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SELECTED QUESTIONS in LABOR LAW

LABOR STANDARDS

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

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

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

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

3. Is a corporation, of which seventy percent (70%) of the authorized and voting capital is

owned and controlled by Filipino citizens, allowed to engage in the recruitment and placement of workers, locally or overseas? Explain briefly.

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

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

prior publication?

NO. The POEA MEMO Circular no. 2, series of 1983 was void. Where the administrative circular in question is one of those issuances which should be published for its effectivity, since its purpose is to enforce and implement an existing law pursuant to a valid delegation. Considering that POEA Administrative Circular No. 2, Series of 1983 has not as yet been published or filed with the National Administrative Register, the same is ineffective and ma not be enforced (Philsa International Placement and Services Corp. vs. Secretary of DOLE, G.R. No. 103144, April 4,

2001).

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

NO. the law is clear on the matter. Private respondents further argue that they cannot be held liable by petitioner because no employment contract between him and Step-Up Agency had been approved by the POEA. They also claim that the absence of a Special Power of Attorney and an Affidavit of Responsibility, as required under Sections 1 and 2, Rule 1, Book III of the POEA Rules and Regulations only proves that they did not deploy petitioner to Singapore.

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Their argument is far from persuasive. Surely, they cannot expect us to utilize their non- compliance with the POEA Rules and Regulations as a basis in absolving them. To do so would be tantamount to giving premium to acts done in violation of established rules. At most, private respondents’ act of deploying petitioner to Singapore without complying with the POEA requirements only made them susceptible to cancellation or suspension of license as provided by Section 2, Rule I, Book VI of POEA Rules and Regulations. (Hornales v. NLRC, G.R. No. 118943, September 10, 2001).

6. Is there a requirement that a physician must be accredited by the POEA before he can

attend to a sick seaman?

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

7. Martina is a clerk typist in Hospicio de San Jose, a charitable institution dependent for its

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

YES. Martina is entitled to overtime compensation. She does not fall under any of the

Said provision equivocally states that

“Title I, Book III of the Labor Code dealing with hours of work, weekly rest periods, holidays,

service incentive leaves and service charges, covers all employees in all establishments, whether for profit or not, except the following employees:

exceptions enumerated under Art. 82 of the Labor Code.

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a.

Government employees

 

b.

Managerial employees

c.

Officers and members of the managerial staff

 

d.

Field personnel

 

e.

Members of the family of the employer who and dependent on him for support

 

f.

Domestic helpers

 

g.

Persons in the personal service of another

 

h.

Workers paid by results.

 

A

covered

employee

who

works

beyond

eight

(8)

hours

is

entitled

to

overtime

compensation.

8. Krishna earns P7.00 for every manicure she does in the barbershop of a friend which has

nineteen (19) employees. At times, she takes home P175.00 a day and at other times she earns nothing. She now claims holiday pay. Is Krishna entitled to this benefit?

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

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

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

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

10. A manufacturing firm with 500 employees schedules Sunday as the latter’s rest day. Fifty

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

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

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

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

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

11. This year, National Heroes Day (August 25) falls on a Sunday.

Bonifacio whose daily rate is P500.00.

Sunday is the rest day of

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

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

Formula:

(a) To get rest day pay

Step 1: Get hourly wage rate

Daily Basic Wage

X

Number of hours worked

special holiday wage rate

e.g. (P500 / 8 hrs) x 130%

= P81.25 (rest day wage rate)

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

Number of hours worked

X

special holiday wage rate

e.g.

8hrs

x

P81.25

= P650

(b) To get regular holiday pay

Rest day Wage rate

X

Regular holiday

e.g.

P650

x

200%

= P1300

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

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

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

Step 1: Get hourly wage rate

Daily Basic Wage

X

Number of hours worked

special holiday wage rate

e.g.

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

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

[(30% X Wage Per Hour) + Wage Per Hour]

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

No. of OT Hours = OT Premium Pay

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e.g. (30 % x P325) + P325

= P422.50

no. of OT hours (5pm – 10pm) =

2hrs

------------

P845.00

Step 3: COMPUTATION

8am-5pm

8hrs x P200.00 2hrs x P260.00

 

P1300

2 hours

845

 

------------

Total Take Home Pay

P2,145

12. Sia, the employer, admits that Damasco’s work starts at 8:30 in the morning and ends up at

6:30 in the evening daily, except holidays and Sundays. However, Sia claims that Damasco’s basic salary of P140.00 a day is more than enough to cover the “one hour excess work” which is the compensation they allegedly agreed upon. What other evidences are required to warrant the award of overtime pay?

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

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

13. May a Company adopt working hours beyond 8 hours a day? If the workers do not question

such an arrangement, would that scheme be considered valid?

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YES. In Interphil Laboratories Employees Union FFW v. Interphil (G.R. No. 142824, December 19, 2001) it was held by the Court that:

Section 1. Regular Working Hours — A normal workday shall consist of not more than eight (8) hours. The regular working hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should such change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.

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

14. Explain the principle of “A FAIRS DAY WAGE FOR A FAIRS DAY’S LABOR”

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

15. A Co., a tobacco manufacturing firm, is owned by Mr. X who also owned B Security Agency

(BSA). When the employees of B formed a union, A’s management preterminated the security contract between A and B firms. When the guards filed a case of illegal dismissal and ULP against both A and B, the counsel of A filed a Motion to Dismiss, alleging that that there was no employer-employee relationship between A and the guards.

a.

Should the MOTION be granted? Explain.

NO. The Motion should not be granted. The facts indicate a concerted effort on the part of respondents to remove petitioners from the company and thus abate the growth of the union and block its actions to enforce their demands in accordance with the Labor Standards laws. The Court held in Insular Life Assurance Co., Ltd., Employees Association-NATU vs. Insular Life Assurance Co., Ltd.,37 SCRA 244 (1971), that “the test of whether an employer has interfered with and coerced employees within the meaning of section (a) (1) is whether the employer has engaged in conduct which it may reasonably be said tends to interfere with the free exercise of employees' rights under section 3 of the Act, and it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of threats of the employer if there is a reasonable inference that anti-union conduct of the employer does have an adverse effect on self- organization and collective bargaining.”

b.

applicable hereto?

Is the doctrine of piercing the veil of corporate fiction

It is a fundamental principle in corporation law that a corporation is an entity separate and distinct from its stockholders and from other corporations to which it is connected. However, when the concept of separate legal entity is used to defeat public convenience, justify wrong, protect

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fraud or defend crime, the law will regard the corporation as an association of persons, or in case of two corporations, merge them into one. The separate juridical personality of a corporation may also be disregarded when such corporation is a mere alter ego or business conduit of another person.

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

16. Discuss the doctrine on the “economic reality of the relations of parties” test with respect

to the existence of employer-employee relationship.

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

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

17. Pandoy was an electrician who worked within the premises of Ushio's car accessory shop, in

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

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

18. In the employment of workers, is there a difference between an ordinary employer- employee relationship and independent job contracting/ subcontracting?

YES. In an ordinary employer-employee relationship, there are only two parties involved - the employer and the employee. This relationship is established through a four-fold test, under which the employer:

a. Directly exercises control and supervision over the employee not only as to the results of

the work but also as to the means employed to attain this result;

b. Has the power to select and hire the employee;

c. Has the obligation to pay the employees his or her wages and other benefits.

d. Has the power to transfer and dismiss or discharge employees.

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

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

a. The principal who decides to farm out a job or service to a subcontractor;

b. The job contractor or subcontractor which has the capacity to independently undertake

the performance of the job or service; and

c. The employees engaged by the job contractor or subcontractor to accomplish the job or

service.

In job contracting or subcontracting, the four-fold test of employer-employee relationship should be satisfied by the contractor or subcontractor in relation to the employee it engages to accomplish the contracted or subcontracted job or service. In such cases, the contractor or subcontractor is also referred to as an independent contractor.

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

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

YES. A job contractor or subcontractor directly undertakes a specific job or service for a principal, and for this purpose employs its own workers. A PRPA cannot be a subcontractor. It simply recruits workers for the purpose of placing them with another employer so that the workers recruited will not become the PRPA's employees.

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A job contractor or subcontractor is governed primarily by Articles 106-109 of the Labor

Code. A private recruitment and placement agency is governed by Articles 25 to 39 of the Labor Code and the rules implementing these articles.

A job contractor or subcontractor does not need authority from the Department of Labor

and Employment (DOLE) to undertake a subcontracted job or service. A PRPA needs an authority or

license from DOLE to legally undertake recruitment and placement activities.

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

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

The following laws and rules also apply in addition to Articles 106 to 109 of the Labor Code:

a. Article 248 (c) of the Labor Code, which disallows contracting out of services or functions

being performed by union members when such will interfere with, restrain or coerce employees in

the exercise of their right to self-organization;

b. Article 280, Labor Code, which classifies employees into regular, project or seasonal

employees;

c. Article 2180 of the Civil Code, under which the principal, in a civil suit for damages

instituted by an injured person, can be held liable for any negligent acts of the employees of a labor-only contractor;

d. Republic Act No. 5487, which regulates the operation of security agencies, and its

implementing rules;

e. Jurisprudence interpreting the foregoing laws;

f. D.O. No. 19, Series of 1993, for subcontracting arrangements in the construction industry;

and

h. Contractual stipulations provided these are not in conflict with Labor Code provisions, jurisprudence, and D.O. Nos. 3 and 19.

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

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

a. It revoked Department Order No. 10, Series of 1997, which was then the implementing rules

on Articles 106 to 109;

b.

It prohibits labor-only contracting;

c.

It recognizes the continuing validity of contracts entered into when D.O. No. 10 was still in

force;

d.

It is a temporary measure;

e.

It sets the process and mechanism, which is through consultations through the Tripartite

Industrial Peace Council, by which a new set of rules shall be formulated.

22. Is job contracting or subcontracting illegal?

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

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

a. The contractor or subcontractor carries on a distinct and independent business and

undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

b. The contractor or subcontractor has substantial capital or investment;

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c. The agreement between the principal and the contractor or subcontractor assures the

contractual employees entitlement to all occupational safety and health standards, free exercise of

the right to self organization, security of tenure, and social and welfare benefits.

23.

subcontracting?

What

is

substantial

capital?

Is

substantial

capital

sufficient

to

establish

legitimate

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

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

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

and the prohibition?

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

a. The Constitution, which provides that the State shall protect labor and promote its welfare,

and shall guarantee basic labor rights including just and humane terms and conditions of employment and the right to self-organization.

b. Article 106 of the Labor Code, which allows the Secretary of Labor to distinguish between

labor-only contracting and job contracting to prevent any violation or circumvention of the Labor Code.

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

25. If you are the counsel of an agency which is being charged of LABOR-ONLY CONTRACTING,

what evidence will you present to refute the charge? Explain.

I would present the same documents shown in the case of Escario vs. NLRC, G.R. No. 124055, June 8, 2000, to wit:

“D.L. Admark is a legitimate independent contractor. Among the circumstances which tend to establish the status of D.L. Admark as a legitimate job contractor are:

a. The SEC registration certificate of D.L. Admark states that it is a firm engaged in

promotional, advertising, marketing and merchandising activities.

b. The service contract between CMC and D.L. Admark clearly provides that the agreement is

for the supply of sales promoting merchandising services rather than one of manpower placement.

c. D.L. Admark was actually engaged in several activities such as advertising, publication,

promotions, marketing and merchandising. It had several merchandising contracts with companies

like Purefoods, Corona supply, Nabisco Biscuits and Licron. It was likewise engaged in the publication business, as evidenced by its magazine, the “Phenomenon.”

d. It had its own capital assets to carry out its promotion business. It then had current assets

amounting to P6 million and is therefore a highly capitalized venture. It had an authorized capital stocks of P500,000. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied.

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26. What are the effects of a labor-only contracting arrangement?

The following are the effects:

a. The contractor or subcontractor will be treated as the agent of the principal. Since the act

of an agent is the act of the principal, representations made by the contractor or subcontractor to the employees will bind the principal.

b. The principal will become the employer as if it directly employed the workers engaged to

undertake the contracted or subcontracted job or service. It will be responsible to them for all their entitlements and benefits under the labor laws.

c. The principal and the contractor or subcontractor will be solidarily treated as the

employer.

d. The employees will become employees of the principal, subject to the classifications of

employees under Article 28 of the Labor Code.

If the labor-only contracting activity is undertaken by a legitimate labor organization, a petition for cancellation of union registration may be filed against it, pursuant to Article 239 (e).

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

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

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The second type of liability, which arises from the third and fourth paragraphs of Article 106, is absolute and direct. This liability arises when there is labor-only contracting as defined in D.O. No. 3. In such cases, the principal shall be held responsible to the workers in the same manner and extent as if it directly employed these workers.

28. Which employer should be held liable for the wages of security guards, the PRINCIPAL EMPLOYER or the AGENCY? Explain.

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

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

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29. When is an “insurance agent” deemed an independent contractor of an insurance company?

As held in Insular Life Insurance Company, Ltd. vs. NLRC, G.R. No. 84484, Nov. 15,

1989, “There is no employer-employee relationship between a commission agent and an investment company. The former is an independent contractor where said agent and others similarly placed are:

a. paid compensation in the form of commissions based on percentages of their sales, any

balance of commissions earned being payable to their legal representatives in the event of death or

resignation;

b. required to put up performance bond;

c. subject to a set of rules and regulations governing the performance of their duties under

the agreement with the company and termination of the services for certain causes;

d. not required to report for work at any time, nor to devote their time exclusively to working

for the company nor to submit a record of their activities, and who finally shouldered their own selling and transportation expenses.”

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

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

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

31. Is the joint and several liability of the principal and the job contractor under Articles 107

and 109, in relation to Article 106 of the Labor Code, dependent upon the insolvency or unwillingness to pay on the part of the contractor or direct employees?

NO. Nothing in Article 106 indicates that insolvency or unwillingness to pay by the contractor or direct employer is a prerequisite for the joint and several liability of the principal or indirect employer. This joint and several liability facilitates, if not guarantees, payment of the workers’ performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution (Development Bank of the Philippines vs. NLRC, June 17,

1994).

32. A taxicab company required its taxi drivers to make deposits to defray any deficiency which

the latter may incur in the remittance of their “boundary” and to cover car wash payments. Is this requirement authorized under Article 114 of the Labor Code? Explain.

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

But the requirement for deposit for car wash payments is lawful. There is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to

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restore the unit he has driven to the same clean condition when he took it out. Furthermore, the amounts doled out were paid directly to the persons who washed the units. Finally, it will be noted that there was nothing to prevent the drivers from cleaning the taxi units themselves, if they wanted their car wash payments (Five J Taxi vs. NLRC, August 22, 1994).

33. Do disparity in wages between employees holding similar positions but located in different

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

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

34. Does a wage increase granted pursuant to a collective bargaining agreement constitute

compliance with a subsequently issued wage order?

NO. A collective bargaining agreement is a contractual obligation. It is distinct from an obligation imposed by law. The terms and conditions of a collective bargaining contract constitute the law between the parties. Beneficiaries thereof are therefore, by right, entitled to the fulfillment of the obligation prescribed therein. Moreover, compliance with a collective bargaining agreement is mandated by the expressed policy to give protection to labor. Unless otherwise provided by law, said policy should be given paramount consideration.

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

35. Can a woman be employed in any kind of occupation or undertaking?

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

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

The following are considered acts of discrimination:

a. Payment of a lesser compensation, including wage, salary and fringe benefits, to a female

employee as against a male employee, for work of equal value;

b. Favoring a male employee over a female employee with respect to promotion, training

opportunities, study and scholarship grants solely on account of their sexes.

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

maternity leave benefits?

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

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

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

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

39. What is the status of a woman permitted or suffered to work in any night club, bar, or

other similar establishment under the Labor Code?

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

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

The employer shall provide the following:

a. Free family planning services to employees and their spouses, if the establishment regularly

employ more than 200 workers;

b. Holiday pay during the period that the woman employee is receiving maternity or disability

benefits, equivalent to the same percentage as the benefit granted by SSS;

c. Flexible work schedule to any solo parent as defined in Republic Act No. 8972;

d. Parental leave of not more than seven days every year to the solo parent who has rendered

at least one-year service.

e. facilities for women such as seats, separate toilet rooms and nursery in the work place.

f. to determine the appropriate minimum age and other standards for retirement in special

occupations for women.

41. Who are considered young workers and working children?

Young workers are in different categories, namely:

a. The working youth who are between 15 and 30 years of age (Republic Act No. 8044);

b. Employed minors who are from 15 to below 18 years of age (Labor Code);

c. Working children who are below 15 years of age, subject to the exceptions specified by Republic Act No. 7658;

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

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

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

43. What is a non-hazardous undertaking?

It refers to any kind of work or activity, in which the employee is not exposed to any risk that constitutes an imminent danger to his or her life and limb, safety and health.

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Hazardous work and activities to persons below 18 years age include:

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

b. Work under ground, under water, at dangerous heights or at unguarded heights of two

meters and above, or in confined spaces;

c. Work with hazardous machinery, equipment and tools, or which involves manual handling or

transport of heavy loads;

d. Work in an unhealthy environment which may expose children to hazardous processes, to

temperatures, noise levels or vibrations damaging to their health, to toxic, corrosive, poisonous, noxious, explosive, flammable and combustible substances or composites, to harmful biological agents, or to other dangerous chemicals including pharmaceuticals.

e. Work under particularly difficult conditions such as work for long hours or during the night,

or work where the child is unreasonably confined to the premises of the employer.

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

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

1. When the child works directly under the sole responsibility of his or her parents or guardians or legal guardian and where only members of the employer’s family are employed, on the following conditions:

a. The employment does not endanger the child’s life, safety and health and morals;

b. The employment does not impair the child’s moral development

c. The employer parent or legal guardian provides the child with primary and / or secondary education prescribed by the Department of Education, Culture and Sports (DECS).

2. Where the child’s employment or participation in public entertainment or information through cinema, theater, radio or television is essential, provided that:

a. The employment does not involve advertisement or commercials promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting violence;

b. There is a written contract approved by the DOLE;

c. The employment does not endanger the child’s life, safety, health and morals;

d. The employment does not interfere with his or her schooling.

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46. Once a firm validly employs a young person, is he or she entitled to the same terms and

conditions of employment accorded to an employee of legal age?

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

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

A minor, whether male or female, may be employed as a domestic servant to render service in and about the employer’s home, which services are usually necessary or desirable for the maintenance and enjoyment thereof, such as ministering to the personal comfort and enjoyment of the employer’s family.

48. Can a young worker be a member of the Social Security System (SSS) and avail of the social

security (SS) and Employees Compensation (EC) benefits?

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

49. Who are considered child laborers?

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

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

50. You were asked by a paint manufacturing company about the possible employment as a

mixer of a person, aged seventeen (17), who shall be directly under the care of the section supervisor. What advice would you give? Explain briefly.

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

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

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

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

52. Are SSS benefits considered property earned by the member during his lifetime? Do they

form part of his estate? Explain.

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

53. Does the delay on the part of the victim of sexual harassment to complain said act impair

his cause of action against his/her employer?

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

54. The owners of FALCON Factory, a company engaged in the assembling of automotive

Fifty (50) persons, composed of

engineers, architects and other construction workers, were hired by the company for this

components, decided to have their building renovated.

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purpose. The work is estimated to be completed in three (3) years. The employees contended that since the work would be completed after more than one (1) year, they should be subject to compulsory coverage under the Social Security Law. Is their contention correct?

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

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

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

LABOR RELATIONS

55. PICOP's main thesis is that the positions Section Heads and Supervisors, who have been

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

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NO. The petition not being meritorious, must fail and the same should be as it is hereby dismissed. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, we had occasion to elucidate on the term "managerial employees." Managerial employees are ranked as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers have the authority to devise, implement and control strategic and operational policies while the task of First-Line Managers is simply to ensure that such policies are carried out by the rank-and- file employees of an organization. Under this distinction, "managerial employees" therefore fall in two (2) categories, namely, the "managers" per se composed of Top and Middle Managers, and the "supervisors" composed of First-Line Managers. Thus, the mere fact that an employee is designated manager" does not ipso facto make him one. Designation should be reconciled with the actual job description of the employee, for it is the job description that determines the nature of employment (PICOP vs. Laguesma, G.R. No. 101738, April 12, 2000).

56. Do labor arbiters have jurisdiction over illegal dismissal cases that may be filed against

priests and ministers?

YES. The fact that a case involves the church and its religious minister does not ipso facto give the case a religious significance. Simply stated, what is involved in an illegal dismissal case is the relationship of the church as an employer and the minister as an employee—a purely secular matter not related to the practice of faith, worship, or doctrines of the church (Austria vs. NLRC, G.R. No. 124382, August 16, 1999).

57. Do Labor Arbiters or the NLRC have jurisdiction over criminal cases involving violations of

the penal provisions of labor laws? Explain.

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

58. Explain the doctrine of forum non-conveniens.

exercise of jurisdiction by the labor arbiter?

May this doctrine be invoked against the

Under the rule of forum non conveniens, a Philippine court or agency MAY assume jurisdiction over the case if it chooses to do so, PROVIDED:

a. that the Philippine court is one to which the parties may conveniently resort to;

b. that the Philippine court is in a position to make an intelligent decision as to the law and

the facts; and

c. that the Philippine court has or is likely to have power to enforce its decision.

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

a. The NLRC is an inconvenient forum given that all the incidents of the case- from the time

of recruitment, to employment, and to dismissal occurred outside the Philippines. The inconvenience is compounded by the fact that the proper defendants – the Palace Hotel and MHICL – are not nationals of the Philippines. Neither are they doing business in the Philippines. Likewise, the main witnesses are non-residents of the Philippines.

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

c. Even assuming that the proper decision could be reached by the NLRC, such would not have

any binding effect against the employer, the Palace Hotel. The Palace hotel is a corporation incorporated under the laws of China and was not even served with summons, hence jurisdictions over its person was not acquired.

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

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

Under this principle, a party to a labor case is estopped from raising the issue of jurisdiction of the labor arbiter when he has participated in the proceedings from start to finish. In this case the petitioner bank actively participated in the proceedings before the Labor Arbiter, NLRC and Court of Appeals. It was only when the Court of Appeals made an adverse decision did it raise the issue of jurisdiction. The Supreme Court held that it was already too late to raise the issue of jurisdiction as the petitioner was already in estoppel. While it is true that jurisdiction over the subject matter of a case may be raised at any time of the proceedings, this rule presupposes that laches or estoppel has not supervened.

60. Does the Labor Arbiter have jurisdiction over disputes involving the wages and terms and

conditions of employment of COOPERATIVE employees? Explain.

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

ART. 121. Settlement of Disputes. — Disputes among members, officers, directors, and committee members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in

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

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

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

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

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

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

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

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

63. In cases involving monetary award, why does the law require an employer to post a cash or

surety bond as an indispensable condition for the perfection of an appeal?

An appeal stays the execution of an award. Such decision could be in the form of a monetary award in favor of an employee. Thus, an appeal will mean that a monetary award will not be executed. To ensure that an appealed monetary award is affirmed and has become final and executory, Art. 223 requires that as an indispensable condition for the perfection of an appeal by an employer, he must post a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award in the judgment appealed from.

64. What is the remedy in case the Regional Office or BLR verbally denies or refuses to act on

an application for registration for a considerable amount of time?

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

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65. What is the effect of the filing/pendency of inter/intra union and other related labor

disputes to the relationship of the party litigants?

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The rights, relationships and obligations of the parties-litigants against each other and other parties-in-interest prior to the institution of the petition shall continue to remain during the pendency of the petition and until the date of finality of the decision rendered therein. Thereafter, the rights, relationships and obligations of the parties-litigants against each other and other parties-in-interest shall be governed by the decision so ordered.

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

66. Can there be several unions in one enterprise?

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

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

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

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

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

This also holds true for confidential employees such as accounting personnel, radio and telegraph operators, who having access to confidential information, may become the source of undue advantage. Said employee(s) may act as a spy (ies) of either party to a collective bargaining agreement. This is especially true in the present case where the petitioning Union is already the bargaining agent of the rank-and-file employees in the establishment. To allow confidential employees to join the existing Union of the rank-and file would be in violation of the terms of the Collective Bargaining Agreement wherein this kind of employees by the nature of their functions/positions are expressly excluded. (Philips vs. NLRC, G.R. No. 88957, June 25, 1992).

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

a. Initiation of the company union idea, which may occur in three styles:

(1) Outright formation by the employer or his representative\ (2) Employee formation or outright demand or influence of the employer (3) Managerially motivated formation by employees.

b. Financial support to the union An employer commits unfair labor practice if he defrays the union expenses or pays the fees of the attorney who drafted the union’s constitution and by-laws.

c. Employer encouragement and assistance

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Immediately granting the union exclusive recognition as a bargaining agent without determining whether the union represents the majority of employees is an illegal form of assistance amounting to unfair labor practice.

d. Supervisory assistance

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

69. XYZ Co. was informed that a petition for certification election has been filed by ABC Union,

a legitimate labor organization within XYZ Co beyond the 60-day freedom period granted to the former. By virtue of said information. XYZ Co. unilaterally suspended the on-going negotiations for a new CBA with XYZ Co. Employees Association (XYZEA) and refused to do any further negotiations and bargaining. Was there unfair labor practice on the part of XYZ Co.?

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

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

The Labor Code, as amended, recognizes the validity of a union shop agreement in Article 248 thereof, Section (e) provides, to wit:

‘to discriminate in regard to hire or tenure of employment or any term or condition of employment in order to encourage or discourage membership in any labor organization. Nothing in this Code or in any other law shall prevent the parties from requiring membership in a recognized collective bargaining agent as a condition for employment, except of those employees who are already members of another union at the time of the signing of the collective bargaining agreement.

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We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in addition to the existing maintenance of membership clause in the collective bargaining

agreement. As the Solicitor General asserted in his consolidated Comment, the University's reliance on the case of Victoriano vs. Elizalde Rope Workers' Union is clearly misplaced. In that case, we

right to join a union includes the right to abstain from joining any union. The

right to refrain from joining labor organizations recognized by Section 3 of the Industrial Peace Act

is, however, limited. The legal protection granted to such right to refrain from joining is withdrawn by operation of law, where a labor union and an employer have agreed on a closed shop, by virtue of which the employer may employ only members of the collective bargaining union, and the employees must continue to be members of the union for the duration of the contract in order to keep their jobs (DLSU vs. Laguesma, G.R.No. 109002, 12 April 2000).

ruled that "

the

71. Union X, a local/chapter of Y Federation moved to disaffiliate from the latter. The move

was supported by almost all of its members. During the pendency of the disaffiliation proceeding, the company entered into a collective bargaining agreement with Union X. Y federation filed an action for ULP against the company. Decide.

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

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

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

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

72. What is a sweetheart contract?

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

73. May an electric cooperative be held liable to pay damages for the ULP it has committed

against its employees? How much?

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

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

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

An in-house agency is where a contractor or subcontractor is engaged in the supply of labor which is owned, managed, or controlled by the principal and operates solely for the principal owning, managing, and controlling it. It is prohibited by law.

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

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

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76. Which is the better barometer of the true financial standing of a company for purposes of

resolving an economic deadlock in collective bargaining, a proposed budget or an audited financial statement. Explain.

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

77. What is the controlling doctrine on the issue of RETROACTIVITY of CBA benefits? Explain.

May the Secretary of Labor order the retroactivity of a CBA?

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

78. May the Labor Unions and the Company enter into a CBA that grants a moratorium of ten

years in collective bargaining? Is this not a novation of the union’s right to collective bargaining? Explain.

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

Under Article 253-A of the Labor Code insofar as representation is concerned, a CBA has a term of five years, while the other provisions, except for representation, may be negotiated not later than three years after the execution. Petitioners submit that a 10-year CBA suspension is inordinately long, way beyond the maximum statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers’ constitutional right to bargain for another CBA at the mandated time. We find the argument devoid of merit (Rivera v. Espiritu, G.R. No. 135547, January 23, 2002).

79. Is there a conflict between a CBA that grants a 10-year moratorium on CBA bargaining on

one hand, and Art. 253-A of the Labor Code, on the other? Explain.

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

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

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

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

Election; and (3) Consent Election.

 

Med-Arbiter certifies that a certain Union is the exclusive collective bargaining representative of the employees of an appropriate

Direct Certification

bargaining unit without holding of a certification election, but merely on the basis of evidence presented in support of the Union’s claim that

it

is the choice of the majority of the employees. Such evidence may

consist of affidavits made by a clear majority of the employees stating

that they are members of and are supporting the Union petitioning for direct certification to be their exclusive collective bargaining representation (Prohibited by law under E.O. 111)

 

A

certification election is an election ordered by Med-Arbiter for the

Certification

purpose of determining the sole and exclusive bargaining agent of the employees in an appropriate bargaining unit.

Election

 

A

consent election is an election agreed upon by the parties to

Consent Election

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

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

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

82. When is consent election a bar to a petition for certification election? When is it not a bar?

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

83. Union X, a legitimate labor organization filed a petition for certification election during the

freedom period. Union Y, another union in the same company, moved to dismiss the same

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alleging among others that Union X is composed of not only rank and file employees, but also of supervisory employees, who under the law, may not join a labor organization composed of rank and file employees. What is the effect of such allegation upon the petition for certification election?

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

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

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

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

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

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

“A certification proceeding is not a ‘litigation’ in the sense in which this term is commonly understood, but a mere investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation. The court enjoys a wide discretion in determining the procedure necessary to insure the fair and free choice of bargaining representatives by the employees (Sandoval Shipyards vs. Prisco Pepito, G.R. No. 143428, June 25, 2001).”

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

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

87. What is the Doctrine of Union Monopoly?

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

88. Is there a violation of the CBA’s “no strike no lockout” provision when workers join a

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

89. What is a union recognition strike?

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

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

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

91. Would the Union’s failure to submit the STRIKE VOTE RESULTS to the NCMB cause the

illegality of the strike? Explain.

YES. The Supreme Court said so in the case of Samahan ng Manggagawa sa Moldex v. NLRC, G.R. No. 119467, February 1, 2000. It has been shown that the results of the strike-vote were never forwarded to the NCMB, as admitted by petitioners themselves and as attested to by a Certification of Non-Submission of Strike Vote issued by the NCMB. There is thus no need for additional evidence on the matter, as it would not change the fact that the results of the strike- vote were not submitted to the NCMB. Without the submission of the results of the strike-vote, the strike was illegal, pursuant to Article 264 of the Labor Code

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

is under assumption of jurisdiction?

In the case of Telefunken Semiconductors Employees Union FFW v. CA, G.R. No. 143013-14, December 18, 2000, the Supreme Court held that the strike of the Union cannot be viewed as anything but illegal for having been staged in open and knowing defiance of the assumption and return-to-work orders. The necessary consequence thereof are also detailed by the Supreme Court in its various rulings. In Marcopper Mining Corp. v. Brillantes (254 SCRA 595), the High Tribunal stated in no uncertain terms that -

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“by staging a strike after the assumption of jurisdiction or certification for arbitration, workers forfeited their right to; be readmitted to work, having abandoned their employment, and so could be validly replaced.”

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

1995.

93. Define the following:

a. Constructive resignation

Constructive Resignation is otherwise known as abandonment. It is present when the following requisites concur:

(1) The worker has no intention to return to work, and (2) The worker has manifested by overt acts such an intention.

b. Constructive retrenchment

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

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

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

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

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

and

(a)

(b)

(c)

(d)

loss of confidence which should not be simulated;

it should not be used as a subterfuge for causes which are improper, illegal or unjustified;

it should not be arbitrarily asserted in the face of overwhelming evidence to the contrary;

it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.

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

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

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

2001).

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

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

98. Is MISREPRESENTATION

RESIGNATION? Explain.

of essential facts

enough to vitiate the voluntariness of a

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

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

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

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

Unpaid Wages are wages earned prior to the illegal dismissal but are not yet paid to the employee.

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

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

The Labor Code (Art. 279) provides that an employee who is unjustly dismissed from work is entitled to reinstatement and also to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to his actual reinstatement.

An employee is entitled to all the above benefit regardless if he is a rank and file employee or a managerial employee. However, backwages may also include the 13th month pay which is paid to rank and file employees, as well as benefits arising from the CBA given only to the employees in

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the bargaining unit. Managerial employees cannot be given the same since they are ineligible to join the labor organization.

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

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

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

FREQUENTLY ASKED QUESTIONS

TOPIC: LABOR; SOCIAL JUSTICE

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

Suggested Answer:

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

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Alternative Answer:

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

Another Alternative Answer:

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

TOPIC: CONSTITUTIONAL PROVISIONS RELATED TO LABOR LAW

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

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

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

ALTERNATIVE ANSWER:

The Constitution in (Article XIII, Section 3) provides that the State shall afford protection to labor, local and overseas, organized unorganized. The State shall afford protection to labor by promoting full employment and equality of employment opportunities for all. Workers are entitled to security of tenure, humane conditions of work and a living wage. The State shall guarantee the right of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike, in accordance by law.

Workers shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in setting labor disputes, including conciliation, and shall enforce mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers recognizing the right to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

1. LABOR STANDARDS

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

Zapato Custom-made make shoes to customer specifications and repaired them. As a service to customers, a shoe shine stand was operated on its premises. There were 10 shoe shine boys at the stand. They owned their shoe shine boxes with cleaning agent polish, brushes, and rags.

Walk-in customers willing to wait were led by the shoe shine boys to a seat at the stand where he waited while the boy asked the customer to pay to the receptionist. Customers not willing

to wait left the shoes with the stand’s receptionist who gave a receipt with the price for the

service and pick-up date and time indicated. The boys were free to get shoes to be shined for the receptionist when there were no waiting walk-ins. For each pair shined, the boys got markers corresponding to the price for their service. ZaCSI’s staff did not interfere with, nor supervise, how the boys went about their tasks. At day’s end, the markers held by each boy were tallied and paid for. The boys signed a receipt to acknowledge full payment for work done.

A labor federation organized ZaCSI and filed a petition for a consent election. The boys,

sympathizing with the workers, joined the union. At the pre-election conference, the lawyer

for ZaCSI moved to exclude the boys as voters.

As Med-Arbiter handling the case, rule on the objection. Would you ruling be different if in this

case, ZaCSI provided the boys with the shoe shine boxes and their contents? Explain.

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As Med-arbiter, I will rule that the shoe shine boys should be excluded as voters in the consent election. The shoe shine boys are not employees of ZaCSI and thus could not be considered as employees belonging to bargaining unit who will designate or select a bargaining representative. They are not employees of ZaCSI because according to the given facts, they are not under the

control of ZaCSI which is an essential element for the existence of employer-employee relationship.

In the statement of facts, it is said that “ZaCSI’s staff did not interfere with, nor supervise how the

boys went about their task.” My ruling will not be different even if ZaCSI provided the boys with the shoe shine boxes and their contents. ZaCSI, by this act, is not yet exercising control that is determinative of the existence or non-existence of control over them. It is the existence of employer-employee relationship.

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

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

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

The action of Harbor View Hotel is legal and valid. The valid exercise of management prerogative, discretion and judgment encompasses all aspects of employment, including the hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers, except as provided for, or limited by special laws. Company policies and regulations are, unless shown to be gross oppressive or contrary to law, generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferably through negotiation or by competent authority (San Miguel Corporation vs. Ubaldo and Cruz, 218 SCRA 293).

ALTERNATIVE ANSWER:

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

a valid exercises of its management prerogatives and the right to make business judgments in accordance with law.

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

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

(a) What is a “labor-only” contract?

“Labor-only” contract is a contract between an employer and a person who supplies workers and does not have substantial capital or investment in the form of tools, equipments, machineries, work premises, among others, and the workers recruited and placed by such person are perfoming activities which are directly related to the principal business of such employer. (Art. 106, Labor Code)

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

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

ALTERNATIVE ANSWER:

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

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

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

ALTERNATIVE ANSWER:

An award of backwages is given to an employee who is unjustly dismissed. On the other hand, an award of unpaid wages is given to an employee who has not been paid his salaries or wages for services actually rendered. The cause of action here is non-payment of wages or salaries. (General Baptist Bible College vs. NLRC 219 SCRA 549).

TOPIC: OVERTIME PAY

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SUMMARY OF THE RULE: Undertime work on any particular day shall not be offset by overtime work on any other day.

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

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

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

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

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The weekly work schedule of a driver is as follows:

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

(a) Is the driver a house helper?

The driver is a house helper. A person is a house helper or is engaged in domestic or household service if he/she renders services in the employer’s home which are usually necessary or desirable to the maintenance and enjoyment thereof and which includes ministering to the personal comfort and convenience of the members of the employer’s household including the services of family drivers.

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

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

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

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

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

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

The claim of Engineer “A” that he is a regular employee and not a project employee is not correct. The Labor Code provides:

Art. 280. Regular and casual employment. - An employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion of which has been determined at the time of the engagement of the employee.

In all the five (5) successive contracts of employment of Engineer “A” the name of the project, its duration, and the temporary project nature of the engagement of his services are clearly stated; hence, Engineer “A” falls within the exemption of Art. 280. The fact that the petitioners worked for several projects of private respondent company is no basis to consider them as regular employees. By the very nature of their employee’s business, they will always remain project employees regardless of the number of projects in which they have worked (Manansag v. NLRC, 218 SCRA 722, 1993) Project employees are not considered regular employees, their services, being needed only when there are projects to be undertaken. The rationale for this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting for another project (De Ocampo v. NLRC, 186 SCRA 361, 1990).

ALTERNATIVE ANSWER:

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

TOPIC: HOURS WORKED

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

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

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

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

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

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

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

Is Arnold a job contractor? Explain briefly.

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

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

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

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

TOPIC: SOCIAL SECURITY ACT OF 1997; COVERAGE SUMMARY OF THE RULE: Coverage under the SSS is compulsory where employer-employee relations exist. Nevertheless, “integration” of other benefits is allowed.

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

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

TOPIC: COMPREHENSIVE AGRARIAN REFORM LAW

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

The 1987 Constitution enunciates in Article II as one of the state policies that the State shall promote comprehensive rural development and agrarian reform.” In Article XII of the Constitution, in dealing with the national economy and patrimony, it is also stated that “the State shall promote industrialization and full employment based on sound agricultural development and agrarian reform.” Then in Article XIII of the Constitution, in dealing with social justice and human rights, there is this provision, among others: the state shall, by law, undertake an agrarian reform program founded on the right of framers and regular farm – workers, who are landless, to own directly or workers, to receive a just share of the fruits thereof. To this end, the state shall

encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining the retention limits, the state shall respect the right of small landowners. The state shall further provide incentives for voluntary landsharing.” Taken together, the above provisions could be considered as the foundation of the agrarian reform program. Under the Comprehensive Agrarian Reform Law, the lands covered by the CARP shall be distributed as much as possible to landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality in the following order of priority:

1. agricultutral lessees and share tenants;

2. regular farmworkers;

3. seasonal farmworkers;

4. other farmworkers;

5. actual tillers or occupants of public lands;

6. collectives or cooperatives of the above beneficiaries; and

7. others directly working on the land.

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The children of landowners, who are qualified to be awardees of not more than three

hectares, shall be given preference in the distribution of the land of their parents. Actual tenant tillers in the landholding shall not be ejected or removed therefrom. Beneficiaries under PD 27 who have culpably sold, disposed of or abandoned their land are disqualified to became beneficiaries under the CARP.

A basic qualification of a beneficiary shall be his willingness aptitude and ability to

cultivate and make the land as productive as possible. The DAR shall adopt a system of monitoring the record or performance of each beneficiary, so that any beneficiary guilty of negligence or misuse of the land or any support extended to him shall forfeit his right to continue as such beneficiary. The DAR shall submit periodic reports on the performance of the beneficiaries to the CARP.

If, due to the landowner’s retention rights or to the number o tenants, lessees, or workers

on the land, there is not enough land to accommodate any or some of them, they may be granted ownership of other lands available for distribution under the CARL, at the option of the beneficiaries. Farmers already in place and those not accommodated in the distribution of privately owned lands will be given preferential rights in the distributions of lands from the public domain.

1.b.

Bill of rights? How it is determined under the former?

Distinguish just compensation under the CARL of 1988 form just compensation under the

In the Bill of Rights it is provided that private property shall not be taken for public use

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without just compensation.

In the provisions of the 1987 constitution on agrarian reform, it is provided that in the just

distribution of all agricultural lands, the same shall be subject, among others, to the payment of just compensation. The concepts of just compensation in the Bill of Rights and in agrarian reform are similar in the sense that in both situations, the person who is deprived of his property should be given the fir and full equivalent value of the property that is taken from him. In both situations, ultimately, it is the courts, which may determine ultimately just compensation. Under the CARL, however, the Land Bank of the Philippines shall compensate the landowner in such amount as may agreed upon by the landowner and the Department of Agrarian Reform and the Land Bank of the Philippines. Also, under the CARL, compensation could be in cash and in government financial instruments like Land Bank of the Philippines bonds. At the option of the landowner, the compensation may be in shares of stock in government owned and controlled corporations, or in tax credits. The CARL provides that in determining just compensation, the cost of acquisition of the land the current value of like properties, its nature, actual use of income, the sworn valuation by the owner, the tax declarations, and the assessment made by the government assessors shall be considered. The social and economic benefits contributed by the farmers and the farm-owners and by the government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

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

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

Club Paris is an entertainment entity that operates a night club along Roxas Boulevard. The club provides food and drinks which are served by women who are dressed like Playboy Bunnies. In the employment contract of each woman, the ff. provisions appear:

“Compensation -- All tips, commissions and other forms of payment received from customers minus 10%

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Hours of work – 6 pm to 3 am, daily, including Sundays and Holidays Other conditions – Must remain single; marriage or pregnancy is valid cause for dismissal.”

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

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

TOPIC: ASSUMPTION ORDER

2. LABOR RELATIONS

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

Under Art. 263(g) of the Labor Code, such assumption shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption order. If one had already taken place at the time of assumption, all striking or lockout employees shall immediately return to work and the employer shall immediately resume operations and re-admit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment may seek the assistance of law enforcement agencies to ensure compliance with this provision as well as he may issue to enforce the same. The mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return to work order, even if the directive to return to work is not expressly stated in the assumption order. Those who violate the foregoing shall be subject to disciplinary action or even criminal prosecution. Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the assumption of jurisdiction by the Secretary.

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

Jenson & Jenson (J&J) is a domestic corporation engaged in the manufacturing of consumer products. Its rank-and-file workers organized the Jenson Employees Union (JEU), a duly registered local union affiliated with PAFLU, a national union. After having been certified as the exclusive bargaining agent of the appropriate bargaining unit, JEU_PAFLU submitted its proposals for a Collective Bargaining Agreement with the company.

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In the meantime, a power-struggle occurred within the national union PAFLU between its National President, Manny Pakyao, and its National Secretary General, Gabriel Miro. The representation issue within PAFLU is pending resolution before the Office of the Secretary of Labor.

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

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

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

ALTERNATIVE ANSWER:

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

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

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

In a certification election, all rank-and-file employees in the appropriate bargaining unit are entitled to vote. This principle is clearly stated in Article 255 of the Labor Code which states that the “labor organization designated or selected by the majority of the employees in such unit shall be the exclusive representative of the employees in such unit for the purpose of collective bargaining.” Collective bargaining covers all aspects of the employment relation and the resultant CBA negotiated by the certified union binds all employees in the bargaining unit. Hence, all rank- and-file employees, probationary or permanent, have substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as bases for eligibility to vote in the petition for certification election. The law refers to “all” the employees in the bargaining unit. All they need to be eligible to vote is to belong to the bargaining unit. (Airtime Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749).

ALTERNATIVE ANSWER:

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

ANOTHER ALTERNATIVE ANSWER:

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

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

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

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

ALTERNATIVE ANSWER:

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

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

Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All were stockholders, directors and officers of the Pagaspas Marketing Co., Inc. (PMCI). PMCI sold office machines and supplies. It employed 20 sales persons, 10 delivery men, 20 service personnel, and 10 administrative employees. On December 10, 1987, 45 rank and file workers of the company formed and registered a labor union. They sent a letter to Pagaspas demanding recognition as bargaining agent of all workers, enclosing check-off authorization forms of the union members, and a set of economic demands. PMCI refused to recognize the union. The union president went to you, as labor adviser of the federation which they were planning to affiliate with.

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

The union president tells you that they prefer to go on strike. He wants to know the legal requirements that the union must comply with so the strike will be legal. What advice will you give?

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

TOPIC: CONDITIONS FOR A VALID RETRENCHMENT

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

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In the case of Asian Alcohol Corporation vs. NLRC, G.R. No. 131108, March 25, 1999, The SC stated that the requirements for a valid retrenchment must be proved by clear and convincing evidence:

(1) that the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real or if only expected, re reasonably imminent as perceived by objectively and in good faith by the employer; (2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least one month pay for every year of service, whichever is higher; (4) that the employer exercises his prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employee’s right of security of tenure; and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status (i.e., whether they are temporary, casual, regular, or managerial employees), efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

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

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

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

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

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

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

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

ALTERNATIVE ANSWER:

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

xxx The employer shall furnish the worker whose employment is sought to be

terminated a written notice containing a statement of the causes for termination and shall

afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires….

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

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

597).

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

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

The Motion to Dismiss should be denied. It is a regular court and not a Labor Arbiter that

has jurisdiction on the suit for damages. The damages did not arise from the employer-employee relations which would not have placed the suit under the jurisdiction of a Labor Arbiter. The suit arises from the fact that the President of the company shouted invectives at Mariet Demetrio in the presence of employees and visitors. Her complaint for damages is against an officer of the Company based on slanderous language alleged made by the latter. This falls under the jurisdiction of the ordinary courts. There is here a simple action for damages for tortious acts allegedly committed by the defendant. Such being the case, the governing statue is the Civil Code and not the Labor Code. (Medina vs. Castro-Bartolome, 116 SCRA 597)

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ALTERNATIVE ANSWER:

The Motion to dismiss should be granted. According to the Labor Code (Article 217 (a)4), the Labor Arbiter has original and exclusive jurisdiction to hear and decide, among others, claims for actual, moral and exemplary and other forms of damages arising from the employer-employee relations. The claim for damages in the case in question arose from the fact that the President of the Company shouted invectives at Mariet Demetrio in the presence of employees and visitors for a minor infraction she committed. If the infraction has something to do with her work, then, the claim for damages could be considered as arising from employer-employee relations. Thus, the claim is under the exclusive jurisdiction of the Labor Arbiter.

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

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

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

ALTERNATIVE ANSWER:

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

3. SELECTED 2004 BAR QUESTIONS AND ANSWERS

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A. RS, a security guard, filed a complaint for illegal dismissal against Star Security Agency. He alleged he was constructively dismissed after ten years of service to the agency. Having been placed on “off-detail” and “floating status” for 6 months already, he claimed the Agency just really wanted to get rid of him because it required him to take a neuro-psychiatric evaluation test by Mahusay Medical Center. RS said he already submitted the result of his evaluation test by Brent Medical Clinic as precondition to a new assignment, but the report was rejected by the Agency. RS added that Mahusay Medical Center had close ties with Star’s president. It could manipulate tests to favor oThnly guards whom the Agency wanted to retain. Star defended its policy of reliance on Mahusay Medical Center because it has been duly accredited by the Philippine National Police. It is not one of those dubious testing centers issuing ready-made reports. Star cited its sad experience last year when a guard ran amuck and shot an employee of a client-bank. Star claimed management prerogative in assigning its guards, and prayed that RS’ complaint be dismissed.

What are the issues? Identify and resolve them.

SUGGESTED ANSWER:

The facts in the question raise these issues:

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

was terminated?

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

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

ANOTHER SUGGESTED ANSWER:

The issues involved are as follows:

1. Is there constructive dismissal?

2. Is there a valid exercise of management prerogative?

RS cannot be placed on “off detail” or

“floating status” indefinitely. If it lasts for more than 6 months, RS shall be deemed to have been

constructively dismissed thus entitling him to separation benefits. (Superstar Security Agency vs. NLRC, 184 SCRA 74) On the second issue, there is no valid exercise of management prerogative. Star’s claim of management prerogative in assigning its guards cannot be exercised to defeat or circumvent RS’ right to security of tenure.

On the first issue, there is constructive dismissal.

B. A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year old

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

SUGGESTED ANSWER:

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

[N.B. Sec. 3, RA 9231 allows a child below 15 years of age to work for not more than 20 hours a week; provided that the work shall not be more than 4 hours at any given day; provided further, that he does not work between 8PM and 6AM of the following day; and provided, finally, that the work is not hazardous or deleterious to his health or morals. This is a law approved only on July 28, 2003, which is beyond the cut-off period of the then 2004 Bar Examinations.]

C. Which of the following may be considered among industries most vital to national interest as

to be subject of immediate assumption of jurisdiction by the Secretary of Labor or certification for compulsory arbitration in case of strike or work stoppage arising from a labor dispute?

1. Bulletin daily newspaper publishing company

2. Local franchise of Jolibee and Starbucks

3. Shipping and port services in Cebu and Manila

4. Enchanted Kingdom, Elephant Island and Boracay Resort

5. LBC, DHL and FedEX centers

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SUGGESTED ANSWER:

Certification of labor dispute for immediate assumption of jurisdiction by the Secretary refers to industries indispensable to national interest:

1. Bulletin Daily Newspaper, since access to information is a requirement for an

informed citizenry.

2. Shipping and port services, since the country needs domestic sea transport due

to our topography and for the smooth flow of business and government operations.

3. LBC, DHL and FedEX centers, since couriers are essential to foreign and domestic

business and government operations.

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

SUGGESTED ANSWER:

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

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

briefly.

SUGGESTED ANSWER:

No.

They are government employees, and as such, they do not have the right to strike.

Sec 3 of Art XIII of the Constitution states, “The State shall guarantee the rights of all workers to

self-organization, collective bargaining and negotiations, and peaceful concerted activities including the right to strike in accordance with law.”

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

ANOTHER SUGGESTED ANSWER:

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

POEA; POWERS AND FUNCTIONS.

CASE DOCTRINES

BOOK ONE

APPROVAL OF OVERSEAS CONTRACTS

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

REIMBURSEMENT OF OVERPAID FEES

POEA has the power to order refund or reimbursement of fees fraudulently or illegally collected, or in excess of what is legally allowed. (Eastern Assurance & Surety Corporation vs. Secretary of Labor).

ISSUANCE OF SEARCH AND SEIZURE ORDERS

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

ILLEGAL RECRUITMENT; CONCEPT.

ILLEGAL RECRUITMENT vis-à-vis ESTAFA

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A person convicted for illegal recruitment under the Labor Code can be convicted for violation of the Revised Penal Code provisions on estafa provided the elements of the crime are present (People vs. Calonzo).

BOOK TWO

APPRENTICESHIP AGREEMENTS: CONCEPT.

CONCEPT

An apprenticeship program needs prior approval by the Department of Labor and Employment. If employed without a pre-approved apprenticeship program, the apprentice is not an apprentice but a regular employee (Nitto Enterprises v. NLRC).

APPRENTICESHIP vis-à-vis EMPLOYER-EMPLOYEE RELATIONSHIP

There is no employer-employee relationship between students on one hand, and schools, colleges or universities, on the other, where there is written agreement between them under which the former agree to work for the latter in exchange for the privilege to study free of charge, provided, the students are given real opportunities, including such facilities as may be reasonable and necessary to finish their chosen courses under such agreement." (Implementing Rules of Book III, Rule X, Sec. 14)

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

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BOOK THREE

MANAGEMENT PREROGATIVE, DEFINED.

Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and the discipline, dismissal and recall of workers (San Miguel Brewery Sales vs. Ople).

CONDITIONS OF EMPLOYMENT; COVERAGE

INSURANCE AGENTS

An insurance company may have two classes of agents who sell its insurance policies: (1) salaried employees who keep definite hours and work under the control and supervision of the company; and (2) registered representatives who work on commission basis. The agents who belong to the first category are regular employees. Those who belong to the second category are not regular employees for they do not have to devote their time exclusively to or work solely for the company since the time and the effort they spend in their work depend entirely upon their own will and initiative (Great Pacific Life Insurance Corporation vs. Judico).

TEACHERS

College teachers are regular employees. The principal consideration in determining whether a workman is an employee or an independent contractor is the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but

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

JEEPNEY DRIVERS UNDER BOUNDARY SYSTEM

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

PIECE-RATE WORKERS

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

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

FISHERMEN

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

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

CONDITIONS OF EMPLOYMENT; HOURS OF WORK

WAITING TIME

Waiting spent by an employee shall be considered as working time if waiting is considered an integral part of his work or if the employee is required or engaged by an employer to wait (Zapanta v. National Alliance of Teachers and Office Workers Assoc, Sept. 5, 1980).

MEAL TIME

Meal time is NOT working time if the employee is completely freed from duties during his meal period even though he remains in the workplace (Pan American World Airways System [Phil.] vs. Pan American Employment Association).

Where work is continuous for several shifts, the mealtime breaks should be counted as working time for purposes of overtime compensation (National Dev’t Company vs. CIR and the National Textile Workers Union).

WORKING WHILE SLEEPING

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

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An employee who is required to remain on call on the employer’s premises or so close thereto that he cannot use the time effectively for his own purposes is working while “on call”. The time he stays in the place of work is considered hours worked (National Labor Union vs. Gotamco Lumber Co. vs. CIR).

NIGHT SHIFT DIFFERENTIAL

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

OVERTIME PAY

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

WAIVER OF OVERTIME PAY

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

NIGHT SHIFT DIFFERENTIAL AND OVERTIME PAY

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

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OVERTIME PAY BASED ON BASIC PAY

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

CONDITIONS OF EMPLOYMENT; HOLIDAY PAY AND SERVICE INCENTIVE LEAVES

ENTITLEMENT OF MONTHLY-PAID EMPLOYEES TO HOLIDAY PAY

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

ENTITLEMENT OF PART-TIME OR CONTRACTUAL WORKERS TO SERVICE INCENTIVE LEAVE

Bureau of Working Conditions, Advisory Opinion to Philippine Integrated Exporters, Inc. on the query about Conditions of Employment of Part-time Workers

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

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

CONDITIONS OF EMPLOYMENT; WAGES

SALARY EXCLUDES ALLOWANCES

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

BASIC WAGE AND COMMISSIONS

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

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

PROPORTIONATE 13 th MONTH PAY

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

WAGES; PAYMENT OF WAGES

NON-LAWYERS NOT ENTITLED TO ATTORNEY’S FEES

Although the law allows, under certain circumstances, non-lawyers to appear before the National Labor Relations Commission or any Labor Arbiter, however, this does not mean that they are entitled to attorney’s fees. Their act of representing, appearing or defending a party litigant in a labor case does not, by itself, confer upon them legal right to claim for attorney’s fees. Entitlement to attorney’s fees presupposes the existence of attorney-client relationship. This relationship cannot exist unless the client’s representative is a lawyer (Five J Taxi, et al. vs. NLRC).

WAGES; PROHIBITION REGARDING WAGES

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

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

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worker concerned; and (c) in cases where the employer is authorized by law or regulations issued by the Secretary of Labor (Apodaca vs. NLRC, et a.).

WAGE DISTORTION

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

(a) The concept of wage distortion assumes an existing grouping or classification of

employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of

employees.

(b)

Wage distortions have often been the result of government-decreed increases in

minimum wages. There are, however, other causes of wage distortions, like the merger of two companies (with differing classifications of employees and different wage rates) where the surviving company absorbs all the employees of the dissolved corporation.

(c) Should a wage distortion exist, there is no legal requirement that, in the rectification

of that distortion by readjustment of the wage rates of the differing classes of employees, the gap

which had previously or historically existed be restored in precisely the same amount. In other words, correction of a wage distortion may be done by reestablishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the differing classes of employees. (d) The reestablishment of a significant difference in wage rates may be the result of resort to grievance procedures or collective negotiations (National Federation of Labor vs. NLRC).

WORKING CONDITIONS; SPECIAL GROUP OF EMPLOYEES

STIPULATION AGAINST MARRIAGE (Article 136)

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

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The criterion is the personal comfort and enjoyment of the family of the employer in the home of said employer. While the nature of work of a househelper, domestic servant or laundry woman in a home or in a company staff house may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staff houses or within the premises of the business of the employer. In such instances, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee (Apex Mining Co., Inc. vs. NLRC).

BOOK FIVE

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

MEANING OF COMPULSORY ARBITRATION

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

CONTEMPT POWER

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

COMPROMISE AGREEMENTS AND RES JUDICATA