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INTRODUCTION

Social Justice As Aim


Promotion of the welfare of the people
- Dr. Jose P. Laurel Neither communism. Nor
despotism, nor atomism, nor anarchy, but the
humanization of laws and the equalization of social
and economic forces of the state so that justice in
its rational and objectively secular conception may
at least be approximated.

Achieved through the maintenance of proper economic


and social equalization in the interrelations of the
member community, constitutionality, through the
exercise of powers underlying the existence of all
governments, at the same time honoured principle of
salus populi est suprema lex.

Both a Juridical Principle and a Societal Goal


Juridical Principle prescribes equality of the people, rich
or poor, before the law
Social Goal attainment of decent quality of life of the
masses through humane productive efforts
Legal equality opens opportunities that strengthen equality
that creates more opportunities
- Making the rich share w/ government the
responsibility of realizing social justice as an end
(Article 2, Sec. 9 and 10 of 1987 Constitution)
Attainment of Social Justice through industrial peace and
progress
Social Legislation those laws that provide particular kinds
of protection or benefits to society or segments thereof in
furtherance of Social Justice
Labor Law
(1) Labor Standards
- Minimum terms and conditions of employment
prescribed by existing laws, rules, and regulations
relating to wages, hours of work, cost-of-living
allowances, and other monetary and welfare
benefits
- Answers the question WHAT? (content)
- i.e. 13th month pay
(2) Labor Relations
- Concerned w/ stabilization of relations of employer
and employees and seek to forestall and adjust the
differences b/w them by encouragement of CBA
and the settlement of labor disputes through
reconciliation, mediation and arbitration
- Answers the question HOW? (process)
- i.e. additional allowance pursuant to CBA
IN A SENSE, LABOR LAW ARE SOCIAL
LEGISLATIONS
Labor laws are narrower in concept and directly affect
employment.

Social Legislation are broader and governs the effect of


employment
Purpose of Labor Legislation
an exercise of the police power
to regulate the relation b/w employers and employees
respecting the terms and conditions of employment, either by
providing for certain standards or for a legal framework w/in
w/c better terms and conditions of work could be negotiated
through Collective Bargaining. (correcting inherent injustices
in Er-Ee relationship)
Related Laws to Labor
(1) New Civil Code
1700 relation between capital and labor are not
merely contractual.
- contracts must yield for the common
good
1701 neither capital nor labor shall act
oppressively against the other, or impair the interest
or convenience of the public
1702 in case of doubt, labor legislation and all
labor contracts shall be construed in favor of the
safety and decent living of the labourer
1703 Involutary Servitude
(2) RPC
Art. 289 Involuntary Servitude
(3) R.A. 10395 Tripartism
EMPLOYER-EMPLOYEE RELATIONSHIP
EMPLOYER-EMPLOYEE RELATIONSHIP
ESSENTIAL
The existence of employer-employee relationship, as
explained in Book III, is determined by the presence of the
following elements, namely:
(a) selection and engagement of the employee;
(b) payment of wages;
(c) power to dismiss; and
(d) power to control the employees conduct.
The fourth is the most important element.
WHO ARE EMPLOYEES
The term employee:
(1) shall include any employee
(2) and shall not be limited to the employee of any
particular employer, unless the Act so explicitly
states otherwise
(3) and shall include any individual
(a) whose work has ceased as a result of, or in
connection with any current labor dispute
(b) and who has not obtained any other
substantially
equivalent
and
regular
employment.

1|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

Employee refers to any person working for an employer. It


includes one whose work has ceased in connection with any
current labor dispute or because of any unfair labor practice
and one who has been dismissed from work but the legality
of the dismissal is being contested in a forum of appropriate
jurisdiction.
Employer refers to any person or entity who employs the
services of others, one for whom employees work and who
pays their wages or salaries. An employer includes any person
directly or indirectly acting in the interest of an employer. It
shall also refer to the enterprise where a labor organization
operates or seeks to operate.
An employer may be brought into bargaining and economic
relationship with persons not in his actual employ; such
persons are given the status and tights of employees in
relation to him, in order to accord to them the protection of
the Act. Thus, The nature of a labor dispute does not
require that the disputants should stand in the proximate
relation of employer and employee, with consequent
protection of concerted activities carried out by many
persons belonging to several employers.
LABOR ORGANIZATION
CHAPTER I
REGISTRATION AND CANCELLATION
Granted by the Constitution
Art. 3, Sec. 8 Right to form association is the freedom to
organize as to be member of any group or association, union
or society and to adopt rules w/c the members judge most
appropriate to achieve their purpose.
Art. 13, Sec. 3
Labor Organization; 2 Broad Purpose
(1) Collective Bargaining
(2) Dealing w/ employers concerning terms and
conditions of employment
Definition

Labor Organizations any union or association of


employees in the private sector w/c exists in whole or in part
for the purpose of collective bargaining, mutual aid, interest,
cooperation, protection or other lawful purpose

Legitimate Labor Organization any labor organization


in the private sector registered or reported w/ the
department in accordance w/ Rule 3 and 4 of the Rules
-

No such thing as illegitimate labor organization

Exclusive Bargaining Agent (EBR) legitimate labor

union duly recognized or certified as the sole and exclusive


bargaining representative or agent of all the employees in a
bargaining unit.

Bargaining Unit refers to a group of employees sharing

mutual interest w/in a given employer unit comprised of all


or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping w/in such employer unit.

Workers Association refers to an association of workers


organized for a mutual aid and protection of its members or
for any legitimate purpose other than Collective Bargaining.

Legitimate Workers Association workers association


duly registered w/ the Department in accordance w/ Rule 3,
Section 2C and 2D of these rules.

Distinction b/w Collective Bargaining and dealing w/


Employer
BOTH ARE CONCERNED WITH THE TERMS
AND CONDITIONS OF EMPLOYMENT
To Bargain Collectively a right that may be acquired
by the labor organization after registering itself w/ the
DOLE and after being recognized and certified by the
DOLE as the EBR of the employees
Dealing w/ employer generic description of
interaction b/w Er and Ee concerning grievances,
wages, work hours and other terms and conditions of
employment, even if the employees group is not
registered w/ DOLE.
explains why labor org. does not always have to be a labor
union and why Er-Ee collective interactions are not always
collective bargaining
Labor Management Council
-when there is no labor union, consultation should be made
w/ the labor management council (consultation concerning
policies of management and of the Er.
LABOR ORGANIZATION NOT NECESSARILY A
UNION
Workers may opt something shorn of the rigidity and
formality of a labor union
Labor Management Committee
-medium of the Er-Ee interaction in the
establishment through w/c problems or disputes or
potential dispute may be resolved by consensus,
compromise or other constructive voluntary mode
CLASSIFICATION OF LABOR ORGANIZATIONS
(A) At the National Level
(1) National Union/Federatioon (NU)
-any labor org. w/ at least 10 local/chapters or
affiliates each of w/c must be duly certified or
recognized CB Agents.
(2) Industry Union (IU)
-any group of LLO operating w/in an identified
industry, organized for CB or dealing w/
employees concerning terms and conditions of
employment w/in an industry

2|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

(3) Trade Union Center (TUC)


-refer to group of national unions or unions
organized for the mutual aid and protection of its
members, for assisting such members in CB, or
for participating in the formulation of social and
employment policies, standards or programs.
(4) Alliance
-aggregation of unions existing in one line of
industry or in a conglomerate, a group of
franchises, a geographical area, or an industry
center
(5) Company-Union
-labor org in w/c, in whole or in part is Ercontrolled or Er-dominated

(B) At the Enterprise Level

Union at the enterprise level may be created either


through (1) independent registration; or (2)
chartering

(1) Independent (IndU)


-if created by independent registration
-obtained through their own action
-has legal personality of its own (but may affiliate
w/ a federation/national union)
(2) Chapter
-if created through chartering
-through issuance of a charter by a federation or
national union
RECENT CHANGES BY R.A. 9481
(1) No required number
(2) Tentative legal personality
(3) Specified grounds of Cancellation
(4) PCE proceeds despite petition to cancel union
registration
(5) Only 3 grounds to cancel
(6) Cancellation by Action of the members
(7) Reportorial Requirements
(8) Affiliation w/ some federation
(9) Commingling
(10) Non-disclosure of Identity
(11) Non-disclosure even in unionized company
(12) Employer, as by-stander

WHERE THE
OPERATES

WHERE TO REGISTER
(1) Regional Offices independent labor unions;
chartered local and workers association

PRINCIPALLY

(2) BLR/Regional offices (then to BLR)


federation/national union or workers association
operating in more than one region
REGISTRATION REQUIREMENTS
R.A. 9481 (Fed/NU/IU/TUC/IndU)
(a) Fifty pesos registration fee
(b) Names of officers, their addresses, the principal
address of the labor organization, the minutes of org
meeting and the list of workers who participated in
such meeting
(c) In case the applicant is an Independent Union (IndU)
the name of all its members comprising at least 20%
of all the employees in the bargaining unit where it
seeks to operate;
(d) If the applicant has been in existence for one or more
years, copies of its annual financial reports; and
(e) Four copies of the CBL of the applicant union,
minutes of its adoption or ratification, and the list of
the members who participated in it
Rule III of the Rules Implementing Book V (under
D.O. No. 40-03)

Federation or National Union


1)

a statement indicating the name of the applicant labor


union, its principal address, the name of its officers
and their respective addresses;

2)

the minutes of the organizational meeting(s) and the


list of employees who participated in the said
meeting(s);

3)

the annual financial reports if the applicant union has


been in existence for one or more years, unless it has
not collected any amount from the members, in which
case a statement to this effect shall be included in the
application;

4)

the applicant union's constitution and by-laws,


minutes of its adoption or ratification, and the list of
the members who participated in it. The list of
ratifying members shall be dispensed with where the
constitution and by-laws was ratified or adopted
during the organizational meeting(s). In such a case,
the factual circumstances of the ratification shall be
recorded in the minutes of the organizational
meeting(s);

5)

the resolution of affiliation of at least ten (10)


legitimate labor organizations, whether independent
unions or chartered locals, each of which must be a
duly certified or recognized bargaining agent in the
establishment where it seeks to operate; and

REGISTRATION RATIONALE
For attainment of Legal Personality
EFFECT OF REGISTRATION UNDER THE
CORPORATION LAW
-has only effect of giving to it juridical personality before
regular courts of justice. Such incorporation does not grant
the rights and privileges of legitimate labor organizations

APPLICANT

3|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

6)

the name and addresses of the companies where the


affiliates operate and the list of all the members in
each company involved.

Labor Orgs. Operating w/in an identified industry may also


apply as federation or national union by submitting the same
required documents to the Bureau.

Independent Union
1)

the name of the applicant labor union, its principal


address, the name of its officers and their respective
addresses, approximate number of employees in the
bargaining unit where it seeks to operate, with a
statement that it is not reported as a chartered local of
any federation or national union;

2)

the minutes of the organizational meeting(s) and the


list of employees who participated in the said
meeting(s);

3)

the name of all its members comprising at least 20%


of the employees in the bargaining unit;

4)

the annual financial reports if the applicant has been


in existence for one or more years, unless it has not
collected any amount from the members, in which
case a statement to this effect shall be included in the
application;

5)

the applicant's constitution and by-laws, minutes of its


adoption or ratification, and the list of the members
who participated in it. The list of ratifying members
shall be dispensed with where the constitution and bylaws was ratified or adopted during the organizational
meeting. In such a case, the factual circumstances of
the ratification shall be recorded in the minutes of the
organizational meeting(s).

Workers Association
1)

the name of the applicant association, its principal


address, the name of its officers and their respective
addresses;

2)

the minutes of the organizational meeting(s) and the


list of members who participated therein;

3)

the financial reports of the applicant association if it


has been in existence for one or more years, unless it
has not collected any amount from the members, in
which case a statement to this effect shall be included
in the application;

4)

the applicant's constitution and by-laws to which must


be attached the names of ratifying members, the
minutes of adoption or ratification of the constitution
and by-laws and the date when ratification was made,
unless ratification was done in the organizational
meeting(s), in which case such fact shall be reflected in
the minutes of the organizational meeting(s).

The application of registration of a workers union


operating than one region shall be accompanied (+ the
requirement above) by a resolution of membership of each
member association, duly approved by its board of directors.

Chartered Local

A union created through chartering is called a local, a


chapter, or a chartered local in the employer enterprise where
the union officers and members are employees.
Under D.O. 40-03 a chartered local is defined as labor
organization in the private sector operating at the enterprise
level that acquired legal personality through registration with
the Regional Office in accordance with Rule III, Section 2-E
of these Rules.

Chartered Local; Requirements

A duly-registered federation or national union may directly


create a chartered local by submitting to the Regional Office
two (2) copies of the following:
(a) A charter certificate issued by the federation or
national union indicating the creation or establishment of
the local/chapter;
(b) The names of the local/chapter's officers, their
addresses, and the principal office of the local/chapter;
and
(c) The local/chapter's constitution and by-laws,
provided that where the local/chapter's constitution and
by-laws is the same as that of the federation or national
union, this fact shall be indicated accordingly.

Legal Personality only to file PCE

A charter acquires legal personality on the date it was


issued a charter certificate by its mother federation or NU.
The acquisition of legal personality seems to happen
automatically, but only for purposes of filing a petition for a
certificate election.

Submission of Confirming Documents

The acquired personality, moreover, is tentative because it


needs to be confirmed by submission of additional
requirements otherwise the chapter does not become entitled
to all other rights and privileges of an LLO. The article does
not fix a time limit for submitting those additional
requirements because, presumably, a chapter want to become
a bargaining agent will waste no time to permanently
legitimize its status.
Med-arbiter may dismiss the petition for certification
election if the union is not listed in DOLEs registry of
legitimate unions of if it fails to attach to its petition a duly
issued charter certificate.

A Trade Union Center Cannot Create a Chapter

Whether a trade union center could create a local chapter


(SC decided) The Court said no, and the ruling conforms
with the new Article 234-A under w/c only duly registered
federations or NU may create chapters.

When does a Chapter Become an LLO?

4|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

D.O. No. 9 (1997)


Section3. Acquisition of legal personality by local/chapter. A local/chapter constituted in accordance with Section 1 of
this Rule shall acquire legal personality from the date of filing
of the complete documents enumerated therein. Upon
compliance with all the documentary requirements, the
Regional Office or Bureau shall issue in favor of the
local/chapter a certificate indicating that it is included in the
roster of legitimate labor organizations.

Recognition by BLR not a Ministerial Duty

The shift from the date of submission of documents to date of


issuance of certificate of registration is in line with the courts ruling
in 1997 that registering a union is NOT a ministerial duty.
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 labor
organization should be denied recognition as a legitimate
labor organization. (Progressive Development Corp.-Pizza Hut vs.
Laguesma, et al.)
(Note: Subsequent to the Progressive Development ruling,
R.A. 9481, Article 258-A, no longer allows employer to
oppose petition for CE.)

Union Legitimacy not Subject to Collateral Attack

After stating that the union acquires legal personality on the


date its registration certificate is issued, Section 8, Rule IV of
D.O. 40-03 further states: Such legal personality may be
questioned only through an independent petition and not by
way of collateral; attack in [the] petition for certification
election proceedings under Rule VIII.
COLLECTIVE BARGAINING AGREEMENT
Bargaining Unit refers to a group of employees sharing
mutual interest within given employer unit, comprised of all
or less than all of the entire body of employees in the
employer unit or any specific occupational or geographical
grouping within such employer unit.
The bargaining unit is always a group of employees. It may
be all the supervisors or all the rank-and-file in the company,
but the law does not allow supervisors and rank-and-file to
belong to the same bargaining unit. Or the unit may be an
identifiable smaller group of supervisors or smaller group of
rank-and-file workers.
In every case the composition of the unit must be
appropriate meaning the members share common
concerns of common interest.
The unit may be numerous as thousands of employees or as
few as less than a hundred. The law fixes no minimum or
maximum number. Whatever the number, 20% thereof
should be member of the independent union applying for
registration.
The CBU is different from and bigger than a union. Union
members come from the CBU and there can be several rival
unions within a CBU. A union represents a CBU. The

representative is the union; the group represented is the


CBU. The representative union, once determined, will
represent even the members of other unions as long as they
are part of the CBU. This is why the representative union is
called exclusive bargaining representative (EBR).
CONSTITUTION, BY-LAWS, AND REGULATION
Labor unions have the right to adopt constitution, rules, and
by-laws within the scope of the lawful purposes of the union
and bind their members thereby, provided they are
reasonable, uniform, and not discriminatory, and provided
they are not contrary to public policy or the law of the land.
Constitutes a contract between the members which the
courts will enforce, if not immoral or contrary to public
policy or the law of the land. A rule of a labor union which
violates the staute is, of illegal.
A unions constitution and by-laws govern the relationship
b/w and among the members. As in the interpretation of
contracts, if the terms are clear and leave no doubt as to the
intention of the parties, the literal meaning of the stipulation
shall control.
Johnson and Johnson Labor Union-FFW, et al. vs. Director of Labor
Relations
The union constitution is a covenant between the union and
its members and among the members. There is nothing in
the constitution which leaves the legal interpretation of its
terms unilaterally to the union or its officer or even the
general membership.
The fact that the union-officers impleaded since the
inception of the case acted in a representative capacity on
behalf of the entire unions membership substantially meets
the requirements of due process with respect to the said
union.
SOME REASOS FOR JOINING A UNION
(1) Need to improve conditions
(2) Discontent of wages
(3) Inadequate benefits
(4) No feelings of justice
(5) Insecurity
(6) Poor supervision
(7) Lack of communication

Limitation to by-laws

A statute providing that labor unions may devise and adopt


ways and means to make their rules, regulations, by-laws and
resolutions effective does not sanction rules, regulations, bylaws or resolutions to commit wrong, nor does it authorize
interference with the constitutional right of others.
Constitution
and
by-laws
democratically ratified.

Amendments

should

be

A unions constitution and by-laws may be amended,


modified and extended by the duly constituted union

5|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

authorities under the laws of the state. In the absence of


other requirements, and subject to the vested rights, a union
constitution may be made, changed, unmade, or superseded
by a majority vote of the members or its subsequent
constituent body.
PROVISIONS COMMON TO THE REGISTRATION
OF LABOR ORGANIZATIONS AND WORKERS
ASSOCIATION
Attestation Fee, Copies of Documents
-application for org of labor unions and workers assoc.,
notice for change of name, merger, consolidation and
affiliation including all the accompanying documents, shall be
certified under oath by its Secretary or Treasurer, as the case
may be, and attested to by its President.
Submitted to the Regional Office or the Bureau
Action on the Application/Notices
-Regional offices of the BLR shall act on all application for
registration or notice of change of name, affiliation, merger
and consolidation WITHIN 10 DAYS FROM RECEIPT
either by:
(a) Approving the application and issuing the certificate
of registration/acknowledging the notice/report;
(b) Denying the application/notice for failure of the
applicant to comply with the requirements for
registration/notice.
Denial of Application/Return of Notice
When the documents for application are incomplete or do
not contain the required certification and attestation, the
Regional Office of the BLR shall w/in 5days from receipt of
the application of notice, notify the applicant/labor org
concerned in writing of the necessary requirement and
complete the same w/in 30days from receipt of notice.
failure of compliance = deny the application
The order of the regional office of BLR denying the
application for registration/returning the notice of
change of name, affiliation, meger, or consolidation
shall be in writing, stating in clear terms the reason
for the denial or return.
Appeal
Denial of Regional Office appeal to BLR CA
Denial of BLR appeal to Secretary of DOLE CA
The memorandum of appeal shall be filed w/ the
regional office of the BLR that issued the
denial/return of notice.
The memorandum of appeal together w/ the
complete
records
of
the
application
registration/notice of change of name, affiliation,
merger or consolidation shall be transmitted by the
Regional Office to the BLR, or by the BLR to the
office of the Secretary w/in 24hrs from receipt of
the memo of appeal.
BLR or Secretary shall decide the appeal w/in 20days
from receipt of the records of the case.

AFFILIATION
Affiliate an independently registered union that enters into
an agreement w/ a federation or a national union.
-also refers to a chartered local w/c applies for and
is granted an independent registration but does not
disaffiliate from its member federation or national
union.

Why enter/join federation:

(1) To secure support or assistance particularly during


the formative stage of the unionization
(2) To utilize expertise in preparing and pursuing
bargaining proposals
(3) To marshal mind and manpower in the source of a
group action such as a strike

Relationship as that of Agency


o Charter/Local Union Principal
o Federation/NU Agent

Report Affiliation: Requirements

Report shall be filed w/ the RO that issued its certificate of


registration
The report of affiliation shall be accompanied by the ff.
documents:
(a) Resolution of the labor unions board of directors
approving the certification;
(b) Minutes of general memberships meeting approving
the affiliation;
(c) Total numbers of members compromising the labor
union and the names of the members who approved
the affiliation;
(d) The certification issued by the federation in favor of
the independently registered labor union; and
(e) Written notice to the employer concerned if the
affiliating union is the incumbent bargaining agent.
DISAFFILIATION
A local union, being a separate and voluntary
association, is free to serve the interest of all its
members including the freedom to disaffiliate when
circumstances
warrant
(consistent
w/
the
constitutional grant of freedom of association)
The local unions remain the basic unit of association,
free to serve their own interests SUBJECT TO THE
RESTRAINT IMPOSED BY THE CBL OF THE
NATIONAL FEDERATIONS and free also to
renounce the affiliation UPON THE TERMS LAID
DOWN IN THE AGREEMENT w/c brought such
affiliation to existence.
To disaffiliate is a right, but to observe the terms
of affiliation is an obligation

Disaffiliation is NOT an act of disloyalty, w/c is a


sufficient ground for dismissal from employment

When to Disaffiliate

6|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

Generally A labor union may disaffiliate from the mother


union to form a local or independent union only during the
60-day freedom period immediately preceeding the expiration
of the CBA.

But even before the onset of the freedom period (and


despite the closed-shop provision in the CBA between
the mother union and mgmt.) disaffiliation may still
be carried out, but such disaffiliation must be effected
by a majority of the members in the Bargaining unit.
OPINION: True only if the contract of affiliation does
not specify the period for possible disaffiliation. If it does,
the stipulation MUST BE OBSERVED.

A federation, NU or workers association may revoke the


charter issued to a local/chapter or branch by serving on the
latter a verified notice of revocation, copy furnished the
bureau, on the ground of disloyalty or such other grounds
may be specified in the CBL of the federation, NU or
workers association. The revocation shall divest the
local/chapter of its legal personality upon receipt of the
notice by the Bureau, unless in the meantime the
local/chapter has acquired independent registration in
accordance with the Rules.

Effect of Cancellation of Registration of Federation or


NU on Locals/Chapters

(1) Divest its local chapter of their status as LLO


(2) Unless the locals/chapters are covered by a duly
registered CBA, the locals/chapters shall be allowed
to register as independent unions, failing which shall
lose their legitimate status upon the expiration of
the CBA.

Disaffiliation must b by Majority Decision

-has to be decided by the entire membership through secret


balloting

A member or any number of members may disaffiliate from


their mother union during the freedom period. But
disaffiliating the union itself from its mother union must be
supported by the majority of the members. If done by
minority, even during the freedom period may constitute
disloyalty.

Disaffiliation: Effect on Legal Status

If not independently registered: not entitled to the rights and


privileges granted to a LLO.
-cannot file a petition for CE

Disaffiliation: Effect on Union Dues

The federation is entitled to receive the dues from the


employer only as long as the local union is affiliated
w/ the federation. Without said affiliation, the
employer has no link to the mother union. The
obligation of an employer to pay union dues is
coterminous w/ the his affiliation of membership.

A local which has validly withdrawn from its affiliation w/


the present association and w/c continues to represent the
employees of an employer is entitled to check-off dues
under a collective bargaining contract.

Disaffiliation: Effect on
Substitutionary Doctrine

existing

CBA;

the

CBA continues to bind the members of the new of


disaffiliated and independent union up to the CBAs
expiration date
Subtitutionary Doctrine provides that the employee cannot
revoke the validly executed collective bargaining contract w/
their employer by the simple expedient of changing their
bargaining agent.

The employees, thru their new bargaining agent,


cannot renege on the collective bargaining contract,
except to negotiate w/ management for the
shortening thereof.

REVOCATION OF CHARTER

MERGER OR CONSOLIDATION
New Concept in the PH
Merger (absorption) process where a labor organization
absords another, resulting in the cessation of the absorbed
labor organizations existence and the continued existence of
the absorbing labor organization.
Effect: transfer to the absorbing organization all the rights,
interest and obligations of the absorbed organization
Consolidation (amalgamation) refers to the creation or
formation of a new union arising from the unification of two
or more unions.
Effect: the newly created labor org acquires all the rights
interests and obligations of the consolidating labor
aorganizations.

Why do unions merge?


(1) to gain access to greater resources and expertise
(2) to eliminate interorganizational conflicts
(3) to maintain job security and institutional survival

Experience, however, confirms that union


merger/consolidation does not easily happen.
(Political, no less than the economic considerations,
are central)

Notice of Merger/Consolidation of Labor Organization;


where to file

Independent Labor Union, chartered locals and workers association


Regional Office that issued the certificate of
registration/certificate of creation of chartered local of either
the merging or consolidating labor org
Federation/NU filed and recorded by the Bureau

Requirements of Notice of Merger/Consolidation

(1) The minutes of merger/consolidation convention


or general membership meeting(s) of all the
merging/consolidating labor organizations, with the

7|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

list of their respective members who approved the


same.
(2) The amended CBL and minutes of its ratification,
unless
ratification
transpired
in
the
merger/consolidation convention, which fact shall
be indicated accordingly

Certificate of Registration

issued to the merged labor organizations shall bear the


registration number of one of the merging labor
organizations as agreed upon by the parties
Certificate of registration shall indicate the ff:
(a) The new name of the merged/consolidated labor
organization
(b) The fact that it is merger/consolidation of two or
more labor organizations
(c) The name of the labor organizations that were
merged or consolidated
(d) Its office or business address
(e) The date when each of the merging/consolidating
labor org acquired legitimate personality as stated in
their respective original certificate of registration
CHANGE OF NAME
Notice of Change of Name of a Registered Labor Org
shall be filed with the Bureau or Regional Office where the
concerned labor organizations certificate of registration or
certificate of creation of a chartered local was issued.
shall be accompanied by the proof of approval or
ratification of change of name; and the amended CBL

Effect of Change of Name

The change of name of a labor org shall not affect its legal
personality. All the rights and obligations of a labor org
under its old name shall continue to be exercised by the labor
org under its new name.
CANCELLATION OF REGISTRATION; GROUNDS
Cancellation the governments act that divests the
organization its status. It thereby reverts to its character prior
to the registration. Although it does not cease to exist or
become an unlawful organization, its juridical personality as
well as its statutory rights and privileges is suspended.
Grounds:
(1) Misrepresentation about the union CBL
(2) Misrepresentation about the election
(3) Desire of the union (to dissolve) themselves; 4
requisites
(a) The members desire to dissolve or cancel the
registration of their union should have been voted
upon through secret balloting, applying the rule in
Art. 214(d)
(b) The balloting should take place in ameeting duly
called for the purpose of deciding whether or not to
dissolve the union
(c) The vote to dissolve should represent 2/3
affirmative vote of the general membership, not just
of the quorum.

(d) The members resolution should be followed by an


application for cancellation passed and submitted
by the unions governing board, which application
must be attested to by the president
(Note: 4th requisite, however, raises the question Can the
decision of the general membership be defeated by lack of
action by the board? Is there no time limit for the board to
submit the application to cancel the registration?)

Invalid Grounds (some)

(1) Having held an illegal strike


(2) Nonrenewal of registration/permit will not cause
dismissal of the case by the union, provided that
when it filed the petition it had juridical personality
and the court had acquired jurisdiction over the
case.

Cabo and Other Grounds Deleted

Cabo refers to a person or group of persons or to a labor


group which, in the guise of a labor org, supplies workers to
an employer, with or without monetary or other
consideration whether in the capacity of an agent of the
employer or as an ostensible independent contractor.
Also deleted sweetheart contract or a CBA which provides
for terms and conditions of employment below the minimum
standards established by law
Also abandoned by Art. 239 as amended is asking for or
accepting attorneys fees or negotiation fees from the
employer (but, this cause of union cancellation still exists
because the Labor Code itself in Art. 249 prohibits it as a
ULP act)

Administrative
requirements

Cancellation;

the

reportorial

It shall be the duty of every legitimate labor unions and


workers associations to submit to the Regional Office or the
Bureau which issued its certificate of registration or
certificate of creation of chartered local, as the case may be,
two (2) copies of each of the following documents:
(a) any amendment to its constitution and by-laws and
the minutes of adoption or ratification of such
amendments, within thirty (30) days from its adoption
or ratification;
(b) annual financial reports within thirty (30) days after
the close of each fiscal year or calendar year;
(c) updated list of newly-elected officers, together with
the appointive officers or agents who are entrusted
with the handling of funds, within thirty (30) days
after each regular or special election of officers, or
from the occurrence of any change in the officers of
agents of the labor organization or workers
association;
(d) updated list of individual members of chartered locals,
independent unions and workers' associations within
thirty (30) days after the close of each fiscal year; and
(e) updated list of its chartered locals and affiliates or
member
organizations,
collective
bargaining
agreements executed and their effectivity period, in

8|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

the case of federations or national unions, within


thirty (30) days after the close of each fiscal year, as
well as the updated list of their authorized
representatives, agents or signatories in the different
regions of the country.
The fiscal year of labor org shall coincide with the calendar
year, unless a different period is prescribed in the CBL.

Failure of the labor org to submit the reports


mentioned above for 5 consecutive years authorizes
the bureau to institute cancellation proceedings
upon its own initiative or upon complaint by any
party-in-interest.

WHO
FILES
FOR
PETITION
FOR
CANCELLATION
Any party-in-interest may commence a petition for
cancellation of a unions registration, except in actions
involving violations of Art. 241 which can only be
commenced by members of the labor org concerned.

NATURE OF RELATIONSHIP B/W UNION AND


ITS MEMBERS
(1) The degree of dependence of the individual on the
union organization;
(2) The comprehensive power vested in the union with
respect to the individual

Duty of the Court to protect Laborers from Unjust


Exploitation by Oppressive Employers and Union
Leaders
Court has stricken down unjust exploitation of labourers by
oppressive employers, so it will strike down their unfair
treatment by their own unworthy leaders. Fair dealings is
equally demanded of unions as well as of employers in their
dealings with employees.
RIGHTS OF THE UNION MEMBERS
(1) Political right the members right to vote and be
voted for, subject to lawful provisions on
qualifications and disqualifications
(2) Deliberative right the members right to participate
in deliberations on major policy questions and
decide them by secret ballot.
(3) Rights over money matters the members right against
excessive fees; rights against unauthorized collection
of contributions or unauthorized disbursements;
etc.
(4) Rights to information the members right to be
informed about the organizations CBL and CBA
and about labor laws.

But such petition, as already explained, should be a


SEPARATE ACTION; it cannot be entertained in the
petition for certification election filed by the union.
WHERE TO FILE THE PETITION
Upon the filing of an independent complaint or petition for
cancellation:
Regional Director may cancel the registration of any
legitimate labor union, chartered local and workers
association
-decision by the RD are appealable to the BLR, not
appealable to the DOLE Secretay but appealable to
the CA (by certiorari)
Bureau Director in case of federations, national or
industry unions and trade union centers
-decision by the BD appealable to the DOLE
Secretary then to CA by certiorari
Article 240. Equity of the incumbent. All existing
federations and national unions which meet the
qualifications of a legitimate labor organization and
none of the grounds for cancellation shall continue to
maintain their existing affiliates regardless of the nature
of the industry and the location of the affiliates.
CHAPTER II
RIGHTS AND CONDITION OF MEMBERSHIP
DEMOCRATIZATION OF UNIONS
The governing philosophy is ownership of private property,
not popular sovereignty, and the traditional norm is superiorsubordinate relationship, not egalitarianism. The workers,
generally do not and cannot select their superiors, and neither
do they decide policy questions or control the making of
rules.
Realizing that there is strength in unity, they unionize to
match somehow the power of their corporate superiors.

Eligibility of Membership

Membership depends on the unions CBL inasmuch as


Article 249 gives a labor org the right to prescribe its own
rules for acquisition or retention of membership.
Under Art 277, an employee is already qualified for union
membership starting on his first day of service.

Employees membership in a union does not


necessary mean coverage by the CBA.
The CBA defines its coverage as agreed by the
parties. Qualifying for union membership, therefore,
does not necessarily mean inclusion in the coverage of
the CBA.
Vice versa, membership in the CBA does not
automatically membership in the union
Members of certain religious sects do not join unions
although they are members of a bargaining unit
CBU Members vote for ratification of CBA
Only Union Members vote for their union official

ELECTION OF UNION OFFICER


Union officers are elected directly by the members in secret
balloting. The election takes place at intervals of 5 years w/
the term of office of the union officer including those of a
NU, federation or TUC.
What positions to fill up, where, and how the election
should be done are matters left by law to the unions
CBL.

9|M S AC N SP [ La b or R ela ti on s Az u ce na Bo ok ]

In the absence thereof, IRR of Book V shall apply.


IRR requires the incumbent president to create an
election committee w/in 60days before expiration of
the incumbent officers term. The Rules specify the
composition as well as the powers and duties of the
election committee, but its rules and actions cannot
contradict the Labor Code mandates.
If the officers with expired term do not call an
election, the remedy, according to Rule XII, is for at
least 30% of the members to file a petition with the
DOLE Regional Office.

The members frustration over the performance of the union


officers as well as their fear of fraudulent election to be
held under the latters supervision does not justify disregard
of the unions CBL (UST Faculty Union, et al. vs. Bitonio, Jr. et
al.).
The ratification of the new CBA executed b/w the
petitioners and the UST management did not validate the
void October 4, 1996 election. Ratified were the terms of the
new CBA, not the issue of union leadership matter that
should be decided only by union members in the proper
forum at the proper time and after observance of proper
procedure.

Eligibility of Voters

Only members of the union can take part in the election of


union officers
A labor org may prescribe reasonable rules and regulations
with respect to voting eligibility. Thus, it may, in appropriate
circumstances, defer eligibility to vote by requiring a
reasonable period of prior membership, such as 6 months or
a year.
A labor organization may condition the exercise of the right
to vote on the payment of dues, since paying dues is a basic
obligation of membership but is subject to 2 qualifications:
(1) Any rule demanding dues-delinquent members the
right to vote must be applied uniformly;
(2) Members must be afforded a reasonable
opportunity to pay dues, including a grace period
during w/c dues may be paid w/o any loss of rights

Union Officer Must be an Employee

One should be employed in the company to qualify as officer


of a union in that company. Although subsequent
department orders deleted this provision, the membership
qualification remains because it is required in the Code itself,
in Art 241 (c), 2nd sentence.

Disqualification of Union Officers

No person who has been convicted of a crime involving


moral turpitude shall be eligible for election as a union officer
or for appointment to any position in the union.
A crime involving moral turpitude is one characterized by
an act of baseness, vileness, or depravity in the private or
social duties w/c a man owes his fellowmen, or to society in
general, contrary to accepted and customary rule of right and

duty between man and man, or conduct contrary to justice,


honesty, modesty, or good morals.
Disqualification to membership in a union involving
subversive activity also applies to disqualification of
candidates in union election, in other words, one who cannot
even be a member cannot be a candidate for an office.

Union Election Protest: Proclamation of Winners

treated as intra-interunion dispute (Rule XI of D.O. 40-03


shall apply)
ACTION AGAINST UNION OFFICERS
The remedy against erring union officers is not referendum
but union expulsion. If the union officers were guilty of the
alleged acts imputed against them, the public respondent
[DOLE Secretary], pursuant to Art 242 of the New Labor
Code and in the light Our ruling in Duyag v. Inciong should
have meted out the appropriate penalty on them, i.e. to expel
them from the Union, as prayed for, and not call for a
referendum to decide the issue.
DUE PROCESS IN IMPEACHMENT
Litton Mill Employment Association-Kapatiran v. Ferrer-Calleja
As to the impeachment of a union officer, Section 2, Article
XV of the petitioner unions CBL provides the procedures to
be followed, to wit:
(1) Impeachment should be initiated by petition by at
least 30% of all bona fide members of the union,
and addressed to the Chairman of the Executive
Board;
(2) A general membership meeting shall be convened
by the Board Chairman to consider the
impeachment of an officer;
(3) Before any impeachment vote is finally taken, the
union officer againsy whom the impeachment
charges have been filed shall be given ample
opportunity to defend himself; and
(4) A majority of all the members of the union shall be
required to impeach or recall union officers.
Nevertheless despite the practical difficulties in complying
with the said procedure, petitioners should have shown
compliance with said impeachment procedure, by giving
Umali ample opportunity to defend himself, as contrasted to
an outright impeachment, right after he failed to appear
before the first and only investigation scheduled on August
25, 1986 in the Litton Canteen.
EXPULSION OF MEMBER
The court explicitly ruled that a member of a labor union
may be expelled only for a valid cause by following the
procedure outlined in the CBL of the union.
Ferrer, et al. v. NLRC
The union has a specific provision for the permanent or
temporary expulsion of its erring members in its CBL.
No hearing was ever conducted by the SAMAHAN to look
into petitioners explanation of their moves to oust the union
leadership under Capitle, or their subsequent affiliation with
the FEDLU. The SAMAHAN should have observed its own
CBL by giving petitioners an opportunity to air their side and
explain their moves.

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RELIEF WITHIN THE UNION


GR Generally, redress first must be sought w/in the union
itself in accordance with its CBL.
XPN Where the exhaustion of remedies within the union
itself would practically amount to denial of justice, it would
not be insisted upon as a condition to the right to invoke the
aid of a court.
CONSEQUENCES OF VIOLATION OF RIGHTS
If the condition of membership, or the right of the members,
are violated, the violation may result in the cancellation of the
union registration or the expulsion of the capable officers.
Under D.O. 40-03, any complaint or petition with allegation
of mishandling, appropriation or non-accounting of funds in
violation of Art 241 shall be treated as an intra-union dispute.
It shall be heard and resolved by the Med-Arbiter.

Exception: When 30% Not Required

GR 30% of the members to report a violation of the labor


organization procedures
XPN When such violation directly affects only one or two
members, then only one or two members would be enough
to report such violation.
(Note: In view of Art 238 and 239 that limit to only 3 the
grounds of cancellation of union registration and violation of
Art 241 is not one of the three, the 30% requirement is now
of doubtful relevance to the particular issue of union
cancellation.)
VISTORIAL POWER
Art 274 authorizes the Secretary of Labor and Employment
or his duly authorized representative to inquire into the
financial activities of any labor organization on the basis of a
complaint under oath, supported by 20% of the membership
in order to determine compliance or noncompliance with the
laws and to aid in the prosecution of any violation thereof.
CHECK-OFFS AND ASSESSMENT
Check-off is a method of deducting from an employees
pay at prescribed period, the amount due the union fees,
fines or assessments. The right of a union to collect union
dues is recognized under Art 277(a).
Under Art 113, one of the lawful deductions from the
employees wage is for union dues, in cases where the right
of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual by
the individual worker concerned.
Amount of union dues should be reasonable.

Assessments, like dues, may also be Checked-Off

Dues are defined as payments to meet the unions general


and current obligations. The payment must be regular,
periodic, and uniform.
Assessments payments used for a special purpose,
especially if required only for a limited time

Under Art 241, other than for mandatory activities under


the Code, no special assessments, attorneys fees, negotiation
fees, or any other extraordinary fees may be checked off
from any amount due an employee w/o individual written
authorization duly signed by the employee. The
authorization should specifically state the amount,
purpose, and beneficiary of the deduction.
Attorneys fees may not be deducted or checked off from any
amount due to an employee without his written consent,
except for mandatory activities under the Code.
Mandatory Activity judicial process of settling dispute laid
down by the law. An amicable settlement entered into by the
management and the union is not a mandatory activity under
the Code. Moreover, the law explicitly requires the individual
written authorization of each employee concerned, to make
the deduction of attorneys fees valid.
Pulacol v. Pura Ferrer-Calleja, et al.
(1) Requirements The failure of the Union to comply
strictly with the requirements set out by the law
invalidates the questioned special assessment.
Substantial compliance is not enough in view of the
fact that the special assessment will diminish the
compensation of the union members. Their express
consent is required, and this consent must be obtained
in accordance with the steps outlined by law, which
must be followed to the letter. No shortcuts allowed.
(2) Effects of withdrawal of authorization Paragraph
(o), on the hand, requires an individual written
authorization duly signed by every employee in order
that a special assessment may be validly checked-off.
The withdrawal of authorization is equivalent to no
authorization at all.
(3) Forms of disauthorizations The union points out
that disauthorizations are not valid being collective in
form no merit. There is nothing in law which
requires that the disauthorization must be in
individual form.
(4) Purpose of the special assessment only the
collection of a special fund for labor and education
research is mandated. The two other purposes,
namely, the purchase of vehicles and other items for
the benefits of the union officers and the general
membership,a nd the payment of services rendered by
union officers, consultants, and others should not be
supported by the regular union dues, there being no
showing that the latter are not sufficient to cover the
same.

Three Requisites to Collect Special Assessment

(1) Authorization by a written resolution of the


majority of all the members at the general
membership meeting duly called for the purpose;
(2) Secretarys record of the minutes of the meeting
(3) Individual written authorization for check-off duly
signed by the employee concenred

Art 241 (n and o): Authorization should proceed from


free consent

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The authorization, embodied in the ratification of the


employer-union memo of agreement, is a vitiated
authorization because it could be assumed that the union
members felt it difficult to turn down the substantial and
lucrative award of Php 42million economic package. They
had no free choice: they had to sign the ratification w/c also
embodies the deduction of the union dues and special
assessments. Such situation militated against the legitimacy or
genuine consent that should characterize the authorization.

Check-off of Agency Fee

Agency fee an amount, equivalent to union dues, w/c


non-union member pays to the union because he benefits
from the CBA negotiated by the union.
Another allowable deduction from the employees wage

Illegal Check-off Ground for Cancellation

Violation of the law on check-off of special assessments


was one of the grounds for cancellation of union registration
On the part of employer, illegal check-off may give rise to a
charge of illegal decution, in violation of Article 113.

Employers Liability in Check-off Arrangement

No provision of law makes the employer directly liable for


the payment to the labor organization of union dues and
assessments that the former fails to deduct from its
employees salaries and wages pursuant to a check-off
stipulation.
The employers failure to make the requisite deductions may
constitute violation of a contractual commitment for which it
may incur liability for ULP. But the employer, does not, by
that omission, incur liability to the union for the aggregate of
dues or assessments uncollected from the union members, or
agency fees for non-union employees.
Check-offs in truth impose an extra burden to the employer
in the form of additional administrative and bookkeeping
costs. The only obligation of the employer under a check-off
is to effect the deductions and remit the collections to the
union.

Jurisdiction over Check-off disputes

Regional Director of DOLE, not the labor arbiter, has


jurisdiction over check-off disputes.
RIGHTS OF LEGITIMATE LABOR
ORGANIZATION
1. ORGANIZING IN GENERAL
The rights to organize and to bargain, in a general
sense, are given not exclusively to employees. Even workers
who are not employees of any particular employer may form
their organizations to protect their interests.
Under Art. 243 of this Code, the right to organize
refers also to forming, joining or assisting a labor
organization. Connected to Art. 246 this right carries with it
the right to engage in group action, provided it is peaceful, to
support the organizations objective which is not necessarily
bargaining but, simply, to aid and protect its members. But

this kind of group action must be differentiated from strike


which, because it is work stoppage, must observe certain
regulation; otherwise, the strike may be declared illegal and its
leaders may be thrown out of their jobs.
1.1 Coverage of the Right to Organize; Exceptions
The right to form, join or assist a labor organization
is granted to all kinds of employees of all kinds of
employerspublic or private, profit or non-profit,
commercial or religious. Their usual form of organization is a
union and the usual purpose is collective bargaining with
their employers.
But the seemingly all-inclusive coverage of all
persons in Article 243 actually admits exceptions. Under
Art. 245, for instance, managerial employees, regardless of
the kind of organization where they are employed, may not
join, assist or form any labor organization, meaning a labor
union.
Accordingly, managerial employees cannot, in the
absence of an agreement to the contrary, be allowed to share
in the concessions obtained by the labor union through
collective negotiation. Otherwise, they would be exposed to
the temptation of colluding with the union during the
negotiations to the detriment of the employer. However,
there is nothing to prevent the employer from granting
benefits to managerial employees equal to or higher than
those afforded to union members.
Supervisors are allowed to organize, but they cannot
for, join or assist a rank-and-file union.
2. RIGHT TO ORGANIZE CANNOT BE
BARGAINED AWAY
Although we have upheld the validity of the CBA as
the law among the parties, its provisions cannot override
what is expressly provided by law that only managerial
employees are ineligible to join, assist or form any labor
organization. Therefore, regardless of the challenged
employees' designations, whether they are employed as
Supervisors or in the confidential payrolls, if the nature of
their job does not fall under the definition of "managerial" as
defined in the Labor Code, they are eligible to be members
of the bargaining unit and to vote in the certification election.
Their right to self-organization must be upheld in the
absence of an express provision of law to the contrary. It
cannot be curtailed by a collective bargaining agreement.
3. EMPLOYEES OF NONPROFIT INSTITUTIONS
Under Article 243 of the Labor Code, the rank-and-file
employees of non-profit medical institutions are permitted to
form, organize or join labor unions of their choice for
purposes of collective bargaining. If the union has complied
with the requisites provided by law for calling a certification
election, it is incumbent upon the DOLE Regional Director
to conduct such certification election to ascertain the
bargaining representative of the hospital employees.
4. EXCEPTION: EMPLOYEE-MEMBERS OF A
COOPERATIVE
A cooperative is by its nature different from an
ordinary business concern being run either, by persons,
partnerships or corporations. Its owners and/or members are

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the ones who run and operate the business while the others
are its employees. As above stated, irrespective of the name
of shares owned by its members they are entitled to cast one
vote each in deciding upon the affair of the cooperative.
Their share capital earn limited interests. They enjoy special
privileges as exemption from income tax and sales taxes,
preferential right to supply their products to State agencies
and even exemption from minimum wage laws.
An employee of such a cooperative who is a
member and co-owner thereof cannot invoke the right to
collective bargaining for certainly an owner cannot bargain
with himself or his co-owners.
However, in so far as it involves cooperatives with
employees who are not members or co-owners thereof,
certainly such employees are entitled to exercise the rights of
all workers to organization, collective bargaining,
negotiations and others as are enshrined in the Constitution
and existing laws of the country.
In another case, the court clarified that it is the fact of
ownership of the cooperative, and not involvement in the
management thereof, which disqualifies a member from
joining any labor organization within the cooperative. Thus,
irrespective of the degree of their participation in the actual
management of the cooperative, all members thereof cannot
form, assist or join a labor organization for the purpose of
collective bargaining.
But member-employees of a cooperative may
withdraw as members of the cooperative in order to join a
labor union. Membership in a cooperative is voluntary;
inherent in it is the right not to join.
4.1 Exception to Exception: Association, not Union
While the members of a cooperative who are also
its employees cannot unionize for bargaining purposes, the
law does not prohibit them from forming an association for
their mutual aid and protection as employees.
D.O. No. 40-03 allows and defines a workers
association as one which is organized for the mutual aid and
protection of its members or for any legitimate purpose other
than collective bargaining.
5. EXCEPTION: INTERNATIONAL
ORGANIZATIONS
A certification election cannot be conducted in an
international organization which the Philippine Government
has granted immunity from local jurisdiction.
The grant of such immunity is a political question whose
resolution by the executive branch of government is
conclusive upon the courts
(1) International Organization and Specialized Agencies
The term "international organization" is generally used to
describe an organization set up by agreement between two or
more states. Under contemporary international law, such
organizations are endowed with some degree of international
legal personality such that they are capable of exercising
specific rights, duties and powers. They are organized mainly
as a means for conducting general international business in
which the member states have an interest. The United
Nations, for instance, is an international organization

dedicated to the propagation of world peace. "Specialized


agencies" are international organizations having functions in
particular fields. The term appears in Articles 57 and 63 of
the Charter of the United Nations.
(2) Principles Underlying the Grant of International Immunities to
International OrganizationsThere are basically three
propositions underlying the grant of international immunities
to international organizations. These principles, contained in
the ILO Memorandum are stated thus:
(1) international institutions should have a status which
protects them against control or interference by any one
government in the performance of functions for the
effective discharge of which they are responsible to
democratically constituted international bodies in which
all the nations concerned are represented;
(2) no country should derive any national financial
advantage by levying fiscal charges on common
international funds; and
(3) the international organization should, as a
collectivity of States members, be accorded the
facilities for the conduct of its official business
customarily extended to each other by its individual
member States.
The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with
the status, dignity or privileges of individuals, but with the
elements of functional independence necessary to free
international institutions from national control and to enable
them to discharge their responsibilities impartially on behalf
of all their members. The raison d'etre for these immunities
is the assurance of unimpeded performance of their
functions by the agencies concerned.
(3) Labors Basic Rights RemainThe immunity of
International Catholic Migration Commission (ICMC) and
the International Rice Research Institution (IRRI) from local
jurisdiction by no means deprives labor of its basic rights,
which are guaranteed by Article II, Section 18, Article III,
Section 8, and Article XIII, Section 3, of the 1987
Constitution; and implemented by Articles 243 and 246 of
the Labor Code.
(4) Certification Election Barred by ImmunityThe immunity
granted being "from every form of legal process except in so
far as in any particular case they have expressly waived their
immunity," it is inaccurate to state that a certification election
is beyond the scope of that immunity for the reason that it is
not a suit against ICMC. A certification election cannot be
viewed as an independent or isolated process. It could trigger
off a series of events in the collective bargaining process
together with related incidents and/or concerted activities,
which could inevitably involve ICMC in the "legal process,"
which includes any penal, civil and administrative
proceedings. The eventuality of Court litigation is neither
remote and from which international organizations are
precisely shielded to safeguard them from the disruption of
their functions. Clauses on jurisdictional immunity are said to

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be standard provisions in the constitutions of international


Organizations. The immunity covers the organization
concerned, its property and its assets...
5.1 Waiver of Immunity
Waiver of its immunity is discretionary to IRRI. Without
such express waiver the NLRC or its labor arbiters have no
jurisdiction over IRRI even in cases of alleged illegal
dismissal of any of its employees.
5.2 Foreign Workers
Foreigners, whether natural or juridical, as well as foreign
corporations are strictly prohibited from engaging directly or
indirectly in all forms of trade union activities. However,
aliens working in the country with valid work permits may
exercise the right to self-organization if they are nationals of
a country that grants the same or similar rights to Filipino
workers. (Art. 269)
6.
EXCEPTION:
RELIGIOUS
IGLESIA NI CRISTO MEMBERS

OBJECTORS;

Under the Industrial Peace Act (1953) which


preceded the Labor Code (and even under the present Code)
the employer and the union could enter into a closed shop
agreement which would compel employees to become union
workers as a condition of continued employment. But in
1961 R.A. No. 3350 was passed to exempt from such
compulsory union membership the followers of any religious
sect (such as the Iglesia ni Cristo) whose teachings forbid
membership in labor unions. The constitutionality of R.A.
No. 3350 was upheld by the Supreme Court in Victoriano v.
Elizalde.
It may not be amiss to point out here that the free
exercise of religious profession or belief is superior to
contract rights. In case of conflict, the latter must, therefore,
yield to the former.
6.1 Does the Exemption Still Stand?
6.2 Iglesia Ni Cristo Members May Form and Join Own Union
RIGHTS OF EMPLOYEES IN PUBLIC SERVICE
________
Article 244. Right of employees in the public service.
Employees of government corporations established under
the Corporation Code shall have the right to organize and to
bargain collectively with their respective employers. All other
employees in the civil service shall have the right to form
associations for purposes not contrary to law. (As amended
by Executive Order No. 111, December 24, 1986).
________
1. GOVERNMENT EMPLOYEES RIGHT TO
ORGANIZE; LIMITATIONS
The highest law of the land guarantees to government
employees the right to organize and to negotiate, but not the
right to strike.
1.1 Limited Purpose
The extent of the government employees' right of
self-organization differs significantly from that of employees
in the private sector. The latter's right of self-organization,

i.e., "to form, join or assist labor organizations for purposes


of collective bargaining," admittedly includes the right to deal
and negotiate with their respective employers in order to fix
the terms and conditions of employment and also, to engage
in concerted activities for the attainment of their objectives,
such as strikes, picketing, boycotts. But the right of
government employees to "form, join or assist employees
organizations of their own choosing" under Executive Order
No. 180 is not regarded as existing or available for "purposes
of collective bargaining," but simply "for the furtherance and
protection of their interests."
In other words, the right of Government employees
to deal and negotiate with their respective employers is not
quite as extensive as that of private employees. Excluded
from negotiation by government employees are the "terms
and conditions of employment...that are fixed by law," it
being only those terms and conditions not otherwise fixed by
law that "may be subject of negotiation between the duly
recognized employees' organizations and appropriate
government authorities."
Declared to be 'not negotiable' are matters "that
require appropriation of funds;" e.g., increase in salary
emoluments and other allowances, car plan, special
hospitalization, medical and dental services, increase in
retirement benefits (Sec. 3, Rule VIII), and those "that
involve the exercise of management prerogatives;" e.g.,
appointment, promotion, assignment/detail, penalties as a
result of disciplinary actions, etc. (Sec. 4, Id.) Considered
negotiable are such matters as schedule of vacation and other
leaves, work assignment of pregnant women; recreational,
social, athletic, and cultural activities and facilities, etc. (Sec.
2, Id.).
1.2 No Signing Bonus
Employees and officers of SSS are not entitled to the signing
bonus provided for in the collective negotiation agreement
because the process of collective negotiations in the public
sector does not encompass terms and conditions of
employment requiring the appropriation of public funds. The
Court reminds the Social Security Commission officials that
the SSS fund is not their money
1.3 Excepted Employees
Excepted from the application of Executive Order
180, however, are members of the Armed Forces of the
Philippines, including police officers, policemen, firemen,
and jail guards (Sec. 4). For reasons of security and safety,
they are not allowed to unionize.
A high level employee is one whose functions are
normally considered policy determining, managerial or one
whose duties are highly confidential in nature. A managerial
function refers to the exercise of powers such as: (1) to
effectively recommend such managerial actions; (2) to
formulate or execute management policies and decisions; or
(3) to hire, transfer, lay-off, recall, dismiss, assign or discipline
employees.
1.3a Professors as rank-and-file employees
Professors at the University of the Philippines who are not
exercising managerial or highly confidential functions are

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rank-and-file employees and may unionize separately from


the non-academic personnel.
In short, the professors, associate professors and assistant
professors of the University of the Philippines are rank-andfile employees. The full professors, associate professors,
assistant professors, instructors and the research, extension
and professional staff may, if so minded, organize themselves
into a separate collective bargaining unit.
1.4 Right to Strike
EO No. 180 also concedes to government employees, like
their counterparts in the private sector, the right to engage in
concerted activities, including the right to strike, the
executive order is quick to add that those activities must be
exercised in accordance with law, i.e. are subject both to
"Civil Service Law and rules" and "any legislation that may be
enacted by Congress," that "the resolution of complaints,
grievances and cases involving government employees" is not
ordinarily left to collective bargaining or other related
concerted activities, but to "Civil Service Law and labor laws
and procedures whenever applicable;" and that in case "any
dispute remains unresolved after exhausting all available
remedies under existing laws and procedures, the parties may
jointly refer the dispute to the (Public Sector LaborManagement) Council for appropriate action." What is more,
the Rules and Regulations implementing Executive Order
No. 180 explicitly provide that since the "terms and
conditions of employment in the government, including any
political subdivision or instrumentality thereof and
government-owned and controlled corporations with original
charters are governed by law, the employees therein shall not
strike for the purpose of securing changes thereof.
2. REGISTRATION
Sec. 7. Government employees' organizations shall register
with the Civil Service Commission and the Department of
Labor and Employment. The application shall be filed with
the Bureau of Labor Relations of the Department which shall
process the same in accordance with the provisions of the
Labor Code of the Philippines, as amended. Applications
may also be filed with the Regional Offices of the
Department of Labor and Employment which shall
immediately transmit the said applications to the Bureau of
Labor Relations within three (3) days from receipt thereof.
Sec. 8. Upon approval of the application, a registration
certificate be issued to the organization recognizing it as a
legitimate employees' organization with the right to represent
its members and undertake activities to further and defend its
interest. The corresponding certificates of registration shall
be jointly approved by the Chairman of the Civil Service
Commission and Secretary of Labor and Employment. (E.O.
No. 180)
3. CERTIFICATION ELECTION IN
GOVERNMENT CORPORATION
A certification election to choose the union that will
represent the employees may be conducted by the Bureau of
Labor Relations in a government corporation, whether
governed by the Labor Code or the Civil Service rules.
3.1 Election of Officers in Government Unions

It is quite clear from this provision that BLR has the original
and exclusive jurisdiction on all inter-union and intra-union
conflicts. An intra-union conflict would refer to a conflict
within or inside a labor union, and an inter-union
controversy or dispute, one occurring or carried on between
or among unions. The subject of the case at bar, which is the
election of the officers and members of the board of
KMKK-MWSS, is, clearly, an intra-union conflict, being
within or inside a labor union. It is well within the powers of
the BLR to act upon.
4. WHEN PSLMC MAY RULE ON LEGALITY OF
DISMISSAL
The Public Sector Labor-Management Council, created by
Executive Order No. 180 (June 1, 1987) has jurisdiction to
hear charges of unfair labor practice filed by government
employees against their employer, e.g., the Pamantasan ng
Lungsod ng Maynila. In deciding the ULP charge the
PSLMC may also rule on the complainants dismissal if the
two issuesULP and dismissalare unavoidably
interlinked.
5. UNION-BUSTING IN A GOVERNMENT
AGENCY, U.L.P.
5.1 Even Temporary Employees May Organize
Even temporary employees enjoy the basic right to form
organization or association for purposes not contrary to law.
Under Art. 277(c) of the Labor Code, any employee,
whether employed for a definite period of not, shall
beginning on his first day of service, be considered an
employee for purposes of membership in any labor union.
Ineligibility of managerial employees to join any labor
organization; Right of Supervisory Employees
________
Article 245. Ineligibility of managerial employees to join any
labor organization; Right of Supervisory Employees. Managerial employees are not eligible to join, assist or form
any labor organization. Supervisory employees shall not be
eligible for membership in the collective bargaining unit of
the rank-and-file employees but may join, assist or form
separate collective bargaining units and/or legitimate labor
organizations of their own. The rank-and-file union and the
supervisors union operating within the same establishment
may join the same federation or national union. (As amended
by Section 18, Republic Act No. 6715, March 21, 1989 and
Section 8, Republic Act No. 9481 which lapsed into law on
May 25, 2007 and became effective on June 14, 2007).
________
1. CATEGORIES OF EMPLOYEES
RA 6715 which took effect on March 21, 1989 (15 days after
its publication in the "Philippines Daily Inquirer") provides
that although "supervisory employees shall not be eligible for
membership in a labor organization of the rank and file
employees," they may, however, "join, assist or form separate
labor organization of their own."
2. INELIGIBILITY OF MANAGERS
2.1 Types of Managerial Employees

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The term "manager" generally refers to "anyone who is


responsible for subordinates and other organizational
resources." As a class, managers constitute three levels of a
pyramid, namely, top management, middle management, and
first-line management which is also called supervisor. Below
this third level are the operatives or operating employees
who, we may add, are also called rank-and-file.
FIRST-LINE MANAGERS The lowest level in an
organization at which individuals are responsible for the
work of others is called first-line or first-level management.
First-line managers direct operating employees only; they do
not supervise other managers. Examples of first-line
managers are the "foreman" or production supervisor in a
manufacturing plant, the technical supervisor in a research
department, and the clerical supervisor in a large office. Firstlevel managers are often called supervisors.
MIDDLE MANAGERS The term middle management
can refer to more than one level in an organization. Middle
managers direct the activities of other managers and
sometimes also those of operating employees. Middle
managers' principal responsibilities are to direct the activities
that implement their organizations' policies and to balance
the demands of their superiors with the capacities of their
subordinates. A plant manager in an electronics firm is an
example of a middle manager.
TOP MANAGERS Composed of a comparatively small
group of executives, top management is responsible for the
overall management of the organization. It establishes
operating policies and guides the organization's interactions
with its environment. Typical titles of top managers are
"chief executive officer," "president," and "senior vicepresident." Actual titles vary from one organization to
another and are not always a reliable guide to membership in
the highest management classification.
As can be seen from this description, a distinction
exists between those who have the authority to devise,
implement and control strategic and operational policies (top
and middle managers) and those whose task is simply to
ensure that such policies are carried out by the rank-and-file
employees
of
an
organization
(first-level
managers/supervisors). What distinguishes them from the
rank-and-file employees is that they act in the interest of the
employer in supervising such rank-and-file employees.
"Managerial employees" may therefore be said to
fall into two distinct categories: the "managers" per se, who
compose the former group described above, and the
"supervisors" who form the latter group. Whether they
belong to the first or the second category, managers, vis-a-vis
employers, are, likewise, employees.
2.2 Constitutionality of the Prohibition
The question is whether the first sentence of Art.
245 of the Labor Code, prohibiting managerial employees
from forming, assisting or joining any labor organization, is
constitutional in light of Art. III, Sec. 8 of the Constitution
which provides:

The right of the people, including those employed


in the public and private sectors, to form unions, association,
or societies for purposes not contrary to law shall not be
abridged.
The present Article 245 is the result of the amendment of the
Labor Code in 1989 by R.A. No. 6715, otherwise known as
the Herrera-Veloso Law. Unlike the Industrial Peace Act or
the provisions of the Labor Code which it superseded, R.A.
No. 6715 provides separate definitions of the terms
"managerial" and "supervisory employees" (See Art. 212[m]).
Although the definition of "supervisory employees"
seems to have been unduly restricted to the last phrase of the
definition in the Industrial Peace Act, the legal significance
given to the phrase "effectively recommends" remains the
same. In fact, the distinction between top and middle
managers, who set management policy, and front-line
supervisors, who are merely responsible for ensuring that
such policies are carried out by the rank and file, is articulated
in the present definition.
The rationale for this inhibition has been stated to
be, because if these managerial employees would belong to or
be affiliated with a Union, the latter might not be assured of
their loyalty to the Union in view of evident conflict of
interests. The Union can also become company-dominated
with the presence of managerial employees in Union
membership.
2.2a Other Opinions
Justice Puno further airs a warning: To declare Article 245
of the Labor Code unconstitutional cuts deep into our
existing industrial life and will open the floodgates to
unionization at all levels of the industrial hierarchy. Such a
ruling will wreak havoc on the existing set-up between
management and labor. If all managerial employees will be
allowed to unionize, then all who are in the payroll of the
company, starting from the president, vice-president, general
managers and everyone, with the exception of the directors,
may go on strike or picket the employer. Company officers
will join forces with the supervisors and rank-and-file.
3. EVOLUTION OF SUPERVISORS RIGHT TO
ORGANIZE
Unlike managers, supervisors can unionize.
3.1 First Period: Under the Industrial Peace Act
The problem was that although the Industrial Peace Act
defined a supervisor, it failed to define a manager or
managerial employee. So the question arose: Did the word
supervisor include manager? Could managers also
unionize? In a case involving Caltex managers, the Court
answered affirmatively.
3.2 Second Period: Under the Labor Code Before Amendment by R.A.
No. 6715
This time the question was: Did managerial employee
include supervisor? Were supervisors also banned from
unionizing? Yes. The prohibition was applied to supervisors
in the case of Bulletin Publishing Corp. V. Sanchez, 144 SCRA
428, decided on October 7, 1986.
3.3 Third Period: Under the Labor Code as Amended by RA 6715

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R.A. No. 6715 presents a compromise formula: retain the


ineligibility of managerial employees but revive the right of
supervisory employees to unionize.
4. DEFINITION OF MANAGER AND SUPERVISOR
Unlike in the Industrial Peace Act and the Labor Code
before such amendment, the power to decide on managerial
acts is now separated from the power to recommend those
managerial acts, such as laying down policy, hiring or
dismissing employees, etc. A supervisor has the power only
to recommend while a managerial employee has the power to
decide and do those acts.
But to make one a supervisor, the power to
recommend must not be merely routinary or clerical in
nature but requires the use of independent judgment. In
other words, the recommendation is (1) discretionary or
judgmental (not clerical), (2) independent (not a dictation of
someone else), and (3) effective (given particular weight in
making the management decision). If these qualities are
lacking or, worse, if the power to recommend is absent, then
the person is not really a supervisor but a rank-and-file
employee and therefore belongs or should belong to a rankand-file organization.
Similarly, a so-called manager, no matter how his
position is titled, is not really a manager in the eyes of the law
if he does not possess managerial powers (to lay down and
execute management policies and/ or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
employees). If he can only recommend the exercise of any of
these powers, he is only a supervisor, hence, may join, assist
or form a supervisors organization.
5. TEST OF SUPERVISORY STATUS
The test of "supervisory" or "managerial status"
depends on whether a person possesses authority to act in
the interest of his employer in the matter specified in Article
212 (k) of the Labor Code and Section 1 (m) of its
Implementing Rules and whether such authority is not
merely routinary or clerical in nature, but requires the use of
independent judgment. Thus, where such recommendatory
powers as in the case at bar, are subject to evaluation, review
and final action by the department heads and other higher
executives of the company, the same, although present, are
not effective and not an exercise of independent judgment as
required by law.
It is the nature of an employee's functions and not
the nomenclature or title given to his job which determines
whether he has rank-and-file or managerial status. Among
the characteristics of managerial rank are:
(1) He is not subject to the rigid observance of
regular office hours;
(2) His work requires the consistent exercise of
discretion and judgment in its performance;
(3) the output produced or the result accomplished
cannot be standardized in relation to a given
period of time;
(4) He manages a customarily recognized
department or subdivision of the establishment,
customarily and regularly directing the work of
other employees therein;

(5) He either has the authority to hire or discharge


other employees or his suggestions and
recommendations as to hiring and discharging,
advancement and promotion or other change of
status of other employees are given particular
weight; and
(6) As a rule, he is not paid hourly wages nor
subjected to maximum hours of work.
5.1 The Power to Recommend
The power to recommend, in order to qualify an employee as
a supervisor, must not only be effective but should require
the use of independent judgment. It should not be merely of
a routinary or clerical nature.
5.2 Examples of Ineffective or Clerical Recommendation
6. SEGREGATION OF RANK-AND-FILE AND
SUPERVISORS
Article 245 allows supervisory employees to form, join, or
assist separate labor organizations of their own, but they are
not eligible for membership in a labor organization of the
rank-and-file employees. Neither may a rank-and-file join a
union of supervisors.
This policy of segregating the supervisors union from that of
the rank-and-file is founded on fairness to the employees
themselves. It will be doubly detrimental to the employer if
the supervisors and the rank-and-file, as members of only
one union, could take a common stand against the employer.
6.1 Effects of Having Mixed Membership
A union whose membership is a mixture of
supervisors and rank-and-file is not and cannot become a
legitimate labor organization. It cannot petition for a
certification election, much less ask to be recognized as the
bargaining representative of employees.
The Labor Code has made it a clear statutory policy
to prevent supervisory employees from joining labor
organizations consisting of rank-and-file employees as the
concerns which involve members of either group are
normally disparate and contradictory.
Clearly, based on Article 245, a labor organization
composed of both rank-and-file and supervisory employees
is no labor organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not being one,
an organization which carries a mixture of rank-and-file and
supervisory employees cannot possess any of the rights of a
legitimate labor organization, including the right to file a
petition for certification election for the purpose of collective
bargaining. It becomes necessary, therefore, anterior to the
granting of an order allowing a certification election, to
inquire into the composition of any labor organization
whenever the status of the labor organization is challenged
on the basis of Article 245 of the Labor Code.
The rationale behind the Code's exclusion of
supervisors from unions of rank-and-file employees is that
such employees, while in the performance of supervisory
functions, become the alter ego of management in the
making and the implementing of key decisions at the submanagerial level. Certainly, it would be difficult to find unity
or mutuality of interests in a bargaining unit consisting of a

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mixture of rank-and-file and supervisory employees. And this


is so because the fundamental test of a bargaining unit's
acceptability is whether or not such a unit will best advance
to all employees within the unit the proper exercise of their
collective bargaining rights. The Code itself has recognized
this, in preventing supervisory employees from joining
unions of rank-and-file employees.
6.2 Affiliation of Supervisors and Rank-and-File Unions
Even in affiliating with a federation, the unions of
the supervisors and of the ran-and-file should be segregated.
The peculiar role of supervisors is such that while
they are not managers, when they recommend action
implementing management policy or ask for the discipline or
dismissal of subordinates, they identify with the interests of
the employer and may act contrary to the interests of the
rank-and-file.
We agree with the petitioner's contention that a
conflict of interest may arise in the areas of discipline,
collective bargaining and strikes. Members of the supervisory
union might refuse to carry out disciplinary measures against
their co- member rank-and-file employees. In the area of
bargaining, their interests cannot be considered identical. The
needs of one are different from those of the other.
Moreover, in the event of a strike, the national federation
might influence the supervisors' union to conduct a
sympathy strike on the sole basis of affiliation.
Thus, if the intent of the law is to avoid a situation
where supervisors would merge with the rank and-file or
where the supervisors' labor organization would represent
conflicting interests, then a local supervisors' union should
not be allowed to affiliate with the national federation of
union of rank-and-file employees where that federation
actively participates in union activity in the company.
7. CONFIDENTIAL EMPLOYEES
7.1 First Swing: Inclusion Among Rank-and-File
7.2 Second Swing: Exclusion from Rank-and-File
7.3 Third Swing: Inclusion Among Supervisors
7.4 Fourth Swing: Inclusion Among Monthly Paid Rank-and-File
7.4a Limited Exclusion; Doctrine of Necessary Implication
A confidential employee is one entrusted with confidence on
delicate matters, or with the custody, handling, or care and
protection of the employer's property. While Art. 245 of the
Labor Code singles out managerial employees as ineligible to
join, assist or form any labor organization, under the doctrine
of necessary implication, confidential employees are similarly
disqualified.
The doctrine of necessary implication means that what is
implied in a statute is as much a part thereof as that which is
expressed.
7.4b The Metrolab and Meralco Summations: Exclusion from
Bargaining unit and Closed-shop Clause
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 or those who by


reason of their positions or nature of work are required to
assist or act in a fiduciary manner to managerial employees
and hence, are likewise privy to sensitive and highly
confidential records.
7.4c Who Are Confidential Employees?
Confidential employees assist and act in a
confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in the
field of labor relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist or join a
labor union equally applies to them.
Confidential employees are those who by reason of
their positions or nature of work are required to assist or act
in a fiduciary manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential records.
By the very nature of their functions, they assist and
act in a confidential capacity to, or have access to confidential
matters of, persons who exercise managerial functions in the
field of labor relations.
7.4d The Labor Nexus
The broad rationale behind this rule is that employees should
not be placed in a position involving a potential conflict of
interests. "Management should not be required to handle
labor relations matters through employees who are
represented by the union with which the company is required
to deal and who in the normal performance of their duties
may obtain advance information of the company's position
with regard to contract negotiations, the disposition of
grievances, or other labor relations matters."
Art. 245 of the Labor Code does not directly prohibit
confidential employees from engaging in union activities.
However, under the doctrine of necessary implication, the
disqualification of managerial employees equally applies to
confidential employees. The confidential-employee rule
justifies exclusion of confidential employees because in the
normal course of their duties they become aware of
management policies relating to labor relations. It must be
stressed, however, that when the employee does not have
access to confidential labor relations information, there is no
legal prohibition against confidential employees from
forming, assisting, or joining a union.
7.4e New CBA may include employees excluded from old CBA;
Expired CBA may be Modified, not just Renewed
The employer and the union in an enterprise may negotiate
and agree whom to cover in their CBA. And they are free to
change their agreement: people excluded before may be
included now, or vice versa.
8. SECURITY GUARDS MAY JOIN RANK-ANDFILE OR SUPERVISORS UNION
Under the old rules, security guards were barred from joining
a labor organization of the rank-and-file. Under RA 6715,
they may now freely join a labor organization of the rankand-file or that of the supervisory union, depending on their
rank.
________

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Article 246. Non-abridgment of right to self-organization.


It shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with employees and
workers in their exercise of the right to self-organization.
Such right shall include the right to form, join, or assist labor
organizations for the purpose of collective bargaining
through representatives of their own choosing and to engage
in lawful concerted activities for the same purpose or for
their mutual aid and protection, subject to the provisions of
Article 264 of this Code. (As amended by Batas Pambansa
Bilang 70, May 1, 1980).
________
1. CONCEPT OF THE RIGHT TO SELF
ORGANIZATION
This is a key article that offers an inclusionary definition of
the right to self-organization (S.O.) by saying not what it is
but what it includes. It includes at least two rights: (1) the
right to form, join or assist labor organizations, and (2) the
right to engage in lawful concerted activities. The labor
organization may be a union or association of employees, as
mentioned in Article 212(g). Its purposes may be collective
bargaining (as stated in this Article) or dealing with the
employer [as stated in Article 212(g)].
The right to form labor organization is twin to the right to
engage in concerted activities.
It is worth noting, finally, that the right to self-organization is
granted not only to employees but to workers, whether
employed or not. In fact, constitutionally speaking, the right
to form associations or societies is a right of the people,
whether workers or not.
No personinside or outside of government, employer or
non-employer, unionist or non-unionistmay abridge these
rights. If abridged in the workplace, the abridgment is termed
ULP (unfair labor practice).
Article 246, is both (in mixed metaphors), the conceptual
mother and the formidable fortress of the prohibition
expounded in the next three article.
STRIKES AND LOCKOUTS
Part 1. Regulations and Limits of Strike and Lockout
1. THE RIGHT TO ENGAGE IN CONCERTED
ACTIVITIES
Sec. 3, Art. XIII of the Constitution commands the
state to guarantee the rights of all workers to selforganization, collective bargaining and negotiations and
peaceful concerted activities, including the right to strike in
accordance with law.
Art. 263 of the Labor Code, as amended, declares
that in line with the policy of the State to encourage free
trade unionism and free collective bargaining x x x workers
shall have the right to engage in concerted activities for
purposes of collective bargaining or for their mutual benefit
and protection. A similar right to engage in concerted
activities for mutual benefit and protection is tacitly and
traditionally recognized in respect of employers.
1. 1 Concerted Activity by One
Occurs when an activity is planned and
accomplished by people acting together. However, instances
may arise when an individual, acting alone, may be deemed
engaged in concerted activity.

Jurisprudential definition: one undertaken


by two or more ees, or by one on behalf of others
e.g. ee seeking to induce group activity
ee as representative of at least one
other ee; ee preparing a leaflet to distribute to other ees about
needed improvements in their working condition
2. NATURE OF STRIKE
It is a cessation of work by ees in an effort to get
more favorable terms for themselves, or as a concerted
refusal by ees to do any work for their er, or to work at their
customary rate of speed, until the object of the strike is
attained by the ers granting the demanded concession.
Art. 212: it means any temporary stoppage of work
by the concerted action of employees as a result of an
industrial or labor dispute.
It may be legally held either or both 1) a collective
bargaining deadlock or 2) an unfair labor practice act of the
er.
It has been considered as the most effective weapon
of labor in protecting the rights of ees to improve the terms
& conditions of their employment.
It is only the coercive weapon that can correct
abuses against labor. It remains as the great equalizer.
2.2 Characteristics:
1. there must be an established
relationship between the strikers and the person or persons
against whom the strike is called.
2. the relationship must be one of er-ee
3. the existence of a dispute between the
parties and the utilization by labor of the weapon of
concerted refusal to work as a means of persuading, or
coercing compliance with the working mens demands
4. the contention advanced by the workers
that although work ceases, the employment relation is
deemed to continue albeit in a state of belligerent suspension
5. there is work stoppage, which stoppage
is temporary
6. the work stoppage is done through
concerted action of the ees
7. the striking groups is a legitimate labor
organization and, in case of bargaining deadlock, is the ees
sole bargaining representative.
2.3 Basic Objective
The idea behind a strike is that a company
engaged in a profitable business cannot afford to have its
production or activities interrupted, much less paralyzed. Any
interruption or stoppage of production spells loss, even
disaster.
2.4 Constitutional Status
Labors early exercise of the right to strike
collided with the laws on rebellion and sedition and sent its
leaders languishing in prisons. The spectre of incarceration
did not spur its leaders to sloth; on the contrary, it spiked
labor for its legitimization.
It was enormously boosted by the
American occupation of our country. Hence, on July 17,
1953, Congress gave statutory recognition of the right to
strike when it enacted RA 875, otherwise known as the
Industrial Peace Act.

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For nearly two decades, labor enjoyed the


right to strike until it was prohibited on September 21, 1972
upon the declaration of martial law in the country.
Among those chosen by then President
Corazon C. Aquino to draft the 1987 Constitution were
recognized labor leaders like Eulogio Lerum, Jose D.
Calderon, Blas D. Ople and Jaime S.L. Tadeo. These
delegates helped craft into the 1987 Constitution its Art. 13
entitled Social Justice and Human Rights.
2.5 Nature and Definition of Lockout
If employees can strike, the employer can
lockout.
Lockout means the temporary refusal of
any er to furnish work as a result of an industrial or labor
dispute; it is an employers act excluding ees who are union
members from the plant.
Similarities
Strike
Lockout
Both
connote Done by the ees
Done by the ers
temporary
stoppage of work
They
occur
because of and in
relation to a labor
or
industrial
dispute involving
the parties
Same regulations
and
limits
applicable
GR: not subject to
labor injunction or
restraining orders
EXPN: national
interest, prohibited
acts are being
committed
Lockout may affect all or less than all of
the ee-union members. It is an act directed at the union itself
rather than at the individual ee-ers of the union. The
dismissal of individual ee-union members to discipline the
acts of these individuals differs from a lockout. Whereas in
the former action, the discharge is in discipline of individuals,
in a lockout the dismissal is in discipline of the union itself.
3. GROUNDS FOR STRIKE/LOCKOUT
D.O. No. 40-03, amended by D.O. No. 40A-03:
A strike or lockout may be declared in cases of
bargaining deadlocks and unfair labor practices. Violations of
CBAs, except flagrant and/or malicious refusal to comply
with its economic provisions, shall not be considered ULP
and shall not be strikeable. No strike or lockout may be
declared on grounds involving inter-union and intra-union
disputes or without first having filed a notice of strike or
lockout or without the necessary strike or lockout vote
having been obtained and reported to the Board. Neither will
a strike be declared after assumption of jurisdiction by the
Secretary or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency
of cases involving the same grounds for the strike or lockout.
Requisites:

(a) notice of intention to declare a strike/lockout has


been filed with DOLE
(b) at least 30 days has elapsed since the filing of the
notice before lockout is declared
(c) an impasse has resulted in the negotiations
(d) the strike/lockout is not discriminatory
Under Art. 263, the notice or cooling-off period is
15 days for ULP strike/lockout and 30 days for bargaining
strike/lockout.
An er may lockout his ees to protect his bargaining
position after an impasse occurs in negotiations , and also
before such an impasse is reached. An er should show that
he was merely protecting his bargaining position and not
acting out of hostility to the process of collective bargaining
or by way of discriminating against union members. An ers
legal position is improved if it appears that he did not lock
out his ees during the early stages of negotiations, and did
not employ the lockout to force acceptance of his terms.
A lockout is valid where, in the course of a labor
dispute, it is undertaken as a defensive weapon, or in
pursuance of the ers interest.
Lockout has been held valid in the ff:
1. in anticipation of a threatened strike or walkout
2. in response to a whipsaw strike
3. in response to unprotected strike or walkout
Lockout have been held unlawful where undertaken for the ff.
purposes:
1. to discourage and dissipate membership in a
labor organization or otherwise kill the union
2. to aid a particular union by preventing further
unorganizational work of its rival, or to coerce the employees
to join the favored union
3. to avoid bargaining.
It must be for a lawful purpose and carried out
through lawful means.
4. KINDS OF STRIKE
4.1 Extent
A. General Strike extends over a whole
community, province, state or country. It is an extended
form of sympathetic strike, involving many workers who
cease to work in sympathy w/ the workers of another er, or
in order to put pressure upon the government or in order to
paralyze the present economic and social systems.
B. Local Strike one undertaken by workers in a
particular enterprise, locality or occupation; it usually
involves only one union or only one industry.
4.2 Nature of Act
A. Strike Proper
B. Sit-down Strike occurs when a group of ees
or other interested in obtaining a certain objective in a
particular business forcibly take over possession of the
property of such business, establish themselves within the
plant, stop its production and refuse access to the owners or
to the others desiring to work. It is defined as a strike in the
traditional sense, to w/c is added the element of trespass by
the strikers upon the property of the er.
C. Partial or Quickie Strike it takes the form of
intermittent, unannounced work stoppage, including
slowdowns, unauthorized extensions of rest periods, and

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walkouts for portions of a shift or for entire shifts. It is used


interchangeably with wildcat strike w/c is a work stoppage
that violates the labor contract and is not authorized by the
union.
4.3 Degree of Employee Interest
A. Primary Strike it is one declared by the ees
who have a direct and immediate interest, whether economic
or otherwise, in the subject of the dispute, which exists
between them and their er.
B. Secondary Strike it refers to a coercive
measure adopted by workers against an er connected by
product or employment with alleged labor conditions or
practices. It exists where ees in concert refuse to assist or
cooperate with the allegedly unfair ers or their product. It is
the absence of this connection between employment and
product which characterizes the sympathetic as distinguished
from the secondary strike. It occurs not because of any
complaint over their labor standard under the er, but because
he persists in dealing with a third person against whom they
have a grievance. It is an attempt to secure the economic
assistance of their er to compel this 3rd person to capitulate
to the union over some issue between them, at the risk of
losing the unionized ers business if he does not capitulate.
C. Sympathetic Strike it is illegal as there is no
labor dispute between the ee and the er. The striking ees have
no demands or grievances of their own, but strike for the
purpose of directly or indirectly aiding others, w/o direct
relation to the advancement of the interest of the strikers. It
is a stoppage of work to make common cause with other
strikers in other establishments or companies, w/o the
existence of any labor dispute between the striking ees and
their er. It is deemed to be an unlawful infliction of damage,
aimless and unjustifiable because of the absence of any direct
economic advantages to the group of workers participating in
it.
4.4 Purpose or Nature of Employee Interest
A. Economic Strike/ Bargaining Strike it is
intended to force wage and other concessions from the er,
w/c he is not required by law to grant. It is designed to
enforce the union position on bargainable issues when an
impasse is reached or the negotiations fail to produce any
agreement. The striking ees have no intention of severing
employment relations w/ their er, except temporarily for the
duration of the strike, although the er is free to replace him if
he can. Indeed, this recourse of the er to the available pool of
unorganized labor is theoretically one of the strongest
economic assets he has in combatting a strike. Strikes are
presumed to be economic rather than ulp.
B. Unfair Labor Practice Strike it is usually for
the er to make him desist from further committing such
practices. This type of strike is perhaps the best known of
strikes for mutual protection, w/c are declared in protest,
and for the discontinuance, or er abuses.
5. A VALID STRIKE NEEDS A LABOR DISPUTE
A strike is recognized and protected only if the
work stoppage is brought about by disagreements regarding
terms and conditions of employment or regarding ways to
arrange or adjust, inter alia, those terms and conditions.
Where there is no dispute or the dispute has nothing to do
with the terms and conditions of employment in the

establishment, the stoppage of work by its ees has no basis in


labor law and the ees who engage in the work stoppage
actually commit an illegal strike and take the risks and
consequences of such an illegal act.
An er may lawfully discharge ees for participating in
an unjustifiable wildcat strike and especially so in this case,
because said wildcat strike was an attempt to undermine the
unions position as the EBR and was, therefore, an
unprotected activity. (National Union of Workers in Hotels, etc.
vs. NLRC and Peninsula Hotel)
5.1 Sympathetic Strike
5.2 Welga ng Bayan
Illegal. It is in the nature of a general strike w/c is
but an extended sympathetic strike; it is work stoppage
affecting numerous (if not all) ers including a particular er
who has no dispute with his ees regarding their terms and
conditions of employment. Their righteous indignation does
not legalize an illegal work stoppage. The stoppage violates
employment obligations, sacrifices productivity, and
victimized even law-abiding employees
But in the realm of political freedom, a general
strike may be defensible. However, at the enterprise level, the
employees absence from work to join a general strike is in
itself an unexcused absence. Participation in political protests
or welga ng bayan should be balanced with the obligations at
the workplace.
6. AVOIDANCE OF STRIKE
Pacific measures or remedies must first be
exhausted before ees may stage a strike. Our courts have
insisted on requiring ees to exhaust available means of
settling the dispute w/o resort to strike. Strikes and other
coercive acts are deemed justified only when peaceful
alternatives have proved unfruitful in settling the dispute.
Thus, disregarding the grievance procedure or refusal to
submit the arbitrable issue to voluntary arbitration may
justify a conclusion that the strike was held prematurely,
hence, illegally.
6.1 Conciliation, Mediation, Compromise to
Avoid Strike
An issue awaiting resolution in arbitration
proceedings, whether compulsory or voluntary, cannot serve
as basis of a strike. Arbitration, by its nature, is a legal device
to forestall compulsive action over a dispute. To resort to a
strike despite ongoing arbitration is an amounting to
sabotage of a peaceful conciliatory process. The law disdains
it.
Conciliation cases which are not subjects of notices
of strike or lockout shall be docketed as preventive mediation
cases.
Information and statements given in confidence at
conciliation proceedings shall be treated as privileged
communications. Conciliators and similar officials shall not
testify in any court or body regarding any matter taken up at
conciliation proceedings conducted by them.
Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Board and its regional
branches shall be final and binding upon the parties. The
NLRC or any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or

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if there is prima facie evidence that the settlement was


obtained through fraud, misrepresentation or coercion. Upon
motion of any interested party, the Labor Arbiter in the
region where the agreement was reached may issue a writ of
execution requiring a sheriff of the Commission or the courts
to enforce the terms of the agreement.
6.2 Premature Strike
7. PROTECTION OF STRIKE
1. it is generally not subject to labor injunction or
restraining order
2. ers may not be discriminated against merely
because they have exercised the right to strike
3. the use of strike-bearers is prohibited
4. mere participation in a strike does not sever the
employment relationship
Art. 264 provides that no er shall employ any strikebearers, nor shall any person be employed as a strike-bearer.
A strike-bearer is a person who obstructs, impedes or
interferes with by force, violence, coercion, threats or
intimidation any peaceful picketing by ees during any labor
controversy affecting wages, hours or conditions of work or
in the exercise of the right of self-organization or collective
bargaining.
Ees who peacefully struck for a lawful object were
not liable to their er even though the strikes shut him down,
bankrupted him, or put him out of business, and even
though it also caused enormous and irreparable damage to
hundreds of thousands of innocent persons not involved in
the strike. But, unless the strikers methods or objects were
illegal, the er had no cause of action for damage to his
business from the strike.
The right to strike includes the right to use
peaceable and lawful means to induce present and expectant
ees to join the ranks of the strikers.
7.1 Role of the Police
DOLE has issues Guidelines for the conduct of
INP/AFP personnel during strikes, lockouts and labor
disputes in general. It provides that the involvement of the
AFP/INP (now PNP) in those situations shall be limited to
the maintenance of the peace and order, enforcement of laws
and legal orders of duly constituted authorities and the
performance of specific functions as may be provided by law.
They should be in uniform, with proper namecloth
at all times; shall observe strict neutrality in dealings with
both parties to the controversy, bearing in mind that the
parties to the labor dispute are not their adversaries but their
partners in the quest for industrial peace and human dignity.
The peacekeeping details shall not be stationed in
the picket/ confrontation line but should be stationed such
that their presence may deter the commission of criminal acts
from either side; they shall maintain themselves outside a 50m radius from the picket line, except, if 50-meter radius
includes a public thoroughfare, they may station themselves
in such public thoroughfare for the purpose of insuring the
free flow of traffic.
Any person who obstructs the free and lawful
ingress to and egress from the employers premises or who
obstructs public thoroughfares may be arrested and
accordingly charged in court.

It does not prohibit a worker from working in place


of the strikers. What is prohibits is being escorted by
police/military men or an armed person.
8. STATUS OF STRIKERS
The ees seek to induce the er to acquiesce in their
demands and to reinstate them in the service under the
conditions that they seek to impose.
Our SC holds that the declaration of a strike does
not amount to a renunciation of the employment relation.
8. 1 Notion of Striking Employee
During a strike the er-ee relationship is not
terminated but merely suspended as the work stoppage is not
permanent but only temporary.
Very clear in the definition given in Art. 212 (f)
which states that ee includes any individual whose work
has ceased as a result of or in connection with any current
labor dispute or because of any ulp if he has not obtained any
other substantially equivalent and regular employment.
A striking employee is not entitled to his wage
during the strike.
Retention of striking ees of their ee status under the act has
two main consequences: 1st, the employers obligation to bargain
collectively in good faith with his ees continues
notwithstanding the fact that the ees are on strike. 2nd, the er
is under an obligation to reinstate striking ees upon
termination of the strike, w/o discriminating against those
more actively engaged in union activity.
9. LEGALITY OF STRIKE: THE SIX FACTORS
AFFECTING LEGALITY
Ludwig Teller says that an illegal strike is one which:
1. is contrary to a specific prohibition of law, such
as strike by ees performing governmental functions
2. violates a specific requirement of law
3. is declared for an unlawful purpose, such as
inducing the er to commit an ulp against nonunion ees
4. employs unlawful means in the pursuit of its
objective, such as a widespread terrorism of nonstrikers
5. is declared in violation of an existing injunction
6. is contrary to an existing agreement, such as nostrike clause or conclusive arbitration clause.
10. 1ST FACTORIN LEGALITY OF STRIKE:
STATUTORY PROHIBITION
Government ees have the right to organize but they
do not have the right to strike. A strike held by them would
be an example of an illegal strike that violates a legal
prohibition.
Since the terms and conditions of government ees
are fixed by law, government workers cannot use the same
weapons employed by workers in the private sector to secure
concessions from their ers. The principle behind labor
unionism in private industry is that industrial peace cannot be
secured through compulsion. Relations between private ers
and their ees rest on an essentially voluntary basis. Subject to
the minimum requirements of wage laws and other labor and
welfare legislation, the terms and conditions of employment
in the unionized private sector are settled through the
process of collective bargaining.

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In government employment, however, it is the


legislature and, where properly given delegated power, the
administrative heads of government which fix the terms and
conditions of employment. And this is effected through
statutes or administrative circulars, rules, and regulations, not
through CBAs. (SSSEA vs CA)
The fact that the conventional term strike was
not used by the striking ees to describe their common course
of action is inconsequential, since the substance of the
situation, and not its appearance, will be deemed to be
controlling. The ability to strike is not essential to the right of
association. In the absence of statute, public ees do not have
the right to engage in concerted work stoppages for any
purpose. Because of their successive unauthorized and
unilateral absences which produced adverse effects upon
their students for whose education they are responsible. The
actuations of petitioners definitely constituted conduct
prejudicial to the best interest of the service, punishable
under the Civil Service law, rules and regulations. (Bangalisan,
et al vs CA, the CSC and DECS)
11. 2ND FACTOR IN LEGALITY OF STRIKE:
PROCEDURAL REQUIREMENTS
These requirements are mandatory, meaning, noncompliance therewith makes the strike illegal. The evident
intention of the law is to regulate the right to strike. Thus,
failure to comply makes the strike illegal and the officers of
the union who participated therein are deemed to have lost
their employment status.
A. Notice of Strike (NS)
In the prescribed form and w/ the required
contents, should be filed with the DOLE, specifically the
regional branch of the NCMB, copy furnished the er or the
union, as the case may be.
Who? Only a legitimate (registered) labor
organization can legally hold a strike; depends on the reason:
ULP by er the notice should be
filed by the duly recognized or CBA. If the bargaining unit
involved has yet no bargaining agent, then the notice may be
filed by even an unrecognized labor union, provided the
union is duly recognized.
Bargaining Deadlock only the
bargaining union has the legal right to file a notice of strike.
Now that a bargaining deadlock exists, only the bargaining
union and no other union has the duty and authority to
take appropriate action, including the filing of a strike notice.
Contents of notice:
1. the names and addresses of the er and
the union involved
2. the nature of the industry to w/c the er
belongs
3. the no. of union members and of the
workers in the BU
4. such other relevant data as may facilitate
the settlement of the dispute, such as a brief statement or
enumeration of all pending labor disputes involving the same
parties.
CBA shall state the unresolved
issues in the bargaining negotiations and be accompanied by
the written proposals of the union, the counter-proposals of

the er and the proof of a request for conference to settle the


differences.
ULP the notice shall, as far as
practicable, state the acts complained of and the efforts taken
to resolve the dispute amicably.
B. Cooling-off period
A time gap is required to cool off tempers between
the filing of notice and the actual execution of strike or
lockout. 30 days in case of bargaining deadlock and 15 days
in case of ULP. However, in the face of union busting as
defined in Art. 263 (c), the cooling off period need not be
observed and the union may take immediate action after the
strike vote is conducted and the results thereof submitted to
the appropriate regional branch of the Board.
The NCMB, upon receipt of the NS and during the
cooling-off period, mediates and conciliates the parties. The
regional branch of the Board may, upon agreement of the
parties, treat a notice as a preventive mediation case. It shall
also encourage the parties to submit the dispute to voluntary
arbitration.
During the proceedings, the parties shall not do any
act which may disrupt or impede the early settlement of the
dispute. They are obliged to participate fully and promptly in
the conciliation meetings called by the Regional Branch of
the Board.
A strike/lockout notice, upon agreement of the
parties, may be referred to alternative modes of dispute
resolution, including voluntary arbitration.
Information and statements in the said proceedings
are treated as privileged communication. Reason: to encourage
free and frank exchange of proposals and counter-proposals
between the parties, thus assisting the conciliator in searching
for the formula most acceptable to both sides.
C. Strike Vote
Before a strike/lockout may actually be started, a
strike/lockout vote should be taken by secret balloting, in
meetings or referenda specially called for the purpose. The
regional branch of the Board may, at its own initiative or
upon request of any affected party, supervise the conduct of
secret balloting. The union or the er shall furnish the regional
branch of the Board the notice of meetings referred to at
least 24 hours before such meetings as well as the results of
the voting at least 7 days before the intended strike or
lockout, subject to the cooling-off period. The decision to
declare a strike requires the secret-ballot approval of majority
of the total union membership in the BU concerned. It is
majority of the union membership, not of the BU. The
members of the minority union may or may not be called to
the strike vote meeting.
Purpose: to ensure that the decision to strike broadly
rests with the majority of the union members in general and
not with a mere minority, and at the same time, discourage
wildcat strikes, union bossism and even corruption.
Similarly, a lockout needs the secret-ballot
concurrence of majority of the directors or partners.
D. Strike Vote Report
The result of the strike/lockout voting should be
reported to the NCMB at least 7 days before the intended
strike/lockout, subject to the cooling-off period. This 7-day
reporting period is intended to give the DOLE an
opportunity to verify whether the projected strike really

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carries the imprimatur of the majority of the union members.


A strike held within the 7-day waiting period is plainly illegal.
The submission of the report gives assurance that a strike
vote has been taken and that, if the report concerning it is
false, the majority of the members can take appropriate
remedy before its too late.
Reasons:
1. to inform the NCMB of the intent of the union
to conduct a strike vote
2. to give the NCMB ample time to decide on
whether or not there is a need to supervise the conduct of
the strike vote to prevent any acts of violence and/or
irregularities intended thereto
3. should the NCMB decide on its own initiative or
upon the request of an interested party including the er, to
supervise the strike vote, to give it ample time to prepare for
the deployment of the requisite personnel, including peace
officers if need be.
The failure of a union to comply with the
requirement of the giving of notice to the NCMB at least 24
hours prior to the holding of a strike vote meeting will render
the subsequent strike staged by the union illegal.
The NCMBs Primer on Strike, Picketing and
Lockout states that if the strike vote is filed within the
cooling-off period, the 7-day requirement shall be counted
from the day ff the expiration of the cooling-off period.
In effect, the 7 days are added to the 15-day or 30day cooling-off period.
11.1 Declaration of Strike or Lockout
The regional branch of the NCMB shall continue
mediating and conciliating. The conciliator-mediator,
however, can only suggest solutions. He is not an arbitrator
or an adjudicator who may impose his decisions upon the
parties.
11.2 Procedural Requirements, Mandatory;
Non-observance Makes Strike Illegal
(National Federation of Sugar Workers vs Ovejera) It
must be stressed that the requirements of the cooling-off
period and 7-day strike ban must both be complied with,
although the labor union may take a strike vote and report
the same within the statutory cooling-off period.
If only the filing of the strike notice and the strikevote report would be deemed mandatory, but not the waiting
periods as specifically and emphatically prescribed by law, the
purposes for which the filing of the strike notice and strikevote report is required would not be achieved.
The right to strike, because of its more serious
impact upon the public interest, is more vulnerable to
regulation than the right to organize and select
representatives for lawful purposes of collective bargaining.
Those periods are reasonable restrictions and their
imposition is essential to attain the legitimate policy
objectives embodied in the law. Thus, they constitute a valid
exercise of the police power of the state.
The employees going on strike the very day they
filed their notice of strike violates Art. 263 (c and f) of the
Labor Code, which provides for a cooling-off period and a 7day strike ban before a strike may be commenced.
11.2a Strike on Installment: Work
Slowdown and Overtime Boycott

The overtime boycott and work


slowdown amounted to illegal strike. It had resulted not
only in financial losses to the company but also damaged its
business reputation. It is defined as the willful reduction in
the rate of work by concerted action of workers for the
purpose of restricting the output of the er, in relation to a
labor dispute; as an activity by which workers, w/o a
complete stoppage of work, retard production or their
performance of duties and functions to compel management
to grant their demands.
11.3 In Case of Union Busting
Where the er is trying to bust the union, the union
is a victim. It needs assistance, not hindrance. And it will be
adding insult to injury to ask the unionists to cool off while
their union is being busted. Hence, Art. 263 (c) does away
with the cooling off period requirement in case of union
busting.
Elements:
1. the union officers are being dismissed
2. those officers are the ones duly elected in
accordance with the union constitution and by-laws
3. the existence of the union is threatened.
The filing of the notice of strike, taking of the strike
vote and submitting of the strike vote report are still
mandatory even in the face of union busting.
Testing a ULP act involves an appraisal of the
perpetrators motives. According to the totality of conduct
doctrine, an act to be characterized as ULP, should be
viewed not in isolation but in connection with collateral
circumstances. An allegation of union busting should
therefore be subjected to an intelligent and unbiased review
and verification. It calls for a delicate balancing of the
respective rights of the er and the workers. And it is a
balancing task that is better done by sober, impartial persons.
Those persons are the NCMB and the union
members themselves. They are brakes or moderating device
against precipitate, impulsive reactions of union officers.
Before plunging the organization into a strike because of
alleged union busting by the er, the union officers should
notify the NCMB and consult the general membership.
These persons must be given the opportunity to assess,
coolly and carefully, whether or not union busting is indeed
occurring.
11.4 Strike During Arbitration, Illegal
The certification of the dispute to the NLRC for
compulsory arbitration had the effect of enjoining the
intended strike subject of the notices.
(Filsyn Employees Chapter vs Drilon) The
certification of the dispute to the NLRC for compulsory
arbitration had the effect of enjoining the intended strike
subject of the notices.
No strike or lockout can be declared while a case is
pending involving the same grounds for strike or lockout.
(Caltex Phil. Inc. vs Phil. Labor Organization) If after
the decision of the Court of Industrial Relations declaring a
strike illegal, new demands or matters arise not in connection
with, or similar to, the demands in the former case subject of
the decision, and the laborers strike anew, the new strike
cannot be held as a violation of the decision. But, again, the
procedural requirements must be complied with.
11.5 Strike Despite Preventive Mediation

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Mediation is a process of resolving disputes with the


aid of a neutral person the mediator who helps the
parties identify issues and develop proposals to resolve their
disputes. Unlike an arbitrator, but like a conciliator, the
mediator is not empowered to decide disputes. He proposes
but does not dispose. Although the Labor Code does not
name preventive mediation as a settlement mode, the NCMB
Manual enunciates it as a remedy to prevent or resolve
disputes whether strikeable or not. Preventive mediation can
be initiated simply by a letter-request.
Mediation/conciliation is not only speedy but
inexpensive as well.
It protects confidentiality; under the auspices of the
privileged communication speech.
(PAL, Inc. vs SLE) PAL strike was illegal for 3
reasons:
a. it was premature for there was an existing CBA
w/c still had 9 months to run. The law provides that neither
party to a CBA shall terminate nor modify such agreement
during its lifetime. While either party can serve a written
notice to terminate or modify the agreement at least 60 days
prior to the expiration date (freedom period), it shall
nevertheless be the duty of both parties to keep the status
quo and to continue in full force and effect the terms and
conditions of the existing agreement during the freedom
period or until a new agreement is reached by them
b. it violated the no-strike provision of the CBA
c. The NCMB had declared the notice of strike as
appropriate for preventive mediation.
The strike w/c the union mounted, while
preventive mediation proceedings were ongoing, was an
ambush.
All that the Secretary may enjoin is the holding of
the strike, but not the companys right to take action against
union officers who participated in the illegal strike and
committed illegal act.
11.6 Violation of a Valid Order
The strikers, thru their representatives, had misled,
not to say deceived, the Industrial Court because despite
their assurances that they would not go on strike and did not
even have the intention of striking, they went on strike just
the same. It was held that the strike was equivalent to a
violation or disobedience of an order of the court, hence,
illegal.
11.7 Grievance Procedure Bypassed
(Almeda vs CIR) In case of any alleged unfair labor
practice on the part of either party, there will be no strikes,
lockouts or any or prejudicial action until the question or
grievance is resolved by the proper court if not settled
through a grievance procedure herein outlined.
If a laborer had a complaint, the same would first
be resolved by a grievance committee not satisfactory
the same would be referred to the top officials of the union
and the company still no settlement is reached CIR
The main purpose of the parties in entering into a
CBA is to adopt a procedure in the settlement of their
disputes so that strikes may be prevented. This procedure
must be first followed in its entirety if it is to achieve its
objective.
Even if the management has failed to do its duty in
connection with the formation of the grievance committee

stipulated in the agreement, such failure does not give to


labor the right to declare a strike outright, for its duty under
the agreement is to exhaust all available means w/n its reach
before resorting to force. If labor chooses not to deal w/ the
management either because of distrust or prejudice, the other
way left to achieve a peaceful settlement on its grievance is to
resort to the CIR. Strikes held in violation of the terms
contained in a CBA are illegal, specially when they provide
for conclusive arbitration clauses. These agreements must be
strictly adhered to and respected if their ends have to be
achieved.
A strike or walkout on the basis of grievances w/c
have not been submitted to the grievance committee, as
stipulated in the agreement of the parties sanctioned by the
CIR, is premature and illegal.
(San Miguel Corp. vs Sanchez, et al) Art. 254 of the
Labor Code provides that no injunction or restraining order
shall be issued by any court except as otherwise provided in
Art. 218 and 264. Under Art. 218 (e), injunction may be used
to restrain an actual or threatened unlawful strike.
SMC is correct in claiming that the union failed to
comply with the procedural requirements of a valid strike,
because it failed to file a valid notice of strike w/ the NCMB
as prescribed by Art. 263 of the Labor Code. When the
NCMB converted IBMs notices into preventive mediation,
this had the effect of dismissing the notices of strike filed by
IBM. In the case if PAL vs Drilon, the Court ruled that after
such a conversion, it is as if there was no notice of strike.
And that during the pendency of the preventive mediation
proceedings, no strike could be legally declared.
Clearly, there were threats of commission of
prohibited activities. Thus, it was grave abuse of discretion
on the part of the NLRC when it failed to grant the petition
for injunction filed by the SMC.
11.8 Dismissal of EEs During Conciliation,
When Legal and Enforceable
(GTE Directories Corp. vs Sanchez) Section 6, Rule
XIII of the Rules and Regulations Implementing the Labor
Code: During the proceedings, the parties shall not do any
act w/c may disrupt or impede the early settlement of the
dispute. They are obliged, as part of their duty to bargain
collectively in GF, to participate fully and promptly in the
conciliation proceedings called by the Bureau or the Regional
Office.
The dismissal is valid; the conciliation proceedings
are not violated.
It does not follow that just because the ees or their
union are unable to realize or appreciate the desirability of
their ers policies or rules, the latter were laid down to
oppress the former and subvert legitimate union activities.
Indeed, the overt, direct, deliberate and continued defiance
and disregard by the ees of the authority of their er left the
latter with no alternative except to impose sanctions. The
sanction of suspension having proved futile, termination of
employment was the only option left to the er.
12. 3rd FACTOR IN LEGALITY OF STRIKE:
PURPOSE; ECONOMIC AND ULP STRIKE
Accordingly, the ff are non-strikeable issues:
1. inter-union or intra-union disputes law
provides for med-arbitration procedures

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2. violation of labor standards law, unless Art. 248,


particularly clauses c, f, or I is also violated labor
enforcement
3. any issue involving wage distortion
4. cases pending at the DOLE regional offices,
BLR, LRC or its regional branches, NWPC and its regional
wage boards, office of the Secretary, Voluntary Arbitrator,
CA or SC
5. execution and enforcement of final orders,
decisions, resolution or wards in no. 4 above.
6. any issue covered by a no strike commitment in a
duly executed CBA
ULP strike a strike w/c is provoked or prolonged
by a refusal to bargain or a discriminatory discharge or any
other sort of ULP by the er.
Economic strike it is held to force wage or other
concessions from the er w/c he is not required by law to
grant.
12.1 The Conversion Doctrine
A strike may start as economic and, as it progresses,
become ULP or vice versa.
Harvadian labor law: when a strike is initiated over
bargaining demands but during the course of the strike, the
er commits ULP. Such an er ULP will be held to convert
the strike if it can be determined that the ers action
prolonged the strike beyond the date it would have
terminated in due course as an economic strike.
12.2 Lawful Purpose: Strike Incident to
Collective Bargaining
The promotion of the welfare of the strikers should
therefore be the aim of a valid strike.
Strikes for the ff are illegal: to procure the commission
of an unlawful or criminal act, to compel an er to join a
boycott, or to overthrow the government.
Bargaining Deadlock
(SMC vs NLRC 2nd Division and SMCEU PTGWO)
Collective Bargaining Deadlock is defined as the situation
between the labor and the management of the company
where there is failure in the collective bargaining negotiations
resulting in a stalemate.
12.2a Legality of Strike Not Dependent
Upon Ability of Management to Grant Demands
The demands that gave rise to the strike
may not properly be granted under the circumstances of this
case, but that fact should not make said demands and the
consequent strike illegal. Otherwise, it is in effect to outlaw
altogether an effective means for securing better working
conditions.
12.3 Lawful Purpose: Strike Against Ers ULP
Union busting, or interference w/ the formation of
a union, constitutes an ULP act, hence a valid ground for the
declaration of strike.
12.4 Lawful Purpose: ULP Strike in GF
There are two tests in determining the existence of
an ULP strike:
1. Objectively, when the strike is declared in protest
of an ULP w/c is found to have been actually committed
2. Subjectively, when a strike is declared in protest
of what the union believed to be ULP committed by
management, and the circumstances warranted such belief in
GF, although found subsequently as not committed.

It is not even required that there be in fact an unfair


practice committed by the er. It suffices if such a belief in GF
is entertained by labor as the inducing factor for staging a
strike.
12.4a The Good Faith Strike
Doctrine Retraced and Reiterated
(Peoples Industrial and Commercial Ees and
Workers Org) A strike may be considered legal when the union
believed that the respondent company committed UL acts
and the circumstances warranted such belief in GF although
subsequently such allegation of ULP are found as not true.
(Pepsi-Cola Labor Union vs NLRC and Pepsi-Cola
Bottling Co.,) And it has also been held that the members of a
union cannot be held responsible for an illegal strike on the
sole basis of such membership or even on account of their
affirmative vote authorizing the same. They become liable
only if they actually participated therein.
12.4b Good-Faith Strike Doctrine
Applied Even to a Strike w/o Prior Notice and Despite
a No-Strike Clause
12.4c Even Good-Faith Strike
Requires Rational Basis
The good-faith strike doctrine does not
tolerate groundless strike. It does not excuse the unions nonpresentation of substantial evidence to support its allegation
of ULP by the er.
(Tiu and Hayuhay vs NLRC and Republic Broadcasting
System) The notice of strike filed by the union before the
NCMB contained general allegations. It is the union,
therefore, who had the burden of proof to present
substantial evidence to support these allegations. It is not
enough that the union believed that the er committed acts of
ULP when the circumstances clearly negate even a prima
facie showing to warrant such a belief.
The bottom line is that the union should have
immediately resorted to the grievance machinery established
in their agreement w/ RBS. In disregarding said procedure,
the union leaders who knowingly participated in the illegal
strike have acted unreasonably, and, as such, the law cannot
interpose its hand to protect them from the consequences of
their behavior.
12.4d Do the Procedural Requirements
Apply even to a ULP Strike in GF?
Even if the union acted in GF in the belief that the
company was committing an ULP, if no notice of strike and
a strike vote were conducted, the said strike is illegal.
12.5 Lawful Purpose: Strike to Compel
Recognition and Bargaining with the Majority Union
(Caltex Filipino Managers and Supervisors Association vs
CIR)
12.6 Lawful Purpose: Strike for Union
Recognition Without Having Proven Majority Status
The legal way to secure union recognition is not
through a strike. It is through a certification election or
voluntary recognition by the er if there is no doubt as to the
unions majority status. This is why Art. 263 (b) prohibits a
strike due to an inter-union or intra-union dispute.
But where the majority status of a union is not in
doubt, not in dispute, or is certainly established and, despite
this, the er still refuses to bargain, then the situation is one of

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refusal to bargain which is ULP act by the er; in this situation


the union, if it strikes, will be staging a valid ULP strike,
assuming that the other requirements are complied with.
If these or any one of these conditions is not
present, it will be premature for a union to hold a strike to
compel bargaining; in fact, such a strike is not to compel
bargaining but to compel recognition.
(Association of Independent Unions in the Phils, Joel
Densing, et al. vs NLRC, Cenapro Chemical Corp, et al) The
NLRC correctly ruled that the strike staged by petitioners
was in the nature of a union-recognition strike. The petition
should have not been entertained because of the contract bar
rule. When a collective bargaining agreement has been duly
recognized in accordance with Art. 231 of the Labor Code, a
PCE or motion for intervention may be entertained only w/n
sixty (60) days prior to the expiry date of the said agreement.
12.6a May a Minority Union Strike?
When a union, after winning in an election, is
certified as the EBR, any other union who participated in the
election thereby becomes a minority union. A minority union
cannot demand collective bargaining with the employer
because such right properly belongs to the union that
commands the majority. The defeated union cannot lawfully
undertake a strike against the employer. Neither can it picket
to compel bargaining. Otherwise, it would obviously to
disregard the results of the consent election. No labor
dispute can exist between a minority union and an er in such
a case.
12.6b Strike
held to
Compel
Recognition while a Case is Unresolved, Illegal
The labor union staged the strike, notwithstanding,
the existence of a collective bargaining agreement as well as a
majority representative and during the pendency of a PCE
filed by the striking union. The labor organization filed its
notice of strike even before it received the answer of the er
to its demands, clearly indicating that the union was
predisposed to go on strike, regardless of the willingness of
the members to negotiate.
12.7 Unlawful Purpose: Trivial, Unjust, or
Unreasonable
During the pendency of an industrial dispute before
the CIR, the er cannot lay off, and much less dismiss, the
petitioning ee w/o the permission of the Court.
The laws protection will be withheld if the motive
that impels, prompts, moves or leads members of a labor
union or organization to stage a strike be unlawful,
illegitimate, unjust, unreasonable or trivial.
12.8 Strike to Compel Removal of an EE;
Implied Assertion of Union Infallibility
According to US jurisdiction, the weight of
authority appears to uphold the right of ees, either
individually or in combination, to quit working because some
fellow ee is obnoxious to them, when they are not governed
by a contract of service of definite duration, the principle
being that ees may choose not only their er, but also their
working associates. This right is subject to a restriction that
its primary purpose must not be to injure an obnoxious ee,
and according to some decisions, that the refusal to work
with another workman may not be for an arbitrary cause.
12.9 Unlawful Purpose

12.9a
Nonstrikeable:
Physical
Rearrangement of Office
(Reliance Surety and Insurance Co, Inc. vs NLRC) There
is no question that the strike itself was prompted by no
actual, existing unfair labor practice committed by the
petitioner. In effecting a change in the seating arrangement in
the offices of the underwriting department, the er merely
exercised a reasonable prerogative ees could not validly
question, much less assail as an act of ULP.
The reinstated officers were clearly in BF, and to
reinstate them w/o loss of seniority rights is to reward them
for an act public policy does not sanction.
The Court must take care, that in the contest
between labor and capital, the results achieved are fair and in
conformity with the rules.
12.9b Nonstrikeable: Companys Sales
Evaluation Policy
(GTE Directories vs Hon.. Agusto Sanchez, et al) It must
thus be conceded that the companys adoption of a new
Sales Evaluation and Production Policy was w/n its
management prerogative to regulate, according to its own
discretion and judgment, all aspects of employment,
including the manner, procedure and processes by which
particular work activities should be done.
The Court fails to see how the existence of
objections made by the union justify the studied disregard of,
or willful disobedience by, the sales representatives of direct
orders of their superior officers to submit reports. Deliberate
disregard or disobedience of rules, defiance of management
authority cannot be countenanced. But until and unless the
rules or orders are declared to be illegal or improper by
competent authority, the ees ignore or disobey them at their
peril. It is impermissible to reverse the process: suspend
enforcement of the orders or rules until their legality or
propriety shall have been subject of negotiation, conciliation
or arbitration.
It is a recognized principle of law that company
policies and regulations are, unless shown to be grossly
oppressive or contrary to law, generally binding and valid on
the parties and must be complied with until finally revised or
amended unilaterally or preferably through negotiations or by
competent authorities.
12.9c Nonstrikeable: Salary Distortion
Under the Wage Rationalization Act
(Ilaw at Buklod ng Manggagawa vs NLRC) SMC filed a
complaint against the Union and members thereof with the
NLRC to enjoin and restrain illegal slowdown and for
damages.
The legislative intent that solution of the problem
of wage distortions shall be sought by voluntary negotiation
or arbitration, and not by strikes, lockouts or other concerted
activities of the ees or management, is made clear in the rules
implementing RA 6727 issued by the SOLE pursuant to the
authority granted by Section 13 of the Act. Sec. 16, Chapter 1
of these implementing rules, after reiterating the policy that
wage distortions be first settled voluntarily by the parties and
eventually by compulsory arbitration, declares that, any issue
involving wage distortion shall not be a ground for a
strike/lockout.
The partial strike or concerted refusal by the Union
members to follow the five-year-old work schedule which

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they had theretofore been observing, resorted to as a means


of coercing correction of wage distortions, was therefore
forbidden by law and contract and, on this account, illegal.
12.9d Nonstrikeable: Inter-union or
Intra-union Dispute
Whether the dispute is between or among unions
(inter-union) or internal to one union, the dispute does not
involve the er. Since the dispute is not with the er, the
dispute cannot justify a work stoppage.
The Rules Implementing the Labor Code provides
in Rule 13 that no strike or lockout may be declared on
grounds involving inter-union or internal union disputes or
on issues brought to voluntary or compulsory arbitration.
13. 4TH FACTOR IN LEGALITY OF STRIKE: MEANS
AND METHODS
The right to self-organization and the right to strike,
as offsprings of the industrial civilization, are not envisioned
to create an uncivilized situation. Thus, the law puts limits to
this exercise:
a. commit any act of violence, coercion or
intimidation, or
b. obstruct the free egress to or ingress from the
ers premises for lawful purposes
c. obstruct public thoroughfares
The use of violence or threat in pursuing labor
rights is punishable under the RPC.
Art. 289 provides that The penalty of arresto
mayor and a fine not exceeding 300pesos shall be imposed
upon any person who, for the purpose of organizing,
maintaining or preventing coalitions of capital or labor, strike
of laborers or lockout of ers, shall employ violence or threats
in such a degree as to compel or force the laborers or
employers in the free and legal exercise of their industry or
work, if the act shall not constitute a more serious offense in
accordance with the provisions of this Code.
13.1 Threats, Coercion or Violence
Even if the purpose of a strike is valid, the strike
may be held invalid where the means employed are illegal.
The use of violence, intimidation, restraint or
coercion in carrying out concerted activities, which are
injurious to the rights of property, or to particular
individuals, makes a strike illegal. Unlawful acts include resort
to terrorism attended with physical violence for the purpose
of preventing nonstrikers from working and the commission
of acts of sabotage against the property of the ee as well as
the employment of violence on nonstrikers; infliction of
physical injuries, assault, breaking of truck side and windows,
throwing of bottles at nonstrikers.
Acts of violence justify the dismissal of the guilty
strikers. Likewise, ees may be discharged for illegal acts or
misconduct during a strike, such as circulating libelous
statements against the er which show actual malice.
(Almira vs B.F. Goodrich Phil., Inc.) The mere filing of
charges against an ee for alleged illegal acts during a strike
does not by itself justify his dismissal. The charges must be
proved at an investigation duly called for where the ee shall
be given an opportunity to defend himself. This is true even
if the alleged ground constitutes a criminal offense. Thus, we
ordered the reinstatement of ees against whom criminal
complaints had been filed but not yet proved.

13.1a Violence on Both Sides


For example, the ees used violence while the
company itself employed hired men to pacify the trikers.
Where violence was committed on both sides
during a strike, such violence cannot be a ground for
declaring the strike as illegal.
13.2 Responsibility for Use of Force: Individual
or Collective?
Individual. Although the strike was illegal because of
the commission of illegal acts, only the union officers and the
strikers who engaged in violent, illegal and criminal acts
against the er are deemed to have lost their employment
status. Union members who were merely instigated to
participate in the illegal strike should be treated differently.
In order to hold a LO liable for the unlawful acts of
individual officers, agents or members, there must be proof
of actual authorization or ratification of such acts after actual
knowledge thereof. Thus, where a union, through its leaders,
not only had knowledge of the acts of violence committed by
some of the strikers but either participated or ratified the
same, the strike was illegal, and the dismissal of all active
participants therein was justified.
13.3 Minor Disorders
A strike is essentially a battle waged with economic
weapons.
Nothing therein should be construed so as to
interfere or impede or diminish in any way the right to strike.
If this were not so, the rights afforded to ees by the Act
would indeed be illusory. We accordingly, recently held that it
was not intended by the Act that minor disorders of this
nature would deprive the striker of the possibility of
reinstatement.
13.4 Officials Inability to Leave Premises, Not
Illegal Detention
(People vs Barba) Clearly, there was no kidnapping;
the detention or deprivation of liberty under the
circumstance while certainly not to be justified, was not done
with criminal intent. It was the outcome of picketing carried
to excess, one might say, by people who, perhaps in a less
tense atmosphere and in the absence of the bitterness that
did characterize this particular labor dispute, should have
known better but did not. Their objective, as clearly observed
by the lower court, was not to inflict loss of freedom to the
complainants but to weaken management resistance so that it
would give in to their demands.
13.5 Blockade or Obstruction
Such obstructions are beyond valid exercise of the
right to strike because they deprive the owner of the
company premises of its right to use them for lawful
purposes and the passers-by the use of public passage. The
illegal obstructions on public thoroughfares, such as streets
or sidewalks, are nuisances which local government
authorities can summarily remove.
14. 5th FACTOR IN LEGALITY OF STRIKE;
INJUNCTION
When there is a labor dispute causing or likely to
cause a strike affecting national interest, the SOLE may
either assume jurisdiction or certify the dispute to the NLRC
for compulsory arbitration. The Secretary may so act at his
own initiative or upon petition by any of the parties.

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Such assumption or certification has the effect of


automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification, 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. This is an example of automatic
injunction. But this is strictly limited to national interest
cases, and even in these cases the parties retain the option to
submit the dispute to voluntary arbitration.
A prohibited activity under Art. 264 is the holding
of a strike or lockout after assumption of jurisdiction by the
President or The Secretary of Labor or after certification or
submission of the dispute to compulsory or voluntary
arbitration.
This is an exception to Art. 254 which, in general,
forbids labor injunctions.
14.2 What are Considered National Interest
Cases
The Code vests the President of the Philippines and
the SOLE almost unlimited discretion to determine what
industries may be considered as indispensable to the national
interest.
The assumption of jurisdiction by the Secretary of
Labor 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. The
compelling consideration is the fact that a prolonged strike or
lockout is inimical to the national economy and thus, the
need to implement some measures to suppress any act which
will hinder the companys essential productions is
indispensable for the promotion of the common good.
The Secretary of labor 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.
(PSBA vs Noriel) There is no doubt that the ongoing
labor dispute at the school adversely affects the national
interest.
(GTE Directors Corp. vs Sanchez) The fact that the
top officers of the union were dismissed during the
conciliation process, obviously do not suffice to make the
dispute in the case at bar one adversely affecting the
national interest
14.2a National Interest by Statutory
Declarion
Sec. 22. Strikes and Lockout The banking industry is
hereby declared as indispensable to the national interest and,
notwithstanding the provisions of any law to the contrary,
any strike or lockout involving banks, if unsettled after 7
calendar days, shall be reported by the Bangko Sentral to the
Secretary of Labor who may assume jurisdiction over the
dispute or decide it or certify the same to the NLRC for
compulsory arbitration. However, the President of the
Philippines may at any time intervene and assume jurisdiction
over such labor dispute in order to settle or terminate the
same.
14.3 Assumption of Jurisdiction: Prior Notice
Not Required
The discretion to assume jurisdiction may be
exercised by the SOLE without the necessity of prior notice

or hearing given to any of the parties disputants. The


rationale for his primary assumption of jurisdiction can
justifiably rest on his own consideration of the exigency of
the situation in relation to the national interests.
The Labor Minister may immediately take action
where a strike has effectively paralyzed a vital industry, e.g.
bus company drivers strike, w/o waiting the filing of notice
of strike.
14.4.
Power
to
Assume
Jurisdiction,
Constitutional
(Union of Filipro Ees, et al. vs. Nestle Phil., Inc., et al)
Articles 263 (g) and 264 of the Labor Code have been
enacted pursuant to the police power of the state, it is an
inherent power of government and does not need to be
expressly conferred by the Constitution.
14.5 Certification to NLRC
Certified labor disputes these are cases certified/
referred to the Commission for compulsory arbitration
dealing about national interest cases.
National Interest may be certified to the NLRC
even before a strike is declared since Art. 263 does not
require the existence of a strike, but only of an industrial
dispute; and that it is not denied that the er and the Union
had such a dispute, and that the officials of the DOLE
previously tried to conciliate the disputants but without
success.
When sitting in a compulsory arbitration certified to
by the SLE, 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 the implementing body, its
authority did not include the power to amend the Secretarys
order.
Moreover, the Commission is further tasked to act
within the earliest time possible and with the end in view that
its actions would not serve the interests of the parties alone,
but would also have favorable implications to the community
and the economy as a whole.
14.6 Effects of Defiance
Non-compliance with the certification order of the
SLE shall be considered as an illegal act committed in the
course of the strike or lockout, and shall authorize the
Commission to enforce the same under pain of immediate
disciplinary action, including dismissal or loss of employment
status or payment by the locking-out er f backwages,
damages and/or other affirmative relief, even criminal
prosecution against the liable parties.
The Commission may also seek the assistance of
law enforcement agencies to ensure compliance and
enforcement of its orders and resolutions.
(Grand Boulevard Hotel vs Genuine Labor Organization of
Workers in Hotel, Restaurant and Allied Industries) The union
went on strike simultaneously with the filing of the notice of
strike. This rendered the strike illegal for failure to comply
with the requisite periods as stated above. Moreover, a strike
undertaken despite the issuance by the SOLE of a
certification order becomes a prohibited activity and thus,
illegal pursuant to Art. 264 of the Labor Code.
A claim of GF is not a valid excuse to dispense with
the procedural steps for a lawful strike.

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14.7 Assumption or Certification Order


Immediately Effective Even w/o Return-to-Work Order;
Strike Becomes an Illegal Activity
(Union of Filipino Ees, et al vs. Nestle Phil., Inc., et al)
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.
Regardless therefore of their motives, or the validity
of their claims, the striking workers must cease and/or desist
from any and all acts that tend to, or undermine this
authority of the SLE, once an assumption and/or
certification order is issued. They cannot, for instance, ignore
return-to-work orders, citing ULP on the part of the
company, to justify their actions.
An assumption and/or certification order of the
Secretary of Labor automatically results in a return-to-work
of all striking workers, whether or not a corresponding order
has been issued by the Secretary of Labor.
Certification of the dispute to the NLRC makes the
continuation of the strike illegal, provided that the parties are
duly notified of the certification order. Notice to the parties
is a prerequisite even if the order states that it is immediately
executory.
(PNOC Dockyard and Engineering Corp. vs NLRC, et
al) Basic is the rule that no order, decision or resolution not
even one that is immediately executory is binding and
automatically executory unless and until the parties are duly
notified thereof. This means that in labor cases, both the
party and its counsel must be duly served their separate
copies of the order, decision or resolution, unlike in ordinary
judicial proceedings where notice to counsel is deemed notice
to the party.
14.8 Refusal to Receive the RTWO
Refusal to receive the Assumption of Jurisdiction
Order amounts to defiance of the Order, which defiance
makes the continuation of the strike an illegal act, thus
subjecting the strikers to loss of employment status. The
strikers should resume work immediately upon receipt or
constructive receipt of the Order. A grace period may be
given but that is not required by law.
(University of San Agustin vs CA, et al.) In this case, the
AJO was served at 8:45 am of September 19, 2003. The
strikers then should have returned to work immediately.
However, they persisted with their refusal to receive the AJO
and waited for their union President to receive the same at
5:25pm. The unions defiance of the AJO was evident in the
sheriffs report.
The Unions assertion of a well-settled practice that
the SOLE always gives 24 hours to the striking workers
within which to return to work, offers no refuge. The Court
have never interpreted the phrase immediately return to
work found in Art.263 (g) to mean within 24 hours.
The mere issuance of an assumption order by the
Secretary automatically carries with it a return-to-work order.
Art. 264 Prohibited Activities
a) x x x No strike or lockout shall be declared after
the assumption of jurisdiction by the President or Secretary
or after certification or submission of the dispute to

compulsory or voluntary arbitration or during the pendency


of cases involving the same grounds for strike or lockout.
Rationale: Once jurisdiction over the labor dispute
has been properly acquired by the competent authority, such
jurisdiction should not be interfered with by the application
of coercive processes of a strike. The refusal to receive such
orders and other processes is described by the SC as an
apparent attempt to frustrate the ends of justice.
By staging a strike after the assumption of
jurisdiction or certification for arbitration, workers forfeited
their right to be admitted to work, having abandoned their
employment, and could be validly replaced.
14.9 Defying the RTWO
(Sarmiento vs Tuico) The RTWO mot so much
confers a right as it imposes a duty even against the workers
will. Returning to work in this situation is not a matter of
option or voluntariness but of obligation. The worker must
return to his job together with his co-workers so the
operations of the company can be resumed and it can
continue serving the public and promoting its interest. So
imperative is the order in fact that it is not even considered
violative of the right against involuntary servitude.
The RTWO should benefit only those workers who
comply with it and, regardless of the outcome of the
compulsory arbitration proceedings, are entitled to be paid
for the work they have actually performed. Conversely, those
workers who refuse to obey the said order and instead wage a
strike are not entitled to be paid for work not done or to
reinstatement to the positions they have abandoned by their
refusal to return thereto as ordered.
One purpose of the RTWO is to protect the
workers who might otherwise be locked out by the er for
threatening or waging a strike. But the more important
reason is to prevent impairment of the national interest in
case the operations of the company are disrupted by refusal
of the strikers to return to work as directed.
Where the RTWO 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 the strike is illegal. Precisely, the purpose of
the RTWO is to maintain the status quo while the
determination is being made.
14.10 Defiance of RTWO, an Illegal Act
Not only union officers but also union members
who defy a RTWO are subject to dismissal. They are deemed
to have participated in an illegal act.
(St. Scholasticas College vs Hon. Ruben Torres and
Samahan ng Manggagawang Pang-edukasyon sa Sta. EscolastikaNAFTEU) A RTWO is immediately effective and executory
notwithstanding the filing of a motion for reconsideration. It
must be strictly complied with even during the pendency of
any petition questioning its validity.
From the moment a worker defies a RTWO, he is
deemed to have abandoned his job. It is already in itself
knowingly participating in an illegal act. Thus, the respondent
secretary gravely abused his discretion when he ordered the
reinstatement of striking union members who refused to
report back to work after he issued 2 RTWO, which in itself
is knowingly participating in an illegal act.

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The union officers and members who have


participated in the said illegal activity are, as a result, deemed
to have lost their employment status.
But to justify dismissal, the defiance of RTWO
must be proved.
Thus, the alleged or perceived defiance of the
RTWO does not mean automatic dismissal of the defying
ees. Due process must be observed.
14.10a Abandonment has Varying
Elements
The rule that to constitute abandonment of position
there must be concurrence of the intention to abandon and
some overt act from which it may be inferred that the ee has
no more interest in working is available as a defense against
dismissals under Art. 282. But it cannot be invoked in
dismissals resulting from a strikers defiance of RTWO under
Art. 263g or 264a.
But the SLE may temper the consequence of the
defiance to the RTWO. He may merely suspend rather than
dismiss the ees involved.
14.11 Restoration of Condition Upon Issuance
of RTWO
It is intended to restore the strikers to their
positions in the company under the last terms and conditions
existing before the dispute arose.
Where a RTWO is issued, may the er be compelled to accept
back to work the strikers with pending criminal charges?
(Telefunken Semiconductors Ees Union-FFW vs Secretary
of Labor) Thus 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. Thus, the SLE gravely abused his discretion.
14.12 Actual, Not Payroll, Readmission
(University of Santo Tomas vs NLRC) Thus, the
placement of the striking teachers to substantially equivalent
academic assignments could not be considered
reinstatement under the same terms and conditions
prevailing before the strike.
(Manila Diamond Hotel Employees Union vs CA) it was
an error on the part of the CA to view the assumption order
of the Secretary as a measure to protect the striking workers
from any retaliatory action of the er. The SC, through Justice
Azcuna, reiterates that this law was written as a means to be
used by the State to protect itself from an emergency or
crises. It is not for labor, nor is it for management.
EXPN: superseding circumstances
(University of immaculate Concepcion, Inc. vs SLE) In
another case the Court recognizes that one of the
superseding circumstances that justifies payroll
reinstatement. The fact that the subject employees positions
were declared confidential in nature by a panel of voluntary
arbitrators.
(National Union of Workers, etc. vs CA) She did not
insist that the management physically and immediately
reinstate them because as the management pointed out, it
would not look nice to have bald staff attending to the
hotels guests.
14.13 Voluntary Return to Work Is Not Waiver
of Original Demands

There is absolutely no merit in this contention. The


strike in this case was adopted by the union to compel the
respondent shipping company to accede to its demand. The
strike was but one of the means employed to achieve its
ends. When the radio officers returned back to work after the
strike, such return did not imply the waiver of the original
demands. The fact that the radio operators returned back to
work and ended their strike only meant that they desisted
from strike; such desistance is a personal act of the strikers,
and cannot be used against the union and interpreted as a
waiver by it of its original demands for which the strike was
adopted as a weapon.
14.4 All Issues to be Determined in the Certified
Industrial Dispute
Where the industrial dispute has been certified by
the President (or the SLE) to the industrial court, all issues
involved in the industrial dispute should be aired and
determined in the case where the dispute as certified by the
President is docketed. The parties should not be permitted to
isolate other germane issues or demands and reserve them
for determination in the other cases pending before other
branches of the industrial court.
All cases between the same parties, except where
the certification order specifies otherwise the issues
submitted for arbitration, w/c are already filed or may be
filed, and are relevant to or are proper incidents of the
certified case, shall be considered subsumed or absorbed by
the certified case, and shall be decided by the Appropriate
Division of the Commission.
Rule IV, Section 4(2), the parties to a certified case,
under pain of contempt, shall inform their counsels and the
Division concerned of all cases pending with the Regional
Arbitration Branches and the Voluntary Arbitrators relative
or certified to the case before it.
Whenever a certified labor dispute involves a
business entity with several workplaces located in different
regions, the Division having territorial jurisdiction over the
principal office of the company shall acquire jurisdiction to
decide such labor dispute; unless the certification order
provides otherwise.
(Bagong Bayani Corp Realty Investors and Developers vs
Blas Ople) The certification for compulsory arbitration, as
directed by the Minister of Labor; overrides the other
unresolved proceedings before the National Labor Relations
Commission. Proceedings in the injunction and unfair labor
practice cases filed by the er necessarily have to be suspended
to await the outcome of the compulsory arbitration
proceedings directed by the Minister of Labor to be
conducted by the NLRC.
(International Pharmaceuticals, Inc. vs Secretary of Labor
and Associated Labor Union) The consolidation of the three
NLRC cases was necessary to enable the Secretary to
competently and efficiently dispose of the dispute in its
entirety.
14.15 Submission of Incidental Issues; Rulings
Reconciled
(St. Scholasticas College vs Hon. Ruben Torres, et al) The
issue on whether respondent Secretary has the power to
assume jurisdiction over a labor dispute and its incidental
controversies, causing or likely to cause a strike or lockout in

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an industry indispensable to the national interest, was already


settled in International Pharmaceuticals, Inc. vs SLE:
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.
Since the matter on the legality or illegality of the
strike was never submitted to him for resolution, he was thus
found to have exceeded his jurisdiction when he restrained
the er from taking disciplinary action against ees who staged
an illegal strike. Before the SLE may take cognizance of an
issue which is merely incidental to the labor dispute,
therefore, the same must be involved in the labor dispute
itself, or otherwise submitted to him for resolution.
A dispute supplying the sulfate requirements of
MWSS is a national interest dispute.
EXPN: where the parties have an existing no strikeno lockout agreement requiring that their disputes be
brought to voluntary arbitration.
14.16 Procedure in Certified Cases
a. When a clarificatory hearing is not needed, the
Commission shall resolve all certified cases w/n 30 calendar
days from receipt by the assigned Commissioner of the
complete records which shall include the position papers of
the parties and the order of the SLE denying the motion for
reconsideration of the certification order, if such motion has
been filed.
b. Where a clarificatory hearing is needed, the
Commission shall, w/n 5 calendar days from receipt of
records, issue a notice to be served on the parties through the
fastest means available, requiring them to appear and submit
additional evidence, if any.
c. Notwithstanding the necessity for a clarificatory
hearing, all certified cases shall be resolved by the
Commission w/n 60 calendar days from receipt of the
complete records.
d. no motion for postponement or extension shall
be entertained.
14.17
Assumption
Order
Regulates
Management Prerogatives
When such a labor dispute has in fact occurred and
a general injunction has been issued restraining the
commission of disruptive acts, management prerogatives
must be exercised consistently with the statutory objective.
14.18 Legal Discretion; Judicial Review of
Secretarys Award or Order
But respect towards the exercise of the Secretarys
assumption power does not mean exemption from judicial
review. The Court may inquire not just into the validity of
the act of assuming jurisdiction over the dispute but even
into the correctness or reasonableness of the contents of the
secretarys order, award or resolution.
Discretion is defined as the act or the liberty to
decide, according to the principles of justice and ones ideas
of what is right and proper under the circumstances, without
willfulness or favor. Where anything is left to any person to
be done according to his discretion, the law intends it must
be done with a sound discretion and according to law.
It is not a mental discretion to be exercised ex
gratia, but a legal discretion to be exercised in conformity

with the spirit of the law, and in the manner to subserve and
not to impede or defeat the ends of substantial justice.
This principle has been discussed in the (Manila
Electric Co. vs. Hon. Sec. Quisumbing and Meralco Employees and
Workers Association) which ruled that the natural and ever
present limitation on the Secretarys acts is, of course, the
Constitution particularly Sec.1 Art. 8 (Judicial power to
determine whether or not there has been grave abuse of
discretion amounting to lack or excess of jurisdiction on the
part of any branch or instrumentality of the government.)
14.19 Secretarys Abuse of Discretion, Examples
- to impose a stipulation which even the union did
not ask for.
14.20 Withdrawal of Case to Submit to VA
The parties, at any stage, can withdraw the case
from compulsory arbitration to bring it instead to voluntary
arbitrator.
15. 6TH FACTOR IN LEGALITY OF STRIKE:
AGREEMENT OF THE PARTIES
(Master Iron Case) as held in Philippine Metal
Foundries, Inc. vs CIR, a no-strike clause in a CBA is
applicable only to economic strikes. Corollarily, if the strike is
founded on an ULP of the er, a strike declared by the union
cannot be considered a violation of the no-strike clause.
15.2 No-Strike Clause Binding; Primacy of
Voluntary Arbitration Agreement
A no-strike-no lockout stipulation generally
deserves respect by the parties to the CBA and by the labor
authorities. Such stipulation applies even to a deadlock in
renegotiating the economic provisions of the CBA. Where
the CBA stipulates that the disputes between the parties
should be resolved through a grievance machinery, including
VA, a notice of strike filed by the union violates that
agreement. The NCMB should consider such notice as not
duly filed (the party so filing shall be notified of such finding
in writing by the Regional Branch Director) and then direct
the union to avail itself of the grievance machinery and VA.
A similar posture should be taken by the SLE instead of
assuming jurisdiction over the dispute.

Primacy of Voluntary
Assumption of Jurisdiction

Arbitration

over

The Conciliator-Mediator shall convince the party


concerned to voluntarily withdraw the notice w/o prejudice
to further conciliation proceedings. Otherwise, he shall
recommend to the Regional Branch Director that the notice
be treated as a preventive mediation case.

Action on Notices Involving Issues Cognizable


by the Grievance Machinery, VA or the NLRC

Disputes arising from the interpretation or


implementation of a CBA or from the interpretation or
enforcement of company personnel policies shall be referred
to the grievance machinery as provided for under Art. 261 of
the LC.
15.3 No-Strike Clause Not Binding Upon
Newly Certified Bargaining Agent
Substitutionary Doctrine only provides that the ees
cannot revoke the validly-executed collective bargaining
contract with their er by the simple expedient of changing
their bargaining agent. And it is in the light of this that the
phrase said new agent would have to respect said contract

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must be understood. It only means that the ees, through their


BA, cannot renege on their collective bargaining contract
except of course to negotiate with management for the
shortening thereof.
As the newly certified BA, the union could always
voluntarily assume all personal undertakings made by the
displaced agent.
15.4 If Members Disregard a No-Strike Clause,
Union May Become Liable
A no strike clause is binding not only upon the
union, but also upon its individual members. An er may
maintain an action against a union for damages resulting
from a violation of a no-strike clause, even though the er
grievances relating to the same work stoppage are arbitrable.
A union which agrees to an express no-strike clause
impliedly agrees to undertake every reasonable means to
induce members participating in an unauthorized strike to
return to work.
15.5 No Violation if Work Stoppage Not
Initiated or Supported by the Union
- If it is apparent that the union officers took steps
to get the situation back to normal as soon as they were
notified about it.
15.6 No-Strike Pledge Inferred from Other
Provisions
A strike during the term of a CBA is not ipso facto
a violation of the agreement. Language in a CBAs
agreements preamble, stating a contractual purpose to
prevent lockouts, boycotts, and strikes, does not constitute a
waiver of the right to strike. However, a no-strike pledge is
inferable from a CBA establishing arbitration as a means of
settling disputes, such as from an agreement that disputes
shall be settled exclusively and finally by compulsory
arbitration or an agreement that the arbitration procedure
shall be the exclusive means of adjudicating all matters.
16. IMPROVED-OFFER BALLOTING
Art. 265. Improved offer balloting. In an effort to
settle a strike, the Department of Labor and Employment
shall conduct a referendum by secret ballot on the improved
offer of the employer on or before the 30th day of the strike.
When at least a majority of the union members vote to
accept the improved offer the striking workers shall
immediately return to work and the employer shall thereupon
readmit them upon the signing of the agreement.
In case of a lockout, the Department of Labor and
Employment shall also conduct a referendum by secret
balloting on the reduced offer of the union on or before the
30th day of the lockout. When at least a majority of the
board of directors or trustees or the partners holding the
controlling interest in the case of a partnership vote to accept
the reduced offer, the workers shall immediately return to
work and the employer shall thereupon readmit them upon
the signing of the agreement. (Incorporated by Section 28,
Republic Act No. 6715, March 21, 1989
- it is a device to stop the work stoppage
- thus, by this, the strike or lockout may end
peaceably, silently, without anyone losing face because no
one will appear defeated.
- it opens a graceful exit.

- An improved offer by the er, or a reduced demand


by the union, will serve as basis for a secret balloting that will
not reveal who retreated from the fight.
PART 2
PICKETING AND OTHER CONCERTED
ACTIVITIES
PICKETING
Picketing involves the presence of striking workers or
their union brothers who pace back and forth before the
place of business of an employer considered unfair to
organized labor, in hope of being able to persuade
peacefully the workers not to work in the establishment, and
the customers no to do business there.
almost always accompanies strike. But there may be
picketing w/o strike because the employees may picket w/o
engaging in work stoppage.
Not every concerted action is a strike

As Phase of Freedom of Speech

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 cannot be
curtailed even in the absence of Er-Ee relationship

Picketing w/o Striking

Common Law Rule picketing w/o a strike was no more


unlawful than a strike w/o picketing.
Under this rule, consumer picketing and recognitional or
organizational picketing were lawful.
Other jurisdictions forbade picketing in the absence of a
labor dispute b/w the Er or his Ee, as where a strike had
ended.
Today it is established that the constitutional right of free
speech is infringed by a states judicial policy forbidding
resort to peaceful picketing where there is no immediate ErEe dispute, as in the case of organizational or recognitional
picketing. Hence, a state cannot outlaw picketing merely
because there is no strike in progress.

Moving Picket

The public easement of way and passage permits the pickets


to parade in front of or near the picketed establishment. As
,e,bers of general public, they have the right of passage over
so much of the employers land as is used as a highway. This
right, however, is one of passage a pedestrian right. It does
not create the additional rights of squatting or assembly on
this portion of the employers land. Any such squatting or
assembly would exceed the scope of the publics easement
and would constitute an enjoinable trespass.
The pickets (or picketers) used by the union in picket lines
may or may not be employees of the offending employer.
Although the task of the picketing in astrike in w/c less than
all the unions members are involved is generally first
assigned to such of the unions members are directly affected
by the strike, where this number is either inadequate or

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unavailable for that purpose, other members of the striking


union are assigned to that task. These disinterested pickets
are customarily drawn from the unions unemployed or
partially employed members.
All members of the union are affected all are assigned to
picket duty

Picketing of Neutral Parties or Innocent By-Standers

A picketing labor union has no right to prevent employees of


another Company from getting in and out of its rented
premises, otherwise it will be held liable for damages for its
act against innocent bystanders (Philippine Association of Free
Labor Unions v. Cloribel)

Picketing of Home

Generally held improper, even when the pickets are


domestic servants A home is not an industrial or business
enterprise, that it is notacquired or maintained for pecuniary
gain or profit, but rather, that it is an institution used and
maintain as a place of abode, and that an enterprise not
conducted as a means of livelihood, or profit, does not come
w/in the ordinary meaning of such terms as business,
trade, or industry.

Vandalism and acts of a less terroristic nature w/c are


designed to cause physical discomfort to the employers
customers are also unlawful.
What constitute intimidation depends
circumstances.
Force threatened = force exercised

on

all

the

There may be unlawful intimidation w/o may direct threats


or overt acts of violence.
Example of unlawful:
Words or acts w/c are calculated and intended to
cause an ordinary person to fear an injury to his
person, business, or property are equivalent to threats.
The number of pickets, their methods, their placards,
and their circular may constitute intimidation.
A display of force w/o actual use thereof may be
intimidation
It is not unlawful to threaten to do what one may legally do.
Example of lawful:
A strike
Threat to drive an employer out of business

Limitations

Untruthful Picketing

Obstruction

False statements are not constitutionally protected free


speech; however, the Constitution does not permit an
injunction against all picketing merely because the pickets
have carried signs w/ false statements.

same limitations as strike, particularly as to lawful purpose


and lawful means. Like freedom of expression in general, has
its limits. Thus, to the extent that it is an instrument of
coercion rather than of persuasion, it cannot rightfully be
entitled to the protection associated with freedom of speech.
Picketing if amounts to nuisance are unlawful.
Picketing may constitute nuisance if it constitutes an
obstruction to the free use of property, so ac substantially to
interfere with the comfortable enjoyment of life or property,
or if its constitutes an unlawful obstruction to the free
passage or use, in the customary manner, of a street.

Untruthful Picketing = Unlawful Picketing (and is enjoinable


even though the purpose is valid)

Picketing is not peaceful where there is shouting or the use


of loudspeakers in front of a picketed place of business.
Picketing may not properly use abusive and threathening
language towards patrons of a place or business or against
employees.

Picketing accompanied by intimidation, threats, violence, and


coercion may properly be held to constitute a nuisance.

Permissible activities on the part of picketers do not include


misrepresentation.

Pickets may not aggressively interfere with the right of


peaceful ingress and egress to and from the employers shop,
or obstruct the public thoroughfares.

GR The means employed in aid of a strike must be free


from falsehood or defamation.

Picketing is not peaceful where the sidewalk or entrance to a


place of business is obstructed by pickets parading around in
circle or lying on the sidewalk.

Violence and Intimidation

Picketing carried on with intimidation, threats, coercion, or


force is unlawful, however laudable the strikers motive or
purpose, and regardless of whether the intimidated persons
are the employers employees or potential employees or
customers.

OTHER CONCERTED ACTIVITIES


Collective Letter informal action participated by at least
two employees for mutual aid or protection in regard to
their interests such as acting in concert with other employees
to voice their grievances against the bank president through a
letter signed and published by them
Publicity Members of labor union may, w/o authorization
by statute, make known the facts of the dispute, for freedom
of speech is granted by the Constitution. Striking employees,
too, have the right to acquaint the public with the fact of the
existence of a strike setting forth their claims in a controversy
over terms and conditions of employment, by sign, handbill,

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or newspaper advertisement as a legitimate mean of


economic coercion
Placards and Banner may carry such placards or banners
upon a public street, provided the inscription is not
libellous or otherwise unlawful.
-there are limitations upon the right to banner, for
the right to publish does not mean that one may always
publish when and where he pleases.
-legality may depend upon the locality in w/c it
takes place, and the right to speak or publish may not be
so used as to constitute a nuisance. The display of signs
misstating the facts in respect of the labor dispute it not
permitted.
-lawful when statements made are true in fact, and
if there is not obstruction to traffic or of access to the
plaintiffs place of business, and no threat, intimidation,
or other unlawful interference, and if the object sought
to be attained by the boycott is not an unlawful one.
Wearing Armbands
Bascon, et al v. CA, et al.
Facts: Employees actually participation in the illegal strike
was limited to wearing armbands and putting up placards.
There was no finding that the armbands or the placards
contained offensive words or symbols.
Held: SC decided that it was lawful. Wearing Armband and
putting up placards to express ones views w/o violating the
rights of 3rd parties are legal per se and even constitutionally
protected. Wearing armbands to signify union membership
and putting up placards to express their views cannot be such
great dimension as to warrant the extreme penalty of
dismissal, especially considering the long years of service
rendered by the petitioners and the fact that they have not
heretofore been subject of any disciplinary action in the
course of their employment with MCCH.
Speeches, Music and Broadcasts
-It is not unlawful for a labor org in a radio broadcast, w/o
employing threat or intimidation, to express its honest
opinion as to the fairness of an employer toward organized
labor and to advise the public and friends of labor not to
patronize him.
Nor is it unlawful to cause to be driven through streets a
vehicle w/c bears signs that are not unlawful and is equipped
w/ apparatus for broadcasting music. However, use of
loudspeaker in front of a picketed place of business has been
condemned as a form of intimidation. The same is true of
the holding of street meetings near the place of business of
the employer w/ whom a union has a dispute.
Employees Demonstration to Protest Police Abuses
Philippine Blooming Mills Employees Org v. Philippine Blooming
Mills
Facts: The worker of the Company working in the 1st, 2nd
and 3rd shifts planned a demonstration in Malacaang to
protest the alleged abuses of the Pasig police. Upon hearing
the plan, the Company management called a meeting w/ the
union officers telling them that such activity would constitute
a violation of the no strike clause in the CBA.

Held: SC decide that the was no ULP on the part of union


and its officers for the violation of the no-strike clause and
that the officers are guilty of bargaining in bad faith and
violating the CBA. The demonstration held by petitioners on
March 4, 1969 before Malacaang was against the alleged
abuses of some Pasig policemen, not against the employer.
Said demonstration was purely and completely an exercise of
freedom of expression, in general, and of their right of
assembly and of petition for redress of grievances, in
particular before the appropriate agency, the Chief Executive,
against the police officers of the municipality of Pasig. They
exercised their civil and political rights for their mutual aid
and protection from what they believed were police excesses.
Rallies as Illegal Strikes
Toyota Motor Phils. Corp. Workers Association, et al. v. NLRC, et
al.
Relying on the Ruling of Phil. Blooming Mills the workers and
union officers of Toyota Motors tried to justify the work
stoppage they committed as they rallied in front of DOLE
Offices.
The Court rejected the argument with this explanation:
the union fails to realize one major difference: there was
no labor dispute in Philippine Blooming Mills Employees
Organization. In the present case, there was an on-going labor
dispute arising from Toyotas refusal to recognize and
negotiate w/ the Union, which was the subject of notice of
strike filed by the union on January 16, 2001.
BOYCOTT
Boycott as applied to labor unions, is generally understood
to a combination to harm one person by coercing others to
harm him that is, a combination of many to cause a loss to
one person by causing others, against their will, to withdraw
from him their beneficial business intercourse through
threats that unless others do so, the many will cause similar
loss to him or them.
-defined as an attempt, by arousing a fear of loss, to
coerce others, against their will to withhold from one
denominated unfriendly to labor their beneficial
business intercourse.
-a confederation, generally secret, of many persons
whose interest is to injure another by preventing any and
all persons from doing business with him, through fear
of incurring the displeasure, persecution and vengeance
of the conspirators.

Kinds of Boycott

Primary Boycott when a union which had contracts with


virtually all the funeral directors in the area picketed a funeral
home whose owners refused to pay dues to the union and
requested suppliers in accordance with the contract to refuse
to deal with the owners
Secondary Boycott combination not merely to refrain
from dealing with a person, or to advise or by peaceable
means persuade his customers to refrain , but to exercise
coercive pressure upon such customers, actual or
prospective, in order to cause them to withhold or withdraw
patronage from him through fear of loss or damage to
themselves should they deal with him.

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-exists where many combine to injure one in his


business by coercing 3rd persons, against their will, to
cease patronizing him by threats of similar injury.

Lawfulness of Boycott

element involved, although sometimes happens that


operations are reduced to so diminished a point that the
condition differs only nominally from complete stoppage of
work.

may be lawful or unlawful depending on the means and


methods employed and the ends to be accomplished. Its lawfulness
may also depend upon whether it is used against the
industrial antagonist directly against an outsider because of
his influence on or connection with the industrial antagonist.

Slowdown can be executed only by such of the


offending employers personnel as operate the facilities
of production and distribution (compared with picketing
and secondary boycott, can be done by employees and nonemployees)

Boycott by labor for the purpose of the maintenance or


advancement of wages, improvement of conditions of labor,
shortening of periods of labor, engagements of union
employees and reinstatement under contract of union men
dismissed because of union affiliation are considered
legitimate.

a strike on the instalment plan,

Boycott is illegal where its purpose is to require the employer


to coerce his employees to pay their back dues to the union
or discharge them, or to compel the payment by an employee
of a fine, or other penalties, or to compel an employee to
refrain from working, or to compel employment of more
help than mecessary, or to compel one to sign a contract ot
to compel an employer to refrain from issuing new process
or machinery.
As to the means and methods employed, only a boycott that
is free of violence or malevolence is held anywhere to be
lawful. Interference with ones patronage by persuading his
patrons against their will, or preventing them by means of
violence or threats, from having beneficial intercourse with
him is unlawful.

Means or Methods to Carry Out Boycott

The means and methods of carrying out the boycott may be


in form of a refusal of a labor union to allow its members to
handle products of the employer or to work on materials
from non-union shops, or to work on a job union w/c a
contract or w/ whom they are at variance in an existing labor
dispute. It may consist in instructing or ordering their
members not to accept employment w/ an individual or to
continue in his employment where the action of the union is
to promote its members or it may be thru distribution of
circulars of the publication of newspaper articles put forth in
pursuance of a legitimate object and form no part of a
scheme of intimidation.

Overtime Boycott

Overtime Boycott or work slowdown may amount to illegal


strike.
SLOWDOWN
Slowdown is a method by w/c ones employees, without
seeking a complete stoppage of work, retard production and
distribution in an effort to compel compliance by the
employer with the labor demands made upon him.
-does not have as its object the complete
curtailment of operations; merely reduces the pace of
production and distribution; extent of reduction depends
entirely on the circumstances and disposition of the labor

REQUIREMENTS
FOR
ARREST
AND
DETENTION
DIRECTIVE TO PROSECUTORS
Requirement to the fiscals and other government
prosecutors to first secure the clearance of the Ministry of
Labor and/or the Office of the President before taking
cognizance of complaints for preliminary investigations and
filing in the court of the corresponding information of cases
arising out of or related to a labor dispute, including
allegations of violence, coercion, physical injuries,
obstructing the free ingress to and egress from a factory or
place of operation of the machines of such factory, or the
employers premises.
The criminal cases should be suspended until the completion
of the compulsory arbitration proceedings in the NLRC.
Part 3
CONSEQUENCES OF CONCERTED ACTIONS
STRIKERS RETENTION OF EMPLOYMENT
The effects of employment, generally, are merely suspended
during that time the workers do not work and do not get
paid. When the strike is over, the employees go back and the
effects of employer-employee relationship are resumed.
Generally therefore the strikers retain their jobs.
Generally, yes. In Bacus vs. Ople (L-56856, October 23, 1984),
the Court said: Even if declared illegal, the strike need not
have been attended with such a drastic consequence as
termination of employment relationship. This is so,
according to the court, because of the security of tenure
provision of the Constitution,
Using compassion and good faith as reasons, the Court
ruled that a finding of illegality of a strike should not be
automatically followed by wholesale dismissal of striking
workers from their employment. On equitable
considerations, the Court ordered the reinstatement of the
striking workers to their former positions without backwages,
or if reinstatement is not possible, to pay them separation pay
under the Labor Code or under the collective bargaining
agreement, whichever is higher, except those who have
accepted their termination and financial assistance from the
company.
In so far as the strikers who are ordinarily unschooled
laborers and who do not fully understand the impact of what

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constitutes a strikeable or nonstrikeable issue are concerned,


compassion plays a role. In one case, the strikers are lowincome earners to whom a seemingly meagre increase of
P1.50 in daily wage is worth fighting for. Their reading and
interpretation of the collective bargaining agreement
provision, albeit erroneous, led them to believe in good faith
that they are entitled to such increase and that the failure of
respondent company to comply with the collective
bargaining agreement provision provided a valid ground for a
strike. They had previously met with representatives of
respondent company over this matter, but to no avail. Under
the circumstances, they cannot entirely be blamed for
thinking that only through the potent weapon of strike could
they attain their objective.
The above rulings indicate rejection of the rule of vicarious
liability. Under this rule, mere membership in a labor union
could serve as a basis of liability for acts of individuals, or for
a labor activity, done on behalf of the union. The union
member could be made liable on the theory that all the
members were engaged in a general conspiracy, and the
unlawful acts of the particular members were viewed as
necessary incidents of the conspiracy. It has been said that in
the absence of statute providing otherwise, the rule of
vicarious liability would apply.
Replacing the Industrial Peace Act, the Labor Code had not
adopted the vicarious liability rule. The nonrevival is shown
by the decisions in Bacus and Progressive Workers, as already
explained.
the rule on vicarious liability of a union
member is inapplicable and it is only when a
striking worker "knowingly participates in the
commission of illegal act during a strike" that
he will be penalized with dismissal.
STRIKERS LOSS OF EMPLOYMENT
The law, as it now stands, protects the union members. Their
participation in a strike that turned out to be illegal does not
result in their loss of job. As to the union officers, however,
the law is different.
Article 264 makes a distinction between workers and union
officers who participate in a strike. An ordinary striking
cannot be terminated for mere participation in an illegal
strike. There must be proof that the committed illegal acts
during a strike. A union officer, on the other hand, may be
terminated from work when he unknowingly participates in
an illegal strike, or when he commits an illegal act during a
strike.

What Illegal Acts?

No precise meaning was given to the phrase "illegal acts". It


may encompass a number acts that violate existing labor or
criminal laws, such as the ff:
(1) Violation of Article264(e) of the Labor Code xxx
(2) Commission of crimes and other unlawful acts in
carrying out the strike; and
(3) Violation of any order, prohibition or injuction
issued by the DOLE Secretary or NLRC in
connection with the assumption of jurisdiction

not exclusive and it may cover other breaches of


existing laws.

Anyone whether union officer or member who


commits illegal acts in the course of a strike, whether
itself is legal or illegal, is liable for his illegal acts and
may lose his job.
Dismissal of a union officer who committed illegal
acts during strike is not discrimination constituting
ULP. A union officer carries heavier responsibilities
than a union member does.

Suspension Instead of Dismissal

The penalty imposable on the erring stirkers does not always


have to be dismissal; it may be scaled down to suspension.
When both parties contributed tp the volatile atmosphere
emerging despite the Secretary of Labors status Quo order,
disrupting thereby the orderly continuance of the
negotiations. Moreover, in justifying suspension instead of
dismissal, the Court cited, judicial prerogative. It said. The
Court invokes it judicial prerogative to resolve disputes in a
way to render to each interested party the most judicious
solution, and in the ultimate scheme a resolution of a dispute
tending to preserve the greater order of society (PAL vs.
Brillantes and PALEA).

Union Officers of Leaders?

Should all the union officer and/or leader be dismissed for


staging an illegal strike?
In a 1990 case of a cement factory, the union staged a strike
to compel the employer to comply w/ an arbitration award
of payment of vacation and sick leave of employees. The
court had held that the strike was unnecessary and had no
lawful basis. What the union should have done was to apply
for a writ of execution of the awards instead of going to
strike.
the union officers had the duty to guide their
members to respect the law. Instead, they urged
then to violate the law and defy the duly constituted
authorities. Their responsibility is greater than that
of the members. Their dismissal from the service is
a just penalty for their unlawful acts.
The codal provisions mentions officers, not leaders.
There can be leaders who are not officers.

Shop of Stewards are Union Officers


Shop Steward as a union official who represents members

in a particular department. (Blacks Law Dictionary)


His duties include the conduct of initial negotiations for the
settlement of grievances. He is to help the other members
when they have concerns with employer or other workrelated issues. He is the 1st person that workers turn to for
assistance or information.
As a union officer, also deserves the penalty of dismissal
from their employment

Union Members

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A union member who participated in committing illegal acts


during strike (whether legal or illegal) may also lose his
employment status.
Example:
Violence consisting of hurling stones w/c smashed
glass windows of the building of the company and
the headlight of a car
Utterance of obscenities such as PI
WHO DECLARES LOSS OF EMPLOYMENT
STATUS?
Gold City Integrated Port Services, Inc. v. NLRC, Adelo Ebuna, et
al.
The law, in using the word may grants the EMPLOYER the
option of declaring a union officer who participated in an
illegal strike as having lost his employment.

Declaration of Illegality of Strike is Not a Prerequisite to


Dismissal of Illegal Strikers

Jackbilt Industries, Inc. v. Jackbilt Employees Workers UnionNAFLU-KMU


Filing a petition to declare a strike illegal is not a
prerequisite for the employer to terminate the employment
of employees, whether union or members who commit illegal
acts in the course of strike. Article 264 allows an employer to
terminate employees that committed illegal acts in the course
of a strike.
Exception: Pending Case at the NLRC
PNOC Dockyard and Engineering Corp. v. NLRC
Facts: Dismissal of individuals respondents were due to
infractions of company rules and regulations, the alleged
infraction actually arose from their participation in the strike.
Held: The issues relating to the strike and lockouts were
already submitted before the NLRC through the
corresponding complaint filed by the petitioner itself and
private respondents. By filing a formal complaint for illegal
strike, it behoved petitioner to desist from undertaking its
own investigation on the same matter, concluding upon the
illegality of the union activity and dismissing outright the
union officers involved. The latter object, in fact, to the
conduct of such investigations precisely due to the pendency
before the NLRC of an action based on the same grounds.
Instead, petitioner pre-empted the NLRC from ascertaining
the merits of the complaint.
GOOD-FAITH STRIKE
A strike may be justified by belief in good faith that the
employer was committing ULP at the time the strikers went
on strike. Good faith saves the strike from being declared
illegal and the strikers from being declared to have lost their
employment status.

Reinstatement without backwages (ruling of the


court as to the consequences on Good-Faith
Strike)

STRIKE W/C IS ILLEGAL AND NOT MARKED


WITH GOOD FAITH STRIKERS FORFEIT
THEIR EMPLOYMENT

Absence of good faith entitles the employer to dismiss the


employee that is guilty for illegal strike.
FORFEITURE OF REINSTATEMENT
The court had occasion to rule that a striker who failed to
report for work when one had the opportunity to do so
waived thereby his right to reinstatement. Because of the
apparent lack of interest of the strikers concerned as shown
by their failure to report to work w/o justifiable reason w/
the petitioners therein, we are constrained to declare them to
have forfeited their right to reinstatement.
If during the strike, a striking employee has found another
job, is he still entitled to reinstatement?
Yes and No. it is for the Board in each case to weigh the
particular facts and to determine, in the exercise of wise
administrative discretion, whether the Act would be best
effectuated by directing reinstatement despite the fact that
the given employees had found equivalent employment.
(Cromwell Commercial Employees and Laborers Union [PTUC] v.
Court of Industrial Relations and Cromwell Commercial Co., Inc.)
DISCRIMINATION
IN
READMISSION
OF
STRIKERS
Discrimination undoubted exist where the record shows
that the union activity of the rehired strikers has been less
prominent than that of the strikers who were denied
reinstatement.
REINSTATEMENT MAY RENDER MOOT THE
QUESTION OF ILLEGALITY OF STRIKE
Where the employer voluntarily agreed to reinstate the
strikers, such agreement on the part of the employer
constitutes a waiver of the defense that the strike was illegal.
GENERALLY, NO BACKWAGES IN STRIKE
In an economic strike, the strikers are not entitled to
backwages on the principle that a fairs day wage accrues
only for a fair days labor.
In case where a labourer absents himself from work because
of a strike or to attend a conference or hearing in a case or
incident between him and his employer, he might seek
reimbursement of his wages from his union w/c had
declared the strike or filed the case in the industrial court. Or
he might have his absence from his work charged against his
vacation leave.
If even in cases of unfair labor practices, the Court may be
justified in denying backpay there is absolutely no reason
for granting the backpay if there has not been any unfair
labor practice on the part of the respondent companies at
all. (The Philippine Marine Radio Officers Association v. Court of
Industrial Relations)

Unfair Labor Practice Strike

Cromwell Commercial Employees and Laborers Union [PTUC] v.


Court of Industrial Relation
Two types of employees involved in ULP cases should be
distinguished:

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(1) Those who were discriminatorily dismissed for


union activities
(2) Those who voluntarily went on strike even if it is in
protest of an ULP
Both types of employees are entitled to reinstatement.
Employees who strike because of ULP are entitled to
reinstatement, however, must be excepted those, who,
although discriminatorily discharged, must nevertheless
be denied reinstatement because of (a) unlawful conduct
or (b) because of violence.

Exception: Involuntary Strikers Illegally Locked out

Maclaed & Co. of P.I. vs. Progressive Federation of Labor


While there is a rule that strikers may not collect their
wages during the days they did not go to work because of
the age-old rule governing the relation of labor and capital
epitomized in a fair days wage for a fair days labor. This
rule does not apply in this case for the simple reason
that the thirty-eight laborers herein concerned did not
voluntarily strike but were practically locked out. (having
a condition for reinstatement that they should affiliate
themselves with another union, Davao Stevedoring Mutual
Benefit Association). This clause smacks of an unfair labor
practice the purpose of which is to bust a well-organized
labor union.
However, as it appears that the 38 laborers had been out of
the company for more than 2 years during w/c they may
have found another employment of means of livelihood, it is
the sense of the Court that whatever they may have earned
during that period may be deducted from their backwages to
mitigate somewhat the liability of the company. This is under
the principle that no one should be allowed to enrich himself
at the expense of another.
Voluntary Strikers in ULP Strike who Offered to
Return to Work Unconditionally
When employees voluntarily go on strike, even if in protest
against unfair labor practice, it has been our policy not to
award them backpay during the strike. However, when the
strikers abandon the strike and apply for reinstatement
despite the ULP and the employer either refuses to reinstate
them or imposes upon their reinstatement new conditions
that constitute unfair labor practices, We are of the opinion
that the consideration impelling our refusal to award backpay
are no longer controlling the strikers who refuse to accept
the conditions and are consequently refused reinstatement
are entitled to be made whole for any loses of pay they may
have suffered by reason of the respondents discriminatory
acts. (National Labor Relations Board in the case of American
Manufacturing Co., NLRB 443)
The strikers offer to return to work must be unconditional
so that they will be entitled to backpay.
Circumstances that must concur in order for the striker to be
entitled to backwages:
(1) That the strike was legal
(2) That there was an unconditional offer to return to
work
(3) That the strikers were refused reinstatement

But where the strikers unconditional offer to return to


work was not implemented because of an injunction issued
by the SC, the employer is not obliged to pay backwages.
COURTS DISCRETION ON BACKWAGES
Even after finding of ULP by the employer, award of
backwages rests on the Courts jurisdiction
Consolidated Labor Association of the Philippines v. Marsman and
Company, Inc.
Facts: Failing to agree with the terms of CBA, filed a notice
of strike by the union. The strike was attended by acts of
violence on the part of certain strikers. After settlement,
some were refused readmission, they again strike and
picketed.
Held: even after the court has made a finding of ULP, it
has the discretion to determine whether or not to grant
backpay. Such discretion was not abused when it denied
backwages to complainants, considering the climate of
violence w/c attended the strike and picket that the
complainants conducted. While the complainants ordered
reinstated did not actively take part in the acts of violence,
their mandatory attitude towards the Company may be
gathered from the fact that from the very first day of the
strike, policemen had to patrol the strike zone in order to
preserve peace.
EMPLOYERS RIGHT TO HIRE REPLACEMENTS
DURING
STRIKE;
DISCHARGE
OF
REPLACEMENTS
The strikers have a right to reinstatement, notwithstanding
that the management may have hired other workers to
replace them. According to the SC:
Anent the companys argument that reinstatement
of said strikers would be unfair to those who had
been taken in to replace them during the strike
when the company direly needed their services,
suffice it to consider two other points. The first is
that said other workers must be deemed to have
accepted their employment as replacements w/ the
knowledge that the same is subject to the
consequences of the labor dispute b/w the striker
and the company on the resolution of w/c
depended the effects of the strike as to the right to
reinstatement of the strikers. The second point is
that said workers had by now been engaged for
almost 9years, so that it is not inequitable for them
to be made to yield their positions to those finally
ruled to be with right to occupy the same. (Norton
Harrison Company & Jackbilt Concrete Blocks Co. Labor
Union v. Norton & Harrison Co. & Jackbilt Concrete
Blocks Co.)
The failure or refusal of the employer to obey the court order
reinstating the strikers constitutes contempt of court.

Where Reinstatement of Illegally Dismissed Strikers has


become Impossible, Backwages should be Paid
The strike was conciliated and an agreement was reached for
the reinstatement of the strikers. Subsequently, some of the

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reinstated workers were laid off, which triggered a ULP


charge against the Company and the contractors. The SC
found that the contractors indeed were guilty of
discrimination in laying off the reinstated strikers, but found
reinstatement impossible to accomplish. Under the
circumstances, the SC only declared the employees entitled to
backwages from the day of the lay-off to the date of its
decision.

Liability of Officers of Labor Organizations

RESIGNATION DOES NOT PREVENT SIGNING


OF CBA
Commodity Transport Corporation v. NLRC
Facts: PAFLU, the certified collective bargaining agent of
the workers of Commodity Transport, submitted to the latter
a set of proposals for collective bargaining. Commodity
Transport responded with a counter-proposal w/c the
workers rejected. They subsequently held a strike. The
dispute was voluntarily submitted to the labor arbiter for
adjudication. After the hearings, labor arbiter ordered the
parties to execute and sign the CBA containing certain
benefits contained in the decision.
Commodity transport contends that the case is moot because
the worker who took part in the strike had resigned and the
union ceased to be certified collective bargaining agent since
it could no longer meet the 20% requirement.
Held: The 20% requirement stated in Art 234 of the Labor
Code pertains to registration of a labor organization and not
to its election as a collective bargaining agent. Even when a
LLO could no longer meet the 20% requirement after its
registration, it does not, ipso facto, lose its status as such until
after due hearing by the BLR.

Members of labor unions are not subject to civil liability for


the acts of the unions or its officers as such, unless it is
shown that they personally authorized or participated in the
particular acts, and the liability of a member of a labor union
for the wrongful acts of his associates done w/o his
knowledge or approval is not to be inferred from mere
membership in the union. However, the members of a labor
union are liable for the damages resulting from particular
unlawful acts w/c they participated or in w/c are performed
at their direction or pursuant to a delegation of authority to
them.

CIVIL LIABILITY OF LABOR ORGANIZATIONS


If any injury results to anyone, it will be considered merely
incidental and damnum absque injuria. Thus, where a
combination of laborers is recognized as legal and a strike is
lawful, no liability arises because of injuries incidental thereto.
However, labor unions may be held liable for resulting
damages where they attempt to attain their legitimate
objectives by unlawful means or where they attempt to attain
unlawful objectives.
In order to hold a labor organization liable for the unlawful
acts of individual officers, agents or members, there must be
proof of actual authorization or ratification of such acts after
actual knowledge thereof.

Labor Organizations Not Liable for Unauthorized Acts


of Officers

Labor unions are liable for the unlawful acts of their officers
or members which they have authorized or adopted and
labor unions which form a conspiracy are liable for the acts
of non-members who voluntarily join in the doing of
unlawful acts in the aid of the scheme.
Labor unions are not liable in damages for the unauthorized
or ungratified unlawful acts of their officials nor are they
responsible for the unlawful acts of individual members w/c
neither their officers nor committees have directed, aided or
approved.

Where the acts of the labor union are unlawful and tortuous,
the officers participating in such unlawful actions are liable
for the resulting damages irrespective of the fact that they
were acting in behalf of the union. Officers of labor union
are also liable for unlawful and tortuous acts done pursuant
to a conspiracy to which unions are a party.

Liability of Members of Labor Organization

Liability of Labor Unions for Damages Arising from


Boycott

A person against whom an unlawful boycott has been


instituted may have an action for damages thereby
occasioned against any and all of the persons who have
combined against him, provided there is a causal connection
b/w the acts complained of and the damages suffered. This
is true irrespective of the impossibility of determining the
total amount of the loss or the difficulty of ascertaining w/
certainty the money value of the damages w/c can be proved.

Liability of Labor Unions for Damages for Interfering


w/ Rights of Laborers to Work

A labor organization w/c interferes w/ the right of a worker


to dispose of his services in a free market must justify such
interference or respond in damages. An action for damages
will lie against anyone, including a labor union, its officers or
members, or a former employer, who unlawfully prevents
one from procuring employment, or who intentionally and
w/o legal justification or excuse procures an employer to
discharge his employee, to the damages of the latter. So, if
officers of a labor union wrongfully prevent one from
obtaining employment, an action will be against them, and
against the union as well, if their acts were done in the course
of their service and for the benefit of the body.

Liability of Extorting Money from Employers

Where an employer pays a sum of money to a labor union


upon a threat of refusal to handle his products because of
sale to employers of nonlabor union, he may recover such
sum of money.
Similarly, a conspiracy by the members of a labor union to
obtain from an employer money w/c he is under no legal
obligation to pay , by inducing his workmen to leave him and
by deterring others from entering into his employment, or by
threatening him and by deterring others from entering into
his business w/o yielding to the demand, is an illegal
conspiracy; and the money thus obtained may be recovered
back from the conspiring parties, who are also liable for all

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damages to the business of such employer occasioned by


such illegal acts.

Liability for Damages Arising Out of Publications and


Circulation of False Statements
Labor unions have been held liable for damages arising out
of the publication and circulation of false statements relating
to industrial controversies.

the plaintiff, which has been violated or invaded by the


defendant may be vindicated and recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered.
Union officers are liable for damages caused to the
business by the illegal strike. The business owner may
recover those damages if he is able to prove them. In
addition, the officers will lose their jobs.

Example:
The circulation of a false statement by members of a
labor union among members of a craft for the purpose
of preventing a contract or from securing employees,
which results in damages to the contractor, gives him a
right of action for damages although the purpose of the
union was a lawful one, that of furthering the interests
of its members.
DAMAGES
Union officers may not be vicariously held liable for illegal
acts of strikers. The rule of vicarious liability has, since the
passage of R.A. 875, been expressly legislated out. Under the
said rule, mere membership in a labor union is sufficient to
predicate liability for acts of individuals done in behalf of the
union, or a labor union and/or its official and members to be
liable, there must be proof of actual participation in, or
authorization or ratification of, the illegal acts.
RTC has no jurisdiction over a complaint for damages filed
by an employer against a labor union for declaring an
allegedly illegal strike.
As to use of violence which outlaws a strike otherwise valid
in purpose, the Court has made it clear that absent a
pervasive and widespread use of force and violence
deliberately promoted and countenanced by the union, where
responsibility for injury to persons and destruction of
property may be collectively attributed to the entire union
leadership and membership, responsibility for such sporadic
and isolated acts must be individual in nature.
Where the strike is illegal, the employer is entitled to an
award for damages adequately approved.
National Federation of Labor, et al. v. NLRC and Permex Producer
and Exporter Corp.
This court had ruled that in order that damages may be
recovered, the best evidence obtainable by the injured party
must be presented. Actual or compensatory damages cannot
be presumed, but must be duly proved, and so proved with a
reasonable degree of certainty. A court cannot rely on
speculation, conjecture, or guesswork as to the fact and
amount of damages, but must depend upon competent proof
that they have been suffered and on evidence of the actual
amount thereof. If the proof is flimsy and insubstantial, no
damages will be awarded.
Strike dragged down for 50 days, there is no doubt that
some species of injury was caused to private respondent. In
the absence of competent proof on the actual damages
suffered, private respondent is entitled to nominal damages
which, as the law says, is adjudicated in order that a right of

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Book Six
POST-EMPLOYMENT
Title I
TERMINATION OF EMPLOYMENT
Part I
INTRODUCTION: EMPLOYEES SECURITY OF
TENURE

ordinary rank-and-file Ees, whose termination on the basis of


same grounds require a higher proof of involvement in the
events in question. Mere uncorroborated assertions and
accusations by the er will not suffice.
But while managerial ee may be dismissed merely on the
ground of lack of confidence, the matter of determining
whether the cause for dismissing an employee is justified on
the ground of loss of confidence, cannot be left entirely to
the er.

1. Constitutional Guaranty of Tenure


Policy of the state to assure the right of workers to security
of tenure guaranty as an act of social justice
great mass of the population is almost wholly dependent on
their employment for their livelihood. When a worker losses
his job, his family faces deprivation, if not starvation. Hence,
the demand for job security.
Both the Constitution (Sec. 3, Art 13) and the Labor Code
[LC] (Art. 279) enunciate this right as available to an
employee. SC has upheld the employees right to security of
tenure in the face of oppressive mgmt. behaviour and mgmt.
prerogative. Security of tenure is a right w/c may not be
denied on mere speculation of any unclear and nebulous
basis.
When a person has no property, his job may possibly be his
only possession or means of livelihood. Therefore, he should
be protected against any arbitrary deprivation of his job. Art.
79 of the LC has construed security of tenure as meaning
that the er shall not terminate the services of an employee
except for just cause or when authorized by the Code.
1.1 Non-regular Employees
Art. 279 in itself is defective because it recognizes
security of tenure only in cases of regular
employment. Such specification is not found in the
consti w/c entitles all workers to the right to
security of tenure. The code itself and the court
rulings do not limit security of tenure to regular
employees.
Terminating a probationary Ee needs a valid reason
and proper procedure. So also a project or seasonal
employee enjoys security of tenure even only for the
duration of limited of the limited period of their
employment. Court said: As probationary and
contractual
employees,
private
respondents
[complainant Ees] enjoyed security of tenure, but only
to a limited extent i.e. they remained secure in the
employment remained in effect.
Security of Tenure the right not to be removed
from ones job w/o valid cause and valid procedure
is also fundamental it extends to regular (permanent)
as well as non-regular (temporary) Ees. (In short,
there is security of tenure for a limited period and
security of tenure for an unlimited period.)
2. Tenure of Managerial Personnel
Generally, employers are allowed a wider latitude of
discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform
functions w/c by their nature require the Ers full trust and
confidence. This should be distinguished from the case of

2.1 Even Managerial Ees are entitled to Security of


Tenure
While an Er has its own interests to protect, it may
terminate a managerial ee for a just cause, such
prerogative to dismiss or lay off ee must be exercised
w/o abuse of discretion. Its implementation should be
tampered with compassion and understanding. The er
should bear in mind that in the execution of said
prerogative, what is at stake is not only the ees
position but his livelihood. The fact that one is a
managerial ee does not by itself exclude him from the
protection of the constitutional guarantee of security
of tenure.
Managerial personnel and other ees occupying the
same positions of trust and confidence are entitled to
security of tenure, fair standards of employment and
the protection of labor laws.
An in-house legal counsel may be an ee in fact, a
regular ee. He is entitled to security of tenure. The
relationship is that of er-ee, and not of client-lawyer.
To terminate the relationship the applicable law is the
LC and not the Rules of Court.
Hydro Resources Contractors Corp. v. Pagalilauan A
lawyer, like any other professional, may very well be
and ee of a private corp or even of the govt. It is not
unusual for a big corporation to hire a staff of lawyers
as its in-house counsel, and otherwise treat them like
its other officers and ees. At the same time, it may also
contract with a law firm to act as outside counsel on a
retainer basis. The two classes of lawyers often work
closely together but one group is made up of ees while
the other is not. A similar arrangement may exist as to
doctors, nurses, dentists, public relations practitioners,
and other professionals.
3.

Right to Security of Tenure cannot be Contracted


Away
The right to security of tenure cannot be blotted out by an
employment contract.
In trying to justify the ees dismissal, the er did not cite any
just or authorized causes. Instead, it merely insisted that the
dismissal was authorized in the employment contract that the
ee had voluntary signed. SC responded:
Truly the contracting parties may establish such
stipulations, clauses, terms and conditions as they want, and
their agreement would have the force of law b/w them.
However, the petitioner [er] overlooks the qualification that
those terms and conditions agreed upon must not be
contrary to law, morals, customs, public policy or public
order. As explained earlier, the employment contact between
[er] and [ee] isgoverned by PH labor laws. Hence, the

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stipulations, clauses, and terms and conditions of the


contract must not contravene our labor law provisions.
(Philippine National Bank v. Cabansag, June 21, 2005)
Moreover, a contract of employment is imbued with
public interest. The Court has time and time again reminded
the parties that they are not at liberty to insulate themselves
and their relationships from the impact of labor laws and
regulations by simply contracting with each other. Also while
a contract is the law b/w the parties, the provisions of
positive law that regulate such contracts are deemed included
and shall limit and govern the relations b/w the parties. (Ibid)
PART II
KINDS OF EMPLOYMENT
1. Essentiality of er-ee relationship
It is pointless to discuss security of tenure if the parties
involved are not er-ee to each other.
1.1 Art. 280 presupposes Employment relationship
Art 280 applies where the existence of er-ee
relationship is not an issue in dispute. If the issue is
whether or not claimant is an employee, the answer
should be searched elsewhere but not in this Art 280.
The article limits itself to differentiating 4 kinds of
employment arrangement: regular, project, seasonal,
and casual.
1991

Singer Sewing Machine Co. v. Drilon, et al., January 24,


The nature of the relationship b/w a company and its
collecting agents depends on the circumstances of
each particular relationship. Not all collecting agents
(CA) are ees and neither are all collecting agents
independent contractors. The collectors could fall
under either category depending on the facts of each
case.
The respondents contention that the union members
are ees of the company is based on selected provisions
of the Agreement but ignores the ff. circumstances
w/c respondents never refuted either in the trial
proceedings before the labor officials nor in its
pleadings filed before this court:
a. The CA are not required to observe office hours
or report to Singers office everyday except,
naturally and necessarily, for the purpose of
remitting their collections.
b. CA do not have to devote their time exclusively
for Singer. No prohibition on the part of the CA
from working elsewhere. Nor are these agents
required to account their time and submit record
of their activity.
c. The manner and method of effecting collections
are left solely to the discretion of the CA w/o any
interference on the part of Singer.
d. CA shoulder their transportation expenses
incurred in the collection of the account assigned
to them.
e. CA are paid strictly on commission basis. The
amounts paid to them are based solely on the
amounts of collection each of them makes. They
do not receive any commission if they do not

effect any collection even if they put a lot of


effort in collecting. They are paid on commission
basis of actual collections.
f. CA by the collection agents are directly deduced
by them from the amount of collections they are
able to effect. The net amount is what is remitted
to Singer.
The Court finds the contention of respondents that
the union members are ees under Art 260 of the LC
to have no basis. The definition that regular ees are
those who perform activities which are desirable and
necessary for the business of the er is not determinate
in this case. Ahy agreement may provide that one
party shall render services for and in behalf of another
for a consideration (no matter how necessary for the
latters business) even w/o being hired as an ee.
Art. 280 is not the yardstick for determining the
existence of an employment relationship because it
merely distinguishes b/w two kinds of ees, regular ees
and casual ees, for purposes of determining the right
of an ee to certain benefits, to join or form a union, or
to security of tenure. Art. 280 does not apply where
the existence of an employment relationship is in
dispute.
The question of existence of er-ee relationship is
resolved principally by applying the four-fold test w/c
Court rulings explain. It is not resolved by appling
Art. 106 or Art. 280. Art. 106 is relevant in resolving
whether the Er is solidarily liable with the contractor
for unpaid wages; Art. 280 is relevant in determining
the employment status of an ee. Under both articles
the existence of er-ee relationship is not in question.
2. Regular Employees (REes)
The primary standard to determine a regular employment is
the reasonable connection b/w the particular activity
performed by the ee in relation to the usual business or trade
of the er. The test is whether ee is usual necessary or
desirable in the usual business or trade of the er.
Policy Instruction No. 2 of the then Minister of Labor (now
SOLE) provides that the Presidential Decree 859 has
defined the concept of regular and casual employment. What
determines regularity or casualness is not the employment
contract, written or otherwise, but the nature of the job. If
the job is usually necessary or desirable to the main business
of the er, then employment is regular. x x x
basis of regular status of ee vs. basis of computation of
the compensation latter may be based on time spent on
the job, on actual output, or some other arrangement. (Being
paid on the basis of per piece wok or piece-rate basis does
not prevent one from gaining status as ees)
If the work is integral part of the business and the worker
does not furnish an independent business or professional
service, the work is presumed to be a regular employment.
Considering Art 280, there are two kinds of REes: (1) REes
by nature of work, and (2) REes by years of services.
2.1 Examples of REes by Nature of Work
De Leon v. NLRC, August 21, 1986

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Ruling: The law demands that the nature and entirety of


the activities performed by the employee be considered.
Here, the painting and maintenance work given Moises
manifests a treatment consistent with a maintenance man
and not just a painter, for if his job was only to paint a
building there would be no basis for giving him other work
assignments in-between painting activities.
It is not tenable to argue that the painting and
maintenance work of Moises are not necessary in La
Tondeas business of manufacturing liquors; otherwise,
there would be no need for the regular maintenance
section of the companys engineering department.
It is of no moment that Moises was told when he was
hired that his employment would only be casual, that he
was paid through cash vouchers, and that he did not
comply with regular employment procedure.
What determines whether a certain employment is
regular or casual is not the will and word of the er, to
which the worker often accedes, much less the procedure
of hiring the ee or the manner of paying his salary. It is the
nature of the activities performed in relation to the
particular business or trade considering all circumstances,
and in some cases the length of time of its performance
and its continued existence.
2.1a Workers Supplied by Labor-Only Contractor
Considered REes of Contractee
Ecal et al. v. NLRC; March 13, 1991
Ruling: The Court finds the petitioner Mr. Ecal to be a
"labor-only" contractor, a mere supplier of man-power
to Hi-Line. Mr. Ecal was only a poor laborer at the time
of his resignation on February 4, 1987. He resigned and
became a supplier of laborers for Hi-line.
A finding that Mr. Ecal is a "labor-only" contractor
is equivalent to a finding that an er-ee relationship exists
between the company and Ecal including the latter's
"contract workers," herein petitioners, the relationship
being such as provided by the law itself.
Since petitioners perform task which are usually
necessary or desirable in the main business of Hi-Line,
they should be deemed regular employees of the latter
and are entitled to all benefits and rights appurtenant to
regular employment.
2.1b Contractual Project Ee Becoming Regular
Magante v. NLRC and Constress Philippines, Inc., May, 7,
1990
Ruling: The decision of NLRC is reversed and set aside,
and the decision of the LA is affirmed and reinstated.
Petitioner has establish that since the very inception of
his employment in 1980, he was never deployed from
project to project of private respondent but had been
regularly assigned to perform carpentry work. This goes
to show 2 things: that petitioner was assigned to
perform tasks w/c are usually necessary or desirable in
the usual business or trade of private respondent; and
that said assignments did not end on a project basis
although the contrary was made to appear by private
respondent through the signing of separate employment
contracts allegedly for different projects.

Although petitioner had only rendered almost 2


years of service, nevertheless, this should not detract
from his status of being a regular employee because as
correctly stated by the Labor Arbiter, the determining
factor of the status of complainant-petitioner or any
worker is the nature performed by the latter and the
place where he performed his assignments.
2.1c Day-to-Day Contractual Ee Becoming
Regular
Baguio Country Club Corporation v. NLRC et al, February 28,
1992
Ruling: The law on the matter is Art. 280 of LC w/c
defines regular and casual employment.
Petitioner corporation, w/c is certified by the Ministry
of Labor and Employment as entertainment service
establishment, claims that [the employee] was contracted
for a fixed and specific period. However, the records
reveal that the [ee] was repeatedly re-hired to perform
task ranging from dishwashing and gardening, aside
from performing maintenance work.
Such repeated re-hiring and the continuing need for
his service are sufficient evidence of the necessity and
indispensability of his service to the petitioners business
or trade.
Furtehrmore, [he] performed the said tasks w/c lasted
for more than 1 year, until early January 1981 when he
was terminated. Certainly, by this fact alone, he is
entitled by law to be considered a regular ee.
Another example f a regular job is that of sale route
helpers that [a softdrink company] hired for 5months
and thereafter on day-to-day basis. They would wait
every morning outside the company premises, so when
regular sales route helpers were absent or additional
helpers were needed, they would be hired and paid a
daily wage. They would go w/ route salesmen on board
delivery trucks and undertook the laborious task of
loading and unloading soft drink products to various
delivery points. They, the Court ruled, were doing a
regular job.
2.1d Temporary Ee Becoming Regular
Beta Electric Corporation v. NLRC, et al. February 15, 1990
Issue: Petitioner argues mainly that the private
respondents appointment was temporary and, hence,
she may be terminated at will.
Rulings: That she had been hired merely on a
temporary basis, for purpose of meeting the seasonal or
peak demands of the business, and as such, her services
may lawfully be terminated after the accomplishment of
her task is untenable. She was to all intents and
purposes, and at the very least, a probationary ee, who
became regular upon expiration of 6months.
Under the LC, an employment may only be said to
be temporary where it has been fixed for a specific
undertaking the completion or termination of w/c has
been determined at the time of the engagement of the ee
or where the work or services to be performed is
seasonal in nature and the employment is for a duration
of the season. Contrary, the respondents work, that of

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typist-clerk is far from being specific or seasonal, but


rather, one, according to the code: Where the ee has
been engaged to perform activities w/c are usually
necessary or desirable in the usual business. And under
the code where he performs such activities, he is a
regular employee, the provisions of written agreement to
the contrary notwithstanding.
2.2 Casual Ee; Regular Ee by Year(s) of Service
the other type of REe is the Casual Employee (CEe) who,
after one year of service, becomes regular. But he is
regular: only for that work activity for w/c he was hired.
His employment may be on-and-off, but every time the
particular work activity occurs, he is the one to be rehired.
(aka regular casual). A casual may become regular even if
he not issued a regular appointment.
Philippine Geothermal, Inc. v. NLRC, et al., August 30, 1990
Rulings: (1) Two Kinds of REes in another case, SC
classified the two kinds of REes as (a) those who are
engaged to perform activities w/c are usually necessary or
desirable in the usual business or trade of the employer,
and (b) those who have rendered at least 1 year of service,
whether continuous or broken w/ respect to the activity in
w/c they are employed.
(2) Ees right to security of tenure; casual becoming regular ee CEe
can be regarded as REe of the er as soon as he completes 1
year of service. Under the circumstances, the er may not
terminate the service of a REe except for a just cause or
when authorized under the LC.
2.2a Casual Ees with Less than 1 year of Service
does not become Regular
Capule, et al., v. NLRC, et al., November 12, 1990
Issue: WON Casual or Temporary Ees may be
dismissed by the Er before the expiration of the 1-year
period of employment.
Ruling: The usual business or trade of the private
respondent is the manufacture of cultured milk. The
cutting of cogon grass in the premises of its factory is
hardly necessary or desirable in the usual business of the
private respondents. Thus, petitioners, are casual ees
who cannot be considered REes under the aforestated
provision of the LC. Nevertheless, they may be
considered REes if they have rendered services for at
least 1 year. When, as in this case, they were dismissed
from their employment before the expiration of the 1year period they cannot lawfully claim that their
dismissal was illegal.
2.2b Salary of Casual Ee Converted to Regular
should not be reduced
Philippine American Mgmt. Association, et al., v. Court of
Industrial Relations, et al., April 15 1988
Ruling: The CEes have been converted to regular and
so should be entitled to be treated as such in every
respect. They should be allowed to retain the same rate
they were enjoying at the time of their conversion to
REes.
2.3 May Regular Jobs be Contracted Out?

Qualified yes or no.


Matter covered by D.O. No. 18-02 (Rules Impelementing
Articles 106-109) in its Section 6 (Prohibitions) states:
Notwithstanding Section 5 of these rules, the ff are
hereby declared prohibited for being contrary to law or
public policy: (a) Contracting out a job, work, or service
when not done in good faith and not justified by the
exigencies of the business and the same result in the
termination of regular ees and reduction of work hours pr
reduction or splitting of the bargaining unit. x x x
This provision, styled negatively, says the same thing
when restated positively: Contracting out a job, work, or
service that result in the termination of regular ees and
reduction of work hours or reduction or splitting of the
bargaining unit is allowed when done in good faith and justified by
the exigencies of the business.
The answer to the question posed above depends on
two conditions: good faith and exigencies of the business.
If these conditions are absent, the answer is no; if present,
the answer is yes even regular jobs can be contracted out.
because survival, expansion, and even dominance are
legitimate aims of business and mgmt. is allowed by law
and impelled by business economics to take lawful
measures to realize these aspirations.
xxx Consequently absent proof that management
acted in a malicious or arbitrary manner the Court will not
interfere with the exercise of judgement by an employer.
(Asian Alcohol Corp. v. NLRC)
In the Serrano ruling, efficiency and economical
operations are therefore recognized as valid, lawful reasons
for contracting out jobs, even those being done by direct
hire-regular employees. But, always, the legal bars must not
be transgressed so as to protect the workers, namely: (1)
the contractor must be a legitimate one and not a laboronly contractor, and (2) the contracting out is not one of
the arrangements prohibited under Section 6 of D.O. No.
18-02 nor does it amount to ULP.
2.4 Contracting Out Almost All regular Jobs
Wack Wack Golf & Country Club v. NLRC, et al., April 15,
2005
Ruling: The NLRC posits that BSMI is merely a supplier
of workers or a labor-only contractor; hence, the petitioner
remains to be the principal er of the respondents and liable
for their reinstatement and payment of backwages.
The ruling of NLRC is wrong
There is indubitable evidence showing that BSMI is an
independent contractor, engaged in the management of
projects, business operations, functions, jobs and other
kinds of business ventures, and has sufficient capital and
resources to undertake its principal business ventures, and
has sufficient capital and resources to undertake its
principal business. It had provided mgmt services to
various industrial and commercial business establishments.
As legitimate job contractor, there can be no doubt as to
the existence of an er-ee relationship b/w the contractor
and the workers.
2.5 Does Contracting
Conformity?

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Out

Require

Unions

In one case the union was demanding that the


management should first consult the union before it may
contract out jobs that may last for 6months or more. The
SOLE granted the demand but the Court turned it down,
explaining that contracting out is a management right
subject to regulations already existing.
We feel that the limitations imposed by the union
advocates are too specific and may not be applicable to the
situations that the company and the union may face in the
future. To our mind, the greater risk is with this type of
limitation is that it will tend to curtail rather than allow the
business growth that the company and the union must
aspire for. Hence, we are for the general limitations we
have stated above because they will allow a calibrated
response to specific future situations the company and
union may face. (San Miguel Employees Union-PTGWO v.
Bersamira)
We recognize that contracting out is not unlimited;
rather, it is a prerogative that management enjoys subject
to well-defined legal limitations. (Manila Electric Co. v.
Quimbising and MEWA)
3. Project Employment: Meaning and Scope
A Project Employee (PEe) is one whose employment has
been fixed for a specific project or undertaking, the
completion or termination of w/c has been determined at the
time of the engagement of the ee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season.
(1) The project for carrying out of w/c project ees
are hired would ordinarily have some relationship to
the usual business of the employer.
(2) The project undertaking might not have an
ordinary or normal relationship to the usual
business of the employer.
The determination of the scope and parameters of
the project becomes fairly easy. It is unusual (but
still conceivable) for a company to undertake a
project w/c has absolutely no relationship to the
usual business of the company; thus, for instance, it
would be an unusual steel-making company which
would undertake the breeding and production of
fish or the cultivation of vegetables.
3.1 Two Types of Project Activities
(1) A project could refer to a particular job or
undertaking that is within the regular or usual business
of the employer company, but which is distinct and
separate, and identifiable as such, from the other
undertakings of the company. Such job or
undertaking begins and ends at a determined or
determinable times
(2) The term project could also refer to a particular job
or undertaking that is not within the regular business
of the corporation. Such a job or undertaking must
also be identifiably separate and distinct from the
ordinary or regular business operation of the
employer. The job or undertaking also begins and
ends at determined or determinable times.
Whichever type of project employment is found in a
particular case, a common basic requisite is that the

designation of named employees as project employees


and their assignment to a specific project are effected and
implemented in good faith, and not merely as a means of
evading otherwise applicable requirements of labor laws.
The services of PEe are coterminous with the project and
may be terminated upon the end or completion of that
project for which they were hired. REe, in contrast, are
lgally entitled to remain in the service of their er until their
services are terminated by one or another of the
recognized modes of termination of services under the LC.
3.2 Principal Test
The principal test for determining whether particular
ees are properly characterized as project employees as
distinguished from regular employees is whether or not
the project employees were assigned to carry out a
specific project or undertaking, the duration (and scope)
of which were specified at the time the employees were
engaged for that project.
The predetermination of the duration or period of a
project employment is important in resolving whether one
is a project employee or not. The term period has been
defined to be a length of existence; duration. A point of
time making a termination as of a cause or an activity ; an
end, a limit, a bound; conclusion; termination. A series of
years, months or days in w/c something is completed. A
time of definite length of the period from one fixed date to
another fixed date. In this Violeta case the Court observes
that the ee is clearly hired for a specific project. But the
absence of definite duration of the project led the Court to
conclude that the ee was regular.
The Court reiterates, security of workers in their job is
a fundamental objective of PH Labor Laws. This is why
the law and the court decisions incline toward regular
instead of non-regular ee status. In fact, Art. 280 manifests
a bias for regularity of status. Any other arrangements is an
unpreferred deviation from that presumption.
To be exempted from the presumption of regularity
of employment, therefore, the agreement b/w the PEe and
his er must strictly conform with the requirements and
conditions provided in Art. 280. It is not enough that an ee
is hired for a specific project or phase of work. There must
also be a determination of a clear agreement on the
completion or termination of the project at the time the ee
is engage in the objective of Art. 280 is to be achieved.
It has been held that the length of service of a PEe is
not the controlling test of employment tenure but whether
or not the employment has been fixed for a specific
project or undertaking the completion or termination of
which has been determined at the time of the engagement
of the ee.
The simple fact that the employment as PEe has gone
beyond 1 year, does not detract from, or legally dissolve,
their status as PEes. The second paragraph of Art. 280,
providing that an ee who has served for at least 1 year shall
be considered a REe, relates to CEes and not to PEes. The
proviso in the second paragraph of Art 280 relates to CEes
and is not applicable to those who fall within the definition
of said Articles first paragraph, i.e. PEes or SEes.
3.3 Project Ees in the Construction Industry

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Fernandez v. NLRC and D.M. Consunji, Inc., February 28,


1994
Inasmuch as the documentary evidence clearly
showed gaps of a month or months b/w the hiring of
petitioner in the numerous project wherein he was
assigned, the ineluctable conclusion that petitioner has not
continuously worked with private respondent but only
intermittently as he was hired solely for specific projects.
As such, he is governed by the Policy Instruction No. 20,
the pertinent portions are as follows:
Generally, there are 2 types of ees in the construction
industry namely 1) Project Employees and 2) Non-project
Employees.
Project Employees are those employed in connection
with a particular construction project. Non-project Ees are
those employed by a construction company w/o reference
to a particular project.
Project Ee are not entitled to termination pay if they
are terminated as a result of the completion of the project
or any phase thereof in w/c they are employed, regardless
of the number of projects in w/c they have been employed
by a particular construction company.
The Policy Instruction also requires an employer company
to report to the nearest Public Employment Office the fact
of termination of a project employee as a result of the
completion of the project or any phase thereof in which he
is employed (Now under Department Order No. 19,
1993). It does not totally dispense with the notice
requirement but, instead, makes provisions therefor and
considers it as one of the indicators that a worker is a
PEe.
3.4 Indicators of Project Employment
Section 2.2 of Department Order No. 19 states.
Either one or more of the following circumstances, among
others, may be considered as indicators that an employee is
a project employee.
(a) The duration of the specific/identified
undertaking for which the worker is engaged is
reasonably determinable.
(b) Such duration, as well as the specific
work/service to be performed, is defined in an
employment agreement and is made clear to the
employee at the time of hiring.
(c) The work/service performed by the employee is
in
connection
with
the
particular
project/undertaking for which he is engaged.
(d) The employee, while not employed and awaiting
engagement, is free to offer his services to any other
employer.
(e) The termination of his employment in the particular
project/undertaking is reported to the Department of Labor
and Employment (DOLE) Regional Office having
jurisdiction over the workplace within 30 days following the
date of his separation from work, using the prescribed form
on employees terminations/dismissals/suspensions.

(f) An undertaking in the employment contract by


the employer to pay completion bonus to the
project employee as practiced by most construction
companies.
Perforce, we agree with the LA that the private
respondents failure to report the termination of
petitioners services to the nearest Public Employment
Office, after completion of every project or a phase
thereof to which he is assigned, is a clear indication that
petitioner was not and is not a PEe.
3.5 Work Pool
Members of a work pool from which a construction
company draws PEes, if considered ee of yje construction
company while in the work pool, are non-project ees or
ees for an indefinite period. If they are employed in a
particular project, the completion of the project or any
phase thereof will not mean severance of er-ee
relationship.
But in another PNCC case in 1997 the Court clarifies
this ruling, regarding work pool workers:
PEes may or may not be members of a workpool,

(that is, the er may or may not have formed a work


pool at all), and in turn, members of a work pool
could be either PEes or REes. In the instant case,

respondent NLRC did not indicate how private


respondents came to be considered members of a work
pool as distinguished from ordinary (non-work pool)
ees. It did not establish that a work pool existed in the
first place. Neither did it make any finding as to whether
the herein private respondents were indeed free to leave
anytime and offer their services to other ers, as vigorously
contended by petitioner, despite the fact that such a
determination would have been critical in defining the
precise
nature
of
private
respondents'
employment. Clearly, the NLRC's conclusion of regular
employment has no factual support and is thus
unacceptable.
3.5a Illustrative Case: Project Employee
Cartanegas v. Romago Electric Company, Inc. September 15, 1989
Since its works depends on availability of such contracts
or projects, necessarily coterminous w/ the projects to w/c
they are assigned and from whose payrolls they are paid. It
would be extremely burdensome for their er who, like
them, depends on the availability of projects, if it would
have to carry them as permanent ees and pay them wages
even if there are no projects for them to work on.
3.5b Project Employees Not Entitled to Separation
Pay; Exceptions
Salazar v. NLRC, April 17, 1996
We rule that petitioner is a project employee and,
therefore, not entitled to separation pay. In the case at
bench, it was duly established that private respondent hired
petitioner as project or construction engineer specifically
for its Monte de Piedad building project. Accordingly, as
PEe, the petitioners service were deemed coterminous w/
the project, that is petitioners dismissal was due to the

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completion of the construction of the Monte de Piedad


building. Petitioner, thus, has no legal right to demand
separation pay. Policy Instruction No. 20 entitled
"Stabilizing Er-Ee Relations in the Construction Industry"
explicitly mandates that:
x x x PEes are not entitled to termination pay if they
are terminated as a result of the completion of the
project or any phase thereof in which they are employed,
regardless of the number of projects in which they have
been employed by a particular construction company.
Moreover, the company is not required to obtain a
clearance from the Secretary of Labor in connection
with such termination. What is required of the company
is a report to the nearest Public Employment Office for
statistical purposes.
De Ocampo, et al. v. NLRC, June 6, 1990 (XPN)
The rationale of this rule is that if a project has already
been completed, it would be unjust to require the er to
maintain them in the payroll while they are doing
absolutely nothing except waiting until another project is
begun, if at all. In effect, these stand-by workers would be
enjoying the status of privileged retainers, collecting
payment for work not done, to be disbursed by the er
from profits not earned. This is not fair by any standard
and can only lead to a coddling of labor at the expense of
management.
We believe, however, that this rule is not applicable in
the case at bar, and for - good reason. The record shows
that although the contracts of the project workers had
indeed expired, the project itself was still on-going and so
continued to require the workers' services for its
completion. There is no showing that such services were
unsatisfactory to justify their termination. This is not even
alleged by the private respondent [er]. One can therefore
only wonder why, in view of these circumstances, the
contract workers were not retained to finish the project
they had begun and were still working on. This had been
done in past projects. This arrangement had consistently
been followed before, which accounts for the long years of
service many of the workers had with the MDC.
It is obvious that the real reason for the termination of
their services-which were still needed-was the complaint
the project workers had filed and their participation in the
strike against the private respondent. These were the acts
that rendered them persona non grata to the management.
Their services were discontinued by the MDC not because
of the expiration of their contracts, which had not
prevented their retention or rehiring before as long as the
project they were working on had not yet been completed.
The real purpose of the MDC was to retaliate against the
workers, to punish them for their defiance by replacing
them with more tractable ees.
3.6 Non-Project Employees; Three Types
De Jesus v. Philippine National Construction Corporation, et al.,
March 20, 1991
Rulings: It is clear from the records that the petitioner is,
contrary to the assailed decision, a non-project employee
and is, hence, entitled to regular employment having

rendered service for more than ten years. As such, he


cannot be terminated unless for just cause.
Without question, the petitioner, a carpenter,
performs work "necessary, or desirable" in the
construction business, the respondent corporation's field
of activity. The fact however that he had been involved in
project works will not alter his status because the law
requires a "specific project or undertaking the completion
or termination of which has been determined at the time
of the engagement" in order to make a project employee a
true project employee.
Generally, there are three (3) types of non-project ees:
(1) probationary ees; (2) regular ees; and (3) casual ees.
Based therefore on the personnel action forms
submitted to this Court, the petitioner is either a member
of a work pool of workers, which Policy Instructions No.
20 terms as "non-project ees," or at the very least, a
probationary worker who, after the period of six months,
has achieved a regular status.
As a REe, the petitioner could not have been validly
terminated by reason alone of the completion of the
project.
3.7 What Makes a Project Employee Regular
Samson v. NLRC and Atlantic Gulf and Pacific Co., Manila, Inc.
February 1, 1996
It is not disputed that petitioner had been working for
private respondent for approximately twenty-eight (28)
years as of the adjudication of his plaint by respondent
NLRC, and that his "project-to-project" employment was
renewed several times. With the successive contracts of
employment wherein petitioner continued to perform
virtually the same kind of work, i.e., as rigger, throughout
his period of employment, it is manifest that petitioner's
assigned tasks were usually necessary or desirable in the
usual business or trade of private respondent. The repeated
re-hiring and continuing need for his services are sufficient
evidence of the necessity and indispensability of such
services to private respondent's business or trade.
Where from the circumstances it is apparent that
periods have been imposed to preclude the acquisition of
tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good customs
or public order. As observed by the Solicitor General, the
record of this case discloses, as part of petitioner's position
paper, a certification duly issued by private respondent
clearly showing that the former's services were engaged by
private respondent on a continuing basis since 1965. The
certification indubitably indicates that after a particular
project has been accomplished, petitioner would be rehired immediately the following day save for a gap of one
(1) day to one (1) week from the last project to the
succeeding one. There can, therefore, be no escape from
the conclusion that petitioner is a regular employee of
private respondent.
Tomas Lao Construction, et al. v. NLRC, September 5, 1997
While it may be allowed that in the instant case the
workers were initially hired for specific projects or
undertakings of the company and hence can be classified
as PEes, the repeated re-hiring and the continuing need for

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their services over a long span of time (the shortest, at


seven [7] years) have undeniably made them REes. Thus,
we held that where the employment of PEes is extended
long after the supposed project has been finished, the ees
are removed from the scope of PEes and considered REes.
While length of time may not be a controlling test for
project employment, it can be a strong factor in
determining whether the ee was hired for a specific
undertaking or in fact tasked to perform functions which
are vital, necessary and indispensable to the usual business
or trade of the er. In the case at bar, private respondents
had already gone through the status of PEes. But their
employments became non-coterminous with specific
projects when they started to be continuously re-hired due
to the demands of petitioners' business and were reengaged for many more projects without interruption.
Moreover, if private respondents were indeed
employed as "project employees," petitioners should have
submitted a report of termination to the nearest public
employment office every time their employment was
terminated due to completion of each construction project.
The records show that they did not.
The contracts were a scheme of petitioners to prevent
respondents' from being considered as REes. It imposed
time frames into an otherwise flexible employment period
of private respondents some of whom were employed as
far back as 1969. Clearly, here was an attempt to
circumvent labor laws on tenurial security. Settled is the
rule that when periods have been imposed to preclude the
acquisition of tenurial security.
3.7a Recapitulation: Circumstances that Make a
Project Employee Regular
Maraguinot and Enero v. NLRC and Viva Films, January 22,
1998
A project employee or a member of a work pool
may acquire the status of a regular employee when the
following concur:
1) There is a continuous rehiring of project
employees even after cessation of a project; and
2) The tasks performed by the alleged "project
employee" are vital, necessary and indispensable to
the usual business or trade of the er.
However, the length of time during which the
employee was continuously re-hired is not controlling,
but merely serves as a badge of regular employment.
xxx it may not be gainsaid that these tasks
were vital, necessary and indispensable to the usual
business or trade of the er.
Similar to the case of regular seasonal
employees, the employment relation is not severed
by merely being suspended. The ees are, strictly
speaking, not separated from services but merely on
leave of absence without pay until they are
reemployed. Thus we cannot affirm the argument
that non-payment of salary or non-inclusion in the
payroll and the opportunity to seek other
employment denote project employment.
At this time, we wish to allay any fears that this
decision unduly burdens an er by imposing a duty to rehire a project employee even after completion of the

project for which he was hired. The import of this


decision is not to impose a positive and sweeping
obligation upon the er to re-hire project ees. What this
decision merely accomplishes is a judicial recognition of
the employment status of a project or work pool ee in
accordance with what is fait accompli, i.e., the
continuous re-hiring by the er of project or work pool
ees who perform tasks necessary or desirable to the er's
usual business or trade. Let it not be said that this
decision "coddles" labor, for as Lao has ruled, project or
work pool ees who have gained the status of REes are
subject to the "no work-no pay" principle.
3.7b Completion of Project Not Valid Reason to
Separate a Project Employee Who has Become
Regular
When a project ee who has gained regular status is
separated from employment on the alleged ground of
completion of project, such separation is for an invalid
reason, hence unwarranted. Because the termination is
unjustified the ee is entitled to reinstatement with
backwages, w/o loss of seniority rights and other
benefits that may have accrued.
3.7c Computing the Backwages of Project
Employees Who has become Regular; No Work,
No Pay Rule Applicable
Following the principles of suspension of work
and no pay b/w the end of one project and the start
of a new one, in computing petitioners backwages, the
amounts corresponding to what could have been earned
during the periods from the date petitioners were
dismissed until their reinstatement when petitioners
respective Shooting Units were not undertaking any
movie projects, should be deducted.
Petitioners are entitled to receive full backwages
from the date of their dismissal up to the time of their
reinstatement, without deducting whatever earnings
derived elsewhere during the period of illegal dismissal.
4.

Seasonal Employment: Regular Seasonal After


One Season
Seasonal ees (SEes) are considered regular ees. Regular
Seasonal ees are those called to work from time to time. The
nature of their relationship with the employer is such that
during off season they are temporarily laid off but during
summer season they are reemployed, or when their services
may be needed. They are not, strictly speaking, separated
from the service but are merely considered as on leave of
absence w/o pay until they are reemployed. Their
employment relationship is never severed but only
suspended.
It is not enough that they perform services that are
seasonal in nature. They must have also been employed only
for the duration of one season. The evidence proves the existence
of the first, but not of, the second condition. The fact that
respondents repeatedly worked as sugarcane workers for
petitioners for several years is not denied by the latter.
Evidently, petitioners employed respondents for more than
one season. Therefore, the general rule of regular
employment is applicable.

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Visayan Stevedore Trans. Co., et al. v. CIR, et al., February 25,


1967
After the first milling season subsequently to the
liberation of the Philippines, Complainants merely reported
for work, at the beginning of each succeeding milling season,
and their services were invariably availed of by the Company,
although an officer of the UWFA or union concerned
determined the laborers who would work at a given time,
following a rotation system arranged therefor. Complainants
worked under the direction and control of the officers of the Company,
whose paymaster paid the corresponding compensation
directly to said Complainants. Hence, laborers working under
these conditions are employees of the Company, Er-ee
relationship exists b/w a milling company and the workers
during off season. During that period, the workers concerned
are considered, not separated from the service, but, merely on
leave of absence, without pay, during the off-season, their
employer-employee relationship being merely deemed
suspended, not severed, in the meanwhile.
4.1 Employer-Employee Relationship Exists between
Milling Company and its Workers Even During Off
Season
There is, therefore, merely a temporary cessation of
the manufacturing process due to passing shortage of raw
material that by itself alone is not sufficient, in the absence
of other justified reasons, to sever the employment or
labor relationship between the parties, since the shortage is
not permanent. The proof of this assertion is the undenied
fact that many of the petitioner members of the ICAWO
Union have been laboring for the Central, and reengaged
for many seasons without interruption. Nor does the
Central interrupt completely its operations in the interval
between milling seasons; the office and sales force are
maintained, precisely because operations are to be later
resumed. (Industrial-Commercial-Agricultural Workers
Union v. CIR, March 31, 1966)
4.2 Seasonal Pakiao Employees
Zamudio v. NLRC, March 25, 1990
The nature of their employment, i.e. pakiao basis,
does not make petitioners independent contractors. Pakiao
workers are considered ees as long as the er exercises
control over the means by which such workers are to
perform their work. Considering that petitioners did their
work inside private respondents farm, the latter necessarily
exercised control over the work performed by petitioners.
The seasonal nature of petitioners work does not
detract from the conclusion that er-ee relationship exists.
Seasonal workers whose work is not merely for the
duration of the season but who are rehired every working
season are considered regular ees. The circumstance that
petitioners do not appear in respondents payroll does not
destroy the er-ee relationship b/w them. Omission of
petitioners in the payroll was not within their control; they
had no hand in the preparation of the payroll. This
circumstance, even if true, cannot be taken against
petitioners.

4.3 The Mercado Ruling: Project Employees Do Not


Become Regular Although Service Exceeds One
Year
The Mercado ruling refused to apply the element of time
mentioned in the second paragraph of Art 280. It said
essentially that the one-year duration on the job is
pertinent to deciding whether a CEes has become regular
or not. But it is not pertinent to a seasonal or project ee.
Passage of time does not make a season worker regular or
permanent.
Mercado, Sr., et al., v. NLRC, et al., September 5, 1991
Ruling: The contention of petitioners that the second
paragraph of Article 280 of the Labor Code should have
been applied in their case presents an opportunity to clarify
the afore-mentioned provision of law.
The second paragraph of Art. 280 demarcates as
"casual" employees, all other employees who do not fan
under the definition of the preceding paragraph. The
proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at
least one year of service regardless of the fact that such
service may be continuous or broken.
Petitioners, in effect, contend that the proviso in the
second paragraph of Art. 280 is applicable to their case and
that the Labor Arbiter should have considered them
regular by virtue of said proviso. The contention is without
merit.
xxx the proviso in the second paragraph of Art. 280 was
not designed to stifle small-scale businesses nor to oppress
agricultural land owners to further the interests of laborers,
whether agricultural or industrial. What it seeks to
eliminate are abuses of employers against their employees
and not, as petitioners would have us believe, to prevent
small-scale businesses from engaging in legitimate methods
to realize profit. Hence, the proviso is applicable only to
the employees who are deemed "casuals" but not to the
"project" employees nor the regular employees treated in
paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees,
or, to use the correct term, seasonal employees, their
employment legally ends upon completion of the project
or the season. The termination of their employment
cannot and should not constitute an illegal dismissal.
4.3a Mercado Reconciled with Earlier Rulings
Mercado ruling does not reverse the earlier rulings
that SEes are regular and merely on leave w/o pay
during off season.
In Mercado, although respondent constantly availed
herself of petitioners services from year to year, it was
clear from the facts that they were not in her regular
employ. Petitioners therein performed different phases
of agricultural work in a given year. xxx they worked
for respondent, but were nevertheless free to contract
their services w/ other far, owners. The Court was thus
emphatic when it ruled that petitioners were mere
PEes, who could be hired by other farm owners. As
such, their employment would naturally end upon the
completion of each project or each phase of farm work
w/c has been contracted.

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The doctrine that SEes are regular and merely


considered on leave of absence w/o pay during offseason, still stands. Since they are regular, their
employment did not end with the 1993 season and
because they were not rehired in 1994, they are deemed
to have been illegally terminated.
4.4 Regular Contractuals Entitled to Benefits of
Regular Employees
Cinderela Marketing Corp. V. NLRC, et al., June 22, 1998
Ruling: Petitioner has engaged in a semantic interplay of
words in distorting the definition of a "regular employee"
as provided by the Labor Code. Under Article 280 of the
Labor Code.
It is undeniable that private respondents have
rendered at least one year of service to petitioner as sales
clerks, an activity which is usually necessary or desirable in
the usual business or trade of the employer. Therefore,
they are regular employees under the CBA who are entitled
to the benefits granted to all other regular employees of
petitioner under the CBA.
5

Fixed-Period Employment, When Valid


Article 280 or any other provision of the LC does not
mention fixed-period employment or employment for a
term.
On the one hand, there is the gradual and progressive
elimination of references to term or fixed-period
employment in the Labor Code. There is, on the other hand,
the Civil Code, which has always recognized, and continues
to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no
restraints on the freedom of the parties to fix the duration of
a contract, whatever its object, be it specie, goods or services,
except the general admonition against stipulations contrary to
law, morals, good customs, public order or public
policy. Under the Civil Code, therefore, and as a general
proposition, fixed-term employment contracts are not
limited, as they are under the present Labor Code, to those
by nature seasonal or for specific projects with predetermined dates of completion; they also include those to
which the parties by free choice have assigned a specific date
of termination. (Brent School, Inc. v. Zamora, February 5,
1990)
Brent School, Inc. v. Zamora, February 5, 1990
It should have no application to instances where a fixed
period of employment was agreed upon knowingly and
voluntarily 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 where it satisfactorily appears that the
employer and employee dealt with each other on more or
less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited
in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended consequences.
5.2 Brent Doctrine Summarized

Art 280 of the LC does not prescribe or prohibit an


employment contract with a fixed period, provided the
same is entered into by parties w/o any force, duress, or
improper pressure being brought to bear upon the
employee and absent any other circumstance vitiating
consent. It does not necessarily follow that where the
duties of the ee consist of activities usually necessary or
desirable in the usual business of the er, the parties are
forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing
essentially contradictory b/w a definite period of
employment and the nature of the ees duties.
5.3 Pretermination of Fixed-Period Employment,
Liability of Employer
A fixed-period employer is not regular because his job, as
anticipated and agreed, will exist only for a specified period
of time. It is not permanent. But he is deemed regular in
two senses: (1) the nature of his work is necessary or
desirable in the principal business of the employer; and (2)
he enjoys security of tenure during the limited time of his
employment. Before the end of the agreed period he
cannot be removed w/o a valid cause. If this is done, the
employer commits illegal dismissal. In fact, if he commits a
breach of contract, in w/c case, the Court has ruled, the
Ee is entitled to payment of his salaries corresponding to
the unexpired portion of his contract.
5.3 Illegal Fixed Period Employment; Brent Ruling
Clarified
Cielo v. The Honorable National Labor Relations Commission
(January 28, 1991)
Ruling: There is no question that the purpose behind
these individual contracts was to evade the application of
the labor laws by making it appear that the drivers of the
trucking company were not its regular employees.
Under these arrangements, the private respondent
hoped to be able to terminate the services of the drivers
without the inhibitions of the Labor Code. All it had to do
was refuse to renew the agreements, which, significantly,
were uniformly limited to a six-month period. No cause
had to be established because such renewal was subject to
the discretion of the parties. In fact, the private respondent
did not even have to wait for the expiration of the contract
as it was there provided that it could be "earlier terminated
at the option of either party."
By this clever scheme, the private respondent could
also prevent the drivers from becoming regular employees
and thus be entitled to security of tenure and other
benefits, such as a minimum wage, cost-of-living
allowances, vacation and sick leaves, holiday pay, and other
statutory requirements.
We accept the factual finding of the Labor Arbiter
that the petitioner was a regular employee of the private
respondent. The private respondent is engaged in the
trucking business as a hauler of cattle, crops and other
cargo for the Philippine Packing Corporation. This
business requires the services of drivers, and continuously
because the work is not seasonal, nor is it limited to a
single undertaking or operation. Even if ostensibly hired
for a fixed period, the petitioner should be considered a

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regular employee of the private respondent, conformably


to Article 280 of the Labor Code.
5.3a Effect of retention of Ee Beyond Period of
Employment
GR: Upon the expiration of a contract of employment for
a definite term, the Ee continues to render the same
services as he rendered during the term of the contract
w/o explicitly entering into any agreement, it will be
presumed prima facie that he is serving under a new
contract having the same terms and conditions as the
original one.
XPN: This presumption may be rebutted by evidence
showing a change of the terms of the contract, or by proof
of facts and circumstances showing that the parties
understood that the terms of the old contract were not to
apply to the continued service.
Viernes v. NLRC and Benguet Electric Cooperative, Inc.
(BENECO) April 2003
Ruling: We sustain petitioners claim that they should be
reinstated to their former position as meter readers, not on
a probationary status, but as regular employees.
A review of the records shows that petitioners have
never been probationary employees. There is nothing in
the letter of appointment, to indicate that their
employment as meter readers was on a probationary
basis. It was not shown that petitioners were informed by
the private respondent, at the time of the latters
employment, of the reasonable standards under which they
could qualify as regular employees. Instead, petitioners
were initially engaged to perform their job for a limited
duration, their employment being fixed for a definite
period, from October 8 to 31, 1990.
Private respondents reliance on the case of Brent
School, Inc. vs. Zamora, xxx is misplaced.
The principle we have enunciated in Brent applies only
with respect to fixed term employments. While it is true
that petitioners were initially employed on a fixed term
basis as their employment contracts were only for October
8 to 31, 1990, after October 31, 1990, they were allowed to
continue working in the same capacity as meter readers
without the benefit of a new contract or agreement or
without the term of their employment being fixed anew.
Herein petitioners fall under the first category. They
were engaged to perform activities that are necessary to the
usual business of private respondent. We agree with the
labor arbiters pronouncement that the job of a meter
reader is necessary to the business of private respondent
because unless a meter reader records the electric
consumption of the subscribing public, there could not be
a valid basis for billing the customers of private
respondent. The fact that the petitioners were allowed to
continue working after the expiration of their employment
contract is evidence of the necessity and desirability of
their service to private respondents business.
5.3b When Five-Month Contractuals Considered
Regular Ees; the Purefoods Precedent
Purefoods Corp. v. NLRC, et al., December 12, 1997

Ruling: The petitioner does not deny or rebut private


respondents' averments (1) that the main bulk of its
workforce consisted of its so-called casual employees;
(2) that as of July 1991, casual workers numbered 1,835;
and regular employees, 263; (3) that the company hired
casual every month for the duration of five months, after which
their services were terminated and they were replaced by other casual
employees on the same five-month duration; and (4) that these
casual employees were actually doing work that were
necessary and desirable in petitioners usual business.
This scheme of the petitioner was apparently designed
to prevent the private respondents and the other casual
employees from attaining the status of a regular
employee. It was a clear circumvention of the employees right to
security of tenure and to other benefits like minimum wage,
cost-of-living allowance, sick leave, holiday pay, and 13th
month pay. Indeed, the petitioner succeeded in evading the
application of labor laws. Also, it saved itself from the
trouble or burden of establishing a just cause for
terminating employees by the simple expedient of refusing
to renew the employment contracts.
5.3c Effect of Renewal of Fixed-Period Employment
in Regular Jobs
Where the direct-hired is doing necessary or desirable job,
3-month fixed term of the employment, renewed several times
exceeding 1year, establishes her being a regular Ee. Such
contractual employment on as needed basis contravenes
the Ees right to security of tenure. The two criteria so that
the term employment may not violate the law on
security of tenure are: (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; and (2) 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.
Ees have not attained regular status and they are not
illegally terminated if they worked under fixed term
employment contracts non of w/c was extended beyond
the initial 5-moth period, even if they are doing jobs
necessary or desirable to the Ers business. There is
nothing essentially contradictory b/w a definite period of
employment and the nature of the Ees duties. This
conclusion assumes that the fixed term contracts meet the
2 criteria as laid down in Brent School vs. Zamora.
5.3d Seafarers are Contractuals
Millares and Lagda v. NLRC, et al., July 29, 2002
it is clear that seafarers are considered contractual
employees. They cannot be considered as regular
employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign every
time they are rehired and their employment is terminated
when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall
under the exception of Article 280 whose employment has
been fixed for a specific project or undertaking the
completion or termination of which has been determined
at the time of engagement of the employee or where the

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work or services to be performed is seasonal in nature and


the employment is for the duration of the season. We need
not depart from the rulings of the Court in the two
aforementioned cases which indeed constitute stare
decisis with respect to the employment status of seafarers.
Moreover, it is an accepted maritime industry practice
that employment of seafarers are for a fixed period
only. Constrained by the nature of their employment
which is quite peculiar and unique in itself, it is for the
mutual interest of both the seafarer and the employer why
the employment status must be contractual only or for a
certain period of time.
we hereby state that petitioners are not considered
regular or permanent employees under Article 280 of the
Labor Code. Petitioners employment have automatically
ceased upon the expiration of their contracts of enlistment
(COE).
1.

PROBATIONARY EMPLOYMENT
A probationary employee, as understood under Article
282 (now 281) of the LC, is one who is on trial by an Er
during which the Er determines whether or not he is
qualified for permanent employment. A probationary
appointment is made to afford Er 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
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.
The employer has the right or is at liberty to choose who
will be hired and who will be denied employment. In that
sense, it is within the exercise of the right to select his
employees that the employer may set or fix a probationary
period within which the latter may test and observe the
conduct of the former before hiring him permanently.
1. Employers Right to Select; the Need for Probation
There is nothing under Article 281 of the Labor Code that
would preclude the employer from extending a regular or a
permanent appointment to an employee once the employer
finds that the employee is qualified for regular employment
even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither
attained nor attainable within the said period, Article 281 of
the Labor Code does not likewise preclude the employer
from terminating the probationary employment on justifiable
causes.
Manila Electric Company v. NLRC, September 29, 1989

Ruling: The NLRC gravely abused its discretion in holding


that the dismissal of the private respondent after a
probationary period of five (5) months instead of six (6), as
provided in Art. 280 of the Labor Code, was illegal, and in
ordering his reinstatement as probationary employee for a
period of five (5) months, or a total of nine (9) months of
probationary employment. There was sufficient cause for
terminating his probationary employment after only four (4)
months.
2.

Rights of Probationary Ee; Termination only for


Cause
If an ee hired allegedly on probationary basis was not
informed of the standards that should qualify her as a regular
ee, the er is deemed to have been hired from day one as
regular ee.
Probationary ees, notwithstanding their limited tenure, are
also entitled to security of tenure. Thus, except for just cause
are provided by law, or under the employment contract, a
probationary ee cannot be terminated.
A.M. Oreta & Co., Inc. v. NLRC, et al. August 10, 1989
Cases involving employees engaged on probationary
period basis, the employer shall make known to the employee
at the time he is hired, the standards by which he will qualify
as a regular employee. Nowhere in the employment contract
executed between company and Grulla is there a stipulation
that the latter shall undergo a probationary period for three
months before he can qualify as a regular employee. There is
also no evidence on record showing that the respondent
Grulla has been appraised of his probationary status and the
requirements which he should comply in order to be a
regular employee. Absent these requisites, there is
justification in concluding that respondent Grulla was a
regular employee at the time he was dismissed by petitioner.
As such, he is entitled to security of tenure during his period
of employment and his services cannot be terminated except
for just and authorized causes enumerated under the Labor
Code and under the employment contract.
A probationary employee cannot be removed except for
cause during the period of probation. Although a
probationary or temporary employee has limited tenure, he
still enjoys security of tenure. During his tenure of
employment or before his contract expires, he cannot be
removed except for cause as provided by law.
3.

Limitations to Termination of Probation; Regular


Status after Probationary Period
The power of an employer to terminate a probationary
employment contract is subject to the limitations that: (1) it
must be exercised in accordance with the specific
requirements of the contract; (2) if a particular time is
prescribed, the termination must be done within such time
and if formal notice is required, then that form must be used;
(3) the employer dissatisfaction must be real and in good
faith, not feigned so as to circumvent the contract or the law;
(4) there must be no unlawful discrimination in the dismissal.
It is an elementary rule in the law on labor relations that a
probationary employee engaged to work beyond the

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probationary period of six months, as provided under Article


281 of the Labor Code, or for any length of time set forth by
the employer (in this case, three months), shall be considered
a regular employee. This is clear in the last sentence of
Article 281.
4. No Successive Probation
An ee who is allowed to work after a probationary period
shall be considered a regular ee. In one case, SC held that the
ee should be considered when the ff circumstances are
present:
(1) The nature of the job are necessary and desirable in
the usual business;
(2) The employment is not covered by any
apprenticeship agreement;
(3) Rehiring; ( the fact of rehiring negates that the ee
failed to qualify as a regular ee)
Successive hiring and firings as a ploy to avoid the
obligations imposed by law on the ers for the protection and
benefit of probationary ees, who, more than not, are kept in
the bondage of unending probationary employment w/o
complaint due to the serious unemployment problem
besetting our country today.
4.1 Probation in Sister Company
It has been the practice of some companies which, shortly
after a worker has become REe, effects of the transfer of
the same Ee to another entity whose owners are the same,
or identical, in order to deprive subject Ee of the benefits
and protection he is entitled to under the law.
There is no basis for subjecting an ee to a new
probationary or temporary employment where he had
already become a REe when absorbed by a sister company.
5. Period of Probation not necessarily 6 months
6-month probation is a general rule. Probation longer than 6mos. can be justified.
Buiser et al., v. Hon. Vicente Leogardo, Jr. and General Telephone
Directory Co., July 31, 1984
Generally, the probationary period of employment is
limited to six (6) months. The exception to this general rule is
When the parties to an employment contract may agree
otherwise, such as when the same is established by company
policy or when the same is required by the nature of work to
be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in
requiring a longer period of probationary employment, such
as in the present case where the probationary period was set
for eighteen (18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the employee must learn a
particular kind of work such as selling, or when the job
requires certain qualifications, skills, experience or training.
Moreover, an eighteen month probationary period is
recognized by the Labor Union in the private respondent
company, which is Article V of the Collective Bargaining
Agreement. And as indicated earlier, the very contracts of
employment signed and acquiesced to by the petitioners
specifically indicate that "the company hereby employs the
employee as telephone sales representative on a probationary
status for a period of eighteen (18) months, i.e. from May

1980 to October 1981, inclusive. This stipulation is not


contrary to law, morals and public policy.
6. Extension of Probation
Mariwasa Manufacturing, Inc. v. Hon. V. Leogardo, Jr. January 26,
1989
Ruling: By voluntarily agreeing to an extension of the
probationary period, Dequila in effect waived any benefit
attaching to the completion of said period if he still failed to
make the grade during the period of extension. The Court
finds nothing in the law which by any fair interpretation
prohibits such a waiver. And no public policy protecting the
employee and the security of his tenure is served by
prescribing voluntary agreements which, by reasonably
extending the period of probation, actually improve and
further a probationary employee's prospects of
demonstrating his fitness for regular employment.
7. Last Day of Probation
When the probationary period of an ee is, for example, six
months, when is its last day?
SC has so far used 2 different computation methods in 3
cases. Under the 1st method, a probation of, say, six months,
ends on the same date it started 6 months before. Under the
2nd method, it ends 180 days for the starting date.
CALS Poultry vs. Roco July 30, 2002
The probation was from May 26, 1995 to November 15,
1995; the 180th day was November 11, 1995. But the Court
ruled that November 15, 1995 (184th day) was still within the
6-month period because the computation of the 6-month
probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month
following.
Mitsubishi Motors v. Chrysler Phil. Labor Union, June 29, 2004
The Court explained that the probationary period of six (6)
months consists of 180 days, in conformity with, Art 13 of
the NCC, which provides that a month undesignated by
name is understood as consisting of thirty (30) days each.
Hence the formaula for 6 months probation is 30 days times
6 months equals 180 days
Note: Mitsubishi is latest among the cases.
8. Probation of Teachers
According to Policy Instruction No. 11 issued by the DOLE,
the probationary employment of professors, instructors, and
teachers shall be subject to standards established by the
DepEd.
Under paragraph 75 of the Manual of Regulations for Private
Schools, to wit: Full time teachers who have rendered three
consecutive years of satisfactory services shall be considered
permanent.
The legal requisites, therefore, for acquisition by a teacher of
permanent employment, or security of tenure, are as follows:
(a) the teacher is a full-time teacher; (b) must have rendered 3
consecutive years of service; and (c) such service must be
satisfactory.
A full-time teacher is also one whose total working day is
devoted to the school, no other regular remunerative

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employment, and is paid on a regular monthly basis


regardless of the number of teaching hours; and that in
college the normal teaching load of a full-time instructor
shall be eighteen hours a month.
The policy of the Bureau of Private Schools extending the
probationary employment of teachers to 3years did not
repeal or render inoperative Art 282 [now 281] of the LC
w/c provides that the services of an employee who has been
engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular ee in accordance
with reasonable standards made known to the ee at the time
of his engagement.
8.1 Reversion from Full-Time to Part-Time Teacher
Bongar v. NLRC and AMA Computer College August 24, 1998
Ruling: SC affirmed the decision of the NLRC:
"If this line of reasoning (which We perceive to be too
technical to serve the ends of justice) is adopted in the
process of determining the regularity of a teachers
employment, the possibility of a teacher becoming
infinitely non-regular is not too far-fetched to
expect. For all that an unscrupulous school has to do
to negate or render meaningless the rule on
probationary employment, is to inflexibly confine the
recruitment or employment of its teachers to parttime basis, or to revert, as what happened to the
complainant herein, an originally full-time status to
mere part-time basis to prevent in any way the
incumbent teacher from becoming regular, a subtle
way of circumventing the LC provisions on
probationary employment.
9. Employment Contracts Mostly Adhesion Contracts
(Employment Contracts, mostly, are prepared by the Er)
Art 1377 of the NCC provides:
The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the obscurity.
This rule of interpretation is applicable to contracts of
adhesion where there is already a prepared form containing
the provisions of the employment contract. The Ee takes it
or leaves it. The presumption is that there was an imposition
by one party against the other and that the Ee signed the
contract out necessity. (Cadalin, et al. v. POEA, NLRC, et al.,
December 5, 1994)
PART 3
MANAGEMENT RIGHTS AND
THE JUST CAUSES OF TERMINATION
I. MANAGEMENT RIGHTS
1. Right to Manage People, In General
Even as the law is solicitous of the welfare of the ees, it must
also protect the rights of an er to exercise what are clearly
management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose
cannot be denied.
So long as a companys prerogatives are exercised in good
faith for the advancement of the ers interest and not for the
purpose of defeating or circumventing the rights of the ees
under special laws or under valid agreements, the SC will
uphold them.

Equality of rights exists b/w the er and the ee. The rights of
the labourer to sell his labor to such persons as he may
choose is, in its essence, the same as the right of an er to
purchase labor from any person whom it chooses. The er
and the ee have an equality of right guaranteed by the Consti.
If the er can compel the ee to work against the latters will,
this is servitude. If the ee can compel the er to give him work
against the ers will, this is oppression.
2. Right to Discipline
The er has the prerogative to instill discipline in his ees and
to impose reasonable penalties, including dismissal, on erring
ees pursuant to company rules and regulations.
It will be highly prejudicial to the interests of the er to
impose on him the services of an ee who has been shown to
be guilty of the charges that warranted the dismissal. It will
demoralize the rank-and-file if the undeserving if not
undesirable, remains in the service.
3. Right to Transfer Ees
The court has recognized and upheld the prerogative of
management to transfer an ee from one office to another
w/in the business establishment , provided that there is no
demotion in rank or a diminution of his salary, benefits and
other privileges. This is a privilege inherent in the ers right to
control and manage its enterprise effectively. Even as the law
is solicitous of the ees welfare, it cannot ignore the right of
the employer to exercise what are clearly and obviously
management prerogatives.
It is the ers prerogative, based on its assessment and
perception of the its ees qualification, aptitudes, and
competence, to move them around in various areas of its
business operations in order to ascertain where they will
function maximum benefit to the company. When his
transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and other privileges, the ee may not
complain that it amounts to a constructive dismissal.
4. Right to Demote
Petrophil Corporation v. NLRC , A.B. Encarnacion and Gersher
Engineering Works, August 29, 1986
Ruling: Encarnacion was not dismissed but was only
demoted and transferred to Caltex Phil., Inc. because of his
failure to observe proper diligence of his work and also
because of his indolence, habitual tardiness and absences. But
following his demotion and transfer, Encarnacion refused to
report to work anymore.
Time and again, this Office has sustained the view that it
is management prerogative to transfer, demote, discipline,
and even to dismiss an ee to protect its business, provided it
is nottainted w/ ULP.
The record, however is bereft of any evidence to show
that the demotion and transfer of Encarnacion was due to
ULP acts defined under Art 249 (now 248), hence the act of
Gersher Engineering Works in transferring and demoting
complainant Encarnacion is anchored on just and valid
grounds.
5. Right to Dismiss
While the Consti is committed to the policy of social justice
and the protection of the working class, it should not be

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supposed that every labor dispute will be automatically


decide in favor of labor. Management also has its own rights,
w/c as such are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for those w/
less privileges, the SC has inclined more often than not
toward the worker and upheld his cause in his conflicts w/
the er.
5.1 Power to Dismiss not absolute
The right of an er to freely discharge his ees is subject to
regulation by the State, basically in the exercise of its
paramount police power. This is so because the
preservation of the lives of the citizens is a basic duty of
the State, more vital than the preservation of corporate
profits.
Dismissals must not be arbitrary. Due process must be
observed in dismissing an ee because its effects not only
his position but also his means of livelihood. Ers should,
therefore, respect and protect the rights of their ees, w/c
include the right to labor.
II. JUST CAUSES OF DISMISSAL
1. Causes of Dismissal in General
A company has the right to dismiss its erring ees if only as a
measure of self-protection against acts inimical to its interest.
The er cannot be legally compelled to continue w/ the
employment of person who admittedly was guilty of
misfeasance towards his er and whose continuance in the
service of the latter is patently inimical to his interest. The
law is protecting the rights of the labourer authorizes neither
oppression nor self-destruction of er.
Art 282 = dismissal
Art 283 and 284 = separation
2. Just Cause: Serious Misconduct
Misconduct is improper or wrong conduct. It is 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. The
misconduct to be serious within the meaning of the Act must
be of such a grave and aggravated character and not merely
trivial or unimportant. Such misconduct, however serious,
must, nevertheless, be in connection with the employees
work to constitute just cause for his separation.
A series irregularities when put together may constitue
serious misconduct w/c, under Art 283 of the LC, is a just
cause of dismissal.
The Er may dismiss an ee if the former has reasonable
grounds to believe, or to entertain the moral conviction, that
the latter is responsible for the misconduct and the nature of
his participation therein renders him absolutely unworthy of
the trust and confidence demanded by his position.
2.1 Examples of Misconduct
The pressure and influence exerted by the petitioner (a college
teacher) on his colleague to change a failing grade to a
passing one, as well as his misrepresentation that the
student is his nephew, constitute serious misconduct, w/c
is a valid ground for dismissing an ee.
An ee who utters obscene, insulting or offensive words against a
superior may be dismissed. It is not only destructive of his

co-ees morale and a violation of the company rules and


regulations, but also constitutes gross misconduct, a
ground provided by law for terminating an ees services.
As a general rule, immorality on the part of an ee does not
justify a discharge therefor unless such conduct is
prejudicial or in some was detrimental to the ers interests.
Taking the nature of the employment into account, the
immoral acts complained of were such as to render the
servant incapable of performing the service properly or
were calculated to injure the ers business.
Sleeping in post, gross subordination, dereliction of duty
and challenging superior officers to a fight and
insubordination on the part a security guard w/c is to
protect the company property from pilferage or loss.
Challenging superior officers to a fight and
insubordination on the part of the ee are acts inimical to
the interest of his er.
Villarama v. NLRC and Golden Donuts, Inc., September 2, 1994
Ruling: Sexual harassment abounds in all sick societies. It
is reprehensible enough but more when inflicted by those
w/ moral ascendancy over their victims We rule that it is a
valid cause for separation from services.
2.2 Cause Found Inadequate
Where the fisticuffs are plainly matter b/w 2 ees w/c had
no apparent deleterious effects on the substantial interest
of the
company, the penalty of dismissal is not
commensurate w/ the ees allege misconduct.
The acts committed by an ee (a first offender) of vending,
soliciting, engaging in usurious activities do not warrant the
drastic remedy of dismissal, since the company rules and
regulations merely provide the penalty of written
reprimand for the first offense, 6days suspension for the
2nd offense and discharge for the 3rd offense.
2.2a Teacher in Love with Student: The Heart has
Reasons which Reason does not know
Chua-Qua v. Hon. Jacobo C. Clave, August 30, 1990
Ruling: Teacher falling in love with student, not immoral
Even the labor arbiter conceded that there was no direct
evidence to show that immoral acts were committed.
Nonetheless, indulging in a patiently unfair conjuncture, he
concluded that it is however enough for a sane and
credible mind to imagine and conclude what transpired
during those times.
Private Respondent (school) utterly failed to show that
petitioner took advantage of her position to court her
student. If the two eventually fell in love, despite the
disparity of their ages and academic levels, this only lends
substance to the truism that the heart has reasons of its
own w/c reason does not know. But, definitely, yielding to
this gentle and universal emotion is not to be so casually
equated w/ immorality. The deviation of the circumstances
of their marriage from the usual societal pattern cannot be
considered as a defiance of contemporary social mores.
Reinstatement, not possible The charge against petitioner
not having been substantiated, we declare her dismissal as
unwarranted and illegal. It being apparent, however, that
the relationship b/w the petitioner and private respondent
has been inevitably and severely strained, we believe that it

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would neither be to the interest of the parties nor would


any prudent purpose be served by ordered her
reinstatement.
2.3 Extra-marital Relationship as Immorality
In another case, they are both married teachers. The SC
considers the affair immoral. Sustaining the dismissal of
the complainant ee, the Court said: A teacher, both in his
personal and official conduct, must display exemplary
behavior When a teacher engages in extra-marital
relationship, especially when the parties are both married,
such behavior amount to immorality, justifying his
dismissal from employment.
2.3a Immoral Conduct defined
Immoral conduct has been defined as that conduct which
is so willful, flagrant, or shameless as to show indifference
to the opinion of good and respectable members of the
community. Furthermore, such conduct must not only be
immoral, but grossly immoral. That is, it must be so corrupt
as to constitute a criminal act or so unprincipled as to be
reprehensible to a high degree or committed under such scandalous or
revolting circumstances as to shock the common sense of decency.
2.4 Being the Spouse of a Co-employee
May an ee be dismissed for being married to a coemployee?
The policy may not facially violate Art 136 of the LC, but
it creates, the only way it could pass judicial scrutiny is a
showing that it is reasonable despite the discriminatory,
albeit disproportionate, effect. The failure of [the er] to
prove a legitimate business concern in imposing the questioned
policy cannot prejudice the ees right to be free from
arbitrary discrimination based upon stereotypes of married
persons working together in one company.
3. Just Cause: Willful Disobedience
It is the ers prerogative to prescribe reasonable and
regulations necessary or proper for the conduct of its
business, to provide certain disciplinary measures to
implement said rules and to assure that the same be complied
with.
In order that the willful disobedience by the ee may
constitute a just cause for terminating his employment, the
orders, regulations, or instruction of the er or representative
must be:
(1) Reasonable and lawful
(2) Sufficiently known to the ee; and
(3) In connection w/ the duties w/c the ee has been
engaged to discharge
As to what is a reasonable order or rule will depend on the
circumstances of each case. Reasonableness has reference not
only to the kind and character of directions and commands,
but also to the manner in w/c they are made.
Any ee may be dismissed for violation of a reasonable
company rule or regulation for the conduct of the latters
business, such as a rule w/c prohibits ees from using
company vehicles for private purpose w/o authority from
management or rules and regulations of the company
designed for the safety of the labourers themselves.

3.1 Valid termination: Ers Policy Enforcable despite


Unions Objection
GTE Directories Corp. v. Sanchez, et al., May 27, 1991
It does not follow that just because the employees or their
union are unable to realize or appreciate the desirability of
their ers' policies or rules, the latter were laid down to
oppress the former and subvert legitimate union activities.
Indeed, the overt, direct, deliberate and continued defiance
and disregard by the employees of the authority of their
employer left the latter with no alternative except to
impose sanctions. The sanction of suspension having
proved futile, termination of employment was the only
option left to the employer.
It would be dangerous doctrine indeed to allow ees to
refuse to comply with rules and regulations, policies and
procedures laid down by their employer by the simple
expedient of formally challenging their reasonableness or
the motives which inspired them, or filing a strike notice
with the DOLE, or, what amounts to the same thing, to
give the employees the power to suspend compliance with
company rules or policies by requesting that they be first
subject of collective bargaining, It would be well nigh
impossible under these circumstances for any employer to
maintain discipline in its establishment.
3.2 Elements of Disobedience
Gold City Intergrated Port Services, Inc. v. NLRC, Sept. 21, 1990
Ruling:
(1) Willful Disobedience concurrence of at least 2
requisites: the ees assailed conduct must have been
willful or intentional, the will-fullness being
characterized by a wrongful and perverse attitude;
and the order violated must have been reasonable,
lawful, made known to the ee and must pertain to
duties w/c he had been engaged to discharge.
(2) Suspension, Not Dismissal It does not follow, however,
that private respondent Bacalso's services were
lawfully terminated either under Article 282 (a) of the
Labor Code or under the CBA Schedule of penalties.
We believe that not every case of insubordination or
wilful disobedience by an employee of a lawful workconnected order of the employer or its representative
is reasonably penalized with dismissal. For one thing,
Article 282 (a) refers to "serious misconduct or wilful
disobedience".
There
must
be
reasonable
proportionality between, on the one hand, the wilful
disobedience by the employee and, on the other hand,
the penalty imposed therefor.
3.3 Disobeying an Order to Transfer
Requsites above sated must be observed perhaps w/
greater prudence before dismissing an ee who disobeys
an order transferring him from one job or location to
another. The disobedience and the consequent dismissal
may or may not be valid depending on the presence of
those 2 requisites. Disobedience of a valid transfer order
may justify dismissal; disobedience of an invalid transfer
order does not.
3.3a Valid Transfer
Management had the right to transfer or reassign an ee.

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This right flows from ownership and from the established


rule that labor does not authorize the substitution of
judgement of the er in the conduct of his business, unless
it is shown to be contrary to law, morals or public policy.
The only time the er cannot exercise this right is where it is
vitiated by improper motive and is merely a disguised
attempt to remove or punish the ee sought to be
transferred.
The demotion of an ee and his transfer to another place of
work because of his failure to observe the proper diligence
in his work, and of his indolence, habitual tardiness and
absences do not constitute dismissal.
Abbot Laboratories v. NLRC, October 12, 1987
Ruling: By the very nature of his employment, a drug
salesman or medical representative is expected to travel.
He should anticipate reassignment according to the
demands of the business. It would be a porr drug corp
which cannot even assign its representative or detail men
to new markets calling for opening or expansion or to
areas where the need for pushing its product is great. More
so if such reassignments are part of the employment
contract.
3.3b Invalid Transfer
Having the right should not be confused w/ the manner
w/c that right must be exercised. Thus, it cannot be used
subterfuge by the ere to rid himself of an undesirable
worker. Nor when the real reason is to penalize an ee for
his union activities and thereby defeat his right to selforganization. But the transfer can be upheld when there is
no showing that it is necessary, inconvenient and
prejudicial to the displaced ee.
Thus, when the transfer was timed at the height of union
concerted activities in the firm, deliberately calculated to
demoralize the other union members. Under such
questionable circumstances, private respondents had a
valid reason to refuse the Manila reassignment. Public
Respondent did not err or abuse his discretion in
upholding the ees cause. (Yuco Chemical Industries, Inc. v.
Ministry of Labor and Employment, May 28, 1990)
3.3c May an Ee Disobey an Inconvenient Transfer?
Difficulty lies in the situation where no such illicit,
improper or underhanded purpose can be ascribed to the
Er, but the Ee is opposing the transfer on ground of
inconvenience or hardship that the transfer will cause to
the Ee or his family.
In the cases of Abbot (1987) of Philippine-Japan Active Carbon
(1989), of PT&T (1989), and of Homeowners Savings (1996),
the transfer orders of meant inconvenience (even
embarrassment) to the ees concerned, and yet the Court
sustained the validity and enforceability of the transfer
order, hence, the disobeying ees were validly dismissed.
But in the case of Escobin (1998) where the ee guards in
Mindanao were told to report to the Manila office for
reassignment in Metro Manila, the Court invalidated the
order; that is, the ees should not have been dismissed.

Escobin, et al., v. NLRC, Peftok Integrated Services, Inc. (PISI),


April 15, 1998
Ruling: SC set aside the NLRC decision and reinstated
that of the LA.
First, it was grossly inconvenient for petitioners,
who were residents and heads of families residing in
Basilan, to commute to Manila. In Yuco Chemical Industries,
Inc. vs. Ministry of Labor and Employment, the transfer to
Manila of two workers, who were also studying in Tarlac,
was held to be grossly inconvenient. The distance to
Manila from Basilan is considerably greater than that from
Tarlac. Such transfer would have necessarily entailed
separation of the petitioners from their families.
Second, petitioners were not provided with funds to
defray
their
transportation
and
living
expenses. Petitioners, not unknown to their employer,
earned only P1,500 to P2,500 a month before they were
placed on reserve status, after which they remained
jobless. Furthermore, being residents of Basilan,
petitioners would have required living arrangements in
Manila which, in turn, would have entailed additional
expenses on their part.
x
x
x
Fourth, If indeed the postings were to be made in
Basilan, there would have been no necessity for petitioners
to report to Manila and no justification for respondents
insistence on their compliance with its directive. Since
private respondent did not provide transportation and
living allowances; and since, in the first place, petitioners
could have been easily informed of their new assignments
right there in Basilan, there was no reason for petitioners
to travel all the way to Manila.
To summarize: Incovenience to the ee does not
necessarily invalidate a transfer order, as shown in the
Homeonwers Savings and other cases already mentioned. But
inconvenience caused by unreasonableness of the transfer
order makes the order itself invalid, and disobedience
thereof is not a reason to dismiss the worker.
Transfer order itself becomes flawed and
unenforceable if it fails the criteria of lawfulness and
reasonableness.
The reasonableness and lawfulness of a rule, order or
instruction depend on the circumstances availing in each
case. Reasonableness pertains to the kind or character of
directives and commands and to the manner in which they
are made.
3.3d Change of Position and Work
Benguet Electric Cooperative v. G. Verzosa and J. Fianza, March
9, 2004
Ruling: The dismissal was valid. The records show the
ers explanation and evidence that there was a restructuring
of the organization after a thorough review by the
management of the indispensable and unessential
positions. It was undertaken to address the requirements
of an automated system and to streamline operations. The
revamp abolished the property custodian position, and in
fact, its function had already been absorbed by other
officers about 2years before complainant was told to
assume the bill distributor job.

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The er, the Court said, was able to meet its burden of
proving that the transfer was not unreasonable,
inconvenient or prejudicial to the ee and that it dis not
involve demotion in rank or diminution of salary,
privileges or other benefits. The Court refused to
invalidate the ers transfer just because it was against her
wishes and not commensurate to her self-worth or
personal qualifications.
3.3e Test of Validity of Transfer
Blue Dairy Corp. v. NLRC and E.R. Recalde, September 14,
1999
It is the prerogative of management to transfer an
employee from one office to another within the business
establishment based on its assessment and perception of
the employees qualifications, aptitudes and competence,
and in order to ascertain where he can function with
maximum benefit to the company. This is a privilege
inherent in the employers right to control and manage his
enterprise effectively. The freedom of management to
conduct its business operations to achieve its purpose
cannot be denied.
But, like other rights, there are limits thereto. The
managerial prerogative to transfer personnel must be
exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having
the right should not be confused with the manner in which
that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show
that the transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve a demotion
in rank or a diminution of his salaries, privileges and other
benefits. Should the employer fail to overcome this burden
of proof, the employees transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting
because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving a demotion
in rank and diminution in pay. Likewise, constructive
dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so
unbearable to the employee leaving him with no option
but to forego with his continued employment.
3.3f Invalid Change of Position
As long as the ee is permitted to perform the contemplated
services, he cannot treat a mere request or direction to
perform additional services as a discharge. It is otherwise
where there has been refusal to permit the servant [ee] to
perform the substantial or principal service w/c is shown
to have been contemplated by the contract or employment
and a direction to substitute a different service. In such
case, the ee may treat the contract as terminated.
3.3g Transfer with Promotion of a Manager
A transfer becomes unenforceable if the transfer is
coupled w/ or is in the nature, where the promotion is
rejected by the ee.
Dosch v. NLRC and Northwest Airlines, July 5, 1983
Ruling:

(1) Employer cannot shift cause of separation from resignation to


dismissal As indicated earlier, Northwest on appeal to
NLRC changed its stand and claimed that petitioner
was guilty of insubordination" when he refused to
comply with the transfer order made by Vice
President Jenkins. And for such act of
insubordination, Northwest claimed it lost confidence
in the petitioner. Since "resignation" was the particular
cause alleged by Northwest in terminating petitioner's
employment, Northwest is restricted to the ground
specified and may not invoke any other cause for the
discharge.
(2) Manager may decline promotion There is no law that
compels an employee to accept a promotion, as a
promotion is in the nature of a gift or a reward, which
a person has a right to refuse. When petitioner refused
to accept his promotion to Director of International
Sales, he was exercising a right and he cannot be
punished for it as qui jure suo utitur neminem laedit. He
who uses his own legal right injures no one.
While it may be true that the right to transfer or
reassign an employee is an employer's exclusive right
and the prerogative of management, such right is not
absolute.
(3) Managers Security of Tenure The fact that petitioner is
a managerial employee does not by itself exclude him
from the protection of the constitutional guarantee of
security of tenure.
(4) No insubordination - We cannot agree to Northwest's
submission that petitioner was guilty of disobedience
and insubordination which respondent Commission
sustained. The only piece of evidence on which
Northwest bases the charge of contumacious refusal is
petitioner's letter dated August 28, 1975 to R. C.
Jenkins wherein petitioner acknowledged receipt of
the former's memorandum dated August 18, 1975,
appreciated his promotion to Director of
International Sales but at the same time regretted "
that at this time for personal reasons and reasons of
my family, I am unable to accept the transfer from the
Philippines" and thereafter expressed his preference to
remain in his position, saying. " I would, therefore,
prefer to remain in my position of ManagerPhilippines until such time that my services in that
capacity are no longer required by Northwest
Airlines." From this evidence, We cannot discern even
the slightest hint of defiance, much less imply
insubordination on the part of petitioner.
(5) Dismissal too severe the outright dismissal of petitioner
from his position as Manager-Philippines of
Northwest Airlines is much too severe, considering
the length of service that petitioner has rendered for
11 fruitful and loyal years, a strong and vital factor
that must be taken into account in labor law
determinations.
3.3h Transfer Distinguished from Promotion
A transfer is a movement from one position to another of
equivalent rank, level or salary, w/o break in the service.
Promotion, on the other hand, is the advancement from
one position to another w/ an increase in duties and

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responsibilities as authorized by law, and usually


accompanied by an increase in salary. Whereas, promotion
denotes a scalar ascent of senior officer or ee to another
position higher either in rank or salary, transfer refers to
lateral movement from one position to another of
equivalent rank, level or salary.
Philippine Telegraph & Telephone Corp. v. CA, September 29,
2003
Ruling: The ees transfer are promotion in nature even if
they were not accompanied by an increase in salary. As was
held in Homeowners Savings and Loan Association, Inc. v.
NLRC, the indispensable element for there to be
promotion is that there must be an advancement from one
position to another or an upward vertical movement of the
ees rank or position. Any increase in salary should only be
considered incidental but never determinate of whether or
not a promotion is bestowed upon an ee.
An ee cannot be promoted, even if merely result of
transfer, w/o his consent. Therefore, the exercise by the
seven dismissed ees of their right to refuse cannot be
considered as insubordination or willful disobedience.
4. Just cause: Neglect of Duties
It is difficult to lay down any general rule as a guide on the
question whether, in a particular case, the act of negligence is
gross or not. Generally, gross neglect means an absence of
that diligence that an ordinarily prudent man would use in his
own affairs.
In order to constitute a just cause for the ees dismissal,
the neglect of duties must not only be gross but also habitual.
Sinlge or isolated acts of negligence do not constitute a just
cause for the dismissal of the ee.
To justify the dismissal of an ee for neglect of duties, it
does not seem necessary that the er show that he has
incurred actual loss, damage, or prejudice by reason of the
ees conduct. It is sufficient that the gross and habitual
neglect by the ee of his duties tends to prejudice the ers
interest since it would be unreasonable to require the er to
wait until he is materially injured before removing the cause
of the impending evil.
An ee may be dismissed because of inefficiency, neglect,
or carelessness. The law implies a situation or undertaking by
an employee in entering into a contract of employment that
he is competent to perform the work undertaken and is
possessed of the requisite skill and knowledge to enable him
to do so, and that he will do the work of the employer in a
careful manner. If he is not qualified to do the work which
he undertakes, if he is incompetent, unskillful or inefficient,
or if he executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may lawfully be
discharged before the expiration of his term of employment.
The degree of skill, care, diligence, and attention
imposed by the implied possession of competency,
knowledge, skilfulness, etc., of the ee is that of ordinary and
reasonable skill, care, and diligence. If the parties have
specially contracted that the ees services shall be warranted
or agreed to give satisfaction, the er is vested w/ power to
determine the question whether the work is satisfactory; and
the reasonableness of the grounds of dissatisfaction cannot

be inquired into by the court in an action by the ee for


damages for his discharge.
4.1 Gross Negligence defined; Examples
Gross negligence 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 w/o exerting any effort to avoid them.
Associated Bank v. NLRC, June 19, 1989
Ruling: S was guilty of gross negligence w/c warrants
his dismissal. The huge disparity in the values arrived at is
itself proof indicative of his gross negligence. Moreover, he
admittedly went to appraise the property on a Sunday and
merely asked the people residing thereat for the land
valuation w/o confirming it with the Citys Assessors
office. If ees are allowed to do their work in the same way
S discharged his assignment, no bank would survive. He
did not exercise ordinary diligence and care.
4.2 Abandonment
- A form of neglect of duty
There must be a clear and deliberate intent to discontinue
ones employment w/o any intention of returning back.
An ee may be dismissed on the ground of abandonment or
negligence of duty where said ee had been absent for a
period of 1 year and the prolonged absence from work was
w/o any valid notice or leave from the company,a nd said
absence is not by reason of any illness or disease.
4.2a Elements of Abandonment; Immediate filing of
Dismissal Complaint
Labor, et al v. NLRC and Gold City Commercial Complex, Inc.
September 14, 1995
To constitute abandonment, 2 elements must concur:
(1) The failure to report for work or absence w/o valid or
justifiable reason; and
(2) A clear intention to sever the er-ee relationship (more
determinative factor and being manifested by some
overt acts)
Er has the burden of proof to show a deliberate and
unjustified refusal of the ee to resume his employment
w/o any intention of returning.
Filing by an ee of a complaint for illegal dismissal is proof
enough of his desire ro return to work, thus negating the
ers charge of abandonment.
4.2b Immediate Filing of Complaint Negates
Abandonment; Exception
There are peculiar circumstances where the immediate
filing of illegal dismissal complaint does not disprove
abandonment of work.
In one case, SC ruled the evidence revealed instead that
the illegal dismissal complaint was intended to gain
leverage for the ee to induce the er to withdraw the
criminal charge filed against the ee.
4.3 Tardiness and Absenteeism
- Generally, a form of neglect of duty.
Acts of insubordination, coupled w/ habitual tardiness, are
sufficient causes for petitioners dismissal, especially

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considering the fact that the ees involved were not mere
rank-and-file ees but supervisors who owed more than the
usual fealty to the organization and were therefore
expected to adhere to its rules in an exemplary manner.
Petitioners did not even reflect upon and consider the
undesirable example that they were setting to those who
were under their supervision.
An employee who consistently receives promotions in rank
and salary must be a highly efficient worker, and therefore
should be retained despite occasional lapse in punctuality
and attendance. Perfection cannot after all be demanded.
4.3a Illustrative Case: Valid Dismissal Due to
Unauthorized Absences of a Union Officer
Cando v. NLRC and Filipinas Bank, September 14, 1990
Ruling: Dismissal of ee (the union president based on unauthorized
absences, justified) The dismissal of the petitioners based
on his unjustified absences for a number of months. As an
ee the petitioner is expected to be aware of the rules and
regulations of the bank regarding leaves of absences. As
observed by the Commission, the absences of the
petitioner were not authorized.
4.4 Is Attitude Problem a Just Cause to Dismiss an
Ee?
An ee who cannot get along with his co-ees is detrimental
to the company, for he can upset and strain the working
environment. Without the necessary teamwork and
synergy, the organization cannot function well. Thus,
management has the prerogative to take the necessary
action to correct the situation and protect its organization.
An ees attitude problem is a valid ground for his
termination. It is a situation analogous to loss of trust and
confidence that must be duly proved by the er. Similarly,
compliance w/ the twin requirement of notice and hearing
must also be proven by the er.
The burden of proof is not on the ee but on the er who
must affirmatively show adequate evidence that the
dismissal was for justifiable cause.
5. Just Cause: Dishonesty, Loss of Confidence
To constitute a just cause for terminating the ees services,
the fraud must be committed against the er or representative
and in connection w/ the ees work. The fraud committed by
an ee against 3rd persons not in connection w/ his work and
which does not in anyway involve his er is not a ground for
the dismissal of the ee. Since fraud implies willfulness or
wrongful intent, the innocent nondisclosure of facts by the ee
to the er will not constitute a just cause for the dismissal of
the ee.
5.1 Example of Dishonesty: Falsification of Time
Cards
San Miguel Corporation v. NLRC, June 29, 1989
Ruling: In order for obedience to be considered as an
exempting circumstance, it must be in compliance with a
lawful order not opposed to a higher positive duty of the
subaltern, and that the person commanding act within the
scope of his authority. As a general rule, an inferior should
obey his superior. But between a general law which enjoins
obedience to a superior giving just order, etc., and a

prohibitive law which plainly forbids what the superior


commands, the choice is not doubtful.
In order to be exempted on the ground of obedience,
it must be shown that both the person who gives the order
and the person who executes it are acting within the
limitations prescribed by law.
The falsification and fraud which the private
respondents committed against their employer were
inexcusable. The chiefs initials on the false entries in their
time cards did not purge the documents of their falsity.
Their acts constituted dishonesty and serious misconduct,
lawful grounds for their dismissal under Art. 282, sub-pars.
(a) and (c), of the Labor Code.
5.1a Theft of Company Property
Firestone Tire and Rubber Company of the Philippines v. Lariosa,
February 27, 1987
Ruling: Theft committed by an employee constitutes a
valid reason for his dismissal by the employer. Although as
a rule this Court leans over backwards to help workers and
employees continue with their employment or to mitigate
the penalties imposed on them, acts of dishonesty in the
handling of company property are a different matter. 8
Thus, under Article 283 of the Labor Code, an
employer may terminate an employment for "serious
misconduct" or for "fraud or willful breach by the
employee of the trust reposed in him by his employer or
representative."
If there is sufficient evidence that an employee has
been guilty of a breach of trust or that his employer has
ample reasons to distrust him, the labor tribunal cannot
justly deny to the employer the authority to dismiss such
an employee.
5.2 Loss of Confidence
While the right an employer to freely select or discharge
his ees is subject to regulation by the State basically in the
exercise of its paramount police power, nonetheless an er
cannot be compelled to continue in employment an ee
guilty of acts inimical of the er and justifying loss of
confidence in him.
In a decided case, SC stated: we have repeated held that
loss of confidence should not be simulated in order to
justify what would otherwise be, under the provisions of
law, and illegal dismissal. It should not be used as a
subterfuge for causes w/c are illegal, improper and
unjustified. It must be genuine, not a mere afterthought to
justify an earlier action taken in bad faith.
5.2a To Whom Applicable; Position of Trust
Explained
Loss of confidence should ideally apply only:
(1) To cases involving ees occupying positions of trust
and confidence, or (managerial ees i.e. those vested
w/ the powers or prerogatives to lay down
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline
ees or effectively recommend such managerial actions)
(2) To those situations where the ee is routinely charged
w/ the care and custody of the ers money or property
(cashiers, auditors, property custodians, etc., or those

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who, in the normal and routine exercise of their


functions, regularly handle significant amounts of
money or property)
5.2b Conflict of Interest; Employment with
Competitor
Is its lawful to prohibit w/ a competitor?
The er has to adduce evidence to prove that the restriction
is reasonable and not greater than necessary to protect the
ers legitimate business interests. The restraint may not be
unduly harsh or oppressive in curtailing the ees legitimate
efforts to earn a livelihood and must be reasonable in light
of sound public policy,
5.3 Proof Required
Proof beyond reasonable doubt of the ees misconduct is
not required. It is sufficient if there is some basis for such
loss of confidence or if the er has reasonable ground to
believe or to entertain the moral conviction that the ee
concerned is responsible for the misconduct and that the
nature of his participation therein rendered him unworthy
of the trust and confidence demanded by his position.
The right of an er to dismiss ees on the ground that it has
lost its trust and confidence in him must not be exercised
arbitrarily and w/o just causes. For loss of trust and
confidence to be a valid ground for an ees dismissal it
must be substantial and not arbitrary, and must be founded
on clearly established facts sufficient to warrant the ees
separation work.
5.4 Guidelines Summarized
While loss of confidence is one of the just causes for
termination of an ee, the dismissal must rest on an actual
breach of duty committed by the ee. The guidelines for
applying the doctrine of loss of confidence are:
(1) Loss of confidence should not be simulated;
(2) It should not be used as a subterfuge for causes w/c
are improper, illegal, or unjustified;
(3) It may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary;
(4) It must be genuine, not a mere afterthought to justify
earlier action taken in bad faith; and
(5) The ee involved holds a position of trust and
confidence.
6.

Just Cause: Commission of a Crime or Offense


- Commission of a crime or offense against the person of
his er or against any immediate member of the ers
family.
immediate family limited to spouse, ascendants,
descendants, or legitimate, natural, or adopted brothers or
sisters of the er or his relative by affinity in the same
degrees, and those by consanguinity w/in 4th civil degree.
6.1 Conviction or Prosecution Not Required
An er may dismiss an ee for breach of trust in the
handling of funds in spite of his having been acquitted in
the course of criminal prosecution. Conviction for a
crime involving loss of such funds is not necessary
before the ee may be dismissed. There is more reason

for dismissal where the acts of misconduct and wilful


breach of trust are repeatedly committed by an ee.
7. Analogous Causes
The determination of whether the cause for terminating
employment is analogous to any of those enumerated in Art
282 of the Code will depend on the circumstances of each
case.
To be considered analogous to the just cases enumerated, a
cause must be due to the voluntary and/or wilful act or
omission of the ee.
Theft committed by an ee against another ee (not against er)
is not work-related, hence, not serious misconduct under Art
282(e). A cause analogous to serious misconduct is a
voluntary and/ or wilful act or omission attesting to an ees
moral depravity. The theft, if proven by substantial evidence,
is analogous to serious misconduct.
PART 4
AUTHORIZED CAUSES OF TERMINATION
1. Authorized Causes in General
Under Art 283, an Er may terminate the employment of any
ee due to the ff causes:
(1) Installation of labor-saving devices
(2) Redundancy
(3) Retrenchment to prevent losses
(4) Closing or cessation of operation of the
establishment or undertaking, unless the closing is
ofr the purpose of circumventing the provisions of
law
1.1 Many other Authorized Causes
Art 283 is not a complete enumeration of aithorized causes
of employment termination. Among other causes are:
(a) Total and permanent disability of an ee;
(b) Disease not curable in 6months;
(c) Completion of project in project employment;
(d) Failure in probation;
(e) Sale amounting to closure of business;
(f) Relocation of business to a distant place;
(g) Defiance of return-to-work order;
(h) Commission of illegal acts in strike;
(i) Non-feasible reinstatement;
(j) Floating status or off-detail beyond 6months;
(k) Resignation;
(l) Violation of contractual commitment;
(m) Retirement; and
(n) Death of the Ee
1.2 Separation Pay
Separation Pay is used in 4 senses:
(1) As statutory benefit;
(2) As employment benefit voluntary granted or required
by contract;
(3) As alternative to reinstatement of an illegally
dismissed ee; and
(4) As financial assistance to a legally dismissed worker
In case of termination due to the installation of laborsaving devices or redundancy, the worker affected thereby
shall be entitled to separation pay equivalent to at least 1

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month pay to at least one month pay for every year of


service, whichever is higher.
In case of retrenchment, the separation pay shall be
equivalent to one month of pay or at least month pay
for every year of service, whichever is higher.

This issue was not raised before the LA nor the NLRC.
As it would be offensive to the basic rules of fair play and
justice to allow party to raise a question w/c has not been
passed by both administrative tribunals, it is now too late
to entertain it.

1.3 Backwages
Incompatible
with
Statutory
Separation Pay
An Ee whose employment is terminated due to any of the
cuases under Art 283 (except closure or cessation because
of serious losses) is entitled to a separation pay.
There being redundancy, dismissal of private lid.
Thus, private respondent are entitled to separation
pay only. The awards of backwages to them has no
basis of law.

3.2 Valid Abolition of Position and Transfer to Lower


Position
Great Pacific Life Assurance Corp. v. NLRC, July 30, 1990
Ruling: Based on his premise, however, that Allado's
services could have been terminated after her position as
Regional Cashier was abolished, We adopt by analogy
Article 283 of the Labor Code which provides that in case
of termination of employment due to installation of laborsaving devices or redundancy, the worker affected shall be
entitled to a separation pay of at least one (1) month pay or
to at least one (1) month pay for every year of service
whichever is higher. We took consideration of the fact that
Allado's proposed transfer to Makati, Metro Manila would
indeed entail much sacrifice on her part and the finding of
the NLRC that the position Allado was to assume is two
grades lower than a Regional Cashier so much so that
GREPALIFE's accommodation to her is almost illusory.
Thus, in the interest of justice, Allado should be entitled to
receive one (1) month pay for every year of service as her
separation pay. Since Allado was already paid one-half ()
month pay for every year of service she is only entitled to
the balance.

2. Introduction to Labor-Saving Devices


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.
The right to reduce personnel should, not be abused. It
should not be made a pretext for easing out labourers on
account of their union activities. But neither should it be
denied when it is shown that they are not discharging their
duties in a manner consistent w/ good discipline and
efficient operation of an industrial enterprise.
3. Redundancy
The Er may terminate an ee due to redundancy however the
er must comply w/ the procedural requirement of a written
notice to the Ministry of Labor [and the ee concerned] at
least 1month prior to dismissal.
Redundancy exists where the services of an ee are in excess
of what is reasonably demanded by the actual requirements
of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position may be the
outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a
particular product line or service previously manufactured or
undertaken by the enterprise.
Duplication of work does not necessarily mean redundancy.
Absence of proof of the act of termination was ill-motivated,
it is presumed that termination was done in good faith.
3.1 Creation of Position Function Related or Similar
to those of the Abolished Position does not
Necessarily Invalidate the Declaration of
Redundancy
Santos, et al. v. CA, Pepsi Cola Products Phil., et al., July 5, 2001
Ruling: Therefore, the 2 positions being different, it
follows that the redundancy program instituted by PEPSI
was undertaken in good faith. Petitioners have not
established that the title Account Development Manager
was created in order to maliciously terminate their
employment. Nor they have shown that PEPSI had any ill
motive against them. It is therefore apparent that their
reconstructing and streamlining of PEPSIs distribution
and sales system were an honest effort to make the
company more efficient.
Absence or inadequacy of Criteria should be
raised before the LA of the NLRC

International Harvester Macleod, Inc. IAC and Joson, May 18,


1987
Ruling: A searching review of the records fails to show
that petitioner in demoting private respondent and later
terminating his services acted Oppressively, unjustly or
arbitrarily. The lower court observing that the phasing out
of the department in question was preceded by a bitter
discussion between private respondent and his superiors,
alluded to the latter as the probable cause of the alleged
illegal dismissal. But such is only a surmise, in the absence
of any concrete evidence that the reorganization being
undertaken by petitioner company is for any other purpose
than its declared objective as a labor and cost saving
device. Indeed, there is no argument against the fact that
with the hiring of IHEC, it was no longer economical to
retain the services of private respondent; so much so that
despite the findings of the trial court that on many
occasions, petitioner company undertook direct sales to
the Philippine Government despite engagement of the
Asia Pacific Corporation as government dealer, it is not
precluded from adopting a new policy conducive to a more
economical and effective management.
Moreover, the issue as to whether or not his employer has
the right to demote him has been laid to rest inPetrophil v.
NLRC (143 SCRA 704 [1986]), where the Supreme Court
quoted with approval the,ruling of the Labor Arbiter in
this regard:
Time and again, this Office has sustained tho
view that it is management prerogative to
transfer, demote, discipline and even to
dismiss an employee to protect its business,

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provided it is not tainted with unfair labor


practice.
3.3 Replacing a Regular Ee w/ an Independent
Contractor
Serrano v. NLRC and Isetann Department Store, January 27,
2000
Ruling: Indeed, as we pointed out in another case, the
"[management of a company] cannot be denied the faculty
of promoting efficiency and attaining economy by a study
of what units are essential for its operation. To it belongs
the ultimate determination of whether services should be
performed by its personnel or contracted to outside
agencies . . . [While there] should be mutual consultation,
eventually deference is to be paid to what management
decides." Consequently, absent proof that management
acted in a malicious or arbitrary manner, the Court will not
interfere with the exercise of judgment by an employer.
In the case at bar, we have only the bare assertion of
petitioner that, in abolishing the security section, private
respondents real purpose was to avoid payment to the
security checkers of the wage increases provided in the
collective bargaining agreement approved in 1990. Such an
assertion is not a sufficient basis for concluding that the
termination of petitioners employment was not a bona
fide decision of management to obtain reasonable return
from its investment, which is a right guaranteed to
employers under the Constitution. Indeed, that the phaseout of the security section constituted a "legitimate
business decision" is a factual finding of an administrative
agency which must be accorded respect and even finality
by this Court since nothing can be found in the record
which fairly detracts from such finding.
Accordingly, we hold that the termination of petitioners
services was for an authorized cause, i.e., redundancy.
Hence, pursuant to Art. 283 of the Labor Code, petitioner
should be given separation pay at the rate of one month
pay for every year of service.
4.

Invalid Declaration of Redundancy; Illustrative


Cases
This is an exercise of business judgement whose soundness
or enforcement is generally not subject to unsolicited review
of the labor court or labor administrators.
Law and the fundamentals of good faith should be observed.
Redundancy is not the way to remove an unwanted ee. There
are prescribed causes and procedure for that.
Asufrin v. San Miguel Corp., March 10, 2004
Ruling: The SC ordered his reinstatement w/ full
backwages. The Court cited 4 reasons why it was not
convinced about the alleged redundancy:
(1) Out of the 14 ees who did not avail of the
retirement package, only the complainant was not
redeployed to other offices or outlets; he therefore
appeared to have been singled out;
(2) Complainant was in the payroll of the Sta. Fe
Brewery actually posted at the Sum-ag Warehouse
where his post was declared redundant and could
have been retained by him;

(3) Despite contrary allegation, warehousing activities


continued in Sum-ag as transit point where dealers
got their stocks;
(4) No criteria, e.g. ee status, efficiency, and seniority
was adopted in determining the ees to be laid off.
4. Retrenchment
Retrenchment is one of the economic grounds resorted to by
an er to terminate employment primarily to avoid or
minimize business losses. However, the er bears the burden
to prove his allegation of economic or business reverses. The
ers failure to prove it necessarily means that the ees
dismissal was not justified.
4.1 Causes of Retrenchment

Lack of Work

Justifiable cause for termination of employment. Where


the continuation of the men in the service is patently
inimical to the interest of the er, there is no alternative but
for the court to authorize the er to lay off such number of
workers as the circumstances may warrant. But the court
may impose the condition that the er shall not admit any
new labourer in case of available work in the future before
the laid-off men who are able, willing and available to do
the same shall have been recalled to work.

Business Recession

Where the mgmt found it unnecessary to continue


employing some of its labourers because of business
recession, lack of materials to work on dus to government
control or due to lack of demand for its products, the
Court upheld the mgmts right to dismiss its labourers,
specially when dismissal was only temporary.

Fire

Supervening event therefore the resumption of


employment would be unwarranted and a waste of labor
and add heavy burden to already distressed business of the
er, the Sc may consider and apply Art 284 [283] of the LC.

Conservatorship

Conservatorship proceedings contemplate, not the


liquidation of the company involved, but a conservation of
company assets and business during the period of stress by
the commissioner of insurance, who thereafter yields
control to the regular officers of the company.
4.2 Basic Requisites of Valid Retrenchment
Under Art 283, there are 3 basic requisites for valid
retrenchment:
(1) The retrenchment is necessary to prevent or minimize
the loss and such losses are proven (whether or not
the er would imminently suffer serious or substantial
losses for economic reason is essentially a question of
fact to be determined by the LA and the NLRC to
determine)
(2) Written notice is given to the ees and the DOLE at
least one month before the intended date of
retrenchment;
(3) Separation pay is paid.
To the 3 requisites mentioned above should be added two
more:

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(4) The er exercises its prerogative to retrench ees in good


faith for the advancement of its interest and not to
defeat or circumvent the ees right to security of
tenure; and
(5) The er uses fair and reasonable criteria in ascertaining
who will be dismissed or retained among the ees, such
as status, efficiency, seniority, physical fitness, age and
financial hardship for certain workers.
4.2a Criteria; whom to lay off
There must be fair and reasonable criteria to be used in
selecting ees to be dismissed, on account of retrenchment
such as, (a) less preferred status; (b) efficiency rating; and
(c) seniority.
Where there is need to reduce the workforce, the mgmt
has the right to choose whom to lay off, depending on the
work still required to be done and qualities of the workers
to be retained.
4.2b Seniority Rights
Ee has no inherent right to seniority. He has only such
rights as may be based on a contract, a statute, or an
administrative regulation relative thereto.
- Contractual and not constitutional
4.3 Four Standards of Retrenchment
Lopez Sugar Corp. v. Federation of Free Workers, et al., August
30, 1990
Ruling: Standards w/c justify retrenchment - We consider it
may be useful to sketch the general standards in terms of
which the acts of petitioner employer must be appraised.
Firstly, the losses expected should be substantial and not
merely de minimis in extent. If the loss purportedly sought
to be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bona
fide nature of the retrenchment would appear to be
seriously in question.
Secondly, the substantial loss apprehended must be
reasonably imminent, as such imminence can be perceived
objectively and in good faith by the employer. There
should, in other words, be a certain degree of urgency for
the retrenchment, which is after all a drastic recourse with
serious consequences for the livelihood of the employees
retired or otherwise laid-off.
Because of the consequential nature of retrenchment, it
must, thirdly, be reasonably necessary and likely to
effectively prevent the expected losses. The employer
should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than
labor costs. An employer who, for instance, lays off
substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called
"golden parachutes", can scarcely claim to be retrenching
in good faith to avoid losses. To impart operational
meaning to the constitutional policy of providing "full
protection" to labor, the employer's prerogative to bring
down labor costs by retrenching must be exercised
essentially as a measure of last resort, after less drastic
means e.g., reduction of both management and rankand-file bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of

marketing and advertising costs, etc. have been tried


and found wanting.
Lastly, but certainly not the least important, alleged if
already realized, and the expected imminent losses sought
to be forestalled, must be proved by sufficient and
convincing evidence. The reason for requiring this
quantum of proof is readily apparent: any less exacting
standard of proof would render too easy the abuse of this
ground for termination of services of employees.
4.4 Evidence to Prove Losses: Modicum of
Admissibility
Evidence presented in NLRC proceedings must have
modicum of admissibility
The retrenchment of some 5,000 ees of PAL was declared
invalid. PAL failed to submit its audited financial
documents to prove severe losses in several years
preceding the retrenchment. Furthermore, in deciding who
to retrench, PAL in effect disregarded the seniority factor
because it used as basis the ee;s performance rating for
only one year. It also used other reasons which however,
were never specified.
4.5 Hiring of Replacements
Retrenchment are allowed for all unnecessary positions
based on the ers own reorganization program. However,
the reorganization cannot be used as a convenient device
to get rid of existing personnel in order to replace them w/
new one. For this purpose, the regular rules and
procedures on dismissal will have to be followed.
Retrenchment does not substitute for dismissal of an ee.
Dismissal results from an intolerable act of the ee, and
dismissal has its own procedure and effects. Retrenchment,
on the hand, arises from an economic condition the poor
financial health of the business. Retrenchment is not an
escape route to implement a secret desire to remove an
unwanted person. In fine, retrenchment (like redundancy)
is justified by ethical, good-faith business motive. This is
the reason an er may be challenged to prove the alleged
losses of the business.
4.6 Contracting After Retrenchment/Redundancy
The court upheld the termination of ees on ground of
redundancy and subsequent hiring of an independent
contractor to promote economy and efficiency (Serrano
ruling).
4.7 Redundancy Distinguished from Retrenchment
Temporary versus Permanent Retrenchment
Retrenchment
Redundancy
Linked with losses; it is cost- Results from the fact that
cutting
measure
made the position of the ee has
immediately necessary by become superfluous, an
business
reduction
or excess over what is actually
reverses.
needed, even if the business
has not suffered reverses.
Separation pay is lower Higher compare than that of
compare than that of retrenchment
redundancy.

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Retrenchment is either permanent or temporary. Permanent


retrenchment is contemplated in Art 283; temporary
retrenchment is included in Art 286. When the 6month
period mentioned in Art 286 is over and the ee (still willing
to work) is not recalled, he is deemed separated or
constructively dismissed. (Constructive dismissal is one
inferred or construed from the ers action; at first glance, it
does not look like a dismissal, but upon interpretation, the
action amounts anyway to dismissal.)
Sebuguero, et al., V. NIRC, G.T.I. Sportswear Corp., et al.,
September 27, 1995
Ruling: The petitioners' first contention is based on a wrong
premise or on a miscomprehension of the statement of the
NLRC. What the NLRC sustained and affirmed is
not redundancy, but retrenchment as a ground for
termination of employment. They are not synonymous but
distinct and separate grounds under Article 283 of the Labor
Code, as amended. 9
Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual
requirements of the enterprise. A position is redundant
where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such
as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably
with the term "lay-off." It is the termination of employment
initiated by the employer through no fault of the employee's
and without prejudice to the latter, resorted to by
management during periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or
of automation. Simply put, it is an act of the employer of
dismissing employees because of losses in the operation of a
business, lack of work, and considerable reduction on the
volume of his business, a right consistently recognized and
affirmed by this Court.
Art 283 speaks of a permanent retrenchment as opposed to a
temporary lay-off as is the case here. There is no specific
provision of law which treats of a temporary retrenchment or
lay-off and provides for the requisites in effecting it or a
period or duration therefor. These employees cannot forever
be temporarily laid-off. To remedy this situation or fill the
hiatus, Article 286 may be applied but only by analogy to set
a specific period that employees may remain temporarily laidoff or in floating status. Six months is the period set by law
that the operation of a business or undertaking may be
suspended thereby suspending the employment of the
employees concerned. The temporary lay-off wherein the
employees likewise cease to work should also not last longer
than six months. After six months, the employees should
either be recalled to work or permanently retrenched
following the requirements of the law, and that failing to
comply with this would be tantamount to dismissing the
employees and the employer would thus be liable for such
dismissal.

4.8 The Puzzle: Redundancy or Preventive


Retrenchment?
In an actual unreported case, the airline company
discontinued certain flights because of very low number of
passengers. The affected personnel claimed redundancy
pay wjile the er insisted on retrenchment pay.
Understandable, because retrenchment pay is only half the
redundancy pay.
In Asian Alcohol losses have bled the company for several
years. A new mgmt took over whose mission was to save
the company from bankruptcy. It had to reorganize and,
pursuing a cost-saving program, removed more than 100
personnel. In describing the mgmts action the Court
skirted around the difference b/w redundancy and
retrenchment and ended up saying that some ees were
terminated on the twin grounds of redundancy and
retrenchment.
In the Edge Apparel case, the LA saw the manpower
reduction as retrenchment; the NLRC said it was
redundancy. The High Court sided w/ arbiter. Despite the
ruling, however, the puzzle persists because decrease in
volume of business is acceptable reason to justify
redundancy as well as retrenchment.
In another redundancy-retrenchment case, the Court
explains that both retrenchment and redundancy are forms of
downsizing. They are often resorted to during periods of
business recession, industrial depression, or seasonal
fluctuations, and during lulls in production occasioned by
lack of orders, shortage of materials, conversion of the
plant for a new production program, or introduction of
new methods or more efficient machinery or automation.
In this case, the court ended up in saying, Some
positions had to be declared redundant to cut losses.
In this context, what may technically be considered as
redundancy may verily be considered as retrenchment
measure.
4.9 Reduction of Work Days: Constructive
Retrenchment
International Hardware, Inc. v. NLRC, August 10, 1989
Ruling: Admittedly, Pedroso had not been terminated or
retrenched by petitioner but that due to financial crisis the
number of working days of private respondent was
reduced to just two days a week. The er could not have
been expected to notify DOLE of the retrenchment of
Pedroso under the circumstances for there was no
intention to do so on the part of er.
Nevertheless, considering that Pedroso had been rotated
by er for over 6months due to the serious losses in the
business so that Pedroso had been effectively deprived a
gainful occupation thereby, and considering further that
the business of er was ultimately closed and sold off, the
Court finds, and so holds that the NLRC correctly ruled
that Pedroso was thereby constructively dismissed or
retrenched from employment.
Thus, private respondent is entitled to one (1) month pay
or at least (1/2) month pay for every year of service,
whichever is higher.
5. CLOSURE OF BUSINESS

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5.1 Closure Because of Losses


- Article 283 allows an er to terminate the services
of his ees in case of closure of business as a result of grave
financial losses. But the er must comply with the clearance or
report required under the LC & its implementing rules before
terminating the employment of the ees. DOLE clearance to
terminate is no longer required.
- But ers who contemplate terminating the services
of their workers cannot be so arbitrary and ruthless as to find
flimsy excuses for their decisions. This must be so,
considering that the dismissal of an ee from work involves
not only the loss of his position but more important, his
means of livelihood.
- a firm which faces serious business decline and
loss is entitled to close its business in order to avoid further
economic loss, and a court has no power to require such firm
to continue operating at a loss.
5.1a Losses must be Shown
- But while business reverses can be a just cause for
terminating ees, the losses must be sufficiently proven by the
er.
- Art. 277 the burden of proving that the
termination was for a valid or authorized cause shall rest on
the er.
- the failure of the er to show proof of its actual and
imminent losses that would justify drastic cuts in personnel
or costs, is fatal to its cause.
- Evidence, such as reports of financial conditions
for the years preceding the closure cannot be entertained
before the CA or the SC. Moreover, the alleged reason for
cessation of operation is rendered even more doubtful by the
fact that the corporation resumed operation barely a month
after the supposed folding up and only after obtaining an
agreement with the remaining union officers that they would
not organize a union if they are readmitted to work. Such act
constitutes ULP. Financial losses are a question of fact that
must be proven before the LA or the NLRC; therefore the
CAs affirmation of NLRCs decision that the closure was
not due to alleged losses did constitute abuse of discretion.
5.2 Right to Close Whether Losing or
Not
- it does not mean that closure is allowed only in
case the business is losing. If the business is not losing but its
owner, for reasons of his own, wants to get out of the
business, he in good faith can lawfully do so anytime. Just as
no law forces anyone to go into business, no law compels
anybody to stay in business. But the ees should be paid the
severance pay.
(Catatista, et al vs NLRC & Victorias Milling Co., Inc.,)
Clearly, private respondents purpose inconverting said
hacienda into an ipil ipil plantation and terminating the
service of petitioners is to cut down on losses which it had
adequately shown to have suffered through an income
statement for the fiscal year. It would, indeed, be stretching
the intent and spirit of the law if we were to unjustly interfere
in managements prerogative to close or cease its business
operations just because said business operation or
undertaking is not suffering from any loss.
- Art. 284 of the LC (as it existed in 1983), cessation
of business operations not due to business reverses, must
meet three requirements namely:

a. service of a written notice to the ees and to the


MOLE at least 1 month before the intended date thereof
b. the cessation of or withdrawal from business
operations must be bona fide in character
c. payment to the ees of termination pay amounting
to at least month pay for each year of service, or 1 month
pay, whichever is higher.
5.2a Closure Contrasted to
Downsizing
- Though often used interchangeably and are
interrelated, they are actually two separate and independent
authorized causes for termination of employment toe may
be predicated on one without need of resorting to the other.
Closure of Business
Retrenchment
It is the reversal of fortune It is reduction of personnel
of the er whereby there is a usually due to poor financial
complete
cessation
of returns so as to cut down on
business operations and/or costs of operations in terms
an actual locking up of the of salaries and wages to
doors of establishment, prevent bankruptcy of the
usually due to financial company;
sometimes
losses.
referred to as downsizing
As an authorized cause for It is an authorized cause for
toe, it aims to prevent toe which the law accords an
further financial drain upon er who is not making good in
an er who cannot pay its operations in order to cut
anymore his ees since back on expenses for salaries
business has already stopped. and wages by laying off some
ees. Its purpose is to save a
financially ailing business
establishment
from
eventually collapsing.
5.3 Partial Closure
- (Dangan vs NLRC) The court reasoned out that
since the greater right to close the entire establishment and
cease operations due to adverse economic conditions is
granted an er, the closure of a part thereof to minimize
expenses and reduce capitalization should similarly be
recognized. Art 283 of the LC which permits closure or
cessation of operation of an establishment or undertaking
not due to serious business losses or financial reverses, in our
reading, includes both the complete cessation of operations
and only a cessation of only a part of a companys activities.
5.4 Temporary Shutdown
- TS of one of the furnaces of a glass plant is not a
good reason to terminate the ees, where operations
continued after such repairs, and it is apparent that the
closure of the companys warehouse was merely a ploy to get
rid of the ees who were then agitating the company for
benefits, reforms and collective bargaining as a union. There
is no showing that petitioners had been remiss in their
obligations and inefficient in their jobs to warrant their
separation.
5.4 Should Separation Pay be Paid in Case of
Closure Because of Serious Business Losses?
- (Banco Filipino Savings and Mortgage Bank, etc. vs
NLRC) Art 282 of the LC enumerates the just causes for an
er to terminate an ee. If an ee is dismissed for just cause, he is
not entitled to separation pay. However, in Art 283, in case
of closure of establishment, the ee is always given

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termination pay. The reason for the closure is taken into


consideration only to determine whether to give one month
or one- half month pay for every year of service. This
provision is based on social justice and equity.
5.5a Contrary Jurisprudence
- The rulings in State Investment House, in Mendoza and
in Mindanao Terminal which are all more recent than the 1990
ruling in Banco Filipino, support the conclusion that separation
pay need not be paid to ees if the business has closed or
ceased operations because of serious losses or financial
reverses duly proven.
5.5b The Final Word: Rulings in North Davao
and Reahs Corporation
- Art 283 governs the grant of separation benefits
in case of closures or cessation of operation of business
establishments NOT due to serious business losses or
financial reverses. Where, however, the closure was due to
business losses, the LC does not impose any obligation upon
the er to pay separation benefits, for obvious reasons.
- The court further explained that the grant of
separation pay under Art 283 is a statutory obligation on the
part of the er and a demandable right on the part of the ee,
except only where the closure or cessation of operations was
due to serious business losses or financial reverses and there
is sufficient proof of this fact or condition. In the absence of
such proof of serious financial business losses or financial
reverses, the er closing his business is obligated to pay his ees
and workers their separation pay.
5.5c Does Previous Generosity Obligate the
Company
If the company paid a generous separation pay to batch one,
must it do the same to batch two of the separated ees?
- The Court ruled that indeed indeed there was
impermissible discrimination against the complainant ees in
the payment of their separation benefits. The law requires an
er to extend equal treatment to its ees. It may not, in the
guise of exercising management prerogatives, grant greater
benefits to some and less to others.
- The factual circumstances of BISSI are quite
different from the current case of North Davao. The court
noted that BISSI continued to suffer losses even after the
retrenchment of the 1st batch of ees; clearly, business did not
improve despite such drastic measure. That notwithstanding,
when BISSI finally shutdown, it could well afford and
actually did pay off its remaining ees with MORE separation
benefits as compared with those earlier laid off; obviously,
then, there was no reason for BISSI to skimp on separation
pay for the first batch of discharged ees. That it was able to
pay one month separation benefits for ees at the time of
closure of business meant that it must have been also in a
position to pay the same amount to those who were
separated prior to closure. That it did not do so was a
wrongful exercise of management prerogatives. That is why
the Court correctly faulted it with impermissible
discrimination. Clearly, its exercised its mp contrary to
general principles of fair play and justice.
- In the North Davao case, however, the companys
practice of giving one months pay for every year of service
could no longer be continued precisely because the company
could not afford it anymore. Therefore, the fact that less
separation benefits were granted when the company finally

met its business death cannot be characterized as


discrimination. Such action was dictated not by a
discriminatory management option but by its complete
inability to continue its business life due to accumulated
loses. Indeed, one cannot squeeze blood out of a dry stone.
Nor water out of parched land.
5.6 Justification for Closure Not Credible; ULP
- Other than the amount of separation pay, another
question about closure is whether it is bona fide or merely an
evasion of the obligation to deal with the ees union. The
closure, in other words, may turn out to be ULP in disguise.
- The determination to cease operations is a
prerogative of management that is usually not interfered with
by the State as no business can be required to continue
operating at a loss simply to maintain the workers in
employment. That would be taking of property without due
process of law which the er has a right to resist. But where it
is manifest that the closure is motivated not by a desire to
avoid further losses but to discourage the workers from
organizing themselves into a union for more effective
negotiations with the management, the State is bound to
intervene.
5.7 Closure by Operation of the Agrarian
Reform Law
- The Patalon Coconut Estate was closed down
because a large portion of the said estate was acquired by the
DAR pursuant to the CARP. The owners even filed a
petition to have said estate exempted from the coverage of
RA 6657 but it was denied by DAR. The petitioners are not
entitled to separation pay. The termination of their
employment was not caused by the private respondents. The
resulting closure of the business establishment, when it was
placed under CARP, occurred through no fault of the private
respondents. The closure contemplated under Art. 283 is a
unilateral and voluntary act on the part of the er to close the
business establishment as may be gleaned from the wording
of the said legal provision. It does not contemplate of a
situation where the closure of the business establishment
is forced upon the er and ultimately for the benefit of the ees.
5.7a Expiration of Lease
- If the workers tenure of employment is
coterminous with the lease of the hacienda, their
employment expires as soon as the lease expires and the
lessee turns over the hacienda to the owner. What severs the
er-ee relationship is not the workers dismissal but the
expiration of their working relationship with the lessee.
Hence, even if it is assumed that a gap existed between the
expiration of their employment and the resumption of the
operation by the owner, the workers are not entitled to any
separation pay as the case entails expiration of tenure, not
dismissal.
6. SALE IN GOOD FAITH
- No law prohibits bona fide sale of a going enterprise. When
that happens, the purchaser, unless he agrees to do so, has no
legal obligation to continue employing the ees of the seller.
The seller, as er, is obliged to pay his ees separation pay and
other benefits founded on law, policy or contract. the
transferee may, but is not obliged to, give employment
preference to the former ees; if hired, they may be required
to pass probation. If the sale is tinged with bad faith,

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however, the law and rulings on unfair labor practice and the
doctrine of successor er may apply.
- (San Felipe Neri School of Mandaluyong, Inc. vs NLRC, Roman
Catholic Archbishop of Manila) the main issue is whether the
respondent teachers employment was terminated by the sale
and transfer of San Felipe Neri School of Mandaluyong, Inc.
to the Archbishop of Manila that would entitle them to
separation pay. As there is no law which requires the
purchaser to absorb the ees of the selling corporation, the
most that the purchasing company may do, for purposes of
public policy and social justice, is to give preference to the
qualified separated ees of the selling company, who in their
judgment are necessary ion the continued operation of the
business establishment. This, RCAM did. It required private
respondents to reapply as new ees as a condition for rehiring
subject to the usual probationary status, the latters past
services with the petitioners-transferors not recognized.
Hence, petitioners contention that private respondents are
not entitled to separation pay on the ground that there was
no termination of the latters employment but a mere change
of ownership in the assets and properties of the school is
untenable. Neither can the flimsy excuse that at the time of
their alleged termination, there was no er-ee relationship
between them and the petitioners, be sustained.
6.1 Sale of Business: Is it Closure or
Cessation of Business
- in the previously-mentioned case, there was in
effect a closure and cessation of business. But in Manlimos
case, the Court declared that whether it is closure or
cessation is not material. In any case, the ees lose their jobs
(w/ post-employment benefits) unless the new owner opts to
retain or rehire them.
- (Manlimos vs NLRC and Super Mahogany Plywood
Corp., Albert Go) in a no. of cases, the rule has been laid down
that the sale or diposition must be motivated by good faith as
an element of exemption from liability. Indeed, an innocent
transferee has no liability to the ees of the transferor to
continue employing them. Nor is the transferee liable for
past ULP of the previous owner, except when the liability
therefor is assumed by the new er under the contract of sale,
or when liability arises because of the new owners
participation in thwarting or defeating the rights of the ees.
The private corp was under no legal obligation to employ
them; it may, however, give them preference in the hiring
which may or may not be subject to probation, a
management prerogative.
6.2
Successor-in-interest,
Contractual
Obligation to Employ
- (Marina Port Srvices, Inc. vs Hon. Cresencio R. Iniego)
Pending hearing of the case, the contract of the Metro Port
Services, Inc. as operator of the Arrastre Service in the South
Harbor, was cancelled by the PPA. Said contract was
awarded by PPA to the Marina Port Services, Inc. with the
condition that it shall absorb all the ees and shall be liable for
all benefits provided for under the existing CBA. Thus, the
labor personnel of previous operator except those positions
of trust and confidence, shall be absorbed by the grantee.
The grantee shall be responsible for all obligations, liabilities
or claims arising out of any transactions or undertaking in
operations as of the actual date of transfer thereof to the
grantee.

7. MERGER
- succession of employment rights and obligations occurs
between the absorbing corp and the ees of the absorbed
corp. Not only must the absorbing corp retain the ees; it
should likewise recognize the length of service in the
previous er. In merger, like in sale in bad faith, the successor
employer principle applies.
- (Filipinas Port Services, Inc. vs NLRC) Based on previous
rulings, the latter is deemed a survivor entity because it
continued in an essentially unchanged manner the business
operations of the predecessor arrastre and port service
operators, hiring substantially the same workers, including
herein appellee, of the integree of the predecessors, using
substantially the same facilities, w/ similar working
conditions and line of business, and employing the same
corporate control, although under a new management and
corporate personality. The alleged memorandum of the PPA
Assistant GM exonerating Filport from any liability arising
from and as a result of the merger is contrary to public policy
and is violative of the workers right to security of tenure.
Said memorandum was issued in response to a query of the
PMU OIC and was not even published nor made known to
the workers who came to know of its existence only at the
hearing before the NLRC. Thus, Filport 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 ees w/ their former ees as well. To rule otherwise
would be manifestly less than fair. Certainly, less than just
and equitable.
8. CONSOLIDATION
- The law enforced at the time of the merger was Section 3 of
Act No. 2772 which took effect on March 6, 1918. Said law
provides:
Sec. 3. Upon the perfecting, as aforesaid, of a consolidation
made in the manner herein provided, the several
corporations parties thereto shall be deemed and taken as
one corporation, upon the terms and conditions set forth in
said agreement; or, upon the perfecting of a merger, the
corporation merged shall be deemed and taken as absorbed
by the other corporation and incorporated in it; and all and
singular rights, privileges, and franchises of each of said
corporations, and all property, real and personal, and all
debts due on whatever account, belonging to each of such
corporations, shall be taken and deemed as transferred to and
vested in the new corporation formed by the consolidation,
or in the surviving corporation in case of merger, without
further act or deed; and the title to real estate, either by deed
or otherwise, under the laws of the Philippine Islands vested
in either corporation, shall not be deemed in any way
impaired by reason of this Act: Provided, however, That the
rights of creditors and all liens upon the property of either of
said corporations shall be preserved unimpaired; and all debts
liabilities, and duties of said corporations shall thenceforth
attach to the new corporation in case of a consolidation, or
to the surviving corporation in case of a merger, and be
enforced against said new corporation or surviving
corporation as if said debts, liabilities, and duties had been
incurred or contracted by it.

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9. AILMENT OR DISEASE
- If the ee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health
or to the health of his co-employees, the er shall not
terminate his employment unless there is a certification by a
competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a
period of 6 months even with proper medical treatment.
- The burden of proving the validity of the dismissal rests on
the er. As such, the er must prove that the requisites for a
valid dismissal due to a disease have been complied with.
- (Triple Eight Integrated Services, Inc. vs NLRC) The requirement
for a medical certificate under Art 284 of the LC cannot be
dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the er of the gravity or extent
of the ees illness and thus defeat the public policy on the
protection of labor.
- a medical certificate issued by the companys own physician
is not a certificate by competent public health authority.
- Even if there is no illegal dismissal, there may be an award
for separation pay.
ART. 284. Disease as ground for termination. - An employer may
terminate the services of an employee who has been found to
be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-employees: Provided,
That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year
of service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.
- Even voluntary resignation due to ill health may be paid
termination pay for reasons analogous to those contemplated
under Art. 284 of the LC.
PART
5.
PROCEDURE
EMPLOYMENT
TITLE I

TO

TERMINATE

-the cause and procedure of dismissal are important, but they


are not of equal importance in legal effect.
Lack of a valid cause
Lack of proper procedure
It makes the dismissal illegal It does not invalidate the
and invalid, thus generally dismissal which means that
entitling
the
ee
to the ee remains dismissed,
reinstatement.
but the er becomes liable for
indemnity violating the ees
right to due process
- what makes a dismissal illegal is the absence of valid
cause, not the nonobservance of procedural due process.
1. PROCEDURE UNDER THE RULES
2. PROCEDURAL DUE PROCESS; AMPLE
OPPORTUNITY TO BE HEARD
- Substantive Due Process mandates that an ee can only be
dismissed based on just or authorized causes.
- Procedural Due Process requires further that he can only be
dismissed after he has been given an opportunity to be heard.
-Where the ee denies the charges against him, a hearing is
necessary to thresh out all doubts. The failure of the er to
give the ee benefits of a hearing and an investigation before

his termination constitutes an infringement of his


constitutional right to due process of law.
- To constitute a completely valid and faultless dismissal, it is
well-settled that the er must show not only sufficient ground
therefor but it must also prove that it observed procedural
due process by giving the ee two notices:
1. notice of the intention to dismiss, indicating
therein his acts or omissions complained against
2. notice of the decision to dismiss
And an opportunity to answer and rebut the charges against
him, in between such notices.
-The right to labor is a constitutional as well as a statutory
right. Every man has a natural right to the fruits of his own
industry. The right of a person to his labor is deemed to be
property within the meaning of constitutional guarantees.
That is his means of livelihood. He cannot be deprived of his
labor or work without due process of law.
-the guarantee of due process applies to all workers,
including managerial employees.
-it is enough that there was due notice and a hearing before a
judgment or resolution thereof is made. When a party has
been given the opportunity to be heard, then he was afforded
due process.
-summary proceedings may be conducted. Non-verbal
devices such as written explanation, affidavits, position
papers or other pleadings can establish just as clearly and
concisely an aggrieved partys defenses. What is essential is
ample opportunity to be heard.
-The SC has ruled that the ees right to due process prevails
over the company rules that allow immediate dismissal of
the erring ee.
2.1 Standards of Procedural Due Process
I.For termination of employment based on just causes as
defined in Article 282 of the Code:
(a)A written notice served on the employee specifying the
ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his
side;
(b) A hearing or conference during which the employee
concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge,
present his evidence or rebut the evidence presented against
him; and
(c) A written notice of termination served on the employee
indicating that upon due consideration of all the
circumstances, grounds have been established to justify his
termination.
In case of termination, the foregoing notices shall be served
on the employees last known address.
II.For termination of employment as based on authorized
causes defined in Article 283 of the Code, the requirements
of due process shall be deemed complied with upon service
of a written notice to the employee and the appropriate
Regional Office of the Departmentat least thirty days before
the effectivity of the termination, specifying the ground or
grounds for termination.
III.If the termination is brought about by the completion of
the contract or phase thereof, no prior notice is required.If
the termination is brought about by the failure of an
employee to meet the standards of the employer in the case
of probationary employment, it shall be sufficient that a

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written notice is served the employee within a reasonable


time from the effective date of termination.
2.2 Two-Notice Requirement for the Just and
the Authorized Causes
- Failure to comply with the requirements taints the
dismissal with illegality. This procedure is mandatory, in the
absence of which any judgment reached by management is
void and inexistent.
- For the authorized causes under Arts. 283 and
284, two notices are also required; one to the ee to be
separated and another to the DOLE. Each such notice must
be served 30 days before the ees separation takes effect.
2.3 Preventive Suspension and Investigation Do
Not Replace Two Notice Requirement of Due
Process; Defect Not Cured by NLRC Hearings
- (De Vera vs NLRC and BPIInc.) Definitely, the
Notice of Preventive Suspension cannot be considered
adequate notice since the objectives of the petitioners
preventive suspension, as stated in the notice, were merely to
ascertain the extent of the loss to the bank and to pinpoint
the responsibilities of the parties involved, and not to apprise
the petitioner of the causes of his desired dismissal. Ample
opportunity to be heard is especially accorded to the ee
sought to be dismissed after he is informed of the charges
against him in order to give him an opportunity to refute the
accusations leveled against him, and it certainly does not
consist of an inquiry conducted merely for the purpose of
filing a criminal case against another person. What the LC
sets forth is the procedure prior to dismissal. Fire the ee,
and let him explain latter is not in accord with the due
process under the law.
2.4 Consultation with Union, Insufficient
Notice
- (Century Textile Mills, Inc., vs NLRC) The ers prior
consultation with the labor union with w/c the ee is
affiliated is legally insufficient. The rights of an ee whose
services are sought to be terminated to be informed
beforehand of his proposed dismissal (or suspension) as well
as of the reasons therefor, and to be afforded an adequate
opportunity to defend himself from the charges leveled
against him, are rights personal to the ee. Those rights are
not satisfied by the ers obtaining the consent of or
consulting w/the labor union. Such consultation or consent
is not a substitute for actual observance of those rights of the
ee. The ee can waive those rights, if he chooses, but the
union cannot waive them for him. That the ee simply kept
silent all the while, is not adequate to show an effective
waiver of his rights. Notice and opportunity to be heard must
be accorded an er even though the ee does not affirmatively
demand them. In the absence of such other evidence, a coconspirators confession implicating the dismissed ee must be
received with considerable caution.
2.5 Illustrative Case: Ample Opportunity for
EEs Defense
(Ruffy vs NLRC and Central Azucarera Don Pedro)
- An ee must be given notice and an ample
opportunity prior to his dismissal to adequately prepare for
his defense. The law lays down the procedure prior to the
dismissal of an ee. It need not be observed to the letter, but
at least, it must be done in the natural sequence of notice,
hearing and judgment.

- by ample opportunity is meant every kind of


assistance that management must accord to the ee to enable
him adequately to prepare for his defense. The worker may
be provided with a representative. In this case, although the
interregnum between the date of the notice of dismissal and
the date of its effectivity ostensibly provided the petitioner
the time within which to defend himself, there really was
nothing to defend, because the fact is, he had been fired.
2.5a At Least Five Days
- Reasonable opportunity should be construed as a
period of at least five calendar days from receipt of the notice
to give the ees 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 complainant.
2.5b Participation of Counsel
Does the ees counsel have the right to participate in the
investigatory hearing?
- (Lorlene A. Gonzales vs Ateneo De Davao University)
Gonzales had been complained of inflicting corporal
punishment to her students. Two years after, she found out,
thru her students and their parents, that Ateneo had solicited
complainants to lodge written complaints against her. An
investigative committee was organized but she refused to
take part in the investigation unless the rules of procedure
laid down by the Committee be revised, contending that the
same were violative of her right to due process
: her
counsel shall not directly participate in the investigation but
will merely advise her. Committee however continued
without petitioners participation and served a Notice of
Termination pursuant to the findings and recommendation
of the Committee.
The Court ruled that there was
noncompliance of the twin requirements of procedural and
substantial due process.
2.5c Formal Hearing Not Required
- There is no violation of due process even if no
formal or actual hearing was conducted, provided a party is
given a chance to explain his side.
- Nonetheless, Section 2 (d) of the LC, Rule I of the
IRR of Book VI should not be taken to mean an actual
hearing or conference is a condition sine qua non for
compliance with due process process requirement in the
termination of employment. The test for the fair procedure
guaranteed under Art 277 (b) cannot be whether there has
been a formal pretermination confrontation between the er
and the ee. The ample opportunity to be heard standard is
neither synonymous nor similar to a formal hearing. To
confine the ees right to be heard to a solitary form narrows
down that right. It deprives him of other equally effective
forms of adducing evidence in his defense. Certainly, such an
exclusivist and absolutist interpretation is overly restrictive.
The very nature of due process negates any concept of
inflexible procedures universally applicable to every
imaginable situation.
- To be heard does not mean verbal
argumentation inasmuch as one may be heard just as
effectively through written explanations, submissions or
pleadings. While it may in fact include an actual hearing, it is
not limited to a formal hearing only. In other words, the
existence of an actual, formal trial type hearing, although

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preferred is not absolutely necessary to satisfy the ees right


to be heard.
2.6 Procedural Due Process Not Wiped Away
by Union Security Clause
- (Carino vs NLRC) The companys precipitate
action in dismissing Carino is an indication of lack of good
faith. The company had failed to accord him the latters right
to procedural due process. The right of an ee to be informed
of the charges against him and to reasonable opportunity to
present his side in a controversy with either the company or
his union, is not wiped away by a union security clause or a
union shop clause in a CBA. An ee is entitled to be protected
not only from a company which disregards his rights but also
from his own union the leadership of which could yield to
the temptation of swift and arbitrary expulsion from
membership and, hence, dismissal from his job.
- (Ferrer, et al vs NLRC) it is enough that there is due
notice and hearing before a decision to dismiss is made. But
even if no hearing is conducted, the requirement of due
process would have been met where a chance to explain a
partys side of the controversy had been accorded him.
In terminating the employment of an ee by
enforcing the union security clause, the er needs only to
determine and prove that:
1. the union security clause is applicable
2. the union is requesting for enforcement
of the union security provisions in the CBA
3. there is sufficient evidence to support
the unions decision to expel the ee from the union.
2.7 When Hearing Not Required
- no hearing is needed if the ee has admitted his
guilt
-but there must be admission of guilt. If the ee
merely narrated and explained what he did, w/o admitting his
guilt, then conducting a hearing is required; otherwise, there
is failure of due process.
2.8 Due Process in Authorized Causes; Two
Notices Required but not a Hearing
- in employment terminations due to authorized
causes, the due process requirement is not completely done
away with. Investigation and hearing need not be done by the
er. But the one month advance notices (1) to the affected
employee and (2) to DOLE must be complied with under
Art. 283.
2.8a Individual, Not Collective, Notice
- (Shoppers Gain Supermart vs NLRC) the lease
contract over the premises which the er supermart was using
was not renewed, hence, the business had to close. Thirty
days before closing, the er posted a notice of closure on the
ees bulletin board. Such notice, according to the SC, is not
sufficient compliance with the statutory requirement.
Sustaining the NLRC, the court said that the law is very
clear that an er who seeks to terminate the employment of its
ee must notify him in writing at least 30 days before the
intended dismissal.
2.8b Voluntary Arbitration as Notice
- VA is substantial compliance with the one-month
mandatory notice required under Article 283. The purpose of
this notice requirement is to enable the proper authorities to
ascertain whether the closure of the business is being done in
good faith and is not just a pretext for evading compliance

with the just obligations of the er to the affected ees. In fact,


the va proceedings more than satisfied the intendment of the
law considering that the parties were accorded the benefit of
a hearing, in addition to the right to present their respective
position papers and documentary evidence.
2.8c When Notice Not Needed
- If an ee consented to his retrenchment or
voluntarily applied for retrenchment with the er due to the
installation of labor-saving devices, redundancy, closure or
cessation of operation or to prevent financial losses to the
business of the er, the required previous notice to the DOLE
is not necessary as the ee thereby acknowledged the existence
of a valid cause for termination of his employment.
2.9 Burden of Proof
- it rests upon the er to show that the dismissal is
for just and valid cause. Failure to do so would necessarily
mean that the dismissal was not justified and, therefore, was
illegal.
- where it involve all Filipino workers recruited and
deployed to overseas employment, the burden devolves upon
both the foreign-based er and the employment agency or
recruitment entity which recruited the worker, for the latter is
not only the agent of the former, but is also solidarily liable
with the foreign principal for any claims or liabilities arising
from the dismissal of the workers.
-equipoise is not enough
- proof beyond reasonable doubt of the ees
misconduct is not required, it being sufficient that there is
some basis for the same or that the er has reasonable ground
to believe that the ee is responsible for the misconduct and
his participation therein renders him unworthy of the trust
and confidence demanded by his position.
- Substantial Evidence = it is more than mere scintilla.
It means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.
2.10 Condonation
- an er may, by condonation or waiver of the
conduct of his ees, preclude himself from subsequently
asserting the right to discharge them for a cause. Having
condoned the misconduct of the ee and pardoned the latter,
he is deemed to have lost or waived his right to insist on the
ees act as ground for dismissal. The mere fact that a
considerable period has elapsed between the commission of a
breach of duty by an ee and its discovery by his er, will not of
itself preclude him from relying upon the breach as a ground
for dismissal. The retention of the ee, however, after the
actual discovery of an act of misconduct on his part will, in
some circumstances, warrant the inference that the act has
been condoned, so as to be no longer available as a ground
for dismissal.
- In case of the continuing breach of the contract of
employment, there can be no waiver or condonation that will
prevent the er from discharging the ee at any time. The fact
that the er has paid the wages/salary of an ee to the time of
his discharge does not amount to such a condonation of a
violation by the ee of his duties as will deprive the er of his
right to terminate the contract of employment.
- a conclusion that the ees misconduct was
condoned is sustainable where it appears that the er retained
him in the service after having had knowledge of the facts,

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and paid to him the stipulated wages or salary without


objection or protest.
3. PREVENTIVE SUSPENSION
- Section 8. The er may place the worker concerned
under preventive suspension if his continued employment
poses a serious and imminent threat to the life or property of
the er or of his co-workers.
3.1 Invalid Preventive Suspension
- for having violated company rules and regulations
by incurring repeated absences and tardiness appears that
the continued presence of the subject ee does not pose a
serious and imminent threat to the life or property of the er
or co-employees.
3.2 Valid Preventive Suspension
- (Globe-Mackay Cable and Radio Corp vs NLRC and
Salazar) By itself, preventive suspension does not signify that
the company has adjudged the ee guilty of the charges she
was asked to answer and explain. Such disciplinary measure is
resorted to for the protection of the companys property
pending investigation of any alleged malfeasance or
misfeasance committed by the ee.
3.3 Period of Suspension
- being only an intermediate protective measure, it
cannot last for an indefinite period. The Codes
implementing rules provide that no preventive suspension
shall last longer than 30 days (applies to employment in
general). After that period, the er shall reinstate the worker in
his former position or in a substantially equivalent position,
or the er may extend the period of suspension, provided that
during the period of suspension, he pays the wages and other
benefits due to the worker. In such case the worker shall not
be bound to reimburse the amount paid to him during the
extension if the er decides, after completion of the hearing,
to dismiss the worker.
- for project and nonproject ees in the construction
industry, the preventive suspension cannot be longer than 15
days. Beyond that the ee is entitled to wages and other
benefits.
3.4 Preventive Suspension Exceeding 30 days;
Constructive Dismissal
- constructive dismissal does not always involve
forthright dismissal or diminution in rank, compensation,
benefit and privileges. There may be constructive dismissal if
an act of clear discrimination, insensibility or disdain by an er
becomes so unbearable on the part of the ee that it could
foreclose any choice by him except to forego his continued
employment.
4. APPROPRIATE PENALTY
- the cause may be valid and due process may have been
followed, but still the dismissal may be questioned and
eventually nullified if the penalty itself is not appropriate. The
fundamental rule is that the penalty must be commensurate
to the offense.
- diverse factors should be considered, such as the ee s long
years of otherwise satisfactory service, the penalty imposed in
previous similar offenses, and even the amount of money or
value involved.
- not every case of serious misconduct, willful disobedience,
neglect of duty, or even dishonesty will justify dismissal.

Dismissal is the supreme penalty at the workplace. It should


be imposed only as a last recourse.
- Labor law determinations should not be only secundum
rationem but also secundum caritatem.
4.1 Value of Property
- in determining the appropriate penalty, the value
of the property taken is a pertinent factor.
- dishonesty is dishonesty regardless of the amount.
This is a good motto and a motherly teaching worth
remembering. But the motto pertains to the character of the
act; it does not say what the penalty should be. The penalty
should be appropriate or proportionate to the offense.
Appropriateness of the penalty depends on several factors,
one of which is the amount involved. Thus the motto is
ignored by courts in reexamining the penalty imposed. The
juridical guideline, rather, is that there are degrees of
dishonesty and degrees of penalty under both the penal and
the labor laws.
4.2 Past Offenses
- such previous offenses may be so used as valid
justification for dismissal from work only if the infractions
are related to the subsequent offense upon which basis the
termination of employment is decreed. The previous
infraction, in other words, may be used if it has a bearing to
the proximate offense warranting dismissal.
5. FILING OF ILLEGAL DISMISSAL COMPLAINT;
VENUE AND TIME
- any decision taken by the er shall be without
prejudice to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the regional
Branch of the Commission (branch comprising the
workplace)
- the complaint should be filed within 4 years from
the time the ee is dismissed.
6. CLEARANCE NO LONGER REQUIRED
- Art. 278b of the LC, then in force stated: with or
w/o a CBA, no er may shut down his establishment or
dismiss or terminate the employment of ees with at least one
yr of service during the last 2 years, whether such service is
continuous or broken, w/o prior written authority issues in
accordance with such rules and regulations as the Secretary
may promulgate.
- Batas Pambansa Blg. 130, Aug, 21, 1981, abolished
the clearance requirement.
PART 6. CONSEQUENCES OF TERMINATION
TITLE I TERMINATION OF EMPLOYMENT
- the consequences vary as to whether the termination is
illegal or legal which in turn depends on whether there is
valid reason in dismissing an ee.
1. SEPARATION PAY
1.1 Background: Old Law
1.2 Under Present Law: 4 Kinds of Separation
Pay
- no valid reason, no termination. Lack of valid
reason is not rectified by plenty of notice or plenty of
separation pay. What the law prefers is the ees continued
possession of his job, which is considered property, and not

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mere advance notice or monetary help towards finding


another job
- GR: continuance on the job
EXPN: payment of separation pay in lieu of the job
- it may be viewed in 4 ways or contexts:
1. SP as ers statutory obligation in cases of legal
termination due to authorized cases under Arts. 283 or 284
2. SP as financial assistance, as an act of social
justice, even in cases of legal dismissal under Art. 282
3. SP in lieu of reinstatement in illegal dismissal
cases where the ee is ordered reinstated but reinstatement is
not feasible
4. SP as an employment benefit granted in a CBA
or company policy.
1.3. 1st KIND: SP as ers statutory obligation in
cases of legal termination due to authorized cases under
Arts. 283 or 284
- it refers to the monetary liability of the er to the
ees as provided for in those said articles.
-statutory SP
- when the employment has to be terminated
because of the so-called authorized causes, such
termination is legal. But since those causes are not faults of
the ee but exigencies of the business (except disease), it is
only fair in the context of social justice that the er give
separation pay to the ee.
1.3a Amount of Separation Pay for Authorized
Causes
- because of introduction of labor saving devices or of
redundancy = SP is equivalent to whichever is higher of either
(a) 1 month ay or (b) 1 month multiplied by the ees years of
service, a fraction of at least 6 months being counted as one
year.
- retrenchment or closure or cessation of operations not due to
serious business losses = SP is lower than that for the preceding
2 causes precisely because the business is caught in financial
straits. = SP is equivalent to whichever is higher of either (a)
1 month ay or (b) 1 month multiplied by the ees years of
service, a fraction of at least 6 months being counted as one
year. This is also the formula applicable to separation due to
disease under Article 284.
- if the closure or cessation of business is due to serious
business losses or financial reverses = no separation need be paid at
all.
1.3b Computation of Statutory SP; Inclusion of
Regular Allowance
- the salary base properly used in computing the SP
should include not just the basic salary but also the regular
allowances that an ee has been receiving.
- but commissions (override commissions plus net
deposit incentive) may not be included in such base figure
since such commissions must be earned by actual market
transactions attributable to the ee. Neither should travels
equivalent (an unusual and unexplained term) and
commission in trading personal clients be included in such
base figure.
1.4 2nd KIND: SP as financial assistance, as an
act of social justice, even in cases of legal dismissal
under Art. 282
- serves as an exception to Art. 282

- Under that article, an ee who commits any of the


acts enumerated may be dismissed. Such is legal and
therefore, ordinarily, no separation pay need be paid to the
ee. However, if the act committed by the ee does not amount
to serious misconduct or does not reflect on the ees moral
character, the Court may require the er to pay as a measure of
social justice, separation pay or financial assistance to the
ee.
- the discerning compassion doctrine
- (PLDT Co. vs NLRC and M. Abucay)
Award of separation pay distinguished = where the
cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more
discerning. There is no doubt it is compassionate to give SP
to a salesman if he is dismissed for his inability to fill his
quota but surely he does not deserve such generosity if his
offense is misappropriation of the receipt of his sales. A
security guard found sleeping on the job is doubtless subject
to dismissal but may be allowed separation pay since his
conduct, while inept, is no depraved. But if he was in fact
sleeping but sleeping with a prostitute during his tour of duty
and in the company premises, the situation is changed
completely. This is not only inefficiency but immorality and
the grant of SP would be entirely unjustified.
Financial Assistance Now Depends on Cause of
Dismissal = shall be allowed only in those instances where
the ee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character.
For Whom is Social. Justice = the policy of social
justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it
may mitigate the penalty of every humane society but only
when the recipient is not a rascal claiming an undeserved
privilege. Those who invoke it may do so only if their hands
are clean and their motives blameless and not simply because
they happen to be poor.
*** the grant of SP is unjustified. The private
respondent has been dismissed for dishonesty and as she
herself has impliedly admitted. The fact that she has worked
with the PLDT for more than a decade, if it is to be
considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened
instead of betraying during all of her 10 years of service with
the company.
1.4a More Exceptions: No Financial Assistance
- PLDT precedent gives SP, in the name of
compassionate justice, to an ee dismissed for a just cause
under Art. 282, w/ two exceptions:
1. serious misconduct
2. other offense reflecting on his moral character
However, for analogous cases (clause e), the LC
may opt to grant SP anchored on social justice.
1.4b Dishonesty Doubted: Financial Assistance
may be Granted
- (Manggagawa ng Komunikasyon sa Pilipinas and A.L.
Cruz vs NLRC & PLDT) When there is doubt that
dishonesty was committed, financial assistance may still be
awarded an ee who has been rendered long years of service.
The doubt is resolved in ees favor, hence, despite the nature
of the offense, financial assistance on the ground of
compassionate justice may still be given.

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Retiree

1.4c Financial Assistance for an Uncovered

- Financial assistance based on compassionate


justice was granted even to an ee who was not dismissed but
who had to retire w/o being covered by the companys
retirement plan.
1.4d Grant of Financial Assitance, Although
Not Objected to, may be Revoked
1.4e Amount of Financial Assistance
-in lawful dismissal cases, SP is based on equity, on
compassionate justice. Such being the basis, there is and
there can be no fixed formula to determine the amount of
financial assistance. It rests on the sound judgment of the
adjudicating authority, weighing the peculiar circumstances of
each case.
- Financial assistance may resolve not only dismissal
disputes. Because of the state policy promoting the primacy
of mediation and conciliation (Art. 211) and encouraging
compromise settlements (Art 227), there are myriad
situations where the parties buy peace and settle their
disputes by agreeing on some form of financial assistance.
Subject to legal limitations of waivers and quitclaims, such
settlements have the force of law between them.
1.5 3rd KIND: SP in lieu of reinstatement in
illegal dismissal cases where the ee is ordered reinstated
but reinstatement is not feasible
- unlike the preceding two which both involve legal
termination, the 3rd concept of separation pay is an
alternative relief after a finding of illegal dismissal. Where
there is illegal dismissal there should ordinarily be an order to
reinstate the ee. But situations do arise where reinstatement is
neither possible nor advisable such as when the ees position
no longer exists, or the company has closed down, or
severely strained relations has set in between the parties. As
an alternative to reinstatement, payment of SP may be
ordered.
1.6. 4th KIND: as Employment Benefit From
Employer
- does not arise from legal or illegal dismissal but
from nonadversarial mode of leaving ones employment,
such as resignation. It is in the form of a perquisite or
employment benefit whose demandability demands on the
terms of its grant through a CBA or voluntary company
policy or established practice. It may be called resignation pay
or gratuity. Its standard requisite is that the ee has rendered a
specified minimum of service to the er.
- the rule is that an ee who voluntarily resigns from
employment is not entitled to SP, except when it is stipulated
in the employment contract or CBA, or it is sanctioned by
established er practice or policy.
- there is nothing illegal with the practice in some
companies of allowing an ee to resign, instead of being
terminated, so as not to smear the ees employment record.
But even if not granted by a company policy or
practice, resignation pay may still be awarded for equitable
reason. E.g. security guard who, after a service of almost a
quarter of a century, had to resign for health reason.
2. BACKWAGES
- backwages and reinstatement are 2 reliefs given to an
illegally dismissed ee. They are separate and distinct from

each other. However, in the event that reinstatement is no


longer possible, separation pay is awarded to the ee. Thus,
the award of SP is in lieu of reinstatement and not of
backwages.
- An illegally dismissed ee is entitled to (1) either
reinstatement, if viable, or SP if reinstatement is no longer
viable and (2) backwages.
Backwages
Reinstatement
Granted on grounds of It means restoration to a state
equity for earnings which a of condition from which one
worker or ee has lost due to had been removed or
his illegal dismissal
separated.
- backwages presupposes illegal termination. It is restitution
of earnings unduly withheld from the ee because of illegal
termination. Hence where there is no illegal termination there
is no basis for claiming or awarding of backwages.
- while generally an order of reinstatement carries with it an
award of backwages, the court may not only mitigate, but
also absolve the er from liability for backwages where good
faith is evident.
- where there is no illegal dismissal, there can be no award of
backwages. But there can be an illegal dismissal finding w/o a
grant of backwages.
2.1 Backwages Distinguished from Separation
Pay
Backwages
Separation Pay
Represent compensation that Granted where reinstatement
should be earned but not is no longer advisable
collected because of the because of strained relations
unjust dismissal
between the er and the ee
Basis = the actual period Basis = The length of the
when he was unlawfully ees service
prevented from working
The loss of earnings that It is oriented towards the
would have accrued to the immediate
future,
the
dismissed ee during the transitional
period
the
period between dismissal and dismissed ee must undergo
reinstatement; it is a form of before
locating
a
relief that restores the replacement job
income that was lost by
reason of unlawful dismissal
- a labor arbiter cannot order that the separation pay
be deducted from the backwages.
- if the dismissal is illegal, the ee is entitled to
reinstatement as well as to backwages. Backwages therefore
presupposes illegal dismissal. But there may be award of
backwages without an order of reinstatement such as, for
instance, when the dismissal is illegal but reinstatement is not
feasible.
2.1a Backwages Distinguished from Unpaid
Salary
Backwages
Unpaid Salary
Those earnings lost after and Those earned prior to
because of illegal dismissal
dismissal
An order of reinstatement Only ordered if there are still
carries with it an award of salaries collectible by the ee
backwages
from the er by reason of
services already rendered
2.2 Complainants Failure to Claim Backwages
- it is evident that the award of backwages resulting
from the illegal dismissal of an ee is a substantive right. Thus,

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the failure to claim backwages in a complaint for illegal


dismissal has been held to be a mere procedural lapse which
cannot defeat a right granted under the substantive law.
Art. 279 An ee who is unjustly dismissed shall be
entitled to reinstatement w/o loss of seniority rights and
other privileges and to full backwages, inclusive of
allowances, and to other benefits or their monetary
equivalent computed from the time compensation was
withheld up to the time of actual reinstatement.
2.3 Labor Arbiters Failure to Award Backwages
- Suppose an ee was found to have been illegally
dismissed but was not awarded backwages, can the higher
court, in an appeal filed only by the er, grant backwages to
the ee who did not appeal? Earlier court decisions gave
different answers: one ignored technicality and granted the
backwages, the other denied backwages because of
technicality. By 2001 the more liberal decision has prevailed.
- (St. Michaels Institute, et al vs. Santos)
The er dismissed 3 of its regular classroom teachers
allegedly on grounds of serious disrespect to their superior
and serious misconduct. The LA dismissed the ees
complaints for lack of merit. On appeal, the NLRC
reversed the arbiter and ordered the ees reinstatement, but it
did not award backwages. The er appealed to the CA, the ees
did not. The CA sustained the NLRC and in addition,
awarded backwages. This, the er argued in the SC, was a
serious error because the CA cannot grant backwages to ees
who did not appeal the denial of backwages by the NLRC.
Ruling:
The fact that the NLRC did not award backwages to the
respondents or that the respondents themselves did not appeal the
NLRC decision does not bar the CA from awarding backwages.
While as a GR, a party who has not appealed is not entitled
to affirmative relief other than the ones granted in the
decision of the court below, the CA is imbued with sufficient
authority and discretion to review matters, not otherwise
assigned as errors on appeal, if it finds that their
consideration is necessary in arriving at a complete and just
resolution of the case or to serve the interests of justice or to
avoid dispensing piecemeal justice. The twin reliefs provided
for in Art. 279 are rights granted by substantive law which
cannot be defeated by mere procedural lapses. Substantive
rights like the award of backwages resulting from illegal
dismissal must not be prejudiced by a rigid and technical
application of the rules. The order of the CA to award
backwages being a mere legal consequence of the finding that
respondents were illegally dismissed by petitioners, there was
no error in awarding the same.
2.4 Basis of Computation of Backwages
- the base figure to be used in the computation of
backwages due to the ee should include not just the basic
salary, but also the regular allowances that he had been
receiving such as the emergency living allowances and the
13th month pay mandated under the law.
* Where there is a patently improper application and
interpretation of the law on the part of administrative
officers who are tasked to perform quasi-judicial functions,
the Court will not hesitate to disregard procedural rules so as
to effect faithful adherence to that mandated under the law.
- (Evangelista vs NLRC & Mendoza, 1995)

Mendoza filed a complaint for illegal dismissal


against er Evangelista. The decision in favor of Mendoza
became final upon denial of Evangelistas MR. He later on
filed a motion seeking clarification with respect to the salary
scale w/c should be applied in computing the 3 years
backwages. He cited the decision in De Jesus vs PNCC
wherein the award of backwages was based on the latest pay
scale of the ees position. Mendozas motion was granted.
Evangelista later on prayed for the reversal of the said
resolution. He alleged that he was not furnished a copy of the
motion for clarification and neither was there a resolution
issued by the Court requiring him to comment thereto,
thereby depriving him of his right to due process. He
disputed the computation of the award of backwages based
on the current wage levels and maintained that the same
should instead be computed based on the rate of the wage
level in 1977 when private respondent was illegally dismissed,
in accordance with the prevailing jurisprudence.
Ruling:
An unqualified award of backwages means that the
ee is paid at the wage rate at the time of his dismissal.
Furthermore, the award of salary differentials is not allowed,
the established rule being that upon reinstatement, illegally
dismissed ees are to be paid their backwages w/o deduction
and qualification as to any wage increases or other benefits
that may have been received by their co-workers who were
not dismissed or did not go on strike.
- The SC do not see that a salary increase can be
interpreted as either an allowance or benefit. Indeed, if the
intent were to include salary increase as basis in the
computation of backwages, the same should have been
explicitly stated in the manner that the law used clear and
unambiguous terms in expressly providing for the inclusion
of allowances and other benefits.
- the last salary should be based on Philippine peso
if the ee was assigned in the Philippines at the time of
dismissal.
- salary scales reflect the standard of living
prevailing in the country and the purchasing power of the
domestic currency.
- Petitioner objects to the inclusion of gasoline, car
and representation allowances in the computation of
backwages on the ground that these are but operating
expenses to the company. However, while these may be
operating expenses to petitioner they are, on the other hand,
still allowances/ benefits to private respondent and hence
included in the computation of her backwages under Article
279 of the LC.
2.4a Reckoning of Backwages
- the backwages should be computed from the time
of the illegal dismissal w/c is usually also the time the ees
salary started to be withheld. The computation does not
begin from the time the ee filed the illegal dismissal
complaint, even if filing was delayed by about 3 years.
- it is computed from the time that his
compensation was withheld from him, e.g. from the time of
his illegal dismissal, up to the time of his actual reinstatement.
Thus, where reinstatement is adjudged, the award of
backwages and other benefits continues beyond the date of
the Labor Arbiters Decision ordering reinstatement and

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extends up to the time said order of reinstatement is actually


carried out.
- There can be no gap or interruption, lest we defeat
the very reason of the law in granting the same. That
petitioner did not immediately file his complaint should not
affect or diminish his right to backwages, for it is a right
clearly granted to him by law should he be found to have
been illegally dismissed and for as long as his cause of
action has not been barred by prescription.
- The ee concerned is given a period of 4 years from
the time of his illegal dismissal within which to institute the
complaint. This is based on Art. 1146 of the NCC w/c states
that actions based upon an injury to the rights of the plaintiff
must be brought within 4 years. The 4-yr prescriptive period
shall commence to run only upon the accrual of a cause of
action of the worker.
2.5 Full Backwages: The Rule Before R.A.
6715; The Mercury Drug Rule
- Prior to the adoption of the Mercury Drug rule in
1974, the award of backwages to an ee could be reduced by
subtracting the wages actually earned by him from
employment during the period of his separation, or the wages
which he could have earned had he been diligent enough to
find a job. The computation and deduction of interim
earnings not only reduced the awarded backwages but also
delayed its payment.
- it was in this case where the SC, in the interest of
justice and expediency, adopted the policy of granting
backwages for a maximum period of 3 years without
qualification and deduction. (Mercury Drug Rule)
2.5a Backwages: The Rule after R.A. 6715;
Full Backwages but with Deductions; Mercury Drug
Rule Abandoned
- RA 6715 (March 21, 1989), amended Article 279,
in part, to entitle an illegally dismissed ee to full backwages.
The Court acknowledged in July 1993 that with the
passage of RA 6715, it would seem that the Mercury Drug
Rule is no longer applicable for illegal dismissals that
occurred after March 21, 1989. In Ferrer case, however, the
Court still allowed the er to deduct any amount w/c the ee
may have earned during the period of his illegal termination.
2.5b Full Backwages without Deduction; Pines
City Ruling Abandoned in Bustamante
- (Osmalik Bustamante, et al. vs NLRC and
Evergreen Farms, 1996)
The Court announced that it was reconsidering the
Pines City ruling. The backwages to be awarded to an illegally
dismissed ee, should not, as a GR, be diminished or reduced
by the earnings derived by him elsewhere during the period
of his illegal dismissal. The underlying reason for this ruling
is that the ee, while litigating the legality/illegality of his
dismissal, must still earn a living to support himself and
family, while full backwages have to be paid by the er as part
of the price or penalty he has to pay for illegally dismissing
his ee. The provision calling for full backwages to illegally
dismissed ees is clear, plain and free form ambiguity and,
therefore, must be applied without attempted or strained
interpretation.
2.6 Full Backwages Amendment Not
Retroactive

- the full backwages amendment by RA 6715 has


no retroactive effect; it applies only prospectively. Thus, the
rule is: where the illegal dismissal happened before the
effectivity of RA 6715, that is, before March 21, 1989, the
award of backwages is limited to three years w/o deduction
or qualification. If the illegal dismissal occurred on or after
March 21, 1989, the full backwages rule under Bustamante is
applicable.
2.7 Backwages Up to Retirement Age Only
- If the ordered reinstatement is no longer feasible
because the ee has reached retirement age, the Court will not
insist on reinstatement and even the backwages will not
extend beyond the ees retired date.
2.8 Inflation
- Regarding the argument that the inflation that has
supervened justifies the imposition of interest, the Court has
held that the effects of extraordinary inflation are not to be
applied w/o an agreement between the parties and w/o an
official declaration thereof by competent authorities.
2.9 Dismissal for Cause But Without Due
Process; The Wenphil Doctrine
- (Wenphil Corporation vs NLRC)
Although belatedly, the ee was afforded due process
before the labor arbiter wherein the just cause of his
dismissal had been established, it would be arbitrary and
unfair to order his reinstatement with backwages. Under the
circumstances, the dismissal of the ee for just cause should
be maintained. He has no right to return to his former
employment.
However, the er must nevertheless be held to
account for failure to extend to the ee his right to an
investigation before causing his dismissal. The dismissal of an
ee must be for just or authorized cause and after due process.
Where the er committed an infraction of the second
requirement, a sanction must be imposed upon such er for
failure to give a formal notice and conduct an investigation as
required by law before dismissing the ee from employment.
An indemnity of Php 1, 000 may be awarded. The measure
of this award depends on the facts of each case and the
gravity of the omission committed by the er.
2.9a Amount of Penalty for not Observing Due
Process
- The Court did not intend to fix a value or price on
such right of an ee, for rights, especially the right to due
process, cannot be translated in monetary value. The amount
awarded in such cases was intended to serve as a penalty to
the er who violated an ees right as well as to serve as an
example for other ers inclined to violate theie ees rights. The
Court reiterated the guideline that the amount of the sanction
depends on the facts of each case and the gravity of the
omission committed by the er.
- the damages w/c an er should pay if he vilates an
ees right to procedural due process prior to his dismissal for
cause is in the nature of nominal damages. This means that
the purpose of the damages is not to penalize the er but to
vindicate or recognize the right of the ee.
2.9b No Just Cause and No Due Process The
Wenphil Doctrine does Not Apply; Dismissal Illegal
- (Hellenic Philippine Shipping, Inc. vs. E. Siete and
NLRC, 1991)

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It is not denied that Siete was not informed of the


charges beforehand or that he was given an opportunity to
refute them. Even after his arrival in Manila, he was kept in
the dark about the reason for his dismissal.
The law requires that the investigation be
conducted before the dismissal, not after. That omission
cannot be corrected by the investigation later conducted by
the POEA. As the Solicitor General correctly maintained, the
due process requirement in the dismissal process is different
from the due process requirement in the POEA proceeding.
Both requirements must be separately observed.
While it is true that in Wenphil Corp. vs NLRC and
Rubberworld vs NLRC, the lack of due process before the
dismissal of the ee was deemed corrected by the subsequent
administrative proceedings where the dismissed ee was given
a chance to be heard, those cases involved dismissals that
were later proved to be for a valid cause. The doctrine in
those cases is not applicable to the case at bar because our
finding here is that the dismissal was not justified.
It is not correct to say that managerial ees may be
arbitrarily dismissed at any time and w/o cause as established
in an appropriate investigation. Managerial ees, no less than
rank-and-file laborers, are entitled to due process. Loss of
confidence, w/c is the usual ground for the removal of the
managerial ee, must be established like any other lawful
cause. Even if it be assumed that Siete was a managerial ee
an issue w/c, incidentally, was not earlier raised or resolved
the petitioner has not satisfactorily proved the reason for its
supposed loss of confidence in him.
2.10 Objections to Wenphil: Indemnity Only
Too Niggardly?
- the price that the Court has set is too
insignificant, too niggardly, and sometimes even too late a
sanction for the violation of a sacred right
2.11 Illegal or Merely Defective?
- the dismissal that did not follow due process was
held not illegal but merely effective
- (Sebuguero, et al vs. NLRC, G.T.I. Sportswear
Corp., et al)
It is now settled that where the dismissal of an ee is
in fact for a just and valid cause and is so proven to be but he
is not accorded his right to due process, i.e. he was not
furnished the twin requirements of notice and the
opportunity to be heard, the dismissal shall be upheld but the
er must be sanctioned for noncompliance with the
requirements of or failure to observe due process.
- (Magnolia Dairy Products Corporation vs NLRC
and Calibo)
The law authorizes an er, like the herein petitioner,
to terminate the employment of any ee due to the installation
of labor saving devices. The installation of these devices is a
management prerogative, and the courts will not interfere
with its exercise in the absence of abuse of discretion,
arbitrariness, or maliciousness on the part of the
management, as in this case. Nonetheless, this did not excuse
petitioner from complying with the required written notice to
the ee and to the DOLE at least 1 month before the intended
date of termination. This procedure enables an ee to contest
the reality or good-faith character of the asserted ground for
the termination of his services before the DOLE.

The failure of petitioner to serve the written notice


to private respondent and to the DOLE, however, does not
ipso facto make private respondents termination from service
illegal so as to entitle her reinstatement and payment of
backwages. If at all, her termination from service is merely
defective because it was not tainted with bad faith or
arbitrariness and was due to a valid cause.
The well settled rule is that the er shall be
sanctioned for non-compliance with the requirements of, or
for failure to observe due process in terminating from service
its ee.
2.12 Serrano Modifies Wenphil: Where Due
Process is Disregarded, Full Backwages must be
Awarded
- Serrano modifies but does not junk Wenphil. The
ee, dismissed for a valid reasons, remains dismissed, but the
er who disregarded proper procedure, must pay full
backwages in addition to separation pay, if applicable, and
indemnity.
2.13 From Wenphil to Serrano to Viernes: Not
Only Full Backwages but also Indemnity
- the Serrano ruling w/c grants full backwages is not
meant to do away w/ indemnity to the ee whose right to due
process was violated; that is the indemnity is aside from the
full backwages.
- in Viernes, the Court held that the meter readers
had become regular ees when they continued to work after
their term employment ended. In addition to reinstatement
the Court also ordered the payment of full backwages
because their termination was invalid. Furthermore, because
the termination did not follow due process the er was held
liable for indemnity.
- the indemnity is in the form of nominal damages
intended not to penalize the er but to vindicate or recognize
the ees right to procedural due process which was violated
by the er. Under Art. 221 of the CC, nominal damages are
adjudicated in order that a right of the plaintiff, w/c has been
violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.
2.14 Agabon Discards Serrano and Partially
Restores Wenphil
- Prior to 1989 the rule was to declare the
termination outright illegal and the ee should be reinstated.
Then came Wenphil in 1989 w/c declared the termination
valid but the er should pay indemnity for not respecting the
ees right to due process.
Then came Serrano in 2000 w/c stiffened the penalty
to full backwages followed by Viernes in 2003 w/c imposed
both backwages and indemnity.
Now comes Agabon. The Court changes its mind
again by saying in effect: Lets discard Serrano and essentially
restore Wenphil. That is, the termination is valid, the ee
remains dismissed, but the er must pay an indemnity heavier
than that imposed in Wenphil but lighter than full backwages.
- (Agabon vs NLRC, Reviera Home Improvements,
et al)
Where the dismissal is for a just cause, as in the
instant case, the lack of statutory due process should not
nullify the dismissal, or render it illegal, or ineffectual.
However, the er should indemnify the ee for the violation of

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his statutory rights. The indemnity to be imposed should be


stiffer to discourage the abhorrent practice of dismiss now,
pay later, w/c we sought to deter in the Serrano ruling. The
sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking
into special consideration the gravity of the due process
violation of the er.
The violation of the petitioners right to statutory
due process by the private respondent warrants the payment
of indemnity in the form of nominal damages. The amount
of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances. We
believe that this form of damages would serve to deter ers
from future violations of the statutory due process rights of
ees.
2.14a Jaka Revises Agabon: Higher Indemnity
in the Authorized Causes
- just about 5 months after its promulgation, this
ruling came under review by the SC. The Jaka Food decision
does not overturn Agabon but, in a manner of speaking finetunes it.
1. if the dismissal is based on a just cause under
Article 282 but the er failed to comply w/ 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 ee;
2. if the dismissal is based on an authorized cause
under Article 283 but the er failed to comply w/ the notice
requirement, the sanction should be stiffer because the
dismissal was initiated by the ers exercise of his management
prerogative.
2.14b JAKA Refined Further by Industrial
Timber
- Industrial Timber does not lump the authorized
causes altogether but subdivides them into: 1) due to losses
and 2) not due to losses. If the authorized cause that
terminates employment arises from losses, the penalty to the
er who disregarded due process may be lighter than if the
authorized cause has no relation to losses.
In the determination of the amount of nominal
damages w/c is addressed to the sound discretion of the
court, several factors are taken into consideration: 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 no. of ees to be awarded, 3) the capacity of the ers to
satisfy the awards, taking into account their prevailing
financial status as borne by the records, 4) the ers grant of
other termination benefits in favor of the ees, and 5) whether
there was a bona fide attempt to comply with the notice
requirements as opposed to giving no notice at all.
3. REINSTATEMENT
- the normal consequences of a finding that an ee
has been illegally dismissed are that the ee becomes entitled
to reinstatement to his former position w/o loss of seniority
rights and the payment of backwages.
Reinstatement
Backwages
Restores the ee who was It allows the ee to recover
unjustly dismissed to the from the er that w/c he had
position from w/c he was lost by way of wages as a

removed, that is, to his status result of his dismissal


quo ante dismissal
- these twin remedies make the dismissed ee whole
who can then look forward to continued employment.
Though the grant of reinstatement commonly carries with it
an award of backwages, the inappropriateness or
nonavailability of one does not carry with it the
inappropriateness of nonavailability of the other.
- reinstatement is incompatible with a finding of
guilt of the ee
- when the er is guilty of ULP, the Minister of
Labors order for reinstatement follows as a matter of course.
3.1 Reinstatement without Backwages
- (Manila Electric Co. vs NLRC, 1989)
S, a supervisor-leadman of Meralco, facilitated the
processing of an application for electrical services as well as
the required documentation for said application, in
consideration of the amount of Php 7, 000. At that time, the
area where the residence of the applicant was located was not
yet within the serviceable point of Meralco. S was found
guilty of breach of trust and violation of company rules, the
penalty for which ranges from reprimand to dismissal
depending on the gravity of the offense. He, however, had
been with the company for 20 years without any previous
derogatory record, in addition to the fact that the company
had awarded him two commendations for honesty.
Ruling:
The reinstatement of S is proper in the instant
case, but w/o the award of backwages, considering the good
faith of the er in dismissing him.
*this shows that while an award of backwages presupposes a
finding of illegal dismissal, not every case of illegal dismissal
entails an award of backwages.
3.2 Reinstatement Not Feasible Due to
Changed Circumstances
- if between the time the wrongful discharge
occurred and the reinstatement order was issued, the ers
commercial or financial circumstances have changed, the
court cannot compel the er, despite the latters ulp, to
reinstate such no. of ees as may exceed his needs under the
altered conditions. While the court, under such
circumstances, may not be empowered to order present
reinstatement, it does have the right to order that those who
were not reinstated be given precedence in future hiring.
- instead of being reinstated, the illegally dismissed
ee should be paid full backwages from the time of his
dismissal up to the time his retrenchment would have taken
effect. He should also be paid separation pay due to
retrenchment under Art. 283 of the LC.
- an illegally dismissed ee who is approaching or has
reached the retirement age shall not be ordered reinstated.
Instead, he shall be entitled not only to separation pay and
full backwages, but additionally, to his retirement benefits
pursuant to any CBA in the workplace or, in the absence
thereof, as provided in Sec. 14, Book IV of the IRR of the
LC.
- In another case the complainant ee has not yet
reached retirement age. But again the Court allowed payment
of separation pay in lieu of reinstatement because
considerable time has lapsed between the dismissal and the
resolution of the case.

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3.2a Contrast: Reinstatement Enforced Despite


Closure of Original Er
- (Pepsi-cola Bottling Co., et al vs NLRC, Encabo,
et al.,)
Issue: Pepsi-Cola Products Philippines, Inc. (PCPPI)
filed a manifestation with the NLRC stating that it received a
writ of execution dated February 18, 1991, addressed to
Pepsi-Cola Bottling Co. (PBC) and ordering Pepsi-Cola
Distributors of the Philippines (PCD) to reinstate Oscar T.
Encabo. PCPPI further stated that it was returning the writ
unsatisfied since it is a corporation separate and distinct from
PBC or PCD, making it an inappropriate party to w/c the
writ of execution should be served.
In the motion for reconsideration filed w/ the
NLRC, the petitioners alleged that reinstatement is no longer
possible since the petitioner company closed down its
business on July 24, 1989 and the new franchise holder,
Pepsi-Cola Products Philippines is a new entity.
Further, PCPPI claims that the public respondent
NLRC committed grave abuse of discretion in holding it
liable for the reinstatement of the private respondent
considering that PCPPI is an entity separate and distinct
from the PCD.
On the ground of serious business losses, PCD
alleged that it ceased to operate on July 24, 1989 and PCPPI,
a company separate and distinct from PCD, acquired the
franchise to sell the Pepsi-Cola products.
Ruling:
PCD may have ceased business operations and
PCPPI may be a new company but it does not necessarily
follow that no one may now be held liable for illegal acts
committed by the earlier firm. The complaint was filed when
PCD was still in existence. Pepsi-Cola never stopped doing
business in the Philippines. The same softdrinks product sold
in 1988 when the complaint was initiated continue to be sold
now. The sale of products, purchases of materials, payment
of obligations, and other business acts did not stop at the
time PCD bowed out and PCPPI came into being. There is
no evidence presented showing that PCPPI, as the new entity
or purchasing company, is free from any liabilities incurred
by the former corporation.
In fact, we agree with the public respondents
observation that in the surety bond put up by the petitioners
as appeal bond, both PCD and PCPPI bound themselves to
answer the monetary awards of the private respondent in
case of an adverse decision of the appeal, w/c clearly implies
that the PCPPI as a result of the transfer of the franchise
bound itself to answer for the liability of PCD to its ees.
Moreover, the liability of petitioners A.C. Sian and
V. Castillo as Plant General Manager and Manufacturing
Manager, respectively, of PCD is beyond question as they are
the architects of the dismissal or private respondent. The
petitioners acted arbitrarily and wantonly in dismissing the
private respondent on the mere basis of loss of trust and
confidence. The records reveal that they were the ones
responsible for bypassing the private respondent in the
rehabilitation of the soaker machine and at the end, blaming
the latter for the companys financial losses. Castillos
affidavit is not only self-serving but baseless. While a
managers right to fire an ee is recognized as an inherent part
of the position such right must be exercised with utmost

prudence and with humane consideration. The petitioners


dismally failed in this respect.
However, to order reinstatement at this juncture
would serve no prudent purpose considering the supervening
facts and circumstances of the case. Not only is PCPPI a new
corporation continuing the business and operation of PCD,
there is also no doubt that the relationship between the
petitioners and the private respondent has been strained by
reason of their respective imputations of bad faith which is
quite-evident from the vehement and consistent stand of the
petitioners in refusing to reinstate the private respondent.
Thus, in order to prevent further delay in the execution of
the decision to the prejudice of the private respondent and to
spare him the agony of having to work anew with the
petitioners under an atmosphere of antagonism, and so that
the latter do not have to endure the continued services of the
private respondent in whom they have lost liking and, at this
stage, confidence, the private respondent should be awarded
separation pay as an alternative to reinstatement.
3.3 Reinstatement Not Feasible Due to Strained
Relations
Where the relationship of er to ee is so strained and
ruptured as to preclude a harmonious working relationship
should reinstatement of the ee be decreed, the latter should
be afforded the right to separation pay so that he can be
spared the agony of having to work anew w/ the er under an
atmosphere of antipathy and antagonism and the er does not
have to endure the continued services of the ee in whom it
has lost confidence.
The antagonism between the er and the ee brought
about bu the filing of complaint by the ee, plus the fact that a
new ee had been hired to take over the place of the dismissed
ee, and there is a no equivalent position available to the latter,
militate against the propriety of reinstating the said dismissed
ee.
There may be no problem in ordering the
reinstatement with facility of a laborer, clerk or other rankand-file ee. But an officer in a key position such as one who
is a vice president for marketing can work effectively only if
said ee enjoys the full trust and confidence of top
management.
Respondent ees demand for separation pay was an
acknowledgment by him that because of the strain in his
relation with his er, reinstatement was no longer feasible.
3.3a Qualifications to the Strained Relations
Principle
- (Globe-Mackay Cable and Radio Corp. vs NLRC
and Salazar)
The SC refused to be swayed by the strained
relations as enough reason to bar reinstatement. Instead, it
indicated certain limitations or qualifications to the
applicability of the said principle.
- there may be a ground or grounds for nonapplication of the above-cited provision (Article 279) this
should be by way of exception, such as when reinstatement
may be inadmissible due to ensuing strained relations
between the er and the ee.
- Thus, it should be proved that the ee concerned
occupies a position where he enjoys the trust and confidence

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of his er; and that it is likely that if reinstated, an atmosphere


of antipathy and antagonism may be generated as to
adversely affect the efficiency and productivity of the ee
concerned.
- the said principle cannot be applied
indiscriminately. Otherwise, reinstatement can never be
simply possible because some hostility is invariably
engendered between the parties as a result of litigation. That
is human nature.
Besides, no strained relations should arise from a
valid and legal act of asserting ones right; otherwise, an ee
who shall assert his right could be easily separated from the
service, by merely paying his separation pay on the pretext
that his relationship with his er had already become strained.
- In this case, it has not been proved that the
position of private respondent as systems analyst is one that
may be characterized as a position of trust and confidence
such that if reinstated, it may lead to strained relations
between er and ee. Hence, this does not constitute an
exception to the general rule.
- (Maranaw Hotels vs CA)
To the ers argument that strained relations
between the parties bar reinstatement, the Court replied:
The relationship between the ee, a roomboy, and
management was clearly on an impersonal level. The ee did
not occupy such a sensitive position as would require
complete trust and confidence, where personal ill will would
preclude his reinstatement.
A confidential ee is one who (1) assists or acts in a
confidential capacity, in regard to (2)persons who formulate,
determinate and effectuate management policies specifically
in the field of labor relations.
Strained relations are a factual issue which must be
raised before the labor arbiter for the proper reception of
evidence. If raised only on appeal, there would be no
evidentiary basis to support the assertion that peaceful
working relationship was no longer possible. This ruling
should be observed even if the ee involved is a manager.
The overgrowth of the strained relations
principle should not be taken advantage of by the ers. This
principle should not be given an overarching interpretation
or as a cover to get rid of its ees and thus defeat their right to
job security.
- (D.V. Quijano vs Mercury Drug Corp. and
NLRC)
Every labor dispute almost always results in
strained relations, and the phrase cannot be given an
overarching interpretation, otherwise, an unjust ee can never
be reinstated.
In the case at bar, the NLRC refused to reinstate
the petitioner and relied on the contents of the November
19, 1991 notice of termination of management to petitioner
detailing the alleged 5 charges of misconduct against him and
on petitioners September 14, 1991 written explanation.
From them, the NLRC deducted an antagonism between the
parties and concluded that there would be no harmonious
working relationship between them. The NLRC then ruled
that petitioners reinstatement was impractical and that he
should instead be given separation pay.
The arbiter found as a fact that the false charges
were filed against petitioner by two of his superiors to punish

him for exposing their usurious loan operations. Hence, to


deny petitioners reinstatement due to the strained relations
with his accusers whose charged were found to be false
would result in rewarding the accusers and penalizing
petitioner, the victim. This would set a bad precedent, for no
er should be allowed to profit from his own misdeed. In
addition, it is most inequitable to rule that the antagonism
engendered by petitioners performance of his legal right to
expose the usurious lending operations of some warehouse
officers will cause him to lose the security of his job.
3.4 When Reinstatement Not Feasible;
Separation Pay in Lieu of Reinstatement
- Although reinstatement (w/ or w/o backwages) is
a legal right of an illegally dismissed ee, there are supervening
events that may bar the reinstatement, such as justified
redundancy, retrenchment, closure, attainment of retirement
age, strained relations or similar justifications.
In the event that reinstatement is no longer feasible,
or if the ee chooses not to be reinstated, the er shall pay him
separation pay in lieu of reinstatement, such separation pay
to be computed according to the formula used in earlier
cases.
An ee who is separated from his employment on a
false or nonexistent cause is entitled to be reinstated to his
former position because the separation is illegal. But if the er
has already hired a replacement, reinstatement of the illegally
dismissed ee to his former position would be neither fair nor
just. The ers remedy is to reinstate the ee to a substantially
equivalent position.
3.4a Separation Pay in lieu of Reinstatemet
Different from Backwages
- payment of backwages is a form of relief that
restores the income that was lost by reason of unlawful
dismissal; separation pay, in contrast, is oriented towards the
immediate future, the transitional period the dismissed ee
must undergo before locating a replacement job.
- the grant of separation pay is a proper substitute
only for reinstatement. It could not be an adequate
substitution both for reinstatement and for backwages.
3.4b Separation Pay in lieu of Reinstatement
Different from Separation Pay in Legal Terminations
- it bears emphasizing that the separation pay in lieu
of reinstatement is different from the separation pay required
under Arts 283 and 284 (the authorized causes) and
likewise different from the separation pay allowed in
compassionate exception under Article 282 (the just
causes).
3.4c How much is the Separation Pay in lieu of
Reinstatement?
- preponderant jurisprudence favors one month pay
for each year of service
- (Gaco vs NLRC, et al) we sustain the ruling of the
Labor Arbiter granting separation pay in the amount of 1
month pay for every year of service. This has been our
consistent ruling in numerous decisions awarding separation
pay to an illegally dismissed ee in lieu of reinstatement.
3.4d Separation Pay in lieu of Reinstatement of
Seasonal Worker
- an er claims serious business losses as
justification for nonpayment of separation pay to terminated

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seasonal ees. But the alleged losses were not adequately


proven, hence the termination was declared illegal.
What is the formula to compute the separation pay of a seasonal worker
who was illegally dismissed but cannot be reinstated because the plant
has been closed?
(Philippine Tobacco Flue-curing and Redyring
Corp. vs NLRC)
The amount of separation pay is based on two
factors: the amount of monthly salary and the no. of years of
service. Although the LC provides different definitions as to
what constitutes one year of service Book Six does not
specifically define one year of service for purposes of
computing separation pay. However, Arts 283 and 284 both
state in connection with separation pay that a fraction of at
least six months shall be considered one whole year. We hold
that the amount of separation pay which respondent
members of the Lubat and Luris groups should receive is
of their respective average monthly pay during the last season
they worked multiplied by the no. of years they actually
rendered service, provided that they worked for at least six
months during a given year.
The formula that petitioner proposes, wherein a
year of work is equivalent to actual rendered for 303 days, is
both fair and inapplicable, considering that Arts 283 and 284
provide that in connection with separation pay, a fraction of
at least six months shall be considered one whole year. Under
these provisions, an ee who worked for only 6 months in a
given year w/c is certainly less that 303 days is considered
to have worked for one whole year.
3.5 Objection: Disproportionate Substitutions
- if an ee were actually reinstated, no one knows
how long or how short he would stay on the job. But in any
case the one months pay per year of service seems to be a
greatly disproportionate reduction. The formula is no
substitute for a whole job that the ee may hold for years and
years.
- Indeed, a job is more than the salary it carries.
Payment of 30 days salary cannot compensate for the
psychological effect of the stigma of immediately finding
ones self laid off from work.
4. REMEDY IF REINSTATEMENT IS THWARTED
- if the er fails or is unable to comply w/ a final and
executory judgment for the reinstatement of an ee, the plain
and obvious remedy is simply to compel the er by writ of
execution to effect the reinstatement and pay the amounts
decreed. The ers claim of inability to reinstate the ee has to
be overruled. If there be valid and unsuperable cause for
such inability to reinstate, this factor must be taken into
account in the process of directing and effectuating the
award of relief to the ee consistent with the judgment. The
remedy is certainly never the institution of a separate action,
whether in the regular courts or the labor arbiters branch.
Such a recourse would violate the well-settled principle of res
judicata. It would give rise to multiplicity of actions which the
law abhors and exerts every effort to eschew.
- the single, particular act of the er in refusing or
professing inability to comply with the executory judgment to
reinstate an ee cannot be made the subject of two
proceedings: one, execution; and two, a new separate action,

instituted by the ee in the NLRC for damages and attorneys


fees.
- Thus, the RTC is not the proper tribunal to pass
upon the ees complaint against the failure of the LA to
enforce the NLRCs decision to reinstate him to his former
position. His remedy against the refusal or inaction of the
LA, who is in charge of executing the awards of the NLRC,
is to call the NLRCs attention to the alleged nonfeasance
and not to file a mandamus action in the RTC w/c has no
jurisdiction to interfere w/ the execution of a final judgment
of the NLRC.
- the remedy for refusal of the er to reinstate the ee
despite several writs of execution is not the grant of
additional backwages to serve as damages but to file a motion
to cite the er for contempt.
(Dandy V. Quijano vs G.A. Bartolabac and A.R. Quimpo)
- We took judicial notice of the fact that private
respondent Mercury Drug Corporation operates nationwide
and has numerous branches all over the Philippines.
Petitioner, as warehouseman, occupied a clerical/rank and
file position in said company and we find it highly
inconceivable that no other substantially equivalent position
exists to effect his reinstatement.
Clearly, the Court is unwilling to accept the
corporation and respondent labor arbiters reason that
reinstatement is no longer feasible because the position of
warehouseman had already been abolished and there is no
substantially equivalent position in the corporation.
Both respondents labor arbiter and commissioner
do not have any latitude to depart from the Courts ruling.
The Decision in G.R. No. 126561 is final and executory and
may no longer be amended. It is incumbent upon
respondents to order the execution of the judgment and
implement the same to the letter. Respondents have no
discretion on this matter, much less any authority to change
the order of the Court. The acts of respondent cannot be
regarded as acceptable discretionary performance of their
functions as labor arbiter and commissioner of the NLRC,
respectively, for they do not have nay discretion in executing
a final decision. The implementation of the final and
executory decision is mandatory.
In the dispositive portion of the decision, the Court,
applying the Code of Professional Responsibility, declares the
LA and the NLRC Commissioner suspended from the
practice of law for a period of 3 months.
(Mariano Y. Siy vs NLRC and Elena Embang)
- Atty. Quevedos act of filing a baseless appeal w/
the NLRC was obviously intended to defeat the
implementation of a final and executory decision. Elementary
is the rule that an order granting a motion for a writ of execution is not
appealable. Thus, Atty. Quevedos deceptively innocent
appeal constituted either a willful disregard or gross
ignorance of basic rules of procedure resulting in the
obstruction of justice.
His conduct has thwarted the due execution of a
final and executory decision. By appealing an order which he
knew to be unappealable, he abused court processes and
hindered the dispensation of justice. His dilatory tactics were
an affront to the dignity of the Court, clearly constituting
indirect contempt.

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4.1 Backwages Continue to Accrue Until Er


Complies w/ Reinstatement Order
- the award of backwages, 13th month pay and other
benefits subsists, and those monetary obligations continue to
accumulate, as long as the er has not complied w/ the order
to reinstate (at work or in payroll) the ees who were illegally
dismissed.
- (Triad Security & Allied Services, et al vs. Ortega)
It bears emphasizing that the law (Art 223)
mandates the prompt reinstatement of the dismissed or
separated ee. This, the petitioners (er) failed to heed.
It should be pointed out that an order of
reinstatement by the labor arbiter is not the same as actual
reinstatement of a dismissed or separated ee. Thus, until the
er continuously fails to actually implement the reinstatement
aspect of the decision of the labor arbiter, their obligation to
respondents, insofar as accrued backwages and other benefits
are concerned, continues to accumulate. It is only when the
illegally dismissed ee receives the separation pay that it could
be claimed with certainty that the er-ee relationship has
formally ceased thereby precluding the possibility of
reinstatement. In the meantime, the illegally dismissed ees
entitlement to backwages, 13th month pay, and other benefits
subsists. Until the payment of separation pay is carried out,
the er should not be allowed to remain unpunished for the
delay, if not outright refusal, to immediately execute the
reinstatement aspect of the labor arbiters decision.
5. SALARY RATE UPON REINSTATEMENT
- (Grolier International, Inc. vs. Executive Labor
Arbiter, et al.,)
Fernandez was occupying the position of
comptroller w/ a basic monthly salary of Php 4, 000 when he
left for Australia. There he worked for Grolier of Australia
for 7 years and received a salary of AUS8, 000/ annum. He
returned to Manila to follow up his application for
immigration to Australia, but his immigrant visa was
disapproved. He sought reinstatement to his former position
but Grolier (Manila) denied his request.
In its resolution, the SC ordered Grolier to reinstate
Fernandez, or if that is not feasible, to grant him separation
pay.
Ruling: Had Fernandez been reinstated either upon
his initial request or as required by the SC, he would have
occupied his former position in Grolier in the Philippines as
Comptroller, and as such would have been entitled only to
his previous salary of Php 4, 000 per month.
Salary scales are based upon or reflect, as economic
facts, the standard of living prevailing in the country and the
purchasing power of the domestic currency. It cannot be
supposed that he was prompted when he was sent to
Australia offices of Grolier. He went to Australia on
company business, w/c means that his trip was related to the
duties of the position he was then holding in the Philippines.
The apparently higher salary given to him while working in
Australia must be viewed in the light of the fact that the costs
of living in Australia are higher than those prevailing in the
Philippines.
6.
REINSTATEMENT
IMMEDIATELY
EXECUTORY; EMPLOYERS OPTIONS

- under Art 223 (3), the decision of the LA


reinstating a dismissed ee is immediately executory even
while the case is on appeal. It may be actual or merely in
payroll, at the ers option.
- in the amendment made by RA 6715, effective
March 21, 1989 means that if execution pending appeal is
granted, the ee concerned shall be admitted back to work
under the terms and conditions prevailing prior to his
dismissal or separation. However, instead of doing so, the er
is granted the option to merely reinstate the ee in the payroll.
This would simply mean that although not admitted to work,
the ee would nevertheless be included in the payroll and
entitled to receive her salary and other benefits as if she were
in fact working.
The NLRC rules on reinstatement of an illegally dismissed ee
state:
Section 14, Rule V, Revised NLRC Rules of
Procedure, 2005 In case the decision of the LA includes an
order of reinstatement, it shall likewise contain:
a. a statement that the reinstatement aspect is
immediately executory
b. a directive for the er to submit a report of
compliance within 10 calendar days from receipt of the said
decision.
Section 6, Rule XI, Revised NLRC Rules of
Procedure, 2005 In case the decision includes an order of
reinstatement and the er disobeys the directive under the 2 nd
paragraph of Section 14 of Rule V or refuses to reinstate the
dismissed ee, the LA shall immediately issue a writ of
execution, even pending appeal, directing the er to
immediately reinstate the dismissed ee either physically or in
the payroll, and to pay the accrued salaries as consequence of
such reinstatement at the rate specified in the decision.
The Sheriff shall serve the Writ of Execution upon
the er or any other person required by law to obey the same.
If he disobeys the writ, such er or person may be cited for
contempt in accordance with Rule 9.
6.1 May an EE Lose the Right to
Reinstatement?
- (Buenviaje vs CA)
The er complying w/ the NLRCs order of
reinstatement, gave the ees 5 days to report for work. How
much time do the ees have to appear to secure their reinstatement? The
SC, ruling on the ees position, faulted the er for not giving
the ees ample time to explain why they failed to report to
work at once. But what is ample time?
We cannot stretch the language of the law so as to
give the er the right to remove an ee who fails to immediately
comply with the reinstatement order, especially when there is
reasonable explanation for the failure. If the er were really
sincere in its offer to immediately reinstate petitioners to
their former positions, it should have given them reasonable
time to wind up their current preoccupation or at least to
explain why they could not return to work at once. It did not
do either. Instead, it gave them only five days to report to
their posts and when the petitioners failed to do so, it lost no
time in serving them with their individual notices of
termination.
(Roquero vs PAL, Inc.,)
R and P, equipment mechanics of PAL, were caught
red-handed possessing and using shabu in a raid conducted

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by PAL and NARCOM security personnel. They were


charged administratively and placed under preventive
suspension. R and P assailed their arrest and asserted that
they did not voluntarily indulge in the said act but were
instigated by certain PAL personnel.
Issues:
1. Whether the instigated ee shall be solely
responsible for an action arising from the instigation by the
er
2. Whether the ees reinstatement can be
halted by a petition filed in higher courts w/o any restraining
order or preliminary injunction having been ordered in the
meantime
Even if R was instigated to take drugs he has no
right to be reinstated to his position. He took the drugs fully
knowing that he was on duty and more so that it is
prohibited by company rules. Instigation is only a defense
against criminal liability. It cannot be used as a shield against
dismissal from employment especially when the position
involves the safety of human lives.
The unjustified refusal of the er to reinstate a
dismissed ee entitles him to payment of his salaries effective
from the time the er failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining
order issued, it is ministerial upon the LA to implement the
order of reinstatement. In the case at bar, no restraining
order was granted. Thus, it was mandatory on PAL to
actually reinstate R or reinstate him in the payroll. Having
failed to do so, PAL must pay R 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 SC.
6.2 No Obligation to Reimburse
- Roquero case, both the CA and the SC reversed the
order of reinstatement as they upheld the ees dismissal. Must
the ee pay back the salary he received during the reinstatement? The
Court said NO.
Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of the er to
reinstate and pay the wages of the dismissed ee during the
period of appeal until reversal by the higher court. On the
other hand, if the ee has been reinstated during the appeal
period and such reinstatement order is reversed with finality,
the ee 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.
6.2a Garcia Drops Genuino and Reaffirms

Roquero

- (I didnt include Genuino since it is no longer


controlling)
- Garcia pursuant to the police power, the state
may authorize an immediate implementation, pending appeal,
of a decision reinstating a dismissed or separated ee. The
immediate reinstatement is a saving act designed to stop a
continuing threat or danger to the survival or even the life of
the ee and his family. Moreover, the social justice principles
of labor law outweigh or render inapplicable the civil law
doctrine of unjust enrichment.
Such substantive right cannot be treated as a
procedural matter that can be undone and taken back when
conditions change.

remains.

In fine, therefore, the no-reimbursement rule

6.3 Rationale of Payroll Reinstatement


Maranaw Hotel case:
This options is based on practical
considerations. The er may insist that the dismissal of the ee
was for a just and valid cause and the latters presence within
its premises is intolerable by any standard; or such presence
would be inimical to its interest or would demoralize the coees. Thus, while payroll reinstatement would in fact be
unacceptable because it sanctions the payment of salaries to
one not rendering service, it may still be the lesser evil
compared to the intolerable presence in the workplace of an
unwanted ee.
6.4 Rationale and Constitutionality of
Reinstatement During Appeal
- (Aris Phils, Inc. vs NLRC, et al)
The petitioner-er questions the constitutionality of
the provision allowing immediate execution, even pending
appeal, of the reinstatement aspecr of a decision of a labor
arbiter. The er argues that said portion violates the due
process clause of the Constitution in that it is oppressive and
unreasonable. It argues that the right of the er to dismiss is
consistent with the legal truism that the law, in protecting the
rights of the laborer, authorizes neither the oppression nor
the destruction of the er.
In authorizing execution pending appeal of the
reinstatement aspect of a decision of the LA reinstating a
dismissed or separated ee, the law itself has laid down a
compassionate policy which, once more, vivifies and
enhances the provisions of the 1987 Constitution on labor
and the workingman.
6.5 Exception to Immediate Reinstatement
- where the dismissed ees reinstatement would lead
to a strained relation between the er and the ee or to an
atmosphere of antipathy and antagonism, the exception to
the twin remedies of reinstatement and payment of
backwages can be invoked and reinstatement, w/c might
become anathema to industrial peace, could be held back
pending appeal.
6.6 Reinstatement Pending Appeal is
Enforceable Despite Ers Denial of Er-Ee Relationship
- (PAL, Inc vs NLRC, et al.,)
The intent of the law in making a reinstatement
order immediately executory is much like a RTWO, i.e. to
restore the status quo in the workplace in the meantime that
the issues raised and the proofs presented by the contending
parties have not yet been finally resolved. It is a legal
provision which is fair to both labor and management
because while execution of the order cannot be stayed by the
posting of a bond by the er, the workers also demand their
physical reinstatement if the er opts to reinstate them only in
the payroll.
Although PAL is challenging the existence of an eree relationship, it is indisputable that prior to the filing of the
numerous cases before the LA, the said complainants were
working for PAL.
PAL, as an er, is given the choice of accepting the
complainants back of simply reinstating them in its payroll
until the regularization and illegal dismissal cases are
determined definitively.

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by LA

6.7 Reinstatement should have been Ordered

- An order for reinstatement must be specifically


declared and cannot be presumed; like backwages, it is a
separate and distinct relief given to an illegally dismissed ee.
There being no specific order for reinstatement and the order
being for complainants separation, there can be no basis for
the award of salaries/backwages during the pendency of the
appeal. Since the dismissal of private respondent was deemed
valid, she cannot be entitled to reinstatement and backwages.
An award of backwages by the NLRC during the period of
appeal is totally inconsistent with its finding of a valid
dismissal.
6.8 Amendment by RA 6715 Not Retroactive
- (Inciong vs NLRC)
The decision of the LA was rendered on December
18, 1988 or 3 months before Art. 223 of the LCwas amended
by RA 6715Since the new law contains no provision giving it
retroactive effect, the Court ruled that the amendment may
not be applied to the decision, hence, the reinstatement could
not be executed immediately.
7. IS REINSTATEMENT SELF-EXECUTORY?
- it must be stressed, however, that although the
reinstatement aspect of the decision is immediately executory, it
does not follow that it is self-executory. There must be a writ of
execution which may be issued motu proprio or on motion of
an interested party as stated in Art 224 of the LC. In the
absence of then of an order for the issuance of a writ of
execution on the reinstatement aspect of the decision of the
LA, the er is under no legal obligation to admit back to work
the er under the terms and conditions prevailing prior to her
dismissal or, at the petitioners option, to merely reinstate her
in the payroll (Maranao Hotel vs NLRC, 1994).
- According to the Court, Art 223, as amended, is
clear that an award for reinstatement shall be immediately
executory even pending appeal, and the posting of a bond by
the er shall not stay the execution for reinstatement. To
require the application for and issuance of a writ of execution
as prerequisites of the execution of a reinstatement award
would betray and run counter to the very object and intent of
Art 223, i.e., the immediate execution of a reinstatement
order.
The Court is of the view that Art 223 would be
rendered nugatory if it rules otherwise because there
would be numerous reasons to delay the issuance of a
writ of execution. For instance, a mere postponement of
a scheduled hearing on the part of the Labor Arbiter
could easily delay the issuance of the writ.
The Court concluded that henceforth, an award or
order of reinstatement is self-executory. After receipt of the
decision or resolution ordering the ees reinstatement, the er
has the right to choose whether to re-admit the ee to work
under the same terms and conditions prevailing prior to his
dismissal, or to reinstate the ee in the payroll.
7.1 NLRCs Reinstatement Order Not SelfExecutory
- in the 2007 case Panuncillo case the Court clarifies
that a reinstatement ordered by the LA is self-executory, but
a reinstatement order from the NLRC itself is not selfexecutory.

- Art 223 (3rd par) the decision of the LA


reinstating a dismissed or separated ee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal.
- Art 224a (6th par) The decision of the
Commission shall be final and executory after 10 calendar
days from receipt thereof by the parties.
Execution of decisions, orders or awards (a) the
Secretary of Labor and Employment or any Regional
Director, the Commission or any LA, 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 5
years from the date it becomes final and executory.
8. IF REINSTATEMENT IS NOT PRAYED FOR
- (Labor, et al. vs NLRC), the petitioners did not
pray for reinstatement in the position paper they filed with
the LA. The latter in turn ordered the payment of separation
pay in lieu of reinstatement. That being the case, and as we
have said before, if the ee decides not to be reinstated, the er
shall pay him separation pay in lieu of reinstatement.
- (General Baptist College and General Baptist
Church of the Phils vs NLRC and Gaudencia Basa), In
resolving whether or not the relief or reinstatement may be
granted to Academic Dean Gaudencio notwithstanding his
failure to pray for the same in his complaint, we rule in the
affirmative. We are for the granting of the relief he is entitled
to under the law, although he failed to specifically pray for
the same in his complaint.
- Labor is more recent than Baptist College
9. DAMAGES
- Apart from the reliefs expressly set out in the LC
flowing from illegal dismissal from employment, no other
damages may be awarded to an illegally dismissed ee other
than those specified by the CC. Hence, the fact that the issue
of whether or not moral or other damages were suffered by
an ee and in the affirmative, the amount that should properly
be awarded to him in the circumstances, is determined under
the provisions of the CC and not the LC.
9.1 Moral Damages
- it may be awarded to compensate one for diverse
injuries such as mental anguish, besmirched reputation,
wounded feelings and social humiliation. It is, however, not
enough that such injuries have arisen. It is essential that they
have sprung from a wrongful act or omission of the
defendant which was the proximate cause thereof.
The er is liable for moral damages under the
provision of Article 2220 of the CC providing for damages
for breaches of contract where the er acted fraudulently or
in bad faith.
As a rule, moral damages are recoverable only
where the dismissal or suspension of the ee was attended by
bad faith or fraud, or constituted an act oppressive to labor,
or was done in a manner contrary to morals, good customs
or public policy. Bad faith does not simply mean negligence
or bad judgment. It involves a state of mind dominated by ill
will or motive. It implies a conscious and intentional design
to do a wrongful act for a dishonest purpose or some moral
obliquity. The person claiming moral damages must prove

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the existence of bad faith by clear and convincing evidence


for the law always presumes good faith.
A corporation, being an artificial person, has no
feelings, no emotions, no senses. Therefore, it cannot
experience physical suffering and mental anguish. Hence,
moral damages cannot be awarded to it.
9.2 Exemplary Damages
- Award or moral and exemplary damages in favor
of the ee who was illegally dismissed shall be upheld where
the ee had been harassed by the er.
- it may be awarded only if the dismissal was shown
to have been effected in a wanton, oppressive or malevolent
manner.
10. INDEMNITY TO HOUSEHELPER
- Article 149. Indemnity for unjust termination of services.
If the period of household service is fixed, neither the er
nor the househelper may terminate the contract before the
expiration of the term, except for a just cause. If the
househelper is unjustly dismissed, he or she shall be paid the
compensation already earned plus that for 15 days by way of
indemnity.
If the househelper leaves without a justifiable
reason, he or she shall forfeit any unpaid salary due him or
her not exceeding 15 days.
11. ATTORNEYS FEES
- these are not recoverable where there is no
sufficient showing of bad faith on the part of er; there must
always be a factual basis for its award.
- Art 2208 (2) of the NCC, the award is justified if
the claimant is compelled to litigate w/ 3 rd persons or to
incur expenses to protect his interest by reason of an
unjustified act of the party against whom it is sought.
- Where an ee was included in a criminal complaint
not in his personal but official capacity, and the case arose in
connection w/ his work as such, his er is obligated to defray
the formers legal expenses.
12.
PERSONS
LIABLE
FOR
WRONGFUL
DISMISSAL: GENERAL RULE THE SUNIO
DOCTRINE
- It is basic that a corporation is invested by law
with a personality separate and distinct from those of the
persons composing it as well as from that of any other legal
entity to which it may be related. Mere ownership by a single
stock-holder or by another corporation of all or nearly all of
the capital stock of a corporation is not of itself sufficient
ground for disregarding the separate corporate personality.
Petitioner, Sunio, therefore, should not have been made
personally answerable for the payment of private
respondents back salaries.
- The mere fact that the officer is part of the family
corporation does not mean that all its acts are imputed to
him directly and personally, in the absence of a showing that
he acted w/o or in excess of his authority or was motivated
by personal ill-will against the ee. His acts were official acts,
done in his capacity as VP of the company and on its behalf.
12.1 Government as Stockholder Not Directly
Liable for Corporate Indebtedness

- even if the national government owned or


controlled 81.8% of the common stock and 100% of the
preferred stock of North Davao Mining Corporation, it
remains only a stockholder thereof, and under existing laws
and prevailing jurisprudence, a stockholder as a rule is not
directly, individually and/or personally liable for the
indebtedness of the corporation.
12.2 Exception: Piercing the Corporate Veil:
Officers Become Personally Liable
- Generally, officers of a corporation are not
personally liable for their official acts unless it is shown that
they have exceeded their authority.
- Where the incorporators and directors belong to a
single family, the corporation and its members can be
considered as one in order to avoid its being used as an
instrument to commit injustice, or to further an end
subversive of justice. The shield of corporate fiction should
be pierced when it is deliberately and maliciously designed to
evade financial obligations to ees.
- Section 31 of the Corporation Code Directors
os trustees who willfully and knowingly vote for or assent to
patently unlawful acts of the corporation or who are guilty of
gross negligence or bad faith in directing the affairs of the
corporation shall be liable jointly and severally for all
damages resulting therefrom suffered by the corporation, its
stockholders or members of other persons.
- (A.C. Ransom Labor Union-CCLU vs NLRC)
If the er is an artificial person, it must have an
officer who can be presumed to be the er, being the person
acting in the interest of the er. The corporation is only the
er in the technical sense.
The responsible officer of an er corporation can be
held personally liable, not to say even criminally liable for
nonpayment of backwages. This is the policy of the law. If it
were otherwise, corporate ers would have devious ways to
evade paying backwages.
If no definite proof exists as to who is the
responsible officer, the president of the corporation who can
be deemed to be its chief operation officer shall be presumed
to be the responsible officer. In Rep. Act 602, for example,
criminal responsibility is with the manager or in his default,
the person acting as such.
If the nonpayment of backwages of the strikers has
been a continuing situation, the er-corporation presidents
personal liability at the time the backwages were ordered to
be paid should also be a continuing joint and several personal
liabilities of all who may have thereafter succeeded to the
office of the president; otherwise, the strikers would be
deprived of their rights by the election of a president who
has no leviable assets.
- (Chua vs NLRC)
Can the vice-president be held jointly and severally liable with
the corporation for the unpaid wages of the companys former president?
Personal animosity existed between these two
brothers. With Johnsons manifest interest in the case and his
being the top officer after his brother was eased out, there is
enough reason to believe that Johnson had a hand in the
dismissal of Jesus. The NLRC correctly applied Art 289 of
the LC, which provides: If the offense is committed by a
corporation, trust firm, partnership, association or any other
entity, the penalty shall be imposed upon the guilty officer or

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officers of such corporation, trust, firm, partnership,


association or entity.
It is an established principle that when the veil of
corporate fiction is made as a shield to perpetrate fraud or to
confuse legitimate issues (the relation or ee-ee), the same
should be pierced.
- (Camelcraft Corp vs NLRC)
Facts: Carmen contends that she is not liable for the
acts of the company, assuming it had acted illegally, because
the Camelcraft Corporation is a distinct and separate entity
w/ a legal personality of its own. She claims that she is only
an agent of the company carrying out the decisions of its
board of directors.
Ruling: We do not agree. She is, in fact and legal
effect, the corporation, being not only its president and
general manager but also its owner. Moreover, she is raising
this issue only at this tardy hour, when she should have
invoked this argument earlier, when the case was being heard
before the labor arbiter and later in the NLRC.
12.3 Instances When Corporate Officers
Become Solidarily Liable
- (Uichico, et al vs NLRC, Santos, et al.,)
The GR is that obligations incurred by the
corporation, acting through its directors, officers and ees, are
its sole liabilities. There are times, however, when solidary
liabilities may be incurred but only when exceptional
circumstances warrant such as in the following cases:
1. When directors and trustees or, in appropriate
cases, the officers of a corporations: (a) vote for or assent to
patently unlawful acts of the corporation; (b) act in bad faith
or with gross negligence in directing the corporate affairs ; (c)
are guilty of conflict of interest to the prejudice of the
corporation, its stockholders or members, and other persons;
2. when a director or officer has consented to the
issuance of watered stocks or who, having knowledge
thereof, did not forthwith file with the corporate secretary
his written objection thereto;
3. when a director, trustee or officer has
contractually agreed or stipulated to hold himself personally
and solidarily liable with the corporation; or
4. when a director, trustee or officer is made, by
specific provision of law, personally liable for his corporate
actions.
Corporate directors and officers are solidarily liable
with the corporation for the termination of employment of
corporate ees done with malice or in bad faith. In this case, it
is undisputed that petitioners have a direct hand in the illegal
dismissal of respondent ees. They were the ones, who as
high-ranking officers and directors of Crispa, Inc., signed the
Board Resolution retrenching the private respondents on the
feigned ground of serious business losses that had no basis
apart from an unsigned and unaudited Profit and Loss
Statement w/c, to repeat, had no evidentiary rule whatsoever.
This is indicative of bad faith on the part of petitioners for
w/c they can be held jointly and severally liable w/Crispa,
Inc. for all the money claims of the illegally terminated
respondent ees in this case.
- (Pabalan vs NLRC)
To justify solidary liability, there must be an
allegation or showing that the officers of the corporation
deliberately or maliciously designed to evade the financial

obligation of the corporation to its ees, or a showing that


the officers indiscriminately stopped its business to
perpetrate an illegal act, as a vehicle for the evasion of
existing obligations, in circumvention of statutes, and to
confuse legitimate issues.
- family corporation
12.4 Limited Liability of Indirect Er
- Arts 106 (to the extent of the work performed
under the contract), 107 (to the performance of any work,
task or project) and 109 (to the extend of their civil liability
under this Chapter (on payment of wages)) hold an er jointly
and severally liable with its contractor or subcontractor, as if
it were the direct er. The liability under these articles,
however, does not extend to the payment of backwages and
separation pay of ees who were constructively or illegally
dismissed by the contractor, e.g., a security agency, where it is
not shown that the principal/indirect er had conspired with
the contractor in effecting the illegal dismissal.
- an order to pay backwages and separation pay is
invested with a punitive character
- (Sentinel Security Agency vs NLRC)
The Client did not, as it could not illegally dismiss
the complainants. Thus, it should not be held liable for
separation pay and backwages. But even if the Client is not
responsible for the illegal dismissal of the complainants, it is
jointly and severally liable with the Agency for the
complainants service incentive leave pay.
In the case at bar, the relief and transfer order per
se did not sever the employment relationship between the
complainants and the Agency. Thus, despite the fact that
complainants were no longer assigned to the Client, Art 287
of the LC, as amended by RA 7641, still binds the Agency to
provide them upon their reaching the retirement age of 60
to 65 years retirement pay or whatever else was established
in the CBA or in any other applicable employment contract.
On the other hand, the Client is not liable to the
complainants for their retirement pay because of the absence
of an er-ee relationship between them.
13. QUITCLAIM: PUBLIC POLICY PROTECTS
LABOR
- Generally, once an er resigns and executes a
quitclaim in favor of the er, he is estopped from filing any
further money claim against the er arising from his
employment. However, when the voluntariness of the
execution of the quitclaim or release is put in issue, or when
it is proved that there is an unwritten agreement entitling the
ee to other remuneration or benefits, then such a money
claim of the ee may still be given due course.
The conduct of petitioners toward the ees has been
reprehensible. 1st, the company inveigled them to waive their
claims to compensation due them on the promise that future
benefits would be paid (there is no showing thet they were
indeed paid). 2nd, it refused to recognize the respondent
union, suggesting to the ees that they join another union
acceptable to management. 3rd, it threatened the ees w/ the
closure of the company and then actually did so when the ees
insisted on their demands.
Even if voluntarily executed, agreements are invalid
if they are contrary to public policy. Reason: The subordinate
position of the ee vis--vis management renders him

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especially vulnerable to its blandishments and importunings,


and even intimidations. Recognizing this danger, the SC have
consistently held that quitclaims of the workers benefits will
not stop them from asserting them just the same on the
ground of public policy prohibits such waivers.
- but the preceding ruling does not mean that
quitclaims and waivers are illegal and always disallowed.
13.1 Not All Waivers are Against Public Policy:
Elements of Validity of Waivers and Quitclaim
- (Periquet vs NLRC and the PNCC)
First, she signed a waiver and then she rejected it;
then she signed another waiver w/c she also rejected, again
on the ground that she had been deceived. In her 1 st waiver,
she acknowledged full settlement of the judgment in her
favor, and then in the 2nd waiver, after accepting additional
payment, she again acknowledged full settlement of the same
judgment.
In her petition, she is now disowning both
acknowledgments and claiming that the earlier payments,
both of w/c she had accepted as sufficient, are insufficient.
They were valid before but they were invalid now. She also
claimed she was harassed and cheated by the past
managements of the CDCP and sought the help of the new
management of PNCC. But now she is denouncing the new
management for also tricking her into signing the 2 nd
quitclaim.
Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily entered into
and represents a reasonable settlement, it is binding on the
parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person,
or the terms of settlement are unconscionable on its face,
that the law will step in to annul the questionable transaction.
But where it is shown that the person making the waiver did
so voluntarily, with full understanding of what he was doing,
and the consideration for the quitclaim is credible and
reasonable the transaction must be recognized as a valid and
binding undertaking.
13.1a Dire Necessity does not Nullify
Quitclaim
- it is not an acceptable ground for annulling the
releases, especially since it has not been shown that the ees
had been forced to execute them. It has not even been
proven that the considerations for the quitclaims were
unconscionably low and that the petitioners had been tricked
into accepting them.
- it could not be invalidated if no deception has
been established on the part of the er that would justify the
annulment.
Title VII-A
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
1. CONTRACT ADMINISTRATION AS PART OF
THE DUTY TO BARGAIN
Collective bargaining is not an end in itself. It is a means to
an end, which is the making of collective agreements
stabilizing employment relations for a period of time with
results advantageous both to the worker and the employer.

However narrowly it may canalize its course, the execution of


a contract does not complete collective bargaining. Piece
rates and work assignments frequently require day-to-day
adjustments; periodic decisions must be made concerning
such matters as shop rules, job content, and the letting of
subcontracts. There will be ambiguities in the agreement to
be clarified and gaps be filled. In other words, the duty to
bargain continues into the contract administration stage.
In effect, therefore, contract negotiations are the legislative
process of collective bargaining; the day-to-day working out
of plant problems is its administrative or judicial aspects.
Strengthening the binding force of the CBA, Art. 248
considers as unfair labor practice any act that violates an
existing collective bargaining agreement. But this law must be
related to Art, 261 which limits that kind of ULP to gross
violations only.
2. C.B.A., LAW BETWEEN THE PARTIES
The provisions of the collective bargaining agreement must
be respected since its terms and conditions "constitute the
law between the parties." Those who are entitled to its
benefits can invoke its provisions. In the event that an
obligation therein imposed is not fulfilled, the aggrieved party
has the right to go to court for redress.
Unilaterally formulated rules and policy can neither
contradict nor undermine the CBA provisions.
Since the collective bargaining agreement is considered the
law between the parties, containing as it does the agreed
terms of employment of the employee with his employer,
unilaterally imposed orders or rules qualifying the terms
contained in the agreement are subordinate to the CBA. At
most, such rules, such as the rules on trips abroad formulated
by petitioner [school] a few months before Legaspis
application, are merely suppletory and can neither contradict
nor undermine the terms found in the CBA.
2.1 Construing the Contract
The CBA being a contract, the rules embodied in the Civil
Code on interpretation of contracts should govern. The
intent of the parties should be ascertained by considering
relevant provisions of the said CBA. The intention of the
parties is primordial; if the terms of the contract are clear, the
literal meaning of the stipulations shall control, but if the
words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former.
Any doubts or ambiguity in the contract between
management and the union members should be resolved in
the light of Article 1702 of the Civil Code that: In case of
doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the
laborer. This is also in consonance with the principle
enunciated in the Labor Code that all doubts should be
resolved in favor of the worker.

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But contracts which are not ambiguous are to be interpreted


according to their literal meaning and should not be
interpreted beyond their obvious intendment.
Compliance with a CBA is mandated by the expressed policy
to give protection to labor. In the same vein, CBA provisions
should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context
in which it is negotiated and purpose which it is intended to
serve." This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest. It
goes without saying, however, that only provisions embodied
in the CBA should be so interpreted and complied with.
2.2 Proposal Contained in Minutes but Not in the CBA Itself
A proposal mentioned in the negotiation but not embodied
in the collective bargaining contract itself is not part of the
CBA. It cannot serve as basis of a charge of violating the
CBA or of bargaining in bad faith.
2.3 Zipper Clause
A device to forestall negotiation proposals after the CBA has
been signed is the zipper clause. It is a stipulation in a CBA
indicating that issues that could have been negotiated but not
contained in the CBA cannot be raised for negotiation when
the CBA is already in effect. In short, the CBA is a complete
agreement; negotiation is closed, as a zipper does.
3. LAW DEEMED WRITTEN IN CONTRACT
The principle is thus well-settled that an existing law enters
into and forms part of a valid contract without the need for
the parties expressly making reference to it. Only thus could
its validity insofar as some of its provisions are concerned be
assured.
4. BINDING EFFECT OF AGREEMENT
A collective bargaining agreement entered into by officers of
a union, as agent of the members, and an employer, gives rise
to valid enforceable contractual relations, against the
individual union members in matters that affect them
peculiarly, and against the union in matters that affect the
entire membership or large classes of its members," and "a
union member who is employed under an agreement
between the union and his employer is bound by the
provisions thereof, since it is a joint and several contract of
the members of the union entered into by the union as their
agent."
4.1 Persons Entitled to Benefits
It is true that whatever benefits the majority union obtains
from the employer accrue to its members as well as to nonmembers. For the benefits of a collective bargaining
agreement are extended to all employees regardless of their

membership in the union because to withhold the same from


the non-members would be to discriminate against them.
It is even conceded that a laborer can claim benefits from a
collective bargaining agreement entered into between the
company and the union of which he is a member at the time
of the conclusion of the agreement, even after he has
resigned from said union.
4.2 Managers Not Entitled to CBA Benefits; Exception
Managers, who are not allowed to unionize to bargain
collectively with the employer, cannot claim the benefits
contained in the CBA negotiated by the workers under them.
They cannot obtain indirectly what they cannot do directly.
Accordingly, managerial employees cannot, in the absence of
an agreement to the contrary, be allowed to share in the
concessions obtained by the labor union through collective
negotiation. Otherwise, they would be exposed to the
temptation of colluding with the union during the
negotiations to the detriment of the employer.
However, there is nothing to prevent the employer from
granting benefits to managerial employees equal to or higher
than those afforded to union members. There can be no
conflict of interest where the employer himself voluntarily
agrees to grant such benefits to managerial employees. In the
case at bar, at the beginning of petitioner's employment, he
was told that those who are not covered by the CBA would
nevertheless be entitled to benefits which would be, if not
higher, at least equivalent to those provided in the CBA. That
private respondents made such a promise to petitioner is not
denied by them.
4.3 Effect of Collective Agreement on the Individual Contracts of
Employment
When a collective agreement is concluded between a labor
union and an employer, the members of the labor union are
precluded from entering into individual contracts of
employment. But if the agreement merely fixes wages and
working conditions, the employer may enter into particular
contracts of employment with his employees even though
both are bound by the general contract as to wages and
working conditions.
5. ENFORCEABILITY AGAINST TRANSFEREE OF
ENTERPRISE
5.1 Purchase of Assets
The rule is that unless expressly assumed, labor contracts
such as employment contracts and collective bargaining
agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding
only between the parties. A labor contract merely creates an
action in personally and does not create any real right which
should be respected by third parties. This conclusion draws
its force from the right of an employer to select his
employees and to decide when to engage them as protected

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under our Constitution, and the same can only be restricted


by law through the exercise of the police power.
As a general rule, 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.
5.2 Exceptions
Although the purchaser of the assets or enterprise is not
legally bound to absorb in its employ the employers 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.
5.3 Merger and Consolidation
Merger takes place when two or more corporations join into
a single corporation which is one of the merging
corporations; the separate existence of the other constituent
corporations ceases. Consolidation occurs when two or more
corporations join into a new single corporation; the separate
existence of all the constituent corporations ceases, except
that of the consolidated corporation.
Section 80. Effects of merger or consolidation. - The
merger or consolidation shall have the following effects:
xxx
5. The surviving or consolidated corporation shall be
responsible and liable for all the liabilities and obligations
of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation
had itself incurred such liabilities or obligations; and any
pending claim, action or proceeding brought by or against
any of such constituent corporations may be prosecuted
by or against the surviving or consolidated corporation.
The rights of creditors or liens upon the property of any
of such constituent corporations shall not be impaired by
such merger or consolidation. (n)

5.4 Wiley Doctrine


The disappearance by merger of a corporate employer which
has entered into a collective bargaining agreement with a
union does not automatically terminate all rights of the
employees covered by the agreement, even though the
merger is for genuine business reasons. Under the Wiley
doctrine, a duty to arbitrate arising from a collective
bargaining agreement survives the employers ceasing to do
business as a separate entity after its merger with a
substantially large corporation, so as to be binding on the
larger corporation, where relevant similarity and continuity of
operations across the change in ownership is evidenced by
the wholesale transfer of the smaller corporations employees
to the larger corporations plant. If a contractual duty to
arbitrate survives the employers merger into another
corporate employer, question as to the effect of the merger
on the rights of the employees covered by the agreement
the former employees of the merged employerare
arbitrable if questions as to those rights would have been
arbitrable before the merger.

But a duty to arbitrate arising from collective bargaining


agreement does not survive in every case in which the
ownership or corporate structure of an enterprise is changed.
It does not survive where there is lack of any substantial
continuity of identity in the business enterprise before and
after a change, or where the union abandons its right to
arbitration by failing to make its claims known.
6.
CHANGE
OF
BARGAINING
SUBSTITUTIONARY DOCTRINE

AGENT;

How does disaffiliation affect the CBA?


The agreement is binding on the parties for the period
therein specified. The employees cannot revoke the validly
executed collective bargaining contract with their employer
by the simple expedient of changing their bargaining
representative. Thus, when there occurs a shift in employees'
union allegiance after the execution of a bargaining contract
with their employer, and the employees change their
bargaining representative, the contract continues to bind
them up to its expiration date. The new agent, however, may
bargain for the shortening of the contract period.
In formulating the "substitutionary" doctrine, the only
consideration involved was the employees' interest in the
existing bargaining agreement. The agent's interest never
entered the picture. In fact, the justification 9 for said
doctrine was:
xxx that the majority of the employees, as an entity under the
statute, is the true party in interest to the contract, holding
rights through the agency of the union representative. Thus,
any exclusive interest claimed by the agent is defeasible at the
will of the principal.... (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only provides
that the employees cannot revoke the validly executed
collective bargaining contract with their employer by the
simple expedient of changing their bargaining agent. And it is
in the light of this that the phrase "said new agent would
have to respect said contract" must be understood. It only
means that the employees, thru their new bargaining agent,
cannot renege on their collective bargaining contract, except
of course to negotiate with management for the shortening
thereof.
The "substitutionary" doctrine, therefore, cannot be invoked
to support the contention that a newly certified collective
bargaining agent automatically assumes all the personal
undertakings like the no-strike stipulation here in the
collective bargaining agreement made by the deposed union.
When BBWU bound itself and its officers not to strike, it
could not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the
agent of the employees, not of the other unions which
possess distinct personalities. To consider UNION
contractually bound to the no-strike stipulation would
therefore violate the legal maxim that res inter alios nec prodest
nec nocet.

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7. GRIEVANCES
A grievance is defined as any question by either the
employer or the union regarding the interpretation or
application of the collective bargaining agreement or
company personnel policies or any claim by either party that
the other party is violating any provision of the CBA or
company personnel policies.
If the term grievance is to be applied in the loose or generic
sense, any dispute or controversy respecting terms and
conditions of employment which an employee or group of
employees may present to the employer can be a grievance,
even without a union or CBA.
The expansion of the original and exclusive jurisdiction of
voluntary arbitrators to include questions arising from the
interpretation and enforcement of company personnel policies has the
effect of widening the meaning and interpretation of a
grievance to include a situation where there is no collective
bargaining agent and no CBA.
Personnel policies are guiding principles stated in broad,
long-range terms that express the philosophy or beliefs of an
organizations top authority regarding personnel matters.
They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedures in
administration of wages, benefits, promotions, transfer and
other personnel movements which are usually not spelled out
in the collective agreement. The usual source of grievances,
however, is the rules and regulations governing disciplinary
actions.
7.1 By-passing the Grievance Machinery: ULP
All grievances arising from the implementation or
interpretation of the collective bargaining agreement and/or
interpretation and enforcement of company personnel
policies are compulsorily subject to the grievance of
machinery.
Upholding the requirement, the Court has ruled that the
grievance procedure provided in the CBA should be adhered
to by the parties. Refusal or failure to do so is an unfair labor
practice, because the grievance procedure is part of the
continuous process of collective bargaining. It is intended to
promote friendly dialogue between labor and management as
a means of maintaining industrial peace.
Before an aggrieved employee may resort to the courts to
enforce his individual rights under a bargaining contract, the
employee must exhaust all the remedies available to him
under such contract. And a court should not entertain any
complaint by an aggrieved employee until proper use has
been made of the contract grievance procedure agreed upon
by employer and the bargaining representative.
The grievance machinery under the agreement is the very
heart of industrial self0government.

May a grievance be brought to voluntary arbitration without


passing through the grievance procedure under the CBA?
This appears to be proscribed by the Labor Code which
directs the parties to a CBA to establish a grievance
machinery for the adjustment and resolution of grievances
arising from the interpretation or enforcement of company
personnel policies.
In view, however, of the State policy to encourage voluntary
arbitration of all other labor-management disputes, it is
submitted that a grievance may be brought directly to
voluntary arbitration without passing through the grievance
machinery, especially when the latter has been proven to be
ineffective in the past, or when the parties inadvertently
failed to include a grievance machinery provision in their
CBA.
7.2 Waiver of Grievance Machinery Procedure and Submission to VA
Article 262 of the Labor Code provides that upon agreement
of the parties, the voluntary arbitrator can hear and decide all
other labor disputes.
Contrary to the finding of the Court of Appeals, voluntary
arbitration as a mode of settling the dispute was not forced
upon respondents. Both parties indeed agreed to submit the
issue of validity of the dismissal of petitioner to the
jurisdiction of the voluntary arbitrator by the Submission
Agreement duly signed by their respective counsels. As the
voluntary arbitrator had jurisdiction over the parties'
controversy, discussion of the second issue is no longer
necessary.
The employees waiver of her option to submit her case to
grievance machinery did not amount to relinquishing her
right to avail herself of voluntary arbitration.
7.3 Structure and Procedure
In the absence of applicable provision in the collective
bargaining agreement, a grievance committee shall be created
within ten (10) days from signing of the collective bargaining
agreement. The committee shall be composed of at least two
(2) representatives each from the members of the bargaining
unit and the employer, unless otherwise agreed upon by the
parties. The representatives from among the members of the
bargaining unit shall be designated by the union.
Section 2. Procedure in handling grievances. - In the absence of a
specific provision in the collective bargaining agreement or
existing company practice prescribing for the procedures in
handling grievance, the following shall apply:
(a) An employee shall present this grievance or complaint
orally or in writing to the shop steward. Upon receipt
thereof, the shop steward shall verify the facts and determine
whether or not the grievance is valid.

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(b) If the grievance is valid, the shop steward shall


immediately bring the complaint to the employee's immediate
supervisor. The shop steward, the employee and his
immediate supervisor shall exert efforts to settle the
grievance at their level.
(c) If no settlement is reached, the grievance shall be referred
to the grievance committee which shall have ten (10) days to
decide the case.
Where the issue involves or arises from the interpretation or
implementation of a provision in the collective bargaining
agreement, or from any order, memorandum, circular or
assignment issued by the appropriate authority in the
establishment, and such issue cannot be resolved at the level
of the shop steward or the supervisor, the same may be
referred immediately to the grievance committee.
8. VOLUNTARY ARBITRATION
Section 3. Submission to voluntary arbitration. - Where grievance
remains unresolved, either party may serve notice upon the
other of its decision to submit the issue to voluntary
arbitration. The notice shall state the issue or issues to be
arbitrated, copy thereof furnished the board or the voluntary
arbitrator or panel of voluntary arbitrators named or
designated in the collective bargaining agreement. If the party
upon whom the notice is served fails or refuses to respond
favorably within seven (7) days from receipt thereof, the
voluntary arbitrator or panel of voluntary arbitrators
designated in the collective bargaining agreement shall
commence voluntary arbitration proceedings. Where the
collective bargaining agreement does not so designate, the
board shall call the parties and appoint a voluntary arbitrator
or panel of voluntary arbitrators, who shall thereafter
commence arbitration proceedings in accordance with the
proceeding paragraph.

Voluntary arbitration has been defined as a contractual


proceeding whereby the parties to any dispute or
controversy, in order to obtain a speedy and inexpensive final
disposition of the matter involved, select a judge of their own
choice and by consent submit their controversy to him for
determination. 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.
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. 1 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.
In Philippine context, the judge in voluntary arbitration is
called arbitrator, while that in compulsory is labor arbiter.
The jurisdiction of a VA is stated in Articles 261 and 262
while that of an LA is in Article 217.
8.1 Voluntary Arbitration: A Private Judicial System

In instances where parties fail to select a voluntary arbitrator


or panel of voluntary arbitrators, the regional branch of the
Board shall designate the voluntary arbitrator or panel of
voluntary arbitrators, as may be necessary, which shall have
the same force and effect as if the parties have selected the
arbitrator.

A voluntary arbitrator is not a public tribunal imposed upon


the parties by a superior authority which the parties are
obliged to accept. He has no general character to administer
justice for a community which transcends the parties. He is
rather part of a system of self-government created by and
confined to the parties.

The parties to a CBA will decide on the number of


arbitrators who may hear a dispute only when the need for it
arises. Even the law itself does not specify the number of
arbitrators. Their alternatives whether to have one or
three arbitrators have their respective advantages and
disadvantages. In this matter, cost is not the only
consideration; full deliberation on the issues is another, and it
is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to
decide for themselves the composition of the grievance
machinery as they find appropriate to a particular situation.

The primary function of voluntary labor arbitration is to


provide (1) a process for the orderly disposition of disputes
and (2) a foundation for stable labor-management relations.

Labor arbitration is the reference of a labor dispute to a third


party for determination on the basis of evidence and
arguments presented by such parties, who are bound to
accept the decision.

8.2 Voluntary Arbitration: A Master Procedure


In labor-management relations voluntary arbitration is a
master procedure. Any and all kinds of labor disputes may be
submitted to, settled, or resolved through voluntary
arbitration, if the parties so desire. Money claims, bargaining
deadlocks, strike or lockout, employment termination, and
even questions about existence or absence of employeremployee relationship, may be resolved by the partieswith
finalityby availing themselves of voluntary arbitration.

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As a master procedure voluntary arbitration takes precedence


over other dispute settlement devices (i.e., cases before the
labor arbiter or Secretary of Labor or the NLRC)

industrial disputes by persons who have specialized


knowledge of labor management relations.
________

A dispute pending in voluntary arbitration (or compulsory


arbitration, for that matter) cannot be the subject of a strike
or lockout notice.

Article. 261. Jurisdiction of Voluntary Arbitrators or panel of


Voluntary Arbitrators. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have original and exclusive jurisdiction
to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or
enforcement of company personnel policies referred to in the
immediately preceding article. Accordingly, violations of a Collective
Bargaining Agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement.
For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and/or malicious refusal
to comply with the economic provisions of such agreement.

9. WHO MAY BE ACCREDITED AS VOLUNTARY


ARBITRATOR
The following are the minimum criteria for accreditation as
voluntary arbitrator:
(1) A Filipino citizen residing in the Philippines;
(2) A holder of at least a Bachelors Degree in any field of
behavioral or applied sciences or equivalent educational
training short of a Bachelors Degree;
(3) At least five (5) years experience in the field of LaborManagement relations;
(4) Completion of a training course on voluntary arbitration
conducted by the Board; and
(5) A person of good moral character, noted for
impartiality, probity, and has not been civilly, criminally
and administratively adjudged guilty of any offense
involving moral turpitude as evidenced by a duly sworn
affidavit.
10. HOW VOLUNTARY ARBITRATOR IS CHOSEN
A voluntary arbitrator is chosen by the parties themselves
(preferably accredited by the NCMB). The choice is usually
influenced by the trust in the persons fairness and
knowledge of the dynamics, including law, of labormanagement relation.
The preferred method of selection is by mutual agreement of
the parties. Alternative methods include the selection or
appointment by an administrative agency like the NCMB.
Parties in general may choose between the use of a
temporary (when a dispute is already at hand; specific) or
permanent arbitrator (before a dispute arises; for a period of
time, usually during the life of the CBA). They have also a
choice as to the number of arbitrators, either a sole arbitrator
or a panel of arbitrators or Arbitration Board.
11. DISTINGUISHED FROM A COURT OF LAW
Court of Law
Formal
Follow precedents
Rules of evidence observed
Decisions may be appealed
to the higher court
Hear a great variety of cases
Services of a lawyer is
essential due to complexity

Arbitration
Informal
Not obliged
Not observed
No comparable appeal
recourse
Hear only industrial disputes
Not essential

Arbitration, in sum, is a non-technical and relatively


inexpensive procedure for obtaining a quick solution to

The Commission, its Regional Offices and the Regional Directors


of the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.

________

Article. 262. Jurisdiction over other labor disputes. - 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.

________

1. ARBITRABLE DISPUTES
In the field of labor relations, arbitration applies to two kinds
of disputes: (1) contract-negotiation disputes; and (2)
contract-interpretation disputes. Contract negotiation disputes
are disputes as to the terms of a collective bargaining
agreement. Where there is an existing agreement to arbitrate
such disputes, and a bargaining deadlock or impasse has
arisen, the disputants submit to an impartial outsider for
settlement the collective bargaining issue which they had
been unable to settle by themselves, whether or not aided by
conciliators. Contract interpretation disputes are disputes arising
under an existing collective bargaining agreement, involving
such matters as the interpretation and application of the
contract, or alleged violation of its provisions.
Arbitration of contract negotiation disputes is often known
as arbitration of interest, while arbitration of contract
interpretation disputes is known as arbitration of grievance
or rights.
2. JURISDICTION OF L.A. AND V.A.
The aforecited provisions of law cannot be read in isolation
or separately. They must be read as a whole and each Article
of the Code reconciled one with the other. An analysis of the
provisions of Articles 217, 261, and 262 indicates, that:
1. The jurisdiction of the Labor Arbiter and Voluntary
Arbitrator or Panel of Voluntary Arbitrators over the cases

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enumerated in Articles 217, 261 and 262, can possibly include


money claims in one form or another.
2. The cases where the Labor Arbiters have original and
exclusive jurisdiction are enumerated in Article 217, and that
of the Voluntary Arbitrator or Panel of Voluntary Arbitrators
in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is
qualified by an exception as indicated in the introductory
sentence of Article 217 (a), to wit:
Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as
otherwise provided under this Code the Labor Arbiter
shall have original and exclusive jurisdiction to hear and
decide . . . the following cases involving all workers. . . .
The phrase "Except as otherwise provided under this
Code" refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx
(c) Cases arising from the interpretation or
implementation of collective bargaining agreement and
those arising from the interpretation or enforcement of
company procedure/policies shall be disposed of by the
Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitrator as may be provided in
said agreement.
B. Art. 262. Jurisdiction over other labor disputes. 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.

4. The jurisdiction of Voluntary Arbitrator or Panel of


Voluntary Arbitrators is provided for in Arts. 261 and 262 of
the Labor Code as indicated above.
A. A close reading of Article 261 indicates that the
original and exclusive jurisdiction of Voluntary Arbitrator
or Panel of Voluntary Arbitrators is limited only to:
. . . unresolved grievances arising from the interpretation
or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or
enforcement of company personnel policies . . .
Accordingly, violations of a collective bargaining
agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and
shall be resolved as grievances under the Collective
Bargaining Agreement. . . . .
B. Voluntary Arbitrators or Panel of Voluntary
Arbitrators, however, can exercise jurisdiction over any
and all disputes between an employer and a union and/or
individual worker as provided for in Article 262.

It must be emphasized that the jurisdiction of the Voluntary


Arbitrator or Panel of Voluntary Arbitrators under Article
262 must be voluntarily conferred upon by both labor and
management. The labor disputes referred to in the same

Article 262 can include all those disputes mentioned in


Article 217 over which the Labor Arbiter has original and
exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of
Articles 217, 261, and 262 of the Labor Code, the National
Labor Relations Commission correctly ruled that the Labor
Arbiter had no jurisdiction to hear and decide petitioner's
money-claim-underpayment of retirement benefits, as the
controversy between the parties involved an issue "arising
from the interpretation or implementation" of a provision of
the collective bargaining agreement. The Voluntary
Arbitrator or Panel of Voluntary Arbitrators has original and
exclusive jurisdiction over the controversy under Article 261
of the Labor Code, and not the Labor Arbiter.
2.1 Jurisdiction over Termination Disputes
The preference or bias of the law in favor of voluntary
arbitration justifies the view that employment termination
disputes, arising from CBA or personnel policy
implementation, are cognizable by a voluntary arbitrator and
not a labor arbiter. Such termination cases, if filed with a
labor arbiter, is to be dismissed for lack of jurisdiction and
referred to the concerned NCMB Regional Branch for
appropriate action.
Article 260 of the Labor Code on grievance machinery and
voluntary arbitrator states that "(t)he parties to a Collective
Bargaining Agreement shall include therein provisions that
will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the
adjustment and resolution of grievances arising from the
interpretation or implementation of their Collective
Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel
policies." It is further provided in said article that the parties
to a CBA shall name or designate their respective
representatives to the grievance machinery and if the
grievance is not settled in that level, it shall automatically be
referred to voluntary arbitrators (or panel of voluntary
arbitrators) designated in advance by the parties. It need not
be mentioned that the parties to a CBA are the union and the
company. Hence, only disputes involving the union and the
company shall be referred to the grievance machinery or
voluntary arbitrators.
Article 261 of the Labor Code which grants to voluntary
arbitrators original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the
interpretation or implementation of the collective bargaining
agreement and those arising from the interpretation or
enforcement of company personnel policies. Note the phrase
"unresolved grievances." In the case at bar, the termination
of petitioner is not an unresolved grievance.
Article 260 further provides that the parties to a CBA shall
name or designate their respective representative to the
grievance machinery and if the grievance is unsettled in that
level, it shall automatically be referred to the voluntary
arbitrators designated in advance by the parties to a CBA of

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the union and the company. It can thus be deduced that only
disputes involving the union and the company shall be
referred to the grievance machinery or voluntary arbitrators.
2.1a Policies, Rules, Procedures
Policies are formulated by management even before a
company opens for business in order to guide the men in the
operational level, the line manager or supervisor as to the
scope of their activities, authority and responsibility, and to
enable them to arrive at sound decisions. Policies are valuable
in fixing definite objectives for the organization. Policy
statements are also needed to allow subordinate executives to
make fair and consistent decisions on recurrent problems.
They promote uniformity of action and prevent conflicting
decisions especially as regards labor matter.
Company policies must be issued by top management which
is responsible for making major policies that are by nature
company-wide in application.
Minor policies, better known as rules and procedures, are the
extension of major policies and are usually formulated by
minor executives or department managers. Rules are specific
guides intended to govern conduct and action of operating
supervisors and employees in the performance of their
designated activities. Procedures are made to specify ways or
methods of carrying out policies and rules. A procedure tells
what work or task to do, how to do it, and when to do it.
2.2 Jurisdiction over CBA Violations
CBA violations not constituting ULP are likewise cognizable
by a voluntary arbitrator if not resolved through the
grievance machinery. If the violations, however, are gross
in character, these are to be treated as unfair labor practice
which, following Art. 217 (a-1), are to be heard and decided
by a labor arbiter.
The law wants the industrial players to resolve their
differences by and among themselves as much as possible.
And if they need help, they are likewise free to agree where
that help may come from.
For a ULP case to be cognizable by the Labor Arbiter, and
the NLRC to exercise its appellate jurisdiction, the allegations
in the complaint should show prima facie the concurrence of
two things, namely: (1) gross violation of the CBA; AND (2)
the violation pertains to the economic provisions of the
CBA.
Unsubstantiated conclusions of bad faith and unjustified
refusal to re-employ petitioners, to our mind, do not
constitute gross violation of the CBA for purposes of lodging
jurisdiction with the Labor Arbiter and the NLRC. Although
evidentiary matters are not required (and even discouraged)
to be alleged in complaint, still, sufficient details supporting
the conclusion of bad faith and unjust refusal to re-employ
petitioners must be indicated. Furthermore, it is even
doubtful if the CBA provision on re-employment fits into the
accepted notion of an economic provision of the CBA.

2.3 Other Cases


Section 4. Jurisdiction of voluntary arbitrator or panel of
voluntary arbitrators. - The voluntary arbitrator or panel of
voluntary arbitrators shall have exclusive and original
jurisdiction to hear and decide all grievances arising from the
implementation or interpretation of the collective bargaining
agreements and those arising from the interpretation or
enforcement of company personnel policies which remain
unresolved after exhaustion of the grievance procedure.
They shall also have exclusive and original jurisdiction, to
hear and decide wage distortion issues arising from the
application of any wage orders in organized establishments,
as well as unresolved grievances arising from the
interpretation and implementation of the productivity
incentive programs under RA 6971.
Upon agreement of the parties, any other labor dispute may
be submitted to a voluntary arbitrator or panel of voluntary
arbitrators. Before or at any stage of the compulsory
arbitration process, the parties may opt to submit their
dispute to voluntary arbitration.
The National Labor Relations Commission, its regional
branches and Regional Directors of the Department of
Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original
jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same
to the appropriate grievance machinery or voluntary
arbitration provided in the collective bargaining agreement.
2.4 Dispute over Companys Drug Abuse Policy
A unions petition to enjoin implementation of the
companys drug policy is a labor dispute beyond RTCs
jurisdiction. It is a personnel policy dispute within the
jurisdiction of a VA.
3.
HOW
VOLUNTARY
INITIATED

ARBITRATION

IS

Voluntary arbitration may be initiated either by 1) a


Submission or 2) by a Demand or Notice invoking a
collective agreement arbitration clause. Sometimes both
instruments are used in a case.
Submission is sometimes called a Stipulation or an
Agreement to Arbitrate. It is used where there is no
previous agreement to arbitrate. The Submission, which must
be signed by both parties, describes an existing dispute; it
often names the arbitrator, procedures in the hearing and it
sometimes contains considerable details of the arbitrators
authority and other matters which the parties wish to control.
Submission is more appropriate in interest disputes since
collective agreement generally do not provide for the
arbitration of such disputes that may arise in the future.
Submission is often entered into after the dispute has
materialized and the issues can already be defined.

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However, Demand or Notice of Intent to Arbitrate is more


applicable to rights dispute because collective agreements are
required under RA 6715 to provide for a grievance procedure
and a voluntary arbitration clause with respect to disputes
arising from the application or interpretation of the
agreement. Thus, there is an agreement to arbitrate future
dispute that may arise under and during the term of the CBA.
If a dispute is covered by such an arbitration clause,
arbitration may be initiated unilaterally by one party by
serving upon the other a written demand or notice of intent
to arbitrate.

4.1 Power to Arbitrate Any Dispute

3.1 The Submission Agreement; Extent of Arbitrators Authority

4.2 No Power to Add To or Subtract From the Contract

Although the contract may establish the breadth of the


arbitrators power and the limits of his authority, his power
may be more sharply defined in the submission agreement.
Frequently, the parties jointly formulate in writing the
specific issues to be decided by the arbitrator. Sometimes the
arbitrator is asked by the parties to help them frame the issue
on the basis of the written grievance or the case as presented.

Some arbitration clauses limit the arbitrators power to an


interpretation and application of the contract and further
specifically provide that he shall have no power to add to or
subtract from the contract.

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 will assume that
he has the power to make a final settlement.
It is thus essential to stress that the Voluntary Arbitrator had
plenary jurisdiction and authority to interpret the agreement
to arbitrate and to determine the scope of hs own authority
subject only, in a proper case, to the certiorari jurisdiction of
this Court.
Generally, the arbitrator is expected to decide only those
questions expressly delineated by the submission agreement.
Nevertheless, the arbitrator can assume that he has the
necessary power to make a final settlement since arbitration
is the final resort for adjudication of disputes.
The issue of regularization should be viewed as two-tiered
issue. While the submission agreement mentioned only the
determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of
authority as well as adequate prerogative to accomplish the
reason for which the law on voluntary arbitration was created
speedy labor justice. It bears stressing that the underlying
reason why this case arose is to settle, once and for all, the
ultimate question of whether respondent employees are
entitled to higher benefits. To require them to file another
action for payment of such benefits would certainly
undermine labor proceedings and contravene the
constitutional mandate providing full protection to labor.
4. POWERS OF THE ARBITRATOR
The study of collective bargaining agreements discloses
different types of arbitration clauses with varying degrees of
power granted to the arbitration. This power may be very
limited or unusually broad in scope.

The contract clause that gives the arbitrator the broadest


scope of power is commonly known as the disputes clause.
This type of clause grants the arbitrator jurisdiction to hear
and determine practically any matter in dispute between the
parties. Moreover, he is not necessarily limited to matters
specifically stated in the contract. It is common, however, for
some relationship to be shown between the matter in dispute
and the provisions of the contract.

Such clauses clearly state the parties intention that the


arbitrator will be empowered only to interpret the contract
but not add to or modify it.
As a general rule, the authority of an arbitrator embraces or
covers the following:
(1) General authority to investigate and hear the case upon
notice of the parties and to render an award based on
the contract and record of the case;
(2) Incidental authority to perform all acts necessary to an
adequate discharge of his duties and responsibilities like
setting and conduct of hearing, attendance of witnesses
and proof documents and other evidences, fact-finding
and other modes of discovery, reopening of hearing,
etc.;
(3) Special power in aid of his general contractual authority
like the authority to determine arbitrability of any
particular dispute and to modify any provision of
existing agreement upon which a proposed change is
submitted for arbitration.
(4) Authority to issue writ of execution
5. FUNCTIONS OF ARBITRATOR
The labor arbitrator under a collective bargaining agreement
is an indispensable agency in the continuous collective
bargaining process. He sits to settle disputes at the plant
leveldisputes which require for their solution knowledge of
the custom and practices of a particular factory or of a
particular industry as reflected in particular agreements.
On the other hand, the power and authority of arbitrators in
labor dispute cases is derived from and limited by the terms
of the parties agreement. The arbitrator is confined to
interpretation and application of the CBA; he does not sit to
dispense his own brand of industrial justice. The arbitrators
authority is contractual rather than judicial in nature; his
power is conferred by the CBA; and his duty with respect to
that agreement is to settle disputes arising thereunder by
applying and interpreting that agreement.

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But so long as an arbitrator is not arbitrary, he has wide


latitude in exercising his authority, especially in fashioning an
appropriate remedy.
5.1 Arbitrators Interpretation of CBA
It is said that an arbitral award does not draw its essence
from the CBA; hence, there is an unauthorized amendment
or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose
of the agreement;
3. It is without factual support in view of its language,
its context, and any other indicia of the parties'
intention;
4. It ignores or abandons the plain language of the
contract;
5. It is mistakenly based on a crucial assumption
which concededly is a nonfact;
6. It is unlawful, arbitrary or capricious; and
7. It is contrary to public policy.
________
Article. 262-A. Procedures. - The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have the power to hold hearings, receive
evidences and take whatever action is necessary to resolve the issue
or issues subject of the dispute, including efforts to effect a
voluntary settlement between parties.
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of
any witness from the proceedings shall be determined by the
Voluntary Arbitrator or panel of Voluntary Arbitrators. Hearing
may be adjourned for cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an
award or decision within twenty (20) calendar days from the date of
submission of the dispute to voluntary arbitration.
The award or decision of the Voluntary Arbitrator or panel of
Voluntary Arbitrators shall contain the facts and the law on which it
is based. It shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or
panel of Voluntary Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the absence or incapacity of
the Voluntary Arbitrator or panel of Voluntary Arbitrators, for any
reason, may issue a writ of execution requiring either the sheriff of
the Commission or regular courts or any public official whom the
parties may designate in the submission agreement to execute the
final decision, order or award.
________

1. COMPLIANCE WITH DUTY TO ARBITRATE


If a CBA requires settlement of disputes exclusively by the
arbitration, then arbitration is needed before court suits for
breach of the contract may be filed.
Nonetheless, the parties to a CBA may waive the arbitration
covenants of the agreement, but their conduct must clearly
show that intention.

2. WHO DETERMINES
PROCEDURES

THE

ARBITRATION

In practice, voluntary arbitration of labor cases use


procedures based on the Labor Code as amended by RA
6715 and its Implementing Rules, the CBA, and other
agreements of the parties, the directives of the arbitrator, and
the procedural rules of appropriate agencies like the NCMB
Procedural Guidelines in Conduct of Voluntary Arbitration
Proceedings.
3. ETHICAL STANDARDS OF ARBITRATORS
An arbitrator is obliged to maintain a high level of
professional ethics in his relationship with the parties and the
appointing agencies. He also has a responsibility to society.
His conduct should be above reproach. Since in effect, he is
a judge, and his ethics must be on the same high level as the
code that governs the conduct of judicial tribunals.
Failure on the part of the voluntary arbitrator to render a
decision, resolution, order or award within the prescribed
period, shall upon complaint of a party, be sufficient ground
for the Board to discipline said voluntary arbitrator, pursuant
to the guidelines issued by the Secretary. In cases that the
recommended sanction is de-listing, it shall be unlawful for
the voluntary arbitrator to refuse or fail to turn over to the
board, for its further disposition, the records of the case
within ten (10) calendar days from demand thereof.
4.
VOLUNTARY
ARBITRATION
GENERALLY FINAL; EXCEPTIONS

AWARD

The decisions of voluntary arbitrators must be given the


highest respect and as a general rule must be accorded a
certain measure of finality. This is especially true where the
arbitrator chosen by the parties enjoys the first rate
credentials. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions.
Inspite of statutory provisions making 'final' the decisions of
certain administrative agencies, we have taken cognizance of
petitions questioning these decisions where want of
jurisdiction, grave abuse of discretion, violation of due
process, denial of substantial justice, or erroneous
interpretation of the law were brought to our attention.
A voluntary arbitrator by the nature of her fucntions acts in
quasi-judicial capacity. There is no reason why herdecisions
involving interpretation of law should be beyond this Court's
review. Administrative officials are presumed to act in
accordance with law and yet we do 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 official
acts is properly raised in petitions for certiorari.
The Labor Code and its Implementing Rules thus clearly
reflect the important public policy of encouraging recourse to
voluntary arbitration and of shortening the arbitration
process by rendering the arbitral award non- appealable to

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the NLRC. The result is that a voluntary arbitral award may


be modified and set aside only upon the same grounds on
which a decision of the NLRC itself may be modified or set
aside, by the Supreme Court.
4.1 Motion for Reconsideration*
Section 7. Finality of Award/Decision. - The decision, order,
resolution or award of the voluntary arbitrator or panel of
voluntary arbitrators shall be final and executory after ten
(10) calendar days from receipt of the copy of the award or
decision by the parties and it shall not be subject of a motion
for reconsideration.

fixing of fee of Voluntary Arbitrators, whether shouldered wholly


by the parties or subsidized by the Special Voluntary Arbitration
Fund, shall take into account the following factors:
(a) Nature of the case;
(b) Time consumed in hearing the case;
(c) Professional standing of the Voluntary Arbitrator;
(d) Capacity to pay of the parties; and
(e) Fees provided for in the Revised Rules of Court.

4.2 Review of Award by Certiorari


The voluntary arbitrator no less performs a state function
pursuant to a governmental power delegated to him under
the provisions therefor in the Labor Code and he falls,
therefore, within the contemplation of the term
"instrumentality" in the aforequoted Sec. 9 of B.P. 129. The
fact that his functions and powers are provided for in the
Labor Code does not place him within the exceptions to said
Sec. 9 since he is a quasi-judicial instrumentality as
contemplated therein.
A fortiori, the decision or award of the voluntary arbitrator
or panel of arbitrators should likewise be appealable to the
Court of Appeals, in line with the procedure outlined in
Revised Administrative Circular No. 1-95, just like those of
the quasi-judicial agencies, boards and commissions
enumerated therein.
In effect, this equates the award or decision of the voluntary
arbitrator with that of the regional trial court. Consequently,
in a petition for certiorari from that award or decision, the
Court of Appeals must be deemed to have concurrent
jurisdiction with the Supreme Court. As a matter of policy,
this Court shall henceforth remand to the Court of Appeals
petitions of this nature for proper disposition.
4.2a From VA to CA: Mode of Appeal is Rule 43, not 65
The mode of appeal from VA to the CA is therefore Rule 43
of the 1997 Rules of Procedure. It is not Rule 65 because a
petition for certiorari under that Rule lies only where there is
no appeal and no plain, speedy and adequate remedy in the
ordinary course of law. Certiorari under Rule 65 cannot be
allowed when a party to a case fails to appeal a judgment
despite the availability of that remedy, certiorari not being a
substitute for lost appeal. The remedies of appeal and
certiorari are mutually exclusive and not alternative or
successive.
4.3 Findings of Facts of a Voluntary Arbitrator
________
Article. 262-B. Cost of voluntary arbitration and Voluntary
Arbitrators fee. - The parties to a Collective Bargaining Agreement
shall provide therein a proportionate sharing scheme on the cost of
voluntary arbitration including the Voluntary Arbitrators fee. The

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