LABOR LAW REVIEW

Lecture/recitation notes
Atty. Marlon Manuel
Notes by Glenn T. Tuazon
RIGHT TO SELF-ORGANIZATION
Who can join a union?
o Anyone, whether for proft or not, and regardless of nature
(commercial, industrial, charitable, educational, etc.)
o Exceptions:
managerial
supervisory only by themselves
What is a union?
o See defnition
How do you form a union?
o Identify the bargaining unit
o Register the union
20% of members of bargaining unit
Constitution and by-laws
If you do not have 20% of the membership of the bargaining unit,
you cannot organize. T or F?
o False. You can still have a union, although not a legitimate
labor organization.
o You can still receive a charter from a federal union you do not
need to meet the 20% requirement to become a chartered
local.
o What is the signifcance of removing the 20% requirement
for chartered locals?
Consistent with policy that makes it easier to self-
organize.
o But why is an independent union still required to have the
20%? Why only make it easier for chartered locals?
You privilege chartered locals. You want unions that
are attached to parent federations, which already
have systems and support in place.
What is a federation?
o An umbrella organization a group of local unions forming the
national level (there are industry unions, ex. Banking unions;
while there are national federation from diferent industries)
An independent union is not part of a federation. T or F?
o False. An independent union can join a federation, after
independently organizing itself.
A chartered local is not an afliate. T or F?
o True, because it has to be created by the federation. See
below for the types of afliates.
Can a chartered local register as an independent union while
within the federation?
o Yes. It becomes an afliate.
o There are two types of afliates:
1. Independent frst, then joined federation.
2. Part of federation, then became independent but
did not leave the union.
What can a federation do versus other types?
o ONLY a federation can create another labor organization.
o An independent union cannot create another union. A
chartered local cannot, as well.
o N.B. A Trade union is not a legitimate labor organization.
Whats the diference between procedure for acquisition of legal
personality of an independent union and a chartered local?
o Independent union:
Obtain a certifcate of registration
o Chartered local:
Issuance of charter certifcate has limited legal
personality (to apply for certifcation election)
Do you need submission, or does legal
personality vest upon issuance of the certifcate?
Just upon the moment of issuance of charter
certifcate. No need for submission or fling.
Why is the personality limited?
Personality is only to apply for certifcation
election.
What documents must be submitted?
1. Chapters ofcers, addresses, principal
ofce of the chapter
2. Constitution, by-laws
Upon submission, what happens?
You obtain all rights and privileges of a
legitimate labor organization.
Whats the reason behind the diference in requirements?
o Note that you need to wait for the certifcate for independent
union; while for a chartered local, you just need to submit.
(IMPT!)
o Because you are not encountering an entirely new
organization; the chartered local is merely the creature of an
existing union.
How do you illustrate limited legal personality of a chartered
local?
o They do not possess all the rights of legitimate labor
organizations (which a chartered local becomes after
submission of documents):
Ex. Cannot conduct a strike
All chartered locals, upon fling for petition for certifcation
election have limited legal personality. T or F?
o False. Limited legal personality is an option that can be
exercised by a chartered local. Meaning, you can either
acquire full legal personality frst before fling for certifcation
election (by submitting the documents: a) list of ofcers, b)
constitution and by-laws); or you can do it the normal way and
obtain limited legal personality frst.
In the amendment introduced by RA 9481, R&F and supervisors
can be part of the same union. T or F?
o False. Only same federation, not same union.
o RA 9481 removed the prohibition against the joining together of
supervisory and R&F unions in a federation. It overturned
Atlas. This is not in Art. 245, but merely a jurisprudential
prohibition. So they can now mix in the same federation.
N.B. De La Salle qualifed the Atlas doctrine by
providing qualifcations (direct professional
relationship between supervisors and R&F, etc.).
So when Atlas was killed, the De La Salle
qualifcations also died.
Did RA 9481 allow comingling between R&F and supervisors?
o Yes. Allow within the same federation, without the
qualifcations set in law before.
o But no comingling within union or chartered local, because this
is prohibited by the Labor Code.
o What is the efect of this comingling?
Those not supposed to be part of the union are
deemed to be not included or part of the union.
BUT it is not a ground for cancellation of the
registration of the union. The Labor Code only
provides three grounds for cancellation of a unions
registration comingling is not one of these.
N.B. Art 245 speaks of eligibility of employees to
become union members. Even before RA 9481, the
SC clarifed that because the LC speaks of eligibility
of employees and not legitimacy of unions. So it
should not adversely impact the union, just the
employees.
What are these three grounds?
1. Misrepresentation, false statement, or
fraud in adoption/ratifcation of constitution or
by-laws or amendments to such; minutes of
ratifcation, or list of members taking part in
the ratifcation
2. Misrepresentation, false statement, or
fraud in election of ofcers, minutes of
election, and list of voters
3. Voluntary cancellation
o 2/3 of general membership
o In a meeting duly called for that
purpose
o Submitted by labor organizations
board, attested by president of org
Can an opposition be fled by another union or party, alleging any
of the grounds for cancellation against another union during the
fling for certifcation election?
o No. You cannot attack the validity of an organization
collaterally in a procedure for certifcation election. You have to
directly attack it.
o Is this an absolute rule?
No. Wait for this in the part on certifcation elections.
Extra questions
What is a trade union?
o It is the third level. It is a group of federations. This is why is
it not a legitimate labor organization. Its just a grouping of
diferent federations.
If a chartered local disafliates, does it lose its legal personality?
o Yes. Because its existence is dependent on the federation.
The legal personality is tacked on the point of creation, which
is the federation issuing a charter certifcate. (Consistent with
policy of RA 9481 on encouraging membership in federations)
What if a petition for cancellation is fled against the federation and
the federations personality is indeed cancelled?
o It also erases the legal personality of all the chartered locals.
o OLD EXCEPTION (does not apply anymore this is missing in
the new DO): if there is an existing CBA and the chartered local
is the administrator of the CBA, the chartered local will not exist
only until after the CBA expires.
BARGAINING AGENT AND CERTIFICATION ELECTION
<Copy from Jaja>
Pre-election proceedings
o Includes matters such as exclusion and inclusion of voters
Ex. when there is no employer-employee relationship;
when he is not a member of the bargaining unit
o How do you do undergo inclusion/exclusion?
Report to Med-Arbiter, who will note it in the minutes.
Undergo with normal conduct of elections. But actual
exclusion/inclusion only happens after the elections.
But what if they agree? Can there be removal
during pre-election?
Yes.
Normally, whats the status of the challenged
names?
They can vote. But the Med-Arbiter decides
after certifcation election.
But how can you exclude them?
o You segregate their votes, in
separate envelopes, because their
votes are otherwise anonymous.
Election proceedings
o If there are 500 voters, how many must vote for there to be
valid elections?
At least 251.
o What if there is a failure of election?
This happens when there is 50% or less valid votes
from the voters in the bargaining unit.
You DONT have to fle another petition. You can just
request through a motion to repeat the conduct of a
certifcation election.
o What are you voting on?
Either you vote for a union (Union A or Union B), or
vote for no union.
If there is just one union, its yes or no in favor of
Union X.
o How do you determine the winner?
Get the majority of those who actually voted with valid
votes.
What do you mean valid votes?
Those which are not spoiled ballots.
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 150
o Union B 200
o No Union 40
o Spoiled 10
o Is there a winning Union?
Yes. Union B got majority of 390 votes (at least 196
votes).
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 150
o Union B 150
o No Union 90
o Spoiled 10
o Is there a winning Union?
No. There will be a run-of election.
o What is your basis for determining whether there should
be a union, even if there is no majority?
At least 50% of ALL votes, including spoiled ballots,
voted for unions,
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 90
o Union B 100
o No Union 200
o Spoiled 10
o Is there a winner?
Yes. No Union won.
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 100
o Union B 100
o No Union 190
o Spoiled 10
o Is there a winner?
No, no choice got the magic number of 196.
o Will there be a run-of?
Yes, because the two unions got 50% of ALL the
votes (200 out of 400). (You count the spoiled ballots
in the total, but you dont care about what their
contents are [Gs question])
o What happens?
No union choice will be removed.
o N.B. In this situation, even if no union got most of the votes,
ONLY unions can participate in run of elections.
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 150
o Union B 95
o No Union 195
o Spoiled 10
o Is there a winner?
No. Nobody got a majority.
o Is there a run-of election?
No, because the two unions did not get at least 50%
of ALL the votes (200 out of 400).
o Is there a valid election?
Yes.
o What is the efect of this particular certifcation election?
The one-year bar applies. The certifcation election
has ended. It is as if no union won.
NOTE: Diferent base fgures based on example:
o 500 (for total amount of voters need 251 for valid elections)
o 390 (for majority need 196 which is 50%+1)
o 400 (whether there will be a run-of elections just 50%, not
50%+1)
For instance, of the 500 voters, 400 voted. 390 are valid votes.
o Union A 150
o Union B 95
o No Union 195
o CHALLENGED (not spoiled) 10
o what happens here?
You put Challenged persons X in one envelope and
put his/her name. You put Challenged persons Y in
another SEPARATE envelope and put the name.
o Do you open the segregated envelopes immediately after
elections?
Only if it will materially afect the result of the
elections.
o In this case, does it apply?
Yes, because there is no winner and any of those
challenged votes could lead to a winner.
Also, if none of the 10 votes is for no union it can
also help the two unions reach 200 votes to enable
run-of elections.
N.B. When they are qualifed as valid votes, 196 will
not be the majority number, because the base number
will increase.
o What is the reason why challenged ballots are treated this
way?
So you dont unduly expose their votes to scrutiny if
there is no need to do so.
Aside from the one-year bar from certifcation election, is there any
other bar for certifcation election?
o 1. Certifcation election bar <this>
- one year bar
o 2. Contract bar
Wait for the 60-day freedom period before the 5 year
period expires
o 3. Deadlock bar
o 4. Negotiation bar
Once negotiations are started within the 1
st
year, even
if there is no CBA at the end of the 1-year period, it
bars a subsequent CE
There is no incumbent EBR. So there was a certifcation election
(or consent election).
o From the CE, you have 1 year bar. This protects the union that
won the CE, through a one-year protection to give it a chance
to negotiate with the employer as regards a CBA.
o After 1 year, the ideal situation is that there is CBA. This
extends the 1 year period to a 5-year period.
There is a short window period (60 day freedom
period before the expiration of the 5 year term of the
CBA)
o N.B. (very important) If you dont have a CBA and you are
nearing the end of the frst year, in the past, you need a
deadlock to bar subsequent CE. NOW, there is no more need
for a CBA or a deadlock, because as long as you have started
negotiations and you have sustained negotiations beyond the
frst year, you are still protected.
What are the two kinds of consent elections?
o If Union A and B decide to have elections without participation
of DOLE, it has no efect of a valid CE. It only determines the
majority.
o But if Union A and B agree to have elections, but involve the
Med-Arbiter and the DOLE, then it has efect of valid CE.
COLLECTIVE BARGAINING
What is collective bargaining?
o Agreement between employer and employee as to terms of
employment (benefts, conditions of work), and dispute
settlement (ex. grievance machinery).
How do you start collective bargaining?
o Submission of the EBR to the employer of notice to collectively
bargain, along with proposal
o Then the employer will submit a counterproposal
What next?
o They will negotiate (do not proceed to the NCMB immediately,
contrary to what the provision of law suggests!). You can meet
several times, over a period, until you have discussed each
provision.
o If you have exhausted all eforts, you will reach a point where
there can be no agreement or movement in the positions of the
parties as to particular provisions.
What if the employer refuses to respond to the EBRs proposal?
o There is Unfair Labor Practice violation of the duty to bargain
collectively.
o It can be submitted to the Labor Arbiter.
o The penalty for management for refusing to bargain the
proposal becomes the new CBA
What if you refuse to go to the labor arbiter?
o You can use it as a ground to fle a notice of strike.
o You cannot do both. These two remedies are mutually
exclusive.
What is the term of the CBA?
o It can be fxed by the parties. It can be 20 years, whatever, but
subject to the fve-year period.
o What happens after fve years?
There is a freedom period (60-days before the end of
the fve years) to possibly hold another CE.
o What happens before the end of the third year?
N.B. Use the term underlined to be precise.
You can renegotiate the economic provisions of the
CBA.
How do you do the renegotiation?
The terms of the CBA will be reexamined.
Who will start it?
o The union. You will not expect the
employer to start it.
o The union submits a proposal for
modifcation. The same
principle/penalty for management
refusing to bargain will apply the
proposal becomes the new CBA if
management refuses to respond.
What if the union does not submit a
proposal?
o Then the existing CBA will persist.
o Can the parties renegotiate on the frst year? The second
year?
Yes, but only if the parties both agree.
But on the third year, the law mandates bargaining.
This is valid:
o There is a CBA that covers fve years, giving wage increases
for the frst, second, and third years, leaving the fourth and ffth
years open.
o Or it can provide for wage increases in years four and fve, but
subject to renegotiation.
A CBA expires after fve years. You commence negotiations for a
new CBA. (Alternatively, renegotiations, if the CBA is not yet
expiring, but after 3 years.) What is the relevance of the six month
period?
o Agreement between the parties on the new CBA will retroact to
the beginning of the frst date after expiration, if they agree
within 6 months from expiration.
Here, the law mandates retroactivity.
o If they agree after six months post expiration of the CBA, the
parties will determine when the CBA is deemed to have
commenced.
There can still be retroactivity, but optional.
Does the six month period apply to mid-term renegotiation period?
o No. The six month period only applies to a new CBA. The
provision only speaks of expiration so it must involve a new
CBA.
If there is no agreement on retroactivity, what must the Secretary
of Labor do after he assumes jurisdiction?
o There is an SC case that says the CBA must retroact to the frst
after the end of the six month period. BUT there is no basis for
this. This seems like an invention of the SC.
In case you have a situation when there is a new CBA entered into
after the six month period and there is no retroactivity. So there is
a gap (ex. 10 months). What happens?
o There is a hold-over principle where the frst CBA will be
deemed to exist in the meantime.
o What if there is a four month interim instead?
In the interim, the frst CBA will hold-over for the
meantime.
But since there is an agreement within six months, the
new CBA retroacts to replace the efects of the frst
CBA. (Ex. Back pay of wage diferentials)
STRIKES
How are strikes related to CBA?
o One of the grounds for strike is a bargaining deadlock
T/F You cannot strike before negotiation.
o False, you can strike on ULP.
T/F You cannot strike before certifcation election.
o False. If there is no EBR, an LLO can strike on ULP and LLO.
T/F You cannot strike before you register in the DOLE.
o True. Because an LLO has to be registered with DOLE.
T/F If you are not an independent union, hence a chartered union,
you cannot strike without having registered with DOLE.
o True. Because the charter certifcate only gives your
personality to fle for certifcation.
T/F If you are a chartered local, and you submitted all
requirements, can you strike?
o Yes. Upon submission, you have all the rights of an LLO. (No
need to wait for approval)
When can you strike?
o There are only two. No other:
o 1. ULP
o 2. Deadlock in collective bargaining
What is ULP?
o Acts of the employer or the labor organization that violate the
right to organize.
o Youre not being paid OT pay. Is this ULP?
No, not in itself. It must be done in order to
discourage membership in a labor organization.
TEST: It must be related to the exercise of an
employees right to self-organize.
Can the employer only commit ULP when there is a union?
o No. [GT: I think, grounds B and F in 247]
Can ULP be committed only by the employer?
o No. The labor organization can commit it too (248).
Can there be a strike when there is no union?
o No. There has to be a union.
What if the temporary work stoppage becomes permanent?
What is the defnition of strike?
o Temporary stoppage of work by concerted action arising from a
labor dispute between employer and employee.
o Requisites?
1. Temporary stoppage of work
2. Concert action
3. From labor dispute between employer and
employee
o What does concerted action mean?
Group of employees. At least two.
o 10 employees can there be a valid strike?
As long as initiated by the labor union.
o If not initiated by a labor union, is it still a strike?
Yes, but its not a valid strike.
Is a violation of a CBA an ULP?
o If it amounts to ULP (Economic provision + malice).
o All other violations are just grievances its still an actionable
wrong, but not ULP. You go to the grievance machinery.
o If you strike on the basis of a grievance, what happens?
It is not a valid strike.
N.B. The distinction between gross and simple violations only applies
to violations of the CBA. Do not get confused.
T/F If there is no dispute with the employer, there can be no
strike.
o True.
o Is a welga ng bayan a strike?
No. There is no employer-employee dispute. It is a
mere sympathy strike.
Its a mass action that could lead to possible
dismissal.
o Is it proper to call it an illegal strike?
No. Because its not a strike in the frst place, so you
dont even go into the inquiry whether its a legal or
illegal strike.
If its not an egg, do not call it a rotten egg. Its not an
egg. The SC is guilty of doing this a lot.
Although jurisprudence calls it a strike. Be careful.
But in the Bar exam, follow this classifcation.
The SC has upheld certain actions by employees, ex. wearing
armbands, having placards as valid expressions. But after the Dusit
case, it seems unclear if these will already be considered as work
stoppage or mass action. (NUWHRAIN Dusit Hotel Nikko Chapter v. CA,
November 11, 2008)
There was a case where the employees did not apply for a permit to
strike, but just applied for a mayors permit to hold a rally, on the theory
that it is not a strike, but a mass action.
o But the SC held that it is a strike because there is work
stoppage; because they applied for work leaves, and there is a
dispute existing.
Is a prayer rally a strike?
o No, as long as it does not disrupt the work of those in duty. A
hot tip is to include as well non-members of the union. And it is
no question, valid, if done after work hours. If done during
work hours, do not disrupt.
T/F If there is no actual ground for a strike, there is no legal
strike.
o False. You can have a good faith strike, when the union in
good faith believed there is a ground to strike, even if it is found
not to have actually existed.
o There must be actions done by the employer that would justify
the belief that there was ULP committed.
What do you do?
o 1. File notice to strike stating that you intend to hold a strike on
the stated ground to the Regional Ofce of the DOLE
*TAKE NOTE of the cooling of period below
What if you dont have an intended date?
Its not required in the IRR.
So in this case, how do you peg 15 and 30
days?
o [no answer]
o 2. Inform the NCMB (DOLE) at least 24 hours before the strike
vote
This is the second notice. The purpose is to inform
the NCMB and give it a chance to supervise the strike
vote, and give it ample time to deploy personnel
When do you fle this?
Anytime after notice to strike.
Should the union wait for a DOLE representative?
No, because it is not mandatory.
o 3. Hold strike vote
It has to be done after fling notice of strike. There is
no specifc period.
Majority vote of whom?
Union members only
This is diferent from the eligible voters in a
certifcation election
Third notice: notice of result of strike vote
o 4. 7 day strike ban
Count this 7-day ban from the time you submitted the
strike-vote results
Can it be counted within the cooling of period?
It can be wholly within, partly within, or
entirely outside the cooling of period.
Just use the submission of the results of the
strike-vote as the starting point.
What is the purpose of this?
Allow DOLE to confrm the results of the
vote, and allow any party to contest the
results.
Can they wait several weeks after to conduct the
actual strike?
Yes.
What is the cooling of period?
o At least 30 days before intended date of strike for CBA
deadlock
o At least 15 days for ULP
Exception: No cooling-of period for union-busting,
such as dismissal of union ofcers who are duly-
elected ofcers (take note of the duty elected part)
Does termination of an appointed ofcer fall
within this exception?
No.
o What is the reason for 30 and 15 days?
To give the parties chance to cool-of, in order to
reconcile.
What if the strike ban is over but the cooling of period is not?
o You cannot strike yet. Wait for the cooling of period to end.
What if the cooling of period is done, but the strike ban is not?
o Same. Wait for the strike ban to end.
How many notices all-in-all do you need for a valid strike?
o Three notice of strike, notice of conduct of strike vote, notice
of strike vote results
[Class question] What if the employer commits ULP against the
minority union but the EBR doesnt strike on behalf of the minority
union. Can the minority strike?
o Sir. MM Yes they should be able to, based on ULP.
Especially when the EBR is in cahoots with the employer.
o Jurisprudence No, they cannot.
Can there be an illegal strike vote?
o No such thing; there is no requirement that should be complied
with.
o But what if there is absence of notice of strike vote?
There is defect in notice, but the strike vote itself is not
illegal.
After complying with all the four steps, what else do you have to
comply with?
o Cannot perform acts that would render a strike illegal.
o Ex. violence
What are the prohibited acts of employer?
o Employing strike breakers
o Etc.
Should the employer wait for a case to be fled in order to fre an
employee who committed an illegal act? Should the employer wait
for a determination that the strike is illegal?
o No. The act is illegal, independent of whether the strike is
illegal or not. So the employer just has to follow the regular
procedure of terminating an employee, independent of any
holding in a case.
Recent case: statements or charges made by strikers against
management or company were considered illegal activities that would
convert an otherwise valid strike into an illegal strike.
o Ex. Libelous, statements against products or services
o Although general rule is that a strike is a confict situation, so
the language used is expected to be strong.
So when does a strike change from valid to illegal due to the acts
of the strikers?
o It is a factual question. It is case-to-case basis.
o A single or isolated act of violence does not convert. Only if
the violence is pervasive.
What is assumption of jurisdiction?
o The Secretary will decide the confict him or herself.
o Without the assumption order, the dispute will not be decided
by government. Patagalan at patigasan. The parties have to
decide the confict themselves.
Distinguish from court jurisdiction over a case.
o In assumption, the parties do not initiate it; the Secretary steps
in.
o Is it still an assumption even if a petition is fled?
Yes.
o What happens in an assumption order?
Enjoin pending strike or ongoing strike. Workers have
to return to work or cannot pursue the strike.
How diferent is assumption from certifcation order?
o Assumption: Secretary will decide the case. Certifcation:
refers the matter to the NLRC. The NLRC will decide the case.
o Both are interventions of government that convert the issue into
a case to be decided upon by the Secretary or NLRC
respectively.
What are the implications/efects of assumption order?
o Immediately return to work.
o Secretary of Labor issues a Return to Work Order in addition to
the assumption order.
o Can you have an assumption order with a return to work
order? What if there is no return to work order?
The return to work order is automatic with the
assumption order. It is necessarily implied.
Otherwise, its a free vacation for the laborers! Steel
Corp. v. SMP
o Go back to status quo ante. The employer must accept the
employees under the same terms and conditions as before.
To whom do you serve the assumption order?
o To the union, and to the employer.
o Serve to the president usually, as agent.
What is the efect of declaration of illegality of a strike? What if the
union ofcers did not participate in the strike and were reporting
for work, but then the rest of the union were striking?
o Union members will not be terminated, unless they performed
illegal acts during the strike.
o Union ofcers can be terminated. Even if they did not actually
physically participate in the strike.
o When can you terminate all strikers?
When there is a Return to Work Order and they
refused to comply with it.
And this RWO only happens when there is an
Assumption or Certifcation.
So mass termination cannot happen in ordinary
strikes there has to be defance of RWO, which can
only be issued in an Assumption or Certifcation
Order.
o Of course, if everyone committed illegal activities, everyone will
be terminated not because of the strike per se, but because of
individual actions, even if the strike per se is legal.
When is there an award of backwages?
o There is no reward of backwages, even if the strikers win.
Can employers hire replacement workers?
o Yes, employers can.
In sum, what are the four grounds to make a strike valid
o 1. Ground
o 2. Procedure
o 3. Conduct
o 4. Compliance with return to work
Employer-employee relationship
Why is it important to determine EER?
o It determines the legal relationship between the parties, and
their rights and obligations.
How do you determine whether there is an EER?
o Four-fold test
1. Selection and hiring
2. Payment of wages
3. Power to dismiss the employee
4. Control over how the employee performs his
functions
o How do you determine when there is control?
Determine how the employee performs the functions,
not just the end product
There is no control under the EER if the employer just
says the end product or goal
o What about employees working outside the facilities, are
they still under control of the employer?
They still can be under the control of the employer.
Ex. taxi cab drivers.
Distinguish giving details on the work, supervision on the manner
of doing the work:
o Instructions, no matter how detailed, may not actually indicate
control. If the details pertain to the product itself, then you are
not controlling the work. (Ex. you say that you want a barong
that has gold buttons, long sleeves, made of a certain tela,
etc.)
o If the details pertain to the work itself, there is control.
o N.B. So reporting about collections, or progress of the chair
being construction these reports are really just about the
end product, and do not indicate control. So even reports do
not always indicate control.
Should the power be exercised?
o No, need not be. Just as long as its available.
o How can you prove it if its not exercised?
If there is a written agreement, you can point to
certain provisions.
o What if there is no written contract or any proof of the
instructions given?
Usually you can prove it by the fact that he is within
the company premises. That his presence is
permitted by the school, and he is given an ID, are
strong indicators. Working in a place controlled by the
employer is a good indicator.
In the above examples, there are only two parties. But if there are
multiple parties involved and there are multiple suspected
employers, how do you determine who the employer is?
o Control is the strongest factor. For instance, A hires, B fres, C
pays, and D controls. D is the employer.
Contracting arrangement
Whats a contracting arrangement?
o There are three parties: the principal, the contractor, and the
employee
o There are two contracts between the principal and contractor,
and the contractor and the employee
What is the relationship between the principal and the worker?
o The principal is the indirect employer.
o Principle why this is so: the work is always for the principal. It
redounds to his beneft.
N.B. This does not refer to all situations where there is
a complicated process/production line, where
ultimately, what is produced by employer goes to the
principal. For instance, some outsourcing
transactions are not contracting arrangements. Just
take note of this.
The principal has no liability to the employee is you have a
legitimate contracting arrangement. T/F?
o False. The principal is solidarily liable for failure to pay wages.
What are the rights of the parties in a legitimate contracting
arrangement?
o The principal is the indirect employer.
o Contractor is the direct employer.
o Employee is, well, the employee.
In an illegitimate contracting relationship?
o Principal is the direct employer
o Contractor is the agent of the principal
o Employee is still the employee
How diferent are the responsibilities of the principal is the two
relationships?
o Legitimate principal is solidarily responsible if the employer-
contractor cannot pay the wages due
o Illegitimate principal is principally liable for the wages
When is there solidary liability?
o In EITHER contractual arrangement.
o But in the illegitimate contractual arrangement, the solidary
liability is not as important, because they are targeting the
principal usually. But it is wrong to say that the contractor is
not solidarily liable. It is solidarily liable; otherwise it will be in a
better position than the legitimate contractor. But for all intents
and purposes they just go to the principal anyway.
What is the diference though?
o In legitimate labor contracting, the principal is only liable if the
contractor fails to pay wages.
NOTE: Under Art. 106, the principal is ONLY liable for
failure to pay wages by the contractor for work
performed, but the principal is NOT their employer for
any other purpose. Nothing else. Not even back-
wages stemming from illegal termination.
Note: Under Art. 109, solidary liability is established
between principal and contractor. In 109, there is no
diference between legitimate and illegitimate
contractors, as to solidary liability.
o In illegitimate labor contracting, the principal is employer even
beyond this single circumstance. It is, for all intents and
purposes, just like any other employer. It is liable not just for
payment but for responsibilities of the employer.
o If the illegitimate contractor already paid the wages, is the
principal still liable?
Not anymore, because the principal/employers agent
has paid.
What if there a violation of the Labor Code?
o For legitimate contracting arrangement, the principal is
generally not liable, unless it has participated or connived in
the violation. Remember, the principal is just liable under one
circumstance: payment of wages for work performed. Nothing
else.
o Take note of Rosewood case, which laid down that there must
be fnding of fault in the principal to hold it liable for violation of
Labor Code.
What is a legitimate contracting arrangement?
o 1. The contractor has sufcient capital
o 2. Employees do not perform work directly related to the
business of the principal
o 3. Contractor has control
When does it become a labor-only contracting arrangement? Does
it have to violate all three grounds or just one?
o Do not be confused by the structure of the defnition in Dept.
Order 18-02. You go back to Art. 100. One disqualifcation
out of three is the more reasonable interpretation.
o For legitimate contractor you have to meet ALL requirements.
o For illegitimate you miss just one, you are illegitimate.
o N.B. In the old rules, there was a defnition of an independent
contractor. We only have the defnition of a labor-only
contractor.