Labor Law

I. CONSTITUTIONAL PROVISIONS
A. Construction in favor of Labor
Moreover, it is a well-settled doctrine that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. It is a timehonored rule that in controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing, should be resolved in the
formers favor. The policy is to extend the doctrine to a greater number of employees who can
avail themselves of the benefits under the law, which is in consonance with the avowed policy of
the State to give maximum aid and protection to labor. (Lepanto Consolidated Mining Co. vs.
Moreno Dumapis, et. al., G.R. No. 163210 August 13, 2008).

B. Protection to Labor
Art. XIII, Sec. 3: "The State shall afford full protection to labor...."
In affording full protection to labor, this Court must ensure equal work opportunities regardless of
sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile
relationship between employees and employers, we are mindful of the fact that the policy of the
law is to apply the Labor Code to a greater number of employees. This would enable employees
to avail of the benefits accorded to them by law, in line with the constitutional mandate giving
maximum aid and protection to labor, promoting their welfare and reaffirming it as a primary
social economic force in furtherance of social justice and national development. (Angelina
Francisco vs NLRC. G.R. No. 170087 August 31, 2006).

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment under the fundamental law is that the cause of labor does not
prevent us from sustaining the employer when the law is clearly on its side. (Estrellita G. Salazar
vs Philippine Duplicators, Inc, G.R. No. 154628 December 6, 2006).

Dismissal is the ultimate penalty that can be meted to an employee. The Constitution does not
condone wrongdoing by an employee; nevertheless, it urges a moderation of the sanction that
may be applied to him. Where a penalty less punitive would suffice, whatever missteps may have
been committed by the worker ought not to be visited with a consequence so severe such as
dismissal from employment. For the Constitution guarantees the right of the workers to security
of tenure. The misery and pain attendant to the loss of jobs then could be avoided if there is
acceptance of the view that under certain circumstances of the case the workers should not be
deprived of their means of livelihood. Indeed, the consistent rule is that if doubt exists between
the evidence presented by the employer and the employee, the scales of justice must be tilted in
favor of the latter. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause. (Marival Trading Inc. vs NLRC. G.R. No. 169600 June 26,
2007).

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II. ILLEGAL RECRUITMENT

A. Elements of illegal recruitment
In order to hold a person liable for illegal recruitment, the following elements must concur: (1) the
offender undertakes any of the activities within the meaning of recruitment and placement under
Article 13(b)20 of the Labor Code, or any of the prohibited practices enumerated under Article 34
of the Labor Code (now Section 6 of RA 8042) and (2) the offender has no valid license or
authority required by law to enable him to lawfully engage in recruitment and placement of
workers. In the case of illegal recruitment in large scale, a third element is added: that the
offender commits any of the acts of recruitment and placement against three or more persons,
individually or as a group. All three elements are present in the case at bar. (People of the
Philippines v. Melissa Chua and Clarita NG Chua. G.R. No. 187052 September 13, 2012)

Inarguably, appellant Chua engaged in recruitment when she represented to private complainants
that she could send them to Taiwan as factory workers upon submission of the required
documents and payment of the placement fee. The four private complainants positively identified
appellant as the person who promised them employment as factory workers in Taiwan for a fee of
P80,000. The Senior Labor Employment Officer of the POEA presented a certification to the
effect that appellant Chua is not licensed by the POEA to recruit workers for overseas
employment. The prosecution witnesses were positive and categorical in their testimonies that
they personally met appellant and that the latter promised to send them abroad for employment.
Appellant cannot escape liability by conveniently limiting her participation as a cashier of Golden
Gate. The provisions of Article 13(b) of the Labor Code and Section 6 of RA 8042 are
unequivocal that illegal recruitment may or may not be for profit. It is immaterial, therefore,
whether appellant remitted the placement fees to the agencys treasurer or appropriated them.
(People of the Philippines v. Melissa Chua and Clarita NG Chua. G.R. No. 187052
September 13, 2012).

Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by
non-licensees or non-holders of authority are deemed illegal and punishable by law. When the
illegal recruitment is committed against three or more persons, individually or as a group, then it
is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a
form of economic sabotage. But to prove illegal recruitment, it must be shown that the accused,
without being duly authorized by law, gave complainants the distinct impression that he had the
power or ability to send them abroad for work, such that the latter were convinced to part with
their money in order to be employed. It is important that there must at least be a promise or offer
of an employment from the person posing as a recruiter, whether locally or abroad. (People of
the Philippines vs. Teresita Tessie Laogo. G.R. No. 176264 January 10, 2011).

1. Simple illegal recruitment

The Supreme Court defines 4 types of illegal recruitment:
(a) Simple or licensee: illegal recruitment committed by a licensee or holder of authority
against one or two persons only;

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(b) Non-licensee: illegal recruitment committed by any person who is neither a licensee
nor holder of authority
(c) Syndicated;
(d) Large scale or qualified
People vs. Sadiosa

2. Illegal recruitment by a syndicate or committed in large scale

Accused-appellants posits that the prosecution failed to prove that there were more than
two persons involved in the alleged crime of illegal recruitment for it to be qualified as
syndicated illegal recruitment, since the trial court held only two of the accused liable for
the crime. The Supreme Court however dismissed accused-appellants contention. In this
case, the prosecution was able to establish that accused-appellants Bernadette and
Franz were not the only ones who had conspired to bring the victims to Malaysia. It was
also able to establish at the very least, through the credible testimonies of the witnesses,
that (1) Jun and Macky were the escorts of the women to Malaysia; (2) a certain Tash
was their financier; (3) a certain Bunso negotiated with Macky for the price the former
would pay for the expenses incurred in transporting the victims to Malaysia; and (4)
Mommy Cindy owned the prostitution house where the victims worked. The concerted
efforts of all these persons resulted in the oppression of the victims. Clearly, it was
established beyond reasonable doubt that accused-appellant, together with at least two
other persons, came to an agreement to commit the felony and decided to commit it. The
accused appellants were convicted of the crime of illegal recruitment committed by a
syndicate. (People of the Philippines v. Nurfrashir Hashim y Saraban, et al. G.R. No.
194255 June 13, 2012).

In the case at bar, the foregoing elements are present. Appellant, in conspiracy with her
co-accused, misrepresented to have the power, influence, authority and business to
obtain overseas employment upon payment of a placement fee which was duly collected
from complainants Rogelio Legaspi, Dennis Dimaano, Evelyn Estacio, Soledad Atle and
Luz Minkay. Further, the certification issued by the Philippine Overseas Employment
Administration (POEA) and the testimony of Ann Abastra Abas, a representative of said
government agency, established that appellant and her co-accused did not possess any
authority or license to recruit workers for overseas employment. And, since there were
five (5) victims, the trial court correctly found appellant liable for illegal recruitment in
large scale. (People of the Philippines vs Beth Temporada. G.R. No. 173473
December 17, 2008).

The appellant is guilty of large scale illegal recruitment. The essential elements of large
scale illegal recruitment are: a) the offender has no valid license or authority required by
law to enable him to lawfully engage in recruitment and placement of workers; b) the
offender undertakes any of the activities within the meaning of recruitment and
placement under Article 13(b) of the Labor Code, or any of the prohibited practices
enumerated under Article 34 of the said Code (now Section 6 of RA 8042); and c) the
offender committed the same against three (3) or more persons, individually or as a
group, are present in this case. The prosecution adduced proof beyond reasonable doubt

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that the appellant enlisted the three (3) complainants for overseas employment without
any license to do so. (People of the Philippines v. Mariavic Espenilla y Mercado. G.R.
No. 193667 February 29, 2012).

3. Liabilities
The above provisions are clear that the private employment agency shall assume joint
and solidary liability with the employer. This Court has, time and again, ruled that private
employment agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of employment. This
joint and solidary liability imposed by law against recruitment agencies and foreign
employers is meant to assure the aggrieved worker of immediate and sufficient payment
of what is due him. This is in line with the policy of the state to protect and alleviate the
plight of the working class. (Santosa B. Datuman vs. First Cosmopolitan Manpower
and Promotion Services Inc. G.R. No. 156029 November 14, 2008).

Private employment agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of employment. This
joint and solidary liability imposed by law against recruitment agencies and foreign
employers is meant to assure the aggrieved worker of immediate and sufficient payment
of what is due him. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the aforesaid claims and damages.
(Becmen Service Exporter vs. Spouses Simplicio and Mila Cuaresma. G.R. Nos.
182978-79, G.R. Nos. 184298-99, April 7, 2009).

4. Theory of imputed knowledge

The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the
principal, employer Xiong, not the other way around. The knowledge of the principalforeign employer cannot, therefore, be imputed to its agent Sunace. There being no
substantial proof that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As such, it and its
"owner" cannot be held solidarily liable for any of Divinas claims arising from the 2-year
employment extension. (Sunance International Management Services, Inc. vs NLRC.
G.R. No. 161757
January 25, 2006).

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III. LABOR STANDARDS

A. Hours of work
The philosophy underlying the exclusion of piece workers from the Eight-Hour Labor Law is that
said workers are paid depending upon the work they do "irrespective of the amount of time
employed" in doing said work. Such freedom as to hours of work does not obtain in the case of
the laborers herein involved, since they are assigned by the employer to work in two shifts for 12
hours each shift. Thus it cannot be said that for all purposes these workers fall outside the law
requiring payment of compensation for work done in excess of eight hours. At least for the
purpose of recovering the full differential pay stipulated in the bargaining agreement as due to
laborers who perform 12 hours of work under the night shift, said laborers should be deemed pro
tanto or to that extent within the scope of the afore-stated law. (Red Coconut Products, Ltd. vs
CIR. G.R. No. L-21348 June 30, 1966).

The Court reiterated that the rendition of overtime work and the submission of sufficient proof that
said work was actually performed are conditions to be satisfied before a seaman could be entitled
to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In
short, the contract provision guarantees the right to overtime pay but the entitlement to such
benefit must first be established. Realistically speaking, a seaman, by the very nature of his job,
stays on board a shipor vessel beyond the regular eight-hour work schedule. For the employer to
give him overtime pay for the extra hours when he might be sleeping or attending to his personal
chores or even just lulling away his time would be extremely unfair and unreasonable. (StoltNielsen Marine Services (Phils.) Inc. vs. NLRC. G.R. No. 109156. July 11, 1996).

Petitioner did not submit to the secretary of labor a proposed wage rate based on time and
motion studies and reached after consultation with the representatives from both workers' and
employers' organization which would have applied to its piece-rate workers. Without those
submissions, the labor arbiter had the duty to use the daily minimum wage rate for nonagricultural workers prevailing at the time of private respondent's dismissal, as prescribed by the
Regional Tripartite Wages and Productivity Boards. Put differently, petitioner did not take the
initiative of proposing an appropriate wage rate for its piece-rate workers. In the absence of such
wage rate, the labor arbiter cannot be faulted for applying the prescribed minimum wage rate in
the computation of private respondent's separation pay. In fact, it acted and ruled correctly and
legally in the premises. It is clear, therefore, that the applicable minimum wage for an eight-hour
working day is the basis for the computation of the separation pay of piece-rate workers like
private respondent. The computed daily wage should not be reduced on the basis of
unsubstantiated claims that her daily working hours were less than eight. Aside from its bare
assertion, petitioner presented no clear proof that private respondent's regular working day was
less than eight hours. (Pulp and Paper, Inc. vs NLRC. G.R. No. 116593 September 24, 1997).

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private

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respondents act, therefore, of going home to take his dinner does not constitute abandonment.
(Philippine Airlines vs. NLRC. G.R. No. 132805 Feb. 2, 1999).

There is no dispute that petitioners were employees of private respondents although they were
paid not on the basis of time spent on the job but according to the quantity and the quality of work
produced by them. There are two categories of employees paid by results: (1) those whose time
and performance are supervised by the employer. (Here, there is an element of control and
supervision over the manner as to how the work is to be performed. A piece-rate worker belongs
to this category especially if he performs his work in the company premises.); and (2) those
whose time and performance are unsupervised. (Here, the employers control is over the result of
the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are
paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where
work is done in the company premises, while payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in sugar plantations where the work is performed in
bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised
employees.(Avelino Lambo vs NLRC. G.R. No. 111042 October 26, 1999).

In any event, the parties stipulated:

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. (Interphil
Laboratories Employees Union vs Interphil Laboratories. G.R. No. 142824. December 19,
2001)
With respect, however, to the award of overtime pay, the correct criterion in determining whether
or not sailors are entitled to overtime pay is not whether they were on board and cannot leave
ship beyond the regular eight working hours a day, but whether they actually rendered service in
excess of said number of hours. In the present case, the Court finds that private respondent is not
entitled to overtime pay because he failed to present any evidence to prove that he rendered
service in excess of the regular eight working hours a day. (PCL Shipping Philippine, Inc. and
U-Ming Marine Transport Corporation, vs NLRC. G.R. No. 153031,December 14, 2006).

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Apropos the monetary claims, there is insufficient evidence to prove petitioners entitlement
thereto. As crew members, petitioners were required to stay on board the vessel by the very
nature of their duties, and it is for this reason that, in addition to their regular compensation, they
are given free living quarters and subsistence allowances when required to be on board. It could
not have been the purpose of our law to require their employers to give them overtime pay or
night shift differential, even when they are not actually working. Thus, the correct criterion in
determining whether they are entitled to overtime pay or night shift differential is not whether they
were on board and cannot leave ship beyond the regular eight working hours a day, but whether
they actually rendered service in excess of said number of hours. In this case, petitioners failed
to submit sufficient proof that overtime and night shift work were actually performed to entitle
them to the corresponding pay. (Lazaro V. Dacut, et al. vs CA, et al., G.R. No. 169434 March
28, 2008).

Hence, it being improbable that respondent rendered overtime work during the unexpired term of
his contract, the inclusion of his guaranteed overtime pay into his monthly salary as basis in the
computation of his salaries for the entire unexpired period of his contract has no factual or legal
basis and the same should have been disallowed. (Bahia Shipping Services, Inc. vs. Reynaldo
Chua. G.R. No. 162195 April 8, 2008).

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the
employees will derive from the adoption of a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for establishments wishing to save
on energy costs, promote greater work efficiency and lower the rate of employee absenteeism,
among others. Workers favor the scheme considering that it would mean savings on the
increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack
expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest,
leisure, family responsibilities, studies and other personal matters, and that it will spare them for
at least another day in a week from certain inconveniences that are the normal incidents of
employment, such as commuting to and from the workplace, travel time spent, exposure to dust
and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally
observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours
from Monday to Friday without the employer being obliged for pay overtime premium
compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the
benefits abovecited that will accrue to the employees. Moreover, the adoption of a compressed
workweek scheme in the company will help temper any inconvenience that will be caused the
petitioners by their transfer to a farther workplace.( Bisig Manggawa sa Tryco, et al. vs. NLRC,
et al., G.R. No. 151309 October 15, 2008).

In the absence of any concrete proof that additional service beyond the normal working hours and
days had been rendered, overtime pay cannot be granted. Handwritten itemized computations
are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no
way of verifying the truth of the handwritten entries stated therein.(AbdulJuahid R. Pigcaulan
vs. Security and Credit Investigation, Inc. G.R. No. 173648, January 16, 2011).

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A claim for overtime pay will not be granted in the absence of any factual and legal basis. In this
respect, the records indicated that the labor arbiter granted Meneses claim for holiday pay, rest
day and premium pay on the basis of payrolls. There is no such proof in support of Meneses
claim for overtime pay other than her contention that she worked from 8:00 a.m. up to 5:00 p.m.
She presented no evidence to show that she was working during the entire one hour meal break.
The Supreme Court thus found the NLRCs deletion of the overtime pay award in order. (Emirate
Security and Maintenance Systems, Inc. vs. Glenda M. Menese. G.R. No. 182848 October 5,
2011).
However, the Court decided that they are not entitled to overtime and premium pays. The burden
of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the
employee because these are not incurred in the normal course of business. In the present case,
the petitioners failed to adduce any evidence that would show that they actually rendered service
in excess of the regular eight working hours a day, and that they in fact worked on holidays and
rest days. (Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013).

B. Wages
The term "wages" differs from the term "salary." Wages apply to compensation for manual labor,
skilled or unskilled, paid at stated times and measured by the day, week, month or season; while
salary denotes a higher grade of employment or a superior grade of services and implies a
position or office. By contrast, the term "wages" indicates a considerable pay for a lower and less
responsible character of employment, while "salary" is suggestive of a larger and more important
service)
The distinction between salary and wage in Gaa vs CA was only for the purpose of Art. 1708 of
the Civil Code which provides that "the laborers' wage shall not be subject to execution or
attachment except for debts incurred for food, shelter, clothing, and medical attendance.
(Rosario A. Gaa vs CA G.R. No. L-44169
Dec. 3, 1985).

Every worker should, according to the Labor Code, "be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than ten (10)
workers;" this, of course, even if the worker does no work on these holidays. The regular holidays
include: "New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the
twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth of December, and the
day designated by law for holding a general election (or national referendum or plebiscite).
(Wellington Investment and Manufacturing Corp. vs. Cresenciano B. Trajano
G.R. No. 114698
July 3, 1995).

The Labor Arbiter accepted hook, line and sinker the private respondents bare claim that the
reason the monetary benefits received by petitioner between 1981 to 1987 were less than the
minimum wage was because petitioner did not factor in the meals, lodging, electric consumption
and the water she received during the period in her computations. Granting that means and
lodging were provided and indeed constituted facilities, such facilities could not be deducted
without the employer complying first with certain legal requirements. Without satisfying these

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requirements, the employer simply cannot deduct the value from the employees wages. First
proof must be shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally,
facilities must be charged at fair and reasonable value. These requirements were not met in the
instance case. More significantly, the food and lodging or the electricity and water consumed by
the petitioner were not facilities but supplements. A benefit or privilege granted to an employee
for the convenience of the employer is not a facility. The criterion in making a distinction between
the two not so much lies in the king (food, lodging) but the purpose. Considering therefore, that
hotel workers are required to work different shifts and are expected to be available at various odd
hours, their ready availability is necessary matter in the operations of a small hotel, such as the
private respondents hotel. (Norma Mabeza vs. NLRC. G.R. No. 118506. April 18, 1997).

Second, by nature, commissions are given to employees only if the employer receives income.
Employees, as a reward, receive a percentage of the earnings of the employer, which they,
through their efforts, helped produce. Commissions are also given in the form of incentives or
encouragement so that employees will be inspired to put a little more industry into their tasks.
Commissions can also be considered as direct remunerations for services rendered. All these
different concepts of commissions are incongruent with the claim that an employee can continue
to receive them indefinitely after reaching his mandatory retirement age. (International
Broadcasting Corp. vs Reynaldo Benedicto. G.R. No. 152843, July 20, 2006).

A diminution of pay is prejudicial to the employee and amounts to constructive dismissal.

Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to
when continued employment becomes impossible, unreasonable or unlikely; when there is a
demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to an employee. In Globe Telecom, Inc. v. Florendo-Flores, we
ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay,
an unreasonable situation arises which creates an adverse working environment rendering it
impossible for such employee to continue working for her employer. Hence, her severance from
the company was not of her own making and therefore amounted to an illegal termination of
employment. (Angelina Francisco, vs. National Labor Relations Commission,
G.R. No. 170087, August 31, 2006).

Respecting petitioners claim for holiday pay, Forest Hills contends that petitioner failed to prove
that she actually worked during specific holidays. Article 94 of the Labor Code provides, however,
that
(a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate.
The provision that a worker is entitled to twice his regular rate if he is required to work on a
holiday implies that the provision entitling a worker to his regular rate on holidays applies even if
he does not work. (Lilia P. Labadan vs. Forest Hills Academy. G.R. No. 172295
December 23, 2008).

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The term basic salary of an employee for the purpose of computing the thirteenth-month pay
was interpreted to include all remuneration or earnings paid by the employer for services
rendered, but does not include allowances and monetary benefits which are not integrated as part
of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances.
However, these salary-related benefits should be included as part of the basic salary in the
computation of the thirteenth-month pay if, by individual or collective agreement, company
practice or policy, the same are treated as part of the basic salary of the employees. (Central
Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949,
July 26, 2010).

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that
benefits given to employees cannot be taken back or reduced unilaterally by the employer
because the benefit has become part of the employment contract, written or unwritten. The rule
against diminution of benefits applies if it is shown that the grant of the benefit is based on an
express policy or has ripened into a practice over a long period of time and that the practice is
consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the
construction or application of a doubtful or difficult question of law. But even in cases of error, it
should be shown that the correction is done soon after discovery of the error. (Central Azucarera
De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949, July 26,
2010).

As correctly observed by the CA and the LA, these duties clearly pertained to "Division
Managers/Department Managers/ Supervisors," which respondent was not, as he was merely a
team supervisor. Petitioners themselves described respondent as "the superior of a call center
agent; he heads and guides a specific number of agents, who form a team." From the foregoing,
respondent is thus entitled to his claims for holiday pay, service incentive leave pay, overtime pay
and rest day pay, (Clientologic Philippines Inc. vs Benedict Castro. G.R. No. 186070 April
11, 2011).

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is
consistent and deliberate; (3) the practice is not due to error in the construction or application of a
doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally
by the employer. (Ricardo E. Vergara, Jr. vs Coca-Cola Bottlers Philippines Inc.
G.R. No. 176985 April 1, 2013).

C. Wage distortion
It is therefore opportune to re-state the general principles enunciated in that case, summarized in
Metro Transit Organization, Inc. vs. NLRC, et al., as follows:
(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

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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 (2)
companies (with differing classification of employees and different wage rates) where the
surviving company absorbs all the employees of the dissolved corporation. (In the present Metro
case, as already noted, the wage distortion arose because the effectivity dates of wage increases
given to each of the two (2) classes of employees (rank-and-file and supervisory) had not been
synchronized in their respective CBAs.).
(c)
Should a wage distortion exist, there is no legal requirement that, in the rectification of
that distortion by re-adjustment 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 re-establishing a substantial or significant
gap (as distinguished from the historical gap) between the wage rates of the differing classes of
employees.
(d)
The re-establishment of a significant difference in wage rates may be the result of resort
to grievance procedures or collective bargaining negotiations. (Manilia Mandarin Employees
Union vs NLRC. G.R. No. 108556 November 19, 1996).
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p)
Wage Distortion means a situation where an increase in prescribed wage rates results in
the elimination or severe contradiction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC.
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the
standard considered by the regional Tripartite Wages and Productivity Commission for the
correction of pay scale structures in cases of wage distortion, 15 to well be the appropriate
measure to balance the respective contentions of the parties in this instance. We also view it as
being just and equitable
Minimum Wage = % x Prescribed = Distortion
Increased Adjustment
Actual Salary

(Metropolitan Bank and Trust Company Employees Union-ALU-TUCP vs NLRC

G.R. No. 102636
September 10, 1993)

Even assuming that there is a decrease in the wage gap between the pay of the old employees
and the newly hired employees, to Our mind said gap is not significant as to obliterate or result in
severe contraction of the intentional quantitative differences in the salary rates between the

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employee group. As already stated, the classification under the wage structure is based on the
rank of an employee, not on seniority. For this reason, ,wage distortion does not appear to exist.
(Bankard Employees Union-Workers Alliance Trade Unions vs NLRC. G.R. No. 140689
February 17, 2004).

th

D. 13 month pay
It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial
Workers Union. Notably in the said case, it was established that the drivers and conductors
praying for 13th- month pay were not paid purely on commission. Instead, they were receiving a
commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held that bus
drivers and conductors who are paid a fixed or guaranteed minimum wage in case their
commission be less than the statutory minimum, and commissions only in case where they are
over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth
of their total earnings during the calendar year.
On the other hand, in his Complaint, respondent admitted that he was paid on commission only.
Moreover, this fact is supported by his pay slips which indicated the varying amount of
commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month
pay benefit. (King of Kings Transport Inc. vs Santiago O. Mamac. G.R. No. 166208,June 29,
2007).

Insofar as what constitutes basic salary, the foregoing discussions equally apply to the
computation of petitioners 13th month pay. As held in San Miguel Corporation v. Inciong:
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is
used as the basis in the determination of his 13th-month pay. Any compensations or
remunerations which are deemed not part of the basic pay is excluded as basis in the
computation of the mandatory bonus.
Under the Rules and Regulations Implementing Presidential Decree 851, the following
compensations are deemed not part of the basic salary:
a)
Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter
of Instruction No. 174;
b)
Profit sharing payments;
c)
All allowances and monetary benefits which are not considered or integrated as
part of the regular basic salary of the employee at the time of the promulgation of the
Decree on December 16, 1975. (Rogelio Reyes vs NLRC. G.R. No. 160233, August 8,
2007)

The practice of petitioner in giving 13th-month pay based on the employees gross annual
earnings which included the basic monthly salary, premium pay for work on rest days and special
holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has
ripened into a company policy or practice which cannot be unilaterally withdrawn. The petitioner
cannot claim that the practice arose from an erroneous application of the law since no doubtful or
difficult question of law is involved in this case. The guidelines set by the law are not difficult to
decipher. (Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU
G.R. No. 188949, July 26, 2010).

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The argument of petitioner that the grant of the benefit was not voluntary and was due to error in
the interpretation of what is included in the basic salary deserves scant consideration. No doubtful
or difficult question of law is involved in this case. The guidelines set by the law are not difficult to
decipher. The voluntariness of the grant of the benefit was manifested by the number of years the
employer had paid the benefit to its employees. Petitioner only changed the formula in the
computation of the 13th-month pay after almost 30 years and only after the dispute between the
management and employees erupted. This act of petitioner in changing the formula at this time
cannot be sanctioned, as it indicates a badge of bad faith. (Central Azucarera De Tarlac vs.
Central Azucarera De Tarlac Labor Union-NLU. G.R. No. 188949, July 26, 2010)

E. Separation pay
However, the circumstances obtaining in this case do not warrant the reinstatement of
respondents. Antagonism caused a severe strain in the parties employer-employee relationship.
Thus, a more equitable disposition would be an award of separation pay equivalent to at least
one month pay, or one month pay for every year of service, whichever is higher, (with a fraction of
at least six (6) months being considered as one (1) whole year), in addition to their full
backwages, allowances and other benefits. (Grandspan Development Corporation, vs.
Ricardo Bernardo, et. al. G.R. No. 141464,September 21, 2005).

We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is,
for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other name it is called, on the ground of
social justice. (Ha Yuan Restaurant vs National Labor Relations Commission and Juvy Soria
G.R. No. 147719 January 27, 2006).

But still, petitioners insist that since respondent already received her separation benefits, she can
no longer claim that they coerced her to retire. On this point, the Court of Appeals ruled that
employees who receive their separation pay are not barred from contesting the legality of their
dismissal from the service and their acceptance of those benefits would not amount to estoppel.
We agree. Otherwise, employees who have been forced to resign and accept their separation
pay can no longer resort to legal remedies. (Amkor Technology Philippines, Inc. vs Nory A.
Juangco. G.R. No. 166507, September 27, 2006).

Since the circumstances obtaining in this case do not warrant private respondents reinstatement
in the light of the antagonism generated by this litigation which must have caused a severe strain
in the parties' employer-employee relationship, an award of separation pay in lieu of
reinstatement, equivalent to one month pay for every year of service, in addition to full
backwages, allowances, and other benefits or the monetary equivalent thereof, is in order. The

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award of attorneys fees is sanctioned by law and must be upheld.(Petron Corporation vs
National Labor Relations Commission. G.R. No. 154532 October 27, 2006).

Considering, however, the supervening event that SMCs Magnolia Division has been acquired by
another entity, it appears that private respondents reinstatement is no longer feasible. Instead,
he should be awarded separation pay as an alternative. Likewise, owing to petitioners bad faith,
it should be held liable to pay damages for causing undue injury and inconvenience to the private
respondent in its contractual hiring-firing-rehiring scheme. (San Miguel Corporation, vs. NLRC
G.R. No. 147566 December 6, 2006).

At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore well
over the statutory compulsory retirement age. For this reason, we grant her separation pay in lieu
of reinstatement. It is also for this reason that we modify the award of backwages in her favor, to
be computed from the time of her illegal dismissal on November 18, 1993 up to her compulsory
retirement age. (Alpha C. Jaculbe vs Siliman University. G.R. No. 156934 March 16, 2007).

Although long years of service might generally be considered for the award of separation benefits
or some form of financial assistance to mitigate the effects of termination, this case is not the
appropriate instance for generosity under the Labor Code nor under our prior decisions. The fact
that private respondent served petitioner for more than twenty years with no negative record prior
to his dismissal, in our view of this case, does not call for such award of benefits, since his
violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an
employees length of service is to be regarded as a justification for moderating the penalty of
dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of undesirables. (Central
Pangasinan Electric Cooperative Inc. vs NLRC. G.R. No. 163561, July 24, 2007).

The general rule is that when just causes for terminating the services of an employee under Art.
282 of the Labor Code exist, the employee is not entitled to separation pay. The apparent reason
behind the forfeiture of the right to termination pay is that lawbreakers should not benefit from
their illegal acts. The dismissed employee, however, is entitled to whatever rights, benefits and
privileges [s/he] may have under the applicable individual or collective bargaining agreement with
the employer or voluntary employer policy or practice or under the Labor Code and other existing
laws. This means that the employee, despite the dismissal for a valid cause, retains the right to
receive from the employer benefits provided by law, like accrued service incentive leaves. With
respect to benefits granted by the CBA provisions and voluntary management policy or practice,
the entitlement of the dismissed employees to the benefits depends on the stipulations of the
CBA or the company rules and policies. (Toyota Motor Phils. Corp. Workers Association
(TMPCWA) vs NLRC/ G.R. Nos. 158786 &158789, G.R. Nos. 158798-99, October 19, 2007).

Petitioners separation pay is pegged at the amount equivalent to petitioners one (1) month pay,
or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from his first
day of employment up to finality of this decision. Full backwages, on the other hand, should be

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computed from the date of his illegal dismissal until the finality of this decision. (Bienvenido D.
Goma vs. Pamplona Plantation, Inc., G.R. No. 160905, July 4, 2008).

We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is,
for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the dismissed employee
separation pay, or financial assistance, or whatever other name it is called, on the ground of
social justice. (Central Philippines Bandag Retreaders. Inc. vs. Prudencio Diasnes
G.R. No. 163607, July 14, 2008).

Since petitioner was not faultless in regard to the offenses imputed against her, we hold that the
award of separation pay only, without backwages, is proper. (Elizabeth D. Palteng vs UCPB
G.R. No. 172199, February 27, 2009).

We thus find the dismissal to be illegal. Consequently, respondent is entitled to reinstatement

without loss of seniority rights and other privileges, and to full backwages, inclusive of
allowances, and other benefits or their monetary equivalent, computed from the time of the
withholding of the employee's compensation up to the time of actual reinstatement. If
reinstatement is not possible due to the strained relations between the employer and the
employee, separation pay should instead be paid the employee equivalent to one month salary
for every year of service, computed from the time of engagement up to the finality of this decision.
(M+W Zander Philippines Inc. and Rolf Wiltschek vs Trinidad M. Enriquez
G.R. No. 169173, June 5, 2009).

Above all, the intention to sever the employer-employee relationship was not duly established by
respondents. The prior submission of a medical certificate that petitioner is fit to resume work
negates the claim of respondents that the former demanded for separation pay on account of her
failing health. Certainly, petitioner cannot demand for separation benefits on the ground of illness
while at the same time presenting a certification that she is fit to work. Respondents could have
denied petitioners demand at that instance and ordered her to return to work had it not been their
intention to sever petitioner from their employ. Hence, we find the allegation that petitioner
presented herself for work but was refused by respondents more credible. (Concepcion
Faeldonia vs. Tong Yak Groceries, Jayme Go and Merlita Go. G.R. No. 182499, October 2,
2009).

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its
employees and management their respective shares in the service charges collected, the hotel
cannot claim that payment thereof to its 82 employees constitute substantial compliance with the
payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees right to their shares in
the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA;
gratification by the hotel of one does not result in the satisfaction of the other. (Philippine
Hoteliers Inc., Dusit Hotel Nikko-Manila vs National Union of Workers in Hotel, Restaurant,

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and Allied Industries (NUWHRAIN-APL-IUF)-Dusit Hotel Nikko Chapter. G.R. No. 181972,
August 25, 2009).

In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the

amount to be awarded shall be equivalent to one month salary for every year of service reckoned
from the first day of employment until the finality of the decision. Payment of separation pay is in
addition to payment of backwages. And if separation pay is awarded instead of reinstatement,
backwages shall be computed from the time of illegal termination up to the finality of the decision.
(Agricultural and Industrial Supplies Corp. et al vs. Jueber P. SiazarG.R. No. 177970
August 25, 2010).

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a
fraction of six months to be considered as one whole year. Here that would begin from January
31, 1994 when petitioner Belen began his service. Technically the computation of his separation
pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to
render service and his wages ended. But, since Belen was entitled to collect backwages until the
judgment for illegal dismissal in his favor became final, here on September 22, 2008, the
computation of his separation pay should also end on that date. (Daniel P. Javellana, Jr. vs
Albino Belen. G.R. No. 181913. Albino Belen vs. Daniel P. Javellana Jr. and Javellana
Farms Inc. G.R. No. 182158, March 5, 2010).

The basis for the payment of backwages is different from that for the award of separation pay.
Separation pay is granted where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages represent compensation that
should have been earned but were not collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the employees service while that for separation
pay is the actual period when the employee was unlawfully prevented from working. (Golden Ace
Builders vs. Jose A. Talde. G.R. No. 187200 May 5, 2010).
F. Retirement pay
For the purpose of computing retirement pay, one-half month salary shall include all of the
following:
15 days salary based on the latest salary rate;
cash equivalent of 5 days of service incentive leave (or vacation leave);
1/12 of the 13th month pay; other benefits as may be agreed upon by employer and employee
for inclusion.
But, it shall not include the following:
cost of living allowance;
profit-sharing payments; and
other monetary benefits which are not considered as part of or integrated into the regular salary
of the employees. (Rogelio Reyes vs NLRC, G.R. No. 160233. August 8, 2007).

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Moreover, it is worthy to note that Bolso applied for benefits under PLDTs early
retirement/redundancy program. Bolsos counsel even wrote PLDT for the withdrawal of the
administrative complaint against Bolso and for the release of the benefits under this program.
Therefore, Bolsos plea for reinstatement in this case conflicts with his application for early
retirement, which PLDT denied due to the then pending complaint against him. Reinstatement is
plainly irreconcilable with retirement. (Philippine Long Distance Telephone Company vs The
Late Romeo F. Bolso. G.R. No. 159701 August 17, 2007).

R.A. No. 7641, otherwise known as The Retirement Pay Law, only applies in a situation where
(1) there is no collective bargaining agreement or other applicable employment contract providing
for retirement benefits for an employee; or (2) there is a collective bargaining agreement or other
applicable employment contract providing for retirement benefits for an employee, but it is below
the requirements set for by law. The reason for the first situation is to prevent the absurd
situation where an employee, who is otherwise deserving, is denied retirement benefits by the
nefarious scheme of employers in not providing for retirement benefits for their employees. The
reason for the second situation is expressed in the latin maxim pacta privata juri publico derogare
non possunt. Private contracts cannot derogate from the public law. Alberto Oxales vs. United
Laboratories, Inc., G.R. No. 152991 July 21, 2008).
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2)
the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement
schemes are alternative in nature such that the retired pilot can only be entitled to that which
provides for superior benefits. Comparing the benefits under the two (2) retirement schemes, it
can readily be perceived that the 22.5 days worth of salary for every year of service provided
under Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half
worth of monthly salary per year of service provided under the PAL Pilots Retirement Benefit
Plan, which will be further added to the 125,000.00 to which the petitioner is entitled under the
PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage that PALs
retirement plans were applied in the computation of his retirement benefits. (Bibiano C. Elegir
vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012).

As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the
absence of an applicable retirement agreement shall Article 287 of the Labor Code apply. There
is a proviso however, that an employees retirement benefits under any agreement shall not be
less than those provided in the said article. The Rules of the Banco Filipino Retirement Fund do
not provide for benefits lower than those in the Labor Code. In fact, the bank offers a retirement
pay equivalent to one andone-half month salary for every year of service, a rate over and above
the one-half month salary threshold provided by the law. Although the Rules of the Banco Filipino
Retirement Fund do not grant a rounding off scheme, they nonetheless provide that prorated
credit shall be given for incomplete years, regardless of the fraction of months in the retirees
length of service. Notwithstanding the lack of a rounding-up provision, still, the higher retirement
pay, together with the prorated crediting, cannot be deemed to be less favorable than that
provided for by the law. Ultimately, the more important threshold to be considered in construing
whether the retirement agreement provides lesser benefits, compared to those provided by the
Retirement Pay Law, is that the retirement benefits in the said agreement should at least amount
to one-half of the employees monthly salary. (Banco Filipino Savings and Mortgage Bank vs.

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Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et
al .G.R. No. 185346 & G.R. No. 185442 June 27, 2012)

IV. TERMINATION OF EMPLOYMENT

A. Employer-Employee Relationship
The issue of whether or not an employer-employee relationship existed between petitioner and
respondent is essentially a question of fact. The factors that determine the issue include who has
the power to select the employee, who pays the employees wages, who has the power to
dismiss the employee, and who exercises control of the methods and results by which the work of
the employee is accomplished. Although no particular form of evidence is required to prove the
existence of the relationship, and any competent and relevant evidence to prove the relationship
may be admitted, a finding that the relationship exists must nonetheless rest on substantial
evidence, which is that amount of relevant evidence that a reasonable mind might accept as
adequate to justify a conclusion. (Legend Hotel v. Realuyo G.R. No. 153511 July 18, 2012).

1. Four-Fold Test (Indicia of Employment); Economic or Economic Readity Test

a. The power of selection and engagement of the employee

b. payment of wages
c. power of dismissal
d. power to control the employees' conduct
To determine the existence of an employer-employee relationship, case law has
consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is
accomplished. The so-called "control test" is the most important indicator of the presence
or absence of an employer-employee relationship. (Sycip, Gorres, Velayo & Company
vs. Carol De Raedt. G.R. No. 161366; June 16, 2009).
Among these four tests however, the most important test is the element of control, which
has been defined as "one where the employer has reserved the right to control not only
the work to be achieved, but the manner and method by which such work is to be
achieved. (LVN Pictures vs LVN Musician's Guild. G.R. No. L-12582. January 28,
1961).
It should be remembered that the control test merely calls for the existence of the right to
control, and not necessarily the exercise thereof. It is not essential that the employer
actually supervises the performance of duties of the employee. It is enough that the
former has a right to wield the power. (Manila Water Company, Inc. vs. Jose J.
Dalumpines. G.R. No. 175501; October 4, 2010).
Under the control test, there is an employer-employee relationship when the person for
whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end. (Television and Production
Exponents, Inc. vs. Roberto C. Servaa. G.R. No. 167648; January 28, 2008).
It is sufficient if the task or activity, as well as the means of accomplishing it, is dictated,
as in this case where the objectives and activities were laid out, and the specific time for
performing them was fixed by the controlling party. (Coca Cola Bottlers, Inc. vs. Dr.
Dean N. Climaco. G.R. No. 146881; February 5, 2007).

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Under the control test, an employer-employee relationship exists where the person for
whom the services are performed reserves the right to control not only the end achieved,
but also the manner and means to be used in reaching that end. From the quoted scope
of petitioners professional services, there is no showing of a power of control over
petitioner. The services to be performed by her specified what she needed to achieve but
not on how she was to go about it. (Corazon Almirez vs. Infinite Loop Technology.
G.R. 162401; January 31, 2006).
To bolster the payment of wages and control test, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls,
submission of his name with the SSS, Pag-ibig, Philhealth, otherwise known as economic
test, are also applied in determining employer-employee relationship. (Sevilla vs CA,
G.R. No. 44182-3, April 15, 1988).
It should, however, be obvious that not every form of control that the hiring party reserves
to himself over the conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship between them in
the legal or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is not to vanish
altogether. Realistically, it would be a rare contract of service that gives untrammelled
freedom to the party hired and eschews any intervention whatsoever in his performance
of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines
towards 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 aim only to
promote the result, create no employer-employee relationship unlike the second, which
address both the result and the means used to achieve it. (Insular Life Assurance Co.
Ltd. G.R. No. 84484 November 15, 1989).

In the present case, the power to control is missing. Pamana tasked Consulta to
organize, develop, manage, and maintain a sales division, submit a number of
enrollments and revenue attainments in accordance with company policies and
guidelines, and to recruit, train and direct her Supervising Associates and Health
Consultants.[12] However, the manner in which Consulta was to pursue these
activities was not subject to the control of Pamana. Consulta failed to show that
she had to report for work at definite hours. The amount of time she devoted to
soliciting clients was left entirely to her discretion. The means and methods of
recruiting and training her sales associates, as well as the development,
management and maintenance of her sales division, were left to her sound
judgment.(Raquel P. Consulta G.R. No. 145443. March 18, 2005).
2. Kinds of Employment

a. Probationary
A probationary employee, as understood under Article 282 (now Article 281) of the Labor
Code, is one who is on trial by an employer during which the employer determines
whether or not he is qualified for permanent employment. A probationary appointment is
made to afford the employer an opportunity to observe the fitness of a probationer while
at work, and to ascertain whether he will become a proper and efficient employee. The

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word "probationary", as used to describe the period of employment, implies the purpose
of the term or period, but not its length.
Being in the nature of a "trial period" the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer
and the employee during said period. The length of time is immaterial in determining the
correlative rights of both in dealing with each other during said period. While the
employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer
to ascertain whether he is qualified for permanent employment, the probationer, on the
other, seeks to prove to the employer, that he has the qualifications to meet the
reasonable standards for permanent employment. (International Catholic Migration
Commission vs. NLRC and Bernadette Galang. G.R. No. 72222
; January 30,
1989).
They are considered regular if they are allowed to work beyond the probationary period.
Probationary employees enjoy security of tenure in the sense that during their
probationary employment, they cannot be dismissed except for cause or when he fails to
qualify as a regular employee in accordance with reasonable standards made known to
him or her at the time of engagement. But the probationary employees security of tenure
is limited to the period of probation. (Woodbridge School vs. Pe Benito. G.R. No.
160240; October 28, 2008).

A probationary employee, like a regular employee, enjoys security of tenure. The

services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (1) a just or (2) an authorized cause and (3) when he
fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer. (Mylene Carvajal vs. Luzon Development Bank
G.R. No. 186169; August 1, 2012).

Completion of probationary period does not automatically qualify a teacher to become a

permanent employee of the University. (Lacuesta vs. Ateneo De Manila University.
G.R. No. 152777; December 9, 2005).

While the probationary employee is required to be appraised of the standards against

which his performance shall be assessed, there is however no need to inform the
probationary employee that he has to follow company rules and regulations such
requirement strains credulity. Due process in failure to qualify as regular employee does
not mean notice and hearing." (Philippine Daily Inquirer vs. Magtibay. G.R. No.
164532; July 24, 2007).

b. Regular
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual
business or trade of the employer. (Macarthur Malicdem and Hermenigildo Flores vs.
Marulas Industrial Corporation. G.R. No. 204406; February 26, 2014).

Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered

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regular, but only with respect to such activity and while such activity exists. (De Leon vs.
NLRC. G.R. No. 70705; August 21, 1989).
The practice of entering into employment contracts which would prevent the workers from
becoming regular should be struck down as contrary to public policy and morals.
(Universal Robina Corporation v. Catapang. G.R. No. 164736; October 14, 2005).

Television-radio talent is not an employee. Relationship of a big name talent and a

television-radio broadcasting company is one of an independent contracting
arrangement. ABS-CBN engaged Sonzas services specifically to co-host the "Mel &
Jay" programs. ABS-CBN did not assign any other work to Sonza. To perform his work,
Sonza only needed his skills and talent. How Sonza delivered his lines, appeared on
television, and sounded on radio were outside ABS-CBNs control. Sonza did not have to
render eight hours of work per day. The Agreement required Sonza to attend only
rehearsals and tapings of the shows, as well as pre- and post-production staff meetings.
ABS-CBN could not dictate the contents of Sonzas script. (Jose Y. Sonza vs. ABS-CBN
Broadcasting Corporation. G.R. No. 138051; June 10, 2004).
But production assistants called talents and drivers, cameramen, editors, tele-prompters
called off-camera talents are actually regular employees, there being control on the part
of ABS-CBN. Their nomenclature as such talents or off-camera talents to make it
appear that they are independent contractor, cannot override the fact that they are not
actors/actresses/radio specialists but are mere clerks or utility employees. (ABS-CBN vs.
Nazareno (2006); and, Farley Fulache vs. ABS-CBN (2010)).

c. Project Employment
The principal test used to determine whether employees are project employees is
whether or not the employees were assigned to carry out a specific project or
undertaking, the duration or scope of which was specified at the time the employees were
engaged for that project. (Goma v. Pamplona Plantation, Inc.G.R. No. 160905; July 4,
2008).

A project employee is assigned to a project which begins and ends at determined or

determinable times. Employees who work under different project employment contracts
for several years do not automatically become regular employees; they can remain as
project employees regardless of the number of years they work. Length of service is not a
controlling factor in determining the nature of ones employment. Their rehiring is only a
natural consequence of the fact that experienced construction workers are preferred. In
fact, employees who are members of a "work pool" from which a company draws workers
for deployment to its different projects do not become regular employees by reason of
that fact alone. The Court has consistently held that members of a "work pool" can either
be project employees or regular employees. (Dacuital vs. L.M. Camus Engineering
Corporation. G.R. No. 176748; September 1, 2010).

A project or work pool employee, who has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks; and
(2) those tasks are vital, necessary and indispensable to the usual business or trade of
the employer, must be deemed a regular employee. (Maraguinot, Jr. v. NLRC.348 Phil.
580 (1998).

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The length of service or the re-hiring of construction workers on a project-to-project basis

does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of which has been determined and
made known to the employees at the time of the employment, are properly treated as
project employees and their services may be lawfully terminated upon the completion of a
project. Should the terms of their employment fail to comply with this standard, they
cannot be considered project employees. (Hanjin Heavy Industries vs. Ibanez. G.R.
No. 170181; June 26, 2008).
However, a project or work pool employee who has been continuously rehired by the
same employer for the same tasks that are necessary to the usual business of the
employer must be deemed a regular employee (Alcatel Phils. vs Relos, G.R. No.
164315. July 3, 2009).
Failure to file termination reports, particularly on the cessation of petitioners employment,
was an indication that the petitioner was not a project employee but a regular employee.
(Goma vs. Pamplona Plantation, Inc. G.R. No. 160905. July 4, 2008).

In cases where the employees were hired without any mention of a specific project to
which they will be assigned, and that there were no termination reports at the end of each
alleged project, then they are regular. Moreover, the employees ceased to be
coterminous with a specific project when the employee was continuously rehired due to
the demands of the employers business and re-engaged for many more projects
without interruption. (Cocomangas Hotel Beach Resort vs. Visca. G.R. No. 167045;
August 29, 2008).

d. Seasonal
Seasonal workers who are called to work from time to time and are temporarily laid off
during off-season are not separated from service in that period, but merely considered on
leave until re-employed. (Hacienda Fatima v. National Federation of Sugarcane
Workers-Food and General Trade. G.R. No. 149440; January 28, 2003).

One-year duration on the job is pertinent in deciding whether a casual employee has
become regular or not, but it is not pertinent to a seasonal or project employee. Passage
of time does not make a seasonal worker regular or permanent. (Mercado v. NLRC.
G.R. No. 79869; September 5, 1991).
However, he may acquire a regular status if he is repeatedly engaged from season to
season performing the same tasks. (Hacienda Fatima vs NFSWFGT. G.R. 149440. Jan.
28, 2003).

e. Casual
Any casual employee who has rendered at least one (1) year of service, whether it is
continuous or broken, shall be considered a regular employee with respect to the activity
for which he is employed, and his employment shall continue while such activity exists.

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The status of regular employment attaches to the casual employee on the day
immediately after the end of his first year of service. The law does not provide the
qualification that the employee must first be issued a regular appointment or must first be
formally declared as such before he can acquire a regular status. (Aurora Land Projects
Corp. vs. NLRC. G.R. No. 114733 (1997)).
A casual employee is only casual for one year, and it is the passage of time that gives
him a regular status. (KASAMMA-CCO v. Court of Appeals. G.R. No. 159828; April 19,
2006).

f. Fixed-Term
A kind of employment, wherein workers are hired for a specific period and upon the
arrival of the date specified in the contract - the employer-employee relationship is
automatically terminated. Such a contract, which specifies that employment will last only
for a definite period, is not per se illegal or against public policy. (Brent School vs.
Zamora. G. R. No. 48494; February 5, 1990).

The Court thus laid down the criteria under which fixed-term employment could not be
said to be in circumvention of the law on security of tenure, thus:
1. The fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress, or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and the employee dealt with each other
on more or less equal terms with no moral dominance exercised by the former or
the latter.
(Caparoso v. Court of Appeals. G.R. No. 155505; February 15, 2007).
While this Court has upheld the legality of fixed-term employment, where from the
circumstances it is apparent that the periods have been imposed to preclude acquisition
of tenurial security by the employee, they should be struck down or disregarded as
contrary to public policy and morals. (Manila Water Company, Inc. vs. Pena. G.R. No.
158255; July 8, 2004).

3. Job Contracting
a. Pertinent Labor Code provisions (Art. 106-109)
Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract
with another person for the performance of the formers work, the employees of the
contractor and of the latters subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees
in accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly
employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or
prohibit the contracting-out of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions between
labor-only contracting and job contracting as well as differentiations within these types of

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contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal business
of such employer. In such cases, the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.
Article 107. Indirect employer. - The provisions of the immediately preceding article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work,
task, job or project.
Article 108. Posting of bond. - An employer or indirect employer may require the
contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on
condition that the bond will answer for the wages due the employees should the
contractor or subcontractor, as the case may be, fail to pay the same.
Article 109. Solidary liability. - The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any provision of this Code. For purposes
of determining the extent of their civil liability under this Chapter, they shall be considered
as direct employers.
The joint and several liability of the contractor and the principal is mandated by the Labor
Code to ensure compliance with its provisions, including the statutory minimum wage.
The contractor is made liable by virtue of his status as direct employer, while the principal
becomes the indirect employer of the former's employees for the purpose of paying their
wages in the event of failure of the contractor to pay them. (Alpha Investigation and
Security Agency, Inc. vs. NLRC. G.R. No. 111722; May 27, 1997).
In legitimate job contracting, no employer-employee relation exists between the principal
and the job contractor's employees. The principal is responsible to the job contractor's
employees only for the proper payment of wages. But in labor-only contracting, an
employer-employee relation is created by law between the principal and the labor-only
contractor's employees, such that the former is responsible to such employees, as if he
or she had directly employed them. (Philippine Airlines, Inc. vs. NLRC. G.R. No.
125792; November 9, 1998).

b. Department Order No. 18-A

When is there legitimate contracting or subcontracting?
Contracting or subcontracting shall be legitimate if all the following circumstances
concur:
(a) The contractor must be registered in accordance with these Rules and
carries a distinct and independent business and undertakes to perform
the job, work or service on its own responsibility, according to its own
manner and method, and free from 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 has substantial capital and/or investment; and

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(c)

The Service Agreement ensures compliance with all the rights and
benefits under Labor Laws (Sec. 4 of D.O. No. 18-A, S. 2011).

What is substantial capital?

Substantial capital refers to paid-up capital stocks/shares of at least
P3,000,000.00 in the case of corporations, partnerships and cooperatives; in the
case of single proprietorship, a net worth of at least P3,000,000.00. What
constitutes substantial capital previously vary, as fixed by the court, as there
was no specific threshold provided under the law or the implementing guidelines.
It is also important to note that the registration fee is P25,000.00.
Rights of Contractors Employees:
All contractors employees, whether deployed or assigned as reliever, seasonal, weekender, temporary, or promo jobbers, shall be entitled to all the rights and privileges as
provided for in the Labor Code, as amended, to include the following:
(a)
(b)

(c)
(d)
(e)
(f)

Safe and healthful working conditions;

Labor standards such as but not limited to service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay, and separation pay as
may be provided in the Service Agreement or under the Labor Code;
Retirement benefits under the SSS or retirement plans of the contractor,
if there is any;
Social security and welfare benefits;
Self-organization, collective bargaining and peaceful concerted activities;
and
Security of tenure.

Security of Tenure of Contractors Employees:

It is understood that all contractors employees enjoy security of tenure regardless of
whether the contract of employment is co-terminus with the service agreement, or for a
specific job, work or service, or phase thereof (Sec. 11, D.O. 18-A, S. 2011).
Additional Terms and Conditions in the Employment Contract:
Notwithstanding any oral or written stipulations to the contrary, the contract between the
contractor and its employee shall be governed by the provisions of Articles 279 and 280
of the Labor Code, as amended. It shall include the following terms and conditions:
(a)
(b)
(c)

The specific description of the job, work or service to be performed by

the employee;
The place of work and terms and conditions of employment, including a
statement of the wage rate applicable to the individual employee; and
The term or duration of employment that must be co-extensive with the
Service Agreement or with the specific phase of work for which the
employee is engaged.

Contents of the Service Agreement between the Principal and the Contractor
The Service Agreement shall include the following:
1. The specific description of the job, work or service being subcontracted.
2. The place of work and terms and conditions governing the contracting
arrangement, to include the agreed amount of the services to be rendered, the
standard administrative fee of not less than ten percent (10%) of the total
contract cost.
3. Provisions ensuring compliance with all the rights and benefits of the employees
under the Labor Code and these Rules on: provision for safe and healthful
working conditions; labor standards such as, service incentive leave, rest days,

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4.
5.
6.
7.

overtime pay, 13th month pay and separation pay; retirement benefits;
contributions and remittance of SSS, Philhealth, Pag-Ibig Fund, and other
welfare benefits; the right to self-organization, collective bargaining and peaceful
concerted action; and the right to security of tenure.
A provision on the Net Financial Contracting Capacity of the contractor, which
must be equal to the total contract cost.
A provision on the issuance of the bond/s as defined in Section 3(m) renewable
every year.
The contractor or subcontractor shall directly remit monthly the employers share
and employees contribution to the SSS, ECC, Philhealth and Pag-Ibig Fund.
The term or duration of engagement. The Service Agreement must conform to
the DOLE Standard Computation and Standard Service Agreement, which form
part of these Rules as Annexes A and B.

Mandatory Registration and Registry of Legitimate Contractors:

Consistent with the authority of the Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the rights of workers, it shall be mandatory
for all persons or entities, including cooperatives, acting as contractors, to register with
the Regional Office of the Department of Labor and Employment (DOLE) where it
principally operates.
Effect of Failure to Register by the Independent Contractor with DOLE:
A Certificate of Registration is good for 3 years. Failure to register shall give rise to the
presumption that the contractor is engaged in labor-only contracting (Section 14, D.O.
No. 18-A, Series 2011).
Appeal:
The Order of the Regional Director is appealable to the Secretary within ten (10) working
days from receipt of the copy of the Order. The appeal shall be filed with the Regional
Office which issued the cancellation Order. The Office of the Secretary shall have thirty
(30) working days from receipt of the records of the case to resolve the appeal. The
Decision of the Secretary shall become final and executory after ten (10) days from
receipt thereof by the parties. No motion for reconsideration of the Decision shall be
entertained (Sec. 25, supra).
New Requirements Under Department Order No. 18-A, Series 2011:
1. Declaration of the Independent Contractors Net Financial Contracting Capacity
(NFCC) to be incorporated in the service contract (Sec. 3 (G)):
Current Assets Less Current Liabilities x K (Contract Duration) Equivalent,
Minus Value of All Outstanding, On-Going or Starting Projects
Where K = 10, if contract is one year or less;
= 15, for more than one (1) year up to two (2) years;
= 20, for more than two (2) years.
2. Substantial capital of at least P3,000,000.00 in case of corporations,
partnerships, cooperatives or single proprietorship (Sec. 13(L)).
3. Registration fee of P25,000.00 plus renewal fee of twenty five thousand pesos
every three years (Sections 19 and 21).
The Negative List: What Cannot Be Validly Sub-Contracted Out

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(D.O. No. 18-02 as amended by D.O. No. 18-A, Series 2011)

1. Contracting out of a job, work or service when not done in good faith and not justified
by the exigencies of the business and the same results in the termination of regular
employees and reduction of work hours or reduction or splitting of the bargaining unit
2. Contracting out to a Cabo.
Under the cabo system, (a) the union is the independent contractor that engages
the services of its members who are seconded to the principal; (b) the charges
against the principal are made by the Union; and the workers are paid on union
payroll without intervention of the principal.
3. Taking undue advantage of the economic situation or lack of bargaining strength of
the contractual employee, or undermining his security of tenure or basic rights, or
circumventing the provisions of regular employment, in any of the following instances:
(a)

(b)

(c)

In addition to his assigned functions, requiring the contractual employee to

perform functions which are currently being performed by the regular
employees of the principal or of the contractor or subcontractor;
Requiring him to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of labor
standards including minimum wages and social or welfare benefits; or a
quitclaim releasing the principal, contractor or subcontractor from any liability
as to payment of future claims; and
Requiring him to sign a contract fixing the period of employment to a term
shorter than the term of the contract between the principal and the contractor
or subcontractor, unless the latter contract is divisible into phases for which
substantially different skills are required and this is made known to the
employee at the time of engagement.

4. Contracting out of a job, work or service through an in-house agency;

5. Contracting out of a job, work or service directly related to the business or
operation of the principal by reason of a strike or lockout whether actual or
imminent;
6. Contracting out of a job, work or service being performed by union members
when such will interfere with, restrain or coerce employees in the exercise of their
rights to self-organization as provided in A. 248 (C), Labor Code, as amended.
New Prohibitions to the Original Negative List
Provided Under D.O. 18-A Series of 2011 (Section 7):
7. Repeated hiring of employees under an employment contract of short duration or
under a service agreement of short duration with the same or different contractors,
which circumvents the Labor Code provisions on security of tenure;
8. Requiring employees under a sub-contracting arrangement to sign a contract fixing
the period of employment to a term shorter than the term of the service agreement,
except when the contract is divisible into phases xxx and this is made known to the
employee;
9. Refusal to provide a copy of the Service Agreement and employment contracts
between the contractor and employees, to the principals certified bargaining agent;

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Engaging or maintaining by the principal of subcontracted employees in excess of those

provided for in applicable CBA or set by the Industry Tripartite Council (ITC).
c. Department Circular No. 01-12
Salient Provisions:
Clarifying the Applicability of D.O. No. 18-A, S. 2011 to Business Processing
Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the Construction
Industry
Are BPOs and KPOs covered by D.O. No. 18-A?
No. DO 18-A, Series of 2011, clearly speaks of a trilateral relationship that
characterizes the covered contracting/subcontracting arrangement. Thus,
vendor-vendee relationship for entire business processes covered by the
applicable provisions of the Civil Code on Contracts is excluded.
Note: DO 18-A, Series of 2011, contemplates generic or focused singular activity in one
contract between the principal and the contractor (for example: janitorial, security,
merchandising, specific production work) and does not contemplate information
technology-enabled services involving an entire business processes (for example:
business process outsourcing, knowledge process outsourcing, legal process
outsourcing, hardware and/or software support, medical transcription, animation services,
back office operations/support). These companies engaged in business processes
("BPOs") may hire employees in accordance with applicable laws, and maintain these
employees based on business requirements, which may or may not be for different
clients of the BPOs at different periods of the employees employment.
Are contractors licensed by the Philippine Contractors Accreditation Board (PCAB)
required to register under D.O. 18-A? No. Licensing and the exercise of regulatory
powers over the construction industry is lodged with the PCAB and not with the DOLE or
any of its regional offices. Moreover, findings of violation/s on labor standards and
occupational health and safety standards by the contractors shall be coordinated with the
PCAB for its appropriate action, including the possible cancellation/suspension of the
contractor's license.
d. Effects of Labor-Only Contracting
The employer is deemed the direct employer and is made liable to the employees of the
contractor for a more comprehensive purpose (wages, monetary claims, and all other
benefits in the Labor Code such as SSS/Medicare/Pag-Ibig). The labor-only contractor is
deemed merely an agent. A finding that a contractor is a labor-only contractor is
equivalent to declaring that there is an ER-EE relationship between the principal and the
employees of the labor-only contractor. (San Miguel Corp. vs. MAERC Integrated
Systems. G.R. No. 144672; July 10, 2003).

e. Trilateral Relationship in Job Contracting

Trilateral Relationship refers to the relationship in a contracting or subcontracting
arrangement where there is a contract for a specific job, work or service between the
principal and the contractor, and a contract of employment between the contractor and its
workers. There are 3 parties involved in these arrangements: the principal who decides to
farm out a job, work or service to a contractor; the contractor who has the capacity to
independently undertake the performance of the job, work or service; and the contractual

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workers engaged by the contractor to accomplish the job, work or service (Sec. 3(m),
D.O. 18-A).
Trilateral Relationship in Contracting Arrangements; Solidary Liability.
In the event of any violation of any provision of the Labor Code, including the failure to
pay wages, there exists a solidary liability on the part of the principal and the contractor
for purposes of enforcing the provisions of the Labor Code and other social legislation, to
the extent of the work performed under the employment contract.
When is the principal be deemed the direct employer of the contractors employee?
In cases where:
a. There is a finding by a competent authority of labor-only contracting, or
b. Commission of prohibited activities as provided in Sec. 7, D.O. 18-A; or,
c. A violation of either Secs. 8 or 9, D.O. 18-A. (Sec. 5, D.O. 18-A, 2011).
When is there job contracting or subcontracting?
It is an arrangement whereby a principal agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a specific job, work
or service within a definite or predetermined period, regardless of whether such
job, work or service is to be performed or completed within or outside the
premises of the principal. (IRR, Book III, VIII-A, Section 4)
Elements of a Valid Independent Contracting
a. The contractor/agency carries on an independent business; and
b. Undertakes the contract work on his account under his own responsibility
using his own manner and methods;
c. Free from the control of the principal in all matters connected with the
performance of work excepting the results thereof.
d. He has his own substantial capital in the form of;
e. Tools, equipment, machinery;
f. Work premises and other materials which are necessary in the conduct of his
business.
The preceding elements, enunciated in D.O. No. 10 (now revoked) are no longer
available in D.O. No. 18-02. However, it is enough for D.O. No. 18-02 to enumerate
what it prohibits, and it does not have to itemize what it allows. (This is to avoid any
confusion created by D.O. No. 10 where the prohibitions overlapped with the
permissions) The validity of job contracting is already recognized, implicitly though, in
Article 106 par. 3 as well as in Article 1713 of the Civil Code, and in numerous judicial
rulings.
When is there labor-only contracting?
There is labor-only contracting where the contractor or sub-contractor merely
recruits, supplies or places workers to perform a job, work or service for a
principal. For labor-only to exist, Sec. 6 of Department Order No. 18-A
requires any two of the elements to be present:
1. No Cap Direct. The contractor does not have substantial capital or
investments in the form of tools, equipment, machineries, work premises,
among others, and the employees recruited and placed are performing
activities which are usually necessary or desirable to the operation of the
company, or directly related to the main business of the principal within a
definite or predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the premises of
the principal; or,

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Note: Directly related means, the work performed by the workers are
dependent and integral steps in all aspects relating to the essential
operations of the principal. If not directly related to, then it should be
allowed as job-contracting.
2. No Control. The contractor does not exercise the right to control over the
performance of the work of the employee.
To emphasize, a finding that a job contractor is a labor-only contractor is equivalent
to declaring that there is an employer-employee relationship between the company
and the employees of the labor-only contractor. This is because the labor-only
contractor is considered as a mere agent of the employer.
A mere statement in a contract with a company that laborers who are paid according to
the amount and quality of work are independent contractors does not change their status
as mere employees in contemplation of labor laws.

Contractor vis--vis Employees

If the nature or character of the work passes the control test, then it is job-contracting.
Otherwise, if it fails the control test, then it is labor-only contracting.

Note: In job-contracting, the principal has no right of control over the conduct of the
employees as to the means employed to achieve an end.

B. Dismissal from employment

1. General Principles
in illegal dismissal cases, the employer is burdened to prove just cause for terminating the
employment of its employees with clear and convincing evidence. This principle is designed to
give flesh and blood to the guaranty of security of tenure granted by the constitution to employees
under the Labor Code. (Duty Free Philippines Service,Inc. vs. Tria. G.R. No. 174809. June 27,
2012).
2. Just Causes
a. Serious Misconduct
Improper or wrong conduct; the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. To be serious within the
meaning and intendment of the law, the misconduct must be of such grave and
aggravated character and not merely trivial or unimportant.( Villamor Golf Club
vs. Pehid. G.R. No. 166152. October 4, 2005).

Although fighting within company premises may constitute serious misconduct

(possible ground for disciplinary actions), not every fight with in company
premises in which an employee is involved automatically warrant dismissal from
service. (Supreme Steel Pipe Corp. vs. Bardaje
G.R. No. 170811; April 24, 2007).

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The refusal to obey a valid transfer order constitutes willful disobedience of a

lawful order of an employer. Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as unjust or illegal.
However, until and unless these rules or orders are declared illegal or improper
by competent authority, the employees ignore or disobey them at their peril. But
transfer should not result to demotion of rank which is tantamount to constructive
dismissal. (Manila Pavilion Hotel vs. Henry Delada. G.R. No. 189947; January
25, 2012).
Halloween invitation sent out by employee for office trick-or-treating without
clearance from higher management is considered misbehavior. The
circumstances in the case were differentiated from Samson vs. NLRC where the
offensive remarks were verbally made during informal Christmas gathering.
(Punzal vs. ETSI Technologies. G.R. No. 170384-85. March 9, 2007)
Managers stubbornness, arrogance, hostility & uncompromising stance, reading
confidential letter not intended for her (but about her). When an employee
accepts promotion to a managerial position, or to a position requiring full trust
and confidence, she gives up some of the rigid guarantees available to ordinary
workers infractions, which if committed by other would be overlooked or
condoned / penalties mitigated, may visited with more severe disciplinary action
life committed by managerial employee.( Sim vs. NLRC (October 2, 2007) &
Tirazona vs. CA (G.R. No. 169712; March 14, 2008)

When an employee, despite repeated warnings from the employer, obstinately

reuses to curtail a bellicose inclination such that it erodes the morale of the coemployees, the same may be a ground for dismissal for serious misconduct.
Acts destructive of co-employees morale may be considered serious
misconduct. (Citibank vs NLRC. G.R. No. 159302. February 6, 2008)
The Supreme Court has taken judicial notice of scientific findings that drug abuse
can damage the mental faculties of the user. It is beyond question that any
employee under the influence of drugs cannot possibly continue doing his duties
without posing a serious threat to the lives and property of his co-workers, and
even his employer. An employees statements given to the police during
investigation is evidence which can be considered by the employer against
another employee, especially so if the latter did not appear in the scheduled
admin hearing to present his side. ( Bughaw Jr. vs. Treasure Island. G.R. No.
173151. March 28, 2008).
A teacher engaging in an extra-marital affair with another married person is a
serious misconduct, if not an immoral act. But a teacher falling in love with her
pupil and, subsequently, contracting a lawful marriage with him, though there is a
disparity in their ages and academic level cannot be considered as a defiance of
contemporary social mores. (Chua-Qua vs. Clave. G.R. No. 49549; August 30,
1990).

Generally, it is not a valid ground for dismissal. However, a security guard found
sleeping on the job is doubtless subject to dismissal on the ground of serious
misconduct. (PLDT vs. NLRC and Abucay. August 23, 1988).

Gross Insubordination

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The refusal to obey a valid transfer order constitutes willful disobedience of a

lawful order of an employer. Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as unjust or illegal.
However, until and unless these rules or orders are declared illegal or improper
by competent authority, the employees ignore or disobey them at their peril. But
transfer should not result to demotion of rank which is tantamount to constructive
dismissal. (Manila Pavilion Hotel vs. Henry Delada (2012)

Contra I.
It has been judicially affirmed as justification for an employees refusal to follow
an employers transfer order if the transfer deters the employee from exercising
his right to self-organization.
Contra II.
Lores Realty Enterprises, Inc. v. Virginia E. Pacia
March 2011
Petitioner employer ordered the respondent employee to prepare checks for
payment of petitioners obligations. Respondent did not immediately comply with
the instruction since petitioner employer had no sufficient funds to cover the
checks. Petitioner employer dismissed respondent employee for willful
disobedience. The Court held that respondent employee was illegally dismissed.
Though there is nothing unlawful in the directive of petitioner employer to prepare
checks in payment of petitioners obligations, respondent employees initial
reluctance to prepare the checks, although seemingly disrespectful and defiant,
was for honest and well intentioned reasons. Protecting the petitioner employer
from liability under the Bouncing Checks Law was foremost in her mind. It was
not wrongful or willful. Neither can it be considered an obstinate defiance of
company authority. The Court took into consideration that respondent employee,
despite her initial reluctance, eventually did prepare the checks on the same day
she was tasked to do it.
b. Gross and Habitual Neglect of Duties; Gross Negligence
It has been defined as the want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. (NBS vs. Court of
Appeals. G.R. No. 146741; February 27, 2002)

Labor adjudicatory officials and the CA must demur the award of separation pay
based on social justice when an employees dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or
willful breach of trust; or commission of a crime against the person of the
employer or his immediate family - grounds under Art. 282 of the Labor Code that
sanction dismissals of employees. They must be most judicious and circumspect
in awarding separation pay or financial assistance as the constitutional policy to
provide full protection to labor is not meant to be an instrument to oppress the
employers. The commitment of the Court to the cause of labor should not
embarrass us from sustaining the employers when they are right, as here. In fine,
we should be more cautious in awarding financial assistance to the undeserving
and those who are unworthy of the liberality of the law. (Quiambao vs. Manila
Electric Company. G.R. No. 171023; December 18, 2009).

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An employee who was grossly negligent in the performance of his duty, though
such negligence committed was not habitual, may be dismissed especially if the
grossly negligent act resulted in substantial damage to the company. (LBC
Express vs. Mateo. G.R. No. 168215; June 9, 2009).

c. Fraud or Willful Breach of Trust

(Loss of Trust and Confidence)
Employees routinely charged with the care and custody of the employer's money
or property to this class belong cashiers, auditors, property custodians, etc., or
those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property. (Mabeza vs. NLRC. G.R. No. 118506.
April 18, 1997).
A breach is willful if it is done intentionally, knowingly, and purposely without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly, or inadvertently. (De la Cruz vs. NLRC. G.R. No. 119536; February
17, 1997).
The act constituting the breach must be work-related such as would show the
employee concerned to be unfit to continue working for the employer. (Gonzales
vs. NLRC. G.R. No. 131653; March 26, 2001).
It must be substantial and founded on clearly established facts sufficient to
warrant the employees separation from employment. (Sulpicio Lines Inc. vs.
Gulde. G.R. No. 149930; February 22, 2002).

d. Commission of a Crime or Offense

e. Other Analogous Cases

For abandonment to constitute a valid cause for termination of employment there
must be a deliberate unjustified refusal of the employee to resume his
employment. This refusal must be clearly shown. Mere absence is not sufficient;
it must be accompanied by overt acts pointing to the fact that the employee
simply does not want to work anymore. (Jardine Davies vs. NLRC. G.R. No.
106915; August 31, 1993).
Abandonment is negated by the immediate filing of an action for illegal
dismissal.( Del Monte Philippines vs. NLRC. G.R. No. 126688; March 5,
1998).

To constitute abandonment, there must be a clear and deliberate intent to

discontinue ones employment without any intention of returning back. (Flores
vs. Funeraria Neustro. G.R. No. L-66890.April 15, 1988).

The employer is not guilty of unfair labor practice if it merely complies in good
faith with the request of the certified union for the dismissal of employees
expelled from the union pursuant to the union security clause in the collective
bargaining agreement. (Soriano vs. Atienza. G.R. No. 68619. March 16, 1989).

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3. Authorized causes
a. Introduction of labor saving device:
Reduction of the number of workers in a companys factory made necessary by
the introduction of machinery in the manufacture of its products is justified. There
can be no question as to the right of the manufacturer to use new labor-saving
devices with a view to effecting more economy and efficiency in its method of
production. (Philippine Sheet Metal Workers Union vs. CIR. G.R. No. L-2028;
April 28, 1949).

b. Redundancy:
Requirements for a valid Redundancy Program:
1. A written notice served on both the employees and DOLE at least one month
prior to the intended date of retrenchment;
2. Payment of separation pay equivalent to at least one month pay or at least
one month pay for every year of service, whichever is higher;
3. Good faith in abolishing the redundant positions;
4. Fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished such as but not limited to:
a. Preferred status
b. Efficiency
c. Seniority
(DAP v. Court of Appeals. G.R. No. 165811; December 14, 2005).
It does not necessarily or even ordinarily refer to duplication of work. A position is
redundant if it is a superfluity. (Almodiel vs NLRC. G.R. No. 100641. June 14,
1992).
c. Retrenchment (Downsizing); Delayering
The phrase to prevent losses means that retrenchment or termination from the
service of some employees is authorized to be undertaken by the employer
sometime before the losses anticipated are actually sustained or realized.
Evidently, actual losses need not set in prior to retrenchment. (Cajucom VII vs.
TPI Philippines Cement Corporation. February 11, 2005).
Standards to Justify Retrenchment:
1. The losses expected should be substantial and not merely de minimis in extent;
2. The substantial loss apprehended must be reasonably imminent. It be
reasonably necessary and likely to effectively prevent the expected losses;
3. The employer should have taken other measures prior or parallel to retrenchment
to forestall losses;
4. The alleged losses if already realized, and the expected imminent losses must be
proved by sufficient and convincing evidence.
(Oriental Petroleum & Minerals Corp. vs. Fuentes. G.R. No. 151818. October
14, 2005)
The employer must have used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees, such as
status, efficiency, seniority, physical fitness, age and financial hardship for certain
workers. (Asian Alcohol Corp. v. NLRC. G.R. No. 131108. March 25, 1999).

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d. Closure of business
Where closure is due to serious business losses, no separation pay is required
(North Davao Mining Corp. v. NLRC; G.R. No. 112546. March 13, 1996);
Where closure was due to an act of the government, the workers are not entitled
to separation pay (National Federation of Labor v. NLRC; G.R. No. 127718.
March 2, 2000).
Article 283 includes both the complete cessation of all business operation of an
establishment and the cessation of only part of a companys business. (Cheniver
Deco Print Technics Corp. vs. NLRC. G.R. No. 122876. February 17, 2000).

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

be dismissed, on account of retrenchment, such as: (a) less preferred status (i.e.,
temporary employees); (b) efficiency rating; and (c) seniority. (Asiaworld
Publishing House Inc. vs. Ople. G.R. No. 56398; July 23, 1987).

When there is need to reduce the workforce, the management has the right to
choose who to lay off, depending on the work still required to be done and the
qualities of the workers to be retained. (Almoite vs. Pacific Architects. G.R.
No. 73680; July 10, 1986).

Labor contracts being in personam in nature, are binding only between the
parties. Moreover, there is no law requiring a bona fide purchaser of assets of an
on-going concern to absorb in its employ the employees of the latter.
(Sundowner Development Corp. vs. Drilon. G.R. No. 82341. Dec. 6, 1989).

However, although the purchaser of the assets or enterprise is not legally bound
to absorb in its employ the employees of the seller of such assets or enterprise,
the parties are liable to the employees if the transaction between the parties is
colored or clothed with bad faith. The sale or disposition must be motivated by
good faith as an element of exemption from liability (Associated Labor Unions
VIMCONTU vs. NLRC. G.R. No. 74841 December 20, 1991).
In case of mergers, where the transferee is merely an alter-ego of the different
merging firms. In such instance, the transferee has the obligation not only to
absorb the workers of the dissolved companies but also to include the length of
service earned by the absorbed employees with their former employers as well.
To rule otherwise would be manifestly less than fair, certainly, less than just and
equitable. (Filipinas Port Services, Inc. vs. NLRC. G.R. No. 97237 August

16, 1991).

e. Disease:
When his continued employment is prohibited by law or prejudicial to his health
or to the health of his co-employees. There is a certification by a competent
public health authority that the disease is of such nature or at such stage that it
cannot be cured within a period of 6 months even with proper medical treatment.

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The requirement for a medical certificate cannot be dispensed with; otherwise, it

would sanction the unilateral and arbitrary determination by the employer of the
gravity or extent of the employees illness and thus defeat the public policy on the
protection of labor. (Manly Express vs. Payong. G.R. No. 167462. Oct. 25,
2005).

f. Other Authorized Causes:

a. Total and permanent disability of the employee;
b. Valid application of union security clause;
c. Expiration of period in term of employment;
d. Completion of project in project employment;
e. Failure in prohibition;
f. Relocation of business to a distant place;
g. Defiance of return-to-work order;
h. Commission of illegal acts in a strike;
i. Violation of contractual commitment;
j. Retirement.
4. Totality of Infractions Doctrine
Where the employee has been found to have repeatedly incurred several suspensions or
warnings on account or violations of the company rules and regulations, the law warrants
their dismissal as it is akin to habitual delinquency.
1.
Due Process
a.
Twin-notice requirement
(Villeno vs. NLRC. G.R. No. 108153; December 26, 1995).

5. Due process in termination

General Rule:
The twin requirements of notice and hearing are the essential elements of due process in
termination cases, which cannot be dispensed with without violating the constitutional right to
due process.
a. Notice
In order to intelligently prepare the employees for their explanation and defenses, the
notice should contain a detailed narration of the facts and circumstances that will serve
as the basis for the charge against the employee a general description of the change
will not suffice.( (King of Kings Transport vs. Mamac. G.R. No. 166208. June 29,
2007).

The first notice should contain a detailed narration of facts and circumstances that will
serve as basis for the charge against the employee. A general description of the charge
will not suffice. The notice should specifically mention which company rules, if any, are
violated (King of Kings Transport vs. Mamac; June, 2007), and that the employer
seeks dismissal for the act or omission charged against the employee; otherwise; the
notice does not comply with the rules (Magro Placement vs. Hernandez. G.R. No.
156964. July 04, 2007).
The law does not require that an intention to terminate ones employment should be
included in the first notice. It is enough that employees are properly apprised of the
charges brought against them so they can properly prepare their defenses; it is only

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during the second notice that the intention to terminate ones employment should be
explicitly stated (Esguerra vs. Valle Verde Country Club. G.R. No. 173012. June 13,
2012).
Every kind of assistance that management must accord to the employees to enable them
to prepare adequately for their defense. This should be construed as a period of Five (5)
Calendar Days from receipt of notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint (King of Kings Transport;
June, 2007).
Second Notice: Notice of Termination (Post-Notice), which is a written notice of
termination served upon the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.
Note: The twin-notice rule should be complied with.
b.

Hearing; meaning of opportunity to be heard

The new revolutionized doctrine of due process in termination cases: hearing or
conference not necessary.
Petitioners insistence on a hearing cannot be given merit. The Supreme Court ruled that
there is no need for a hearing or conference, and noted: There is a marked difference in
the standards of due process to be followed as prescribed in the Labor Code and its
implementing rules. The Labor Code, on one hand, provides that an employer must
provide the employee ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires. The Omnibus Rules implementing the
Labor Code, on the other hand, require a hearing and conference during which the
employee concerned is given the opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him At the outset, it must be stated
that the time-honored doctrine is that, in case of conflict, the law prevails over the
administrative regulations implementing it. The authority to promulgate implementing
rules proceeds from the law itself. To be valid, a rule or regulation must conform to and
be consistent with the provisions of the enabling statute. As such, it cannot amend the
law either by abridging or expanding its scope. (Perez vs. Philippine Telegraph and
Telephone Company. G.R. No. 152048. April 7, 2009).
The right to counsel and the assistance of one in investigations involving termination
cases is neither indispensable nor mandatory, except when the employee himself
requests for one or that he manifests that he wants a formal hearing on the charges
against him. (Lopez vs. Alturas Group. G.R. No. 191008. April 11, 2011).

A hearing or conference should be held during which the employee concerned, with the
assistance of counsel, if the employee so desires, is given the opportunity to respond to
the charge, present his evidence or rebut the evidence presented against him. (Lavador
vs. J Marketing Corporation and Soyao. G.R. No. 157757; June 28, 2005).

c. Agabon Doctrine: Belated Due Process Rule

It abandoned Serrano Ruling. Dismissal for an authorized or just cause, without
procedural due process is not an illegal dismissal which warrants back wages; the
employee is entitled only to nominal damages.

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The Court interpreted Art. 279 to the effect that: termination is illegal only if it is not for
any of the justified or authorized causes provided by law. Payment of back wages and
other benefits, including reinstatement, is justified only if the employee was unjustly
dismissed.
The Court decided to follow Wenphil that where the dismissal is for a just cause,
the lack of statutory due process should not nullify the dismissal or render it
illegal. However, the employer should indemnify the employee for the violation of
his rights. The indemnity should be stiffer than that provided in Wenphil to
discourage the abhorrent practice of dismiss now, pay later. The indemnity
should be in the form of nominal damages, which is adjudicated in order that a
right of plaintiff, which has been violated by the defendant, may be vindicated.
If the dismissal is based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him should be
tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee. On the other hand, if the dismissal is based on an authorized cause under
Article 283 but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the employers exercise
of his management prerogative. (Jaka Food Processing v. Pacot. G.R. No.
151378.March 28, 2005).
Factors to be taken into account in determining the amount of nominal damages in
dismissal cases:
1. The authorized cause invoked, whether it was a retrenchment or a closure or
cessation of operation of the establishment due to serious business losses or
financial reverses or otherwise;
2. The number of employees to be awarded;
3. The capacity of the employers to satisfy the awards, taken into account their
prevailing financial status as borne by the records;
4. The employer's grant of other termination benefits in favor of the employees;
5. Whether there was a bona fide attempt to comply with the notice requirements as
opposed to giving no notice at all. SC reduced the nominal damages from P
30,000 to P 10,000.
(Industrial Timber Corp. v. Agabon. G.R. No. 164518. March 30, 2006).

C. Reliefs for Illegal Dismissal

1. Reinstatement
Payroll reinstatement in lieu of actual reinstatement is a departure from the rule and there must
be showing of special circumstances rendering actual reinstatement impracticable, or otherwise
not conducive to attaining the purpose of the law in providing for assumption of jurisdiction by the
Secretary of Labor and Employment in a labor dispute that affects the national interest. (Manila
Diamond Hotel Employees Union vs. Secretary. G.R. No. 140518; December 16, 2004).

a.

Pending Appeal (Art. 223, Labor Code)

The reinstatement order of the Labor Arbiter is immediately executory even pending
appeal (Article 223 (3), Labor Code). In fact, it is self-executory, without need of the
complainant filing a Motion for Execution to effect the reinstatement (Pioneer
Texturizing vs. NLRC; G.R. No. 118651. October 16, 1997).
Hence, it is the obligation of the employer to immediately admit the employee back to
work or reinstate him in the payroll at his option. Otherwise, the employer will be held
liable for backwages from the date of notice of the order up to the date of employees

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actual or payroll reinstatement. (International Container Terminal Services, Inc. vs.

NLRC; G.R. No. 115452. December 21, 1998)
Failure on the part of the employer to exercise the options in the alternative, the employer
must pay the employees salaries (Garcia vs. Philippine Airlines, Inc. G.R. No. 164856.
August 29, 2007).
Where the order of reinstatement by the labor arbiter is reversed on appeal. Even if the
order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the
part of the employer to reinstate and pay the wages of the dismissed employee during
the period of appeal until reversal by the higher court. On the other hand, if the employee
has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services during the period. (Roquero
vs. Philippine Airlines, Inc. G.R. No. 152329. April 22, 2003).
Note (Poquiz): He should not refund the salaries he received pending appeal for the
principle of social justice renders inapplicable the civil law doctrine of unjust enrichment.

Exception:
After the Labor Arbiters decision is reversed by a higher tribunal, the employee may be
barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer (Garcia vs.
Philippine Airlines; 2009).

2. Separation pay in lieu of reinstatement

a. Doctrine of Strained Relations:
When the employer can no longer trust the employee and vice-versa, or there were
imputations of bad faith to each other, reinstatement could not effectively serve as a
remedy. This doctrine applies only to positions which require trust and confidence.
(Globe Mackay v. NLRC. G.R. No. 82511; March 3, 1992).

b. Separation Pay in lieu of Reinstatement

1.

Full Backwages

Entitlement to backwages of the illegally dismissed employee flows from law. Even if he
does not ask for it, it may be given. The failure to claim backwages in the complaint for
illegal dismissal is a mere procedural lapse which cannot defeat a right granted under
substantive law. (St. Michaels Institute v. Santos. G.R. No. 145280; December 4,
2001).

(a) Computation
The backwages to be awarded should not be diminished or reduced by earning
elsewhere during the period of his illegal dismissal. The reason is that the
employee while litigating the illegality of his dismissal must still earn a living to
support himself and his family. (Bustamante vs. NLRC (March 15, 1996), and
Buenviaje v. CA (2002)).

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The award of backwages is computed on the basis of a 30-day month. (JAM

Trans Co. v. Flores. G.R. No. L-68555; March 19, 1993).
When the order of the labor arbiter approving reinstatement was reversed on
appeal, the employee is not required to reimburse the backwages or other
salaries received during the pendency of the appeal except when there is delay
in the execution of the order of reinstatement prior to the reversal and the delay
or non-execution was not due to employers fault. (Garcia vs. PAL. G.R. No.
164856; January 20, 2009).

(b) Limited Backwages

D.

Preventive Suspension
When an employee resigns or executes a quitclaim in favor of the employer, he is thereby
stopped from filing any money claims against the employer arising from his employment.
(Philippine National Construction Corporation vs. NLRC. G.R. No. 117240; October 2,
1997).

Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represented a reasonable settlement, it is binding on the parties and
may not later be disowned, simply because of a change of mind. (Candido Alfaro v. Court of
AppealsG.R. No. 140812; August 28, 2001).

E.

Constructive Dismissal
Constructive Dismissal is defined as quitting because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving demotion in rank and a diminution in
pay. (Jo Cinema Corporation v. Abellana. G.R. No. 132837; June 28, 2001).

There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an

employer becomes so unbearable on the part of the employee that it could foreclose any choice
by him except to forego his continued employment.( Hyatt Taxi Services, Inc. v. Catinoy. G.R.
No. 143204. June 26, 2001).

V. MANAGEMENT PREROGATIVE
This prerogative flows from the established rule that labor laws do not authorize the substitution
of judgment of the employer in the conduct of his business. The employer can exercise this
prerogative without fear of liability as long as it is done in good faith for the advancement of his
interests, and not for the purpose of defeating or circumventing the rights of the employees under
special laws or valid agreements. It is valid as long as it is not performed in a malicious, harsh,
oppressive, vindictive or wanton manner, or out of malice or spite.( Great Pacific Employees
Union vs. Great Pacific Life Assurance. G.R. No. 126717; February 11, 1999).
As long as the companys exercise of the same is exercised in good faith for the advancement of
the employers interest, and not for the purpose of defeating or circumventing the rights of the
employees under special laws or valid agreements, the courts will uphold them (also: San Miguel
Brewery Sales Force Union (PTGWO) vs. Ople | G.R. No. L-53515; February 8, 1989). (Capitol
Medical Center, Inc. v. Meris. G.R. No. 155098; September 16, 2005)

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A.

Discipline
The employer has the prerogative to instill discipline in his employees and to impose reasonable
penalties, including dismissal, on erring employees pursuant to company rules and regulations.
(San Miguel Corp. vs. NLRC. G.R. No. 78277. May 12, 1989).

It will be highly prejudicial to the interests of the employer to impose on him the services of an
employee who has been shown to be guilty of the charges that warranted his dismissal. It will
demoralize the rank-and-file if the undeserving, if not undesirable, remains in the service.
(Shoemart, Inc. vs. NLRC. G.R. No. 74229. August 11, 1989).

B.

Transfer of Employees
This is a privilege inherent in the employers right to control and manage its enterprise effectively.
(Yuco Chemical Industries vs. Ministry of Labor. G.R. No. L-75656 May 28, 1990).
It is the inherent prerogative of an employer to transfer and reassign its employees to meet the
requirements of its business. Be that as it may, the prerogative of the management to transfer its
employees must be exercised without grave abuse of discretion. The exercise of the prerogative
should not defeat an employee's right to security of tenure. The employers privilege to transfer its
employees to different workstations cannot be used as a subterfuge to rid itself of an undesirable
worker. (Veterans Security Agency v. Vargas. G.R. No. 159293; December 16, 2005).

An employer has the right to transfer, reduce or lay-off personnel in order to minimize expenses
and to insure the stability of the business, and even to close the business, and this right has been
consistently upheld even in the present era of multifarious reforms in the relationship of capital
and labor, provided the transfer or dismissal is not abused but is done in good faith and is due to
causes beyond control. ((Gregorio Araneta Employees Union vs. Roldan. G.R. No. L-6846

July 20, 1955).

It is the employers prerogative, based on its assessment and perception of its employees
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. When an employees transfer is not unreasonable, nor inconvenient or prejudicial to
him, and it does not involve a demotion in rank or diminution of his salaries, benefits and other
privileges, the employee may not complain that it amounts to a constructive dismissal. (Philipiine
Telegraph vs. Laplana. G.R. No. 76645; July 23, 1991).

It cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. Nor
when the real reason is to penalize an employee for his union activities and thereby defeat his
right to self-organization. But the transfer can be upheld when there is no showing that it is
unnecessary, inconvenient and prejudicial to the displaced employee. (Pocketbell Phils., Inc.
vs. NLRC and Arthur Alinas. G.R. No. 106843; January 20, 1995).

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C.

Productivity Standard
Failure to observe prescribed standards of work; or to fulfill reasonable work assignments due to
insufficiency may constitute just cause for dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either by failing to complete the same within the
allotted reasonable period, or by producing unsatisfactory results. This management prerogative
of requiring standards may be availed of so long as they are exercised in good faith for the
advancement of the employers interest. (Buiser vs. Leogardo . G.R. No. L-63316 July 31,

1984).
D.

Grant of Bonus
General Rule:
Bonus is not demandable as a matter of right. It is a management prerogative, given in addition to
what is ordinarily received by or strictly due to the recipient (Producers Bank v. NLRC. G.R. No.
100701. March 28, 2001).
Exceptions
1. When it was promised to be given without any conditions imposed for its payment in which
case it is deemed part of the wage;
2. When it has ripened into practice.
(Marcos v. NLRC; G.R. No. 111744. September 8, 1995):

E. Change of Working Hours

The working hours may be changed, at the discretion of the company, should such change be
necessary for its operations, and that employees shall observe such rules as have been laid
down by the company.(Interphil Laboratories Union-FFW vs. Interphil Laboratories, Inc.

G.R. No. 142824. December 19, 2001).

F. Rules on Marriage between employees of competitor-employers
The failure of the employer to prove legitimate business concern in imposing the questioned
policy cannot prejudice the employees right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company Thus, for failure of the
employer to present undisputed proof of a reasonable business necessity, we rule that the
questioned policy is an invalid exercise of management prerogative. (Star Paper Corp. vs.
Simbol. G.R. No. 164774
April 12, 2006).

Prohibition of marriage or existing or future relationships between employees of competing

companies is not violative of the equal protection clause. (Duncan vs. Glaxo Wellcome. G.R.
No. 162994; September 17, 2004).
A woman worker may not be dismissed on the ground of dishonesty for having written single on
the space for civil status on the application sheet, contrary to the fact that she was married.
(PT&T Co. v. NLRC. G.R. No. 118978. May 23, 1997).

G. Post-employment Ban
Non-involvement Clause:
A non-involvement clause is not necessarily void for being in restraint of trade as long as there
are reasonable limitations as to time, trade, and place. It was also stated in this case that the

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validity of a non-involvement clause depends upon the nature of work of the subject employee.
Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in
charge of respondents Hong Kong and ASEAN operations, she had been privy to confidential
and highly sensitive marketing strategies of respondents business. To allow her to engage in a
rival business soon after she leaves would make respondents trade secrets vulnerable especially
in a highly competitive marketing environment. In sum, we find the non-involvement clause not
contrary to public welfare and not greater than is necessary to afford a fair and reasonable
protection to respondent. (Daisy Tiu vs. Platinum Plans. G.R. No. 163512. February 28,
2007).

VI. SOCIAL WELFARE LEGISLATION

A.

Social Security Service Law (R.A. No. 8282)

The policy objective in the enactment of SSS law is the policy of the State to establish, develop,
promote and perfect a sound and viable tax-exempt social security system suitable to the needs
of the people throughout the Philippines which shall promote social justice and provide
meaningful protection to members and their beneficiaries against the hazards of disability,
sickness, maternity, old age, death, and other contingencies resulting in loss of income or
financial burden (RA 8282, Section 2). The enactment of SSS law is a legitimate exercise of the
police power. It affords protection to labor and is in full accord with the constitutional
mandate on the promotion of social justice. (Roman Catholic Archbishop of Manila vs.
SSS. G.R. L-15045. January 20, 1961).
The right of an employee to be covered by the SSS is premised on the existence of an employeremployee relationship (Gapayao vs. Fulo. G.R. No. 193493
June 13, 2013).
A wife who is already separated de facto from her husband cannot be said to be "dependent for
support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that
the husband and wife were still living together at the time of his death, it would be safe to
presume that she was dependent on the husband for support, unless it is shown that she is
capable of providing for herself. (SSS v. Aguas. G.R. No. 165546; February 27, 2006)

Effect of Non-Remittance of Contributions by the Employer:

An employee is still entitled to social security benefits even if his employer fails/refuses to remit
the contribution to the SSS (Gapayao v. Fulo. G.R. No. 193493
June 13, 20132013).

B.

GSIS Law (R.A. No. 8291)

The compulsory retirement of government officials and employees upon their reaching the age of
65 years is founded on public policy which aims by it to maintain efficiency in the government
service and at the same time give to the retiring public servants the opportunity to enjoy during
the remainder of their lives the recompense, inadequate perhaps for their long service and
devotion to the government, in the form of a comparatively easier life, freed from the rigors of civil
service discipline and the exacting demands that the nature of their work and their relations with
their superiors as well as the public would impose upon them. (Beronilla v. GSIS. G.R. No. L21723; November 26, 1970).

Retirement benefits given to government employees in effect reward them for giving the best
years of their lives to the service of their country. This is especially true with those in government

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service occupying positions of leadership or positions requiring management skills because the
years they devote to government service could be spent more profitably in lucrative appointments
in the private sector. In exchange for their selfless dedication to government service, they enjoy
security of tenure and are ensured of a reasonable amount of support after they leave the
government. The basis for the provision of retirement benefits is, therefore, service to
government. (GSIS vs. CSC. G.R. No. 98395-102449; June 19, 1995).

Thus, where the employee retires and meets the eligibility requirements, he acquires a vested
right to benefits that is protected by the due process clause. Retirees enjoy a protected property
interest whenever they acquire a right to immediate payment under pre-existing law. Thus, a
pensioner acquires a vested right to benefits that have become due as provided under the terms
of the public employees pension statute. No law can deprive such person of his pension rights
without due process of law, that is, without notice and opportunity to be heard. (GSIS vs. De
Leon. G.R. No. 186560; November 17, 2010).
Note (Poquiz):
Coverage of GSIS Law
Membership is compulsory for all employees:
Appointee or elective
whether temporary, counsel, permanent or contractual with employer-employee
relationship
who are receiving basic pay or salary but not per diems, honoraria or allowances, and
who have not reached the compulsory retirement age of 65 years old
Who are not covered:
The following are excluded from the compulsory membership of the GSIS
Uniformed members of the AFP and PNP
Those who are not receiving basic pay or salary (per diems, honoraria or allowances are
excluded)
members of the judiciary and constitutional commissions. (they are only covered by life
insurance)
Purely casual employees
C. Limited Portability Law (R.A. No. 7699)
2011 Bar Exam Question:
Under the Limited Portability law, funds from the GSIS and the SSS maybe transferred for the
benefit of a worker who transfers from one system to the other. For this purpose, overlapping
periods of membership shall be credited only once.
D. Employees Compensation coverage and when compensable
Under the present law, in order for the employee to be entitled to sickness or death benefits, the
claimant must show: (1) that the disability or death is the result of an occupational disease listed
under Annex A of the ECC Rules with the conditions set therein satisfied; or, (2) that the risk of
contracting the disease is increased by the working conditions. (Lorenzo v. GSIS. G.R. No.
188385; October 2, 2013).

Where the primary injury is shown to have arisen in the course of employment, every natural
consequence that flows from the injury likewise arises out of the employment, unless it is the
result of an independent intervening cause attributable to complainants own negligence or

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misconduct. Simply stated, all the medical consequences and sequels that flow from the primary
injury are compensable. (Belarmino vs. ECC. G.R. No. 90204; May 11, 1990).

1. Direct Premises Rule

a. General Rule:
The accident of the employee should have occurred at the place of work in order to be
compensable.
b. Exceptions:
(The accident is still compensable even if it occurred outside the work premises)
(1) Proximity Rule:
When the injury is sustained when the employee is proceeding to or from his
work on the premises of the employer, the injury is compensable.( Iloilo Dock &
Engineering Co. vs. ECC. G.R. No. L-26341. Nov. 27, 1968).
(2). Going To or Coming From Work
when the injury is sustained when the employee is proceeding to or from his work
on the premises of the employer, the injury is compensable.
a. The act of the employee of going to, or coming from, the work place,
must have been a continuing act, that is, he had not been diverted
therefrom by any other activity and he had not departed from his usual
route to, or from, his workplace; and,
b. An employee on a special errand must have been official and in
connection with his work.
c.

Extra Premises Rule:

The company which provides the means of transportation in going to, or
coming from the place of work, is liable to the injury sustained by the
employees while on board said means of transportation. (Enao v. ECC
G.R. No. L-46046; April 5, 1985).

d. Special Errand Rule:

Injury sustained outside the company premises is compensable if his
being out is covered by an office order or a locator slip or a pass for
official business. The special errand must be official and in connection to
the employees work.
e. Dual Purpose Doctrine allows compensation where a special trip would
have to be made for the employer if the employee had not combined the
service for the employer with his going or coming trip even if in the
course of the trip, the employee also pursues a personal purpose.
f.

Special Engagement Rule covers field trips, outings, intramurals, and

picnics when initiated and sanctioned by the employer.

g. Positional and Local Risks Doctrine:

If an employee by reason of his duties is exposed to a special or peculiar
danger from the elements, that is, one greater than that to which other
persons in the community are exposed and an unexpected injury occurs,
the injury is compensable

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2. 24 Hour Duty Doctrine

The 24 Hour Duty Doctrine applies to both policemen and firemen. The policemen and
firemen are technically on duty 24 hours a day except when they are on vacation leave,
they may be on-call anytime. However, to be compensable, the injury should be caused
by an activity which is police or firemen services in character (reasonable connection
between the injury and the work or service). (Hinoguin v. ECC. G.R. No. 84307; April
17, 1989).

The 24-hour duty doctrine should not be sweepingly applied to all acts and circumstances
causing the death of a police officer but only to those which, although not on official line
of duty, are nonetheless basically police service in character. (GSIS vs. Court of
Appeals. G.R. No. 128524; April 20, 1999).

VII. LABOR RELATIONS

A. Right to self-organization
1. Who may unionize for purposes of collective bargaining
Article 212(g) of the Labor Code defines a labor organization as any union or association of
employees which exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment. Upon compliance with all the
documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant
labor organization a certificate indicating that it is included in the roster of legitimate labor
organizations. Any applicant labor organization shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance
of the certificate of registration. (Sta. Lucia East Commercial Corporation vs. Hon. Secretary
of Labor and Employment, et al., G.R. No. 162355, August 14, 2009).

2. Bargaining unit
a. Test to determine the constituency of an appropriate bargaining unit
An appropriate bargaining unit is defined as a group of employees of a given employer,
comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer, indicate to be best
suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law. The test of grouping is community or mutuality of
interest. Certain factors, such as specific line of work, working conditions, location of
work, mode of compensation, and other relevant conditions do not affect or impede their
commonality of interest. Although they seem separate and distinct from each other, the
specific tasks of each division are actually interrelated and there exists mutuality of
interests which warrants the formation of a single bargaining unit
Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any
labor organization to managerial employees, jurisprudence has extended this prohibition
to confidential employees. The positions of Human Resource Assistant and Personnel

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Assistant belong to the category of confidential employees and, hence, are excluded from
the bargaining unit, considering their respective positions and job descriptions. As
Human Resource Assistant, the scope of ones work necessarily involves labor relations,
recruitment and selection of employees, access to employees personal files and
compensation package, and human resource management. As regards a Personnel
Assistant, ones work includes the recording of minutes for management during collective
bargaining negotiations, assistance to management during grievance meetings and
administrative investigations, and securing legal advice for labor issues from the
petitioners team of lawyers, and implementation of company programs. Therefore, in the
discharge of their functions, both gain access to vital labor relations information which
outrightly disqualifies them from union membership. (San Miguel Foods, Inc. vs. San
Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011).
A bargaining unit is a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, consistent with equity to the employer, indicated
to be the best suited to serve the reciprocal rights and duties of the parties under the
collective bargaining provisions of the law. The fundamental factors in determining the
appropriate collective bargaining unit are:
(1) the will of the employees (Globe Doctrine);
(2) affinity and unity of the employees interest, such as substantial similarity of work and
duties, or similarity of compensation and working conditions (Substantial Mutual Interests
Rule);
(3) prior collective bargaining history; and
(4) similarity of employment status.
(Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and
Employment, et al., G.R. No. 162355, August 14, 2009

Under Article 245 of the Labor Code, supervisory employees are not eligible for
membership in a labor union of rank-and-file employees. The supervisory employees are
allowed to form their own union but they are not allowed to join the rank-and-file union
because of potential conflicts of interest. Further, to avoid a situation where supervisors
would merge with the rank-and-file or where the supervisors labor union would represent
conflicting interests, a local supervisors union should not be allowed to affiliate with the
national federation of unions of rank-and-file employees where that federation actively
participates in the union activity within the company. Thus, the limitation is not confined to
a case of supervisors wanting to join a rank-and-file union. The prohibition extends to a
supervisors local union applying for membership in a national federation the members of
which include local unions of rank-and-file employees. (Coastal Subic Bay Terminal,
Inc., vs DOLE. G.R. No. 157117,November 20, 2006 ).

There are two classes of rank and file employees in the university that is, those who
perform academic functions such as the professors and instructors, and those whose
functions are non-academic who are the janitors, messengers, clerks etc. Thus, not much
reflection Is needed to perceive that the mutuality of interest which justifies the formation
of a single bargaining unit is lacking between the two classes of employees. (U.P. v
Ferrer-Calleja. G.R. No. 96189. July 14, 1992).

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While the existence of a bargaining history is a factor that may be reckoned with in
determining the appropriate bargaining unit, the same is not decisive or conclusive. Other
factors must be considered. The test of grouping is community or mutuality of interests.
This is so because the basic test of an asserted bargaining units acceptability is whether
or not it is fundamentally the combination which will best assure to all employees the
exercise of their Collective Bargaining rights. (Democratic Labor Assocation v Cebu
Stevedorin Company, Inc.G.R. No. L-10321, Feb 28, 1958).
The attempt to make the security agencies appear as two separate entities, when in
reality they were but one, was a devise to defeat the law and should not be permitted.
Although respect for corporate personality is the general rule, there are exceptions. In
appropriate cases, the veil of corporate fiction may be pierced as when it is used as a
means to perpetrate a social injustice or as a vehicle to evade obligations. Petitioner was
thus correctly ordered to pay respondents retirement under RA 7641, computed from
January 1979 up to the time he applied for retirement in July 1997. (Enriquez Security
Services,Inc. vs. Victor A. Cabotaje
G.R. No. 147993,July 21, 2006).
b. Voluntary recognition
c. Certification election
(i) In an unorganized establishment
(ii) In an organized establishment
The choice of their representative is the exclusive concern of the employees; the
employer cannot have any partisan interest therein; it cannot interfere with, much
less oppose, the process by filing a motion to dismiss or an appeal from it; not
even the allegation that some employees participating in a petition for
certification election are actually managerial employees will give an employer
legal personality to block the certification election. The employers only right in
the proceeding is to be notified or informed thereof. (Samahang Manggagawa
sa Charter Chemical Solidarity of Unions in the Philippines for
Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio
Union President v. Charter Chemical and Coating Corporation
G.R. No. 169717, March 16, 2011).
The general rule is that an employer has no standing to question the process of
certification election, since this is the sole concern of the workers. Law and
policy demand that employers take a strict, hands-off stance in certification
elections. The bargaining representative of employees should be chosen free
from any extraneous influence of management. The only exception is where the
employer itself has to file the petition pursuant to Article 258 of the Labor Code
because of a request to bargain collectively. (San Miguel Foods, Inc. vs. San
Miguel Corp. Supervisors and Exempt Union. G.R. No. 146206. August 1,
2011).
A certification election is not a litigation but merely an investigation of a
nonadversarial fact finding character in which BLR plays a part of a
disinterested investigator seeking merely to ascertain the desire of the

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employees as to the matter of their representation. (Airline Pilots Assn of the
Philippines v. CIR. G.R. No. L33705, April 15, 1977).
The bargaining deadlock-bar rule was not applied because the duly certified
exclusive bargaining agent of all rank-and-file employees did not, for more than
four (4) years, take any action to legally compel the employer to comply with its
duty to bargain collectively, hence, no CBA was executed; nor did it file any
unfair labor practice suit against the employer or initiate a strike against the latter.
Under the circumstances, a certification election may be validly held. (Kaisahan
ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] vs. Trajano,
G. R. No. 75810, September 9, 1991).
This is what is strikingly different between the Kaisahan case and the case at
bench for in the latter case, there was proof that the certified bargaining agent,
respondent union, had taken an action to legally coerce the employer to comply
with its statutory duty to bargain collectively, i.e., charging the employer with
unfair labor practice and conducting a strike in protest against the employers
refusal to bargain. It is only just and equitable that the circumstances in this case
should be considered as similar in nature to a bargaining deadlock when no
certification election could be held. This is also to make sure that no floodgates
will be opened for the circumvention of the law by unscrupulous employers to
prevent any certified bargaining agent from negotiating a CBA. Thus, Section 3,
Rule V, Book V of the Implementing Rules should be interpreted liberally so as to
include a circumstance, e.g., where a CBA could not be concluded due to the
failure of one party to willingly perform its duty to bargain collectively. (Capitol
Medical Center Alliance of Concerned Employees-Unified Filipino Service
Workers vs. Laguesma. G. R. No. 118915, February 4, 1997).

The pendency of a petition for cancellation of union registration does not

preclude collective bargaining, and that an order to hold a certification election is
proper despite the pendency of the petition for cancellation of the unions
registration because at the time the respondent union filed its petition, it still had
the legal personality to perform such act absent an order cancelling its
registration. The legitimacy of the legal personality of respondent cannot be
collaterally attacked in a petition for certification election proceeding but only
through a separate action instituted particularly for the purpose of assailing it.
The Implementing Rules stipulate that a labor organization shall be deemed
registered and vested with legal personality on the date of issuance of its
certificate of registration. Once 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 V of the Implementing Rules. (Legend International Resorts
Limited v. Kilusang Manggagawa ng Legenda. G.R. No. 169754, February
23, 2011).
d) Run-off election
e) Re-run election
f) Consent election
It is wellsettled that under the double majority rule for there to be a valid certification
election, majority of the bargaining unit must have voted and the winning union must

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have garnered majority of the valid votes cast. Following the ruling that all the
probationary employees votes should be deemed valid votes while that of the
supervisory Ees should be excluded, it follows that the number of valid votes cast would
increase. Under Art. 256 of the LC, the union obtaining the majority of the valid votes cast
by the eligible voters shall be certified as the sole exclusive bargaining agent of all the
workers in the appropriate bargaining unit. This majority is 50% + 1. (NUWHRAIN
MPHC v. SLE. G.R. No. 181531, July 31, 2009).

g) Affiliation and disaffiliation of the local union from the mother union
A local union may disaffiliate at any time from its mother federation, absent any showing
that the same is prohibited under its constitution or rules. Such disaffiliation, however,
does not result in it losing its legal personality. A local union does not owe its existence to
the federation with which it is affiliated. It is a separate and distinct voluntary association
owing its creation to the will of its members. The mere act of affiliation does not divest the
local union of its own personality, neither does it give the mother federation the license to
act independently of the local union. It only gives rise to a contract of agency where the
former acts in representation of the latter. In the present case, whether the FFW went
against the will of its principal (the member-employees) by pursuing the case despite the
signing of the MOA, is not for the Court, nor for respondent employer to determine, but
for the Union and FFW to resolve on their own pursuant to their principal-agent
relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be
resolved in a different forum in an action at the instance of either or both the FFW and the
union or a rival labor organization, but not the employer as in this case. (Cirtek
Employees Labor Union-Federation of Free workers vs. Cirtek Electronics,
Inc., G.R. No. 190515. June 6, 2011).

Under the LC and the rules, the power granted to LOs to directly create a chapter or local
through chartering is given to a federation or national union only, not to a trade union
center. (SMCEU v. San Miguel Packaging Products Ees Union
G.R. No. 171153, Sep. 12, 2007).
It becomes mandatory for the BLR to check if the requirements under Art. 234 of
the LC have been sedulously complied with. If its application for registration is vitiated
by falsification and serious irregularities, especially those appearing on the face of the
application and the supporting documents, a LO should be denied recognition as a LLO.
(Progressive Devt Corp.Pizza Hut v. Laguesma. G.R. No. 115077, April 18, 1997).
This happens when there is a substantial shift in allegiance on the part of the majority of
the members of the union. In such a case, however, the CBA continues to bind the
members of the new or disaffiliated and independent union up to determine the union
which shall administer the CBA may be conducted. (ANGLOKMU v. Samahan ng
Manggagawang Nagkakaisa sa Manila Bay Spinning Mills at J.P. Coats
G.R. No.118562, July 5, 1996).

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Disaffiliation should be in accordance with the rules and procedures stated in the
constitution and bylaws of the federation. A local union may disaffiliate with its mother
federation provided that there is no enforceable provision in the federations constitution
preventing disaffiliation of a local union. (Tropical Hut Ees Union v. Tropical Hut
G.R. Nos. L4349599, Jan. 20, 1990).
Disaffiliation should always carry the will of the majority. It cannot be effected by a mere
minority group of union members. The obligation to check-off federation dues is
terminated with the valid disaffiliation of the local union from the federation with which it
was previously affiliated. Once a Local Chapter disaffiliates from the federation, it ceases
to be entitled to the rights and privileges granted to a legitimate labor organization. It
cannot file a petition for certification election. (Villar vs. Inciong. 121 SCRA 444, April
20, 1983).
The Supreme Court upheld the right of local unions to separate from their mother
federation on the ground that as separate and voluntary associations, local unions do not
owe their creation and existence to the national federation to which they are affiliated but,
instead, to the will of their members. The sole essence of affiliation is to increase, by
collective action, the common bargaining power of local unions for the effective
enhancement and protection of their interests. Admittedly, there are times when without
succor and support local unions may find it hard, unaided by other support groups, to
secure justice for themselves. (Liberty Cotton Mills Workers Union Vs. Liberty Cotton
Mills, Inc. G.R. No. L-33987, September 4, 1975).

(i)

Substitutionary doctrine

The Er cannot revoke the validly executed CB contract with their Er by the simple
expedient of changing their bargaining agent. The new agent must respect the contract. It
cannot be invoked to support the contention that a newly certified CB agent automatically
assumes all the personal undertakings of the former agentlike the no strike clause in
the CBA executed by the latter. (Benguet Consolidated Inc. v. BCI Ees and Workers
UnionPAFLU. G.R. No. L24711, April 1968).

(h) Union dues and special assessments

(i) Requirements for validity
It shall invalidate the questioned special assessments. Substantial compliance of the
requirements is not enough in view of the fact that the special assessment will diminish
the compensation of union members. i) Agency fees. (Palacol v. Ferrer Calleja
G.R. No. 85333, Feb. 26, 1990).

B. Right to collective bargaining

Jurisdictional preconditions in collective bargaining
1. Possession of the status of majority representation of the employees representative in
accordance with any of the means of selection or designation provided for the Labor Code
2. Proof of majority representation
3. A demand to bargain under Art. 250 (a) of the LC.( Kiok Loy v. NLRC.

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G.R. No. L 54334, Jan.22, 1986)

1. Duty to bargain collectively

a. When there is absence of a CBA
b. When there is a CBA
Where there is a legitimate representation issue, there is no duty to bargain collectively
on the part of the Employer. (Lakas ng mga Manggagawang Makabayan v. Marcelo
Enterprises. G.R. No. L38258, Nov. 19, 1982).

There is no perfect test of good faith (GF) in bargaining. The GF or BF is an

inference to be drawn from the facts and is largely a matter for the NLRCs expertise.
The charge of BF should be raised while the bargaining is in progress. With the execution
of the CBA, BF can no longer be imputed upon any of the parties thereto. All provisions in
the CBA are supposed to have been jointly and voluntarily incorporated therein by the
parties. This is not a case where private respondent exhibited an indifferent attitude
towards CB because the negotiations were not the unilateral activity of petitioner union.
The CBA is good enough that private respondent exerted reasonable effort of GF
bargaining.( Samahang Manggagawa sa Top Form ManufacturingUnited Workers
of the Phils v. NLRC. G.R. No. 113856, Sept. 7, 1998).

This is no different from a bargaining representatives perseverance to include one that

they deem of absolute necessity. Indeed, an adamant insistence on a bargaining position
to the point where the negotiations reach an impasse does not establish bad faith.
Obviously, the purpose of CB is the reaching of an agreement resulting in a contract
binding on the parties; but the failure to reach an agreement after negotiations have
continued for a reasonable period does not establish a lack of good faith. The
statutes invite and contemplate a collective bargaining contract, but they do not compel
one. The duty to bargain does not include the obligation to reach an agreement.
While the law makes it an obligation for the Er and the Ees to bargain collectively with
each other, such compulsion does not include the commitment to precipitately accept or
agree to the proposals of the other. All it contemplates is that both parties should
approach the negotiation with an open mind and make reasonable effort to reach a
common ground of agreement. (Union of Filipro Ees v. Nestle Phils.
G.R. Nos. 15893031, Mar. 3, 2008).

2. Collective Bargaining Agreement (CBA). (Law of the Plant)

As regular employees, petitioners fall within the coverage of the bargaining unit and are
therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the
CBA, petitioners are members of the appropriate bargaining unit because they are
regular rank-and-file employees and do not belong to any of the excluded categories.
Most importantly, the labor arbiters decision of January 17, 2002 affirmed all the way to
the CA ruled against the companys submission that they are independent contractors.

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Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under
the CBAs express terms, they are entitled to its benefits. CBA coverage is not only a
question of fact, but of law and contract. The factual issue is whether the petitioners are
regular rank-and-file employees of the company. The tribunals below uniformly
answered this question in the affirmative. From this factual finding flows legal effects
touching on the terms and conditions of the petitioners regular employment. (Farley
Fulache, et al. vs. ABS-CBN Broadcasting Corporation. G.R. No. 183810, January
21, 2010).
The certification of the CBA by the BLR is not required to make such contract valid.
Once it is duly entered into and signed by the parties, a CBA becomes effective as
between the parties whether or not it has been certified by the BLR. (Liberty Flour Mills
Ees Association v. Liberty Flour Mills. G.R. Nos. 5876870, Dec. 29, 1989).
A CBA is not an ordinary contract but one impressed with public interest, only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal
raised by a contracting party does not find print in the CBA, it is not a part thereof and the
proponent has no claim whatsoever to its implementation. (SMTFMUWP v. NLRC.
G.R. No. 113856, Sept. 7, 1998).
A pending cancellation proceeding is not a bar to set mechanics for collective bargaining
(CB). If a certification election may still be held even if a petition for cancellation of a
unions registration is pending, more so that the CB process may proceed. The majority
status of the union is not affected by the cancellation proceedings. (Capitol Medical
Center v. Trajano. G.R. No. 155690, June 30, 2005).
Although a CBA has expired, it continues to have legal effects as between the parties
until a new CBA has been entered into. (Pier & Arrastre Stevedoring Services, Inc.
v. Confessor. G.R. No. 110854, February 13, 1995).
a. Mandatory provisions of CBA
i. Grievance procedure
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into
by and between respondent GCI and AMOSUP provides that the Company and the
Union agree that in case of dispute or conflict in the interpretation or application of
any of the provisions of this Agreement, or enforcement of Company policies, the
same shall be settled through negotiation, conciliation or voluntary arbitration.
(Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No.
172642, June 13, 2012)

ii. Voluntary arbitration

Article 217 of the Labor Code states that unfair labor practices and termination
disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an
exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties,
shall also hear and decide all other labor disputes including unfair labor practices and

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bargaining deadlocks. For the exception to apply, there must be agreement between
the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement
may be stipulated in a collective bargaining agreement. However, in the absence of a
collective bargaining agreement, it is enough that there is evidence on record
showing the parties have agreed to resort to voluntary arbitration. (The University of
the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26,
2011).

Under voluntary arbitration, on the other hand, referral of a dispute by the

parties is made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding resolution. Ideally,
arbitration awards are supposed to be complied with by both parties without
delay, such that once an award has been rendered by an arbitrator, nothing is left to
be done by both parties but to comply with the same. After all, they are presumed to
have freely chosen arbitration as the mode of settlement for that particular dispute.
Pursuant thereto, they have chosen a mutually acceptable arbitrator who shall hear
and decide their case. Above all, they have mutually agreed to be bound by said
arbitrator's decision. (Luzon Devt Bank v. Assn of Luzon Devt Bank Ees
G.R. No. 120319, Oct. 6, 1995).
iii. No strike-no lockout clause
The no strikeno lockout clause in the CBA applies only to economic strikes. It does
not apply to ULP strikes. Hence, if the strike is founded on an unfair labor practice of
the employer, a strike declared by the union cannot be considered a violation of the
no strike clause. (Master Iron Labor Union v. NLRC. G.R. No. 92009, Feb. 17,
1993).
Note (Poquiz): A strike can be waived under this clause
b. Labor management council
c. Duration
Article 253 of the Labor Code mandates 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 CBA and/or until a new agreement is
reached by the parties. The law does not provide for any exception nor qualification on
which economic provisions of the existing agreement are to retain its force and effect.
Likewise, the law does not distinguish between a CBA duly agreed upon by the parties
and an imposed CBA. The provisions of the imposed CBA continues to have full force
and effect until a new CBA is entered into by the parties. (General Milling CorporationIndependent Labor Union [GMC-ILU] vs. General Milling Corporation
G.R. Nos. 183122/183889, June 15, 2011).
While the parties may agree to extend the CBAs original five-year term together with all
other CBA provisions, any such amendment or term in excess of five years will not carry
with it a change in the unions exclusive collective bargaining status. By express provision
of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter not for the workplace parties to
agree upon. In other words, despite an agreement for a CBA with a life of more than five

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years, either as an original provision or by amendment, the bargaining unions exclusive
bargaining status is effective only for five years and can be challenged within sixty (60)
days prior to the expiration of the CBAs first five years.( FVC Labor Union-Philippine
Transport and General Workers Organization (FVCLU-PTGWO) Vs. Sama-samang
Nagkakaisang Manggagawa sa FVC-Solidarity of Independent and General Labor
Organization (SANAMA-FVC-SIGLO. G.R. No. 176249, November 27, 2009)
Under the principle of hold over, until a new CBA has been executed by and between the
parties, they are duty bound to keep the status quo and must continue in full force and
effect the terms and conditions of the existing agreement. The law does not provide for
any exception or qualification as to which of the economic provisions of the existing
agreement are to retain force and effect. Therefore, it must be encompassing all the
terms and condition in the said agreement. (New Pacific Timber v. NLRC. G.R. No.
124224, Mar. 17, 2000).

The signing of the CBA does not determine whether the agreement was entered into
within the 6 month period from the date of expiration of the old CBA. In the present case,
there was already a meeting of the minds between the company and the union prior to
the end of the 6 month period after the expiration of the old CBA. Hence, such meeting of
the mind is sufficient to conclude that an agreement has been reached within the 6 month
period as provided under Art. 253A of the LC. (Mindanao Terminal and
Brokerage Services Inc., v. Confessor. G.R. No. 111809, May 5, 1997).

The CBA arbitral awards granted 6 months from the expiration of the last CBA shall
retroact to such time agreed upon by both the Er and the union. Absent such agreement
as to retroactivity, the award shall retroact to the 1st day after the 6 month period
following the expiration of the last day of the CBA should there be one. In the absence of
a CBA, the SLEs determination of the date of retroactivity as part of his discretionary
powers over arbitral award shall control. (Manila Electric Company v. Quisumbing.
G.R. No. 127598, Feb. 22 and Aug. 1, 2000).
There is no conflict between the agreement and Art. 253A of the LC for the latter has a
2fold purpose namely: a) to promote industrial stability and predictability and b) to assign
specific time tables wherein negotiations become a matter of right and requirement.
In so far as the first purpose, the agreement satisfies the first purpose. As regard the
second purpose, nothing in Art. 253A prohibits the parties from waiving or suspending
the mandatory timetables and agreeing on the remedies to enforce the same. For under
the said article, the representation limit of the exclusive bargaining agent applies only
when there is an existing CBA in full force and effect. In this case, the parties
agreed to suspend the CBA and put in abeyance the limit on representation. (Rivera v.
Espiritu. G.R. No. 135547, Jan. 23, 2002).
3. Union Security
a. Union security clauses; closed shop, union shop, maintenance of membership
shop, etc.
b. Check-off; union dues, agency fees

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What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA,
petitioners new regular employees (regardless of the manner by which they became
employees of BPI) are required to join the Union as a condition of their continued
employment. (Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter
G.R. No. 164301. October 19, 2011).
In terminating the employment of an employee by enforcing the union security clause, the
employer needs to determine and prove that:
(1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision in the
CBA; and
(3) there is sufficient evidence to support the decision of the union to expel the
employee from the union. These requisites constitute just cause for terminating an employee
based on the union security provision of the CBA.( Picop Resources Incorporated (PRI) vs.
Anacleto L. Taeca, et al., G.R. No. 160828, August 9, 2010).
GMC completely missed the point that the expulsion of Casio, et al. by the union and the
termination of employment of the same employees by GMC, although related, are two
separate and distinct acts. Despite a closed shop provision in the CBA, law and
jurisprudence impose upon GMC the obligation to accord Casio, et al. substantive and
procedural due process before complying with the unions demand to dismiss the expelled
union members from service. The failure of GMC to carry out this obligation makes it liable
for illegal dismissal of Casio, et al. (General Milling Corporation vs. Ernesto Casio, et al.
and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010).
While it is true that the withdrawal of support may be considered as a resignation from the
union, the fact remains that at the time of the unions application for registration, the affiants
were members of the union and they comprised more than the required 20% membership for
purposes of registration as a labor union. Article 234 of the Labor Code merely requires a
20% minimum membership during the application for union registration. It does not mandate
that a union must maintain the 20% minimum membership requirement all throughout its
existence. (Mariwasa Siam Ceramics, Inc. vs. The Secretary of the Department of Labor
and Employment, et al., G.R. No. 183317, December 21, 2009).
Article 222(b) of the Labor Code, as amended, prohibits the payment of attorneys fees only
when it is effected through forced contributions from the employees from their own funds as
distinguished from union funds. Hence, the general rule is that attorneys fees, negotiation
fees, and other similar charges may only be collected from union funds, not from the amounts
that pertain to individual union members. As an exception to the general rule, special
assessments or other extraordinary fees may be levied upon or checked off from any amount
due an employee for as long as there is proper authorization by the employee. A check-off is
a process or device whereby the employer, on agreement with the Union, recognized as the
proper bargaining representative, or on prior authorization from the employees, deducts
union dues or agency fees from the latters wages and remits them directly to the Union. Its
desirability in a labor organization is quite evident. The Union is assured thereby of
continuous funding. The system of check-off is primarily for the benefit of the Union and, only
indirectly, for the individual employees.
These requisites are:
(1) an authorization by a written resolution of the majority of all the union members at
the general membership meeting duly called for the purpose;
(2) secretarys record of the minutes of the meeting; and
(3) individual written authorization for check-off duly signed by the employee
concerned.
(Eduardo J. Mario, Jr. et al. vs. Gil Y. Gamilla, et al.. G.R. No. 149763, July 7, 2009).

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A shop steward leads to the conclusion that it is a position within the union, and
not within the company. A shop steward is appointed by the union in a shop, department,
or plant and serves as representative of the union, charged with negotiating and
adjustment of grievances of employees with the supervisor of the employer. He is
the representative of the union members in a building or other workplace. Blacks Law
Dictionary defines a shop steward as a union official elected to represent members in a
plant or particular department. His duties include collection of dues, recruitment of new
members and initial negotiations for the settlement of grievances. A judgment
of reinstatement of the petitioner to the position of union Shop Steward would have no
practical legal effect since it cannot be enforced. Based on the requirements imposed by
law and the APCWU-ATI CBA, and in the nature of things, the subsequent separation of
the petitioner from employment with respondent ATI has made his reinstatement to union
Shop Steward incapable of being enforced. (Teodoro S. Miranda, Jr. vs. Asian
Terminals, Inc. and Court of Appeals, G.R. No. 174316, June 23, 2009).
Union security is a generic term, which is applied to and comprehends closed shop,
union shop, maintenance of membership or any other form of agreement which imposes
upon employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shop when all new regular employees are required to join the
union within a certain period as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or transferred
out of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand,
may be defined as an enterprise in which, by agreement between the employer and his
employees or their representatives, no person may be employed in any or certain agreed
departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which
the employees in interest are a part.
In terminating the employment of an employee by enforcing the Union Security Clause, the
employer needs only to determine and prove that:
(1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision in
the CBA; and
(3) there is sufficient evidence to support the unions decision to expel the employee
from the union or company. (Herminigildo Inguillom, et al. vs. First Philippine Scales,
Inc., et al. G.R. No. 165407, June 5, 2009

4. Unfair Labor Practice in collective bargaining

a. Bargaining in bad faith
The act of the employer in refusing to comply with the terms and conditions of a CBA
constitutes bargaining in bad faith and is considered an unfair labor practice. (Oceanic
Pharmacal Employees Union vs. Inciong. G. R. No. L-50568, Nov. 7, 1979).

b. Refusal to bargain

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c. Blue sky bargaining

Whether or not the union is engaged in bluesky bargaining is determined by the evidence
presented by the union as to its economic demands. Thus, if the union requires exaggerated
or unreasonable economic demands, then it is guilty of ULP. In order to be considered as
unfair labor practice, there must be proof that the demands made by the union were
exaggerated or unreasonable. In the minutes of the meeting show that the union based its
economic proposals on data of rank-and-file employees and the prevailing economic benefits
received by bank employees from other foreign banks doing business in the Philippines and
other branches of the bank in the Asian region. Hence, it cannot be said that the union was
guilty of ULP for blue-sky bargaining.(Standard Chartered Bank v. Confessor. G.R. No.
114974, June 16, 2004).

d. Surface bargaining
Surface bargaining is defined as going through the motions of negotiating without any legal
intent to reach an agreement. The resolution of surface bargaining allegations never presents
an easy issue. The determination of whether a party has engaged in unlawful surface
bargaining is usually a difficult one because it involves, at bottom, a question of the intent of
the party in question, and usually such intent can only be inferred from the totality of the
challenged partys conduct both at and away from the bargaining table. Whether an
employers conduct demonstrates an unwillingness to bargain in good faith or is merely hard
bargaining. There can be no surface bargaining, absent any evidence that management had
done acts, both at and away from the bargaining table, which tend to show that it did not want
to reach an agreement with the union or to settle the differences between it and the union.
Here, admittedly, the parties were not able to agree and reached a deadlock. However, it
must be emphasized that the duty to bargain does not compel either party to agree to a
proposal or require the making of a concession. Hence, the parties failure to agree does not
amount to ULP under Article 248 [g] for violation of the duty to bargain. (Standard Chartered
Bank Employees Union [NUBE] vs. Confesor. G. R. No. 114974, June 16, 2004).

e. Unfair Labor Practice (ULP)

1. Nature of ULP
Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an
unfair labor practice when an employer interferes, restrains or coerces employees in the
exercise of their right to self-organization or the right to form an association. In order to
show that the employer committed unfair labor practice under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion. In the case at bar, respondents were indeed unceremoniously
dismissed from work by reason of their intent to form and organize a union. (Park Hotel,
et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012).
Unfair labor practice refers to acts that violate the workers right to organize. The
prohibited acts are related to the workers right to self-organization and to the observance
of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be

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shown that his acts interfere with his employees right to self-organization. Since there is
no showing that the respondent companys implementation of the Right-Sizing Program
was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its
employees right to self-organization, there is no unfair labor practice to speak of in this
case. (Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R.
No. 165381, February 9, 2011).
Unfair labor practice refers to acts that violate the workers right to organize. The
prohibited acts are related to the workers right to self-organization and to the observance
of a CBA. Without that element, the acts, even if unfair, are not unfair labor practices.
(General Santos Coca Cola Plant Free Workers Union-Tupas vs. COCA-COLA
BOTTLERS PHILS., INC. G.R. No. 178647. Feb. 13, 2007).

2. ULP of employers
For a charge of unfair labor practice to prosper, it must be shown that respondent CABs
suspension of negotiation with CABEU-NFL and its act of concluding a CBA with
CABELA, another union in the bargaining unit, were motivated by ill will, bad faith, or
fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs,
or public policy However, the facts show that CAB believed that CABEU-NFL was no
longer the representative of the workers. It just wanted to foster industrial peace by
bowing to the wishes of the overwhelming majority of its rank and file workers and by
negotiating and concluding in good faith a CBA with CABELA. Such actions of CAB are
nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair
labor practices. (Central Azucarera De Bais Employees Union-NFL, represented by
its President, Pablito Saguran vs. Central Azucarera De Bais, Inc.
G.R. No. 186605, November 17, 2010).
Unfair labor practice cannot be imputed to MMC since the call of MMC for a suspension
of the CBA negotiations cannot be equated to refusal to bargain. Article 252 of the
Labor Code defines the phrase duty to bargain collectively. For a charge of unfair labor
practice to prosper, it must be shown that the employer was motivated by ill-will, bad faith
or fraud, or was oppressive to labor. The employer must have acted in a manner
contrary to morals, good customs, or public policy causing social humiliation, wounded
feelings or grave anxiety. It cannot be said that MMC deliberately avoided the
negotiation. It merely sought a suspension and even expressed its willingness to
negotiate once the mining operations resume. There was valid reliance on the
suspension of mining operations for the suspension of the CBA negotiation. The Union
failed to prove bad faith. (Manila Mining Corp. Employees Association, et al. vs..
Manila Mining corp, et al.,G.R. Nos. 178222-23, September 29, 2010).
We found it proper to award moral and exemplary damages to illegally dismissed
employees as their dismissal was tainted with unfair labor practice. The Court said:
Unfair labor practices violate the constitutional rights of workers and employees to selforganization, are inimical to the legitimate interests of both labor and management,
including their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the
promotion of healthy and stable labor-management relations. As the conscience of the
government, it is the Courts sworn duty to ensure that none trifles with labor rights.
(Geronimo Q. Quadra vs. Court of Appeals G.R. No. 147593, July 31, 2006).
To constitute ULP, however, violations of the CBA must be gross. Gross violation of the
CBA, under Article 261 of the Labor Code, means flagrant and/or malicious refusal to

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comply with the economic provisions thereof. Evidently, the University can not be faulted
for ULP as it in good faith merely heeded the above-said request of Union members.
(Arellano University Employees and Workers Union vs Court of Appeals,
G.R. No. 139940, September 19, 2006).
Direct evidence that an Ee was in fact intended or coerced by the statements of threats of
the Er is not necessary if there is a reasonable interference that the antiunion conduct of
the Er does have an adverse effect on selforganization and CB. (The Insular Life
AssuranceNATU v. The Insular Life Co. Ltd. G.R. No.L25291, Jan. 30, 1971).
A companys refusal to make counterproposal, if considered in relation to the entire
bargaining process, may indicate BF and this is especially true where the unions request
for a counter proposal is left unanswered. (Kiok Loy v. NLRC. G.R. No. L54334, Jan.
22, 1986).
ALU is the certified exclusive bargaining representative after winning the certification
election. The company merely relied on the letter of disaffiliation by BFEAs president
without proof and consequently refusing to bargain collectively constitutes ULP. Such
refusal by the company to bargain collectively with the certified exclusive bargaining
representative is a violation of its duty to collectively bargain which constitutes ULP. (
Balmar Farms v. NLRC. G.R. No.73504, Oct. 15, 1991)

(a) ULP of labor organizations

A union member may not be expelled from the union, and consequently from his job,
for personal and impetuous reasons or for causes foreign to the closed
shop
agreement. (Manila Mandarin Ees Union v. NLRC. G.R. No. 76989, Sep. 29, 1987).
Labor unions are not entitled to arbitrarily exclude qualified applicants for membership
and a closed shop applicants provision will not justify the employer in discharging, or a
union in insisting upon the discharge of an employee whom the union thus refuses to
admit to membership without any reasonable ground thereof. (Salunga v. CIR. G.R.
No. L22456, Sep. 27, 1967).
Note (Poquiz):
ULP's committed in the absence of employer-employee relationship:
a) Agents of the employer or union who are non-employees may commit ULP
b) In the case of yellow-dog contract, where ULP is committed by the employer against
an applicant to the job, and
c) In case of the application of the doctrine of innocent by-stander

C. Right to peaceful concerted activities

The law does not look with favor upon strikes and lockouts because of their disturbing and
pernicious effects upon the social order and the public interests; to prevent or avert them and to
implement Sec. 6, Art. XIV of the Constitution, the law has created several agencies, namely: the

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BLR, the DOLE, the Labor Management Advisory Board, and the CIR. (Luzon Marine Devt
Union v. Roldan. G.R. No. L2660, May 30, 1950).
Assuming that they acted in their individual capacities when they wrote the letter, they were
nonetheless protected, for they were engaged in a concerted activity, in their right of
selforganization that includes concerted activity for mutual aid and protection. Any interference
made by the company will constitute as ULP. The joining in protests or demands, even by a small
group of Ees, if in furtherance of their interests as such is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union activity be involved or that collective
bargaining be contemplated. (Republic Savings Bank v. CIR. G.R. No. L20303, Oct. 31, 1967).

It shall comprise not only concerted work stoppages, but also slowdowns, mass leaves,
sitdowns, attempt to damage, destroy or sabotage plant equipment and facilities, and similar
activities. (Samahang Manggagawa sa Sulpicion Lines v. Sulpicio Lines, Inc.
G.R. No. 140992, Mar. 25, 2004).

A coercive measure resorted to by laborers to enforce their demands. The idea behind a strike is
that a company engaged in a profitable business cannot afford to have its production or activities
interrupted, much less, paralyzed. (Phil. Can Co. v. CIR. G.R. No. L3021, July 13, 1950).
The concept of a slowdown is a "strike on the installment plan." It is a willful reduction in the rate
of work by concerted action of workers for the purpose of restricting the output of the employer
(Er), in relation to a labor dispute; as an activity by which workers, without a complete stoppage of
work, retard production or their performance of duties and functions to compel management to
grant their demands. Such a slowdown is generally condemned as inherently illicit and
unjustifiable, because while the employees (Ees) "continue to work and remain at their positions
and accept the wages paid to them," they at the same time "select what part of their allotted tasks
they care to perform of their own volition or refuse openly or secretly, to the Er's damage, to do
other work;" in other words, they "work on their own terms. (Interphil Laboratories Ees
UnionFFW v. Interphil Laboratories, Inc.G.R. No. 142824, Dec. 19, 2001).
An Ee has no inherent right to seniority. He has only such rights as may be based on a contract,
statute, or an administrative regulation relative thereto. Seniority rights which are acquired by an
Ee through longtime employment are contractual and not constitutional. The discharge of an Ee
thereby terminating such rights would not violate the Constitution. When the pilots tendered their
respective retirement or resignation and PAL immediately accepted them, both parties mutually
terminated the contractual employment relationship between them thereby curtailing whatever
seniority rights and privileges the pilots had earned through the years. The pilots mass action
was not a strike because Ees who go on strike do not quit their employment. Ordinarily, the
relationship of Er and Ee continues until one of the parties acts to sever the relationship or they
mutually act to accomplish that purpose. As they did not assume the status of strikers, their
protest retirement/resignation was not a concerted activity which was protected by law.
(Enrique v. Zamora. G.R. No. L51382, Dec. 29, 1986).

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Any controversy or matter concerning terms or conditions or representation of persons in

negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment,
regardless of whether or not the disputants stand in the proximate relation of Ers and Ees. (Gold
City Integrated Port Services, Inc. v. NLRC. G.R. No. 103560, July 6, 1995)
Liwayway Publication Inc. is not in anyway related to the striking union except for the fact that it is
the sub lessee of a bodega in the companys compound. The business of Liwayway is
exclusively the publication of magazines which has absolutely no relation or connection
whatsoever with the cause of the strike of the union against their company, much less with the
terms, conditions or demands of the strikers. Liwayway is merely a 3rd person or aninnocent
bystander. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union. G.R. No.
L25003, Oct. 23, 1981).
The concerted efforts of the members of the union and its supporters caused a temporary work
stoppage. The allegation that there can be no work stoppage because the operation in the
division had been shut down is of no consequence. It bears stressing that the other divisions
were fully operational. (Bukluran ng Manggagawa sa Clothman Knitting Corp. v. CA. G.R.
No. 158158, Jan.17, 2005).

1. Forms of concerted activities

Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work by
the concerted action of employees as a result of an industrial or labor dispute. A labor dispute
includes any controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless of whether or not the disputants stand in the
proximate relation of employers and employees. The term strike shall also include slowdowns,
mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities
and similar activities. In the instant case, about 712 employees absented themselves from work in
a concerted fashion for three continuous days. Considering that these mass actions stemmed
from a bargaining deadlock and an order of assumption of jurisdiction had already been issued by
the Secretary of Labor to avert an impending strike, all the elements of strike are evident in the
Union-instigated mass actions. (Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank
Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al.
G.R. No. 159460 and G.R. No. 159461, November 15, 2010).

2. Who may declare a strike or lockout?

NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and
members was declared illegal. (Visayas Community Medical Center (VCMC) formerly known
as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,
G.R. No. 196156, January 15, 2014).

3. Requisites for a valid strike/lockout

Article 263 of the Labor Code, as amended by Republic Act (R.A.) No. 6715, and Rule XXII, Book
V of the Omnibus Rules Implementing the Labor Code outline the following procedural
requirements for a valid strike:

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1)
A notice of strike, with the required contents, should be filed with the
DOLE, specifically the Regional Branch of the NCMB, copy furnished the
employer of the union;
2)
A cooling-off period must be observed between the filing of notice and the
actual execution of the strike thirty (30) days in case of bargaining deadlock and
fifteen (15) days in case of unfair labor practice. However, in the case of union
busting where the unions existence is threatened, the cooling-off period need not
be observed.
xxx
xxx
xxx
3)
Before a strike is actually commenced, a strike vote should be taken by
secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a
strike requires the secret-ballot approval of majority of the total union
membership in the bargaining unit concerned.
4) The result of the strike vote should be reported to the NCMB at least seven (7)
days before the intended strike or lockout, subject to the cooling-off period. It is
settled that these requirements are mandatory in nature and failure to
comply therewith renders the strike illegal.

The requisites for a valid strike are:

(a) a notice of strike filed with the DOLE 30 days before the intended date thereof
or 15 days in case of ULP;
(b) a strike vote approved by a majority of the total union membership in the
bargaining unit concerned obtained by secret ballot in a meeting called for that
purpose; and
(c) a notice to the DOLE of the results of the voting at least seven (7) days before
the intended strike. The requirements are mandatory and failure of a union to
comply therewith renders the strike illegal.
(Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga
Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant,
etc., G.R. No. 165756, June 5, 2009).

Article 212 of the Labor Code defines strike as any temporary stoppage of work
by the concerted action of employees as a result of an industrial or labor dispute.
A valid strike therefore presupposes the existence of a labor dispute. The strike
undertaken by respondents took the form of a sit-down strike, or more aptly
termed as a sympathetic strike, where the striking employees have no demands
or grievances of their own, but they strike for the purpose of directly or indirectly
aiding others, without direct relation to the advancement of the interest of the
strikers. It is indubitable that an illegal strike in the form of a sit-down strike
occurred in petitioners premises, as a show of sympathy to the two employees
who were dismissed by petitioner. Apart from the allegations in its complaint for
illegal strike filed before the Labor Arbiter, petitioner presented the affidavits and
testimonies of their other employees which confirm the participation of
respondents in the illegal strike. Petitioner has sufficiently established that
respondents remained in the work premises in the guise of waiting for orders
from management to resume operations when, in fact, they were actively
participating in the illegal strike. (G & S Transport Corporation, vs Tito S.
Infante, G. R. No. 160303, September 13, 2007).

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It is undisputed that the notice of strike was filed by the union without attaching
the counter-proposal of the company. This, according to petitioners and the labor
arbiter, made the ensuing strike of respondents illegal because the notice of
strike of the union was defective.The Implementing Rules use the words as far
as practicable. In this case, attaching the counter-proposal of the company to
the notice of strike of the union was not practicable. It was absurd to expect the
union to produce the companys counter-proposal which it did not have. One
cannot give what one does not have. Indeed, compliance with the requirement
was impossible because no counter-proposal existed at the time the union filed a
notice of strike. The law does not exact compliance with the
impossible. Nemo tenetur ad impossible. (Club Filipino, Inc. and Atty. Roberto
F. De Leon vs. Benjamin Bautista, et al., G.R. No. 168406, July 13, 2009).
There is no question that the May 6, 2002 strike was illegal, first, because when
Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood
Cooperative (KMLMS) filed the notice of strike on March 5 or 14, 2002, it had not
yet acquired legal personality and, thus, could not legally represent the eventual
union and its members. And second, similarly, when KMLMS conducted the
strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS
only acquired legal personality as an independent legitimate labor organization
only on April 9, 2002 or the day after it conducted the strike-vote. Consequently,
the mandatory notice of strike and the conduct of the strike-vote report were
ineffective for having been filed and conducted before KMLMS acquired legal
personality as a legitimate labor organization, violating Art. 263(c), (d) and (f) of
the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the
Labor Code. It is, thus, clear that KMLMS did not comply with the mandatory
requirement of law and implementing rules on possession of a legal personality
as a legitimate labor organization. (Magdala Multipurpose & Livelihood, et al.
vs. KMLMS, et al.,G.R. No. 191138-39. October 19, 2011).

In fine, the legality of a strike is determined not only by compliance with

its legal formalities but also by the means by which it is carried out.
(Biflex Phils. Inc. Labor Union (NAFLU) vs Filflex Industrial &
Manufacturing Corporation. G.R. No. 155679, December 19, 2006).
In the event the result of the strike/lockout ballot is filed within the coolingoff
period, the 7day requirement shall be counted from the day following the
expiration
of
the
coolingoff period. (NSFW vs. Ovejera. G.R. No.
59743, May 31, 1982).

Ees, who have no labor dispute with their Er but who, on a day they are
scheduled to work, refuse to work and instead join a welga ng bayan commit an
illegal work stoppage. There being no showing that the two unions notified the
corporations of their intention, or that they were allowed by the corporations, to
join the welga ng bayan, their work stoppage is beyond legal protection. (BIFLEX
Phils. Inc. Labor Union (NAFLU) vs. FILFLEX Industrial and Manufacturing
Corp. G.R. No. 155679, Dec. 19, 2006).

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The failure of the union to serve the company a copy of the notice of strike is a
clear violation of Section 3, Rule XXII, Book V of the Rules Implementing the LC.
The Constitutional precepts of due process mandate that the other party be
notified of the adverse action of the opposing party. (Filipino Pipe and
Foundry Corp. v. NLRC. G.R. No. 115180, Nov.16, 1999).

To give DOLE an opportunity to verify whether the projected strike really

carries the imprimatur of the majority of the union members in addition to
the coolingoff period before the actual strike. (Lapanday Workers Union,
et.al. v. NLRC. G.R. Nos. 9549497, Sep. 7, 1995).
A no strike/lockout clause is legal, but it is applicable only to economic strikes,
not ULP strikes. As a provision in the CBA, it is a valid stipulation although
the clause may be invoked by an employer (Er) only when the strike is
economic in nature or one which is conducted to force wage or other
concessions from the Er that are not mandated to be granted by the law itself. It
would be inapplicable to prevent a strike which is grounded on ULP. (Malayang
Samahan ng mga Manggagawa sa Greenfield v. Ramos. G.R. No. 113907,
Feb. 28, 2000).

In cases of ULP, the notice of strike shall as far as practicable, state the acts
complained of and the efforts to resolve the dispute amicably. (Tiu v. NLRC.
G.R. No. 123276, Aug. 18, 1997).

The coolingoff period in Art. 264(c) and the 7day strike ban after the strikevote
report prescribed in Art. 264 (f) were meant to be mandatory. The law provides
that the labor union may strike should the dispute remain unsettled until the
lapse of the requisite number of days from the filing of the notice, this clearly
implies that the union may not strike before the lapse of the coolingoff period.
The coolingoff period is for the Ministry of Labor and Employment to exert
all efforts at mediation and conciliation to effect a voluntary settlement. The
mandatory character of the 7day strike ban is manifest in the provision that in
every case the union shall furnish the MOLE with the results of the voting at
least 7 days before the intended strike. This period is to give time to verify that a
strike vote was actually held. (NFSW v. Ovejera. G.R. No. L 59743, May
31, 1982).
There is no evidence to show that a strike vote had in fact been taken before a
strike was called. Even if there was a strike vote held, the strike called by
the union was illegal because of nonobservance by the union of the mandatory
7 day strike ban counted from the date the strike vote should have been
reported to the DOLE. (First City Interlink Transportation Co., Inc. v.
Confessor. G.R. No. 106316, May 5, 1997).

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When the workers who staged a voluntary ULP strike offered to return
to work unconditionally but the Er refused to reinstate them.( Manila Diamond
Hotel vs. Manila Diamond Hotel Ees Union, G.R. No. 158075, June 30,
2006).
4. Requisites for lawful picketing
To strike is to withhold or to stop work by the concerted action of employees as a result of an
industrial or labor dispute. The work stoppage may be accompanied by picketing by the striking
employees outside of the company compound. While a strike focuses on stoppage of work,
picketing focuses on publicizing the labor dispute and its incidents to inform the public of what is
happening in the company struck against. A picket simply means to march to and from the
employers premises, usually accompanied by the display of placards and other signs making
known the facts involved in a labor dispute. It is a strike activity separate and different from the
actual stoppage of work. (PHIMCO Industries, Inc. v. PHIMCO Industries Labor Association
(PILA), et al, G.R. No. 170830, August 11, 2010).
The right to picket as a means of communicating the facts of a labor dispute is a phase of
the freedom of speech guaranteed by the Constitution. If peacefully carried out, it can not be
curtailed even in the absence of ErEe relationship. (PAFLU v. Cloribel. G.R. No. L25878, Mar.
28, 1969).
While peaceful picketing is entitled to protection as an exercise of free speech, the courts are not
without power to confine or localize the sphere of communication or the demonstration to the
parties to the labor dispute, including those with related interests, and to insulate
establishments or persons with no industrial connection or having interest totally foreign to the
context of the dispute. (Liwayway Pub., Inc. v. Permanent Concrete Workers Union. G.R.
No. L25003, Oct. 23, 1981).

5. Assumption of jurisdiction by the DOLE Secretary or Certification of the labor dispute to the
NLRC for compulsory arbitration
The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not
limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or
lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have
taken place. As the term assume jurisdiction connotes, the intent of the law is to give the Labor
Secretary full authority to resolve all matters within the dispute that gave rise to or which arose
out of the strike or lockout, including cases over which the labor arbiter has exclusive jurisdiction.
(Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of
Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5,
2010).
Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the police power of
the State. The grant of plenary powers to the Secretary of Labor makes it incumbent upon him to
bring about soonest, a fair and just solution to the differences between theramiemployer and the
employees, so that the damage such labor dispute might cause upon the national interest may be
minimized as much as possible, if not totally averted, by avoiding stoppage of work or any lag in

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the activities of the industry or the possibility of those contingencies that might cause detriment to
the national interest. In order to effectively achieve such end, the assumption or certification order
shall have the effect of automatically enjoining the intended or impending strike or lockout.
Moreover, if one has already taken place, all striking workers shall immediately return to work,
and the employer shall immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. Assumption and certification orders
are executory in character and are to be strictly complied with by the parties, even during the
pendency of any petition questioning their validity. (YSS Employees Union-Philippine
Transport and General Organization vs. YSS Laboratories, Inc.,
G.R. No. 155125, December 4, 2009).

Automatically enjoins the intended or impending strike/lockout but if one has already taken place,
all striking or locked out Ees shall immediately return to work and the Er shall immediately
resume operations and readmit all workers under the same terms and conditions prevailing
before the strike or lockout. (Trans Asia Shipping Lines, Inc.Unlicensed Crews
Ees
Union v. CA. G.R. No. 145428, July 7, 2004).
Payroll reinstatement in lieu of actual reinstatement but there must be showing of special
circumstances rendering actual reinstatement impracticable, or otherwise not conducive to
attaining the purpose of the law in providing for assumption of jurisdiction by the SLE in a labor
dispute that affects the national interest. (Manila Diamond Hotel Ees Union v. SLE
G.R. No. 140518, Dec. 16, 2004).
Mere issuance of an assumption order automatically carries with it a returntowork order
although not expressly stated therein. (TSEUFFW v. CA. G.R. Nos. 14301314, Dec.18, 2000).

a. Issues that the SLE may resolve when he assumes jurisdiction over a labor dispute
SLE may subsume pending labor cases before LAs which are involved in the dispute and
decide even issues falling under the exclusive and original jurisdiction of LAs such as the
declaration of legality or illegality of strike. (Intl. Pharmaceuticals v. SLE
G.R. Nos. 9298183, Jan. 9, 1992).
Power of SLE is plenary and discretionary.( St. Lukes Medical Center v. Torres
G.R. No. 99395, June29, 1993).
Where the return to work order is issued pending the determination of the legality of
the strike, it is not correct to say that it may be enforced only if the strike is legal
and may be disregarded if illegal. Precisely, the purpose of the return to work order is to
maintain the status quo while the determination is being made. (6. Nature of assumption
order or certification order. (Sarmiento v. Tuico. G.R. Nos. 7527173, June 27, 1988).
The assumption of jurisdiction is in the nature of a police power measure. This is done for
the promotion of the common good considering that a prolonged strike or lockout can be
inimical to the national economy. The SLE acts to maintain industrial peace. Thus, his
certification for compulsory arbitration is not intended to impede the workers right to
strike but to obtain a speedy settlement of the dispute. (Philtread Workers Union v.
Confesor. G.R. No. 117169, Mar. 12, 1997).

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Art. 263(g) does not interfere with the workers right to strike but merely regulates it, when
in the exercise of such right national interest will be affected. The LC vests upon the SLE
the discretion to determine what industries are indispensable to national interest. The
underlying principle embodied in Art. 263 (g) on the settlement of labor disputes is that
assumption and certification orders are executor in character and are strictly complied
with by the parties even during the pendency of any petition questioning their validity.
This extraordinary authority given to the Secretary of Labor is aimed at arriving at a
peaceful and speedy solution to labor disputes, without jeopardizing national interests.
Art. 263(g) is clear and unequivocal in stating that all striking or lockout Ees shall
immediately return to work and the Er shall immediately resume operations and readmit
all workers under the same terms and conditions prevailing before the strike or lockout.
Records of the case would show that the strike occurred one day before the members of
the union were dismissed due to alleged redundancy. Thus the abovementioned article
directs that the Er must readmit all workers under the same terms and conditions
prevailing before the strike. (PLDT v. Manggagawa ng Komunikasyon sa Pilipinas
G.R. No. 162783, July 14, 2005).

7. Effect of defiance of assumption or certification orders

Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken despite
the issuance by the Secretary of Labor of an assumption order and/or certification is
illegal. So is a declaration of a strike during the pendency of cases involving the same
grounds for the strike. In the present case, there is no dispute that when respondents
conducted their mass actions on April 3 to 6, 2000, the proceedings before the Secretary
of Labor were still pending as both parties filed motions for reconsideration of the March
24, 2000 Order. Clearly, respondents knowingly violated the aforesaid provision by
holding a strike in the guise of mass demonstration.( Solid Bank Corp. Ernesto U.
Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed
Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15,
2010).
It shall be considered an illegal act committed in the course of the strike or lockout and
shall authorize the SLE or the NLRC, as the case may be, to enforce the same under
pain or loss of employment status or entitlement to full employment benefits from the
lockingout Er or backwages, damages and/or other positive and/or affirmative reliefs,
even to criminal prosecution against the liable parties. (St. Scholasticas College v.
Torres. G.R. No. 100158, June 2, 1992).

8. Illegal strike
The Supreme Court also cited the 6 categories of illegal strikes which are:
1. When it is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
2. When it violates a specific requirement of law, [such as Article 263 of the
Labor Code on the requisites of a valid strike]; or
3. When it is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or

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4. When it employs unlawful means in the pursuit of its objective, such as a

widespread terrorism of non-strikers [for example, prohibited acts under Art.
264(e) of the Labor Code]; or
5. When it is declared in violation of an existing injunction, [such as injunction,
prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263
of the Labor Code]; or
6. When it is contrary to an existing agreement, such as a no-strike clause or
conclusive arbitration clause.(Toyota v Toyota Workers Association. G.R.
Nos. 158786 & 158789 October 19, 2007).
What is more, the strike had been attended by the widespread commission of
prohibited acts. Well-settled is the rule that even if the strike were to be declared
valid because its objective or purpose is lawful, the strike may still be declared
invalid where the means employed are illegal.[ Among such limits are the
prohibited activities under Article 264 of the Labor Code, particularly paragraph
(e), which states that no person engaged in picketing shall:
a) commit any act of violence, coercion, or intimidation or
b)
obstruct the free ingress to or egress from the
premises for lawful purposes, or
c) obstruct public thoroughfares.

employer's

The following acts have been held to be prohibited activities: where the strikers
shouted slanderous and scurrilous words against the owners of the vessels;
where the strikers used unnecessary and obscene language or epithets to
prevent other laborers to go to work, and circulated libelous statements against
the employer which show actual malice;] where the protestors used abusive and
threatening language towards the patrons of a place of business or against coemployees, going beyond the mere attempt to persuade customers to withdraw
their patronage; where the strikers formed a human cordon and blocked all the
ways and approaches to the launches and vessels of the vicinity of the workplace
and perpetrated acts of violence and coercion to prevent work from being
performed; and where the strikers shook their fists and threatened non-striking
employees with bodily harm if they persisted to proceed to the workplace.
Permissible activities of the picketing workers do not include obstruction of
access of customers. (Sukhothai Cuisine and Restaurant vs. Court of
Appeals,G.R. No. 150437 .July 17, 2006).

A strike may be regarded as invalid although the labor union has complied with
the strict requirements for staging one as provided in Article 263 of the Labor
Code when the same is held contrary to an existing agreement, such as a no
strike clause or conclusive arbitration clause. Here, the CBA between the parties
contained a no strike, no lockout provision that enjoined both the Union and the
Company from resorting to the use of economic weapons available to them
under the law and to instead take recourse to voluntary arbitration in settling their
disputes. No law or public policy prohibits the Union and the Company from
mutually waiving their respective right to strike and lockout, which are otherwise
available to them under the law, in favor of voluntary arbitration. (C. Alcantara &
Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa AlsonsSPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc. G.R. No.
155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010).

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Article 264(e) of the Labor Code prohibits any person engaged in picketing from
obstructing the free ingress to and egress from the employers premises. Since
respondent was found in the July 17, 1998 decision of the NLRC to have
prevented the free entry into and exit of vehicles from petitioners compound,
respondents officers and employees clearly committed illegal acts in the course
of the March 9, 1998 strike. The use of unlawful means in the course of a strike
renders such strike illegal. Therefore, pursuant to the principle of conclusiveness
of judgment, the March 9, 1998 strike was ipso facto illegal. The filing of a
petition to declare the strike illegal was thus unnecessary. (Jackbilt Industries,
Inc. Vs. Jackbilt Employees Workers Union-Naflu-KMU, G.R. No. 171618-19,
March 13, 2009).
A strike may be considered legal where the union believed that the company
committed ULP and the circumstances warranted such belief in GF, although
subsequently such allegations of ULP are found out as not true.( Bacus v. Ople.
G.R No. L56856, Oct. 23, 1984).
Even if no ULP acts are committed by the Er, if the Ees believe in GF that ULP
acts exist so as to constitute a valid ground to strike, then the strike held
pursuant to such belief may be legal. Where the union believed that the Er
committed ULP and the circumstances warranted such belief in GF, the
resulting strike may be considered legal although, subsequently, such
allegations of ULP were found to be groundless. (NUWHRAINInterim Junta v.
NLRC. G.R. No. 125561, Mar. 6, 1998)
The petitioners were charged with conducting an illegal strike, not a mass leave,
without specifying the exact acts that the company considers as constituting an
illegal strike or violative of company policies. Such allegation falls short of the
requirement in King of Kings Transport, Inc. of a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees.
A bare mention of an illegal strike will not suffice. Further, while Biomedica cites
the provisions of the company policy which petitioners purportedly violated, it
failed to quote said provisions in the notice so petitioners can be adequately
informed of the nature of the charges against them and intelligently file their
explanation and defenses to said accusations.( Alex Q. Naranjo, et al. vs.
Biomedica Health Care, Inc., et al. G.R. No. 193789. September 19, 2012).

(a) Liability of Officers and Ordinary Workers

The law makes a distinction between union members and union officers. A union
member who merely participates in an illegal strike may not be terminated from
employment. It is only when he commits illegal acts during a strike that he may
be declared to have lost employment status. In contrast, a union officer may be
terminated from employment for knowingly participating in an illegal strike or
participates in the commission of illegal acts during a strike. The law grants the
employer the option of declaring a union officer who participated in an illegal
strike as having lost his employment. It possesses the right and prerogative to
terminate the union officers from service. (Visayas Community Medical Center
(VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v.
Erma Yballe, et al., G.R. No. 196156, January 15, 2014).

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A distinction exists between the ordinary workers liability for illegal strike and that
of the union officers who participated in it. The ordinary worker cannot be
terminated for merely participating in the strike. There must be proof that he
committed illegal acts during its conduct. On the other hand, a union officer can
be terminated upon mere proof that he knowingly participated in the illegal strike.
Moreover, the participating union officers have to be properly identified. In the
present case, with respect to those union officers whose identity and participation
in the strike having been properly established, the termination was legal. (Yolito
Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods
Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et
al., G.R. No. 178409/G.R. No. 178434, June 8, 2011)
As a general rule, when just causes for terminating the services of an employee
exist, the employee is not entitled to separation pay because lawbreakers should
not benefit from their illegal acts. The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the
Union officers to have knowingly participated in the illegal strike. Worse, the
Union members committed prohibited acts during the strike. Thus, as the Court
has concluded in other cases it has previously decided, such Union officers are
not entitled to the award of separation pay in the form of financial assistance.
(C. Alcantara & Sons, Inc. vs. Court of Appeals, G.R. No. 155109/G.R. No.
155135/G.R. No. 179220. March 14, 2012).
Since the Unions strike has been declared illegal, the Union officers can be
terminated from employment for their actions. This includes the shop stewards
who cannot be shielded from the coverage of Article 264 of the Labor Code since
the Union appointed them as such and placed them in positions of leadership
and power over the men in their work units. As regards the rank and file Union
members, Article 264 provides that termination from employment is not
warranted by the mere fact that a union member has taken part in an illegal
strike. It must be shown that such union member, clearly identified, performed
an illegal act or acts during the strike. The striking Union members allegedly
committed the following prohibited acts:
a. They threatened, coerced, and intimidated non-striking employees,
officers, suppliers and customers;
b. They obstructed the free ingress to and egress from the company
premises; and
c. They resisted and defied the implementation of the writ of preliminary
injunction issued against the strikers.
The mere fact that the criminal complaints against them were subsequently
dismissed does not extinguish their liability under the Labor Code. Nor does
such dismissal bar the admission of the affidavits, documents, and photos
presented to establish their identity and guilt during the hearing of the petition to
declare the strike illegal. (C. Alcantara & Sons, Inc. vs. Court of Appeals /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.
Alcantara & Sons, Inc. G.R. No. 155109/G.R. No. 155135/G.R. No. 179220,
September 29, 2010).

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No backwages will be awarded to union members as a penalty for their

participation in the illegal strike. As for the union officers, for knowingly
participating in an illegal strike, the law mandates that a union officer may be
terminated from employment and they are not entitled to any relief. (Gold City
Integrated Port Services, Inc. v. NLRC. G.R. No. 86000, Sep. 21, 1990).
Those union members who have joined an illegal strike but have not committed
any illegal act shall be reinstated but without back wages.The responsibility for
the illegal acts committed during the strike must be on an individual and not on a
collective basis. (First City Interlink Transportation Co., Inc. v. Confesor
G.R. No. 106316, May 5, 1997).
A mere finding of the illegality of a strike should not be automatically followed by
wholesale dismissal of the strikers from their employment. While it is true that
administrative agencies exercising quasijudicial functions are free from the
rigidities of procedure, it is equally wellsettled that avoidance of technicalities of
law or procedure in ascertaining objectively the facts in each case should
not, however, cause denial of due process. (Bacus v. Ople. G.R. No. L56856,
Oct. 23, 1984).
To exclude union officers, shop stewards and those with pending criminal
charges in the directive to the company to accept back the striking workers
without first determining whether they knowingly committed illegal acts would be
tantamount to dismissal without due process of law. (Telefunken
Semiconductors Ees UnionFFW v. SLE. G.R. No. 122743 & 127215, Dec.
12, 1997).

b) Waiver of illegality of strike

When an employer accedes to the peaceful settlement brokered by the NLRC by
agreeing to accept all employees who had not yet returned to work, it waives
the issue of the illegality of the strike. (Reformist Union v. NLRC.
G.R. No. 120482, Jan. 27, 1997).
When management and union are in pari delicto, the contending parties must be
brought back to their respective positions before the controversy; that is, before
the strike. In this case, managements fault arose from the fact that a day after
the union filed a petition for certification election before the DOLE, it hit back by
requiring all its employees to undergo a compulsory drug test. Indeed, the timing
of the drug test was suspicious. Moreover, management engaged in a runaway
shop when it began pulling out machines from the main building (AER building)
to the compound (AER-PSC premises) located on another street on the pretext
that the main building was undergoing renovation. On the other hand, like
management, the union and the affected workers were also at fault for resorting
to a concerted work slowdown and walking out of their jobs in protest of their
illegal suspension. It was also wrong for them to have forced their way to the
AER-PSC premises to try to bring out the boring machines. Adding to the injury
was the fact that the picketing employees prevented the entry and exit of nonparticipating employees and possibly AERs clients to the premises. Thus, the
Supreme Court affirmed the ruling of the Court of Appeals favoring the

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reinstatement of all the complaining employees, including those who tested

positive for illegal drugs, without backwages. (Automotive Engine Rebuilders,
Inc. et al. v. Progresibong Unyon ng mga Manggagawa sa AERG.R. No.
160138/G.R. No. 160192. July 13, 2011).

9. Injunctions
a) Requisites for labor injunctions
b) Innocent bystander rule
The innocent by stander must show:
1. Compliance with the grounds specified in Rule 58 of the Rules of Court, and
2. That it is entirely different from, without any connection whatsoever to,
either party to the dispute and, therefore, its interests are totally foreign to the
context thereof.
(MSF Tire & Rubber v. CA, G.R. 128632, Aug. 5, 1999).
A party, by filing its 3rd party claim with the deputy sheriff, it submitted itself to
the jurisdiction of the NLRC acting through the LA. The broad powers granted to
the LA and to the NLRC by Art. 217, 218 and 224 of the LC can only be
interpreted as vesting in them jurisdiction over incidents arising from, in
connection
with
or relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular courts. The RTC, being a
coequal body of the NLRC, has no jurisdiction to issue any restraining order or
injunction to enjoin the execution of any decision of the latter. (Deltaventures
v. Cabato. G.R. No. 118216, Mar. 9, 2000).
The concerted action taken by the members of the union in picketing the
premises of the department store, no matter how illegal, cannot be regarded as
acts not arising from a labor dispute over which the RTCs may exercise
jurisdiction. (Samahang Manggagawa ng Liberty Commercial v. Pimentel
G.R. No. L78621, Dec. 2, 1987).

VII. PROCEDURE AND JURISDICTION

A. Labor Arbiter
1. Jurisdiction
a. Jurisdiction of the NLRC and LA
The jurisdiction of labor arbiters, as well as of the NLRC, is limited to disputes arising
from an employer-employee relationship which can only be resolved by reference to the
Labor Code, other labor statutes, or their collective bargaining agreement. U-Bix's
complaint was one to collect sum of money based on civil laws on obligations and
contract, not to enforce rights under the Labor Code, other labor statutes, or the collective
bargaining agreement. (U-Bix Corporation, et al. vs. Valerie Anne H. Hollero. G.R. No.
177647, October 31, 2008)

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Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino
workers from the POEA to the Labor Arbiters, the law did not remove from the POEA
the original and exclusive jurisdiction to hear and decide all disciplinary action cases
and other special cases administrative in character involving such workers. The
obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in
resolving all administrative matters affecting and involving such workers. The NLRC
had no appellate jurisdiction to review the decision of the POEA in disciplinary cases
involving overseas contract workers. (Eastern Mediterranean Maritime Ltd., et al. vs.
Estanislao Surio, et al. G.R. No. 154213, August 23, 2012).

b. Jurisdiction, intra-corporate dispute

It is a settled rule that jurisdiction over the subject matter is conferred by law. The
determination of the rights of a director and corporate officer dismissed from his
employment as well as the corresponding liability of a corporation, if any, is an intracorporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate
court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction
over the present case. (Lesli Okol v. Slimmers World International. G.R. No. 160146,
December 11, 2009).
Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he
argues that the Labor Arbiter has jurisdiction over the case. One of the corporate officers
provided for in the by-laws of ETPI is the Vice-President. It can be gathered from Atty.
Garcias complaint-affidavit that he was Vice President for Business Support Services
and Human Resource Departments of ETPI when his employment was terminated
effective 16 April 2000. It is therefore clear from the by-laws and from Atty. Garcia
himself that he is a corporate officer. One who is included in the by-laws of a corporation
in its roster of corporate officers is an officer of said corporation and not a mere
employee. Being a corporate officer, his removal is deemed to be an intra-corporate
dispute cognizable by the SEC and not by the Labor Arbiter. (Atty. Virgilio Garcia v.
Eastern Telecommunications Philippines, Inc. G.R No. 173115April 16, 2009).

c. Jurisdiction over interpretation or implementation of the CBA

R.A. 8042 is a special law governing overseas Filipino workers. However, there is no
specific provision thereunder which provides for jurisdiction over disputes or unresolved
grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A.
8042 simply speaks, in general, of claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.
On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating
that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. In the present case, the basic issue
raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the
subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned.
This issue clearly involves the interpretation or implementation of the said CBA. Thus, the
specific or special provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by
and between respondent GCI and AMOSUP provides that the Company and the Union
agree that in case of dispute or conflict in the interpretation or application of any of the
provisions of this Agreement, or enforcement of Company policies, the same shall be

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settled through negotiation, conciliation or voluntary arbitration. The provisions of the

CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as
amended by Republic Act No. 10022, which states that for OFWs with collective
bargaining agreements, the case shall be submitted for voluntary arbitration in
accordance with Articles 261 and 262 of the Labor Code. With respect to disputes
involving claims of Filipino seafarers wherein the parties are covered by a collective
bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a
voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective
bargaining agreement that parties may opt to submit the dispute to either the NLRC or to
voluntary arbitration. (Estate of Nelson R. Dulay, vs. Aboitiz Jebsen Maritime, Inc.
and General Charterers, Inc. G.R. No. 172642, June 13, 2012).

d. Jurisdiction, how acquired

The NLRC acquires jurisdiction over parties in cases before it either by summons served
on them or by their voluntary appearance before its Labor Arbiter. Here, while the Union
insists that summons were not properly served on the impleaded Union members with
respect to the Companys amended petition that sought to declare the strike illegal, the
records show that they were so served. The Return of Service of Summons indicated
that 74 out of the 81 impleaded Union members were served with summons. But they
refused either to accept the summons or to acknowledge receipt of the same. Such
refusal cannot of course frustrate the NLRCs acquisition of jurisdiction over them.
Besides, the affected Union members voluntarily entered their appearance in the case
when they sought affirmative relief in the course of the proceedings like an award of
damages in their favor. (C. ALCANTARA & SONS, INC. v. COURT OF APPEALS, et
al.G.R. No. 155109, G.R. No. 155135, G.R. No. 179220, September 29, 2010).

i. NLRC, LA Jurisdiction vis--vis DOLE jurisdiction

The Court ruled that no limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure was laid
down where the DOLE would only make a preliminary finding, that the power was
primarily held by the NLRC. x x x
The DOLE, in determining the existence of an employer-employee relationship, has a
ready set of guidelines to follow, the same guide the courts themselves use. The
elements to determine the existence of an employment relationship are: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
(4) the employers power to control the employees conduct. The use of this test is not
solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize
the same test, even in the course of inspection, making use of the same evidence that
would have been presented before the NLRC. x x x
If the DOLE finds that there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a
claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art.
217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and
other terms and conditions of employment, if accompanied by a claim for reinstatement.
If a complaint is filed with the NLRC, and there is still an existing employer-employee
relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE,
however, may still be questioned through a petition for certiorari under Rule 65 of the

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Rules of Court. (Peoples Broadcasting Service vs. The Secretary of Labor and
Employment. G.R. No. 179652, March 6, 2012).
The mere disagreement by the employer with the findings of the labor officer, or the
simple act of presenting controverting evidence, does not automatically divest the DOLE
Secretary or any of his authorized representatives such as the regional directors, of
jurisdiction to exercise their visitorial and enforcement powers under the Labor Code.
Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of the Labor
Code has the following elements, which must all concur to divest the regional director of
jurisdiction over workers' claims:
(a) that the employer contests the findings of the labor regulations officer and raises
issues thereon;
(b) that in order to resolve such issues, there is a need to examine evidentiary
matters; and
(c) that such matters are not verifiable in the normal course of inspection.
Thus, in SSK Parts Corporation v. Camas in which the employer contested the Regional
Director's finding of violations of labor standards, but such issue was resolved by an
examination of evidentiary matters which were verifiable in the ordinary course of
inspection, it was held that there was no more need to indorse the case to the arbitration
branch of the NLRC.
Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the course of
inspection. Where the evidence presented was verifiable in the normal course of
inspection, even if presented belatedly by the employer, the Regional Director, and later
the DOLE Secretary, may still examine them; and these officers are not divested of
jurisdiction to decide the case. (Bay Haven, Inc. et. Al. vs. Florentino Abuan, et. al.
G.R. No. 160859, July 30, 2008).

ii. Reinstatement pending appeal

(a) Reinstatement, immediately executory
The spirit of the rule on reinstatement pending appeal animates the proceedings
once the Labor Arbiter issues the decision containing an order of reinstatement.
The immediacy of its execution needs no further elaboration. Reinstatement
pending appeal necessitates its immediate execution during the pendency of the
appeal, if the law is to serve its noble purpose. At the same time, any attempt on
the part of the employer to evade or delay its execution should not be
countenanced. After the labor arbiters decision is reversed by a higher tribunal,
the employee may be barred from collecting the accrued wages, if it is shown
that the delay in enforcing the reinstatement pending appeal was without fault on
the part of the employer. (Juanito A. Garcia and Alberto Dumago v. PAL. G.R
No. 164856, January 20, 2009).

The order of reinstatement is immediately executory. The unjustified refusal of

the employer to reinstate a dismissed employee entitles him to payment of his
salaries effective from the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining order issued, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement. In the

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case at bar, no restraining order was granted. Thus, it was mandatory on PAL to
actually reinstate Roquero or reinstate him in the payroll. Having failed to do so,
PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from
the time of the decision of the NLRC until the finality of the decision of this Court.
(Milagros Panuncillo v. CAP Philippines, Inc.G.R No. 161305, February 9,
2007).
(b) Implementation of reinstatement order, ministerial
Case law recognizes that unless there is a restraining order, the implementation
of the order of reinstatement is ministerial and mandatory. This injunction or
suspension of claims by legislative fiat partakes of the nature of a restraining
order that constitutes a legal justification for respondents non-compliance with
the reinstatement order. Respondents failure to exercise the alternative options
of actual reinstatement and payroll reinstatement was thus justified. Such being
the case, respondents obligation to pay the salaries pending appeal, as the
normal effect of the non-exercise of the options, did not attach. (Juanito Garcia
v. Philippine Airlines. G.R No. 164856, January 20, 2009).
(c) When reinstatement ordered by NLRC
Art. 223 of the Labor Code provides that reinstatement is immediately executory
even pending appeal only when the Labor Arbiter himself ordered the
reinstatement. In this case, the original Decision of Labor Arbiter Drilon did not
order reinstatement. Reinstatement in this case was actually ordered by the
NLRC, affirmed by the Court of Appeals. The order of Labor Arbiter Pura on 31
January 2005 directing reinstatement was issued after the Court of Appeals
Decision dated 17 March 2004 which affirmed the NLRCs order of
reinstatement.
Thus, Art. 223 finds no application in the instant case.
Considering that the order for reinstatement was first decided upon appeal to the
NLRC and affirmed with finality by the Court of Appeals in CA-G.R. SP 80369 on
17 March 2004, petitioner rightly invoked Art. 224 of the Labor Code. As
contemplated by Article 224 of the Labor Code, the Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor Arbiter, or
med-arbiter or voluntary arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within five (5) years from
the date it becomes final and executory. Consequently, under Rule III of the
NLRC Manual on the Execution of Judgment, it is provided that if the execution
be for the reinstatement of any person to a position, an office or an employment,
such writ shall be served by the sheriff upon the losing party or upon any other
person required by law to obey the same, and such party or person may be
punished for contempt if he disobeys such decision or order for reinstatement
(Mt. Carmel College v. Jocelyn Resuena et al. G.R No. 173076, October 10,
2007).
.
2. Requirements to perfect appeal to NLRC
a. Appeal, requisites to perfect

Evident it is from the foregoing that an appeal from rulings of the Labor Arbiter to the NLRC
must be perfected within ten (10) calendar days from receipt thereof, otherwise the same
shall become final and executory. In a judgment involving a monetary award, the appeal shall
be perfected only upon (1) proof of payment of the required appeal fee and (2) posting of a
cash or surety bond issued by a reputable bonding company and (3) filing of a memorandum

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of appeal. A mere notice of appeal without complying with the other requisites mentioned
shall not stop the running of the period for perfection of appeal. (Stolt-Nielsen Marine
Services Inc. (now Stolt-Nielsen Transportation Group Inc.) vs. NLRC. G.R. No.
147623,December 13, 2005).
b, Appeal, when there is substantial compliance
There was substantial compliance with the NLRC Rules of Procedure when the respondents
PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly,
the Joint Declaration Under Oath, which is required when an employer appeals from the
Labor Arbiters decision granting a monetary award and posts a surety bond. Under the
NLRC rules, the following requisites are required to perfect the employers appeal: (1) it must
be filed within the reglementary period; (2) it must be under oath, with proof of payment of the
required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied
by typewritten or printed copies of the memorandum of appeal, stating the grounds relied
upon, the supporting arguments, the reliefs prayed for, and a statement of the date of receipt
of the appealed decision, with proof of service on the other party of said appeal. If the
employer posts a surety bond, the NLRC rules further require the submission by the
employer, his or her counsel, and the bonding company of a joint declaration under oath
attesting that the surety bond posted is genuine and that it shall be in effect until the final
disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award
and filed the notice of appeal and the appeal memorandum within the reglementary period.
When the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the
respondents immediately complied with the said order. There was only a late submission of
the Joint Declaration. Considering that there was substantial compliance with the rules, the
same may be liberally construed. The application of technical rules may be relaxed in labor
cases to serve the demands of substantial justice. (Rolando L. Cervantes vs. PAL Maritime
Corporation and/or Western Shipping Agencies. G.R. No. 175209. January 16, 2013)

c. Effect of failure to perfect appeal

Failure to perfect an appeal renders the decision final and executory. The right to appeal
is a statutory right and one who seeks to avail of the right must comply with the statute or the
rules.
The rules, particularly the requirements for perfecting an appeal within the
reglementary period specified in the law, must be strictly followed as they are considered
indispensable interdictions against needless delays and for the orderly discharge of judicial
business. It is only in highly meritorious cases that this Court will opt not to strictly apply the
rules and thus prevent a grave injustice from being done. The exception does not obtain
here. Thus, we are in agreement that the decision of the Labor Arbiter already became final
and executory because petitioner failed to file the appeal within 10 calendar days from receipt
of the decision. (Nationwide Security and Allied Services, Inc. vs. CA, et al.
G.R. No. 155844, July 14, 2008).
d. When party does not appeal
As a rule, a party who does not appeal from the decision may not obtain any affirmative relief
from the appellate court other than what he has obtained from the lower tribunal, if any,
whose decision is brought up on appeal. Due process prevents the grant of additional awards
to parties who did not appeal. As an exception, he may assign an error where the purpose is
to maintain the judgment on other grounds, but he cannot seek modification or reversal of the
judgment or affirmative relief unless he has also appealed or filed a separate petition. (Aklan
College, Inc. v. Perpetuo Enero, et al.G.R No. 178309, January 27, 2009).

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e. Rules on perfection of appeal, when strictly construed

Rules on perfection of an appeal, particularly in labor cases, must be strictly construed
because to extend the period of the appeal is to delay the case, a circumstance which would
give the employer the chance to wear out the efforts and meager resources of the worker to
the point that the latter is constrained to give up for less than what is due him. This is to
assure the workers that if they finally prevail in the case the monetary award will be given to
them upon dismissal of the employers appeal. It is further meant to discourage employers
from using the appeal to delay or evade payment of their obligations to the employees.
(Colby Construction and Management Corporation v. NLRC. GR No. 170099, November
28, 2007).
f. Rules on perfection of appeal, when may be relaxed
In any case, even if the appeal was filed one day late, the same should have been
entertained by the NLRC. Indeed, the appeal must be perfected within the statutory or
reglementary period. This is not only mandatory, but also jurisdictional. Failure to perfect the
appeal on time renders the assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment, much less entertain the appeal.
However, this Court has, time and again, ruled that, in exceptional cases, a belated appeal
may be given due course if greater injustice will be visited upon the party should the appeal
be denied. The Court has allowed this extraordinary measure even at the expense of
sacrificing order and efficiency if only to serve the greater principles of substantial justice and
equity. (Government Service Insurance System v. NLRC, G.R No. 180045, November 17,
2010).
g. Completeness of service by registered mail
The Supreme Court also overruled the respondents contention that UE filed its appeal to the
NLRC beyond the required ten (10)-day period. For completeness of service by registered
mail, the reckoning period starts either from the date of actual receipt of the mail by the
addressee or after five (5) days from the date he or she received the first notice from the
postmaster. In this case, the respondents averred that, on March 17, 2005, the postmaster
gave UEs counsel a notice to claim the mail containing the Labor Arbiters decision. The
respondents claimed that UEs counsel was deemed in receipt of the decision 5 days after
the giving of the notice, or on March 22, 2005. Thus, according to the respondents, when UE
filed its appeal to the NLRC on April 14, 2005, the 10-day reglementary period had already
lapsed. The Supreme Court, however, ruled that there must be conclusive proof that the
registry notice was received by or at least served on the addressee. In this case, the records
did not show that UEs counsel in fact received the alleged registry notice requiring him to
claim the mail. On the other hand, UE was able to present a registry return receipt showing
that its counsel actually received a copy of the Labor Arbiters decision on April 4, 2005.
Reckoned from this date, the 10-day reglementary period had not yet lapsed when UE filed
its appeal to the NLRC on April 14, 2005. (University of the East, et al. v. Analiza F.
Pepanio and Mariti D. Bueno. G.R No. 193897, January 23, 2013).

h. Bond
The second paragraph of Article 223 of the Labor Code states that when a judgment
involving monetary award is appealed by the employer, the appeal may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the
judgment. This is to assure the workers that if they finally prevail in the case, the monetary
award will be given to them upon dismissal of the employers appeal, and is meant to

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discourage employers from using the appeal to delay or evade payment of their obligations to
the employees. However, as provided for in Section 6, Rule VI of the New Rules of
Procedure of the NLRC, such amount of the bond may be reduced in meritorious cases, upon
motion of the appellant. The exercise of this authority is not a matter of right on the part of the
movant but lies within the sound discretion of the NLRC upon showing of meritorious
grounds. Indeed, an unreasonable and excessive amount of bond would be oppressive and
unjust, and would have the effect of depriving a party of his right to appeal. (Ronaldo B.
Casimiro, et. al. vs. Stern Real Estate Inc. Rembrandt Hotel and/or Grace Kristin
Meehan (General Manager), and Eric Singson (Owner),G.R. No. 162233, March 10,
2006).

i. Filing of bond, jurisdictional

Paragraph 2, Article 223 of the Labor Code provides that [i]n case of a judgment
involving a monetary award, an appeal by the employer may be perfected only upon the
posting of 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. Contrary to the respondents claim, the issue of the appeal bonds validity may be
raised for the first time on appeal since its proper filing is a jurisdictional requirement. The
requirement that the appeal bond should be issued by an accredited bonding company is
mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage
the employers from using an appeal to delay or evade the employees just and lawful
claims. It is intended to assure the workers that they will receive the money judgment in
their favor if the employers appeal is dismissed. (Wilgen Loon, et al. v. Power Master,
Inc., et al. G.R. No. 189404, December 11, 2013).

ii. Revocation of bond, prospective application

The respondents filed a surety bond issued by Security Pacific Assurance Corporation
(Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited
bonding company. However, the NLRC revoked its accreditation on February 16, 2003.
This subsequent revocation should not prejudice the respondents who relied in good faith
on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine
Journalists, Inc. it was held that a bonding companys revocation of authority is
prospective in application. Nonetheless, the respondents should post a new bond issued
by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of
the NLRC Rules of Procedure, which states that [a] cash or surety bond shall be valid
and effective from the date of deposit or posting, until the case is finally decided, resolved
or terminated or the award satisfied.
(Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013).

iii. Period of effectivity of bond

A cash or surety bond shall be valid and effective from the date of deposit or posting, until
the case is finally decided, resolved or terminated, or the award satisfied. This condition
shall be deemed incorporated in the terms and conditions of the surety bond, and shall
be binding on the appellants and the bonding company. (Ciudad Fernandina Food
Corporation Employees Union-Associated Labor Unions v. CA. G.R. No. 166594,
July 20, 2006).

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iv. Bank Certification, not valid compliance with bond requirement

In the case at bar, the respondents cannot be excused from making a substantial
compliance with the bond requirement. The law does not require outright payment of
the appealed monetary award, but only the posting of a cash or surety bond issued by
a reputable bonding company duly accredited by the NLRC or this Court, and not a
mere bank certification which only states the total amount of deposit existing in such
bank as of a certain date. The cash or surety bond will ensure that the award will be
eventually paid in case the appeal fails. A mere bank certification of the type submitted
by respondents will not. What respondents have to pay is a moderate and reasonable
sum for premiums for such bond. (Emma Cordova, et. al. v. KEYSAS Boutique
G.R. No. 156379,September 16, 2005).
v. When bond may be reduced
All told, the bond requirement on appeals involving monetary awards has been and
may be relaxed in meritorious cases. These cases include instances in which (1) there
was substantial compliance with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.
(Ronaldo Nicol, et al. v. Footjoy Industrial Corp.G.R No. 159372, July 27, 2007).
vi. What constitutes reasonable amount; the Mcburnie Rule
To ensure the provisions of Section 6, Rule VI of the NLRC Rules that give parties the
chance to seek a reduction of the appeal bond are effectively carried out, without
however defeating the benefits of the bond requirement in favor of a winning litigant, all
motions to reduce bond that are filed with the NLRC shall be accompanied by the
posting of a cash or surety bond equivalent to 10% of the monetary award that is
subject of the appeal, which shall provisionally be deemed the reasonable amount of
the bond in the meantime that an appellants motion is pending resolution by the
Commission. Only after the posting of a bond in the required percentage shall an
appellants period to perfect an appeal under the NLRC Rules be deemed suspended.
The percentage of the bond that is set by this guideline is merely provisional. The
NLRC retains its authority and duty to resolve the motion and determine the final
amount of bond that shall be posted by the appellant, still in accordance with the
standards of meritorious grounds and reasonable amount.
Should the NLRC after considering the motions merit, determine that a greater amount
or the full amount of the bond needs to be posted by the appellant, then the party shall
comply accordingly. The appellant shall be given a period of 10 days from notice of the
NLRC order within which to perfect the appeal by posting the required appeal bond.
(Andrew Mcburnie v. Eulalio Ganzon. GR Nos. 178034, 178117 and GR No.
186984-85, 2013).

vi. When bond is invalid

In a nutshell, the rules are explicit that the filing of a bond for the perfection of an
appeal is mandatory and jurisdictional. The requirement that employers post a cash
or surety bond to perfect their appeal is apparently intended to assure workers that if
they prevail in the case, they will receive the money judgment in their favor upon the

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dismissal of the formers appeal. It was intended to discourage employers from using
an appeal to delay, or even evade, their obligations to satisfy their employees' just
and lawful claims. However, the whole essence of requiring the filing of bond is
defeated if the bond issued turned out to be invalid due to the surety company's
expired accreditation. After being informed of the expired accreditation of Intra Strata,
respondents should have refrained from allowing Intra Strata to transact business or
to post a bond in favor of Bacman. It is not within respondent's discretion to allow the
filing of the appeal bond issued by a bonding company with expired accreditation
regardless of its pending application for renewal of accreditation. Respondents
cannot extend Intra Strata's authority or accreditation. Neither can it validate an
invalid bond issued by a bonding company with expired accreditation, or give a
semblance of validity to it pending this Court's approval of the application for renewal
of accreditation. (Rolando E. Cawaling et al. v. Napoleon M. Menese. AC No.
9698, November 13, 2013).

i. Verification, formal requisite and not jurisdictional

Neither the laws nor the rules require the verification of the supplemental appeal.
Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended to
give assurance that the matters alleged in the pleading are true and correct and not of mere
speculation.
Also, a supplemental appeal is merely an addendum to the verified
memorandum on appeal that was earlier filed in the case; hence, the requirement for
verification has been substantially complied. (Wilgen Loon, et al. v. Power Master, Inc., et
al.G.R. No. 189404, December 11, 2013).

The Court has consistently held that the requirement regarding verification of a pleading is
formal, not jurisdictional. Such requirement is simply a condition affecting the form of the
pleading, non-compliance with which does not necessarily render the pleading fatally
defective. Verification is simply intended to secure an assurance that the allegations in the
pleading are true and correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. The court may order the correction of
the pleading if verification is lacking or act on the pleading although it is not verified, if the
attending circumstances are such that strict compliance with the rules may be dispensed with
in order that the ends of justice may thereby be served. (LDP Marketing Inc. vs. Erlinda
Dyolde, G.R. No. 159653,January 25, 2006).
j. Corporations Verification and Certification
It is clear from the NLRC Rules of Procedure that appeals must be verified and certified
against forum-shopping by the parties-in-interest themselves. The purpose of verification is to
secure an assurance that the allegations in the pleading are true and correct and have been
filed in good faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the
employee, and respondent Clark Development Corporation as the employer. A corporation
can only exercise its powers and transact its business through its board of directors and
through its officers and agents when authorized by a board resolution or its bylaws. The
power of a corporation to sue and be sued is exercised by the board of directors. The
physical acts of the corporation, like the signing of documents, can be performed only by
natural persons duly authorized for the purpose by corporate bylaws or by a specific act of
the board. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who
signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of
respondent corporation, may be considered as the appellant and employer referred to by
the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal.

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(Antonio B. Salenga, et al. vs. Court of Appeals, et al.mG.R. No. 174941, February 1,
2012).
k. Exception to general rule regarding a corporations verification and certification of nonforum shopping
Anent UEs failure to comply with the general rule that the Board of Directors or Board of
Trustees of a corporation must authorize the person who shall sign the verification and
certification of non-forum shopping accompanying a petition, the Supreme Court held that
such authorization is not necessary when it is self-evident that the signatory is in a position to
verify the truthfulness and correctness of the allegations in the petition. The Supreme Court
declared that Dean Eleanor Javier, who signed UEs verification and certification, was in such
a position, since she knew the factual antecedents of the case and she actually
communicated with the respondents regarding the required postgraduate qualification.
(University of the East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno
G.R. No. 193897. January 23, 2013).

B.

National Labor Relations Commission (NLRC)

1. Jurisdiction
In sum, respondent contested the findings of the labor inspector during and after the
inspection and raised issues the resolution of which necessitated the examination of
evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional
Director was divested of jurisdiction and should have endorsed the case to the appropriate
Arbitration Branch of the NLRC. Considering, however, that an illegal dismissal case had
been filed by petitioners wherein the existence or absence of an employer-employee
relationship was also raised, the CA correctly ruled that such endorsement was no longer
necessary. (Victor Meteoro, et al. v. Creative Creatures, Inc. G.R No. 171275, July 13,
2009).

When petitioner surety company cancelled the surety bond because Radon Security failed to
pay the premiums, it gave due notice to the latter but not to the NLRC. By its failure to give
notice to the NLRC, AFPGIC failed to acknowledge that the NLRC had jurisdiction not only
over the appealed case, but also over the appeal bond. This oversight amounts to disrespect
and contempt for a quasi-judicial agency tasked by law with resolving labor disputes. Until
the surety is formally discharged, it remains subject to the jurisdiction of the NLRC. (AFP
General Insurance Corporation vs. Noel Molina.G.R. No. 151133, June 30, 2008).

2. Effect of NLRC reversal of Labor Arbiters order of reinstatement

Even if the order of reinstatement is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of the
appeal until reversal by the higher court. On the other hand, if the employee has been
reinstate during the appeal period and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the period. (Pfizer v. Geraldine Velasco
GR No. 177467, March 9, 2011).

3. Remedies

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a. Motion for Reconsideration, not Petition for Certiorari

On the issue of the propriety of entertaining the Petition for Certiorari despite the
prescribed Motion for Reconsideration with the NLRC, the SC found that the CA
committed error when it entertained the petition for certiorari and explained that when
respondent failed to file a Motion for Reconsideration of the NLRCs 30 November 2006
Resolution within the reglementary period, the Resolution attained finality and could no
longer be modified by the Court of Appeals. Untimeliness in filing motions or petitions is
not a mere technical or procedural defect, as leniency regarding this requirement will
impinge on the right of the winning litigant to peace of mind resulting from the laying to
rest of the controversy. (AGG Trucking and/or Alex Ang Gaeid vs. Melanio B. Yuag.
G.R. No. 195033, October 12, 2011).

b. Injunction

Section 1, Rule 58 of the Rules of Court, as amended, defines a preliminary injunction as

an order granted at any stage of an action prior to the judgment or final order requiring a
party or a court, agency or a person to refrain from a particular act or acts. Injunction is
accepted as the strong arm of equity or a transcendent remedy to be used cautiously as
it affects the respective rights of the parties, and only upon full conviction on the part of
the court of its extreme necessity. As an extraordinary remedy, injunction is designed to
preserve or maintain the status quo of things and is generally availed of to present actual
or threatened acts until the merits of the case can be heard. It may be resorted to only by
a litigant for the preservation or protection of his rights or interests and for no other
purpose during the pendency of the principal action. It is resorted to only when there is a
pressing necessity to avoid injurious consequences, which cannot be remedied under
any standard compensation. The resolution of an application for a writ of preliminary
injunction rests upon the existence of an emergency or of a special recourse before the
main case can be heard in due course of proceedings. (Nagkahiusang Mamumuo sa
Picop Resources Inc et al. vs Court of Appeals. G.R. Nos. 148839-40, November 2,
2006).
c. Contempt
Under Article 218 of the Labor Code, the NLRC (and the labor arbiters) may hold any
offending party in contempt, directly or indirectly, and impose appropriate penalties in
accordance with law. The penalty for direct contempt consists of either imprisonment or
fine, the degree or amount depends on whether the contempt is against the Commission
or the labor arbiter. The Labor Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the
Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial court. This mode is to be observed only
when there is no law granting them contempt powers. As is clear under Article 218(d) of
the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to
hold the offending party or parties in direct or indirect contempt. The petitioners,
therefore, have not improperly brought the indirect contempt charges against the
respondents before the NLRC. (Federico Robosa, et al. v. NLRC, et al.
GR No. 176085, February 18, 2012).

4. Certified Cases

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a. Function of NLRC in Certified Cases

When sitting in compulsory arbitration certified to by the Secretary of Labor, the NLRC is
not sitting as a judicial court but as an administrative body charged with the duty to
implement the order of the Secretary. As an implementing body, its authority did not
include the power to amend the Secretarys order. (UST v. NLRC and UST Faculty
Union. GR No. 89920, 1990).

b. Compulsory arbitration
The very nature of compulsory arbitration makes the settlement binding upon the private
respondents, for compulsory arbitration has been defined both as "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 the parties," and as a mode of
arbitration where the parties are "compelled to accept the resolution of their dispute
through arbitration by a third party." Clearly then, the legality of the strike could no longer
be reviewed by the Labor Arbiter, much less by the NLRC, as this had already been
resolved. It was the sole issue submitted for compulsory arbitration by the private
respondents, as is obvious from the portion of their letter quoted above. The case
certified by the Labor Secretary to the NLRC was dismissed after the union and the
company drew up the agreement mentioned earlier. This conclusively disposed of the
strike issue. (Reformist Union of RB Liner, et al. v. NLRC, et al.
GR No. 120482, January 27, 1997).

C. Bureau of Labor Relations Med-Arbiters

1. Jurisdiction (original and appellate)
The BLR shall have original and exclusive authority to act, at their own initiative or upon
request of either or both parties, on all inter-union and intra-union conflicts. As already held
by the Court in La Tondena Workers Union v. Secretary of Labor, intra-union conflicts such
as examinations of accoutns are under the jurisdiction of the BLR. However, the Rules of
Procedure on Mediation-Arbitration purpose and expressly separated or distinguished
examinations of union accounts from the genus of intra-union conflict and provided a different
procedure for the resolution of the same. Original jurisdiction over complaints for
examinations of union accounts is vested on the Regional Director and appellate jurisdiction
over decisions of the former is lodged with the BLR. This is apparent from Sections 3 and 4 of
the Med-Arbitration Rules as already mentioned. Contrast these two sections from Section 2
and Section 56 of the same rules. Section 2 expressly vests upon Med-Arbiters original and
exclusive jurisdiction to hear and decide inter alia all other inter-union or internal union
disputes. Section 5 states that the decisions of the Med-Arbiter shall be appealable to the
DOLE Secretary. Without a doubt, the rules of Procedure on Mediation-Arbitration did not
amend or supplant substantive law but implemented and filled in details of procedure left
vacuous or ambiguous by the Labor Code and its Implementing Rules. (Manolito Barles, et
al. v. Hon. Benedicto Bitonio, et al. GR No. 120270, June 16, 1999).

D. National Conciliation and Mediation Board

1. Nature of Proceedings

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Arbitration is the reference of a labor dispute to an impartial third person for determination on
the basis of evidence and arguments presented by such parties who have bound themselves
to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their
dispute through arbitration by a third party. The essence of arbitration remains since a
resolution of a dispute is arrived at by resort to a disinterested third party whose decision is
final and binding on the parties, but in compulsory arbitration, such a third party is normally
appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made,
pursuant to a voluntary arbitration clause in their collective agreement, to an impartial third
person for a final and binding resolution. Ideally, arbitration awards are supposed to be
complied with by both parties without delay, such that once an award has been rendered by
an arbitrator, nothing is left to be done by both parties but to comply with the same. After all,
they are presumed to have freely chosen arbitration as the mode of settlement for that
particular dispute. Pursuant thereto, they have chosen a mutually acceptable arbitrator who
shall hear and decide their case. Above all, they have mutually agreed to de bound by said
arbitrator's decision. (Luzon Development Bank v. Association of Luzon Development
Bank Employees. GR No. 120319, October 6, 1995).

E. DOLE Regional Directors

1. Jurisdiction
If a complaint is brought before the DOLE to give effect to the labor standards provisions of
the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an
existing employer-employee relationship, the DOLE exercise jurisdiction to the exclusion of
the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction
is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a
claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of
the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction
over those cases involving wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed
with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction
is properly with the DOLE. The findings of the DOLE, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.
(Peoples Broadcasting Service (Bombo Radyo Phils.,Inc. v. Secretary of Labor
GR No. 179652, March 6, 2012).

F. DOLE Secretary
1. Visitorial and enforcement powers
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power
somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the
visitorial and enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions.
The determination of the existence of employer-employee relationship is still

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primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128(b).
Thus, if a complaint is brought before the DOLE to give effect to the labor standards
provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE
that there is an existing employer-employee relationship, the DOLE exercise jurisdiction to
the exclusion of the NLRC. If the DOLE finds that there is no employer-employee
relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE ,
and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor
Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has
original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment, if accompanied by a claim for
reinstatement. If a complaint is filed with the NLRC, and there is still an existing employeremployee relationship, the jurisdiction is purely with the DOLE. The findings of the DOLE,
however may still be questioned through a petition for certiorari under Rule 65 of the Rules of
Court. (Peoples Broadcasting (Bombo Radyo Phils) v. Secretary of Labor, et al.
GR No. 179652, May 8, 2009).

The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional
Director, have jurisdiction to enforce compliance with labor standards laws under the broad
visitorial and enforcement powers conferred by Article 128 of the Labor Code, and expanded
by R.A. No. 7730. An order issued by the duly authorized representative of the Secretary of
Labor and Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Secretary of Labor and Employment and Employment in the amount equivalent to the
monetary award in the order appealed from.
The Court has held that the visitorial and enforcement powers of the Secretary, exercised
through his representatives, encompass compliance with all labor standards laws and other
labor legislation, regardless of the amount of the claims filed by workers. This has been the
rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b) of the Labor
Code, to expand the visitorial and enforcement powers of the DOLE Secretary. Under the
former rule, the DOLE Secretary had jurisdiction only in cases where the amount of the claim
does not exceed P5,000.00. (Bay Haven, Inc. v. Florentino Abuan, et al.GR No. 160859,
July 30, 2008).

Pursuant to Section 1 of Republic Act 7730 [Approved on June 2, 1994] which amended
Article 128 (b) of the Labor Code, the Secretary of Labor and Employment or his duly
authorized representative, in the exercise of their visitorial and enforcement powers, are now
authorized to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on findings of labor employment and enfocement
officers or industrial safety engineers made in the course of inspection, sans any restriction
with respect to the jurisdictional amount of P5,000.00 provided under Article 129 and Article
217 of Code. (Cirineo Bowling Plaza v. Gerry Sensing, et al.GR No. 146572, January 14,
2005).

2. Power to suspend/effects of termination

When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of the
termination of the individual respondents, the Secretary did not exceed her jurisdiction, nor

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did the Secretary gravely abuse the same. It must be pointed out that one of the substantive
evils which Article 263(g) of the Labor Code seeks to curb is the exacerbation of a labor
dispute to the further detriment of the national interest. In her Order dated March 28, 1995,
the Secretary of Labor rightly held:
It is well to remind both parties herein that the main reason or rationale for the exercise of the
Secretary of Labor and Employments power under Article 263(g) of the Labor Code, as
amended, is the maintenance and upholding of the status quo while the dispute is being
adjudicated. Hence, the directive to the parties to refrain from performing acts that will
exacerbate the situation is intended to ensure that the dispute does not get out of hand,
thereby negating the direct intervention of this office.
The Universitys act of suspending and terminating union members and the Unions act of
filing another Notice of Strike after this Office has assumed jurisdiction are certainly in conflict
with the status quo ante. By any standards[,] these acts will not in any way help in the early
resolution of the labor dispute. It is clear that the actions of both parties merely served to
complicate and aggravate the already strained labor-management relations. (University of
Immaculate Concepcion, Inc. v. Secretary of Labor, et al.GR No. 151379, January 14,
2005).

3. Assumption of jurisdiction
a. Assumption by the Secretary
More to the point, the Court has consistently ruled in a long line of cases spanning
several decades that once the SOLE assumes jurisdiction over a labor dispute, such
jurisdiction should not be interfered with by the application of the coercive processes of a
strike or lockout. Defiance of the assumption order or a return-to work order by a striking
employee, whether a union officer or a member, is an illegal act and, therefore, a valid
ground for loss of employment status.
The assumption of jurisdiction by the SOLE over labor disputes causing or likely to cause
a strike or lockout in an industry indispensable to the national interest is in the nature of a
police power measure. In this case, the SOLE sufficiently justified the assumption order,
thus:
The Hotel is engaged in the hotel and restaurant business and one of the de luxe hotels
operating in Metro Manila catering mostly to foreign tourist groups and businessmen. It
serves as venue for local and international conventions and conferences. The Hotel
provides employment to more than 700 employees as well as conducts business with
entities dependent on its continued operation. It also provides substantial contribution to
the government coffers in the form of foreign exchange earnings and tax payments.
Undoubtedly, a work stoppage thereat will adversely affect the Hotel, its employees, the
industry, and the economy as a whole. (Manila Hotel Employees Association and its
members v. Manila Hotel Corporation. GR No. 154591, March 5, 2007).
The Secretarys assumption of jurisdiction power necessarily includes matters incidental
to the labor dispute, that is, issues that are necessarily involved in the dispute itself, not
just to those ascribed in the Notice of Strike; or, otherwise submitted to him for resolution.
As held in the case of International Pharmaceuticals, Inc. v. Sec. of Labor and
Employment, x x x [t]he Secretary was explicitly granted by Article 263 (g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a

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strike or lockout in an industry indispensable to the national interest, and decide the same
accordingly. Necessarily, this authority to assume jurisdiction over the said labor dispute
must include and extend to all questions and controversies arising therefrom, including
cases over which the Labor Arbiter has exclusive jurisdiction. Accordingly, even if not
exactly on the ground upon which the Notice of Strike is based, the fact that the issue is
incidental to the resolution of the subject labor dispute or that a specific issue had been
submitted to the Secretary of the DOLE for her resolution, validly empowers the latter to
take cognizance of and resolve the same. (Skippers Pacific Inc and J.P. Samartzsis
Maritime Enterprises Co., S.A., vs. Jerry Maguad and Porfero Ceudadano
G.R. No. 166363,August 15, 2006).

The moment the Secretary of Labor assumes jurisdiction over a labor dispute in an
industry indispensable to national interest, such assumption shall have the effect of
automatically enjoining the intended or impending strike. It was not even necessary for
the Secretary of Labor to issue another order directing a return to work. 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. (Steel Corp. of the Phils. vs. SCP Employees Union-National
Federation of Labor Unions, G.R. No. 169829-30, April 16, 2008).
Again, we spell out what encompass the Secretarys assumption of jurisdiction power.
The Secretary of the DOLE has been explicitly granted by Article 263(g) of the Labor
Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, and decide the same
accordingly. And, as a matter of necessity, it includes questions incidental to the labor
dispute; that is, issues that are necessarily involved in the dispute itself, and not just to
that ascribed in the Notice of Strike or otherwise submitted to him for resolution. (
UFE-DFA-KMU vs. Nestl Philippines, Incorporated.G.R. No. 158930-31, March 3,
2008).

4. Appellate jurisdiction
a. DOLE Secretary has appellate jurisdiction over POEA disciplinary cases

Perusal of the POEA rules and the IRR of RA 8042 show that NLRC has no jurisdiction to
review disciplinary cases decided by the POEA. Petitioners should have appealed the
adverse decision of the POEA to the Secretary of Labor instead of to the NLRC.
Consequently, the CA being correct in its conclusions, committed no error in upholding
that appellate jurisdiction was vested in the Secretary of Labor in accordance with his
power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the
Revised Administrative Code of 1987. (Eastern Mediterranean Maritime Ltd v.
Estanislao Surio, et al.GR No. 154213, August 23, 2012).

b. No appellate jurisdiction over review of BLR in cancellation proceedings

The Secretary of Labor and Employment has no jurisdiction to entertain the appeal of
Abbott. The appellate jurisdiction of the Secretary of Labor and Employment is limited
only to a review of cancellation proceedings decided by the Bureau of Labor Relations in
the exercise of its exclusive and original jurisdiction. The Secretary of Labor and
Employment has no jurisdiction over decisions of the Bureau of Labor Relations rendered
in the exercise of its appellate power to review the decision of the Regional Director in a

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petition to cancel the union's certificate of registration, said decisions being final and
inappealable. (Abbot Laboratories Philippines v. Abbott Laboratories Employees
Union. G.R No. 131374, 2000).

5. Voluntary arbitration powers

G. Grievance Machinery and Voluntary Arbitration

1. Subject matter of grievance
Art. 217(c) of the Labor Code provides that cases arising from the interpretation or
implementation of collective bargaining agreements and those arising from the interpretation
or enfocement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided
in said agreements. This provision requires labor arbiters to refer cases involving the
implementation of CBAs to the grievance machinery provided therein and to voluntary
arbitration. Moreover, Art. 260 of the Labor Code clarifies that such disputes must be referred
first to the grievance machinery and, if unresolved within seven days, they shall automatically
be referred to voluntary arbitration. Under Art. 261, violations of a CBA, except those which
are gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the CBA. Under this provision, voluntary arbitrators have
original and exclusive jurisdiction over matters which have not been resolved by the
grievance machinery. Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor
Code, the labor arbiter should have referred the matter to the grievance machinery provided
in the CBA. Because the labor arbiter did not have jurisdiction over the subject matter, his
decision was void. (Miguel Santuyo, et al. v. Remerco Garments Manufacturing, Inc.
GR. 174420, March 22, 2010).

2. Voluntary Arbitrator
a)

Jurisdiction

i. Voluntary arbitration, plenary authority and jurisdiction of VA

Goya, Inc.s contention that the Voluntary Arbitrator (VA) exceeded his power in
ruling on a matter not covered by the sole issue submitted for voluntary arbitration
is untenable. In a prior case, the Supreme Court has ruled that, in general, the
arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the
adjudication of disputes, the arbitrator can assume that he has the power to make
a final settlement. The VA has plenary jurisdiction and authority to interpret the
CBA and to determine the scope of his or her own authority. Subject to judicial
review, this leeway of authority and adequate prerogative is aimed at
accomplishing the rationale of the law on voluntary arbitration speedy labor
justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted
for voluntary arbitration the sole issue of whether or not the company is guilty of an
unfair labor practice in engaging the services of PESO, a third party service
provider, under existing CBA, laws, and jurisprudence. The Union claimed that the
hiring of contractual workers from PESO violated the CBA provision that prescribes
only three categories of workers in the company, namely: the probationary, the
regular, and the casual employees. Instead of hiring contractual workers, Goya,

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Inc. should have hired probationary or casual employees, who could have become
additional Union members, pursuant to the union security clause in the CBA. The
VA ruled that while Goya, Inc. was not guilty of any unfair labor practice, it still
committed a violation of the CBA, though such violation was not gross in character.
The Supreme Court held that the VAs ruling is interrelated and intertwined with the
sole issue submitted for arbitration. The ruling was necessary to make a complete
and final adjudication of the dispute between the parties. (Goya Inc. v. Goya Inc.
Employees Union-FFW. GR No. 170054, January 21, 2013).

In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, the Supreme Court
ruled that the voluntary arbitrator had plenary jurisdiction and authority to interpret
the agreement to arbitrate and to determine the scope of his own authority
subject only, in a proper case, to the certiorari jurisdiction of this Court. It was also
held in that case that the failure of the parties to specifically limit the issues to that
which was stated allowed the arbitrator to assume jurisdiction over the related
issue. In Ludo & Luym Corporation v. Saornido, the Supreme Court recognized that
voluntary arbitrators are generally expected to decide only those questions
expressly delineated by the submission agreement; that, nevertheless, they can
assume that they have the necessary power to make a final settlement on the
related issues, since arbitration is the final resort for the adjudication of disputes.
Thus, the Supreme Court ruled that even if the specific issue brought before the
arbitrators merely mentioned the question of whether an employee was
discharged for just cause, they could reasonably assume that their powers
extended beyond the determination thereof to include the power to reinstate the
employee or to grant back wages. In the same vein, if the specific issue brought
before the arbitrators referred to the date of regularization of the employee, law and
jurisprudence gave them enough leeway as well as adequate prerogative to
determine the entitlement of the employees to higher benefits in accordance with
the finding of regularization. Indeed, to require the parties to file another action for
payment of those benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor and speedy
labor justice. (Manila Pavilion Hotel, etc. vs. Henry Delada. G.R. No. 189947,
January 25, 2011).

Under Art. 217, it is clear that a LA has original and exclusive jurisdiction over
termination disputes. However, under Art. 261, a VA has original and exclusive
jurisdiction over grievances arising from the interpretation or enforcement of
company policies. As a general rule then, termination disputes should be brought
before the LA, except when the parties unmistakably express that they agree to
submit the same to voluntary arbitration. (Negros Metal Corporation v. Armelo
Lamayo. GR No. 186557, August 25, 2010).

b) Labor Arbiters may act as voluntary arbitrators

The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining deadlocks. This is what the parties did in this case. After
the Board failed to resolve the bargaining deadlock between parties, the union filed
a petition for compulsory arbitration in the Arbitration Branch of the NLRC.
Petitioner joined the petition and the case was submitted for decision. Although the
unions petition was for compulsory arbitration, the subsequent agreement of
petitioner to submit the matter for arbitration in effect made the arbitration a
voluntary one. The essence of voluntary arbitration, after all is that it is by

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agreement of the parties, rather than compulsion of law, that a matter is submitted
for arbitration. It does not matter that the person chosen as arbitrator is a labor
arbiter who, under Art 217 of the Labor Code, is charged with the compulsory
arbitration of certain labor cases. There is nothing in the law that prohibits these
labor arbiters from also acting as voluntary arbitrators as long as the parties agree
to have him hear and decide their dispute. (Manila Central Line Corporation v.
Manila Central Line Free Workers Union National Federation of Labor
GR No. 109383, June 15, 1998).

c) Remedies
Art. 262-A deleted the word unappealable from Art. 263. It makes the VA award
final and executory after 10 calendar days from receipt of the copy of the award or
decision by the parties. Presumably, the decision may still be reconsidered by the
va on the basis of a motion for reconsideration duly field during that period. (
Albert Teng v. Alfredo Pahagac. GR No. 169704, November 17, 2010).

As the Voluntary Arbitrator acts in a quasi-judicial capacity, there is no reason

why the VAs decisions involving interpretation of law should be beyond the
Supreme Courts review. Administrative officials are presumed to act in accordance
with law, yet the Court will not hesitate to pass upon their work where a question of
law is involved or where a showing of abuse of authority or discretion in their
officials acts is properly raised in petitions for certiorari. (Continental Marble
Corporation v. NLRC, GR No. L-43825, 1988).

H. Court of Appeals
1. Rule 65, Rules of Court
Rule 65, mode of judicial review of NLRC decisions

It has long been settled in the landmark case of St. Martin Funeral Home v. National Labor
Relations Commission, that the mode for judicial review of decisions of the NLRC is by a
petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The different
modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and 43), and
petition for review on certiorari (Rule 45), cannot be availed of because there is no provision
on appellate review of the NLRC decisions in the Labor Code, as amended. Although the
same case recognizes that both the Court of Appeals and the Supreme Court have original
jurisdiction over such petitions, it has chosen to impose the strict observance of the hierarchy
of courts. Hence, a petition for certiorari of a decision or resolution of the NLRC should first
be filed with the Court of Appeals; direct resort to the Supreme Court shall not be allowed
unless the redress desired cannot be obtained in the appropriate courts or where exceptional
and compelling circumstances justify an availment of a remedy within and calling for the
exercise by the Supreme Court of its primary jurisdiction. (Marival Trading, Inc. v. NLRC
GR No. 169600, June 26, 2007).

As correctly explained by the CA, judicial review of decisions of the NLRC via petition for
certiorari under Rule 65, as a general rule, is confined only to issues of lack or excess of
jurisdiction and grave abuse of discretion on the part of the NLRC. The CA does not assess
and weigh the sufficiency of evidence upon which the LA and the NLRC based their
conclusions. The issue is limited to the determination of whether or not the NLRC acted

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without or in excess of its jurisdiction, or with grave abuse of discretion in rendering the
resolution, except if the findings of the NLRC are not supported by substantial evidence.
(Anonas Construction and Industrial Supply Corporation, et al. vs. NLRC, et al.
G.R. No. 164052, October 17, 2008).

2. Petition for Review as mode of appeal vis--vis Special Civil Action for Certiorari
There are, of course, settled distinctions between a petition for review as a mode of appeal
and a special civil action for certiorari, thus:
a. In appeal by certiorari, the petition is based on questions of law which the appellant
desires the appellate court to resolve. In certiorari as an original action, the petition raises the
issue as to whether the lower court acted without or in excess of jurisdiction or with grave
abuse of discretion.
b. Certiorari, as a mode of appeal, involves the review of the judgment, award or final
order on the merits. The original action for certiorari may be directed against an interlocutory
order of the court prior to appeal from the judgment or where there is no appeal or any other
plain, speedy or adequate remedy.
c. Appeal by certiorari must be made within the reglementary period for appeal. An
original action for certiorari may be filed not later than sixty (60) days from notice of the
judgment, order or resolution sought to be assailed.
d. Appeal by certiorari stays the judgment, award or order appealed from. An original
action for certiorari, unless a writ of preliminary injunction or a temporary restraining order
shall have been issued, does not stay the challenged proceeding.
e. In appeal by certiorari, the petitioner and respondent are the original parties to the
action, and the lower court or quasi-judicial agency is not to be impleaded. In certiorari as an
original action, the parties are the aggrieved party against the lower court or quasi-judicial
agency and the prevailing parties, who thereby respectively become the petitioner and
respondents.
f. In certiorari for purposes of appeal, the prior filing of a motion for reconsideration is not
required (Sec. 1, Rule 45); while in certiorari as an original action, a motion for
reconsideration is a condition precedent (Villa-Rey Transit vs. Bello, L-18957, April 23, 1963),
subject to certain exceptions.
g. In appeal by certiorari, the appellate court is in the exercise of its appellate jurisdiction
and power of review for, while in certiorari as an original action, the higher court exercises
original jurisdiction under its power of control and supervision over the proceedings of lower
courts. (San Miguel Corporation v. Numeriano Layoc, Jr. GR No. 149640, October 19,
2007).

3. Dates must be stated in Petition for Certiorari

There are three essential dates that must be stated in a petition for certiorari brought under
Rule 65. First, the date when notice of the judgment or final order or resolution was received;
second, when a motion for new trial or reconsideration was filed; and third, when notice of the
denial thereof was received. Failure of petitioner to comply with this requirement shall be
sufficient ground for the dismissal of the petition. Substantial compliance will not suffice in a
matter involving strict observance with the Rules. (Dr. Rey C. Tambong, vs R. Jorge
Development Corporation. G.R. No. 146068, August 31, 2006).

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4. Effect of receipt of award pending outcome of Petition for Certiorari

The prevailing partys receipt of the full amount of the judgment award pursuant to a writ
of execution issued by the labor arbiter does not close or terminate the case if such receipt is
qualified as without prejudice to the outcome of the petition for certiorari pending with the
Court of Appeals. (Timoteo H. Sarona vs. National Labor Relations Commission, Royale
Security Agency, et al., G.R. No. 185280, January 18, 2011).

I.

Supreme Court
1. Rule 45, Rules of Court
General rule:
It is a settled rule in this jurisdiction that only questions of law are allowed in a petition for
review on certiorari. The Courts power of review in a Rule 45 petition is limited to resolving
matters pertaining to any perceived legal errors, which the CA may have committed in issuing
the assailed decision. In reviewing the legal correctness of the CAs Rule 65 decision in a
labor case, the Court examines the CA decision in the context that it determined whether or
not there is grave abuse of discretion in the NLRC decision subject of its review and not on
the basis of whether the NLRC decision on the merits of the case was correct. (Universal
Robina Sugar Milling Corporation v. Ferdinand Acibo. GR No. 186439, January 15,
2014).

Exception to the general rule:

The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of
Court is generally limited to reviewing errors of law. The Court is not the proper venue to
consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad and a
departure therefrom may be warranted where the findings of fact of the CA are contrary to the
findings and conclusions of the NLRC and LA, as in this case. In this regard, there is
therefore a need to review the records to determine which of them should be preferred as
more conformable to evidentiary facts. (INC Shipmanagement, Inc. et al. v Alexander L.
Moradas. GR No. 178564, January 15, 2014).

While generally, only questions of law can be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the
findings are grounded entirely on speculations, surmises, or conjectures; (2) when the
inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave
abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the
findings of fact are conflicting; (6) when in making its findings, the same are contrary to the
admissions of both appellant and appellee; (7) when the findings are contrary to those of the
trial court; (8) when the findings are conclusions without citation of specific evidence on which
they are based; (9) when the facts set forth in the petition as well as in the petitioners main
and reply briefs are not disputed by the respondent; and (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record.
The illegality of petitioners dismissal was an issue that was squarely raised before the NLRC.
When the NLRC decision was reversed by the Court of Appeals, there was a situation where
the findings of facts are conflicting. The petition for review filed by the Petitioner comes
within the purview of exception (5) and by analogy, exception (7). (Mylene Carvajal vs.
Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012).

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As a general rule, the Supreme Court is not a trier of facts and a petition for review on
certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law.
Moreover, if factual findings of the National Labor Relations Commission and the Labor
Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them the
respect and finality they deserve. It is well-settled and oft-repeated that findings of fact of
administrative agencies and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect, but
finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not
hesitate to deviate from what are clearly procedural guidelines and disturb and strike down
the findings of the Court of Appeals and those of the labor tribunals if there is a showing that
they are unsupported by the evidence on record or there was a patent misappreciation of
facts. Indeed, that the impugned decision of the Court of Appeals is consistent with the
findings of the labor tribunals does not per se conclusively demonstrate the correctness
thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if
only to rectify the prejudice and injustice resulting from an incorrect assessment of the
evidence presented. (Timoteo H. Sarona vs. National Labor Relations Commission,
Royale Security Agency, et al., G.R. No. 185280, January 18, 2011).

Writ of Certiorari will not issue where appeal is available

Additionally, the general rule is that a writ of certiorari will not issue where the remedy of
appeal is available to the aggrieved party. The remedies of appeal in the ordinary course of
law and that of certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive
and not alternative or cumulative. Time and again this Court reminded members of the
bench and bar that the special civil action of Certiorari cannot be used as a substitute for a
lost appeal where the latter remedy is available. Such a remedy will not be a cure for failure
to timely file a Petition for Review on Certiorari under Rule 45. Nor can it be availed of as a
substitute for the lost remedy of an ordinary appeal, especially if such loss or lapse was
occasioned by ones own negligence or error in the choice of remedies. (Cathay Pacific
Steel Corporation vs Court of Appeals. G.R. No. 164561, August 30, 2006).

Indeed there are instances when certiorari was granted despite the availability of appeal such
as: (a) when public welfare and the advancement of public policy dictates; (b) when the
broader interest of justice so requires; (c) when the writs issued are null and void; or (d) when
the questioned order amounts to an oppressive exercise of judicial authority. None of these
recognized exceptions, however, is present in the case at bar. Petitioner failed to show
circumstances that would justify a deviation from the general rule, and make available a
petition for certiorari in lieu of taking an appeal. (Iloilo La Filipina Uygongco Corporation v.
CA. GR No. 170244, November 28, 2007).

J. Prescription of actions
Under Article 261 of the Labor Code, the Voluntary Arbitrator has original and exclusive
jurisdiction to decide all grievances arising from either the interpretation or implementation of
the Collective Bargaining Agreement; violations of the CBA shall no longer be treated as an
unfair labor practice but instead should be resolved as grievance under the CBA, and the
Department of Labor and Employment shall not entertain any matter under the exclusive and
original jurisdiction of the Voluntary Arbitrator. All money claims arising from an employeremployee relation are covered by the three-year prescriptive period mandated by Article 291
of the Labor Code, and not by Article 1144 of the Civil code which provides for a ten-year
prescriptive period for written agreements. Thus, Article 291 of the Labor Code applies to

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petitioners money claim, which is based on a provision of the CBA on retirement and
separation benefits and is a consequence of employer-employee relation. Moreover,
voluntary arbitrators have original and exclusive jurisdiction to hear and decide grievances
arising from the implementation of a CBA. Hence, the filing of a CBA-related complaint before
the labor arbiter or the NLRC does not interrupt the three-year prescriptive period. (Amado
de Guzma and Manila Workers Union and General Workers Union v. CA. GR No.
132257, October 12, 1998).

The day the action may be brought is the day a claim starts as a legal possibility. In the
present case, January 1, 2000 was the date that respondent Pingol was not allowed to
perform his usual and regular job as a maintenance technician. He, however only filed the
complaint for constructive dismissal and monetary claims four years later or on March 29,
2004. As correctly held by the LA, complainant's cause of action has already prescribed.
Respondent's contention that the prescriptive period was interrupted when he made followups is also untenable. Like other causes of action, the prescriptive period for money claims is
subject to interruption, and in the absence of an equivalent Labor Code provision for
determining whether the said period may be interrupted, Art. 1155 provides that the
prescription of an action is interrupted by (a) the filing of an action, (b) written extrajudicial
demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.
In this case, respondent Pingol never made any written extrajudicial demand. Neither did
petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed
"follow-ups" could not have validly tolled the running of the prescriptive period. It is worthy to
note that respondent never presented any proof to substantiate his allegation of follow-ups.
(Philippine Long Distance Telephone Company v. Roberto Pingol. GR No. 182622,
September 8, 2010).
In the present case, the day came when petitioner learned of Asiakonstrukts deduction from
his salary of the amount of advances he had received but had, by his claim, been settled, the
same having been reflected in his payslips, hence, it is assumed that he learned of it at the
time he received his monthly paychecks. As thus correctly ruled by both the NLRC and the
appellate court, only those illegal deductions made from 1997 to 1999 when he was
dismissed can be claimed, he having filed his complaint only in February 2000. Per his own
computation and as properly adopted by the NLRC in its assailed Resolution dated March 10,
2004, petitioner is thus entitled to reimbursement of P88,000.00.
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time
when the third element of a cause of action transpired. Stated differently, in the computation
of the three-year prescriptive period, a determination must be made as to the period when the
act constituting a violation of the workers right to the benefits being claimed was committed.
For if the cause of action accrued more than three (3) years before the filing of the money
claim, said cause of action has already prescribed in accordance with Article 291.( Virgilio
Anabe v. Asian Construction. GR No. 183233, December 23, 2009).

Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is

established that the benefits being claimed have been withheld from the employee for a
period longer than three (3) years, the amount pertaining to the period beyond the three-year
prescriptive period is therefore barred by prescription. The amount that can only be
demanded by the aggrieved employee shall be limited to the amount of the benefits withheld
within three (3) years before the filing of the complaint.
In the case of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of the year.

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Furthermore, if the employee entitled to service incentive leave does not use or commute the
same, he is entitled upon his resignation or separation from work to the commutation of his
accrued service incentive leave. Correspondingly, it can be conscientiously deduced that the
cause of action of an entitled employee to claim his service incentive leave pay accrues from
the moment the employer refuses to remunerate its monetary equivalent if the employee did
not make use of said leave credits but instead chose to avail of its commutation. Accordingly,
if the employee wishes to accumulate his leave credits and opts for its commutation upon his
resignation or separation from employment, his cause of action to claim the whole amount of
his accumulated service incentive leave shall arise when the employer fails to pay such
amount at the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive
leave, we can conclude that the three (3)-year prescriptive period commences, not at the end
of the year when the employee becomes entitled to the commutation of his service incentive
leave, but from the time when the employer refuses to pay its monetary equivalent after
demand of commutation or upon termination of the employees services, as the case may be.
(Auto Bus Transport System v. Antonio Baustista, GR No. 156367, May 16, 2005).

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