01,
Series of 2017 (Issued on June 09, 2017) was issued by the DOLE Secretary to clarify the inapplicability
of Department Order No. 174, Series of 2017 to BPO, KPO, LPO, IT Infrastructure Outsourcing,
Application Development, Hardware and/ or Software Support, Medical Transcription, Animation
Services, Back Office Operations/Support, and CONSTRUCTION INDUSTRY.

d. TRILATERAL RELATIONSHIP IN JOB CONTRACTING

▪ What is meant by trilateral relationship?

As distinguished from employment relationship which is “bilateral” in nature, involving as it does only
two (2) parties, namely: (1) the employer, and (2) the employee, in legitimate job contracting, it is
“trilateral” in character, there being three (3) parties involved, to wit:
1. The principal who farms out a job, work or service to a contractor;

2. The contractor who has the capacity to independently undertake the performance of the job, work or
service; and

3. The contractor’s workers engaged by the contractor and farmed out to the principal to accomplish
the job, work or service.

▪ What are the contracts involved in this trilateral relationship?

Only two (2) contracts are involved, namely:

1) Service Agreement between the principal and the contractor wherein the obligation arising
therefrom is civil in nature and thus cognizable by the regular courts.

2) Employment contract between the contractor and its workers supplied to the principal.

▪ Is there any employment relationship and/or contractual relationship between the principal and
the contractor’s workers farmed out to the principal?

None. There is no employment relationship nor any form of contractual relationship of whatsoever
nature between the principal and the workers supplied by the contractor. Hence, the principal can ask
the contractor to remove any of the latter’s employees assigned or farmed out to it anytime without
need to observe due process.

e. EFFECTS OF LABOR-ONLY CONTRACTING

LEGITIMATE JOB CONTRACTING.

▪ What are the elements of legitimate job contracting?

The following four (4) words are very important: CONTROL, MANNER & METHOD and RESULT in
determining the elements of legitimate job contracting arrangement.

Here are the elements based on law, Department Order No. 174 and jurisprudence:

(a) The contractor is engaged in a distinct and independent business and undertakes to perform the job
or work on its own responsibility, according to its own manner and method;

(b) The contractor has substantial capital to carry out the job farmed out by the principal on his own
account, manner and method, investment in the form of tools, equipment, machinery and
supervision;

(c) In performing the work farmed out, the contractor is free from the control and/or direction of the
principal in all matters connected with the performance of the work EXCEPT as to the result thereto;
and

(d) The Service Agreement ensures compliance with all the rights and benefits for all the employees of
the contractor under labor laws.

Absence of any of the foregoing requisites makes it a labor-only contracting arrangement.


Therefore:

➢ If the first party has control over the manner and method of performing the job or work, including
its result, and the second party who supplied the workers to the first party to perform the job or work
has no such control over such manner and method, then the first party is the direct employer of the
workers supplied by the second party to perform the job or work and such second party shall not be
considered as a legitimate “contractor” but a “labor-only contractor.”

➢ Contrarily, if the first party has NO control over the manner and method of performing the job or
work as such control thereover is reposed on the second party, and the first party’s interest pertains
only to the result of the performance of the job or work, then there exists here a legitimate job
contracting arrangement where the first party is considered the principal and the second party, the
contractor.

Example:

Principal – ABC University

Contractor – XYZ Security Agency

Contractor’s Employees – Security Guards assigned by Contractor to Principal

Scenario 1: If it is ABC University that controls the manner and method of performing the job or work of
XYZ Security Agency’s security guards (such as when it is ABC University, that (1) sets the schedule of the
Security Guards; (2) makes the assignments to their respective posts; (3) monitors their
attendance/absences; (3) supervises their every action and performance of their duties, and the like),
then, ABC University is the direct employer of the guards and the XYZ Security Agency is but a laboronly
contractor.

Scenario 2: If it is ABC Security Agency which controls such manner and method of performing the job
or work of the Security Guards it assigned to ABC University, and ABC University is interested only on the
result of the arrangement (such as the safety of the students, teachers and employees, safeguard of
school property and premises, peace and tranquility inside its campus, etc.), then, there is here
legitimate job contracting arrangement where ABC University is the principal, XYZ Security Agency is the
contractor, and the Security Guards, the contractor’s employees.

• What is the amount of SUBSTANTIAL CAPITAL required under the new Rules?

According to Department Order No. 174, Series of 2017 (issued on March 16, 2017), the following
consists of substantial capital:

1. In the case of corporations, partnerships or cooperatives – paid-up capital stocks/shares of at least


P5 Million; or

2. In the case of single proprietorship - a net worth of at least P5 Million.

• “Substantial capital” and “investment in tools, etc.” are two separate requirements.

“Substantial capital” and “investment in tools, equipment, implements, machineries and work premises”
should be treated as two (2) distinct and separate requirements in determining whether there is
legitimate job contracting arrangement. It is enough that only one of these two requisites is complied
with to make the job contracting arrangement legitimate.

• May individuals engage in legitimate job contracting?

Yes. Legitimate job contracting may not only be engaged by corporation, partnership or single
proprietorship. Individuals may become legitimate job contractors themselves for as long as they have
SPECIAL SKILLS or TALENTS.

• Are individuals engaged as legitimate job contractors required to fulfill the requisites of legitimate
job contracting as afore-described?

NO. They need not be registered as independent contractors with DOLE; they need not have substantial
capital (such as the P5 Million stated above). All that they are required is to have their tools consisting of
SPECIAL SKILL, TALENT or EXPERTISE.

• What are examples of individuals as independent contractors?

1. Sonza v. ABS-CBN Broadcasting Corporation - TV and radio talents and others with 1 special talents
and skills are not employees but legitimate independent contractors.

2. Orozco v. The Fifth Division of the Honorable Court of Appeals2 - A newspaper columnist is not an
employee but an independent contractor of the newspaper publishing the column.

3. Jose Mel Bernarte v. Philippine Basketball Association3 - Basketball or soccer referee or umpire, an
independent contractor.

4. Semblante and Pilar v. CA, Gallera de Mandaue, et al.4 - Cockpit masiador and sentenciador are
independent contractors.

5. Escasinas v. Shangri-la’s Mactan Island Resort5 - A doctor may be engaged as an independent


contractor.

LABOR-ONLY CONTRACTING.

• Is labor-only contracting allowed under the law and issuances?

NO, it is absolutely prohibited.

• What are the elements of labor-only contracting?

Based on law, Department Order No. 174 and jurisprudence, the following are the elements:

(a) The contractor does not have either (i) SUBSTANTIAL CAPITAL or (ii) INVESTMENTS in the form of
tools, equipment, machineries, supervision, work premises, among others, AND the contractor's
employees recruited and placed are performing activities which are directly related to the main
business operation of the principal; or

(b) The contractor does not exercise the right to control over the performance of the work of the
employee.

NOTE: - There is labor-only contracting even if only one of the two (2) elements above is present.
- An unregistered contractor is presumed to be a labor-only contractor. Registration should be made
with the DOLE.

• What are the EFFECTS of labor-only contracting?

1. The labor-only contractor will be treated as the agent or intermediary of the principal. Since the act
of an agent is the act of the principal, representations made by the labor-only contractor to the
employees will bind the principal.

2. The principal will become the direct employer as if it directly employed the workers supplied by the
labor-only contractor to undertake the contracted job or service. The principal will be responsible to
them for all their entitlements and benefits under labor laws.

3. The principal and the labor-only contractor will be solidarily treated as the direct employer.

• What are the distinctions between legitimate job contracting and labor-only contracting?

The chief distinctions between legitimate job contracting, on the one hand, and the prohibited labor-
only contracting, on the other, may be summed up as follows:

1. In the former, no employer-employee relationship exists between the contractual employees of the
job contractor and the principal; while in the latter, an employer-employee relationship is created by
law between the principal and the employees supplied by the labor-only contractor.

2. In the former, the principal is considered only an “indirect employer”; while in the latter, the principal
is considered the “direct employer” of the employees supplied by the labor-only contractor.

3. In the former, the solidary obligation of the principal and the legitimate job contractor is only for a
limited purpose, that is, to pay the wages of the contractor’s employees supplied to the principal. Other
than this obligation of paying the wages, the principal is not responsible for any claim made by the
contractor’s employees; while in the latter, the principal becomes solidarily liable with the labor only
contractor to the latter’s employees in the same manner and extent that the principal is liable to
employees directly hired by him/her.

• What are OTHER ILLICIT FORMS OF EMPLOYMENT IN D.O. 174, Series of 2017, (IN ADDITION TO
LABOR-ONLY CONTRACTING)?

The following are considered as such (formerly called “PROHIBITIONS” under previous Department
Orders):

a) When the principal farms out work to a “Cabo” which term refers to a person or group of persons or
to a labor group which, under the guise of a labor organization, cooperative or any entity, supplies
workers to an employer, with or without any monetary or other consideration, whether in the capacity
of an agent of the employer or as an ostensible independent contractor.

b) Contracting out of job or work through an “In-house Agency” which term refers to a contractor which
is owned, managed, or controlled, directly or indirectly, by the principal or one where the principal
owns/represents any share of stock, and which operates solely or mainly for the principal.

c) Contracting out of job or work through an “In-house Cooperative” which merely supplies workers to
the principal. An “In-house Cooperative” refers to a cooperative which is managed, or controlled
directly or indirectly by the principal or one where the principal or any of its officers owns/represents
any equity or interest, and which operates solely or mainly for the principal.

d) Contracting out of a job or work by reason of a strike or lockout, whether actual or imminent.

e) Contracting out of a job or work being performed by union members and such will interfere with,
restrain or coerce employees in the exercise of their rights to self-organization as provided in Article
259 [248] of the Labor Code, as amended.

f) Requiring the contractor's/subcontractor's employees to perform functions which are currently being
performed by the regular employees of the principal.

g) Requiring the contractor's/subcontractor's employees to sign, as a precondition to employment or


continued employment, an antedated resignation letter; a blank payroll; a waiver of labor standards
including minimum wages and social or welfare benefits; or a quitclaim releasing the principal or
contractor from liability as to payment of future claims; or require the employee to become member
of a cooperative.

h) Repeated hiring by the contractor/subcontractor of employees under an employment contract of


short duration.

i) Requiring employees under a contracting/subcontracting arrangement to sign a contract fixing the


period of employment to a term shorter than the term of the Service Agreement, unless the contract is
divisible into phases for which substantially different skills are required and this is made known to the
employee at the time of engagement.

j) Such other practices, schemes or employment arrangements designed to circumvent the right of
workers to security of tenure.

B. TERMINATION OF EMPLOYMENT

1. TERMINATION BY EMPLOYEE

(RESIGNATION)

a. RESIGNATION VERSUS CONSTRUCTIVE DISMISSAL

i. RESIGNATION

• What are the two (2) kinds of resignation under the Labor Code (Article 300 [285])?

(a) Voluntary resignation - without just cause; or

(b) Involuntary resignation - with just cause.

• What are the distinctions between the two?

(a) On service of written notice (resignation letter).

Voluntary Resignation requires the submission of a written resignation letter at least thirty (30) days
before its effectivity date; while in Involuntary Resignation, no such written resignation letter is required
since it is being made by the employee for just cause (see just causes below).
(b) On the consequence of failure to serve a written notice.

In Voluntary Resignation, the failure to serve the written resignation letter within the said 30-day period
would make the resigning employee liable for damages; while in Involuntary Resignation, since there is
no similar requirement of service of prior written notice, hence, there is no adverse consequence for
such failure to the involuntarily resigning employee.

(c) On whether there is illegal or constructive dismissal.

There can be no constructive dismissal in the case of Voluntary Resignation, the same having been
voluntarily and freely tendered by the employee; however, it is different in the of In Involuntary
Resignation, since it always amounts to constructive dismissal. (See discussion below).

• What are the requisites for resignation WITHOUT JUST CAUSE?

(a) The resigning employee should tender a written (not verbal) notice of the termination (commonly
known as “resignation letter”);

(b) Service of such notice to the employer at least one (1) month in advance; and

(c) Written acceptance by the employer of the resignation.

• What is involuntary resignation (WITH JUST CAUSE)?

(a) Serious insult by the employer or his representative on the honor and person of the employee;

(b) Inhuman and unbearable treatment accorded the employee by the employer or his representative;

(c) Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and

(d) Other causes analogous to any of the foregoing.

• What is FORCED RESIGNATION?

The employee is made to do or perform an involuntary act, that is, the submission or tender of
resignation letter meant to validate the action of the employer in inveigling, luring or influencing or
practically forcing the employee to resign. It is therefore a form of involuntary resignation.

ii. CONSTRUCTIVE DISMISSAL

• When is there constructive dismissal?

Constructive dismissal contemplates any of the following situations:

1) An involuntary resignation resorted to when continued employment is rendered impossible,


unreasonable or unlikely;

2) A demotion in rank and/or a diminution in pay; or

3) A clear discrimination, insensibility or disdain by an employer which becomes unbearable to the


employee that it could foreclose any choice by him except to forego his continued employment.

• What is the test of constructive dismissal?


The test of constructive dismissal is whether a reasonable person in the employee’s position would have
felt compelled to give up his position under the circumstances. It is an act amounting to dismissal but
made to appear as if it were not. In fact, the employee who is constructively dismissed may be allowed
to keep on coming to work.

Constructive dismissal is, therefore, a dismissal in disguise. The law recognizes and resolves this
situation in favor of the employees in order to protect their rights and interests from the coercive acts of
the employer.

• What are examples of constructive dismissal or forced resignation?

▪ Denying to the workers entry to their work area and placing them on shifts “not by weeks but almost
by month” by reducing their workweek to three days.

▪ Barring the employees from entering the premises whenever they would report for work in the
morning without any justifiable reason, and they were made to wait for a certain employee who would
arrive in the office at around noon, after they had waited for a long time and had left.

▪ Sending to an employee a notice of indefinite suspension which is tantamount to dismissal.

▪ Imposing indefinite preventive suspension without actually conducting any investigation.

▪ Changing the employee’s status from regular to casual constitutes constructive dismissal.

▪ Preventing the employee from reporting for work by ordering the guards not to let her in. This is
clear notice of dismissal.

• What is the distinction between illegal dismissal and constructive dismissal?

In illegal dismissal, the employer openly shows his intention to dismiss the employee. In fact, the
employer, in compliance with due process, asks the employee to explain why he should not be
dismissed for committing a wrongful act and he is given due process prior to terminating him.

In contrast, in constructive dismissal, the employer will never indicate that he is terminating the
employee.

He will even allow the employee to report to his work every day. But he will do any of the three (3) acts
mentioned above that indicates his intention to get rid of the services of the employee. This is the
reason why it is called “dismissal in disguise.”

2. TERMINATION BY EMPLOYER

• What is meant by TWO-FOLD DUE PROCESS requirement?

Dismissal of employees requires the observance of the two-fold due process requisites, namely:

1. Substantive aspect which means that the dismissal must be for any of the (1) just causes provided
under the Labor Code or the company rules and regulations promulgated by the employer; or (2)
authorized causes under the Labor Code; and
2. Procedural aspect which means that the employee must be accorded both STATUTORY DUE PROCESS
AND CONTRACTUAL DUE PROCESS.

• What is the distinction between JUST CAUSES and AUTHORIZED CAUSES?

A dismissal based on a just cause means that the employee has committed a wrongful act or omission;
while a dismissal based on an authorized cause means that there exists a ground which the law itself
allows or authorizes to be invoked to justify the termination of an employee even if he has not
committed any wrongful act or omission such as installation of labor-saving devices, redundancy,
retrenchment, closure or cessation of business operations or disease.

a. JUST CAUSES

• What are the just causes under the Labor Code?

The just causes in the Labor Code are found in the following provisions thereof:

(1) Article 297 [282] - (Termination by the Employer) which provides for the following grounds:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

(2) Article 279(a) [264(a)] - (Prohibited Activities) which provides for the termination of the following:

(a) Union officers who knowingly participate in an illegal strike and therefore deemed to have lost their
employment status.

(b) Any employee, union officer or ordinary member who knowingly participates in the commission of
illegal acts during a strike (irrespective of whether the strike is legal or illegal), is also deemed to have
lost his employment status.

(3) Article 278(g) [263(g)] - (National Interest Cases) where strikers who violate orders, prohibitions and/
or injunctions as are issued by the DOLE Secretary or the NLRC, may be imposed immediate disciplinary
action, including dismissal or loss of employment status.

(4) Article 259(e) [248(e)] - (Union Security Clause) where violation of the union security agreement in
the CBA may result in termination of employment. Under this clause, the bargaining union can demand
from the employer the dismissal of an employee who commits a breach of union security arrangement,
such as failure to join the union or to maintain his membership in good standing therein. The same
union can also demand the dismissal of a member who commits an act of disloyalty against it, such as
when the member organizes a rival union.
• What are just causes under established jurisprudence?

In addition to the just causes mentioned in the Labor Code, just causes are also found in prevailing
jurisprudence.

The following may be cited as just causes in accordance with prevailing jurisprudence:

1. Violation of Company Rules and Regulations or Company Code of Discipline.

2. Theft of property owned by a co-employee as distinguished from company-owned property which is


considered serious misconduct.

3. Incompetence, inefficiency or ineptitude.

4. Failure to attain work quota.

5. Failure to comply with weight standards of employer.

6. Attitude problem.

• Is dismissal based on Company Code of Discipline or Company Rules and Regulations illegal?

No.

In Sampaguita Auto Transport Corporation v. NLRC, the Supreme Court pronounced that the Court of
Appeals erred in ruling that the dismissal of private respondent, a bus driver of petitioner, was illegal
because the “grounds upon which petitioners based respondent’s termination from employment, viz.:
‘hindi lahat ng schedule nailalabas,’ [‘]mababa ang revenue ng bus, laging kasama an[g] asawa sa
byahe’ and ‘maraming naririnig na kwento tungkol sa kanya, nag-uutos ng conductor para kumita sa
hindi magandang paraan[,]’ xxx are not among those enumerated under Article 297 [282] of the Labor
Code as just causes for termination of employment.” The irregularities or infractions committed by
private respondent in connection with his work as a bus driver constitute serious misconduct or, at the
very least, conduct analogous to serious misconduct, under the above-cited Article 297 [282] of the
Labor Code. The requirement in the company rules that: ‘3. to obey traffic rules and regulations as well
as the company policies. 4. to ensure the safety of the riding public as well as the other vehicles and
motorist (sic)’ is so fundamental and so universal that any bus driver is expected to satisfy the
requirement whether or not he has been so informed.

I. SERIOUS MISCONDUCT

1. REQUISITES.

For misconduct or improper behavior to be a just cause for dismissal, the following requisites must
concur:

1. It must be serious; and

2. It must relate to the performance of the employee’s duties; and

3. It must show that he has become unfit to continue working for the employer.

All the above three (3) requisites must concur.


2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.

• Serious misconduct implies that it must be of such grave and aggravated character and not merely
trivial or unimportant.

• Simple or minor misconduct would not justify the termination of the services of an employee.

• Possession or use of shabu or other drugs is a valid ground to terminate employment.

• Immorality, as a general rule, is not a just ground to terminate employment. The exception is when
such immoral conduct is prejudicial or detrimental to the interest of the employer.

• Immoral act committed beyond office hours is a valid ground to terminate employment.

• Sexual intercourse inside company premises constitutes serious misconduct.

• The act of a 30-year old lady teacher in falling in love with a 16-year old student is not immoral.

• Fighting is a ground for termination but only the instigator or aggressor and not the victim who was
constrained to defend himself should be dismissed.

• Challenging superiors to a fight is a just cause for termination.

• Assaulting another employee is a just cause for termination.

• Utterance of obscene, insulting or offensive words constitutes serious misconduct.

• Gambling within company premises is a serious misconduct.

• Rendering service to business rival is a just cause to terminate employment.

• Selling products of a competitor is a just cause for termination.

• Organizing a credit union by employees in a bank is a serious misconduct.

• Deceiving a customer for personal gain is a just cause for termination.

• Contracting work in competition with employer constitutes serious misconduct.

• Intoxication which interferes with the employee’s work constitutes serious misconduct.

• The act of a teacher in pressuring a colleague to change the failing grade of a student is serious
misconduct.

• Sexual harassment is a just ground to dismiss.

• Sleeping while on duty is a ground for termination.

• Dismissal is too harsh a penalty for eating while at work.

• Pilferage or theft of company-owned property is a just cause to terminate.

• Theft of funds or property not owned by employer is not a ground to terminate.

• Act of falsification is a valid ground to terminate employment.


• Punching-in of time cards of other employees is a just cause for termination.

II. INSUBORDINATION OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS

1. REQUISITES.

One of the fundamental duties of an employee is to obey all reasonable rules, orders and instructions of
the employer. In order to validly invoke this ground, the following requisites must be complied with, to
wit:

1. The employee’s assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and

2. The order violated must be based on a reasonable and lawful company rule, regulation or policy and
made known to the employee and must pertain to the duties for which he has been engaged to
discharge.

2. SOME PRINCIPLES ON INSUBORDINATION.

• Making false allegations in complaint does not constitute insubordination.

• Failure to answer memo to explain constitutes willful disobedience.

• Another notice is required in case of termination on the ground of failure to answer memo to explain.

• Refusal to undergo random drug testing constitutes both serious misconduct and insubordination.

• Refusal to render overtime to meet production deadline constitutes insubordination.

• Refusal to comply with a lawful transfer constitutes insubordination.

III. GROSS AND HABITUAL NEGLECT OF DUTIES

1. REQUISITES.

The following are the requisites:

(1) There must be negligence which is gross and/or habitual in character; and

(2) It must be work-related as would make him unfit to work for his employer.

2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF DUTIES.

• Simple negligence is not sufficient to terminate employment.

• The negligence must be gross in character which means absence of that diligence that an ordinarily
prudent man would use in his own affairs.

• As a general rule, negligence must be both gross and habitual to be a valid ground to dismiss.

• Habituality may be disregarded if negligence is gross or the damage or loss is substantial. “Habitual
negligence” implies repeated failure to perform one’s duties for a period of time, depending upon the
circumstances.

• Actual damage, loss or injury is not an essential requisite.


• Gross negligence may result to loss of trust and confidence.

• Absences, if authorized, cannot be cited as a ground to terminate employment.

• Tardiness or absenteeism, if not habitual, cannot be cited as a ground to terminate employment.

• Tardiness or absenteeism, if habitual, may be cited as a ground to terminate employment.

• Tardiness or absenteeism, if habitual, may be tantamount to serious misconduct.

• Absences or tardiness due to emergency, ailment or fortuitous event are justified and may not be
cited as just cause to terminate employment.

• Unsatisfactory or poor performance, inefficiency and incompetence are considered just causes for
dismissal only if they amount to gross and habitual neglect of duties.

IV. ABANDONMENT OF WORK

1. CONCEPT.

Abandonment is not provided for in the Labor Code but it is jurisprudentially considered a form of
neglect of duty; hence, a just cause for termination of employment under Article 297(b) [282(b)] of the
Labor Code.

2. REQUISITES.

To constitute abandonment, two (2) elements must concur, namely:

1) The employee must have failed to report for work or must have been absent without valid or
justifiable reason; and

2) There must have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act.

3. SOME PRINCIPLES ON ABANDONMENT.

• Mere absence is not enough to constitute abandonment.

• Clear intention to sever employment relationship is necessary.

• Due process in abandonment cases consists only of the service of 2 notices to the employee, viz.:

a. First notice directing the employee to explain why he should not be declared as having abandoned his
job; and

b. Second notice to inform him of the employer’s decision to dismiss him on the ground of
abandonment.

• No hearing is required to validly dismiss an employee for abandonment.

• Notices in abandonment cases must be sent to employee’s last known address per record of the
company. The employer need not look for the employee’s current whereabouts.

• Immediate filing of a complaint for illegal dismissal praying for reinstatement negates abandonment.
• Lapse of time between dismissal and filing of a case is not a material indication of abandonment.
Hence, lapse of 2 years and 5 months or 20 months or 9 months or 8 months before filing the complaint
for illegal dismissal is not an indication of abandonment. Under the law, the employee has a 4-year
prescriptive period within which to institute his action for illegal dismissal.

• Filing of a case to pre-empt investigation of the administrative case is tantamount to abandonment.

• When what is prayed for in the complaint is separation pay and not reinstatement, the filing of
complaint does not negate abandonment.

• It is abandonment when what is prayed for in the complaint is separation pay and it was only in the
position paper that reinstatement was prayed for.

• Employment in another firm coinciding with the filing of complaint does not indicate abandonment.

• Offer of reinstatement by employer during proceedings before Labor Arbiter and refusal by employee
does not indicate abandonment but more of a symptom of strained relations between the parties.

• An employee may be absolved from the charge of abandonment of work but adjudged guilty of AWOL.
These two grounds are separate and distinct from each other.

• An employee who failed to report for work after the expiration of the duly approved leave of absence
is considered to have abandoned his job.

• An employee who failed to comply with the order for his reinstatement is deemed to have abandoned
his work.

• An employee who, after being transferred to a new assignment, did not report for work anymore is
deemed to have abandoned his job.

• An employee who deliberately absented from work without leave or permission from his employer for
the purpose of looking for a job elsewhere is deemed to have abandoned his work.

• Imprisonment or detention by military does not constitute abandonment.

• Absence to evade arrest is not a valid justification. To do so would be to place an imprimatur on the
employee’s attempt to derail the normal course of the administration of justice.

V. FRAUD

1. REQUISITES.

The following are the requisites of this ground:

1. There must be an act, omission, or concealment;

2. The act, omission or concealment involves a breach of legal duty, trust, or confidence justly reposed;

3. It must be committed against the employer or his/her representative; and

4. It must be in connection with the employees' work.1

2. SOME PRINCIPLES ON FRAUD.


• Failure to deposit collection constitutes fraud.

• Lack of damage or losses is not necessary in fraud cases. The fact that the employer did not suffer
losses from the dishonesty of the dismissed employee because of its timely discovery does not excuse
the latter from any culpability.

• Lack of misappropriation or shortage is immaterial in case of unauthorized encashment of personal


checks by teller and cashier.

• Restitution does not have absolutory effect.

VI. WILLFUL BREACH OF TRUST AND CONFIDENCE

Per latest DOLE Department Order No. 147-15, series of 2015, September 07, 2015.

1. REQUISITES.

For the doctrine of loss of trust and confidence to apply, the following requisites must be satisfied:

(1) The employee holds a position of trust and confidence;

(2) There exists an act justifying the loss of trust and confidence, which means that the act that betrays
the employer’s trust must be real, i.e., founded on clearly established facts;

(3) The employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and
purposely, without justifiable excuse; and

(4) The act must be in relation to his work which would render him unfit to perform it.

2. GUIDELINES.

As a safeguard against employers who indiscriminately use “loss of trust and confidence” to justify
arbitrary dismissal of employees, the Supreme Court, in addition to the above elements, came up with
the following guidelines for the application of the doctrine:

(1) The loss of confidence must not be simulated;

(2) It should not be used as a subterfuge for causes which are illegal, improper or unjustified;

(3) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and

(4) It must be genuine, not a mere afterthought, to justify earlier action taken in bad faith.

The foregoing guidelines have been prescribed by the Supreme Court due to the subjective nature of
this ground which makes termination based on loss of trust and confidence prone to abuse.

3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND CONFIDENCE.

• Employee’s position must be reposed with trust and confidence.

• “Position of trust and confidence” is one where a person is entrusted with confidence on delicate
matters, or with the custody, handling, or care and protection of the employer’s property.
• Two (2) classes of positions of trust. The first class consists of managerial employees or those who,
by the nature of their position, are entrusted with confidential and delicate matters and from whom
greater fidelity to duty is correspondingly expected. They refer to those vested with the powers or
prerogatives to lay down and execute management policies and/or to hire, transfer suspend, lay-off,
recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.
Their primary duty consists of the management of the establishment in which they are employed or of a
department or a subdivision thereof.

The second class consists of fiduciary rank-and-file employees who, though rank-and-file, are routinely
charged with the custody, handling or care and protection of the employer's money or property, or
entrusted with confidence on delicate matters, and are thus classified as occupying positions of trust
and confidence. Included under this class are “cashiers, auditors, property custodians, or those who, in
the normal and routine exercise of their functions, regularly handle significant amounts of [the
employer’s] money or property.”

• Rules on termination of managerial and supervisory employees different from those applicable to
rankand- file employees. Thus, with respect to rank-and-file personnel, loss of trust and confidence as a
ground for valid dismissal requires proof of involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for believing that he has breached the trust of his
employer would suffice for his dismissal.

• There must be “some basis” for the loss of trust and confidence which means that there is reasonable
ground to believe, if not to entertain the moral conviction, that the concerned employee is responsible
for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of
trust and confidence demanded by his position.

• Dismissal due to feng shui mismatch is not a valid ground to lose trust and confidence.

• Command responsibility of managerial employees is a ground to dismiss.

• Confidential employee may be dismissed for loss of trust and confidence.

• Grant of promotions and bonuses negates loss of trust and confidence.

• Long years of service, absence of derogatory record and small amount involved are deemed
inconsequential insofar as loss of trust and confidence is concerned.

• Dropping of criminal charges or acquittal in a criminal case arising from the same act does not affect
the validity of dismissal based on loss of trust and confidence.

• Full restitution does not absolve employee of offense which resulted in the loss of trust and
confidence.

VII. COMMISSION OF CRIME OR OFFENSE

1. REQUISITES.

The following are the requisites for the valid invocation of this ground:

1. A crime or offense was committed by the employee;


2. It was committed against any of the following persons:

(a) His employer;

(b) Any immediate member of his employer’s family; or

(c) His employer’s duly authorized representative.

2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR OFFENSE.

• Because of its gravity, work-relation is not necessary. Neither is it necessary to show that the
commission of the criminal act would render the employee unfit to perform his work for the employer.

VIII. OTHER ANALOGOUS CAUSES

1. ANALOGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.

The following may be cited as analogous causes:

1) Violation of company rules and regulations.

2) Theft of property owned by a co-employee, as distinguished from theft of property owned by the
employer.

3) Incompetence, inefficiency or ineptitude.

4) Failure to attain work quota.

5) Failure to comply with weight standards of employer.

6) “Attitude problem” is analogous to loss of trust and confidence.

IX. TERMINATION DUE TO ENFORCEMENT OF UNION SECURITY CLAUSE

• What is a union security clause?

The “union security clause” is a stipulation in a CBA which allows the parties thereto to enter into an
agreement requiring membership in the sole and exclusive bargaining agent (SEBA) which successfully
negotiated said CBA as a condition for continued employment with the exception of employees who are
already members of another union at the time of the signing of the CBA.

• What are the effects of application of this clause?

The following are the effects:

a. On members of the SEBA. They are not allowed to resign or terminate their membership therefrom.
Any member of the SEBA who resigns or is expelled therefrom may be recommended to the employer
by the SEBA for termination of his employment.

b. On non-members of the SEBA but members of the minority union/s. They are not bound by the union
security clause if they are members of the minority or other unions at the time of the signing of the CBA.
Hence, they cannot be compelled to resign from their union/s in order to join the SEBA.
c. On non-members of the SEBA or of any minority union/s. If not a member of the SEBA or any other
unions in the bargaining unit at the time of the signing of the CBA by reason of the fact that he is
excepted from the coverage of the bargaining unit, the employee cannot be compelled to join the SEBA.

d. On new employees hired after the signing of the CBA containing the union security clause. They can
be compelled to join the SEBA. If they refuse, they can be recommended for termination by the SEBA to
the employer as such refusal is deemed a violation of this clause.

• Is there an exception to this rule?

Yes. An employee cannot be compelled to join any union based on religious ground (Religious
Objectors).

For example: members of the Iglesia ni Kristo (INK) cannot be compelled to join a union; hence, they are
not bound by the union security doctrine.

• Can religious objectors be denied membership in a union or be disallowed from participating in a


certification election?

No. Religious objectors, if they choose to, cannot be denied membership in a union or prevented from
participating in a certification election.

• What are the requisites in order to validly terminate employees based on this clause?

(1) The union security clause is applicable;

(2) The bargaining union is requesting for the termination of employment due to enforcement of the
union security provision in the CBA; and

(3) There is sufficient evidence to support the union’s decision to expel the employee from the union.
(Alabang Country Club, Inc. v. NLRC,1).

All the foregoing requisites should be complied with to justify the termination of employment.

• Is the employer required to observe due process before terminating an employee who is
recommended by the SEBA for termination due to violation of the union security clause?

Yes, the employer should afford both substantive and procedural due process to the employee. It
cannot terminate his employment merely on the basis of the recommendation of the union.

• Can the employer adopt the due process afforded by the SEBA to the employee in expelling him from
his membership in the SEBA?

No. The employer cannot adopt the due process afforded by the SEBA as its own due process for the
simple reason that such due process concerns the termination of membership of the employee from the
SEBA. The due process in above-cited Alabang Country Club, Inc. v. NLRC, is required for a different 1
purpose - to terminate his employment.

OTHER PRINCIPLES `ON TERMINATION

PER DEPARTMENT ORDER NO. 147-15, SERIES OF 2015 (07 SEPTEMBER 2015):
➢ An employee found positive for use of dangerous drugs shall be dealt with administratively which
shall be a ground for suspension or termination.3

➢ An employee shall not be terminated from work based on actual, perceived or suspected HIV
status.4

➢ An employee shall not be terminated on basis of actual, perceived or suspected Hepatitis B status.5

➢ An employee who has or had tuberculosis shall not be discriminated against. He/she shall be entitled
to work for as long as they are certified by the company's accredited health provider as medically fit and
shall be restored to work as soon as his/her illness is controlled.6

➢ An employee may also be terminated based on the grounds provided for under the CBA.

b. AUTHORIZED CAUSES

• What are the 2 classes of authorized cause termination?

Under the Labor Code, authorized causes are classified into two (2) classes, namely:

(1) Business-related causes. – Referring to the grounds specifically mentioned in Article 298 [283], to
wit:

a. Installation of labor-saving device;

b. Redundancy;

c. Retrenchment;

d. Closure or cessation of business operations NOT due to serious business losses or financial reverses;
and

e. Closure or cessation of business operations due to serious business losses and financial reverses.

(2) Health-related causes. – Referring to disease covered by Article 299 [284] of the Labor Code.

• What are the common requisites applicable to the authorized causes under Article 298 [283]?

The following are the five (5) common requisites applicable to the ALL the grounds under Article 298

[283]:

1. There is good faith in effecting the termination;

2. The termination is a matter of last resort, there being no other option available to the employer after
resorting to cost-cutting measures;

3. Two (2) separate written notices are served on both the affected employees and the DOLE at least
one (1) month prior to the intended date of termination;

4. Separation pay is paid to the affected employees, to wit:


(a) If based on (1) installation of labor-saving device, or (2) redundancy. - One (1) month pay or at least
one (1) month pay for every year of service, whichever is higher, a fraction of at least six (6) months shall
be considered as one (1) whole year.

(b) If based on (1) retrenchment, or (2) closure NOT due serious business losses or financial reverses. -
One (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher, a
fraction of at least six (6) months shall be considered as one (1) whole year.

(c) If closure is due to serious business losses or financial reverses, NO separation pay is required to be
paid.

(d) In case the CBA or company policy provides for a higher separation pay, the same must be followed
instead of the one provided in Article 298 [283].

5. Fair and reasonable criteria in ascertaining what positions are to be affected by the termination, such
as, but not limited to: nature of work; status of employment (whether casual, temporary or regular);
experience; efficiency; seniority; dependability; adaptability; flexibility; trainability; job performance;
discipline; and attitude towards work. Failure to follow fair and reasonable criteria in selecting who to
terminate would render the termination invalid.

NOTE: SENIORITY is not the principal criterion. The other criteria mentioned above which are lifted from
jurisprudence, is of equal importance.

I. INSTALLATION OF LABOR-SAVING DEVICE

• What are the additional requisites unique to this ground?

In addition to the five (5) common requisites above, the unique requisites are as follows:

1. There must be introduction of machinery, equipment or other devices; and

2. The purpose for such introduction must be valid such as to save on cost, enhance efficiency and other
justifiable economic reasons.

II. REDUNDANCY

• What are the additional requisites unique to this ground?

The additional requisites are as follows:

1. There must be superfluous positions or services of employees;

2. The positions or services are in excess of what is reasonably demanded by the actual requirements of
the enterprise to operate in an economical and efficient manner; and

3. There must be an adequate proof of redundancy such as but not limited to the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created positions, job description and the
approval by the management of the restructuring.

III. RETRENCHMENT

• What are the additional requisites unique to this ground?


Per latest issuance of the DOLE, 3 the following are the additional requisites:

1. The retrenchment must be reasonably necessary and likely to prevent business losses;

2. The losses, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or
if only expected, are reasonably imminent;

3. The expected or actual losses must be proved by sufficient and convincing evidence;4 and

4. The retrenchment must be in good faith for the advancement of its interest and not to defeat or
circumvent the employees' right to security of tenure.

This is the only statutory ground in Article 283 which requires this kind of proof. The other grounds of
closure or cessation of business operations may be resorted to with or without losses.

▪ What are some relevant principles on retrenchment?

▪ The fact that there has been economic or other crisis besetting a particular sector or the country as a
whole is not sufficient justification for retrenchment.

▪ The phrase “retrenchment to prevent losses” means that retrenchment must be undertaken by the
employer before the losses anticipated are actually sustained or realized. The employer need not keep
all his employees until after his losses shall have materialized. Otherwise, the law could be vulnerable to
attack as undue taking of property for the benefit of another.

▪ Best evidence of losses - financial statements audited by independent auditors (not by internal
auditors).

▪ Best evidence of losses in a government-controlled corporation - financial statements audited by


COA.

▪ Income tax returns, not valid since they are self-serving documents.

▪ Mere affidavit on alleged losses is not sufficient.

▪ Retrenchment effected long after the business losses is not valid.

▪ Profitable operations in the past do not affect the validity of retrenchment.

▪ Retrenchment due to liquidity problem is not valid.

▪ Sharp drop in income is not a ground to justify retrenchment. A mere decline in gross income cannot
in any manner be considered as serious business losses. It should be substantial, sustained and real.

▪ Litany of woes, in the absence of any solid evidence that they translated into specific and substantial
losses that would necessitate retrenchment, will not suffice to justify retrenchment.
▪ Rehiring of retrenched employees does not necessarily indicate illegality of retrenchment.

▪ In an enterprise which has several branches nationwide, profitable operations in some of them will
not affect the validity of the retrenchment if overall, the financial condition thereof reflects losses.

IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS

• Can an employer close its business even if it is not suffering from business losses?

Yes. In fact, closure involves two (2) situations:

(a) When NOT due to serious business losses or financial reverses; or

(b) When due to serious business losses or financial reverses

It is only in the first that payment of separation pay is required. No such requirement is imposed in the
second.

• What are some relevant principles on closure?

▪ Principle of closure under Article 283 applies in cases of both total and partial closure or cessation of
business operations. Management may choose to close only a branch, a department, a plant, or a shop.

▪ Closure of department or section and hiring of workers supplied by independent contractor as


replacements is valid.

▪ Relocation of business may amount to cessation of operations.

▪ Closure of business to merge or consolidate with another or to sell or dispose all of its assets, held
valid.

▪ Audited financial statements necessary only in closure due to losses.

V. DISEASE

• What are the newest doctrines on termination due to disease?

The newest doctrines are the ones enunciated in Deoferio and Fuji on the matter of due process as
discussed below. The due process applicable to disease, although an authorized cause, is similar to the
one applicable to just cause termination and not to authorized cause termination.

1. THE DEOFERIO DOCTRINE ON THE REQUISITES.

Disease is one of the authorized causes to terminate employment. In the 2014 case of Deoferio v. Intel
Technology Philippines, Inc., the Supreme Court divided into two, the requisites that 1 must be
complied with before termination of employment due to disease may be justified, namely:

(1) Substantive requisites; and

(2) Procedural requisites.


1.1. THE DEOFERIO RULE ON SUBSTANTIVE REQUISITES.

The following are the three (3) substantive requisites:

(1) An employee has been found to be suffering from any disease;

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of
his co-employees; and

(3) A competent public health authority issues a medical certificate that the disease is of such nature or
at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment.2

1.2. THE DEOFERIO RULE ON PROCEDURAL REQUISITES.

Deoferio, finally pronounced the rule that the employer must furnish the employee two (2) written
notices in terminations due to disease, namely:

(1) The notice to apprise the employee of the ground for which his dismissal is sought; and

(2) The notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense.

➢ In other words, due process in termination due to disease is similar to due process for just cause
termination but different from authorized cause termination under Article 298 [283].

2. THE FUJI RULE – THE EMPLOYEE SHOULD BE GIVEN THE CHANCE TO PRESENT

COUNTERVAILING MEDICAL CERTIFICATES.

Subsequent to Deoferio, another 2014 case, Fuji Television Network, Inc. v. Arlene S. Espiritu,1 has
further expounded on the due process requirement in termination due to disease, this time by
categorically specifying the right of the ailing employee to present countervailing evidence in the form
of medical certificates to prove that his dismissal due to disease is not proper and therefore illegal.
Respondent Arlene was petitioner’s news correspondent/producer “tasked to report Philippine news to
Fuji through its Manila Bureau field office.” She was successively given yearly fixed-term employment
contracts until she was diagnosed with lung cancer sometime in January 2009 when the Chief of News
Agency of Fuji informed her “that the company will have a problem renewing her contract” since it
would be difficult for her to perform her job.

She, however, “insisted that she was still fit to work as certified by her attending physician.”
Subsequently, Arlene and Fuji signed a non-renewal contract where it was stipulated that her contract
would no longer be renewed after its expiration on May 31, 2009 and that the parties release each other
from liabilities and responsibilities under the employment contract. Arlene received her unpaid salaries
and bonuses but she affixed her signature on the nonrenewal contract with the initials “U.P.” for “under
protest.” The day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismissal
and attorney’s fees with the Labor Arbiter, alleging that she was forced to sign the non-renewal contract
when Fuji came to know of her illness and that Fuji withheld her salaries and other benefits for March
and April 2009 when she refused to sign. Arlene claimed that she was left with no other recourse but to
sign the non-renewal contract, and it was only upon signing that she was given her salaries and bonuses,
in addition to separation pay equivalent to 4 years.

The Supreme Court declared respondent Arlene as having been constructively dismissed. It was likewise
held here that respondent was not afforded due process, thus:

“There is no evidence showing that Arlene was accorded due process. After informing her employer of
her lung cancer, she was not given the chance to present medical certificates. Fuji immediately
concluded that Arlene could no longer perform her duties because of chemotherapy. It did not ask her
how her condition would affect her work. Neither did it suggest for her to take a leave, even though she
was entitled to sick leaves. Worse, it did not present any certificate from a competent public health
authority. What Fuji did was to inform her that her contract would no longer be renewed, and when she
did not agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of the
National Labor Relations Commission that for failure of Fuji to comply with due process, Arlene was
illegally dismissed.”

▪ What are some salient points to consider under this ground of disease?

▪ If the disease or ailment can be cured within the period of six (6) months with proper medical
treatment, the employer should not terminate the employee but merely ask him to take a leave of
absence. The employer should reinstate him to his former position immediately upon the restoration of
his normal health.

▪ In case the employee unreasonably refuses to submit to medical examination or treatment upon
being requested to do so, the employer may terminate his services on the ground of insubordination or
willful disobedience of lawful order.

▪ A medical certificate issued by a company’s own physician is not an acceptable certificate for
purposes of terminating an employment based on Article 284, it having been issued not by a
“competent public health authority,” the person referred to in the law.

▪ A “competent public health authority” refers to a government doctor whose medical specialization
pertains to the disease being suffered by the employee. For instance, if the employee suffers from
tuberculosis, the medical certificate should be issued by a government-employed pulmonologist who is
competent to make an opinion thereon. If the employee has cardiac symptoms, the competent
physician in this case would be a cardiologist.

▪ The medical certificate should be procured by the employer and not by the employee.

3. DUE PROCESS

(a) Twin-Notice Requirement

(b) Hearing; Ample Opportunity to be Heard PRELIMINARY CLARIFICATORY STATEMENT ON DUE


PROCESS

At the outset, there is a need to point out the following distinction:


(1) Due process required to be complied with by the employer in terminating the employee’s
employment (COMPANY-LEVEL DUE PROCESS); and

(2) Due process required to be observed by the labor authorities/tribunals/courts (Labor


Arbiter/NLRC/CA) in hearing and deciding labor cases brought before them for adjudication and decision
(COURT-LEVEL DUE PROCESS).

No. 1 above requires compliance with both the statutory and contractual due process as discussed
below; while No. 2 above requires observance of the constitutional due process.

It is No. 1 above that is prescribed in the Syllabus, hence, discussion herein will focus thereon.

▪ What is the latest rule on due process?

Due process means compliance with BOTH STATUTORY DUE PROCESS and CONTRACTUAL DUE
PROCESS.

CONSTITUTIONAL DUE PROCESS is not applicable (Per Agabon doctrine).

Statutory due process refers to the one prescribed in the Labor Code (Article 292[b] 277[b]); while
contractual due process refers to the one prescribed in the Company Rules and Regulations (Per Abbott
Laboratories doctrine).

Contractual due process was enunciated in the 2013 en banc ruling in Abbott Laboratories, Philippines
v. Pearlie Ann F. Alcaraz. Thus, it is now required that in addition to compliance with 1 the statutory
due process, the employer should still comply with the due process procedure prescribed in its own
company rules. The employer’s failure to observe its own company-prescribed due process will make it
liable to pay an indemnity in the form of nominal damages, the amount of which is equivalent to the
P30,000.00 awarded under the Agabon doctrine.

▪ Are the twin-notice requirement and hearing required in all cases of termination?

No. The two-notice requirement and hearing are required only in case of just cause termination in the
following order:

1. Service of first written notice;

2. Conduct of hearing; and

3. Service of second written notice.

▪ What is the King of Kings Transport doctrine on just cause procedural due process?

Based on this doctrine which was enunciated in the 2007 case of King of Kings Transport, Inc. v.
Mamac,2 the following requirements should be complied with in just cause termination:

(1) First written notice.

The first written notice to be served on the employee should:

a) Contain the specific causes or grounds for termination against him;


b) Contain a directive that the employee is given the opportunity to submit his written explanation
within the reasonable period of FIVE (5) CALENDAR DAYS from receipt of the notice:

1) to enable him to prepare adequately for his defense;

2) to study the accusation against him;

3) to consult a union official or lawyer;

4) to gather data and evidence; and

5) to decide on the defenses he will raise against the complaint.

c) Contain a detailed narration of the facts and circumstances that will serve as basis for the charge
against the employee. This is required in order to enable him to intelligently prepare his explanation and
defenses. A general description of the charge will not suffice.

d) Specifically mention which company rules, if any, are violated and/or which among the grounds under
Article 282 is being charged against the employee.

(2) Hearing required,

After serving the first notice, the employer should schedule and conduct a hearing or conference
wherein the employee will be given the opportunity to:

1) explain and clarify his defenses to the charge/s against him;

2) present evidence in support of his defenses; and

3) rebut the evidence presented against him by the management.

During the hearing or conference, the employee is given the chance to defend himself personally, with
the assistance of a representative or counsel of his choice. Moreover, this conference or hearing could
be used by the parties as an opportunity to come to an amicable settlement.

NOTE: As earlier discussed, per the 2011 Lopez doctrine, which is the prevailing rule, the right to counsel
is neither indispensable nor mandatory. It becomes mandatory only in two (2) situations:

(1) When the employee himself requests for counsel; or

(2)When he manifests that he wants a formal hearing on the charges against him, in which case, he
should be assisted by counsel. (See Lopez v. Alturas Group of Companies).

(3) Second written notice.

After determining that termination of employment is justified, the employer shall serve the employees a
written notice of termination indicating that:

1) all circumstances involving the charge/s against the employee have been considered; and

2) grounds have been established to justify the severance of his employment.

▪ What is the PEREZ doctrine on hearing?


The 2009 Perez doctrine enunciates the new guiding principle on the hearing requirement. It has
interpreted the term “ample opportunity to be heard” as follows:

(a) “Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.

(b) A formal hearing or conference is no longer mandatory. It becomes mandatory only under any of
the following circumstances:

(1) When requested by the employee in writing; or

(2) When substantial evidentiary disputes exist; or

(3) When a company rule or practice requires it; or

(4) When similar circumstances justify it.

(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or
conference” requirement in its Implementing Rules and Regulations. This is how the Supreme Court
resolved the conflict in the following provisions of the Labor Code and its implementing rules:

The Perez doctrine is now the prevailing rule as shown by a catena of cases which cited it after its
promulgation.

▪ Are the twin-notice requirement and hearing applicable to authorized cause termination?

No. Due process in authorized cause termination is deemed complied with upon the separate and
simultaneous service of a written notice of the intended termination to both:

(1) the employee to be terminated; and

(2) the appropriate DOLE Regional Office, at least one (1) month before the intended date of the
termination specifying the ground/s therefor and the undertaking to pay the separation pay required
under Article 283 of the Labor Code.

For obvious reason, hearing is not required.

However, as earlier discussed above, the foregoing due process is not applicable to the authorized cause
of disease as held in Deoferio and Fuji which held that just cause due process is the one that should be
followed.

▪ Are the twin-notice requirement and hearing applicable to an abandonment case which is a just
cause to terminate employment?

No. Although considered as a just cause to terminate employment, the due process requirement is
different.

No hearing is required (since the employee has already abandoned his job) but the following notices
should be complied with:
1) First notice asking the employee to explain why he should not be declared as having abandoned his
job; and

2) Second notice informing him of the employer’s decision to dismiss him on the ground of
abandonment.

▪ What are some notable principles on the hearing requirement?

▪ If employee does not answer, hearing should still proceed.

▪ Outright termination violates due process.

▪ Investigation still required even if incident was witnessed by many.

▪ Meeting, dialogue, consultation or interview is not the hearing required by law. It may not be a
substitute for the actual holding of a hearing.

▪ Prior consultation with union is not part of the due process requirement.

▪ Cross-examination or confrontation of witnesses is not necessary in company investigations.

▪ Co-conspirator’s confession is not sufficient to merit dismissal.

• What are the instances where hearing is not required?

Hearing is not required in the following cases:

1. Termination of project, seasonal, casual or fixed-term employment.

2. Termination of probationary employment on the ground of failure of the probationary employee to


qualify as a regular employee in accordance with reasonable standards made known to him at the
start of the employment.

3. Termination due to abandonment of work.

4. Termination due to authorized causes under Article 283 (installation of labor-saving device,
redundancy, retrenchment or closure of business or cessation of operations). In such cases, there are no
allegations which the employees should refute and defend themselves from.

5. Termination due to disease under Article 284.

6. Termination by the employee (resignation) under Article 285.

7. Termination after 6 months of bona-fide suspension of operation under Article 286. For purposes of
satisfying due process, what is required is simply that the notices provided under Article 283 be served
to both the affected employees and the DOLE at least one (1) month before the termination becomes
effective.

8. Termination due to retirement under Article 287.


9. Termination due to closure or stoppage of work by government authorities when non-compliance
with the law or implementing rules and regulations poses grave and imminent danger to the health and
safety of workers in the workplace.

10. Termination of employee who has admitted his guilt for the offense charged.

• What are the seven (7) standard situations in termination cases?

The rules on termination of employment in the Labor Code and pertinent jurisprudence are applicable
to seven (7) different situations, namely:

1. The dismissal was for a just cause under Article 282, for an authorized cause under Article 283, or for
health reasons under Article 284, and due process was observed – This termination is LEGAL.

2. The dismissal was without a just or authorized cause but due process was observed – This termination
is ILLEGAL.

3. The dismissal was without a just or authorized cause and due process was not observed – This
termination is ILLEGAL.

4. The dismissal was for a just or authorized cause but due process was not observed – This termination
is LEGAL.

5. The dismissal was for a non-existent cause – This termination is ILLEGAL.

6. The dismissal was not supported by any evidence of termination – This termination is NEITHER LEGAL
NOR ILLEGAL as there is no dismissal to speak of. Reinstatement is ordered not as a relief for illegal
dismissal but on equitable ground.

7. The dismissal was brought about by the implementation of a law – This termination is LEGAL.

3. RELIEFS FOR ILLEGAL DISMISSAL

• What are the reliefs under the Labor Code, particularly under Article 279 thereof?

Under this article, an illegally dismissed employee is entitled to the following reliefs:

(1) Reinstatement without loss of seniority rights and other privileges;

(2) Full backwages, inclusive of regular allowances; and

(3) Other benefits or their monetary equivalent.

• What are the other reliefs that are not provided in the Labor Code but are granted in illegal dismissal
cases?

The following reliefs that are awarded in illegal dismissal cases are missing in Article 279:

(1) Award of separation pay in lieu of reinstatement.

(2) Award of penalty in the form of nominal damages in case of termination due to just or authorized
cause but without observance of procedural due process.
(3) Reliefs to illegally dismissed employee whose employment is for a fixed period. The proper relief is
only the payment of the employee’s salaries corresponding to the unexpired portion of the employment
contract.

(4) Award of damages and attorney’s fees.

(5) Award of financial assistance in cases where the employee’s dismissal is declared legal but because
of long years of service, and other considerations, financial assistance is awarded.

(6) Imposition of legal interest on separation pay, backwages and other monetary awards.

1. REINSTATEMENT

a. REINSTATEMENT PENDING APPEAL

(Article 229 [223], Labor Code)

• Is reinstatement pending appeal solely applicable to reinstatement ordered by the Labor Arbiter?

Yes. Reinstatement is self-executory or immediately executory only if it is ordered by the Labor Arbiter.

This means that the employee ordered reinstated need not file any motion for the issuance of writ of
execution to enforce reinstatement. The employer, in fact, is required to manifest within 10 days from
his receipt of the order of reinstatement which of the two (2) options he is taking:

(1) To reinstate the employee to his former position or to a substantially equivalent position; or

(2) To reinstate him in the payroll, which means the employee need not report for work but only for the
purpose of getting his wage.

There is no way the employer can disregard the reinstatement order. Posting of a bond does not stay
the execution of immediate reinstatement.

In contrast, if ordered by the NLRC, on appeal, or the Court of Appeals, under a Rule 65 certiorari
petition, or even by the Supreme Court, reinstatement is not immediately executory. This means that
the employee reinstated should still file a motion for issuance of writ of execution to enforce the
reinstatement.

• Are there instances where writ of execution of Labor Arbiter’s reinstatement order is still required?

Yes, under the following two (2) instances, viz.:

(1) When the employer disobeys the Rules-prescribed directive to submit a report of compliance within
ten (10) calendar days from receipt of the decision; or

(2) When the employer refuses to reinstate the dismissed employee.

The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the reinstatement wages as
they accrue until actual reinstatement or reversal of the order of reinstatement.

The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter
shall thereafter motu proprio issue the writ. Employer may be cited for contempt for his refusal to
comply with the order of reinstatement.
Employer is liable to pay the salaries for the period that the employee was ordered reinstated pending
appeal even if his dismissal is later finally found to be legal on appeal.

▪ What are some relevant principles on reinstatement pending appeal?

▪The Labor Arbiter cannot exercise option of employer by choosing payroll reinstatement pending
appeal.

▪If the former position is already filled up, the employee ordered reinstated under Article 223 should
be admitted back to work in a substantially equivalent position.

▪Reinstatement to a position lower in rank is not proper.

▪Reinstatement cannot be refused on the basis of the employment elsewhere of the employee
ordered reinstated.

▪The failure of the illegally dismissed employee who was ordered reinstated to report back to work
does not give the employer the right to remove him, especially when there is a reasonable explanation
for his failure.

▪No reinstatement pending appeal should be made when antipathy and antagonism exist.

▪If reinstatement is not stated in the Labor Arbiter’s decision (neither in the dispositive portion nor in
the text thereof), reinstatement is not warranted.

b. SEPARATION PAY IN LIEU OF REINSTATEMENT

• Is separation pay applicable only to reinstatement as an alternative remedy?

Yes. Separation pay, as a substitute remedy, is only proper for reinstatement but not for backwages.

This remedy is not found in the Labor Code but is granted in case reinstatement is no longer possible or
feasible, such as when any of the following circumstances exists:

(1) Where the continued relationship between the employer and the employee is no longer viable due
to the strained relations and antagonism between them (Doctrine of Strained Relations).

(2) When reinstatement proves impossible, impracticable, not feasible or unwarranted for varied
reasons and thus hardly in the best interest of the parties such as:

(a) Where the employee has already been replaced permanently as when his position has already been
taken over by a regular employee and there is no substantially equivalent position to which he may be
reinstated.

(b) Where the dismissed employee’s position is no longer available at the time of reinstatement for
reasons not attributable to the fault of the employer.
(c) When there has been long lapse or passage of time that the employee was out of employer’s employ
from the date of the dismissal to the final resolution of the case or because of the realities of the
situation.

(d) By reason of the injury suffered by the employee.

(e) The employee has already reached retirement age under a Retirement Plan.

(f) When the illegally dismissed employees are over-age or beyond the compulsory retirement age and
their reinstatement would unjustly prejudice their employer.

(3) Where the employee decides not to be reinstated as when he does not pray for reinstatement in his
complaint or position paper but asked for separation pay instead.

(4) When reinstatement is rendered moot and academic due to supervening events, such as:

(a) Death of the illegally dismissed employee.

(b) Declaration of insolvency of the employer by the court.

(c) Fire which gutted the employer’s establishment and resulted in its total destruction.

(d) In case the establishment where the employee is to be reinstated has closed or ceased operations.

(5) To prevent further delay in the execution of the decision to the prejudice of private respondent.

(6) Other circumstances such as (a) when reinstatement is inimical to the employer’s interest; (b)
reinstatement does not serve the best interests of the parties involved; (c) the employer is prejudiced by
the workers’ continued employment; or (d) that it will not serve any prudent purpose as when
supervening facts transpired which made execution unjust or inequitable.

• What is the amount of separation pay in lieu of reinstatement?

Per prevailing jurisprudence, the following are the components of separation pay in lieu of
reinstatement>

(1) The amount equivalent to at least one (1) month salary or to one (1) month salary for every year of
service, whichever is higher, a fraction of at least six (6) months being considered as one (1) whole year.

(2) Allowances that the employee has been receiving on a regular basis.

• What is the period covered?

From start of employment up to the date of finality of decision except when the employer has ceased its
operation earlier, in which case, the same should be computed up to the date of closure.

• What is the salary rate to be used in computing it?

The salary rate prevailing at the end of the period of putative service should be the basis for
computation which refers to the period of imputed service for which the employee is entitled to
backwages.

• What are some important principles on separation pay in lieu of reinstatement?


1. Award of separation pay and backwages are not inconsistent with each other. Hence, both may be
awarded to an illegally dismissed employee. The payment of separation pay is in addition to payment of
backwages.

2. Reinstatement cannot be granted when what is prayed for by employee is separation pay in lieu
thereof.

BACKWAGES

• What is the Bustamante doctrine?

In 1996, the Supreme Court changed the rule on the reckoning of backwages. It announced a new
doctrine in the case of Bustamante v. NLRC, which is now known as the Bustamante doctrine. 1 Under
this rule, the term “full backwages” should mean exactly that, i.e., without deducting from backwages
the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.

• What are the components of backwages?

The components of backwages are as follows:

1. Salaries or wages computed on the basis of the wage rate level at the time of the illegal dismissal and
not in accordance with the latest, current wage level of the employee’s position.

2. Allowances and other benefits regularly granted to and received by the employee should be made
part of backwages.

• What are some principles on backwages?

▪ Salary increases during period of unemployment are not included as component in the
computation of backwages.

▪ Dismissed employee’s ability to earn is irrelevant in the award of backwages.

▪ In case reinstatement is ordered, full backwages should be reckoned from the time the
compensation was withheld (which, as a rule, is from the time of illegal dismissal) up to the time of
reinstatement, whether actual or in the payroll.

▪ If separation pay is ordered in lieu of reinstatement, full backwages should be computed from the
time of illegal dismissal until the finality of the decision. The justification is that along with the finality of
the Supreme Court’s decision, the issue on the illegality of the dismissal is finally laid to rest.

▪ If the illegally dismissed employee has reached the optional retirement age of 60 years, his
backwages should only cover the time when he was illegally dismissed up to the time when he reached
60 years. Under Article 287, 60 years is the optional retirement age.

▪ If the employee has reached 65 years of age or beyond, his full backwages should be computed only
up to said age. The contention of the employer that backwages should be reckoned only up to age 60
cannot be sustained.
▪ If employer has already ceased operations, full backwages should be computed only up to the date of
the closure. To allow the computation of the backwages to be based on a period beyond that would be
an injustice to the employer.

▪ Any amount received during payroll reinstatement is deductible from backwages.

LIMITED BACKWAGES

• When is the award of backwages limited?

(1) When the dismissal is deemed too harsh a penalty;

(2) When the employer acted in good faith; or

(3) Where there is no evidence that the employer dismissed the employee.

Thus, the backwages will not be granted in full but limited to 1 year, 2 years or 5 years.

PREVENTIVE SUSPENSION

• When is preventive suspension proper to be imposed?

Preventive suspension may be legally imposed against an errant employee only while he is undergoing
an investigation for certain serious offenses. Consequently, its purpose is to prevent him from causing
harm or injury to the company as well as to his fellow employees. It is justified only in cases where the
employee’s continued presence in the company premises during the investigation poses a serious and
imminent threat to the life or property of the employer or of the employee’s co-workers. Without this
threat, preventive suspension is not proper.

• What are some relevant principles in preventive suspension?

➢ Preventive suspension is not a penalty. This is different from PUNITIVE SUSPENSION which is
imposed as a penalty less harsh than dismissal.

➢ Preventive suspension, by itself, does not signify that the company has already adjudged the
employee guilty of the charges for which she was asked to answer and explain.

➢ Preventive suspension is neither equivalent nor tantamount to dismissal.

➢ If the basis of the preventive suspension is the employee’s absences and tardiness, the imposition of
preventive suspension on him is not justified as his presence in the company premises does not pose
any such serious or imminent threat to the life or property of the employer or of the employee’s co-
workers simply “by incurring repeated absences and tardiness.”

➢ Preventive suspension does not mean that due process may be disregarded.

➢ Preventive suspension should only be for a maximum period of thirty (30) days. After the lapse of the
30- day period, the employer is required to reinstate the worker to his former position or to a
substantially equivalent position.
➢ During the 30-day preventive suspension, the worker is not entitled to his wages and other benefits.
However, if the employer decides, for a justifiable reason, to extend the period of preventive suspension
beyond said 30-day period, he is obligated to pay the wages and other benefits due the worker during
said period of extension. In such a case, the worker is not bound to reimburse the amount paid to him
during the extension if the employer decides to dismiss him after the completion of the investigation.

➢ Extension of period must be justified. During the 30-day period of preventive suspension, the
employer is expected to conduct and finish the investigation of the employee’s administrative case. The
period of thirty (30) days may only be extended if the employer failed to complete the hearing or
investigation within said period due to justifiable grounds. No extension thereof can be made based on
whimsical, capricious or unreasonable grounds.

➢ Preventive suspension lasting longer than 30 days, without the benefit of valid extension, amounts to
constructive dismissal.

➢ Indefinite preventive suspension amounts to constructive dismissal.

C. RETIREMENT

• Who are covered under the retirement pay law?

The following employees are eligible to avail of retirement benefits under Article 302 [287] of the Labor
Code:

1. All employees in the private sector, regardless of their position, designation or status and irrespective
of the method by which their wages are paid;

2. Part-time employees;

3. Employees of service and other job contractors;

4. Domestic helpers (KASAMBAHAY) or persons in the personal service of another;

3. Underground mine workers;

4. Employees of government-owned and/or controlled corporations organized under the Corporation


Code (without original charters).

• Who are excluded?

Article 302 [287], as amended, does not apply to the following employees:

1. Employees of the national government and its political subdivisions, including government-owned
and/ or controlled corporations, if they are covered by the Civil Service Law and its regulations.

2. Employees of retail, service and agricultural establishments or operations regularly employing not
more than ten (10) employees. These terms are defined as follows:

a. “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or
household use. It shall lose its retail character qualified for exemption if it is engaged in both retail and
wholesale of goods.
b. “Service establishment” is one principally engaged in the sale of service to individuals for their own
or household use and is generally recognized as such.

c. “Agricultural establishment/operation” refers to an employer which is engaged in agriculture.

This term refers to all farming activities in all branches and includes, among others, the cultivation and
tillage of soil, production, cultivation, growing and harvesting of any agricultural or horticultural
commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in
farms or ponds, and any activities performed by a farmer or on a farm as an incident to, or in
conjunction with, such farming operations, but does not include the manufacture and/or processing of
sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products.

• What is the optional and compulsory retirement age?

a. Under Article 302 [287].

This article provides for two (2) types of retirement:

(1) Optional retirement upon reaching the age of sixty (60) years.

(2) Compulsory retirement upon reaching the age of sixty-five (65) years.

It is the employee who exercises the option under No. 1 above.

b. Under retirement plan.

The optional and compulsory retirement schemes provided under Article 287 come into play only in the
absence of a retirement plan or agreement setting forth other forms of optional or compulsory
retirement schemes.

Thus, if there is a retirement plan or agreement in an establishment providing for an earlier or older age
of retirement (but not beyond 65 which has been declared the compulsory retirement age), the same
shall be controlling.

c. Retirement at an earlier age or after rendering certain period of service.

Based on Article 287 the employers and employees are free to agree and stipulate on the retirement
age, either in a CBA or employment contract. It is only in the absence of such agreement that the
retirement age shall be fixed by law, that is, in accordance with the optional and compulsory retirement
age prescribed under Article 287.

d. By mutual agreement, employers may be granted the sole and exclusive prerogative to retire
employees at an earlier age or after rendering a certain period of service.

Cainta Catholic School v. Cainta Catholic School Employees Union [CCSEU], where the Supreme Court
upheld the exercise by the school of its option to retire employees pursuant to the existing CBA where it
is provided that the school has the option to retire an employee upon reaching the age limit of sixty
(60) or after having rendered at least twenty (20) years of service to the school, the last three (3) years
of which must be continuous. Hence, the termination of employment of the employees, arising as it did
from an exercise of a management prerogative granted by the mutually-negotiated CBA between the
school and the union is valid.
e. To be valid, retirement at an earlier age must be voluntarily consented to by the employee.

In Jaculbe v. Silliman University, March 16, 2007, the Supreme Court ruled that in order for retirement
at an earlier age to be valid, it must be shown that the employee’s participation in the plan is voluntary.
An employer is free to impose a retirement age of less than 65 for as long as it has the employees’
consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement
age if they feel they can get a better deal with the retirement plan presented by the employer. (See also
Lourdes Cercado v. Uniprom, Inc., Oct. 13, 2010).

• What is the minimum years of service required for entitlement under the law?

Five (5) years is the minimum years of service that must be rendered by the employee before he can
avail of the retirement benefits upon reaching optional or compulsory retirement age under Article 287.

• What is the retirement age of underground mine workers?

The rule is different. The optional retirement age of underground mine workers is 50 years of age; while
the compulsory retirement age is 60 years old.

• What is the minimum number of years of service required of underground mine workers?

Minimum years of service is also 5 years.

• Are the retirement benefits of underground mine workers similar to ordinary retirees?

Yes. In fact, other than the retirement age, all other requirements as well as benefits provided in the law
are applicable to underground mine workers.

AMOUNT OF RETIREMENT PAY

• What is retirement pay under the law?

a. One-half (1) month salary.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee, upon reaching the optional or compulsory retirement age specified in
Article 287, shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every
year of service, a fraction of at least six (6) months being considered as one (1) whole year.

b. Components of one-half (1) month salary.

For purposes of determining the minimum retirement pay due an employee under Article 287, the term
“one-half month salary” shall include all of the following:

(1) Fifteen (15) days salary of the employee based on his latest salary rate.

(2) The cash equivalent of five (5) days of service incentive leave;

(3) One-twelfth (1/12) of the 13th month pay due the employee; and

(4) All other benefits that the employer and employee may agree upon that should be included in the
computation of the employee’s retirement pay.
c. “One-half (1) month salary” means 22.5 days.

“One-half [1] month salary” is equivalent to “22.5 days” arrived at after adding 15 days plus 2.5 days
representing one-twelfth [1/12] of the 13th month pay plus 5 days of service incentive leave.

• What are some principles on retirement benefits?

• 1/12 of 13th month pay and 5 days of service incentive leave (SIL) should not be included if the
employee was not entitled to 13th month pay and SIL during his employment.

Example: R & E Transport, Inc. v. Latag, where it was held that employees 1 who are not entitled to 13th
month pay and SIL pay while still working should not be paid the entire “22.5 days” but only the fifteen
(15) days salary. In other words, the additional 2.5 days representing one-twelfth [1/12] of the 13th
month pay and the five (5) days of SIL should not be included as part of the retirement benefits.

The employee in this case was a taxi driver who was being paid on the “boundary” system basis. It was
undisputed that he was entitled to retirement benefits after working for fourteen (14) years with R & E
Transport, Inc. However, he was not entitled to the 13th month pay since Section 3 of the Rules and
Regulations Implementing P.D. No. 851 exempts from its coverage employers of those who are paid on
purely boundary basis. He was also not entitled to the 5-day service incentive leave pay pursuant to the
Rules to Implement the Labor Code which expressly excepts field personnel and other employees whose
performance is unsupervised by the employer.

But in the 2010 case of Serrano v. Severino Santos Transit, which involves 1 a bus conductor (petitioner)
who worked for 14 years for respondent bus company which did not adopt any retirement scheme. It
was held herein that even if petitioner as bus conductor was paid on commission basis, he falls within
the coverage of R.A. 7641 (Retirement Pay Law, now Article 287 of Labor Code). This means that his
retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay for a
total of 22.5 days. The affirmance by the Court of Appeals of the reliance by the NLRC on R & E Transport
case was held erroneous. For purposes of applying the law on SIL as well as on retirement, there is a
difference between drivers paid under the “boundary system” and conductors paid on commission
basis. This is so because in practice, taxi drivers do not receive fixed wages. They retain only those sums
in excess of the “boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on
the other hand, are paid a certain percentage of the bus’ earnings for the day. It bears emphasis that
under P.D. No. 851 and the SIL Law, the exclusion from its coverage of workers who are paid on a purely
commission basis is only with respect to field personnel.

RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS

• What are the retirement benefits of workers paid by results?

For covered workers who are paid by results and do not have a fixed monthly rate, the basis for the
determination of the salary for fifteen (15) days shall be their average daily salary (ADS). The ADS is the
average salary for the last twelve (12) months reckoned from the date of their retirement, divided by
the number of actual working days in that particular period.

RETIREMENT BENEFITS OF PART-TIME WORKERS

• How should the retirement benefits of part-time workers be computed?


Applying the principles under Article 287, as amended, the components of retirement benefits of part-
time workers may also be computed at least in proportion to the salary and related benefits due them.

ENTITLEMENT OF EMPLOYEES

DISMISSED FOR JUST CAUSE TO RETIREMENT BENEFITS

General rule – Entitled because employee has acquired vested right over the retirement benefits.

➢ Razon, Jr. v. NLRC, May 7, 1990.

Exception - Where just cause termination is cited in the retirement plan as reason to validly deny claim
for retirement benefits.

➢ San Miguel Corporation v. Lao, July 11, 2002.

Here, the company’s retirement plan prohibits the award of retirement benefits to an employee
dismissed for just cause, a proscription that binds the parties to it.

RETIREMENT BENEFITS VS. SEPARATION PAY

a. When both retirement pay and separation pay must be paid.

➢ Aquino v. NLRC, Feb. 11, 1992.

In this case, the Supreme Court ordered the payment to the retrenched employees of both the
separation pay for retrenchment embodied in the CBA as well as the retirement pay provided under a
separate Retirement Plan. The reason is that these two are not mutually exclusive. There is nothing in
the CBA nor in the Retirement Plan that states that an employee who had received separation pay
would no longer be entitled to retirement benefits or that collection of retirement benefits was
prohibited if the employee had already received separation pay

b. When separation pay may be charged to retirement pay.

➢ Ford Philippines Salaried Employees Association v. NLRC, Dec. 11, 1987.

It is provided in the retirement plan that the retirement, death and disability benefits paid in the plan
are considered integrated with and in lieu of termination benefits under the Labor Code, thus, the
retirement fund may be validly used to pay such termination or separation pay because of closure of
business.

c. When employees are entitled to only one form of benefit.

➢ Cipriano v. San Miguel Corporation, Aug. 21, 1968.

The retirement plan provides that the employee shall be entitled to either the retirement benefit
provided therein or the separation pay provided by law, whichever is higher, the employee cannot be
entitled to both benefits.

􃾎 RETIREMENT PAY UNDER THE LABOR CODE OR RETIREMENT PLAN IS SEPARATE AND DISTINCT
FROM THE RETIREMENT PAY UNDER THE SSS, GSIS AND PAG-IBIG.
------------oOo------------

SYLLABUS

MAJOR TOPIC 5

MANAGEMENT PREROGATIVES

• What are management prerogatives?

Management prerogatives are granted to the employer to regulate every aspect of their business,
generally without restraint in accordance with their own discretion and judgment. This privilege is
inherent in the right of employers to control and manage their enterprise effectively. Such aspects of
employment include 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, lay-off of workers and the discipline, dismissal and recall of workers.

• What are the limitations to the exercise of these prerogatives?

1. Limitations imposed by:

a) law;

b) CBA;

c) employment contract;

d) employer policy;

e) employer practice; and

f) general principles of fair play and justice.

2. It is subject to police power.

3. Its exercise should be without abuse of discretion.

4. It should be done in good faith and with due regard to the rights of labor.

For example, an employer cannot prescribe more than 8 hours as normal working hours in a day
because there is a law which limits it to 8 hours. In the same vein, the employer cannot insist that an
employee should observe 8 hours as the daily normal working hours if there is a stipulation in the CBA,
employment contract, or there is an employer policy or practice that the normal working hours is only
7 hours per day.

A. DISCIPLINE

• What are the components of the right to discipline?

The right or prerogative to discipline covers the following:

1) Right to discipline;

2) Right to dismiss;
3) Right to determine who to punish;

4) Right to promulgate rules and regulations;

5) Right to impose penalty; proportionality rule;

6) Right to choose which penalty to impose; and

7) Right to impose heavier penalty than what the company rules prescribe.

The proportionality rule simply means that the penalty to be imposed should be commensurate to the
offense committed. For example, dismissal for committing tardiness or absence for the first time is too
harsh a penalty. A warning, a reprimand would suffice for the first offense, punitive suspension of a day
or two, for the second offense, a longer suspension for a third offense, and finally, dismissal for a fourth
offense.

For committing serious offenses, such as stealing a company-owned property, or stabbing a co-
employee, because of their nature, would certainly deserve the imposition of the supreme penalty of
dismissal, and not just a warning, a reprimand or punitive suspension.

B. TRANSFER OF EMPLOYEES

• What are the various kinds of transfer?

a. Two (2) kinds of transfer. - A transfer means a movement:

1. From one position to another of equivalent rank, level or salary, without a break in the service; or

2. From one office to another within the same business establishment.

• What are salient points to consider in transfer?

▪ The exercise of the prerogative to transfer or assign employees from one office or area of operation
to another is valid provided there is no demotion in rank or diminution of salary, benefits and other
privileges. The transfer should not be motivated by discrimination or made in bad faith or effected as a
form of punishment or demotion without sufficient cause.

▪ Commitment made by the employee like a salesman in the employment contract to be re-assigned
anywhere in the Philippines is binding on him.

▪ Even if the employee is performing well in his present assignment, management may reassign him
to a new post.

▪ The transfer of an employee may constitute constructive dismissal when:

1) When the transfer is unreasonable, inconvenient or prejudicial to the employee;

2) When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges;
and
3) When the employer performs a clear act of discrimination, insensibility, or disdain towards the
employee, which forecloses any choice by the latter except to forego his continued employment.

▪ The refusal of an employee to be transferred may be held justified if there is a showing that the
transfer was directed by the employer under questionable circumstances. For instance, the transfer of
employees during the height of their union’s concerted activities in the company where they were
active participants is illegal.

▪ An employee who refuses to be transferred, when such transfer is valid, is guilty of insubordination
or willful disobedience of a lawful order of an employer under Article 282 of the Labor Code.

▪ Refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship and
anguish is not valid. An employee could not validly refuse lawful orders to transfer based on these
grounds.

▪ Refusal to transfer to overseas assignment is valid.

▪ Refusal to transfer consequent to promotion is valid.

▪ Transfer to avoid conflict of interest is valid.

▪ A transfer from one position to another occasioned by the abolition of the position is valid.

C. PRODUCTIVITY STANDARD

• How may productivity standards be imposed?

The employer has the prerogative to prescribe the standards of productivity which the employees
should comply. The productivity standards may be used by the employer as:

1. an incentive scheme; and/or

2. a disciplinary scheme.

As an incentive scheme, employees who surpass the productivity standards or quota are usually given
additional benefits.

As a disciplinary scheme, employees may be sanctioned or dismissed for failure to meet the productivity
standards or quota.

Illustrative cases:

In International School Manila v. International School Alliance of Educators (ISAE),1 the teacher was
held guilty of gross inefficiency meriting her dismissal on the basis of the Court’s finding that she failed
to measure up to the standards set by the school in teaching Filipino classes.

In Reyes-Rayel v. Philippine Luen Thai Holdings Corp.,2 the validity of the dismissal of petitioner who
was the Corporate Human Resources (CHR) Director for Manufacturing of respondent company, on the
ground of inefficiency and ineptitude, was affirmed on the basis of the Court’s finding that petitioner, on
two occasions, gave wrong information regarding issues on leave and holiday pay which generated
confusion among employees in the computation of salaries and wages.

In Realda v. New Age Graphics, Inc.,3 petitioner, a machine operator of respondent company, was
dismissed on the ground, among others, of inefficiency. In affirming the validity of his dismissal, the
Supreme Court reasoned:

“xxx (T)he petitioner’s failure to observe Graphics, Inc.’s work standards constitutes inefficiency that is a
valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood
to mean failure to attain work goals or work quotas, either by failing to complete the same within the
allotted reasonable period, or by producing unsatisfactory results.”

D. BONUS

• What is the rule on its demandability and enforceability?

Bonus, as a general rule, is an amount granted and paid ex gratia to the employee.

It cannot be forced upon the employer who may not be obliged to assume the onerous burden of
granting bonuses or other benefits aside from the employees’ basic salaries or wages. If there is no
profit, there should be no bonus. If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the employees.

• When is bonus demandable and enforceable?

It becomes demandable and enforceable:

(2) If it has ripened into a company practice;

(3) If it is granted as an additional compensation which the employer agreed to give without any
condition such as success of business or more efficient or more productive operation, hence, it is
deemed part of wage or salary.

(4) When considered as part of the compensation and therefore demandable and enforceable, the
amount is usually fixed. If the amount thereof is dependent upon the realization of profits, the bonus is
not demandable and enforceable.

E. CHANGE OF WORKING HOURS

• What is the extent of the exercise of this prerogative?

Employers have the freedom and prerogative, according to their discretion and best judgment, to
regulate and control the time when workers should report for work and perform their respective
functions.

Manila Jockey Club Employees Labor Union – PTGWO, v. Manila Jockey Club, Inc.1 - The validity of the
exercise of the same prerogative to change the working hours was affirmed in this case. It was found
that while Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00
noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI thereof expressly
reserves to respondent the prerogative to change existing methods or facilities and to change the
schedules of work. Consequently, the hours of work of regular monthly-paid employees were changed
from the original 9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00 p.m. when horse races are held,
that is, every Tuesday and Thursday. The 9:00 a.m. to 5:00 p.m. schedule for non-race days was,
however, retained. Respondent, as employer, cited the change in the program of horse races as reason
for the adjustment of the work schedule. It rationalized that when the CBA was signed, the horse races
started at 10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for
management but to change the work schedule as there was no work to be done in the morning.
Evidently, the adjustment in the work schedule is justified.

F. MARRIAGE BETWEEN EMPLOYEES OF COMPETITOR-EMPLOYERS

• What is the best illustrative case of this prerogative?

Duncan Association of Detailman-PTGWO v. Glaxo Welcome Philippines, Inc.2 - The contract of


employment in this case expressly prohibited an employee from having a relationship with an employee
of a competitor company. It provides:

“10. You agree to disclose to management any existing or future relationship you may have, either by
consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose
a possible conflict of interest in management discretion, you agree to resign voluntarily from the
Company as a matter of Company policy.”

The Supreme Court ruled that this stipulation is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees of competitor-companies upon its
employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In other words, the policy is imposed to avoid conflict of
interest. In laying down the assailed company policy, the employer only aims to protect its interests
against the possibility that a competitor company will gain access to its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information.

This case of Duncan should be distinguished from the following related cases:

1. Philippine Telegraph and Telephone Company (PT&T) v. NLRC. - It was 1 declared here that the
company policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination afforded all women
workers by our labor laws and by no less than the Constitution.

2. Star Paper Corp. v. Simbol.2 - The following policies were struck down as invalid for violating the
standard of reasonableness which is being followed in our jurisdiction, otherwise called the “Reasonable
Business Necessity Rule”:

“1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.

“2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one of
them should resign to preserve the policy stated above.”
It was in this case of Star Paper that the Supreme Court pronounced that in Duncan, the policy against
marriage has passed and complied with the “Reasonable Business Necessity Rule” because of the
conflict of interest sought to be avoided. But in PT&T, there was no showing that there ever was a
reasonable business necessity sought to be protected by the policy against marriage. So also as in this
case of Star Paper where there is no showing of such reasonable business necessity.

NOTE: Besides the foregoing, Article 136 of the Labor Code considers as an unlawful act of the employer
to require as a condition for or continuation of employment that a woman employee shall not get
married or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated. It is likewise an unlawful act of the employer, to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

G. POST-EMPLOYMENT BAN

• Is a non-compete clause valid?

Yes. The employer and the employee are free to stipulate in an employment contract prohibiting the
employee within a certain period from and after the termination of his employment, from:

(1) starting a similar business, profession or trade; or

(2) working in an entity that is engaged in a similar business that might compete with the employer.

The non-compete clause is agreed upon to prevent the possibility that upon an employee’s termination
or resignation, he might start a business or work for a competitor with the full competitive advantage of
knowing and exploiting confidential and sensitive information, trade secrets, marketing plans,
customer/client lists, business practices, upcoming products, etc., which he acquired and gained from
his employment with the former employer.

Contracts which prohibit an employee from engaging in business in competition with the employer are
not necessarily void for being in restraint of trade.

• What are the requisites in order for a non-compete clause to be valid?

A non-compete clause is not necessarily void for being in restraint of trade as long as there are
reasonable limitations as to three (3) things: time, place and trade.

Example:

The non-compete clause (called “Non-Involvement Provision”) in the 2007 case of Daisy B. Tiu v.
Platinum Plans Philippines, Inc., provides as follows:

“8. NON-INVOLVEMENT PROVISION – The EMPLOYEE further undertakes that during his/her
engagement with EMPLOYER and in case of separation from the Company, whether voluntary or for
cause, he/ she shall not, for the next TWO (2) years thereafter, engage in or be involved with any
corporation, association or entity, whether directly or indirectly, engaged in the same business or
belonging to the same pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall
render the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos
(P100,000.00) for and as liquidated damages.”

Starting on January 1, 1993, petitioner worked for respondent as Senior Assistant Vice-President and
Territorial Operations Head in charge of its Hongkong and Asean operations under a 5-year contract of
employment containing the afore-quoted clause. On September 16, 1995, petitioner stopped reporting
for work. In November 1995, she became the Vice-President for Sales of Professional Pension Plans, Inc.,
a corporation engaged also in the pre-need industry. Consequently, respondent sued petitioner for
damages before the RTC of Pasig City. Respondent alleged, among others, that petitioner’s employment
with Professional Pension Plans, Inc. violated the above-quoted non-involvement clause in her contract
of employment. Respondent thus prayed for P100,000 as compensatory damages; P200,000 as moral
damages; P100,000 as exemplary damages; and 25% of the total amount due plus P1,000 per counsel’s
court appearance, as attorney’s fees. Petitioner countered that the non-involvement clause was
unenforceable for being against public order or public policy: First, the restraint imposed was much
greater than what was necessary to afford respondent a fair and reasonable protection. Petitioner
contended that the transfer to a rival company was an accepted practice in the pre- need industry. Since
the products sold by the companies were more or less the same, there was nothing peculiar or unique
to protect. Second, respondent did not invest in petitioner’s training or improvement. At the time
petitioner was recruited, she already possessed the knowledge and expertise required in the pre-need
industry and respondent benefited tremendously from it. Third, a strict application of the non-
involvement clause would amount to a deprivation of petitioner’s right to engage in the only work she
knew.

In affirming the validity of the Non-Involvement Clause, the Supreme Court ratiocinated as follows:

“xxx a non-involvement clause is not necessarily void for being in restraint of trade as long as there
are reasonable limitations as to time, trade, and place. “In this case, the non-involvement clause has a
time limit: two years from the time petitioner’s employment with respondent ends. It is also limited
as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to
respondent’s. It is limited as to place since the prohibition covers only Hongkong and Asean operations.

“More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations
Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and
highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business
soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly
competitive marketing environment. In sum, we find the non-involvement clause not contrary to
public welfare and not greater than is necessary to afford a fair and reasonable protection to
respondent.

“Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent
P100,000 as liquidated damages. While we have equitably reduced liquidated damages in certain cases,
we cannot do so in this case, since it appears that even from the start, petitioner had not shown the
least intention to fulfill the noninvolvement clause in good faith.”

------------oOo------------

SYLLABUS

MAJOR TOPIC 6

SOCIAL WELFARE LEGISLATION


A. SSS LAW (R.A. No. 8282)

• Who are covered employers?

a. An employer or any person who uses the services of another person in business, trade, industry or
any undertaking.

b. A social, civic, professional, charitable and other non-profit organizations which hire the services of
employees are considered “employers.”

c. A foreign government, international organization or its wholly-owned instrumentality such as an


embassy in the Philippines, may enter into an administrative agreement with the SSS for the coverage of
its Filipino employees.

• Who are compulsorily covered employees?

a. A private employee, whether permanent, temporary or provisional, who is not over 60 years old.

b. A domestic worker or kasambahay who has rendered at least one (1) month of service.

c. A Filipino seafarer upon the signing of the standard contract of employment between the seafarer and
the manning agency which, together with the foreign ship owner, act as employers.

d. An employee of a foreign government, international organization or their wholly-owned


instrumentality based in the Philippines, which entered into an administrative agreement with the SSS
for the coverage of its Filipino workers.

e. The parent, spouse or child below 21 years old of the owner of a single proprietorship business.

• Are self-employed persons covered?

Yes. A self-employed person, regardless of trade, business or occupation, with an income of at least
P1,000 a month and not over 60 years old, should register with the SSS. Included, but not limited to, are
the following selfemployed persons:

a. Self-employed professionals;

b. Business partners, single proprietors and board directors;

c. Actors, actresses, directors, scriptwriters and news reporters who are not under an employer-
employee relationship;

d. Professional athletes, coaches, trainers and jockeys;

e. Farmers and fisherfolks; and

f. Workers in the informal sector such as cigarette vendors, watch-your-car boys, hospitality girls, among
others.

Unless otherwise specified, all provisions of the law, R.A. No. 8282, applicable to covered employees
shall also be applicable to the covered self-employed persons.

A self-employed person shall be both employee and employer at the same time.
• Who may be covered voluntarily?

1. Separated Members

A member who is separated from employment or ceased to be self-employed/OFW/non-working


spouse and would like to continue contributing.

2. Overseas Filipino Workers (OFWs)

A Filipino recruited in the Philippines by a foreign-based employer for employment abroad or one who
legitimately entered a foreign country (i.e., tourist, student) and is eventually employed.

3. Non-working spouses of SSS members A person legally married to a currently employed and actively
paying SSS member who devotes full time in the management of household and family affairs may be
covered on a voluntary basis, provided there is the approval of the working spouse. The person should
never have been a member of the SSS.

The contributions will be based on 50 percent (50%) of the working spouse’s last posted monthly salary
credit but in no case shall it be lower than P1,000.

• What is the effective date of coverage?

For compulsory coverage:

1. For employer - Compulsory coverage of the employer shall take effect on the first day of his operation
or on the first day he hires employee/s. The employer is given only 30 days from the date of
employment of employee to report the person for coverage to the SSS.

2. For employee - Compulsory coverage of the employee shall take effect on the first day of his
employment.

3. For self-employed - The compulsory coverage of the self-employed person shall take effect upon his
registration with the SSS or upon payment of the first valid contribution, in case of initial coverage.

For voluntary coverage:

1. For an OFW – upon first payment of contribution, in case of initial coverage.

2. For a non-working spouse – upon first payment of contribution.

3. For a separated member – on the month he/she resumed payment of contribution.

• Who are excluded employers?

Government and any of its political subdivisions, branches or instrumentalities, including corporations
owned or controlled by the Government with original charters.

• Who are excluded employees?

Workers whose employment or service falls under any of the following circumstances are not covered:

(1) Employment purely casual and not for the purpose of occupation or business of the employer;
(2) Service performed on or in connection with an alien vessel by an employee if he is employed when
such vessel is outside the Philippines;

(3) Service performed in the employ of the Philippine Government or instrumentality or agency thereof;

(4) Service performed in the employ of a foreign government or international organization, or their
whollyowned instrumentality: Provided, however, That this exemption notwithstanding, any foreign
government, international organization or their wholly-owned instrumentality employing workers in the
Philippines or employing Filipinos outside of the Philippines, may enter into an agreement with the
Philippine Government for the inclusion of such employees in the SSS except those already covered by
their respective civil service retirement systems: Provided, further, That the terms of such agreement
shall conform with the provisions of R.A. No. 8282 on coverage and amount of payment of contributions
and benefits: Provided, finally, That the provisions of this Act shall be supplementary to any such
agreement; and

(5) Such other services performed by temporary and other employees which may be excluded by
regulation of the Social Security Commission. Employees of bona-fide independent contractors shall not
be deemed employees of the employer engaging the service of said contractors.

• What are the classifications of benefits?

The SSS benefits may be classified into two (2) as follows:

(a) Social security benefits:

1) Sickness

2) Maternity

3) Retirement

4) Disability

5) Death and funeral.

(b) Employees’ compensation benefits.

• Who are primary beneficiaries?

The following are primary beneficiaries:

1. The dependent spouse until he or she remarries;

2. The dependent legitimate, legitimated or legally adopted, and illegitimate children who are not yet
21 years of age. The dependent illegitimate children shall be entitled to 50% of the share of the
legitimate, legitimated or legally adopted children. However, in the absence of the dependent
legitimate, legitimated children of the member, his/her dependent illegitimate children shall be entitled
to 100% of the benefits

• Who are secondary beneficiaries?

The following are secondary beneficiaries:


1. The dependent parents, in the absence of the primary beneficiaries.

2. Any other person designated by the member as his/her secondary beneficiary, in the absence of all
the foregoing primary beneficiaries and dependent parents.

B. GSIS LAW (R.A. No. 8291)

• Who are compulsorily required to become members of the GSIS?

1. All government personnel, whether elective or appointive, irrespective of status of appointment,


provided they are receiving fixed monthly compensation and have not reached the mandatory
retirement age of 65 years, are compulsorily covered as members of the GSIS and shall be required to
pay contributions.

2. However, employees who have reached the retirement age of 65 or more shall also be covered,
subject to the following rules:

An employee who is already beyond the mandatory retirement age of 65 shall be compulsorily covered
and be required to pay both the life and retirement premiums under the following situations:

a. An elective official who at the time of election to public office is below 65 years of age and will be 65
years or more at the end of his term of office, including the period/s of his re-election to public office
thereafter without interruption.

b. Appointive officials who, before reaching the mandatory age of 65, are appointed to government
position by the President of the Republic of the Philippines and shall remain in government service at
age beyond 65.

c. Contractual employees including casuals and other employees with an employee-government agency
relationship are also compulsorily covered, provided they are receiving fixed monthly compensation and
rendering the required number of working hours for the month.

• What are the classes of membership in the GSIS?

Membership in the GSIS is classified either by type or status of membership.

• As to type of members, there are regular and special members:

(a) Regular Members – are those employed by the government of the Republic of the Philippines,
national or local, legislative bodies, government-owned and controlled corporations (GOCC) with
original charters, government financial institutions (GFIs), except uniformed personnel of the Armed
Forces of the Philippines, the Philippine National Police, Bureau of Jail Management and Penology
(BJMP) and Bureau of Fire Protection (BFP), who are required by law to remit regular monthly
contributions to the GSIS.

(b) Special Members – are constitutional commissioners, members of the judiciary, including those with
equivalent ranks, who are required by law to remit regular monthly contributions for life insurance
policies to the GSIS in order to answer for their life insurance benefits defined under RA 8291.

• As to status of membership, there are active and inactive members.


(a) Active member – refers to a member of the GSIS, whether regular or special, who is still in the
government service and together with the government agency to which he belongs, is required to pay
the monthly contribution.

(b) Inactive member – a member who is separated from the service either by resignation, retirement,
disability, dismissal from the service, retrenchment or, who is deemed retired from the service under
this Act.

• When does membership become effective?

The effective date of membership shall be the date of the member’s assumption to duty on his original
appointment or election to public office.

• What is the effect of separation from the service?

A member separated from the service shall continue to be a member, and shall be entitled to whatever
benefits he has qualified to in the event of any contingency compensable under the GSIS Law.

• Who are excluded from the compulsory coverage of the GSIS Law?

The following employees are excluded from compulsory coverage:

(a) Uniformed personnel of the Armed Forces of the Philippines (AFP), Philippine National Police (PNP),
Bureau of Fire Protection (BFP) and Bureau of Jail Management and Penology (BJMP);

(b) Barangay and Sanggunian Officials who are not receiving fixed monthly compensation;

(c) Contractual Employees who are not receiving fixed monthly compensation; and

(d) Employees who do not have monthly regular hours of work and are not receiving fixed monthly
compensation.

• What are the kinds of benefits under the GSIS Law?

The following are the benefits under the GSIS Law:

(a) Compulsory Life Insurance Benefits under the Life Endowment Policy (LEP)

(b) Compulsory Life Insurance Benefits under the Enhanced Life Policy (ELP)

(c) Retirement Benefits

(d) Separation Benefit

(e) Unemployment Benefit

(f) Disability Benefits

(g) Survivorship Benefits

(h) Funeral Benefits

• Who are beneficiaries under the GSIS Law?

There are two (2) kinds of beneficiaries under the GSIS Law as follows:
1. Primary beneficiaries — The legal dependent spouse until he/she remarries and the dependent
children.

2. Secondary beneficiaries — The dependent parents and, subject to the restrictions on dependent
children, the legitimate descendants.

• Who are dependents under the GSIS Law?

Dependents shall be the following:

(a) the legitimate spouse dependent for support upon the member or pensioner;

(b) the legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried,
not gainfully employed, not over the age of majority, or is over the age of majority but incapacitated and
incapable of self-support due to a mental or physical defect acquired prior to age of majority; and

(c) the parents dependent upon the member for support.

Gainful Occupation — Any productive activity that provided the member with income at least equal to
the minimum compensation of government employees.

C. PORTABILITY LAW (R.A. No. 7699)

• What is limited portability scheme?

R.A. No. 7699 was enacted to enable those from the private sector who transfer to the government
service or from the government sector to the private sector to combine their years of service and
contributions which have been credited with the SSS or GSIS, as the case may be, to satisfy the required
number of years of service for entitlement to the benefits under the applicable laws.

• What is totalization?

The term “totalization” refers to the process of adding up the periods of creditable services or
contributions under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of
benefits.

What is portability?

On the other hand, the term “portability” refers to the transfer of funds for the account and benefit of a
worker who transfers from one system to the other.

• How are benefits computed?

All services rendered or contributions paid by a member personally and those that were paid by the
employers to either System shall be considered in the computation of benefits which may be claimed
from either or both Systems. However, the amount of benefits to be paid by one System shall be in
proportion to the services rendered or periods of contributions made to that System.

“Benefits” refer to the following:

1. Old-age benefit;

2. Disability benefit;
3. Survivorship benefit;

4. Sickness benefit;

5. Medicare benefit, provided that the member shall claim said benefit from the System where he was
last a member; and

6. Such other benefits common to both Systems that may be availed of through totalization.

• When does totalization apply?

a. if a worker is not qualified for any benefits from both Systems; or

b. if a worker in the public sector is not qualified for any benefits from the GSIS; or

c. if a worker in the private sector is not qualified for any benefits from the SSS.

For purposes of computation of benefits, totalization applies in all cases so that the contributions made
by the worker-member in both Systems shall provide maximum benefits which otherwise will not be
available. In no case shall the contribution be lost or forfeited.

• What is the effect if worker is not qualified after totalization?

If after totalization, the worker-member still does not qualify for any benefit as listed in the law, the
member will then get whatever benefits correspond to his/her contributions in either or both Systems.

• What is the effect if worker qualifies for benefits in both Systems?

If a worker qualifies for benefits in both Systems, totalization shall not apply.

D. EMPLOYEE’S COMPENSATION

COVERAGE AND WHEN COMPENSABLE

• What is the State Insurance Fund [SIF]?

The State Insurance Fund (SIF) is built up by the contributions of employers based on the salaries of their
employees as provided under the Labor Code.

There are two (2) separate and distinct State Insurance Funds: one established under the SSS for private
sector employees; and the other, under the GSIS for public sector employees. The management and
investment of the Funds are done separately and distinctly by the SSS and the GSIS. It is used exclusively
for payment of the employees’ compensation benefits and no amount thereof is authorized to be used
for any other purpose.

• What are the agencies involved in the implementation of the Employees Compensation Program
(ECP)?

There are three (3) agencies involved in the implementation of the Employees’ Compensation Program
(ECP). These are: (1) The Employees’ Compensation Commission (ECC) which is mandated to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases from (2) the Government
Service Insurance System (GSIS) and (3) the Social Security System (SSS), the administering agencies of
the ECP.
• Who are covered by the ECP?

a. General coverage. – The following shall be covered by the Employees’ Compensation Program (ECP):

1. All employers;

2. Every employee not over sixty (60) years of age;

3. An employee over 60 years of age who had been paying contributions to the System (GSIS/SSS) prior
to age sixty (60) and has not been compulsorily retired; and

4. Any employee who is coverable by both the GSIS and SSS and should be compulsorily covered by both
Systems.

b. Sectors of employees covered by the ECP. - The following sectors are covered under the ECP:

1. All public sector employees including those of government-owned and/or controlled corporations and
local government units covered by the GSIS;

2. All private sector employees covered by the SSS; and

3. Overseas Filipino workers (OFWs), namely:

a. Filipino seafarers compulsorily covered under the SSS.

b. Land-based contract workers provided that their employer, natural or juridical, is engaged in any
trade, industry or business undertaking in the Philippines; otherwise, they shall not be covered by the
ECP.

• When is the start of coverage of employees under the ECP?

The coverage under the ECP of employees in the private and public sectors starts on the first day of their
employment.

• What are the benefits under the ECP?

The following are the benefits provided under the Labor Code:

a. Medical Benefits

b. Disability Benefits

1. Temporary total disability

2. Permanent total disability

3. Permanent partial disability

c. Death Benefit

d. Funeral Benefit

------------oOo------------

SYLLABUS
MAJOR TOPIC 7

LABOR RELATIONS

A. RIGHT TO SELF-ORGANIZATION

1. WHO MAY EXERCISE THE RIGHT

• Who are eligible to join, form or assist a labor organization for purposes of collective bargaining?

• In the private sector:

1. All persons employed in commercial, industrial and agricultural enterprises;

2. Employees of government-owned and/or controlled corporations without original charters


established under the Corporation Code;

3. Employees of religious, charitable, medical or educational institutions, whether operating for profit or
not;

4. Front-line managers, commonly known as supervisory employees [See discussion below];

5. Alien employees [See discussion below];

6. Working children [See discussion below];

7. Homeworkers [See discussion below];

8. Employees of cooperatives [See discussion below]; and

9. Employees of legitimate contractors not with the principals but with the contractors

• In the public sector:

All rank-and-file employees of all branches, subdivisions, instrumentalities, and agencies of


government, including government-owned and/or controlled corporations with original charters, can
form, join or assist employees’ organizations of their own choosing.

• Are front-line managers or supervisors eligible to join, form or assist a labor organization?

Yes, but only among themselves. They cannot join a rank-and-file union.

• Do alien employees have the right to join a labor organization?

No, except if the following requisites are complied with:

(1) He should have a valid working permit issued by the DOLE; and

(2) He is a national of a country which grants the same or similar rights to Filipino workers OR which has
ratified either ILO Convention No. 87 or ILO Convention No. 98 (ON THE RIGHT TO SELFORGANIZATION
OF WORKERS) as certified by the Philippine Department of Foreign Affairs (DFA).

• Do members of cooperatives have the right to join, form or assist a labor organization?

No, because they are co-owners of the cooperative.


• What about employees of a cooperative?

Yes, because they have employer-employee relationship with the cooperative.

• What about members who are at the same time employees of the cooperative?

No, because the prohibition covers employees of the cooperative who are at the same time members
thereof. But employee-members of a cooperative may withdraw as members of the cooperative for
purposes of joining a labor union.

• Can employees of job contractors join, form or assist a labor organization?

Yes, but not for the purpose of collective bargaining with the principal but with their direct employer –
the job contractor.

• Are self-employed persons allowed to join, form or assist a labor organization?

Yes, for their mutual aid and protection but not for collective bargaining purposes since they have no
employers but themselves. BUT AS AND BY WAY OF DISTINCTION, THEIR LABOR ORGANIZATION IS
CALLED “WORKERS’ ASSOCIATION.”

This rule applies as well to ambulant, intermittent and other workers, rural workers and those without
any definite employers. The reason for this rule is that these persons have no employers with whom
they can collectively bargain.

2. COMMINGLING or MIXED MEMBERSHIP

• Is COMMINGLING or MIXED MEMBERSHIP of supervisors and rank-and-file union in one union


allowed? Is it a ground to cancel its registration?

No. It is not allowed. However, it bears noting that in case there is commingling or mixed membership
of supervisors and rank-and-file employees in one union, the new rule enunciated in Article 256 [245-A]
of the Labor Code, unlike in the old law, is that it cannot be invoked as a ground for the cancellation of
the registration of the union. The employees so improperly included are automatically deemed removed
from the list of members of said union. In other words, their removal from the said list is by operation of
law.

3. WHO CANNOT FORM, JOIN OR ASSIST LABOR ORGANIZATIONS

1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR ORGANIZATIONS.

a. In the private sector.

1. Top and middle level managerial employees; and

2. Confidential employees.

b. In the public sector.

The following are not eligible to form employees’ organizations:

1. High-level employees whose functions are normally considered as policy-making or managerial or


whose duties are of a highly confidential nature;
2. Members of the Armed Forces of the Philippines;

3. Police officers;

4. Policemen;

5. Firemen; and

6. Jail guards.

• Are managerial employees allowed unionize?

There are 3 types of managerial employees:

1. Top Management

2. Middle Management

3. First-Line Management (also called supervisory level)

The first two above are absolutely prohibited; but the third, being supervisors, are allowed but only
among themselves.

• Are confidential employees allowed to join, form or assist a labor organization?

No, under the confidential employee rule.

“Confidential employees” are those who meet the following criteria:

(1) They assist or act in a confidential capacity;

(2) To persons or officers who formulate, determine, and effectuate management policies specifically in
the field of labor relations. If not related to labor relations, an employee can never be considered as
confidential employee as would deprive him of his right to self-organization.

The two (2) criteria are cumulative and both must be met if an employee is to be considered a
“confidential employee” that would deprive him of his right to form, join or assist a labor organization.

4. DOCTRINE OF NECESSARY IMPLICATION

• What is the doctrine of necessary implication?

Under the confidential employee rule, a rank-and-file employee or a supervisory employee, is elevated
to the position of a managerial employee, under another doctrine called the DOCTRINE OF NECESSARY

IMPLICATION, hence, he is treated as if he is a managerial employee because of his access to


confidential information related to labor relations. THE DOCTRINE OF NECESSARY IMPLICATION IS
THEREFORE THE LEGAL BASIS FOR INELIGIBILITY OF CONFIDENTIAL EMPLOYEE TO JOIN A UNION.

For example, not all secretaries to top officials of the company may be considered as confidential
employees, unless they have access to confidential information related to labor relations, such as when
they transcribe or type/encode the counter-proposals of management on the proposals of the SEBA in a
CBA negotiation.
That access to such counter-proposals is the type of access contemplated under this rule.

• What are some principles on the right to self-organization?

• Any employee, whether employed for a definite period or not, shall, beginning on the first day of his
service, be eligible for membership in any labor organization.

• Right to join a union cannot be made subject of a CBA stipulation.

5. RIGHTS AND CONDITIONS OF MEMBERSHIP

a. NATURE OF RELATIONSHIP

• What is the relationship of the union and its members?

It is in the nature of principal-agent relationship, the members being the principal and the union, the
agent.

• What is the relationship of the labor union and federation?

It is also in the nature of principal-agent relationship, the labor union being the principal and the
federation, the agent.

a.1. AFFILIATION AND DISAFFILIATION OF THE LOCAL UNION FROM THE MOTHER UNION

1. AFFILIATION.

a. Mother union.

In relation to an affiliate, the federation or national union is commonly known as the “mother union.”

This term is not found in law but oftentimes, the Supreme Court uses this term to describe a federation
or a national union.

b. Affiliate.

An “affiliate” refers to:

(1) An independent union affiliated with a federation or a national union; or

(2) A local chapter which has been subsequently granted independent registration but did not
disaffiliate from the federation or national union which created it.

c. A chartered local/local chapter, not an affiliate.

Based on the above definition and description, technically, a local chapter created through the mode of
chartering by a mother union under Article 234-A of the Labor Code, cannot be properly called an
“affiliate” if it has not acquired any independent registration of its own.

The contract that binds a mother union and an affiliate is called “Contract of Affiliation”; while that of a
mother union and the chartered local/local chapter is called “Charter Certificate.”

d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage of the affiliate. No doubt, the
purpose of affiliation by a local union with a mother union (federation or national union) is to increase
by collective action its bargaining power in respect of the terms and conditions of labor.

e. Principal-agent relationship.

To iterate, the mother union, acting for and in behalf of its affiliate, has the status of an agent while the
local union remains the principal – the basic unit of the association free to serve the common interest of
all its members subject only to the restraints imposed by the constitution and by-laws of the association.

f. Some principles on affiliation.

• Independent legal personality of an affiliate union is not affected by affiliation.

• Affiliate union becomes subject of the rules of the federation or national union.

• The appendage of the acronym of the federation or national union after the name of the affiliate
union in the registration with the DOLE does not change the principal-agent relationship between them.
Such inclusion of the acronym is merely to indicate that the local union is affiliated with the federation
or national union at the time of the registration. It does not mean that the affiliate union cannot
independently stand on its own.

• The fact that it was the federation which negotiated the CBA does not make it the principal and the
affiliate or local union which it represents, the agent.

• In case of illegal strike, the local union, not the mother union, is liable for damages.

2. DISAFFILIATION.

a. Right to disaffiliate.

The right of the affiliate union to disaffiliate from its mother federation or national union is a
constitutionally-guaranteed right which may be invoked by the former at any time. It is axiomatic that
an affiliate union is a separate and voluntary association free to serve the interest of all its members -
consistent with the freedom of association guaranteed in the Constitution.

b. Disaffiliation of independently-registered union and local chapter, distinguished.

The disaffiliation of an independently-registered union does not affect its legitimate status as a labor
organization. However, the same thing may not be said of a local chapter which has no independent
registration since its creation was effected pursuant to the charter certificate issued to it by the
federation or national union. Once a local chapter disaffiliates from the federation or national union
which created it, it ceases to be entitled to the rights and privileges granted to a legitimate labor
organization. Hence, it cannot, by itself, file a petition for certification election.

c. Some principles on disaffiliation.

▪ Disaffiliation does not divest an affiliate union of its legal personality.

▪ Disaffiliation of an affiliate union is not an act of disloyalty.


▪ Disaffiliation for purposes of forming a new union does not terminate the status of the members
thereof as employees of the company. By said act of disaffiliation, the employees who are members of
the local union did not form a new union but merely exercised their right to register their local union.

The local union is free to disaffiliate from its mother union.

▪ Disaffiliation should be approved by the majority of the union members.

▪ Disaffiliation terminates the right to check-off federation dues. The obligation to check-off federation
dues is terminated with the valid disaffiliation of the affiliate union from the federation with which it
was previously affiliated.

▪ Disaffiliation does not affect the CBA. It does not operate to amend it or change the administration of
the contract.

▪ Disaffiliating from the federation and entering into a CBA with the employer does not constitute an
unfair labor practice.

▪ Disaffiliation is not a violation of the union security clause.

a.2. SUBSTITUTIONARY DOCTRINE

1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE LIFE OF A CBA.

It simply refers to the substitution of the existing SOLE AND EXCLUSIVE BARGAINING AGENT (“SEBA” or
simply “bargaining agent”) by a newly certified SEBA which defeated it in the certification election.

As new SEBA, it is duty-bound to respect the existing CBA but it can renegotiate for new terms and
conditions thereof.

2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE DEPOSED UNION’S PERSONAL UNDERTAKINGS.

In case of change of bargaining agent under the substitutionary doctrine, the new bargaining agent is
not bound by the personal undertakings of the deposed union like the “no strike, no lockout” clause in
a CBA which is the personal undertaking of the bargaining agent which negotiated it.

3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.

• The substitutionary doctrine cannot be invoked to subvert an existing CBA, in derogation of the
principle of freedom of contract. The substitution of a bargaining agent cannot be allowed if the purpose
is to subvert an existing CBA freely entered into by the parties. Such act cannot be sanctioned in law or
in equity as it is in derogation of the principle underlying the freedom of contract and good faith in
contractual relations.

• The substitutionary doctrine is applicable also to a situation where the local union, which was created
through the process of chartering by the mother union, disaffiliates from the latter after it secured an
independent registration. The local union will thus be substituted to that of the federation which
negotiated the CBA as in Elisco-Elirol Labor Union [NAFLU] v. Noriel, where petitioner union was
created through the mode of chartering by the National Federation of Labor Unions (NAFLU) and later, it
secured its independent registration with the BLR and disaffiliated with NAFLU by virtue of a resolution
by its general membership.

B. BARGAINING UNIT

• What is a bargaining unit?

A “bargaining unit” refers to a group of employees sharing mutual interests within a given employer
unit, comprised of all or less than all of the entire body of employees in the employer unit or any specific
occupational or geographical grouping within such employer unit. It may also refer to the group or
cluster of jobs or positions within the employer’s establishment that supports the labor organization
which is applying for registration.

(a) TEST TO DETERMINE THE CONSTITUENCY OF AN APPROPRIATE BARGAINING UNIT

• What are the four tests to determine appropriate bargaining unit?

Based on jurisprudence, there are certain tests which may be used in determining the appropriate
collective bargaining unit, to wit:

(1) Community or mutuality of interest doctrine;

(2) Globe doctrine or will of the members;

(3) Collective bargaining history doctrine; and

(4) Employment status doctrine.

1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.

Under this doctrine, the employees sought to be represented by the collective bargaining agent must
have community or mutuality of interest in terms of employment and working conditions as evinced by
the type of work they perform. It is characterized by similarity of employment status, same duties and
responsibilities and substantially similar compensation and working conditions.

St. James School of Quezon City v. Samahang Manggagawa sa St. James School of Quezon City.1 -

Respondent union sought to represent the rank-and-file employees (consisting of the motor pool,
construction and transportation employees) of petitioner-school’s Tandang Sora campus. Petitioner-
school opposed it by contending that the bargaining unit should not only be composed of said
employees but must include administrative, teaching and office personnel in its five (5) campuses. The
Supreme Court disagreed with said contention. The motor pool, construction and transportation
employees of the Tandang Sora campus had 149 qualified voters at the time of the certification election,
hence, it was ruled that the 149 qualified voters should be used to determine the existence of a quorum
during the election. Since a majority or 84 out of the 149 qualified voters cast their votes, a quorum
existed during the certification election. The computation of the quorum should be based on the rank-
and-file motor pool, construction and transportation employees of the Tandang Sora campus and not on
all the employees in petitioner’s five (5) campuses. Moreover, the administrative, teaching and office
personnel are not members of the union. They do not belong to the bargaining unit that the union seeks
to represent.
Other cases:

(1) San Miguel Corporation v. Laguesma,2 involving a petition of the union which seeks to represent
the sales personnel in the various Magnolia sales offices in Northern Luzon. Petitioner company,
however, opposed it by taking the position that each sales office should constitute one bargaining unit.
In disagreeing with this proposition of petitioner, the High Court said: “What greatly militates against
this position (of the company) is the meager number of sales personnel in each of the Magnolia sales
office in Northern Luzon. Even the bargaining unit sought to be represented by respondent union in the
entire Northern Luzon sales area consists only of approximately fiftyfive (55) employees. Surely, it would
not be for the best interest of these employees if they would further be fractionalized. The adage ‘there
is strength in number’ is the very rationale underlying the formation of a labor union.”

(2) San Miguel Corporation Supervisors and Exempt Employees Union v. Laguesma,3 involving the
issue of validity of constituting as one CBU of employees working in San Miguel’s three (3) plants located
in three (3) different places, namely: (1) in Cabuyao, Laguna, (2) in Otis, Pandacan, Metro Manila, and (3)
in San Fernando, Pampanga. It was declared that geographical location is immaterial and therefore can
be completely disregarded if the communal or mutual interest of the employees are not sacrificed. The
distance among the 3 plants is not productive of insurmountable difficulties in the administration of
union affairs. Neither are there regional differences that are likely to impede the operations of a single
bargaining representative.

(3) Similar to this case is University of the Philippines v. Ferrer-Calleja,4 where all non-academic
rankand- file employees of the University of the Philippines in its various campuses, to wit: (1) Diliman,
Quezon City; (2) Padre Faura, Manila; (3) Los Baños, Laguna; and (4) the Visayas, were allowed to
participate in a certification election as one bargaining unit.

2. GLOBE DOCTRINE.

This principle is based on the will of the employees. It is called Globe doctrine because this principle was
first enunciated in the United States case of Globe Machine and Stamping Co.,5 where it was ruled, in
defining the appropriate bargaining unit, that in a case where the company’s production workers can be
considered either as a single bargaining unit appropriate for purposes of collective bargaining or as
three (3) separate and distinct bargaining units, the determining factor is the desire of the workers
themselves. Consequently, a certification election should be held separately to choose which
representative union will be chosen by the workers.

International School Alliance of Educators [ISAE] v. Quisumbing.6 - The Supreme Court ruled here that
foreign-hired teachers do not belong to the bargaining unit of the local-hires because the former have
not indicated their intention to be grouped with the latter for purposes of collective bargaining.
Moreover, the collective bargaining history of the school also shows that these groups were always
treated separately.

3. COLLECTIVE BARGAINING HISTORY DOCTRINE.

This principle puts premium to the prior collective bargaining history and affinity of the employees in
determining the appropriate bargaining unit. However, the existence of a prior collective bargaining
history has been held as neither decisive nor conclusive in the determination of what constitutes an
appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit Lumber Development Company Workers

Union.7 - It was ruled here that there is mutuality of interest among the workers in the sawmill division
and logging division as to justify their formation of a single bargaining unit. This holds true despite the
history of said two divisions being treated as separate units and notwithstanding their geographical
distance from each other.

4. EMPLOYMENT STATUS DOCTRINE.

The determination of the appropriate bargaining unit based on the employment status of the employees
is considered an acceptable mode. For instance, casual employees and those employed on a day-to-day
basis, according to the Supreme Court in Philippine Land-Air-Sea Labor Union v. CIR, 1 do not have the
mutuality or community of interest with regular and permanent employees. Hence, their inclusion in the
bargaining unit composed of the latter is not justified. Confidential employees, by the very nature of
their functions, 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 behind
the ineligibility of managerial employees to form, assist or join a labor union equally applies to them.
Hence, they cannot be allowed to be included in the rank-and-file employees’ bargaining unit. The
rationale for this inhibition is that if these 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 interest.
The union can also become company-dominated with the presence of managerial employees in its
membership.

C. BARGAINING REPRESENTATIVE A.K.A. SEBA OR BARGAINING AGENT

• What is an exclusive bargaining agent?

The term “bargaining representative” or “bargaining agent” or “sole and exclusive bargaining agent” or
“SEBA” refers to a legitimate labor union duly certified as the sole and exclusive bargaining
representative or agent of all the employees in a bargaining unit.

• What are the modes of determining the sole and exclusive bargaining agent?

The following are the modes:

1. Voluntary recognition (ALREADY REPEALED AND REPLACED BY THE MODE CALLED “REQUEST FOR
SEBA CERTIFICATION” UNDER DEPARTMENT ORDER NO. 40-i-15, SERIES OF 2015, (SEPT. 7, 2015).

2. Certification election;

3. Consent election;

4. Run-off election;

5. Re-run election (NOW PROVIDED UNDER DEPARTMENT ORDER NO. 40-i-15, SERIES OF 2015, (SEPT.
7, 2015).

(a) REQUEST FOR SEBA CERTIFICATION (FORMERLY “VOLUNTARY RECOGNITION”)

• Is voluntary recognition still a proper mode of selecting a SEBA?


No more, because of its repeal and being replaced by the new mode called “REQUEST FOR SEBA
CERTIFICATION” per DEPARTMENT ORDER NO. 40-i-15, SERIES OF 2015, (SEPT. 7, 2015).

• What could have been the reason for such repeal?

Being the sole and exclusive concern and domain of the employees, the previous mode of allowing the
employer to extend “voluntary recognition” to enable a union to become a SEBA is a patently
incongruous and selfcontradictory rule that runs diametrically contrary to the autonomous process of
choosing the SEBA. For by so allowing the employer to extend “voluntary recognition” to a union, it is, in
a way, no longer the employees but the employer who determines and designates the SEBA when he is
not supposed to have any iota of role in such determination and designation.

Although DEPARTMENT ORDER NO. 40-i-15 that repealed “voluntary recognition” failed to explain the
rationale behind it, the foregoing disquisition on the bystander role of the employer in the certification
election process can be the only logical rationale for such repeal and its eventual replacement by the
mode of filing a Request for SEBA Certification by the union desiring to be certified as a SEBA, without
need to secure first the consent and voluntary recognition of the employer. And under this new rule, the
DOLE Regional Director is duty bound to extend such SEBA Certification simply on the basis of the
requesting union’s compliance with the requirements.

• What should the employer do if a request for recognition or a demand for CBA negotiation is made
by a union which has not been certified as the SEBA?

The employer so requested cannot now extend voluntary recognition but may still validly file a petition
for certification election (PCE) under Article 270 [258] of the Labor Code, in order to determine if the
requesting union has the majority support of the employees in the bargaining unit which it seeks to
represent or where it intends to operate.

• What are the situations involved in this new mode of “REQUEST FOR SEBA CERTIFICATION”?

1. THREE SCENARIOS INVOLVING A REQUEST FOR CERTIFICATION.

There are three (3) scenarios conceived under the Rules on this mode, namely:

(1) Request for certification in unorganized establishment with only one (1) legitimate union;

(2) Request for certification in unorganized establishment with more than one (1) legitimate labor
organization; and

(3) Request for certification in organized establishment.

The foregoing scenarios are discussed below.

2. FIRST SCENARIO: Request for certification in an UNORGANIZED establishment with only one (1)
legitimate union.

a. Validation process.

If the DOLE Regional Director finds the establishment unorganized with only one (1) legitimate labor
organization in existence, he/she should call a conference within five (5) working days for the
submission of the following:
1. The names of employees in the covered bargaining unit who signify their support for the SEBA
certification, provided that said employees comprise at least majority of the number of employees in
the covered bargaining unit; and

2. Certification under oath by the president of the requesting union or local that all documents
submitted are true and correct based on his/her personal knowledge.

The submission shall be presumed to be true and correct unless contested under oath by any member of
the bargaining unit during the validation conference. For this purpose, the employer or any
representative of the employer shall not be deemed a party-in-interest but only as a bystander to the
process of certification.

If the requesting union or local fails to complete the requirements for SEBA certification during the
conference, the Request should be referred to the Election Officer for the conduct of certification
election.1

b. Action on the submission – when SEBA Certification should be issued.

If the DOLE Regional Director finds the requirements complete, he/she should issue, during the
conference, a Certification as SEBA enjoying the rights and privileges of an exclusive bargaining agent of
all the employees in the covered bargaining unit.2

The DOLE Regional Director should cause the posting of the SEBA Certification for 15 consecutive days in
at least 2 conspicuous places in the establishment or covered bargaining unit.

c. Effect of certification.

Upon the issuance of the Certification as SEBA, the certified union or local shall enjoy all the rights and
privileges of an exclusive bargaining agent of all the employees in the covered CBU.

3. SECOND SCENARIO: Request for certification in unorganized establishment with more than one (1)
legitimate labor organization.

If the DOLE Regional Director finds the establishment unorganized with more than one (1) legitimate
labor organization, he/she should refer the same to the Election Officer for the conduct of certification
election.3 The certification election shall be conducted in accordance with the Rules.

4. THIRD SCENARIO: Request for certification in organized establishment.

If the Regional Director finds the establishment organized, he/she should refer the same to the
Mediator- Arbiter for the determination of the propriety of conducting a certification election.

5. CONDUCT OF CERTIFICATION ELECTION UNDER THIS MODE.

It is clear that under the three (3) scenarios cited above, the 2nd and 3rd clearly involve the conduct of
certification election. It is only in the 1st that the conduct of certification election is not the order of the
day; there will be certification election only when the requesting union or local fails to complete the
requirements for SEBA certification during the conference, in which event, the DOLE Regional Director
shall refer the Request directly to the Election Officer, not to the Mediator-Arbiter, for the conduct of
certification election.
(b) CERTIFICATION ELECTION

• What is certification election?

“Certification election” refers to the process of determining through secret ballot the sole and exclusive
bargaining agent of the employees in an appropriate bargaining unit for purposes of collective
bargaining or negotiations.

• Who may file a petition for certification election?

The petition may be filed by:

1. A legitimate labor organization which may be:

(a) an independent union; or

(b) a national union or federation which has already issued a charter certificate to its local chapter
participating in the certification election; or

(c) a local chapter which has been issued a charter certificate by the national union or federation.

2. An employer, when requested by a labor organization to bargain collectively and its majority status is
in doubt.

• What are the rules prohibiting the filing of petition for certification election (bar rules)?

a. General rule.

The general rule is that in the absence of a CBA duly registered in accordance with Article 231 of the
Labor Code, a petition for certification election may be filed at any time.

b. Bar rules.

No certification election may be held under the following rules:

1. Statutory bar rule;

2. Certification year bar rule;

3. Negotiations bar rule;

4. Bargaining deadlock bar rule; or

5. Contract bar rule.

1. STATUTORY BAR RULE.

The Labor Code does not contain any provision on this rule but the Rules to Implement the Labor Code
embody a rule that bars the filing of a PCE within a period of one (1) year from the date of a valid
conduct of a certification, consent, run-off or re-run election where no appeal on the results thereof was
made. If there was such an appeal from the order of the Med-Arbiter, the running of the one-year
period is deemed suspended until the decision on the appeal has become final and executory.
This is called the statutory bar rule which finds its roots from a similar rule in the United States. Thus, an
election cannot be held in any bargaining unit in which a final and valid election was concluded within
the preceding 12-month period.

2. CERTIFICATION YEAR BAR RULE.

Under this rule, a petition for certification election (PCE) may not be filed within one (1) year:

1. From the date a union is certified as SEBA by virtue of a REQUEST FOR SEBA CERTIFICATION; or

2. From the date a valid certification, consent, run-off or re-run election has been conducted within the
bargaining unit.

If after this one year period, the SEBA did not commence collective bargaining with the employer, a PCE
may be filed by a rival union to challenge the majority status of the certified SEBA.

3. NEGOTIATIONS BAR RULE.

Under this rule, no PCE should be entertained while the sole and exclusive bargaining agent (SEBA) and
the employer have commenced and sustained negotiations in good faith within the period of one (1)
year from the date of a valid certification, consent, run-off or re-run election or from the date of
voluntary recognition.

Once the CBA negotiations have commenced and while the parties are in the process of negotiating the
terms and conditions of the CBA, no challenging union is allowed to file a PCE that would disturb the
process and unduly forestall the early conclusion of the agreement.

4. BARGAINING DEADLOCK BAR RULE.

Under this rule, a PCE may not be entertained when a bargaining deadlock to which an incumbent or
certified bargaining agent is a party has been submitted to conciliation or arbitration or has become the
subject of a valid notice of strike or lockout.

Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v. Trajano. - The bargaining deadlock-bar


rule was not applied here because for more than four (4) years after it was certified as the exclusive
bargaining agent of all the rank-and-file employees, it did not take any action to legally compel the
employer to comply with its duty to bargain collectively, hence, no CBA was executed. Neither did it file
any unfair labor practice suit against the employer nor did it initiate a strike against the latter. Under the
circumstances, a certification election may be validly ordered and held.

5. CONTRACT BAR RULE.

Under this rule, a PCE cannot be filed when a CBA between the employer and a duly recognized or
certified bargaining agent has been registered with the Bureau of Labor Relations (BLR) in accordance
with the Labor Code. Where the CBA is duly registered, a petition for certification election may be filed
only within the 60- day freedom period prior to its expiry. The purpose of this rule is to ensure stability
in the relationship of the workers and the employer by preventing frequent modifications of any CBA
earlier entered into by them in good faith and for the stipulated original period.

When contract bar rule does not apply.


The contract-bar rule does not apply in the following cases:

1. Where there is an automatic renewal provision in the CBA but prior to the date when such automatic
renewal became effective, the employer seasonably filed a manifestation with the Bureau of Labor
Relations of its intention to terminate the said agreement if and when it is established that the
bargaining agent does not represent anymore the majority of the workers in the bargaining unit.

2. Where the CBA, despite its due registration, is found in appropriate proceedings that: (a) it contains
provisions lower than the standards fixed by law; or (b) the documents supporting its registration are
falsified, fraudulent or tainted with misrepresentation.

3. Where the CBA does not foster industrial stability, such as contracts where the identity of the
representative is in doubt since the employer extended direct recognition to the union and concluded a
CBA therewith less than one (1) year from the time a certification election was conducted where the “no
union” vote won. This situation obtains in a case where the company entered into a CBA with the union
when its status as exclusive bargaining agent of the employees has not been established yet.

4. Where the CBA was registered before or during the last sixty (60) days of a subsisting agreement or
during the pendency of a representation case. It is well-settled that the 60-day freedom period based on
the original CBA should not be affected by any amendment, extension or renewal of the CBA for
purposes of certification election.

• What are the requisites for the validity of the petition for certification election?

The following requisites should concur:

1. The union should be legitimate which means that it is duly registered and listed in the registry of
legitimate labor unions of the BLR or that its legal personality has not been revoked or cancelled with
finality.

2. In case of organized establishments, the petition for certification election is filed during (and not
before or after) the 60-day freedom period of a duly registered CBA.

3. In case of organized establishments, the petition complied with the 25% written support of the
members of the bargaining unit.

4. The petition is filed not in violation of any of the four (4) bar rules [See above discussion thereof].

• What are the two (2) kinds of majorities (DOUBLE MAJORITY RULE)?

The process of certification election requires two (2) kinds of majority votes, viz.:

1. Number of votes required for the validity of the process of certification election itself. In order to
have a valid certification election, at least a majority of all eligible voters in the appropriate bargaining
unit must have cast their votes.

2. Number of votes required to be certified as the collective bargaining agent. To be certified as the
sole and exclusive bargaining agent, the union should obtain a majority of the valid votes cast.

• What are some pertinent principles on certification election?


• The pendency of a petition to cancel the certificate of registration of a union participating in a
certification election does not stay the conduct thereof.

• The pendency of an unfair labor practice case filed against a labor organization participating in the
certification election does not stay the holding thereof.

• Direct certification as a method of selecting the exclusive bargaining agent of the employees is not
allowed.

This is because the conduct of a certification election is still necessary in order to arrive in a manner
definitive and certain concerning the choice of the labor organization to represent the workers in a
collective bargaining unit.

• The “No Union” vote is always one of the choices in a certification election. Where majority of the
valid votes cast results in “No Union” obtaining the majority, the Med-Arbiter shall declare such fact in
the order.

• Only persons who have direct employment relationship with the employer may vote in the
certification election, regardless of their period of employment.

b.1. CERTIFICATION ELECTION IN AN UNORGANIZED ESTABLISHMENT

• What is meant by “unorganized establishment”?

As distinguished from “organized establishment,” an “unorganized establishment” is an employer entity


where there is no recognized or certified collective bargaining union or agent. A company or an
employer-entity, however, may still be considered an unorganized establishment even if there are
unions in existence therein for as long as not one of them is duly certified as the sole and exclusive
bargaining representative of the employees in the particular bargaining unit it seeks to operate and
represent.

Further, a company remains unorganized even if there is a duly recognized or certified bargaining agent
for rank-and-file employees, for purposes of the petition for certification election filed by supervisors.
The reason is that the bargaining unit composed of supervisors is separate and distinct from the
unionized bargaining unit of rank-andfile employees. Hence, being unorganized, the 25% required
minimum support of employees within the bargaining unit of the supervisors need not be complied
with.

• How should certification election be conducted in an unorganized establishment?

In case of a petition filed by a legitimate organization involving an unorganized establishment, the Med-
Arbiter is required to immediately order the conduct of a certification election upon filing of a petition
for certification election by a legitimate labor organization.

b.2. CERTIFICATION ELECTION IN AN ORGANIZED ESTABLISHMENT

• What are the requisites for the conduct of a certification election in an organized establishment?

The Med-Arbiter is required to automatically order the conduct of a certification election by secret
ballot in an organized establishment as soon as the following requisites are fully met:
1. That a petition questioning the majority status of the incumbent bargaining agent is filed before the
DOLE within the 60-day freedom period;

2. That such petition is verified; and

3. That the petition is supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit.

c. RUN-OFF ELECTION

• What is a run-off election?

A “run-off election” refers to an election between the labor unions receiving the two (2) highest number
of votes in a certification election or consent election with three (3) or more unions in contention,
where such certification election or consent election results in none of the contending unions receiving
the majority of the valid votes cast; provided, that the total number of votes for all contending unions, if
added, is at least fifty percent (50%) of the number of valid votes cast.

• When is it conducted?

If the above conditions that justify the conduct of a run-off election are present and there are no
objections or challenges which, if sustained, can materially alter the election results, the Election Officer
should motu proprio conduct a run-off election within ten (10) days from the close of the election
proceeding between the labor unions receiving the two highest number of votes.

ILLUSTRATION.

To illustrate, in a certification election involving four (4) unions, namely: Union A, Union B, Union C, and
Union D, where there are 100 eligible voters who validly cast their votes, and the votes they each
garnered are as follows: Union A – 35; Union B – 25; Union C – 10; Union D - 15; and No Union - 15, a
run-off election may be conducted between Union A and Union B because:

(1) Not one of the unions mustered the majority vote of 51 votes but Union A and Union B got the first
two highest number of votes;

(2) If all the votes for the contending unions are added up, it will result in at least 50% of the valid votes
cast (Union A – 35; Union B – 25; Union C – 10; Union D - 15 for a total of 85 or 85%); and

(3) There are no objections or challenges which, if sustained, can materially alter the results of the
election.

THE “NO UNION” CHOICE SHOULD NO LONGER BE INCLUDED.

For obvious reason, the choice of “No Union” should no longer be included in the run-off election.

d. RE-RUN ELECTION

1. RULE ON RE-RUN ELECTION, NOT FOUND IN LABOR CODE BUT LATELY PROVIDED IN A DOLE
DEPARTMENT ORDER.

a. Belated enunciation of rule on re-run elections.


This mode of choosing the SEBA is not expressly provided in the Labor Code nor in the original rendering
of its implementing rules. It was only in 2015 that an issuance of the DOLE Secretary has introduced this
term for the first time as an amendment to the Rules to Implement the Labor Code and defines it as
follows:

“‘Re-run election’ refers to an election conducted to break a tie between contending unions, including
between ‘no union’ and one of the unions. It shall likewise refer to an election conducted after a failure
of election has been declared by the Election Officer and/or affirmed by the Mediator-Arbiter.”

b. Grounds cited in the Rules for re-run election.

Based on the above-quoted rule, there are 2 situations contemplated thereunder that justify the
conduct of a re-run election, to wit:

(1) To break a tie; or

(2) To cure a failure of election.

c. A third ground.

A re-run election is obviously in the nature of a corrective action meant to cure a seriously defective and
distorted certification election. Consequently, a 3rd ground that may be cited as would justify the
conduct of a fair re-run election is when the certification election is invalidated or nullified by a
multitude of reasons that negate the true will, undistorted desire and informed choice of the employee
selectorate. Apt to be cited in this connection are the following:

(1) Employer’s commission of ULPs that resulted in the election not being free, orderly, honest, peaceful
and credible or that undermined a union’s majority;

(2) Perpetration, not only by the employer but by the contending unions and/or labor officials as well, of
serious election irregularities such as massive disenfranchisement of voters, lack of secrecy in the voting,
election fraud or bribery.

2. RULE IN CASE OF FAILURE OF ELECTION.

a. When is there a failure of election?

In failure of election, the number of votes cast in the certification or consent election is less than the
majority of the number of eligible voters and there are no challenged votes that could materially change
the results of the election. For example, in a CBU composed of 100 employees, the majority of 100,
which is 51, should validly cast their votes in the election; otherwise, if less than 51 employees have
validly cast their votes, there is here a failure of election.

b. Effect of failure of election.

A failure of election shall not bar the filing of a motion for the immediate holding of another certification
or consent election, now to be called re-run election.

3. ADDITIONAL GROUND WHEN RE-RUN ELECTION IS JUSTIFIED.

a. When election is invalidated.


As earlier pointed out, the conduct of a re-run election may also be justified if the certification, consent
or run-off election has been invalidated or nullified due to certain serious irregularities that have been
committed during the conduct thereof, such as, inter alia, disenfranchisement of the voters, lack of
secrecy in the voting, fraud or bribery or acts of terrorism, force, threat and intimidation employed by
any of the contending unions or the employer. Such invalidation would necessitate the conduct of a re-
run election among the contending unions to determine the true will and desire of the employees-
electorate.

b. Relevant jurisprudence.

Philippine jurisprudence has not exactly denominated the holding of another certification election after
the invalidation of the first as “re-run” election but the same may well be deemed the correct
terminology to describe it. Two cases may be cited as good examples of cases where “re-run” election
was ordered:

(1) Confederation of Citizens Labor Unions v. Noriel;1 and

(2) National Federation of Labor v. The Secretary of Labor.1

CONSENT ELECTION

• What is consent election?

A “consent election” refers to the process of determining through secret ballot the sole and exclusive
bargaining agent (SEBA) of the employees in an appropriate bargaining unit for purposes of collective
bargaining and negotiation. It is voluntarily agreed upon by the parties, with or without the intervention
of the DOLE.

• What is the distinction between consent election and certification election?

A consent election is one mutually agreed upon by the parties, with or without the intervention of the
DOLE, its purpose being merely to determine the issue of majority representation of all the workers in
an appropriate collective bargaining unit. Whichever union is chosen in the consent election will be
certified by the Med-Arbiter as the SEBA.

A certification election, on the other hand, is one which is ordered by the Med-Arbiter on the basis of a
petition for certification election (PCE) filed by a union which prays that it be certified as the SEBA in an
appropriate bargaining unit.

• Can the parties agree to the conduct of consent election even during the pendency of certification
election?

Yes. In fact, the Med-Arbiter, at the start of a certification election case, is required to ask the parties
whether they want a consent election instead of a certification election. And at any stage of the
certification election proceeding, the parties may decide to conduct a consent election with or without
the supervision of the Med-Arbiter. And whichever union emerges as the winner will be the one
certified by the Med-Arbiter as the SEBA.
The reason for the primacy of and priority given to a consent election is that it is a voluntary mode of
settling a labor dispute – a mode that is enshrined in the Constitution (Section 3, Article XIII, 1987
Constitution).

D. RIGHTS OF LABOR ORGANIZATION

1. CHECK-OFF, ASSESSMENT, AGENCY FEES

1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL ASSESSMENTS.

The following requisites must concur in order for union dues and special assessments for the union’s
incidental expenses, attorney’s fees and representation expenses to be valid, namely:

(a) Authorization by a written resolution of the majority of all the members at a general membership
meeting duly called for the purpose;

(b) Secretary’s record of the minutes of said meeting; and

(c) Individual written authorizations for check-off duly signed by the employees concerned.

3. ASSESSMENT FOR ATTORNEY’S FEES, NEGOTIATION FEES AND SIMILAR CHARGES.

The rule is that no such attorney’s fees, negotiation fees or similar charges of any kind arising from the
negotiation or conclusion of the CBA shall be imposed on any individual member of the contracting
union. Such fees may be charged only against the union funds in an amount to be agreed upon by the
parties. Any contract, agreement or arrangement of any sort to the contrary is deemed null and void.
Clearly, what is prohibited is the payment of attorney’s fees when it is effected through forced
contributions from the workers from their own funds as distinguished from the union funds.

4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.

“Check-off” means a method of deducting from the employee’s pay at prescribed periods, any amount
due for fees, fines or assessments. It is a process or device whereby the employer, on agreement with
the union recognized as the proper bargaining representative, or on prior authorization from its
employees, deducts union dues and assessments from the latter’s wages and remits them directly to the
union.

5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.

The law strictly prohibits the check-off from any amount due an employee who is a member of the
union, of any union dues, special assessment, attorney’s fees, negotiation fees or any other
extraordinary fees other than for mandatory activities under the Labor Code, without the individual
written authorization duly signed by the employee. Such authorization must specifically state the
amount, purpose and beneficiary of the deduction. The purpose of the individual written authorization
is to protect the employees from unwarranted practices that diminish their compensation without their
knowledge or consent.

6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT REQUIRED.

In the following cases, individual written authorization is not required:


a. Assessment from non-members of the bargaining agent of “agency fees” which should be equivalent
to the dues and other fees paid by members of the recognized bargaining agent, if such non-members
accept the benefits under the CBA.

b. Deductions for fees for mandatory activities such as labor relations seminars and labor education
activities.

c. Deductions for withholding tax mandated under the National Internal Revenue Code.

e. Deductions for withholding of wages because of employee’s debt to the employer which is already
due.

f. Deductions made pursuant to a judgment against the worker under circumstances where the wages
may be the subject of attachment or execution but only for debts incurred for food, clothing, shelter
and medical attendance.

g. Deductions from wages ordered by the court.

h. Deductions authorized by law such as for premiums for PhilHealth, SSS, Pag-IBIG, employees’
compensation and the like.

AGENCY FEES

REQUISITES FOR ASSESSMENT

1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL NOR STATUTORY BUT QUASICONTRACTUAL.

The bargaining agent which successfully negotiated the CBA with the employer is given the right to
collect a reasonable fee, called “agency fee” from its non-members - who are employees covered by the
bargaining unit being represented by the bargaining agent - in case they accept the benefits under the
CBA. It is called “agency fees” because by availing of the benefits of the CBA, they, in effect, recognize
and accept the bargaining union as their “agent” as well.

2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO ACCEPT OR NOT THE BENEFITS OF THE
CBA.

There is no law that compels a non-bargaining union member to accept the benefits provided in the
CBA. He has the freedom to choose between accepting and rejecting the CBA itself by not accepting any
of the benefits flowing therefrom. Consequently, if a non-bargaining union member does not accept or
refuses to avail of the CBAbased benefits, he is not under any obligation to pay the “agency fees” since,
in effect, he does not give recognition to the status of the bargaining union as his agent.

3. LIMITATION ON THE AMOUNT OF AGENCY FEE.

The bargaining union cannot capriciously fix the amount of agency fees it may collect from its
nonmembers.

Article 248(e) of the Labor Code expressly sets forth the limitation in fixing the amount of the agency
fees, thus:

(1) It should be reasonable in amount; and


(2) It should be equivalent to the dues and other fees paid by members of the recognized collective
bargaining agent.

Thus, any agency fee collected in excess of this limitation is a nullity.

4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT NEED NOT BECOME MEMBERS THEREOF.

The employees who are not members of the certified bargaining agent which successfully concluded the
CBA are not required to become members of the latter. Their acceptance of the benefits flowing from
the CBA and their act of paying the agency fees do not make them members thereof.

5. CHECK-OFF OF AGENCY FEES.

“Check-off” of agency fees is a process or device whereby the employer, upon agreement with the
bargaining union, deducts agency fees from the wages of non-bargaining union members who avail of
the benefits from the CBA and remits them directly to the bargaining union.

6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND CHECK-OFF OF AGENCY FEES.

The right of the bargaining union to demand check-off of agency fees accrues from the moment the non
bargaining union member accepts and receives the benefits from the CBA. This is the operative fact that
would trigger such liability.

7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-BARGAINING UNION MEMBERS REQUIRED.

To effect the check-off of agency fees, no individual written authorization from the non-bargaining
union members who accept the benefits resulting from the CBA is necessary.

8. EMPLOYER’S DUTY TO CHECK-OFF AGENCY FEES.

It is the duty of the employer to deduct or “check-off” the sum equivalent to the amount of agency fees
from the non-bargaining union members' wages for direct remittance to the bargaining union.”

10. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER TO GRANT IT THE RIGHT TO CHECK-
OFF OF UNION DUES AND ASSESSMENTS FROM THEIR MEMBERS.

The obligation on the part of the employer to undertake the duty to check-off union dues and special
assessments holds and applies only to the bargaining agent and not to any other union/s (called
“Minority Union/s”).

2. COLLECTIVE BARGAINING

a. DUTY TO BARGAIN COLLECTIVELY

1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.

The “duty to bargain collectively” means the performance of a mutual obligation to meet and convene
promptly and expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions of employment, including proposals for
adjusting any grievances or questions arising under such agreement and executing a contract
incorporating such agreements if requested by either party but such duty does not compel any party to
agree to a proposal or to make any concession.
The duty does not compel any party to agree blindly to a proposal nor to make concession. While the
law imposes on both the employer and the bargaining union the mutual duty to bargain collectively, the
employer is not under any legal obligation to initiate collective bargaining negotiations.

2. TWO (2) SITUATIONS CONTEMPLATED.

The duty to bargain collectively involves two (2) situations, namely:

1. Duty to bargain collectively in the absence of a CBA under Article 251 of the Labor Code.

2. Duty to bargain collectively when there is an existing CBA under Article 253 of the Labor Code.

DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS ABSENCE OF A CBA

1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA YET.

The duty to bargain collectively when there has yet been no CBA in the bargaining unit where the
bargaining agent seeks to operate should be complied with in the following order:

First, in accordance with any agreement or voluntary arrangement between the employer and the
bargaining agent providing for a more expeditious manner of collective bargaining; and

Secondly, in its absence, in accordance with the provisions of the Labor Code, referring to Article 250
thereof which lays down the procedure in collective bargaining.

DUTY TO BARGAIN COLLECTIVELY WHEN THERE IS A CBA

1. CONCEPT.

When there is a CBA, the duty to bargain collectively shall mean that neither party shall terminate nor
modify such agreement during its lifetime. However, either party can serve a written notice to terminate
or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both
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 and/or until a new agreement is reached by the parties.

2. FREEDOM PERIOD.

The last sixty (60) days of the 5-year lifetime of a CBA immediately prior to its expiration is called the
“freedom period.” It is denominated as such because it is the only time when the law allows the parties
to freely serve a notice to terminate, alter or modify the existing CBA. It is also the time when the
majority status of the bargaining agent may be challenged by another union by filing the appropriate
petition for certification election.

3. AUTOMATIC RENEWAL CLAUSE.

a. Automatic renewal clause deemed incorporated in all CBAs.

Pending the renewal of the CBA, the parties are bound to keep the status quo and to treat the terms and
conditions embodied therein still in full force and effect during the 60-day freedom period and/or until a
new agreement is negotiated and ultimately concluded and reached by the parties. This principle is
otherwise known as the “automatic renewal clause” which is mandated by law and therefore deemed
incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of the benefits embodied in the CBA which just
expired as it is duty-bound to maintain the status quo by continuing to give the same benefits until a
renewal thereof is reached by the parties. On the part of the union, it has to observe and continue to
abide by its undertakings and commitments under the expired CBA until the same is renewed.

4. KIOK LOY DOCTRINE.

This doctrine is based on the ruling In Kiok Loy v. NLRC, where the petitioner, 1 Sweden Ice Cream Plant,
refused to submit any counter-proposal to the CBA proposed by its employees’ certified bargaining
agent. The High Court ruled that the employer had thereby lost its right to bargain the terms and
conditions of the CBA. Thus, the CBA proposed by the union was imposed lock, stock and barrel on the
erring company.

The Kiok Loy case epitomizes the classic case of negotiating a CBA in bad faith consisting of the
employer’s refusal to bargain with the collective bargaining agent by ignoring all notices for negotiations
and requests for counter-proposals. Such refusal to send a counter-proposal to the union and to bargain
on the economic terms of the CBA constitutes an unfair labor practice under Article 248(g) of the Labor
Code.

OTHER CASES AFTER KIOK LOY.

􃾎 Divine Word University of Tacloban v. Secretary of Labor and Employment, Sept. 11, 1992.

􃾎 General Milling Corporation v. CA, Feb. 11, 2004.

b. COLLECTIVE BARGAINING AGREEMENT (CBA)

1. CBA.

A “Collective Bargaining Agreement” or “CBA” for short, refers to the negotiated contract between a
duly recognized or certified exclusive bargaining agent of workers and their employer, concerning
wages, hours of work and all other terms and conditions of employment in the appropriate bargaining
unit, including mandatory provisions for grievances and arbitration machineries. It is executed not only
upon the request of the exclusive bargaining representative but also by the employer.

2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.

Prior to any collective bargaining negotiations between the employer and the bargaining union, the
following requisites must first be satisfied:

1. Employer-employee relationship must exist between the employer and the members of the
bargaining unit being represented by the bargaining agent;

2. The bargaining agent must have the majority support of the members of the bargaining unit
established through the modes sanctioned by law; and

3. A lawful demand to bargain is made in accordance with law.

3. SOME PRINCIPLES ON CBA.

• CBA is the law between the parties during its lifetime and thus must be complied with in good faith.
• Being the law between the parties, any violation thereof can be subject of redress in court.

• Non-impairment of obligations of contract. A contract is the law between the parties and courts have
no choice but to enforce such contract so long as it is not contrary to law, morals, good customs or
public policy.

Otherwise, courts would be interfering with the freedom of contract of the parties.

• CBA is not an ordinary contract as it is impressed with public interest.

• Automatic Incorporation Clause – law is presumed part of the CBA.

• The benefits derived from the CBA and the law are separate and distinct from each other.

• Workers are allowed to negotiate wage increases separately and distinctly from legislated wage
increases.

The parties may validly agree in the CBA to reduce wages and benefits of employees provided such
reduction does not go below the minimum standards.

• Ratification of the CBA by majority of all the workers in the bargaining unit makes the same binding on
all employees therein.

• Employees entitled to CBA benefits. The following are entitled to the benefits of the CBA:

(1) Members of the bargaining union;

(2) Non-members of the bargaining union but are members of the bargaining unit;

(3) Members of the minority union/s who paid agency fees to the bargaining union; and

(4) Employees hired after the expiration of the CBA.

• Pendency of a petition for cancellation of union registration is not a prejudicial question before CBA
negotiation may proceed.

• CBA should be construed liberally. If the terms of a CBA are clear and there is no doubt as to the
intention of the contracting parties, the literal meaning of its stipulation shall prevail.

1. MANDATORY PROVISIONS OF CBA

1. MANDATORY STIPULATIONS OF THE CBA.

The Syllabus mentions 4 provisions that are mandatorily required to be stated in the CBA, to wit:

1. Grievance Procedure;

2. Voluntary Arbitration;

3. No Strike-No Lockout Clause; and

4. Labor-Management Council (LMC).

If these provisions are not reflected in the CBA, its registration will be denied by the BLR.
(i) GRIEVANCE PROCEDURE

1. “GRIEVANCE” OR “GRIEVABLE ISSUE”.

A “grievance” or “grievable issue” is any question raised by either the employer or the union regarding
any of the following issues or controversies:

1. The interpretation or implementation of the CBA;

2. The interpretation or enforcement of company personnel policies; or

3. Any claim by either party that the other party is violating any provisions of the CBA or company
personnel policies.

In order to be grievable, the violations of the CBA should be ordinary and not gross in character;
otherwise, they shall be considered as unfair labor practice (ULP).

Gross violation of the CBA is defined as flagrant and/or malicious refusal by a party thereto to comply
with the economic provisions thereof. If what is violated, therefore, is a non-economic or a political
provision of the CBA, the same shall not be considered as unfair labor practice and may thus be
processed as a grievable issue in accordance with and following the grievance machinery laid down in
the CBA.

2. GRIEVANCE MACHINERY.

“Grievance machinery” refers to the mechanism for the adjustment and resolution of grievances arising
from the interpretation or implementation of a CBA and those arising from the interpretation or
enforcement of company personnel policies.

3. GRIEVANCE PROCEDURE.

“Grievance procedure” refers to the internal rules of procedure established by the parties in their CBA
with voluntary arbitration as the terminal step, which are intended to resolve all issues arising from the
implementation and interpretation of their collective agreement. It is that part of the CBA which
provides for a peaceful way of settling differences and misunderstanding between the parties.

The terms “grievance procedure” and “grievance machinery” may be used interchangeably.

(ii) VOLUNTARY ARBITRATION

1. VOLUNTARY ARBITRATION.

“Voluntary arbitration” refers to the mode of settling labor-management disputes in which the parties
select a competent, trained and impartial third person who is tasked to decide on the merits of the case
and whose decision is final and executory.

2. VOLUNTARY ARBITRATOR.

A “Voluntary Arbitrator” refers to any person who has been mutually named or designated by the
parties to the CBA – the employer and the bargaining agent - to hear and decide the issues between
them.
A Voluntary Arbitrator is not an employee, functionary or part of the government or of the Department
of Labor and Employment, but he is authorized to render arbitration services provided under labor laws.

(iii) “NO STRIKE, NO LOCKOUT” CLAUSE

1. SIGNIFICANCE OF THE CLAUSE.

A “No Strike, No Lockout” clause in the CBA is an expression of the firm commitment of the parties
thereto that, on the part of the union, it will not mount a strike during the effectivity of the CBA, and on
the part of the employer, that it will not stage a lockout during the lifetime thereof.

This clause may be invoked by an employer only when the strike is economic in nature or one which is
conducted to force wage or other concessions from the employer that are not mandated to be granted
by the law itself. It does not bar strikes grounded on unfair labor practices. This is so because it is
presumed that all economic issues between the employer and the bargaining agent are deemed
resolved with the signing of the CBA.

The same rule also applies in case of lockout. The said clause may only be invoked by the union in case
the ground for the lockout is economic in nature but it may not be so cited if the ground is unfair labor
practice committed by the union.

2. EFFECT OF VIOLATION OF THE CLAUSE.

A strike conducted in violation of this clause is illegal.

(iv) LABOR-MANAGEMENT COUNCIL

1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY JUSTIFIED.

The Labor-Management Council (LMC) whose creation is mandated under the Labor Code, is meant to
implement the constitutionally mandated right of workers to participate in policy and decision-making
processes of the establishment where they are employed insofar as said processes will directly affect
their rights, benefits and welfare. This is the body that implements the policy of co-determination in
the Constitution.

The LMC is mandated to be created in both organized and unorganized establishments.

2. SELECTION OF REPRESENTATIVES TO LMC.

In organized establishments, the workers’ representatives to the committee or council should be


nominated by the exclusive bargaining representative.

In establishments where no legitimate labor organization exists, the workers’ representative should be
elected directly by the employees at large.

3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE MACHINERY (GM).

To avoid confusion and possible major legal complication, a clear distinction line should be drawn
between LMC and GM. The following may be cited:
1. Constitutional origin. – The creation of the LMC is based on the constitutional grant to workers of the
right to participate in policy and decision-making processes under the 1st paragraph, Section 3, Article
XIII of the 1987 Constitution, thus:

“It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate
in policy and decision-making processes affecting their rights and benefits as may be provided by law.”

The creation of a GM, on the other hand, is based on a different constitutional provision, the 2nd
paragraph, Section 3, Article XIII of the 1987 Constitution, which provides as follows:

“The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.”

2. Legal anchor. - The creation of LMC is provided under Article 255 of the Labor Code; while the
formation of a GM is mandated under Article 260 of the same Code.

3. Compulsory provision in the CBA. - Both LMC and GM are compulsorily required to be embodied in
the CBA in order for it to be considered a valid agreement.

4. Purpose for creation. - The LMC is created for the purpose of affording workers the right to
participate in policy and decision-making processes in matters affecting their rights, benefits and
welfare; while that of the GM is to resolve disputes and grievances arising from such policies or
decisions or more specifically, to adjust and resolve grievances arising from (1) the interpretation or
implementation of the CBA or (2) the interpretation or enforcement of company personnel policies.

5. Nature of functions. - The LMC is in the nature of a preventive mechanism meant to prevent and
avoid disputes or grievances by co-determining the proper policies that should be implemented by the
employer in respect of the workers’ rights, benefits and welfare; while a GM is an adjudicatory
mechanism which is set into motion only when a dispute or grievance occurs.

6. Nature of cognizable issues. – The LMC performs non-adversarial and non-adjudicatory tasks as it
concerns itself only with policy formulations and decisions affecting the workers’ rights, benefits and
welfare and not violations or transgressions of any policy, rule or regulation; while that of the GM is
adversarial and adjudicatory in character since its jurisdiction is confined to resolving and deciding
disputes and grievances between management and the workers arising from violations or transgressions
of existing policies, rules or regulations. In other words, the LMC does not resolve grievable or
contentious issues; the GM does.

A case illustrative of this principle is the 2011 case of Cirtek Employees Labor Union-Federation of Free
Workers v. Cirtek Electronics, Inc. The CBA negotiation between petitioner union and respondent
company was deadlocked resulting in the staging of a strike by the former. The DOLE Secretary assumed
jurisdiction over the labor dispute but before he could rule on the controversy, respondent created a
Labor-Management Council (LMC) through which it concluded with the remaining officers of petitioner a
Memorandum of Agreement (MOA) providing for daily wage increases of P6.00 per day effective
January 1, 2004 and P9.00 per day effective January 1, 2005. Petitioner submitted the MOA to the DOLE
Secretary, alleging that the remaining officers signed the MOA under respondent’s assurance that
should the Secretary order a higher award of wage increase, respondent would comply.

Respecting the MOA, petitioner posits that it was “surreptitiously entered into [in] bad faith,” it having
been forged without the assistance of the Federation of Free Workers or counsel, adding that
respondent could have waited for the Secretary’s resolution of the pending CBA deadlock or that the
MOA could have been concluded before representatives of the DOLE Secretary. As found by the DOLE
Secretary, the MOA came about as a result of the constitution, at respondent's behest, of the LMC
which, he reminded the parties, should not be used as an avenue for bargaining but for the purpose of
affording workers to participate in policy and decision-making. Hence, the agreements embodied in the
MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and,
therefore, deserving little weight.

7. Composition. - The representatives of the workers to the LMC may or may not be nominated by the
recognized or certified bargaining agent, depending on whether the establishment is organized or
unorganized. Thus,

in organized establishments, the workers’ representatives to the LMC should be nominated by the
exclusive

bargaining agent. In establishments where no legitimate labor organization exists, the workers’
representatives

should be elected directly by the employees of the establishment at large; while those in the GM are
nominated

solely by the bargaining agent.

E.

UNFAIR LABOR PRACTICE

(ULP)

1.

NATURE, ASPECTS

1. WHEN AN ACT CONSTITUTES ULP.

At the outset, it must be clarified that not all unfair acts constitute ULPs. While an act or decision of an

employer or a union may be unfair, certainly not every unfair act or decision thereof may constitute ULP
as defined

and enumerated under the law.

The act complained of as ULP must have a proximate and causal connection with any of the following 3

rights:

1. Exercise of the right to self-organization;


2. Exercise of the right to collective bargaining; or

3. Compliance with CBA.

Sans this connection, the unfair acts do not fall within the technical signification of the term “unfair
labor

practice.”

2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO THE EXERCISE OF THE RIGHT TO

SELF-ORGANIZATION AND COLLECTIVE BARGAINING.

The only ULP which is the exception as it may or may not relate to the exercise of the right to
selforganization

and collective bargaining is the act described under Article 248 [f], i.e., to dismiss, discharge or

otherwise prejudice or discriminate against an employee for having given or being about to give
testimony

under the Labor Code.

3. LABOR CODE PROVISIONS ON ULP.

Under the Labor Code, there are only five (5) provisions related to ULP, to wit:

1. Article 258 [247] which describes the concept of ULPs and prescribes the procedure for their

prosecution;

2. Article 259 [248] which enumerates the ULPs that may be committed by employers;

3. Article 260 [249] which enumerates the ULPs that may be committed by labor organizations;

4. Article 274 [261] which considers violations of the CBA as no longer ULPs unless the same are gross

in character which means flagrant and/or malicious refusal to comply with the economic provisions

thereof.

5. Article 278(c) [263(c)] which refers to union-busting, a form of ULP, involving the dismissal from

employment of union officers duly elected in accordance with the union constitution and by-laws,

where the existence of the union is threatened thereby.

4. PARTIES WHO/WHICH MAY COMMIT ULP.

A ULP may be committed by an employer or by a labor organization. Article 259 [248] describes the ULPs

that may be committed by an employer; while Article 260 [249] enumerates those which may be
committed by a

labor organization.
On the part of the employer, only the officers and agents of corporations, associations or partnerships
who

have actually participated in or authorized or ratified ULPs are criminally liable.

On the part of the union, only the officers, members of governing boards, representatives or agents or

members of labor associations or organizations who have actually participated in or authorized or


ratified the ULPs

are criminally liable.

5. ELEMENTS OF ULP.

1. There should exist an employer-employee relationship between the offended party and the offender;

and

2. The act complained of must be expressly mentioned and defined in the Labor Code as an unfair

labor practice.

Absent one of the elements aforementioned will not make the act an unfair labor practice.

6. ASPECTS OF ULP.

Under Article 258 [247], a ULP has two (2) aspects, namely:

1. Civil aspect; and

2. Criminal aspect.

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The civil aspect of an unfair labor practice includes claims for actual, moral and exemplary damages,

attorney’s fees and other affirmative reliefs. Generally, these civil claims should be asserted in the labor
case before

the Labor Arbiters who have original and exclusive jurisdiction over unfair labor practices. The criminal
aspect,

on the other hand, can only be asserted before the regular court.

2.
ULP BY EMPLOYERS

I.

INTERFERENCE WITH, RESTRAINT OR COERCION OF EMPLOYEES

IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION

1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.

The terms “interfere,” “restrain” and “coerce” are very broad that any act of management that may

reasonably tend to have an influence or effect on the exercise by the employees of their right to self-
organize may

fall within their meaning and coverage. According to the Supreme Court in Insular Life Assurance Co.,
Ltd.,

Employees Association-NATU v. Insular Life Assurance Co., Ltd., the test 1 of whether an employer has

interfered with or restrained or coerced employees within the meaning of the law is whether the
employer has

engaged in conduct which may reasonably tend to interfere with the free exercise of the employees’
rights. It is not

necessary that there be direct evidence that any employee was in fact intimidated or coerced by the
statements or

threats of the employer if there is a reasonable inference that the anti-union conduct of the employer
does have an

adverse effect on the exercise of the right to self-organization and collective bargaining.

2. TOTALITY OF CONDUCT DOCTRINE.

In ascertaining whether the act of the employer constitutes interference with, restraint or coercion of
the

employees’ exercise of their right to self-organization and collective bargaining, the “totality of conduct
doctrine”

may be applied.

The totality of conduct doctrine means that expressions of opinion by an employer, though innocent in

themselves, may be held to constitute an unfair labor practice because of the circumstances under
which they were

uttered, the history of the particular employer’s labor relations or anti-union bias or because of their
connection with

an established collateral plan of coercion or interference. An expression which may be permissibly


uttered by one
employer, might, in the mouth of a more hostile employer, be deemed improper and consequently
actionable as an

unfair labor practice. The past conduct of the employer and like considerations, coupled with an
intimate connection

between the employer’s action and the union affiliation or activities of the particular employee or
employees taken

as a whole, may raise a suspicion as to the motivation for the employer’s conduct. The failure of the
employer to

ascribe a valid reason therefor may justify an inference that his unexplained conduct in respect of the
particular

employee or employees was inspired by the latter’s union membership and activities.

In General Milling,2 the Supreme Court considered the act of the employer in presenting the letters
from

February to June 1993, by 13 union members signifying their resignation from the union clearly
indicative of the

employer’s pressure on its employees. The records show that the employer presented these letters to
prove that the

union no longer enjoyed the support of the workers. The fact that the resignations of the union
members occurred

during the pendency of the case before the Labor Arbiter shows the employer’s desperate attempt to
cast doubt on

the legitimate status of the union. The ill-timed letters of resignation from the union members indicate
that the

employer had interfered with the right of its employees to self-organization. Because of such act, the
employer was

declared guilty of ULP.

3. INTERFERENCE IN THE EMPLOYEE’S RIGHT TO SELF-ORGANIZATION.

a. Interference is always ULP.

The judicial dictum is that any act of interference by the employer in the exercise by employees of their

right to self-organization constitutes an unfair labor practice. This is the very core of ULP.

In Hacienda Fatima v. National Federation of Sugarcane Workers – Food and General Trade,3 the

Supreme Court upheld the factual findings of the NLRC and the Court of Appeals that from the
employer’s refusal
to bargain to its acts of economic inducements resulting in the promotion of those who withdrew from
the union, the

use of armed guards to prevent the organizers to come in, and the dismissal of union officials and
members, one

cannot but conclude that the employer did not want a union in its hacienda - a clear interference in the
right of the

workers to self-organization. Hence, the employer was held guilty of unfair labor practice.

It was likewise held in Insular Life4 that it is an act of interference for the employer to send individual

letters to all employees notifying them to return to work at a time specified therein, otherwise new
employees would

be engaged to perform their jobs. Individual solicitation of the employees or visiting their homes, with
the employer

or his representative urging the employees to cease their union activities or cease striking, constitutes
ULP. All the

1 G.R. No. L-25291, Jan. 30, 1971, 37 SCRA 244.

2 General Milling Corporation v. CA, G.R. No. 146728, Feb. 11, 2004.

3 G.R. No. 149440, Jan. 28, 2003.

4 Insular Life Assurance Co., Ltd., Employees Association-NATU v. Insular Life Assurance Co., Ltd., G.R.
No. L-25291, Jan. 30, 1971, 37 SCRA 244.

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above-detailed activities are ULPs because they tend to undermine the concerted activity of the
employees, an

activity to which they are entitled free from the employer's molestation.

b. Formation of a union is never a valid ground to dismiss.

c. It is ULP to dismiss a union officer or an employee for his union activities.

II.

YELLOW DOG CONTRACT


1. WHAT IS A YELLOW DOG CONTRACT?

It is one which exacts from workers as a condition of employment that they shall not join or belong to a

labor organization, or attempt to organize one during their period of employment or that they shall
withdraw

therefrom in case they are already members of a labor organization.

2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.

A typical yellow dog contract embodies the following stipulations:

(1) A representation by the employee that he is not a member of a labor organization;

(2) A promise by the employee that he will not join a union; and

(3) A promise by the employee that upon joining a labor organization, he will quit his employment.

The act of the employer in imposing such a condition constitutes unfair labor practice under Article
248(b)

of the Labor Code. Such stipulation in the contract is null and void.

3. ORIGIN OF THE TERM “YELLOW DOG.”

The term “yellow dog” traces its roots to certain commentaries made by the labor press in the United
States

sometime in 1921. An example is the following editor’s comment of the United Mine Workers' Journal:
“This

agreement has been well named. It is yellow dog for sure. It reduces to the level of a yellow dog any
man that signs

it, for he signs away every right he possesses under the Constitution and laws of the land and makes
himself the

truckling, helpless slave of the employer.” Simply put, it is so-called “yellow dog” because 1 the
employees were

deemed to have to cower before their "masters" to get a job.2

III.

CONTRACTING OUT OF SERVICES AND FUNCTIONS

1. GENERAL RULE.

As a general rule, the act of an employer in having work or certain services or functions being performed

by union members contracted out is not per se an unfair labor practice. This is so because contracting-
out of a job,
work or service is clearly an exercise by the employer of its business judgment and its inherent
management rights

and prerogatives. Hiring of workers is within the employer’s inherent freedom to regulate its business
and is a valid

exercise of its management prerogative subject only to special laws and agreements on the matter and
the fair

standards of justice. The employer cannot be denied the faculty of promoting efficiency and attaining
economy by a

study of what units are essential for its operation. It has the ultimate right to determine whether
services should be

performed by its personnel or contracted to outside agencies.

2. WHEN CONTRACTING-OUT BECOMES ULP.

It is only when the contracting out of a job, work or service being performed by union members will

interfere with, restrain or coerce employees in the exercise of their right to self-organization that it shall
constitute an

unfair labor practice. Thus, it is not unfair labor practice to contract out work for reasons of business
decline,

inadequacy of facilities and equipment, reduction of cost and similar reasonable grounds.

IV.

COMPANY UNION

1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.

Paragraph [d] of Article 259 [248] considers it an unfair labor practice to initiate, dominate, assist or

otherwise interfere with the formation or administration of any labor organization, including the giving
of financial

or other support to it or its organizers or supporters. Such union is called “company union” as its
formation, function

or administration has been assisted by any act defined as unfair labor practice under the Labor Code.

V.

DISCRIMINATION

1. COVERAGE OF PROHIBITION.

What is prohibited as unfair labor practice under the law is to discriminate in regard to wages, hours of
work, and other terms and conditions of employment in order to encourage or discourage membership
in any labor

organization.

4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY ACT.

1 Joel I. Seidman, The Yellow Dog Contract, The Johns Hopkins Press, 1932, Ch. 1, pp.11-38.

2 USLegal.com at http://definitions.uslegal.com/y/yellow-dog-contract/; Last accessed: February 14,


2017.

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In Manila Pencil Co., Inc. v. CIR, it was ruled that even assuming that business 1 conditions justify the

dismissal of employees, it is a ULP of employer to dismiss permanently only union members and not
nonunionists.

In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa Manila Railroad Co.,2 the
nonregularization

of long-time employees because of their affiliation with the union while new employees were

immediately regularized was declared an act of discrimination.

VI.

FILING OF CHARGES OR GIVING OF TESTIMONY

1. CONCEPT.

Under paragraph [f] of Article 259 [248] of the Labor Code, it is an unfair labor practice for an employer
to

dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being
about to

give testimony under the Labor Code.

2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO EMPLOYEE’S EXERCISE OF THE RIGHT

TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING.


It must be underscored that Article 259(f) [248 (f)] is the only unfair labor practice that need not be
related

to the exercise by the employees of their right to self-organization and collective bargaining.

In Itogon-Suyoc Mines, Inc. v. Baldo,3 it was declared that an unfair labor practice was committed by
the

employer when it dismissed the worker who had testified in the hearing of a certification election case
despite its

prior request for the employee not to testify in the said proceeding accompanied with a promise of
being reinstated if

he followed said request.

VII.

CBA-RELATED ULPs

1. THREE (3) CBA-RELATED ULPs.

Article 259 [248] enunciates three (3) CBA-related unfair labor practices, to wit:

1. To violate the duty to bargain collectively as prescribed in the Labor Code.

2. To pay negotiation or attorney’s fees to the union or its officers or agents as part of the settlement

of any issue in collective bargaining or any other dispute.

3. To violate a collective bargaining agreement.

VII-A.

PAYMENT OF NEGOTIATION AND ATTORNEY’S FEES

1. WHEN PAYMENT CONSIDERED ULP.

Article 259 (h) [248(h)] of the Labor Code considers as an unfair labor practice the act of the employer in

paying negotiation fees or attorney’s fees to the union or its officers or agents as part of the settlement
of any issue

in collective bargaining or any other dispute.

VII-B.

VIOLATION OF THE CBA

1. CORRELATION.

Article 259 (i) [248(i)] of the Labor Code should be read in relation to Article 261 thereof. Under Article

261, as amended, violations of a CBA, except those which are gross in character, shall no longer be
treated as an
unfair labor practice and shall be resolved as grievances under the CBA. Gross violations of CBA shall
mean

flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

2. CASE LAW.

The act of the employer in refusing to implement the negotiated wage increase stipulated in the CBA,

which increase is intended to be distinct and separate from any other benefits or privileges that may be
forthcoming

to the employees, is an unfair labor practice.

Refusal for a considerable number of years to give salary adjustments according to the improved salary

scales in the CBA is an unfair labor practice.

3.

ULP OF LABOR ORGANIZATIONS

I.

RESTRAINT AND COERCION OF EMPLOYEES

IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION

1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE EMPLOYEES IN THE EXERCISE

OF THEIR RIGHT TO SELF-ORGANIZE.

1 G.R. No. L-16903, Aug. 31, 1965, 14 SCRA 955.

2 G.R. No. L-19728, July 30, 1964.

3 G.R. No. L-17739, Dec. 24, 1964.

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Under Article 260(a) [249 (a)], it is ULP for a labor organization, its officers, agents or representatives to

restrain or coerce employees in the exercise of their right to self-organization. Compared to similar
provision of
Article 248(a) of the Labor Code, notably lacking is the use of the word “interfere” in the exercise of the
employees’

right to self-organize. The significance in the omission of this term lies in the grant of unrestricted
license to the

labor organization, its officers, agents or representatives to interfere with the exercise by the employees
of their right

to self-organization. Such interference is not unlawful since without it, no labor organization can be
formed as the

act of recruiting and convincing the employees is definitely an act of interference.

II.

DISCRIMINATION

Under Article 260(b) [249 (b)], it is ULP for a labor organization, its officers, agents or representatives:

(1) To cause or attempt to cause an employer to discriminate against an employee, including


discrimination

against an employee with respect to whom membership in such organization has been denied.

(2) To terminate an employee’s union membership on any ground other than the usual terms and
conditions

under which membership or continuation of membership is made available to other members.

III.

DUTY OF UNION TO BARGAIN COLLECTIVELY

1. CONCEPT.

Under Article 260(c) [249 (c)], it is ULP for a duly certified sole and exclusive bargaining union, its

officers, agents or representatives to refuse or violate the duty to bargain collectively with the
employer. This is the

counterpart provision of Article 259(g) [248 (g)] respecting the violation by the employer of its duty to
bargain

collectively.

2. PURPOSE.

The obvious purpose of the law is to ensure that the union will negotiate with management in good faith

and for the purpose of concluding a mutually beneficial agreement regarding the terms and conditions
of their

employment relationship.
IV.

FEATHERBEDDING DOCTRINE

1. CONCEPT.

Article 260(d) [249 (d)] is the “featherbedding” provision in the Labor Code. Patterned 1 after a similar

provision in the Taft-Hartley Act,2 “featherbedding” or “make-work” refers to the practice, caused and
induced by a

union, of hiring more workers than are needed to perform a given work, job or task or to adopt work
procedures

which is evidently senseless, wasteful, inefficient and without legitimate justifications since it is meant
purely for

the purpose of employing additional workers than are necessary. This is resorted to by the union as a
response to the

laying-off of workers occasioned by their obsolescence because of the introduction of machines, robots3
or new and

innovative technological changes and improvements in the workplace or as required by minimum health
and safety

standards, among other reasons. Its purpose is to unduly secure the jobs of the workers. Because of
these lay-offs,

the unions are constrained to resort to some featherbedding practices. Accordingly, they usually request
that the

technological changes be introduced gradually, or not at all, or that a minimum number of personnel be
retained

despite such changes. They resort to some ways and methods of retaining workers even though there
may be little

work left for them to do and perform. It therefore unnecessarily maintains or increases the number of
employees

used or the amount of time consumed to work on a specific job, work or undertaking. By so increasing
the demand

for workers, featherbedding obviously keeps wages higher.4

2. REQUISITES.

The requisites for featherbedding are as follows:

1 Etymologically, the term "featherbedding" originally referred to any person who is pampered,
coddled, or excessively rewarded. The term originated in the use of feathers to fill
mattresses in beds, providing for more comfort. The modern use of the term in the labor relations
setting began in the United States railroad industry, which used feathered

mattresses in sleeping cars. Railway labor unions, confronted with changing technology which led to
widespread unemployment, sought to preserve jobs by negotiating contracts

which required employers to compensate workers to do little or no work or which required complex and
time-consuming work rules so as to generate a full day's work for an employee

who otherwise would not remain employed. (Merriam-Webster's Dictionary of Law, 1st ed., Merriam-
Webster, Inc., 1996. ISBN 0-87779-604-1; Visit also the Knowledge Encyclopedia

at http://www.referenceforbusiness.com/knowledge/ Featherbedding.html; Last visited: Jan. 30, 2017).

2 It is the Labor Management Relations Act of 1947, better known as the “Taft–Hartley Act,” which was
enacted on June 23, 1947. It amended the National Labor Relations Act, 29 U.S.

Code § 158 - Unfair labor practices, Sec. 8[b] [6] thereof, which states: “to cause or attempt to cause an
employer to pay or deliver or agree to pay or deliver any money or other thing

of value, in the nature of an exaction, for services which are not performed or not to be performed[.]”

3 “Featherbedding” is the insistence by unions on employment of unnecessary workers, i.e., demanding


payment for work no longer performed by workers because of machines or

robots. Featherbedding dramatically increases labor costs and decreases productivity. (See Labor Law
Glossary, Matt Austin Labor Law, https://mattaustinlaborlaw.com/labor-lawdictionary/;

Last accessed: October 09, 2016).

4 It must be noted that Section 8(b)(6) of the Taft-Hartley Act has outlawed featherbedding
arrangements which is a ULP of the union making the demand for payment of wages for

services which are not performed or not to be performed. However, the prohibitions against
featherbedding under this section are made applicable only to payments for workers not to

work. Consequently, the agreement prescribing minimum number of workers to be hired and
maintained and other “make-work” arrangements are considered valid and legal,

notwithstanding the provision of this section.

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(1) The labor organization, its officers, agents or representatives have caused or attempted to cause an
employer either:

(a) to pay or agree to pay any money, including the demand for fee for union negotiations; or

(b) to deliver or agree to deliver any things of value;

(2) Such demand for payment of money or delivery of things of value is in the nature of an exaction; and

(3) The services contemplated in exchange for the exaction are not actually performed or will not be

performed.

On No. 1 above, it is important that the effort at securing payment of sums of money or delivery of
goods

or things of value, emanates from and initiated by the union.

On No. 2 above, the act of the employer in paying the money or delivering the things of value
demanded by

the union, is against its will and is therefore, as the law states, “in the nature of exaction” by the union.

“Exaction”, as a legal term, means an excessive or harsh demand of a reward or fee for an official
service

performed in the normal course of duty. It is taking more fee or pay for the services than what the law
allows, under

color of one’s official authority. While it is a form of extortion, it should, 1 2 however, be differentiated
from

“extortion” in that, in “extortion,” the union extorts more than its due, when something is due; in
“exaction,” the

union exacts what is not due, when there is nothing due to it.3

On No. 3 above, although the employer agrees to pay money or deliver things of value, the employees
to

whom such payment and delivery are made will not actually do or perform the contemplated services.
Being an

exaction, no services would be rendered in exchange for the money paid or things of value delivered.

3. DEMAND FOR PAYMENT OF STANDBY SERVICES.

A union commits ULP under this provision by causing or attempting to cause an employer to pay or
agree

to pay for standby services. Payments for “standing-by,” or for the substantial equivalent of “standing-
by,” are not

payments for “services performed” within the meaning of the law. When an employer receives a bona-
fide offer of
competent performance of relevant services, it remains for the employer, through free and fair
negotiation, to

determine whether such offer should be accepted and what compensation should be paid for the work
done.4

It is an exaction constitutive of ULP within the meaning of this law for a union to demand of the
employer

for a contract calling for payment of compensation for the presence of one of its members at a jobsite
when no

unionist’s work is being done therein, and when the employer indicated that it had no need for such
labor, the union

staged a strike to make the employer respond to such demand. The demand herein is considered not a
bona-fide offer

of competent performance of relevant services.5

A union’s demand that a theater corporation employ maintenance men at its theater is also an arguable

violation of the anti-featherbedding provision of the law where maintenance men employed at other
theaters under

union compulsion did little or no actual work but were merely present on the premises during working
hours.6

4. DEMAND FOR PAYMENT OF MADE WORK.

Where work is actually done by an employee with the employer’s consent, the union’s demand that the

employee be compensated for time spent in doing the work does not violate the law.7 The law leaves to
collective

bargaining the determination of what work, if any, including bona-fide “made work,” shall be included
as

compensable services and what rate of compensation shall be paid for it.8

A musicians’ union has been held not to have violated the anti-featherbedding provision by refusing to

permit a union band to perform at the opening game of the baseball season, refusing to permit a union
organist to

play at the home games, and picketing the baseball stadium, in order to force the owner of the baseball
team to hire a

union band to play at all weekend home games; or by refusing to give its consent to appearances of
travelling bands

in a theater unless the theater manager also employs a local orchestra in connection with certain
programs where the
local orchestra is to perform actual and not token services, even though the theater manager does not
need or want to

1 Meaning of “exaction” per USLegal.com found at http://definitions.uslegal.com/e/exaction/. Last


visited: June 30, 2016. Note that “[t]he act of exacting money or the sum exacted is

also called exaction.” See also TheLawDictionary.Com at http://thelawdictionary.org/exaction/, Last


accessed: June 30, 2016.

2 See YourDictionary.com at http://www.yourdictionary.com/exaction. Last visited: June 30, 2016.

3 See USLegal.com at http://definitions.uslegal.com/e/exaction/. Last visited: June 30, 2016. The


FreeDictionary.com at http://legal-dictionary.thefreedictionary.com/exaction,

distinguished these two terms, thus: “EXACTION, torts. A willful wrong done by an officer, or by one
who, under color of his office, takes more fee or pay for his services than what the

law allows. Between extortion and exaction there is this difference; that in the former case the officer
extorts more than his due, when something is due to him; in the latter, he exacts

what is not his due, when there is nothing due to him. Wishard; Co. Litt. 368.” Last accessed: June 30,
2016.

4 NLRB v. Gamble Enterprises, Inc., 345 US 117 97 L Ed 864, 73 S Ct 560.

5 International Brotherhood of Teamsters, etc., 212 NLRB 968, 1974 CCH NLRB 26867, 87 BNA LRRM
1101.

6 Consolidated Theaters, Inc. v. Theatrical Stage Employees Union, 69 Cal 2d 713, 73 Cal Rptr 213, 447
P2d 325.

7 NLRB v. Gamble Enterprises, Inc., 345 US 117, 97 l Ed 864, 73 S Ct 560; American Newspaper
Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d

497.

8 American Newspaper Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d
497.

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employ the local orchestra. Similarly, a printers’ union does not violate 1 the anti-featherbedding
provision by
securing payment of wages to printers from newspapers for setting “bogus” - duplicate forms for local

advertisements although the newspaper already has cardboard matrices to be used as molds for metal
casting from

which to print the same advertisements – even though the “bogus” is ordinarily not used but is melted
down

immediately.2

5. DEMAND FOR PAYMENT OF WORK ALREADY COMPENSATED.

The anti-featherbedding provision has been held not to bar a union from demanding payment for work
for

which the employer has already paid another person. Hence, a union has been held not guilty of ULP in
demanding

payment to it of an amount equal to the wages paid by the employer to a non-union employee for work
to which the

union’s members were entitled. If the work is actually done by employees, there can be no conflict with
the antifeatherbedding

provision, regardless of whether or not the persons receiving payment are the ones who performed

the work.3

V.

DEMAND OR ACCEPTANCE

OF NEGOTIATION FEES OR ATTORNEY’S FEES

1. CONCEPT.

Under Article 260(e) [249 (e)], it is ULP for a labor organization, its officers, agents or representatives to

ask for or accept negotiation fees or attorney’s fees from employers as part of the settlement of any
issue in

collective bargaining or any other dispute.

VI.

VIOLATION OF THE CBA

1. CONCEPT.

Under Article 260(f) [249 (f)], it is ULP for a labor organization, its officers, agents or representatives to

violate a CBA.

2. COUNTERPART PROVISION.
This is the counterpart provision of Article 259(i) [248 (i)] regarding the employer’s act of violating a
CBA.

But it must be noted that under Article 261 of the Labor Code, violation of the CBA is generally
considered merely a

grievable issue. It becomes an unfair labor practice only if the violation is gross in character which means
that there

is flagrant and/or malicious refusal to comply with the economic (as distinguished from non-economic)
stipulations

in the CBA. This principle applies not only to the employer but to the labor organization as well.

VII.

CRIMINAL LIABILITY FOR ULPs OF LABOR ORGANIZATION

1. PERSONS LIABLE.

Article 260 [249] is explicit in its provision on who should be held liable for ULPs committed by labor

organizations. It states that only the officers, members of governing boards, representatives or agents or
members of

labor associations or organizations who have actually participated in, authorized or ratified unfair labor
practices

shall be held criminally liable.

F.

PEACEFUL CONCERTED ACTIVITIES

A.

FORMS OF CONCERTED ACTIVITIES

1. FORMS OF CONCERTED ACTIVITIES.

There are three (3) forms of concerted activities, namely:

1. Strike;

2. Picketing; and

3. Lockout.

1.

BY LABOR ORGANIZATION

1. Strike; and

2. Picketing.
1. STRIKE.

1 Musicians Union v. Superior Court of Alameda County, 69 Cal 2d 695, 73 Cal Rptr 201, 447 P2d 313;
NLRB v. Gamble Enterprises, Inc., 345 US 117, 97 L Ed 864, 73 S Ct 560.

2 American Newspaper Publishers Association v. NLRB, 345 US 100, 97 L Ed 852, 73 S Ct 552, 31 ALR2d
497; International Hod Carriers Bldg. & Common Laborers Union, 135

NLRB 1153 1962 CCH NLRB 10938, 49 BNA LRRM 1638.

3 Rabouin v. NLRB [CA2] 195 F2d 906.

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“Strike” means any temporary stoppage of work by the concerted action of the employees as a result
of

an industrial or labor dispute.

2. PICKETING.

“Picketing” is the act of workers in peacefully marching to and fro before an establishment involved in a

labor dispute generally accompanied by the carrying and display of signs, placards and banners intended
to inform

the public about the dispute.

2.

BY EMPLOYER

1. LOCKOUT.

“Lockout” means the temporary refusal by an employer to furnish work as a result of an industrial or

labor dispute.

It consists of the following:

1. Shutdowns;

2. Mass retrenchment and dismissals initiated by the employer.

3. The employer’s act of excluding employees who are union members.


a.

REQUISITES FOR A VALID STRIKE

1. PROCEDURAL BUT MANDATORY REQUISITES FOR A VALID STRIKE.

A strike, in order to be valid and legal, must conform to the following procedural requisites:

1st requisite - It must be based on a valid and factual ground;

2nd requisite - A notice of strike must be filed with the NCMB-DOLE;

3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the

taking of the strike vote by secret balloting, informing said office of the decision to conduct

a strike vote, and the date, place, and time thereof;

4th requisite - A strike vote must be taken where a majority of the members of the union obtained by

secret ballot in a meeting called for the purpose, must approve it;

5th requisite - A strike vote report should be submitted to the NCMB-DOLE at least seven (7) days
before

the intended date of the strike;

6th requisite - Except in cases of union-busting, the cooling-off period of 15 days, in case of unfair labor

practices of the employer, or 30 days, in case of collective bargaining deadlock, should be

fully observed; and

7th requisite - The 7-day waiting period/strike ban reckoned after the submission of the strike vote
report

to the NCMB-DOLE should also be fully observed in all cases.

All the foregoing requisites, although procedural in nature, are mandatory and failure of the union to

comply with any of them would render the strike illegal.

I.

FIRST REQUISITE:

EXISTENCE OF VALID AND FACTUAL GROUND/S

1. VALID GROUNDS.

The law recognizes only 2 grounds in support of a valid strike, viz.:

1. Collective bargaining deadlock (Economic Strike); and/or

2. Unfair labor practice (Political Strike).


A strike not based on any of these two grounds is illegal.

2. SOME PRINCIPLES ON THE FIRST REQUISITE.

▪ Violation of CBA, except when gross, is not an unfair labor practice, hence, may not be cited as

ground for a valid strike. Ordinary violation of a CBA is no longer treated as an unfair labor practice

but as a mere grievance which should be processed through the grievance machinery and voluntary

arbitration.

▪ Inter-union or intra-union dispute is not a valid ground.

▪ Violation of labor standards is not a valid ground.

▪ Wage distortion is not a valid ground.

II.

SECOND REQUISITE:

FILING OF A NOTICE OF STRIKE

1. NOTICE OF STRIKE.

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No labor organization shall declare a strike without first having filed a notice of strike.

III.

THIRD REQUISITE:

SERVICE OF A 24-HOUR PRIOR NOTICE

In Capitol Medical Center, Inc. v. NLRC, it was imposed as additional requisite that a 24-hour notice

must be served to the NCMB-DOLE prior to the taking of the strike vote by secret balloting, informing it
of the

union’s decision to conduct a strike vote as well as the date, place, and time thereof.

IV.
FOURTH REQUISITE:

CONDUCT OF A STRIKE VOTE

1. MAJORITY APPROVAL OF THE STRIKE.

No labor organization shall declare a strike without the necessary strike vote first having been obtained
and

reported to the NCMB-DOLE. A decision to declare a strike must be approved by a majority of the total
union

membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called
for that

purpose. This process is called “strike vote balloting.”

A STRIKE WITHOUT THE MAJORITY SUPPORT OF THE UNION MEMBERS IS CALLED A

“WILDCAT STRIKE.”

2. PURPOSE.

The purpose of a strike vote is to ensure that the decision to strike broadly rests with the majority of the

union members in general and not with a mere minority.

3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL OF A STRIKE.

The majority decision to stage a strike is valid for the duration of the dispute based on substantially the

same grounds considered when the strike vote was taken.

V.

FIFTH REQUISITE:

SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE

1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.

The evident intention of the law in mandatorily requiring the submission of the strike vote report is to

afford the NCMB of opportunity to verify the truth and veracity of the majority vote by the union
members in

support of the intended strike.

2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.

The strike vote report should be submitted to the NCMB-DOLE at least seven (7) days before the actual

staging of the intended strike, subject to the observance of the cooling-off periods provided under the
law.
VI.

SIXTH REQUISITE:

OBSERVANCE OF THE COOLING-OFF PERIOD

1. GENERAL RULE.

The cooling-off periods provided under the law before the intended date of the actual mounting of the
strike

are as follows:

1. In case of bargaining deadlock, the cooling-off period is thirty (30) days from the filing of the notice

of strike; or

2. In case of unfair labor practice, the cooling-off period is fifteen (15) days from the filing of the notice

of strike.

2. EXCEPTION: IN CASE OF UNION-BUSTING.

In case of dismissal from employment of union officers (not ordinary members) duly elected in

accordance with the union constitution and by-laws which may constitute union-busting because the
existence of

the union is threatened by reason of such dismissal, the 15-day cooling-off period does not apply and
the union

may take action immediately after the strike vote is conducted and the results thereof duly submitted to
the regional

branch of the NCMB.

In cases of union-busting, only the 15-day cooling-off period need not be observed; all the other
requisites

must be fully complied with.

3. RECKONING OF THE COOLING-OFF PERIODS.

The start of the cooling-off periods should be reckoned from the time the notice of strike is filed with
the

NCMB-DOLE, a copy thereof having been served on the other party concerned.

4. PURPOSE OF THE COOLING-OFF PERIODS.

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The purpose of the cooling-off periods is to provide an opportunity for mediation and conciliation of the

dispute by the NCMB-DOLE with the end in view of amicably settling it.

VII.

SEVENTH REQUISITE:

7-DAY WAITING PERIOD OR STRIKE BAN

1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.

The seven (7) day waiting period is intended to give the NCMB-DOLE an opportunity to verify whether

the projected strike really carries the approval of the majority of the union members.

2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.

The 7-day waiting period or strike ban is a distinct and separate requirement from the cooling-off period

prescribed by law. The latter cannot be substituted for the former and vice-versa.

The cooling-off period is counted from the time of the filing of the notice of strike. The 7-day waiting

period/strike ban, on the other hand, is reckoned from the time the strike vote report is submitted to
the NCMBDOLE.

Consequently, a strike is illegal for failure to comply with the prescribed mandatory cooling-off period
and

the 7-day waiting period/strike ban after the submission of the report on the strike vote.

3. BOTH MUST BE COMPLIED WITH SEPARATELY AND DISTINCTLY FROM EACH OTHER.

The requirements of cooling-off period and 7-day waiting period/strike ban must both be complied with.

The labor union may take the strike vote and report the same to the NCMB-DOLE within the statutory
cooling-off

period. In this case, the 7-day waiting period/strike ban should be counted from the day following the
expiration of

the cooling-off period. A contrary view would certainly defeat and render nugatory the salutary
purposes behind the

distinct requirements of cooling-off period and the waiting period/strike ban.

The NCMB Primer on Strike, Picketing and Lockout, issued by 1 the NCMB, the agency of government
directly tasked with the implementation and enforcement of this particular legal provision and
requirement, is very

clear on this point, thus:

“In the event the result of the strike/lockout vote ballot is filed within the cooling-off

period, the 7-day requirement shall be counted from the day following the expiration of the

cooling-off period.”2

In other words, the seven (7) days should be added to the cooling-off period of fifteen (15) days, in case
of

unfair labor practice, or thirty (30) days, in case of collective bargaining deadlock and it is only after the
lapse of the

total number of days after adding the two (2) periods that the strike/lockout may be lawfully and validly
staged.

While there was no categorical declaration on this point, the Supreme Court, in holding in the 2010 case
of

Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA),3 that respondents fully satisfied
the

legal procedural requirements, noted that the strike notice grounded on collective bargaining deadlock
was filed on

March 9, 1995. Consequently, the 30-day cooling-off period would have lapsed on April 9, 1995. The
strike vote

was reached on March 16, 1995 and the notification thereof was filed with the DOLE on March 17, 1995
or well

within the cooling-off period. Based on the said rule in the NCMB Primer, the strike could only be validly
staged

starting from April 17, 1995 and onwards, i.e., after the lapse of 7 days from April 9, 1995. Hence, since
the actual

strike was launched only on April 25, 1995, there was clearly full compliance with the requisites.

Example: In a case where the notice of strike grounded on ULP is filed on October 1, 2015, and the strike

vote is taken within the cooling-off period, say, on October 5, 2015 and the strike vote report showing
majority

support for the intended strike is submitted to the NCMB-DOLE the following day, October 6, 2015, the
question is

when can the union legally stage the strike?


Following the above principle, the answer obviously is on October 24, 2015 or any day thereafter. This is

so because the 15-day cooling-off period for ULP expires on October 16 and adding the 7-day strike ban
which

“should be counted from the day following the expiration of the cooling-off period,” the 7th day would
be on

October 23, 2015. Obviously, the strike cannot be conducted on the 7th day but rather after the lapse
thereof; hence,

it is only on October 24, 2015 and onwards that the union may lawfully conduct the strike.

4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY WAITING PERIOD.

▪ Deficiency of even one (1) day of the cooling-off period and 7-day strike ban is fatal.

▪ One-day strike without complying with the 7-day strike ban is illegal.

b.

REQUISITES FOR A VALID LOCKOUT

1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.

1 2nd Edition, December 1995.

2 No. 6 thereof.

3 G.R. No. 170830, Aug. 11, 2010.

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With a slight, insignificant variation, the procedural but mandatory requisites for a valid strike discussed

above are substantially similar to those applicable for valid lockout. For purposes of ease and clarity, the
same are

presented as follows:

• 1st requisite - It must be based on a valid and factual ground;

• 2nd requisite - A notice of lockout must be filed with the NCMB-DOLE;

• 3rd requisite - A notice must be served to the NCMB-DOLE at least twenty-four (24) hours prior to the
taking of the lockout vote by secret balloting, informing said office of the decision to conduct a lockout

vote, and the date, place, and time thereof;

• 4th requisite - A lockout vote must be taken where a majority of the members of the Board of
Directors

of the corporation or association or of the partners in a partnership obtained by secret ballot in a


meeting

called for the purpose, must approve it;

• 5th requisite - A lockout vote report should be submitted to the NCMB-DOLE at least seven (7) days

before the intended date of the lockout;

• 6th requisite - The cooling-off period of 15 days, in case of unfair labor practices of the labor

organization, or 30 days, in case of collective bargaining deadlock, should be fully observed; and

• 7th requisite - The 7-day waiting period/lockout ban reckoned after the submission of the lockout vote

report to the NCMB-DOLE should also be fully observed in all cases.

c.

REQUISITES FOR LAWFUL PICKETING

1. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE TO PICKETING.

The seven (7) requisites for a valid strike discussed above do not apply to picketing.

2. REQUISITES FOR LAWFUL PICKETING.

The most singular requirement to make picketing valid and legal is that it should be peacefully
conducted.

Based on the foregoing provision, the requisites may be summed up as follows:

1. The picket should be peacefully carried out;

2. There should be no act of violence, coercion or intimidation attendant thereto;

3. The ingress to (entrance) or egress from (exit) the company premises should not be obstructed; and

4. Public thoroughfares should not be impeded.

3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION AND THE LAW.

Unlike a strike which is guaranteed under the Constitutional provision on the right of workers to conduct

peaceful concerted activities under Section 3, Article XIII thereof, the right to picket is guaranteed
under the
freedom of speech and of expression and to peaceably assemble to air grievances under Section 4,
Article III

(Bill of Rights) thereof.

4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE CONDUCT OF THE PICKET.

In the event the picketers employ discourteous and impolite language in their picket, such may not
result in,

or give rise to, libel or action for damages.

5. PICKETING VS. STRIKE.

(a) To strike is to withhold or to stop work by the concerted action of employees as a result of an
industrial

or labor dispute. The work stoppage may be accompanied by picketing by the striking employees
outside of the

company compound.

(b) While a strike focuses on stoppage of work, picketing focuses on publicizing the labor dispute and its

incidents to inform the public of what is happening in the company being picketed.

(c) A picket simply means to march to and fro in front of the employer’s premises, usually accompanied
by

the display of placards and other signs making known the facts involved in a labor dispute. It is but one
strike

activity separate and different from the actual stoppage of work.

Phimco Industries, Inc. v. Phimco Industries Labor Association (PILA).1 - While the right of

employees to publicize their dispute falls within the protection of freedom of expression and the right to
peaceably

assemble to air grievances, these rights are by no means absolute. Protected picketing does not extend
to

blocking ingress to and egress from the company premises. That the picket was moving, was peaceful
and

was not attended by actual violence may not free it from taints of illegality if the picket effectively
blocked

entry to and exit from the company premises.

6. WHEN PICKET CONSIDERED A STRIKE.

In distinguishing between a picket and a strike, the totality of the circumstances obtaining in a case
should
be taken into account.

Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola Bottlers Phils., Inc.2 - Petitioners contend

that what they conducted was a mere picketing and not a strike. In disagreeing to this contention, the
High Court

emphasized that it is not an issue in this case that there was a labor dispute between the parties as
petitioners had

notified the respondent of their intention to stage a strike, and not merely to picket. Petitioners’
insistence to stage a

1 G.R. No. 170830, Aug. 11, 2010.

2 G.R. Nos. 164302-03, Jan. 24, 2007.

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strike is evident in the fact that an amended notice of strike was filed even as respondent moved to
dismiss the first

notice. The basic elements of a strike are present in this case: 106 members of petitioner Union, whose
respective

applications for leave of absence on September 21, 1999 were disapproved, opted not to report for
work on said

date, and gathered in front of the company premises to hold a mass protest action. Petitioners
deliberately absented

themselves and instead wore red ribbons and carried placards with slogans such as: “YES KAMI SA
STRIKE,”

“PROTESTA KAMI,” “SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN,” “CBA-’WAG BABOYIN,”

“STOP UNION BUSTING.” They marched to and fro in front of the company’s premises during working
hours.

Thus, petitioners engaged in a concerted activity which already affected the company’s operations. The
mass

concerted activity obviously constitutes a strike. Moreover, the bare fact that petitioners were given a
Mayor’s
permit is not conclusive evidence that their action/activity did not amount to a strike. The Mayor’s
description of

what activities petitioners were allowed to conduct is inconsequential. To repeat, what is definitive of
whether the

action staged by petitioners is a strike and not merely a picket is the totality of the circumstances
surrounding the

situation.

Petitioner union in the 2011 case of Leyte Geothermal Power Progressive Employees Union-ALUTUCP

v. Philippine National Oil Company – Energy Development Corporation, 1 contends that there was no

stoppage of work; hence, they did not strike. Euphemistically, petitioner union avers that it “only
engaged in

picketing,” and maintains that “without any work stoppage, [its officers and members] only engaged in
xxx protest

activity.” The Supreme Court, however, ruled that it was a strike and not picketing or protest activity
that petitioner

union staged. It found the following circumstances in support of such finding:

(1) Petitioner union filed a Notice of Strike on December 28, 1998 with the DOLE grounded on

respondent’s purported unfair labor practices, i.e., “refusal to bargain collectively, union busting and
mass

termination.” On even date, petitioner Union declared and staged a strike.

(2) The DOLE Secretary intervened and issued a Return-to-Work Order dated January 4, 1999, certifying

the labor dispute to the NLRC for compulsory arbitration. The Order indicated the following facts: (1)
filing of the

notice of strike; (2) staging of the strike and taking control over respondent’s facilities of its Leyte
Geothermal

Project on the same day petitioner union filed the notice of strike; (3) attempts by the NCMB to forge a
mutually

acceptable solution proved futile; (4) in the meantime, the strike continued with no settlement in sight
placing in

jeopardy the supply of much needed power supply in the Luzon and Visayas grids.

(3) Petitioner union itself, in its pleadings, used the word “strike.”

(4) Petitioner union’s asseverations are belied by the factual findings of the NLRC, as affirmed by the CA
thus: “The failure to comply with the mandatory requisites for the conduct of strike is both admitted
and clearly

shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off
period was not

observed and that the 7-day strike ban after the submission of the strike vote was not complied with
since there was

no strike vote taken.”

In fine, petitioner union’s bare contention that it did not hold a strike cannot trump the factual findings
of

the NLRC that petitioner union indeed struck against respondent. In fact, and more importantly,
petitioner union

failed to comply with the requirements set by law prior to holding a strike.

d.

WHEN IS A STRIKE CONSIDERED ILLEGAL?

A strike is illegal if it is declared and staged:

1) Without complying with the procedural but mandatory requisites (See 7 requisites above).

2) For unlawful purpose such as to compel the dismissal of an employee or to force recognition of the

union or for trivial and puerile purpose or to circumvent contracts and judicial orders.

3) Based on non-strikeable or invalid grounds such as:

a) Inter-union or intra-union disputes.

b) Simple violation of CBA in contrast to gross violation thereof which is deemed ULP.

c) Violation of labor standards.

d) Legislated wage orders (wage distortion).

4) Without first having bargained collectively.

5) In violation of the “no strike, no lockout” clause in the CBA.

6) Without submitting the issues to the grievance machinery or voluntary arbitration or failing to
exhaust

the steps provided therein.

7) While conciliation and mediation proceeding is on-going at the NCMB.

8) Based on issues already brought to voluntary or compulsory arbitration.

9) During the pendency of a case involving the same ground/s cited in the notice of strike.
1 G.R. No. 170351, March 30, 2011.

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10) In defiance of an assumption or certification or return-to-work order.

11) In violation of a temporary restraining order or an injunction order.

12) After the conversion of the notice of strike into a preventive mediation case.

13) Against the prohibition by law.

14) By a minority union.

15) By an illegitimate union.

16) By dismissed employees.

17) In violation of the company code of conduct which prohibits “inciting or participating in riots,

disorders, alleged strikes or concerted actions detrimental to [Toyota’s] interest,” The penalty for

which is dismissal.

18) As protest rallies in front of government offices such as in the following cases:

Toyota Motor Phils. Corp. Workers Association [TMPCWA] v. NLRC,1 where the Supreme Court

ruled that the protest rallies staged by the employees from February 21 to 23, 2001 in front of the

offices of the Bureau of Labor Relations (BLR) and the DOLE Secretary constitute illegal strike and

not legitimate exercise of their right to peaceably assemble and petition the government for redress of

grievances. It was illegal for having been undertaken without satisfying the mandatory pre-requisites

for a valid strike under Article 263 of the Labor Code.

The ruling in Toyota was cited in Solidbank Corporation v. Gamier, 2 as basis in declaring the

protest action of the employees of petitioner Solidbank which was staged in front of the Office of the

DOLE Secretary in Intramuros, Manila, as constitutive of illegal strike since it paralyzed the

operations of the bank. The protest action in this case was conducted because of the CBA deadlock.

19) As welga ng bayan which is in the nature of a general strike as well as an extended sympathy strike.
3.

ASSUMPTION OF JURISDICTION

(BY THE DOLE SECRETARY OR ALTERNATIVELY, AT HIS DISCRETION,

CERTIFICATION OF THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY

ARBITRATION)

1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR DISPUTE.

Article 278(g) [263(g)] of the Labor Code provides that when in the opinion of the DOLE Secretary, the

labor dispute causes or will likely to cause a strike or lockout in an industry indispensable to the
national

interest, he is empowered to do either of 2 things:

1. He may assume jurisdiction over the labor dispute and decide it himself; or

2. He may certify it to the NLRC for compulsory arbitration, in which case, it will be the NLRC which

shall hear and decide it.

This power may be exercised by the DOLE Secretary even before the actual staging of a strike or

lockout since Article 278(g) [263(g)] does not require the existence of a strike or lockout but only of a
labor dispute

involving national interest.

2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?

The Labor Code vests in the DOLE Secretary the discretion to determine what industries are
indispensable

to the national interest. Accordingly, upon the determination by the DOLE Secretary that such industry is

indispensable to the national interest, he has authority to assume jurisdiction over the labor dispute in
the said

industry or certify it to the NLRC for compulsory arbitration.

Past issuances of the DOLE Secretary have not made nor attempted to mention specifically what the

industries indispensable to the national interest are. It was only in Department Order No. 40-H-13, Series
of 2013,

that certain industries were specifically named, thus:

“Section 16. Industries Indispensable to the National Interest. – For the guidance of the

workers and employers in the filing of petition for assumption of jurisdiction, the following industries/
services are hereby recognized as deemed indispensable to the national interest:

a. Hospital sector;

b. Electric power industry;

c. Water supply services, to exclude small water supply services such as bottling and

refilling stations;

d. Air traffic control; and

e. Such other industries as may be recommended by the National Tripartite Industrial Peace

Council (TIPC).”

1 G.R. Nos. 158786 &158789, Oct. 19, 2007.

2 G.R. No. 159460, Nov. 15, 2010.

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Obviously, the above enumerated industries are not exclusive as other industries may be considered

indispensable to the national interest based on the appreciation and discretion of the DOLE Secretary or
as may be

recommended by TIPC.

3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN HOSPITALS, CLINICS AND MEDICAL

INSTITUTIONS.

As a general rule, strikes and lockouts in hospitals, clinics and similar medical institutions should be

avoided.

In case a strike or lockout is staged, it shall be the duty of the striking union or locking-out employer to

provide and maintain an effective skeletal workforce of medical and other health personnel whose
movement and

services shall be unhampered and unrestricted as are necessary to insure the proper and adequate
protection of the

life and health of its patients, most especially emergency cases, for the duration of the strike or lockout.
The DOLE Secretary may immediately assume, within twenty four (24) hours from knowledge of the

occurrence of such a strike or lockout, jurisdiction over the same or certify it to the NLRC for compulsory

arbitration.

4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER OF THE DOLE SECRETARY.

▪ Prior notice and hearing are not required in the issuance of the assumption or certification order.

▪ The DOLE Secretary may seek the assistance of law enforcement agencies like the Philippine National
Police

to ensure compliance with the provision thereof as well as with such orders as he may issue to enforce
the same.

5. RETURN-TO-WORK ORDER.

a. It is a STATUTORY PART AND PARCEL of assumption/certification order even if not expressly

stated therein.

The moment the DOLE Secretary assumes jurisdiction over a labor dispute involving national interest or

certifies it to the NLRC for compulsory arbitration, such assumption or certification has the effect of
automatically

enjoining the intended or impending strike or, if one has already been commenced, of automatically
prohibiting its

continuation. The mere issuance of an assumption or certification order automatically carries with it a
return-to-work

order, even if the directive to return to work is not expressly stated therein. It is thus not necessary for
the DOLE

Secretary to issue another order directing the strikers to return to work.

It is error therefore for striking workers to continue with their strike alleging absence of a return-to-
work

order since Article 263(g) is clear that once an assumption/certification order is issued, strikes are
enjoined or, if one

has already taken place, all strikers should immediately return to work.

b. Nature of return-to-work order.

Return-to-work order is compulsory and immediately executory in character. It should be strictly

complied with by the parties even during the pendency of any petition questioning its validity in order to
maintain
the status quo while the determination is being made. Filing of a motion for reconsideration does not
affect the

enforcement of a return-to-work order which is immediately executory.

c. Some principles on return-to-work order.

▪ The issue of legality of strike is immaterial in enforcing the return-to-work order.

▪ Upon assumption or certification, the parties should revert to the status quo ante litem which refers
to

the state of things as it was before the labor dispute or the state of affairs existing at the time of the
filing

of the case. It is the last actual, peaceful and uncontested status that preceded the actual controversy.

▪ To implement the return-to-work order, the norm is actual reinstatement. However, payroll

reinstatement in lieu of actual reinstatement may properly be resorted to when special circumstances

exist that render actual reinstatement impracticable or otherwise not conducive to attaining the
purposes

of the law.

Example:

University of Sto. Tomas v. NLRC, where the teachers ordered to return to work could not be given

back their academic assignments since the return-to-work order of the DOLE Secretary was issued in the

middle of the first semester of the academic year. The Supreme Court affirmed the validity of the payroll

reinstatement order of the NLRC and ruled that the NLRC did not commit grave abuse of discretion in

providing for the alternative remedy of payroll reinstatement. It observed that the NLRC was only trying

its best to work out a satisfactory ad hoc solution to a festering and serious problem.

3.1.

NATURE OF ASSUMPTION ORDER

OR CERTIFICATION ORDER

1. A POLICE POWER MEASURE.

The power to issue assumption or certification orders is an extraordinary authority granted to the

President and to his alter ego, the DOLE Secretary, the exercise of which should be strictly limited to
national

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interest cases. It is in the nature of a police power measure. This is done for the promotion of the
common good

considering that a prolonged strike or lockout can be inimical to the national economy.

3.2.

EFFECT OF DEFIANCE OF

ASSUMPTION OR CERTIFICATION ORDERS

ON EMPLOYMENT OF DEFIANT WORKERS

1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.

The defiance by the union, its officers and members of the Labor Secretary's assumption of jurisdiction
or

certification order constitutes a valid ground for dismissal.

The following are the justifications:

1. A strike that is undertaken after the issuance by the DOLE Secretary of an assumption or certification

order becomes a prohibited activity and thus illegal. The defiant striking union officers and

members, as a result, are deemed to have lost their employment status for having knowingly

participated in an illegal strike.

2. From the moment a worker defies a return-to-work order, he is deemed to have abandoned his job.

3. By so defying, the workers have forfeited their right to be readmitted to work.

2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY ARE OFFICERS OR ORDINARY

MEMBERS, ARE DEEMED DISMISSED.

Once the DOLE Secretary assumes jurisdiction over a labor dispute or certifies it to the NLRC for

compulsory arbitration, such jurisdiction should not be interfered with by the application of the coercive
processes

of a strike or lockout. Any defiance thereof is a valid ground for the loss of employment status.

3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT MATERIAL.


The length of time within which the return-to-work order was defied by the strikers is not significant in

determining their liability for the legal consequences thereof. The following cases are illustrative of this
rule:

a. University of San Agustin Employees’ Union-FFW v. The CA. - The period 1 of defiance was less than

nine (9) hours from 8:45 a.m. to 5:25 p.m. on September 19, 2003.

b. Federation of Free Workers v. Inciong. 2 - The period of defiance was only nine (9) days.

4. SOME PRINCIPLES ON DEFIANCE OF THE ASSUMPTION/CERTIFICATION ORDER.

▪ The assumption/certification order may be served at any time of the day or night.

▪ No practice of giving 24 hours to strikers within which to return to work. There is no law or
jurisprudence

recognizing this practice.

▪ The defiant strikers could be validly replaced.

▪ The refusal to acknowledge receipt of the assumption/certification orders and other processes is an

apparent attempt to frustrate the ends of justice, hence, invalid. The union cannot be allowed to thwart
the

efficacy of the said orders issued in the national interest through the simple expediency of refusing to

acknowledge receipt thereof.

3.3.

LIABILITY OF UNION OFFICERS

FOR DECLARATION OF ILLEGALITY OF STRIKE

3.4.

LIABILITY OF ORDINARY WORKERS

FOR COMMISSION OF ILLEGAL ACTS IN THE COURSE OF STRIKE

1. PARTICIPATION IN LAWFUL STRIKE.

An employee who participates in a lawful strike is not deemed to have abandoned his employment.
Such

participation should not constitute sufficient ground for the termination of his employment even if a
replacement has

already been hired by the employer during such lawful strike.


2. PARTICIPATION IN ILLEGAL STRIKE.

a. Distinction in the liability between union officers and ordinary union members.

1. Union officers.

1 G.R. No. 169632, March 28, 2006.

2 G.R. No. L-49983, April 20, 1992.

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The mere declaration of illegality of the strike will result in the termination of all union officers who

knowingly participated in the illegal strike. Unlike ordinary members, it is not required, for purposes of

termination, that the officers should commit an illegal act during the strike.

However, absent any showing that the employees are union officers, they cannot be dismissed based

solely on the illegality of the strike.

To illustrate how the “knowing participation” of union officers may be ascertained and established, the

following factors were taken into account in another 2011 case, Abaria v. NLRC, which led 1 to the
declaration that

they knowingly participated in the illegal strike:

(1) Their persistence in holding picketing activities despite the declaration by the NCMB that their union

was not duly registered as a legitimate labor organization and notwithstanding the letter from the
federation’s legal

counsel informing them that their acts constituted disloyalty to the national federation; and

(2) Their filing of the notice of strike and conducting a strike vote despite the fact that their union has no

legal personality to negotiate with their employer for collective bargaining purposes.

2. Ordinary union members.

The mere finding or declaration of illegality of a strike will not result in termination of ordinary union

members. For an ordinary union member to suffer termination, it must be shown by clear evidence that
he has
committed illegal acts during the strike.

b. Reason for the distinction.

The reason for this distinction is that the union officers have the duty to guide their members to respect
the

law. If instead of doing so, the officers urged the members to violate the law and defy the duly
constituted

authorities, their dismissal from the service is a just penalty or sanction for their unlawful act. Their
responsibility as

main players in an illegal strike is greater than that of the ordinary union members and, therefore,
limiting the

penalty of dismissal only to the former for their participation in an illegal strike is in order.

c. Some principles on illegality of a strike.

▪ The fact that the employees are signatories to the CBA does not in itself sufficiently establish their

status as union officers during the illegal strike. Neither were their active roles during the bargaining

negotiations be considered as evidence of their being union officers.

▪ Only the union officers during the period of illegal strike are liable. If the employees acted as

union officers after the strike, they may not be held liable and, therefore, could not be terminated in

their capacity as such.

▪ Shop stewards are union officers. Hence, they should be terminated upon the declaration of the

illegality of the strike.

▪ Union officers may be dismissed despite the fact that the illegal strike was staged only for 1 day

or even for less than 10 hours. This holds true in cases of defiance of the assumption/ certification

order issued in national interest cases.

▪ If the dispositive portion of the decision failed to mention the names of union officers, resort

should be made to the text of the decision.

▪ No wholesale dismissal of strikers allowed. The employer cannot just unceremoniously dismiss a

hundred of its employees in the absence of clear and convincing proof that these people were indeed

guilty of the acts charged and then, afterwards, go to court to seek validation of the dismissal it

whimsically executed. That certainly cannot be allowed.


3. PARTICIPATION IN THE COMMISSION OF ILLEGAL ACTS DURING A STRIKE.

a. Legality or illegality of strike, immaterial.

As far as liability for commission of illegal acts during the strike is concerned, the issue of legality or

illegality of the strike is irrelevant. As long as the union officer or member commits an illegal act in the
course

of the strike, be it legal or illegal, his employment can be validly terminated.

b. Meaning of “illegal acts.”

The term “illegal acts” under Article 264(a) may encompass a number of acts that violate existing labor
or

criminal laws, such as the following:

(1) Violation of Article 264(e) of the Labor Code which provides that “[n]o person engaged in picketing

shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from

the employer’s premises for lawful purposes, or obstruct public thoroughfares.”

(2) Commission of crimes and other unlawful acts in carrying out the strike.

(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in

connection with the assumption of jurisdiction or certification order under Article 263(g) of the Labor

Code.

This enumeration is not exclusive as jurisprudence abounds where the term “illegal acts” has been

interpreted and construed to cover other breaches of existing laws.

1 G.R. Nos. 154113, 187778, 187861 & 196156, Dec. 7, 2011, 661 SCRA 686.

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Liability for illegal acts should be determined on an individual basis. For this purpose, the individual

identity of the union members who participated in the commission of illegal acts may be proved thru
affidavits and
photographs. Simply referring to them as “strikers,” or “complainants in this case” is not enough to
justify

their dismissal.

d. Some principles on commission of illegal acts in the course of the strike.

▪ Only members who are identified as having participated in the commission of illegal acts are

liable. Those who did not participate should not be blamed therefor.

• To effectively hold ordinary union members liable, those who participated in the commission of illegal

acts must not only be identified but the specific illegal acts they each committed should be

described with particularity.

▪ If violence was committed by both employer and employees, the same cannot be cited as a ground
to

declare the strike illegal.

------------oOo------------

SYLLABUS

MAJOR TOPIC 8

JURISDICTION AND REMEDIES

PRELIMINARY CONSIDERATIONS

ON PROCEDURE AND JURISDICTION

1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.

The existence of employer-employee relationship between the parties-litigants, or a reasonable causal

connection to such relationship is a jurisdictional pre-requisite for the exercise of jurisdiction over a
labor dispute by

the Labor Arbiters or any other labor tribunals.

2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.

Even if there is employer-employee relationship, if the cause of action did not arise out of or was not

incurred in connection with the employer-employee relationship, Labor Arbiters and other labor
tribunals have no

jurisdiction thereover.

Actions between employers and employees where the employer-employee relationship is merely
incidental
are within the exclusive original jurisdiction of the regular courts.

3. REASONABLE CAUSAL CONNECTION RULE – THE RULE IN CASE OF CONFLICT OF

JURISDICTION BETWEEN LABOR COURT AND REGULAR COURT.

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Under this rule, if there is a reasonable causal connection between the claim asserted and the
employeremployee

relations, then the case is within the jurisdiction of labor courts.

In the absence of such nexus, it is the regular courts that have jurisdiction.

4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT RELATIONSHIP.

Under labor laws, it is not only the Labor Arbiters and the NLRC who/which are vested with the power to

determine the existence of employer-employee relationship.

The following have also the power to make similar determination:

(1) The DOLE Secretary and the DOLE Regional Directors, to the exclusion of the Labor Arbiter and

the NLRC;

(2) The Med-Arbiter;

(3) The Social Security Commission (SSC).

5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE JURISDICTION EVEN ABSENT

THE EMPLOYMENT RELATIONSHIP.

In Santiago v. CF Sharp Crew Management, Inc., it was held that a seafarer 1 who has already signed a

POEA-approved employment contract but was not deployed overseas and, therefore, there is no
employer-employee

relationship, may file his monetary claims case with the Labor Arbiter. This is because the jurisdiction of
Labor

Arbiters is not limited to claims arising from employer-employee relationships. Under Section 10 of R. A.
No. 8042
(Migrant Workers and Overseas Filipinos Act of 1995), as amended, the Labor Arbiter may exercise
jurisdiction

over the claims of OFWs arising out of an employer-employee relationship or by virtue of any law or
contract

involving Filipino workers for overseas deployment, including claims for actual, moral, exemplary and
other

forms of damage. (See also the 2012 case of Bright Maritime Corporation v. Fantonial2).

6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS FILED BY THE HEIRS OF THE

OFW.

This was the ruling in Medline Management, Inc. v. Roslinda.3 As heirs, the wife and son of Juliano

Roslinda, the deceased OFW, have the personality to file the claim for death compensation,
reimbursement of

medical expenses, damages and attorney's fees before the Labor Arbiter of the NLRC.

7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY CONCILIATION.

Labor cases are not subject to the conciliation proceedings prescribed under P.D. No. 1508 requiring the

submission of disputes before the Barangay Lupong Tagapayapa prior to their filing with the court or
other

government offices. Instead of simplifying labor proceedings designed at expeditious settlement or


referral to the

proper courts or offices to decide them finally, the conciliation of the issues before the Barangay Lupong

Tagapayapa would only duplicate the conciliation proceedings and unduly delay the disposition of labor
cases.

A.

LABOR ARBITER

1. THE LABOR ARBITER.

The Labor Arbiter is an official in the Arbitration Branch of the National Labor Relations Commission

(NLRC) who hears and decides cases falling under his original and exclusive jurisdiction as provided by
law.

2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY THE COMMISSION (NLRC) HAS THIS

POWER.

Previously, Labor Arbiters are possessed of injunctive power. This grant of injunctive power, however,
was
deleted in recent NLRC Rules. The Labor Arbiter thus has no more injunctive power. Only the
Commission (NLRC)

has that power.

1.

JURISDICTION

1. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL AND EXCLUSIVE.

The jurisdiction conferred by Article 217 upon the Labor Arbiters is both original and exclusive, meaning,

no other officers or tribunals can take cognizance of, or hear and decide, any of the cases therein
enumerated.

2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE JURISDICTION OF LABOR ARBITERS.

The following cases are the exceptions when the Labor Arbiters may not exercise their original and

exclusive jurisdiction:

1. In assumed cases. When the DOLE Secretary or the President exercises his power under Article 278(g)

[263(g)] of the Labor Code to assume jurisdiction over national interest cases and decide them himself.

2. In certified cases. When the NLRC exercises its power of compulsory arbitration over similar national

interest cases that are certified to it by the DOLE Secretary pursuant to the exercise by the latter of his

certification power under the same Article 278(g) [263(g)].

1 G.R. No. 162419, July 10, 2007.

2 G.R. No. 165935, Feb. 8, 2012.

3 G.R. No. 168715, Sept. 15, 2010.

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3. In cases arising from CBA. - When cases arise from the interpretation or implementation of collective

bargaining agreements and from the interpretation or enforcement of company personnel policies
which

shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration, as may be provided in said agreements.

4. In cases submitted for voluntary arbitration. - When the parties agree to submit the case to
voluntary

arbitration before a Voluntary Arbitrator or panel of Voluntary Arbitrators who, under Articles 274 [261]

and 275 [262] of the Labor Code, are also possessed of original and exclusive jurisdiction to hear and

decide cases mutually submitted to them by the parties for arbitration and adjudication.

3. RUNDOWN OF ALL CASES FALLING UNDER THE JURISDICTION OF THE LABOR ARBITERS.

More particularly, Labor Arbiters shall have original and exclusive jurisdiction to hear and decide the

following cases involving all workers, whether agricultural or non-agricultural:

1. Under Article 224 [217] of the Labor Code:

(a) Unfair labor practice cases;

(b) Termination disputes (Illegal dismissal cases);

(c) Money claims exceeding P5,000.00.

(d) Claims for actual, moral, exemplary and other forms of damages arising from employer-employee

relations; and

(e) Cases involving the legality of strikes and lockouts.

NOTE: Claims for employees’ compensation, SSS, PhilHealth (Medicare) and maternity benefits do not

fall under the jurisdiction of the Labor Arbiter because these fall under the jurisdiction of other
government

agencies.

2. Under Article 124 of the Labor Code, as amended by R.A. No. 6727:

Disputes involving legislated wage increases and wage distortion in unorganized establishments not

voluntarily settled by the parties pursuant to R.A. No. 6727.

3. Under Article 128(b) of the Labor Code, as amended by R.A. No. 7730:

• Contested cases under the exception clause in Article 128(b) of the Labor Code.

4. Under Article 233 [227] of the Labor Code:

• Enforcement of compromise agreements when there is non-compliance by any of the parties thereto,

pursuant to Article 227 of the Labor Code.

5. Under Article 276 [262-A] of the Labor Code:


• Issuance of writ of execution to enforce decisions of Voluntary Arbitrators or panel of Voluntary

Arbitrators, in case of their absence or incapacity, for any reason.

6. Under Section 10 of R.A. No. 8042, as amended by R.A. No. 10022:

• Money claims of OFWs arising out of employer-employee relationship or by virtue of any law or

contract, including claims death and disability benefits and for actual, moral, exemplary and other

forms of damages.

7. Other cases as may be provided by law.

I.

JURISDICTION OVER UNFAIR LABOR PRACTICE CASES

1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.

• The Labor Arbiter has jurisdiction over all ULPs whether committed by the employers or the labor

organizations.

• The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the criminal aspect being lodged
with the

regular courts.

II.

JURISDICTION OVER ILLEGAL DISMISSAL CASES

1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION CASES.

• The validity of the exercise of jurisdiction by Labor Arbiters over illegal dismissal cases is not

dependent on the kind or nature of the ground cited in support of the dismissal; hence, whether the

dismissal is for just cause or authorized cause, it is of no consequence.

• In case of conflict of jurisdiction between Labor Arbiter and the Voluntary Arbitrator over

termination cases, the former’s jurisdiction shall prevail for the following reasons:

(1) Termination of employment is not a grievable issue that must be submitted to the grievance

machinery or voluntary arbitration for adjudication. The jurisdiction thereover remains within the

original and exclusive ambit of the Labor Arbiter and not of the Voluntary Arbitrator.

(2) Even if the CBA provides that termination disputes are grievable, the same is merely discretionary

on the part of the parties thereto.

(3) Once there is actual termination, jurisdiction is conferred upon Labor Arbiters by operation of law.
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(4) Interpretation of CBA and enforcement of company personnel policies are merely corollary to an

illegal dismissal case.

(5) Article 217 is deemed written into the CBA being an intrinsic part thereof.

• In other words, the Voluntary Arbitrator will only have jurisdiction over illegal dismissal cases when

there is express agreement of the parties to the CBA, i.e., the employer and the bargaining agent, to

submit the termination case to voluntary arbitration. Absent the mutual express agreement of the
parties,

Voluntary Arbitrator cannot acquire jurisdiction over termination cases.

• The express agreement must be stated in the CBA or there must be enough evidence on record

unmistakably showing that the parties have agreed to resort to voluntary arbitration.

III.

JURISDICTION OVER MONEY CLAIMS CASES

1. CLASSIFICATION OF MONEY CLAIMS.

Money claims falling within the original and exclusive jurisdiction of the Labor Arbiters may be classified

as follows:

1. Any money claim, regardless of amount, when asserted in an illegal dismissal case (where the

remedy of reinstatement is proper). Here, the money claim is but an accompanying remedy

subordinated to the principal cause of action, i.e., illegal dismissal; or

2. Any money claim exceeding the amount of P5,000.00 per claimant.

If the amount does not exceed P5,000.00, it is, under Article 129, the DOLE Regional Director who has

jurisdiction to take cognizance thereof. Therefore, the amount of P5,000.00 becomes important only
when the

principal cause of action is MONETARY CLAIM.


3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.

• Award of statutory benefits even if not prayed for is valid.

• Claim for notarial fees by a lawyer employed by a company is within the jurisdiction of the Labor
Arbiter.

(a)

VERSUS REGIONAL DIRECTOR

1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL MONEY CLAIMS LODGED UNDER

ARTICLE 129.

As earlier emphasized, under Article 129 of the Labor Code, DOLE Regional Directors have jurisdiction

over claims amounting to P5,000 or below, provided the following requisites concur:

1. The claim must arise from employer-employee relationship;

2. The claimant does not seek reinstatement; and

3. The aggregate money claim of each employee does not exceed P5,000.00.

2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE 128 (VISITORIAL AND

ENFORCEMENT POWER), THE DOLE REGIONAL DIRECTORS HAVE JURISDICTION

REGARDLESS OF WHETHER OR NOT THE TOTAL AMOUNT OF CLAIMS PER EMPLOYEE

EXCEEDS P5,000.00.

a. Requisites.

For the valid exercise by the DOLE Secretary or any of his duly authorized representatives (DOLE

Regional Directors) of the visitorial and enforcement powers provided under Article 128(b), the
following requisites

should concur:

(1) The employer-employee relationship should still exist;

(2) The findings in question were made in the course of inspection by labor inspectors; and

(3) The employees have not yet initiated any claim or complaint with the DOLE Regional Director under

Article 129, or the Labor Arbiter under Article 217.

3. HOWEVER, JURISDICTION OVER CONTESTED CASES UNDER THE EXCEPTION CLAUSE IN

ARTICLE 128(b) OF THE LABOR CODE INVOLVING INSPECTION OF ESTABLISHMENTS

BELONGS TO THE LABOR ARBITERS AND NOT TO DOLE REGIONAL DIRECTORS.


a. Relation of paragraph (b) of Article 128 to the jurisdiction of Labor Arbiters.

The Labor Arbiters have jurisdiction over contested cases under the exception clause in Article 128(b),

which states: “xxx. The Secretary or his duly authorized representatives shall issue writs of execution to
the

appropriate authority for the enforcement of their orders, except in cases where the employer contests
the findings

of the labor employment and enforcement officer and raises issues supported by documentary proofs
which were not

considered in the course of inspection.”

In interpreting the afore-quoted provision of the exception clause, three (3) elements must concur to
divest

the Regional Directors or their representatives of jurisdiction thereunder, to wit:

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(a) That the employer contests the findings of the labor regulations officer and raises issues thereon;

(b) That in order to resolve such issues, there is a need to examine evidentiary matters; and

(c) That such matters are not verifiable in the normal course of inspection.

The 2009 case of Meteoro v. Creative Creatures, Inc., best illustrates the 1 application of the exception

clause. Here, it was held that the Court of Appeals aptly applied the “exception clause” because at the
earliest

opportunity, respondent company registered its objection to the findings of the labor inspector on the
ground that

there was no employer-employee relationship between petitioners and respondent company. The labor
inspector, in

fact, noted in his report that “respondent alleged that petitioners were contractual workers and/or
independent and

talent workers without control or supervision and also supplied with tools and apparatus pertaining to
their job.” In
its position paper, respondent again insisted that petitioners were not its employees. It then questioned
the Regional

Director’s jurisdiction to entertain the matter before it, primarily because of the absence of an
employer-employee

relationship. Finally, it raised the same arguments before the Secretary of Labor and the appellate court.
It is,

therefore, clear that respondent contested and continues to contest the findings and conclusions of the
labor

inspector. To resolve the issue raised by respondent, that is, the existence of an employer-employee
relationship,

there is a need to examine evidentiary matters.

IV.

JURISDICTION OVER CLAIMS FOR DAMAGES

1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR DAMAGES.

It is now a well-settled rule that claims for damages as well as attorney’s fees in labor cases are
cognizable

by the Labor Arbiters, to the exclusion of all other courts. Rulings to the contrary are deemed
abandoned or modified

accordingly.

2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS (OFWs).

Claims for actual, moral, exemplary and other forms of damages that may be lodged by overseas Filipino

workers are cognizable by the Labor Arbiters.

V.

JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS

1. JURISDICTIONAL INTERPLAY IN STRIKE OR LOCKOUT CASES.

Based on the Labor Code, below is an outline of the interplay in jurisdiction among them.

1. Filing of a notice of strike or lockout with NCMB. - A union which intends to stage a strike or an

employer which desires to mount a lockout should file a notice of strike or notice of lockout, as the case
may be,

with the NCMB and not with any other office. It must be noted, however, that the NCMB, per Tabigue v.

International Copra Export Corporation,2 is not a quasi-judicial body; hence, the Conciliators-
Mediators of
the NCMB do not have any decision-making power. They cannot issue decisions to resolve the issues
raised in

the notice of strike or lockout. Their role is confined solely to the conciliation and mediation of the said
issues,

although they can suggest to the parties that they submit their dispute to voluntary arbitration through
the Voluntary

Arbitrators accredited by the NCMB.

2. Filing of a complaint to declare the illegality of the strike or lockout with the Labor Arbiter or

Voluntary Arbitrator or panel of Voluntary Arbitrator. - In case a party wants to have the strike or
lockout

declared illegal, a complaint should be filed either with the Labor Arbiter under Article 224(a)(5)
[217(a)(5)] of the

Labor Code or, upon mutual agreement of the parties, with the Voluntary Arbitrator or panel of
Voluntary Arbitrators

under Article 275 [262] of the same Code. The issue of illegality of the strike or lockout cannot be
resolved by the

Conciliators-Mediators of the NCMB as earlier pointed out and discussed.

3. Filing of an injunction petition with the Commission (NLRC). - In case illegal acts violative of

Article 279 [264] are committed in the course of the strike or lockout, a party may file a petition for
injunction

directly with the Commission (NLRC) under Article 225(e) [218(e)] of the Labor Code for purposes of
securing a

temporary restraining order (TRO) and injunction. The Labor Arbiters or Voluntary Arbitrators are not
possessed of

any injunctive power under the Labor Code. In other words, the aggrieved party, despite the pendency
of the case for

the declaration of the illegality of the strike or lockout with the Labor Arbiter or Voluntary Arbitrator, as
the case

may be, may directly go to the Commission to secure the injunctive relief.

4. Assumption of jurisdiction by the DOLE Secretary. – Under Article 278(g) [263(g)] of the Labor

Code, the DOLE Secretary has the power to assume jurisdiction over labor disputes which, in his opinion,
may

cause or likely to cause a strike or lockout in industries indispensable to the national interest (so-called
“national
interest” cases). Once he makes the assumption, he shall decide all the issues related to the labor
dispute himself, to

the exclusion of all other labor authorities.

5. Certification of the labor dispute to the NLRC. - Under the same provision of Article 278(g) [263(g)]

of the Labor Code, the DOLE Secretary has the option of not assuming jurisdiction over the labor dispute
in national

interest cases. Instead, he may certify it to the NLRC for compulsory arbitration, in which case, it will be
the NLRC

which shall hear and decide all the issues subject of the certification order.

1 G.R. No. 171275, July 13, 2009.

2 G.R. No. 183335, Dec. 23, 2009; See also Hotel Employees Union-NFL v. Waterfront Insular Hotel
Davao, G.R. Nos. 174040-41, Sept. 22, 2010.

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In case at the time of the said assumption or certification, there is a pending case before the Labor
Arbiter

or Voluntary Arbitrator on the issue of illegality of the strike or lockout, the same shall be deemed
subsumed in the

assumed or certified case. Resultantly, it is no longer the Labor Arbiter or the Voluntary Arbitrator who
should

decide the said case but the DOLE Secretary, in the case of assumed cases, or the NLRC, in the case of
certified

cases.

6. Assumption of jurisdiction over a national interest case by the President. - The President of the

Philippines is not precluded from intervening in a national interest case by exercising himself the powers
of his alter

ego, the DOLE Secretary, granted under Article 278(g) [263(g)] by assuming jurisdiction over the same
for purposes
of settling or terminating it.

7. Submission of a national interest case to voluntary arbitration. - Despite the pendency of the

assumed or certified national interest case, the parties are allowed to submit any issues raised therein
to voluntary

arbitration at any stage of the proceeding, by virtue of Article 278(h) [263(h)] which provides that
“(b)efore or at

any stage of the compulsory arbitration process, the parties may opt to submit their dispute to voluntary

arbitration.”

The foregoing interplay explains why Article 278(i) [263(i)] makes specific reference to the President of

the Philippines, the Secretary of Labor and Employment, the Commission (NLRC) or the Voluntary
Arbitrator in

connection with the law on strike, lockout and picketing embodied in Article 278 [263]. The only labor
official not

so mentioned therein but who has a significant role to play in the interaction of labor officials and
tribunals in strike

or lockout cases, is the Labor Arbiter. This is understandable in the light of the separate express grant of
jurisdiction

to the Labor Arbiters under Article 224(a)(5) [217(a)(5)] as above discussed.

VI.

JURISDICTION OVER CASES INVOLVING

LEGISLATED WAGE INCREASES AND WAGE DISTORTION

1. CASES IN ORGANIZED ESTABLISHMENTS.

Jurisdiction is with the Voluntary Arbitrator.

2. CASES IN UNORGANIZED ESTABLISHMENTS.

Jurisdiction is with Labor Arbiter.

VII.

JURISDICTION OVER ENFORCEMENT OR ANNULMENT

OF COMPROMISE AGREEMENTS

1. LEGAL BASIS.

Article 233 [227] clearly embodies the following provisions on compromise agreements:

“Article 233 [227]. Compromise Agreements. - Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau
or the

regional office of the Department of Labor, shall be final and binding upon the parties. The National
Labor

Relations Commission or any court shall not assume jurisdiction over issues involved therein except in

case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained

through fraud, misrepresentation, or coercion.”

Clear from the foregoing provision that, although the compromise agreement may have been entered
into by

the parties before the Bureau of Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter
who

has jurisdiction to take cognizance of the following issues related thereto, to the exclusion of the BLR
and the

DOLE Regional Directors:

(1) To enforce the compromise agreement in case of non-compliance therewith by any of the parties
thereto;

or

(2) To nullify it if there is prima facie evidence that the settlement was obtained through fraud,

misrepresentation, or coercion.

VIII.

JURISDICTION OVER EXECUTION AND ENFORCEMENT

OF DECISIONS OF VOLUNTARY ARBITRATORS

1. DECISIONS OF VOLUNTARY ARBITRATORS.

Article 276 [262-A] of the Labor Code prescribes the procedures that Voluntary Arbitrators or panel of

Voluntary Arbitrators should follow in adjudicating cases filed before them. Once a decision has been
rendered in a

case and subsequently becomes final and executory, it may be enforced through the writ of execution
issued by the

same Voluntary Arbitrator or panel of Voluntary Arbitrators who rendered it, addressed to and requiring
certain

public officers to execute the final decision, order or award.

2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.


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In situations, however, where the Voluntary Arbitrator or the panel of Voluntary Arbitrators who
rendered

the decision is absent or incapacitated for any reason, Article 276 [262-A] grants jurisdiction to any
Labor Arbiter in

the region where the winning party resides, to take cognizance of a motion for the issuance of the writ
of execution

filed by such party and accordingly issue such writ addressed to and requiring the public officers
mentioned above

to execute the final decision, order or award of the Voluntary Arbitrator or panel of Voluntary
Arbitrators.

IX.

JURISDICTION OVER CASES OF OFWs

1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY CLAIMS OF OFWs.

All claims of OFWs with a sign of peso are cognizable by the Labor Arbiters, including claims for

disability and death benefits.

2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE JURISDICTION OVER MONEY CLAIMS IF

THERE EXISTS A CBA.

If there is a CBA between the foreign employer and the bargaining union of the OFWs, the jurisdiction
over

monetary claims of OFWs belongs to the Voluntary Arbitrator and not to the Labor Arbiter.

3. OFW-RELATED CASES OVER WHICH THE POEA, AND NOT THE LABOR ARBITERS, HAS

JURISDICTION.

The Philippine Overseas Employment Administration (POEA) has original and exclusive jurisdiction to

hear and decide:

(a) All cases which are administrative in character, involving or arising out of violation of rules and
regulations relating to licensing and registration of recruitment and employment agencies or entities,

including refund of fees collected from workers and violation of the conditions for the issuance of

license to recruit workers.

(b) Disciplinary action cases and other special cases which are administrative in character, involving

employers, principals, contracting partners and Filipino migrant workers.

No. 1 above covers recruitment violations or violations of conditions of license; while No. 2 above
involves

(a) disciplinary action cases against foreign principals or employers, and (a) disciplinary action cases
against landbased

OFWs and seafarers.

X.

OTHER ISSUES OVER WHICH

LABOR ARBITERS HAVE JURISDICTION

1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN JURISPRUDENCE.

In accordance with well-entrenched jurisprudence, the issues, claims or cases of the following fall under
the

jurisdiction of the Labor Arbiters:

(a) Employees in government-owned and/or controlled corporations without original charters;

(b) Domestic workers or kasambahay;

(c) Employees of cooperatives;

(d) Counter-claims of employers against employees.

X-1.

JURISDICTION OVER CASES OF

DOMESTIC WORKERS OR KASAMBAHAY

1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The Labor Arbiter has jurisdiction if the amount of the claim exceeds P5,000.00; otherwise, the
jurisdiction

is vested with the DOLE Regional Director under Article 129 of the Labor Code.

Incidentally, it is no longer legally correct to use the term “domestic servant” or “househelper” in
reference to a person who performs domestic work. Under R.A. No. 10361, “domestic servant” or
“househelper”

should now be referred to as “domestic worker” or “kasambahay.”

X-2.

JURISDICTION OVER CASES OF

EMPLOYEES OF COOPERATIVES

1. WHEN LABOR ARBITERS HAVE JURISDICTION.

The Labor Arbiter has jurisdiction only over monetary claims and illegal dismissal cases involving

employees or member-employees of cooperatives but not the claims or termination of membership of


members

thereof. Cooperatives organized under R.A. No. 6938, are composed of members; hence, issues on the
termination

of their membership with the cooperative do not fall within the jurisdiction of the Labor Arbiters.

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Simply stated, insofar as member-employees are concerned, there is a need to determine their cause of

action. If what they are asserting arose from their employment relationship with the cooperative, such
as monetary

claims or illegal dismissal cases, then, the Labor Arbiter has jurisdiction thereover. But if the action
involves their

membership with the cooperative, then, it is considered an intra-cooperative dispute which falls under
the

jurisdiction of the Cooperative Development Authority (CDA).

Members of cooperatives or member-employees thereof are not allowed to organize a labor


organization to

collectively bargain with the cooperative because they are the owners of the cooperative. They cannot
negotiate with

themselves. Only employees of cooperative can organize such labor organization, for obvious reason.
X-3.

JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST EMPLOYEES FILED BY THE LATTER

BEFORE THE LABOR ARBITERS.

Almost all labor cases decided by labor courts involve claims asserted by the workers. The question that

may be propounded is whether the employers can assert counter-claims against their employees before
the Labor

Arbiters. The Supreme Court answered this poser in the affirmative.

Bañez v. Hon. Valdevilla. - The jurisdiction of Labor Arbiters and the 1 NLRC is comprehensive enough to

include claims for all forms of damages “arising from the employer-employee relations.” By this clause,
Article 217

should apply with equal force to the claim of an employer for actual damages against its dismissed
employee, where

the basis for the claim arises from or is necessarily connected with the fact of termination, and should
be entered as a

counter-claim in the illegal dismissal case. This is in accord with paragraph 6 of Article 217(a), which
covers “all

other claims, arising from employer-employee relations.”

But such counter-claim, being a factual issue, must be asserted before the Labor Arbiter; otherwise, it
can

no longer be passed upon by a reviewing court.

XI.

ISSUES AND CASES OVER WHICH

LABOR ARBITERS HAVE NO JURISDICTION

. LABOR ARBITERS HAVE NO JURISDICTION OVER CERTAIN ISSUES AND CASES.

The following issues or cases do not fall under the jurisdiction of Labor Arbiters:

(a) Claims for damages arising from breach of a non-compete clause and other post-employment

prohibitions;

(b) Claims for payment of cash advances, car, appliance and other loans of employees;

(c) Dismissal of corporate officers and their monetary claims;


(d) Cases involving entities immune from suit;

(e) Cases falling under the doctrine of forum non conveniens;

(f) Constitutionality of CBA provisions.

XI-A.

CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-COMPETE CLAUSE AND

OTHER POST-EMPLOYMENT PROHIBITIONS

1. JURISDICTION IS LODGED WITH THE REGULAR COURTS.

In case of violation of the non-compete clause and similar post-employment bans or prohibitions, the

employer can assert his claim for damages against the erring employee with the regular courts and not
with the labor

courts.

XI-B.

EMPLOYER’S CLAIMS FOR CASH ADVANCES, CAR, APPLIANCE

AND OTHER PERSONAL LOANS OF EMPLOYEES

1. LABOR ARBITERS HAVE NO JURISDICTION.

With respect to resolving issues involving loans availed of by employees from their employers, it has
been

the consistent ruling of the Supreme Court that the Labor Arbiters have no jurisdiction thereover but the
regular

courts.

Where the claim to the principal relief sought is to be resolved not by reference to the Labor Code or
other

labor relations statute or a collective bargaining agreement but by the general civil law, the jurisdiction
over the

dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such
situations,

resolutions of the dispute requires expertise, not in labor management relations nor in wage structures
and other

terms and conditions of employment, but rather in the application of the general civil law. Clearly, such
claims fall

outside the area of competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC and the
rationale for
granting jurisdiction over such claims to these agencies disappears.”

The following loans may be cited:

1 G.R. No. 128024, May 9, 2000, 331 SCRA 584.

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a. Cash loans/advances are in the nature of simple collection of a sum of money brought by the
employer,

as creditor, against the employee, as debtor. The fact that they were employer and employee at the
time

of the transaction does not negate the civil jurisdiction of the trial court. The case does not involve

adjudication of a labor dispute but recovery of a sum of money based on our civil laws on obligation

and contract.

b. Car loans such as those granted to sales or medical representatives by reason of the nature of their

work. The employer’s demand for payment of the employees’ amortizations on their car loans, or, in the

alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves
debtorcreditor

relations, rather than employee-employer relations.

c. Appliance loans concern the enforcement of a loan agreement involving debtor-creditor relations

founded on contract and do not in any way concern employee relations. As such it should be

enforced through a separate civil action in the regular courts and not before the Labor Arbiter.

d. Loans from retirement fund also involve the same principle as above; hence, collection therefor may

only be made through the regular courts and not through the Labor Arbiter or any labor tribunal.

XI-C.

DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS

1. LABOR ARBITERS HAVE NO JURISDICTION.

The dismissal of a director or corporate officer is an intra-corporate dispute cognizable by the Regional
Trial Court and not by the Labor Arbiter.

2. MATLING DOCTRINE.

Under this doctrine, 1 the following rules should be observed:

(1) The dismissal of regular employees falls under the jurisdiction of Labor Arbiters; while that of

corporate officers falls within the jurisdiction of the regular courts.

(2) The term “corporate officers” refers only to those expressly mentioned in the Corporation Code and

By-Laws; all other officers not so mentioned therein are deemed employees.

(3) Corporate officers are elected or appointed by the directors or stockholders, and those who are
given

that character either by the Corporation Code or by the corporation’s by-laws.

(4) The Corporation Code specifically mentions only the following corporate officers, to wit: president,

secretary and treasurer and such other officers as may be provided for in the by-laws.

(5) The Board of Directors can no longer create corporate offices because the power of the Board of

Directors to create a corporate office cannot be delegated. Therefore, the term “corporate officers”

should only refer to the above and to no other. A different interpretation can easily leave the way open

for the Board of Directors to circumvent the constitutionally guaranteed security of tenure of the

employee by the expedient inclusion in the By-Laws of an enabling clause on the creation of just any

corporate officer position.

(6) Distinction between a corporate officer and an employee. - An “office” is created by the charter of

the corporation and the “corporate officer” is elected by the directors or stockholders. On the other

hand, an “employee” occupies no office and generally is employed not by the action of the directors or

stockholders but by the managing officer of the corporation who also determines the compensation to

be paid to such employee.

(7) Because of the Matling doctrine, the rulings in Tabang and Nacpil, are no longer controlling because

they are “too sweeping and do not accord with reason, justice, and fair play.”

(8) The status of an employee as director and stockholder does not automatically convert his

dismissal into an intra-corporate dispute.

(9) TWO (2) ELEMENTS TO DETERMINE WHETHER A DISPUTE IS INTRA-CORPORATE

OR NOT.
(a) The status or relationship of the parties (Relationship test); and

(b) The nature of the question that is the subject of their controversy. (Nature of controversy test).

In the absence of any one of these factors, the RTC will not have jurisdiction.

(10)The criteria do not depend on the services performed but on the manner of creation of the office.

In Matling, respondent Corros was supposedly at once an employee, a stockholder, and a Director of

Matling. The circumstances surrounding his appointment to office must be fully considered to

determine whether the dismissal constituted an intra-corporate controversy or a labor termination

dispute. It must also be considered whether his status as Director and stockholder had any relation at

all to his appointment and subsequent dismissal as Vice President for Finance and Administration.

1 Enunciated in the 2010 case of Matling Industrial and Commercial Corp. v. Ricardo R. Coros, G.R. No.
157802, Oct. 13, 2010. This case is an appeal via petition for

review on certiorari. The petitioners challenge the decision of the CA which sustained the ruling of the
NLRC to the effect that the Labor Arbiter had jurisdiction because

the respondent, its Vice President for Finance and Administration, was not a corporate officer of
petitioner Matling.

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Obviously enough, the respondent was not appointed as Vice President for Finance and Administration

because of his being a stockholder or Director of Matling. He had started working for Matling on

September 8, 1966, and had been employed continuously for 33 years until his termination on April 17,

2000. His first work as a bookkeeper and his climb in 1987 to his last position as Vice President for

Finance and Administration had been gradual but steady. Even though he might have become a

stockholder of Matling in 1992, his promotion to the position of Vice President for Finance and

Administration in 1987 was by virtue of the length of quality service he had rendered as an employee

of Matling. His subsequent acquisition of the status of Director/stockholder had no relation to his

promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from
employment as Vice President for Finance and Administration.

3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING DOCTRINE.

a. Cosare v. Broadcom Asia, Inc., (2014)

In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not the regular courts, has original

jurisdiction over the illegal dismissal case filed by petitioner Cosare who was an incorporator of
respondent

Broadcom and was holding the position of Assistant Vice President for Sales (AVP for Sales) and Head of
the

Technical Coordination at the time of his termination. The following justifications were cited in support
of this

ruling:

(1) The mere fact that a person was a stockholder and an officer of the company at the time the subject

controversy developed does not necessarily make the case an intra-corporate dispute.

(2) A person, although an officer of the company, is not necessarily a corporate officer thereof.

(3) General Information Sheet (GIS) submitted to SEC neither governs nor establishes the nature of
office.

(4) The Nature of the Controversy Test: The mere fact that a person was a stockholder at the time of the

filing of the illegal dismissal case does not make the action an intra-corporate dispute.

b. Other cases:

(1) Barba v. Liceo de Cagayan University (2012);

(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M. Joson (2011);

(3) Real v. Sangu Philippines, Inc. (2011).

XI-D.

LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT

1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW VIOLATIONS.

In this jurisdiction, the generally accepted principles of international law are recognized and adopted as
part

of the law of the land. Immunity of a State and international organizations from suit is one of these
universally

recognized principles. It is on this basis that Labor Arbiters or other labor tribunals have no jurisdiction
over
immune entities.

2. ILLUSTRATIVE CASE.

In Department of Foreign Affairs v. NLRC, involving an illegal dismissal case 1 filed against the Asian

Development Bank (ADB), it was ruled that said entity enjoys immunity from legal process of every form
and

therefore the suit against it cannot prosper. And this immunity extends to its officers who also enjoy
immunity in

respect of all acts performed by them in their official capacity. The Charter and the Headquarters
Agreement

granting these immunities and privileges to the ADB are treaty covenants and commitments voluntarily
assumed by

the Philippine government which must be respected.

3. EXCEPTION TO THE RULE.

There is an exception to the immunity rule as exemplified by the case of United States v. Hon. Rodrigo,2

where it was held that when the function of the foreign entity otherwise immune from suit partakes of
the nature of a

proprietary activity, such as the restaurant services offered at John Hay Air Station undertaken by the
United States

Government as a commercial activity for profit and not in its governmental capacity, the case for illegal
dismissal

filed by a Filipino cook working therein is well within the jurisdiction of Philippine courts. The reason is
that by

entering into the employment contract with the cook in the discharge of its proprietary functions, it
impliedly

divested itself of its sovereign immunity from suit.

4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN IMMUNE ENTITY.

An entity immune from suit cannot be estopped from claiming such diplomatic immunity since estoppel

does not operate to confer jurisdiction to a tribunal that has none over a cause of action.

XI-E.

DOCTRINE OF FORUM NON CONVENIENS

1 G.R. No. 113191, Sept. 18, 1996, 262 SCRA 39, 43-44.

2 G.R. No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.
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1. REQUISITES.

This doctrine is an international law principle which has been applied to labor cases. The following are
the

requisites for its applicability:

(1) That the Philippine court is one to which the parties may conveniently resort;

(2) That the Philippine court is in a position to make an intelligent decision as to the law and the facts;
and

(3) That the Philippine court has or is likely to have power to enforce its decision.

2. APPLICATION TO LABOR CASES.

a. Case where doctrine was rejected.

Petitioners’ invocation of this principle was rejected in Pacific Consultants International Asia, Inc. v.

Schonfeld. Petitioners’ insistence was based on the fact that respondent is a Canadian citizen 1 and was
a repatriate.

In so rejecting petitioners’ contention, the Supreme Court cited the following reasons that do not
warrant the

application of the said principle: (1) the Labor Code does not include forum non conveniens as a ground
for the

dismissal of the complaint; and (2) the propriety of dismissing a case based on this principle requires a
factual

determination; hence, it is properly considered as a defense.

b. Case where doctrine was applied.

This doctrine was applied in the case of The Manila Hotel Corp. and Manila Hotel International

Limited v. NLRC,2 where private respondent Marcelo Santos was an overseas worker employed as a
printer in a

printing press in the Sultanate of Oman when he was directly hired by the Palace Hotel, Beijing, People’s
Republic
of China to work in its print shop. This hotel was being managed by the Manila Hotel International Ltd., a
foreign

entity registered under the laws of Hong Kong. Later, he was terminated due to retrenchment
occasioned by business

reverses brought about by the political upheaval in China (referring to the Tiananmen Square incident)
which

severely affected the hotel’s operations.

In holding that the NLRC was a seriously inconvenient forum, the Supreme Court noted that the main

aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements.
The only

link that the Philippines has with the case is that the private respondent employee (Marcelo Santos) is a
Filipino

citizen. The Palace Hotel and MHICL are foreign corporations. Consequently, not all cases involving
Filipino

citizens can be tried here. Respondent employee was hired directly by the Beijing Palace Hotel, a foreign
employer,

through correspondence sent to him while he was working at the Sultanate of Oman. He was hired
without the

intervention of the POEA or any authorized recruitment agency of the government. Hence, the NLRC is
an

inconvenient forum given that all the incidents of the case - from the time of recruitment, to
employment 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, Mr. Shmidt (General Manager of the Palace Hotel) and
Mr. Henk

(Palace Hotel’s Manager) are non-residents of the Philippines.

Neither can an intelligent decision be made as to the law governing the employment contract as such
was

perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law
of the place
where the contract was made). It must be noted that the employment contract was not perfected in the
Philippines.

Private respondent employee signified his acceptance thereof by writing a letter while he was in the
Sultanate of

Oman. This letter was sent to the Palace Hotel in the People’s Republic of China. Neither can the NLRC
determine

the facts surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People’s
Republic

of China. The NLRC was not in a position to determine whether the Tiananmen Square incident truly
adversely

affected the operations of the Palace Hotel as to justify respondent employee’s retrenchment.

Even assuming that a proper decision could be reached by the NLRC, such would not have any binding

effect against the employer, the Palace Hotel, which is a corporation incorporated under the laws of
China and was

not even served with summons. Jurisdiction over its person was not acquired. This is not to say that
Philippine

courts and agencies have no power to solve controversies involving foreign employers. Neither could it
be said that

the Supreme Court does not have power over an employment contract executed in a foreign country. If
the

respondent employee were an “overseas contract worker”, a Philippine forum, specifically the POEA,
not the

NLRC, would protect him. He is not an “overseas contract worker”, a fact which he admits with
conviction.

XI-F.

CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS

1. THE HALAGUEÑA DOCTRINE.

In Halagueńa v. Philippine Airlines, Inc.,3 it was pronounced that it is not the Labor Arbiter but the
regular

court which has jurisdiction to rule on the constitutionality of labor contracts such as a CBA. Petitioners
were female

flight attendants of respondent Philippine Airlines (PAL) and are members of the Flight Attendants and
Stewards
Association of the Philippines (FASAP), the sole and exclusive bargaining representative of the flight
attendants,

flight stewards and pursers of respondent. The July 11, 2001 CBA between PAL and FASAP provides that
the

compulsory retirement for female flight attendants is fifty-five (55) and sixty (60) for their male
counterpart.

1 G.R. No. 166920, Feb. 19, 2007.

2 G.R. No. 120077, Oct. 13, 2000.

3 G.R. No. 172013, Oct. 2, 2009.

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Claiming that said CBA provision is discriminatory against them, petitioners filed against respondent a

Special Civil Action for Declaratory Relief with Prayer for the Issuance of Temporary Restraining Order
and Writ of

Preliminary Injunction with the Regional Trial Court (RTC) of Makati City.

In ruling that the RTC has jurisdiction, the Supreme Court cited the following reasons:

(1) The case is an ordinary civil action, hence, beyond the jurisdiction of labor tribunals.

(2) The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the

application of the Constitution, labor statutes, law on contracts and the Convention on the Elimination

of All Forms of Discrimination Against Women (CEDAW). The power to apply and interpret the

constitution and CEDAW is within the jurisdiction of trial courts, a court of general jurisdiction.

(3) Not every controversy or money claim by an employee against the employer or vice-versa is within

the exclusive jurisdiction of the Labor Arbiter. Actions between employees and employer where the

employer-employee relationship is merely incidental and the cause of action proceeds from a different

source of obligation are within the exclusive jurisdiction of the regular courts. Here, the
employeremployee
relationship between the parties is merely incidental and the cause of action ultimately arose

from different sources of obligation, i.e., the Constitution and CEDAW.

2.

REQUIREMENTS TO PERFECT APPEAL TO NLRC

I.

APPEAL IN GENERAL

1. APPEAL, MEANING AND NATURE.

The term “appeal” refers to the elevation by an aggrieved party to an agency vested with appellate

authority of any decision, resolution or order disposing the principal issues of a case rendered by an
agency vested

with original jurisdiction, undertaken by filing a memorandum of appeal.

2. SOME PRINCIPLES ON APPEAL.

• Appeals under Article 223 apply only to appeals from the Labor Arbiter’s decisions, awards or orders to
the

Commission (NLRC).

• There is no appeal from the decisions, orders or awards of the NLRC. Clearly, therefore, Article 223 of
the

Labor Code is not the proper basis for elevating the case to the Court of Appeals or to the Supreme
Court. The

proper remedy from the decisions, awards or orders of the NLRC to the Court of Appeals is a Rule 65
petition

for certiorari and from the Court of Appeals to the Supreme Court, a Rule 45 petition for review on
certiorari.

• Appeal from the NLRC to the DOLE Secretary and to the President had long been abolished.

• Appeal is not a constitutional right but a mere statutory privilege. Hence, parties who seek to avail of it
must

comply with the statutes or rules allowing it.

• A motion for reconsideration is unavailing as a remedy against a decision of the Labor Arbiter. The
Labor

Arbiter should treat the said motion as an appeal to the NLRC.

• A “Petition for Relief” should be treated as appeal.

• Affirmative relief is not available to a party who failed to appeal. A party who does not appeal from a
decision of a court cannot obtain affirmative relief other than the ones granted in the appealed decision.

3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).

The appeal to the NLRC may be entertained only on any of the following grounds:

a. If there is a prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

b. If the decision, order or award was secured through fraud or coercion, including graft and corruption;

c. If made purely on questions of law; and/or

d. If serious errors in the findings of fact are raised which, if not corrected, would cause grave or

irreparable damage or injury to the appellant.

• NLRC has certiorari power.

The first ground above regarding prima facie evidence of abuse of discretion on the part of the Labor

Arbiter is actually an exercise of certiorari power by the NLRC. The case of Triad Security & Allied
Services, Inc.

v. Ortega, expressly recognized this certiorari power of the NLRC. Clearly, according 1 to the 2012 case
of Auza, Jr.

v. MOL Philippines, Inc.,2 the NLRC is possessed of the power to rectify any abuse of discretion
committed by the

Labor Arbiter.

II.

PERFECTION OF APPEAL

1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.

To reiterate, the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter
except

execution for reinstatement pending appeal.

1 G.R. No. 160871, Feb. 6, 2006.

2 G.R. No. 175481, Nov. 21, 2012.

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2. PERFECTION OF APPEAL, MANDATORY AND JURISDICTIONAL.

The perfection of appeal within the period and in the manner prescribed by law is jurisdictional and
noncompliance

with the legal requirements is fatal and has the effect of rendering the judgment final and executory,

hence, unappealable.

3. REQUISITES.

The requisites for perfection of appeal to the NLRC are as follows:

(1) Observance of the reglementary period;

(2) Payment of appeal and legal research fee;

(3) Filing of a Memorandum of Appeal;

(4) Proof of service to the other party; and

(5) Posting of cash, property or surety bond, in case of monetary awards.

The foregoing are discussed below.

III.

REGLEMENTARY PERIOD

1. THREE (3) KINDS OF REGLEMENTARY PERIOD.

The reglementary period depends on where the appeal comes from, viz.:

1. Ten (10) calendar days – in the case of appeals from decisions of the Labor Arbiters under Article 223

of the Labor Code;

2. Five (5) calendar days – in the case of appeals from decisions of the Labor Arbiters in contempt cases;

and

3. Five (5) calendar days – in the case of appeals from decisions of the DOLE Regional Director under

Article 129 of the Labor Code.

Calendar days and not working days.

The shortened period of ten (10) days fixed by Article 223 contemplates calendar days and not working

days. The same holds true in the case of the 5-day reglementary period under Article 129 of the Labor
Code.

Consequently, Saturdays, Sundays and legal holidays are included in reckoning and computing the
reglementary
period.

2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR DAY REGLEMENTARY PERIOD

RULE.

The following are the specific instances where the rules on the reckoning of the reglementary period
have

not been strictly observed:

1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in which case, the appeal may be filed
in

the next working day.

2) When NLRC exercises its power to “correct, amend, or waive any error, defect or irregularity whether

in substance or form” in the exercise of its appellate jurisdiction, as provided under Article 218(c) of the

Labor Code, in which case, the late filing of the appeal is excused.

3) When technical rules are disregarded under Article 221.

4) When there are some compelling reasons that justify the allowance of the appeal despite its late filing

such as when it is granted in the interest of substantial justice.

3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.

• The reglementary period is mandatory and not a “mere technicality.”

• The failure to appeal within the reglementary period renders the judgment appealed from final and

executory by operation of law. Consequently, the prevailing party is entitled, as a matter of right, to a
writ of

execution and the issuance thereof becomes a ministerial duty which may be compelled through the
remedy of

mandamus.

• The date of receipt of decisions, resolutions or orders by the parties is of no moment. For purposes of
appeal,

the reglementary period shall be counted from receipt of such decisions, resolutions, or orders by the
counsel

or representative of record.

• Miscomputation of the reglementary period will not forestall the finality of the judgment. It is in the
interest of

everyone that the date when judgments become final and executory should remain fixed and
ascertainable.
• Date of mailing by registered mail of the appeal memorandum is the date of its filing.

• Motion for extension of time to perfect an appeal is not allowed. This kind of motion is a prohibited
pleading.

• Motion for extension of time to file the memorandum of appeal is not allowed.

• Motion for extension of time to file appeal bond is not allowed.

IV.

APPEAL FEE AND LEGAL RESEARCH FEE

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1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE, MANDATORY AND JURISDICTIONAL.

The payment by the appellant of the prevailing appeal fee and legal research fee is both mandatory
and

jurisdictional. An appeal is perfected only when there is proof of payment of the appeal fee. It is by no
means a

mere technicality. If not paid, the running of the reglementary period for perfecting an appeal will not
be tolled.

V.

MEMORANDUM OF APPEAL

1. REQUISITES.

The requisites for a valid Memorandum of Appeal are as follows:

1. The Memorandum of Appeal should be verified by the appellant himself in accordance with the Rules
of

Court, as amended;

2. It should be presented in three (3) legibly typewritten or printed copies;

3. It shall state the grounds relied upon and the arguments in support thereof, including the relief
prayed

for;
4. It shall contain a statement of the date the appellant received the appealed decision, award or order;
and

5. It shall be accompanied by:

(i) proof of payment of the required appeal fee and legal research fee;

(ii) posting of a cash or surety bond (in case of monetary awards); and

(iii) proof of service upon the other party.

2. REQUIREMENTS NOT JURISDICTIONAL.

The aforesaid requirements that should be complied with in a Memorandum of Appeal are merely a

rundown of the contents of the required appeal memorandum to be submitted by the appellant. They
are not

jurisdictional requirements.

3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.

• Mere notice of appeal without complying with the other requisites aforestated shall not stop the
running

of the period for perfecting an appeal.

• Memorandum of appeal is not similar to motion for reconsideration.

• Lack of verification in a memorandum of appeal is not a fatal defect. It may easily be corrected by

requiring an oath.

• An appeal will be dismissed if signed only by an unauthorized representative.

• Only complainants who signed the memorandum of appeal are deemed to have appealed the Labor

Arbiter’s decision. The prevailing doctrine in labor cases is that a party who has not appealed cannot
obtain

from the appellate court any affirmative relief other than those granted, if any, in the decision of the
lower

tribunal.

VI.

PROOF OF SERVICE TO ADVERSE PARTY

1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.

While it is required that in all cases, the appellant shall furnish a copy of the Memorandum of Appeal to
the
other party (appellee), non-compliance therewith, however, will not be an obstacle to the perfection of
the appeal;

nor will it amount to a jurisdictional defect on the NLRC’s taking cognizance thereof.

VII.

POSTING OF BOND

1. WHEN POSTING OF BOND REQUIRED.

Only in case the decision of the Labor Arbiter or the DOLE Regional Director (under Article 129 of the

Labor Code) involves a monetary award, that an appeal by the employer may be perfected only upon
the posting of

a bond, which shall either be in the form of (1) cash deposit, (2) surety bond or (3) property bond,
equivalent in

amount to the monetary award, but excluding the amount of damages (moral and exemplary) and
attorney’s fees.

In other words, only monetary awards (such as unpaid wages, backwages, separation pay, 13th month
pay,

etc.) are required to be covered by the bond. Moral and exemplary damages and attorney’s fees are
excluded.

2. SOME PRINCIPLES ON POSTING OF BOND.

• Posting of bond is mandatory and jurisdictional.

• The cash or surety bond required for the perfection of appeal should be posted within the
reglementary

period. If a party failed to perfect his appeal by the non-payment of the appeal bond within the 10-
calendar day

period provided by law, the decision of the Labor Arbiter becomes final and executory upon the
expiration of

the said period.

• In case the employer failed to post a bond to perfect its appeal, the remedy of the employee is to
file a

motion to dismiss the appeal and not a petition for mandamus for the issuance of a writ of execution.

• Surety bond must be issued by a reputable bonding company duly accredited by the Commission
(NLRC) or the

Supreme Court.

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• The bond shall be valid and effective from the date of deposit or posting, until the case is finally
decided,

resolved or terminated, or the award satisfied.

• Posting of a bank guarantee or bank certification is not sufficient compliance with the bond
requirement.

It is not equivalent to nor can be considered compliance with the cash, surety or property bond.

• Cooperatives are not exempted from posting bond.

• Government is exempt from posting of bond; government-owned and/or controlled corporations,


however,

are not exempt therefrom.

• Bond is not required for the NLRC to entertain a motion for reconsideration. An appeal bond is
required

only for the perfection of an appeal of a Labor Arbiter’s decision involving a monetary award.

• Bond is not required to file a Rule 65 petition for certiorari.

3. JUSTIFICATIONS FOR NON-POSTING OF BOND.

• No monetary award, no bond required. The rule is clear that when the judgment of the Labor Arbiter
does

not involve any monetary award, no appeal bond is necessary.

• There is no duty to post a bond if the monetary award is not specified in the decision. The Labor
Arbiter’s

decision or order should state the amount awarded. If the amount of the monetary award is not
contained or

fixed in the judgment, the appeal bond is not required to be posted.

• In case of conflict between the body and the fallo of the decision, the latter should prevail.

VII-A.

RULE ON REDUCTION OF APPEAL BOND


1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY BE REDUCED.

(1) The motion should be filed within the reglementary period;

(2) The motion to reduce bond should be based on meritorious grounds; and

(3) The motion should be accompanied by a partial bond, the amount of which should be reasonable in

relation to the monetary awards.

2. THE MCBURNIE DOCTRINE: NEW GUIDELINES FOR FILING AND ACCEPTANCE OF MOTIONS

TO REDUCE BOND.

The 2013 en banc decision rendered in the case of Andrew James Mcburnie v. Eulalio Ganzon,1 has

enunciated the following guidelines that must be observed in the matter of the filing and acceptance of
motions to

reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure:

(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the
following

conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;

(b) For purposes of compliance with condition no. (2) above, a motion shall be accompanied by the

posting of a provisional cash or surety bond equivalent to ten percent (10%) of the monetary award

subject of the appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day

reglementary period to perfect an appeal from the Labor Arbiter’s decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final

amount of bond that shall be posted by the appellant, still in accordance with the standards of

meritorious grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the

amount of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice

of the NLRC order within which to perfect the appeal by posting the required appeal bond.

This Mcburnie ruling has completely overhauled the rules on motion to reduce bond. Before its advent,
the

issue of what amount to post by way of partial or provisional bond has continued to hound the party
litigants and the
courts. Now, the fixing of “ten percent (10%) of the monetary award subject of the appeal, exclusive of
damages

and attorney's fees” as the “reasonable amount” that should be posted has completely eradicated any
and all

controversies thereon. In other words, no more motion for reduction of bond accompanied by said 10%
requirement

would be denied outright on the ground of insufficiency or inadequacy of the partial or provisional bond.

What is left for the determination by the NLRC, using its sound judgment and discretion, are only the

issues of (1) the reasonable final amount of the bond; and (2) what constitute “meritorious grounds.”
This

determination is important since “in all cases, the reduction of the appeal bond shall be justified by
meritorious

grounds and accompanied by the posting of the required appeal bond in a reasonable amount.”2

1 G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17, 2013.

2 Andrew James Mcburnie v. Eulalio Ganzon, G.R. Nos. 178034, 178117, 186984 and 186985, Oct. 17,
2013.

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The rule set in McBurnie was clarified by the Court in the consolidated cases of Sara 1 Lee Philippines v.

Ermilinda Macatlang.2 Thus, while McBurnie has effectively addressed the preliminary amount of the
bond to be

posted in order to toll the running of the period to appeal, there is no hard and fast rule in determining
whether the

additional bond to be posted is reasonable in relation to the judgment award. In this case of Sara Lee,
petitioner

companies3 were held liable by the Labor Arbiter for the illegal dismissal of 5,984 employees with
accompanying

award of separation pay and other monetary benefits amounting to P3,453,664,710.86. Petitioner
companies filed
their Notice of Appeal with Motion to Reduce Appeal Bond and To Admit Reduced Amount with the
NLRC. They

asked the NLRC to reduce the appeal bond to P1 Million each on the grounds that it is impossible for any
insurance

company to cover such huge amount and that, in requiring them to post in full the appeal bond, it would
be

tantamount to denying them their right to appeal.

In light of the impossibility for any surety company to cover the appeal bond and the huge economic
losses

which the companies and their employees might suffer if the P3.45 Billion bond is sustained, the NLRC
granted the

reduction of the appeal bond. The NLRC issued an Order dated 31 March 2006 directing petitioner
corporations to

post an additional P4.5 Million bond, bringing the total posted bond to P9 Million. The Court of Appeals,
however,

reversed and set aside the said 31 March 2006 NLRC Resolution and deemed it reasonable under the
circumstances

of the case to order the posting of an additional appeal bond of P1 Billion.

Considering the peculiar circumstances in Sara Lee, the Court has to determine what is the reasonable

amount of appeal bond. The fact was underscored that the amount of 10% of the award is not a
permissible bond

but is only such amount that shall be deemed reasonable in the meantime that the appellant’s motion is
pending

resolution by the NLRC. The actual reasonable amount yet to be determined is necessarily a bigger
amount. In an

effort to strike a balance between the constitutional obligation of the state to afford protection to labor,
on the one

hand, and the opportunity afforded to the employer to appeal, on the other, it considered the appeal
bond in the

amount of P725M which is equivalent to 25% of the monetary award sufficient to perfect the appeal,
viz.:

“We sustain the Court of Appeals in so far as it increases the amount of the required appeal bond.

But we deem it reasonable to reduce the amount of the appeal bond to P725 Million. This directive

already considers that the award if not illegal, is extraordinarily huge and that no insurance
company would be willing to issue a bond for such big money. The amount of P725 Million is

approximately 25% of the basis above calculated. It is a balancing of the constitutional obligation

of the state to afford protection to labor which, specific to this case, is assurance that in case of

affirmance of the award, recovery is not negated; and on the other end of the spectrum, the

opportunity of the employer to appeal.

“By reducing the amount of the appeal bond in this case, the employees would still be assured of

at least substantial compensation, in case a judgment award is affirmed. On the other hand,

management will not be effectively denied of its statutory privilege of appeal.”

In line with Sara Lee and the objective that the appeal on the merits to be threshed out soonest by the

NLRC, the Court, in the 2015 case of Balite v. SS Ventures International, Inc.,4 held that the appeal
bond of

P100,000.00 posted by the respondent company for the total monetary award of P490,308.00, which is
equivalent to

around 20% thereof, is sufficient to perfect the appeal. With the employer's demonstrated good faith in
filing the

motion to reduce the bond on demonstrable grounds coupled with the posting of the appeal bond in the
requested

amount, as well as the filing of the memorandum of appeal, the right of the employer to appeal must be
upheld. This

is in recognition of the importance of the remedy of appeal, which is an essential part of our judicial
system and the

need to ensure that every party litigant is given the amplest opportunity for the proper and just
disposition of his

cause freed from the constraints of technicalities.

3.

REINSTATEMENT PENDING APPEAL

1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT OF LABOR ARBITER’S

DECISION, IMMEDIATELY EXECUTORY EVEN PENDING APPEAL; NO WRIT OF EXECUTION

REQUIRED.

According to the Pioneer Texturizing doctrine, an order of reinstatement issued by the Labor Arbiter
under
Article 229 [223] of the Labor Code is self-executory or immediately executory even pending appeal. This
means

that the perfection of an appeal shall stay the execution of the decision of the Labor Arbiter except
execution of the

reinstatement pending appeal.

2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO THE REINSTATEMENT ORDER

ISSUED BY THE LABOR ARBITER; WRIT OF EXECUTION REQUIRED WHEN REINSTATEMENT

IS ORDERED BY NLRC ON APPEAL, OR SUBSEQUENTLY BY THE COURT OF APPEALS OR

SUPREME COURT, AS THE CASE MAY BE.

By way of distinction, the rule on reinstatement pending appeal applies only to the order of
reinstatement

issued by the Labor Arbiter and to no other. This means that if the reinstatement order is issued by the
NLRC on

1 The fact of clarification was pronounced in Balite v. SS Ventures International, Inc., G.R. No. 195109,
Feb. 4, 2015.

2 G.R. Nos. 180147-180150, 180319 and 180685, June 4, 2014.

3 This case is a consolidation of 6 cases involving several corporations, namely: Sara Lee Philippines, Inc.
(SLPI), Aris Philippines, Inc. (Aris), Sara Lee Corporation (SLC)

and Fashion Accessories Philippines, Inc. (FAPI).

4 G.R. No. 195109, Feb. 4, 2015.

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appeal, or by the Court of Appeals or by the Supreme Court, there is a need to secure a writ of execution
from the

Labor Arbiter of origin to enforce the reinstatement of the employee whose dismissal is declared illegal.

3. TWO (2) OPTIONS OF EMPLOYER.

To implement the reinstatement aspect of a Labor Arbiter’s decision, there are only two (2) options
available to the employer, to wit:

1. Actual reinstatement. - The employee should be reinstated to his position which he occupies prior to
his

illegal dismissal under the same terms and conditions prevailing prior to his dismissal or separation or, if

no longer available, to a substantially-equivalent position; or

2. Payroll reinstatement. – The employee should be reinstated in the payroll of the company without

requiring him to report back to his work.

4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED REINSTATED.

It is required that in case the decision of the Labor Arbiter includes an order of reinstatement, it should

contain:

(a) A statement that the reinstatement aspect is immediately executory; and

(b) A directive for the employer to submit a report of compliance within ten (10) calendar days from

receipt of the said decision.

Disobedience of this directive clearly denotes a refusal to reinstate. The employee need not file a
motion

for the issuance of the writ of execution since the Labor Arbiter is mandated thereafter to motu proprio
issue the

writ. With the new rules in place, there is hardly any difficulty in determining the employer’s
intransigence in

immediately complying with the order.

5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITER’S REINSTATEMENT ORDER

STILL REQUIRED.

Under the 2011 NLRC Rules of Procedure, there are two (2) instances when a writ of execution should
still

be issued immediately by the Labor Arbiter to implement his order of reinstatement, even pending
appeal, viz.:

(1) When the employer disobeys the prescribed directive to submit a report of compliance within ten
(10)

calendar days from receipt of the decision; or

(2) When the employer refuses to reinstate the dismissed employee.

The Labor Arbiter shall motu proprio issue a corresponding writ to satisfy the reinstatement wages as
they
accrue until actual reinstatement or reversal of the order of reinstatement.

6. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.

• Employer has no way of staying execution of immediate reinstatement. He cannot post bond to
prevent its

execution.

• Reinstatement pending appeal applies to all kinds of illegal dismissal cases, regardless of the grounds

thereof.

• Reinstatement pending appeal does not apply when the dismissal is legal but reinstatement is
ordered for

some reasons like equity and compassionate justice.

• The failure of employee ordered reinstated pending appeal to report back to work as directed by the
employer

does not give the employer the right to remove him, especially when there is a reasonable explanation
for his

failure.

• When former position is already filled up, the employee ordered reinstated pending appeal should be
reinstated

to a substantially equivalent position.

• Reinstatement to a position lower in rank is not proper.

• In case of two successive dismissals, the order of reinstatement pending appeal under Article 223
issued

in the first case shall apply only to the first case and should not affect the second dismissal. According to

Sevilla v. NLRC, the Labor Arbiter was correct in denying the third motion for reinstatement filed by the

petitioner because what she should have filed was a new complaint based on the second dismissal. The

second dismissal gave rise to a new cause of action. Inasmuch as no new complaint was filed, the Labor

Arbiter could not have ruled on the legality of the second dismissal.

• Reinstatement pending appeal is not affected by the reinstated employee’s employment elsewhere.

• Effect of grant of achievement award during reinstatement pending appeal.

In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc., it 1 was pronounced that the act of

respondent CCBPI in giving an award of a Certificate of Achievement to petitioner for his exemplary
sales
performance during his reinstatement ordered by the Labor Arbiter, while respondent’s appeal with the
NLRC

was still pending, constitutes recognition of petitioner’s abilities and accomplishments. It indicates that
he is a

responsible, trustworthy and hardworking employee of CCBPI. It constitutes adequate proof weighing in
his

favor.

B.

NATIONAL LABOR RELATIONS COMMISSION (NLRC)

1. NATURE.

1 G.R. No. 180972, Jan. 20, 2014.

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The NLRC is an administrative quasi-judicial body. It is an agency attached to the DOLE solely for

program and policy coordination only. It is in charge of deciding labor cases through compulsory
arbitration.

2. COMPOSITION OF THE NLRC.

The NLRC is composed of a Chairman and twenty-three (23) members called “Commissioners.”

The NLRC has tripartite composition. Eight (8) members thereof should be chosen only from among the

nominees of the workers sector and another eight (8) from the employers sector. The Chairman and the
seven (7)

remaining members shall come from the public sector, with the latter to be chosen preferably from
among the

incumbent Labor Arbiters.

3. COMMISSION EN BANC.

The Commission sits en banc only for the following purposes:

(1) To promulgate rules and regulations governing the hearing and disposition of cases before any of its
divisions and regional branches; and

(2) To formulate policies affecting its administration and operations.

The NLRC does not sit en banc to hear and decide cases. The banc has no adjudicatory power. The

Commission exercises its adjudicatory and all other powers, functions, and duties through its eight (8)

Divisions.

4. NLRC’S EIGHT (8) DIVISIONS.

The NLRC is divided into eight (8) divisions, each one is comprised of three (3) members. Each Division

shall consist of one (1) member from the public sector who shall act as its Presiding Commissioner and
one (1)

member each from the workers and employers sectors, respectively.

The various Divisions of the Commission have exclusive appellate jurisdiction over cases within their

respective territorial jurisdictions.

1.

JURISDICTION

1. TWO (2) KINDS OF JURISDICTION.

The NLRC exercises two (2) kinds of jurisdiction:

1. Exclusive original jurisdiction; and

2. Exclusive appellate jurisdiction.

2. EXCLUSIVE ORIGINAL JURISDICTION.

The NLRC exercises exclusive and original jurisdiction over the following cases:

a. Petition for injunction in ordinary labor disputes to enjoin or restrain any actual or threatened

commission of any or all prohibited or unlawful acts or to require the performance of a particular act in

any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable

damage to any party.

b. Petition for injunction in strikes or lockouts under Article 264 of the Labor Code.

c. Certified cases which refer to labor disputes causing or likely to cause a strike or lockout in an industry

indispensable to the national interest, certified to it by the Secretary of Labor and Employment for

compulsory arbitration by virtue of Article 263(g) of the Labor Code.

d. Petition to annul or modify the order or resolution (including those issued during execution
proceedings) of the Labor Arbiter.

3. EXCLUSIVE APPELLATE JURISDICTION.

The NLRC exercises exclusive appellate jurisdiction over the following:

a. All cases decided by the Labor Arbiters.

b. Cases decided by the DOLE Regional Directors or hearing officers involving small money claims under

Article 129 of the Labor Code.

c. Contempt cases decided by the Labor Arbiters.

2.

EFFECT OF NLRC REVERSAL OF

LABOR ARBITER’S ORDER OF REINSTATEMENT

1. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS ACTUALLY

REINSTATED.

The BERGONIO Rule:

Bergonio, Jr. v. South East Asian Airlines, April 21, 2014.

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• After reversal of Labor Arbiter’s decision, the employer’s duty to reinstate the dismissed employee in
the

actual service or in the payroll is effectively terminated. The employee, in turn, is not required to return

the wages that he had received prior to the reversal of the LA’s decision.

2. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS REINSTATED IN

THE PAYROLL.

The GENUINO Doctrine:

Marilou S. Genuino v. NLRC, Citibank, N.A., Dec. 4, 2007.

• The Refund Doctrine in Genuino no longer applies, per Garcia Doctrine (See below).
The WENPHIL Rule: (The prevailing rule)

Wenphil Corporation v. Abing, April 7, 2014.

• The period for computing the backwages due to the dismissed employees during the period of appeal

should END on the date that a higher court (in this case the CA) reversed the labor arbitration ruling of

illegal dismissal.”

3. EFFECT OF REVERSAL OF REINSTATEMENT ORDER WHEN EMPLOYEE WAS NEITHER

REINSTATED TO HIS FORMER POSITION OR IN THE PAYROLL.

3.1. ENTITLEMENT TO REINSTATEMENT WAGES.

• The employee is entitled to reinstatement salaries/wages, allowances and benefits under the
following

doctrines:

(1) ROQUERO doctrine (Roquero v. Philippine Air Lines, Inc., April 22, 2003); and

(2) GARCIA doctrine (Garcia v. Philippine Airlines, Inc., Jan. 20, 2009 [En Banc]).

Based on the foregoing doctrines, from the moment an employee is ordered reinstated by the Labor
Arbiter

on the basis of the finding that his dismissal is illegal, up to the time that an appellate tribunal like the
NLRC, Court

of Appeals and Supreme Court, as the case may be, reverses the said finding, the employee is generally
entitled to

his so-called “reinstatement wages.”

3.1.1. ROQUERO DOCTRINE.

The Roquero doctrine, enunciates the rule that in cases where an employee is ordered reinstated by the

Labor Arbiter and the employer fails or refuses to obey the reinstatement order but initiates an appeal,
the

employer’s success in having the decision of the Labor Arbiter’s decision reversed on appeal will not
exculpate him

from the liability to pay the reinstatement wages of the employee reckoned and computed from the
time the

employee was ordered reinstated by the Labor Arbiter until the date of its reversal on appeal.

In this case of Roquero, the dismissal of petitioners Roquero and Pabayo was held valid by the Labor

Arbiter. On appeal to the NLRC, the Labor Arbiter’s decision was reversed and consequently, petitioners
were
ordered reinstated. They did not appeal from that decision of the NLRC but filed a motion for the
issuance of a writ

of execution of the order of reinstatement. The Labor Arbiter granted the motion but respondent PAL
refused to

comply with the said order on the ground that it has filed a Petition for Review before the Supreme
Court.

Subsequently, the CA reversed the decision of the NLRC and ruled that the dismissal of petitioners was
valid. The

Supreme Court later affirmed the CA’s decision but it held that the unjustified refusal by PAL to reinstate
Roquero

who, unlike Pabayo, has not amicably settled his case, entitles him to the payment of his reinstatement
wages

effective from the time PAL failed to reinstate him despite the issuance of the writ of execution. Thus, it
was

mandatory for PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so,
the former

must pay the latter the salaries he is entitled to, as if he was reinstated, from the time of the decision of
the NLRC

until the finality of the decision of the Supreme Court.

Following Roquero, it is now the norm that even if the order of reinstatement of the Labor Arbiter is

reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the
dismissed

employee during the period of appeal until its reversal by the NLRC, or the Court of Appeals or the
Supreme Court,

as the case may be. If the employee has been reinstated during the appeal period and such
reinstatement order is

subsequently reversed on appeal with finality, the employee is not required to reimburse whatever
salaries he has

received for he is entitled to such, more so if he actually rendered services during the said period.

3.1.2. GARCIA DOCTRINE.

a. Modification of the Roquero and Genuino doctrines.

The Roquero and Genuino doctrines have been modified by the Garcia doctrine. In this case, while

respondent Philippine Airlines (PAL) was undergoing rehabilitation receivership, an illegal dismissal case
was filed
by petitioners against respondent PAL which was decided by the Labor Arbiter in their favor thus
ordering PAL to,

inter alia, immediately comply with the reinstatement aspect of the decision. On appeal, the NLRC
reversed the

ruling of the Labor Arbiter and held that their dismissal was valid. The issue of whether petitioners may
collect their

reinstatement wages during the period between the Labor Arbiter’s order of reinstatement pending
appeal and the

NLRC decision overturning that of the Labor Arbiter, now that respondent PAL has terminated and
exited from

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rehabilitation proceedings, was resolved in the negative by the Supreme Court. The following
ratiocinations were

cited:

(1) Re: modification of the Genuino doctrine. - The “refund doctrine” in Genuino should no longer be

observed because it easily demonstrates how a favorable decision by the Labor Arbiter could harm,
more than help,

a dismissed employee. The employee, to make both ends meet, would necessarily have to use up the
salaries

received during the pendency of the appeal, only to end up having to refund the sum in case of a final
unfavorable

decision. It is mirage of a stop-gap leading the employee to a risky cliff of insolvency. Further, the
Genuino ruling

not only disregards the social justice principles behind the rule, but also institutes a scheme unduly
favorable to

management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in
installment
by the employer. For in the event of a reversal of the Labor Arbiter’s decision ordering reinstatement,
the employer

gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if
not directly

contradicts, the proscription that the “posting of a bond [even a cash bond] by the employer shall not
stay the

execution for reinstatement.”

(2) Re: modification of the Roquero doctrine. – The Roquero doctrine was reaffirmed but with the

modification that “[a]fter the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may
be barred

from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending
appeal was

without fault on the part of the employer.”

b. Two-fold test under the Garcia doctrine.

Under Garcia, the test to determine the liability of the employer (who did not reinstate the employee

pending appeal) to pay the wages of the dismissed employee covering the period from the time he was
ordered

reinstated by the Labor Arbiter to the reversal of the Labor Arbiter’s decision either by the NLRC, the
Court of

Appeals or the High Court, is two-fold, to wit:

(1) There must be actual delay or the fact that the order of reinstatement pending appeal was not
executed

prior to its reversal; and

(2) The delay must not be due to the employer’s unjustified act or omission. If the delay is due to the

employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding

the reversal of the Labor Arbiter’s decision.

In Garcia, there was actual delay in reinstating petitioners but respondent PAL was justified in not

complying with the reinstatement order of the Labor Arbiter because during the pendency of the illegal
dismissal

case, the SEC placed respondent PAL under an Interim Rehabilitation Receiver who, after the Labor
Arbiter

rendered his decision, was replaced with a Permanent Rehabilitation Receiver. It is settled that upon
appointment
by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against
the

corporation shall ipso jure be suspended. Resultantly, respondent PAL’s “failure to exercise the
alternative options

of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s
obligation to

pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.”

c. Cases decided after the promulgation of the Garcia doctrine.

Subsequent to Garcia, some of the cases decided in accordance with this doctrine are as follows:

(1) College of the Immaculate Conception v. NLRC (2010);

(2) Islriz Trading v. Capada (2011);

(3) Pfizer, Inc. v. Velasco (2011); and

(4) C. Alcantara & Sons, Inc. v. CA (2012).

2. RECKONING OF THE PERIOD COVERED BY ACCRUED REINSTATEMENT WAGES.

To clarify, employees ordered reinstated by the Labor Arbiter are entitled to accrued reinstatement
wages

only from the time the employer received a copy of the Labor Arbiter’s decision declaring the
employees’

termination illegal and ordering their reinstatement up to the date of the decision of the appellate
tribunal

overturning that of the Labor Arbiter. It is not accurate therefore to state that such entitlement
commences “from

the moment the reinstatement order was issued up to the date when the same was reversed by a
higher court without

fear of refunding what he had received.”

4. SOME PRINCIPLES ON REINSTATEMENT WAGES.

• Employer is not liable to pay any reinstatement backwages if reinstatement is ordered not by the
Labor Arbiter

but by the NLRC on appeal and it was not executed by writ and its finding of illegal dismissal is later
reversed

by the Court of Appeals and/or Supreme Court.

• Payroll-reinstated employee is entitled not only to reinstatement wages but also to other benefits
during the
period of payroll reinstatement until the illegal dismissal case is reversed by a higher tribunal.

• Award of additional backwages and other benefits from the time the Labor Arbiter ordered
reinstatement until

actual or payroll reinstatement is proper and valid.

C.

COURT OF APPEALS

1.

RULE 65, RULES OF COURT

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1. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF ELEVATING A LABOR CASE TO

THE COURT OF APPEALS.

The only mode by which a labor case decided by any of the following labor authorities/tribunals may
reach

the Court of Appeals is through a Rule 65 petition for certiorari.

(a) the DOLE Secretary;

(b) the Commission (NLRC); and

(c) the Director of the Bureau of Labor Relations (BLR) in cases decided by him in his appellate

jurisdiction (as distinguished from those he decides in his original jurisdiction which are appealable to

the DOLE Secretary).

The remedy of ordinary appeal to the Court of Appeals is not available from their decisions, orders or

awards. The reason for this rule is that their decisions, orders or awards are final and executory and
therefore

inappealable.

2. THE ONLY EXCEPTION.

The only exception to the foregoing rule is in the case of decisions, orders or awards issued by the
Voluntary Arbitrator or panel of Voluntary Arbitrators which may be elevated to the Court of Appeals
by way

of an ordinary appeal under a Rule 43 petition for review.

3. FILING OF MOTION FOR RECONSIDERATION OF THE DECISION OF THE DOLE SECRETARY,

THE COMMISSION (NLRC) OR THE BLR DIRECTOR, A PRE-REQUISITE TO FILING OF RULE 65

PETITION FOR CERTIORARI.

The rule on the filing of a Motion for Reconsideration of the decision of the DOLE Secretary, the NLRC

and the BLR Director is mandatory and jurisdictional. Failure to comply therewith would result in the
dismissal of

the Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule that a motion for
reconsideration is a prerequisite

for the filing of a special civil action for certiorari.

The reason for this rule is that in labor cases, a motion for reconsideration is the plain and adequate

remedy from an adverse decision of the DOLE Secretary, the NLRC and the BLR Director.

• THE PHILTRANCO DOCTRINE: a motion for reconsideration should be filed even though it is not

required or even prohibited by the concerned government office. This was the rule enunciated in the

2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-Association of Genuine

Labor Organizations (PWU-AGLO). Thus, while a government office may prohibit 1 altogether the filing

of a motion for reconsideration with respect to its decisions or orders, the fact remains that certiorari

inherently requires the filing of a motion for reconsideration which is the tangible representation of the

opportunity given to the office to correct itself. Unless it is filed, there could be no occasion to rectify.

Worse, the remedy of certiorari would be unavailing. Simply put, regardless of the proscription against
the

filing of a motion for reconsideration, the same may be filed on the assumption that rectification of the

decision or order must be obtained and before a petition for certiorari may be instituted.

4. CERTIORARI PETITION MAY BE FILED EVEN IF THE DECISION OF THE DOLE SECRETARY,

THE COMMISSION (NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME FINAL AND

EXECUTORY.

This rule applies to the decisions rendered by the DOLE Secretary, the NLRC or the BLR Director (in cases

which he decided in his appellate jurisdiction).


If the CA grants the petition and nullifies their decisions on the ground of grave abuse of discretion

amounting to excess or lack of jurisdiction, such decisions are, in contemplation of law, null and void ab
initio;

hence, they never became final and executory.

2.

JUDICIAL REVIEW OF DECISIONS

OF VOLUNTARY ARBITRATORS

1. DECISIONS, FINAL AND EXECUTORY.

As a general rule, decisions or awards of Voluntary Arbitrators are final, inappealable and executory
after

ten (10) calendar days from receipt of a copy thereof by the parties.

2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE –

VOLUNTARY ARBITRATORS ARE OF THE SAME LEVEL AS RTC JUDGES.

Being a quasi-judicial agency, the decisions and awards of a Voluntary Arbitrator are appealable by way
of

a petition for review to the Court of Appeals under Revised Administrative Circular No. 1-95 which
provides for a

uniform procedure for appellate review of all adjudications of quasi-judicial entities and which is now
embodied in

Section 1, Rule 43 of the 1997 Rules of Civil Procedure.

The ruling in Luzon Development Bank v. Association of Luzon Development Bank Employees,2 in

effect, equates the decisions or awards of the Voluntary Arbitrator to those of the Regional Trial Court
(RTC).

1 G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the
principle enunciated herein equally applies to the NLRC.

2 G.R. No. 120319, October 6, 1995.

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Hence, in a petition for certiorari from the awards or decisions of the Voluntary Arbitrator, the Court of
Appeals has

concurrent jurisdiction with the Supreme Court.

In Alcantara, Jr. v. CA, it was held that Luzon Development 1 Bank is still a good law.

3. PERIOD OF APPEAL – 15 DAYS.

Rule 43 of the Rules of Court requires that the petition for review to be taken to the Court of Appeals

should be filed within fifteen (15) days from notice of the award, judgment or final order or resolution of
the

Voluntary Arbitrator.

D.

SUPREME COURT

1.

RULE 45, RULES OF COURT

1. RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE ONLY MODE BY WHICH A LABOR

CASE MAY REACH THE SUPREME COURT.

Since the Court of Appeals has jurisdiction over the petition for certiorari under Rule 65 that may be
filed

before it from the decisions of the NLRC or the DOLE Secretary or the BLR Director (in cases decided by
him in

his appellate jurisdiction), any alleged errors committed by it in the exercise of its jurisdiction would be
errors of

judgment which are reviewable by means of a timely appeal to the Supreme Court and not by a special
civil action

of certiorari.

If the aggrieved party fails to do so within the reglementary period and the decision accordingly
becomes

final and executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of
his

deliberate inaction. A petition for certiorari under Rule 65 cannot be a substitute for a lost appeal
under Rule

45; hence, it should be dismissed.


2. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH PERIOD FROM DENIAL OF MOTION

FOR RECONSIDERATION.

In the 2013 case of Elizabeth Gagui v. Dejero,2 petitioner successively filed two Motions for

Reconsideration of the CA’s decision but both were denied. Petitioner elevated the case to the Supreme
Court under

Rule 45. In their comment, respondents alleged that the instant petition had been filed 15 days after the
prescriptive

period of appeal under Section 2, Rule 45 of the Rules of Court. In her reply, petitioner countered that
she has a

fresh period of 15 days from the date she received the Resolution of the CA to file the instant Rule 45
petition. In

affirming the contention of petitioner, the Supreme Court cited the en banc ruling in the case of Neypes
v. CA3

which standardized the appeal periods, thus:

“To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal

their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice
of appeal

in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or
motion for

reconsideration.

“Henceforth, this ‘fresh period rule’ shall also apply to Rule 40 governing appeals from the Municipal
Trial

Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the
Court of

Appeals; Rule 43 on appeals from quasi-judicial agencies to the Court of Appeals and Rule 45
governing

appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period
uniform,

to be counted from receipt of the order denying the motion for new trial, motion for reconsideration
(whether full

or partial) or any final order or resolution.”

Consequently, since petitioner in Gagui received the CA Resolution denying her two Motions for
Reconsideration only on 16 March 2011, she had another 15 days within which to file her Petition, or
until 31 March

2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-day period.

E.

BUREAU OF LABOR RELATIONS (BLR)

1.

JURISDICTION

1. LABOR OFFICIALS CONCERNED.

As far as labor relations cases are concerned, the following officials are involved in their adjudication:

(1) Mediators-Arbiters (Med-Arbiters);

(2) DOLE Regional Directors; and

1 G.R. No. 143397, Aug. 6, 2002.

2 G.R. No. 196036, Oct. 23, 2013.

3 G.R. No. 141524, Sept. 14, 2005.

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(3) BLR Director.

2. MED-ARBITER.

The term “Med-Arbiter” refers to an officer in the DOLE Regional Office or in the BLR authorized to hear
and

decide representation cases, inter-union or intra-union disputes and other related labor relations
disputes.1

While the Labor Code refers to this official as “Med-Arbiter,”2 it should, however, be construed to mean

“Mediator-Arbiter.”3 Most recent DOLE issuances4 have specifically changed such reference to
“Mediator-Arbiter” in
their provisions. This is but proper since the word “Med”5 obviously is an abbreviation of the word
“Mediator.”

3. DOLE REGIONAL DIRECTOR.

The Regional Directors are the duly authorized representatives of the DOLE Secretary in the DOLE
regional

offices. They are in charge of the administration and enforcement of labor standards within their
respective territorial

jurisdictions.6 Although, like the Med-Arbiters, they are not also specifically mentioned in said article, it
is a known

procedural rule, however, that in addition to their jurisdiction over cases falling under Articles 1287 and
1298 of the Labor

Code, they also have jurisdiction over certain specified cases contemplated under Article 232 [226] of
the same Code such

as disputes concerning union registration and cancellation of union registration as well as CBA
registration or

deregistration cases.

4. BLR DIRECTOR.

The BLR is headed by a Director who hears and decides certain specified cases over which he has either
original

or appellate jurisdiction. In many cases, his name, instead of the BLR, is usually the one impleaded as
public respondent in

certiorari petitions to the CA or subsequent appeals to the Supreme Court. Thus, one would encounter
countless cases filed

against such luminaries like Pura-Ferrer Calleja, Cresenciano B. Trajano, Benedicto Ernesto R. Bitonio Jr.,
and Hans Leo

J. Cacdac, among others, who are sued in their capacity as BLR Directors.

III.

CASES COGNIZABLE

The following are the general classifications of the cases falling under the jurisdiction of the said officials,
to wit:

(a) Inter-union disputes;

(b) Intra-union disputes;9 and

(c) Other related labor relations disputes.10


III-A.

INTER-UNION AND INTRA-UNION DISPUTES

1. INTER-UNION OR REPRESENTATION DISPUTE.

An “inter-union dispute” or “representation dispute” is one occurring or carried on between or among


unions.11 It

refers to a case involving a petition for certification election filed by a duly registered labor organization
which is seeking

to be recognized as the sole and exclusive bargaining agent (SEBA) of the rank-and-file employees or
supervisory

1 Section 1 [ii], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03, Series of 2003, [Feb. 17, 2003]. Excepted from the Med-Arbiter’s

jurisdiction are cases over which the Regional Director exercises original and exclusive jurisdiction such
as application for union registration, petitions for cancellation of union

registration and complaints for examination of unions books of accounts.” This is per Section 3, Rule II
[Med-Arbitration], Rules of Procedure on Mediation-Arbitration, which provides:

“SEC. 3. Jurisdiction of the Regional Director.- The Regional Director shall exercise original and exclusive
jurisdiction over application for union registration, petitions for cancellation of

union registration and complaints for examination of unions books of accounts.” See also Barles v.
Bitonio, G.R. No. 120220, June 16, 1999.

2 The term “Med-Arbiter” is used and cited in the following articles of the Labor Code: Articles 230 [224]
(Execution of decisions, orders or awards), 268 [256] (Representation issue in

organized establishments), 269 [257] (Petitions in unorganized establishments), 272 [259] (Appeal from
certification election orders), and 292 [277] (Miscellaneous provisions),

paragraph (i) thereof. Surprisingly, Med-Arbiter is not referred to at all in Article 232 [226].

3 Nowhere, however, in the Labor Code is the term “Mediator-Arbiter” used or cited.

4 Such as Department Order No. 40-F-03, Series of 2008, issued on October 30, 2008. This Department
Order was issued by the DOLE Secretary to implement the changes in the

Labor Code brought about by the amendments introduced thereto by R.A. No. 9481 [Effective June 14,
2007]. Another issuance is Department Order No. 40-I-15, Series of 2015

[September 07, 2015], entitled “Further Amending Department Order No. 40, Series of 2003, Amending
the Implementing Rules and Regulations of Book V of the Labor Code of the

Philippines, as Amended.”

5 Although without a period that would signify that it is an abridgement of a word.


6 See Article 128, Labor Code.

7 Visitorial and enforcement powers of the DOLE Secretary and his duly authorized representatives, the
DOLE Regional Directors.

8 See Article 129, Labor Code, involving monetary claims of ₱5,000 or less.

9 Diokno v. Hon. Cacdac, G.R. No. 168475, July 4, 2007; Bautista v. CA, G.R. 123375, Feb. 28, 2005, 452
SCRA 406, 420.

10 Section 1[B] (formerly Section 2), Rule XI, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]; Article 232

[226], Labor Code; Policy Instructions No. 6; Villaor v. Trajano, G.R. No. 69188, Sept. 23, 1986; M. Y. San
Biscuits, Inc. v. Laguesma, G.R. No. 95011, April 22, 1991.

11 Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.

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employees, as the case may be, in the appropriate bargaining unit of a company, firm or establishment.1
If there are two or

more legitimate unions involved, it also refers to any conflict between and among them concerning the
issue of which of

them should be certified as the SEBA for purposes of collective bargaining with the employer. Broadly, it
covers any other

conflict or dispute between legitimate labor unions.2

Note must be made of the latest innovative amendment of the Labor Code’s Implementing Rules
introduced by

Department Order No. 40-I-15, Series of 2015,3 which has expressly repealed the entire provision4 on
“Voluntary

Recognition” of the Implementing Rules on Book V and replaced it with the freshly-minted mode of
securing the status of

a sole and exclusive bargaining agent through a “Request for SEBA Certification” or “Request.”
Voluntary recognition is

therefore no longer allowed and is effectively replaced by the Request mode.


The Request basically is in the nature of an inter-union or representation dispute. While it may not
involve the

actual conduct of a certification election when it is made in an unorganized establishment with only
one (1) legitimate

union, since it would merely require a simple validation process by the DOLE Regional Director of
confirming the

majority support of the members of the bargaining unit for the requesting union and once validated, the
requesting union is

immediately certified as the SEBA without conducting a certification election, however, certification
election will have to

be conducted under any of the following situations:

(1) When the Request is made in an unorganized establishment with only one (1) legitimate union, and
the

requesting union or local fails to complete the requirements for SEBA certification during the validation
conference before

the DOLE Regional Director, such Request should be referred to the Election Officer for the conduct of
certification

election,5 in which case, such certification election should now be under the jurisdiction of the
Mediator-Arbiter.

(2) When the Request is made in an unorganized establishment with more than one (1) legitimate
labor

organization, in which case, the DOLE Regional Director, before whom Requests are required to be filed,
should refer the

Request directly to the Election Officer for the conduct of a certification election6 in accordance with the
Rules;7 and

(3) When the Request is made in an organized establishment, in which case, the Regional Director
should refer

the same to the Mediator-Arbiter for the determination of the propriety of conducting a certification
election.8

It is clear from the foregoing discussion that there is a jurisdictional interplay between the DOLE
Regional

Director and the Med-Arbiter, a subject which will be discussed further in the sections below dwelling
on the jurisdiction

of these labor authorities.


2. INTRA-UNION OR INTERNAL UNION DISPUTE.

An “intra-union dispute” or “internal union dispute” refers to a conflict within or inside a labor union.9 It
may

refer to any conflict between and among officers and/or members of one particular union, including
grievances arising

from any violation of the rights and conditions of membership, violation of or disagreement over any
provision of the

union’s constitution and by-laws,10 issues over control, supervision and management of its internal
affairs,11 or disputes

arising from chartering or affiliation of a union.12

3. RUNDOWN OF INTER-UNION AND INTRA-UNION CASES.

1 Section 1 [9], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases;
Appendix 2 [Definition of Terms], NCMB Primer on Strike, Picketing and

Lockout, 2nd Edition, December 1995; Diokno v. Hon. Cacdac, Ibid.; Bautista v. CA, Ibid.

2 Section 1 [x], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03, Series of 2003, [Feb. 17, 2003].

3 Issued on September 07, 2015.

4 Particularly its Rule VII [Voluntary Recognition], Book V, Rules to Implement the Labor Code, as
amended by Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]. This

provision has been repealed and replaced by a new provision entitled, "REQUEST FOR SOLE AND
EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION", pursuant to the

amendment introduced by Section 3, Department Order No. 40-I-15, Series of 2015 [September 07,
2015], entitled “Further Amending Department Order No. 40, Series of 2003,

Amending the Implementing Rules and Regulations of Book V of the Labor Code of the Philippines, as
Amended.”

5 Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order No.
40-I-15, Series of 2015 [September 07, 2015]. The election should be

conducted in accordance with Rule IX thereof.

6 Section 5, Rule VII, Ibid.

7 Referring to Rule IX of the Labor Code’s Implementing Rules, as amended by Department Order No.
40-I-15, Series of 2015 [September 07, 2015].

8 Section 6, Rule VII, Ibid. in accordance with Rules VIII and IX, Ibid.

9 Diokno v. Hon. Cacdac, supra, citing Bautista v. CA, supra.


10 Section 1 [bb], Rule I, Book V, Ibid.; Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.

11 Section 1 [8], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases;
Appendix 2 [Definition of Terms], NCMB Primer on Strike, Picketing and

Lockout, 2nd Edition, December 1995.

12 Section 1 [bb], Rule I, Book V, Ibid.; Diokno v. Hon. Cacdac, supra; Bautista v. CA, supra.

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In accordance with the Labor Code’s Implementing Rules, as amended in 2015, the following 1 is a
rundown of all

possible inter-union/intra-union disputes:

a) Cancellation of registration of a labor organization filed by its members or by another labor


organization;

b) Conduct of election of union and workers’ association officers or nullification of election of union and

workers' association officers;

c) Audit/accounts examination of union or workers' association funds;

d) Deregistration of collective bargaining agreements;

e) Validity/invalidity of union affiliation or disaffiliation;

f) Validity/invalidity of acceptance/non-acceptance for union membership;

g) Validity/invalidity of impeachment/expulsion of union and workers' association officers and members;

h) Validity/invalidity of Request for SEBA Certification2 (Replacing “Voluntary Recognition” as a mode of


securing

sole and exclusive bargaining agent status);

i) Opposition to application for union and CBA registration;

j) Violations of or disagreements over any provision in a union or workers' association constitution and
by-laws;

k) Disagreements over chartering or registration of labor organizations and collective bargaining


agreements;
I) Violations of the rights and conditions of union or workers' association membership;

m) Violations of the rights of legitimate labor organizations, except interpretation of collective


bargaining

agreements;3 and

n) Such other disputes or conflicts involving the rights to self-organization, union membership and
collective

bargaining -

1) Between and among legitimate labor organizations; or

2) Between and among members of a union or workers’ association.

III-B.

OTHER RELATED LABOR RELATIONS DISPUTES

1. MEANING OF “OTHER RELATED LABOR RELATIONS DISPUTES.”

“Other related labor relations dispute” refers to any conflict between a labor union and the employer or
any

individual, entity or group that is not a labor union or workers’ association.4

More specifically, it may refer to any of the following:

(a) Any conflict between:

(1) a labor union and an employer, or

(2) a labor union and a group that is not a labor organization; or

(3) a labor union and an individual who is not a member of such union;

(b) Cancellation of registration of unions and workers’ associations filed by individuals other than its
members,

or group that is not a labor organization; and

(c) A petition for interpleader involving labor relations.5

IV.

ORIGINAL AND EXCLUSIVE JURISDICTION

OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR

Having known the various cases afore-described, a discussion of the respective jurisdictions of the Med-
Arbiters,

DOLE Directors and BLR Director over these cases may now be made with greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-ARBITERS.

The cases falling under the original and exclusive jurisdiction of the Med-Arbiters are as follows:

(1) Inter-union disputes (representation or certification election conflicts), such as:

1 See Section 1, Rule XI, Book V of the Rules to Implement the Labor Code, as previously amended by
Department Order No. 40-F-03, Series of 2008 [October 30, 2008] which

designated this section as “Section 1(A)”, and as further amended by Section 18, Department Order No.
40-I-15, Series of 2015 [September 07, 2015], entitled “Further Amending

Department Order No. 40, Series of 2003, Amending the Implementing Rules and Regulations of Book V
of the Labor Code of the Philippines, as Amended.”

2 This is in the nature of an inter-union dispute which may be occasioned by the introduction of a new
mode of securing the status of sole and exclusive bargaining agent (SEBA). The

Labor Code’s Implementing Rules, particularly its RULE VII on “Voluntary Recognition” was actually
repealed and replaced by a completely new provision entitled “REQUEST FOR

SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) CERTIFICATION” This was introduced by the
amendatory provision of Section 3, Department Order No. 40-I-15, Series of

2015 [September 07, 2015], Ibid.

3 Disputes over the interpretation or implementation of the CBA are considered as grievable issues
cognizable by and should be processed through the grievance machinery and

voluntary arbitration provided in the CBA itself. (See Articles 273 [260] and 274 [261], Labor Code).

4 Section 1 [rr], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03, Series of 2003, [Feb. 17, 2003].

5 Section 1[B] (formerly Section 2), Rule XI, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].

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(a) Request for SEBA certification when made in an unorganized establishment with only one1 or

more than one (1) legitimate union2 or in an organized establishment;3 or

(b) Petition for certification election, consent election, run-off election or re-run election;
(2) Intra-union disputes;

(3) Other related labor relations disputes;4

(4) Injunction cases;5 and

(5) Contempt cases.6

On No. 1[a] above, the Mediator-Arbiter will have jurisdiction over a Request for SEBA Certification if it
is

made in an organized establishment as well as in instances where it is made in an unorganized


establishment with

more than one (1) legitimate organization. Under this situation, the DOLE Regional Director, before
whom the said

Request is filed, is required to refer it to the Mediator-Arbiter for the determination of the propriety of
conducting a

certification election; consequently, the Mediator-Arbiter would now have the jurisdiction to take
cognizance of the

certification election.7

2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE REGIONAL DIRECTORS.

The DOLE Regional Directors have original and exclusive jurisdiction over numerous cases.8 But not all of
them

are relevant to or connected with the three (3) classes of cases9 expressly mentioned in Article 232
[226]. Only the

following cases cognizable by them are related thereto or connected therewith by virtue of laws and
rules:

(1) Visitorial cases under Article 289 [274],10 involving examination of books of accounts of
independent

unions, local chapters/chartered locals and workers’ associations;

(2) Union registration-related cases, such as:

a) Applications for union registration of independent unions, local chapters and workers’
associations;11

1 In case the Request is made in an unorganized establishment with only one (1) legitimate union, and
the requesting union or local fails to complete the requirements for SEBA

certification during the validation conference before the DOLE Regional Director, in which event, such
Request should be referred to the Election Officer for the conduct of certification
election (Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department
Order No. 40-I-15, Series of 2015 [September 07, 2015]. The election should be

conducted in accordance with Rule IX thereof.), which necessarily would mean that such certification
election should now be conducted under the jurisdiction of the Mediator-Arbiter

to whom the Election Officer is duty-bound to report the outcome of the election proceeding. Certainly,
the ensuing certification election cannot be conducted under the directive of the

DOLE Regional Director without the participation of the Mediator-Arbiter who, under the law, is the one
possessed of the original and exclusive jurisdiction over certification election

cases, including the proclamation of the winning SEBA. (See Section 21, Rule IX, Book V, Rules to
Implement the Labor Code, as ordered renumbered by Section 17, Department

Order No. 40-I-15, Series of 2015 [September 07, 2015]. This section was originally numbered Section
20, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it

was subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct.
30, 2008]).

2 Section 5, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015
[September 07, 2015].

3 Section 6, Rule VII, in relation to Rules VIII and IX, Ibid.

4 Section 1 [ii], Rule I, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03, Series of 2003, [Feb. 17, 2003]; Section 4, Rule XI, Book V of the

Rules to Implement the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008
[October 30, 2008]. See also Article 226, Labor Code; Policy Instructions No. 6;

Villaor v. Trajano, G.R. No. 69188, Sept. 23, 1986.

5 Med-Arbiters have the authority to issue temporary restraining orders (TROs) and writs of injunction
in appropriate cases. Section 5, Rule XVI, Book V of the Omnibus Rules

Implementing the Labor Code states: “Sec 5. Injunctions. -- No temporary injunctions or restraining
order in any case involving or growing out of a labor dispute shall be issued by any

court or other entity. On the other hand, the Office of the President, the Secretary of Labor, the
Commission, the Labor Arbiter or Med-Arbiter may enjoin any or all acts involving or

arising from any case pending before any of said offices or officials which if not restrained forthwith may
cause grave or irreparable damage to any of the parties to the case or

seriously affect social or economic stability.”

6 Section 4, Rule XVI, Book V, Rules to Implement the Labor Code.

7 Section 6, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015
[September 07, 2015].
8 All the cases cognizable by the DOLE Regional Directors are as follows: (a) Visitorial (inspection) cases
under Article 37; (b) Visitorial (inspection) and enforcement cases under

Article 128; (c) Visitorial cases under Article 289 [274], involving examination of books of accounts of
independent unions, local chapters/chartered locals and workers’ associations;

(d) Occupational safety and health violations; (e) Small money claims cases arising from labor standards
violations in an amount not exceeding ₱5,000.00 and not accompanied with

a claim for reinstatement under Article 129; (f) Cases related to private recruitment and placement
agencies (PRPAs) for local employment, such as: (1) Applications for license or

denial thereof; (2) Complaints for suspension or cancellation of license by reason of administrative
offenses; (3) Complaints for illegal recruitment; and (4) Petition for closure of

agency; (g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators
(EVAs) under Department Order No. 83-07, Series of 2007; (h) Union

registration-related cases, such as: 1) Applications for union registration of independent unions, local
chapters and workers’ associations; 2) Petition for denial of application for

registration of said unions; 3) Petitions for revocation or cancellation of registration of said unions; (i)
Notice of merger, consolidation, affiliation and change of name of said unions

and or petition for denial thereof; (j) CBA-related cases, such as: 1) Application for registration of single-
enterprise CBAs or petition for deregistration thereof; 2) Petition for denial

of registration of single-enterprise CBAs or denial of deregistration thereof; and (k) Request for SEBA
certification when made in an unorganized establishment with only one (1)

legitimate union.

9 These are (1) inter-union disputes; (2) intra-union disputes; and (3) Other related labor relations
disputes.

10 “Article 289 [274]. Visitorial power. The Secretary of Labor and Employment or his duly authorized
representative is hereby empowered to inquire into the financial activities of

legitimate labor organizations upon the filing of a complaint under oath and duly supported by the
written consent of at least twenty percent (20%) of the total membership of the labor

organization concerned and to examine their books of accounts and other records to determine
compliance or non-compliance with the law and to prosecute any violations of the law

and the union constitution and by-laws: Provided, That such inquiry or examination shall not be
conducted during the sixty (60)-day freedom period nor within the thirty (30) days

immediately preceding the date of election of union officials.” (As amended by Section 31, Republic Act
No. 6715, March 21, 1989).

11 Section 3, Rule II of the Med-Arbitration Rules states: “SEC. 3. Jurisdiction of the Regional Director.-
The Regional Director shall exercise original and exclusive jurisdiction over
application for union registration, petitions for cancellation of union registration and complaints for
examination of unions books of accounts.” See also Section 1, Rule II,

Rules of Procedure on Mediation-Arbitration.

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b) Denial of application for registration1 of said unions;2

c) Petitions for revocation or cancellation of registration3 of said unions;4

(3) Denial of registration of single-enterprise5 CBAs or petitions for deregistration thereof;6 and

(4) Request for SEBA certification when made in an unorganized establishment with only one (1)

legitimate union.7

On No. 1 above, it is imperative to point out that although by nature, this is an intra-union dispute, the
rules,

however, treat this separately from those generally applicable to intra-union disputes8 and accordingly
vest jurisdiction

thereover in the DOLE Regional Directors and not in the Med-Arbiters.

Barles v. Bitonio9 is clear on this point. It was held here10 that while intra-union conflicts, such as
examinations

of accounts are under the jurisdiction of the BLR, however, the Rules of Procedure on Mediation-
Arbitration purposely

and expressly separated or distinguished examinations of union accounts from the genus of intra-union
conflicts and

provided a different procedure for their resolution. Consequently, original jurisdiction over complaints
for examinations of

union accounts is vested not in the Med-Arbiter but in the DOLE Regional Director. This is apparent from
Section 311

thereof.

But there is a need to point out though that the foregoing rule applies only when the request for
examination of
books of accounts concerns only those of independent unions, local chapters/chartered locals and
workers’

associations. If what is involved are those of federations, national unions, industry unions or trade
union centers, and

their local chapters/chartered locals, affiliates and member organizations, the jurisdiction thereover is
vested with the

BLR Director and not with the DOLE Regional Director.

On No. 2[a] above, as far as workers’ associations are concerned, if they operate in more than one
region, the

application for registration should be filed with the BLR or the Regional Offices, but either way, it should
be processed by

the BLR.12 This is so in order to have a unified resolution of the merits of the application by one, single
agency.

On No. 4 above, when the Request for SEBA Certification is made in an unorganized establishment
with

only one (1) legitimate union, it should be filed with the DOLE Regional Director who will make an
immediate

determination on whether there is majority support by the members of the bargaining unit to the
requesting union. Once

the majority support is confirmed and the requesting union does not fail to complete the requirements
for SEBA

certification during the validation conference, the requesting union is immediately certified by the DOLE
Regional

Director as the SEBA without conducting a certification election.

As a consequence of this latest change in the Rules, it may be said that the DOLE Regional Director, in a
way, is

now empowered to rule on a “representation” issue which, technically speaking, falls under and is
covered by the general

class of “inter-union disputes” that falls within the jurisdiction of the Mediator-Arbiter. In fact, the very
Request itself

speaks of “SEBA Certification,” a relief that is not the consequence of “Voluntary Recognition” - the
original remedy

intended to be replaced by this Request mode.


1 See Article 243 [236] of the Labor Code which provides: “Art. 243 [236]. Denial of registration; appeal.
The decision of the Labor Relations Division in the regional office denying

registration may be appealed by the applicant union to the Bureau within ten (10) days from receipt of
notice thereof.”

2 Referring to independent unions, local chapters and workers’ associations, as distinguished from
federations, national unions, industry unions, trade union centers and their local

chapters/chartered locals, affiliates and member organizations whose application for registration as well
as denial or cancellation or revocation of registration is cognizable by the BLR

Director in his original and exclusive jurisdiction [infra].

3 Specifically cited as exception to Med-Arbiter’s jurisdiction is cancellation of union registration, per


Section 1 [ii], Rule I, Book V, Rules to Implement the Labor Code, as amended by

Department Order No. 40-03, Series of 2003, [Feb. 17, 2003].

4 Section 3, Rule II of the Med-Arbitration Rules, supra; See also Section 4, Rule XI, Book V of the Rules
to Implement the Labor Code, as amended by Department Order No. 40-F-03,

Series of 2008 [October 30, 2008].

5 As distinguished from cases involving multi-empoyer CBAs which fall under the original jurisdiction of
the BLR Director.

6 Section 4 [formerly Section 5], Rule XI, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as renumbered

by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].

7 Section 4, Rue VII, Department Order No. 40-I-15, Series of 2015 [September 07, 2015]. Under this
situation, the DOLE Regional Director, before whom the Request for SEBA

Certification is filed, should refer the Request for SEBA Certification to the Mediator-Arbiter for the
determination of the propriety of conducting a certification election, in which case,

the Mediator-Arbiter now has the jurisdiction to decide the certification election issue. (Section 6, Rule
VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of

2015 [September 07, 2015]). Note must be made that when the Request for SEBA Certification is made
in an unorganized establishment with more than one (1) legitimate labor

organization, the Med-Arbiter takes over from the DOLE Regional Director in the matter of hearing and
resolving the issue of certification election.

8 See Section 3, Rule XIII, Book V, Rules to Implement the Labor Code, as amended by Department Order
No. 40-03, Series of 2003, [Feb. 17, 2003], thus, a request for examination

of books of accounts pursuant to Article 289 [274], in the absence of allegations pertaining to a violation
of Article 250 [241], should not be treated as an intra-union dispute.
9 G.R. No. 120220, June 16, 1999.

10 Citing La Tondena Workers Union v. Secretary of Labor, G.R. No. 96821, Dec. 9, 1994, 239 SCRA 117.

11 Section 3, Rule II of the Med-Arbitration Rules states: “SEC. 3. Jurisdiction of the Regional Director.-
The Regional Director shall exercise original and exclusive jurisdiction over

application for union registration, petitions for cancellation of union registration and complaints for
examination of unions books of accounts.”

12 See 2nd paragraph, Section 1, Rule III, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17, 2003]; See also Section 1, Rule II,

Rules of Procedure on Mediation-Arbitration.

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For it is clear that under the previous repealed rule on voluntary recognition, the DOLE Regional Director
never

issues a “SEBA Certification”; what is done is the mere recording 1 of the “Notice of Voluntary
Recognition” jointly

submitted by the employer and the union to the DOLE Regional Office which issued the recognized labor
union’s

certificate of registration or, in the case of local chapter, where the charter certificate and the other
documents required

under Article 241 [234-A] were submitted and filed.2 Since it is crystal clear under existing laws, rules
and jurisprudence

that it is the Mediator-Arbiter who has the original and exclusive jurisdiction to issue a “SEBA
Certification” under any

of the modes3 of selecting a SEBA, it is not surprising if the issue of the validity of the exercise of similar
power to issue

the SEBA Certification by the DOLE Regional Director would be raised in an appropriate proceeding.

But the rule is quite clear that the Mediator-Arbiter would acquire original jurisdiction over the Request
for

SEBA Certification under the following situations:


(1) In case the Request is made in an unorganized establishment with only one (1) legitimate union,
and the

requesting union or local fails to complete the requirements for SEBA certification during the validation
conference before

the DOLE Regional Director, in which event, such Request should be referred to the Election Officer4 for
the conduct of

certification election5 which necessarily would mean that such certification election should now be
conducted under the

jurisdiction of the Mediator-Arbiter to whom the Election Officer is duty-bound to report the outcome
of the election

proceeding.6 Certainly, the ensuing certification election cannot be conducted under the directive of the
DOLE Regional

Director without the participation of the Mediator-Arbiter who, under the law,7 is the one possessed of
the original and

exclusive jurisdiction over certification election cases, including the proclamation of the winning SEBA.8

(2) In case the Request is made in an unorganized establishment with more than one (1) legitimate
union, in

which event, the DOLE Regional Director is required to refer the Request directly to the Election Officer
for the conduct

of a certification election9 which should be in accordance with the Rules10 that state, in its Section 2,
Rule VIII, that the

“(Request) shall be heard and resolved by the Mediator-Arbiter.” Resultantly, it is still the Mediator-
Arbiter who should

take cognizance of the Request which, in this case, is the equivalent of the Petition for Certification
Election over which he

exercises original jurisdiction.

(3) In case the Request is made in an organized establishment, in which case, the Regional Director
should refer

the same to the Mediator-Arbiter for the determination of the propriety of conducting a certification
election.11

3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR DIRECTOR.

At the outset, it must be stressed that reference in the law and pertinent rules to “BLR”, as far as the
issue of
jurisdiction is concerned, should appropriately mean “BLR Director.” This is as it should be because
“BLR” is a generic

1 Under the previous repealed provision, it is stated that where the notice of voluntary recognition is
sufficient in form, number and substance and where there is no other registered

labor union operating within the bargaining unit concerned, the DOLE Regional Office, through the Labor
Relations Division shall, within ten (10) days from receipt of the notice, record

the fact of voluntary recognition in its roster of legitimate labor unions and notify the labor union
concerned. (See the repealed provision of Section 3, Rule VII, Book V, Rules to

Implement the Labor Code, as amended by Department Order No. 40-03, Series of 2003, [Feb. 17,
2003]).

Where the notice of voluntary recognition is insufficient in form, number and substance, the DOLE
Regional Office shall, within the same period, notify the labor union of its findings

and advise it to comply with the necessary requirements. Where neither the employer nor the labor
union failed to complete the requirements for voluntary recognition within thirty (30)

days from receipt of the advisory, the DOLE Regional Office shall return the notice of voluntary
recognition together with all its accompanying documents without prejudice to its resubmission.

(Section 3, Rule VII, Book V, Ibid.).

2 Section 1, Rule VII, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17, 2003].

3 Besides this mode, the other modes of selecting or designating a SEBA are certification election,
consent election, run-off election, and lately, re-run election.

4 “Election Officer” refers to an officer of the Bureau of Labor Relations or the Labor Relations Division
in the Regional Office authorized to conduct certification elections, election of

union officers and other forms of elections and referenda. (Section 1 [o], Rule I, and Sections 2-5, Rule
XII, Book V, Rules to Implement the Labor Code, as amended by Department

Order No. 40-03, Series of 2003, [Feb. 17, 2003]). It is the Election Officer who shall have control of the
pre-election conference and election proceedings. (Section 1, Rule IX, Book

V, Ibid.).

5 Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department Order No.
40-I-15, Series of 2015 [September 07, 2015]. The election should be

conducted in accordance with Rule IX thereof.

6 Under the Rules, within 24 hours from the final canvass of votes, there being a valid election, the
Election Officer shall transmit the records of the case to the Med-Arbiter who shall,
within the same period from receipt of the minutes and results of election, issue an order proclaiming
the results of the election and certifying the union which obtained the majority of

the valid votes cast as the sole and exclusive bargaining agent in the subject bargaining unit, xxx. (The
provision entitled “Proclamation and certification of the result of the election”

should now be denominated as Section 21, Rule IX, Book V, Rules to Implement the Labor Code, by
virtue of the re-numbering ordered by Section 17, Department Order No. 40-I-15,

Series of 2015 [September 07, 2015]. This section was originally numbered Section 20, per Department
Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it was subsequently renumbered

to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008]. This latest 2015 re-
numbering was effected through said Section 17 which states:

“Sections subsequent to inserted new provisions and/or renumbered sections are renumbered
accordingly.”).

7 Article 232 [226], Labor Code.

8 See Section 21, Rule IX, Book V, Rules to Implement the Labor Code, as ordered renumbered by
Section 17, Department Order No. 40-I-15, Series of 2015 [September 07, 2015].

This section was originally numbered Section 20, per Department Order No. 40-03, Series of 2003, [Feb.
17, 2003], but it was subsequently re-numbered to Section 19, per

Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].

9 Section 5, Rule VII, Rules to Implement the Labor Code, as amended by Department Order No. 40-I-15,
Series of 2015 [September 07, 2015].

10 Referring to Rule IX of the Rules to Implement the Labor Code, as amended by Department Order No.
40-I-15, Series of 2015 [September 07, 2015]. Note must be made that when

the Request for SEBA Certification is made in organized establishment, in which case, the Regional
Director should refer the same to the Mediator-Arbiter for the determination of the

propriety of conducting a certification election. (Section 6, Rule VII, Ibid. in accordance with Rules VIII
and IX, Ibid.).

11 Section 6, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015
[September 07, 2015].

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term that includes not only the Med-Arbiters and DOLE Regional Directors but the BLR Director himself.
More

significantly, there is jurisprudential variance in the cases cognizable by the BLR Director, in relation to
Med-Arbiters and

DOLE Regional Directors, hence, referring to the cases properly falling under the jurisdiction of the “BLR
Director” as

such would be more appropriate and less confusing than simply referring to them as falling under the
jurisdiction of the

“BLR.”

The BLR Director exercises two (2) kinds of jurisdiction, namely: original and appellate. The 1 following
cases

fall under the first:

(1) Complaints and petitions involving the application for registration, revocation or cancellation of
registration

of federations, national unions, industry unions, trade union centers and their local chapters/chartered

locals, affiliates and member organizations;2

(2) Request for examination of books of accounts of said labor organizations3 under Article 289 [274] of
the

Labor Code;

(3) Intra-union disputes involving said labor organizations;4

(4) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for
denial

thereof;5

(5) Registration of multi-employer6 CBAs or petitions for deregistration thereof;7

(6) Contempt cases.

As far as No. 3 above is concerned, the 2010 case of Atty. Montaño v. Atty. Verceles,8 is relevant.
Petitioner9 here

claimed that under the Implementing Rules,10 it is the DOLE Regional Director and not the BLR
(Director) who has

jurisdiction over intra-union disputes involving federations which, in this case, pertains to the election
protests in
connection with the election of officers of the federation (Federation of Free Workers [FFW]). In finding
no merit in

petitioner’s contention, the High Court pointed out that Article 226 of the Labor Code clearly provides
that the BLR

(Director) and the Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-
union

disputes. Such disputes include the conduct or nullification of election of union and workers’ association
officers. There is,

thus, no doubt as to the BLR (Director)’s jurisdiction over the instant dispute involving member-unions
of a federation

arising from disagreement over the provisions of the federation’s constitution and by-laws. It agreed
with the following

observation of the BLR (Director):

“Rule XVI lays down the decentralized intra-union dispute settlement mechanism. Section 1 states that
any

complaint in this regard ‘shall be filed in the Regional Office where the union is domiciled.’ The concept
of domicile in

labor relations regulation is equivalent to the place where the union seeks to operate or has established
a geographical

presence for purposes of collective bargaining or for dealing with employers concerning terms and
conditions of

employment.

“The matter of venue becomes problematic when the intra-union dispute involves a federation,
because the

geographical presence of a federation may encompass more than one administrative region. Pursuant
to its

authority under Article 232 [226], this Bureau exercises original jurisdiction over intra-union disputes
involving

federations. It is well-settled that FFW, having local unions all over the country, operates in more than
one

administrative region. Therefore, this Bureau maintains original and exclusive jurisdiction over
disputes arising

from any violation of or disagreement over any provision of its constitution and by-laws.”11

V.
APPELLATE JURISDICTION OF THE BLR DIRECTOR

AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY

1. NECESSITY FOR JURISDICTIONAL DISTINCTIONS.

1 The appellate jurisdiction of the BLR Director is discussed in another section below.

2 As distinguished from petitions for cancellation of registration of independent unions, local chapters
and workers’ associations, as provided in Section 3, Rule II of the Med-Arbitration

Rules which states: “SEC. 3. Jurisdiction of the Regional Director.- The Regional Director shall exercise
original and exclusive jurisdiction over application for union registration,

petitions for cancellation of union registration and complaints for examination of unions books of
accounts.” See also Section 4, Rule XI, Book V of the Rules to Implement

the Labor Code, as amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008] and
Section 1, Rule II, Rules of Procedure on Mediation-Arbitration.

3 Referring to federations, national unions, industry unions and trade union centers, as distinguished
from independent unions, local chapters and workers’ associations.

4 Id.

5 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17, 2003] and as further amended by

Department Order No. 40-D-05, Series of 2005, Sept. 13, 2005.

6 As distinguished from cases involving single-enterprise CBAs which fall under the jurisdiction of the
DOLE Regional Director.

7 Section 4, Rule XI, Book V of the Rules to Implement the Labor Code, as amended by Department
Order No. 40-F-03, Series of 2008 [October 30, 2008].

8 G.R. No. 168583, July 26, 2010.

9 Petitioner was elected the National Vice President of FFW in the National Convention held at Subic
International Hotel, Olongapo City over the strong opposition and protest of

respondent Atty. Ernesto C. Verceles, a delegate to the convention and president of University of the
East Employees Association (UEEA-FFW) which is an affiliate union of FFW.

10 See Section 6 of Rule XV, in relation to Section 1 of Rule XIV of Book V of the Rules to Implement the
Labor Code.

11 Emphasis supplied.

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The distinctions pointed out above between the respective jurisdictions of the Med-Arbiters, DOLE
Regional

Directors and the BLR Director acquire significance in determining which of the cases over which they
exercise

jurisdiction may be appealed to the BLR Director and those that may be appealed to the DOLE Secretary,
both of whom,

based on law and jurisprudence, are possessed of exclusive appellate jurisdiction over certain cases
decided by the Med-

Arbiters, DOLE Regional Directors and BLR Director.

The Supreme Court had occasion to distinguish the appellate jurisdiction of the BLR Director from that of
the

DOLE Secretary in the case of Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees
Union.1

Accordingly, the appellate jurisdiction of the DOLE Secretary is limited only to the review of decisions
rendered by the

BLR Director in the exercise of his exclusive and original jurisdiction. The DOLE Secretary has no
jurisdiction over

decisions of the BLR Director rendered in the exercise of his appellate jurisdiction over decisions made
by Med-Arbiters

and DOLE Regional Directors in the exercise of their respective original and exclusive jurisdictions, the
reason being that

such decisions are final and inappealable.

2. APPEALS FROM DECISIONS OF MED-ARBITERS.

Decisions in the cases falling under the original and exclusive jurisdiction of the Med-Arbiters are
appealable as

follows:

(1) Inter-union disputes (representation or certification election conflicts) – to DOLE Secretary2

(a) Request for SEBA certification when made in an unorganized establishment with only one3 or more
than

one (1) legitimate union4 or in an organized establishment – to DOLE Secretary


(b) Petition for certification election, consent election, run-off election or re-run election - to DOLE

Secretary

(2) Intra-union disputes5 – to BLR Director

(3) Other related labor relations disputes - to BLR Director

(4) Injunction cases - to BLR Director

(5) Contempt cases - to BLR Director

2.1. DIFFERENT RULE RE APPELLATE JURISDICTION OVER MED-ARBITER’S DECISIONS IN INTERUNION

DISPUTES.

a. Legal basis.

While generally, the decisions of the Med-Arbiters are appealable to the BLR Director, excepted
therefrom are

their decisions in inter-union disputes6 which are appealable directly to the DOLE Secretary by virtue of
Article 272 [259]7

of the Labor Code.

b. Variance in the rule on appeal in unorganized and organized establishments.

The rule on appeal in certification election cases in unorganized establishments is different from that of

organized establishments, to wit:

(1) Appeal in unorganized establishments. - The order granting the conduct of a certification election in
an

unorganized establishment is not subject to appeal. Any issue arising from its conduct or from its results
is proper subject

of a protest. Appeal may only be made to the DOLE Secretary in case of denial of the petition within ten
(10) calendar

days from receipt of the decision of denial.8

1 G.R. No. 131374, Jan. 26, 2000.

2 This is by virtue of Article 272 [259] of the Labor Code. This article is entitled “Appeal from
Certification Election Orders” and it provides as follows: “Article 259. Appeal from

Certification Election Orders. – Any party to an election may appeal the order or results of the election
as determined by the Med-Arbiter directly to the Secretary of Labor and

Employment on the ground that the rules and regulations or parts thereof established by the Secretary
of Labor and Employment for the conduct of the election have been violated.
Such appeal shall be decided within fifteen (15) calendar days.” Prior to the amendment of Article 272
[259] by R.A. No. 6715, the decisions of the Med-Arbiter in certification election

cases are appealable to the BLR. Now, they are appealable to the DOLE Secretary. (A’ Prime Security
Services, Inc. v. Hon. Secretary of Labor, G.R. No. 91987, July 17, 1995). It

must be emphasized that as far as intra-union disputes are concerned, the decisions of the Med-Arbiters
thereon remain appealable to the BLR. (See Section 1 [1], Rule III, NCMB

Manual of Procedures for Conciliation and Preventive Mediation Cases).

3 In case the Request is made in an unorganized establishment with only one (1) legitimate union, and
the requesting union or local fails to complete the requirements for SEBA

certification during the validation conference before the DOLE Regional Director, in which event, such
Request should be referred to the Election Officer for the conduct of certification

election (Section 4, Rule VII of the Rules to Implement the Labor Code, as amended by Department
Order No. 40-I-15, Series of 2015 [September 07, 2015]. The election should be

conducted in accordance with Rule IX thereof.), which necessarily would mean that such certification
election should now be conducted under the jurisdiction of the Mediator-Arbiter

to whom the Election Officer is duty-bound to report the outcome of the election proceeding. Certainly,
the ensuing certification election cannot be conducted under the directive of the

DOLE Regional Director without the participation of the Mediator-Arbiter who, under the law, is the one
possessed of the original and exclusive jurisdiction over certification election

cases, including the proclamation of the winning SEBA. (See Section 21, Rule IX, Book V, Rules to
Implement the Labor Code, as ordered renumbered by Section 17, Department

Order No. 40-I-15, Series of 2015 [September 07, 2015]. This section was originally numbered Section
20, per Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], but it

was subsequently re-numbered to Section 19, per Department Order No. 40-F-03, Series of 2008 [Oct.
30, 2008]).

4 Section 5, Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015
[September 07, 2015].

5 Section 1 [1], Rule III, NCMB Manual of Procedures for Conciliation and Preventive Mediation Cases.

6 Otherwise known as representation or certification election conflicts.

7 Supra.

8 Section 18 [formerly Section 17], Rule VIII, Book V, of the Rules to Implement the Labor Code, as
amended by Department Order No. 40-F-03, Series of 2008 [October 30, 2008].

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(2) Appeal in organized establishments. - The order granting the conduct of a certification election in an

organized establishment and the decision dismissing or denying the petition for certification election
may be appealed to

the DOLE Secretary within ten (10) calendar days from receipt thereof.1

3. APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS.

a. Decisions appealable to the BLR Director.

Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the BLR

Director. Only decisions in the following cases relevant and related to labor relations, are appealable to
the BLR Director:

(1) Visitorial cases under Article 289 [274], involving examination of books of accounts of independent
unions,

local chapters/chartered locals and workers’ associations;2

(2) Union registration-related cases, such as:

a) Denial of applications3 for union registration of independent unions, local chapters and workers’

associations;

b) Revocation or cancellation4 of registration of said unions;

(3) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for
denial

thereof;5

(4) CBA-related cases, such as:

a) Application for registration of single-enterprise6 CBAs or petition for deregistration thereof;7

b) Petition for denial of registration of single-enterprise CBAs or denial of petition deregistration thereof.

As far as No. 1 above is concerned, appellate authority over decisions of the DOLE Regional Directors
involving

examinations of union accounts is expressly conferred on the BLR Director under the Rules of Procedure
on Mediation-

Arbitration,8 to wit:
“RULE II

MED-ARBITRATION

“SEC. 3. Jurisdiction of the Regional Director. - The Regional Director shall exercise original and exclusive

jurisdiction over application for union registration, petitions for cancellation of union registration and
complaints for

examination of union books of accounts.

SEC. 4. Jurisdiction of the Bureau.-

xxx

“(b) The Bureau shall exercise appellate jurisdiction over all cases originating from the Regional Director

involving union registration or cancellation of certificates of union registration and complaints for
examination of

union books of accounts.”9

The language of the law is categorical. Any additional explanation on the matter is superfluous. It is thus
clear

then that the DOLE Secretary has no appellate jurisdiction over decisions of DOLE Regional Directors
involving petitions

for examinations of union accounts.10

b. Cases not appealable to the BLR Director but to some other labor officials.

For greater clarity in presentation and to avoid any confusion, it is worthy to mention that the decisions
of the

DOLE Regional Directors in the following cases which are not related to labor relations are appealable to
the DOLE

Secretary and not to the BLR Director:

1 Id.

2 The BLR Director, not the DOLE Secretary, has the appellate authority over decisions of the DOLE
Regional Directors involving examinations of union accounts as provided under

Rule II of the Rules of Procedure on Mediation-Arbitration, issued on April 10, 1992, to wit: “SEC. 3.
Jurisdiction of the Regional Director. - The Regional Director shall exercise

original and exclusive jurisdiction over application for union registration, petitions for cancellation of
union registration and complaints for examination of unions books of accounts.

SEC. 4. Jurisdiction of the Bureau.- xxx “(b) The Bureau shall exercise appellate jurisdiction over all cases
originating from the Regional Director involving union registration or
cancellation of certificates of union registration and complaints for examination of union books of
accounts.”

3 See Article 243 [236] of the Labor Code which provides: “Art. 243 [236]. Denial of registration; appeal.
The decision of the Labor Relations Division in the regional office denying

registration may be appealed by the applicant union to the Bureau within ten (10) days from receipt of
notice thereof.”

4 See Article 245 [238] of the Labor Code which provides: “Art. 245 [238]. Cancellation of registration;
appeal. The certificate of registration of any legitimate labor organization, whether

national or local, shall be cancelled by the Bureau if it has reason to believe, after due hearing, that the
said labor organization no longer meets one or more of the requirements

herein prescribed.”

5 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17, 2003] and as further amended by

Department Order No. 40-D-05, Series of 2005, Sept. 13, 2005.

6 As distinguished from cases involving multi-employer CBAs which fall under the original jurisdiction of
the BLR Director.

7 Section 4 [formerly Section 5], Rule XI, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as renumbered

by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].

8 Issued on April 10, 1992.

9 Italics and underlining supplied.

10 Barles v. Bitonio, G.R. No. 120220, June 16, 1999.

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(a) Visitorial (inspection) cases under Article 37;1

(b) Visitorial (inspection) and enforcement cases2 under Article 128, (either routine or initiated through
a

complaint);3
(c) Occupational safety and health violations;4

(d) Cases related to private recruitment and placement agencies (PRPAs) for local employment, such as:

1) Applications for license or denial thereof;

2) Complaints for suspension or cancellation of license by reason of administrative offenses;

3) Complaints for illegal recruitment; and

4) Petition for closure of agency.5

Additionally, their decisions on small money claims cases arising from labor standards violations in an
amount

not exceeding ₱5,000.00 and not accompanied with a claim for reinstatement under Article 129 are
appealable to the

NLRC.

VI.

REMEDIES FROM DECISIONS OF

BLR DIRECTOR AND DOLE SECRETARY

RENDERED IN THEIR APPELLATE JURISDICTION

1. APPEALS END WITH BLR DIRECTOR AND DOLE SECRETARY.

Notably, the remedy of appeal involved in the cases contemplated under Article 232 [226] is available
only up to

the level of either the BLR Director or the DOLE Secretary, as the case may be. Appeal to the CA from
their decisions

rendered in their respective appellate jurisdictions is not available; the only remedy being the filing of an
original special

civil action for certiorari under Rule 65 of the Rules of Court.6

In the case of decisions rendered by the BLR Director in his appellate jurisdiction, they can no longer be

appealed to the DOLE Secretary because another appeal to the DOLE Secretary is not tenable anymore,
the BLR

Director’s decisions thereon having already become final and executory.7

2. REMEDY FROM CA DECISIONS TO THE SUPREME COURT.

There is only one mode to elevate labor cases from the CA to the Supreme Court and that is, through
Rule 45

petition for review on certiorari.


VII.

ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs

The BLR and the Labor Relations Divisions (LRDs) in the DOLE Regional Offices have concurrent
jurisdiction

over the following administrative functions:

1. Registration of labor unions;

2. Keeping of registry of labor unions;

3. Maintenance and custody of the files of CBAs and other related agreements.

4. Records of settlement of labor disputes; and

5. Copies of orders and decisions of Voluntary Arbitrators.8

1 “Article 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives may, at
any time, inspect the premises, books of accounts and records of any person or

entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on
violation of any provisions of this Title.” (Referring to Tile I [Recruitment and Placement

of Workers], Book I, Labor Code).

2 Visitorial cases involve inspection of establishments to determine compliance with labor standards;
while enforcement cases involve issuance of compliance orders and writs of

execution.

3 Based on the 2nd paragraph of Article 128(b), Labor Code, which states: “An order issued by the duly
authorized representative of the Secretary of Labor and Employment under this

Article may be appealed to the latter. xxx” (As amended by Republic Act No. 7730, June 2, 1994).
Additionally, it is provided in Section 1, Rule IV, of the Rules on the Disposition of

Labor Standards Cases in the Regional Offices, thus: “Section 1. Appeal. – The order of the Regional
Director shall be final and executory unless appealed to the Secretary of Labor

and Employment within ten (10) calendar daysfrom receipt thereof.” The grounds for the appeal are
provided in Section 2 thereof, thus: “Grounds for appeal. – The aggrieved party

may appeal to the Secretary the Order of the Regional Director on any of the following grounds: (a)
there is a prima facie evidence of abuse of discretion on the part of the Regional

Director; (b) the Order was secured through fraud, coercion or graft and corruption; (c) the appeal is
made purely on questions of law; and (d) serious errors in the findings of facts

were committed which, if not corrected, would cause grave irreparable damageor injury to the
appellant.” (See also Section 2, in relation to Section 3(a), Rule X, Book III of the Rules

to Implement the Labor Code}.


4 Section 6(a) of Rule VI [Health and Safety Cases] of the Rules on the Disposition of Labor Standards
Cases in the Regional Offices which provides: Section 6. Review by the

Secretary. - (a) The Secretary at his own initiative or upon the request of the employer and/or employee,
may review the order of the Regional Director which shall be immediately

final and executory unless stayed by the Secretary upon posting by the employer of a reasonable cash or
performance bond as fixed by the Regional Director.” See also the 2nd

paragraph of Article 128(b), Labor Code.

5 Section 62, Department Order No. 141-14, Series of 2014, Nov. 20, 2014.

6 Section 23, Rule XI, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17, 2003]; National Federation of Labor [NFL] v.

Laguesma, G.R. No. 123426, March 10, 1999.

7 Abbott Laboratories Philippines, Inc. v. Abbott Laboratories Employees Union, G.R. No. 131374, Jan,
26, 2000.

8 Article 237 [231], Labor Code.

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It must be noted that it is the registration of the labor organization with the BLR and not with the
Securities and

Exchange Commission (SEC) which makes it a legitimate labor organization with rights and privileges
granted under the

Labor Code.1

F.

NATIONAL CONCILIATION AND MEDIATION BOARD

(NCMB)

1.

NATURE OF PROCEEDINGS

1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.


NCMB is not a quasi-judicial agency, according to the 2009 case of Tabigue v. International

Copra Export Corporation. 2

“Quasi-judicial function” is a term which applies to the action, discretion, etc. of public administrative

officers or bodies, who are required to investigate facts or ascertain the existence of facts, hold
hearings, and draw

conclusions from them as a basis for their official action and to exercise discretion of a judicial nature.

2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMB’S RULINGS CANNOT BE ELEVATED TO, AND

COGNIZABLE BY, THE COURT OF APPEALS.

Rule 43 of the Rules of Court applies only to awards, judgments, final orders or resolutions of or
authorized

by any quasi-judicial agency in the exercise of its quasi-judicial functions. Hence, NCMB’s decision, not
having

been rendered by a quasi-judicial body, cannot be elevated to the Court of Appeals under said rule.

2.

CONCILIATION VS. MEDIATION

1. CONCILIATION AND MEDIATION, MEANING.

Both the terms “conciliation” and “mediation” refer to a process whereby a third person usually called

Conciliator (in case of conciliation) or Mediator (in case of mediation), intervenes in a dispute involving
two or

more conflicting parties for the purpose of reconciling their differences or persuading them into
adjusting or settling

their dispute. The Conciliator or Mediator normally does not make or render any decision, his role being
confined to

the functions afore-described.

3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.

Generally, there are no marked distinctions between conciliation and mediation. The reason is that in
both

cases, a neutral third party (called Conciliator or Mediator) is tasked to assist two or more opposing
parties in

finding appropriate resolution to a dispute.

In the NCMB, the hearing officer is called Conciliator-Mediator. There is no separate classification
between conciliators and mediators. When the Conciliator-Mediator performs his task, he does not
make any

distinction when he is acting as Conciliator or as Mediator.

In other jurisdictions, the principal distinction between conciliation and mediation lies on the extent

of the power and authority granted to the neutral third party.

In mediation, the Mediator normally facilitates a deliberation or discussion of the issues between the

parties. He may or may not offer any opinions on the strength and weaknesses of each party's positions
and

arguments. Thus, mediation may be classified into two, namely:

1. Facilitative Mediation where the Mediator does not make or offer any opinion; or

2. Evaluative Mediation where the Mediator offers an opinion which is not binding on the parties.

It bears stressing, however, that regardless of which of the 2 methods above is chosen, the Mediator is
not

empowered to impose his will on the parties.

In conciliation, the Conciliator is given more power and authority in that he may not only offer an
opinion

on the issues at hand but may actually make a binding opinion thereon provided the parties stipulate in
advance to

this effect. His opinion is based on the facts and the law involved in the controversy before him.

It may thus be observed that conciliation is more formal than mediation in the sense that the
Conciliator’s

opinion, unlike the Mediator’s, may be binding on the parties, although it may be merely temporary in
character.

3.

PREVENTIVE MEDIATION

1. PREVENTIVE MEDIATION AS A REMEDY.

1 Cebu Seamen’s Association, Inc. v. Hon. Pura Ferrer-Calleja, G.R. No. 83190. Aug. 4, 1992; See also
Philippine Land-Sea-Air Labor Union [PLASLU] v. CIR, G.R. Nos. L-5664 &

L-5698, Sept. 17, 1953, 93 Phil. 747.

2 G.R. No. 183335, Dec. 23, 2009.

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“Preventive mediation,” as a remedy, is not found in the Labor Code. But under the law which created
the

NCMB, it is expressly stated that one of its functions is to provide preventive mediation to disputing
parties.

The term “preventive mediation case” refers to the potential or brewing labor dispute which is the
subject

of a formal or informal request for conciliation and mediation assistance sought by either or both parties
in order to

remedy, contain or prevent its degeneration into a full blown dispute through amicable settlement.

2. HOW TO INITIATE PREVENTIVE MEDIATION.

Preventive mediation proceeding may be initiated in two (2) ways:

(1) By filing a notice or request of preventive mediation, as distinguished from a notice of strike/

lockout; or

(2) By conversion of the notice of strike/lockout into a preventive mediation case.

3. AUTHORITY TO CONVERT A NOTICE OF STRIKE/LOCKOUT INTO A PREVENTIVE MEDIATION

CASE.

The NCMB has the authority to convert a notice of strike/lockout filed by the union/employer into a

preventive mediation case under any of the following circumstances:

1. When the issues raised in the notice of strike/lockout are not strikeable in character.

2. When the party which filed the notice of strike/lockout voluntarily asks for the conversion.

3. When both parties to a labor dispute mutually agree to have it subjected to preventive mediation

proceeding.

Such authority is in pursuance of the NCMB’s duty to exert all efforts at mediation and conciliation to

enable the parties to settle their dispute amicably and in line with the State policy of favoring voluntary
modes of

settling labor disputes.


4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF LOCKOUT INTO A PREVENTIVE

MEDIATION CASE RESULTS IN ITS DISMISSAL.

Once the notice of strike is converted into a preventive mediation case, the notice is deemed dropped
from

the dockets as if no notice of strike has been filed. Since there is no more notice of strike to speak about,
any strike

subsequently staged by the union after the conversion is deemed not to have complied with the
requirements of a

valid strike and therefore illegal.

The same rule applies in the case of lockout by an employer.

5. RELEVANT CASES.

A case in point is Philippine Airlines, Inc. v. Secretary of Labor and Employment, 1 where the strike was

declared illegal for lack of a valid notice of strike in view of the NCMB’s conversion of said notice into a
preventive

mediation case.

It is clear, according to San Miguel Corporation v. NLRC,2 that the moment the NCMB orders the

preventive mediation in a strike case, the union thereupon loses the notice of strike it had filed.
Consequently, if it

still defiantly proceeds with the strike while mediation is on-going, the strike is illegal.

G.

DOLE REGIONAL DIRECTORS

1.

JURISDICTION

1. ROLE OF THE DOLE REGIONAL DIRECTORS.

The DOLE has a total of 16 Regional Offices nationwide each one of them is headed by a Regional
Director. The

DOLE Regional Directors are the duly “authorized representatives” of the DOLE Secretary referred to in
Article 128 of

the Labor Code which grants to them both visitorial and enforcement powers. They are in charge of the
administration

and enforcement of labor standards within their respective territorial jurisdictions.3

2. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.


The DOLE Regional Directors have original and exclusive jurisdiction over the following cases:

(a) Visitorial (inspection) cases under Article 37;4

1 G.R. No. 88210, Jan. 23, 1991, 193 SCRA 223.

2 G.R. No. 119293, June 10, 2003.

3 See Section 3, Rule I, Rules on the Disposition of Labor Standards Cases in the Regional Offices [Sept.
16, 1987]; Atilano v. De la Cruz, G.R. No. 82488, Feb. 28, 1990, 182 SCRA

886; San Miguel Corporation v. The Hon. CA, G.R. No. 146775, Jan. 30, 2002.

4 “Article 37. Visitorial Power. - The Secretary of Labor or his duly authorized representatives may, at
any time, inspect the premises, books of accounts and records of any person or

entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on
violation of any provisions of this Title.” (Referring to Tile I [Recruitment and Placement

of Workers], Book I, Labor Code).

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(b) Visitorial (inspection) and enforcement cases1 under Article 128,2 (either routine or initiated
through a

complaint);

(c) Visitorial cases under Article 289 [274],3 involving examination of books of accounts of independent

unions, local chapters/chartered locals and workers’ associations;

(d) Occupational safety and health violations;4

(e) Small money claims cases arising from labor standards violations in an amount not exceeding
₱5,000.00

and not accompanied with a claim for reinstatement under Article 129;

(f) Cases related to private recruitment and placement agencies (PRPAs) for local5 employment, such as:

1) Applications for license or denial thereof;6

2) Complaints for suspension or cancellation of license by reason of administrative offenses;7


3) Complaints for illegal recruitment;8 and

4) Petition for closure of agency;9

(g) Cases submitted for voluntary arbitration in their capacity as Ex-Officio Voluntary Arbitrators (EVAs)
under

Department Order No. 83-07, Series of 2007.10

(h) Union registration-related cases, such as:

1) Applications for union registration of independent unions, local chapters and workers’
associations;11

2) Petitions for denial of application for registration12 of said unions;13

3) Petitions for revocation or cancellation of registration14 of said unions;15

(i) Notice of merger, consolidation, affiliation and change of name of said unions and or petition for
denial

thereof;16

(j) CBA-related cases, such as:

1) Application for registration of single-enterprise17 CBAs or petition for deregistration thereof;18

2) Petition for denial of registration of single-enterprise CBAs or denial of petition for deregistration

thereof; and

1 Visitorial cases involve inspection of establishments to determine compliance with labor standards;
while enforcement cases involve issuance of compliance orders and writs of

execution.

2 Article 128 is entitled “Visitorial and Enforcement Power.”

3 Article 289 [274] is entitled “Visitorial Power.”

4 Section 6 of Rule VI [Health and Safety Cases] of the Rules on the Disposition of Labor Standards Cases
in the Regional Offices.

5 As distinguished from recruitment and placement of workers for overseas employment which falls
under the jurisdiction of the Philippine Overseas Employment Administration

(POEA).

6 Section 8, Department Order No. 141-14, Series of 2014 (Revised Rules and Regulations Governing
Recruitment and Placement for Local Employment), Nov. 20, 2014; See

previous provision on this matter in Section 36, Rule VII, Rules And Regulations Governing Private
Recruitment and Placement Agency for Local Employment, June 5, 1997. See

also National Federation of Labor v. Laguesma, G.R. No. 123426, March 10, 1999.
7 Section 54, in relation to Section 51, Department Order No. 141-14, Series of 2014, Ibid.

8 Section 45, Department Order No. 141-14, Series of 2014, Ibid.

9 Section 47, Department Order No. 141-14, Series of 2014, Ibid.

10 Issued by former DOLE Secretary, now Associate Justice of the Supreme Court, Arturo D. Brion on
June 8, 2007.

11 Section 3, Rule II of the Med-Arbitration Rules states: “SEC. 3. Jurisdiction of the Regional Director.-
The Regional Director shall exercise original and exclusive jurisdiction over

application for union registration, petitions for cancellation of union registration and complaints for
examination of unions books of accounts.” See also Section 1, Rule II,

Rules of Procedure on Mediation-Arbitration.

12 See Article 243 [236] of the Labor Code which provides: “Art. 243 [236]. Denial of registration;
appeal. The decision of the Labor Relations Division in the regional office denying

registration may be appealed by the applicant union to the Bureau within ten (10) days from receipt of
notice thereof.”

13 Referring to independent unions, local chapters and workers’ associations, as distinguished from
federations, national unions, industry unions, trade union centers and their local

chapters/chartered locals, affiliates and member organizations whose application for registration as well
as denial or cancellation or revocation of registration is cognizable by the BLR

Director in his original and exclusive jurisdiction [infra].

14 See Article 245 [238] of the Labor Code which provides: “Art. 245 [238]. Cancellation of registration;
appeal. The certificate of registration of any legitimate labor organization, whether

national or local, shall be cancelled by the Bureau if it has reason to believe, after due hearing, that the
said labor organization no longer meets one or more of the requirements

herein prescribed.”

15 Section 3, Rule II of the Med-Arbitration Rules, supra; See also Section 4, Rule XI, Book V of the Rules
to Implement the Labor Code, as amended by Department Order No. 40-

F-03, Series of 2008 [October 30, 2008].

16 Section 5, Rule IV, Book V, Rules to Implement the Labor Code, as amended by Department Order No.
40-03, Series of 2003, [Feb. 17, 2003] and as further amended by

Department Order No. 40-D-05, Series of 2005, Sept. 13, 2005.

17 As distinguished from cases involving multi-empoyer CBAs which fall under the original jurisdiction of
the BLR Director.
18 Section 4 [formerly Section 5], Rule XI, Book V, Rules to Implement the Labor Code, as amended by
Department Order No. 40-03, Series of 2003, [Feb. 17, 2003], and as renumbered

by Department Order No. 40-F-03, Series of 2008 [Oct. 30, 2008].

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(k) Request for SEBA certification when made in an unorganized establishment with only one (1)

legitimate union.1

I.

LABOR STANDARDS ENFORCEMENT CASES

1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS - THE ESTABLISHMENT AND

NOT THE EMPLOYEES THEREIN.

The subject of the visitorial and enforcement powers granted to the DOLE Secretary or his duly
authorized

representatives under Article 128 is the establishment which is under inspection and not the employees
thereof.

Consequently, any awards granted are not confined to employees who signed the complaint inspection
but

are equally applicable to all those who were employed by the establishment concerned at the time
the

complaint was filed, even if they were not signatories thereto. The reason is that the visitorial and

enforcement powers are relevant to, and may be exercised over, establishments, not over individual
employees

thereof, to determine compliance by such establishments with labor standards laws. Necessarily, in
case of an

award from such violation by the establishment, all its existing employees should be benefited
thereby. It must

be stressed, however, that such award should not apply to those who resigned, retired or ceased to be
employees at
the time the complaint was filed.

2. ORIGINAL JURISDICTION.

The DOLE Regional Directors exercise original jurisdiction over the following:

(a) Cases involving inspection of establishments to determine compliance with labor standards (Visitorial

Power); and

(b) Cases involving issuance of compliance orders and writs of execution (Enforcement Power).

3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(a).

Pursuant to their visitorial power under Article 128(a), the DOLE Regional Directors shall have:

(a) access to employer’s records and premises at any time of the day or night, whenever work is being

undertaken therein; and

(b) the right:

(1) to copy from said records;

(2) to question any employee and investigate any fact, condition or matter which may be necessary to

determine violations or which may aid in the enforcement of the Labor Code and of any labor law,

wage order, or rules and regulations issued pursuant thereto.

4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER ARTICLE 128(b).

The statutory basis of the authority of the DOLE Regional Directors to administer and enforce labor

standards is found in Article 128(b) of the Labor Code, as amended.

Pursuant thereto, the DOLE Regional Director, in cases where the employer-employee relationship still

exists, shall have the power:

a. to issue compliance orders to give effect to the labor standards provisions of the Labor Code and

other labor legislations based on the findings of labor employment and enforcement officers or

industrial safety engineers made in the course of inspection.

b. to issue writs of execution to the appropriate authority for the enforcement of their orders, except in

cases where the employer contests the findings of the labor employment and enforcement officer and

raises issues supported by documentary proofs which were not considered in the course of inspection,

in which case, the contested case shall fall under the jurisdiction of the Labor Arbiter to whom it

should be endorsed by the Regional Director.

c. to order stoppage of work or suspension of operations of any unit or department of an establishment


when non-compliance with the law or implementing rules and regulations poses grave and imminent

danger to the health and safety of workers in the workplace. Within 24 hours, a hearing shall be

conducted to determine whether an order for the stoppage of work or suspension of operations shall be

lifted or not. In case the violation is attributable to the fault of the employer, he shall pay the

employees concerned their salaries or wages during the period of such stoppage of work or suspension

of operation.

d. to require employers, by appropriate regulations, to keep and maintain such employment records as

may be necessary in aid of his visitorial and enforcement powers under the Labor Code.

II.

SMALL MONEY CLAIMS CASES

1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.

1 Under this situation, the DOLE Regional Director, before whom the Request for SEBA Certification is
filed, should refer the Request for SEBA Certification to the Mediator-Arbiter for

the determination of the propriety of conducting a certification election, in which case, the Mediator-
Arbiter now has the jurisdiction to decide the certification election issue. (Section 6,

Rule VII, in relation to Rules VIII and IX, Department Order No. 40-I-15, Series of 2015 [September 07,
2015]). Note must be made that when the Request for SEBA Certification is

made in an unorganized establishment with more than one (1) legitimate labor organization, the Med-
Arbiter takes over from the DOLE Regional Director in the matter of hearing and

resolving the issue of certification election.

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The DOLE Regional Director has original jurisdiction over small money claims cases arising from labor

standards violations in the amount not exceeding P5,000.00 and not accompanied with a claim for
reinstatement

under Article 129 of the Labor Code.


Article 129 contemplates the recovery of wages and other monetary claims and benefits, including legal

interest, owing to an employee or domestic worker or kasambahay, arising from employer-employee


relations

provided the claim does not exceed P5,000.00.

2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION BY DOLE REGIONAL DIRECTORS

UNDER ARTICLE 129.

The following requisites must all concur, to wit:

(1) The claim is presented by an employee or domestic worker or kasambahay;

(2) The claimant, no longer being employed, does not seek reinstatement; and

(3) The aggregate money claim of the employee or domestic worker or kasambahay does not exceed

P5,000.00.

In the absence of any of the aforesaid three (3) requisites, the Labor Arbiters have original and
exclusive

jurisdiction over all claims arising from employer-employee relations, other than claims for employees’

compensation, social security, PhilHealth and maternity benefits.

III.

CASES SUBMITTED TO REGIONAL DIRECTORS AND ASSISTANT REGIONAL

DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR CAPACITY AS EX-OFFICIO

VOLUNTARY ARBITRATORS (EVAs)

1. JURISDICTION.

As EVAs, the DOLE Regional Directors and their Assistants have jurisdiction over the following cases:

(a) All grievances arising from the interpretation or implementation of the CBA;

(b) All grievances arising from the interpretation or enforcement of company personnel policies which

remain unresolved after exhaustion of the grievance procedure;

(c) Cases referred to them by the DOLE Secretary under the DOLE’s Administrative Intervention for

Dispute Avoidance (AIDA) initiative (provided under DOLE Circular No. 1, Series of 2006); and

(d) Upon agreement of the parties, any other labor dispute may be submitted to the EVAs for voluntary

arbitration.

H.
DOLE SECRETARY

1. POWERS OF THE DOLE SECRETARY.

The DOLE Secretary, being the head of the Department of Labor and Employment, is possessed of a

number of powers, some of which are mentioned in the syllabus, to wit:

1. Visitorial and enforcement powers;

2. Power to suspend the effects of termination;

3. Assumption of jurisdiction;

4. Appellate jurisdiction; and

5. Voluntary arbitration powers.

2. CASES FALLING UNDER THE DOLE SECRETARY’S ORIGINAL JURISDICTION.

The DOLE Secretary has original jurisdiction over the following cases:

(1) Petition to assume jurisdiction over labor disputes affecting industries indispensable to the national
interest

(national interest cases);1

(2) Petition to certify national interest cases to the NLRC for compulsory arbitration;2

(3) Petition to suspend effects of termination;3

(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;4

(5) Voluntary arbitration cases;5 and

(6) Contempt cases.6

1.

1 See paragraph (g) of Article 278 [263], Labor Code.

2 Id.

3 See paragraph (b) of Article 292 [277], Labor Code.

4 This is a new form of dispute settlement introduced by the DOLE Secretary under DOLE Circular No. 1,
Series of 2006, issued on August 11, 2006 by former DOLE Secretary Arturo

D. Brion, later a distinguished member of the Highest Court. This was issuedin line with the objectives of
R.A. No. 9285, otherwise known as the “Alternative Dispute Resolution Act of

2004” [approved on April 2, 2004], Executive Order No. 523 dated April 07, 2006 and the mandate of the
DOLE to promote industrial peace.

5 As mandated under DOLE Circular No. 1, Series of 2006, Ibid.


6 As provided under Article 231 [225] which states: Article 231 [225]. Contempt powers of the Secretary
of Labor. In the exercise of his powers under this Code, the Secretary of Labor

may hold any person in direct or indirect contempt and impose the appropriate penalties therefor.

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VISITORIAL AND ENFORCEMENT POWERS

1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.

Article 128 of the Labor Code, as amended, basically enunciates the three (3) kinds of power which the

DOLE Secretary and/or the Regional Directors, his duly authorized representatives, may exercise in
connection with

the administration and enforcement of the labor standards provisions of the Labor Code and of any
labor law, wage

order or rules and regulations issued pursuant thereto.

The three (3) kinds of power are as follows:

1) Visitorial power:

2) Enforcement power: and

3) Appellate power or power of review.

2. WHO EXERCISE THE POWERS.

Nos. 1 and 2 above are exercised under the original jurisdiction of the DOLE Regional Directors.

This has been earlier discussed under the separate topic of “VII. PROCEDURE AND JURISDICTION, E.

DOLE Regional Directors, 1. Jurisdiction”, supra. Hence, the same will no longer be touched under the
instant topical

discussion.

The appellate power in No. 3 above may only be exercised by the DOLE Secretary in respect to any

decision, order or award issued by the DOLE Regional Directors.

3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.


The visitorial and enforcement powers granted to the DOLE Secretary and the DOLE Regional Directors

who are his duly authorized representatives, are quasi-judicial in nature.

4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL JURISDICTION TO EXERCISE THE

VISITORIAL AND ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.

In the instances contemplated under Articles 37, 128 and 274, it is the DOLE Regional Directors, the

DOLE Secretary’s duly authorized representatives commonly referred to in these three (3) articles, who
have the

original jurisdiction to exercise the visitorial power granted therein.

5. THE ROLE OF THE DOLE SECRETARY IN THE EXERCISE OF VISITORIAL AND ENFORCEMENT

POWERS IS APPELLATE IN NATURE.

It is clear from the above disquisition that the original jurisdiction over the exercise of the visitorial and

enforcement powers belongs to the DOLE Regional Directors, as the duly authorized representatives of
the DOLE

Secretary.

The role of the DOLE Secretary is confined to the exercise of his appellate jurisdiction over the decisions,

orders and awards of the DOLE Regional Directors in cases brought before them for adjudication under
Articles 128

and 274.

2.

POWER TO SUSPEND EFFECTS OF TERMINATION

1. GROUNDS.

The DOLE Secretary may suspend the effects of termination pending resolution of the dispute in the
event

of a prima facie finding by the appropriate official of the DOLE before whom the dispute is pending that:

1. the termination may cause a serious labor dispute; and/or

2. the termination is in implementation of a mass lay-off.

2. RATIONALE FOR SUSPENDING THE EFFECTS OF TERMINATION.

The obvious purpose behind this rule is to bring the parties back to the status quo ante litem, that is,
their

state of relationship prior to the termination. In this way, the workers will be litigating the issue of the
validity or
legality of their termination on more or less equal footing with the employer since they will be
immediately

reinstated and accordingly not be deprived of their wages while the litigation is on-going.

3. REINSTATEMENT PENDING RESOLUTION OF THE TERMINATION DISPUTE.

Suspension of the effects of termination will necessarily result in the immediate reinstatement of the

terminated employees. An order of reinstatement pending resolution of the case may thus be issued by
the DOLE

Secretary pursuant to this power.

4. DISTINGUISHED FROM DOLE SECRETARY’S POWER OF ASSUMPTION OR CERTIFICATION IN

NATIONAL INTEREST CASES.

a. Different power of the DOLE Secretary.

This power of the DOLE Secretary granted under Article 277(b) should be distinguished from his power
to

assume or certify labor disputes involving industries indispensable to the national interest under Article
263(g). The

following distinctions may be cited:

First, the exercise of the power to suspend the effects of termination involves only the issue of
termination

of employment which may cause a serious labor dispute or is in implementation of a mass lay-off; while
the power

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to assume or certify labor disputes is applicable to all labor disputes, irrespective of the grounds
therefor, provided

such labor disputes will cause or likely to cause strikes or lockouts in industries indispensable to the
national

interest.

Second, the former requires the conduct of preliminary determination of the existence of prima facie
evidence that the termination may cause a serious labor dispute or is in implementation of a mass lay-
off to be

conducted by the appropriate official of the DOLE before whom the termination dispute is pending;
while the latter

does not require such preliminary prima facie determination. In fact, prior notice and hearing are not
required before

the DOLE Secretary may issue an assumption or certification order.

Third, the “serious labor dispute” contemplated under the former may or may not involve a strike or

lockout; while the labor dispute referred to in the latter will cause or likely to cause a strike or lockout.

Fourth, the former may be exercised in cases of termination of employment for as long as any of the
two

(2) grounds mentioned in Article 277(b) exists, irrespective of the nature of the business of the
employer; while the

latter may only be exercised in industries indispensable to the national interest.

Fifth, the remedy under the former is immediate reinstatement pending resolution of the termination
case;

while in the latter, the remedy is the automatic return to work of the strikers or locked-out employees, if
the strike or

lock-out is on-going at the time of the issuance of the assumption/certification order or the enjoining of
the strike or

lockout, if one has not taken place, pending the resolution of the issues raised in the notice of strike or
lockout.

3.

ASSUMPTION OF JURISDICTION

The DOLE Secretary is granted under Article 263(g) of the Labor Code, the extraordinary police power of

assuming jurisdiction over a labor dispute which, in his opinion, will cause or likely to cause a strike or
lockout in an

industry indispensable to the national interest, or the so-called “national interest” cases. Alternatively,
he may

certify the labor dispute to the NLRC for compulsory arbitration.

4.

APPELLATE JURISDICTION

I.
VARIOUS APPEALS TO THE DOLE SECRETARY

UNDER THE LABOR CODE AND APPLICABLE RULES

1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.

Appeals to the DOLE Secretary may originate from any of the following offices:

(1) DOLE Regional Directors;

(2) Med-Arbiters;

(3) Director of the Bureau of Labor Relations (BLR); and

(4) Philippine Overseas Employment Administration (POEA).

2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.

The following decisions, awards or orders are not appealable to the Office of the DOLE Secretary:

(1) Those rendered by Labor Arbiters that are appealable to the Commission (NLRC) which has exclusive

appellate jurisdiction thereover;

(2) Those rendered by the Commission (NLRC) since they can be elevated directly to the CA by way of a

Rule 65 certiorari petition;

(3) Those rendered by the BLR Director in the exercise of his appellate jurisdiction since they can be

brought directly to the CA under Rule 65 certiorari petition;

(4) Those rendered by DOLE Regional Directors under Article 129 of the Labor Code since they are

appealable to the NLRC;

(5) Those issued by DOLE Regional Directors in their capacity as Ex-Officio Voluntary Arbitrators (EVAs)

since they can be brought directly to the CA under Rule 43 of the Rules of Court; and

(6) Those rendered by Voluntary Arbitrators which are appealable directly to the CA under Rule 43 of
the

Rules of Court.

II.

APPEALS FROM DOLE REGIONAL DIRECTORS

1. CASES APPEALABLE TO DOLE SECRETARY.

Not all decisions, awards or orders rendered by the DOLE Regional Directors are appealable to the DOLE

Secretary. Only those issued in the following cases are so appealable:

(a) Labor standards enforcement cases under Article 128;


(b) Occupational safety and health violations; and

(c) Complaints against private recruitment and placement agencies (PRPAs) for local employment.

2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.

As earlier pointed out, the following cases decided by the DOLE Regional Directors are not appealable to

the DOLE Secretary but to some other agencies/tribunals indicated below:

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(a) Decisions in small money claims cases arising from labor standards violations in the amount not

exceeding P5,000.00 and not accompanied with a claim for reinstatement under Article 129 are

appealable to the NLRC;

(b) Decisions in cases submitted to DOLE Regional Directors for voluntary arbitration in their capacity as

Ex-Officio Voluntary Arbitrators (EVAs) under Department Order No. 83-07, Series of 2007 may be

elevated directly to the Court of Appeals by way of a Rule 43 petition. This is so because the DOLE

Regional Directors, in so deciding, are acting as Voluntary Arbitrators; hence, what should apply are

the rules on appeal applicable to voluntary arbitration.

III.

APPEALS FROM DECISIONS OF

MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR

(NOTE: See discussion above in connection with

the jurisdiction of the Bureau of Labor Relations [BLR])

V.

APPEALS FROM DECISIONS OF POEA

1. CASES APPEALABLE TO THE DOLE SECRETARY.

The decisions in the following cases rendered by the Philippine Overseas Employment Administration

(POEA) in its original jurisdiction are appealable to the DOLE Secretary:


(a) Recruitment violations and other related cases. - All cases which are administrative in character,

involving or arising out of violation of rules and regulations relating to licensing and registration of

recruitment and employment agencies or entities, including refund of fees collected from workers and

violation of the conditions for the issuance of license to recruit workers.

(b) Disciplinary action cases and other special cases which are administrative in character, involving

employers, principals, contracting partners and Filipino migrant workers.

It must be noted that the POEA ceased to have any jurisdiction over money claims of OFWs, or those

arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers for

overseas deployment including claims for actual, moral, exemplary and other forms of damages. The
jurisdiction

over these claims was transferred to the Labor Arbiters of the NLRC by virtue of Section 10 of R.A. No.
8042, as

amended. Hence, appeals therefrom may be instituted to the Commission (NLRC).

5.

DOLE SECRETARY’S VOLUNTARY ARBITRATION POWERS

1. AIDA.

a. New rule on voluntary settlement of cases by the DOLE Secretary.

A new form of dispute settlement by the DOLE Secretary was introduced by DOLE Circular No. 1, Series

of 2006. Called Administrative Intervention for Dispute Avoidance (AIDA), this is a new administrative

procedure for the voluntary settlement of labor disputes in line with the objectives of R.A. No. 9285,
Executive

Order No. 523 and the mandate of the DOLE to promote industrial peace.

b. Nature of administrative intervention by DOLE Secretary.

This recourse is separate from the established dispute resolution modes of mediation, conciliation and

arbitration under the Labor Code, and is an alternative to other voluntary modes of dispute resolution
such as the

voluntary submission of a dispute to the Regional Director for mediation, to the NCMB for preventive
mediation, or

to the intervention of a regional or local tripartite peace council for the same purpose.

c. Parties who may request for DOLE Secretary’s intervention.


Either or both the employer and the certified collective bargaining agent (or the representative of the

employees where there is no certified bargaining agent) may voluntarily bring to the Office of the DOLE
Secretary,

through a Request for Intervention, any potential or ongoing dispute defined below.

d. Potential or on-going dispute.

A potential or on-going dispute refers to:

(a) a live and active dispute;

(b) that may lead to a strike or lockout or to massive labor unrest; and

(c) is not the subject of any complaint or notice of strike or lockout at the time a Request for
Intervention

is made.

2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.

If the intervention through AIDA fails, either or both parties may avail themselves of the remedies
provided

under the Labor Code. Alternatively, the parties may submit their dispute to the Office of the DOLE
Secretary for

voluntary arbitration. Such voluntary arbitration should be limited to the issues defined in the parties'
submission to

voluntary arbitration agreement and should be decided on the basis of the parties' position papers and
submitted

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evidence. The Office of the DOLE Secretary is mandated to resolve the dispute within sixty (60) days
from the

parties' submission of the dispute for resolution.

3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF VOLUNTARY ARBITRATOR ONCE HE

ASSUMES JURISDICTION OVER A LABOR DISPUTE?


In the 2014 case of Philtranco Service Enterprises, Inc. v. Philtranco Workers Union-Association of

Genuine Labor Organizations (PWU-AGLO), this poser was answered in the negative. 1 A notice of strike
was

filed by respondent union which, after failure of conciliation and mediation by the NCMB, was referred
by the

Conciliator-Mediator to the Office of the DOLE Secretary who thereby assumed jurisdiction over the
labor dispute.

The case was resolved by the Acting DOLE Secretary in favor of respondent union. A motion for
reconsideration

was filed by petitioner company. The DOLE Secretary, however, declined to rule on the motion citing a
DOLE

regulation, applicable to voluntary arbitration, which provided that the Voluntary Arbitrators’ decisions,
orders,

resolutions or awards shall not be the subject of motions for reconsideration. The DOLE Secretary took
the position

that when he assumed jurisdiction over the labor dispute, he was acting as a Voluntary Arbitrator.
Petitioner

subsequently filed a Rule 65 certiorari petition with the CA. The CA, however, dismissed petitioner
company’s Rule

65 certiorari petition on the ground, among others, that the decision of the DOLE Secretary, having been
rendered

by him in his capacity as Voluntary Arbitrator, is not subject to a Rule 65 certiorari petition but to a Rule
43 petition

for review which properly covers decisions of Voluntary Arbitrators.

Before the Supreme Court, petitioner asserted that, contrary to the CA’s ruling, the case is not a simple

voluntary arbitration case. The character of the case, which involves an impending strike by petitioner’s
employees;

the nature of petitioner’s business as a public transportation company, which is imbued with public
interest; the

merits of its case; and the assumption of jurisdiction by the DOLE Secretary – all these circumstances
removed the

case from the coverage of Article 262, and instead placed it under Article 263, of the Labor Code. For its
part,
respondent union argued that the DOLE Secretary decided the assumed case in his capacity as Voluntary
Arbitrator;

thus, his decision, being that of a Voluntary Arbitrator, is only assailable via a petition for review under
Rule 43.

The Supreme Court, however, pronounced that:

“It cannot be said that in taking cognizance of NCMB-NCR CASE No. NS-02-028-07, the Secretary of
Labor

did so in a limited capacity, i.e., as a voluntary arbitrator. The fact is undeniable that by referring the
case to the

Secretary of Labor, Conciliator-Mediator Aglibut conceded that the case fell within the coverage of
Article 263 of

the Labor Code; the impending strike in Philtranco, a public transportation company whose business is
imbued

with public interest, required that the Secretary of Labor assume jurisdiction over the case, which he in
fact did.

By assuming jurisdiction over the case, the provisions of Article 263 became applicable, any
representation to the

contrary or that he is deciding the case in his capacity as a voluntary arbitrator notwithstanding.”

Consequently, the Supreme Court reversed and set aside the CA ruling and reinstated the case and
directed

the CA “to resolve the same with deliberate dispatch.”

I.

GRIEVANCE MACHINERY

AND VOLUNTARY ARBITRATION

(NOTE must be made that the 2017 Syllabus merely requires a discussion of the jurisdiction of the

Voluntary Arbitrator and the remedies available before him. However, in the view of the author,

there can be no meaningful discussion of these subject matters without touching the subject of

“Grievance Machinery” since the main bulk of cases cognizable by Voluntary Arbitrators emanate

from and consist of unresolved grievances that were initially processed and adjudicated through the

Grievance Machinery. Hence, a discussion of Grievance Machinery is of extreme necessity).

1.

SUBJECT MATTER OF GRIEVANCE


1. GRIEVANCE OR GRIEVABLE ISSUE.

A “grievance” or “grievable issue” is any question raised by either the employer or the union regarding

any of the following issues or controversies:

1. The interpretation or application of the CBA;

2. The interpretation or enforcement of company personnel policies; or

3. Violation of any provisions of the CBA or company personnel policies.

2. VALIDITY AND BINDING EFFECT OF DECISIONS OF GRIEVANCE COMMITTEE.

A member of the bargaining union who brought his grievable issue for resolution by the Grievance

Committee is bound by whatever disposition the latter may render thereon.

ELEVATION OF GRIEVANCE TO VOLUNTARY ARBITRATION

1. UNRESOLVED GRIEVANCES.

All grievances submitted to the grievance machinery which are not settled within seven (7) calendar
days

from the date of their submission for resolution should automatically be referred to voluntary
arbitration prescribed

in the CBA.

1 G.R. No. 180962, Feb. 26, 2014. Although this case involves a decision of the DOLE Secretary, the
principle enunciated herein equally applies to the NLRC.

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The various internal procedural steps or stages of resolving grievances under the grievance machinery in
a

CBA should be fully exhausted before resort to voluntary arbitration may be made. The 7-calendar day
period is

usually reckoned from the date of their submission for resolution to the last step of the internal
grievance machinery.
Simply stated, only after exhausting all the internal procedures and only after the lapse of this period
that unsettled

or unadjusted grievances should automatically be referred to voluntary arbitration enunciated in the


CBA.

2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN DISREGARD OF VOLUNTARY

ARBITRATION AFTER DECISION IS RENDERED BY GRIEVANCE COMMITTEE.

Before a party is allowed to seek the intervention of the court, it is a precondition that he should have

availed of all the means of administrative processes afforded him. Hence, if a remedy within the
administrative

machinery can still be resorted to by giving the administrative officer concerned every opportunity to
decide on a

matter that comes within his jurisdiction, then such remedy should be exhausted first before the court’s
judicial

power can be sought. The premature invocation of the court’s judicial intervention is fatal to one’s cause
of action.”

Indeed, the underlying principle of the rule on exhaustion of administrative remedies rests on the
presumption

that when the administrative body, or grievance machinery, is afforded a chance to pass upon the
matter, it will

decide the same correctly.

2.

VOLUNTARY ARBITRATOR

1. VOLUNTARY ARBITRATION.

“Voluntary arbitration” refers to the mode of settling labor-management disputes in which the parties
select

a competent, trained and impartial third person who is tasked to decide on the merits of the case and
whose decision

is final and executory. It is a third-party settlement of a labor dispute involving the mutual consent by
the

representatives of the employer and the labor union involved in a labor dispute to submit their case for
arbitration.

2. VOLUNTARY ARBITRATOR.

a. Who is a Voluntary Arbitrator?


A “Voluntary Arbitrator” refers to:

(1) any person who has been accredited by the National Conciliation and Mediation Board (“NCMB” or

“Board”) as such; or

(2) any person named or designated in the CBA by the parties as their Voluntary Arbitrator; or

(3) one chosen by the parties with or without the assistance of the NCMB, pursuant to a selection
procedure

agreed upon in the CBA; or

(4) one appointed by the NCMB in case either of the parties to the CBA refuses to submit to voluntary

arbitration.

This term includes a panel of Voluntary Arbitrators.

3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL CAPACITY.

Although not a part of a government unit or a personnel of the Department of Labor and Employment, a

Voluntary Arbitrator, by the nature of his functions, acts in a quasi-judicial capacity. He is a means by
which

government acts, or by which a certain government act or function is performed. He performs a state
function

pursuant to a governmental power delegated to him under the Labor Code. The landmark case of Luzon

Development Bank v. Association of Luzon Development Bank Employees, clearly 1 declared that a
Voluntary

Arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial agency.

2.1.

JURISDICTION

1. ORIGINAL AND EXCLUSIVE JURISDICTION.

a. In general.

The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have exclusive and original jurisdiction

over the following cases:

(1) Unresolved grievances arising from the interpretation or implementation of the collective bargaining

agreement (CBA).

(2) Unresolved grievances arising from the interpretation or enforcement of company personnel policies.

(3) Violations of the CBA which are not gross in character.


(4) Other labor disputes, including unfair labor practices and bargaining deadlocks, upon agreement of
the

parties.

(5) National interest cases.

(6) Wage distortion issues arising from the application of any wage orders in organized establishments.

(7) Unresolved grievances arising from the interpretation and implementation of the Productivity
Incentive

Programs under R.A. No. 6971.

2.1.1.

1 G.R. No. 120319, Oct. 6, 1995.

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JURISDICTION OVER OTHER LABOR DISPUTES

Under Article 262 of the Labor Code, upon agreement of the parties, the Voluntary Arbitrator or panel of

Voluntary Arbitrators may also hear and decide all other labor disputes, including unfair labor practices
and

bargaining deadlocks. For this purpose, before or at any stage of the compulsory arbitration process,
parties to a

labor dispute may agree to submit their case to voluntary arbitration.

2.1.2.

JURISDICTION OVER NATIONAL INTEREST CASES

Article 263(g) of the Labor Code which involves the DOLE Secretary’s power of assumption of jurisdiction

or certification to the NLRC of labor disputes affecting industries indispensable to the national interest,
also

provides that “[b]efore or at any stage of the compulsory arbitration process, the parties may opt to
submit

their dispute to voluntary arbitration.”


This means that even if the case has already been assumed by the DOLE Secretary or certified to the
NLRC

for compulsory arbitration, or even during its pendency therewith, the parties thereto may still
withdraw the case

from the DOLE Secretary or NLRC, as the case may be, and submit it to a Voluntary Arbitrator for
voluntary

arbitration purposes.

2.1.3.

JURISDICTION OVER WAGE DISTORTION CASES

▪ Jurisdiction over wage distortion cases depends on whether the establishment is organized or

unorganized.

In organized establishments, the employer and the union are required to negotiate to correct the wage

distortion. Any dispute arising from such wage distortion should be resolved through the grievance
procedure under

the CBA and if it remains unresolved, through voluntary arbitration.

In unorganized establishments, where there are no CBAs or recognized or certified collective bargaining

unions, the jurisdiction is with the Labor Arbiter.

SOME PRINCIPLES.

1) Cases cognizable by Voluntary Arbitrators in their original jurisdiction but ERRONEOUSLY filed

with Labor Arbiters, DOLE Regional Offices or NCMB should be disposed of by referring them to

the Voluntary Arbitrators or panel of Voluntary Arbitrators mutually chosen by the parties.

2) Cases cognizable by Voluntary Arbitrators but filed with regular courts should be dismissed.

3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE DOES NOT INVOLVE THE

PARTIES TO A CBA – THE EMPLOYER AND THE BARGAINING UNION - IT IS NOT

SUBJECT TO VOLUNTARY ARBITRATION. While individual or group of employees, without the

participation of the union, are granted the right to bring grievance directly to the employer, they

cannot submit the same grievance, if unresolved by the employer, for voluntary arbitration without

the union’s approval and participation. The reason is that it is the union which is the party to the

CBA, and not the individual or group of employees. - This rule was lately affirmed in the 2009 case of

Tabigue v. International Copra Export Corporation. Pursuant to Article 260 of the Labor Code, the
parties to a CBA shall name or designate their respective representatives to the grievance machinery
and if

the grievance is unsettled in that level, it shall automatically be referred to the voluntary arbitrators

designated in advance by parties to a CBA. Consequently only disputes involving the union and the

company shall be referred to the grievance machinery or voluntary arbitrators.”

3.

REMEDIES

1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY VOLUNTARY ARBITRATORS.

Besides the procedural remedies discussed above, the Voluntary Arbitrator or panel of Voluntary
Arbitrators

may grant the same reliefs and remedies granted by Labor Arbiters under Article 279 of the Labor Code,
such as:

(1) In illegal dismissal cases:

(a) Actual reinstatement;

(b) Separation pay in lieu of reinstatement, in case reinstatement becomes impossible, non-feasible or

impractical;

(c) Full backwages;

(d) Moral and exemplary damages; and

(e) Attorney’s fees.

(2)Monetary awards in monetary claims cases in which case, the decision should specify the amount

granted and the formula used in the computation thereof.

J.

PRESCRIPTION OF ACTIONS

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1. MONEY CLAIMS CASES.


a. Prescriptive period is three (3) years under Article 291 of the Labor Code. - The prescriptive period

of all money claims and benefits arising from employer-employee relations is 3 years from the time the

cause of action accrued; otherwise, they shall be forever barred.

b. All other money claims of workers prescribe in 3 years. - Article 291 contemplates all money claims

arising from employer-employee relationship, including:

1. Money claims arising from the CBA.

2. Incremental proceeds from tuition increases.

3. Money claims of Overseas Filipino Workers (OFWs).

Note must be made that in the 2010 case of Southeastern Shipping v. Navarra, Jr., 1 the 1-year
prescriptive

period in Section 28 of POEA-SEC was declared null and void. The reason is that Article 291 of the Labor
Code

is the law governing the prescription of money claims of seafarers, a class of overseas contract workers.
This law

prevails over said Section 28.

2. ILLEGAL DISMISSAL CASES.

a. Legal basis is not Article 291 of the Labor Code but Article 1146 of the Civil Code. - The 3-year

prescriptive period in Article 291 solely applies to money claims but not to illegal dismissal cases which

are not in the nature of money claims. The prescriptive period of illegal dismissal cases is 4 years under

Article 1146 of the Civil Code.

3. UNFAIR LABOR PRACTICE (ULP) CASES.

a. Prescriptive period of ULP cases is 1 year (Article 290, Labor Code). - The prescriptive period for all

complaints involving unfair labor practices is one (1) year from the time the acts complained of were

committed; otherwise, they shall be forever barred.

b. Pre-requisite for prosecution of criminal cases. - Before a criminal action for ULP may be filed, it is a

condition sine qua non that a final judgment finding that an unfair labor practice act was committed by

the respondent should first be secured or obtained in the labor case initiated before the Labor Arbiter or

the Voluntary Arbitrator, as the case may be. Final judgment is one that finally disposes of the action or

proceeding. For instance, if the remedy of appeal is available but no appeal is made, then, the judgment

is deemed final and executory. If an appeal is made, then the final judgment rendered by the last
tribunal, say the Supreme Court, to which the case was elevated should be the reckoning factor.

c. Interruption of prescriptive period of offenses. - As far as ULP cases are concerned, the running of

the one (1) year prescriptive period is interrupted during the pendency of the labor proceeding.

d. Evidentiary value of the final judgment in the labor case. - In ULP cases, the final judgment in the

labor case cannot be presented as evidence of the facts proven therein or as evidence of the guilt of the

respondent therein. Its evidentiary or probative value is confined merely in proving the fact of

compliance with the condition sine qua non prescribed by law, i.e., that a final judgment has been

secured in the labor proceeding finding that an unfair labor practice act was in fact committed by the

respondent.

4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS IMPLEMENTING RULES AND

REGULATIONS (IRR).

a. Prescriptive period is 3 years (Article 290, Labor Code). - The prescriptive period of all criminal

offenses penalized under the Labor Code and the Rules to Implement the Labor Code is three (3) years

from the time of commission thereof.

b. Consequence of non-compliance with prescriptive period under Article 290. - Failure to initiate or

file the criminal action or complaint within the prescriptive period shall forever bar such action.

c. Illegal dismissal is not an “offense” under Article 290. - The act of the employer in dismissing an

employee without cause, although a violation of the Labor Code and its implementing rules, does not

amount to an “offense” as this term is understood and contemplated under Article 290.

5. ILLEGAL RECRUITMENT CASES.

a. Simple illegal recruitment cases. – The prescriptive period is five (5) years.

b. Illegal recruitment cases involving economic sabotage. – The prescriptive period is twenty (20)
years.

------------oOo------------

10/25/16

1 G.R. No. 167678, June 22, 2010.

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