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LABOR LAW REVIEW

I. GENERAL PRINCIPLES
CONSTITUTION
Art. XIII, 3.The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of employme
nt opportunities for all.
It shall guarantee the rights of all workers to self-organizations, and
peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, an
d a living wage. They shall also participate in policy and decision-making proce
sses affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between w
orkers and employers and the preferential use of voluntary modes in settling dis
putes, including conciliation, and shall enforce their mutual compliance therewi
th to foster industrial peace.
The State shall regulate the relations between workers and employers, re
cognizing the right of labor to its just share in the fruits of production and t
he right of enterprises to reasonable returns on investments, and to expansion a
nd growth.
Art. II, 18.The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
Art. III, 8. The right of the people, including those employed in the public and
private sectors, to form unions, associations, or societies for purposes not co
ntrary to law shall not be abridged.

LABOR CODE
Art. 1. Name of Decree. This Decree shall be known as the Labor Code of the Phil
ippines.
Art. 2. Date of effectivity. This Code shall take effect six (6) months after i
ts promulgation. (P.D. 442 was made effective on November 1, 1974)
Art. 3. Declaration of basic policy.
The State shall:
- afford protection to labor,
- promote full employment,
- ensure equal work opportunities regardless of sex, race or creed,
- and regulate the relations between workers and employers.
- The State shall assure the rights of workers to:
a) self-organization,
b) collective bargaining,
c) security of tenure, and
d) just and humane conditions of work.
Art. 4. Construction in favor of labor. All doubts in the implementation and in
terpretation of the provisions of this Code, including its implementing rules an
d regulations, shall be resolved in favor of labor.
Art. 5. Rules and regulations. The Department of Labor and Employment, and othe
r government agencies charged with the administration and enforcement of this Co
de or any of its parts shall promulgate the necessary implementing rules and reg
ulations. Such rules and regulations shall become effective fifteen (15) days af
ter announcement of their adoption in newspapers of general circulation.
Art. 6. Applicability. All rights and benefits granted to workers under this Co
de shall, except as may otherwise be provided herein, apply alike to all workers
, whether agricultural or non-agricultural.
Art. 211. Declaration of policy.
A. It is the policy of the State:
(a) To promote and emphasize:
- the primacy of free collective bargaining and negotiations, including voluntar
y arbitration, mediation and conciliation,
- as modes of settling labor or industrial disputes;
(b) To promote:
- free trade unionism
- as an instrument for
- the enhancement of democracy and
- the promotion of social justice and development;
(c) To foster:
- the free and voluntary organization
- of a strong and united labor movement;
(d) To promote:
- the enlightenment of workers
- concerning their rights and obligations
- as union members and as employees;
(e) To provide:
- an adequate administrative machinery
- for the expeditious settlement of labor or industrial disputes;
(f) To ensure:
- a stable but dynamic and just industrial peace; and
(g) To ensure:
- the participation of workers
- in decision and policy-making processes
- affecting their rights, duties and welfare.
B. To encourage
- a truly democratic method of regulating the relations between the employers an
d employees by means of agreements freely entered into through collective bargai
ning,
- no court or administrative agency or official shall have the power to set or f
ix
- wages,
- rates of pay,
- hours of work
- or other terms and conditions of employment,
- except as otherwise provided under this Code.
Art. 275. Tripartism and tripartite conferences.
(a) Tripartism in labor relations is hereby declared a State policy. Towards
this end, workers and employers shall, as far as practicable, be represented in
decision and policy-making bodies of the government.
(b) The Secretary of Labor and Employment or his duly authorized representatives
may from time to time
- call a national, regional, or industrial tripartite conference of representati
ves of government, workers and employers
- for the consideration and adoption of voluntary codes of principles
- designed to promote
- industrial peace based on social justice
- or to align labor movement relations with established priorities in ec
onomic and social development.
In calling such conference, the Secretary of Labor and Employment may con
sult with accredited representatives of workers and employers.

CIVIL CODE
Art. 1700. The relation between capital and labor are not merely contractual. T
hey are co impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on labor
unions, collective bargaining, strikes and lockouts, closed shop, wages, workin
g conditions, hours of labor and similar subjects.
Art. 1701. Neither capital nor labor shall act oppressively against the other,
or impair the interest or convenience of the public.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shal
l be construed in favor of the safety and decent living for the laborer.
Art. 1703. No contract which practically amounts to involuntary servitude, unde
r any guise whatsoever, shall be valid.
CASES
Phil. Blooming Mills Employees Assoc. vs. PBM, 51 SCRA 189
PBMEO wanted to stage a mass demonstration at Malacanang, against alleged police
abuses. PBMEO informed the employer PBM, and told PBM that PBMEO did not intend
to prejudice PBM. PBM disagreed saying it would prejudice operations, and said
that at least one shift should be present on the day of the rally. PBM warned th
at should they fail to report, they would be dismissed because of the no lockout-
no strike clause in the CBA. PBMEO went ahead with the rally and was thus charged
with violation of the CBA. The CIR ruled in favor of PBM.
Held: The CIR as an agency of the State is under obligation at all times to give
meaning and substance to these constitutional guarantees in favor of the workin
g man; for otherwise these constitutional safeguards would be merely a lot of mea
ningless constitutional patter . Under the Industrial Peace Act, the CIR is enjoin
ed to effect the policy of the law. to eliminate the causes of industrial unrest
by encouraging and protecting the exercise by employees of their right to self-o
rganization for the purpose of collective bargaining and for the promotion of th
eir moral, social and economic well-being.
The demonstration held by the employees was against alleged abuses of so
me Pasig policemen, not against their employer. Said demonstration was completel
y an exercise of their freedom of expression in general and of their right of as
sembly and petition for redress of grievances in particular before the appropria
te government agency. They exercised their civil and political rights for their
mutual aid and protection from what they believed were police excesses. It was t
o the interest of the firm to protect the employees to rally to the defense of a
nd to take up the cudgels for its employees so that they can report to work free
from harassment, vexation or peril and as a consequence perform more efficientl
y their respective tasks to enhance its productivity as well as profits.
The primacy of human rights-freedom of expression, of peaceful assembly
and of petition for redress of grievances-over property rights, has been sustain
ed.
Philippine Airlines vs. NLRC, 225 SCRA 301
In March 1985, PAL completely revised its Code of Discipline, which was circulat
ed, immediately implemented and caused the imposition of disciplinary sanctions
on some employees. PALEA filed a complaint with the NLRC for unfair labor practi
ce, because the Code was arbitrarily implemented without prior notice and discus
sion of such with the union. PAL posits that it has the prerogative to prescribe
rules and regulations regarding employees conduct in carrying out their functio
ns.
Labor Arbiter ruled not guilty of ULP, but must provide all employees wit
h the new Code to discuss any objectionable items. On appeal, NLRC said though a
dopting Rules of Conduct is a mgt. prerogative, it can no longer exclude labor,
and so must let them participate in the review of the Code.
Held: The exercise of managerial prerogatives is not unlimited. It is circumscri
bed by limitations found in law, the CBA, or general principles of fair play and
justice. Al line must be drawn between management prerogatives regarding busine
ss operations per se and those which affect the rights of employees. In treating
the latter, mgt. should see to it that its employees are at least properly info
rmed of its decisions and modes of action.
PAL says that by signing the CBA, PALEA in effect recognized PAL s exclusi
ve right to make and enforce company rules and regulations to carry out the func
tions of management without having to discuss the same with PALEA, and much less
, the latter s conformity thereto. Such provision in the CBA may not be interprete
d as a cession of employees rights to participate in the deliberation of matters
which may affect their right s and the formulation of policies relative thereto.
And one such matter is the formulation of a Code of Discipline. Industrial peac
e cannot be achieved if the employees are denied their just participation in the
discussion of matters affecting their rights. The attainment of a harmonious la
bor-mgt relationship and the then already existing state policy of enlightening
workers concerning their rights as employees demand no less than the observance
of transparency in managerial moves affecting employee s rights.
Cebu Royal Plant vs. Deputy Minister of Labor, 153 SCRA 38
Ramon Pilones handled ingredients in the processing of soft drinks. Later he was
removed due to pulmonary tuberculosis minimal . He filed for illegal dismissal. Re
gional Director found in favor of employer. However on appeal, the Minister orde
red reinstatement, as it was found that he was a permanent employee, and that th
e ailment was not certified as incurable within six months as to justify separat
ion. Also, the Minister said that the employer should have first obtained a clea
rance for termination of employment, as required by the regulations then in forc
e.
Employer insists he was a probationary employee at the time he was dismi
ssed. It is also argued that the regional director s findings should not be distur
bed on appeal, since he had direct access to the facts.
Held: Employee should be reinstated. It is shown that employee continued working
as usual way beyond the six-month period of probation. Hence he was on permanen
t status at the time he was dismissed. Also, the record does not contain the cer
tification as required by the Rules. The medical certificate offered by the empl
oyer came from its own physician who was not a competent public health authority
, and merely stated the employee s disease without more.
We may surmise that if the required certification was not presented, it w
as because the disease was not of such a nature or seriousness that it could not
be cured within a period of six months even with proper treatment. The court re
affirms its concern for the lowly worker who, often at the mercy of his employer
s, must look up to the law for his protection.
LECTURE
The management and labor relationship is like a bicycle with a third whe
el. The third wheel is the government, which does not convert the bicycle into a
tricycle, because it does not intervene in the management-labor relationship. T
he government allows management and labor to negotiate and determine the terms o
f the contractual relationship that is, the fixing of wages, et.al. but governme
nt sets the minimum standards. This is the only means by which the government in
tervenes.
However, the relationship between management and labor is not merely con
tractual. Check the Civil Code Arts. 1700-1703. This emphasizes that the relatio
nship is so impressed with public interest. As such, the third wheel only suppor
ts and assists the relationship, not to change the relationship but only to bala
nce a relationship that is inherently imbalanced. An example is the government f
ixes wage rates in order to avoid abuses against the weaker party.
Although in some aspects of labor relations, the government has no power
of intervention at all. Check the Constitutional provisions on voluntary modes
of settling disputes. In this case the government s policy of regulation is not eq
uivalent to policy of intervention. An example of this is drawing up the CBA and
modes of dispute resolution. In contrast, the government intervenes through iss
uance of permits to strike, cease and desist orders or return to work orders.

II. EMPLOYER-EMPLOYEE RELATIONSHIP


LABOR CODE
[You can skip these provisions as according to Atty. Manuel, they re stupid defini
tions, but in case you want to check it: Art. 97 (b, c, e); Art. 167 (f, g) Art.
212 (e, f)*]
Art. 106. Contractor or sub-contractor. Whenever an employer enters into a cont
ract with another person for the performance of the former s work, the employees o
f the contractor and of the latter s sub-contractor, if any, shall be paid in acco
rdance with the provisions of this Code.
In the event that the contractor or sub-contractor fails to pay the wages
of his employees in accordance with this Code, the employer shall be jointly an
d severally liable with his contractor or sub-contractor to such employees to th
e extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, re
strict or prohibit the contracting out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make appr
opriate distinctions between labor-only contracting as well as differentiations
within these types of contracting, and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any viola
tion or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an em
ployer does not have substantial capital or investment in the form of tools, equ
ipment, machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related to th
e principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were directly emp
loyed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding Articl
e shall likewise apply to any person, partnership, association or corporation wh
ich, not being an employer, contracts with an independent contractor for the per
formance of any work, task, job or project.
Art. 108. Posting of bond. An employer or indirect employer may require the con
tractor or sub-contractor to furnish a bond equal to the cost of labor under con
tract, on condition that the bond will answer for the wages due the employees sh
ould the contractor or sub-contractor, as the case may be, fail to pay the same.

Art. 109. Solidary liability. - The provisions of existing laws to the con
trary notwithstanding, every employer or indirect employer shall be held respons
ible with his contractor or subcontractor for any violation of any provision of
this Code. For purposes of determining the extent of their civil liability under
this Chapter, they shall be considered as direct employers.
DEPARTMENT ORDER NO. 3, SERIES OF 2001
Revoked D.O. No. 10 Series of 1997 which liberalizes labor-only contracting in c
ertain situations.
CASES
Aurora Land Projects Corp. v. NLRC, 266 SCRA 48
Jurisprudence is firmly settled that whenever the existence of an employer-emplo
yee relationship is in dispute, four elements constitute the reliable yard stick
: (a) selection and engagement of the employee; (b) the payment of wages; (c) po
wer of dismissal; (d) the employer s power of control over the employee s conduct.
It is the so-called control test , that is whether the employer controls or has res
erved the right to control the employee, not only as to the result of the work t
o be done, but the means and methods by which the same is to be accomplished, th
at is the most important index of the existence of the employer-employee relatio
nship.
Algon Engineering v. NLRC, 280 SCRA 188
Employer-Employee relationship question of fact. Liability for loss of materials
in employees custody and subsequent transfer is indicative of employer s power of
control.

Filipinas Broadcasting v. NLRC, 287 SCRA 348


Power of control regulate or control employee s activities or input, subject to em
ployer s supervision.
Insular Life v. NLRC, 287 SCRA 476
It is axiomatic that the existence of an employer-employee relationship cannot b
e negated by expressly repudiating it in the management contract and providing t
herein that the employee is an independent contractor when the terms of the agreem
ent clearly shows otherwise.
Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401
(case where the SC uses Art. 280 to prove er- ee relationship)
Paid wages directly to employee, wielded power of dismissal, and members of unio
n did not possess substantial capital which belies claim that they were independ
ent contractors.
Maraguinot v. NLRC, 284 SCRA 539
It is settled that contracting out of labor is allowed only in case of job-contr
acting. For a contactor to be job-contactor, must have tools, equipment, machine
ry, work premises, and other materials necessary to his business, or substantial
capital or investment.
As labor-only contracting is prohibited, the law considers the person or
entity engaged in the same, a mere agent or intermediary of the direct employer.
Coca-Cola v. NLRC, May 17, 1999
Although janitorial services may be deemed directly related to the principal bus
iness of employer, as with every business, it is deemed unnecessary in the condu
ct of the employer s principal business. But this rests on the presumption that th
e contractor is a legitimate job-contractor such that the employer-employee rela
tionship between him and the employee cannot be doubted.

Corporal v. NLRC, Oct. 2, 2000; GR 129315


(again SC uses Art. 280 of Labor Code in determining er- ee relationship) Control-
required to report daily and observe definite hours of work, not free to accept
employment elsewhere.
No longer true that membership in SSS is predicated on the existence of e
mployer-employee relationship as the policy now is to encourage even the self-em
ployed to become members.
AFP Mutual Benefit v. NLRC, 267 SCRA 47
Not all that glitters is control .
In insurance, exclusivity is not indicative of control as the Insurance C
ommission prohibits serving in more than one insurance company.
Also, the mere fact that an employee is subject to company rules is not i
ndicative of control if it is not shown that it relates to the means and methods
of service rendered and not merely to the end result. The significant factor i
n determining the relationship of parties is the presence or absence of supervis
ory authority to control the method and details of performance of the service be
ing rendered, and to the degree to which the principal may intervene to exercise
such control. Not every form of control that a party reserves to himself over t
he conduct of the other party in relation to the services being rendered may be
accorded the effect of establishing an ee- er relationship.
Neri v. NLRC, 224 SCRA 717
The law does not require both substantial capital and investment in the form of
tools, equipment, machineries, etc. This is clear from the use of the conjunctio
n or. If the intention was to require the contractor to prove that he has both cap
ital and the requisite investment, then the conjunction and should have been used.
While these services (These services range from janitorial, security and
even technical or other specific services.) may be considered directly related
to the principal business of the employer, nevertheless, they are not necessary
in the conduct of the principal business of the employer.
Phil. Fuji Xerox v. NLRC, 254 SCRA 294
It is wrong to say that if a task is not directly related to the employer s busine
ss, or it falls under what may be considered housekeeping activities, the one perf
orming the task is a job contractor. The determination of the existence of an em
ployer-employee relationship is defined by law according to the facts of each ca
se, regardless of the nature of the activities involved.
Not substantial capital or investment alone which makes one a job contrac
tor, but also presence of four-fold test in relation to contractor and employee.
Also the fact that the contractor was providing specific special services (radi
o/telex operator and janitor) to the employer.
Vinoya v. NLRC, Feb. 2, 2000, GR 126586
From the two aforementioned decisions, it may be inferred that it is not enough
to show substantial capitalization or investment in the form of tools, equipment
, machineries and work premises, among others, to be considered as an independen
t contractor. In fact, jurisprudential holdings are to the effect that in determ
ining the existence of an independent contractor relationship, several factors m
ight be considered such as, but not necessarily confined to, whether the contrac
tor is carrying on an independent business; the nature and extent of the work; t
he skill required; the term and duration of the relationship; the right to assig
n the performance of specified pieces of work; the control and supervision of th
e workers; the power of the employer with respect to the hiring, firing and paym
ent of the workers of the contractor; the control of the premises; the duty to s
upply premises, tools, appliances, materials and labor; and the mode, manner and
terms of payment.
Lapanday v. CA, Jan 31, 2000; GR 112139
It will be seen from the above provisions that the principal (petitioner) and th
e contractor (respondent) are jointly and severally liable to the employees for
their wages. The joint and several liability of the contractor and the principal
is mandated by the Labor Code to assure compliance with the provisions therein
including the minimum wage. The contractor is made liable by virtue of his statu
s as direct employer. The principal, on the other hand, is made the indirect emp
loyer of the contractor s employees to secure payment of their wages should the co
ntractor be unable to pay them. Even in the absence of an employer-employee rela
tionship, the law itself establishes one between the principal and the employees
of the agency for a limited purpose i.e. in order to ensure that the employees
are paid the wages due them.
It is clear also from the foregoing that it is only when contractor pays
the increases mandated that it can claim an adjustment from the principal to cov
er the increases payable to the security guards. The conclusion that the right o
f the contractor (as principal debtor) to recover from the principal as solidary
co-debtor) arises only if he has paid the amounts for which both of them are jo
intly and severally liable.
Rosewood Processing v. NLRC, 290 SCRA 408
As to wages, the indirect employers liability to the contractor s employees extend
s only to the period during which they were working for the petitioner, and the
fact that they were reassigned to another principal ends such responsibility. T
he same rule applies to back wages and separation pay, with the added qualificat
ion that to make the indirect employer liable, there must be a finding of fault
or conspiracy in the illegal dismissal.
LECTURE
It is important to determine the employer-employee relationship in order
to ascertain what rights and obligations of the parties accrue in such a situat
ion. The Labor Code attempts to define who is an employer and an employee, but m
iserably fails to do so! Thus, in determining existence of employer-employee rel
ationship the Code cannot be the basis! As such, jurisprudence is essential and
must be resorted to, in order to determine the existence of such relationship.
Jurisprudence provides a FOUR-WAY or FOUR-FOLD TEST to determine the exi
stence of employer-employee relationship:
1) Hiring a written agreement is not necessary, and is not a conclusive test bec
ause it can be avoided and confused by the use of subcontracting agreements or o
ther contracts other than employment contracts.
2) Firing termination and disciplinary measures; however, it is not conclusive b
ecause the question of employer-employee relationship may arise even before the
firing occurs. In cases other than an employment contract, such as a managment c
ontract, the fact that an employer has not fired does not negate the existence o
f employer-employee relationship.
3) Wages as defined in Art. 97 (f) of the Labor Code, it must be remuneration ca
pable of being expressed in terms of money, payable by an employer to an employe
e for work or services to be done or rendered
4) Control -
The element of control pertains not only to the result of the work to be
done but also control over the manner or method to be employed. There is no need
for the employer to have actually exercised control, as long as he had the oppo
rtunity to do so. Consequently, proof must be given reflecting a manifestation o
f control, such as monitoring the work, letting the employee work in the employe
r s premises, as long as the company or employer had the ability or power to inter
vene in the work.
Control is the primary test. This is because hiring, firing, wages may be
done by an entity separate from the entity that controls the employee. For exam
ple, hiring done by head hunters or transfer of ownership of a company. Thus, al
though the other factors may be absent, as long as there is control there is an
employer-employee relationship.
In the AFP case, the Court emphasized that not all that glitters is contro
l ! This case was very good in qualifying the principle that rules per se are not
equivalent to control all the time, for control should be over the means and con
duct of the work, not merely over the result. This case ruled that if the rules
pertain only to the end result, this is not tantamount to control.
It must be borne in mind however that there are some situations, mutations
if you could call it, where the control principle is not applicable, for instanc
e, in a taxi-operator and taxi-driver relationship. However, the three other ind
icators may be used to determine that there is an employer-employee rel.
Also, exclusivity of service is not conclusive in determining control. Th
at is, when the employee is prohibited to work, for instance, insurance agents a
re required to maintain exclusive company as required by law.
Must all 4 be passed? No. Not all elements need be present. Hence, the be
st term to use is the FOUR INDICATORS, because FOUR-FOLD TEST connotes the need
for all four elements to be present.
Now, Art. 280 of the Labor Code provides that an employee is deemed regul
ar where the employee has been engaged to perform activities which are usually n
ecessary or desirable in the usual business or trade of the employer ( UNOD in UTO
B ). Remember that UNOD in UTOB cannot be used to determine the existence of emplo
yer-employee relationship. It is used only to determine whether an employee is r
egular or not, and hence it necessarily presupposes that an employer-employee re
lationship already exists.
There is also such a thing as economic condition test, where the employee
may successfully establish an employer-employee relationship by showing documen
ts like the SSS list and payroll.
Now let us go to contracting. Article 106 of the LC defines Labor-only c
ontracting. Labor-only contracting is illegal as compared to job contracting whi
ch is allowed. How do we determine whether contracting is labor only or job?
JOBHasCONTRACTING
-LABOR ONLY CONTRACTING
sufficient capital OR investment in machinery or equipment (must be substa
ntial, and machinery/equipment must be directly or intended to be related to the
-job
Has
Carries
Undertakes
contracted
no substantial
independent
on an
to independent
)perform
capital
business
the business
job
ANDunder
investment
different
its own account
from theandemployer
responsibility,
s free f
-rom
Performs
theMust
principal
activities
all three
s control
directly
elements
(principal
related
be present
intervenes
to in
theorder
mainonly
business
to bewith
considered
the
of the
endprincipal
result)
a labor-only
contractor? According to Court decisions, the primary determination is if one i
s a Job contractor or not. Hence, the test to determine whether one is a job or
labor only contractor is to look into the elements of a job contractor. If ALL e
lements of a job contractor is present AND the contractor qualifies as a job con
tractor then he is a job contractor. Otherwise he is a labor-only contractor.
In many cases the Court looks into the control factor to determine if one
is a job contractor or not. For instance, if the first two elements are present
(sufficient capital and independent business), but control is exercised by the
principal, he is not considered a legitimate job contractor and as such is consi
dered labor-only. Read the Vinoya case to elucidate the matter, particularly p.
481, second paragraph.
[ 2nd paragraph of p. 481:
From the two aforementioned decisions (referring to the Phil. Fuji Xerox and Ner
i cases), it may be inferred that it is not enough to show substantial capitaliz
ation or investment in the form of tools, equipment, machineries and work premis
es, among others, to be considered as an independent contractor. In fact, jurisp
rudential holdings are to the effect that in determining the existence of an ind
ependent contractor relationship, several factors might be considered such as, b
ut not necessarily confined to, whether the contractor is carrying on an indepen
dent business; the nature and extent of the work; the skill required; the term a
nd duration of the relationship; the right to assign the performance of specifie
d pieces of work; the control and supervision of the workers; the power of the e
mployer with respect to the hiring, firing and payment of the workers of the con
tractor; the control of the premises; the duty to supply premises, tools, applia
nces, materials and labor; and the mode, manner and terms of payment.]
What is the liability of the principal to the employee in cases of illega
l dismissal?
- Joint and several with the employer, but with the right to reimbursement from
the employer contractor
- Wage differentials only to the extent where the employee performed the work un
der the principal
- Separation pay and backwages, only when the principal has some relation to the
termination (such as when he conspired to terminate)
- The ruling in Rosewood Processing is an obiter and made an unjustified interpr
etation of Art. 109 of the LC. Rosewood held that monetary awards given in relat
ion to illegal dismissal is the direct liability of the contractor alone unless
the principal conspired with the contractor. However, Art. 109 makes the princip
al liable in illegal dismissal whether or not there was fault on his part.

III. CLASSES OF EMPLOYEES


LABOR CODE
Art. 280. Regular and casual employment. The provisions of written agreeme
nt to the contrary notwithstanding and regardless of the oral agreements of the
parties, an employment shall be deemed to be:
- REGULAR where the employee has been engaged to perform activities which are us
ually necessary or desirable in the usual business or trade of the employer
- except where the employment has been fixed for a specific PROJECT or undertaki
ng, the completion or termination of which has been determined at the time of th
e engagement of the employee
- or where the work or service to be performed is SEASONAL in nature and the emp
loyment is for the duration of the season.
An employment shall be deemed to be CASUAL if it is not covered by the preceding
paragraph;
- provided,
- that any employee who has rendered at least one year of service,
- whether such service is continuous or broken,
- shall be considered a REGULAR employee with respect to the activity in which h
e is employed and his employment shall continue while such activity exists.
Art. 281. Probationary employment.
Probationary employment
- shall not exceed six months from the date the employee started working,
- unless it is covered by an apprenticeship agreement stipulating a longer perio
d.
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 employee
a) in accordance with reasonable standards
b) made known by the employer to the employee at the time of his engagement.
An employee who is allowed to work after a probationary period shall be consider
ed a regular employee.
CASES
De Leon V. NLRC, 176 SCRA 615
De Leon was employed by La Tondena as a painter and on the agreement that he is
considered a casual employee. He was made to clean and oil machines and other od
d jobs when he had no painting job. After more than a year of service, he reques
ted to be included in the payroll of regular workers. La Tondena responded by d
ismissing him.
The Labor Arbiter found that de Leon was illegally dismissed and, in lig
ht of the facts, is considered a regular employee. NLRC reversed. Petition for
review with the Supreme Court.
Held: Petition granted, employer must reinstate De Leon as a regular maintenance
man.
Contrary agreements notwithstanding, an employment is deemed regular when
the activities performed by the employee are usually necessary or desirable in
the usual business or trade of the employer. Not considered regular are the so-
called project employment the completion or termination of which is more or less d
eterminable at the time of employment, such as those employed in connection with
a particular construction project, and seasonal employment which by its nature
is only desirable for a limited period of time. However, any employee who has r
endered at least one year of service, whether continuous or intermittent, is dee
med regular with respect to the activity he performed and while such activity ac
tually exists.
The primary standard, therefore, of determining a regular employment is
the reasonable connection between the particular activity performed by the emplo
yee in relation to the usual business or trade of the employer. The test is whe
ther the former is usually necessary or desirable in the usual business or trade
of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or
trade in its entirety. Also, if the employee has been performing the job for a
t least one year, even if the performance is not continuous or merely intermitte
nt, the law deems the repeated and continuing need for its performance as suffic
ient evidence of the necessity if not indispensability of that activity to the b
usiness. Hence, the employment is also considered regular, but only with respec
t to such activity and while such activity exists.
What determines whether a certain employment is regular or casual is not
the will and word of the employer, to which the desperate worker often accedes,
much less the procedure of hiring the employee or the manner of paying his sala
ry. 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.
Aurora Land vs. NLRC, 266 SCRA 48
Honorio Dagui was hired by Dona Aurora Suntay Tanjangco in 1953 to take charge
of the maintenance and repair of the Tanjangco apartments and residential build
ings. He was to perform carpentry, plumbing, electrical and masonry work. Upon
the death of Dona Aurora Tanjangco in 1982, her daughter, petitioner Teresita T
anjangco Quazon, took over the administration of all the Tanjangco properties.
On June 8, 1991, his services was terminated. He filed a complaint for illegal d
ismissal with the Labor Arbiter.
Petitioners insist that Dagui had never been their employee. Since the
establishment of Aurora Plaza, Dagui served therein only as a job contractor. D
agui had control and supervision of whoever he would take to perform a contracte
d job. On occasion, Dagui was hired only as a tubero or plumber as the need arise
s in order to unclog sewerage pipes. Every time his services were needed, he wa
s paid accordingly. It was understood that his job was limited to the specific
undertaking of unclogging the pipes. In effect, petitioners would like the Cour
t to believe that Dagui was an independent contractor, particularly a job contr
actor, and not an employee of Aurora Plaza.
Held: An employer-employee relationship exists. Section 8, RuleVIII, Book III
of the Implementing Rules and Regulations of the Labor Code provide the essenti
al requisites before one is considered a job contractor. Honorio Dagui earns a m
easly sum of P180.00 a day (latest salary). Ostensibly, and by no stretch of the
imagination can Dagui qualify as a job contractor.
Whenever the existence of an employment relationship is in dispute, four
elements constitute the reliable yardstick:
* the selection and engagement of the employee (hiring);
* the payment of wages (wages);
* the power of dismissal (firing); and
* the employer s power to control the employee s conduct (control).
It is the so-called control test , whether the employer controls or has res
erved the right to control the employee not only as to the result of the work to
be done but also as to the means and methods by which the same is to be accompl
ished, which constitute the most important index of the existence of the employe
r-employee relationship. An employer-employee relationship exists where the per
son for whom the services are performed reserves the right to control not only t
he end to be achieved but also the means to be used in reaching such end.
Brent School vs. Zamora, 181 SCRA 702
Brent School, Inc. ( BS ) employed Doroteo R. Alegre ( DA ) as athletic director. The em
ployment contract fixed a specific term for its existence: 5 years (18 July 1971
to 17 July 1976). 3 subsequent subsidiary agreements reiterated the same terms
and conditions stipulated in the original contract.
20 April 1976. DA received copy of report filed by BS with DOLE advising
of the termination of his services effective 16 July1976. The ground: completion
of contract, expiration of the definite period of employment. DA protested, argu
ing that he had acquired regular employment status and could not be removed exce
pt for valid cause because his services were UNOD in UTOB and his employment had
lasted for 5 years.
DOLE Regional Director ruled in favor of DA. Secretary of Labor sustaine
d. Office of the President dismissed BS appeal and affirmed SOL decision.
Held: Since the entire purpose behind the development of legislation culminating
in the present Art. 280 of the Labor Code clearly appears to have been, as alre
ady observed, to prevent circumvention of the employee s right to be secure in his
tenure, the clause in said article indiscriminately and completely ruling out a
ll written or oral agreements conflicting with the concept of regular employment
as defined therein should be construed to refer to the substantive evil that th
e Code itself has singled out: agreements entered into precisely to circumvent s
ecurity of tenure. It should have no application to instances where a fixed peri
od of employment was agreed upon knowingly and voluntarily by the parties, witho
ut any force, duress or improper pressure being brought to bear upon the employe
e and absent any circumstances vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt with each other on more or less eq
ual terms with no moral dominance whatever being exercised by the former over th
e 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 poin
tless and arbitrary, unjust in its effects and apt to lead to absurd and uninten
ded consequences.
There was a valid fixed term employment contract. DA s employment was termi
nated upon the expiration of his last contract with BS on 16 July 1976 without
necessity of any notice.
Concurring and dissenting opinion (J. Sarmiento): I cannot liken employment contr
acts to ordinary civil contracts in which the relationship is established by sti
pulations agreed upon.
International Catholic Migration Commission v. NLRC, 169 SCRA 606
Petitioner engaged the services of private respondent Galang as a probat
ionary cultural orientation teacher for a probationary period of 6 months. Thre
e months thereafter, she was informed, orally and in writing , that her services
were being terminated for her failure to meet the prescribed standards of petit
ioner as reflected in the performance evaluation of her supervisors during the t
eacher evaluation program she underwent along with other newly-hired personnel.
She subsequently filed a complaint for illegal dismissal, unfair labor p
ractice and unpaid wages against petitioner with the then Ministry of Labor and
Employment, praying for reinstatement with backwages, exemplary and moral damage
s.
The labor arbiter dismissed the complaint, but awarded payment for the u
nexpired portion of the agreed period. NLRC affirmed. Petitioner questions the a
ward.
Held: For the petitioner.
A probationary employee, as understood under Art 281 of the Labor Co
de, is one who is on trial by an employer, during which the employer determines
whether or not he is qualified for permanent employment. A probationary employm
ent is made to afford the employer an opportunity to observe the fitness of a pr
obationer while at work, and to ascertain whether he will become a proper and ef
ficient employee. The word probationary , as used to describe the period of employ
ment, 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 perio
d of employment fundamentally lies in the purpose or objective sought to be atta
ined by both the employer and the employee during said period. The length of ti
me is immaterial to determining correlative rights of both in dealing with each
other during said period. While the employer observes the fitness, propriety an
d 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 employm
ent.
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 probationar
y period within which the latter may test and observe the conduct of the former
before hiring him permanently.
Art 281 of the LC gives ample authority to the employer to terminate a p
robationary employee for a just cause or when he fails to qualify as a regular e
mployee in accordance with reasonable standards made known by the employer to th
e employee at the time of his engagement. There is nothing under Art 281 of the
LC that would preclude the employer from extending a regular or permanent appoin
tment to an employee once the employer finds that the employee is qualified for
regular employment even before the expiration of the probationary period. Conve
rsely, if the purpose sought by the employer is neither attained nor attainable
within the said period, Art 281 does not likewise preclude the employer from ter
minating the probationary employment on justifiable causes.
The dissatisfaction of the petitioner over the performance of private re
spondent Galang is a legitimate exercise of its prerogative to select whom to hi
re or refuse employment for the success of its program or undertaking. More impo
rtantly, Galang failed to show that there was unlawful discrimination in the dis
missal.
Mercado vs. NLRC, 201 SCRA 332
Petitioners are farm workers who are contending that they are regular farm worke
rs of Cruz and other respondents and thus, are entitled to benefits like overtim
e pay, holiday pay, service incentive leave, ECOLA, 13th month pay, etc.
They claim that they have been working for 12 hours a day the whole yea
r round for almost 19 years (others, for 30 years).
Respondents deny that petitioners are regular workers since they are onl
y hired to work for six months (during the harvesting of sugar canes) a year and
for the rest of the year, petitioners are allowed to seek employment elsewhere.
Petitioners 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.
Held: They are seasonal workers.
The first paragraph of Art 280 answers the question of who are regular em
ployees. It states that regardless of any written or oral agreement to the cont
rary, an employee is deemed regular where he is engaged in necessary or desirabl
e activities in the usual business or trade of the employer, except for project
employees. A project employee has been defined to be one whose employment has be
en fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee, or whe
re the work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
The second paragraph demarcates as casual employees, all other employees w
ho do not fall under the definition of the preceding paragraph. Policy Instruct
ion No 12 discloses that the concept of regular and casual employees was design
ed to put an end to casual employment in regular jobs, which has been abused by
many employers to prevent so-called casuals from enjoying the benefits of regul
ar employees or to prevent casuals from joining unions. The same instructions s
how that the proviso in the second paragraph was not designed to stifle small sc
ale 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 method
s to realize profits. Hence the proviso is applicable only to the employees who
are deemed casuals but not to the project employees nor the regular employees t
reated in paragraph one of Art 280.
Labor Congress vs. NLRC, 290 SCRA 509
Three factors lead the Court to conclude that petitioners, although piece-rate w
orkers, were regular employees of respondent Empire Foods Corp. First, as to th
e nature of petitioner s tasks, their job of repacking snack food was necessary or
desirable in the usual business of respondents, who were engaged in the manufac
ture and selling of such food products; second, petitioners worked for responden
ts throughout the year, their employment not having been dependent on a specific
project or season; and third, the length of time that petitioners worked. Thus
, while petitioner s mode of compensation was on a per piece basis , the status and n
ature of their employment was that of regular employees. Not only did petitione
rs labor under the control of the respondents as their employer, likewise did pe
titioners toil throughout the year with the fulfillment of their quota as suppos
ed basis for compensation.
Caurdanetaan Piece Workers Union v. Laguesma, 286 SCRA 401
Petitioner union has 92 members working as cargadores of Corfarm. They are paid
on a piece rate basis. They unload, load and pile sacks of palay from the wareho
use to the cargo trucks and from the truck to the place delivered. Union filed a
petition for certification election, which Corfarm opposed on the ground that t
here is no e-e relationship, and that there is only a contractual relationship.
Held: The workers are regular employees. To determine the existence of an e-e re
lation. The four fold test is to be applied: (1) the power to hire, (2) payment
of wages, (3) the power to dismiss, (4) the power of control the last being the mo
st important element. Prior to his ruling on Corfarms motion for reconsideration
, Laguesma ruled as follows:
the existence of an independent contractor relationship is generally established
criteria: (1) whether the contractor is carrying on an independent business; (2)
the nature and extent of the work; (3) the skill required; (4) the term and dur
ation of the relationship; (5) the right to assign the performance of a specifie
d piece of work; (6) the control and supervision over the workers; (7) the payme
nt of the contractor s workers; (8) the control of premises; (9) the duty to suppl
y the premises, tools and appliances, materials and laborers, and the mode and m
anner and terms of payment.
Corfarm, failed to show by clear and convincing proof that the union has
the substantial capital or investment to qualify as an independent contractor un
der the law. The premises, equipment, and paraphernalia are all supplied by Corf
arm. It is only the manpower or labor force which the alleged contractor supplie
s, suggesting the existence of a labor only contracting scheme, which is prohibite
d by law.
The petitioner s members worked as cargadores, which is directly related, n
ecessary and vital to the operations of Corfarm. Their tasks were essential in t
he usual business of Corfarm. The lack of control or the existence of waiting ti
me (for the next batch of sacks to load/unload) does not denigrate the regular e
mployment of these workers. The continuity of employment is not the determining
factor, but rather whether the work of the laborer is part of the regular busine
ss or occupation of the employer.
Maraguinot vs. NLRC, 284 SCRA 539
VIVA insists that the petitioners, who are cameramen, are project employees of
associate producers who, in turn, act as independent contractors. It is settled
that the contracting out of labor is allowed only in the case of job contracting
. Assuming that the associate producers are job contractors, they then must be e
ngaged in the business of making motion pictures. As such to be a job contractor
under the preceding description, associate producers must have tools, equipment
, machinery, work premises and other necessary materials to make motion pictures
. However the associate producers have none of these.
The associate producers of VIVA cannot be considered labor-only contract
ors as they did not supply, recruit nor hire the workers.
The employer-employee relationship between petitioners and VIVA can be fu
rther established by the control test i.e. the employer s power to control the emplo
yee s conduct, the most important element is the employer s control of the employee s
conduct, not only as the result of the work to be done, but also as to the means
and methods to accomplish the same. VIVA s control is evident in its mandate that
the end result must be quality acceptable to the company. The means and methods t
o accomplish the result are likewise controlled by VIVA.
International Pharmaceuticals, Inc. vs. NLRC, 287 SCRA 213
Quinta was employed as Medical Director for the development of the company s herba
l medicine department. Their contract had a period of one year. After the contra
ct, she was allowed to continue work until she was terminated.
Held: Quinta became a regular employee. The SC held that although their contract
was valid, the fact that after its expiration, petitioner decided to continue h
er services, she is now entitled to security of tenure.
Moreover the SC agreed with the labor arbiter that the fact the employee
was not required to report at a fixed hour or to keep fixed hours of work does n
ot detract from her status as a regular employee. As petitioner itself, admits,
Quinta was a managerial employee and therefore not covered by the Labor Code pro
visions on hours of work.
Whether one s employment is regular is not determined by the number of hour
s one works, but by the nature of the work and by the length of time one has bee
n in that particular job.
Highway Copra Traders vs. NLRC, 293 SCRA 350
[A]n employment is deemed regular when the activities performed by the employee ar
e usually necessary or desirable in the usual business or trade of the employer.
The nature of his work as a general utility man was definitely necessary and de
sirable to petitioner s business of trading copra and charcoal and regardless of t
he length of time. The argument of the respondent was only engaged for a specifi
c task, the completion of which is resulted in the cessation of his employment
is untenable. By specific project or undertaking, Article 280 of the Labor Code
contemplates an activity which is not commonly or habitually performed or such
type of work which is not done on a daily basis but only for a specific duratio
n of time or until completion in which case the services of an employee are nece
ssary and desirable in the employer s usual business only for the period of time i
t takes to complete the project.
Philippine Federation of Credit Cooperatives vs. NLRC, Dec. 11, 1998
A probationary employee who is engaged to work beyond the probationary period of
6 months or for any length of time set forth by the employer, shall be consider
ed a regular employee.
Villa vs. NLRC, 284 SCRA 105
By entering into such contract of project employment, an employee is deemed to u
nderstand that his employment is coterminous with the project. Project employmen
t contracts are not lopsided agreements in favor of one party. Thus, the fact th
at workers work under different project employment contracts for several years c
annot be made a basis to consider them as regular employees, for they remain pro
ject employees regardless of the number of projects in which they have worked.
Length of service is not the controlling determinant of the employment tenure of
a project employee.
San Miguel Corporation vs. NLRC, 297 SCRA 277
An employment is deemed regular when the activities performed by the employee a
re usually necessary or desirable in the usual trade or business of the employer
even if the parties enter into an agreement stating otherwise. But considered n
ot regular are the project employment the termination of which is more or less det
erminable at the time of employment, and seasonal employment which by its nature
is only for one season of the year the employment is limited for the duration o
f the season. Nevertheless, an exception to the exception is made: any employee
who has rendered at least one year of service whether continuous or intermittent
with respect to the activity he performed and while such activity actually exis
ts, must be deemed regular.
It must be noted that the respondent was employed only for seven months.
First he was employed for repair and upgrading of furnaces, upon completion of s
uch , he was terminated. A few days after, two other furnaces required draining/
cooling down and emergency repair. Thus he was hired again. Upon completion of s
uch second undertaking, he was likewise terminated. He was not hired for a third
time and his two engagements taken together did not total one full year. Clearl
y, he was hired for a specific project that was not within the regular business
of the corporation.
Romares vs. NLRC, 294 SCRA 411
There are two kinds of regular employees: those who are engaged to perform activ
ities which are UNOD in UTOB, and those casual employees who have rendered at le
ast one year of service, whether continuous or broken, with respect to the activ
ity in which they are employed.
The scheme of rehiring him for a two to three month contract on a tempora
ry job as a mason is a clear circumvention of the employee s right to security of
tenure and to other benefits. Despite the provisions of the contract of employme
nt, as long as the activities are UNOD in UTOB, such employee is already regular
.
PAL vs. NLRC, 298 SCRA 430
The janitorial service agreement is not a labor-only contracting. There is labor
only contracting where the person supplying workers to an employer does not hav
e substantial capital or investment in the form of tools, equipment, machinery,
work premises, among others and the workers recruited and placed by such persons
are performing activities that are directly related to the principal business o
f such employer.
Stellar was not engaged in labor only contracting because it has sufficie
nt capital form of tools and equipment, like vacuum cleaners, polishers, and sub
stantial capitalization as proven by its financial statements. STELLAR even has
other clients like San Miguel Corporation and etc. Thus PAL is not the employer
of the janitors.
Philippine Tobacco Flue-Curing Corp. vs. NLRC, 300 SCRA 37
They are entitled to separation pay. Seasonal workers who work from time to time
and are temporarily laid off during off-season are not separated from service i
n said period, but are merely considered on leave until re-employed.
Since they are repeatedly rehired, such is sufficient evidence of the nec
essity and indispensability of services, and is equated to a regular employee. O
n the contrary, when an employee is rehired every year but may work with another
, one is not seasonal but a project employee and would naturally end upon the co
mpletion of each project.
The doctrine in Mercado vs. NLRC is inapplicable to the case at bar beca
use in Mercado, the seasonal employees were not in the employer s regular employ.
They performed different phases of agricultural work in a given year, and during
such periods they could work for others, which they did. They were free to cont
ract with others even if they were presently working for the employer.
Rather, the case at bar is pretty much similar to the case of Gaco vs. N
LRC, where the Court likewise ruled that Gaco was a regular employee, due to his
repeated rehiring every season, spanning over fifteen years.
Bernardo vs. NLRC, July 12, 1999
Those who have worked beyond worked beyond 6 months and whose contracts have bee
n renewed are already regularized.
The accommodation argument does not change the nature of their employmen
t. An employee is regular because of the nature of work and the length of servic
e, not because of the mode or even the reason for hiring them. The character of
employment is determined not by stipulations in the contract but by the nature
of the work performed. Otherwise no employee can become regular by the simple ex
pedient of incorporating this condition in the contract of employment. Where an
employee has been engaged to perform activities which are usually necessary or d
esirable in the usual business of the employer, such employee is deemed a regula
r employee and is entitled to security of tenure notwithstanding the contrary pr
ovisions of his contract of employment.
Imbuido vs. NLRC, GR 114734, 329 SCRA 357
The principal test for determining whether an employee is a project employee or
a regular employee is whether the project employee was assigned to carry out a
specific project or undertaking, the duration and scope of which were specified
at the time the employee was engaged for that project. A project employee is one
whose employment has been fixed for a specific project or undertaking, the comp
letion or termination of which has been determined at the time of the engagement
of the employee or where the work or service to be performed is seasonal in nat
ure and the employment is for the duration of the season.
In the recent case of Maraguinot, Jr. v. NLRC, we held that [a] project em
ployee or a member of a work pool may acquire the status of a regular employee w
hen the following concur: 1) There is a continuous rehiring of project employees
even after [the] cessation of a project; and 2) The tasks performed by the alle
ged project employee are vital, necessary and indispensable to the usual business
or trade of the emplyer.
LECTURE (PART ONE)
It is important to distinguish the classes in order to apply the proper
rules in labor standards, or apply the security of tenure provisions (illegal te
rmination). It is also important in labor relations, because in a certification
election, the definition of a bargaining unit depends on the classes of employee
agreed upon by the parties allowed to join.
The general rule is that all employees are regular employees. The standa
rd test is that there must be a reasonable connection between the job and the em
ployer s business.
Regular employee:
1. Performs tasks which are UNOD in UTOB; and the word usually is used because it
does not mean they always have to perform tasks which are necessary or desirable
.
2. It also refers to casual employees who have rendered at least one year of ser
vice, whether continuous or broken, with respect to the activity they are employ
ed.
3. Probationary or term employees are also considered regular once they are allo
wed to work beyond the term or duration of the project.
4. Project employee who has been continuously rehired (Maraguinot case) becomes
regular for the specific job continuously rehired for
a. The employee is continuously rehired from project to project even with gaps o
f time in between
b. Task is UNOD in UTOB, or else the project ee is considered only a casual ee
c. Rehired for the same task or nature of task.
A project employee converted to regular employee is still not paid for the pe
riod he does not work. But the employer is required to hire him when the next pr
oject requires he particular job he does, or else, the employer is guilty of ill
egal termination.
Project employee:
Those employed for a fixed project or specific task, the completion of which has
been determined and made known to the ee at the time of engagement. Two kinds:
1. Tasks which are UNOD in UTOB
2. Tasks which are not UNOD in UTOB
a. The job must be distinct from the totality of the er s business
b. The project must be definite as to its completion
c. Employment terminates with the project, regardless of the period
A Workpool is not necessary in order to convert the project ee into regular. But
its existence may signify that the proj. ee has become regular if there is cont
inuous rehiring.
Fixed Term:
The job is assigned a specific date of expiration even if the job is considered
UNOD in UTOB. The important aspect is that the job is time bound.
Brent School ruling: requirements for a valid FT employment:
a. The parties dealt on equal footing (bargaining position)
b. The contract is reasonable, not oppressive
c. The employee entered into it voluntarily
d. There is no intent to circumvent labor laws
e. Usually apply to teachers; sadly, it is used in other types of jobs and has b
een subject of abuse
Seasonal Employee:
Hired for a specific period of time during the year, and may be UNOD in UTOB
- Rehired whenever their services are required (e.g. farmworkers)
- At the arrival of the season must be rehired, or else the er is guilty of ille
gal termination
- Allowed to seek work elsewhere while off-season (Mercado case is clarified by
the Phil Tobacco case).
Probationary Employee:
Hired for 6 months to determine qualification, or capacity as a regular employee
, though an ee can become regular right away without going through probation
- The employee is given the standards at the time of engagement (employer must e
xplain, not merely giving document)
- General rule is that it is limited to 6 months, except
a. When the qualifications cannot be determined during the 6 months, as part of
company policy
b. When the ee is the one who asked for the extension
Casual Employee:
- One who does not fall under the definition of a regular, project, seasonal or
fixed employee
- The job is not UNOD in UTOB
- Casual converted to regular after rendering more than a year of service with r
espect to that activity employed, whether continuous or broken
- If broken but has served more than one year already, during the intervals he d
oes not have work due to temporary lay-off, he can look for another job, but no
t during the times the er needs him.
- Any doubts must be resolved in favor of regular employment (PFCCI case)

LECTURE (PART TWO)


Types of employment
Remember that the presumption is in favor of regular employment. It may b
e shown that one is not a regular employee, but proof must be given to show this
.
How to determine regular employment? The nature of the work is UNOD in UT
OB of the employer, and if a casual is employed for more than one year, he is co
nsidered an employee.
Probationary employment:
probe period is 6 months for the employer to determine the eligibility of the em
ployee. But the period may be shortened or extended. Probe converts to regular a
fter the period imposed has lapsed, and the employee continues to work. It impli
es that the employee has passed and is eligible for regular employment. Also, if
the terms and conditions of employment are not clearly provided by the employer
, the standards are not clear then the employee is deemed a regular employee. Th
is is because the employee has no knowledge of what standards he or she must mee
t, and so this should not work to his or her prejudice.
Project employment:
Project employee is one who works for a specific project or undertaking which is
separate and distinct from the main business of the employer. E.g. the Ateneo L
aw School wants to computerize its records. The employees hired to do such are p
roject employees. But remember the project or undertaking MAY be within the regu
lar business of the employer. That is, it may be necessary or desirable to the m
ain business. But it is considered a project because it is distinguishable as se
parate from the main business.
There are three instances when the project employee is converted into a r
egular employee.
1. A project employee may be converted to regular status when he was employed fo
r a specific project, the completion of which is determined, but despite the ter
mination of the project, he is still made to work. It negates the essence of pro
ject employment. It shows the employee s work is needed not only in the specific p
roject.
2. Within the project itself, and before the completion of the project, the empl
oyee is given tasks not related at all to the project. Giving the employee addit
ional work negates again the essence of project employment. It shows again the n
eed of his services is not limited to the project. Even if the extra work is not
UNOD in UTOB to the main business, he is converted to a regular employee.
3. The case of Maraguinot. Under multiple succeeding projects, can you have gaps
between each project, and the employee still be converted to regular status? YE
S. But only when the project employee is rehired continuously, and for the same
nature of task. There is a pattern showing that UNOD in UTOB.
Remember that the one year rule in the Code applies only to casual emplo
yment, not to project nor seasonal employees.
If a project employee is converted to a regular employee, when can he re
ckon his conversion to regular employment? At the start of the project? Accordin
g to Sir, there is no clear answer to that. Two possible options: One is to say
that regular employment starts from day one, because it can be analogous to the
ground of psychological incapacity under the Family Code. Theoretically it should
have existed from the very start, even if it manifests much later. Hence, one th
eory is that from day one, the work done is UNOD in UTOB, thus regular employee
from day one.
The second option is after showing a series of rehiring, a pattern, only
then will conversion occur. But it is hard to determine what exact date the reg
ular employment will be counted should it be counted from the start of the third
project? Or from the second project? Etc. etc. Again, there is no clear-cut for
mula.
Casual Employment:
A casual employee is one whose employment is not UNOD in UTOB, but his term of e
mployment is not made known at the time of the employment, unlike a project ee.
A casual converts to regular ee if after one year of service, whether continuous
or broken, he still works for the employer. The length of time is an indication
that his job is UNOD in UTOB.
Now what if this scenario happens:
In this case, the employee becomes regular after one year, that is, under
the second undertaking. Hence he is deemed a regular employee, and so he may dem
and to be rehired when there is another available undertaking, even though the i
ntervals between jobs may stretch to months. During the second vacancy, the empl
oyee is still considered a regular employee, but since there is no job to do, th
e Court considers this a temporary lay-off without pay. Hence he is still a regu
lar employee who follows the no work, no pay rule.
The same principle temporary lay off applies to a project and seasonal emplo
yee/employment, who acquires regular employment. Such employee can demand that h
e be rehired for the next casual work. If the company hires someone else, then i
t is guilty of illegal termination illegally terminating the employee converted
to regular employee.
During the period that he is temporarily laid off, the worker may seek wor
k elsewhere. This will not negate his conversion to a regular employee in the fi
rst company.
After the one year, the employee has the right to demand that he be rehire
d for succeeding undertakings. Conversely, management can demand and compel the
employee to report for work for the next undertaking. If the employee is working
elsewhere, then the employer can deem the employee as refusing to work, a groun
d for disciplinary action and termination.
REMEMBER: A casual employee becomes regular after completion of service of
one year for the SAME task or nature of tasks. He must complete the one year pe
riod for the SAME tasks/nature of tasks. So let s say for the second undertaking h
e was hired as a driver, but in the first undertaking he was hired as a waiter,
then there is no conversion. The Principle in project or seasonal employment tha
t once a project/seasonal employee is made to do tasks other than or outside of
the work for which he was hired makes him a regular employee, DOES NOT apply to
casual employment.
* The codal provisions are very important especially for bar purposes. The cases
are interpretations of the provisions. You must know the provisions first befor
e the cases.
Seasonal Employment:
In this case, conversion occurs similar to project employees. When they a
re continuously rehired for the same task/nature of task, they become regular em
ployees. During off-season, they are temporarily laid off, without pay, but they
are still considered regular employees.
So during off-season, the relationship is still continuous. Regular seaso
nal employees . Sir uses this term only because the Court used it. But the correct
term should be seasonal employees converted to regular employees. Anyway, the hi
ring must be for the same task/nature of task. If not, there is no pattern for U
NOD in UTOB. Except in cases where the employer hires an all around person. Obviou
sly, not the same nature of task. But there is still that pattern showing his se
rvices are UNOD in UTOB. So he becomes regular as well. In the Phil. Tobacco cas
e, the workers were hired season after season after season. So obviously they we
re regular employees.
Remember our discussion awhile ago, regarding project employees, as to w
hen to reckon an employee to be regular once there is conversion? The same two
scenarios apply to seasonal employees. There is also no clear-cut answer to sea
sonal employees. But it is easier to defend the first scenario that from day one
they were regular, it became manifest only after some time. Use the principle o
f resolving all doubts in favor of labor. Otherwise it will be difficult to defe
nd the time of conversion.
Remember that once an employee is converted to a regular employee, he sh
ould enjoy or derive all benefits covered by the CBA that is given to regular em
ployees. Now, look at the codal provision. In effect, it says that if one is not
regular, he is project/seasonal. If he is not project/seasonal, he is casual. B
ut there is another type of employment created by jurisprudential rule:
Fixed Term employment:
Unlike project, where what is fixed is the term of completion of the pro
ject, in Fixed Term, the PERIOD of employment is fixed. The Court clarified that
Fixed term is allowed only if:
* it was entered into by both parties negotiating on a more-or-less equal bargai
ning position
* the worker should not be coerced
* the worker should not be deprived of his workers rights as an employee
* it must be a good faith agreement, not entered into by the employer to circumv
ent the law on regular employment
This is the Brent ruling. The Court upheld this pursuant to provisions on
the Civil Code, that one must respect the terms of a contract entered into by t
he parties. Is this correct? Partly yes, essentially no. Yes the CC contains the
provisions recognizing the parties rights to fix the terms of a contract. But th
e CC itself says that for employment relationship it is not the CC that applies
but rather the Labor Code. For a contract of employment is not an ordinary contr
act-it is so vested with public interest that it should be covered by special pr
ovisions. Even the CC points us back to special laws.
Is the Brent doctrine applicable to any situation? No. It will NOT apply
to a factory and a factory worker. Remember that the people involved in Brent w
ere the school and an athletic director.
Similar to a probationary/project/seasonal employee being made to work be
yond the period/project/season, a fixed term employee made to work beyond the fi
xed term should be considered regular, because it negates the essence of fixed t
erm employment. Even if the parties bargained on equal footing. Second, is repea
tedly rehiring the fixed term employee through fixed term employment contracts.
The element of circumvention in this case is clearly shown. It lacks one of the
conditions under the Brent doctrine that the fixed term employment must be done
in good faith. Hence in the second situation the employee should be deemed regul
ar as well.
Remember that it is not a general rule that you can fix the term of empl
oyment. It is an exceptional case that must be applied in exceptional circumstan
ces. The general rule is one is a regular employee. Remember the rule in statuto
ry construction that exceptions to the general rule must be construed strictly.
So if you are not sure whether the employee falls under one of the exceptional c
ircumstances, then he should be deemed regular. Is there a problem with that? Th
ere is none because an employer can hire an employee as regular starting from da
y one.

IV. RIGHT TO SELF-ORGANIZATION


A. CONCEPT AND SCOPE
LABOR CODE
Art. 243. Coverage and employees right to self-organization.
ALL persons employed in:
- commercial, industrial, and agricultural enterprises, and
- in religious, charitable, medical or educational institutions, whether operati
ng for profit or not
shall have the right to
- self organization and to
- form, join, or assist labor organizations of their own choosing
for purposes of collective bargaining.
- Ambulant, intermittent and itinerant workers,
- Self-employed people,
- Rural workers, and
- Those without any definite employers
MAY form labor organizations for their mutual aid and protection.
Art. 246. Non-abridgement of right to self-organization.
IT shall be unlawful 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 organization for the purpose of collective bargain
ing through representatives of their own choosing, and
- to engage in lawful concerted activities for the same purpose, or for their mu
tual aid and protection, subject to the provisions of Art. 264 of this Code.
Art. 277(c). Miscellaneous provisions.
ANY employee,
- whether employed for a definite period or not,
- shall, beginning on his first day of service,
- be considered an employee
- for purposes of membership in any labor union.
Art. 212. Definitions.
(e) Employer includes
- any person
- acting in the interest of an employer,
- directly or indirectly.
The term shall not include
- any labor organization
- or any of its officers or agents
- EXCEPT when acting as employer.
(f) Employee includes
- any person
- in the employ of an employer.
The term shall not be limited to the employees of a particular employer, unless
this Code so explicitly states.
It shall include
- any individual whose work has ceased
- as a result of or in connection with
- any current labor dispute
- or because of any unfair labor practice
- IF he has not obtained any other substantially equivalent and regular employme
nt.

OMNIBUS RULES, BOOK V RULE I, SEC. 1 (F,G) RULE II


RULE I
Definition of Terms
SECTION 1. Definition of terms.
(f) "Employer" includes any person acting in the interest of an employer, di
rectly or indirectly. The term shall not include any labor organization or any o
f its officers or agents except when acting as employer.
(g) "Employees" includes any person in the employ of a particular employer.
The term shall not be limited to the employees of a particular employer, unless
the Code so explicitly states. It shall include any individual whose work has ce
ased as a result of or in connection with any current labor dispute or because o
f any unfair labor practice if he has not obtained any other substantially equiv
alent and regular employment.
RULE II
Coverage of the Right to Self-Organization
SECTION 1. Policy. It is the policy of the State to promote the free and re
sponsible exercise of the right to self-organization through the establishment o
f a simplified mechanism for the speedy registration of labor organizations and
workers associations, determination or representation status, and resolution of i
ntra- and inter-union disputes. Only legitimate or registered labor organization
of workers associations shall have the right to represent their members for coll
ective bargaining and other purposes.
SECTION 2. Who may join labor organizations. All persons employed in commercial
, industrial and agricultural enterprises, including employees of government-own
ed or controlled corporations without original charters established under the Co
rporation Code, as well as employees or religious, charitable, medical or educat
ional institutions whether operating for profit or not, shall have the right to
self-organization and to form, join or assist labor organizations for purposes o
f collective bargaining; provided, however, that supervisory employees shall not
be eligible for membership in a labor organization of the rank-and-file employe
es but may form, join or assist labor organizations for purposes of collective b
argaining if they are a national or a country which grants the same or similar r
ights to Filipino workers, as certified by the Department of Foreign Affairs.
For the purpose of this Section, any employee, whether employed for a definite p
eriod or not, shall, beginning on the first day of his service, be eligible for
membership in any labor organization
SECTION 3. All other workers including ambulant, intermittent and other workers
, the self-employed, rural workers and those without any definite employers may
form workers associations for their mutual and protection and for other legitima
te purposes.
B. SPECIAL GROUPS OF EMPLOYEES
LABOR CODE
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 a labor organization of the rank-and-file employees
- but may join, assist or form separate labor organizations of their own.
212. Definitions.
(m) Managerial employee is one who is vested with the powers or prerogatives
- to lay down and execute management policies
- and/or to hire, transfer, suspend, lay off, recall, discharge, assign or disci
pline employees.
Supervisory employees are those who,
- in the interest of the employer,
- effectively recommend such managerial actions
- if the exercise of such authority is not merely routinary or clerical in natur
e
- but requires the use of independent judgement.
All employees not falling within any of the above definitions are considered ran
k-and-file employees for purposes of this Book.
OMNIBUS RULES, BOOK V
RULE I
Definition of Terms
SECTION 1. Definition of terms.
(t) "Managerial Employee" is one who is vested with powers or prerogatives t
o lay down and execute management policies and/or to hire, transfer, suspend, la
yoff, recall, discharge, assign or discipline employees. "Supervisory Employee"
is one who, in the interest of the employer, effectively recommends managerial a
ctions if the exercise of such authority is not merely routinary or clerical in
nature but requires the use of independent judgment. All employees not failing w
ithin the definition of managerial or supervisory employees are considered rank-
and-file employees, for purposes of these Rules.
CASES
Franklin Baker vs. Trajano, 157 SCRA 416 (1988)
A union representing 90 workers of the company filed for a certification electio
n. The company opposed saying that 76 of the workers were managerial employees,
citing instances wherein these workers recommended the dismissal and hiring of
several workers.
Held: The test of supervisory or managerial status depends on whether a person poss
esses authority to act in the interest of his employer in the matter specified i
n 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 re
quires the use of independent judgment. Thus, where such recommendatory powers a
s 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 requir
ed by law.
Subject employees are not managerial employees because as borne by the re
cords, they do not participate in policy making but are given ready policies to
execute and standard practices to observe, thus having little freedom of action.
United Pepsi-Cola Supervisory Union vs. Laguesma, 288 SCRA 15
The company opposed the inclusion of its route managers in the list of members o
f the union claiming said employees are managerial employees and should be exclu
ded.
Held: A distinction exists between those who have the authority to devise, impl
ement and control strategic and operational policies (top and middle managers) a
nd those whose task is simply to ensure that such policies are carried out by th
e 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 th
e interest of the employer in supervising such rank-and-file employees.
Designations or titles of positions are not controlling. And neither sh
ould it be presumed that just because they are given set benchmarks to observe,
they are ipso facto supervisors. Adequate control methods which require a deline
ation of the functions and responsibilities of managers by means of ready refere
nce cards as here, have long been recognized in management as effective tools fo
r keeping businesses competitive.
University of the Philippines Corp. vs. Ferrer-Calleja, 211 SCRA 451
UP protested the inclusion of the academic staff in a labor union composed of ot
her non-academic rank and file, claiming that they are high level-employees or a
t the least, should comprise a separate collective bargaining unit.
Held: Even assuming arguendo that UP professors discharge policy-determining fu
nction through the University Council, still such exercise would not qualify the
m as high-level employees within the context of E.O. 180. Policy-determining refe
rs to policy-determination in university matters that affect those same matters
that may be the subject of negotiation between public sector management and labo
r. The reason why policy-determining has been laid down as a test in segregating r
ank-and-file from management is to ensure that those who lay down policies in ar
eas that are still negotiable in public sector collective bargaining do not them
selves become part of those employees who seek to change these policies for thei
r collective welfare.
The policy-determining functions of the University Council refer to acade
mic matters, i.e., those governing the relationship between the University and i
ts students, and not the University as an employer and the professors as employe
es. It is thus evident that no conflict of interest results in the professors be
ing members of the University Council and being classified as rank-and-file empl
oyees.
The basic test in determining the appropriate bargaining unit is that a
unit, to be appropriate, must affect a grouping of employees who have substantia
l, mutual interests in wages, hours, working conditions and other subjects of co
llective bargaining. The test of the grouping is community or mutuality of inte
rests. And this is so because the basic test of an asserted bargaining unit s acce
ptability is whether or not it is fundamentally the combination which will best
assure to all employees the exercise of their collective bargaining rights.
Toyota Motor Philippines Corp. vs. Toyota Motor Philippines Labor Union, 268 SCR
A 573
The company opposed the holding of a certification election because the union ha
s both rank and file employees and supervisory employees.
Held: A labor organization composed of both rank-and-file and supervisory emplo
yees 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 mi
xture of rank-and-file and supervisory employees cannot possess any of the right
s of a legitimate labor organization, including the right to file a petition for
certification election for the purpose of collective bargaining. It becomes nec
essary, therefore, anterior to the granting of an order allowing a certification
election, to inquire into the composition of any labor organization whenever th
e status of the labor organization is challenged on the basis of Article 245 of
the Labor Code.
(The Court held that the union cannot, prior to purging itself of its sup
ervisory employee members, attain the status of a legitimate labor organization.
Not being one, it cannot possess the requisite personality to file a petition f
or certification election.)
SPI Technologies vs. DOLE (Minute Resolution), March 8, 1999
The company opposed the petition for certification filed by the union alleging t
hat the union is not a legitimate labor organization as it represents both super
visory and rank and file employees, and submitting the names of 19 alleged super
visory employees.
Held: The record shows that the union is a legitimate labor organization having
been issued a certificate of registration. Under prevailing rules, once a unio
n acquires legitimate status as a labor organization, it continues as such until
its certificate of registration is cancelled or revoked in an independent actio
n for cancellation
Article 245 merely prescribes the requirements for eligibility in joinin
g a union and does not prescribe the grounds for the cancellation of union regis
tration. In the absence of any independent petition for cancellation of registr
ation filed against the respondent labor union, it continues to be possessed wit
h legal personality of a legitimate labor organization.

Atlas Lithographic Services vs. Laguesma, 205 SCRA 12


A local union comprised of supervisory employees filed a petition for certificat
ion election which was opposed by the company because such union was affiliated
with a national federation which has as one of its members the union of the comp
any s rank-and-file employees.
Held: These supervisory employees are allowed to form their own union but they
are not allowed to join the rank-and-file union because of conflict of interest.
The peculiar role of supervisors is such that while they are not managers, whe
n 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.
A conflict of interest nay arise in the areas of discipline, collective b
argaining and strikes.
Members of the supervisory union might refuse to carry out disciplinary m
easure against their co-member rank-and-file employees. In the area of bargaini
ng, their interests cannot be considered identical. The needs of one are differe
nt from those of the other. Moreover, in the event of a strikes the national fed
eration might influence the supervisors union to conduct a sympathy strike on the
sole basis of affiliation.
De La Salle University Medical Center vs. Laguesma, 294 SCRA 141
The company opposed the petition for certification election on the ground that t
he federation representing the supervisors union also represents its rank-and-fil
e employees union.
Held: The reason for the segregation of supervisory and rank-and-file employees
of a company with respect to the exercise of the right to self-organization is
the difference in their interests. Supervisory employees are more closely identi
fied with the employer than with the rank-and-file employees. If supervisory and
rank-and-file employees in a company are allowed to form a single union, the co
nflicting interests of these groups impair their relationship and adversely affe
ct discipline, collective bargaining, and strikes. These consequences can obtain
not only in cases where supervisory and rank-and-file employees in the same com
pany belong to a single union but also where unions formed independently by supe
rvisory and rank-and-file employees of a company are allowed to affiliate with t
he same national federation.
However, such a situation would obtain only where two conditions concur:
First, the rank-and-file employees are directly under the authority of supervis
ory employees. Second, the national federation is actively involved in union ac
tivities in the company.
The affiliation of two local unions in a company with the same national
federation is not by itself a negation of their independence since in relation t
o the employer, the local unions are considered as the principals, while the fed
eration is deemed to be merely their agent. This conclusion is in accord with th
e policy that any limitation on the exercise by employees of the right to self-o
rganization guaranteed in the Constitution must be construed strictly. Workers s
hould be allowed the practice of this freedom to the extent recognized in the fu
ndamental law.
National Association of Trade Unions (NATU) vs. NLRC, 239 SCRA 546
The petition for certification election of the union was opposed by the company
on the ground that some of the employees included in the list of members were ei
ther managerial or confidential employees.
Held: It is the nature of the employee s functions, and not the nomenclature or t
itle given to his job, which determines whether he has rank and file, supervisor
y, or managerial status.
The grave abuse of discretion committed by public respondent is at once a
pparent. Art. 212, par. (m), of the Labor Code is explicit. A managerial employe
e is (a) one who is vested with powers or prerogatives to lay down and execute m
anagement policies, or to hire, transfer, suspend, lay off, recall, discharge, a
ssign or discipline employees; or (b) one who is vested with both powers or prer
ogatives. A supervisory employee is different from a managerial employee in the
sense that the supervisory employee, in the interest of the employer, effectivel
y recommends such managerial actions, if the exercise of such managerial authori
ty is not routinary in nature but requires the use of independent judgment. It
is the nature of the employee s functions, and not the nomenclature or title given
to his job, which determines whether he has rank and file, supervisory, or mana
gerial status.
A confidential employee is one entrusted with confidence on delicate mat
ters, or with the custody, handling, or care and protection of the employer s prop
erty. While Art. 245 of the Labor Code singles out managerial employees as inel
igible to join, assist or form any labor organization, under the doctrine of nec
essary implication, confidential employees are similarly disqualified.
In the collective bargaining process, managerial employees are supposed
to be on the side of the employer, to act as its representatives, and to see to
it that its interests are well protected. The employer is not assured of such pr
otection if these employees themselves are union members. Collective bargaining
in such a situation can become one-sided. It is the same reason that impelled t
his Court to consider the position of confidential employees as included in the
disqualification found in Art. 245 as if the disqualification of confidential em
ployees were written in the provision. If confidential employees could unionize
in order to bargain for advantages for themselves, then they could be governed b
y their own motives rather than the interest of the employers. Moreover, unioniz
ation of confidential employees for the purpose of collective bargaining would m
ean the extension of the law to persons or individuals who are supposed to act in
the interest of the employers. It is not farfetched that in the course of colle
ctive bargaining, they might jeopardize that interest which they are duty-bound
to protect.
Metrolab Industries vs. Confesor, 254 SCRA 182
The company asked for the exclusion from the closed shop provision and bargainin
g unit of the rank and file employees of the executive secretaries of its manage
rs since such secretaries are confidential employees having access to vital labor
information .
Held: Although Article 245 of the Labor Code 20 limits the ineligibility to joi
n, 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 fiduciar
y manner to managerial employees and hence, are likewise privy to sensitive and
highly confidential records.
The dangers sought to be prevented, particularly the threat of conflict
of interest and espionage, are not eliminated by non-membership of Metrolab s exec
utive secretaries or confidential employees in the Union. Forming part of the ba
rgaining unit, the executive secretaries stand to benefit from any agreement exe
cuted between the Union and Metrolab. Such a scenario, thus, gives rise to a pot
ential conflict between personal interests and their duty as confidential employ
ees to act for and in behalf of Metrolab. They do not have to be union members t
o affect or influence either side.
Finally, confidential employees cannot be classified as rank and file. As
previously discussed, the nature of employment of confidential employees is qui
te distinct from the rank and file, thus, warranting a separate category. Exclud
ing confidential employees from the rank and file bargaining unit, therefore, is
not tantamount to discrimination.
Sugbuanon Rural Bank vs. Laguesma, 324 SCRA 425
The company opposed the union s petition for certification election on the ground
that the members of the union were confidential employees.
Held: Article 245 of the Labor Code does not directly prohibit confidential emp
loyees from engaging in union activities. However, under the doctrine of necess
ary implication, the disqualification of managerial employees usually 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 relat
ions information, there is no legal prohibition against confidential employees f
rom forming, assisting, or joining a union.
San Miguel Corp. Supervisors and Exempt Union vs. Laguesma, 277 SCRA 370
The company petitioned for the exclusion of several supervisors from the bargain
ing unit on the ground that they were confidential employees. These employees h
andle confidential information which relate to product formulation, product stan
dards and product specifications.
Held: Confidential employees are those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management pol
icies in the field of labor relations. The two criteria are cumulative, and bot
h must be met if an employee is to be considered a confidential employee that is
, the confidential relationship must exist between the employee and his supervis
or, and the supervisor must handle the prescribed responsibilities relating to l
abor relations.
An important element of the confidential employee rule is the employee s nee
d to use labor relations information. Thus, in determining the confidentiality o
f certain employees, a key question frequently considered is the employees necess
ary access to confidential labor relations information.
Granting arguendo that an employee has access to confidential labor rela
tions information but such is merely incidental to his duties and knowledge ther
eof is not necessary in the performance of such duties, said access does not ren
der the employee a confidential employee. If access to confidential labor relati
ons information is to be a factor in the determination of an employee s confidenti
al status, such information must relate to the employer s labor relations policies
. Thus, an employee of a labor union, or of a management association, must have
access to confidential labor relations information with respect to his employer,
the union, or the association, to be regarded a confidential employee, and know
ledge of labor relations information pertaining to the companies with which the
union deals, or which the association represents, will not cause an employee to
be excluded from the bargaining unit representing employees of the union or asso
ciation. Access to information which is regarded by the employer to be confiden
tial from the business standpoint, such as financial information or technical tr
ade secrets, will not render an employee a confidential employee.
In the case at bar, the employees in question may not be considered conf
idential employees merely because they handle confidential data as such must first
be strictly classified as pertaining to labor relations for them to fall under
said restrictions. The information they handle are properly classifiable as tech
nical and internal business operations data which, to our mind, has no relevance
to negotiations and settlement of grievances wherein the interests of a union a
nd the management are invariably adversarial. Since the employees are not classi
fiable under the confidential type, this Court rules that they may appropriately
form a bargaining unit for purposes of collective bargaining. Furthermore, even
assuming that they are confidential employees, jurisprudence has established th
at there is no legal prohibition against confidential employees who are not perf
orming managerial functions to form and join a union.
Jacinto vs. CA, 281 SCRA 657
Several public school teachers incurred unauthorized absences when they particip
ated in mass actions. They were preventively suspended and later on dismissed b
y the DECS Secretary. The teachers claimed they were merely exercising their ri
ght to peaceful assembly and petition for redress of grievances.
Held: As regards the right to strike, the Constitution itself qualifies its exe
rcise with the proviso in accordance with law. This is a clear manifestation that
the state may, by law, regulate the use of this right, or even deny certain sect
ors such right. Executive Order 180 which provides guidelines for the exercise o
f the right of government workers to organize, for instance, implicitly endorsed
an earlier CSC circular which enjoins under pain of administrative sanctions, al
l government officers and employees from staging strikes, demonstrations, mass l
eaves, walkouts and other forms of mass action which will result in temporary st
oppage or disruption of public service, by stating that the Civil Service law and
rules governing concerted activities and strikes in the government service shal
l be observed.
It is also settled in jurisprudence that, in general, workers in the publ
ic sector do not enjoy the right to strike.
Acosta vs. CA, 334 SCRA 486
Teachers from different public schools in Metro Manila were administratively cha
rged with grave misconduct and gross neglect of duty when they did not report fo
r work and instead, participated in mass actions. They claimed that they never
went on strike because they never sought to secure changes or modification of th
e terms and conditions of their employment.
Held: The character and legality of the mass actions which they participated in
have been passed upon by this Court as early as 1990 wherein it held that these
mass actions were to all intents and purposes a strike; they constituted a conc
erted and unauthorized stoppage of, or absence from, work which it was the teach
ers sworn duty to perform, undertaken for essentially economic reasons.
LECTURE
Is the right to self organization a constitutional right? Can it be taken
away by statute? The right to self organization is a constitutional right. And
it cannot be taken away by statute. The right to self organization per se is a r
ight of ALL employees, not just rank-and-file or supervisory but even managerial
employees. It is the right to organization for purposes of collective bargainin
g which is limited by the Labor Code. Hence, only rank and file and supervisory
employees may join, assist, or form labor organizations for purposes of collecti
ve bargaining. Art. 243 cannot be read in isolation. It must be read in conjunct
ion with Art. 245.
What is the right to self-organization? It does not only cover the right
to organize for purposes of collective bargaining and for mutual aid and protect
ion, but also pursuant to Art. 246. Look at Art. 246, it defines what is the rig
ht of self-organization.. It extends to the employee s right to assert peaceful, c
oncerted means. Hence, to picket peacefully is part of the right to self-organiz
ation through peaceful, concerted means, and it is beyond the jurisdiction of th
e regular courts.
Who are managerial employees? Look at Art. 82. If one is a member of a ma
nagerial staff by virtue of Art. 82 you are a managerial employee? Insofar as on
e is entitled to certain benefits, one can be considered a managerial employee e
xcluding him from such benefits, and in this case, managerial employee as define
d by Art. 82. But insofar as the right to self-organization is concerned, he may
be considered NOT a managerial employee because of the other definition of a ma
nagerial employee under Art. 245. Because the definition of a managerial employe
e should be applied strictly.
There s a prohibition against managerial employees joining or assisting in
union organizing activities, because it is considered interference by management
. Because they lay down policies. Now as for supervisory employees, they are all
owed to form or join labor organizations because their power is recommendatory.
However it must be effective recommendation. What does that mean? Since all reco
mmendations of supervisors go up to the manager for a final signature at the ver
y least, it can be said it will always be subject to review. So when can a recom
mendation be considered effective?
In the case of a disciplinary action, a supervisor conducted an investiga
tion, and he exercised discretion and recommended termination after deciding the
case, if the manager conducts another investigation, and again evaluate the evi
dence submitted by the supervisor, then the supervisor s recommendation is not eff
ective. He should be considered rank-and- file. On the other hand, if the manage
r merely reviews the supervisor s findings and recommendations, and determine if t
he supervisor exercised due discretion, then the recommendation was effective re
commendation. The supervisor holds a supervisory position.
Now a supervisor cannot join the organization of rank-and-file employees
, and vice versa. There is a prohibition on commingling. Does it matter how many
prohibited employees happened to join the union? No. The legitimacy of the unio
n is invalidated by even a single employee who commingles with that certain unio
n. Such issue will come up in a petition for certification election proceeding.
Remember the case of Toyota. The Court said the legitimacy of a union is nullifi
ed the moment there is commingling. What is the legal basis for this ruling? Art
. 245? But Art. 245 does not mention the effect of nullification in case of comm
ingling.
Remember the Toyota case and Justice Kapunan :). SPI Technologies is a cl
arification of the Toyota case. It says that Art. 245 relates to the eligibility
of the employees to join. It does not relate to the issue of illegitimacy. In f
act, the Labor Code does not include as one of the grounds for cancellation of a
union s registration the commingling of employees in such union. Toyota places a
burden on labor unions to determine with exactness who are supervisory or rank-a
nd-file employees. Instead of Toyota, SPI is a more reasonable interpretation of
Art. 245. Art. 245 bars an employee , and the effect of the violation is for th
e member to be expelled. In the case of a petition for certification election, t
he employee is excluded from voting through inclusion/exclusion proceedings. We
do not know how the Court will reconcile Toyota and SPI. They are irreconcilable
. I suggest for the bar purposes, cite Toyota, then cite SPI. We will not know w
hy the examiner asks the question-if he is relying on Toyota or is testing if yo
u know SPI. So I suggest cite both Toyota then say that there is a recent contra
ry decision in the case of SPI.
The Toyota doctrine says that commingling is a violation of Art. 245, and
results in the nullification of a union s registration. This fatally affects a pe
nding petition for certification election because it can be filed only by a legi
timate labor organization.
Now in the Atlas case, using Art. 245 of the Code, says that a supervisor
y union cannot join the federation of the company s rank-and-file union. Hence it
extends the prohibition to the federation or conglomerate level. Applying Toyota
again, will this affect the federation s legitimacy? Yes. This is again not provi
ded in Art. 245. Go to the last paragraph of the decision, prior to the disposit
ive portion. The company withdrew its opposition to the commingling in the feder
ation. There was no genuine issue left! That is how doctrines in labor are made
year in and year out.
Now in the succeeding case of De La Salle, the commingling per se is not
disallowed. It said the Atlas doctrine is applicable only when:
* The rank-and-file union members are directly under the supervisors comprising
the supervisory union
* The federation is actively involved in the negotiations for CBA (which is stup
id because this is the primary purpose of a federation)
It is possible that there are supervisors in the union who are not superv
ising the rank-and-file members of the union in the same federation. They are no
t really working with each other. For instance, they belong to different departm
ents. Or a union can be organized in such a way where not all rank-and-file empl
oyees comprise only one union. You can divide them into as many bargaining units
as possible depending on the rules in determining the appropriate bargaining un
it.
Confidential employees- are those who assist managerial employees and by
the doctrine of necessary implication are not allowed to join or assist labor or
ganizations. They are akin to managerial employees. Three elements that must be
applied strictly:
* The confidential employee s necessary or primary function entails he must have
access to vital confidential information or matter related to labor relations.
* He also must have fiduciary relationship of a confidential nature with the man
agement employee.
* And the manager must have the power to lay down policies relating to labor rel
ations.
Hence a Xerox operator cannot be considered a confidential employee, beca
use although he may photocopy vital labor relations documents, he does not enjoy
the fiduciary relation.
I suggest you try to know the rules on public sector unionism. You can fi
nd that in any book. I m not sure if it is included in the bar exams though.
A union security agreement is a valid compulsion as a condition for emplo
yment. In compelling him to join a labor organization you are working for his ow
n good. It is done for collective action for labor. It is good for labor. This i
s an exception to the right to association, such as lawyers are compelled to joi
n the IBP.
But who cannot be compelled to be members of the labor union? Those who a
re already members of another union. The compulsion to join the union applies to
those who are not yet members of another union and are not religious objectors.
Religious Objectors applies to people who claim that it is prohibited by their rel
igious belief. They can maintain their employment despite the union security cla
use. But religious objectors are not prohibited from joining if they want to , n
or are they prohibited from forming their own union. No state policy or law proh
ibits this, it is only usually an internal prohibition by the religious group.
This is exemplified in the Kapatiran case. The workers were allowed to f
orm their own union if they wanted to, and even if it would be against their rel
igious belief, the State would still not prohibit them from doing the same.
C. ACQUISITION AND RETENTION OF MEMBERSHIP, UNION SECURITY AGREEMENTS
LABOR CODE
Art. 277 (c). Miscellaneous Provisions.
ANY employee,
- whether employed for a definite period or not,
- shall, beginning his first day of service,
- be considered an employee
- for purposes of membership in any labor union.
Art. 248 (e). Unfair Labor Practices of Employers.
- To discriminate in regard to
a) wages,
b) hours of work,
c) and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization.
- Nothing in this Code or in any other law
~ shall stop the parties from requiring membership in a recognized collective ba
rgaining agent as a condition for employment,
~ except of those employees who are already members of another union at the time
of the signing of the collective bargaining agreement.
- Employees of an appropriate collective bargaining unit
a) who are not members of the recognized collective bargaining agent
b) may be assessed a reasonable fee equivalent to the dues and other fees paid b
y members of the recognized collective bargaining agent,
c) if such non-union members accept the benefits under the collective agreement:
d) Provided, That the individual authorization required under Art. 242, paragrap
h (o), of this Code shall not apply to the non-members of the recognized collect
ive bargaining agent.
CASES
Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54
It is clear that the right to join a union includes the right to abstain from jo
ining any union. The legal protection granted to such right to refrain from join
ing is withdrawn by operation of law. Where a labor union and an employer have a
greed on a closed shop, by virtue of which the employer may employ only members
of the collective bargaining union, and the employees must continue to be member
s of the union for the duration of the contract in order to keep their jobs.
It is clear, therefore, that the assailed Act, far from infringing the c
onstitutional provision on freedom of association, upholds and reinforces it. It
does prohibit the members of said religious sects from affiliating with labor u
nions. It still leaves to said members the liberty and the power to affiliate, o
r not to affiliate, with labor unions. If, notwithstanding their religious belie
fs, the members of said religious sects prefer to sign up with the labor union,
they can do so. If in deference and fealty to their religious faith, they refuse
to sign up, they can do so, the law does not coerce them to join; neither does
the law prohibit them from joining, and neither may the employer or labor union
compel them to join.

Kapatiran sa Meat and Canning Division vs. Ferrer-Calleja, 162 SCRA 367
This Court s decision in Victoriano vs. Elizalde Rope Workers Union, 59 SCRA 54, up
holding the right of members of the IGLESIA NI KRISTO sect not to join a labor u
nion for being contrary to their religious beliefs, does not bar the members of
that sect from forming their own union. The public respondent correctly observed
that the recognition of the tenets of the sect . . . should not infringe on the
basic right of self-organization granted by the constitution to workers, regardl
ess of religious affiliation.
The fact that TUPAS was able to negotiate a new CBA with ROBINA within th
e 60-day freedom period of the existing CBA, does not foreclose the right of the
rival union, NEW ULO, to challenge TUPAS claim to majority status, by filing a t
imely petition for certification election on October 13, 1987 before TUPAS old CB
A expired on November 15, 1987 and before it signed a new CBA with the company o
n December 3, 1987. As pointed out by Med-Arbiter Abdullah, a certification elect
ion is the best forum in ascertaining the majority status of the contending unio
ns wherein the workers themselves can freely choose their bargaining representat
ive thru secret ballot. Since it has not been shown that this order is tainted wi
th unfairness, this Court will not thwart the holding of a certification electio
n.
D. LABOR ORGANIZATIONS
LABOR CODE
Art. 212. Definitions.
(g) Labor organization means any union or association of employees which exist
s in whole or in part for the purpose of collective bargaining or of dealing wit
h employers concerning terms and conditions of employment.
(h) Legitimate labor organization means any labor organization duly registered
with the Department of Labor and Employment and includes any branch or local th
ereof.
ART. 231. Registry of unions and file of collective agreements.
The Bureau shall keep a registry of
- legitimate labor organizations.
The Bureau shall also maintain a file of
- all collective bargaining agreements
- and other related agreements
- and records of settlement of labor disputes,
- and copies of orders, and decisions of voluntary arbitrators.
The file shall be open and accessible
(a) to interested parties
(b) under conditions prescribed by the Secretary of Labor and Employment,
(c) provided that no specific information submitted in confidence shall be discl
osed unless:
- authorized by the Secretary,
- or when it is at issue in any judicial litigation
- -or when public interest or national security so requires.
1.
(a) Within thirty (30) days from the execution of a collective bargaining ag
reement,
(b) the parties shall submit copies of the same directly to the Bureau or the Re
gional Offices of the Department of Labor and Employment for registration ,
(c) accompanied with
- verified proofs of its posting in two conspicuous places in the place of work
- and ratification by the majority of all the workers in the bargaining unit.
2. The Bureau or Regional Offices shall
(a) act upon the application for registration of such collective bargaining agre
ement within five (5) calendar days from receipt thereof.
(b) The Regional Offices shall furnish the Bureau with a copy of the collective
bargaining agreement within five (5) days from its submission.
(c) The Bureau or Regional Office shall assess the employer for every collective
bargaining agreement
- a registration fee of not less than one thousand pesos (P1,000.00) or
- in any other amount as may be deemed appropriate and necessary by the Secretar
y of Labor and Employment
- for the effective and efficient administration of the voluntary arbitration pr
ogram.
Any amount collected under this provision shall accrue to the Special Vol
untary Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or assist in t
he publication, of all final decisions, orders and awards of the Secretary of La
bor and Employment, Regional Directors and the Commission.
ART. 234. Requirements of registration. Any applicant labor organization,
association or group of unions or workers
- shall acquire legal personality
- and shall be entitled to the rights and privileges granted by law to legitimat
e labor organizations
- upon issuance of the certificate of registration
- based on the following requirements:
a. Fifty-pesos (P50.00) registration fee;
b. The names of its officers, their addresses, the principal address of the labo
r organization, the minutes of the organizational meetings and the list of the w
orkers who participated in such meetings;
c. The names of all its members comprising at least twenty 20% percent of all th
e 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 a
nnual financial reports; and
e. Four copies of the constitution and by-laws of the applicant union, the minut
es of its adoption or ratification and the list of the members who participated
in it.
ART. 235. Action on application.
The Bureau shall act on all applications for registration within thirty (30) day
s from filing.
All requisite documents and papers shall be
- certified under oath by the Secretary or the treasurer of the organization, as
the case may be,
- and attested to by its president.
ART. 236. Denial of registration; appeal. The decision of the Labor Relati
ons Division in the regional office denying registration may be appealed by the
applicant union to the Bureau within ten days from receipt of notice thereof.
ART. 237. Additional requirements for federations or national unions. Subj
ect to Art. 238, if the applicant for registration is a federation or a national
union, it shall, in addition to the requirements of the preceding Articles, sub
mit the following:
(a) Proof of the affiliation of at least ten locals or chapters, each of which m
ust be a duly recognized collective bargaining agent in the establishment or ind
ustry in which it operates, supporting the registration of such applicant federa
tion or national union;
(b) The names and addresses of the companies where the locals or chapters operat
e and the list of all the members in each company involved.
ART. 238. Cancellation of registration, appeal.
The certificate of registration of any legitimate labor organization, whether na
tional or local,
- shall be cancelled by the Bureau
- if it has reason to believe,
- after due hearing,
- that the said labor organization no longer meets one or more of the requiremen
ts herein prescribed.
ART. 239. Grounds for cancellation of union registration. The following sh
all constitute grounds for cancellation of union registration:
(a) Misrepresentation, false statement or fraud in connection with the
- adoption or ratification of the constitution and by-laws or amendments thereto
,
- the minutes of ratification,
- and the list of members who took part in the ratification;
(b) Failure to submit the documents mentioned in the preceding paragraph wit
hin thirty (30) days from adoption or ratification of the constitution and by-la
ws or amendments thereto;
(c) Misrepresentation, false statement or fraud in connection with the
- election of officers,
- minutes of the election of officers
- and the list of voters,
or failure to
- submit these documents
- together with the list of the newly elected/appointed officers and their posta
l addresses
- within thirty (30) days from election;
(d) Failure to submit the annual financial report to the Bureau within thirt
y (30) days after the closing of every fiscal year and misrepresentation, false
entries or fraud in the preparation of the financial report itself;
(e) Acting as a labor contractor or engaging in the cabo system, or otherwise
engaging in any activity prohibited by law;
(f) Entering into collective bargaining agreements which provide terms and c
onditions of employment below minimum standard established by law;
(g) Asking for or accepting attorney s fees or negotiation fees from employers
;
(h) Other than for mandatory activities under this Code, checking off specia
l assessments or any other fees without duly signed individual written authoriza
tions of the members;
(i) Failure to submit a list of individual members to the Bureau once a year
or whenever required by the Bureau; and
(j) Failure to comply with requirements under Articles 237 and 238.
ART. 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.
Art. 242. Rights of Legitimate Labor Organizations. A legitimate labor organizat
ion shall have the right:
a) to act as representative of its members for the purpose of collective bargain
ing;
b) to be certified as exclusive representative of all the employees in an approp
riate collective bargaining unit for purposes of collective bargaining;
c) to be furnished by the employer, upon written request, with the annual audite
d financial statements, including the balance sheet and the profit and loss stat
ement, within thirty (30) calendar days from the date of receipt of the request,
after the union has been duly recognized by the employer or certified as the so
le and exclusive bargaining representatives of the employees in the bargaining u
nit, or within sixty (60) calendar days before the expiration of the existing co
llective bargaining agreement, or during the collective bargaining negotiation;
d) to own property, real or personal, for the use and benefit or the labor organ
ization and its members;
e) to sue and be sued in its registered name;
f) to undertake all other activities designed to benefit the organization and it
s members including cooperative, housing welfare and other projects not contrary
to law.
Notwithstanding any provision of a general or special law to the contrary, t
he income and properties of legitimate labor organization, including grants, end
owments, gifts, donations and contributions they may receive from fraternal and
similar organizations, local or foreign, which are actually, directly and exclus
ively used for their lawful purposes, shall be free from taxes, duties and other
assessments. The exemptions provided herein may be withdrawn only by a special
law expressly repealing this provision.
Art. 277. Miscellaneous Provisions.
(a) All unions are authorized to collect reasonable membership fees, union dues,
assessments and fines and other contributions for labor education and research,
mutual death and hospitalization benefits, welfare fund, strike fund, and credi
t and cooperative undertakings.

OMNIBUS RULES, BOOK V


RULE I
Definition of Terms
SECTION 1. Definition of terms.
(h) "Labor Organization" means any union or association of employees which e
xists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment.
(i) "Legitimate Labor Organization" means any organization defined under let
ter (h) hereof which is duly registered with the Department. The term includes a
local/chapter directly chartered by a federation or national union which has be
en duly reported to the Department in accordance with Rule \vi, Section 2 of thi
s Book.
(j) "Workers Association" means any association of workers organized for the
mutual aid and protection of its members or for any legitimate purpose other tha
n collective bargaining.
(k) "Independent Union" means any labor organization operating at the enterp
rise level whose legal personality is derived through an independent action for
registration prescribed under Article 234 of the Code and Rule II, Section 2 of
these Rules. An independent union may be affiliated with a federation, national
or industry union, in which case it may also be referred to as an affiliate.
(l) "Local Union/Chapter" means any labor organization operating at the ente
rprise level whose legal personality is derived through the issuance of a charte
r by a duly registered federation or national union, subject to the reporting re
quirement prescribed in Rule VI, Section 1 of these Rules.
(m) "National Union/Federation" means any labor organization with at least t
en (10) locals or chapters each of which must be a duly recognized collective ba
rgaining agent.
(n) "Legitimate Workers Association" means any workers association defined un
der letter (j) hereof which is duly registered with the Department.
(o) "Industry Union" means any legitimate labor organizations operating with
in an identified industry, organized for collective bargaining or for dealing wi
th employers concerning terms and condition of employment within an industry, or
for participating in the formulation of social and employment policies, standar
ds and programs in such industry, which is duly registered with the Department i
n accordance with Rule III, Section 2 of these Rules.
(p) "Trade Union Center" means any group of registered national unions or fe
derations organized for the mutual aid and protection of its members, for assist
ing such members in collective bargaining, or for participating in the formulati
on of social and employment policies, standards and programs, which is duly regi
stered with the Department in accordance with Rule III, Section 2 of these Rules
.
RULE III
Registration of Labor Organizations
SECTION 1. Where to file applications. The application for registration of any
federation, national or industry union or trade union center shall be filed with
the Bureau. Where the application is filed with the Regional Office, the same s
hall be immediately forwarded to the Bureau within forty-eight (48) hours from f
iling thereof, together with all the documents supporting the registration.
The application for registration of an independent union shall be filed w
ith and be acted upon by the Regional Office where the applicant s principal offic
e is located.
The charter certificate issued by a federation or national union in creat
ing a local/chapter, shall be filed with the Regional Office or the Bureau withi
n thirty (30) days from the issuance of such charter certificate.
SECTION 2. Requirement for registration of labor organizations.
(I) The application for registration of an independent union shall be suppor
ted by the following:
(a) The names of its officers, their addresses, the principal address of the
labor organization, the minutes of the organizational meetings and the list of
workers who participated in such meetings;
(b) The number of employees and names of all its members comprising at least
twenty percent (20%) of the employees in the bargaining unit where it seeks to
operate;
(c) If the applicant union has been in existence for one or more years, two
copies of its annual financial reports, unless it has not collected any amount f
rom the members, in which case a statement to this effect shall be included in t
he application; and
(d) Four copies of its consitution and by-laws, minutes of its adoption or r
atification, and the list of the members who participated it. However, the list
of ratifying members shall be dispensed with where the constitution and by-laws
was ratified or adopted during the organizational meeting referred to in paragr
aph (a) above. In such case, the factual circumstances of the ratification shal
l be recorded in the minutes of the organizational meeting.
(II) The application for registration of a federation or national union shall
, in addition to subparagraphs (a), (c) and (d) of the immediately preceding par
agraph, be supported by:
(a) The resolution of affiliation of at least ten (10) locals/chapters or af
filiates, each of which must be a duly recognized or certified bargaining repres
entative in the establishment where it seeks to operate; and
(b) The names and addresses of the companies where the locals/chapters or af
filiates operate and the list of all the members in each company involved.
(III) The Application for registration of an industry or trade union center sh
all be supported by the following:
(a) The list of its member organizations and their respective presidents and
, in the case of an industry union, the industry where the union seeks to operat
e;
(b) The resolution of membership of each member organization, approved by th
e Board of Directors of such union;
(c) The name and principal address of the applicant, the names of its office
rs and their addresses, the minutes of its organizational meeting/s, and the lis
t of member organizations and their representative who attended such meeting/s;
and
(d) A copy of its constitution and by-laws and minutes of its ratification b
y a majority of the presidents of the member organizations, provided that where
ratification was done simultaneously with the organizational meeting, it shall b
e sufficient that the fact or ratification be included in the minutes of the org
anizational meeting.
RULE IV
Registration of Workers Associations
SECTION 1. Where to file application. The application for registration of a
workers association whose place of operation is confined to one regional jurisd
iction shall be filed directly and acted upon by the Regional Office where it op
erates. Otherwise, the application shall be filed and acted upon by the Bureau.
SECTION 2. Requirements for registration. the application for registration
of a workers association shall be supported by the following:
(a) The names of its members, their addresses, the principal office of the a
pplicant, the minutes of its organizational meeting/s, and the names of its indi
vidual members who attended such meeting/s;
(b) A copy of its constitution and by-laws, duly ratified by a majority of i
ts individual members;
(c) In the case of any grouping of workers associations, the requirements und
er Rule III, Section 2, No. III of these Rules shall apply.
RULE V
Provisions Common to the Registration of Labor Organizations and Workers Associat
ion
SECTION 1. Attestation requirements. The application for registration of any la
bor organization of workers association, including all the accompanying documents
, shall be verified under oath by its Secretary or Treasurer as the case may be,
and attested to by its President.
SECTION 2. Payment of registration fee. A labor organization or workers asso
ciation shall be issued a certificate of registration upon payment of the prescr
ibed registration fee.
SECTION 3. Action on applications. The Regional Office or the Bureau, as th
e case may be, shall act on all applications for registration within thirty (30)
days from filing thereof, either by approving the application and issuing the c
ertificate of registration, or denying the application for failure of the applic
ant to comply with the requirements for registration. When the documents support
ing the application are not complete or not contain the requisite attestation re
quirements, the Regional Office or the Bureau shall, within five (5) days from r
eceipt of the application, notify the applicant in writing of the requirements n
eeded to complete the application. Where the applicant fails to complete the req
uirements within thirty (30) days from receipt of notice, the application shall
be denied without prejudice.
SECTION 4. Denial of registration: grounds for appeal. The decision of the
Regional Office or the Bureau denying the application for registration shall be
in writing, stating in clear terms the reasons therefor. A copy thereof shall be
furnished the applicant union. The decision may be appealed to the Bureau if th
e denial is by the Regional Director, or to the Secretary if the denial is by th
e Bureau, within ten (10) days from receipt of notice thereof, on the ground of
grave abuse of discretion or violation of these Rules.
The appeal shall be filed in the Regional Office or in the Bureau, as the
case may be, which shall cause the transmittal of the records to the Bureau or
to the Secretary within five (5) calendar days from receipt of the records of th
e cases.
SECTION 5. Effect of registration. The labor organization or workers associa
tion shall be deemed registered and vested with legal personality on the date of
issuance of its certificate of registration. Such legal personality cannot ther
eafter be subject to collateral attack; but maybe questioned only in an independ
ent petition for cancellation in accordance with these Rules.
RULE VI
Chartering and Affiliation of Labor Organizations
and Workers Associations
SECTION 1. Chartering and creation of a local chapter. A duly registered federa
tion or national union may directly create a local/chapter by submitting to the
Regional Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicat
ing the creation or establishment of the local/chapter;
(b) The names of the local/chapter s officer, their addresses, and the princip
al office of the local/chapter; and
(c) The local/chapter s constitution and by-laws; provided that where the loca
l/chapter s constitution and by-laws is the same as that of the federation or nati
onal union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath b
y the Secretary or the Treasurer of the local/chapter and attested by its Presid
ent.
SECTION 2. Chartering by a workers association. A duly registered workers associ
ation may likewise charter any of its branches, subject to the filing of the doc
uments prescribed under the immediately preceding section.
SECTION 3. Acquisition of legal personality. A local/chapter constituted in acc
ordance with Section 1 of this Rule shall acquire legal personality from the dat
e of filing of the complete documents enumerated therein. Upon compliance with a
ll the documentary requirements, the Regional Office or Bureau shall issue in fa
vor of the local/chapter a certificate indicating that it is in included in the
roster of legitimate labor organizations.
SECTION 4. Affiliation of independent union. An independent union shall be cons
idered an affiliate of a federation or national or industry union upon filing by
the latter to the Regional Office of Bureau of two (2) copies each of verified
resolution of affiliation, ratified by a majority of the members of the former,
and a resolution of acceptance by the latter.
RULE VII
Reporting Requirements of Labor Organizations and Workers Associations
SECTION 1. Reporting requirement. It shall be the duty of every legitimate labo
r organization and workers association to submit to the Regional Office or the Bu
reau two (2) copies of each of the following:
(a) Any amendments to its constitution and by-laws and the minutes of adopti
on or ratification of such amendments, within thirty (30) calendar days from its
adoption or ratification;
(b) Annual financial reports within thirty (30) calendar days after the clos
e of each fiscal year;
(c) Updated list of newly-elected officers, together with the appointive off
icers or agents who are entrusted with the handling of funds, within thirty (30)
calendar days after each regular or special election of officers, or from the o
ccurrence of any change in the officers or agents of the labor organizational of
workers association; and
(d) Updated list of individual members, locals/chapters, affiliates or branc
hes, as the case may be, within thirty (30) calendar days after the close of eac
h fiscal year.
As understood in these Rules, the fiscal year of a labor organization or
workers association shall coincide with the calendar year, unless a different per
iod is prescribed in its constitution and by-laws.
RULE VIII
Cancellation of Registration of Labor Organizations and Workers Associations
SECTION 1. Venue of action. If the respondent to the petition is a local/ch
apter, affiliate, or a worker s association with operations limited to one region,
the petition shall be filed with the Regional Office having jurisdiction over t
he place where the respondent principally operates. Petitions filed against fede
rations, national or industry unions, trade unions centers, or workers associatio
ns operating in more than one regional jurisdiction, shall be filed with the Bur
eau.
SECTION 2. Who may file; form and contents of petition. Any party-in-interest m
ay commence a petition for cancellation of registration, except in actions invol
ving violations of Article 241 which can be commenced only by members of the res
pondent labor organizations or workers association.
The petition shall be under oath and shall state clearly and concisely th
e facts and grounds relied upon, accompanied by proof of service that a copy the
reof has been furnished the respondent.
SECTION 3. Cancellation of registration; nature and grounds. Subject to the req
uirement of notice and due process, the registration of any legitimate labor org
anization or workers association may be cancelled by the Bureau or the regional O
ffice upon the filing of an independent petition for cancellation based on any o
f the following grounds:
(a) Failure to comply with any of the requirements prescribed under Articles
234, 237 and 238 of the Code;
(b) Violation of any of the provisions of Article 239 of the code;
(c) Commission of any of the acts enumerated under Article 241 of the code:
provided, that no petition for cancellation based on this ground may be granted
unless supported by at least thirty percent (30%) of all the members of the resp
ondent labor organization or workers association.
SECTION 4. Action on the petition; appeals. The Regional or Bureau Director
, as the case may be, shall have thirty (30) days from submission of the case fo
r resolution within which to resolve the petition. The decision of the Regional
or Bureau Director may be appealed to the Bureau or the Secretary, as the case m
ay be, within ten (10) days from receipt thereof by the aggrieved party on the g
round of grave abuse of discretion or any violation of these Rules.
The Bureau or the Secretary shall have fifteen (15) days from receipt of
the records of the case within which to decide the appeal. The decision of the B
ureau or the Secretary shall be final and executory.
SECTION 5. Revocation of legal personality of local chapter. In addition to
the grounds for cancellation enumerated in the immediately preceding section, a
federation, national union or workers association may be revoke the charter issu
ed to a local/chapter or branch by serving on the latter a verified notice of re
vocation, copy furnished the Bureau, on the ground of disloyalty or such other g
rounds as may be specified in the constitution and by-laws of the federation, na
tional union or workers association. The revocation shall divest the local/chapte
r has acquired independent registration in accordance with these Rules.
SECTION 6. Effect of cancellation of registration of federation or national
union on locals/chapters. The cancellation of registration of a federation or n
ational union shall operate to divest its locals/chapters of their status as leg
itimate labor organizations, unless the locals/chapters are overed by a duly reg
istered collective bargaining agreement. In the latter case, the locals/chapters
shall be allowed to register as independent unions, failing which they shall lo
se their legitimate status upon the expiration of the collective bargaining agre
ement.
CASES
Protection Technology, Inc. vs. Sec., 242 SCRA 99
Non-submission of such books of account certified by and attested to by the appr
opriate officer is a ground which the employer can invoke legitimately to oppose
a petition for certification election filed by the local or chapter concerned.
Although the federation with which the Union is affiliated submitted docu
ments purporting to show that the latter had offered books of account to support
its (the Union s) application for registration as a legitimate labor organization
, what had been actually submitted to the BLR by the Union was a mere financial s
tatement, a generous description considering the sheet of paper in fact submitted
by the Union.
Books of account are quite different in their essential nature from finan
cial statements. In generally accepted accounting practice, the former consist o
f journals, ledgers and other accounting books (which are registered with the Bu
reau of Internal Revenue) containing a record of individual transactions wherein
monies are received and disbursed by an establishment or entity; entries are ma
de on such books on a day-to-day basis (or as close thereto as is possible). Sta
tements of accounts or financial reports, upon the other hand, merely summarize
such individual transactions as have been set out in the books of account and ar
e usually prepared at the end of an accounting period, commonly corresponding to
the fiscal year of the establishment or entity concerned.
Statements of account and financial reports do not set out or repeat the
basic data (i.e., the individual transactions) on which they are based and are,
therefore, much less informative sources of cash flow information. Books of acco
unt are kept and handled by bookkeepers (employees) of the company or agency; fi
nancial statements may be audited statements, i.e., prepared by external indepen
dent auditors (certified public accountants).
It is immaterial that the Union, having been organized for less than a ye
ar before its application for registration with the BLR, would have had no real
opportunity to levy and collect dues and fees from its members which need to be
recorded in the books of account. Such accounting books can and must be submitte
d to the BLR, even if they contain no detailed or extensive entries as yet. The
point to be stressed is that the applicant local or chapter must demonstrate to
the BLR that it is entitled to registered status because it has in place a syste
m for accounting for members contributions to its fund even before it actually re
ceives dues or fees from its members. The controlling intention is to minimize t
he risk of fraud and diversion in the course of the subsequent formation and gro
wth of the Union fund.
Pagpalain Haulers vs. Trajano, 310 SCRA 354
The Labor Code does not require the submission of books of account on order for
a labor organization to be registered as a legitimate labor organization. This
requirement is found only in the Omnibus Rules (Book V) implementing the Labor C
ode, which subsequently was amended by DO9. Department Order No. 9, Series of 19
97, reduced the requirements needed to be submitted, and has done away with the
submission of books of account as a requisite of registration. But as provided b
y Arts. 241 (h) and (j), a labor organization must still maintain books of accou
nt, but it need not submit them as a requisite for registration.
Tropical Hut Employees Union vs. Tropical Hut, 181 SCRA 173
The right of a local union to disaffiliate from its mother federation is well-se
ttled. A local union, being a separate and voluntary association, is free to ser
ve the interest of all its members including the freedom to disaffiliate when ci
rcumstances warrant. This right is consistent with the constitutional guarantee
of freedom of association.
All employees enjoy the right to self-organization and to form and join
labor organizations of their own choosing for the purpose of collective bargaini
ng and to engage in concerted activities for their mutual aid or protection. Thi
s is a fundamental light of labor that derives its existence from the Constituti
on. In interpreting the protection to labor and social justice provisions of the
Constitution and the labor laws or rules or regulations, We have always adopted
the liberal approach which favors the exercise of labor rights.
The locals are separate and distinct units primarily designed to secure a
nd maintain an equality of bargaining power between the employer and their emplo
yee-members in the economic struggle for the fruits of the joint productive effo
rt of labor and capital; and the association of the locals into the national uni
on (PAFLU) was in furtherance of the same end. These associations are consensual
entities capable of entering into such legal relations with their members. The
essential purpose was the affiliation of the local unions into a common enterpri
se to increase by collective action the common bargaining power in respect of th
e terms and conditions of labor. Yet the locals remained the basic units of asso
ciation, free to serve their own and the common interest of all, subject to the
restraints imposed by the Constitution and By Laws of the Association, and free
also to renounce the affiliation for mutual welfare upon the terms laid down in
the agreement which brought it into existence.
The inclusion of the word NATU after the name of the local union THEU in
the registration with the Department of Labor is merely to stress that the THEU
is NATU s affiliate at the time of the registration. It does not mean that the sai
d local union cannot stand on its own. Neither can it be interpreted to mean tha
t it cannot pursue its own interests independently of the federation. A local un
ion owes its creation and continued existence to the will of its members and not
to the federation to which it belongs.
When the local union withdrew from the old federation to join a new feder
ation, it was merely exercising its primary right to labor organization for the
effective enhancement and protection of common interests. In the absence of enfo
rceable provisions in the federation s constitution preventing disaffiliation of a
local union, a local may sever its relationship with its parent.
There is nothing in the constitution of the NATU or in the constitution o
f the THEU-NATU that the THEU was expressly forbidden to disaffiliate from the f
ederation. The alleged non-compliance of the local union with the provision in t
he NATU Constitution requiring the service of three months notice of intention t
o withdraw did not produce the effect of nullifying the disaffiliation for the f
ollowing grounds: firstly, NATU was not even a legitimate labor organization, it
appearing that it was not registered at that time with the Department of Labor,
and therefore did not possess and acquire, in the first place, the legal person
ality to enforce its constitution and laws, much less the right and privilege un
der the Labor Code to organize and affiliate chapters or locals within its group
, and secondly, the act of non-compliance with the procedure on withdrawal is pr
emised on purely technical grounds which cannot rise above the fundamental right
of self-organization.
Pambansang Kapatiran vs. Secretary of Labor, 253 SCRA 96
It is further argued that the CBA has no binding force since it was entered into
by KAMAPI as a federation and not by the local union. Perusal of the agreement
proves the signatories for KAMAPI consisted of its national president and of the
duly elected officers of the local union. Thus the fact that KAMAPI was particu
larly mentioned as the bargaining party without specifying the local union canno
t strip it of its authority to participate in the bargaining process. The local
union maintains its separate personality despite affiliation with a larger natio
nal federation.
The doctrine laid down in Progressive Development Corporation 21 is a mer
e clarification of the principle enunciated in Liberty Cotton Mills Workers Unio
n v. Liberty Cotton Mills, Inc. 22 Both cases have provided that the mother union
acting for and in behalf of its affiliate ha(s) the status of an agent while th
e local union remained the basic unit of the association free to serve the commo
n interest of all its members subject only to the restraints imposed by the Cons
titution and By-Laws of the association.
ANGLO-KMU vs. Samahan ng mga Manggagawa, 258 SCRA 371
ANGLO s local chapter disaffiliated from ANGLO on the ground that the latter has c
ommitted acts inimical to the interests of the chapter. ANGLO refused to honor t
he disaffiliation on the ground that the CBA is still existing, and the freedom
period had not yet set in.
Held: Pursuant to the right to self-organization, the chapter may disaffiliate a
ny time from the mother union. This right may not be defeated on the ground that
there was noncompliance with the procedural rules to disaffiliate. Also, it was
clearly shown that majority of the union members in the chapter supported such
decision. The charge that ANGLO is guilty of acts inimical to the chapter s intere
sts is not rebutted.
LECTURE
Labor Organizations:
Workers associations are a type of organization for the purpose of self-o
rganization but not for the purpose of collective bargaining. Only for mutual ai
d and protection. So we have workers association on the one hand, and labor orga
nizations on the other hand.
Now we concentrate on labor organizations. What are the different types?
Plant level organizations:
* Independent unions
* Affiliates
* Local/Chapters
Conglomerate of plant level organizations:
* National Unions/Federations
* Trade Union Centers
* Industry Unions
How does one become a legitimate labor organization? Under the law, Artic
le 212 it is one which is registered with the Department. Article 234 says that
it acquires rights once it is issued a certificate of registration. Now, an inde
pendent union becomes an LLO and acquires legal personality once it is issued a
certificate of registration with the Bureau of Labor Relations. How about a loca
l or chapter? Under the Omnibus Rules, such acquires legal personality upon issu
ance of a charter by the federation. It is the federation who submits the docume
nts to the Bureau. Hence, without need of registration or issuance of a certific
ate by the Bureau, the local or chapter becomes an LLO.
Does this violate the codal provisions Arts. 212 and 234? No, but once th
e federation loses its legal personality, the local or chapter loses its legal p
ersonality as well, because its legal personality is hinged on the federation s. T
here is no conflict between the Code and Rules. A local or chapter is not covere
d by the registration requirement. It does not violate the definition of a legit
imate labor organization, because a local does acquire legal personality and doe
s become an LLO through the issuance of a charter.
So, when an independent labor organization becomes an affiliate of a fede
ration, and the federation loses its legal personality (through cancellation of
its registration), the independent labor organization still retains its legal pe
rsonality, because it acquired such through registration with the Bureau. When a
n independent union affiliates, it informs the Bureau of such through submission
of resolutions of affiliation and acceptance. A local or chapter may independen
tly register as an organization subsequent to its becoming a local or chapter. T
his converts the chapter into an independent union. The local or chapter is not
barred from doing that, but a federation may usually stipulate against that and
would cause revocation of the local/chapter s charter.
However, remember the exception that when the federation s registration is
cancelled, it does not affect the local or chapter if the chapter has an existin
g CBA with the company. They are given the chance to register as an independent
union and if this is not done, as long as the CBA exists, the chapter s legitimacy
exists. It expires only upon expiration of the CBA. This is done to protect the
employees of the collective bargaining unit.
Now remember the Liberty case is one decided under very peculiar circumst
ances. The Court ruled as such because of the special circumstances. It does not
apply as a general rule. Remember the general rule that it is only upon issuanc
e of a certificate when the union acquires legal personality. The nunc pro tunc
doctrine was applied in the Liberty case because of the peculiarity of the case.
Only in this case did the Court rule that the union acquired legal personality
upon the submission of the required documents and so the issuance of certificate
of registration should retroact to the filing of the petition of a certificatio
n election. This decision was crucial because a petition for certification elect
ion can only be filed by an LLO.
Noticeably the number of required documents to be submitted by independen
t unions is much more than those required by a chapter. Obviously, the State fav
ors the creation of locals/chapters. It encourages affiliations for more product
ivity or greater protection in the workers action. And also, a chapter does not h
ave to repeat the process of submitting the required documents, because the fede
ration has already done so. If the DOLE erroneously submits a certificate to an
organization that has not submitted all the required documents, a person in inte
rest (such as management) can file a petition for cancellation of the certificat
e. Management can also oppose the petition for certification election because of
the lack of required documents.
Why is it required to submit all these documents? To protect the workers
from fly-by-night unions, or unions that are purely moneymaking unions. That s why a
ll the documents must be attested to by the Secretary and President and must be
notarized. Remember, what has to be submitted are Financial Statements, not Book
s of Account. The two are different. Financial statements are prepared by an acc
ountant and embody detailed financial transactions. Books of Account are the day
to day expenses, journals, ledgers. Only in the Rules are Books of Account requ
ired to be submitted. The Code does not require it. But by virtue of D.O. 9, Boo
ks of Account were not required to be submitted anymore. But books of Account ar
e still subject to inspection by the Department when warranted.
Article 237 requires proof of affiliation of at least ten chapters for a
federation. What s wrong with this? In the first place, no federation can become a
federation without locals or chapters. The only way to interpret this provision
is it refers to independently registered unions who decide to form a federation
as affiliates. You cannot have locals/chapters that create a federation, you c
an only have a federation creating a local/chapter. The only situation also wher
e a federation can be created by a local/chapter is when two federations merge o
r form one federation.
E. CONDITIONS OF MEMBERSHIP AND RIGHTS OF MEMBERS
LABOR CODE
ART. 241. Rights and conditions of membership in a labor organization. The
following are the rights and conditions of membership in a labor organization:
(a) - No arbitrary or excessive initiation fees
- shall be required of the members of a legitimate labor organization nor
- shall arbitrary, excessive or oppressive fine and forfeiture be imposed;
(b) The members shall be entitled:
- to full and detailed reports
- from their officers and representatives
- of all financial transactions
- as provided for in the constitution and by-laws of the organization;
(c) The members shall:
- directly elect their officers,
- including those of the national union or federation, trade center or any simil
ar aggrupation to which their union is affiliated,
- by secret ballot at intervals of five (5) years.
No qualification requirement for candidacy to any position shall be impos
ed other than membership in good standing in subject labor organization.
The secretary or any other responsible union officer shall furnish the Se
cretary of Labor and Employment with a list of
- the newly-elected officers,
- together with the appointive officers or agents who are entrusted with the han
dling of funds
- within thirty (30) calendar days after the election of officers or from the oc
currence of any change in the list of officers of the labor organization.
(d) The members shall
- determine by secret ballot,
- after due deliberation,
- any question of major policy affecting the entire membership of the organizati
on,
- unless the nature of the organization or force majeure renders such secret bal
lot impractical,
- in which case the board of directors of the organization may make the decision
in behalf of the general membership.
(e) No labor organization shall
- knowingly admit as member
- or continue in membership
any individual who:
- belongs to a subversive organization
- or who is engaged directly or indirectly in any subversive activity;
(d) 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;
(g) No officer, agent or member of a labor organization shall
- collect any fees, dues, or other contributions in its behalf or
- make any disbursement of its moneys or funds
- unless he is duly authorized pursuant to its constitution and by-laws;
(h) Every payment of fees, dues or other contributions by a member shall be
- evidenced by a receipt
- signed by the officer or agent making the collection and
- entered into the record of the organization to be kept and maintained for the
purpose;
(i) The funds of the organization shall not be applied for any purpose or ob
ject other than those:
- expressly provided by its constitution and by-laws or
- those expressly authorized by
- written resolution,
- adopted by the majority of the members,
- at a general meeting duly called for the purpose;
(j) Every income or revenue of the organization shall be evidenced by a reco
rd showing its source, and every expenditure of its funds shall be evidenced by
a receipt from the person to whom the payment is made, which shall state the dat
e, place and purpose of such payment. Such record or receipt shall form part of
the financial records of the organization.
Any action involving the funds of the organization shall prescribe after
three (3) years from the
- date of submission of the annual financial report to the Department of Labor a
nd Employment
- or from the date the same should have been submitted as required by law, which
ever comes earlier:
- Provided, That this provision shall apply only to a legitimate labor organizat
ion which has submitted the financial report requirements under this Code:
- Provided, further, That failure of any labor organization to comply with the p
eriodic financial reports required by law and such rules and regulations promulg
ated thereunder six (6) months after the effectivity of this Act shall automatic
ally result in the cancellation of union registration of such labor organization
.
(k) The officers of any labor organization shall not be paid any compensatio
n other than the salaries and expenses due to their positions
- as specifically provided for in its constitution and by-laws or
- in a written resolution duly authorized by a majority of all the members at a
general membership meeting duly called for the purpose. The minutes of the meet
ing and the list of participants and ballots cast shall be subject to inspection
by the Secretary of Labor and Employment or his duly authorized representatives
. Any irregularities in the approval of the resolutions shall be a ground for im
peachment or expulsion from the organization;
(l) The treasurer of any labor organization and every officer thereof who is
responsible for the accounts of such organization or for the collection, manage
ment, disbursement, custody or control of the funds, moneys and other properties
of the organization, shall render to the organization and to its members a true
and correct account of all moneys received and paid by him since he assumed off
ice or since the last date on which he rendered such account and of the balance
remaining in his hands at the time of rendering such account, and of all bonds,
securities and other properties of the organization entrusted to his custody or
under his control. The rendering of such account shall be made:
(1) At least once a year within thirty (30) days after the close of its fisc
al year;
(2) At such other times as may be required by a resolution of the majority o
f the members of the organization; and
(3) Upon vacating his office.
The account shall be duly audited and verified by affidavit and a copy th
ereof shall be furnished the Secretary of Labor and Employment;
(m) The books of accounts and other records of the financial activities of a
ny labor organization shall be opened to inspection by any officer or member the
reof during office hours.
(n) No special assessment or other extraordinary fees may be levied upon the
members of a labor organization unless:
- authorized by a written resolution
- of a majority of all the members
- at a general membership meeting duly called for the purpose.
- The secretary of the organization shall record the minutes of the meeting incl
uding the list of all members present, the votes cast, the purpose of the specia
l assessment or fees and the recipient of such assessment or fees.
- The record shall be attested to by the president.
(o) Other than for mandatory activities under the Code, no special assessmen
t, attorney s fees, negotiation fees or any other extraordinary fees may be checke
d off from any amount due an employee without an individual written authorizatio
n duly signed by the employee. The authorization should specifically state the a
mount, purpose and beneficiary of the deduction.
(p) It shall be the duty of any labor organization and its officers to infor
m its members on the provisions of its
- constitution and by-laws,
- collective bargaining agreement,
- the prevailing labor relations system
- and all their rights and obligations under existing labor laws.
For this purpose, registered labor organizations may assess reasonable du
es to finance labor relations seminars and other labor education activities.
Any violation of the above rights and conditions of membership shall be a
ground for cancellation of union registration or expulsion of an officer from o
ffice, whichever is appropriate. At least thirty (30%) per cent of all the membe
rs of a union or any member or members specifically concerned may report such vi
olation to the Bureau. The Bureau shall have the power to hear and decide any re
ported violation and to mete appropriate penalty.
Art. 274. Visitorial power. The Secretary of Labor and Employment or his d
uly authorized representative is hereby empowered
a) to inquire into the financial activities of legitimate labor organizatio
ns
- upon the filing of a complainant under oath
- and duly supported by the written consent of at least twenty percent (20%) of
the total membership of the labor organization concerned and
b) to examine their books of accounts and other records to determine compli
ance or non-compliance with the law
c) to prosecute any violations of the law and the union constitution and by
-laws:
Provided, That such inquiry or examination shall not be conducted during the
- sixty (60) day freedom period
- nor within thirty (30) days immediately preceding the date of election of unio
n officials.
Art. 222. Appearances and fees.
(b) No attorney s fees, negotiation fees or similar charges of any kind arisin
g from any collective bargaining negotiations or conclusion of the collective ag
reement shall be imposed on any individual member of the contracting union: Prov
ided, however, That attorney s fees may be charged against union funds in an amoun
t to be agreed upon by the parties. Any contract, agreement or arrangement of an
y sort to the contrary shall be null and void.

OMNIBUS RULES, BOOK V, RULE XIV, XV, XVII, XVIII


RULE XIV
Intra-Union Disputes
SECTION 1. Complaint; who may file. Any member of a union may file with the
Regional Director a complaint for any violation of the constitution and by-laws
and the rights and conditions of membership under Article 241 of the Code. Howe
ver, if the issue involves the entire membership of the union, the complaint sha
ll be supported by at least thirty percent (30%) of the members of the federatio
n,, national union, local/chapter, affiliate or independent union, as the case m
ay be, at the time of the filing thereof. such complaint shall be filed in the R
egional Officer where the union is domiciled.
SECTION 2. Content of complaint. The complaint shall, among others, contain the
following:
(a) The person or persons charged;
(b) The specific violation/s committed;
(c) The relief/s prayed for; and
(d) Other relevant matters.
Such complaint must be in writing and under oath, and a copy thereof serv
ed on the respondent.
In addition to the above requirement, the petition on its face must show
that the administrative remedies provided for in the constitutional by-laws have
been exhausted or such remedies are not readily available to the complaining me
mbers through no fault of their own.
SECTION 3. Procedure. Within twenty-four (24) hours from receipt of the co
mplaint, the Regional Director shall immediately assign the case to a Med-Arbite
r or appropriate officer of the Labor Relations Division for conciliation on or
hearings, as may be appropriate. Within ten (10) days from receipt of the assign
ment, it shall be mandatory upon such officer to conduct a conciliation conferen
ce and to exert every effort to effect an amicable settlement.
Where no amicable settlement is reached, the officer concerned shall use
the mandatory conference as a venue to limit the issues, ask clarificatory quest
ions, or convince the parties to agree an a stipulation of facts. In every case,
the officer concerned shall keep minutes of the conference signed by and copy f
urnished the parties.
Thereafter, the parties shall be given ten (10) days within which to subm
it their respective position papers addressing all relevant issues and consolida
ting all their arguments and evidences, after which the case shall be deemed sub
mitted for resolution.
The Regional Director shall have twenty (20) working days from submission
of the case for resolution within which to settle or decide the case. The decis
ion shall state the facts and the reliefs granted, if any. If the dispute involv
es a violation of the rights and conditions of membership enumerated under Artic
le 241 of the Code, the Regional director, may if specifically prayed for in the
complaint and supported with substantial evidence, order the cancellation of th
e registration certificate of the erring union or the expulsion of the guilty pa
rty from the union, whichever is appropriate, provided, however, that no cancell
ation shall be ordered unless the complaint is supported by at least thirty perc
ent (30%) of the union membership.
SECTION 4. Appeal: finality of decision. The decision of the Regional Director
may be appealed to the Bureau by the aggrieved party within ten (10) calendar da
ys from receipt thereof, for grave abuse of discretion or any violation of these
Rules.
The appeal shall be under oath, and shall consist of a memorandum of appe
al specifically stating the ground relied upon by the appellant with the support
ing arguments and evidence. The appeal shall be deemed not filed unless accompan
ied by proof of service of a copy thereof to the appellee.
Where no appeal is filed within the ten-day period, the decision shall be
come final and executory, and the Regional Office shall center this fact into th
e records of the case.
SECTION 5. Where to file appeal. The appellant shall file its reply thereto wit
hin ten (10) days from receipt of a copy of the appeal. The Regional Office shal
l, within five (5) days from receipt of the reply, forward the entire records of
the case to the Bureau. Where no reply is received by the regional Office withi
n twenty (20) days when such reply should have been filed, the Regional Office s
hall likewise forward the entire records of the case to the Bureau.
SECTION 7. Decision of the Bureau final and executory. The Bureau shall hav
e fifteen (15) calendar days within which to decide the appeal from receipt of t
he records of the case. The decision of the Bureau shall be final and executory.
SECTION 8. Execution of the pending appeal. The execution of the order of the R
egional Director shall automatically be stayed pending appeal.
RULE XV
Election of Officers of Labor Organizations and Workers Associations
SECTION 1. Committee on election: constitution. In the absence of any agreement
among the members or any provision in the constitution and by-laws of the labor
organization or workers association, the following guidelines may be adopted in
the election of officers:
a) Within sixty (60) days before the expiration of the term of the incumben
t offices, the president of the labor organization or workers association shall
constitute a committee on election to be composed of at least three (3) members
who are not running for any position in the election, provided that if there are
identifiable parties within the organization or association, each party shall h
ave the equal representation in the committee.
b) Upon constitution, the members shall elect the chairman of the committee
from among themselves. In case of disagreement, the president shall designate t
he chairman. In case of an election the conduct of which was ordered by the Regi
onal Director, the chairman of the committee shall be a representative of the La
bor Relations Division of the Regional Office.
SECTION 2. Powers and duties of the committee. Within ten (10) days from its co
nstitution the committee shall, among others, exercise the following powers and
duties:
a) Set the date, time and venue of the election;
b) Prescribe rules on the qualification and eligibility of candidates and v
oters;
c) Prepare and post the voter s list and the list of qualified candidates;
d) Accredit the authorized representatives of the contending parties;
e) Supervise the actual conduct of the election and canvass the votes to en
sure the sanctity of the ballot;
f) Keep minutes of the proceedings;
g) Be the final arbiter of all election protest;
h) Proclaim the winners; and
i) Prescribe such other rules as may facilitate the orderly conduct of the
election.
SECTION 3. Counting of votes. As soon as the polls close, the committee, shall
canvass the votes in the presence of the authorized representatives of the parti
es; provided, however, that the absence of such authorized representatives shall
not be a ground for us suspending the canvassing of ballots.
SECTION 4. Protests. At any time prior to the close of election proceedings, an
y party may file a protest with the committee for any violation of the rules pre
scribed in the election. All protests shall be entered in the minutes of electio
n proceedings. The committee shall endeavor to settle or resolve all protests am
icably. during or immediately after the close of election proceedings.
SECTION 5. Proclamation. Immediately after the canvassing of the ballots, a
nd there being no unresolved protest which, if resolved can materially change th
e results, the committee shall declare the winner of the election.
Any protest left unresolved after the close of the election proceedings s
hall be resolved by the committee within five (5) days. Within this peri
od, the committee may allow the protestant and all oppositors to be heard or to
submit their position papers. Otherwise, the committee shall resolve the protest
on the basis of the minutes of the proceedings.
Upon resolution of the protest, the committee shall immediately proclaim
the winners and the later may assume their positions immediately.
SECTION 6. Protests and petitions for annulment of election results. Protest or
petitions for annulment of the result of an election shall be filed with and ac
ted upon by the Regional Director in accordance with the provisions prescribed i
n Rule XIV of this Book. No protest or petition shall be entertained by the Regi
onal Director unless the issue raised has been resolved by the committee.

RULE XVII
Central Registry of Labor Organizations, Workers Associations and Collective Barg
aining Agreements
SECTION 1. Forms of registration. Consistent with the policy of the State to pr
omote unionism, the Bureau shall devise or prescribe such forms as are necessary
to facilitate the process of registration of labor organizations, workers associ
ation and collective bargaining agreements or of compliance with all documentary
or reporting requirements prescribed in these Rules.
SECTION 2. Transmittal of records; central registry. The Regional Office shall,
within forty-eight (48) hours from issuance of a certificate of registration in
favor of an independent union or workers association, transmit to the Bureau a c
opy of such certificate, accompanied by a copy of the documents supporting such
registration.
The Regional Office shall also transmit to the Bureau a copy of every fin
al decision cancelling or revoking the legitimate status of a labor organization
or workers association, indicating therein the date such decision became final.
In cases of chartering and affiliation under Rule VI or compliance with t
he reporting requirements under Rule VII of this Book effected directly through
the Regional Office, said office shall transmit the original set of documents to
the Bureau, retaining one set of documents for its file, within forty-eight (48
) hours from receipt thereof.
RULE XVIII
Administration of Trade Union Funds and Actions Arising Therefrom
SECTION 1. Right of union to collect dues. The right of the incumbent barg
aining representative to check off and to collect dues resulting therefrom shall
not be affected by the pendency of a representation case or in intra-union disp
ute.
SECTION 2. Actions arising from Article 241 of the Code. Any action arisin
g from the administration or accounting of union funds shall be filed and dispos
ed of as an intra-union dispute in accordance with Rule XIV of this Book.
In cases of violation, the Regional or Bureau Director shall order the re
sponsible officer to render an accounting of funds before the general membership
and may, where circumstances warrant/s, including suspension or expulsing from
the union.
SECTION 3. Visitorial power under Article 274. The Regional or the Bureau
Director may inquire into the financial activities of any legitimate labor organ
ization and examine their books of accounts and other records to determine compl
iance with the law and the organizations constitution and by-laws. Such examinat
ion shall be made upon filing of a complaint under oath, duly supported by the w
ritten consent of at least twenty percent (20%) of the total membership of the l
abor organization concerned, accompanied by proof that the remedies provided for
in the immediately preceding section or in the union s constitution and by-laws h
ave been exhausted or otherwise unavailing. Any complaint which does not meet th
e foregoing requirements shall be dismissed outright.
SECTION 4. Venue of financial examination. Where the respondent in the com
plaint for financial examination is an independent union, local/chapter, or work
ers association operating in one regional jurisdiction, the complaint shall be fi
led in the Regional office having jurisdiction over respondent. Where the respon
dent is a federation, national union, trade union center or workers association
operating in more than one regional jurisdiction, the complainant shall be filed
directly with the Bureau.
SECTION 5. Period of inquiry or examination. No complaint for inquiry or e
xamination of the financial and books of accounts as well as other records of an
y legitimate labor organization mentioned in Section 3 shall be entertained duri
ng the sixty (60) days freedom period or within thirty (30) days immediately pre
ceding the date of election of union officials. Any complaint so filed shall lik
ewise be dismissed.
SECTION 7. Appeals. The decision of the Regional Director may be appealed
to the Bureau on the ground of grave abuse of discretion within ten (10) days fr
om receipt of the parties of a copy thereof.
Where the complaint is directly filed with the Bureau, appeal from the de
cision of the Bureau shall be to the Office of the Secretary, subject to the req
uirements prescribed in the immediately preceding paragraph.
CASES
Tancinco vs. Ferrer-Calleja, 157 SCRA 203
Submission of the employees names with the BLR as qualified members of the union
is not a condition sine qua non to enable said members to vote in the election
of union s officers. It finds no support in fact and in law. Per public respondent s
findings, the April 24, 1986 list consists of 158 union members only wherein 51
of the 56 challenged voters names do not appear. Adopting however a rough estima
te of a total number of union members who cast their votes of some 333 and excl
uding therefrom the 56 challenged votes, if the list is to be the basis as to wh
o the union members are then public respondent should have also disqualified som
e 175 of the 333 voters.
It is true that under Article 242(c) of the Labor Code, as amended, only
members of the union can participate in the election of union officers. The ques
tion however of eligibility to vote may be determined through the use of the app
licable payroll period and employee s status during the applicable payroll period.
The payroll of the month next preceding the labor dispute in case of regular em
ployees and the payroll period at or near the peak of operations in case of empl
oyees in seasonal industries.
In the case before Us, considering that none of the parties insisted on t
he use of the payroll period-list as voting list and considering further that th
e 51 remaining employees were correctly ruled to be qualified for membership, th
eir act of joining the election by casting their votes on May 26, 1986 after the
May 10, 1986 agreement is a clear manifestation of their intention to join the
union. They must therefore be considered ipso facto members thereof
Palacol vs. Ferrer-Calleja, 182 SCRA 279
The principle that employees are protected by law from unwarranted practices that
diminish their compensation without their knowledge and consent is in accord wi
th the constitutional principle of the State affording full protection to labor.
The respondent-Union brushed aside the defects pointed out by petitioners
in the manner of compliance with the legal requirements as insignificant technic
alities. On the contrary, the failure of the Union to comply strictly with the re
quirements set out by the law invalidates the questioned special assessment. Sub
stantial compliance is not enough in view of the fact that the special assessmen
t will diminish the compensation of the union members. Their express consent is
required, and this consent must be obtained in accordance with the steps outline
d by law, which must be followed to the letter. No shortcuts are allowed.
The applicable provisions are clear. The Union itself admits that both pa
ragraphs (n) and (o) of Article 241 apply. Paragraph (n) refers to levy while para
graph (o) refers to check-off of a special assessment. Both provisions must be com
plied with. Under paragraph (n), the Union must submit to the Company a written
resolution of a majority of all the members at a general membership meeting duly
called for the purpose. In addition, the secretary of the organization must rec
ord the minutes of the meeting which, in turn, must include, among others, the l
ist of all the members present as well as the votes cast.
As earlier outlined by petitioners, the Union obviously failed to comply
with the requirements of paragraph (n). It held local membership meetings on sep
arate occasions, on different dates and at various venues, contrary to the expre
ss requirement that there must be a general membership meeting. The contention o
f the Union that the local membership meetings are precisely the very general mee
tings required by law is untenable because the law would not have specified a gen
eral membership meeting had the legislative intent been to allow local meetings
in lieu of the latter.
It submitted only minutes of the local membership meetings when what is r
equired is a written resolution adopted at the general meeting. Worse still, the
minutes of three of those local meetings held were recorded by a union director
and not by the union secretary. The minutes submitted to the Company contained
no list of the members present and no record of the votes cast. Since it is quit
e evident that the Union did not comply with the law at every turn, the only con
clusion that may be made therefrom is that there was no valid levy of the specia
l assessment pursuant to paragraph (n) of Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an individual written authorizat
ion duly signed by every employee in order that a special assessment may be vali
dly checked-off. Even assuming that the special assessment was validly levied pu
rsuant to paragraph (n), and granting that individual written authorizations wer
e obtained by the Union, nevertheless there can be no valid check-off considerin
g that the majority of the union members had already withdrawn their individual
authorizations. A withdrawal of individual authorizations is equivalent to no au
thorization at all. Hence, the ruling in Galvadores that no check-offs from any a
mounts due employees may be effected without an individual written authorization
signed by the employees . . . is applicable.
Aldovino vs. NLRC, 298 SCRA 526
The right of a union as a legitimate labor union to represent its members is exp
ressly guaranteed under Art. 242 of the LC. This right, however does not deprive
its individual members of their concomitant right to file a case in their own n
ames, nor of their right to withdraw from any case filed by the union in their b
ehalf. More importantly, the individual member may seasonably exercise his optio
n to withdraw from the case before its trial, and judgment on the merits are bou
nd by the outcome of the case.
In the present case, it has not been shown that Aldovino and Pimentel wi
thdrew from the case undergoing voluntary arbitration, it stands to reason that
both are bound by the decision rendered thereon.
Producers Bank of the Phil. vs. NLRC, Nov. 16, 1998
When the retired employees were requesting that their retirement benefits be gra
nted, they were not pleading for generosity but were merely demanding that their
rights, as embodied in the CBA, be recognized. Thus, when an employee has retir
ed but his benefits under the law or CBA have not yet been given, he still retai
ns, for the purpose of prosecuting his claims, the status of an employee entitle
d to the protection of the LC, one of which is the protection of the labor union
. While the individual complainant are the real party in interest in issues invo
lving monetary claims and benefits, the union, however, is not denied its right
to sue on behalf of its members.
Gabriel vs. Secretary, 328 SCRA 427
The union officers issued a general membership resolution authorizing check-off
of attorney s fees, in favor of the lawyers who helped with the CBA negotiations.
The union members refuse to shoulder the fees, and assail the validity of the re
solution.
Held: Resolution invalid as it did not comply with the procedural requisites.
Arts. 222 (b) and 241 (o) of the Labor Code state the provisions to be f
ollowed for check-off. Art. 241 gives three requisites:
* authorization by written resolution of majority of all members of the collecti
ve bargaining unit, at a general meeting called for the purpose;
* union secretary s record of the minutes of the meeting;
* individual written authorization duly signed by the employee members
The assailed Resolution lacked the third requirement. Thus, null and void.
Diamonon vs. DOLE, 327 SCRA 283
Diamonon was the National Executive Vice-President of NACUSIP and the Vice Presi
dent of the Luzon Chapter for PACIWU. Later on, he learned that he was removed f
rom both positions, by the National Executive Boards of both unions. He sought r
econsideration of the decision before the two National Boards. At the same time
he filed 2 complaints, questioning the validity of his dismissal, and accusing t
he unions officers of violations of the constitution, abuse of authority, and ill
egal disbursements, with the Med-Arbiter.
Med-Arbiter ruled the removal was invalid, but dismissed the second case
On appeal, the DOLE affirmed the Med-Arbiter, and dismissed the second complaint
for failure to exhaust administrative remedies provided in the constitution and
by-laws of both unions.
Held: DOLE decision affirmed.
Diamonon failed to show compliance with Sec. 2, Rule 8 of Book V of the
implementing Rules of the Labor Code, which provides that the petitioner must sh
ow exhaustion of administrative remedies as provided in the constitution and by-
laws of the union.
When the constitution and by-laws of a union provide for the remedies of
an intra-union dispute, this must be resorted to before judicial recourse is ta
ken to administrative or judicial bodies. This is in order to give the grievance
machinery an opportunity to decide the matter, and to prevent unnecessary and p
remature resort to administrative or judicial bodies.

LECTURE
Remember in terms and conditions of membership, the basic rule is that in
ternal matters should be resolved first by the internal rules, the by-laws, befo
re it can be resolved elsewhere (doctrine of exhaustion). Under Art. 241, (n) an
d (o), special assessment can be levied, following certain requirements, and col
lected following certain requirements. Remember also that levy is different from
collection. There cannot be a valid collection without a valid levy.
Requirements of a valid levy: general membership resolution, in a general
meeting called for the purpose, approving the special assessment. A levy is a s
pecial assessment, hence it cannot be imposed without the required resolution. I
t cannot be imposed by the officers, even if it is approved by management. Only
after a valid levy, then comes in the collection. Collection may be done in two
ways: direct collection from each member, but that is a tedious process. The oth
er way is by check-off. Management s cooperation is needed here. The union submits
a document to management, reflecting the list of collection, the members of the
union, and each member s authorization to collect. Mgt. will deduct such amounts
from each salary and remit the same to the union. You can levy only upon resolut
ion, and you can collect via check-off only upon individual valid authorization
from each member. Check-off is not a matter of right. It is something that must
be embodied in the CBA in order to obligate management to cooperate.
F. UNFAIR LABOR PRACTICES
LABOR CODE
Art 247. Concept of unfair labor practice and procedure for prosecution thereof
.
Unfair labor practices:
- violate the constitutional right of workers and employees to self-organization
,
- are inimical to the legitimate interests of both labor and management, includi
ng their right to bargain collectively and otherwise deal with each other in an
atmosphere of freedom and mutual respect,
- disrupt industrial peace
- and hinder the promotion of healthy and stable labor-management relations.
Consequently, unfair labor practices are not only violations of the civil
rights of both labor and management but are also criminal offenses against the
State which shall be subject to prosecution and punishment as herein provided.
- Subject to the exercise by the President or by the Secretary of Labor and Empl
oyment of the powers vested in them by Articles 263 and 264 of this Code,
- the civil aspects of all cases involving unfair labor practices, which may inc
lude claims for actual, moral, exemplary and other forms of damages, attorney s fe
es and other affirmative relief,
- shall be under the jurisdiction of the Labor Arbiters. The Labor Arbiters shal
l give utmost priority to the hearing and resolution of all cases involving unfa
ir labor practices. They shall resolve such cases within thirty (30) calendar da
ys from the time they are submitted for decision.
Recovery of civil liability in the administrative proceedings shall bar r
ecovery under the Civil Code.
No criminal prosecution under this Title may be instituted:
- without a final judgment, finding that an unfair labor practice was committed,
having been first obtained in the administrative proceeding referred to in the
preceding paragraph.
- During the pendency of such administrative proceeding, the running of the peri
od of prescription of the criminal offense herein penalized shall be considered
interrupted:
- Provided, however, That the final judgment in the administrative proceedings s
hall not be binding in the criminal case nor be considered as evidence of guilt
but merely as proof of compliance with the requirements herein set forth.
Art. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their rig
ht to self-organization;
(b) To require as a condition of employment that a person or an employee shall n
ot join a labor organization or shall withdraw from one to which he belongs;
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their
right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or a
dministration of any labor organization, including the giving of financial or ot
her support to it or its organizers or officers;
(e) To discriminate in regard to wages, hours of work, and other terms and condi
tions of employment in order to encourage or discourage membership in any labor
organization.
Nothing in this Code or in any other law shall stop the parties from requ
iring membership in a recognized collective bargaining agent as a condition for
employment, except of those employees who are already members of another union a
t the time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining unit who are not member
s of the recognized collective bargaining agent:
- may be assessed a reasonable fee equivalent to the dues and other fees paid by
members of the recognized collective bargaining agent,
- if such non-union members accept the benefits under the collective agreement:
- Provided, That the individual authorization required under Article 242, paragr
aph (o), of this Code shall not apply to the non-members of the recognized colle
ctive bargaining agent;
(f) To dismiss, discharge or otherwise prejudice or discriminate against an empl
oyee for having given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney s fees to the union or its officers or agents a
s part of the settlement of any issue in collective bargaining or any other disp
ute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the offic
ers and agents of corporations, associations, or partnerships who have actually
participated in, authorized or ratified unfair labor practices shall be held cri
minally liable.
Art. 249. Unfair labor practices of labor organizations. It shall be unfai
r labor practice for a labor organization, its officers, agents, or representati
ves:
(a) To restrain or coerce employees in the exercise of their right to self-organ
ization. However, a labor organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of membership;
(b) To cause or attempt to cause an employer to discriminate
- against an employee,
- including discrimination against an employee with respect to whom membership i
n such organization has been denied,
- or to terminate an employee on any ground other than the usual terms and condi
tions under which membership or continuation of membership is made available to
other members;
(c) To violate the duty or refuse to bargain collectively with the employer, pro
vided that it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or agree to pay o
r deliver any money or other things of value, in the nature of an exaction, for
services which are not performed or not to be performed, including the demand fo
r a fee for union negotiations;
(e) To ask for or accept negotiation or attorney s fees from employers as part of
the settlement of any issue in collective bargaining or any other dispute; or
(f) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the offic
ers, members of governing boards, representatives or agents or members of labor
associations or organizations who have actually participated in, authorized or r
atified unfair labor practices shall be held criminally liable.
Art. 261. Jurisdiction of voluntary arbitrators and panel of voluntary arb
itrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
- original and exclusive jurisdiction to hear and decide all unresolved grievanc
es
- 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 whi
ch are gross in character, shall no longer be treated as unfair labor practice a
nd shall be resolved as grievances under the Collective Bargaining Agreement. Fo
r purposes of this Article, gross violations of a Collective Bargaining Agreemen
t shall mean flagrant and/or malicious refusal to comply with the economic provi
sions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the De
partment of Labor and Employment shall not entertain disputes, grievances or mat
ters under the exclusive and original jurisdiction of the voluntary arbitrator o
r panel of voluntary arbitrators and shall immediately dispose and refer the sam
e to the grievance machinery or voluntary arbitration provided in the collective
bargaining agreement.
CASES
Insular Life Assurance Co. Employees Association vs. Insular Life Assurance Co.,
37 SCRA 244
The company sent letters to each striker stating its recognition of the employee
s right to strike, but should the latter wish to return to work, they may do so.
The letter listed benefits for those who wished to work. Some were persuaded by
the letter, but others continued with the strike. There were also occasions whe
re management personnel tried to break through the picket lines. The company als
o offered free coffee as bribe to abandon the strike. There was also discriminat
ion in selecting which employees were rehired.
The employers are guilty of ULP. The seemingly innocent letters, when tak
en together with all the other acts clearly show the intent to interfere with th
e right to collective bargaining. The incentives in the letters as well as threa
ts of reprisals upon failure to comply cannot be read otherwise than union busti
ng. Such acts undermine all that the union wishes to do for the benefit of the e
mployees.
The test applied to determine whether the individual acts constitute ULP
was totality of conduct. Factors to be taken into consideration are:
- history of relations between employees and employer;
- anti-union bias;
- any other plan of coercion and interference.

Manila Hotel Co. vs. Pines Hotel Employees, 47 SCRA 88


Whether or not the Pines Hotel incurred losses is of no moment. The fact that ma
nagement granted Christmas bonus to its employees, the same should have been div
ided equally as it has been done before. Aside from the Christmas bonus of 50% t
hat was allocated to the Manila Hotel employees, some of them were granted year-
end bonus while the Pines Hotel employees did not receive any. This is a clear c
ase of discrimination it appearing that there is no union at the Manila Hotel of
Taal Vista Hotel and considering further that lately respondents had always bee
n beset with demands for better living conditions from the complainant union as
well as strikes being staged by the union.
Circumstances showing unfair discrimination of union members where a com
pany contrary to previous practice of dividing equally to all employees a certai
n percentage of its net profits as Christmas bonus, allocated 50% only to its Ma
nila Hotel employees, while Pines Hotel employees, where there exists a labor un
ion, did not receive any year end bonus.
Sime Darby Pilipinas Inc. vs. NLRC, 289 SCRA 86
The change effected by management with regard to working time is made to apply t
o all factory employees engaged in the same line of work whether or not they are
members of a union. Hence, it cannot be said that the new scheme adopted by man
agement prejudices the right of respondent to self-organization.
Management is free to regulate, according to its own discretion and judg
ment, all aspects of employment, including hiring, work assignments, working met
hods, time, place and manner of work, processes to be followed, supervision, lay
off of workers, and discipline, dismissal and recall of workers. Further, manag
ement retains the prerogative whenever exigencies of the service so require, to
change the working hours of its employees. So long as such prerogative is exerci
sed in good faith and for the advancement of the employer s interest and not for t
he purpose of defeating or circumventing the rights of employees under special l
aws or under valid agreements, this Court will uphold such exercise.

Mabeza vs. NLRC, 271 SCRA 670


A pivotal question in any case where ULP on the part of the employer is alleged,
is whether or not the employer has exerted pressure, in the form of restraint,
interference or coercion, against his employee s right to institute concerted acti
on for better terms and conditions of employment. Without doubt, the act of comp
elling employees to sign an instrument indicating that the employer observed lab
or standards provisions of law when he might have not, together with the act of
terminating or coercing those who refuse to cooperate with the employer s scheme c
onstitutes ULP. The first act clearly preempts the right of the hotel s workers to
seek better terms and conditions of employment through concerted action.
Alhambra Industries vs. CIR, 35 SCRA 550
The petitioner is the successor-in-interest of the old company Alhambra Cigar &
Cigarette Manufacturing Co, that was found guilty of ULP, and was ordered by the
Court to reinstate the workers and pay backwages. The petitioner refuses to com
ply with the said order (which has never been executed) on the ground that it mad
e innovations in some of the working organizations formerly under the Alhambra C
igar & Cigarette Manufacturing Co., which affected the former positions by aboli
shing them for, legitimate business reasons as explained in said pleading, Annex
L hereof, and there are no substantially equivalent positions for them to occupy,
and praying that the Honorable Court conduct hearings at which the petitioner w
ill introduce evidence in support of these allegations, and that after such hear
ings, the petitioner be declared exempted from reinstating and paying the back w
ages of the aforesaid employees.
Held: The basic theory of the Industrial Peace Act is to recognize the right of
self-organization to enable labor unions to bargain collectively and to avoid un
fair labor practices on the part of labor and management in order to attain indu
strial democracy. The sooner then an inquiry is made into alleged unfair labor p
ractices and the sooner it is stopped, the better for harmonious labor-managemen
t relations. To discourage each party from committing such unfair labor practice
s, sanctions are provided for. Here, management was at fault, and petitioner, as
the successor, can be compelled to reinstate and to pay back wages. That has no
t been complied with. If we reopen the case to allow petitioner to introduce evi
dence with respondent Court to show why it has not complied with the order of re
instatement, we shall in effect be rendering futile the rights of labor and frus
trating the policies of the Industrial Peace Act. Considering the circumstances
disclosed, we cannot and should not do so.
LECTURE
What is ULP? It is a violation of the right to self-organization. Item (a
) of Art. 248 is an all-encompassing provision-to interfere, restrain or coerce
the right to self-organization. Does that mean we can do away with subparagraphs
(b) to (i)? Are all discriminations ULP? How can discrimination refer to the r
ight to self-organization?
ULP may be done whether one is a union member or is not a union member. B
ut remember violation of a CBA is ULP only if it is a gross violation of the eco
nomic provisions. For management to be guilty of ULP it is not necessary that th
e interference, coercion or restraint be a successful attempt. Remember the Insu
lar case. Management was not successful.
What is the test of ULP? Some acts may in fact be innocent in nature. Lik
e in the Insular case. Remember the doctrine TOTALITY OF CONDUCT. Look at the ac
ts and circumstances as a whole, not just the single act. In order to show manag
ement s intention, one must establish that there is a tendency to restrain, coerce
or interfere with the right to self-organization, in the absence of any clear c
ase of actual interference, restrain or coerce. That management intended to R/I/
C. By looking at the totality of the situation and the circumstances, it may be
shown that ULP is committed.
So, in order to establish ULP, show the totality of the situation and sho
w the link between the act itself and the employee s right to self-organization. I
f the act has a tendency to R/I/C, then in all probability, considering all the
circumstances, management wanted to R/I/C. The act is ULP.
It may seem that the test is quite subjective. This is because ULP must b
e intended to R/I/C and is deliberate. So in many cases it is difficult to prove
that the act is intended by management to R/I/C. So the Court has said that, ap
plying the totality of conduct doctrine it may be shown that mgt. is guilty of U
LP even if the attempt was unsuccessful.
But what if management was really in good faith in doing such act? The go
od faith defense is available to mgt. and it is incumbent upon management to est
ablish this. Also, the good faith defense is available whether or not the act cr
eated an adverse effect. For example, there is a declaration of strike. Then man
agement announces an across the board wage increase to be released a day before
the strike. The act of releasing the bonus will produce an evil effect many employ
ees will not go to the strike. A happy employee will not do such a thing! On the
outset it seems that management is guilty of ULP. But management may show that
it is in good faith. For instance, that the bonus was actually approved and spec
ific date for release was set in a Board Resolution a year ago, and that it was
coincidental that the intended date of release was the day before the strike. He
nce, the good faith or bad faith of the employer should be considered.
Since ULP is illegal, no management employee will do it blatantly, that s w
hy it is usually subjective. That s why we must consider all possible aspects, and
even go into management s mind to determine whether ULP or not..
Now, if the closure of a company is questioned whether it is done in good
faith or bad faith, the issue is usually resolved in favor of labor. For purpos
es of the bar, the theoretical principle of resolving all doubts in favor of lab
or is a good theory to be applied, even though the opposite is what happens in r
eality. But since the bar is a theoretical exam, then apply the theory :).
ULP is a violation of the right to self-organization. There is no doubt a
bout that. But looking at the subparagraphs of Art. 248, specifically subpar. (f
), can it apply to non-union members? Can it apply when it is not related to uni
on activity issues? The case of Mabeza clarifies that. As the Court held there,
even without any union or union-organizing activity, the employer CAN commit ULP
. For instance, is when an employee is dismissed because he asserts his rights.
Art. 248 aims to cover any threat of preventing the start of self-organizing act
ivities, specifically when the employees are on the start of a consciousness as
to their rights and take initial steps to assert these rights. The Court conside
red these ULP, because these were acts of nipping the bud . The Mabeza case harmoni
zes/relates Art. 248 (f) with 248 (a). Hence, (a) also encompasses (f) = ULP.
Now, Art 248 (f) applies only when the employee testifies against the emp
loyer, unless he is dismissed for refusing to testify in favor of management.
Is the enumeration under Art. 248 exclusive? Actually, it is immaterial t
o say so. Because of the all-encompassing proviso of 248 (a). Can (a) then be le
ft alone as a definition of ULP? Yes! The other subparagraphs are illustrations
of (a). However, the other subparagraphs are good illustrations, to give us a ba
sis for conclusion that the specifically stated act is ULP, which is hard to det
ermine looking at (a) alone. (a) is too broad. So if the act does not fall under
(b) (i), but may still fall under (a), it is considered an act of ULP.

POST-MIDTERMS
REVIEW OF THE MIDTERMS QUESTIONS:
Last question
The CBA is not registered hence the legal personality of the union is ext
inguished. But the CBA is effective even without the exclusive bargaining agent.
The legal personality of the union-exclusive bargaining agent has nothing to do
with the effectivity of the CBA. The provision in the Omnibus Rules must be fol
lowed strictly. So, in this case, since there is no exclusive bargaining agent/r
epresentative to act in behalf of the employees, the employees must take into th
eir own hands the necessary measures to enact the CBA provisions. For instance,
when they seek to file a ULP case against the employer for nonobservance of the
CBA s economic provisions, they must do so through a class suit with each employee
in the bargaining unit made a party. They cannot use the employer s act as a grou
nd for strike either, because only a legitimate labor union may conduct a strike
.
What can the local/chapter do once the mother union loses its personality
? They can register as an independent union to acquire legitimate personality. B
ut prior to issuance of the certificate of registration, the union has no legiti
mate personality. That s why the Rules give that leeway period for the local/chapt
er to register as an independent union when the mother union loses its legal per
sonality.
Question 1
My intended answer is it s not ULP. It is merely a correction of an unjust
situation. Can you take it to punish the employer for that? The intention may ha
ve been clear that employer wanted to avoid the formation of a union. From a bus
iness perspective, the formation of a union is costly. The only question at this
point is should the employer be punished for the correction of a wrong situatio
n, even though the deepest intent was to avoid any possibility of formation of a
union.
Essentially ULP is a factual question. The more defensible position in t
his case is that the employer s act was an act done in good faith. It is not a cle
ar interference of the right to self-organization. In Mabeza, the employer commi
tted something wrong against the employee. In this question, nothing wrong was d
one against the employees. So I am not saying that Mabeza is not applicable. It s
an entirely different factual situation. What is looked into is the act complain
ed of as ULP, not the general business desire not to have a union, which is most
often the sentiment of any employer. In this question, there is no clear cut ca
se for ULP if what is used is the act in question.
Question 3
By denying the employee the existence of the er-ee relationship, the empl
oyer excludes them from the coverage of the CBA on such pretext, that makes a ca
se for ULP. So the labor-only contracting issue will make a case for ULP. That s A
lhambra Industries vs. CIR.
Even if the contractor exercises full control but it does not have enough
capital or equipment, there is still labor-only contracting. The contractor is
merely an agent of the principal, thus the control of the contractor should be c
onsidered as exercising control in behalf of the principal.
Is the question of labor-only contracting material to order payment of wa
ges in a case for illegal dismissal? No because the principal is always liable f
or nonpayment of wages.
Question 4
The Vanessa case The contract is an ambiguous contract, hence she should
be considered a regular employee.
The project ee turned into an accounting clerk under a prob. Contract The
re is no rehiring. She is not considered a regular employee. The rehiring is not
for another project but for a regular position under a probationary contract. M
araguinot does not apply.

V. RIGHT TO COLLECTIVE BARGAINING


A. DUTY TO BARGAIN COLLECTIVELY
LABOR CODE
ART. 250. Procedure in collective bargaining. The following procedures shall be
observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall serve a written not
ice upon the other party with a statement of its proposals. The other party shal
l make a reply thereto not later than ten (10) calendar days from receipt of suc
h notice;
(b) Should differences arise on the basis of such notice and reply, either party
may request for a conference which shall begin not later than ten (10) calendar
days from the date of request;
(c) If the dispute is not settled, the Board shall intervene upon request of eit
her or both parties or at its own initiative and immediately call the parties to
conciliation meetings. The Board shall have the power to issue subpoenas requir
ing the attendance of the parties to such meetings. It shall be the duty of the
parties to participate fully and promptly in the conciliation meetings the Board
may call;
(d) During the conciliation proceedings in the Board, the parties are prohibited
from doing any act which may disrupt or impede the early settlement of the disp
utes; and
(e) The Board shall exert all efforts to settle disputes amicably and encourage
the parties to submit their case to a voluntary arbitrator.
ART. 251. Duty to bargain collectively in the absence of collective bargaining
agreements. In the absence of an agreement or other voluntary arrangement provid
ing for a more expeditious manner of collective bargaining, it shall be the duty
of the employer and the representatives of the employees to bargain collectivel
y in accordance with the provisions of this Code.
ART. 252. Meaning of duty to bargain collectively. The duty to bargain collecti
vely means:
* the performance of a mutual obligation
* to meet and convene promptly and expeditiously in good faith
* for the purpose of negotiating an agreement with respect to wages, hours of w
ork and all other terms and conditions of employment
* including proposals for adjusting any grievances or questions arising under su
ch agreement and executing a contract incorporating such agreements if requested
by either party,
* but such duty does not compel any party to agree to a proposal or to make any
concession.
ART. 253. Duty to bargain collectively when there exists a collective barg
aining agreement. When there is a collective bargaining agreement, the duty to b
argain collectively shall also mean that neither party shall terminate or modify
such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify t
he agreement at least sixty (60) days prior to its expiration date.
It shall be the duty of both parties to keep the status quo and to conti
nue in full force and effect the term and conditions of the existing agreement d
uring the 60-day period and/or until a new agreement is reached by the parties.
ART. 253-A. Terms of a collective bargaining agreement. Any collect
ive bargaining agreement that the parties may enter into shall, insofar as the r
epresentation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agewhall agree on th
e duration of retroactivity thereof.
In case of a deadlock in the renegotiation of the collective bargaining a
greement, the parties may exercise their rights under this Code.
ART. 254. Injunction prohibited. No temporary or permanent injunction or r
estraining order in any case involving or growing out of labor disputes shall be
issued by any court or other entity, except as otherwise provided in Art.s 218
and 264 of this Code.
CASES
Kiok Loy v NLRC, 141 SCRA 179
While it is the mutual obligation of labor and management to bargain collectivel
y, the employer is not under any legal duty to initiate negotiation. The mechani
cs of collective bargaining is set in motion only when the following jurisdictio
nal pre-conditions are present:
1. Possession of status of majority representation of the employees representativ
e in accordance with any means of selection or designation as provided in the La
bor Code;
2. Proof of majority representation; and
3. Demand to bargain.
When these requisites are present and the company still refuses to submit
a counter-proposal, such refusal, if considered in relation to the entire barga
ining process, may indicate bad faith and be regarded as ULP. In this case, the
court found the company guilty of ULP where it was shown that it refused to make
a counter proposal, stalled the negotiation by a series of postponements and no
n-appearance at the hearings conducted, and unduly delayed the submission of its
financial statements.

Lakas ng Manggagawang Makabayan v Marcelo Enterprises, 118 SCRA 422


This case involves several issues:
When the CBA was about to reach its expiration date, LAKAS requested for
renegotiation with the company and submitted its proposal. It turns out however
that several unions were likewise demanding for renegotiation. The company, inst
ead of submitting a counter proposal to LAKAS, informed the union of the existen
ce of the conflicting demands from the other unions and suggested that the union
s file the necessary complaint in court to finally determine who is the authoriz
ed representative. LAKAS claims that management refused to bargain with it when
it did not submit a counter proposal.
Held: Management did not ignore the demand for collective bargaining although it
did not submit a counter proposal. There exists in this case a real issue as to
representation and management s suggestion that the unions file the necessary com
plaint in view of the fact that there are several unions claiming to represent t
he employees does not constitute failure or refusal to bargain.
Because of the company s alleged refusal to bargain, LAKAS staged a strike.
Held: Where there exists a legitimate issue as to which of several unions is the
legitimate representative of employees, it is ULP for one of the contending uni
ons to stage a strike and demand that the employer sit down with it for collecti
ve bargaining.
The company asked the striking workers to fill up forms on when they are availab
le for work. The union says this is ULP. The company says it merely wanted to kn
ow when the workers would show up for work so it can come up with a reasonable w
orking schedule. It reasons that the two strikes staged by the employees resulte
d in the complete paralysis of the company s business and it cannot just readmit a
ll returning workers in one big force or as each demanded readmission.
Held: An employer may be justified in requiring a reasonable scheduling of worki
ng hours of returning striking employees and inquiring into their time availabil
ities. The Court took judicial cognizance of the fact that companies whose busin
esses were completely paralyzed by major strikes cannot resume full operation at
once.
Not all the striking workers were allowed to return to work.
Held: It should be noted that only those who refused to fill up the questionnair
e were not readmitted. All those who filled up their respective forms were sched
uled for work and were readmitted. The stoppage of the employees work was not the
direct consequence of the company s act. Their economic loss should not be shifte
d to the employer.
LAKAS brought this action in behalf of all employees who were not allowed to ret
urn to work, whether or not they are members of LAKAS.
Held: A labor union cannot bring an action I behalf of employees who are members
of another union even if said employees signed the complaint. The proper remedy
is to drop the union as party to the action and place the individual names of t
he employees instead.
San Miguel Corp. Employees Union-PTGWO v Confesor, 262 SCRA 81
SMC was restructured. Two of its divisions were turned into separate distinct co
rporations. The union insists on uniting the employees of the 2 new corporations
into one bargaining unit. The Court ruled that the employees from the new corpo
rations constituted separate bargaining units for the following reasons:
1. The workers are employed by two different employers as a consequence of incor
poration (separate juridical personality)
2. The members of a bargaining unit must have mutual interests. Considering the
spin-off, the companies will consequently have their respective and distinctive
concerns in terms of nature of work, wages, hours of work and other conditions o
f employment.

Mindanao Terminal and Brokerage Service Inc. v Roldan-Confesor, 272 SCRA 161
The signing of the agreement is not determinative of the question whether the ag
reement was entered into within the 6 months from the expiry of the previous agr
eement. The point of reckoning is the meeting of the minds. (Marlon: prove meeti
ng of the minds through the minutes)
Samahang Manggagawa sa Top Form Manufacturing-UWP v NLRC, 7 September 1998
The union claims the benefits of an agreement allegedly entered into during the
negotiation, as per the minutes, but was not incorporated in the CBA as written.
Held: The union may not validly claim that the proposal embodied in the minutes
of the negotiation forms part of the CBA. The CBA is the law between the parties
and compliance therewith is mandated by the law.
Note: The minutes is determinative only of the moment when there was a meeting o
f the minds. As to what was particularly agreed upon, it is the CBA as written w
hich shall control.
MERALCO Cases
Facts: A CBA was entered into with a term of 5 years. Nearing its 3rd year of ef
fectivity, the parties met to renegotiate. The remaining 2 years of the CBA, whi
ch is the subject of the renegotiation in this case, was for the period 1 Decemb
er 1995 to 30 November 1997.
MERALCO v Quisumbing, 302 SCRA 173
Nearing the 3rd year of the effectivity of the CBA, the parties met to renegotia
te. Unable to come to an agreement during the renegotiation, and there existing
the imminence of a strike, the Secretary of Labor assumed jurisdiction over the
labor dispute. The Secretary resolved the issue through an order setting forth t
he approved economic demands. The effective date of the Secretary s order is in qu
estion.
Held: The date of effectivity shall be as agreed upon by the parties. The law re
quires that a CBA be renegotiated within 3 years from its execution. If there is
no agreement reached within 6 months from the expiry of the 3 years that follow
the execution of the CBA, the law expressly gives the parties, and not anybody
else, the discretion to fix the effectivity of the agreement. In the absence of
a new CBA, the parties must maintain the status quo and must continue in full fo
rce and effect the terms and conditions of the existing agreement until a new ag
reement is reached.
MERALCO v Quisumbing, 326 SCRA 172
This is a Motion for Reconsideration of the decision in the immediately precedin
g case.
Held: CBA arbitral awards granted after six months from the expiration of the la
st CBA shall retroact to such time agreed upon by both employer and the employee
s or their union. In the absence of such agreement, the award shall retroact to
the first day after the 6-month period following the last day of the CBA, should
there be one, or, in the absence of a CBA, the Secretary s determination of the d
ate of retroactivity as part of his discretionary powers over arbitral awards sh
all control.
MERALCO v Quisumbing, 326 SCRA 172
This is a Motion for Partial Modification of the decision in the immediately pre
ceding case.
Held: The arbitral award shall retroact to the first day after the 6-month perio
d following the expiration of the last day of the CBA. The CBA in this case expi
red on 1 December 1997. The first day after the 6-month period is 1 June 1996. T
he CBA shall be effective from 1 June 1996 to 31 May 1998 (effective for 2 years
).
New Pacific Timber & Supply Co. Inc. v NLRC, 328 SCRA 404
Until a new CBA has been executed by and between the parties, they are duty boun
d to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement. The law does not provide for any exception
or qualification as to which of the economic provisions of the existing agreeme
nt are to retain force and effect. Therefore, it must be understood as encompass
ing all the terms and conditions in said agreement.
Further, when a CBA is entered into by a union representing the employees
and the employer, even non-member employees are entitled to the benefits of the
agreement.
LECTURE
DUTY TO BARGAIN COLLECTIVELY
You must know the elements of the duty to bargain collectively by heart!
What is the duty to bargain collectively?
It is the mutual obligation both of the employer and employee to:
- meet and convene
- promptly and expeditiously
- in good faith
- negotiate
- the TACOE/ grievance machinery
- execute a written document (CBA)
- respect the CBA not to terminate or modify the CBA during its lifetime; contract
bar rule
It is an obligation because it is mandatory-it must be done, otherwise, n
onperformance will merit a sanction. A CBA made by labor may be imposed on manag
ement even without negotiations. Aside from that, management may be found guilty
of ULP. Also, the LLO may exercise its right to strike.
Meet and convene. What does that mean? Meet in person and face-to-face.
The bargaining representative has the primary obligation to start the bargaining
process. How is it started? The bargaining representative submits a proposal, m
anagement submits a counter-proposal, and then they meet and bargain at the barg
aining table. How does a proposal look like? It is in the form of a draft CBA co
ntaining all the provisions labor wants in the CBA. Management replies usually b
y giving a letter saying labor s request cannot be granted. That starts the bargai
ning process.
Each side is represented by a panel, one for the bargaining agent, and f
or management, to bargain collectively. If they fail to meet within ten days, is
that a violation of the right? The law says to meet promptly and expeditiously.
If not, it will be a violation of the duty. It depends on the circumstances for
delay. If management failed to submit a counter-proposal on time, or meet on ti
me, and has no good reason to do so, then it may be a violation.
Now, if they have met promptly and expeditiously, but not in good faith,
it may be a violation. For instance, it manifests bad faith when the management
sends as panel people who don t know anything about bargaining, not the usual peo
ple who represent management in collective bargaining. That s why the union usuall
y asks for authorization from the management, that will ensure the union that wh
atever the panel says will bind management.
Example of bad faith management comes to the bargaining table and announc
es deadlock na tayo on the first day of negotiations.
Convening promptly and expeditiously in good faith to negotiate. On the f
irst day, the union usually asks for the moon. Management usually digs deep deep
down. Then each panel adjusts its demands and try to meet in the middle. Hopefu
lly they end up both happy, because they get into a position which is better tha
n the minimum demand they were willing to settle on. Sometimes they do, oftentim
es they don t-which leads to a deadlock. That s how negotiations happen. A lot has t
o do with psychological warfare.
Remember the Labor Code states that there is no compulsion to agree to a
proposal or submit to a concession. The obligation to negotiate is merely an obl
igation to be flexible and not to give in always to the demand of the other part
ies. The Code states the negotiations must be as to the TACOE and grievance mach
inery. These two factors are the coverage of the obligations. These are the mand
atory negotiable provisions. Matters over and above that is no longer an obligat
ion but the parties may negotiate on such matters if they wish to do so, though
it wouldn t be a violation of the duty if not tackled.
Written agreement. Negotiations must end with a written agreement which
should be registered. Registration is necessary to protect the local/chapter s leg
al personality. Also, it is to protect the status of the union as the sole and e
xclusive bargaining agent which status cannot be challenged until after the laps
e of 4 years and 300 days. It may be challenged only within the 60-day freedom p
eriod. Otherwise, rival unions may file a petition for certification election an
ytime. Actually, management itself may ask for registration for the CBA. In fact
, it is mgt. who pays the filing fees. It is also for mgt. s protection, because i
t will ensure industrial peace for at least five years.
What is the term of a CBA? Five years as to representation and three yea
rs as to non-representation provisions are concerned. The three-year period may
be shortened by agreement of the parties.
For example: CBA entered into on January 25, 2002. It will be effective u
ntil January 24, 2007 (representation) and January 24, 2005 (non-representation
provisions). However, the parties may validly agree that the non-representation
provisions be negotiated on January 24, 2004. The law says the other provisions
shall be renegotiated not later than three years. Hence, they may negotiate on t
he second year.
*Keep in mind that the duty to renegotiate is different from the effectiv
ity of the economic provisions of the CBA. The law does not limit its effectivit
y, unlike the representation status which the law says it must be for a term of
five years. So, the CBA may say the economic provisions shall be valid for 5 yea
rs, or any number of years, but the union has to demand renegotiation within the
three years, anytime within the three year period.
Now, as long as management can comply with the three-year deadline, then
they are not forced to negotiate earlier than three years. What is the practical
implication of that? If the union makes a demand one year after CBA s effectivity
, management can ignore that and such act is not ULP. Management still has the r
emaining two years to comply and mgt. can opt not to renegotiate at that point.
It would be reasonable however to demand renegotiation when nearing the end of t
he third year. It is difficult to peg a cut-off point. It depends on the circums
tances and the possible reasons of management. But if the parties choose to rene
gotiate one year after, they may do so - there is no prohibition, but neither is
it a duty. There is no ULP at this point.
But can the parties renegotiate one year after the effectivity of the CBA
? Yes. There is no prohibition. Can they renegotiate every year after that? Yes,
there is no prohibition. Assuming they renegotiated the non-representation CBA
provisions on Jan. 24, 2003- the first year of the CBA. Will that be good until
January 24, 2007? Since it is a renegotiation, it is a new agreement. It will be
up to the parties if they choose to make the new agreement subsist up to Januar
y 24, 2007. It is entirely up to them to decide the term of effectivity of the C
BA s non-representation provisions. BUT despite whatever term they agree upon, the
y have to renegotiate in by January 25, 2006 within three years from the last re
negotiation and execution of the CBA.
The overlapping of the terms in representation and non-representation is
quite complicated. In the end of the fifth year, there may be a new bargaining r
epresentative, but the non-representation provisions may have been extended beyo
nd the fifth year. The overlapping according to jurisprudence is to promote indu
strial peace. The new representative must respect the non-representation provisi
ons. So, from 1997 to 1998, it is considered the trial period, an adjustment per
iod. The new agent cannot demand negotiations kasi may one year pa. Mgt. won t neg
otiate as well. But this scenario does not promote industrial peace. The new age
nt of course is a rival union and won t be happy with the CBA entered into between
management and the old agent who is a rival union. In fact the CBA is always an
issue in certification elections Palpak naman ang CBA na yan .
That s why unions/bargaining agents seek to avoid this scenario-sinasabay n
ila ang effectivity ng non-representation provisions sa representation aspect ng
CBA. Ginagawang parehong 5 years. In fact I have not seen a CBA that has extend
ed its non-representation aspects beyond five years. On management s side, why wil
l they agree to extend the term of the CBA beyond the authority of the bargainin
g agent?
Now, the parties may agree that the modified provisions take effect until
2009-even beyond the period of representation. Then the bargaining agent s status
is challenged by a rival union. Such CBA will still be effective, and if the ri
val union wins as the new bargaining agent, they have to respect the CBA. The ne
w agent can demand renegotiation but it may take effect only after 2009.
The reckoning point for the three year period for renegotiation is the l
ast day of the last negotiations. That should be the interpretiation of execution
of the CBA . Because when you renegotiate, you are executing new provisions.
My interpretation of renegotiation is that the parties have to reopen neg
otiations within three years, not that they have to agree on new provisions with
in three years. What is the reason for the three year rule? Many economic develo
pments can occur within three years. That makes a need to revisit the positions
of the parties, and to fix the CBA to favor labor. I doubt the CBA can ever be a
djusted to something lower than what labor is already receiving. That would be a
violation of the non-diminution rule. Such benefits already enjoyed can only be
improved, not diminished in the CBA.
Many CBAs have annual wage increase plans. So for instance, year 1=P100,
year 2=P200, year 3=P300, year 4=P400 and year 5=P500. By the third year, they e
ntered into negotiations, they can modify the agreement as to the fourth and fif
th year since it has not yet been given. For instance, the company was hit with
the economic recession, and so the parties agree year four and five=P100 and P20
0 instead of the original agreement. It s a valid agreement. It does not go agains
t the non-diminution of benefits rule because it has not yet been given to the w
orkers. It is something the workers do not yet enjoy.
When the parties enter into a binding agreement to renegotiate one year a
fter, but both mutually agree to defer it to another year, that would be a valid
agreement. On the other hand, if one of the parties refuse to meet one year lat
er as originally agreed upon, the other party may declare deadlock.
Now, when the parties renegotiate, then they agree not to change anything
, that is a valid renegotiation. The three years to next renegotiate shall be re
ckoned from the execution of the CBA agreeing not to change anything in the old
CBA.
If there is no renegotiation within the three years, there is no duty to
negotiate anymore. The three year period lapses the union loses the right to dem
and renegotiation. This is much like the rule in Obligations and Contracts. As s
oon as one party demands, the other incurs in delay. Hence if there is no demand
, there is no delay. Management is not incurring in delay if Labor does not dema
nd. there is no duty If it is not demanded, and the three year period lapsed, th
ere is no duty to negotiate anymore. And such act is not ULP
Now for example January 24, 2002, expiration of the CBA. The union/bargai
ning agent was not changed. Starting February 1, negotiations started, and ended
September 1, 2002. When is the agreement of the parties reckoned? From the meet
ing of the minds, not at the time of signing. Meeting of the minds is when the p
arties come to an agreement. In the absence of formal signing, this is proven by
the very provisions of the CBA. Remember too that only the written provisions o
f the CBA may be enforced. If the agreed provisions (while at the negotiating ta
ble) are not in the written CBA, sorry na lang!! So the panel must read the writ
ten CBA before agreeing to be bound by it. But what usually happens is minamadal
i ang signing para makuha agad ng union ang signing bonus. Management takes adva
ntage of that by removing some provisions in the CBA formerly agreed upon.
When is the effectivity of the new CBA? Two scenarios:
1. If the meeting of the minds happened within 6 months from expiration of the o
ld CBA. So if they entered into the agreement by July 24, 2002 the new CBA will
take effect, will retroact to January 25, 2002. This is automatically operative
by law. No agreement between the parties is needed.
2. If the meeting of the minds happened beyond 6 months, like the above scenario
, then the parties will determine when the new CBA will take effect. There is no
automatic retroactivity. Such will happen only if the parties agree to it. Now,
in the absence of any agreement,
For instance, nag-deadlock. Nag-strike. The Sec. Of Labor assumed jurisdi
ction and imposed a decision-a CBA, on the parties. He did not state a date when
the new CBA shall be effective. As ruled in the three Meralco cases:
1. For example the decision became final June 12, 2002-within the 6 month period
. In this case the law automatically operates so the new CBA retroacts to the da
te of the old CBA s expiry.
2. If the decision became final beyond the six month period, it retroacts automa
tically to the end of the six month period. Generally, the Secretary of Labor ca
n decree retroactivity. But the Court said the retroactivity should only operate
the day after the six month period. So the Secretary can make it retroact only
starting July 25, 2002 or beyond such date. This ruling of the Court misinterpre
ted Art. 253-A, thinking that when the law talks of such date in the last phrase o
f the Code, refers to the six month period. Erroneous! Such date refers to the dat
e of expiry of the old CBA. So I believe there is no reason for the Court to lim
it the Secretary s power.
The first decision was the good decision-it was congruent with the codal
provision stating that only the parties can agree to retroactivity, so the Secr
etary cannot decree retroactivity if the parties do not as well. But this was re
versed in the second Meralco case. This case has no basis to say that the decis
ion retroacts automatically to the end of the six month period. The hard part is
an arbitral award can supplant the parties agreement insofar as retroactivity is
concerned. So the Secretary can decree retroactivity but his freedom to choose
the period when it retroacts is limited by the decision.
B. BARGAINING UNIT, BARGAINING AGENT AND CERTIFICATION ELECTION PROCEEDINGS
LABOR CODE
ART. 255. Exclusive bargaining representation and workers participation in
policy and decision-making. The labor organization designated or selected by the
majority of the employees in an appropriate collective bargaining unit shall be
the exclusive representative of the employee in such unit for the purpose of co
llective bargaining. However, an individual employee or group of employees shall
have the right at any time to present grievances to their employer.
Any provision of law to the contrary notwithstanding, workers shall have
the right, subject to such rules and regulations as the Secretary of Labor and E
mployment may promulgate, to participate in policy and decision-making processes
of the establishment where they are employed insofar as said processes will dir
ectly affect their rights, benefits and welfare.
For this purpose, workers and employers may form labor-management council
s: Provided, That the representatives of the workers in such labor-management co
uncils shall be elected by at least the majority of all employees in said establ
ishment.
ART. 256. Representation issue in organized establishments. In organized e
stablishments, when a verified petition questioning the majority status of the i
ncumbent bargaining agent is filed before the Department of Labor and Employment
within the sixty-day period before the expiration of a collective bargaining ag
reement: the Med-Arbiter shall automatically order an election by secret ballot
when the verified petition is supported by:
1) the written consent
2) of at least twenty-five percent (25%)
3) of all the employees in the appropriate bargaining unit, to ascertain the wil
l of the employees in the appropriate bargaining unit.
4) To have a valid election, at least a majority of all eligible voters in the u
nit must have cast their votes. The labor union receiving the majority of the va
lid votes cast shall be certified as the exclusive bargaining agent of all the w
orkers in the unit.
When an election
1) which provides for three or more choices
2) results in no choice receiving a majority of the valid votes cast,
3) a run-off election shall be conducted between the labor unions receiving the
two highest number of votes:
4) Provided, That the total number of votes for all contending unions is at leas
t fifty percent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to r
ecognize the majority status of the incumbent bargaining agent where no petition
for certification is filed.
ART. 257. Petitions in unorganized establishments. In any establishment wh
ere there is no certified bargaining agent, a certification election shall autom
atically be conducted by the Med-Arbiter upon the filing of a petition by a legi
timate labor organization.
ART. 258. When an employer may file petition. When requested to bargain co
llectively, an employer may petition the Bureau for an election. If there is no
existing certified collective bargaining agreement in the unit, the Bureau shall
, after hearing, order a certification election.
All certification cases shall be decided within 20 working days.
The Bureau shall conduct a certification election within 20 days in accordance
with the rules and regulations prescribed by the Secretary of Labor and Employme
nt.
ART. 259. Appeal from certification election orders. Any party to an elect
ion may appeal the order or results of the election as determined by the Med-Arb
iter directly to the Secretary of Labor and Employment on the ground that the ru
les and regulations or parts thereof established by the Secretary of Labor and E
mployment for the conduct of the election have been violated. Such appeal shall
be decided within fifteen (15) calendar days.
OMNIBUS RULES, BOOK V
RULE I
Definition of Terms
SECTION 1. Definition of terms.
(q) "Bargaining Unit" refers to a group of employees sharing mutual interest
s within a given employer unit, comprised of all or less than all of the entire
body of employees in the employer unit or any specific occupation or geographica
l grouping within such employer unit.
(r) "Exclusive Bargaining Representative" means any legitimate labor organiz
ation duly recognized or certified as the sole and exclusive bargaining agent of
all the employees in a bargaining unit.
(dd) "Consent Election" means the election voluntarily agreed upon by the par
ties, with or without the intervention of the Department, to determine the issue
of majority representation of the workers in the appropriate collective bargain
ing unit.
(ee) "Run-off Election" refers to an election between the labor unions receiv
ing two (2) highest number of votes when a certification election which provides
for three (3) or more choices results in no choice receiving a majority of the
valid votes cast; provided, the total number of votes for all contending unions
is at least fifty percent (50%) of the number of votes cast.
(ff) "Election Proceedings" refer to the period during a certification, conse
nt or run-off election or election of union officers starting from the opening t
o the closing of the polls, including the counting and tabulation of the votes,
but excluding the period for the final determination of the challenged votes and
the canvass thereof.
(gg) "Organized Establishment" refers to a firm or company where there exists
a recognized or certified exclusive bargaining agent.
(hh) "Registration Proceedings" refer to the process leading to the revocatio
n of the legal personality of a labor organization or a workers association.

RULE IX
Determination or Representation Status
SECTION 1. Policy. It is the policy of the State to promote free trade unionism
through expeditious procedures governing the choice of an exclusive bargaining
representative. The determination of such exclusive bargaining representative is
a non-litigious proceeding and, as far as practicable, shall be free from techn
icalities of law and procedure, provided only that in every case, the exclusive
bargaining representative enjoys the majority support of all the employees in th
e bargaining unit.
SECTION 2. Determination of representation status; models. The determination of
an exclusive bargaining representative shall be through voluntary recognition i
n cases where there is only one legitimate labor organization operating within t
he bargaining unit, or through certification, run-off or consent as provided for
in this Book.
RULE X
Voluntary Recognition
SECTION 1. Requirements for voluntary recognition. In unorganized establishment
s, the employer may voluntarily recognize the representation status of a union.
within thirty (30) days from recognition, the employer representative and union
president shall submit to the Regional Office a joint statement attesting to the
fact of voluntary recognition, which shall also include the following:
(a) Proof of posting the joint statement of voluntary recognition for fiftee
n (15) consecutive days in two (2) conspicuous places of the establishment or ba
rgaining unit where the union seeks to operate;
(b) The approximate number of employees in the bargaining unit, accompanied
by the name and signatures of at least a majority of the members of the bargaini
ng unit supporting the voluntary recognition; and
(c) A statement that there is no other legitimate labor organization operati
ng within the bargaining unit.
The joint statement shall be under oath.
SECTION 2. Effect of voluntary recognition. Within twenty-four (24) hours upon
submission of all the aforementioned documents, the Regional Office shall enter
the fact of voluntary recognition into the records of the union, copy of such en
try immediately furnished the Bureau. From the time of recording, the union shal
l enjoy the rights, privileges and obligations of an exclusive bargaining repres
entative.
RULE XI
Certification of Election
SECTION 1. Who may file. Subject to the provisions of this Rule, any legitimate
labor organization or any employer, when requested to bargain collectively and
the status of the union is in doubt, may file a petition for certification elect
ion.
SECTION 2. Where to file. A petition for certification election may be filed wi
th the Med-Arbiter through the Regional Office which has jurisdiction over the p
rincipal office of the employer or where the bargaining unit is principally situ
ated.
When two or more petitions involving the same bargaining unit are filed i
n one Regional Office, the same shall be automatically consolidated. Where these
petitions are filed in different regional Offices, the Regional Office which fi
rst acquires jurisdiction over the case shall exclude the others, in which case
the latter shall endorse the petition to the former for consolidation.
SECTION 3. When to file. In the absence of a collective bargaining agreement du
ly registered in accordance with Article 231 of the Code, a petition for certifi
cation election may be filed at any time. However, no certification election may
be filed within one year from the date of a valid certification, consent or run
-off election or from the date of voluntary recognition in accordance with Rule
X of these Rules; provided, that where an appeal has been filed on the order of
the Med-Arbiter certifying the results of the election, the running of the one-y
ear period shall be suspended until the decision on the appeal shall have become
final and executory.
Neither may a representation question be entertained if, before the filin
g of a petition for a certification election, the duly recognized or certified u
nion has commenced negotiations with the employer in accordance with Article 250
of the Code within the one-year period referred to in the immediately preceding
paragraph, or a bargaining agent is a party had been submitted to conciliation
or arbitration or had become the subject of valid notice of strike or lockout. I
f a collective bargaining agreement has been duly registered in accordance with
Article 231 of the Code, a petition for certification election or a motion for i
ntervention can only be entertained within sixty (60) days prior to the expiry d
ate of such agreement.
SECTION 4. Form and contents of petition. The petition shall be in writing and
under oath and shall contain, among others, the following:
(a) The name of petitioner, its address, and affiliation if appropriate,, th
e date of its registration and number of its certificate of registration if peti
tioner is a federation, national union or independent union, or the date it was
reported to the Department if it is a local/chapter.
(b) The name, address and nature of the employer s business;
(c) The description of the bargaining unit;
(d) The approximate number of employees in the bargaining unit;
(c) The names and addresses of other legitimate labor organizations in the b
argaining unit;
(f) A statement indicating any of the following circumstances:
i) that the bargaining unit is unorganized or that there is no registered c
ollective bargaining agreement covering the employees in the bargaining unit;
ii) if there exists a duly registered collective bargaining agreement, that
the petition is filed within the sixty-day freedom period of such agreement; or
iii) if another union had been previously certified in a valid certification,
consent or run-off election or voluntary recognized in accordance with Rule X o
f these Rules, that the petition is filed outside the one-year period from such
certification or run-off election and no appeal is pending thereon, or from the
time the fact of recognition was entered into the records of such union.
(g) In an organized establishment, the signatures of at least twenty-five (2
5%) percent of all employees in the appropriate bargaining unit which shall be a
ttached to the petition at the time of its filing; and
(h) Other relevant facts
When the petition is filed by an employer, it shall contain, among others
:
(a) The name, address of the legitimate labor organizations involved;
(b) The approximate number of the employees in the appropriate bargaining un
it;
(c) The approximate number of the employees in the appropriate bargaining un
it;
(d) A description of the bargaining unit; and
(e) Other relevant facts.
SECTION 5. Assignment of the case. Within twenty-four (24) hours from receipt o
f the petition, the Regional Director shall assign the case to a Med-Arbiter, wh
o shall immediately cause the posting of the petition in two conspicuous places
where the petition seeks to operate and the issuance of summons to all parties n
amed in the petition, indicating the first hearing and ordering the parties to a
ppear therein.
SECTION 6. Force Intervenor. The incumbent bargaining agent shall automatically
be one of the choices in the certification election as forced intervenor.
SECTION 7. Motions for intervention when proper. When a petition for certificat
ion election had been filed in an organized establishment, any legitimate labor
organization other than the incumbent bargaining agent operating within the barg
aining unit may file a motion for intervention with the Med-Arbiter during the f
reedom period of the collective bargaining agreement. the form and contents of t
he motion shall be the same as that of a petition for certification election.
In an unorganized establishment, the motion shall be filed at any time pr
ior to the finality of the decision calling for a certification election. The fo
rm and contents of the petition shall likewise be the same as that of a petition
for certification election. If the motion is found sufficient in form and subst
ance, the Med-Arbiter shall, within five (5) days from receipt thereof but in an
y event prior to the holding of the election if such had been scheduled, order t
he inclusion of the movant as one of the choices, and the original decision shal
l be amended accordingly. The order of the Med-Arbiter resolving the motion shal
l not be subject to reconsideration or appeal. Any motion for reconsideration or
appeal so filed shall not stay the holding of the certification or consent elec
tion, but nevertheless shall form part of the records of the case.
SECTION 8. Hearings: purpose. The Med-Arbiter may conduct hearings with the view
of (a) arriving at a stipulation of facts; (b) determining the parties to the e
lection; (c) getting the parties to agree to a consent election; (d) asking clar
ificatory questions; and (e) defining or limiting the issues. The Med-Arbiter sh
all have control of the proceedings. Postponements or continuances shall, as a m
atter of policy, be discouraged.
In case the contending unions agree to a consent elections, the Mid-Arbit
er shall not issue a formal order calling for the conduct of an election but sha
ll enter the fact of the agreement in the minutes of the hearing and shall cause
the immediate scheduling of the pre-election conference. The minutes of the hea
ring shall be signed by the parties and attested to by the Med-Arbiter.
SECTION 9. Answer. If the contending unions fail to agree to a consent election
during the first hearing, the Med-Arbiter shall in the same hearing direct all
concerned parties, including the employer, to simultaneously submit their perspe
ctive position papers within a non-extendible period of ten (10) days. The posit
ion papers shall specifically address the issues identified during the hearing,
and shall include all arguments and evidence as the parties may deem relevant in
the disposition of the case. All arguments not so raised are deemed waived. Upo
n the expiration of the ten-day period, the petition shall be deemed submitted f
or resolution, with or without position papers submitted by the parties.
SECTION 10. Failure to appear despite notice. The failure of any party to appea
r twice despite notice, whether consecutive or not, shall be deemed a waiver of
its right to be heard, in which case, the Med-Arbiter shall proceed to resolve t
he petition on the basis of available records.
SECTION 11. Failure action on the petition. The Med-Arbiter shall have twenty (
20) working days from submission of the case for resolution within which to gran
t or dismiss the petition.
I. A decision granting the petition shall state the following:
(a) The name of the employer or the establishment;
(b) The description of the bargaining unit;
(c) The names of the contending unions which shall appear in the following o
rder;
i) Petitioner union or, in case of two or more petitioners, in the order in
which the petitions were filed;
ii) Forced intervenor; and
iii) Other intervenors
The decision shall also include a directive for the employer to submit wi
thin ten (10) days from receipt of the decision, the certified list of employees
in the bargaining unit, or where necessary, the payrolls covering the members o
f the bargaining unit for the last three (3) months immediately preceding the is
suance of the decision. In the event the employer does not submit the list or pa
yrolls as the case may be, the union may submit its own list.
In a petition filed by a legitimate labor organization involving an autho
rized establishment, the Med-Arbiter shall, pursuant to Article 257 of the Code,
automatically order the conduct of certification election after determining tha
t the petition has complied with all the requirements enumerated under Sections
1, 2 and 4 hereof, and that none of the grounds for dismissal enumerated in the
immediately succeeding paragraph exists.
II. The Mid-Arbiter shall dismiss the petition on any of the following groun
ds:
(a) The petitioner is not listed by the Regional Office or Bureau in its reg
istry of legitimate labor organizations, or that its legal personality has been
revoked or cancelled with finality in accordance with Rule VIII of these Rules;
(b) The petition was filed before or after the freedom period of a duly regi
stered collective bargaining agreement; provided, that the sixth-day freedom per
iod based on the original collective bargaining agreement shall not be affected
by any amendment, extension or renewal of the collective bargaining agreement:
(c) The petition was filed within one (1) year from a valid certification, c
onsent or run-off election and no appeal on the results is pending thereon, or f
rom recording of the fact of voluntary recognition with the Regional Office.
(d) A duly recognized or certified union has commenced negotiations with the
employer in accordance with Article 250 of the Code within the one-year period
referred to in Section 3, rule XI of these Rules, or there exists a bargaining d
eadlock which had been admitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout to which an incumbent or certifi
ed bargaining agent is a party;
(e) In case of an organized establishment, failure to submit the twenty-five
percent (25%) support requirement upon the filing of the petition; or
(f) Lack of interest or withdrawal on the part of the petitioner; provided,
that where a motion for intervention has been filed during the freedom period, s
aid motion shall be deemed and disposed of as an independent petition for certif
ication election if it complies with all the requisites for the filing of a peti
tion for certification election as prescribed in Section 4 of these Rules.
SECTION 12. Appeal; finality of decision. The decision of the Med-Arbiter may b
e appealed to the Secretary for any violation of these Rules Interlocutory order
s issued by the Med-Arbiter prior to the grant or denial of the petition, includ
ing orders granting motions for intervention issued after an order calling for a
certification election, shall not be appealable. However, any issue arising the
refrom may be raised in the appeal on the decision granting or denying the petit
ion.
The appeal shall be under oath and shall consist of a memorandum of appea
l specifically stating the grounds relied upon by the appellant with the support
ing arguments and evidence. The appeal shall be deemed not filed unless accompan
ied by proof of service thereof to appellee.
SECTION 13. Where to file appeal. The appellant shall file its appeal with the
Regional Office where the case originated.
SECTION 14. Period to reply. The appellee shall file its reply thereto within t
en (10) calendar days from receipt of a copy of the appeal. The Regional Office
shall, within five (5) calendar days from receipt of the reply forward the entir
e records of the case to the Office of the Secretary.
Where no appeal is filed within the ten-day period, the Med-Arbiter shall transm
it the entire records of the case, entering therein the fact that the decision h
as become final and executory, to the Regional for appropriate disposition.
SECTION 15. Decision of the Secretary final and executory. The Secretary shall
have fifteen (15) calendar days within which to decide the appeal from receipt o
f the records of the case. The filing of the appeal from the decision of the Med
-Arbiter stays the holding of any certification election. The decision of the Se
cretary shall be final and executory.
Upon the finality of the decision of the Secretary affirming the decision
to conduct a certification election, the entire records of the case shall be re
manded to the office of origin for implementation of the decision. The implement
ation shall not be stayed unless restrained by the appropriate court.
SECTION 16. Effects of consent election. Where a petition for certification ele
ction had been filed and, upon the intercession of the Med-Arbiter, the parties
agree to hold a consent election, the results thereof shall constitute a bar to
the holding of a certification election for one year from the holding of such co
nsent election, subject to Section 17 of these Rules. Where no petition for cert
ification election had been filed but the parties themselves have agreed to hold
a consent election, the results thereof shall not constitute a bar to another c
ertification election, unless the winning union had been extended voluntary reco
gnition in accordance with Rule X of these Rules.
SECTION 17. Failure of election; effects. Where the total number of valid votes
cast in a certification or consent election is less than the majority of all th
e eligible employees in the bargaining unit, there shall be a failure of electio
n. Such failure of election shall not bar the filing of a petition for the immed
iate holding of another certification or consent election.
SECTION 18. Effects of early agreements. The representation case shall not be a
dversely affected by a collective bargaining agreement registered before or duri
ng the last sixty (60) days of a subsisting agreement or during the pendency of
the representation case.
SECTION 19. Motions for inhibitions. No motion for inhibition of the Med-Arbite
r shall be entertained from any party unless the same is verified and based on s
pecific grounds or circumstances directly related to or arising from the dispute
under consideration.
Inhibition shall be discretionary on the Med-Arbiter concerned. Within tw
enty-four (24) hours from receipt thereof, the Med-Arbiter shall deny the motion
, which denial shall not be appealable, or grant the same by returning the entir
e records of the case to the Regional Director, specifically stating his reasons
for inhibition.
Within twenty-four (24) hours from return of the records, the Regional Di
rector shall assign the case to another Med-Arbiter. Where there is no other Med
-Arbiter in the Regional Office, the Regional Director shall transmit the entire
records of the case to the Bureau, which shall immediately assign the case to a
ny Med-Arbiter from any of the Regional Offices or from the Bureau.
SECTION 20. Non-availability of Med-Arbiter. Where there is no Med-Arbiter avai
lable in the Regional Office by reason of vacancy, prolonged absence, or excessi
ve volume of workload as determined by the Regional Director, the petition shall
be disposed of in accordance with the last paragraph of the immediately precedi
ng section. The Regional Office shall notify all parties of such action.
RULE XII
Conduct of Certification Elections
SECTION 1. Pre-election conference. Within twenty-four (24) hours from receipt
the Med-Arbiter of the final decision for the conduct of a certification electio
n, or from the remand of the records of the case from the Office of the Secretar
y, the Regional Director shall assign the case to an election officer for the co
nduct of a pre-election conference.
The pre-election conference shall set the mechanics for the election and
shall determine, among others, the following: (a) the list of qualified voters;
(b) the date, time and place of the election; (c) the names of watchers and repr
esentatives; (d) the number and location of polling places or booths; and (e) th
e number of ballots to be prepared.
The failure of any party to appear during the pre-election conference, de
spite notice, shall be construed as a waiver to be represented and to question o
r object to any agreement reached in said pre-election conference. Nothing herei
n, however, shall deprive the non-appearing party of its right to be furnished n
otices of subsequent pre-election conferences and to attend the same.
SECTION 2. Qualification of voters; inclusion-exclusion proceedings. All em
ployees who are members of the appropriate bargaining unit sought to be represen
ted by the petitioner at the time of the certification or consent election shall
be qualified to vote. A dismissed employee whose dismissal is being contested i
n a pending case shall be allowed to vote in the election.
In case of disagreement over the voters list over the eligibility of voter
s, all contested voters shall be allowed to vote. However, their votes shall be
segregated and sealed in individual envelops in accordance with section 9 of the
se Rules.
SECTION 3. Election conducted during regular business day. The election shall b
e set during a regular business day of the company unless otherwise agreed upon
by the parties. It shall be held within company premises unless circumstances ot
herwise require, as determined by the election officer.
SECTION 4. Posting of notices. The Regional Office shall cause the posting of n
otice of election at least five (5) working days before the actual date thereof
in two-most conspicuous places in the company premises. The notice shall contain
the date and time of the election, names of all contending unions, the descript
ion of the bargaining unit and the list of eligible voters. The five-day period
for posting of notice and the list of eligible voters may be waived upon the wri
tten agreement of the parties.
SECTION 5. Secrecy and sanctity of the ballot. To ensure the secrecy of the bal
lot, the election officer, together with the authorized represententatives of th
e contending parties, shall before the start of the actual voting, inspect the p
olling place, the ballot boxes, and the polling booths. After the examination of
each ballot box, the election officer shall seal each with three padlocks. The
key to each padlock shall be kept individually by the election officer, the repr
esentative of the labor organization, and the representative of the employer. If
more than one union is involved, the holder of the key for the labor organizati
on shall be determined by drawing of lots. All keys shall remain in the possessi
on of the election officer and the representative during the entire proceedings
and until all the controversies concerning the opening of the ballot box shall h
ave been resolved. Where the representative of the employer or labor organizatio
n is not present or has lost a key at the time of the opening of the ballot box,
the election officer shall have the authority to break open the box. the circum
stances under which this authority is exercised shall be reflected in the minute
s of the proceedings.
SECTION 6. Preparation of ballots. For the guidance of the voters, ballots sha
ll be prepared in Filipino and English with a translation in the local dialect,
if necessary.
SECTION 7. Marking of votes. The voter must put a cross (X) or a check (?) mark
in the square opposite the name of the union of his choice. If only one union i
s involved, the voter shall make his cross or check mark in the square indicatin
g "yes" or "no".
If a ballot is torn, marked, defaced, or left unfilled in such a manner a
s to create doubt or confusion or to identify the voter, it shall be considered
spoiled. If the voter inadvertently spoils a ballot, he shall return it to the e
lection officer who shall destroy it and give him another ballot.
SECTION 8. Keeping of minutes. The election officer shall keep minutes of the e
ntire proceedings, including therein all events and circumstances relevant to th
e election. Upon completion of the entire proceedings, the representatives of th
e parties shall assign the minutes and be furnished copies thereof. Where the re
presentatives are not present or refuse to sign the minutes, this fact shall be
duly noted by the election officer.
SECTION 9. Challenging of votes. An authorized representative of any of the con
tending parties may challenge a vote before it is deposited in the ballot box on
ly on any of the following grounds:
(a) That there is no employer-employee relationship between the voter and th
e company; and
(b) That the voter is nota member of the appropriate bargaining unit which p
etitioner seeks to represent.
When a vote is properly challenged, the election officer shall place the
ballot in an envelope which shall be sealed in the presence of the voter and the
representatives of the parties. The election officer shall indicate on the enve
lope the voters name, the party challenging the voter, and the ground for the cha
llenge. The sealed envelope shall then be signed by the election officer and the
representatives of all the parties. The election officer shall vote all challen
ges in the minutes of the election and shall be responsible for consolidating al
l envelopes containing the challenged votes. The envelopes shall be opened and t
he question of eligibility shall be passed upon only if the number of segregated
voters will materially alter the results of the election.
SECTION 10. On-the-spot question. The election officer may rule on any question
relating to and raised during the conduct of the election. In no case, however,
shall the election officer rule on any of the grounds for challenge specified i
n the immediately proceeding section.
SECTION 11. Protest; when perfected. Any party-in interest may file a protest b
ased on the conduct or mechanics of the election. Such protests shall be recorde
d in the minutes of the proceedings. Protests not so raised are deemed waived.
The protesting party must formalize its protest with the Med-Arbiter, wit
h specific grounds, arguments and evidence therefor, within five (5) days after
the close of the proceedings. If not recorded in the minutes and formalized with
in the prescribed period, the protest shall be deemed dropped.
SECTION 12. Canvassing of votes; when election is valid. As soon as the polls c
lose, the votes cast shall be counted and tabulated by the election officer in t
he presence of the representatives of the parties. Upon completion of the canvas
sing, the election officer shall give each representative a copy of the minutes
of the election including the results thereof. The ballots and the tally sheets
shall be sealed in an envelope and signed by the election officer and by the rep
resentative of the contending parties and shall remain under the custody of the
election officer.
The union which obtained a majority of the valid votes cast shall be cert
ified as the sole and exclusive bargaining agent of all the workers in the appro
priate bargaining unit. However, in an order to have a valid election, at least
a majority of all eligible voters in the appropriate bargaining unit must have c
ast their votes.
SECTION 13. Proclamation and certification of results by election officer; when
proper. Upon completion of the canvass there being a valid election, the electi
on officer shall proclaim and certify as winner the union which obtained a major
ity of the valid votes cast under any of the following conditions:
a) No protest had been filed or, even if one was filed, the same was not pe
rfected within the five-day period for perfection of the protest;
b) No challenge of eligibility issue was raised or even if one was raised,
the resolution of the same will not materially change the result.
For this purpose, the election officer shall immediately issue the corres
ponding certification, copy furnished all parties, which shall form part of the
records of the case. The winning union shall have the rights, privileges and obl
igations of a duly certified collective bargaining representative from the time
the certification is issued. The proclamation and certification so issued shall
not be appealable.
SECTION 14. Proclamation and certification by Med-Arbiter; when proper. When a
protest has been perfected or any challenge or eligibility issue has been raised
, which if resolved, can materially change the result, only the Med-Arbiter can
proclaim and certify the winner. In such cases, the election officer shall, imme
diately after the lapse of five (5) days from completion of canvass, return the
records of the case to the Med-Arbiter, together with the minutes and the result
s of the election.
The Med-Arbiter shall have twenty (20) days within which to issue an order certi
fying the result of the election. Any protest, eligibility issue, or such other
questions that may have been raised during the election proceedings shall likewi
se be disposed of by the Med-Arbiter in the same order.
SECTION 15. Appeal; finality of decision. The decision of the Med-Arbiter may b
e appealed to the Secretary within ten (10) days from receipt by the parties of
a copy thereof, only on the grounds of violation of Section 9 hereof or of serio
us errors of fact or law in the resolution of a protest.
The appeal shall be under oath and shall consist of a memorandum of appea
l specifically stating the grounds relied upon by the appellant with the support
ing arguments and evidence. The appeal shall be deemed not filed unless accompan
ied by proof of service thereof to appellee. The decisions of the Secretary on t
he appeal shall be final and executory.
Where no appeal is filed within the ten-day period, the decisions shall become f
inal and executory and the Med-Arbiter shall enter this fact into the records of
the case.
SECTION 16. Where to file appeal. The appellant shall file its appeal with the
Regional Office where the case originated.
SECTION 17. Period to reply. The appellee shall file reply thereto within ten (
10) days from receipt of a copy of the appeal. The Regional Office shall, within
five (5) days from receipt of the reply, forward the entire records of the case
to the Office of the Secretary. Where no reply is received by the Regional Offi
ce shall likewise forward the entire records of the case to the Office of the Se
cretary.
SECTION 18. Motion to postpone does not stay election. The filing of a motion t
o postpone shall not stay the holding of the election.
RULE XIII
Run-Offs
SECTION 1. Run-off election. When an election which provides for three (3) or m
ore choices results in no choice receiving a majority of the valid votes cast, a
nd no objections or challenges have been presented which, if sustained, can mate
rially change the results, the election office shall motu proprio conduct a run-
off election within five (5) calendar days from the close of the election procee
dings between the labor union receiving the two highest number of votes; provide
d, that the total number of votes for all contending unions is at least fifty pe
rcent (50%) of the number of votes cast.
The voters list to be used in the run-off election shall be the same as that
used in the first election. The ballots in the run-off election shall provide as
choices the unions receiving the highest number of the votes cast. The union re
ceiving the greater number of valid votes cast shall be certified as the winner,
subject to the applicable provisions of Rule XII of this Book.
CASES
San Miguel Corporation v Laguesma, 236 SCRA 595
The regular sales personnel (55 in all) of Magnolia Dairy Products, employed in
different sales offices in the North Luzon Area, wish to form one bargaining uni
t. The company insists that each of the sales offices in should be considered as
a separate bargaining unit so that negotiations would be more expeditious.
Held: The Court allowed all the employees to be part of a single bargaining unit
saying that it is not the convenience of the employer that constituted the dete
rminative factor in forming an appropriate bargaining unit (and 55 na nga lang s
ila).
The fundamental factors in determining the appropriate collective bargain
ing unit are:
1. The will of the employees (Globe Doctrine)
2. Affinity and unity of the employees interest (Substantial Mutual Interest Rule
)
3. Prior collective bargaining history
4. Similarity of employment status
However, the court has ruled that prior collective bargaining history is
neither decisive nor conclusive in the determination of what constitutes an appr
opriate bargaining unit. The test of grouping is commonality or mutuality of int
erest.
International School Alliance of Educators v Quisumbing, 333 SCRA 13
The International School employs 2 kinds of teachers: foreign hires and local hi
res. The foreign hires enjoy greater benefits than local hires. The issue is whe
ther local hires and foreign hires could be part of a single bargaining unit.
Held: Foreign hires do not belong to the same bargaining unit as local hires. It
does not appear that foreign hires have indicated their intention to be grouped
with local hires. The collective bargaining history of the school also shows th
at these groups were always treated separately. Foreign hires have limited tenur
e; local hires have security of tenure. Although foreign hires perform similar f
unctions under the same working conditions as the local hires, they are accorded
certain benefits not accorded to local hires. These benefits, such as housing,
transportation, shipping costs, taxes and home leave travel allowance, are reaso
nably related to their status as foreign hires, and justify their exclusion from
the bargaining unit.
De La Salle University v De La Salle University Employees Association, 330 SCRA
363
The employees of DLSU and the College of St. Benilde wish to form one bargaining
unit.
Held: DLSU and CSB, although affiliated, are two separate juridical personalitie
s. The employees of the two schools are effectively employees of two different e
mployers and thus cannot form one bargaining unit. There is no evidence in this
case to justify the piercing of the veil of corporate fiction.
Philippine Telegraph and Telephone Corp. v Laguesma, 223 SCRA 454
PT&T s rank and file employees are already represented by a certified bargaining a
gent. The supervisory employees seek to be represented.
Held: Since no certified bargaining agent represents the supervisory employees,
PT&T is deemed an unorganized establishment with respect to such supervisory emp
loyees even if the company is already deemed and organized establishment with re
spect to ots rank and file employees are already organized.
An employer has no standing to question a certification election since it
is the sole concern of the workers, unless the former filed the certification e
lection itself pursuant to Art. 258 of the Labor Code.
Port Workers Union of the Philippines v Laguesma, 207 SCRA 329
Union 1 is the certified bargaining representative. During the freedom period, U
nion 2 and Union 3 filed their respective petitions for certification election.
Union 2 submitted the consent signatures (25% of the employees in the bargaining
unit) 11 days after it filed its petition. Union 3 submitted its consent signat
ures 35 days after it filed its own petition. Union 1 filed a motion to dismiss
both petitions for failing to comply with the IRR which states that (t)he 25% req
uirement shall be satisfied upon the filing of the petition, otherwise the petit
ion shall be dismissed. Held: Motion denied. The Labor Code does not require the
consent signatures to be filed simultaneously with the petition for certificati
on election.
A new CBA was ratified before any certification election was held. Union
1 claims that the overwhelming ratification of the CBA is an affirmation of thei
r membership (?) in the bargaining agent, rendering the representation issue moo
t and academic and conclusively barring the holding of a certification election.
Held: The IRR provides that the representation case shall not be adversely affec
ted by a collective agreement submitted before or during the last 60 days of a s
ubsisting agreement or during the pendency of the representation case. As the ne
w CBA was entered into at the time when the representation case was still pendin
g, it follows that it cannot be recognized as the final agreement between the em
ployer and its employees.
Philippine Fruits and Vegetables Industries, Inc. v Torres, 211 SCRA 95
A certification election was conducted in the PFVII. Employees who were already
dismissed, albeit illegally, took part in the elections.
Held: Employees who have been improperly laid off but who have a present, unaban
doned rights to or expectation of re-employment, are eligible to vote in the cer
tification elections. Thus, if the dismissal is under question, the employees co
ncerned are still qualified to vote.
PVFII filed a protest with the Med-Arbiter. It is argued that the protest was fi
led beyond the reglamentary. To determine the timeliness of the filing of the pr
otest, it must be determined when the close of election proceedings occur.
Held: The close of election proceedings refers to that period from the closing o
f the polls to the counting of the ballots and the tabulation of the votes. It d
oes not include the period for the final determination of challenged votes and c
anvass thereof which could take a very long period.
Samahang Manggagawa ng Permex v Secretary of Labor, 286 SCRA 692
An employer does not have the power to declare a union as the exclusive represen
tative of its workers for the purpose of collective bargaining. Direct certifica
tion (by the employer) has been discontinued as a method of selecting the exclus
ive bargaining agents of workers.
Oriental Tin Can Labor Union v Secretary of Labor and Employment, 294 SCRA 640
Union 1 is the certified bargaining representative. Union 2 filed a petition for
certification election during the freedom period. A protest was filed by the em
ployer alleging that some of the employees who originally signed the petition ha
d already withdrawn in writing their membership from the union.
Held: Once the required percentage requirement is has been reached, the employee
s withdrawal from union membership taking place after the filing of the petition
for certification election does not affect the petition.
The protest was filed by the employer.
Held: Certification elections are exclusively the concern of employees, hence, t
he employer lacks the legal personality to challenge the same.
A new CBA was entered into between the employer and Union 1 during the freedom p
eriod and was registered 3 days after the expiration of the old CBA.
Held: If a CBA has been registered, a petition for certification election or a m
otion for intervention can only be entertained within 60 days prior to the expir
y of the agreement. However, when the CBA was prematurely signed during the free
dom period and a petition for certification election was filed during the afores
aid freedom period, the petition gives rise to a representation case that must b
e resolved even though a new CBA has been entered into.
Samahan ng mga Manggagawa sa Filsystems v Secretary of Labor and Employment, 290
SCRA 680
SAMAFIL-NAFLU-KMU is a registered labor union It filed a petition for certificat
ion election. Filsystems, the employer, filed a protest questioning the status o
f SAMAFIL as a legitimate labor organization for lack of proof of affiliation wi
th NAFLU-KMU.
Held: The failure of an independently registered labor union to prove its affili
ation with a labor federation cannot affect its right to file a petition for cer
tification election as an independent union. (independent nga e)
The petition for certification election was dismissed by the med-arbiter and an
appeal was filed. Meanwhile, FWU, another union in the company, filed it s own pet
ition for certification election. The petition was granted. FWU won and a CBA wa
s entered into. Filsystems now claims that the existence of a CBA bars the holdi
ng of a certification election.
Held: An appeal seasonably filed stays the decision of the med-arbiter, therefor
e the appeal filed by SAMAFIL stops the holding the any certification election.
Accordingly, there exists an unresolved representation case (SAMAFIL s petition wh
ich was pending appeal) at the time the CBA was entered into between FWU and Fil
system. Such CBA cannot and will not prejudice SAMAFIL s pending representation ca
se or render it moot.
National Federation of Labor v Secretary of Labor (287 SCRA 599)
The company and 3 labor unions filed a protest against the results of a certific
ation election due to irregularities in the conduct of the elections (no notice,
flying voters, disfranchisement, etc. parang national elections). The protests
were dismissed for being filed more 5 days after the election was conducted.
Held: The complaint in this case was that a sufficient number of employees were
not able to vote because they were not properly notified of the date of the ele
ctions. They could not therefore have filed their protests within 5 days for the
reason that they did know that an election took place.
The company filed a protest.
Held: It is not improper for the employer to show interest in the conduct of the
election. The manner in which the election was held could make the difference b
etween industrial strife and industrial harmony in the company. What the employe
r is prohibited from doing is to interfere with the conduct of the certification
election for the purpose of influencing its outcome. But certainly, an employer
has an abiding interest in seeing to it that the election is clean, peaceful, o
rderly and credible.

C. BARS TO CERTIFICATION ELECTION


OMNIBUS RULES, BOOK V
RULE XI
Certification of Election
SECTION 11. Failure action on the petition. The Med-Arbiter shall have twenty (
20) working days from submission of the case for resolution within which to gran
t or dismiss the petition.
I. A decision granting the petition shall state the following:
(a) The name of the employer or the establishment;
(b) The description of the bargaining unit;
(c) The names of the contending unions which shall appear in the following o
rder;
i) Petitioner union or, in case of two or more petitioners, in the order in
which the petitions were filed;
ii) Forced intervenor; and
iii) Other intervenors
The decision shall also include a directive for the employer to submit wi
thin ten (10) days from receipt of the decision, the certified list of employees
in the bargaining unit, or where necessary, the payrolls covering the members o
f the bargaining unit for the last three (3) months immediately preceding the is
suance of the decision. In the event the employer does not submit the list or pa
yrolls as the case may be, the union may submit its own list.
In a petition filed by a legitimate labor organization involving an autho
rized establishment, the Med-Arbiter shall, pursuant to Article 257 of the Code,
automatically order the conduct of certification election after determining tha
t the petition has complied with all the requirements enumerated under Sections
1, 2 and 4 hereof, and that none of the grounds for dismissal enumerated in the
immediately succeeding paragraph exists.
II. The Mid-Arbiter shall dismiss the petition on any of the following groun
ds:
(a) The petitioner is not listed by the Regional Office or Bureau in its reg
istry of legitimate labor organizations, or that its legal personality has been
revoked or cancelled with finality in accordance with Rule VIII of these Rules;
(b) The petition was filed before or after the freedom period of a duly regi
stered collective bargaining agreement; provided, that the sixth-day freedom per
iod based on the original collective bargaining agreement shall not be affected
by any amendment, extension or renewal of the collective bargaining agreement:
(c) The petition was filed within one (1) year from a valid certification, c
onsent or run-off election and no appeal on the results is pending thereon, or f
rom recording of the fact of voluntary recognition with the Regional Office.
(d) A duly recognized or certified union has commenced negotiations with the
employer in accordance with Article 250 of the Code within the one-year period
referred to in Section 3, rule XI of these Rules, or there exists a bargaining d
eadlock which had been admitted to conciliation or arbitration or had become the
subject of a valid notice of strike or lockout to which an incumbent or certifi
ed bargaining agent is a party;
(e) In case of an organized establishment, failure to submit the twenty-five
percent (25%) support requirement upon the filing of the petition; or
(f) Lack of interest or withdrawal on the part of the petitioner; provided,
that where a motion for intervention has been filed during the freedom period, s
aid motion shall be deemed and disposed of as an independent petition for certif
ication election if it complies with all the requisites for the filing of a peti
tion for certification election as prescribed in Section 4 of these Rules.
RULE XVI
Registration of Collective Bargaining Agreement
SECTION 3. Term of representation status of agreement; contract-bar rule. The r
epresentation status of the incumbent exclusive bargaining representative which
is a party to a duly registered collective bargaining agreement shall be for a t
erm of five (5) years. No petition questioning the majority status of the incumb
ent exclusive bargaining representative shall be entertained by the Department o
utside the sixty-day period immediately before the date of expiry of such five-y
ear term.
All other provisions of said agreement shall, as a matter of right, be re
negotiated not later than three (3) years after its execution. Any agreement on
such other provisions entered into within six (6) months from the date of expiry
of such provisions shall retroact to the day immediately following such date. I
f any such provisions are entered into beyond six months, the parties shall agre
e on the duration of retroactivity. In case of a deadlock in the renegotiation o
f the agreement, the parties may exercise their rights under the Code. In case o
f renegotiation, all requirements for registration prescribed under the two imme
diately proceeding sections shall be complied with, whichever is applicable, exc
ept payment of the registration fee.
SECTION 4. Exception to contract-bar rule. Notwithstanding its registration, a
collective bargaining agreement shall not constitute a bar to a certification el
ection where it is found in appropriate proceedings before the Regional Director
that any of the following conditions exist:
a) The agreement contains provisions lower than the standards fixed by law;
or
b) The documents supporting its registration are falsified, fraudulent or t
ainted with misrepresentation.
CASES
Capitol Medical Center Alliance of Concerned Employees v Laguesma, 267 SCRA 503
In January 1993, Union 1 was the certified as the exclusive bargaining agent of
the rank and file employees of Capitol Medical Center (CMC). CMC questioned the
validity of Union 1 s certification through a series of petitions and a number of
judicial and administrative proceedings. This had the effect of delaying the com
mencement of negotiations for a CBA. Due to the continued refusal of CMC to nego
tiate, Union 1 filed a notice of strike and subsequently staged a strike. Meanwh
ile, in March 1994, Union 2 filed a petition for certification election, claimin
g that Union 1 has not commenced the negotiations for a CBA and 1 year has alrea
dy elapsed since the last certification election.
Held: Even if one year has already elapsed since the time of declaration of a f
inal certification result, no certification election may be had where the delay
in forging a CBA could not be attributed to the fault of the union which won the
earlier certification election. The SC held that a situation where a CBA could
not be concluded due to the failure of one party to willingly perform its duty t
o bargain collectively is similar in nature to a bargaining deadlock for which no
certification election could be held.
ALU v Ferrer-Calleja, 173 SCRA 178
The employer, upon the representation of Union 1 that it is the exclusive bargai
ning agent, entered into negotiations with the said union. Six days before a CBA
was to be signed by Union 1 and the employer, Union 2 staged a strike. The stri
ke was staged after Union 2 failed to convince the employer to recognize it as t
he real exclusive bargaining agent. Union 2 then filed a petition for certificat
ion election. Union 1 opposed on the ground that there is an existing CBA, hence
the contract bar rule applies.
Held: Contract bar rule does not apply for the following reasons:
1. In the case at bar, the court found that the ratification of the CBA was irre
gular for 2 reasons: (1) the failure to post the same in at least 2 conspicuous
places, and (2) the lack of any showing that it was actually ratified by a major
ity of the employees in the bargaining unit. For the contract bas rule to apply,
the CBA must not only be registered but also validly ratified.
2. The prompt recognition by the employer of Union 1 s standing as the exclusive b
argaining agent was misplaced and the failure to properly determine with legal c
ertainty whether the union enjoyed majority representation may be a ground to nu
llify the certification of that union as the sole bargaining agent. (I think thi
s is merely an obiter )
United CMC Textile Workers Union v BLR, 128 SCRA 316
The Med-Arbiter granted a petition for certification election filed by Union 2 d
espite the pendency of a ULP case filed against Union 1, the certified bargainin
g agent, for being company-dominated.
Held: The pendency of a formal charge of company domination is a prejudicial que
stion that bars proceedings for a certification election.
National Union of Bank Employees v Minister of Labor, 110 SCRA 274
The med-arbiter granted Union s petition for certification election. The employer
filed a motion to suspend the holding of the certification election on the groun
d that there is a pending proceeding for the cancellation of the registration of
the Union for allegedly engaging in prohibited and unlawful activities in viola
tion of the Labor Code.
Held: Motion to suspend denied for the following reasons:
1. A certification election may be ordered despite the pendency of a petition to
cancel the union s registration certificate. (Doctrine: Registration certificate
valid until nullified)
2. The petition to cancel Union s registration certificate was evidently intended
to delay the holding of the certification election. In this case, the petition w
as filed only after the Med-Arbiter has granted Union s petition for certification
election.
Progressive Development Corp. v Secretary of Labor, 271 SCRA 593
1. The propriety of a labor organization s registration could be assailed directly
through cancellation proceedings in accordance with Articles 238 ad 239 of the
Labor Code, or indirectly by challenging its petition for the issuance of an ord
er for certification election.
2. The Med-Arbiter should look into the merits of the petition for cancellation
of a union s registration before issuing an order calling for certification electi
ons. Where the legal personality of a union is seriously challenged, it would be
more prudent for the Med-Arbiter to grant the request for suspension of the pro
ceedings in the certification election case until the issue of legality of the u
nion s registration shall have been resolved.
Samahang Manggagawa sa Permex v Secretary, 286 SCRA 692
An employer does not have the power to declare a union as the exclusive bargaini
ng agent of its workers for the purpose of collective bargaining. Direct certifi
cation previously allowed under the Labor Code had been discontinued as a method
of selecting the exclusive bargaining agent of workers. Certification election
has been found to be the most effective method for determining representation in
a bargaining unit for the reason that it is not enough that a union has the sup
port of majority of the employees. It is equally important that everyone in the
bargaining unit be given the opportunity to express himself.
LECTURE
What is a bargaining unit and what is a bargaining agent? You must know
the difference. How should the proper bargaining unit be determined? By mutualit
y of interests - that s the major consideration to determine the appropriate unit.
It is the set of employees that can be served by bargaining negotiations and ca
n be covered by collective bargaining activities. The set of employees that have
mutual interest should be included in the same bargaining unit. Who makes the i
nitial determination as to who shall comprise the bargaining unit, and when is t
hat determination made? It is made by the employees themselves at the time of or
ganization of a labor organization. You have to make the determination of the ba
rgaining unit that the union intends to represent in the future. If it is a big
company, in organizing the union, one has to determine first if for purposes of
collective bargaining, the bargaining unit wants to represent a particular geogr
aphical unit, or a particular group of employees belonging to the same geographi
cal unit because it will be needed in the registration procedure.
The Supreme Court in the case of International School vs. Quisumbing sai
d that giving foreign employees a salary rate higher than or different from the
basic salary rate of Filipino employees doing the same job, having the same skil
ls, having the same seniority level, is discriminatory. After saying that, howev
er, the Court said they should belong to different bargaining units! Why is that
odd? After saying that it is discriminatory, the Court allowed the company or t
he union to commit discriminatory acts by saying that the foreigners should not
be included in the same bargaining unit as the Filipino employees, then manageme
nt in effect is given the permission to give a set of benefits to the foreign em
ployees different from the benefits given to the Filipino employees covered in t
he bargaining unit.
Voluntary Recognition
How is the bargaining agent determined? Through certification election a
nd voluntary recognition. Is voluntary recognition in the law? It is not found
in the law. It is only provided in the rules. It is of doubtful validity, to say
the least. Why, because it is akin to a direct certification made by the DOLE.
We have cases saying that direct certification cannot be done even if there is o
nly one union and there is no rival union asking for direct certification. The C
ourt said that it is not the democratic way of selecting the representative for
purposes of collective bargaining in the bargaining unit. The most democratic wa
y, according to the Court, is to select the bargaining agent through secret ball
ot in a certification election supervised by the DOLE. That is not the case in d
irect certification where the decision is done not by the employees themselves b
ut by the DOLE. That decision on direct certification can be applied to voluntar
y recognition mode now contained in the rules, as amended in 1997. It was only i
n 1997 that that mode was introduced. What s the basic problem with that? It s very
transparent insofar as the decision of the employees are concerned. It is not do
ne by secret ballot. It is done by signature campaign, by openly asking employee
s to sign the document of voluntary recognition which is initiated by the union
and the employer. So it is totally different from the certification election pro
vided in the law and rules. As far as I m concerned, I will challenge the validity
of that mode of selecting the bargaining agent. But as far as the RULES are con
cerned, we have two modes of selecting the sole and exclusive bargaining represe
ntative.
Certification Election
1. Petition for Certification Election
How is a certification election proceeding started? By filing a petition
for certification election with the Med-Arbiter, through the Regional Office whe
re the bargaining unit is located. Who can file the petition? The legitimate lab
or organization. Also the employer, when he is asked to bargain collectively, an
d the union is not the exclusive bargaining agent. When the employer is not the
petitioner, he is merely a bystander to the certification election proceedings,
meaning that he cannot intervene in the proceedings. HE cannot oppose the petiti
on. He cannot participate in the conferences leading to the decision of the Med-
Arbiter. He can only intervene in the inclusion/exclusion of voters, that such p
erson is not a member of the bargaining unit. But the principle that he is merel
y a bystander is more theoretical than practical. His intervention is usually ho
nored, not only by the Med-Arbiter or by the Secretary of Labor but even by the
Supreme Court. You have read many cases where the Court allowed the employer to
question all sorts of things. And that is a variation of the principle laid down
by the SC itself against undue intervention by the employer in certification el
ection proceedings. What is the reason for the rule or principle that the employ
er be regarded as a mere bystander? Because the certification election is a proc
edure for the employees alone and it is pursuant to the rule that favors establi
shments to be unionized.
Procedure. When can a petition be filed? At any time if there is no exist
ing CBA. But if there is an existing CBA, it must be filed within 60 days prior
to the expiration of such CBA, called the freedom period. Remember that the repr
esentation issue has a set period pegged/fixed by law at 5 years. It cannot be a
dvanced or changed by the parties. Any attempt to do so will be a direct violati
on of the Labor Code, which has a categorical provision that the representation
aspect shall be good for 5 years.
What are the requirements for filing the petition? Names, addresses of t
he union, its members, the 25% signature requirement, description of the union,
the number of members, description of the bargaining unit which is done by stati
ng the set of employees (r&f/supervisory), statement of jurisdictional facts to
show that the petition is not barred by anything that will effectively bar a pet
ition for certification election. The 25% signature support is NOT mandatory in
the sense that the Med-Arbiter may hold the election even without such, but the
labor organization must submit it later. This is according to jurisprudence. Doe
s this have a basis in law? The Labor Code in Art. 256 makes the role of the Med
-Arbiter merely ministerial when the petition is complete-he must grant the peti
tion. Meaning that when it is not complete such as when there is no 25% signatur
e, the Med-Arbiter s role becomes discretionary-he may choose to grant the petitio
n or not.
Is there a conflict between the LC and the Rules? The Rules make it mand
atory to dismiss the petition lacking requirements. On the surface the LC and th
e Rules do not seem conflicting. But the tenor of the LC the law gives the Med-A
rbiter the discretion to still grant the petition despite the lack of requiremen
t. The Rules do not give the Med-Arbiter the discretion. So we follow the LC of
course. And the LC view is the one supported by jurisprudence. This is one of th
e defects of the 1997 Department Order.
If there is a union in a company is the company automatically organized?
No because what makes a company unorganized is the absence of a certified barga
ining agent. Now a company may be organized with respect to its rank-and-file em
ployees, for example, and at the same time be unorganized with respect to its su
pervisory employees. Just because there is a union that is a certified bargainin
g agent in that company then the company is organized. Is it material to determi
ne if the company is organized? Yes, because of the difference in procedure and
the treatment of organized and unorganized establishments. From the moment of th
e petition there is already a difference. An organized establishment must respec
t the freedom period. In unorganized establishments, there is no mention of the
25% signature support requirement.
After the petition is filed, the Med-Arbiter may either grant or deny th
e petition. There cannot be a case where the Med-Arbiter will not decide the pet
ition, except in consent elections. Before, there was a clear difference between
a certification election and a consent election. In one case the Court said (an
d this was asked in the bar exams a few years ago) that in a certification elect
ion, what is being decided is the issue of who among the contending unions will
be the sole and exclusive bargaining representative of the employees covered in
the bargaining unit while in the consent election the only issue is majority rep
resentation-who has majority support. The rules however now give us a confused d
efinition of consent election. It will call an election conducted because of the
parties agreement to the conduct of the election, a consent election. Which sho
uld not be the case because that election will still be for the sole purpose of
determining the sole and exclusive bargaining representative, and will be equiva
lent to a certification election. In short, the consent election as per the rule
s call it should not be consent election, following the distinction earlier made
by the Court. The Rules will now give us two types of consent election one with
the supervision of the DOLE and without the supervision of the DOLE. We don t kno
w how the SC will later on rule on this definition, again it is another innovati
on of the 1997 Department Order.
Who is an intervenor?
ORGANIZED
UNORGANIZED
The
Any
Motion
incumbent
LLO for
inESTABLISHMENTS
the
intervention
ESTABLISHMENTS
bargaining
bargainingmust
agent
unitbeorfiled
any within
other LLO
freedom
in theperiod
BU (this only applies t
o other LLOs, not to the incumbent representative who is considered a forced int
Anytime before finality of the decision
ervenor)
2. Hearing and Conference
Certification election proceedings are not supposed to be adversarial in
nature. They are honesty proceedings, even in the Rules, in order to determine t
he will of the bargaining unit. What should be resolved in the pre-election proc
eedings? A determination/stipulation of facts to determine who the parties are,
and if the Med-Arbiter could get the parties to agree to a consent election, cla
rificatory questions and a final list of voters. But how is a list of voters fin
alized? The Med-Arbiter shall order the employer to get a list of voters and usu
ally it is based on the payroll three months prior to the order granting the cer
tification election.
When there is a disagreement on the exclusion or inclusion of voters, the
y will still be allowed to vote but their votes shall be segregated. Each vote s
hall be placed in a separate envelope. Why is there a need for them in a separat
e envelope? Because it may be necessary to determine if each challenged voter, i
s eligible to vote. And it cannot be done if all the segregated votes are placed
in one ballot box and are mixed or collected in only one box. It will be hard t
o determine which vote was cast by which voter. This issue of eligibility is one
that will delay the case for years. In my experience if there is an issue on th
e list of voters, the representation officer is not a lawyer, and he would give
the case back to the Med-Arbiter, who will rule on the issue. And that decision
can take years, and it goes to the Secretary of Labor, then to the CA and the SC
, and back again to the Med-Arbiter. By that time you have a new set of employee
s, and this would be used to attack the eligibility of voters, going through the
same vicious cycle over again. That happened in one case I handled.
There are other possibilities of delaying the process before the Med-Arb
iter decides the case. And when the Med-Arbiter does, counting the steps before
the decision is final, will give you an idea of how management can delay the pro
ceedings. It may be appealed to the Secretary, then up to the CA and then to the
SC. Assuming that each step takes one year, then it goes to the SC and is given
to the Med-Arbiter, there are at least 3 years before the decision is given ba
ck to the Med-Arbiter before the election proceedings can start.
Now as to the issue of inclusion/exclusion of voters, the procedure provided by
the law solves the problem only if management is in good faith, but not if manag
ement is in bad faith. If management questions the eligibility of a substantial
number of employees, for instance 80 employees, such votes which will be segrega
ted may materially alter the results of the election, but the issue of eligibili
ty will takes 3-5 years to be resolved by the M-A, Secretary, CA and SC. The cha
llenge of voters may be done in pre-election and even during election day itself
. If management challenges practically all active union members votes, then manag
ement validly prevents the finality of the elections.
Bars to Certification Election
A petition for certification election may be filed anytime except when th
ere exists the following:
1. Contract bar when a CBA has been registered in accordance with Art. 231, a pe
tition for certification election can be entertained only within 60 days before
expiration of such CBA.
2. One-Year bar a petition may not be filed within one year from the date of a v
alid certification, consent or run-off election or voluntary recognition. The on
e-year period shall be suspended when an appeal has been filed with the Med-Arbi
ter regarding the results of the election.
3. Deadlock bar when there occurs a bargaining deadlock wherein the certified ba
rgaining has become the subject of a strike or lockout, or which has been submit
ted to conciliation or arbitration.
4. Negotiation bar may not be filed if before such petition is filed, negotiatio
ns have already commenced between the employer and the duly registered/certified
union in accordance with Art. 250)
A CBA is valid even if it is not registered with the DOLE. But it is requ
ired to protect the union from a challenge. Unless the CBA is registered with th
e DOLE, other rival unions are not barred from challenging the bargaining agent-
union anytime. Thus, the existence of a CBA does not necessarily mean a bar unle
ss such CBA is registered.
Now, the right of an exclusive bargaining agent to file a petition for ce
rtification election, that right is suspended by a third party in a petition for
cancellation. But what deprives it of its right to file a petition for certifi
cation election is a final decision canceling its registration not the filing, n
ot the pendency of the petition for cancellation. This goes against many Supreme
Court decisions which say that the union retains its legitimate personality unl
ess there is a final decision canceling its registration.
For instance, the election are conducted, a winner emerges. But there is
a protest. How is a protest made? If it pertains to the conduct of the election
s, it is placed in the minutes, and formalized by filing a protest with the Med-
Arbiter. So it is ascertained in the minutes if a protest was filed. Under the R
ules, if there are no protests in the minutes, there is nothing that will preven
t the certification of the winner. The Rules authorize the representation office
r, the head of the election committee, before whom the pre-election conference a
nd election proceedings were conducted, to immediately certify the winner as the
sole and exclusive bargaining representative. But in reality that is not done,
instead binabalik sa Med-Arbiter. They let the Med-Arbiter issue the certificati
on. Kasi daw baka may magprotesta. Eh wala ngang nagprotesta eh. It s so frustrati
ng to see the Department not following the very rules it issues!!!
What is meant by termination of election proceedings? This is important
for purposes of protest, because it should be filed, it should be formalized wit
hin five days from the termination of the election. But before this may be done
it must be in the minutes. What is the reckoning point of termination? IT is the
end of canvassing of votes, which happens end of election day itself. Not the e
nd of the decision on the segregated votes that will alter the results of the el
ection. It does not include the time the challenged votes are resolved.
When there is a challenge on the inclusion of a voter, the challenge is merely f
ormalized. I need not formalize the challenge in five days it is not considered
an election protest. In the nature of a challenge, and in the nature of an elect
ion protest, the Rules do not say that the challenge is in the nature of an elec
tion protest.
The periods given in the Rules for the Med-Arbiter to follow when an iss
ue is decided upon are hardly followed.
If a deadlock occurs but the union does not do anything, does not act up
on it, it cannot be a bar for a certification election. You are not covered by t
he one-year bar to certification election, because there is no CBA yet. A petiti
on for certification election can be filed if the union has not acted upon the d
eadlock, meaning walang notice of strike submitted, or has not been submitted to
compulsory arbitration proceedings.
What are the other bars to a certification election? The negotiation bar.
This is a problematic provision. It says that as long as negotiations started,
then that bars a petition for certification election. Basta nagsimula ang negot
iations within the first year that serves as a bar. What if negotiations are del
ayed? For instance, three years have passed they are still negotiating. It still
serves as a bar because negotiations commenced on the first year. It is an absu
rd situation.
Now the Certification Election Day itself. What are the requirements?
1. Must be on a regular business day
2. Within company premises
*There is no prohibition to conducting a certification election during a strike,
outside the premises of the company and near a picket line.
Failure of election happens when the votes cast are less than majority of
the number of eligible voters in the bargaining unit. This will not bar another
petition for certification election. An election bar presumes there was a valid
election. A failure of election can prompt a petition for another election. Doe
s it go through the same process of the original petition for certification elec
tion again? The Rules state that they can ask an immediate holding of another el
ection. Immediate should be construed to mean a reasonable time. Personally, I thi
nk this should not extend beyond six months. So all they have to do is file a pe
tition for immediate holding of another election, which does not go through the
steps followed in a petition for certification election. And the Med-Arbiter do
es not have discretion to deny the petition for immediate holding, since he alre
ady previously ruled in favor of conducting an election.
The Rules does not say who should file the petition for immediate holding
, so that means even an intervenor can be the one to file it. The problem is the
Rules do not bar the filing of a petition for certification election prior to f
iling of a petition for immediate holding. To my mind, the petition for certific
ation election should not be entertained, because the first certification electi
on has not yet been resolved with finality. The second petition for certificatio
n election should be considered as a motion for intervention which is filed out
of time.
Look at Rule 11 Section 17. The first sentence of Section 17 must be igno
red!!! It s a totally erroneous statement!! The issue of the validity of votes cas
t is NOT material in the failure of election. Only the number of votes cast is m
aterial it does not matter whether these are valid or not. For instance out of o
ne hundred eligible voters, 60 cast their votes but only 30 are valid, there is
NO failure of elections. It is a valid election.
Are there grounds to suspend a petition for certification election? The P
rogressive Development case. That is if the legal personality of a labor union i
s questioned, it is a prejudicial question which warrants suspension of the elec
tion.
Run-Off Election
Now, when is there a run-off election?
1. There is a valid election meaning at least majority of the eligible voters mu
st have cast their votes
2. There are at least 2 contending unions the Rules state there must be at least
3 choices, meaning one of the choices is no union
3. No choice got majority of the valid votes cast hence no winner emerged
4. The contending unions collectively got at least 50% of the total votes cast
*Keep in mind, that in order to WIN the election, the union must get MAJORITY OF
THE VALID VOTES cast. Hence the basis is the votes cast, minus the spoiled vote
s.
In order to have a RUN-OFF election on the other hand, the basis is that
the unions must collectively get AT LEAST 50% of ALL VOTES CAST. Hence, include
the spoiled votes in the tally.
For example: 100 eligible voters, 3 contending unions
SCENARIO 1:
Union A 5
Union B 20
Union C 35
No Union 0
spoiled - 40
SCENARIO 2:
Union A 5
Union B 0
Union C 34
No Union 41
spoiled 20
SCENARIO 3:
Union A 4
Union B 1
Union C 35
No Union 40
Spoiled 20
*But in this scenario, there was a valid election! This is a valid certification
election which bars a petition for certification for one year.
** No choice is not tantamount to No Union . Keep that in mind!!!
SCENARIO 4:
Union A 4
Union B 1
Union C 35
No Union 40
Spoiled 0
SCENARIO 5:
A=20
B=10
C=10
No Union=40
Spoiled=0
SCENARIO 6
A=15
B=15
C=10
No Union=40
*What if there are segregated votes? The determination of result may be affected
by the segregated votes, whether to have a run-off or not.
*The objective of the run-off election is to eliminate no union as a choice, sin
ce it did not win anyway, and there is favored partiality towards organization a
nd having a bargaining agent.
*If there is failure of run-off election, get an immediate holding for run-off a
gain.
Take note of the Sanyo case. It explains Benguet substitutionality doctrine.

D. ADMINISTRATION OF AGREEMENT
LABOR CODE
ART. 231. Registry of unions and file of collective agreements.
The Bureau shall keep a registry of
- legitimate labor organizations.
The Bureau shall also maintain a file of
- all collective bargaining agreements
- and other related agreements
- and records of settlement of labor disputes,
- and copies of orders, and decisions of voluntary arbitrators.
The file shall be open and accessible
* to interested parties
* under conditions prescribed by the Secretary of Labor and Employment,
* provided that no specific information submitted in confidence shall be disclos
ed unless:
- authorized by the Secretary,
- or when it is at issue in any judicial litigation
-or when public int\erest or national security so requires.
Within thirty (30) days from the execution of a collective bargaining agreement,
* the parties shall submit copies of the same directly to the Bureau or the Regi
onal Offices of the Department of Labor and Employment for registration ,
* accompanied with
- verified proofs of its posting in two conspicuous places in the place of work
- and ratification by the majority of all the workers in the bargaining unit.
The Bureau or Regional Offices shall
* act upon the application for registration of such collective bargaining agreem
ent within five (5) calendar days from receipt thereof.
* The Regional Offices shall furnish the Bureau with a copy of the collective ba
rgaining agreement within five (5) days from its submission.
* The Bureau or Regional Office shall assess the employer for every collective b
argaining agreement a
- registration fee of not less than one thousand pesos (P1,000.00)
- or in any other amount as may be deemed appropriate and necessary by the Secre
tary of Labor and Employment
- for the effective and efficient administration of the voluntary arbitration pr
ogram.
- Any amount collected under this provision shall accrue to the Special Voluntar
y Arbitration Fund.
The Bureau shall also maintain a file, and shall undertake or assist in the
publication, of all final decisions, orders and awards of the Secretary of Labo
r and Employment, Regional Directors and the Commission.
CASES
Benguet Consolodated v BCI Employees and Workers Union, 23 SCRA 465
Union 1 forged a CBA with the employer with a no-strike, no-lockout clause. Subseq
uently, but during the effectivity of the CBA, Union 2 was certified as the new
bargaining agent. Union 2 filed a notice of strike and did stage a strike. The e
mployer invokes the no-strike clause in the CBA against Union 2.
Held: The clause does not bind Union 2 on the basis of the substitutionary doctr
ine. Although the substitutionary doctrine provides that the employees cannot re
voke a validly executed CBA by the simple expedient of changing their bargaining
agent, this is subject to certain exceptions, to wit:
1. To negotiate with management for the shortening of the CBA
2. Personal undertakings
The undertaking of Union 1 not to strike is personal in nature and does n
ot bind any union other than Union 1. A new collective bargaining agent does not
automatically assume the personal undertakings of the deposed union.

Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109 v Cazinares, 211 SCR
A 361
The CBA between Union and Sanyo contained a union security clause. Subsequently,
Union cancelled the membership of a number of employees for various reasons. Th
e union then submitted the names these employees to the employer recommending th
eir dismissal, claiming that the said employees refused to submit themselves to
the union s grievance investigation committee. Sanyo ordered the preventive suspen
sion of the employees following this recommendation. The company received no fur
ther information on whether or not said employees appealed the cancellation of t
heir respective memberships. Hence it considered them dismissed. The dismissed e
mployees filed a complaint for illegal dismissal.
Held: There is illegal dismissal. The law authorizes the enforcement of a union
security clause in the CBA provided that such enforcement is not characterized b
y arbitrariness and always with due process. Sanyo failed in these two aspects.
The employees in this case filed the complaint for illegal dismissal with the NL
RC. Union claims that the NLRC has no jurisdiction because the dispute relates t
o implementation of the CBA (specifically the union security clause) and is subj
ect to grievance machinery and voluntary arbitration.
Held: NLRC has jurisdiction. The parties to the CBA are the union and the compan
y, hence, only disputes involving the union and the company against each other s
hall be referred to the grievance machinery or voluntary arbitrators. In this ca
se, the union and the employer are united as to the dismissal of the employees.
There exists no grievance between them that could be brought to a grievance mach
inery.
MERALCO v Quisumbing, 302 SCRA 173
(I can t find anything in this case directly related to certification election bar
. Here are the rest of the doctrines enunciated in the case. You might find some
thing useful.)
The Secretary of labor assumed jurisdiction over the dispute between MERALCO and
the Union. The Secretary resolved the labor dispute through an order containing
the CBA to be adopted by MERALCO and the Union. The order is here being assaile
d.
Held: When the Secretary of Justice assumes jurisdiction over a dispute, he cann
ot just adopt the middle-ground approach (by finding the midway point between th
e demands of the company and the demands of the union). This approach is too sim
plistic that it fails to recognize and take into consideration that the parties
may already be at the limits of the wage levels they can afford.
As a rule, bonus is not a demandable and enforceable obligation. It may n
evertheless be granted on equitable considerations as when the giving of such bo
nus has been the company s long and regular practice. Marlon: it must be proven th
at the giving of the bonus has become a company policy.
A signing bonus is justified by, and is the consideration paid for, the g
oodwill that existed in the negotiations that culminated in the signing of the C
BA. Without the goodwill, the signing bonus cannot be justified and any order fo
r such payment amounts to a grave abuse of discretion on the part of the Secreta
ry of Labor.
The Secretary cannot include a closed shop security clause since the Unio
n never demanded for the same.

Sundowner Development Corp. v Drilon, 180 SCRA 14


Hotel Mabuhay, Inc., due to financial difficulties, sold all its assets and pers
onal properties to Sundowner. (blablabla, strike, complaint, strike, dispute a l
ot of events immaterial to the issue) This case was subsequently filed by the Un
ion representing the rank and file employees of Mabuhay. This case involves seve
ral issues, all of which revolve about the singular issue of whether or not Sund
owner may be compelled to absorb the employees of Mabuhay.
Held: NO. As a general rule, there is no law requiring a bona fide purchaser of
assets of an ongoing concern to absorb in its employ the employees of the latter
. The rule is that, unless expressly assumed, labor contracts such as employment
contracts and CBAs are not enforceable against the transferee of an enterprise,
labor contracts being in personam and thus binding only the parties thereto.
(Implied from the obiter in the last sentence that when there is a bone fide tra
nsfer of interest over an enterprise the CBA entered into with the transferor do
es not bind the transferee: there exists no contract bar to the filing of a peti
tion for certification election since there is actually no CBA with respect to t
he transferee/new employer.)
VI. RIGHT TO STRIKE AND OTHER PEACEFUL CONCERTED ACTIVITIES
LABOR CODE
Art. 212. Definitions.
(o) Strike means any temporary stoppage of work by the concerted action of emp
loyees as a result of an industrial or labor dispute.
(p) Lockout means the temporary refusal of an employer to furnish work as a re
sult of an industrial or labor dispute.
(q) Internal union dispute includes all disputes or grievances arising from an
y violation of or disagreement over any provision of the constitution and by-law
s of a union, including any violation of the rights and conditions of union memb
ership provided for in this Code.
(r) Strike breaker means any person who obstructs, impedes, or interferes with
by force, violence, coercion, threats or intimidation any peaceful picketing by
employees during any labor controversy affecting wages, hours or conditions of
work or in the exercise of the right of self-organization or collective bargaini
ng.
(s) Strike area means the establishment, warehouses, depots, plants or offices
, including the sites or premises used as run-away shops, of the employer struck
against, as well as the immediate vicinity actually used by picketing strikers
in moving to and fro before all points of entrance to and exit from said establi
shment. (As amended by RA 6715)
Art. 263. Strikes, picketing and lockouts.
(a) It is the policy of the State to encourage free trade unionism and free
collective bargaining.
(b) Workers shall have the right to engage in concerted activities for purpo
ses of collective bargaining or for their mutual benefit and protection. The rig
ht of legitimate labor organizations to strike and picket and of employers to lo
ckout, consistent with the national interest, shall continue to be recognized an
d respected. However, no labor union may strike and no employer may declare a lo
ckout on grounds involving inter-union and intra-union disputes.
(c) In cases of bargaining deadlocks, the duly certified or recognized barga
ining agent may file a notice of strike or the employer may file a notice of loc
kout with the Department at least thirty (30) days before the intended date ther
eof. In cases of unfair labor practice, the period of notice shall be fifteen (1
5) days and in the absence of a duly certified or recognized bargaining agent, t
he notice of strike may be filed by any legitimate labor organization in behalf
of its members. However, in case of dismissal from employment of union officers
duly elected in accordance with the union constitution and by-laws, which may co
nstitute union busting where the existence of the union is threatened, the 15-da
y cooling-off period shall not apply and the union may take action immediately.
(d) The notice must be in accordance with such implementing rules and regula
tions as the Secretary of Labor and Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the Department to
exert all efforts at mediation and conciliation to effect a voluntary settlemen
t. Should the dispute remain unsettled until the lapse of the requisite number o
f days from the mandatory filing of the notice, the labor union may strike or th
e employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority of the tot
al union membership in the bargaining unit concerned, obtained by secret ballot
in meetings or referenda called for that purpose. A decision to declare a lockou
t must be approved by majority of the board of directors of the corporation or a
ssociation or of the partners in a partnership, obtained by secret ballot in a m
eeting called for that purpose. The decision shall be valid for the duration of
the dispute based on substantially the same grounds considered when the strike o
r lockout vote was taken. The Department may, at its own initiative or upon the
request of any affected party, supervise the conduct of the secret balloting. In
every case, the union or the employer shall furnish the Department the results
of the voting at least seven days before the intended strike or lockout, subject
to the cooling-off period herein provided.
(g) When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest,
the Secretary of Labor and Employment may assume jurisdiction over the dispute
and decide it or certify the same to the Commission for compulsory arbitration.
Such assumption or certification shall have the effect of automatically enjoinin
g the intended or impending strike or lockout as specified in the assumption or
certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to
work and the employer shall immediately resume operations and readmit all worke
rs under the same terms and conditions prevailing before the strike or lockout.
The Secretary of Labor and Employment or the Commission may seek the assistance
of law enforcement agencies to ensure compliance with this provision as well as
with such orders as he may issue to enforce the same.
In line with the national concern for and the highest respect accorded to
the right of patients to life and health, strikes and lockouts in hospitals, cl
inics and similar medical institutions shall, to every extent possible, be avoid
ed, and all serious efforts, not only by labor and management but government as
well, be exhausted to substantially minimize, if not prevent, their adverse effe
cts on such life and health, through the exercise, however legitimate, by labor
of its right to strike and by management to lockout. In labor disputes adversely
affecting the continued operation of such hospitals, clinics or medical institu
tions, it shall be the duty of the striking union or locking-out employer to pro
vide and maintain an effective skeletal workforce of medical and other health pe
rsonnel, whose movement and services shall be unhampered and unrestricted, as ar
e necessary to insure the proper and adequate protection of the life and health
of its patients, most especially emergency cases, for the duration of the strike
or lockout. In such cases, therefore, the Secretary of Labor and Employment may
immediately assume, within twenty four (24) hours from knowledge of the occurre
nce of such a strike or lockout, jurisdiction over the same or certify it to the
Commission for compulsory arbitration. For this purpose, the contending parties
are strictly enjoined to comply with such orders, prohibitions and/or injunctio
ns as are issued by the Secretary of Labor and Employment or the Commission, und
er pain of immediate disciplinary action, including dismissal or loss of employm
ent status or payment by the locking-out employer of backwages, damages and othe
r affirmative relief, even criminal prosecution against either or both of them.
The foregoing notwithstanding, the President of the Philippines shall not
be precluded from determining the industries that, in his opinion, are indispen
sable to the national interest, and from intervening at any time and assuming ju
risdiction over any labor dispute in such industries in order to settle or termi
nate the same.
(h) Before or at any stage of the compulsory arbitration process, the partie
s may opt to submit their dispute to voluntary arbitration.
(i) The Secretary of Labor and Employment, the Commission or the voluntary a
rbitrator or panel of voluntary arbitrators shall decide or resolve the dispute
within thirty (30) calendar days from the date of the assumption of jurisdiction
or the certification or submission of the dispute, as the case may be. The deci
sion of the President, the Secretary of Labor and Employment, the Commission or
the voluntary arbitrator or panel of voluntary arbitrators shall be final and ex
ecutory ten (10) calendar days after receipt thereof by the parties. (As amended
by RA 6715)
Art. 264. Prohibited activities.
(a) No labor organization or employer shall declare a strike or lockout without
first having bargained collectively in accordance with Title VII of this Book or
without first having filed the notice required in the preceding Article or with
out the necessary strike or lockout vote first having been obtained and reported
to the Department.
No strike or lockout shall be declared after assumption of jurisdiction by the P
resident or the Secretary or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency of cases involving t
he same grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence of an unlawful
lockout shall be entitled to reinstatement with full backwages. Any union office
r who knowingly participates in an illegal strike and any worker or union office
r who knowingly participates in the commission of illegal acts during a strike m
ay be declared to have lost his employment right: Provided, That mere participat
ion of a worker in a lawful strike shall not constitute sufficient ground for te
rmination of his employment, even if a replacement had been hired by the employe
r during such lawful strike.
(b) No person shall obstruct, impede or interfere with by force, violence, c
oercion, threats or intimidation any peaceful picketing by employees during any
labor controversy or in the exercise of the right of self-organization or collec
tive bargaining or shall aid or abet such obstruction or interference.
(c) No employer shall use or employ any strike-breaker nor shall any person
be employed as a strike-breaker.
(d) No public official or employee, including officers and personnel of the
New Armed Forces of the Philippines or the Integrated National Police, or armed
persons, shall bring in, introduce or escort in any manner, any individual who s
eeks to replace strikers in entering or leaving the premises of a strike area, o
r work in place of the strikers. The police force shall keep out of the picket l
ines unless actual violence or other criminal acts occur therein: Provided, That
nothing herein shall be interpreted to prevent any public officers from taking
any measure necessary to maintain peace and order, protect life and property, an
d/or enforce the law and legal order.
(e) No person engaged in picketing shall commit any act of violence, coercio
n or intimidation or obstruct the free ingress to or egress from the employer s pr
emises for lawful purposes, or obstruct public thoroughfares.
Art. 265. Improved offer balloting. In an effort to settle a strike, the Depar
tment of Labor and Employment shall conduct a referendum by secret balloting 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 thereu
pon readmit them upon the signing of the agreement.
In case of a lockout, the Department of Labor and Employment shall also c
onduct 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 dir
ectors 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 o
f the agreement. (As amended by RA 6715)
Art. 266. Requirement for arrest and detention. Except on grounds of natio
nal security and public peace, no union members or union organizers may be arres
ted or detained for union activities without previous consultations with the Sec
retary of Labor and Employment.
OMNIBUS RULES, BOOK V
RULE XXII
Picketing, Strikes and Lockouts
SECTION 1. Grounds for strike and lockout. A strike or lockout may be declared
in cases of bargaining deadlocks and unfair labor practices. Violations of colle
ctive bargaining agreements, except flagrant and/or malicious refusal to comply
with its economic provisions, shall not be considered unfair labor practices and
shall not be strikeable. No strike or lockout may be declared on grounds involv
ing inter-union and intra-union disputes or on issues brought to voluntary or co
mpulsory arbitration.
SECTION 2. Who may declare a strike or lockout. A certified or duly recognized
bargaining representative may declare a strike in cases of bargaining deadlocks
and unfair labor practices. The employer may declare a lockout in the same cases
. In the absence of a certified or duly recognized bargaining representative, an
y legitimate labor organization in the establishment may declare a strike out bu
t only on grounds of unfair labor practices.
SECTION 3. Notice of strike or lockout. In cases of bargaining deadlocks, a not
ice of strike or lockout shall be filed with the regional branch of the Board at
least thirty (30) days before the intended date thereof, a copy of said notice
having been served on the other party concerned. In cases of unfair labor practi
ce, the period of notice shall be fifteen (15) days. However, in case of unfair
labor practice involving the dismissal from employment of any union officer duly
elected in accordance with the union is threatened, the fifteen-day cooling-off
period shall not apply and the union may take action immediately after the stri
ke vote is conducted and the results thereof submitted to the appropriate region
al branch of the Board.
SECTION 4. Contents of notice. The notice shall state, among others, the names
and addresses of the employer and the union involved, the nature of the industry
to which the employer belongs, the number of union members and the workers in t
he bargaining unit, and such other relevant data as may facilitate the settlemen
t of the dispute, such as a brief statement or enumeration of all pending labor
disputes involving the same parties.
In cases of bargaining deadlocks, the notice shall, as far as practicable
. further state the unresolved issues in the bargaining negotiations and be acco
mpanied by the written proposals of the union, the counter-proposals of the empl
oyer and the proof of a request for conference to settle the differences. In cas
es of unfair labor practices, the notice shall, as far as practicable, state the
acts complained of and the efforts taken to resolve the dispute amicably.
Any notice which does not conform with the requirements of this and the f
oregoing sections shall be deemed as not having been filed and the party concern
ed shall be so informed by the regional branch of the Board.
SECTION 5. Disclosure of information. In collective bargaining, the parties sha
ll, at the request of either of them, make available such up-to-date financial i
nformation on the economic situation of the undertaking, which is normally submi
tted to relevant government agencies, as is material and necessary for meaningfu
l negotiations. Where the disclosure of some of this information could be prejud
icial to the undertakings, its communication may be made condition upon a commit
ment that it would be regarded as confidential to the extent required. The infor
mation to be made available may be agreed upon between the parties to collective
bargaining.
SECTION 6. Conciliation. Upon receipt of the notice, the regional branch o
f the Board shall exert all efforts at mediation and conciliation to enable the
parties to settle the dispute amicably. The regional branch of the Board may, up
on consultation, recommend to the parties that the notice be treated as a preven
tive mediation case. It shall also encourage the parties to submit the dispute t
o voluntary arbitration.
During the proceedings, the parties shall not do any act which may disrup
t or impede the early settlement of the dispute. The are obliged, as part of the
ir duty bargain collectively in good faith, to participate fully and promptly in
the conciliation meetings called by the regional branch of the Board. The regio
nal branch of the Board shall have the power to issue subpoenas requiring the at
tendance of the parties to the meetings.
Information and statements given at conciliation proceedings shall be tre
ated as privileged communications. Conciliation and similar officials shall not
testify in any court or body regarding any matter taken up at conciliation proce
edings conducted by them.
SECTION 7. Strike or lockout vote. A decision to declare a strike must be appro
ved by a majority of majority of the union membership in the bargaining unit con
cerned obtained by secret ballot in meeting of referenda called for the purpose.
A decision to declare a lockout must be approved by a majority of the board of
directors of the employer, corporation or association or the partners in a partn
ership obtained by a secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or upon reque
st of any affected party, supervise the conduct of the secret balloting. In ever
y case, the union or the employer shall furnish the regional branch of the Board
the notice of meetings referred to in the preceding paragraph at least twenty-f
our (24) hours before such meetings as well as the results of the voting at leas
t seven (7) days before the intended strike or lockout, subject to the cooling-p
eriod provided in this Rule.
SECTION 8. Declaration of strike or lockout. Should the dispute remain unsettle
d after the lapse of the requisite number of days from the filing of the notice
of strike or lockout and for the results of the election required in the precedi
ng section, the labor union may strike or the employer may lock out its workers.
The regional branch of the Board shall continue mediating and conciliating.
SECTION 9. Improved offer balloting. In case of a strike, the regional branch o
f the Board shall, at its own initiative or upon the request of any affected par
ty, conduct a referendum by secret balloting on the improved offer of the employ
er on or before the 30th day of strike. When at least a majority of the union me
mbers 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 lockout, the regional branch of the Board shall also conduct a
referendum by secret balloting on the reduced offer of the union on or before 3
0th day of the lockout. When at least a majority of the board of directors or t
rustees or the partners holding the controlling interest in the case of partners
hip vote to accept the reduced offer, the workers shall immediately return to wo
rk and the employer shall thereupon readmit them upon the signing of the agreeme
nt.
SECTION 10. Hiring of replacements. The mere participation of a worker in a law
ful strike shall not constitute sufficient ground for termination of his employm
ent even if a replacement had been hired by the employer during such lawful stri
ke. But any union officer who knowingly participates in the commission of illega
l acts during a strike may be declared to have lost his employment status.
SECTION 11. Prohibitions regarding the employment of replacements. No public of
ficial or employee, including officers and personnel of the Armed Forces of the
Philippines or the Philippine National Police, or any armed person shall
(a) Bring in, introduce or escort, in any manner, any individual who seeks t
o replace strikes in entering or leaving the premises of a strike area or
(b) Work in place of the strikers.
Nothing herein shall be interpreted to prevent aforementioned officials,
employees or peace officers from taking any measure necessary to maintain peace
and order and/or protect life and property.
SECTION 12. Peaceful picketing. Workers shall have the right to peaceful picket
ing. No person engaged in picketing shall commit any act of violence, coercion o
r intimidation or obstruct the free ingress to or agrees for the employer s premis
es for lawful purposes, or obstruct public thoroughfares.
No person shall obstruct, impede or interfere with by force, violence, co
ercion, threats or intimidation, any peaceful picketing by workers during any la
bor controversy or in the exercise of the right to self-organization for collect
ive bargaining or shall aid or abet such obstruction or interference. No employe
r shall use or employ any person to commit acts nor shall any person be employed
for such purpose.
SECTION 13. Injunctions. No court or entity shall enjoin any picketing, strike o
r lockout, except as provided Article 218 and 263 of the Code.
The Commission shall have the power to issue temporary restraining orders
in such cases but only after due notice and hearing and in accordance with its
rules. The reception of evidence for the application of a writ of injunction may
be delegated by the Commission to any Labor Arbiter who shall submit his recomm
endations to the Commission for its consideration and resolution.
Any ex parte restraining order issued by the Commission, or its Chairman
or Vice-Chairman where the Commission is not in session and as prescribed by its
rules, shall be valid for a period not exceeding 20 days.
SECTION 14. Criminal prosecution. The regular courts shall have jurisdiction ov
er any criminal action under Article 272 of the Code.
CASES
First City Interlink Transportation Co., Inc. vs. Roldan- Confesor, 272 SCRA 124
Nagkakaisang Manggagawa ng Fil Transit- NFL went on strike twice after several f
ailed conciliation conferences with Fil Transit(business name of First City Inte
rlink). The company claims that the strikes held were illegal since a) no strik
e vote had been obtained before the strike was called and b) assuming there was,
the result of strike vote was not reported to the DOLE. Thus, Co. refused to c
omply with the return-to-work order. DOLE granted backwages.
Held:
1. Pursuant to Art. 263(c)(f), the requisites for a valid strike are as fol
lows: (1) a notice of strike filed with the Department of Labor at least 30 days
before the intended date thereof or 15 days in case of unfair labor practice; (
2) strike vote approved by a majority of the total union membership in the barga
ining unit concerned, obtained by secret ballot in a meeting called for that pur
pose; (3) notice given to the Dept. of the results of the voting at least 7 days
before the intended strike. These requirements are mandatory.
In none of the numerous pleadings filed by the Union has it been shown th
at a strike vote had been taken before declaring a strike. As between the Co. a
nd the Union, the latter is in a better position to present proof of such fact.
The Union s failure to do so raises the strong probability that there was no stri
ke vote taken. The statement that there was in the Secretary s order is contrary
to evidence in the record.
2. Even assuming that there was a vote taken, the SC agrees that the Union
nevertheless failed to observe the required seven- day strike ban from the date
the strike vote should have been reported to the DOLE up to the time the Union s
taged the strike.
The importance of the strike vote and reporting of the results to the DOL
E cannot be gainsaid as it is the Union itself that the law seeks to protect by
ensuring that the majority of its members voted in favor of the strike. Consequ
ently, good faith cannot be invoked by the Union in this case.
3. The strike declared by the Union was attended by pervasive and widesprea
d violence. The acts of violence committed were not mere isolated incidents whi
ch could normally occur during any strike. Nevertheless, we are constrained to
uphold the Secretary s ruling that responsibility for these illegal acts must be o
n an individual and not collective basis. Therefore, although the strike was il
legal, only the union officers and criminal acts against the employer are deemed
to have lost their employment status. Union members who were merely instigated
to participate in the illegal strike should be treated differently.
Lapanday Workers Union vs. NLRC, 248 SCRA 95
The Union filed a notice of strike with the National Conciliation and Mediation
Board(NCMB), accusing the Co. of ULP (coercion of employees, intimidation of uni
on officers and union- busting). During the pendency of a conciliation conferen
ce called by the NCMB, a director of the Union was gunned down by a man later id
entified to be an alleged member of the new security forces of the Co. For fail
ing to report for work and complying with the quota system adopted by management
, the Co. filed charges against the Union for illegal strike, ULP and damages.
A strike was conducted among the members of the Union. The result of the strike
was then submitted to the NCMB. 2 days later, the Union struck.
Held:
1. Some of the limitations on the exercise of the right of strike are provi
ded for in paragraphs (c) and (f) of Article 263 of the LC. They provide for th
e procedural steps to be followed before staging a strike filing of notice of str
ike, taking of strike vote, and reporting of the strike to DOLE. The 7 day wait
ing period is intended to give DOLE an opportunity to verify whether the project
ed strike really carries the imprimatur of the majority of the union members. S
trike is usually the last weapon of labor to compel capital to concede to its ba
rgaining demands or to defend itself against ULPs of management. In addition, a
majority vote assures the Union it will go to war against management with the s
trength derived from unity and hence, with better chance to succeed.
2. In the case at bar, we rule that the strike conducted by the union is pl
ainly illegal as it was held within the 7- day waiting period provided by par. f
of Art. 263. The haste in holding the strike prevented DOLE from verifying whe
ther it carried the approval of the majority of the union members.
3. We affirm the penalty of dismissal meted only to the leaders of the ille
gal strike, esp. the Union officers who served as major players. They cannot cla
im good faith to exculpate themselves having admitted knowledge of the law on st
rike, including its procedure. Members who were merely instigated to participat
e are entitled to reinstatement but not to backwages as they should not be compe
nsated for services skipped during the illegal strike.
National Union of Workers in Hotels, Restaurants & Allied Industries vs. NLRC, 2
87 SCRA 192
Due to unheeded demands, a faction of the Union proclaimed itself as the Interim
Union Junta. This Junta requested from the Hotel the conduct of a special elec
tion of officers which was disallowed. A notice of strike was filed by the Jun
ta before the NCMB alleging ULP against the Co. The NCMB dismissed said notice
on the ground that the imputed ULP acts were mere conflicts between two sets of
union officers or intra- union disputes, and, being categorized as non- strikeabl
e acts, they fall under DOLE jurisdiction.
Held:
1. Generally, a strike based on a non- strikeable ground is an illegal stri
ke. Corollarily, a strike grounded on ULP is illegal if no such acts actually e
xist. As an exception, even if no ULP acts are committed by the ER, if the EEs
believe in good faith that ULP acts exist soa s to constitute a valid ground to
strike, the strike held pursuant to such belief may be legal, although subsequen
tly, such allegations of ULP were found to be groundless.
Mere claim of good faith would not justify the holding of a strike under
the exception. In addition, the circumstances must have warranted such belief.
Moreover, failure of the Junta to comply with the prohibition to strike by dis
missal of their notice is reflective of bad faith.
2. As such, their discharge by the ER was lawful especially in this case wh
ere such wildcat strike was an attempt to undermine the Union s position as the excl
usive bargaining representative, and was therefore, an unprotected activity.
Philtread Workers Union vs. Confesor, 269 SCRA 393
PTWU filed a notice of strike on grounds of ULP. The Co. filed a notice of lock
out and a petition to declare the work slowdowns staged by the Union illegal. A
fter a failure in conciliation, the company declared a company- wide lockout whi
ch resulted in the dismissal of 80 Union members, which in turn brought about a
notice of strike being filed by the Union in self- defense. In exercise of his
power under Art. 263 (g), the Sec. of Labor certified the case for compulsory ar
bitration to the NLRC enjoining the strike and issued a return-to work order whi
ch is being questioned by the Union.
Held: Art. 263 (g) does not violate the rights of workers to strike.
It was a valid exercise of police power of the State and is pursuant to the Secr
etary s work of maintaining industrial peace. The rights granted by the Constitut
ion are not absolute. They are still subject to the limitation of not being exe
rcised arbitrarily.
The Labor Code vests upon the Secretary discretion as to which industries
are indispensable to national interest. The co. supplies 22% of the tire produ
cts in the country and employs about 700 people. Any work disruption thereat wi
ll certainly prejudice the employment and livelihood of their workers and their
dependents, which will aggravate the already worsening unemployment situation in
the country and discourage foreign and domestic investors from further investin
g in the country. Thus, upon such determination of the Secretary, he will assume
jurisdiction over the dispute of said industry. The intervention of the Secret
ary was necessary to settle the labor dispute. No GAD on his part.
PSBA-Manila vs. Noriel, 164 SCRA 402
A complaint for ULP and declaration of illegality of strike was filed by PSBA ag
ainst the union. The DOLE Sec. assumed jurisdiction and enjoined the parties to
maintain status quo (for the EEs to return to work and for the Co. to accept al
l returning employees under the same terms prior to the strike.). During the pe
ndency of these cases, some students filed a complaint before the RTC to enjoin
the company and the union from continuing with their picket which the RTC dismis
sed.
Held:
1. The facts and the law fully support the acting secretary s assumption of j
urisdiction. It may be added that due to PSBA s intransigent refusal to attend th
e conciliation conferences called after the union struck, assumption of jurisdic
tion by the secretary and the issuance of a return-to-work order had become the
only way of breaking the deadlock.
2. The regional trial court was without jurisdiction over the subject matte
r of the case filed by the students. That the regular courts have no jurisdicti
on over labor disputes and to issue injunctions against strikes is well-settled.

St. Scholastica s College vs. Torres, 210 SCRA 565


Workers and teachers at the St. Scholastica s College formed for the first time, a
labor union. They filed a petition for CE to which the school objected. The t
eacher struck. Upon petition of the school, the DOLE Sec. assumed jurisdiction
and ordered the teachers to return to work twice. For refusing to comply with
such orders, the school dismissed the teachers.
Held: The dismissal of the teachers was valid. The assumption of jurisdiction
by the secretary over labor disputes involving academic institutions was alread
y upheld in PSBA vs. Noriel.
Art. 263 (g) provides that if a strike has already taken place at the ti
me of assumption, all striking employees shall immediately return to work. This
means a return to work order is immediately effective and executory notwithstan
ding the filing of a MfR. Under Art. 264, all workers who knowingly participate
in an illegal strike are deemed to have lost their employment status. Not only
union officers but union members can be dismissed when they knowingly participat
e in an illegal strike. It is presumed that when a striking worker insists on t
he strike when told by the Sec. to return to work, they have forfeited their rig
ht to be readmitted.
Sarmiento vs. Tuico, 162 SCRA 676
Asian Transmission Corporation dismissed Catalino Sarmiento who was the Vice Pre
sident of Bisig ng Asian Transmission Labor Union. The company dismissed him fo
r allegedly carrying a deadly weapon within company premises. The union filed a
notice of strike claiming ULP. SOLE assumed jurisdiction and certified the cas
e to NLRC. NLRC issued a return-to work order. All this happened while crimina
l complaints were pending against the workers for staging an illegal strike.
Held: There can be no question that the SOLE acted correctly in certifying the
labor dispute to the NLRC. The return-to-work order issued by the NLRC was equ
ally valid as a statutory part and parcel of the certification order issued by t
he SOLE. It was merely an implementation of the law and a reiteration of the SO
LE s directive. The law itself provides that such assumption or certification sha
ll have the effect of automatically enjoining the impending strike. If one has
already taken place at the time of assumption or certification, all striking or
locked out employees shall immediately return to work and the employer shall imm
ediately readmit them.
The legality of the order is also not affected by the pendency of the de
termination of the legality of the strike. It is, therefore, not correct to say
that the return-to-work order may be enforced only if the strike is illegal, f
or the purpose precisely is to maintain the status quo while the determination i
s being made.
Reformist Union of R.B. Liner vs. NLRC, 266 SCRA 713
The Union struck. The SOLE assumed jurisdiction and certified the case to NLRC.
Case was dismissed after the two parties reached an agreement that included th
e holding of CE. The winner of the CE made CBA proposals but the co. refused to
bargain so the Union filed a ULP case again while the co. countered with a case
seeking to declare the strike illegal. Strike declared illegal and Ees deemed
to have lost employment for participating.
Held: The co. can no longer contest the legality of the strike held by the uni
on before the agreement as it was even the one which sought compulsory arbitrati
on to resolve the issue. By acceding to the peaceful settlement brokered by the
NLRC, the co. waived the issue of the illegality of the strike which was alread
y resolved. The very nature of compulsory arbitration, that of a compromise agr
eement, makes the settlement binding on the parties. It could no longer be revi
ewed by the Labor Arbiter, much less by the NLRC as the Code provides that decis
ions in compulsory arbitration proceedings shall be final and executory 10 calen
dar days after receipt by the parties.
As regards the illegal lockout alleged, the co. was culpable. Since the
re was no defiance of the SOLE s RWO and there being no cause to decree the Ees dis
missal, reinstatement can be the only outcome (but was infeasible here so sep. p
ay na lang).
Telefunken Semiconductors Employees Union- FFW vs. SOLE, 283 SCRA 145
After striking Ees refused to comply with an RWO of the SOLE, violence erupted i
n their picket lines. Complaints for threats, defamation, illegal detention and
physical injuries against the strikers for stoning the service bus ferrying non-
striking Ees. The Ees were eventually terminated. The Union now questions the
exclusion of union officers, shop stewards and those with pending crim cases in
the SOLE order for the ER to accept striking EEs.
Held: We cannot see how the SOLE arrived at his decision of excluding Union of
ficers, et al. It may be true that the workers struck after the SOLE assumed ju
risdiction over the case and that they may have failed to immediately return to
work even after issuance of the RWO, making their strike illegal (for an RWO is
immediately effective). But the liability of each of the union officers and the
workers, if any, has yet to be determined. This is evident as the DOLE has yet
to hear and receive evidence on the matter. Thus, excluding the specified work
ers w/o first determining whether they knowingly committed illegal acts would be
tantamount to dismissal without due process of law = GAD.
As to the issue of the enforcement of the Writ of Execution for the impl
ementation of the RWO, no legal impediment existed to such as the said issue was
not raised to the SC and has thus become final.
Telefunken Semiconductors Ees Union- FFW vs. CA, GR 1430313-14, December 18, 2000
SOLE issued an Assumption Order after te Union filed a notice of strike. Union
still struck. SOLE then issued an RWO along with directive on the Co. to reinst
ate all striking workers except union officers, shop stewards, and those with pen
ding criminal charges while the resolution on the legality of the strike was pend
ing. SOLE subsequently declared the strike illegal on the basis of position pap
ers and evidence submitted by the Co. only since theUnin refused to adduce evide
nce on the ground of insufficiency of the prosecution s evidence.
Held: The office of a pet. for review on certio (R45) requires only questions o
f law. The factual findings of quasi- judicial agencies, like DOLE, when suppor
ted by substantial evidence are entitled to great respect in view of their exper
tise. The need to determine the individual liabilities of the striking workers,
the union officers and members alike, was correctly dispensed with by the Sec.
of Labor after ha gave sufficient opportunity to the striking workers to cease a
nd desist from continung with ther picket.
It is clear from Art. 263 (g) that the moment the SOLE assumes jurisdict
ion over a labor dispute in an industry indispensabe to national interest, such
assumption shall have the effect of automatically enjoining the intended or impe
nding strike. It was not even necessary for the SOLE to issue another order dir
ecting them to return to work. The mere issuance of an assumption order automat
ically arries with it an RWO, even if the directive to return to work is not exp
ressly stated in the assumption order. Regularity of the service having been es
tablished, the strike is deemed illgal for having been staged in knowing defianc
e of the assumption and retur-to work orders.
Philippines Inter- Fashion, Inc. vs. NLRC, 117 SCRA 659
After being informed by the Co. of the an intended retrenchment, about 200 EEs w
ent to DOLE during their breaktime. On their 2nd visit, the SOLE issued to them
an RWO. Upon their return to Co. premises, they were made to stay in the cante
en only on the pretext that the machines needed repair. Nonetheless, they were
paid their wages for the days they weren t allowed to work. Co. applied for clear
ance to terminate EEs who participated in the alleged walk out
Held:
1. There was no clear and unequivocal waiver by the ER of its right to purs
ue the case for illegal strike against the 114 EEs who weren t reinstated. It act
ually pursued its application for their dismissal. However, in view of the undi
sputed findings of illegal strike and illegal lockoout, both parties are in pari
delicto and such situation warrants the restoration of the status quo ante (i.e
., before the illegal strike and lockout) through reinstatement of the 114 EEs.
2. On the basis of the general rule that strikers aren t entitled to backwage
s, the award of backwages to the 114 EEs is deleted. The principle of no work, n
o pay applies.
Association of Independent Unions in the Phils. vs. NLRC, 305 SCRA 219
Casual EEs were excluded from membership with the bargaining rep. A strike was
staged by a union formed by casual employees seeking regularization during which
they perpetrated illegal acts like coercing non- striking ees to not report fo
r work. Union filed cases for ULP and illegal lockout. The Co. sought injunc
tion and declaration of illegal strike. Strike held illegal and union officers
to have lost employment status.
Held:
1. The strike staged was in the nature of a union-recognition-strike which
is calculated to compel the ER to recognize one s union, and not the other contend
ing group, as the bargaining representative despite teh striking union s doubtful
majority status to merit voluntary recognition and lack of formal certification
as the exclusive rep.
2. The strike was illegal. The right to strike is never meant to oppress o
r destroy the ER. The law provides limits such as the prohibited activities und
er Art. 264, particularly (e): commission of acts of violence, coercion, intimid
ation, etc. Even if a strike is valid because its objective is lawful, it may s
till be declared invalid where the means employed are illegal.
3. It follows, therefore, that dismissal of the union officers of the strik
ing union was justified and valid as a consequence of the illegality of the stri
ke staged by them in accordance with Art. 264 (a):knowing participation in an il
legal strike.
4. No illegal lockout. It was the EEs who voluntarily stopped working beca
use of their strike.

MSF Tire and Rubber, Inc. vs. CA, August 5, 1999


SOLE assumed jurisdiction over Union and Co. dispute. Pending resolution, the C
o. entered into a Memorandunm of Agreement with Siam Tyre Public Co. where the e
quipment and plant of Philtread (the Co.) were to be sold to MSF, Inc. and its l
and to Sucat Land Corp. MSF asked the Union to desist from picketing and upon t
he latter s refusal, filed a complaint for injunction with the RTC. Union moved t
o dismiss on the ground that MSF, being a mere alter ego of Philtread, was not a
n innocent bystander and therfore not entitled to injunction.
Held:
1. The right to picket is not absolute. The courts are authorized to confi
ne or localize the sphere of the demonstration to the parties to the labor dispu
te, including those with related interest, and to insulate establishments or per
sons with no industrial connection or having interest totally foreign to the con
text of the dispute. The right may be regulated at the instance of 3Ps or innoce
nt bystanders when the exercise of the right would constitute an invasion of thei
r rights.
2. Said innocent bystander must, however, satisfy the court that it is enti
rely different from, without any connection whatsoever to, either party to the d
ispute. In the transaction bet/ Philtread and Siam, Philtrad remains 20% owner
of MSF and 60% owner of Sucat Land. MSF not an innocent bystander. (Court refu
sed to apply doctrine of piercing saying that it is the innocent bystander rule
which is applicable.)
Jacinto vs. CA, GR 124540, November 14, 1997
Public teachers staged a mass action for the purpose of pressuring gov t. to grant t
heir demands. DECS Sec. Cario issued an RWO. Upon their refusal, Cario issued fo
rmal charges & preventive suspension orders against them for gross misconduct, f
ound guilty by the CSC. He found them guilty and ordered their dismissal. CA s
aid the mass action was for all intents and purposes a strike which civil servic
e employees, like these public teachers, did not have a right to.
Held:
1. There are allowable standards to freedom of speech such as the overridin
g considerations of national security and preservation of democratic institution
s. As regards to the right to strike, the Constitution itself qualifies its exe
rcise with the proviso in accordance with law , which is a manifestation of the Sta
te s right to regulate its use or even deny certain sectors such right. EO180 enj
oins under pain of administrative sanctions, all gov t officers and EEs from stagi
ng strikes, demonstrations, mass leaves, walkouts, and other forms of mass actio
n that will result in temporary work stoppage or disruption of public service.
Jurisprudence is also clear in holding that workers in the public sector do not
enjoy the right to strike.
2. Strike means any temporary stoppage of work by the concerted action of E
Es as a result of an industrial or labor dispute. In this case, the teachers wer
e not penalized for the exercise of their right to assemble peacefully and to pe
tition the gov t. for redress but of conduct prejudicial to the best interest of t
he service for having absented themselves without prior authority from their sch
ools which led to deprivation of students of education. Had they availed themse
lves of their free time not the DECS, the CSC nor the SC could have held them liable
for the valid exercise of their constitutionally guaranteed rights.
3. No backwages for suspension was justified. Decision of the Sec. confirming d
ismissal of an EE under his jurisdiction is executory even pending appeal thereo
f. It was the Sec s final judgment which were carried out.
Acosta vs. CA, GR 132088, June 28, 2000
Public school teachers didn t report for work and instead staged mass actions at L
iwasang Bonifacio. For refusal to comply with DECS SEC. Cario s RWO, they were cha
rged with gross neglect of duty, etc. The Sec. Found them guilty after an inves
tigation and ordered their dismissal from the service.
Held:
1. Jacinto vs. CA, Mla. Public School Teachers Assoc vs. Laguio constitute s
tare decisis from which the Court finds no reason to deviate.
2. Since dismissal orders remain valid and effective until modified or set
aside, the intervening period during which an EE is not permitted to work cannot
be argued as amounting to unjustified suspension. Preventive suspension not a
penalty. Moreover, after full ventilation of their case before the Merit System
s Protection Board (MSPB), the CSC and the CA, they cannot no w allege denial of
due process to justify claim for backwages. Appeal is curative of supposed den
ial.
LECTURE
Strikes
What is a strike? Any temporary stoppage of work through concerted action
of the workers because of a labor dispute. To be considered a strike, the stopp
age of work must be the result of a labor dispute. Assuming you have a stoppage
of work, the proximate or remote cause of such must be due to a labor dispute, a
nd the stoppage must be through concerted effort of the workers.
There are three elements:
1. Stoppage of work
2. Concerted action of the employees
3. A labor dispute
Without the concurrence of the three elements, there is no strike.
For example:
1. Stoppage of work because the machinery shut down due to a technical problem
2. Stoppage of work because of a labor dispute and because of a commotion in the
negotiations room, the workers out of their own initiative stopped work, with n
ot concerted efforts
The basis of the right to strike is the Constitution and the Labor Code.
However, remember that:
1. This pertains only to the private sector employees.
2. There can never be a strike if there is no legitimate union in the company
3. The right to strike should be exercised only after the exercise of the right
to self-organization
Thus, one can strike even before filing a petition for certification elec
tion. One can strike the moment one becomes a legitimate labor organization.
Grounds for Strike
1. Bargaining deadlock obviously only the LLO bargaining agent may file for noti
ce for strike under this ground
2. ULP any LLO can initiate in the absence of a bargaining agreement
3. Union busting the officers of the union are terminated in bad faith
4. No ULP when the union believed in good faith that there is ULP despite a find
ing to the contrary later on
Requisites for a strike
1. CBA (collective bargaining agreement) deadlock or ULP (unfair labor practice)
these are the ONLY grounds for a valid strike
2. Notice of strike filed with the NCMB Regional Office and the employer 30 or 1
5 (if ULP) days before the intended date thereof
3. Efforts of the NCMB at conciliation and mediation through the conciliator
4. File notice with the NCMB regarding the strike vote to be conducted 24 hours
after notice
5. Report of the strike vote
The strike vote is done in order to determine whether to proceed with the
strike, under the grounds raised in the notice of strike. The earliest it can b
e filed is simultaneous with the notice of strike. If the first strike vote fail
s, can a second strike vote be conducted again? There is no prohibition under th
e law to allow this.
*A common mistake is to think the Med-Arbiter has something to do with strikes.
No. His only function is to act upon and decide petitions for certification elec
tion and nothing else.
Who can file a notice of strike?
* If bargaining deadlock is the cause, the bargaining agent
* If ULP, both bargaining agent and, to Sir s mind =) other LLO s as well. Art. 263
(c) is not a clear prohibition that any LLO can file a notice only in cases wher
e there is no bargaining agent. Besides, in reality, the minority union is usual
ly the victim of ULP!
The importance of notice of strike is that, aside from the fact that it
should be filed, it also initiates the conciliation process, and the day of stri
ke is reckoned from the day the notice of strike is filed.
*Union busting as a ground to strike may be so, when the existence of the union
is threatened:
* In such a case, there is a dismissal of a DULY ELECTED officer of a union
* In this situation, the cooling off period does not apply
After the cooling-off period, the earliest time a strike may be conducte
d is right after such cooling-off period. Noticeably, the law does not give an e
xpiry date for a notice of strike. It does not state a maximum period between fi
ling the notice and conducting the strike.
The law also does not give any period within which to submit the report
of the strike vote. However, the law states the strike may be held only seven da
ys after the report of the strike vote is filed. Now the NCMB manual states that
the 7-day period must be counted after the 30/15 day ban. But that s wrong becaus
e that s not in the law.
There are two views regarding cases of union busting:
View 1 the 15 day period is dispensed with, but the 7-day ban must still be foll
owed, or
View 2 this is an emergency situation where the 7 day period should not be made
to apply as well. The reason why the 15-day period is dispensed with in union bu
sting is because of the exigency of the situation, and if the 7day period is to
be made to apply, it only defeats the purpose of removing the 15-day period.
Illegality of Strikes
When is a strike illegal? When it is attended with any of the following:
1. Procedural requirements are not complied with
2. Non-strikeable grounds
3. Use of violence such will be considered illegal only if it is pervasive and w
idespread. Isolated acts will not affect the legality of the strike.
4. Use of strikebreaker e.g. use of police force to stop the strike
Also, the strike cannot be conducted with the use of violence, force or i
ntimidation or blockage of the ingress/egress of the premises and public thoroug
hfares
Effect of illegal strike
1. Union officer will be terminated if he knowingly participated in an illegal s
trike
2. Union member must knowingly participated in the commission of the illegal act
s for him to be terminated
If prohibited or unlawful acts are committed by the strikers, can injunc
tion issue? YES, but only against the prohibited activities, not against the str
ike.
A strike without valid ground is not tantamount to an illegal strike, if
the workers believed in good faith that there was valid ground to strike. But th
is belief must be based on actual circumstances justifying the belief.

Assumption of Jurisdiction
*Secretary of Labor or president may assume jurisdiction which are indispensable
to the national interest (may be motu propio or upon request)
Assumption Order the Secretary of Labor intervenes and decides the case/issue, n
ot even to conciliate/mediate
Certification Order Secretary certifies the NLRC to arbitrate
* It depends on the Secretary of Labor whether the case should be a case for iss
uance of an AO or CO, but usually if there is a bargaining deadlock, an AO is is
sued. If it is a ULP= CO.
When the Secretary assumes jurisdiction, the employee must return to work
and the employer is required to accept them back, and follow the status quo ant
e the strike. No order is needed, it automatically operates.
The general rule is that in no case can there be a wholesale dismissal of
all strikers if there is an illegal strike. The exception is when there is an a
ssumption/certification order but the employees refuse to obey such order despit
e notice. The employees refusal to return, despite having been duly notified of t
he Secretary s assumption of jurisdiction, is a ground for termination.
However, not all the employees who defied the assumption order or partici
pated in an illegal strike may be terminated at once. Each employee must be judg
ed on their individual culpability (due process pa rin!!!).
During the strike, no work=no pay except if the employee returned volunta
rily and the employer refused to get them back. The employer can hire replacemen
ts while the strike is ongoing. After the strike, the temporary employees can be
terminated for redundancy.
VII. RIGHT TO SECURITY OF TENURE
LABOR CODE
Art. 277. Miscellaneous Provisions.
(b) Subject to the constitutional right of workers to security of tenure and
their right to be protected against dismissal except for a just or authorized c
ause and without prejudice to the requirement of notice under Article 283 of thi
s Code, the employer shall furnish the workers whose employment is so sought to
be terminated a written notice containing a statement of the cause for terminati
on and shall afford the latter ample opportunity to be heard and to defend himse
lf with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the Dep
artment of Labor and Employment. Any decision taken by employer 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 National Labor
Relations Commission. The burden of proving that the termination was for a valid
or authorized cause shall rest on the employer. The Secretary of Labor and Empl
oyment may suspend the effects of the termination pending resolution of the disp
ute in the event of a prima facie finding by the appropriate official of the Dep
artment of Labor and Employment before whom such dispute is pending that the ter
mination may cause a serious labor dispute or is in implementation of a mass lay
-off. (As amended by RA 6715)
ART. 279. Security of Tenure. In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and to his backwa
ges computed from the time his compensation was withheld from him up to time of
his actual reinstatement. (As amended by RA 6715)
ART. 282. Termination by employer. An employer may terminate an employment
for any of the following just causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by h
is employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of h
is employer or any immediate member of his family or his duly authorized represe
ntative; and
(e) Other causes analogous to the foregoing.
ART. 283. Closure of establishment and reduction of personnel. The employe
r may also terminate the employment of any employee due to the installation of l
abor-saving devices, redundancy, retrenchment to prevent losses or the closing o
r cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this title, by serving a w
ritten notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to t
he installation of labor-saving devices or redundancy, the worker affected there
by shall be entitled to a separation pay equivalent to at least one (1) month pa
y or to at least one (1) month pay for every year of service, whichever is highe
r. In case of retrenchment to prevent losses and in cases of closures or cessati
on of operations of establishment or undertaking not due to serious business los
ses or financial reverses, the separation pay shall be equivalent to one (1) mon
th pay or at least one-half (1/2) month pay for every year of service, whichever
is higher. A fraction of at least six (6) months shall be considered one (1) wh
ole year.
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 the health of his co-employees: Provided, That he is paid separation
pay equivalent to at least one month salary or to one-half month salary for eve
ry year of service, whichever is greater, a fraction of at least six months bein
g considered as one whole year.
Art. 285. Termination by employee.
(a) An employee may terminate without just cause the employee-employer relat
ionship by serving a written notice on the employer at least one month in advanc
e. The employer upon whom no such notice was served may hold the employee liable
for damages.
(b) An employee may put an end to the relationship without serving any notic
e on the employer for any of the following just causes:
(1) Serious insult by the employer or his representative on the honor and pe
rson of the employee;
(2) Inhuman and unbearable treatment accorded the employee by the employer o
r his representative;
(3) Commission of a crime or offense by the employer or his representative a
gainst the person of the employee or any of the immediate members of his family;
and
(4) Other causes analogous to any of the foregoing.
Art. 286. When employment not deemed terminated. The bona fide suspension
of the operation of a business or undertaking for a period not exceeding six mon
ths, or the fulfillment by the employee of a military or civic duty shall not te
rminate employment. In all such cases, the employer shall reinstate the employee
to his former position without loss of seniority rights if he indicates his des
ire to resume his work not later than one month from the resumption of operation
s of his employer or from his relief from the military or civic duty.
Art. 287. Retirement. Any employee may be retired upon reaching the retire
ment age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such ret
irement benefits as he may have earned under existing laws and any collective ba
rgaining or other agreements: Provided, however, That an employee s retirement ben
efits under any collective bargaining and other agreements shall not be less tha
n those provided herein.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age o
f sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to retirement pay eq
uivalent to at least one-half (1/2) month salary for every year of service, a fr
action of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th mo
nth pay and the cash equivalent of not more than five (5) days of service incent
ive leaves.
Retail, service and agricultural establishments or operations employing n
ot more than ten (10) employees or workers are exempted from the coverage of th
is provision.
Violation of this provision is hereby declared unlawful and subject to th
e penal provisions under Article 288 of this Code.

OMNIBUS RULES, BOOK V


RULE XXIII
Termination of Employment
SECTION 1. Security of tenure.
(a) In cases of regular employment, the employer shall not of regular employ
ment, the employer shall not terminated the services of an employee except for j
ust or authorized causes as provided by law, and subject to the requirements of
due process.
(b) The foregoing shall also apply in cases of probationary employment; prov
ided, however, that in such cases, termination of employment due to failure of t
he employee to qualify in accordance with the standard of the employer made know
n to the form at the time of engagement may also be a ground for termination of
employment.
(c) In cases of project employment or employment covered by legitimate contr
acting or subcontracting arrangements, no employee shall be dismissed prior to t
he completion of the project or phase thereof for which the employee was engaged
, or prior to the expiration of the contract between the principal and contracto
r, unless the dismissal is for just or authorized cause subject to the requireme
nts of due process or prior notice, or is brought about by by the completion of
the phase of the project or contract for which the employee was engaged.
SECTION 2. Standards of due process; requirements of notice. In all cases of te
rmination of employment, the following standards of due process shall be substan
tially observed.
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 whic
h to explain his side.
(b) A hearing or conference during which the employee concerned, with the as
sistance 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 termination, the foregoing notices shall be served on t
he employee s last known address.
II. For termination of employment as based on authorized causes defined in A
rticle 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 Regio
nal Office of the Department at least thirty (30) 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 written notice is ser
ved the employee within a reasonable time from the effective date of termination
.
SECTION 3. Rights to contest dismissal. Any decision taken by the employer sha
ll be without prejudice to the right of the worker to contest the validity or le
gality of his dismissal by filing a complaint with the Regional Branch of the Co
mmission.
SECTION 4. Period to decide. Cases involving the dismissal of a worker shall be
decided by the Labor Arbiter within twenty (20) working days from the date of s
ubmission of such cases for decision.
SECTION 5. Reinstatement pending hearing. The Secretary may suspend the ef
fects of the termination pending resolution of the case in the event of a prima
facie finding that the termination may cause a serious labor dispute or is in im
plementation of a mass lay-off.
SECTION 6. Certification of employment. A dismissed worker shall be entitle
d to receive, or request, a certificate from the employer specifying the dates o
f his engagement and termination of his employment and the type or types of work
on which he is employed.
SECTION 7. Report of dismissal. The employer shall submit a monthly report to t
he Regional Office having jurisdiction over the place of work all dismissals eff
ected by it during the month, specifying therein the names of the dismissed work
ers, the reasons for their dismissal, the dates of commencement and termination
of employment, the positions last held by them and such other information as may
be required by the Department for policy guidance and statistical purposes.
SECTION 8. Preventive suspension. The employer may place the worker concerned u
nder preventive suspension if has continued employment poses a serious and immin
ent threat to the life or property of the employer or of his co-workers.
SECTION 9. Period of suspension. No preventive suspension shall last longe
r than thirty (30) days. The employer shall thereafter reinstate the worker in h
is former or in a substantially equivalent position or the employer may extend t
he period of suspension provided that during the period of extension, he pays th
e 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 employ
er decides, after completion of the hearings, to dismiss the worker.

OMNIBUS RULES, BOOK VI


RULE I
Termination of Employment and Retirement
SECTION 2. Security of tenure.
(a) In cases of regular employment, the employer shall not terminate the ser
vice of an employee except for just or authorized causes as provided by law, and
subject to the requirements of due process.
(b) The foregoing shall also apply in cases of probationary employment; prov
ided, however, that in such cases, termination of employment due to failure of t
he employee to qualify in accordance with the standards of the employer made kno
wn to the former at the time engagement may also be a ground for termination of
employment.
(c) In cases of employment covered by contracting or subcontracting arrangem
ent, no employee shall be dismissed prior to the expiration of the contract betw
een the principal and contractor or subcontractor as defined in Rule VIII-A, Boo
k III of these Rules, unless the dismissal is for just or authorized cause, or i
s brought about by the completion of the phase of the contract for which the emp
loyee was engaged, but in any case, subject to the requirements of due process o
r prior notice.
(d) In all cases of termination of employment, the following standards of du
e process shall be substantially observed:
For determination of employment based on just causes as defined in Articl
e 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds
for termination, and giving said employee reasonable opportunity within which t
o explain his side.
(ii) A hearing or conference during which the employee concerned, with the as
sistance of counsel if he so desires is give opportunity to respond to the charg
e, present his evidence, or rebut the evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that
upon due consideration of all the circumstances, grounds have been established t
o justify his termination.
For termination of employment as defined in Article 283 of the Labor Code
, the requirement of due process shall be deemed complied with upon service of a
written notice to the employee and the appropriate Regional Office of the Depar
tment of Labor and Employment at least thirty days before effectivity of the ter
mination, specifying the ground or grounds for termination.
If the termination is brought about by the completion of a contract or ph
ase thereof, or by failure of an employee to meet the standards of the employer
in the case of probationary employment, it shall be sufficient that a written no
tice is served the employee within a reasonable time from the effective date of
termination.
CASES
A. JUST CAUSES
Chua-Qua vs. Clave, 189 SCRA 117
Love has its reasons which reason itself does not know
Petitioner is a teacher in Tay Tung High School in Bacolod. She has been teachi
ng for 13 years when the dispute arose because a student, one Booby Qua, was ass
igned to remedial instructions after class. Because of this, they fell in love
and eventually got married. Tay Tung dismissed her on the ground of immorality
or grave misconduct.
Held:
1. On due process, there is no denial of due process where a party was affo
rded an opportunity to present his side. Also, the procedure by which issues are
resolved based on position papers, affidavits and other documentary evidence is
recognized as not violative of such right.
2. Now, on the merits. The determination of the legality of the dismissal h
inges on the issue of whether or not there is substantial evidence to prove that
the antecedent facts which culminated in the marriage between petitioner and he
r student constitute immorality and or grave misconduct. There is, however no di
rect evidence on record which proves the charges of immorality and grave miscond
uct by petitioner. It would seem quite obvious that the avowed policy of the sch
ool in rearing and educating children is being unnecessarily bannered to justify
the dismissal of petitioner. This policy, however, is not at odds with and shou
ld not be capitalized on to defeat the security of tenure granted by the Constit
ution to labor. In termination cases, the burden of proving just and valid cause
for dismissing an employee rests on the employer and his failure to do so would
result in a finding that the dismissal is unjustified. The charge against petit
ioner not having been substantiated, we declare her dismissal as unwarranted and
illegal.

Mabeza vs. NLRC, 271 SCRA 670


Norma Mabeza contends that she was made to sign by the hotel s management an instr
ument attesting to the latter s compliance with minimum wage and other labor stand
ard provisions of law. She refused to swear to the instrument however. She was c
hided by management for her refusal to swear the affidavit. She went on LOA but
when she returned, she was not accepted. Filed case for illegal dismissal.
Held:
1. It is settled that in termination cases the employer bears the burden of
proof to show that the dismissal is for just cause, the failure of which would
mean that the dismissal is not justified and the employee is entitled to reinsta
tement.
2. The claim of abandonment by the employer cannot be sustained as for aban
donment to arise, there must be concurrence of two things: 1) lack of intention
to work; and 2) the presence of overt acts signifying the employee s intention not
to work. The fact that she returned after her LOA negates an intention to aband
on.
3. Loss of confidence as a just cause for dismissal was never intended to p
rovide employers with a blank check for terminating their employees. Such a vagu
e, all-encompassing pretext as loss of confidence, if unqualifiedly given the se
al of approval by this Court, could readily reduce to barren form the words of t
he constitutional guarantee of security of tenure. Having this in mind, loss of
confidence should ideally apply only to cases involving employees occupying posi
tions of trust and confidence or to those situations where the employee is routi
nely charged with the care and custody of the employer s money or property. To the
first class belong managerial employees, i.e., those vested with the powers or
prerogatives to lay down management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees or effectively recomm
end such managerial actions; and to the second class belong cashiers, auditors,
property custodians, etc., or those who, in the normal and routine exercise of t
heir functions, regularly handle significant amounts of money or property. Evide
ntly, an ordinary chambermaid who has to sign out for linen and other hotel prop
erty from the property custodian each day and who has to account for each and ev
ery towel or bedsheet utilized by the hotel s guests at the end of her shift would
not fall under any of these two classes of employees for which loss of confiden
ce, if ably supported by evidence, would normally apply.
PAL vs. NLRC, 194 SCRA 139
Nathaniel Pinuela was ground equipment and tug operator for PAL. He was 5 years
employed when incident occurred. He was towing a plane which crashed into a brid
ge causing damage to the plane. After investigation, he was dismissed.
Held: Pinuela was comparing with other sanctions imposed by PAL on other erring
employees. The SC said: Lastly, Pinuela should not compare the penalty of dismis
sal imposed on him in relation to lesser sanctions previously meted by PAL on it
s other employees. We are solely concerned here with the sufficiency of the evid
ence surrounding Pinuela s dismissal. Besides, Pinuela s examples do not involve a p
lane with a scheduled flight. A mere delay on petitioner s flight schedule due to
aircraft damage entails problems like hotel accommodations for its passengers, r
e-booking, the possibility of law suits, and payment of special landing fees not
to mention the soaring costs of replacing aircraft parts. All told, Pinuela s gro
ss negligence which called for dismissal is evident.
Salaw vs. NLRC, 202 SCRA 7
Espero Santos Salaw was employed by Associated Bank as a credit investigator-app
raiser. The police extorted a confession from to the effect that he sold some fo
reclosed properties by the bank, the proceeds of which he shared with a co-emplo
yee.
After a hearing, he was dismissed for alleged serious misconduct or willf
ul disobedience and fraud or willful breach of the trust reposed on him.
Held:
1. Under the Labor Code, an amended, the requirements for the lawful dismis
sal of an employee by his employer are two-fold: the substantive and the procedu
ral. Not only must the dismissal be for a valid or authorized cause as provided
by law (Articles 279, 281, 282-284, New Labor Code), but the rudimentary require
ments of due process notice of hearing must also be observed before an employee
may be dismissed. One does not suffice; without their concurrence, the terminati
on would, in the eyes of the law, be illegal.
2. The inviolability of notice and hearing for a valid dismissal of an empl
oyee can not be over-emphasized. Those twin requirements constitute essential el
ements of due process in cases of employee dismissal. The requirement of notice
is intended to inform the employee concerned of the employer s intent to dismiss h
im and the reason for the proposed dismissal; on the other hand, the requirement
of hearing affords the employee the opportunity to answer his employer s charges
against him and accordingly to defend himself therefrom before dismissal is effe
cted. Neither one of these two requirements can be dispensed with without runnin
g afoul of the due process requirement of the Constitution.
3. The investigation of petitioner Salaw by the respondent Bank s investigati
ng committee violated his constitutional right to due process, in as much as he
was not given a chance to defend himself, as provided in Rule XIV, Book V of th
e Implementing Rules and Regulations of the Labor Code governing the dismissal o
f employees. Section 5 of the said Rule requires that the employer shall afford t
he worker ample opportunity to be heard and to defend himself with the assistanc
e of his representative, if he so desires. Here petitioner was perfunctorily deni
ed the assistance of counsel during the investigation to be conducted by the PDI
C (not the Phil. Dep. Ins. Corp, this is what they call their internal disciplin
e board). No reasons were proffered which vitiated the denial with irregularity
and unfairness. Significantly, the dismissal of the petitioner from his employme
nt was characterized by undue haste. The law is clear that even in the dispositi
on of labor cases, due process must not be subordinated to expediency or dispatc
h. Otherwise, the dismissal of the employee will be tainted with illegality.
4. In Santos v. NLRC (G.R. No. 76721, September 21, 1987, 154 SCRA 166), th
e SC held that the normal consequences of a finding that an employee has been ill
egally dismissed are, firstly, that the employee becomes entitled to reinstateme
nt to his former position without loss of seniority rights and, secondly, the pa
yment of backwages corresponding to the period from his illegal dismissal up to
actual reinstatement.
Wenphil vs. NLRC, 170 SCRA 69
Roberto Mallare was hired by Wendy s as a crew member at its Cubao Branch. Mallare
had an altercation with a co-employee (near the salad bar), Job Barrameda, as a
result of which he was suspended and subsequently dismissed. It is claimed by W
endy s that Mallare waived the right to investigation, hearing, etc.
Held:
1. Right not waived. Mere failure on the part of Mallare to explain his act
ions after the incident is not a waiver.
2. The failure of petitioner to give private respondent the benefit of a he
aring before he was dismissed constitutes an infringement of his constitutional
right to due process of law and equal protection of the laws.
3. HOWEVER, when Mallare was granted his rights to present his side before
the Labor arbiter, it was found that his dismissal was indeed for just cause.The
policy of ordering the reinstatement to the service of an employee when it appe
ars he was not afforded due process, although his dismissal was found to be for
just and authorized cause should be re-examined. It will be highly prejudicial t
o the interests of the employer to impose on him the services of an employee who
has been shown to be guilty of the charges that warranted his dismissal from em
ployment.
4. HOWEVER AGAIN, Wendy s must nevertheless be held to account for failure to
extend to private respondent his right to an investigation before causing his d
ismissal. It must be imposed a sanction for its failure to give a formal notice
and conduct an investigation as required by law before dismissing petitioner fro
m employment. Tama na ang P1000 na parusa.
Serrano vs. NLRC, 323 SCRA 445, 331 SCRA 331
Ruben Serrano was hired as security checker to apprehend shop-lifters. In view o
f retrenchment by Isetann, he was laid-off. Serrano filed a case for illegal di
smissal, he alleges lack of due process.
Held:
1. The SC felt that the ruling in WenPhil was defective since its effect wa
s to sanction the policy of dismiss now, pay later . What employers would do is dis
miss now without due process, then pay the fine (Isang Libo lang naman). But to
return to the pre-Wenphil doctrine that the dismissal is void would be uncalled
for, because it is unjust to require one to keep in his employ, a worker who is
guilty. The proper doctrine would be to abolish the fine altogether and simply c
onsider the dismissal as merely ineffectual for failure to comply with the requ
irements set forth by law. Thus, the effect of this is to grant the employee ba
ckwages counted from the time he was ineffectively dismissed.
2. On due process, the SC said thru Justice Mendoza that denial of due proc
ess cannot be invoked against an employer as the provisions on the Bill of Right
s is a limitation against Government power. Atty. Manuel interprets this as an e
rosion of the rights of workers (actually lahat, remember his example on Ateneo?
) to due process which cannot be invoked against private individuals. But MY REA
DING of the ruling was that Mendoza s statement was only to justify the upholding
of a dismissal obtained without due process. A violation of the rights of an ind
ividual by another private individual would entitle one to damages under the civ
il code, which the SC in Wenphil awarded. But since this was deemed ineffective,
the SC adopted the ineffective doctrine and awarded full backwages.
Cosep vs. NLRC, 290 SCRA 704
Alma Cosep, et. al. were regular employees of Premiere Development Bank at its G
uadalupe Branch. When one of her co-employees was suspended on alleged malversat
ion of money belonging to its clients, petitioners wrote an open letter which cr
iticized private respondent s handling of the case. Bank sent to each petitioner a
memorandum dismissing them from the service effective immediately, on the groun
d that they undermined the interest of the bank.
Held:
1. For there be willful disobedience of the employer s lawful orders, as a ju
st cause for dismissal of an employee, the concurrence of at least two (2) requi
sites is needed: the employee s assailed conduct must have been willful or intenti
onal, the willfulness being characterized by a wrongful and perverse attitude; a
nd the order violated must have been reasonable, lawful, made known to the emplo
yee and must pertain to the duties which he had been engaged to discharge.
2. The Bank has not established nor presented sufficient basis for the dism
issal of petitioners from service on the ground of serious misconduct. Misconduc
t 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 char
acter, and implies wrongful intent and not mere error in judgment. The misconduc
t to be serious within the meaning of the Act must be of such a grave and aggrav
ated character and not merely trivial or unimportant. Such misconduct, however s
erious, must, nevertheless, be in connection with the employee s work to constitut
e just cause for his separation.
Escobin vs. NLRC, 289 SCRA 48
PEFTOK is a watchman and protective agency while UP-NDC is a corp. which is the
owner/possessor of lands in Basilan. The petitioners are guards hired to worl in
guarding the plantation. Later, they were dismissed by PISI for insubordination
and grave misconduct, as a result of their refusal to ring the bell in the eve
ning while on duty in the premises of the plantation. But it was revoked upon in
tervention of Congressman. What the agency did was to transfer them to Manila.
Petitioners did not report to Manila. Dismissed again for disobedience.
Held:
1. Disobedience, to be a just cause for termination, must be willful or int
entional, willfulness being characterized by a wrongful and perverse mental atti
tude rendering the employee s act inconsistent with proper subordination. A willfu
l or intentional disobedience of such rule, order or instruction justifies dismi
ssal only where such rule, order or instruction is (1) reasonable and lawful, (2
) sufficiently known to the employee, and (3) connected with the duties which th
e employee has been engaged to discharge.
2. First, it was grossly inconvenient for petitioners, who were residents a
nd heads of families residing in Basilan, to commute to Manila. Second, petition
ers were not provided with funds to defray their transportation and living expen
ses. The right to transfer employees from one office to another provided there i
s no demotion in rank or diminution of salary, benefits and other privileges is
judicially recognized as a prerogative inherent in the employer s right to effecti
vely control and manage the enterprise. But this principle is not at issue here.
The issue is whether petitioners alleged disobedience constituted a just and val
id cause to dismiss them. It is obvious to us that the dismissal was effected wi
th mala fides, as it was intended to punish petitioners for their refusal to hee
d their employer s unreasonable directive.
3. Abandonment, as a just and valid cause for dismissal, requires a deliber
ate, unjustified refusal of an employee to resume his work, coupled with a clear
absence of any intention of returning to his work. No evidence was presented to
establish that petitioners relinquished their jobs.
4. Constructive discharge is an involuntary resignation resorted to when co
ntinued employment is rendered impossible, unreasonable or unlikely; when there
is a demotion in rank and/or a diminution in pay; or when a clear discrimination
, insensibility or disdain by an employer becomes unbearable to the employee. In
this particular case, petitioners were not constructively dismissed; they were
actually dismissed without just and valid cause.
Autobus Workers vs. NLRC, 291 SCRA 219
Ricardo E. Escanlar worked with Autobus as a Cutting Machine Operator. He was la
ter elected President of the Autobus Workers Union (AWU), the union for the rank
and file employees. He was transferred to another division and he allegedly used
profane or obscene language against his manager in the division. After investi
gation, Escanlar was dismissed on gross misconduct.
Held:
1. 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 judgme
nt. The misconduct must be of such a grave and aggravated character and not mere
ly trivial or unimportant. The charge of serious misconduct finds ample support
in the record. Petitioner failed to satisfactorily rebut this accusation, his o
nly defense being self-serving denials.
2. It is the prerogative of management, in the interest of effective operat
ions, to transfer employees in good faith, if it means better operations.
3. The twin requirements of notice and hearing constitute the essential ele
ments of due process. Due process of law simply means giving opportunity to be h
eard before judgment is rendered. In fact, there is no violation of due process
even if no hearing was conducted, where the party was given a chance to explain
his side of the controversy. What is frowned upon is the denial of the opportuni
ty to be heard.
Caoile vs. NLRC, 299 SCRA 76
Caoile was hired by Coca-Cola as an Electronic Data Processing Supervisor. He w
as later dismissed on the ground of loss of trust and confidence for his involve
ment in an anomalous encashment of check payments made by a contractor.
Held: Law and jurisprudence have long recognized the right of employers to dism
iss employees by reason of loss of trust and confidence. In the case of supervis
ors or personnel occupying positions of responsibility, loss of trust and confid
ence justifies termination. This ground is premised from the fact that an employ
ee concerned holds a position of trust and confidence. This situation holds wher
e a person is entrusted with confidence on delicate matters, such as custody, ha
ndling, or care of the employer s property. It must also be work-related .
Judy Phils. vs. NLRC, 289 SCRA 755
Virginia Antiola was employed by petitioner Judy Philippines as an assorter of b
aby infant dresses. Virginia Antiola was directed by her supervisor, to sort out
baby infant dresses pursuant to an instruction sheet. She was subsequently made
to explain her erroneous assortment and packaging of 2,680 dozens of infant wea
r. She was dismissed for negligence.
Held: Article 282(b) of the Labor Code requires that . . . such neglect must no
t only be gross, it should be Gross and habitual neglect in character. There is no
doubt that Antiola was negligent, nonetheless, her wrongdoing does not warrant d
ismissal inasmuch as dismissal is the ultimate penalty that can be meted to an e
mployee.
Del Monte vs. NLRC, 287 SCRA 71
Procesa Alsola was a packer paid by the hour in Del Monte Cagayan de Oro. For in
curring a total of 57 days of absences without permission, she was sent a total
of 17 show-cause letters requiring her to explain her absences. Hence, she was d
ismissed after failure to show cause.
Held:
1. The rule is that an employer s power to discipline its workers may not be
exercised in an arbitrary manner as to erode the constitutional guarantee of sec
urity of tenure. Here, the company did not follow its own procedure when instead
of reprimanding and following the scales of penalties in successive violations
of rules, what they did was to dismiss her outright.
2. Abandonment, as a just and valid ground for termination, means the delib
erate, unjustified refusal of an employee to resume his employment. The burden o
f proof is on the employer to show a clear and deliberate intent on the part of
the employee to discontinue employment. The intent cannot be lightly inferred o
r legally presumed from certain equivocal acts. For abandonment to be a valid gr
ound for dismissal, two (2) elements must be proved: the intention of an employe
e to abandon, coupled with an overt act from which it may be inferred that the e
mployee has no more intent to resume his work. In the case at bar, these elemen
ts were not established.
Santos, Jr. vs. NLRC, 287 SCRA 117
Santos, a married man, was employed as a teacher by Hagonoy Institute. Likewise
working as a teacher for Hagonoy was Mrs. Arlene T. Martin, also married. In the
course of their employment, the couple fell in love. Thereafter, rumors regardi
ng the couple s relationship spread, especially among the faculty members and scho
ol officials. What Hagonoy did was to advise Martin to take a LOA which Martin d
id not do. Based on her refusal, she was dismissed.
Held:
1. Having an extra-marital affair is an affront to the sanctity of marriage
, which is a basic institution of society. Even our Family Code provides that hu
sband and wife must live together, observe mutual love, respect and fidelity. As
a teacher, petitioner serves as an example to his pupils, especially during the
ir formative years and stands in loco parentis to them. Consequently, it is but
stating the obvious to assert that teachers must adhere to the exacting standar
ds of morality and decency. There is no dichotomy of morality. A teacher, both i
n his official and personal conduct, must display exemplary behavior. He must fr
eely and willingly accept restrictions on his conduct that might be viewed irk-s
ome by ordinary citizens. In other words, the personal behavior of teachers, in
and outside the classroom, must be beyond reproach. Accordingly, teachers must a
bide by a standard of personal conduct which not only proscribes the commission
of immoral acts, but also prohibits behavior creating a suspicion of immorality
because of the harmful impression it might have on the students. From the forego
ing, it seems obvious that when a teacher engages in extra-marital relationship,
especially when the parties are both married, such behavior amounts to immorali
ty, justifying his termination from employment.
2. Having concluded that immorality is a just cause for dismissing petition
er, it is imperative that the private respondent prove the same. Since the burde
n of proof rests upon the employer to show that the dismissal was for a just and
valid cause, the same must be supported by substantial evidence. Here it was,
so dismissal affirmed.
Libres v. NLRC, 307 SCRA 675
Libres was put under investigation then was suspended for sexually harassing a s
ecretary. The findings were that he touched a female subordinate s hand and should
er, caressed her nape and told other people that it was the girl who had hugged
and kissed him or that she responded to the sexual advances. He questioned the s
uspension.
Held: Before R.A. 7877 (An Act Declaring Sexual Harassment Unlawful in the Empl
oyment, Education or Training Environment and for Other Purposes) was in effect,
the Labor Arbiters had to rely on the common connotation of sexual harassment a
s it is generally understood by the public. It also relied upon the Managerial
Evaluation Committee Report (MEC) defining sexual harassment. It said that sexua
l harassment is an unwelcome or uninvited sexual advance, request for sexual fav
ors and other verbal or physical conduct of sexual nature, and that such conduct
unreasonably interferes with the individual s performance at work, or creates an
intimidating, hostile or offensive work environment. The court agreed that Libre
s, by his actions, had sexually harassed the secretary. As a managerial employe
e, he is bound by more exacting work ethics. He failed to live up to his standa
rd of responsibility when he succumbed to his moral perversity. And when such m
oral perversity is perpetrated against his subordinate, he proves a justifiable
ground for his dismissal for lack of trust and confidence. It is the right and
duty of every employer to protect its employees from oversexed superiors.
Aparente v. NLRC, 331 SCRA 82
Aparente, while driving a truck belonging to his employer, sideswiped a 10-year
old girl, injuring her. He did not have a driver s license. He was put under inv
estigation by the company and then dismissed for having violated company rules a
nd regulations for blatant disregard of control procedures. He filed a case for
illegal dismissal.
Held: Lawful termination. In order that an employer may dismiss an employee on
the ground of willful disobedience, there must be concurrence of two requisites
: the employee s assailed conduct must have been willful or intentional, the willf
ulness being characterized by a wrongful and perverse attitude; and the order vi
olated must have been reasonable, lawful, made known to the employee and must pe
rtain to the duties which he had been engaged to discharge. These requisites ar
e present in this case. Driving a company car without a license and even concea
lment of such fact warrants dismissal as it is a violation of the company s rules
and regulations.
ALU-TUCP v. NLRC, 302 SCRA 708
Felizardo was caught by a security guard bringing out company property. He was d
ismissed for dishonesty and theft of company property. The union questioned the
dismissal.
Held: In this case, there is no question of Felizardo s guilt. He stole a pair o
f boots, a drinking container and 15 hamburger patties. The question is whether
dismissal is an appropriate penalty. The employer has the inherent right to di
scipline, including that of dismissing its employees for just causes. That righ
t is, however, subject to reasonable regulation. The court here decided that di
smissal was not proportionate to the gravity of the offense. Considering the va
lue of the articles stolen and the fact that he had no previous record during hi
s employment, he should not have been terminated.
VH Manufacturing, Inc. v. NLRC, GR 130957, January 19, 2000
Gamido was allegedly caught sleeping on the job. He was terminated for violatio
n of company rules which provide for a penalty of separation for sleeping during
work hours. He questioned the decision.
Held: Not a valid termination. In termination disputes, the burden of proof is
always on the employer to prove that the dismissal was for a just and valid cau
se. The records show that the allegation that Gamido was sleeping was not subst
antiated by any convincing evidence other than the bare allegation of the compan
y. Also, sleeping on the job is not always a valid ground for dismissal. The co
urt has only allowed termination of security guards whose duty necessitates that
they be awake and watchful at all times. While an employer enjoys a wide latit
ude of discretion in the promulgation of policies, rules and regulations, these
directives must always be fair and reasonable, and the corresponding penalties m
ust be commensurate to the offense involved and to the degree of the infraction.
Here, the dismissal under the circumstances appears to be too harsh a penalty.
Jo v. NLRC, GR 121605, February 2, 2000
Mejila, a barber, got into an altercation with a co-barber. He reported the inc
ident to the labor department, which investigated the matter and called several
conferences for mediating the problem. Mejila did not attend the meetings but t
urned over his keys to the barber shop, took all his belongings and began workin
g for another barber shop. He then filed a complaint for illegal dismissal.
Held: There was abandonment, not illegal dismissal. To constitute abandonment,
there must be concurrence of the intention to abandon and some overt acts from
which it may be inferred that the employee concerned has no more interest in wor
king. There must be a clear, deliberate and unjustified refusal to resume emplo
yment and a clear intention to sever the employer-employee relationship on the p
art of the employee. Here, such elements are present.
Farrol v. CA, GR 133259, February 10, 2000
Farrol, a cashier, was dismissed for having cash shortage. It was due to the vi
olation of a company circular which requires daily and up-to-date preparation of
statistical reports and depositing of cash collections twice a day. He request
ed that he be reinstated, then after a while, manifested that he was willing to
settle the case. When the company denied the request, he sued for illegal dismi
ssal.
Held: Illegal dismissal. It cannot be presumed that when there is shortage, th
ere is a corresponding breach of trust. Cash shortages in a cashier s work may ha
ppen, and when there is no proof that the same was deliberately done for a fraud
ulent or wrongful purpose, it cannot constitute breach of trust so as to render
the dismissal from work invalid. Assuming that there was breach of trust and co
nfidence, it was only the first infraction. Although the employer has the prero
gative to discipline or dismiss its employee, such prerogative cannot be exercis
ed wantonly, but must be controlled by substantive due process and tempered by t
he fundamental policy of protection to labor enshrined in the constitution. Inf
ractions committed by an employee should merit only the corresponding sanctions
demanded by the circumstances. The penalty must be commensurate with the act, c
onduct or omission imputed to the employee and imposed in connection with the em
ployer s disciplinary authority. Here, a lighter penalty would have been more jus
t considering it was just his first offense.

Dela Cruz v. NLRC, 268 SCRA 458


Dela Cruz was barred from the premises of the employer/company and was handed a
memorandum of her lay-off allegedly due to a cost-saving program. Upon her retu
rn to work, she was put under investigation for unauthorized possession of compa
ny property, equipment and supply punishable by outright dismissal (bag). She w
as termiated for dishonesty. She filed a complaint for illegal dismissal.
Held: The temporary lay-off was not valid. There should be good faith. In thi
s case, there was none. The company said it was for cost-cutting. However, the
court noted that Dela Cruz was the only one laid-off. It was a sham.
In termination cases, the burden of proving just and valid cause for dis
missing an employee rests upon the employer, and the latter s failure to do so res
ults in a finding that the dismissal is unjustified. Although the alleged defen
se of dela Cruz against the accusations against her were weak, the employer must
still show that the allegations are real. Akin to a criminal case, the employe
r s cause stands or falls on the strength of is evidence, not on the weakness of t
he employee s defense. Here, the company was not able to show that dela Cruz had
violated the rules and that there was dishonesty on her part.
An employer may terminate an employee due to loss of trust and confidenc
e. However, the loss must be based not on ordinary breach by the latter of the
trust reposed on him, but on willful breach. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable cause, as distinguis
hed from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It
must rest on substantial grounds and not on the employer s arbitrariness, whims,
caprices or suspicion, It should be genuine and not simulated. Nor should it a
ppear as a mere afterthought to justify earlier action taken in bad faith or a s
ubterfuge for causes which are improper, illegal or unjustified. Here, the empl
oyee was not a managerial employee. Trust and confidence only applies to such e
mployees.
MSMG-UWP v. Ramos, GR 113907, February 28, 2000
An intra-union dispute arose out of disputes from the election of union officers
. Several officers were dismissed from the union for acts of disloyalty and ini
mical to the interest and violative of the constitution and by-laws of the union
. Since the union has a closed-shop agreement in the CBA, the company terminate
d the ousted union members.
Held: While a company may validly dismiss employees expelled by the union for d
isloyalty under the union security clause of the CBA, the dismissal should not b
e done hastily and summarily thereby eroding the employees right to due process,
self-organization and security of tenure. The enforcement of union-security cla
uses is authorized by law provided such enforcement is not characterized by arbi
trariness and always with due process. There must always be a separate hearing
conducted by the company before the expelled union members are dismissed by the
company.
Deles v. NLRC, 327 SCRA 540, G.R. 121348
Deles was the shift supervisor of employer FPIC, and was tasked to oversee the e
ntire pipeline operation in the employer s terminal. One day, the quality of fuel
delivered to FCPI s pipelines suffered severe downgrading of quality. Deles was p
laced under preventive suspension. It was found that the mishap occurred due to
the fact that his subordinate failed to correctly execute his orders, and he w
as found to have tampered with the pipeline equipment as well. He was dismissed
for loss of confidence.
Held: Valid dismissal. The ground of loss of trust and confidence applies becaus
e Deles holds a position of trust and confidence.
The delicate nature of the business shows that the company has to exercis
e extraordinary diligence in conducting its operations. In this light, Deles is
tasked to perform kay functions and is bound by exacting work ethic. His positio
n requires the full trust and confidence of his employer in every exercise of ma
nagerial discretion He tampered with very sensitive equipment which exposed the
complex and adjacent communities to the danger of a major disaster that could b
e caused by tank explosions and conflagration.
Samson v. NLRC, 330 SCRA 460
Samson was dismissed from work due to utterances of obscene, insulting and offen
sive words, referring to or directed against the company s management committee.
Held: Invalid dismissal. The company argued that the actuation of Samson const
ituted gross misconduct warranting his dismissal. The court however said that m
isconduct is improper or wrong conduct. It is the transgression of some establi
shed and definite rule of action, a forbidden act, a dereliction of duty, willfu
l in character, and implies wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such grave and aggravated character and not
merely trivial and unimportant. Such misconduct, however serious, must neverth
eless, be in connection with the employee s work to constitute just cause for his
separation.
In this case, the alleged misconduct of Samson, when viewed in its conte
xt, is not of such serious and grave character as to warrant his dismissal. The
utterances were made during an informal Christmas gathering of the company s dist
rict sales managers. There was probably a little bit of drinking going on. Emp
loyees should be allowed wider latitude to freely express their sentiments durin
g these kinds of occasions.
The outbursts were not pointed to any senior employees and were not inte
nded to malign any person from the management. It was just a reaction on a cert
ain case involving the company. The court did not consider it a case were utter
lack of respect for superiors was patent.
Phil. Aeolus v. NLRC, April 28, 2000
Rosalinda Cortez was the company nurse. She was dismissed for serious misconduct
and gross and habitual negligence, due to the following infractions she committ
ed:
* Throwing a stapler and hurling invectives at the plant supervisor
* For losing some P1,500 entrusted by the plant supervisor to her, to be given t
o the CLMC Department
* For asking a co-employee to punch her time card
* For failing to process the ATM applications of 9 co-employees
Held: Illegal dismissal.
Misconduct complained of must be:
* Serious
* In relation to the performance of her duties
* Showing the employee unfit to continue working for the employer.
The acts committed against the plant supervisor were not in relation to h
er duties as a nurse, and were done because of the sexual advances made by the h
orny asshole supervisor.
The punching of the time card was done in good faith because at that time
she was made to do an errand, and was immediately corrected when became known.
Thus the company did not suffer. It was her first infraction during the five-yea
r service in the company.
The money was not lost as she remitted it to the company personnel-in-cha
rge as evidence by a receipt.
The failure to open an ATM account was not part of her duties and so does
not support the allegation of gross and habitual negligence.
Metro Transit v. NLRC, 307 SCRA 747
Turing was dismissed for abandonment of work. He was always absent without leav
e allegedly because of domestic problems (iniwan ng asawa). He questioned the d
ismissal.
Held: Illegal dismissal. For abandonment of work to be a just and valid cause
for dismissal, there must be a deliberate and unjustified refusal on the part of
an employee to resume his employment. The burden of proof is on the employer t
o show an unequivocal intent on the part of the employee to discontinue employme
nt. To warrant a finding of abandonment, there must be evidence not only of the
failure of an employee to report for work or his absence without valid or justi
fiable reason, but also of his intention to sever the employer-employee relation
ship. The second element is the more determinative factor, being manifested by
overt acts.
Here, Turing cannot be said to have abandoned his work. No proof of ove
rt acts showing clearly his intention to abandon his work. Upon learning he had
been dismissed, he filed an illegal dismissal case. The court has ruled in so
many cases that a timely filing of an illegal dismissal case negates abandonment
of work.
Icawat v. NLRC, GR 133573, June 20, 2000
Yape, a driver, lost his driver s license. He sought his employer s permission to g
o on leave to secure a new one. When he got his new license, he reported for wo
rk but was informed that a new driver had already taken his place. He filed a c
ase for illegal dismissal.
Held: Illegal dismissal. To constitute abandonment, two elements must concur :
(1) the failure to report for work or absence without valid or justifiable reas
on, and (2) a clear intention to sever the employer-employee relationship, with
the second element as the more determinative factor and being manifested by some
overt acts. Mere absence is not sufficient. To prove abandonment, the employe
r must show that the employee deliberately and unjustifiably refused to resume h
is employment without any intention of returning. Here, no such intention was m
anifested. After getting his license, he immediately reported for work. Plus,
upon learning of his dismissal, he filed a case for illegal dismissal. A charge
of abandonment is totally inconsistent with the immediate filing of a complaint
for illegal dismissal.
Leonardo v. NLRC, 333 SCRA 589
Fuerte, allegedly not meeting his sales quota, was transferred to another compan
y plant which resulted in the withdrawal of his supervisor s allowance. He protes
ted his transfer and subsequently filed a case for illegal termination.
Held: Illegal dismissal. Fuerte s act of staying off work are not indicative of
abandonment. To constitute such a ground for dismissal there must be (1) failur
e to report to work or absence without valid or justifiable reason; and (2) a cl
ear intention, as manifested by some overt acts, to sever the employer-employee
relationship. Again, the filing of a complaint for illegal dismissal is inconsi
stent with a charge of abandonment.
OSS Security v. NLRC, 325 SCRA 157
Legaspi, a lady guard, was transferred by her employer due to a complaint filed
by the building administrator of the last place she was assigned to. Upon her t
ransfer, she did not report for duty at her new assignment. She then filed a co
mplaint for constructive dismissal.
Held: No illegal dismissal. The transfer of an employee ordinarily lies with w
ithin the ambit of management prerogatives. However, a transfer amounts to cons
tructive dismissal when the transfer is unreasonable, inconvenient, or prejudici
al to the employee, and it involves demotion in rank or diminution of salaries,
benefits and other privileges. Here, there is no record that the transfer was a
nything but done in good faith, without grave abuse of discretion, and in the be
st interest of the business enterprise. There was no constructive dismissal.

B. AUTHORIZED CAUSES
Wiltshire File Co. v. NLRC, 193 SCRA 665
A Sales Manager after returning from a (business and pleasure) trip abroad was t
erminated by Wiltshire Co. He tried to get an explanation but he was left with
letter merely handed to him by the Security Guard. The letter justifies his dis
missal on the ground of redundancy.
The Sales Manager in his complaint before the L.A. for illegal dismissal
alleges that his position cannot be redundant because nobody in the company was
then performing the same duties. The Co. in its answer invokes that termination
was a cost cutting measure as company had experienced unusually low volume of o
rders and that it was forced to rotate employees in order to save the company be
cause of its continued experience of financial losses.
After review of records (audited financial losses), court found that co
was indeed suffering from serious financial losses. While letter of termination
used the word redundant, the letter also referred to the company having incurre
d financial losses which in fact has compelled the company to resort to retrench
ment.
Redundancy in an employer s personnel force DOES NOT necessarily or even o
rdinarily refers to duplication of work. That no other person was holding the s
ame position that an employee held prior to the termination of his services, does
NOT show that his position had not become redundant. (in a well organized corp.
hardly would there be any duplication of work/ 2 persons doing the same work)
Redundancy , for the purposes of the Labor Code, exists where the servic
es of an employee are in excess of what is reasonably demanded by the actual req
uirements of the enterprise. A position is redundant where it is superfluous, a
nd superfluity of a position(s) may be the outcome of a number of factors like o
ver-hiring of workers, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the e
nterprise.
Lopez Sugar v. FFW, 189 SCRA 179
Lopez Sugar filed an application to retrench (27) and retire (56) some of its em
ployees to prevent losses due to major economic problems. It is doing so in exe
rcise of its privilege under its CBA.
Union contests the application saying that it is violative of security of
tenure of its members and that to justify retrenchment, there should be serious
business reverses it must be actual, real and amply supported by sufficient and
convincing evidence.
Court has enumerated four standard of justification of retrenchment:
1. The losses expected should be substantial and not merely de minimis in extent
.
2. The substantial loss apprehended must be reasonable imminent, and such immine
nce can be perceived objectively and in good faith by the employer.
3. Because the consequential nature of retrenchment, it must, be reasonably nece
ssary and likely to effectively prevent the expected losses. The employer shoul
d have taken other measures prior or parallel to retrenchment to forestall losse
s. (i.e., cut other costs than labor costs)
4. The alleged losses if already realized, and the expected imminent looses soug
ht to be forestalled, must be proven by sufficient and convincing evidence.
Whether an employer would imminently suffer serious or substantial losses
for economic reasons is essentially a question of fact for the L.A. and NLRC to
determine. In this case, no audited financial statements were showing financia
l condition of petitioner corporation were presented. Company made a passing ref
erence to cast reduction measures it had allegedly undertaken. It failed to spe
cify the cost reduction measures actually undertaken in goodfaith. It asked som
e 110 casual workers to register after reducing its workforce.
Del Mar Domestice Ent. v. NLRC, 282 SCRA 602
Complainants were dismissed by the Company during the strike for alleged abandon
ment of work. The complainants protets that they were only verbally informed th
at their services were no longer needed and that they were considered dismissed
from work. They now seek moral and exemplary damamges.
Company invokes that the strike was in gross violation of CBA provision.
It also claimed that during the height of the strike, a fire of undtermined ori
gin razed to the ground about 70% of the company s premises rendering the factory
useless and inoperable.
The Labor Arbiter and NLRC ruled that the employees are entitled to separ
ation pay. Company claims that employees are not entitled to separation pay beca
use the abandoned their work.
SC: Ees entitled to Separation Pay because (1) No abandonment - Ees have
no intent to sever employement and (2) Serious Business Losses Not proven by co
mpany.
Abandonment as a valid cause for termination requires a deliberate, unjus
tified refusal of the employee to resume his employment. Failure to report for
work or absence without valid or justifiable reason does not constitute abandonm
ent if not coupled with a clear intention to sever the employer-employee relatio
nship. In this case, employees reported for work after the factory was burned, b
ut the company informed them to wait for the resumption of operations.
The company s contention that while the strike was in progress, the factory
building was razed by fire, was not sustained by the SC because such alleged seri
ous business losses sustained by company form the fire were not substantiated by
competent evidence. Financial statements audited by independent external audit
ors constitute the normal method of proof of the profit and loss performance of
a company.
Although the fire caused losses to company, it failed to show how such fi
re so affected the company s financial health that it had to close shop. To exemp
t an employer from the payment of separation pay, he or she must establish by s
ufficient and convincing evidence that the losses were serious, substantial and
actual.
Sebuguero v. NLRC, 248 SCRA 532
38 regular employees of GTI Sportswear were given temporary lay-off notices due
to aleged lack of work and havy losses cause by the cancellation of orders from
abroad and by the garments embargo of 1990.
SC: Article 283 of the Labor Code which covers retrenchment speaks of permanent
retrenchment as opposed to temporary lay-off as in this case. There is no spec
ific provision of law which treats of a temporary retrenchment or lay-off and pr
ovides for the requisites in effecting it or a period or duration therefor
To remedy this situation, Art. 286 may be applied but only by analogy to
set a specific period that employees may remain temporarily laid-off or in floa
ting status. Six months is the period set by law that the operation of a busine
ss or undertaking may be suspended thereby suspending the employment of the empl
oyees concerned.
The temporary lay-off wherein the employees likewise cease to work shoul
d also not last longer than 6 months. After six months, the employees should ei
ther be recalled to work or permanently retrench following the requirements of t
he law, and that failing to comply with this could be tantamount to dismissing t
he employees.
Under Art 283 of the Labor Code, there are 3 basic requirements for a va
lid retrenchment:
1. Retrenchment is necessary to prevent losses and such losses are proven.
2. Written notice to the employees and to the DOLE at least one month prior to t
he intended date of retrenchment;
3. Payment of separation pay equivalent to one month pay or at least month pay f
or every year of service. Whichever is higher.
Lack of written notice to employees and to DOLE does not make retrenchmen
t illegal such that they are entitled to the payment of backwages and separation
pay in lieu of reinstatement as they contend. It merely makes retrenchment def
ective.
Illegal retrenchment is when it is not proven that there s imminent and act
ual serious losses or substantial losses this entitles employees to reinstatemen
t and backwages.
Edge Apparel v. NLRC, 286 SCRA 302
Article 284 provides that an employer would be authorized to terminate the servi
ces of an employee found to be suffering from any disease if the employee s contin
ued employment is prohibited by law or is prjudicial to his health or tho the he
alth of his fellow employees.
The installation of labor-saving devices contemplates the installation o
f machinery to effect economy ad efficiency in the its method of production.
Redundancy exists where the services of an employee are in excess of wha
t whould reasonably be demanded by the actual requirements of the enterprise. A
position is redundant when it is superfluous, and superfluity of a position or
positions chould be the result of a number of factors, such as the overhiring of
workers, a decrease in the volume of business or the dropping of a particular l
ine or service previoulsy manyfactured or undertaken by the enterprise. An empl
oyer has no legal obligation to keep on the payroll employees more than the numb
er needed for the operation of the business. Retrenchment is, in many ways, a m
easure of last resort when other less drastic means have been tried and found to
be inadequate.
Retrenchment, in contrast to redundancy, is an economic ground to reduce
the number of employees. In order to be justified, the termination of employmen
t by reason of retrenchment must be due to business losses or reverses which are
serious, actual and real. Not every loss incurred or expected to be incurred b
y the employer will justify retrenchment, since, in the nature of things, the po
ssibility of incurring losses is constantly present, in greater or lesser degree
, in carrying on the business operations. Retrenchment is normally resorted by
management during periods of business reverses and economic difficulties occasio
ned by such events as recession, industrial depression, or seasonal fluctuations
.
Somerville Stainless Steel Corp. v. NLRC, 287 SCRA 420
The law recognizes the company s right to retrench employees when made necessary or
compelled by economic factors that would otherwise endanger its stability or e
xistence. Retrenchment is only a measure of last resort when other less drastic
means have been tried and found to be inadequate.
Anino vs. NLRC, 290 SCRA 489
Retrenchment is resorted to by an employer because of losses in the operation of
business occasioned by lack of work and considerable reduction in the volume of
business. It is a management prerogative consistently recognized and affirmed
by this Court, subject only to faithful compliance with the substantive and proc
edural requirements laid down by law and jurisprudence.
To justify retrenchment, the following requisites must be complied with: (
a) the losses expected should be substantial and not merely de minimis in exten
t; (b) the substantial losses apprehended must be reasonably imminent; (c) the
retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and (d) the alleged losses, if already incurred, and the expect
ed imminent losses sought to be forestalled must be proved by sufficient and con
vincing evidence.
In a nutshell, the law recognizes a company s right to retrench employees wh
en made necessary or compelled by economic factors that would otherwise endanger
its stability or existence. [R]etrenchment is only a measure of last resort when oth
er less drastic means have been tried and found to be inadequate.
Philippine Tuberculosis Society, Inc. V. National Labor Union, 294 SCRA 567
[Retrenchment is] an act of the employer of dismissing employees because of loss
es in the operation of a business, lack of work, and considerable reduction in t
he volume of his business, a right consistently recognized and affirmed by this
Court.
However, the employer s prerogative to layoff employees is subject to certa
in limitations set forth in Lopez Sugar Corporation v. Federation of Free Worke
rs as follows: Firstly, the losses expected should be substantial and not merel
y de minimis in extent. Itf the loss purportedly sought to be forestalled by ret
renchment is clearly shown to be insubstantial and inconsequential in character,
the bonafide nature of the retrenchment would appear to be seriously in questio
n. Secondly, the substantial loss apprehended must be reasonably imminent, as su
ch imminence can be perceived objectively and in good faith by the employer. The
re 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 liveliho
od 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 m
easures prior or parallel to retrenchment to forestall losses, i.e., cut other c
osts than labor costs. An employer who, for instance, lays off substantial numbe
rs 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 the constitutional meaning to the constitutional policy of pro
viding full protection to labor, the employer s prerogative to bring down labor cost
s by retrenching must be exercised essentially as measure of last resort, after
less drastic means---e.g., reduction of both management and rank and file bonuse
s and salaries, going on reduced time, improving manufacturing efficiencies, tri
mming of marketing and advertising costs---have been tried and found wanting. La
stly, but certainly not the least important, alleged losses if already realized,
and the expected imminent losses sought to be forestalled, must be proved by su
fficient and convincing evidence.
Retrenchment must be implemented in a just and proper manner. As held in
Asiaworld Publishing House, Inc. v. Ople: there must be fair and reasonable crit
eria to be used in selecting employees to be dismissed, such as: (a) less prefe
rred status; (b) efficiency rating (c) seniority.
Phil. Tobacco Flue-Curing and Redrying Corp. vs. NLRC, Dec. 10, 1998
Art. 283 of the Labor Code also requires the employer to furnish both the emplo
yee and DOLE a written Notice of Closure at least one month prior to closure. Tr
ue, in the present case the Notices of Termination were given to the employees o
n August 3, 1994, and the intended date of closure was September 15, 1994. Howev
er, the employees were in fact not allowed to work after August 3, 1994. Therefo
re, the termination notices to the employees were given in violation of the requ
isite one-month prior notice under Art. 283 of the Labor Code.
This Court has previously ruled in Manila Hotel Company v. CIR that seaso
nal workers who are called to work from time to time and are temporarily laid of
f during off-season are not separated form service in said period, but are merel
y considered on leave until re-employed, viz.: The nature of their relationshipx
x x is such that during off season they are re-employed, 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 without pay until they are re-employed
.
Valdez vs. NLRC, 286 SCRA 87
Under Art. 286 of the Labor Code, the bona fide suspension of the operation of a
business or undertaking for a period not exceeding 6 months shall not terminate
employment. Consequently, when the bona fide suspension of the operation of a b
usiness or undertaking exceeds 6 months, then the employment of the employee sha
ll be terminated. By the same token and applying said rule by analogy, if the em
ployee was forced to remain without work or assignment for a period exceeding 6
months, then he is in effect constructively dismissed.
The so-called floating status of an employee should last only for a legally
prescribed period of time. When that floating status of an employee lasts for mor
e than 6 months, he may be considered to have been illegally dismissed from serv
ice. Thus, he is entitled to the corresponding benefits for his separation, and
this would apply to the two types of work suspension heretofore noted, that is,
either of the entire business or of specific component thereof.
Resignation is inconsistent with the filing of a complaint of illegal dis
missal.
Resignation is defined as the voluntary act of an employee who finds himself in
a situation where he believes that personal reasons cannot be sacrificed in favo
r of the exigency of the service, and, that he has no other choice but to disass
ociate himself from his employment. Resignation is a formal pronouncement of rel
inquishment of an office. It must be made with the intention of relinquishment t
he office accompanied by an act of relinquishment.
Sentinel Security Agency, Inc. vs. NLRC, 295 SCRA 123
Being sidelined temporarily is a standard stipulation in employment contracts, a
s the availability of assignment for security guards is primarily dependent on t
he contracts entered into by the agency with third parties. Most contracts for s
ecurity services, as in this case, stipulate that the client may request the rep
lacement of the guards assigned to it. In security agency parlance, being placed
off detail or on floating status means waited to be posted. This circumstance is no
t equivalent to dismissal, so long as such status does not continue beyond a rea
sonable time.
Abandonment, as a just and valid cause for termination, requires a delibe
rate and unjustified refusal of an employee to resume his work, coupled with a c
lear absence of any intention of returning to his or her work. Abandonment has
recently been ruled to be incompatible with constructive dismissal.
A floating status requires dire exigency of the employer s bona fide suspen
sion of operation, business or undertaking. In security services, this happens w
hen the clients that do not renew their contracts with a security agency are mor
e than those that do and the new ones that the agency gets.
Asian Alcohol Corp vs. NLRC, 305 SCRA 416
The condition of business losses is normally shown by audited financial document
s like yearly balance sheets and profit and loss statements as well as annual in
come tax returns. It is our ruling that financial statements must be prepared an
d signed by independent auditors It is necessary that the employer also show that
its losses increased through a period of time and that the condition of the comp
any is not likely to improve in the near future.
Redundancy exists when the service capability of the work force is in ex
cess of what is reasonably needed to meet the demands on the enterprise. A redu
ndant position is one rendered superfluous by any number of factors, such as ove
rhiring of workers, decreased volume of business, dropping of particular product
line previously manufactured by the company or phasing out of a service activit
y priorly undertaken by the business. Under these conditions, the employer has n
o legal obligation to keep in its payroll more employees than are necessary for
the operation of its business.
Requisites for the implementation of a redundancy program:
1. Written notice served on both the employees and the DOLE at least one month p
rior to the intended date of retrenchment;
2. Payment of separation pay equivalent to at least one month pay or at least m
onth pay for every year of service, whichever is higher;
3. Good faith in abolishing the redundant positions; and
4. Fair and reasonable criteria in ascertaining what positions are to be declar
ed redundant and accordingly abolished
Chniver Deco vs. NLRC, GR 122876, February 17, 2000
The company relocated from Makati to Batangas, in view of the expiration of its
lease of the land in Makati. It was informed by the employees that they did not
want to work in Batangas. The company told them to report at the new site within
seven days lest they be considered to have lost interest in their work, and wil
l be replaced. Employees filed for illegal dismissal. Labor arbiter and NLRC fou
nd that dismissal was not illegal, but awarded separation pay, which the company
contests. The company says that the employees should be deemed to have voluntar
ily resigned from their jobs, and the transfer of business is not tantamount to
closure nor retrenchment.
Held: Separation pay awarded. The transfer of business amounts to a cessation of
the business in Makati. Art. 283 of the Labor Code pertains to both complete ce
ssation of all business operations and the cessation of only a part of the compa
ny s business. This exercise of management prerogative to transfer is due to a rea
son beyond the company s control, but still it must pay to afford the employees so
me relief.
NFL V. NLRC, 327 SCRA 158
Petitioners are employees of Patalon Coconut Estate (PCE)in Zamboanga City. Due
to the passage of the Comprehensive Agrarian Reform Law, the PCE was awarded to
PEARA, a cooperative accredited by the Dept. of Agraraian Reform, and of which t
he petitioners are members and co-owners. As a result, the employers shut down t
he operation of PCE but did not award any separation pay.
Held: Petitioners NOT entitled to separation pay. The closure envisaged by Art.
283 of the Labor Code is one pursuant to a unilateral and voluntary act of the e
mployer. Art. 283 does not contemplate a situation where the closure of the bus
iness is forced upon the employer and ultimately for the benefit of the employee
s.
Hence, no separation pay is awarded where the closure was due to the act
of the government, a compulsory acquisition for purposes of agrarian reform, wh
ere the petitioners themselves are made the agrarian lot beneficiaries.

C. CONSEQUENCES OF DISMISSAL
Capili v NLRC, 270 SCRA 488
Facts: Upon assumption of ownership and operation of public utility jeepneys, C
apili required the drivers to sign individual contracts of lease of the jeeps to
formalize their lessor-lessee relationship. However, having gathered the impres
sion that the signing of the contract of lease was a condition precedent before
they could continue driving for Capili, all the drivers stopped plying their ass
igned routes. Thereafter, they filed a complaint for illegal dismissal and praye
d for the grant of separation pay.
Held: The drivers are not entitled to separation pay. The legal basis for the a
ward of separation pay is clearly provided by Art. 279 of the Labor Code which s
tates that the remedy for illegal dismissal is reinstatement without loss of sen
iority rights plus backwages. However, there may be instances where reinstatemen
t is not a viable remedy as where the relations between employer and employee ha
ve been so severely strained that it is no longer advisable to order reinstateme
nt or where the employee decides not to be reinstated. In such events, the emplo
yer will instead be ordered to pay separation pay. But the award of separation p
ay cannot be justified solely because of the existence of strained relations betwe
en the employer and the employee. It must be given to the employee only as an al
ternative to reinstatement emanating from illegal dismissal. When there is no il
legal dismissal, even if the relations are strained, separation pay has no legal
basis. In the case at bar, there was no dismissal at all.
Bustamante v NLRC, 265 SCRA 61
Facts: In this case, the company is questioning the decision of the Court granti
ng backwages to its illegally dismissed employees computed from the time of thei
r illegal dismissal up to the date of their reinstatement. The company is insist
ing that salary earned elsewhere by the employees should be deducted from the aw
ard of backwages.
Held: The SC held that backwages to be awarded to an illegally dismissed employ
ee should not as a general rule, be diminished or reduced by the earnings derive
d by him elsewhere during the period of his illegal dismissal. The underlying re
ason for this ruling is that the employee, while litigating the legality/illegal
ity of his dismissal, must still earn a living to support himself and his family
while full backwages have to be paid by the employer as part of the price or pe
nalty he has to pay for illegally dismissing his employee. The clear legislative
intent of the amendment in RA 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the deduction of earnings e
lsewhere rule. A closer adherence to the legislative policy behind RA 6715 points
to full backwages as meaning exactly that, i.e., without deducting from backwages
the earnings derived elsewhere by the concerned employee during the period of h
is illegal dismissal. Thus, petitioners are entitled to their full backwages, in
clusive of allowances and other benefits or their monetary equivalent, from the
time their actual compensation was withheld from them up to the time of their ac
tual reinstatement.
Wenphil Corp. v NLRC, 170 SCRA 69
Facts: Mallare was dismissed after having an altercation with a co-employee. The
petitioner company failed to give Malare the benefit of a hearing before he was
dismissed.
Held: The Supreme Court held that although the dismissal of Mallare is warrant
ed as it was based on a just cause provided by the labor code, such dismissal is
still considered as illegal because of the failure of the petitioner company to
observe due process in effecting such dismissal. However, the employee should n
ot be reinstated because of non-compliance with the procedural requirements. The
employer cannot be forced to retain the services of an employee who has committ
ed a just cause for dismissal. But there must be a penalty for violation of the
right to procedural due process. The Supreme Court awarded damages in the amount
of P1,000 in this case.
Serrano v NLRC, GR 117040, January 27, 2000 & May 4, 2000
Facts: The employee in this case was dismissed for an authorized cause. However
, the requirement of due process was not observed by the employer in effecting t
he dismissal.
Held: The Supreme Court held that the dismissal is still illegal despite the
fact that it is based on an authorized cause. This is because of the employer s fa
ilure to observe the requirement of due process in effecting the dismissal. Howe
ver, the Supreme Court held that the employee is still not entitled to reinstate
ment because of the presence of the authorized cause. But the Court awarded full
backwages from the time of dismissal up to the finality of the decision plus se
paration pay.
Reahs Corp. v NLRC, 271 SCRA 247
Facts: Reahs Corporation closed its business allegedly due to poor business. Its
employees filed a case for illegal dismissal and demanded for separation pay. Th
e Labor Arbiter dismissed the case for illegal dismissal but upheld the claims f
or separation pay. Reahs Corporation is contending that Art. 283 exempts establis
hments from payment of separation pay when the closure of the business is due to
serious business losses or financial reverses.
Held: The dismissed employees are entitled to separation pay. The grant of separ
ation pay, as an incidence of termination of employment under Art. 283, is a sta
tutory obligation on the part of the employer and a demandable right on the part
of the employee, except only where the closure or cessation of operations was d
ue to serious business losses or financial reverses and there is sufficient proo
f of this fact or condition. In the absence of such proof of serous business los
ses or financial reverses, the employer closing his business is obligated to pay
his employees and workers their separation pay. In the case at bar, the corpora
tion s alleged serious business losses and financial reverses were not amply shown
or proved.
Asionics Phils. v NLRC, 290 SCRA 164
Facts: Asionics Phils. implemented a company-wide retrenchment affecting 105 emp
loyees from a workforce that totaled 304. Among the employees who were dismissed
were Boaquina and Gayola. They joined Lakas Union which staged a strike against
Asionics Phils. The Labor Arbiter declared the strike illegal, but declared tha
t the separation pay of the striking members as valid under the company-wide ret
renchment program. The company is contending that the striking employees should
not be entitled to separation pay because of their involvement in the strike whi
ch was declared illegal.
Held: The employees are entitled to separation pay. The termination of employme
nt of the striking employees was due to the retrenchment policy adopted by the c
ompany and not because of their union activities. It should suffice to say that
the retrenchment of the employees has, in fact, preceded the declaration of stri
ke.
The Court also held that Frank Yih, the President and majority stockholde
r of the company cannot be held personally liable as nothing on record is shown
that he has acted in bad faith or with malice in carrying out the retrenchment p
rogram of the company.
PNCC v NLRC, 286 SCRA 329
Facts: The private respondent in this case is a carpenter who is part of a regul
ar work pool of the petitioner company. Sometime in 1979, private respondent wor
ked in petitioner s project in the Middle East, with a salary of $2.20 per hour. U
pon completion of the project in 1984, private respondent returned to the Philip
pines. Petitioner then failed to give him work in its local projects. Thereafter
, private respondent sued for illegal dismissal. NLRC ordered the reinstatement
of private respondent to his former position and the payment of his backwages fo
r 3 years. This order was affirmed by the SC which ordered the case to be remand
ed to the Labor Arbiter for the computation of backwages. Petitioner is now ques
tioning the basis of the computation of the backwages (in computing the backwage
s, NLRC used private respondent s salary rate in the Middle East). It claimed that
private respondent s backwages should not be based on his salary abroad since his
overseas employment contract was for a definite term and that the project cover
ed by the said contract had been completed in 1984. It submitted its own computa
tion of private respondent s backwages based on the latter s local wage rate at the
time of his transfer to the overseas project.
Held: The basis of computation of private respondent s backwages should have been
the local wage rate at the time of his transfer to the overseas project and not
his overseas rate. An illegally dismissed employee is usually reinstated to his
former position without loss of seniority rights and paid backwages from the ti
me he was separated from work up to his actual reinstatement. The purpose of the
reinstatement is to restore the employee to the state or condition from which h
e has been removed or separated. Backwages aim to replenish the income that was
lost by reason of the unlawful dismissal. In the case at bar, records show that
private respondent was not illegally dismissed while working in the Middle East
project of the petitioner. His overseas assignment was a specific project and fo
r a definite period. Thus, when private respondent prayed for reinstatement, he
meant reinstatement to his position as a regular member of petitioner s work pool.
If private respondent were given local assignments after his stint abroad, he w
ould have received the local wage. This is the loss which backwages aim to restore
.
Dela Cruz v NLRC, Nov. 20, 1998
Facts: The petitioner in this case is questioning the decision of the Labor Arb
iter and NLRC refusing the award of backwages to the latter despite a finding of
illegal dismissal.
Held: The Labor Arbiter and the NLRC committed grave abuse of discretion in ref
using to award backwages to petitioner simply because the latter did not ask for
such relief in his complaint. The award of backwages resulting from the illegal
dismissal of an employee is a substantive right. Failure to claim backwages in
a complaint for illegal dismissal has been held to be a mere procedural lapse wh
ich cannot defeat a right granted under substantive law.
Quijano v Mercury Drug Corp, 292 SCRA 109
Facts: Quijano was a warehouseman of Mercury Drug. He has been working for the
company for 8 yrs. Records show that his working performance was good during thi
s entire period. Sometime in 1990, he exposed the existence of a five-six loan sys
tem in their workplace operated by some of its officers. He then incurred the ir
e of Altavano, the company s manager, who operated usurious transactions. Quijano
was charged with violations of company policies. Thereafter, he was terminated.
He filed an illegal dismissal case against the company. The Labor Arbiter ruled
that Quijano was indeed illegally dismissed and ordered the latter s reinstatement
. On appeal, the NLRC affirmed the finding of illegal dismissal, but ordered tha
t Quijano be given separation pay in lieu of reinstatement. Quijano is now quest
ioning the decision of the NLRC with regard to the order of payment of separatio
n pay in lieu of reinstatement.
Held: Quijano should be reinstated. Well-entrenched is the rule that an illega
lly dismissed employee is entitled to reinstatement as a matter of right. Case l
aw, however, developed that where reinstatement is not feasible, expedient or pr
actical, as where reinstatement would only exacerbate the tension and strained r
elations between the parties, or where the relationship between the employer and
employee has been unduly strained by reason of their irreconcilable differences
, it would be more prudent to order payment of separation pay instead of reinsta
tement. The doctrine of strained relations , however, should be strictly applied so
as not to deprive an illegally dismissed employee of his right of reinstatement
. In the case at bar, the company s charges of misbehavior against Quijano cannot
serve as basis to justify the latter s dismissal, let alone his non-reinstatement.
The antagonism was caused substantially, if not solely, by the misdeeds of the
company s superiors. The Arbiter found that the charges against Quijano were false
and were merely filed by his superiors against him to punish him for exposing t
heir usurious loan operations. Hence, to deny Quijano reinstatement due to the st
rained relations with his accusers whose charges were found to be false would res
ult in rewarding the accusers and penalizing Quijano.
Fernandez v NLRC, 289 SCRA 433
Facts: In his decision, the labor arbiter granted varying amounts of service in
centive leave pay to the petitioners based on the length of their tenure (the sh
ortest was six years and the longest was thirty-three years). The solicitor gene
ral recommended that the award of service incentive leave be limited to three ye
ars.
Held: The award of service incentive leave should not be limited to three year
s. The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Service incentive l
eave is a right which accrues to every employee who has served within 12 months,
whether continuous or broken reckoned from the date the employee started working
, including authorized absences and paid regular holidays unless the working day
s in the establishment as a matter of practice or policy, or that provided in th
e employment contracts, is less than 12 months, in which case said period shall
be considered as one year. It is commutable to its money equivalent if not used o
r exhausted at the end of the year. Thus, to limit the award to three years is t
o unduly restrict such right. Since a service incentive leave is clearly demanda
ble after one year of service or its equivalent period, and it is one of the ben
efits which would have accrued if an employee was not otherwise illegally dismis
sed, it is fair and legal that its computation should be from the date of illega
l dismissal up to the date of reinstatement.
Equitable v NLRC, 273 SCRA 352
Facts: Atty. Sadac was appointed vice-president for the legal department of the
petitioner bank. He was also designated as the bank s general counsel. Sometime l
ater, nine of the lawyer s of the bank s legal department addressed a letter to the
chairman of the board of directors of the bank accusing Atty. Sadac of abusive c
onduct, inefficiency, mismanagement and indecisiveness. The charge was investiga
ted and on the basis of the findings, a memo was sent to Atty. Sadac asking him
to voluntarily resign. He asked for a full hearing but was not granted. Thus, he
filed a complaint against the bank for illegal dismissal and damages.
Held: There was illegal dismissal in this case. The dismissal was without just
cause and there was no notice and hearing. However, the Supreme Court held tha
t Atty. Sadac is not entitled to moral and exemplary damages. Moral damages are
recoverable when the dismissal of an employee is attended by bad faith or fraud
or constitutes an act oppressive to labor, or is done in a manner contrary to go
od morals, good customs or public policy. Exemplary damages may be awarded if th
e dismissal is effected in a wanton, oppressive or malevolent manner. In this ca
se, the Court is of the considered view that petitioners have not motivated by m
alice or bad faith nor have they acted in wanton, oppressive or malevolent manne
r such as to warrant a judgment against them for moral and exemplary damages. Ma
lice or bad faith implies a conscious and intentional design to do a wrongful ac
t for a dishonest purpose or moral obliquity; it is different from the negative
idea of negligence in that malice or bad faith contemplates a state of mind affi
rmatively operating with furtive design or ill will.
Millares v NLRC, 305 SCRA 500
Facts: In this case, petitioners were retrenched to prevent losses. They are no
w contending the decision of the NLRC holding that the Staff/Manager s transportat
ion and Bislig allowances did not form part of the salary base used in computing
the separation pay of petitioners.
Held: The Supreme Court held that the decision of the NLRC is correct. Separat
ion pay when awarded to an illegally dismissed employee in lieu of reinstatement
or to a retrenched employee should be computed based not only on the basic sala
ry but also on the regular allowances that the employee had been receiving. The
Supreme Court, however, held that the disputed allowances were not regularly rec
eived by the petitioners in this case. The receipt of an allowance on a monthly
basis does not ipso facto characterize it as regular and forming part of salary
because the nature of the grant is a factor worth considering. The Supreme Court
agree with the observation of the Office of the Solicitor General that the subj
ect allowances were temporarily, not regularly, received by petitioners because:
1. In the case of the housing allowance, once a vacancy occurs in the company-pr
ovided housing accommodations, the employee concerned transfers to the company p
remises and his housing allowance is discontinued
2. The transportation allowance is in the form of advances for actual transporta
tion expenses subject to liquidation and given only to employees who have person
al cars
3. The Bislig allowance is given to Division Managers and corporate officers ass
igned in Bislig, Surigao del Norte. Once the officer is transferred outside Bisl
ig, the allowance stops
Thus, the petitioners continuous enjoyment of the disputed allowances was
based on contingencies the occurrence of which wrote finis to such enjoyment.
Phil. Aeolus v NLRC, 331 SCRA 237
Facts: Cortez filed a case of illegal dismissal against the petitioner company.
In her complaint, she also prayed for damages in the event that the illegality
of her dismissal is sustained.
Held: The Supreme Court held that Cortez was indeed illegally dismissed and th
at she is entitled to moral and exemplary damages. Anxiety was gradual in Cortez s
five-year employment. It began when her plant manager showed an obvious partial
ity for her which went out of hand when he started to make it clear that he woul
d terminate her services if she would not give in to his sexual advances. Sexual
harassment is an imposition of misplaced superiority which is enough to dampen an
employee s spirit in her capacity for advancement. It affects her sense of judgme
nt; it changes her life. If for this alone Cortez should be adequately compensat
ed. Thus, for the anxiety, the seen and unseen hurt that she suffered, petitione
rs should also be made to pay her moral damages, plus exemplary damages, for the
oppressive manner with which petitioners effected her dismissal from the servic
e, and to serve as a forewarning to lecherous officers and employers who take un
due advantage of their ascendancy over their employees.
PNCC v NLRC, 307 SCRA 218
Facts: Private respondents in this case were dismissed for serious misconduct. H
e is now contending that he is entitled to separation pay and mid-year bonus.
Held: The Supreme Court held that they are not entitled to separation pay and
mid-year bonus. An employee who is dismissed for just cause is generally not ent
itled to separation pay. In some cases, however, the Court awards separation pay
to a legally dismissed employee on the grounds of equity and social justice. Th
is is not allowed, though, when the employee has been dismissed for serious misc
onduct or some other cause reflecting on his moral character. Likewise, private
respondents are not entitled to the mid-year bonus they are claiming. The Suprem
e Court does not agree with the Solicitor General s contention that private respon
dents have already earned their mid-year bonus at the time of their dismissal. A
bonus is a gift from the employer and the grant thereof is a management preroga
tive. Petitioner may not be compelled to award a bonus to private respondents wh
om it found guilty of serious misconduct.
Philippine Tobacco Flue-Curing v NLRC, 300 SCRA 37
Facts: There are two groups of employees in this case, namely, the Lubat group
and the Luris group. The Lubat group is composed of petitioner s seasonal employee
s who were not rehired for the 1994 tobacco season. At the start of that season,
they were merely informed that their employment had been terminated at the end
of the 1993 season. They claimed that petitioner s refusal to allow them to report
for work without mention of any just or authorized cause constituted illegal di
smissal. In their Complaint, they prayed for separation pay, backwages, attorney s
fees and moral damages. On the other hand, the Luris group is made up of season
al employees who worked during the 1994 season. On August 3, 1994, they received
a notice informing them that, due to serious business losses, petitioner planne
d to close its Balintawak plant and transfer its tobacco processing and redrying
operations to Ilocos Sur. Although the closure was to be effective Sept. 15, 19
94, they were no longer all9owed to work starting August 4, 1994. Instead, petit
ioner awarded them separation pay computed according to the following formula:
total no. of days actually worked x daily rate x 15 days
total no. of working days in one year
In their Complaint, they claimed that the computation should be based not
on the above mathematical equation, but on the actual number of years served. I
n addition, they contended that they were illegally dismissed, and thus they pra
yed for backwages.
Held: The Supreme Court held that the Lubat group was indeed illegally dismiss
ed. The seasonal workers who are temporarily laid off during off-season are not
separated from service but merely considered on leave. Thus, petitioner should b
e responsible for the reinstatement of the Lubat group and the payment of their
backwages. However, since reinstatement is no longer possible as petitioner has
already closed its Balintawak plant, respondent members of the said group should
instead be awarded normal separation pay (in lieu of reinstatement) equivalent
to at least one month pay, or one moth pay for every year of service, whichever
is higher. It must be stressed that the separation pay being awarded tot he Luba
t group is due to illegal dismissal; hence, it is different from the amount of s
eparation pay provided for in Article 283 in case of retrenchment to prevent los
ses or in case of closure or cessation of the employer s business, in either of wh
ich the separation pay is equivalent to at least one (1) month or one-half (1/2)
month pay for every year of service, whichever is higher. With regard to the cl
aim of the Luris group, the Supreme Court held that the amount of separation pay
which seasonal workers should receive is one-half (1/2) their respective averag
e monthly pay during the last season they worked multiplied by the number of yea
rs they actually rendered service, provided that they worked for at least six mo
nths during a given year.
D. PREVENTIVE SUSPENSION; CONSTRUCTIVE DISMISSAL
Philippine Airlines, Inc. v. NLRC, 292 SCRA 40
PAL preventively suspended Castro for grave misconduct after government authorit
ies apprehended him for violating a CB Circular. An investigation was conducted
and after 3 years & 6 months of suspension, PAL issued a resolution finding him
guilty but nonetheless reinstating him explaining that the period within which h
e was out of work shall serve as his penalty for suspension. Upon reinstatement,
Castro filed a claim against PAL for backwages and salary increases granted und
er the CBA covering the period of his suspension.
Issue: Whether an employee who has been preventively suspended beyond the maximu
m 30-day period is entitled to backwages and salary increases granted under the
CBA during the period of his suspension.
Held: YUP. Under 3 & 4, Rule XIV of the Omnibus Rules, a preventive suspension sh
all not exceed 30 days, after which the employee must be reinstated to his forme
r position. If the suspension is extended, the employee shall be entitled to his
salaries and other benefits that may accrue to him during the period of such su
spension.
Manila Doctors Hospital v. NLRC, 135 SCRA 262
Macatubal, admitting his guilt for the loss of x-ray films at the Manila Doctors
Hospital (MDH), implicated co-employees Cantor and Pepito. MDH suspended the la
tter and filed an application with the NLRC for clearance to terminate them.
Issue: Whether there was justification for the preventive suspension of Cantor a
nd Pepito.
Held: NONE. Preventive suspension can only be imposed if the continued employmen
t of the employee poses a serious and imminent threat to the life or property of
the employer or his co-employees. Any preventive suspension before the filing o
f the application for clearance shall be considered working days and shall be du
ly paid if the continued presence of the employee concerned does not pose a seri
ous threat to the life and property of the employer or of his co-employees. Here
, there was no such threat. It was only Macatubal who admitted responsibility fo
r the loss and in fact, the fiscal s office ordered the dismissal of the case file
d against Cantor and Pepito. Notwithstanding, MDH withheld the salaries of the l
atter. Thus, the latter are entitled to 50% of backwages from time of suspension
to finality of decision.
Phil. Japan Active Carbon Corp. v. NLRC, 171 SCRA 164
Olga, an Executive Secretary to the Executive VP and General Manager was transfe
rred to the Production Department as Production Secretary. Said transfer was nei
ther with reason or notice, nor however was it with a change in salary and workl
oad.
Issue: Whether Olga was constructively dismissed.
Held: Nope. A constructive discharge is a quitting because continued employment
is rendered impossible, unreasonable, or unlikely; as, an offer involving a demo
tion in rank and a diminution in pay. Here, Olga s assignment as Production Secret
ary was not unreasonable as it did not involve a demotion in rank (her rank was
still that of a dept. secretary) nor a change in workplace (the office is in the
same building) nor a diminution in pay, benefits, and privileges.
It is the employer s prerogative to move its employees where they will be m
ost useful. Security of tenure does not give an employee a vested right to his p
osition as would deprive the employer of this prerogative. A transfer using this
prerogative is not tantamount to constructive dismissal if such is not unreason
able, inconvenient, or prejudicial, or if it does not involve a demotion in rank
, or a diminution of salaries, benefits and other privileges.
Singa Ship Management Phils. v. NLRC, 288 SCRA 692
Sangil worked on board the cruise vessel Crown Odyssey. A heated argument with a
Greek steward resulted to an altercation where Sangil suffered a scalp injury.
While Sangil was confined in a nearby hospital, the ship left without him. The a
ffidavit he executed before the Philippine Consul revealed that the Greek crew c
ontinuously ridiculed and even threatened him. He was then, repatriated.
Issue: Whether there was constructive dismissal.
Held: YUP. Constructive dismissal exists when there is a quitting because conti
nued employment is rendered impossible, unreasonable or unlikely. It does not al
ways involve diminution; an act of clear discrimination, insensibility, or disda
in by an employer may become so unbearable on the part of the employee that it c
ould foreclose any choice by him except to forego his continued employment.
Here, Sangil quit because he feared for his life and his fear was well fo
unded. The intense undercurrent between the Filipinos and the Greeks that could
erupt into violence at the slightest provocation was apparent. Also, Sangil coul
d not get any protection from the Greek ship captain, not even the slightest ass
urance of safety from him. Thus, Sangil s decision to leave was not voluntary but
impelled by the legitimate desire for self-preservation.
Leonardo v. NLRC, 333 SCRA 589
At Reynaldo s Marketing Corporation, Fuerte was a supervisor receiving P122 a day,
augmented by a weekly supervisor s allowance. Fuerte was later transferred to the
Sucat plant for failure to meet his sales quota and his allowance was withdrawn
. He thus filed a complaint for illegal dismissal.
Issue: Whether there was constructive dismissal.
Held: NOPE. An employer acts well within its rights in transferring an employee
as it sees fit provided there is no demotion in rank or diminution in pay. The t
wo circumstances are deemed badges of bad faith, and thus constitutive of constr
uctive dismissal.
Here, although the transfer was undertaken beyond the parameters above-me
ntioned, the employer does not deny that it was really demoting Fuerte but, for
cause. It should be borne in mind that the right to demote an employee also fall
s within the category of management prerogatives. An employer is entitled to imp
ose productivity standards for its workers, and in fact, non-compliance may be v
isited with a penalty even more severe than demotion.
E. DISEASE
Tan v. NLRC, 271 SCRA 216
Ibutnandi was dismissed because he failed to present a medical certificate from
a government doctor certifying that he was already cured of pulmonary tuberculos
is (PTB), hence, already fit to work.
Issue: Whether Ibutnandi was validly dismissed.
Held: NOPE. It undeniable that Ibutnandi became afflicted with PTB and that unde
r Art. 284 of the Labor Code, an employer may terminate the services of his empl
oyee found to be suffering from any disease and whose continued employment is pr
ohibited by law or is prejudicial to his health as well as to that of his co-emp
loyees. However, the fact that an employee is suffering from such a disease does
not ipso facto make him a sure candidate for dismissal.
It is only where there is a prior certification from a competent public a
uthority that the disease is of such nature or at such stage that it cannot be c
ured within 6 months even with proper medical treatment that the employee could
be validly terminated.
Here, there is absolutely nothing to show that the employer obtained such
certification. Rather, it was Ibutnandi who presented a certificate from a doct
or certifying that he was already fit to return to work. The employer rejected t
his and insisted that Ibutnandi present one issued by a government physician. Ac
cording to the Rules, the burden is on the employer, not the employee, to justif
y dismissal with a certificate from public authority that the disease is not cur
able within 6 months. Hence for failure of the employer to present one, dismissa
l was not valid.
F. RETIREMENT
REPUBLIC ACT NO. 7641
AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWIS
E KNOWN AS THE LABOR CODE OF THE PHILIPPINES, BY PROVIDING FOR RETIREMENT PAY TO
QUALIFIED PRIVATE SECTOR EMPLOYEES IN THE ABSENCE OF ANY RETIREMENT PLAN IN THE
ESTABLISHMENT
Sec. 1. Article 287 of Presidential Decree No. 442, as amended, otherwis
e known as the Labor Code of the Philippines, is hereby amended to read as follo
ws:
Art. 287. Retirement. Any employee may be retired upon reaching the retir
ement age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such reti
rement benefits as he may have earned under existing laws and any collective bar
gaining agreement and other agreements: Provided, however, That an employee s reti
rement benefits under any collective bargaining and other agreements shall not b
e less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years i
n the said establishment, may retire and shall be entitled to retirement pay equ
ivalent to at least one-half (1/2) month salary for every year of service, a fra
ction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th m
onth pay and the cash equivalent of not more than five (5) days of service incen
tive leaves.
Retail, service and agricultural establishments or operations employing no
t more than (10) employees or workers are exempted from the coverage of this pro
vision.
Violation of this provision is hereby declared unlawful and subject to the
penal provisions provided under Article 288 of this Code.
Sec. 2. Nothing in this Act shall deprive any employee of benefits to wh
ich he may be entitled under existing laws or company policies or practices.
Sec. 3. This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in at least two (2) national newspapers o
f general circulation, whichever comes earlier.
Approved: December 9, 1992
PSVSIA v. NLRC, 271 SCRA 209
Federico worked for PVSIA as a security guard for 23 years. When he turned 60, h
e tendered his letter of resignation citing as his reasons his physical disability
to perform his duties and desire to spend the rest of his life in the province.
He later sought termination pay corresponding to his years of service, or retir
ement pay. PVSIA rejected Federico s claim.
Issue: Whether Federico is entitled to the benefits of RA 7641.
Held: NO. R.A 7641, enacted as a labor protection measure and as a curative stat
ute, applies to labor contracts still existing at the time the statute took effe
ct. Its benefits can be reckoned retroactively to the time the employment contra
ct started. However, two circumstances must concur: (1) the claimant was still t
he employer s employee at the effectivity of the statute; (2) the claimant complie
s with the requirements for eligibility under the statute for such retirement be
nefits.
Here, only the second circumstance exists. Prior to the effectivity of RA 7641,
Federico already severed his employment with PVSIA when he tendered his letter of
resignation . In fact the issue before the NLRC was not the existence of the empl
oyer-employee relationship between the parties; rather, considering the cessatio
n of his service, whether he was entitled to monetary awards.
Aquino v. NLRC, 206 SCRA 118
Petitioners services were terminated on the ground of retrenchment. They receivd
separation pay double than required by the Labor Code. Later, they demanded reti
rement benefits invoking the retirement plan of the company.
Issue: Whether receipt of separation pay precludes a claim for retirement benefi
ts.
Held: Not necessarily. Provided the CBA does not contain a provision prohibiting
the receipt of both termination and retirement pay, an employee is entitled to
both. Here, both the CBA and the Retirement Plan contain no such prohibition. He
nce, petitioners should get retirement benefits in addition to separation pay. A
lthough the company paid separation pay double than that required by law, this g
enerosity does not excuse it from paying retirement benefits because petitioners
are not pleading for generosity but are demanding their rights embodied in the
CBA. When the employer signed the CBA, it recognized the rights of the workers a
nd did not merely concede certain privileges to them out of generosity.
Producers Bank v. NLRC, 298 SCRA 517
Producers Bank was placed under a conservator. The bank s employees then demanded
from the conservator the implementation of the CBA provisions on retirement. The
bank objected and a deadlock ensued. The employees filed a complaint for ULP an
d violations of the CBA. The bank countered that the employees have already reti
red thus, there was no more employer-employee relationship and therefore, the em
ployees had no personality to sue.
Issues:
1. Whether the conservator can refuse to implement the CBA provisions on retirem
ent.
2. Whether the employees have no personality to sue.
Held: NO to both.
1. A conservator cannot post-facto repudiate perfected transactions in violation
of the non-impairment clause of the Constitution. He can only revoke contracts
that are deemed to be defective. Since he cannot rescind valid contracts, and si
nce the CBA is the law between the parties; the conservator cannot disallow the
implementation of the CBA provisions on retirement considering that the ideals o
f social justice and labor protection are guaranteed not only by the Labor Code
but also by the Constitution.
2. Retirement does not in itself affect employment status, especially when it in
volves the rights and benefits due to an employee. The retirement scheme is part
of the employment package and the benefits therefrom constitute a continuing co
nsideration for services rendered as well as an inducement for remaining with th
e employer. Thus, when an employee has retired but his benefits under the law or
the CBA have not yet been given, he still retains, for the purpose of prosecuti
ng his claims, the status of an employee entitled to protection under the Labor
Code.
Capili v. NLRC, 273 SCRA 576
Capili, a school instructor was informed by his employer that under the school s r
etirement plan, it could retire him, arguing that the employee has the option on
ly in the absence of a retirement plan.
Issue: Whether an instructor of a private educational institution may be compell
ed to retire at the age of 60 years.
Held: Article 287 of the Labor Code provides for two types of retirement: compul
sory at the age of 65; and optional, which is primarily determined by the CBA, e
mployment contract, or employer s retirement plan. In the absence of any provision
on optional retirement in a CBA, etc., an employee may optionally retire at age
60 or more but not beyond 65 provided he has served at least 5 years in the est
ablishment concerned. That prerogative is exclusively lodged in the employee.
By accepting the retirement benefits, Capili is deemed to have opted to retire u
nder the 3rd paragraph of Art. 287. Thereunder, he could choose to retire upon a
ge 60, provided it is before the age 65. It is worth noting his statement that h
e had long been unjustly denied of his retirement benefits since Aug 18,1993. He
was entitled to retirement benefits as early as that date but was denied thereo
f without justifiable reason. This could only mean that he has already acceded t
o his retirement, effective on such date - when he reached the age of 60.
Progressive Development Corp. (PDC) v. NLRC, 344 SCRA 512
PDC s retirement plan provides that any participant with twenty years of service,
regardless of age, may be retired at his option or at the option of the company.
Pursuant to the plan, a number of employees were retired.
Issue: Whether the retirement program of the company is valid.
Held: Yes. The retirement plan under which the employees were retired is valid f
or it forms part of the employment contract of the company. In fact, the Bureau
of Working Conditions of the DOLE recognized the validity of the plan. The retir
ement plan now forms part of the employment contract since it is made known to t
he employees and accepted by them, and such plan has an express provision that t
he company has the choice to retire an employee regardless of age, with twenty y
ears of service, said policy is within the bounds contemplated by the Labor Code
. In addition, a number of employees had availed of the plan since its effectivi
ty; thus the plan has already been part of the employment contract of the compan
y.
G. RESIGNATION
Metro Transit Organization v. NLRC, 284 SCRA 308
Garcia, a station teller at Metro Transit, left work for a few weeks to look for
his missing family. Upon his return (he didn t find his family), he was advised b
y Metro to resign. Still weighed down by his serious family problem, he at once
prepared a resignation letter then left again to look for his family. Later, his
resignation was accepted.
Issue: Whether there was valid resignation.
Held: Metro Transit could have settled the problem of its employee and avoided l
itigation had it listened judiciously to the Garcia s explanation for his absences
. The objectives of social justice can be realized only if employers in appropri
ate situations extend their hand to their employees in dire need of help. The re
instatement of Garcia is in keeping with established jurisprudence. A terminatio
n without cause entitles a worker to reinstatement.
Philippines Today, Inc. v. NLRC, 267 SCRA 202
Alegre filed for a leave of absence citing medical reasons, which were not prove
d. He also wrote a memorandum containing all his grievances. He cleared his desk
of personal belongings, did not report back for work, and expressly manifested
his intention to resign. He, however, was not deprived of his chance to return t
o work.
Issues:
1. Whether Alegre resigned.
2. Whether he can unilaterally withdraw his resignation.
Held:
1. Yes. The facts establish that Alegre resigned.
2. No. Resignations, once accepted may not be withdrawn without the consent of t
he employer. If withdrawal is accepted, the employee retains his job. If not, th
e employee cannot claim illegal dismissal. An employer cannot backtrack on his r
esignation at his whim and without the conformity of his employer.
A resigned employee who wants his job back has to re-apply therefor, and
he shall have the status of a stranger who cannot unilaterally demand an appoint
ment. He cannot arrogate unto himself the same position which he earlier decided
to leave. To allow him to do so would be to deprive the employer of his basic r
ight to choose whom to employ. An employer is free to regulate, according to his
own discretion and judgement, all aspects of employment, including hiring.
LECTURE
Termination of Employee
Substantial requirements
What is the difference between just causes and authorized causes?
An authorized cause has nothing to do with acts allegedly committed by the emplo
yee. A just cause has something to do with and is precisely because of an act a
llegedly committed by the employee. This in turn will be used by the employer a
s a ground for termination.
Just causes
Serious Misconduct. A willful misconduct is not always serious. A misconduct i
s not necessarily a ground for termination. If it is not serious, the misconduc
t will not justify termination.
Willful Disobedience. It must be willful disobedience. It is characterized by
a perverse attitude. That the employee deliberately disobeyed the employer. Th
us if the employer issues an ambiguous order and the employee disobeyed the empl
oyer because he could not understand the order, that disobedience cannot be a ju
st cause for termination. There must be an intent to defy a lawful order of the
employer. The order must be related to his work.
True or False. As long as there is gross misconduct or willful disobedience com
mitted by an employee, there is valid ground for termination.
False. The serious misconduct or willful disobedience must be committed by an e
mployee in relation to his work.
Can an employee possibly commit a series of serious misconduct and yet not be te
rminated by the employer?
Yes. It must be in connection with his work or must affect his work.
Serious misconduct must be in relation to his work. It can be a fight which was
committed inside the premises but outside office hours. If the fight has nothi
ng to do with the work of the employees and if that fight did not interrupt, did
not disrupt the work and did not affect the working relationship of the employe
es in the performance of their job, then such misconduct will not amount to a va
lid ground for termination. But it is a misconduct. And it is serious, it inju
red. But you have to be careful with examples and illustration. It is not nece
ssary that the misconduct be committed within the premises of the employer. The
validity of the ground for termination based on misconduct is not determined by
the place of commission but by the effect of the misconduct on the work of the
employee. It can be committed outside the premises of the company, it can be co
mmitted outside office hours, but it can still affect the work of the employee o
r his performance of the job.
Why should the misconduct be related or in connection with the performance of th
e work? Because you are terminating the employee because he is no longer fit to
work and can no longer function effectively. And that is your reason for termi
nation. So if the misconduct of the employee, however serious in character, if
it has nothing to do, and it does not affect the performance of the work of the
employee, it will not affect the employer-employee relationship and therefore th
e employer should not have anything to do with that misconduct. That will not j
ustify termination. Thus it has the work or affect the performance of the work.
Even willful disobedience. It must affect the performance of the work. In sh
ort if the disobedience pertains to an order which has nothing to do with the pe
rformance of the work, then that disobedience, no matter how deliberate in chara
cter even if it amounts to defiance, has nothing to do with the performance of t
he work and therefore has nothing to do with the employer-employee relationship.
And therefore cannot justify termination by the employer. You have to go back
to the rationale why a particular ground is allowed to justify termination. Re
member that the general rule is you cannot terminate an employee, these should b
e considered as the exceptions these are the only grounds. And the exceptions s
hould be construed strictly and unless you fall under one exception, then you ca
nnot be considered as an exception. Of course, we are discussing a case here wh
ich is different from the other cases involving exceptions because in this case
we have a catch-all provision, saying that it may include other cases not specif
ically mentioned.
Gross misconduct and willful disobedience are two different grounds even if they
are stated in one sentence. So you do not need an order before you can have se
rious misconduct.
Gross and habitual negligence. Negligence means failure to exercise the diligen
ce required of the job and it is without regard to the consequences of your acti
on. Should the negligence be work-related? Yes, it must be neglect of duties.
Duties of an employee, not the duties of a good father or husband. So your neg
ligence which is not work-related will not be a ground for termination.
The negligence has to be gross and habitual. It should be a serious negligence
and must not be based on an isolated act but should be habitual in character. H
abitual means that there s a pattern of the negligent act.
Should the first offense of neglect of duties which is gross in character be sub
ject of disciplinary action? Yes. But not termination. We are not saying that
the first offense should be go unnoticed by the employer. We are not condoning
the offense of the employee which is connected to his work which is gross negli
gence in the performance of his duties. It should not go unpunished. What we a
re saying however is that the punishment could not amount to termination in that
first instance. Because the law says that the negligence should not only be gr
oss but also habitual. The law is clear. It says gross and habitual neglect.
You do not see that in misconduct. The misconduct only has gross. There is no
qualification that the misconduct should be also habitual.
There is no formula for habituality. You have to look at the circumstances. It
can be justified in some cases and not justified in other cases. The justifica
tion will also depend on the seriousness of the negligence. If the negligence i
s so serious and it was penalized the first time, the second offense may justify
termination. In short, management is not required to wait for a third offense.
But what is clear is that the first offense is not a valid ground for terminat
ion if the ground is negligence.
What is different between misconduct and negligence? We have to distinguish bet
ween misconduct and negligence because misconduct is a ground for dismissal at t
he first instance.
Misconduct is a sin of commission. While negligence is a sin of omission. In m
isconduct you do something. But in negligence you failed to do something which
is required of you. Remember that difference, because in some cases, the court
seemed to have confused the two grounds. Minsan negligence lang, sinasabing mis
conduct. And that is very important, because a single act of negligence cannot
be a ground for termination. So if you treat an act of negligence as an act of
misconduct, then the conclusion will be to terminate. In short, the termination
will be valid. But it should not be. Because the misconduct is not really a m
isconduct but mere negligence which although serious, if not habitual, is not a
ground for termination. Again, it s very important to note the difference because
in some case, mere negligence may appear to be a misconduct and in fact in part
icular decisions, the court will confuse negligence with misconduct.
Some cases are examples of that particular ground, I assigned a case of sleeping
while on duty. It s a very good example of how you should treat each particular
ground for termination because sleeping while on duty is a ground for terminatio
n for some employees and not a ground for termination for some other employees.
Kung security guard ka at natutulog ka while on duty, it can be a ground for te
rmination. However, if you are not a security guard, if you re a factory worker an
d nakatulog ka while on duty, that may not justify termination according to the
decision. So what is the rationale of that? You always have to go back to the
effect of the cause on the performance of the job. If the cause does not have a
n effect or has a limited effect on the performance of the job, it should not ju
stify termination. It will justify a disciplinary action which is not terminati
on.
Sleeping on the job is a sin of omission. In short, it s not bad to sleep. It s no
t a misbehavior. But because you are sleeping, you are not doing your job. So
the act of sleeping is a positive act which means that you cannot do something e
lse. And therefore, I don t think it can be considered a gross misconduct. If it
can be considered a misconduct at all. In short, the act of sleeping will not
be a justification for termination at the first instance, even if you re a securit
y guard because it is negligence and not misconduct.
If you re only job is to make sure that all equipment are turned off and to make s
ure that nothing is left on which will cause an accident and you failed to do th
at, the result is so gross, it can be akin to misconduct. Are we saying that th
at negligence is misconduct and are we confusing negligence with misconduct? No
. We are going to the last item, which is analogous. We are not saying that th
is particular act of negligence is equivalent to misconduct. We are saying that
this is analogous to the first cause which is misconduct.
While it is good to distinguish between gross misconduct from gross and habitual
negligence, some extraordinary cases may fall under the analogous reasons item,
in which case a negligent act could be considered a misconduct. But that doesn t
mean that we will equate in all cases, negligence with misconduct.
Fraud or willful breach by employee of the trust reposed on him by the employee.
Fraud is always willful. It should always be deliberate that s why there is no
need for the adjective willful in fraud.
Loss of trust and confidence is one of the most abused ground for termination.
The waiter example. Can a waiter be fired on the ground of loss of trust and co
nfidence? What if the waiter eats the food he is supposed to serve?
Is your primary consideration in hiring the waiter your determination that that
waiter will not eat the food? NO, that is not the primary reason for hiring the
waiter. There is no trust reposed on the waiter that that waiter will not eat
the food that he is supposed to serve. If there is no trust, there can be no br
each. Because the basis is breach of trust. So when can that waiter be termina
ted for breach of trust? In no case can the waiter be terminated for breach of
trust because in no case is trust reposed on the waiter.
Is the ground of loss of trust and confidence applicable to all employees? No, o
nly to employees to whom the employer has reposed his trust and confidence.
Why do you say that the employer repose trust and confidence to a cashier and no
t to a factory employee? Because the cashier handles amounts of money of the em
ployer. Those employees who are primarily in charge of handling company funds,
company money or property.
There s a difference between the handling of a cashier of the money and the handli
ng of the waiters. The waiters handling company assets will be temporary and wi
ll not be the main function of that particular employee as opposed to a cashier
whose main function is to handle and to account for company funds. Who else can
be under that category? A warehouse person for example. An officer in charge
of the custody of the warehouse where you have the supplies and the raw material
s of the management, I think that employee can be terminated for breach of trust
. But ordinary employees who are performing jobs which are not primarily handli
ng or in custody of company property or assets cannot be terminated for breach o
f trust and confidence. It has to be either misconduct or any other ground but
not breach of trust and confidence. Why? Because there can be no breach if the
re is no trust reposed, no trust or confidence reposed in the employee.
Why is there need for breach of trust as a ground? Why can t it just fall under s
erious misconduct?
Serious misconduct must be a positive act. It must be shown that the employee c
learly committed something. In breach of trust, that positive act may not be cl
early committed. And yet who have grounds to terminate an employee because of a
particular breach of trust and confidence.
But we have to be careful about that. In one case, the court said there s a diffe
rence between the treatment of managerial employees and ordinary employees. For
managerial employees, it would seem that the ground of breach of confidence, yo
u don t need to point to a particular misconduct, particularly to a particular act
of the managerial employee. In short, suspicion which is grounded on factual c
ircumstances may be enough. I repeat, suspicion which is based on factual circu
mstances will justify the termination of a managerial employee. Why? Because w
hile there is no misconduct which is clearly shown, but there is breach of trust
and confidence. However, the court said, that cannot be applied to non-manager
ial employee. Meaning for non-managerial employees, you must show a particular
act of breach of trust and confidence. So in that case, for managerial employee
s, you will find value in using breach of trust instead of misconduct. Because
an act or a set of facts will or may justify breach of trust but not misconduct
for a particular managerial employee. So when it comes to that managerial emplo
yee, you will terminate him not because of serious misconduct but due to breach
of trust which you can prove with other factual circumstances.
I think the category recited by Mr. Ariston (wowee, sikat!) can also be consider
ed as part of that set of employees which can be terminated for breach of trust.
Let s say a secretary who handles confidential information and confidential docu
ments and mishandles such documents, it can also be applied. Again, it has to b
e applied strictly and you have to show the circumstances showing a clear breach
of trust.
So the only employees you can terminate for breach are managerial employees and
employees whose jobs primarily consists in handling company properties and compa
ny funds.
Again, be careful about the terms. Take note of the term used, it s willful breac
h. Willful breach is entirely different from simple loss of trust and confidenc
e. How is it different? When you say willful breach, you are referring to a pa
rticular act of an employee. If you simply say loss of trust or confidence, it s
simply the employer losing trust and confidence in the employee. It s not the gro
und contemplated by the law. The ground mentioned is not simply loss of trust w
hich is subjective on the part of the employer, but breach of trust which is a p
ositive act on the part of the employee.
According to the decision of the Court, for managerial employees, mere circumsta
ntial evidence may be enough. But for cashiers, or rank and file employees, you
have to prove the acts constituting the breach of trust. In short, the actual
evidence of the positive act of the employee which can be considered as a willfu
l breach of trust. In short, madali kang matanggal if you re a managerial employe
e.
Commission of a crime. Is there need for an actual case? No. The minimum requ
irement of the law is the commission. And can you say that something is committ
ed even before you file the case? Yes, of course. The employer does not have t
he responsibility to file a criminal case first or even to file it after or even
report it to the police before terminating an employee who has committed an off
ense against the employer. You don t need a case. You certainly don t need a convi
ction before you can do that. A mere commission of an offense against the emplo
yer will justify termination.
We can use offense and crime interchangeably here. This is not a penal law, the
term crime against the person of the employer should not be interpreted as an off
ense against the person (as opposed to offenses against the chastity or liberty)
. I don t think that we have to place the technical meaning it has in criminal ca
ses. I ll give you an example: If an employee committed an offense, let s say acts
of lasciviousness against the daughter of the employer, that will not fall unde
r serious misconduct unless it s work-related. But it should fall under this case
. And I don t think the employee can raise the defense that I did not commit a cri
me against persons.
This ground is not work-related. The work-related qualification no longer appli
es to subparagraph (d). Nakita mo sa labas yung employer mo, sinaksak mo. You
cannot claim hey, that s not work-related. I don t think you can do that.
What if the employee says something to the employer which is tantamount to oral
defamation? Can the employee be terminated based on that?
Depending on the gravity of what he said. Which will take us now to the qualifi
cation that even if you have one of these things, even if you have a ground unde
r Article 282. It does not automatically mean that termination is the proper re
medy of the employer. Even if it can be considered serious misconduct, the cour
t in many cases will say, you have to look at the circumstances, for example, le
ngth of service, the effect of that serious misconduct, the value of the propert
y involved (if property was lost because of serious misconduct). And the court
said that penalty should be commensurate to the offense committed. The term offe
nse committed will certainly refer to the offenses enumerated under Article 282.
What I m saying is that the mere existence of an offense that fall under Article
282 will not justify termination, if a penalty less severe will already be suffi
cient. So hindi basta pumasok kayo under the definition, you will terminate.
Other causes analogous to the foregoing. While I said that this means have some
leeway in considering other causes, again the causes must be analogous to those
items specifically stated in subparagraphs. The term analogous should likewise
be construed narrowly. You cannot simply state that this is analogous to subpa
ragraph (a) or subparagraph (b), it has to be strictly construed. And unless yo
u can show a relation between that particular offense and the offenses which are
specifically allowed to be ground for termination, then you cannot justify term
ination. Let me give you some examples, the court has allowed in some cases, th
e employer to terminate employees based on the employee s violated of the employer s
Code of Conduct. But the offenses enumerated in the Code of Conduct must not b
e remote from the nature of the offenses enumerated under Article 282. So the e
mployer is not limited to a, b, c, d. The employer can impose additional causes
but those causes and the validity of those causes as justification for terminat
ion will be judged on the basis of whether they are on the same in thrust as a,
b, c, d.
Procedural requirements. Three steps:
1. First notice A notice to the employee of the intent of the employer to dismis
s
* Also known as a show cause letter
* Contents:
a. Ground relied upon
b. Facts which constitute the ground
* Cannot simply say that this is the second serious offense since January 22, 200
2
c. Giving the employee the opportunity to prepare and explain his side
d. Intention of the employer to dismiss
* It has to be clear in the letter. Simply asking the employee to explain in wr
iting the incident that happen in a particular date and a particular place. Tha
t is not a show cause letter. It s a show cause letter because the employee is re
quired to show cause why he or she should not be dismissed from the employment.
It is not simply an explanation of an incident. The employee must justify why
he must not be terminated by management and unless you have that, the show cause
letter is insufficient. You have to notify the employee in advance that that e
xplanation letter is so important because it could cause him or her his employme
nt.
2. A hearing to give the employee an opportunity to be heard
* Not really adversarial but employee may have a lawyer with him if he wants
3. Second notice a notice of dismissal
Authorized causes
Automation or labor-saving devices
Because of the installation of labor-saving devices, you no longer need the serv
ices of employees.
How is it different from redundancy?
Redundancy is not the result of the installation of labor-saving device. Is the
re a value for knowing the difference between labor-saving device or redundancy?

Assuming you have this situation where the installation of labor-saving device r
esulted in employees services being redundant meaning you don t need the group of e
mployees anymore because you have installed a labor-saving device. Will the emp
loyee be terminated due to installation of labor-saving device or redundancy? I
s there any difference in the consequences or the procedure of terminating due t
o labor-saving device and redundancy?
If the installation of labor-saving device will mean that a group of employees w
ill no longer be required, I don t think that there is any reason to think about t
he difference of installation of labor-saving device and redundancy. Terminatio
n due to installation of labor-saving device or redundancy will have the same ef
fect. The procedure will be the same. The separation pay will be the same. Bu
t not all redundancy will be the effect of installation of labor-saving device.
You can have redundancy which is the result of dropping one product in the prod
uction line. You don t need that production line anymore. So while you haven t ins
talled a labor-saving device, that is still redundancy.
In redundancy, the employee terminated cannot claim that the termination is inva
lid because he or she was the only one occupying that particular position at the
time of termination. We are not referring to positions only, we are referring
services of the employees. And services may no longer be necessary even if you re
the only person occupying that particular position. Di mo puedeng sabihin na a
ko lang yung may ganun na trabaho sa kumpanya. Di nga kailangan yung trabaho mo
na yun e. Therefore, you are redundant. Redundancy is not simply duplication.
The services of the redundant employee should be in excess of the needs or the
requirements of the business of the employer.
I have 15 employees doing a particular job. Then I hire a group of employees th
rough a subcontractor. Then I terminate the first 15 because of redundancy. Is
that valid?
No. Because the services are not redundant because you still need a group of em
ployees to provide that service. But the Court in Serrano made a statement appe
aring to justify that. That the hiring of contractual employees and terminating
regular employees because they are no longer need. Small item of Serrano. But
Serrano has other portions which claim infamy. We know Serrano because of some
thing else, not that.
Retrenchment.
Termination of employee to prevent further losses involved in the company.
Different from redundancy. Retrenchment pertains to prevention of loss. In re
dundancy, there is no qualification that you are terminating the employees becau
se you are losing money. There is no connection between redundancy and loss.
Is there value in determining the difference between retrenchment and redundancy
? The effect of retrenchment and redundancy as to separation pay is different.
In retrenchment, the employer pays less thus he has to prove loss before he can
terminate due to retrenchment.
What are the remedies of an illegally dismissed worker?
1. Reinstatement/separation pay and payment of backwages
Payment of full backwages from the time actually illegally dismissed until ac
tual reinstatement, or if reinstatement is not possible, up to the finality of t
he decision. Full backwages means all allowances he should have received. Basic
rule in computing backwages, whatever he should have received had he not been il
legally terminated.
In the case of Bustamante the Court said it is a penalty for the employer, an
d since it is a penalty, then it is not in the nature of compensatory damages. R
ather it is in the nature of exemplary damages. Hence it is not compensating for
anything, rather it is penalizing the employer for something. If it were compen
satory in nature, then earnings elsewhere should mitigate the damages or the lia
bility of the employer, because you need not compensate the employee. The employ
ee did not lose anything during that period. In fact he earned something during
that period. Hence whatever earned elsewhere is immaterial in computing the amou
nt to be paid as backwages.
2. If reinstatement is impossible, separation pay should be given.
If reinstatement no longer possible, due to factual circumstances or straine
d relations, separation pay to be reckoned from the date he was hired in the com
pany until finality of decision. Instead of reinstatement, he should be paid an
amount equivalent to one-month pay for every year of service (this rate is based
on jurisprudence. It is not in the law). Remember, this is the formula to be ap
plied as long as it is found that at the point of termination, such was illegal.
So, if the employer alleges lawful dismissal on the ground of just or authorize
d causes, but it is later proven that termination is illegal as the ground does
not exist, he is entitled to reinstatement. If impossible, then in lieu of that
, separation pay equal to 1 month for every year of service. Don t confuse the for
mulas for separation pay for termination due to authorized causes and illegal te
rmination. For instance a company closes in 1990 due to business losses. The wor
kers (e.g. who were hired in 1980) don t believe that and file a case, where event
ually the Supreme Court finds that the closure was fraudulent. The Court cannot
order reinstatement due to the fact of closure, but it can order the company to
pay separation pay worth 1 month salary for every year of service. Case is final
as of March 1, 2002. The company must pay separation pay from 1980 up to 2002,
and backwages from 1990 up to 2002. The separation pay is supposed to replace th
e employee s right to continue working. IT is similar to retirement pay. On the ot
her hand, backwages is supposed to answer for compensation he should have receiv
ed had he not been dismissed illegally.
Now in the above example, if the employer paid the month rate per yr. of serv
ice, following the rules on authorized causes, then he is obligated to pay only
the difference (another mo. per yr. of service) if the Court finds the closure i
llegal. But since this is an illegal dismissal claim, malamang hindi tinanggap n
g employees ang month for every year of service separation pay, as they are cont
esting its validity. I would personally advise them not to receive it. Such act
on their part would be cited by the employer to show that the termination is val
id.
As a general rule, a waiver/quitclaim signed by the employees cannot bar thei
r right to question the validity of termination and reap whatever amount due the
m if found to be illegally terminated. The employees will not be estopped from q
uestioning the legality of termination even if they sign waivers or receive sepa
ration pay. But if I were counsel for the workers, I would advise them not to re
ceive separation payments and sign under such quitclaim. It would be an addition
al issue to be threshed out, but still, such fact of receipt/acceptance would no
t estop the workers from questioning the legality of the quitclaim or their dism
issal.
Let s say eventually the courts find that there was a valid dismissal due to au
thorized causes. The worker is entitled to such separation pay even if he refuse
d to receive it in the beginning. He is not barred from claiming what is due him
.
Now, remember it is the award of full amount of backwages that serves as a pe
nalty to the employer. The separation pay on the other hand, is given as a form
of remedy to the employee, since reinstatement is impossible already.
The rate of separation pay should be based on the rate he should have been re
ceiving as of finality of judgment. In the above example, it would be as of 2002
. The point of this is because his years of service is being counted up to 2002.
It should be treated as if the employee is being reinstated and he is retiring.
Be careful, contrary to this jurisprudential rule, some decisions will tell you
the rate should be as of the time when he was terminated, which is wrong.
All of this, separation pay in lieu of reinstatement, is purely jurisprudenti
al ruling. The only remedy provided in the Labor Code is pure reinstatement. But
the SC recognized the situation where this may be impossible, and so it supplie
d what was missing in the law to avoid injustice to the worker. Otherwise, the w
orker will not have a remedy in case reinstatement is not possible.
Now strained relations means the relations would not be workable-avoid the re
storation of relations when the restoration would not be good for both parties.
It applies only to those positions held in trust and confidence-managerial emplo
yees. This ground cannot apply to rank and file employees. And filing a case, li
tigation cannot be invoked to justify strained relations.
Remember to merit full credit you must answer, that the employee is entitled
to reinstatement to the former or an equivalent position, without loss of senio
rity rights, and full backwages.
Without loss of seniority rights means that if by 2002, he would have rendere
d 22 years of service had he not been terminated in 1990, then when he returns i
n 2002, he should be given the same seniority level as if he has not stopped wor
king. So assuming that because of the render of 22 years of service, he should h
ave been given a car by the company, when he is reinstated in 2002, he is entitl
ed to that car. However, insofar as salaries are concerned, if the company has a
salary scale that takes into consideration a job weighing scale (looks at the s
eniority level vis--vis the rate), at the time of reinstatement he should be plac
ed on the level he should have been had he not been terminated. But, promotions
he could have gotten will not be applicable UNLESS it operates automatically bec
ause of the number of years worked. Usually promotions take into consideration a
lot of factors. Same with benefits-if these should have attached automatically,
as long as the employee rendered a certain number of years of service, then the
reinstated employee is entitled to it.
All this is hinged on the phrase as if the employee had not been dismissed . Thi
s same operative phrase in backwages applies in reinstatement.
These remedies are applicable to a fixed term employment. For example we have
a valid fixed term contract good for ten years, then the employee is illegally
dismissed on the fifth year. Litigation lasted beyond the ten-year term of the c
ontract, but the Court found in favor of the employee. Thus, the employee is en
titled to backwages. The backwages should be computed for good for five years on
ly. Now, reinstatement is impossible because the term has expired. So there is n
o award of separation pay in lieu of reinstatement. Then the present salaries of
his contemporaries may be taken into consideration if the raise in their salari
es are purely attributable to length of service and no other factors.
Payroll reinstatement where the employer implements the reinstatement order by
paying the employee his salaries pending appeal, but he does not let the employe
e report for work.
In such a case, the employee may look for other work if he chooses to do so, fol
lowing the Bustamante doctrine.
If a collective bargaining agreement gives automatic raises then this mus
t be included in the payment of backwages. It covers everything one should recei
ve had he not been illegally terminated.
A probationary employee should be considered past the probationary period
and so entitled to the same principle under Bustamante. He should be considered
a regular employee otherwise the backwages will not run, and the employer would
be able to defeat the rights of an illegally dismissed employee. Even without a
ction, or evaluation on the part of an employer, the mere lapse of time makes a
probie employee converted to regular. The employer should be made to bear the co
st for removing the opportunity of the employee to convert to regular ee under o
rdinary circumstances. This is premised under the idea that management illegally
took the opportunity away because the dismissal was illegal. This means the emp
loyer was unable to show any cause to terminate the probationary period.
Now Serrano complicates matters. Under the Wenphil doctrine, the lack of
procedural due process makes the dismissal illegal, and awards damages because o
f this. However Serrano says the lack of procedural due process makes the dismis
sal merely INEFFECTUAL, and so the termination is effective only upon finality o
f the decision, hence the employee is awarded backwages. Why is Serrano bad? It
is good as it increased the benefits of a dismissed worker who cannot be reinsta
ted because there is just/authorized cause to dismiss him, but it is bad because
it removed the right of a worker to procedural due process-the procedural right
s prior to termination.
Serrano did not say the dismissal is illegal. Worse it says the employee
is not entitled to due process at all, because it involves private parties. Just
ice Mendoza in this case says such right may be invoked only in relations agains
t the Government. It argued using the Constitutional provisions, not the Labor C
ode provisions! Your bar chairman s forte is Constitution. To a person who is good
at using a hammer, every problem is looked at as a nail. This case is a perfect
example. So you cannot invoke due process using Serrano. Serrano is more of a C
onsti case but has repercussions beyond that. However, this is penned by J. Mend
oza, so don t attack this case in your bar exams ^_^.
If at the time of finality of judgment, the employer-corporation has bee
n dissolved, who becomes liable to pay backwages? In some cases the Court pierc
ed the veil of corporate fiction, and allowed the employee to seek relief agains
t the corporation s officers, because the employee did not have any other availabl
e remedy.
CLASS NOTES
Illegal dismissal case is filed with the Labor Arbiter of the NLRC. Remember
that codal provision that proper interpretations of company policies shall be co
ursed through the voluntary arbitrator. However, if for example, an employee is
dismissed because of the application of the company s code of conduct, and so ther
e is a dispute as to the proper interpretation and application of such, it is st
ill within the jurisdiction of the Labor Arbiter because it is mainly a terminat
ion dispute which is under the jurisdiction of the LA.
A Labor Arbiter s immediate reinstatement order is not final pending appeal, howe
ver it is immediately executory. There is no need to issue a writ of execution.
Thus, pending appeal the employer must implement the ruling. If it is not follo
wed, file a motion to cite the employer in contempt, if he refuses to implement
the order. BUT REMEMBER, the Labor Code refers only to the LA s reinstatement orde
r as immediately executory, and nothing else. So for instance, the LA says the d
ismissal was valid, then on appeal the NLRC says illegal dismissal-reinstate, su
ch order is not immediately executory.
Now let s take a little stroll down remedial law lane as applied to illega
l dismissal cases ^_^:
1. file with the Labor Arbiter
2. then appeal to Secretary of Labor
3. then to the Court of Appeals under Rule 65
4. file a Motion for Reconsideration
5. then to the Supreme Court under Rule 45.
The same procedure applies to strike cases and voluntary arbitrator s decisions.
There a two instances where the Labor Arbiter has no jurisdiction over t
ermination disputes:
1) when the parties submit the question of illegal dismissal to voluntary arbitr
ation
2) when the dismissal has become basis for filing a notice of strike, and the Se
cretary of Labor assumed jurisdiction, the Secretary acquires jurisdiction over
the termination dispute as well
When the voluntary arbitration decision is final , it may be challenged bef
ore the Court of Appeals under Rule 65, because it is the only mode or remedy av
ailable, as stated in the DBP case (I m not sure if this case is in the syllabus,
but Sir cites this as recent case doctrine). One cannot file under Rule 43, beca
use the Labor Code says the Voluntary Arbitrator s decision is a final decision.

VIII. RIGHT TO HUMANE CONDITIONS OF WORK


A. PRE-EMPLOYMENT
LABOR CODE
Art. 12. Statement of objectives. It is the policy of the State:
(a) To promote and maintain a state of full employment through improved manp
ower training, allocation and utilization;
(b) To protect every citizen desiring to work locally or overseas by securin
g for him the best possible terms and conditions of employment;
(c) To facilitate a free choice of available employment by persons seeking w
ork in conformity with the national interest;
(d) To facilitate and regulate the movement of workers in conformity with th
e national interest;
(e) To regulate the employment of aliens, including the establishment of a r
egistration and/or work permit system;
(f) To strengthen the network of public employment offices and rationalize t
he participation of the private sector in the recruitment and placement of worke
rs, locally and overseas, to serve national development objectives; aisa dc
(g) To insure careful selection of Filipino workers for overseas employment
in order to protect the good name of the Philippines abroad.
Art. 13. Definitions.
(a) Workers means any member of the labor force, whether employed or unemployed.
(b) Recruitment and placement refers to any act of canvassing, enlisting, cont
racting, transporting, utilizing, hiring or procuring workers, and includes refe
rrals, contract services, promising or advertising for employment, locally or ab
road, whether for profit or not: Provided, That any person or entity which, in a
ny manner, offers or promises for a fee employment to two or more persons shall
be deemed engaged in recruitment and placement.
(c) Private employment agency means any person or entity engaged in the recrui
tment and placement of workers for a fee which is charged, directly or indirectl
y, from the workers or employers or both.
(d) License means a document issued by the Department of Labor authorizing a p
erson or entity to operate a private employment agency.
(e) Private recruitment entity means any person or association engaged in the
recruitment and placement of workers, locally or overseas, without charging, dir
ectly or indirectly, any fee from the workers or employers.
(f) Authority means a document issued by the Department of Labor authorizing a
person or association to engage in recruitment and placement activities as a pr
ivate recruitment entity.
(g) Seaman means any person employed in a vessel engaged in maritime navigatio
n.
(h) Overseas employment means employment of a worker outside the Philippines.
(i) Emigrant means any person, worker or otherwise, who emigrates to a foreign
country by virtue of an immigrant visa or resident permit or its equivalent in
the country of destination.
Art. 34. Prohibited practices. It shall be unlawful for any individual, entity,
licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of Labor
, or to make a worker pay any amount greater than that actually received by him
as a loan or advance;
(b) To furnish or publish any false notice or information or document in rel
ation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit a
ny act or misrepresentation for the purpose of securing a license or authority u
nder this Code;
(d) To induce or attempt to induce a worker already employed to quit his emp
loyment in order to offer him to another unless the transfer is designed to libe
rate the worker from oppressive terms and conditions of employment;
(e) To influence or to attempt to influence any person or entity not to empl
oy any worker who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor
or by his duly authorized representatives;
(h) To fail to file reports on the status of employment, placement vacancies
, remittance of foreign exchange earnings, separation from jobs, departures and
such other matters or information as may be required by the Secretary of Labor;
(i) To substitute or alter employment contracts approved and verified by the
Department of Labor and Employment from the time of actual signing thereof by t
he parties up to and including the periods of expiration of the same without the
approval of the Secretary of Labor.
(j) To become an officer or member of the Board of any corporation engaged i
n travel agency or to be engaged directly or indirectly in the management of a t
ravel agency;
(k) To withhold or deny travel documents from applicant workers before depar
ture for monetary or financial considerations other than those authorized under
this Code and its implementing rules and regulations.
Art. 35. Suspension and/or cancellation of license or authority. The Secretary
of Labor shall have the power to suspend or cancel any license or authority to r
ecruit employees for overseas employment for violation of rules and regulations
issued by the Secretary of Labor, the Overseas Employment Development Board, and
the National Seamen Board, or for violations of the provisions of this and othe
r applicable laws, General Orders and Letters of Instructions.
Art. 38. Illegal Recruitment.
(a) Any recruitment activities, including the prohibited practices enumerated un
der Article 34 of this Code, to be undertaken by non-licensees or non-holders of
authorities shall be deemed illegal and punishable under Article 39 of this Cod
e. The Ministry of Labor and Employment or any law enforcement officer may initi
ate complaints under this Article.
(b) Illegal recruitment when committed by a syndicate or in large scale shal
l be considered an offense involving economic sabotage and shall be penalized in
accordance with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if carried out by a group
of three (3) or more persons conspiring and/or confederating with one another i
n carrying out any unlawful or illegal transaction , enterprise or scheme define
d under the first paragraph hereof. Illegal recruitment is deemed committed in l
arge scale if committed against three (3) or more persons individually or as a g
roup.
(c) The Minister of Labor and Employment or his duly authorized representati
ves shall have the power to cause the arrest and detention of such non-licensee
or non-holder of authority if after investigation it is determined that his acti
vities constitute a danger to national security and public order or will lead to
further exploitation of job-seekers. The Minister shall order the search of the
office or premises and seizure of documents, paraphernalia, properties and othe
r implements used in illegal recruitment activities and the closure of companie
s, establishments and entities found to be engaged in the recruitment of workers
for overseas employment, without having been licensed or authorized to do so.
Art. 39. Penalties.
(a) The penalty of life imprisonment and a fine of One Hundred Thousand Peso
s (P100,000) shall be imposed if illegal recruitment constitutes economic sabota
ge as defined herein:
(b) Any licensee or holder of authority found violating or causing another t
o violate any provision of this Title or its implementing rules and regulations
shall, upon conviction thereof, suffer the penalty of imprisonment of not less t
han two years nor more than five years or a fine of not less than P10,000 nor mo
re than P50,000 or both such imprisonment and fine, at the discretion of the cou
rt;
(c) Any person who is neither a licensee nor a holder of authority under thi
s Title found violating any provision thereof or its implementing rules and regu
lations shall, upon conviction thereof, suffer the penalty of imprisonment of no
t less than four years nor more than eight years or a fine of not less than P20,
000 nor more than P100,000 or both such imprisonment and fine, at the discretion
of the court;
(d) If the offender is a corporation, partnership, association or entity, th
e penalty shall be imposed upon the officer or officers of the corporation, part
nership, association or entity responsible for violation; and if such officer is
an alien, he shall, in addition to the penalties herein prescribed, be deported
without further proceedings;
(e) In every case, conviction shall cause and carry the automatic revocation
of the license or authority and all the permits and privileges granted to such
person or entity under this Title, and the forfeiture of the cash and surety bon
ds in favor of the Overseas Employment Development Board or the National Seamen
Board, as the case may be, both of which are authorized to use the same exclusiv
ely to promote their objectives.
RA 8042 (MIGRANT WORKERS AND OVERSEAS FILIPINO ACT OF 1995)
REPUBLIC ACT NO. 8042
AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A HIGHER S
TANDARD OF PROTECTION AND PROMOTION OF THE WELFARE OF MIGRANT WORKERS, THEIR FAM
ILIES AND OVERSEAS FILIPINOS IN DISTRESS, AND FOR OTHER PURPOSES
Sec. 1. Short Title. - This Act shall be known and cited as the Migrant W
orkers and Overseas Filipinos Act of 1995.
Sec. 2. Declaration of Policies.
(a) In the pursuit of an independent foreign policy and while considering na
tional sovereignty, territorial integrity, national interest and the right to se
lf-determination paramount in its relations with other states, the State shall,
at all times, uphold the dignity of its citizens whether in country or overseas,
in general, and Filipino migrant workers, in particular.
(b) The State shall afford full protection to labor, local and overseas, org
anized and unorganized, and promote full employment and equality of employment o
pportunities for all. Towards this end, the State shall provide adequate and ti
mely social, economic and legal services to Filipino migrant workers.
(c) While recognizing the significant contribution of Filipino migrant worke
rs to the national economy through their foreign exchange remittances, the State
does not promote overseas employment as a means to sustain economic growth and
achieve national development. The existence of the overseas employment program
rests solely on the assurance that the dignity and fundamental human rights and
freedoms of the Filipino citizen shall not, at any time, be compromised or viola
ted. The State, therefore, shall continuously create local employment opportuni
ties and promote the equitable distribution of wealth and the benefits of develo
pment.
(d) The State affirms the fundamental equality before the law of women and m
en and the significant role of women in nation-building. Recognizing the contrib
ution of overseas migrant women workers and their particular vulnerabilities, th
e State shall apply gender sensitive criteria in the formulation and implementat
ion of policies and programs affecting migrant workers and the composition of bo
dies tasked for the welfare of migrant workers.
(e) Free access to the courts and quasi-judicial bodies and adequate legal a
ssistance shall not be denied to any person by reason of poverty. In this regar
d, it is imperative that an effective mechanism be instituted to ensure that the
rights and interest of distressed overseas Filipinos, in general, and Filipino
migrant workers, in particular, documented or undocumented, are adequately prote
cted and safeguarded.
(f) The right of Filipino migrant workers and all overseas Filipinos to part
icipate in the democratic decision-making processes of the State and to be repre
sented in institutions relevant to overseas employment is recognized and guarant
eed.
(g) The State recognizes that the ultimate protection to all migrant workers
is the possession of skills. Pursuant to this and as soon as practicable, the
government shall deploy and/or allow the deployment only of skilled Filipino wor
kers.
(h) Non-governmental organizations, duly recognized as legitimate, are partn
ers of the State in the protection of Filipino migrant workers and in the promot
ion of their welfare. The State shall cooperate with them in a spirit of trust
and mutual respect.
(i) Government fees and other administrative costs of recruitment, introduct
ion, placement and assistance to migrant workers shall be rendered free without
prejudice to the provision of Section 36 hereof.
Nonetheless, the deployment of Filipino overseas workers, whether land-ba
sed or sea-based, by local service contractors and manning agencies employing th
em shall be encouraged. Appropriate incentives may be extended to them.
Sec. 3. Definitions. - For purposes of this Act:
(a) Migrant worker refers to a person who is to be engaged, is engaged or has
been engaged in a remunerated activity in a state of which he or she is not a le
gal resident; to be used interchangeably with overseas Filipino worker.
(b) Gender-sensitivity shall mean cognizance of the inequalities and inequitie
s prevalent in society between women and men and a commitment to address issues
with concern for the respective interests of the sexes.
(c) Overseas Filipinos refers to dependents of migrant workers and other Filip
ino nationals abroad who are in distress as mentioned in Sections 24 and 26 of t
his Act.
I. DEPLOYMENT
Sec. 4. Deployment of Migrant Workers. - The State shall deploy overseas
Filipino workers only in countries where the rights of Filipino migrant workers
are protected. The government recognizes any of the following as a guarantee o
n the part of the receiving country for the protection and the rights of oversea
s Filipino workers:
(a) It has existing labor and social laws protecting the rights of migrant w
orkers;
(b) It is a signatory to multilateral conventions, declarations or resolutio
ns relating to the protection of migrant workers;
(c) It has concluded a bilateral agreement or arrangement with the governmen
t protecting the rights of overseas Filipino workers; and
(d) It is taking positive, concrete measures to protect the rights of migran
t workers.
Sec. 5. Termination or Ban on Deployment. - Notwithstanding the provisio
ns of Section 4 hereof, the government, in pursuit of the national interest or w
hen public welfare so requires, may, at any time, terminate or impose a ban on t
he deployment of migrant workers.
II. ILLEGAL RECRUITMENT
Sec. 6. Definition. - For purposes of this Act, illegal recruitment shal
l mean any act of canvassing, enlisting, contracting, transporting, utilizing, h
iring, or procuring workers and includes referring, contract services, promising
or advertising for employment abroad, whether for profit or not, when undertake
n by a non-licensee or non-holder of authority contemplated under Article 13(f)
of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of
the Philippines: Provided, That any such non-licensee or non-holder who, in any
manner, offers or promises for a fee employment abroad to two or more persons s
hall be deemed so engaged. It shall likewise include the following acts, whethe
r committed by any person, whether a non-licensee, non-holder, licensee or holde
r of authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary of Labor
and Employment, or to make a worker pay any amount greater than that actually r
eceived by him as a loan or advance;
(b) To furnish or publish any false notice or information or document in rel
ation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit a
ny act of misrepresentation for the purpose of securing a license or authority u
nder the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his emp
loyment in order to offer him another unless the transfer is designed to liberat
e a worker from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor
and Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacanci
es, remittance of foreign exchange earnings, separation from jobs, departures an
d such other matters or information as may be required by the Secretary of Labor
and Employment;
(i) To substitute or alter to the prejudice of the worker, employment contra
cts approved and verified by the Department of Labor and Employment from the tim
e of actual signing thereof by the parties up to and including the period of the
expiration of the same without the approval of the Department of Labor and Empl
oyment;
(j) For an officer or agent of a recruitment or placement agency to become a
n officer or member of the Board of any corporation engaged in travel agency or
to be engaged directly or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before depar
ture for monetary or financial considerations other than those authorized under
the Labor Code and its implementing rules and regulations;
(l) Failure to actually deploy without valid reason as determined by the Dep
artment of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection with
his documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker s fault. Illegal recru
itment when committed by a syndicate or in large scale shall be considered an of
fense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by
a group of three (3) or more persons conspiring or confederating with one anothe
r. It is deemed committed in large scale if committed against three (3) or more
persons individually or as a group.
The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.
Sec. 7. Penalties. -
(a) Any person found guilty of illegal recruitment shall suffer the penalty
of imprisonment of not less than six (6) years and one (1) day but not more than
twelve (12) years and a fine of not less than Two hundred thousand pesos (P200,
000.00) nor more than Five hundred thousand pesos (P500,000.00).
(b) The penalty of life imprisonment and a fine of not less than Five hundre
d thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00) s
hall be imposed if illegal recruitment constitutes economic sabotage as defined
herein.
Provided, however, That the maximum penalty shall be imposed if the perso
n illegally recruited is less than eighteen (18) years of age or committed by a
non-licensee or non-holder of authority.
Sec. 8. Prohibition on Officials and Employees. - It shall be unlawful f
or any official or employee of the Department of Labor and Employment, the Phili
ppine Overseas Employment Administration (POEA), or the Overseas Workers Welfare
Administration (OWWA), or the Department of Foreign Affairs, or other governmen
t agencies involved in the implementation of this Act, or their relatives within
the fourth civil degree of consanguinity or affinity, to engage, directly or in
directly in the business of recruiting migrant workers as defined in this Act.
The penalties provided in the immediate preceding paragraph shall be imposed upo
n them.
Sec. 9. Venue. - A criminal action arising from illegal recruitment as d
efined herein shall be filed with the Regional Trial Court of the province or ci
ty where the offense was committed or where the offended party actually resides
at the time of the commission of the offense: Provided, That the court where the
criminal action is first filed shall acquire jurisdiction to the exclusion of o
ther courts: Provided, however, That the aforestated provisions shall also apply
to those criminal actions that have already been filed in court at the time of
the effectivity of this Act.

Sec. 10. Money Claims. - Notwithstanding any provision of law to the con
trary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shal
l have the original and exclusive jurisdiction to hear and decide, within ninety
(90) calendar days after the filing of the complaint, the claims arising out of
an employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims for actual, moral, ex
emplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement age
ncy for any and all claims under this section shall be joint and several. This
provision shall be incorporated in the contract for overseas employment and shal
l be a condition precedent for its approval. The performance bond to be filed b
y the recruitment/placement agency, as provided by law, shall be answerable for
all money claims or damages that may be awarded to the workers. If the recruitm
ent/placement agency is a juridical being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarily liab
le with the corporation or partnership for the aforesaid claims and damages.
Such liabilities shall continue during the entire period or duration of t
he employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on money claims
inclusive of damages under this section shall be paid within four (4) months fr
om the approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or auth
orized cause as defined by law or contract, the worker shall be entitled to the
full reimbursement of his placement fee with interest at twelve percent (12%) pe
r annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.
Noncompliance with the mandatory periods for resolutions of cases provide
d under this section shall subject the responsible officials to any or all of th
e following penalties:
(a) The salary of any such official who fails to render his decision or reso
lution within the prescribed period shall be, or caused to be, withheld until th
e said official complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to hold any appointive
public office for five (5) years.
Provided, however, That the penalties herein provided shall be without pr
ejudice to any liability which any such official may have incurred under other e
xisting laws or rules and regulations as a consequence of violating the provisio
ns of this paragraph.
Sec. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases.
- The preliminary investigations of cases under this Act shall be terminated wit
hin a period of thirty (30) calendar days from the date of their filing. Where
the preliminary investigation is conducted by a prosecution officer and a prima
facie case is established, the corresponding information shall be filed in court
within twenty-four (24) hours from the termination of the investigation. If th
e preliminary investigation is conducted by a judge and a prima facie case is fo
und to exist, the corresponding information shall be filed by the proper prosecu
tion officer within forty-eight (48) hours from the date of receipt of the recor
ds of the case.
Sec. 12. Prescriptive Periods. - Illegal recruitment cases under this Ac
t shall prescribe in five (5) years: Provided, however, That illegal recruitment
cases involving economic sabotage as defined herein shall prescribe in twenty (
20) years.
Sec. 13. Free Legal Assistance; Preferential Entitlement Under the Witne
ss Protection Program. - A mechanism for free legal assistance for victims of il
legal recruitment shall be established within the Department of Labor and Employ
ment including its regional offices. Such mechanism must include coordination a
nd cooperation with the Department of Justice, the Integrated Bar of the Philipp
ines, and other non-governmental organizations and volunteer groups.
The provisions of Republic Act No. 6981 to the contrary notwithstanding,
any person who is a victim of illegal recruitment shall be entitled to the Witne
ss Protection Program provided thereunder.

III. SERVICES
Sec. 14. Travel Advisory/Information Dissemination. - To give utmost pri
ority to the establishment of programs and services to prevent illegal recruitme
nt, fraud and exploitation or abuse of Filipino migrant workers, all embassies a
nd consular offices, through the Philippine Overseas Employment Administration (
POEA), shall issue travel advisories or disseminate information on labor and emp
loyment conditions, migration realities and other facts; and adherence of partic
ular countries to international standards on human and workers rights which will
adequately prepare individuals into making informed and intelligent decisions ab
out overseas employment. Such advisory or information shall be published in a n
ewspaper of general circulation at least three (3) times in every quarter.
Sec. 15. Repatriation of Workers; Emergency Repatriation Fund. - The rep
atriation of the worker and the transport of his personal belongings shall be th
e primary responsibility of the agency which recruited or deployed the worker ov
erseas. All costs attendant to repatriation shall be borne by or charged to the
agency concerned and/or its principal. Likewise, the repatriation of remains a
nd transport of the personal belongings of a deceased worker and all costs atten
dant thereto shall be borne by the principal and/or the local agency. However,
in cases where the termination of employment is due solely to the fault of the w
orker, the principal/employer or agency shall not in any manner be responsible f
or the repatriation of the former and/or his belongings.
The Overseas Workers Welfare Administration (OWWA), in coordination with
appropriate international agencies, shall undertake the repatriation of workers
in cases of war, epidemic, disaster or calamities, natural or man-made, and othe
r similar events without prejudice to reimbursement by the responsible principal
or agency. However, in cases where the principal or recruitment agency cannot
be identified, all costs attendant to repatriation shall be borne by the OWWA.
For this purpose, there is hereby created and established an emergency re
patriation fund under the administration, control and supervision of the OWWA, i
nitially to consist of One hundred million pesos (P100,000,000.00), which shall
be taken from the existing fund controlled and administered by the OWWA. Therea
fter, such fund shall be provided for in the General Appropriations Act from yea
r to year: Provided, That the amount appropriated shall in no case be less than
One hundred million pesos (P100,000,000.00), inclusive of outstanding balances.
Sec. 16. Mandatory Repatriation of Underage Migrant Workers. - Upon disc
overy or being informed of the presence of migrant workers whose actual ages fal
l below the minimum age requirement for overseas deployment, the responsible off
icers in the foreign service shall without delay repatriate said workers and adv
ise the Department of Foreign Affairs through the fastest means of communication
available of such discovery and other relevant information.
Sec. 17. Establishment of Re-placement and Monitoring Center. - A re-pla
cement and monitoring center is hereby created in the Department of Labor and Em
ployment for returning Filipino migrant workers which shall provide a mechanism
for their reintegration into the Philippine society, serve as a promotion house
for their local employment, and tap their skills and potentials for national dev
elopment.
The Department of Labor and Employment, the Overseas Workers Welfare Admi
nistration, and the Philippine Overseas Employment Administration shall, within
ninety (90) days from the effectivity of this Act, formulate a program that woul
d motivate migrant workers to plan for productive options such as entry into hig
hly technical jobs or undertakings, livelihood and entrepreneurial development,
better wage employment, and investment of savings.
For this purpose, the Technical Education and Skills Development Authorit
y (TESDA), the Technology Livelihood Resource Center (TLRC), and other governmen
t agencies involved in training and livelihood development shall give priority t
o returnees who had been employed as domestic helpers and entertainers.
Sec. 18. Functions of the Re-placement and Monitoring Center. - The Cent
er shall provide the following services:
(a) Develop livelihood programs and projects for returning Filipino migrant
workers in coordination with the private sector;
(b) Coordinate with appropriate private and government agencies in the promo
tion, development, re-placement and the full utilization of their potentials;
(c) Institute, in cooperation with other government agencies concerned, a co
mputer-based information system on skilled Filipino migrant workers which shall
be accessible to all local recruitment agencies and employers, both public and p
rivate;
(d) Provide a periodic study and assessment of job opportunities for returni
ng Filipino migrant workers; and
(e) Develop and implement other appropriate programs to promote the welfare
of returning Filipino migrant workers.
Sec. 19. Establishment of a Migrant Workers and other Overseas Filipinos
Resource Center. - Within the premises and under the administrative jurisdictio
n of the Philippine Embassy in countries where there are large concentrations of
Filipino migrant workers, there shall be established a Migrant Workers and Othe
r Overseas Filipinos Resource Center with the following services:
(a) Counselling and legal services;
(b) Welfare assistance including the procurement of medical and hospitalizat
ion services;
(c) Information, advisory and programs to promote social integration such as
post-arrival orientation, settlement and community networking services and acti
vities for social interaction;
(d) Institute a scheme of registration of undocumented workers to bring them
within the purview of this Act. For this purpose, the Center is enjoined to co
mpel existing undocumented workers to register with it within six (6) months fro
m the effectivity of this Act, under pain of having his/her passport cancelled;
(e) Human resource development, such as training and skills upgrading;
(f) Gender sensitive program and activities to assist particular needs of wo
men migrant workers;
(g) Orientation program for returning worker and other migrants; and
(h) Monitoring of daily situations, circumstances and activities affecting m
igrant workers and other overseas Filipinos.
The establishment and operations of the Center shall be a joint undertaki
ng of the various government agencies. The Center shall be open for twenty-four
(24) hours daily including Saturdays, Sundays and holidays, and shall be staffe
d by Foreign Service personnel, service attaches or officers who represent other
Philippine government agencies abroad and, if available, individual volunteers
and bona fide non-government organizations from the host countries. In countrie
s categorized as highly problematic by the Department of Foreign Affairs and the
Department of Labor and Employment and where there is a concentration of Filipi
no migrant workers, the government must provide a lawyer and a social worker for
the Center. The Labor Attache shall coordinate the operation of the Center and
shall keep the Chief of Mission informed and updated on all matters affecting i
t.
The Center shall have a counterpart 24-hour information and assistance ce
nter at the Department of Foreign Affairs to ensure a continuous network and coo
rdinative mechanism at the home office.
Sec. 20. Establishment of a Shared Government Information System for Mig
ration. - An inter-agency committee composed of the Department of Foreign Affair
s and its attached agency, the Commission on Filipinos Overseas, the Department
of Labor and Employment, the Philippine Overseas Employment Administration, the
Overseas Workers Welfare Administration, the Department of Tourism, the Departme
nt of Justice, the Bureau of Immigration, the National Bureau of Investigation,
and the National Statistics Office shall be established to implement a shared go
vernment information system for migration. The inter-agency committee shall ini
tially make available to itself the information contained in existing data bases
/files. The second phase shall involve linkaging of computer facilities in orde
r to allow free flow data exchanges and sharing among concerned agencies.
The inter-agency committee shall convene to identify existing data bases
which shall be declassified and shared among member agencies. These shared data
bases shall initially include, but not be limited to, the following information
:
(a) Masterlists of Filipino migrant workers/overseas Filipinos classified ac
cording to occupation/job category, civil status, by country/state of destinatio
n including visa classification;
(b) Inventory of pending legal cases involving Filipino migrant workers and
other Filipino nationals, including those serving prison terms;
(c) Masterlist of departing/arriving Filipinos;
(d) Statistical profile on Filipino migrant workers/overseas Filipinos/touri
sts;
(e) Blacklisted foreigners/undesirable aliens;
(f) Basic data on legal systems, immigration policies, marriage laws and civ
il and criminal codes in receiving countries particularly those with large numbe
rs of Filipinos;
(g) List of labor and other human rights instruments where receiving countri
es are signatories;
(h) A tracking system of past and present gender disaggregated cases involvi
ng male and female migrant workers; and
(i) Listing of overseas posts which may render assistance to overseas Filipi
nos, in general, and migrant workers, in particular.
Sec. 21. Migrant Workers Loan Guarantee Fund. - In order to further prev
ent unscrupulous illegal recruiters from taking advantage of workers seeking emp
loyment abroad, the OWWA, in coordination with government financial institutions
, shall institute financing schemes that will expand the grant of pre-departure
loan and family assistance loan. For this purpose, a Migrant Workers Loan Guara
ntee Fund is hereby created and the revolving amount of One hundred million peso
s (P100,000,000.00) from the OWWA is set aside as a guarantee fund in favor of p
articipating government financial institutions.
Sec. 22. Rights and Enforcement Mechanism Under International and Region
al Human Rights Systems. - The Department of Foreign Affairs is mandated to unde
rtake the necessary initiative such as promotions, acceptance or adherence of co
untries receiving Filipino workers to multilateral convention, declaration or re
solutions pertaining to the protection of migrant workers rights. The Department
of Foreign Affairs is also mandated to make an assessment of rights and avenues
of redress under international and regional human rights systems that are avail
able to Filipino migrant workers who are victims of abuse and violation and, as
far as practicable and through the Legal Assistant for Migrant Workers Affairs c
reated under this Act, pursue the same on behalf of the victim if it is legally
impossible to file individual complaints. If a complaints machinery is available
under international or regional systems, the Department of Foreign Affairs shal
l fully apprise the Filipino migrant workers of the existence and effectiveness
of such legal options.
IV. GOVERNMENT AGENCIES
Sec. 23. Role of Government Agencies. - The following government agencie
s shall perform the following to promote the welfare and protect the rights of m
igrant workers and, as far as applicable, all overseas Filipinos:
(a) Department of Foreign Affairs - The Department, through its home office
or foreign posts, shall take priority action or make representation with the for
eign authority concerned to protect the rights of migrant workers and other over
seas Filipinos and extend immediate assistance including the repatriation of dis
tressed or beleaguered migrant workers and other overseas Filipinos;
(b) Department of Labor and Employment - The Department of Labor and Employm
ent shall see to it that labor and social welfare laws in the foreign countries
are fairly applied to migrant workers and whenever applicable, to other overseas
Filipinos including the grant of legal assistance and the referral to proper me
dical centers or hospitals:
(b.1) Philippine Overseas Employment Administration - Subject to deregulation an
d phase-out as provided under Sections 29 and 30 herein, the Administration shal
l regulate private sector participation in the recruitment and overseas placemen
t of workers by setting up a licensing and registration system. It shall also f
ormulate and implement, in coordination with appropriate entities concerned, whe
n necessary, a system for promoting and monitoring the overseas employment of Fi
lipino workers taking into consideration their welfare and the domestic manpower
requirements.
(b.2) Overseas Workers Welfare Administration - The Welfare officer or in his ab
sence, the coordinating officer shall provide the Filipino migrant worker and hi
s family all the assistance they may need in the enforcement of contractual obli
gations by agencies or entities and/or by their principals. In the performance
of this function, he shall make representation and may call on the agencies or e
ntities concerned to conferences or conciliation meetings for the purpose of set
tling the complaints or problems brought to his attention.
V. THE LEGAL ASSISTANT FOR MIGRANT WORKERS AFFAIRS
Sec. 24. Legal Assistant for Migrant Workers Affairs. - There is hereby
created the position of Legal Assistant for Migrant Workers Affairs under the De
partment of Foreign Affairs who shall be primarily responsible for the provision
and overall coordination of all legal assistance services to be provided to Fil
ipino migrant workers as well as overseas Filipinos in distress. He shall have t
he rank, salary and privileges equal to that of an undersecretary of said Depart
ment.
The said Legal Assistant for Migrant Workers Affairs, shall be appointed
by the President and must be of proven competence in the field of law with at le
ast ten (10) years of experience as a legal practitioner and must not have been
a candidate to an elective office in the last local or national elections.
Among the functions and responsibilities of the aforesaid Legal Assistant
are:
(a) To issue the guidelines, procedures and criteria for the provision of le
gal assistance services to Filipino migrant workers;
(b) To establish close linkages with the Department of Labor and Employment,
the POEA, the OWWA and other government agencies concerned, as well as with non
-governmental organizations assisting migrant workers, to ensure effective coord
ination and cooperation in the provision of legal assistance to migrant workers;
(c) To tap the assistance of reputable law firms and the Integrated Bar of t
he Philippines and other bar associations to complement the government s efforts t
o provide legal assistance to our migrant workers;
(d) To administer the legal assistance fund for migrant workers established
under Section 25 thereof and to authorize disbursements therefrom in accordance
with the purposes for which the fund was set up; and
(e) To keep and maintain the information system as provided in Section 20.
The Legal Assistant for Migrant Workers Affairs shall have authority to h
ire private lawyers, domestic or foreign, in order to assist him in the effectiv
e discharge of the above functions.
Sec. 25. Legal Assistance Fund. - There is hereby established a legal as
sistance fund for migrant workers, hereinafter referred to as the Legal Assistan
ce Fund, in the amount of One hundred million pesos (P100,000,000.00) to be cons
tituted from the following sources:
Fifty million pesos (P50,000,000.00) from the Contingency Fund of the Pre
sident;
Thirty million pesos (P30,000,000.00) from the Presidential Social Fund;
and
Twenty million pesos (P20,000,000.00) from the Welfare Fund for Overseas
Workers established under Letter of Instruction No. 537, as amended by President
ial Decree Nos. 1694 and 1809.
Any balances of existing funds which have been set aside by the governmen
t specifically as legal assistance or defense fund to help migrant workers shall
, upon effectivity of this Act, be turned over to, and form part of, the Fund cr
eated under this Act.
Sec. 26. Uses of the Legal Assistance Fund. - The Legal Assistance Fund
created under the preceding section shall be used exclusively to provide legal s
ervices to migrant workers and overseas Filipinos in distress in accordance with
the guidelines, criteria and procedures promulgated in accordance with Section
24(a) hereof. The expenditures to be charged against the Fund shall include the
fees for the foreign lawyers to be hired by the Legal Assistant for Migrant Wor
kers Affairs to represent migrant workers facing charges abroad, bail bonds to s
ecure the temporary release of workers under detention, court fees and charges a
nd other litigation expenses.
VI. COUNTRY-TEAM APPROACH
Sec. 27. Priority Concerns of Philippine Foreign Service Posts. - The co
untry-team approach, as enunciated under Executive Order No. 74, series of 1993,
shall be the mode under which Philippine embassies or their personnel will oper
ate in the protection of the Filipino migrant workers as well as in the promotio
n of their welfare. The protection of the Filipino migrant workers and the prom
otion of their welfare, in particular, and the protection of the dignity and fun
damental rights and freedoms of the Filipino citizen abroad, in general, shall b
e the highest priority concerns of the Secretary of Foreign Affairs and the Phil
ippine Foreign Service Posts.
Sec. 28. Country -Team Approach. - Under the country-team approach, all
officers, representatives and personnel of the Philippine government posted abro
ad regardless of their mother agencies shall, on a per country basis, act as one
country-team with a mission under the leadership of the ambassador. In this re
gard the ambassador may recommend to the Secretary of the Department of Foreign
Affairs the recall of officers, representatives and personnel of the Philippine
government posted abroad for acts inimical to the national interest such as, but
not limited to, failure to provide the necessary services to protect the rights
of overseas Filipinos.
Upon receipt of the recommendation of the ambassador, the Secretary of th
e Department of Foreign Affairs shall, in the case of officers, representatives
and personnel of other departments, endorse such recommendation to the departmen
t secretary concerned for appropriate action. Pending investigation by an appro
priate body in the Philippines, the person recommended for recall may be placed
under preventive suspension by the ambassador.
In host countries where there are Philippine consulates, such consulates
shall also constitute part of the country-team under the leadership of the ambas
sador.
In the implementation of the country-team approach, visiting Philippine d
elegations shall be provided full support and information.
VII. DEREGULATION AND PHASE-OUT
Sec. 29. Comprehensive Deregulation Plan on Recruitment Activities. - Pu
rsuant to a progressive policy of deregulation whereby the migration of workers
becomes strictly a matter between the worker and his foreign employer, the DOLE,
within one (1) year from the effectivity of this Act, is hereby mandated to for
mulate a five-year comprehensive deregulation plan on recruitment activities tak
ing into account labor market trends, economic conditions of the country and eme
rging circumstances which may affect the welfare of migrant workers.
Sec. 30. Gradual Phase-out of Regulatory Functions. - Within a period of
five (5) years from the effectivity of this Act, the DOLE shall phase-out the r
egulatory functions of the POEA pursuant to the objectives of deregulation.
VIII. PROFESSIONAL AND OTHER HIGHLY-SKILLED FILIPINOS ABROAD
Sec. 31. Incentives to Professionals and Other Highly-Skilled Filipinos
Abroad. - Pursuant to the objective of encouraging professionals and other highl
y-skilled Filipinos abroad especially in the field of science and technology to
participate in, and contribute to national development, the government shall pro
vide proper and adequate incentives and programs so as to secure their services
in priority development areas of the public and private sectors.
IX. MISCELLANEOUS PROVISIONS
Sec. 32. POEA and OWWA Board; Additional Memberships. - Notwithstanding
any provision of law to the contrary, the respective Boards of the POEA and the
OWWA shall, in addition to their present composition, have three (3) members eac
h who shall come from the women, sea-based and land-based sectors respectively,
to be appointed by the President in the same manner as the other members.
Sec. 33. Report to Congress. - In order to inform the Philippine Congres
s on the implementation of the policy enunciated in Section 4 hereof, the Depart
ment of Foreign Affairs and the Department of Labor and Employment shall submit
to the said body a semi-annual report of Philippine foreign posts located in cou
ntries hosting Filipino migrant workers. The report shall include, but shall no
t be limited to, the following information:
(a) Masterlist of Filipino migrant workers, and inventory of pending legal c
ases involving them and other Filipino nationals including those serving prison
terms;
(b) Working conditions of Filipino migrant workers;
(c) Problems encountered by the migrant workers, specifically violations of
their rights;
(d) Initiatives/actions taken by the Philippine foreign posts to address the
problems of Filipino migrant workers;
(e) Changes in the laws and policies of host countries; and
(f) Status of negotiations on bilateral labor agreements between the Philipp
ines and the host country.
Any officer of the government who fails to report as stated in the preced
ing section shall be subject to administrative penalty.
Sec. 34. Representation in Congress. - Pursuant to Section 5(2), Article
VI of the Constitution and in line with the objective of empowering overseas Fi
lipinos to participate in the policy making process to address Filipino migrant
concerns, two (2) sectoral representatives for migrant workers in the House of R
epresentatives shall be appointed by the President from the ranks of migrant wor
kers: Provided, That at least one (1) of the two (2) sectoral representatives sh
all come from the women migrant workers sector: Provided, further, That all nomi
nees must have at least two (2) years experience as a migrant worker.
Sec. 35. Exemption from Travel Tax and Airport Fee. - All laws to the co
ntrary notwithstanding, the migrant worker shall be exempt from the payment of t
ravel tax and airport fee upon proper showing of proof of entitlement by the POE
A.
Sec. 36. Non-increase of Fees; Abolition of Repatriation Bond. - Upon ap
proval of this Act, all fees being charged by any government office on migrant w
orkers shall remain at their present levels and the repatriation bond shall be a
bolished.
Sec. 37. The Congressional Migrant Workers Scholarship Fund. - There is
hereby created a Congressional Migrant Workers Scholarship Fund which shall bene
fit deserving migrant workers and/or their immediate descendants below twenty-on
e (21) years of age who intend to pursue courses or training primarily in the fi
eld of science and technology. The initial seed fund of Two hundred million pes
os (P200,000,000.00) shall be constituted from the following sources:
(a) Fifty million pesos (P50,000,000.00) from the unexpended Countrywide Dev
elopment Fund for 1995 in equal sharing by all Members of Congress; and
(b) The remaining One hundred fifty million pesos (P150,000,000.00) shall be
funded from the proceeds of Lotto draws.
The Congressional Migrant Workers Scholarship Fund as herein created shal
l be administered by the DOLE in coordination with the Department of Science and
Technology (DOST). To carry out the objectives of this section, the DOLE and t
he DOST shall formulate the necessary rules and regulations.
Sec. 38. Appropriation and Other Sources of Funding. - The amount necess
ary to carry out the provisions of this Act shall be provided for in the General
Appropriations Act of the year following its enactment into law and thereafter.
Sec. 39. Migrant Workers Day. - The day of signing by the President of t
his Act shall be designated as the Migrant Workers Day and shall henceforth be c
ommemorated as such annually.
Sec. 40. Implementing Rules and Regulations. - The departments and agenc
ies charged with carrying out the provisions of this Act shall, within ninety (9
0) days after the effectivity of this Act, formulate the necessary rules and reg
ulations for its effective implementation.
Sec. 41. Repealing Clause. - All laws, decrees, executive orders, rules
and regulations, or parts thereof inconsistent with the provisions of this Act a
re hereby repealed or modified accordingly.
Sec. 42. Separability Clause. - If, for any reason, any section or provi
sion of this Act is held unconstitutional or invalid, the other sections or prov
isions hereof shall not be affected thereby.
Sec. 43. Effectivity Clause. - This Act shall take effect after fifteen
(15) days from its publication in the Official Gazette or in at least two (2) na
tional newspapers of general circulation whichever comes earlier.
Approved: June 7, 1995
OMNIBUS RULES IMPLEMENTING RA 8042
RULES AND REGULATIONS IMPLEMENTING THE MIGRANT WORKERS AND OVERSEAS FILIPINOS AC
T OF 1995
Pursuant to the authority vested by law on the Secretary of Labor and Emp
loyment, the following implementing Rules and regulations are hereby promulgated
:
I. GENERAL POLICY STATEMENT
Section 1. Declaration of Policies.
(a) In the pursuit of an independent foreign policy and while considering na
tional sovereignty, territorial integrity, national interest and the right self-
determination paramount in its relations with other states, the State shall, at
all times, uphold the dignity of its citizens whether in the country or overseas
, in general, and the Filipino migrant workers, in particular.
(b) The State shall afford full protection to labor, local and overseas, org
anized and unorganized, and promote full employment and equality of employment o
pportunities for all. Towards this end, the State shall provide adequate and tim
ely social, economic and legal services to Filipino migrant workers.
(c) While recognizing the significant contribution of Filipino migrant worke
rs to the national economy through their foreign exchange remittances, the State
does not promote overseas employment as a means to sustain economic growth and
achieve national development. The existence of the overseas employment program r
ests solely on the assurance that the dignity and fundamental human rights and f
reedoms of the Filipino citizen shall not, at any time, be compromised or violat
ed. The State, therefore, shall continuously create local employment opportuniti
es and promote the equitable distribution of wealth and the benefits of developm
ent.
(d) The State affirms the fundamental equality before the law of women and m
en and the significant role of women in nation-building. Recognizing the contrib
ution of women migrant workers and their particular vulnerabilities, the State s
hall apply gender sensitive criteria in the formulation and implementation of po
licies and programs affecting migrant workers and the composition of bodies task
ed for the welfare of migrant workers.
(e) Free access to the courts and quasi-judicial bodies and adequate legal a
ssistance shall not be denied to any person by reason of poverty. In this regard
, it is imperative that an effective mechanism be instituted to ensure that the
rights and interest of distressed overseas Filipinos, in general, and Filipino m
igrant workers, in particular, documented or undocumented, are adequately protec
ted and safeguarded.
(f) The right of Filipino migrant workers and all overseas Filipinos to part
icipate in the democratic decision-making process of the State and to be present
ed in institutions relevant to overseas employment is recognized and guarantee.
(g) The State recognizes that the ultimate protection to all migrant workers
is the possession of skills.
(h) Non-governmental organizations, duly recognized as legitimate, are partn
ers of the State in the protection of Filipino migrant workers and in the promot
ion of their welfare. The State shall cooperate with them in the spirit of trust
and mutual respect.
II. DEFINITION OF TERMS
Section 2. Definitions.
(a) Migrant worker refers to a person who is to be engaged, is engaged or ha
s been engaged in a remunerated activity in a State of which he or she is not a
legal resident; to be used interchangeably with Overseas Filipino Workers ;
(b) Legal Resident means a person who has obtained permanent residency statu
s in accordance with the law of the host country.
(c) Overseas Filipinos refers to migrant, workers, other Filipino nationals
and their dependents abroad.
(d) Document migrant Workers refers to:
(1) those who possess valid passports and visas or permits to stay in the ho
st country and whose contracts of employment have been processed by the POEA if
required by law or regulation; or
(2) those registered by the Migrant Workers and Other Overseas Filipinos Res
ource Center or by the Embassy.
(e) Undocumented Migrant Workers refers to those who do not fall under parag
raph (d) herein.
(f) Gender Sensitivity means cognizance of the inequalities and inequalities
prevalent in society between women and men and a commitment to address issues w
ith concern for the respective interest of the sexes.
(g) Non-Government Organizations (NGO s) refers of non-governmental organizati
ons which are duly registered with appropriate Philippine government agencies.
(h) Skilled Workers refers to those who have obtained an academic degree or
sufficient experience in the job for which they are applying, as may be determi
ned by the Secretary.
(i) Underage Migrant Workers refers to those who are below 18 years or below
the minimum age requirement for overseas employment as determined by the Secret
ary.
(j) Employment Agency refers to ant person, partnership or corporation duly
licensed by the Secretary to engage inn the recruitment and placement of workers
for overseas employment for a fee which is charged, directly or indirectly, fro
m the workers or employers or both.
(k) Manning Agency refers to any person, partnership or corporation duly lic
ensed by the Secretary to engage in the recruitment and placement of seafarers f
or vessels plying international waters and for related maritime activities.
(l) Service Contractor refers to any person, partnership or corporation duly
licensed by the secretary to recruit workers for its accredited projects or con
tracts overseas.
(m) Labor Code refers to Presidential Decree No. 442, as amended.
(n) Secretary refers to the Secretary of Labor and Employment.
(o) Act refers to the Migrant Workers and Overseas Filipinos Act of 1995, to b
e used interchangeably with the R.A. 8042.
(p) DOLE refers to the Department of Labor and Employment.
(q) POEA refers to, the Philippines Overseas employment Administration.
(r) OWWA refers to the Overseas Workers Welfare Administration.
(s) NLRC refers to the national Labor Relations Commission.
(t) BLE refers to the Bureau of Local Employment.
(u) TESDA refers to the Technical Education and Skills Development Authority
.
(v) DFA refers to the Department of Foreign Affairs.
(w) DOJ refers to the Department of Justice.
(x) DOST refers to the Department of Science and Technology.
III. DEPLOYMENT
Section 3. Guarantee of Migrant Workers Rights The Secretary shall deplo
y or allow the deployment of Filipino migrant workers only in countries where th
eir rights are protected, recognizing any of the following as a guarantee for th
e protection of the rights of migrant workers:
(a) The country has existing labor and social laws protecting the rights of
migrant workers in substantial conformity with UN Conventions;
(b) The country is a signatory to UN multilateral conventions, declaration o
r resolutions relating to the protection of migrant workers;
(c) The country has concluded bilateral agreement or arrangement with the Ph
ilippine Government on the protection of the rights of Overseas Filipino Workers
; and
(d) The host country is taking positive, concrete measures to protect the ri
ghts of migrant workers consistent with relevant UN Conventions.
The POEA shall process overseas employment contracts only for countries m
eeting any of the above criteria, as determined by the Secretary.
Section 4. Deployment of Skilled Workers As soon as adequate mechanisms
for determination of skills are in place and consistent with national interest,
the Secretary shall allow the deployment only of skilled Filipino workers.
Section 5. Ban on Deployment. Not with standing the provisions of Sectio
ns 3 and 4 of these Rules, the Secretary, in pursuit of the national interest or
when public welfare so requires, may, at any time, terminate or impose ban on t
he deployment of migrant workers.
Section 6. Travel Advisory The POEA shall publish, at least once a month
, a Travel Advisory in a newspapers of general circulation. The Basis of this sh
all be the travel advisories from the DFA relative to labor and employment condi
tions, migration realities and other facts, as well as a adherence of particular
countries to international standards on human and workers rights which will ade
quately individuals into making informed and intelligent decisions about oversea
s employment
The POEA may undertake other programs or resort to other modes of informa
tion and dissemination campaign, such as the conduct of nationwide, comprehensiv
e and sustainable Pre-Employment Orientation Seminars.
IV. REGULATION OF PRIVATE SECTOR PARTICIPATION
Section 7. Role of POEA. Subject deregulation and phase-out as provided
under Section 29 and 30 of the Act, the POEA shall continue to regulate private
sector participation in the recruitment and overseas placement of workers throug
h its licensing and registration system pursuant to its Rules and Regulations on
Overseas Employment.
POEA shall formulate and implement, in coordination with appropriate enti
ties concerned when necessary, a system for promoting and monitoring the oversea
s employment of Filipino workers taking into consideration their welfare and the
domestic manpower requirements.
The POEA shall come up with a package of incentives for deserving manning
agencies and service contractors, along with the policy that the deployment of
workers by such entries shall be encouraged.
V. FEES AND OTHER COSTS
Section 8. Government Fees and Administrative costs. All fees for servic
es being charged by any government office on migrant workers as of 7 June 1995 s
hall not be increased. All other services rendered by the DOLE and other governm
ent agencies in connection with the recruitment, introduction and placement of a
nd assistance to migrant workers shall be rendered free. The administrative cost
thereof shall not be become by the worker.
The migrant workers are exempt from the payment of travel tax and airport
fee upon proper showing of Overseas Employment Certificate issued by the POEA.
VI. ILLEGAL RECRUITMENT
Section 9. Definition. For purpose of the Act, illegal recruitment
shall mean any act of canvassing, enlisting, contracting, transporting, utilizin
g, hiring, or procuring workers and includes referring, contract services, promi
sing or advertising for employment abroad, whether for profit or not, when under
taken by a non-licensee or non-holder of authority contemplated under Article 13
(f) of the Labor Code of the Philippines: Provided, That any such non-licensee
or non-holder-holder who, in any manner, offers or promises for fee employment a
broad to two or more shall be deemed so engaged.
It shall like wise include the following acts committed by any person whe
ther or not a holder of a license or authority:
(a) To charge or accept directly or indirectly any amount greater than that
specified in the schedule of allowable fees prescribed by the Secretary, or to m
ake a worker per recruiter or its agents any amount greater than that actually l
oaned or advanced to him;
(b) To furnish or publish any false notice or information or document in rel
ation to recruitment or employment;
(c) To give any false notice, testimony, information or document or commit a
ny act of misrepresentation for the purpose of securing a license or authority u
nder the Labor Code;
(d) To induce or attempt to induce a worker already employed to quit his emp
loyment in order to offer him another unless the transfer is designed to liberat
e a worker from oppressive terms and conditions of employment;
(e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency;
(f) To engage in the recruitment or placement of workers in jobs harmful to
public health or morality or to the dignity of the Republic of the Philippines a
s may be prohibited by law or duly constituted authority;
(g) To obstruct or attempt to obstruct inspection by the Secretary or by his
/her duly authorized representative;
(h) to fail to submit reports on the status of employment, placement vacanci
es, remittances of foreign exchange earnings, separation from jobs, departures a
nd such other matters or information as may be required by the Secretary under p
enalty of law;
(i) To substitute or latter to the prejudice of the worker, employment contr
acts approved and verified by the DOLE from, the time of actual signing thereof
by the parties up to and including the period of the expirations of the same wit
hout the approval of the DOLE;
(j) For an officer or agent of a recruitment or placement agency to become o
fficer or member of the Board of any corporation engaged in travel agency or to
be engaged directly or indirectly in the management of a travel agency;
(k) To withhold or deny travel documents from applicant workers before depar
ture for monetary or financial considerations other than those authorized under
the Labor Code and its implementing rules and regulations;
(l) To fail to actually deploy without valid reason as determined by the DOL
E;
(m) To fail to reimburse expenses incurred by the worker in connection with
his documentation and processing for purposes of deployment, in case where the d
eployment does not actually take place without the worker s fault.
Section 10. Crime Involving Economic Sabotage Illegal recruitment when c
ommitted by a syndicate or in large scale shall be considered an offense involvi
ng economic sabotage. Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons conspiring or confederating
with one another, It is deemed committed in large scale if committed against thr
ee (3) or more persons individually or as a group.
Section 11. Persons Responsible The person criminally liable for the abo
ve offenses are the principals, accomplices and accessories. In case of juridica
l persons, the officers having control, management or direction of their busines
s shall be liable.
Section 12. Independent Administrator Action. The institution of the cri
minal action is without prejudice to any administrative action against the licen
see or holder of authority cognizable by the POEA which could proceed independen
tly of the criminal action.
VII. PROHIBITION ON GOVERNMENT PERSONNEL
Section 13. Disqualification. The following personnel shall be proh
ibited from engaging directly or indirectly in the business or recruitment of mi
grant workers:
(a) Any official or employee of the DOLE , POEA, OWWA, DFA, DOJ and other go
vernment agencies involved in the implementation of this Act, regardless of the
status of his/her employment; and
(b) Any of his/her relatives within the fourth civil degree of consanguinity
or affinity.
Any government official or employee found to be violating this Section sh
all be charged administratively: according to Civil Service Rules and Regulation
s without prejudice to criminal prosecution.
The government agency concerned shall monitor and initiate, upon its init
iative or upon the petition of any private individual, action against erring off
icials and employees, and/or their relatives.
VIII. ANTI-ILLEGAL RECRUITMENT PROGRAMS
Section 14. POEA Programs. The POEA shall adopt policies and procedures,
prepare and implement programs the eradication of illegal recruitment activitie
s such as, but not limited to the following:
(a) Providing legal assistance to victims of illegal recruitment and related
cases which are administrative or criminal in nature;
(b) Prosecution of illegal recruiter;
(c) Special operations such as surveillance of persons and entities suspecte
d to be engaged in illegal recruitments; and
(d) Information and education campaign.
Whenever necessary, the POEA shall coordinate with other appropriate enti
ties in the implementing of said programs.
Section 15. Legal Assistance. The POEA shall provide free legal serv
ice to victims of illegal recruitment and related cases which are administrative
or criminal in nature in the form of legal advice assistance in the preparation
of complaints and supporting documents, institution of criminal actions and wha
tever necessary, provide counselling assistance during preliminary investigation
and hearings.
Section 16. Receiving of Complaints for Illegal Recruitment. Victims of
illegal recruitment and related cases which are administrative or criminal in na
ture may file with the POEA a report of complaint in writing and under oath for
assistance purposes.
In regions outside the National Capital Region , complaints and reports i
nvolving illegal recruitment may be filed with the appropriate regional office o
f the POEA or DOLE.
Section 17. Action on the Complaint/Report. Where the complaint/rep
ort alleges that illegal recruitment activities are on-going, surveillance shall
be conducted and if such activities are confirmed, issuance of closure order ma
y be recommended to the POEA Administrator through the Director of the Licensing
and Regulation Office (Director-LRO). If sufficient basis for criminal action i
s found, the case shall be immediately forwarded to the appropriate office for s
uch action.
Section 18. Surveillance The POEA and/or designated official in the DOLE
regional offices may on his own conduct initiative conduct surveillance on the
alleged illegal recruitment activities.
Within two (2) days from the termination of surveillance, a report suppor
ted by an affidavit, shall be submitted to the Director-LRO or the Regional Dire
ctor concerned, as the case may be.
Section 19. Issuance of Closure Order. The Secretary or the POEA Ad
ministrator of the DOLE Regional Director of the appropriate regional office out
side The National Capital Region, or their duly authorized representatives, may
conduct an ex parte preliminary examination to determine whether the activities
of a non-licensee constitute a danger to national security and public order or w
ill lead to further exploration of job seekers. For this purpose, the Secretary,
the POEA Administrator or the Regional Director concerned or their duly authori
zed representatives, may examine personally the complainants and/or witness in t
he form of searching questions and answers and shall take their testimony under
oath. The testimony of the complainants and/or witnesses shall be reduced in wri
ting and signed by them.
If upon them preliminary examination or surveillance, the Secretary, POEA
Administrator or DOLE Regional Director is satisfied that such danger or exploi
tation exists, a written order may be issued for the closure of the establishmen
t being used for illegal recruitment activity.
In case of a business establishment whose license or permit to operate a
business was issued by the local government, the Secretary, the POEA Administrat
or or the Regional Director concerned shall likewise recommend to the granting a
uthority the immediate cancellation/revocation of the license or permit to opera
te its business.
Section 20. Implementation of Closure Order. Closure order shall be
served upon the offender or the person in charge of the establishment subject t
hereof. The closure shall be affected by sealing the establishment and posting a
s notice of such closure in bold letters at a conspicuous place in the premises
of the establishment. Whether necessary, the assistance and support of the appro
priate law enforcement agencies may be requested for this purpose.
Section 21. Report on Implementation. A report on the implementatio
n of the closure order executed under oath, stating the details of the proceedin
gs undertaken shall be submitted to the Director-LRO or the Regional Director co
ncerned, as the case may be, within two (2) days from the date of implementation
.
Section 22. Institution of Criminal Action. The Secretary, the POEA Admi
nistrator or the Regional Director concerned, or their duly authorized represent
atives, or any aggrieved person, may initiate the corresponding criminal action
with the appropriate office.
Where a complaint is filed with the a POEA and the same is proper for pre
liminary investigation, it shall file the corresponding complaint with the appro
priate officer, with the supporting documents.
Section 23. Motion to Lift A Closure Order. A motion to lift a closure o
rder which has already been implemented may be entertained only when filed with
the Licensing and Regulations Office (LRO) within ten (10) calendar days from th
e date of implementation thereof. The Motion shall clearly state the grounds upo
n which it is based, attaching thereto the documents in support thereof. A motio
n to lift which does not comform with the requirements herein set forth shall be
denied outrightly.
Section 24. Who May File. The motion to lift a closure order may be file
d only by the following:
(a) The owner of the buildings or his duly authorized representatives;
(b) The building administrator or his duly authorized representative;
(c) The person or entity against whom the closure order was issued and imple
mented or the duly authorized representative; or
(d) Any other person or entity legitimately operating within the premises cl
osed/padlocked whose operations/activities are distinct from the recruitment act
ivities of the person/entity subject of the closure order.
Section 25. Grounds for Lifting/Re-Operating. Lifting of the closure ord
er and/or re-opening of the office closed or padlocked may be granted on any of
the following grounds;
(a) That is not the subject of the closure order;
(b) That the contract of lease with the owner of the building or the buildin
g administrator bas already been cancelled or terminated. The request to re-open
shall be duly supported by an affidavit of undertaking either of the owner of t
he building or the building administrator that the same will not be leased rente
d to any person/entity for recruitment purposes without the necessary license fr
om the POEA;
(c) That the office is shared by a person/entity not involved in illegal rec
ruitment activities, whether directly or indirectly;
(d) Any other ground that the POEA may consider as valid and meritorious.
Lifting of a closure order is without prejudice to the filing of a crimin
al complaint with the appropriate office against the person alleged to have cond
ucted illegal recruitment activities.
Section 26. Appeal. The order of the POEA Administrator denying the moti
on to lift may be appealed to the Secretary within ten (10) days from service or
receipt thereof.
Section 27. Re-Padlocking of Office. Where a re-opened office was subseq
uently confirmed to be used for illegal recruitment activities, a new closure or
der shall be issued which shall not be subject to a motion to lift.
IX. PRE-EMPLOYMENT AND DISCIPLINARY ACTION CASES
Section 28. Jurisdiction of the POEA. The POEA shall exercise origi
nal and exclusive jurisdiction to hear and decide:
(a) all cases, which are administrative in character, involving or arising o
ut of violations of rules and regulations relating to licensing and registration
of recruitment and employment agencies or entities; and
(b) disciplinary actions cases and other cases, which are administrative in
character, involving employers, principals, contracting partners and Filipino mi
grant workers.
Section 29. Venue. The cases mentioned in Section 27(a) of this Rule, ma
y be filed with the POEA Adjudication Office or the DOLE/POEA regional office of
the place where the complainant applied or was recruited, at the option of the
complainant. The office with which with which the complaint was first filed shal
l take cognizance of the case.
Disciplinary action cases and other special cases, as mentioned in the pr
eceding Section, shall be filed with the POEA Adjudication Office.
X. MIGRANT WORKERS LOAN GUARANTEE FUND
Section 30. Definitions.
(a) Pre-Departure Loans. refers to loans granted to departing migrant worker
s covered by new contracts to satisfy their pre-departure requirements such as p
ayments for placement/processing fees, airplane fare, subsistence allowance, cos
t of clothing and pocket money.
(b) Family Assistance Loans. refers to loans granted to currently employed m
igrant workers or their eligible dependents/families in the Philippines to tide
them over during emergency situations.
(c) Guarantee Agreement. refers to a contract between the participating fina
ncial institution and OWWA whereby the latter pledges to pay a loan obtained by
a migrant worker from the former in the case the worker defaults.
(d) GFIs. refers to government financial institutions.
Section 31. Loan Guarantee Fund. The Migrant Workers Loan Guarantee Fund
is hereby established:
(a) to prevent any recruiter from taking advantage of workers seeking employ
ment abroad by expanding the grant of Pre-Departure and Family Assistance Loans
to covered migrant workers;
(b) to established and operate a guarantee system in order to provide guaran
tee cover on the pre-departure and family assistance loans of migrant workers wh
o lack or have insufficient collaterals or securities; and
(c) to ensure the participation of GFIs in extending loan assistance to needy mi
grant workers who are to be engaged for a remunerated activity abroad.
Section 32. Coverage and Scope. All departing migrant workers who need f
inancial assistance to pay or satisfy their pre-departure expenses may avail of
the Pre-Departure Loans.
Currently employed migrant workers or their eligible dependents who need
emergency financing assistance may avail of the Family Assistance Loan.
Section 33. Administration of the Fund. Pursuant to Section 21 of the Ac
t, the amount of One hundred million pesos (P100,000,000.00) from the Capital Fu
nds of OWWA shall constitute the Migrant Workers Loan Guarantee Fund. The Fund,
which shall be administered by the OWWA, shall be used exclusively to guarantee
the repayment of pre-Departure and Family Assistance Loans granted by participat
ing GFIs.
All existing revolving existing revolving funds earmarked for the Pre-Dep
arture and Family Assistance Loans shall revert back to OWWA s Capital Fund.
Section 34. Financing Scheme. The OWWA shall initiate arrangements with
GFIs to implement mutually agreed financing schemes, that will expand the Pre-De
parture and Family Assistance Loans.
Section 35. Guarantee Agreement. No loan shall be considered covered by
a guarantee unless a Guarantee Agreement has been prepared and approved by both
the participating financial institution and the OWWA.
XI. CONGRESSIONAL MIGRANT WORKERS SCHOLARSHIP PROGRAM
Section 36. Establishment of the Congressional Migrant Workers Schol
arship Fund. There is hereby created a Congressional Migrant Workers Scholarship
Fund which shall benefit deserving migrant workers and/or their immediate desce
ndants who intend to pursue course or training primarily in the field of science
and technology, as defined by the DOST.
Section 37. Sources of Fund. The initial seed Fund of Two hundred millio
n pesos (P200,000,00.00) shall be constituted from the following sources:
(a) Fifty million pesos (P50,000,000.00) from the unexpended Countrywide Dev
elopment Fund for 1995 in equal sharing by all Members of Congress; and
(b) The remaining One hundred fifty million pesos (P150,000,000.00) shall be
funded from the proceeds of Lotto draws.
Section 38. Creations of the Scholarship Fund Committee. There is hereby
created a Scholarship Fund to be composed of representatives from the DOLE, DOS
T, POEA, OWWA, TESDA and two (2) representatives of migrant workers to be appoin
ted by the Secretary.
Section 39. Functions of the Scholarship Fund Committee.
(a) To set the coverage, criteria and standards of admission to the Scholars
hip Program;
(b) To determine the amount of availment;
(c) To monitor and evaluate the program;
(d) To identify/accredit training and testing institutions; and
(e) To perform such other functions necessary to attain the purpose of the F
und.
Section 40. Implementing Agency. The OWWA shall be the Secretariat of th
e Scholarship Fund Committee. As such, it shall administer the Scholarship Progr
am, in coordination with the DOST.

XII. MIGRANT WORKERS AND OTHER OVERSEAS FILIPINOS RESOURCE CENTER


Section 41. Establishment of Filipinos Resource Center. A Migrant Worker
s and Overseas Filipinos Resource Center (Filipinos Resource Center) shall be es
tablished in countries where there are at least 20,000 migrant workers or when n
ecessary.
All Filipinos Resource Centers shall be deemed part of the premises of th
e Philippine Embassy or Mission subject to the laws of the host country.
Section 42. Services. The Filipinos Resource Center shall provide the fo
llowing services:
(a) Counseling and legal assistance;
(b) Welfare assistance including the procurement of medical and hospitalizat
ion services.
(c) Information, advisory and programs to promote social integration such as
post-arrival orientation, settlement and community networking services and acti
vities for social interaction;
(d) Registration of undocumented workers;
(c) Implementation of the Voluntary Membership Program of OWWA;
(f) Human resource development, such as training and skills upgrading;
(g) Gender-sensitive programs and activities to assist particular needs of m
igrant workers;
(h) Orientation program for returning workers and other overseas Filipinos;
(i) Monitoring of daily situations, circumstances and activities affecting m
igrant workers and other overseas Filipinos;
(j) Seeing to it that labor and social welfare laws in the host country are
fairly applied to migrant workers and other overseas Filipinos; and
(k) Conciliation of dispute arising from employer-employee relationship.
Section 43. Personnel. Each Filipinos Resource Center shall be staffed b
y a minimum of four (4) personnel composed of the following:
(a) Labor Attache (1)
(b) Foreign Service Officer or Staff from DFA (1)
(c) Welfare Officer (1)
(d) Coordinating Officer (1)
An Interpreter may be retained when necessary (local hire).
In countries deemed highly problematic, a lawyer, a social worker and oth
er personnel may be deployed by the concerned government agency upon the recomme
ndation of the Chief of Mission.
Section 44. Administration. The Labor Attache shall manage the operation
of the Filipino Resource Center and shall keep the Chief of Mission informed an
d updated on all matters affecting it.
Section 45. Round-the Clock operations. The Filipinos Resource Center sh
all operate on a 24-hour basis including Saturdays, Sundays and holidays. The Fi
lipinos Resource Center shall link up with its counterpart 24-hour Information a
nd Assistance Center at the DFA to ensure a continuous network and coordinative
mechanism.
Section 46. Budget. The costs of establishment, maintenance and operatio
n of Filipinos Resource Center, including the costs of services and programs not
specially funded the Act, shall be source from the general Appropriations Act s
hall be included in the annual budget of DOLE.
However, the salaries and allowances of overseas personnel shall be sourc
e from their respective agency s budget.
XIII. ENFORCEMENT OF CONTRACTUAL OBLIGATIONS
Section 47. Role of OWWA. The welfare Officers, or in his absence, the C
oordinating Officer Resources Center shall make proper representations with the
employer/principal and/or agency as the case may be, through conciliation meetin
gs or conferences for the purpose of enforcing contractual obligations concernin
g migrant workers. For this purpose, the officer may enlist the assistance of th
e OWWA Home Office.
XIV. REPATRIATION OF FILIPINO MIGRANT WORKERS
Section 48. Primary for Repatriation. The repatriation of the worker, or
his/her remains; and transport of his/her personal effects shall be the primary
responsibility of the principal or agency which recruited or deployed him/her a
broad. All costs attendant thereto shall be borne by the principal or the agency
concerned.
Section 49. Repatriation of Workers. The Primary responsibility to repat
riate entails the obligation on the part of the principal or agency to advance t
he cost of plane fare and to immediately repatriate the worker should the need f
or it arise, without a prior determination of the cause of the termination of th
e worker s employment. However, after the worker has returned to the country, the
principal or agency may recover the cost of repatriation from the worker if the
termination of employment was due solely to his/her fault.
Every contract for overseas employment shall provide for the primary resp
onsibility of agency to advance the cost of plane fare, and the obligation of th
e worker to refund the cost thereof in case his/her fault is determined by the L
abor Arbiter.
Section 50. Repatriation Procedure. When a need for repatriation arises
and the foreign employer fails to provide for its cost, the responsible personne
l at site shall simultaneously notify OWWA and the POEA of such need. The POEA s
hall notify the agency concerned of the need for repatriation. The agency shall
provide the plane ticket or the prepaid ticket advise (PTA) to the Filipinos Res
ource Center or to the appropriate Philippine Embassy; and notify POEA of such c
ompliance. The POEA shall inform OWWA of the agency.
Section 51. Action an Non-Compliance. If the employment agency fails to
provide the ticket or PTA within 48 hours from receipt of the notice, the POEA s
hall suspend the license of the agency or impose such sanctions as it may deem n
ecessary. Upon notice from the POEA, OWWA shall advance the costs of repatriatio
n with resources to the agency or principal. The administrative sanctions shall
not be lifted until the agency reimburses the OWWA of the cost of repatriation w
ith legal interest.
Section 52. Emergency Repatriation. The OWWA., in coordination with the
DFA, and in appropriate situations with international agencies, shall undertake
the repatriation of workers in case of war, epidemic, disaster or calamities, na
tural or man-made, other similar events without prejudice to reimbursement by th
e responsible principal or agency within sixty (60) days of notice.
Section 53. Mandatory Repatriation of Underage Migrant Workers. The resp
onsible officer at the foreign service post shall immediately cause the repatria
tion of Filipino migrant workers. The costs of repatriation shall be the primary
responsibility of the agency and/or principal.
Section 54. Other Cases of Repatriation. Where the principal or agency o
f the worker cannot be identified, cannot be located or had ceased operations, a
nd the worker is in need and without means, the OWWA personnel at jobsite, in co
ordination with the DFA, shall cause the repatriation.
Section 55. Chargeability of Costs. All costs attendant to repatriation
borne by the OWWA are chargeable to the Emergency Repatriation Fund provided in
the Act, without prejudice to the OWWA requiring the agency/employer or the work
er to reimburse the cost of repatriation, as the case may be.
Section 56. Prohibition on Bonds and Deposits. In no case shall an emplo
yment agency require any bond or cash deposits from the worker of guarantee perf
ormance under the contract or his/her repatriation.
Section 57. Abolition of Mandatory Repatriation Bond. Pursuant to Sectio
n 36 of R.A. 8042, the mandatory repatriation bond is abolished as of 7 June 199
5.
XV. MONEY CLAIMS
Section 58. Jurisdiction of the Labor Arbiters. The Labor Arbiters of th
e NLRC shall have the original and exclusive jurisdiction to hear and decide all
claims arising out of employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims fo
r actual, moral, exemplary and other forms of damages, subject to the rules and
procedures of the NLRC.
Section 59. Pending Cases. All unresolved money claims pending at POEA a
s of 15 July 1995 shall be referred to NLRC for disposition.
Section 60. Solidary Liability. The liability of the principal/employer
and the requirement/placement agency on any and all claims under this Rule shall
be joint and solidary. This liability shall be incorporated in the contract for
overseas employment and shall be a condition be a condition precedent for its a
pproval. The performances bond to be filed by the requirement/placement agency,
as provided by law, shall be answerable for all money claims or damages that may
be awarded to the workers.
If the recruitment/placement agency is a juridical being, the corporate o
fficers and directors and partners as the case may be, shall themselves be joint
ly and solidarily liable with the corporation or partnership for the aforesaid c
laims and damages.
Such liabilities shall continue during the entire period or duration of t
he employment contract and shall contract and shall not be affected by any subst
itution, amendment or modification made locally or a foreign country of the said
contract.
Section 61. Compromise Agreement. Any compromise, amicable settlement or
voluntary agreement on money claims inclusive of damages under this Rule shall
be paid within four (4) months from the approval of the settlement by the approp
riate authority.
XVI. RE-PLACEMENT AND MONITORING CENTER
Section 62. Re-Placement and Monitoring center. A Re-Placement and Monit
oring Center (Center) is hereby created in the DOLE for returning Filipino migra
nt workers which shall:
(a) provide a mechanism for the reintegration into the Philippine society;
(b) serve as a promotion houses for their local employment; and
(c) tap their skills and potentials for national development.
The Center shall be under the administrative supervision and control of t
he Secretary.
The Center, while serving the needs of returning migrant workers, shall l
ikewise provide support to related programs in the Filipinos Resource Centers.
Section 63. Secretariat. A Secretariat shall be created to be composed o
f technical staff from, but not limited to, the OWWA, POEA, TESDA and BLE; and s
hall be headed by a Program Manager to be designated by the Secretary. The Secre
tariat shall be the coordinating and monitoring body of the Center.
Section 64. Participation of Government, Private Sector and NGOs. The DO
LE, in pursuit of the objectives and functions of the Center, may request the pa
rticipation of other government agencies, the private sector and non-government
organizations. Each participating entity shall identify and development programs
or services related to reintegration for the attainment of the Center s objective
s. A Memorandum of Agreement (MOA) shall be entered into by the participating en
tries to define their respective roles.
Section 65. Functions of the Center. The Center shall provided the follo
wing services:
(a) Develop livelihood programs and projects for returning Filipino migrant
workers in coordination with the private sector;
(b) Coordinate with appropriate private and government agencies in the promo
tions, development, re-placement and the full utilization of the potentials of r
eturning migrant workers;
(c) Institute, in cooperation with other government agencies concerned, a co
mputer-based information system on skilled Filipino migrant workers which shall
accessible to all local recruitment agencies and employers, both public and priv
ate;
(d) Provide a periodic study and assessment of Job opportunities for returni
ng Filipino migrant workers;
(e) Develop and implement other appropriate programs to promote the welfare
of returning Filipino migrant workers; and
(f) In coordination with DOST, provide incentives for professionals and othe
r highly-skilled Filipinos abroad, especially in the field of science and techno
logy, to participate in and contribute to national development.
Section 66. Funding for the Center.
(a) Funds necessary for the establishment and initial implementation of them
programs or services of the Center shall be sourced from of the participating a
gencies as may be determined by the Secretary.
(b) Funds for the operation of the Center shall come from the General Approp
riations Act and shall be integrated into the annual budget of the DOLE.
XVII. MIGRANT WORKERS DAY
Section 67. Commemoration. The DOLE shall lead and enlist the cooperatio
n of other government agencies in the commemoration of a Migrant Workers; in of
every year.
XVIII. MISCELLANEOUS PROVISIONS
Section 68. Additional Members of the POEA AND OWWA Boards. The POEA and
OWWA Boards shall have at least (3) additional members each to come from the wo
men, sea-based sectors, and land-based sectors, and to be appointed by the Presi
dent.
Section 69. Reports to Congress. The DOLE shall submit to Congress the r
equired reports under Section 33 of the Act on or before the last day of the Qua
rter following the reporting period.
Section 70. Repealing Clause. All Department Orders, Circulars and Regul
ations inconsistent with these Rules and Regulations are hereby repealed or amen
ded accordingly.
Section 71. Effectivity. The provisions of these Rules and Regulations s
hall take effect fifteen days (15) after publication in two (2) newspapers of ge
neral circulation.
Done in the City of Tagaytay, for Manila, this 5th day of October 1995.
1991 POEA RULES: BOOK I, RULES I - II
RULE I
GENERAL STATEMENT OF POLICY
It shall be the policy of the Administration to:
a. Promote and develop overseas employment opportunities in cooperation with releva
nt government institutions and the private sector;
b. Establish the environment conducive to the continued operations of legit
imate, responsible and professional private agencies;
c. Afford protection to Filipino workers and their families, promote their interest
s and safeguard their welfare; and
d. Develop and implement programs for the effective monitoring of returning contrac
t workers promoting their re-training and re-employment of their smooth re-integ
ration into the mainstream of the national economy.
RULE II
DEFINITION OF TERMS
For purposes of these Rules, the following terms are defined as follows:
a. Administration the Philippine Overseas Employment Administration (POEA).
b. Administrator the Administrator of the POEA.
c. Agency A private employment or a manning agency as defined herein.
d.Allotee any person named or designated by the overseas contract workers as the reci
pient of his remittance to the Philippines.
e. Balik-Mangagawa (Vacationing Worker) a landbased contract worker who is on a vac
ation or on an emergency leave and who is returning to the same worksite to resu
me his employment.
f. Beneficiary the person/s to whom compensation benefits due under an overseas emp
loyment contract are payable by operation of law or those to whom proceeds of a
life or accident insurance are likewise payable.
g. Center the POEA Regional Center in Cebu and such other regional centers as may h
ereinafter be established.
h. Code the Labor Code of the Philippines as amended.
i. Collective Bargaining Agreement the negotiated contract between a legitimate lab
or organization and the employer concerning wages, hours of work and all other t
erms and conditions of employment in a bargaining unit, including mandatory prov
isions for grievance and arbitration machineries.
j. Contract Worker any person working or who has worked overseas under a valid empl
oyment contact.
k. Department the Department of Labor and Employment (DOLE).
l. Directorate the executive body of the Administration composed of its Administrat
or, Deputy Administrators and Directors as defined herein.
m. Director-LRO the Director of the Licensing and Regulation Office.
n. Director-PSO the Director of the Pre-Employment Services Office.
o. Director-AO the Director of the Adjudication Office.
p. Director WEO the Director of the Welfare and Employment Office.
q. Employer any person, partnership or corporation, whether local or foreign, direc
tly engaging the services of Filipino workers overseas.
r. Foreign Exchange (Forex) Earnings the earnings in terms of US dollars (US$) or a
ny other acceptable foreign currency of overseas workers and agencies.
s. Governing Board the policy-making body of the Administration.
t. Government-to-Government Hiring recruitment and placement of Filipino workers by
foreign government ministries or instrumentalities through the Administration.
u. Job Fair an activity conducted outside of an agency s authorized business address
whereby applicants are oriented on employment opportunities and benefits provide
d by foreign principals and employers.
v. License a document issued by the Secretary authorizing a person, partnership or
corporation to operate a private employment agency or a manning agency.
w. Manning Agency any person, partnership or corporation duly licensed by the Secre
tary to recruit seafarers for vessel plying international waters and for related
maritime activities.
x. Manning Agreement an agreement entered into by and between the principal and the
licensed manning agency defining the responsibilities of both parties with resp
ect to the employment of ship personnel for their enrolled vessels.
y. Commission the National Labor Relation Commission.
z. Name Hire a worker who is able to secure employment overseas on his own without
the assistance or participation of any agency.
aa. Non-Licensee any person, partnership or corporation who has not been iss
ued a valid license to engage in recruitment and placement, or whose license has
been suspended, revoked or cancelled.
bb. One-Stop Processing Center an inter-agency servicing body designed to fa
cilitate the documentation of contract workers.
cc. Overseas Employment employment of a worker outside the Philippines inclu
ding employment on board vessels plying international waters, covered by a valid
employment contract.
dd. Philippine Shipping Company any person, partnership or corporation regis
tered under the laws of the Philippines and duly accredited to engage in oversea
s shipping activities by the Maritime Industry Authority (MARINA).
ee. Philippine Registered Vessel vessels duly registered in the Philippines.
ff. Placement Fee the amount charged by a private employment agency from a worker fo
r its services in securing employment.
gg. Principal any foreign person, partnership or corporation hiring Filipino
workers through an agency.
hh. Private Employment Agency any person, partnership or corporation engaged
in the recruitment and placement of workers for a fee which is charged, directl
y or indirectly, from the workers or employees or both.
ii. Recruitment Agreement the agreement entered into by and between the foreign prin
cipal and the licensed private employment agency defining the responsibilities o
f both parties with respect to the employment of workers for their overseas proj
ects.
jj. Recruitment and Placement any act of canvassing, enlisting, contracting, transpo
rting, utilizing, hiring or procuring workers and includes referrals, contract s
ervices, promising or advertising for employment, locally or abroad, whether for
profit or not; provided, that any person or entity which, in any manner, offers
or promises for a fee employment to two or more persons shall be deemed engaged
in recruitment and placement.
kk. Regional Director the head of the Regional Offices of the Department.
ll. Regional Extension Unit the field offices of the Administration in designated re
gions in the Philippines.
mm. Regional labor Center (RLC) the regional field office of the Administrat
ion.
nn. Regional Offices the regional office of the Department of Labor and Empl
oyment.
oo. Remittance the amount or portion of the foreign exchange earnings sent b
y the worker to the Philippines.
pp. Secretary the Secretary of Labor and Employment.
qq. Service Fee the amount charged by a licensee from its foreign employer-p
rincipal as payment for actual services rendered in relation to the recruitment
and employment of workers for said principal.
rr. Valid Employment Contract a written agreement entered into by and between the em
ployer and/or the local agency and the overseas contract worker containing the t
erms and conditions of employment that are in consonance with the master employm
ent contract as approved by the Administration.
ss.Verification the action of labor attach or any other officer designated by the Se
cretary of Labor and Employment in the Philippine Embassy or Consulate, in revie
wing employment documents of Filipino nationals with the view to establish the e
xistence of the employing company, its ability to hire workers at the prescribed
rates, at desirable working conditions consistent with the standards prescribed
by the Administration and terms and conditions prevailing in the country of emp
loyment.
CASES
People vs. Senoron, 267 SCRA 278
Ilano recruited Virtucio and his companions to work abroad. They were given job
application forms, which they filled up as told. Senoron failed to send Virtuc
io and his companions abroad. Thus, a case for illegal recruitment was filed aga
inst her. Senoron alleges that there is nothing on record, which says that the p
lacement fees received by Ilano from them were turned over to her.
Issue: Whether Senoron was guilty of illegal recruitment.
Held: Yes. Illegal recruitment is defined under Article 38(a), of the Labor Co
de, as amended, as (a)ny recruitment activities, including the prohibited practic
es enumerated under Article 34 of this Code, to be undertaken by non-licensees o
r nonholders of authority. Article 13 (b) of the Code defines recruitment and plac
ement as (A)ny act of canvassing, enlisting, contracting, transporting, utilizing
, hiring or producing workers and includes referrals, contract services, promisin
g or advertising for employment, locally or abroad, whether for profit or not: P
rovided, that any person or entity which in any manner, offer or promises for a
fee employment to two or more persons shall be deemed engaged in recruitment and
placement.
To prove illegal recruitment two elements must be shown, namely:
1. The person charged with the crime must have undertaken recruitment activities
, or any of the activities enumerated in Article 34 of the Labor Code, as amende
d; and
2. Said person does not have a license or authority to do so.
Contrary to appellant s mistaken notion, it is not the issuance or signing
of receipts for the placement fees that makes a case for illegal recruitment, bu
t rather the undertaking of recruitment activities without the necessary license
or authority.
Senoron made a distinct impression that she had the ability to send appli
cants to work abroad. She, however, does not possess any license or authority to
recruit which fact was confirmed by the duly authenticated certification.
Darvin vs. CA, 292 SCRA 534
Toledo claims that, Darvin told her that by giving P150,000.00, she could immedi
ately leave for the US without appearance before the US Embassy. Thus, she gave
Darvin the amount. When after a week, there was no word from Darvin, Toledo wen
t to her residence to inquire about any development but could not find Darvin. T
oledo then filed a complaint against Darvin.
Issue: Whether Darvin was guilty of illegal recruitment.
Held: No. To uphold the conviction of accused-appellant, two elements need to
be shown:
1. The person charged with the crime must have undertaken recruitment activities
; and
2. The said person does not have a license or authority to do so.
It is not disputed that Darvin does not have a license or authority to engage in
recruitment activities.
To prove that she was engaged in recruitment activities as to commit the
crime of illegal recruitment, it must be shown that she gave Toledo the distinct
impression that she had the power or ability to send her abroad for work such t
hat the latter was convinced to part with her money in order to be so employed.
There is no sufficient evidence to prove that Darvin offered a job to Toledo. By
themselves, procuring a passport, airline tickets and foreign visa for another
individual, without more, can hardly qualify as recruitment activities. Aside fr
om the testimony of Toledo, there is nothing to show that Darvin engaged in recr
uitment activities.
B. LABOR STANDARDS; COVERAGE
LABOR CODE
Art. 82. Coverage. The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to governmen
t employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another and workers who are paid by results as determined b
y the Secretary of Labor in appropriate regulations.
As used herein, managerial employees refer to those whose primary duty cons
ists of the management of the establishment in which they are employed or of a d
epartment or subdivision thereof, and to other officers or members of the manage
rial staff.
Field personnel refer to non-agricultural employees who regularly perform t
heir duties away from the principal place of business or branch office of the em
ployer and whose actual hours of work in the field cannot be determined with rea
sonable certainty.
OMNIBUS RULES, BOOK III
RULE I
Hours of Work
SECTION 1. General Statement on Coverage. The provisions of this Rule shall
apply to all employees in all establishments and undertakings, whether operated
for profit or not, except to those specifically exempted under Section 2 hereof
.
SECTION 2. Exemption. The provisions of this Rule shall not apply to the fo
llowing persons if they qualify for exemption under the conditions set forth her
ein:
(a) Government employees whether employed by the National Government or any
of its political subdivision, including those employed in government-owned and/o
r controlled corporations;
(b) Managerial employees, if they meet all of the following conditions:
(1) Their primary duty consists of the management of the establishment in wh
ich they are employed or of a department or sub-division thereof.
(2) They customarily and regularly direct the work of two or more employees
therein.
(3) They have the authority to hire or fire employees of lower rank; or thei
r suggestions and recommendations as to hiring and firing and as to the promotio
n or any other change of status of other employees, are given particular weight.
(c) Officers or members of a managerial staff if they perform the following
duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
and
(3) (i) Regularly and directly assist a proprietor or a managerial employee
whose primary duty consists of the management of the establishment in which he i
s employed or subdivision thereof; or (ii) execute under general supervision wor
k along specialized or technical lines requiring special training, experience, o
r knowledge; or (iii) execute, under general supervision, special assignments an
d tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a work w
eek to activities which are not directly and closely related to the performance
of the work described in paragraphs (1), (2) and (3) above.
(d) Domestic servants and persons in the personal service of another if they
perform such services in the employer s home which are usually necessary or desir
able for the maintenance and enjoyment thereof, or minister to the personal comf
ort, convenience, or safety of the employer as well as the members of his employ
er s household.
(e) Workers who are paid by results, including those who are paid on piece-w
ork, "takay," "pakiao" or task basis, and other non-time work if their output ra
tes are in accordance with the standards prescribed under Section 8, Rule VII, B
ook Three of these regulations, or where such rates have been fixed by the Secre
tary of Labor and Employment in accordance with the aforesaid Section.
(f) Non-agricultural field personnel if they regularly perform their duties
away from the principal or branch office or place of business of the employer an
d whose actual hours of work in the field cannot be determined with reasonable c
ertainty.
CASES
Mercidar Fishing Corp. vs. NLRC, 297 SCRA 440
A ship s quartermaster for Mercidar complained that he was constructively dismisse
d when he was refused new assignments. He alleged that he was sick and has gone
on leave without pay but that when he returned to work, he was not reinstated. M
ercidar alleges that it was the complainant who abandoned his work.
The labor arbiter ordered reinstatement and payment of incentive leave p
ay. Mercidar appealed to the NLRC saying that the complainant is not entitled to
service incentive leave pay because he is a field personnel thus not entitled t
o it. Since the work of complainant is performed away from its principal place o
f business, it has no way of verifying his actual hours of work on the vessel.
Issue: Whether the complainant is part of field personnel who are not entitled
to service incentive leave pay.
Held: No. The complainant is not within the definition of filed personnel, th
us he is entitled to service incentive leave pay.
Art. 82. Coverage. The provisions of this title (Working Conditions and R
est Periods) shall apply to employees and undertakings whether for profit or not
, but not to government employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations.
Field personnel shall refer to non-agricultural employees who regularly pe
rform their duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot be determined w
ith reasonable certainty.
The phrase whose actual hours of work in the filed cannot be determined wi
th reasonable certainty in Art. 82 means field personnel and other employees whos
e time and performance is unsupervised by the employer.
The aforementioned rule did not add another element to the Labor Code def
inition of field personnel. The clause whose time and performance is unsupervised
by the employer did not amplify but merely interpreted and expounded the clause w
hose actual hours of work in the field cannot be determined with reasonable cert
ainty. The former clause is still within the scope and purview of Article 82, whi
ch defines field personnel. Hence, in deciding whether or not an employee s actual
working hours in the field can be determined with reasonable certainty, query m
ust be made as to whether or not such employee s time and performance is constantl
y supervised by the employer.
In the case at bar, during the entire course of their fishing voyage, fis
hermen employed by petitioner have no choice but to remain on board its vessel.
Although they perform non-agricultural work away from petitioner s business office
s, the fact remains that throughout the duration of their work they are under th
e effective control and supervision of petitioner through the vessel s patron or m
aster.
International Pharmaceuticals, Inc. v NLRC, 287 SCRA 313
Petitioner employed Quinta as Medical Director for the development of its herbal
medicine department. Their contract had a period of 1 year. After the contract,
Quinta was allowed to continue working until she was terminated. She filed a ca
se for illegal dismissal. Petitioner claims that she was only a project employee
. Moreover, it is claimed by petitioner that she was not required to keep fixed
hours of work, thus she couldn t have been a regular employee.
Issue: Whether Quinta became a regular employee.
Held: Yes. The SC held that although their contracts were valid, the fact that
after its expiration petitioner decided to continue her services, she is now en
titled to security of tenure.
Moreover, the fact that the employee was not required to report at a fix
ed hour or to keep fixed hours of work does not detract from her status as a reg
ular employee. As petitioner itself admits, Quinta was a managerial employee and
therefore not covered by the Labor Code provisions on hours of work.
Neither does the fact that Quinta was teaching full time at the Cebu Doc
tors College negate her regular status since this fact does not affect the nature
of her work. Whether one s employment is regular is not determined by the number
of hours one works, but by the nature of the work and by the length of time one
has been in that particular job.
Labor Congress of the Phils. v NLRC, 290 SCRA 509
LCP is the exclusive bargaining representative of the employees of Empire Food P
roducts. A MOA was entered into by the employees and the company. Later, the emp
loyees, represented by LCP, filed a complaint for ULP, union busting, violation
of the MOA and for underpayment of wages.
The labor arbiter and the NLRC held that there was no underpayment of wa
ges nor were they entitled to other benefits because the employees were pakiao wor
kers and paid on the basis of their output subject to the limitation that the pa
yment conformed with the minimum wage rate to an 8-hour workday. Being pakiao wo
rkers, they are not entitled to any other benefits to which regular workers are
entitled to receive.
Issue: Whether the employees are piece rate workers which make them not entitle
d to other benefits being given to regular employees.
Held: Petitioners are entitled to holiday pay, premium pay, 13th month pay and
service incentive leave. There are 3 factors which led the court to conclude th
at petitioners, although piece rate workers, were regular employees of private r
espondents. First, as to the nature of petitioners tasks, their job of repacking
snack food was necessary or desirable in the usual business of private responde
nts, who were engaged in the manufacture and selling of such food products; seco
nd, petitioners worked for private respondents throughout the year, their employ
ment not having been dependent on a specific project or season; and third, the l
ength of time that petitioners worked for private respondents. Thus, while petit
ioners mode of compensation was on a per piece basis the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from rec
eiving benefits such as nighttime pay, holiday pay, service incentive leave and
13th month pay, inter alia, field personnel and other employees whose time and pe
rformance is unsupervised by the employer, including those who are engaged on ta
sk or contract basis, purely commissions basis, or those who are paid a fixed am
ount for performing work irrespective of the time consumed in the performance th
ereof. Plainly, petitioners as piece-rate workers do not fall within this group.
Not only did petitioners labor under the control of private respondents as thei
r employer, likewise did petitioners toil throughout the year with the fulfillme
nt of their quota as supposed basis for compensation. Further, in Section 8(b),
Rule IV, Book III, piece workers are specifically mentioned as being entitled to
holiday pay.
In addition, the Revised Guidelines on the Implementation of the 13th Mo
nth Pay Law, in view of the modifications to P.D. No. 851 by Memorandum Order No
. 28, clearly exclude employer of piece rate workers from those exempted from pa
ying the 13th month pay.
The Revised Guidelines as well as the Rules and Regulations identify thos
e workers who fall under the piece-rate category as those who are paid a standar
d amount for every piece or unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing the same.
As to overtime pay, the rules, however, are different. According to Sec
2(e), Rule I, Book III of the Implementing Rules, workers who are paid by result
s including those who are paid on piece-work, takay, pakiao, or task basis, if t
heir output rates are in accordance with the standards prescribed under Sec. 8,
Rule VII, Book III, of these regulations, or where such rates have been fixed by
the Secretary of Labor in accordance with the aforesaid section, are not entitl
ed to receive overtime pay. Private respondents did not allege adherence to the
standards set forth in Sec. 8 or with the rates prescribed by the Secretary of
Labor. As such, petitioners are beyond the ambit of exempted persons and are th
erefore entitled to overtime pay.
C. Hours of Work
LABOR CODE
Art. 83. Normal hours of work. The normal hours of work of any employee shall n
ot exceed eight in a day.
Health personnel in cities or municipalities with a population of at leas
t one million (1,000,000) or in hospitals or clinics with a bed capacity of at l
east one hundred (100) shall hold regular office hours for eight (8) hours a day
, for five (5) days a week, exclusive of time for meals, except where the exigen
cies of the service require that such personnel work for six (6) days or forty-e
ight (48) hours, in which case they shall be entitled to an additional compensat
ion of at least thirty (30%) percent of their regular wage for work on the sixth
day. For purposes of this Article, health personnel shall include: resident physi
cians, nurses, nutritionists, dieticians, pharmacists, social workers, laborator
y technicians, paramedical technicians, psychologists, midwives, attendants and
all other hospital or clinic personnel.
Art. 84. Hours worked. Hours worked shall include (a) all time during which an
employee is required to be on duty or to be at a prescribed workplace, and (b) a
ll time during which an employee is suffered or permitted to work.
Rest periods of short duration during working hours shall be counted as h
ours worked.
Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor ma
y prescribe, it shall be the duty of every employer to give his employees not le
ss than sixty minutes time-off for their regular meals.
Art. 86. Night shift differential. Every employee shall be paid a night shift d
ifferential of not less than ten (10%) percent of his regular wage for each hour
of work performed between ten o clock in the evening and six o clock in the morning
.
Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day prov
ided that the employee is paid for the overtime work, an additional compensation
equivalent to his regular wage plus at least twenty-five (25%) percent thereof.
Work performed beyond eight hours on a holiday or rest day shall be paid an add
itional compensation equivalent to the rate for the first eight hours on a holid
ay or rest day plus at least 30 percent thereof.
Art. 88. Undertime not offset by overtime. Undertime work on any particular day
shall not be offset by overtime work on any other day. Permission given to the
employee to go on leave on some other day of the week shall not exempt the emplo
yer from paying the additional compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be required by the employer
to perform overtime work in any of the following cases:
(a) When the country is at war or when any other national or local emergency
has been declared by Congress or the Chief Executive;
(b) When it is necessary to prevent loss of life or property or in case of i
mminent danger to public safety due to an actual or impending emergency in the l
ocality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity;
(c) When there is urgent work to be performed on machines, installation or e
quipment, in order to avoid serious loss or damage to the employer or some other
cause of similar nature;
(d) When the work is necessary to prevent loss or damage to perishable goods
;
(e) Where the completion or continuation of the work started before the eigh
t (8th) hour is necessary to prevent serious obstruction or prejudice to the bus
iness or operations of the employer.
Any employee required to render overtime work under this Article shall be
paid the additional compensation required in this Chapter.
Art. 90. Computation of additional compensation. For purposes of computing over
time and other additional remuneration as required by this Chapter, the regular w
age of an employee shall include the cash wage only, without deduction on account
of facilities provided by the employer.
OMNIBUS RULES, BOOK III
RULE I
Hours of Work
SECTION 3. Hours worked. The following shall be considered as compensable hours
worked:
(a) All time during which an employee is required to be on duty or to be at
the employer s premises or to be at a prescribed work place; and
(b) All time during which an employee is suffered or permitted to work.
SECTION 4. Principles in determining hours worked. The following general princi
ples shall govern in determining whether the time spent by an employee is consid
ered hours worked for purposes of this Rule:
(a) All hours are hours worked which the employee is required to give his em
ployer, regardless of whether or not such hours are spent in productive labor or
involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in order that
his rest period shall not be counted, it being enough that he stops working, may
rest completely and may leave his work place, to go elsewhere, whether within o
r outside the premises of his work place.
(c) If the work performed was necessary, or it benefited the employer, or th
e employee could not abandon his work at the end of his normal working hours bec
ause he had no replacement, all time spent for such work shall be considered as
hours worked, if the work was with the knowledge of his employer or immediate su
pervisor.
(d) The time during which an employee is inactive by reason of interruptions
in his work beyond his control shall be considered working time either if the i
mminence of the resumption of work requires the employee s presence at the place o
f work or if the interval is too brief to be utilized effectively and gainfully
in the employee s own interest.
SECTION 5. Waiting time.
(a) Waiting time spent by an employee shall be considered as working time if
waiting is an integral part of his work or the employee is required or engaged
by the employer to wait.
(b) An employee who is required to remain on call in the employer s premises o
r so close thereto that he cannot use the time effectively and gainfully for his
own purpose shall be considered as working while on call. An employee who is no
t required to leave word at his home or with company officials where he may be r
eached is not working while on call.
SECTION 6. Lectures, meetings, training programs. Attendance at lectures, meeti
ngs, training programs, and other similar activities shall not be counted as wor
king time if all of the following conditions are met:
(a) attendance is outside of the employee s regular working hours;
(b) attendance is in fact voluntary; and
(c) the employee does not perform any productive work during such attendance
.
SECTION 7. Meal and Rest Periods. Every employer shall give his employees, rega
rdless of sex, not less than one (1) hour time-off for regular meals, except in
the following cases when a meal period of not less than twenty (20) minutes may
be given by the employer provided that such shorter meal period is credited as c
ompensable hours worked of the employee:
(a) Where the work is non-manual work in nature or does not involve strenuou
s physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16) ho
urs a day;
(c) In case of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss whic
h the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minute
s shall be considered as compensable working time.
SECTION 8. Overtime pay. Any employee covered by this Rule who is permitted or
required to work beyond eight (8) hours on ordinary working days shall be paid a
n additional compensation for the overtime work in the amount equivalent to his
regular wage plus at least twenty-five percent (25%) thereof.
SECTION 9. Premium and overtime pay for holiday and rest day work.
(a) Except employees referred to under Section 2 of this Rule, an employee w
ho is permitted or suffered to work on special holidays or on his designated res
t days not falling on regular holidays, shall be paid with an additional compens
ation as premium pay of not less than thirty percent (30%) of his regular wage.
For work performed in excess of eight (8) hours on special holidays and rest day
s not falling on regular holidays, an employee shall be paid an additional compe
nsation for the overtime work equivalent to his rate for the first eight hours o
n a special holiday or rest day plus at least thirty percent (30%) thereof.
(b) Employees of public utility enterprises as well as those employed in non
-profit institutions and organizations shall be entitled to the premium and over
time pay provided herein, unless they are specifically excluded from the coverag
e of this Rule as provided in Section 2 hereof.
(c) The payment of additional compensation for work performed on regular hol
idays shall be governed by Rule IV, Book Three, of these Rules.
SECTION 10. Compulsory overtime work. In any of the following cases, an employe
r may require any of his employees to work beyond eight (8) hours a day, provide
d that the employee required to render overtime work is paid the additional comp
ensation required by these regulations:
(a) When the country is at war or when any other national or local emergency
has been declared by Congress or the Chief Executive;
(b) When overtime work is necessary to prevent loss of life or property, or
in case of imminent danger to public safety due to actual or impending emergency
in the locality caused by serious accident, fire, floods, typhoons, earthquake,
epidemic or other disaster or calamities;
(c) When there is urgent work to be performed on machines, installations, or
equipment, in order to avoid serious loss or damage to the employer or some oth
er causes of similar nature;
(d) When the work is necessary to prevent loss or damage to perishable goods
;
(e) When the completion or continuation of work started before the 8th hour
is necessary to prevent serious obstruction or prejudice to the business or oper
ations of the employer; or
(f) When overtime work is necessary to avail of favorable weather or environ
mental conditions where performance or quality of work is dependent thereon.
In cases not falling within any of these enumerated in this Section, no e
mployee may be made to work beyond eight hours a day against his will.
SECTION 11. Computation of additional compensation. For purposes of computing t
he additional compensation required by this Rule, the "regular wage" of an emplo
yee shall include the cash wage only, without deduction, on account of facilitie
s provided by the employer.

RULE I-A
Hours of Work of Hospital and Clinic Personnel
SECTION 1. General statement on coverage. This Rule shall apply to:
(a) all hospitals and clinics, including those with a bed capacity of less t
han one hundred (100) which are situated in cities or municipalities with a popu
lation of one million or more; and
(b) all hospitals and clinics with a bed capacity of at least one hundred (1
00), irrespective of the size of the population of the city or municipality wher
e they may be situated.
SECTION 2. Hospitals or clinics within the meaning of this Rule. The terms "hos
pitals" and "clinics" as used in this Rule shall mean a place devoted primarily
to the maintenance and operation of facilities for the diagnosis, treatment and
care of individuals suffering from illness, disease, injury, or deformity, or in
need of obstetrical or other medical and nursing care. Either term shall also b
e construed as any institution, building, or place where there are installed bed
s, or cribs, or bassinets for twenty-four (24) hours use or longer by patients i
n the treatment of disease, injuries, deformities, or abnormal physical and ment
al states, maternity cases or sanitorial care; or infirmaries, nurseries, dispen
saries, and such other similar names by which they may be designated.
SECTION 3. Determination of bed capacity and population.
(a) For purposes of determining the applicability of this Rule, the actual b
ed capacity of the hospital or clinic at the time of such determination shall be
considered, regardless of the actual or bed occupancy. The bed capacity of hosp
ital or clinic as determined by the Bureau of Medical Services pursuant to Repub
lic Act No. 4226, otherwise known as the Hospital Licensure Act, shall prima fac
ie be considered as the actual bed capacity of such hospital or clinic.
(b) The size of the population of the city or municipality shall be determin
ed from the latest official census issued by the Bureau of the Census and Statis
tics.
SECTION 4. Personnel covered by this Rule. This Rule applies to all persons emp
loyed by any private or public hospital or clinic mentioned in Section 1 hereof,
and shall include, but not limited to, resident physicians, nurses, nutritionis
ts, dieticians, pharmacists, social workers, laboratory technicians paramedical
technicians, psychologists, midwives, and attendants.
SECTION 5. Regular working hours. The regular working hours of any person cover
ed by this Rule shall not be more than eight (8) hours in any one day nor more t
han forty (40) hours in any one week.
For purposes of this Rule a "day" shall mean a work day of twenty-four (2
4) consecutive hours beginning at the same time each calendar year. A "week" sha
ll mean the work of 168 consecutive hours, or seven consecutive 24-hour work day
s, beginning at the same hour and on the same calendar day each calendar week.
SECTION 6. Regular working days. The regular working days of covered emplo
yees shall not be more than five days in a work week. The work week may begin at
any hour and on any day, including Saturday or Sunday, designated by the employ
er.
Employers are not precluded from changing the time at which the work day
or work week begins, provided that the change is not intended to evade the requi
rements of this Rule.
SECTION 7. Overtime work. Where the exigencies of the service so require as det
ermined by the employer, any employee covered by this Rule may be scheduled to w
ork for more than five (5) days or forty (40) hours a week, provided that the em
ployee is paid for the overtime work an additional compensation equivalent to hi
s regular wage plus at least thirty percent (30%) thereof, subject to the provis
ions of this Book on the payment of additional compensation for work performed o
n special and regular holidays and on rest days.
SECTION 8. Hours worked. In determining the compensable hours of work of h
ospital and clinic personnel covered by this Rule, the pertinent provisions of R
ule 1 of this Book shall apply.
SECTION 9. Additional compensation. Hospital and clinic personnel covered
by this Rule, with the exception of those employed by the Government, shall be e
ntitled to an additional compensation for work performed on regular and special
holidays and rest days as provided in this Book. Such employees shall also be en
titled to overtime pay for services rendered in excess of forty hours a week, or
in excess of eight hours a day, whichever will yield the higher additional comp
ensation to the employee in the work week.
SECTION 10. Relation to Rule I. All provisions of Rule I of this Book whic
h are not inconsistent with this Rule shall be deemed applicable to hospital and
clinic personnel.
RULE II
Night Shift Differential
SECTION 1. Coverage. This Rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including
government-owned and/or controlled corporations;
(b) Those of retail and service establishments regularly employing not more
than five (5) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book III of this Code;
(e) Field personnel and other employees whose time and performance is unsupe
rvised by the employer including those who are engaged on task or contract basis
, purely commission basis, or those who are paid a fixed amount for performing w
ork irrespective of the time consumed in the performance thereof.
SECTION 2. Night shift differential. An employee shall be paid night shift
differential of no less than ten per cent (10%) of his regular wage for each ho
ur of work performed between ten o clock in the evening and six o clock in the morni
ng.
SECTION 3. Additional compensation. Where an employee is permitted or suff
ered to work on the period covered after his work schedule, he shall be entitled
to his regular wage plus at least twenty-five per cent (25%) and an additional
amount of no less than ten per cent (10%) of such overtime rate for each hour or
work performed between 10 p.m. to 6 a.m.
SECTION 4. Additional compensation on scheduled rest day/special holiday.
An employee who is required or permitted to work on the period covered during re
st days and/or special holidays not falling on regular holidays, shall be paid a
compensation equivalent to his regular wage plus at least thirty (30%) per cent
and an additional amount of not less than ten (10%) per cent of such premium pa
y rate for each hour of work performed.
SECTION 5. Additional compensation on regular holidays. For work on the pe
riod covered during regular holidays, an employee shall be entitled to his regul
ar wage during these days plus an additional compensation of no less than ten (1
0%) per cent of such premium rate for each hour of work performed.
SECTION 6. Relation to agreements. Nothing in this Rule shall justify an e
mployer in withdrawing or reducing any benefits, supplements or payments as prov
ided in existing individual or collective agreements or employer practice or pol
icy.

CASES
Caltex Regular Employees v Caltex Phils. Inc. , 247 SCRA 398
The union and Caltex entered into a CBA. While it was in effect, the union insti
tuted a complaint for ULP against Caltex alleging violation of Annex B of the 1985
CBA. Union charged Caltex when the latter compensated work performed on the fir
st 2 hours of Saturday, an employee s day of rest, at regular rate, when it should
be paying at day of rest or day off rates. Caltex, on the other hand, maintained th
at the 1985 CBA provided only 1 day of rest, which is Sunday.
Labor Arbiter ruled that the employees had been given 2 days of rest. On
appeal, the NLRC held that CBA granted only one day of rest, i.e., Sunday.
Issue: Whether the CBA provides for 2 days of rest, pursuant to Annex B of the
said CBA.
Held: No. The intention of the parties to the 1985 CBA was to provide the em
ployees with only 1 day of rest. Article III of the CBA provides that Caltex and
Union had agreed to pay day of rest rates for work performed on an employee s one d
ay of rest. The use of one describing the phrase day of rest emphasizes such intentio
n.
Annex B cannot be construed as modifying or altering the terms expressed
in the body of the CBA. Hence, the annex was intended to serve only as a company
-wide guide for work performed by all its employees. The second day-off rates there
fore are applicable only to personnel of the Manila Office, which consisted of o
ther groups, or categories of employees
Furthermore, looking into the bargaining agreements prior to 1985, Articl
e III, provided that only work on an employee s one day of rest shall be paid on the
basis of day of rest rates. This further emphasizes the real intention of the par
ties to the 1985 CBA.

National Semiconductor Dist. Ltd., v NLRC, 291 SCRA 348


Santos filed a case against NSC for unpaid night shift differential among others
. NSC contends that Santos was not able to substantiate his claim that he was no
t paid his night shift differential pay.
Issue: Who has the burden of proving a claim for night shift differential pay,
the worker who claims not to have been paid night shift differentials or the emp
loyer in custody of pertinent documents that would prove the fact of payment of
the same?
Held: The employer. The fact that Santos neglected to substantiate his claim f
or night shift differentials is not prejudicial to his cause. After all, the bur
den of proving payment rests on NSC. Santos allegation of non-payment of this be
nefit, to which he is by law entitled, is a negative evidence unless it is an es
sential part of his main cause of action. It must be noted that his main cause o
f action is his illegal dismissal, and the claim for night shift differential is
but an incident of the protest against such dismissal. Thus, the burden of prov
ing that payment of such benefit has been made rests upon the party who will suf
fer if no evidence at all is presented by either party.
For sure, Santos cannot adequately prove the fact of non-payment of nigh
t shift differentials since the pertinent employee files, payrolls, records, rem
ittances, and other similar documents---which will show that he rendered night s
hift work; the time he rendered services; and, the amount owed as night shift di
fferentials --- are not in his possession but in the custody and absolute contro
l of NSC.
Prangan vs. NLRC, 289 SCRA 142
Prangan was hired for security services by Masagana Security Services Corp and w
as assigned to Cat House Bar and Restaurant until the latter s closure. Prangan f
iled a complaint against Masagana for underpayment and non-payment of wages and
other benefits. Masagana rejected the claim and alleged that it is a mere agent
and the real liability is attached with Cat House, as direct employer.
The labor arbiter ordered payment but Prangan was not satisfied with the
amount the labor arbiter having concluded that he had worked only 4 hours and n
ot 12 hours a day.
Issue: How does one determine the actual number of hours worked by an employee?
Held: There is no dispute that matters concerning an employee s actual hours of
work are within the ambit of management prerogative. However, when an employer a
lleges that his employee works less than the normal hours of employment as provi
ded for in the law, he bears the burden of proving his allegation with clear and
satisfactory evidence.
Prangan never made nor submitted any daily time record with the company c
onsidering the fact that he was assigned to a single post and that the daily tim
e records he allegedly submitted with the company are all falsified and his sign
ature appearing therein forged.
Masagana hardly bothered to controvert his assertion, much less bolster i
ts own contention. As employer, Masagana has unlimited access to all relevant do
cuments and records on the hours of work of Prangan. Yet, even as it insist tha
t Prangan only worked for 4 hours and not 12, no employment contract, payroll
, notice of assignment or posting, cash voucher or any other convincing evidence
which may attest to the actual hours of work of Prangan was even presented. In
stead, what Masagana offered as evidence was only Prangan s daily time record, whi
ch the latter categorically denied ever accomplishing, much less signing.
Another consideration which militates against Masagana s claim is the fact
that both the personnel data sheet of Prangan duly signed by the former s operatio
n manager and the attendance sheets of Cat House Bar and Restaurant, showed that
Prangan worked from 7:00 p.m. to 7:00 a.m. daily.
Lagatic vs. NLRC, 285 SCRA 251
Lagatic was employed in May 1986 by Cityland as a marketing specialist. He was
tasked with making client calls and cold calls, among others. Cold calls refer t
o the practice of prospecting for clients through the telephone directory. Cityl
and requires the submission of daily progress reports on the same.
Cityland issued a written reprimand to Lagatic for his failure to submit
cold call reports. Lagatic claimed that the same was an honest omission brought
about by his concentration on other aspects of his job. Cityland found said ex
cuse inadequate and suspended him for 3 days, with similar warning. Lagatic aga
in failed to submit cold call reports. He was verbally reminded to submit the s
ame. Instead of complying with said directive, he wrote a note, TO HELL WITH COL
D CALLS! WHO CARES? and exhibited the same to his co-employees. To worsen matters
, he left the same lying on his desk where everyone could see it.
Held: An employee may be validly dismissed for violation of a reasonable comp
any rule or regulation adopted for the conduct of the company business. An emplo
yer cannot rationally be expected to retain the employment of a person whose lack
of regard for his employer s rules has so plainly and completely been bared.
Willful disobedience requires the concurrence of at least two requisites:
the employee s assailed conduct must have been willful or intentional, the willfu
lness being characterized by a wrongful and perverse attitude; and the order vio
lated must have been reasonable, lawful, made known to the employee and must per
tain to the duties which he had been engaged to discharge.
The requirement of a hearing is complied with as long as there was an opp
ortunity to be heard, and not necessarily that an actual hearing be conducted.
Lagatic had an opportunity to be heard as he submitted a letter reply to the cha
rge. There is no necessity for a formal hearing where an employee admits respons
ibility for an alleged misconduct.
Additionally, there is no law which requires employers to pay commissions
, and when they do so, as stated in the letter-opinion of the DOLE dated Februar
y 19, 1993, there is no law which prescribed a method for computing commissions.
The determination of the amount of commissions is the result of collective barga
ining negotiations, individual employment contracts or established employer prac
tice. Sine the formula for the computation of commissions was presented to and ac
cepted by Lagatic, such prescribed formula is in order. As to the allegation tha
t said formula diminishes the benefits being received by him whenever there is a
wage increase, it must be noted that his commissions are not meant to be in a f
ixed amount. In fact, there was no assurance that he would receive any commissi
on at all. Non-diminution of benefits, as applied here, merely means that the c
ompany may not remove the privilege of sales personnel to earn a commission, not
that they are entitled to a fixed amount thereof.
It is Cityland s practice to offset rest day or holiday work with equivalen
t time on a regular workday on the ground that the same is authorized by DO 21,
Series of 1990. Said D.O. was misapplied in this case which it involves the sho
rtening of the workweek from 6 days to 5 days but with prolonged hours on those
5 days. Under this scheme, non-payment of overtime premiums was allowed in excha
nge for longer weekends for employees. In the instant case, Lagatic s workweek was
never compressed. Instead, he claims payment for work over and above his normal
5 days of work in a week. Applying by analogy the principle that overtime canno
t be offset by under time, to allow offsetting would prejudice the worker. He wo
uld be deprived of the additional pay for the rest day work he has rendered and
which is utilized to offset his equivalent time off on regular workdays. To allo
w Cityland to do so would be to circumvent the law on payment of premiums for th
e rest they day and holiday work.
Notwithstanding the foregoing discussion, Lagatic failed to show his ent
itlement to overtime and rest day pay due, to the lack of sufficient evidence as
to the number of days and hours when he rendered overtime and rest day work. E
ntitlement to overtime pay must first be established by proof that said overtime
work was actually performed, before an employee may avail of said benefit. To s
upport his allegations, Lagatic submitted in evidence minutes of meetings wherei
n he was assigned to work on weekends and holidays at Cityland s housing projects.
Said minutes do not prove that he actually worked on said dates.

D. Rest Periods and Holidays


LABOR CODE
CHAPTER II
Weekly Rest Periods
Art. 91. Right to weekly rest day.
(a) It shall be the duty of every employer, whether operating for profit or
not, to provide each of his employees a rest period of not less than twenty-four
consecutive hours after every six consecutive normal work days.
(b) The employer shall determine and schedule the weekly rest day of his emp
loyees, subject to collective agreement and to such rules and regulations as the
Secretary of Labor and Employment may provide. However, the employer shall resp
ect the preference of employees as to their weekly rest day when such preference
is based on religious grounds.
Art. 92. When employer may require work on a rest day. The employer may require
his employees to work on any day:
(a) In case of actual or impending emergencies caused by serious accidents,
fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prev
ent loss of life and property or imminent danger to public safety;
(b) In cases of urgent work to be performed on the machinery, equipment or i
nstallation to avoid serious loss which the employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other measures;
(d) To prevent loss or damage to perishable goods;
(e) Where the nature of the work requires continuous operations and the stop
page of work may result in irreparable injury or loss to the employer; and
(f) Under other circumstances analogous or similar to the foregoing as deter
mined by the Secretary of Labor and Employment.
Art. 93. Compensation for rest day, Sunday or holiday work.
(a) Where an employee is made or permitted to work on his scheduled rest day, he
shall be paid an additional compensation of at least thirty (30%) percent of hi
s regular wage. An employee shall be entitled to such additional compensation fo
r work performed on Sunday only when it is his established rest day.
(b) When the nature of the work of the employee is such that he has no regul
ar workdays and no regular rest days can be scheduled, he shall be paid an addit
ional compensation of at least thirty (30%) percent of his regular wage for wor
k performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid an additional compen
sation of at least thirty (30%) percent of the regular wage of the employee. Whe
re such holiday work falls on the employee s scheduled rest day, he shall be entit
led to an additional compensation of at least fifty (50%) percent of his regular
wage.
(d) Where the collective bargaining agreement or other applicable employment
contract stipulates the payment of a higher premium pay than that prescribed un
der this Article, the employer shall pay such higher rate.

CHAPTER III
Holidays, Service Incentive Leaves and Service Charges
Art. 94. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during regular holiday
s, except in retail and service establishment regularly employing less than ten
workers;
(b) The employer may require an employee to work on any holiday but such emp
loyee shall be paid a compensation equivalent to twice his regular rate; and
(c) As used in this Article, holiday includes: New Year s Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth of June, last Sun
day of August, first of November, the thirtieth of November, the twenty-fifth an
d the thirtieth of December, thirty-first of December, and the day designated by
law for holding a general election. [Superseded by Exec. Order 203]
EXECUTIVE ORDER NO. 203
PROVIDING A LIST OF REGULAR HOLIDAYS AND SPECIAL DAYS TO BE OBSERVED THROUGHOUT
THE PHILIPPINES AND FOR OTHER PURPOSES
WHEREAS, a Cabinet Assistance Secretariat Committee was constituted to re
view all existing public holidays;
WHEREAS, there are too many holidays being observed which has caused conf
usion among the public.
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, do he
reby order:
Sec. 1. Unless otherwise modified by law, order or proclamation, the fol
lowing regular holidays and special days shall be observed in this country:
A. Regular Holidays
New Year s Day - January
Maundy Thursday - Movable date
Good Friday - Movable date
Araw ng Kagitingan (Bataan
and Corregidor Day) - April 9
Labor Day - May 1
Independence Day - June 12
National Heroes Day - Last Sunday of August
Bonifacio Day - November 30
Christmas Day - December 25
Rizal Day - December 30
B. Nationwide Special Days
All Saints Day - November 1
Last Day of the Year - December 31
Sec. 2. Henceforth, the terms legal or regular holiday and special holiday ,
as used in laws, orders, rules and regulations or other issuances shall now be r
eferred to as regular holiday and special day , respectively.
Sec. 3. All laws, orders, issuances, rules and regulations or parts ther
eof inconsistent with this Executive Order are hereby repealed or modified accor
dingly.
Sec. 4. This Executive Order shall take effect immediately.
Done in the City of Manila, this 30th day of June, in the year of Our Lor
d, nineteen hundred and eighty-seven.
OMNIBUS RULES, BOOK III
RULE III
Weekly Rest Periods
SECTION 1. General statement on coverage. This Rule shall apply to all emp
loyers whether operating for profit or not, including public utilities operated
by private persons.
SECTION 2. Business on Sundays/Holidays. All establishments and enterprise
s may operate or open for business on Sundays and holidays provided that the emp
loyees are given the weekly rest day and the benefits as provided in this Rule.
SECTION 3. Weekly rest day. Every employer shall give his employees a rest
period of not less than twenty-four (24) consecutive hours after every six cons
ecutive normal work days.
SECTION 4. Preference of employee. The preference of the employee as to hi
s weekly day of rest shall be respected by the employer if the same is based on
religious grounds. The employee shall make known his preference to the employer
in writing at least seven (7) days before the desired effectivity of the initial
rest day so preferred.
Where, however, the choice of the employee as to his rest day based on re
ligious grounds will inevitably result in serious prejudice or obstruction to th
e operations of the undertaking and the employer cannot normally be expected to
resort to other remedial measures, the employer may so schedule the weekly rest
day of his choice for at least two (2) days in a month.
SECTION 5. Schedule of rest day.
(a) Where the weekly rest is given to all employees simultaneously, the employer
shall make known such rest period by means of a written notice posted conspicuo
usly in the work place at least one week before it becomes effective.
(b) Where the rest period is not granted to all employees simultaneously and
collectively, the employer shall make known to the employees their respective s
chedules of weekly rest through written notices posted conspicuously in the work
place at least one week before they become effective.
SECTION 6. When work on rest day authorized. An employer may require any o
f his employees to work on his scheduled rest day for the duration of the follow
ing emergencies and exceptional conditions:
(a) In case of actual or impending emergencies caused by serious accident, f
ire, flood, typhoon, earthquake, epidemic or other disaster or calamity, to prev
ent loss of life or property, or in cases of force majeure or imminent danger to
public safety;
(b) In case of urgent work to be performed on machineries, equipment or inst
allations to avoid serious loss which the employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special circumstances,
where the employer cannot ordinarily be expected to resort to other measures;
(d) To prevent serious loss of perishable goods;
(e) Where the nature of the work is such that the employees have to work con
tinuously for seven (7) days in a week or more, as in the case of the crew membe
rs of a vessel to complete a voyage and in other similar cases; and
(f) When the work is necessary to avail of favorable weather or environmenta
l conditions where performance or quality of work is dependent thereon.
No employee shall be required against his will to work on his scheduled r
est day except under circumstances provided in this Section: Provided, However,
that where an employee volunteers to work on his rest day under other circumstan
ces, he shall express such desire in writing, subject to the provisions of Secti
on 7 hereof regarding additional compensation.
SECTION 7. Compensation on rest day/Sunday/holiday.
(a) Except those employees referred to under Section 2, Rule I, Book III, an emp
loyee who is made or permitted to work on his scheduled rest day shall be paid w
ith an additional compensation of at least 30% of his regular wage. An employee
shall be entitled to such additional compensation for work performed on a Sunday
only when it is his established rest day.
(b) Where the nature of the work of the employee is such that he has no regu
lar work days and no regular rest days can be scheduled, he shall be paid an add
itional compensation of at least 30% of his regular wage for work performed on S
undays and holidays.
(c) Work performed on any special holiday shall be paid with an additional c
ompensation of at least 30% of the regular wage of the employees. Where such hol
iday work falls on the employee s scheduled rest day, he shall be entitled to addi
tional compensation of at least 50% of his regular wage.
(d) The payment of additional compensation for work performed on regular hol
iday shall be governed by Rule IV, Book III, of these regulations.
(e) Where the collective bargaining agreement or other applicable employment
contract stipulates the payment of a higher premium pay than that prescribed un
der this Section, the employer shall pay such higher rate.
SECTION 8. Paid-off days. Nothing in this Rule shall justify an employer i
n reducing the compensation of his employees for the unworked Sundays, holidays,
or other rest days which are considered paid-off days or holidays by agreement
or practice subsisting upon the effectivity of the Code.
SECTION 9. Relation to agreements. Nothing herein shall prevent the employ
er and his employees or their representatives in entering into any agreement wit
h terms more favorable to the employees than those provided herein, or be used t
o diminish any benefit granted to the employees under existing laws, agreements,
and voluntary employer practices.
RULE IV
Holidays With Pay
SECTION 1. Coverage. This rule shall apply to all employees except:
(a) Those of the government and any of the political subdivision, including
government-owned and controlled corporation;
(b) Those of retail and service establishments regularly employing less than
ten (10) workers;
(c) Domestic helpers and persons in the personal service of another;
(d) Managerial employees as defined in Book III of the Code;
(e) Field personnel and other employees whose time and performance is unsupe
rvised by the employer including those who are engaged on task or contract basis
, purely commission basis, or those who are paid a fixed amount for performing w
ork irrespective of the time consumed in the performance thereof.
SECTION 2. Status of employees paid by the month. Employees who are unifor
mly paid by the month, irrespective of the number of working days therein, with
a salary of not less than the statutory or established minimum wage shall be pai
d for all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the sta
tutory minimum wage multiplied by 365 days divided by twelve.
SECTION 3. Holiday Pay. Every employer shall pay his employees their regul
ar daily wage for any worked regular holidays.
As used in the rule, the term "holiday" shall exclusively refer to: New Y
ear s Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the
twelfth of June, the fourth of July, the thirtieth of November, the twenty-fift
h and thirtieth of December and the day designated by law for a general election
or national referendum or plebiscite.
SECTION 4. Compensation for holiday work. Any employee who is permitted or
suffered to work on any regular holiday, not exceeding eight (8) hours, shall b
e paid at least two hundred percent (200%) of his regular daily wage. If the hol
iday work falls on the scheduled rest day of the employee, he shall be entitled
to an additional premium pay of at least 30% of his regular holiday rate of 200%
based on his regular wage rate.
SECTION 5. Overtime pay for holiday work. For work performed in excess of
eight hours on a regular holiday, an employee shall be paid an additional compen
sation for the overtime work equivalent to his rate for the first eight hours on
such holiday work plus at least 30% thereof.
Where the regular holiday work exceeding eight hours falls on the scheduled rest
day of the employee, he shall be paid an additional compensation for the overti
me work equivalent to his regular holiday-rest day for the first 8 hours plus 30
% thereof. The regular holiday rest day rate of an employee shall consist of 200
% of his regular daily wage rate plus 30% thereof.

SECTION 6. Absences.
(a) All covered employees shall be entitled to the benefit provided herein when
they are on leave of absence with pay. Employees who are on leave of absence wit
hout pay on the day immediately preceding a regular holiday may not be paid the
required holiday pay if he has not worked on such regular holiday.
(b) Employees shall grant the same percentage of the holiday pay as the bene
fit granted by competent authority in the form of employee s compensation or socia
l security payment, whichever is higher, if they are not reporting for work whil
e on such benefits.
(c) Where the day immediately preceding the holiday is a non-working day in
the establishment or the scheduled rest day of the employee, he shall not be dee
med to be on leave of absence on that day, in which case he shall be entitled to
the holiday pay if he worked on the day immediately preceding the non-working d
ay or rest day.
SECTION 7. Temporary or periodic shutdown and temporary cessation of work.
(a) In cases of temporary or periodic shutdown and temporary cessation of wo
rk of an establishment, as when a yearly inventory or when the repair or cleanin
g of machineries and equipment is undertaken, the regular holidays falling withi
n the period shall be compensated in accordance with this Rule.
(b) The regular holiday during the cessation of operation of an enterprise d
ue to business reverses as authorized by the Secretary of Labor and Employment m
ay not be paid by the employer.
SECTION 8. Holiday pay of certain employees.
(a) Private school teachers, including faculty members of colleges and unive
rsities, may not be paid for the regular holidays during semestral vacations. Th
ey shall, however, be paid for the regular holidays during Christmas vacation;
(b) Where a covered employee, is paid by results or output, such as payment
on piece work, his holiday pay shall not be less than his average daily earnings
for the last seven (7) actual working days preceding the regular holiday; Provi
ded, However, that in no case shall the holiday pay be less than the applicable
statutory minimum wage rate.
(c) Seasonal workers may not be paid the required holiday pay during off-sea
son when they are not at work.
(d) Workers who have no regular working days shall be entitled to the benefi
ts provided in this Rule.
SECTION 9. Regular holiday falling on rest days or Sundays.
(a) A regular holiday falling on the employee s rest day shall be compensated
accordingly.
(b) Where a regular holiday falls on a Sunday, the following day shall be co
nsidered a special holiday for purposes of the Labor Code, unless said day is al
so a regular holiday.
SECTION 10. Successive regular holidays. Where there are two (2) successiv
e regular holidays, like Holy Thursday and Good Friday, an employee may not be p
aid for both holidays if he absents himself from work on the day immediately pre
ceding the first holiday, unless he works on the first holiday, in which case he
is entitled to his holiday pay on the second holiday.
SECTION 11. Relation to agreements. Nothing in this Rule shall justify an
employer in withdrawing or reducing any benefits, supplements or payments for un
worked holidays as provided in existing individual or collective agreement or em
ployer practice or policy.
CASES
Wellington Investment and Manufacturing Corp vs. Trajano, 245 SCRA 561
A routine inspection was conducted by a Labor Enforcement Officer of the Welling
ton Flour Mills. The officer drew up a report, in which he set forth his finding
of non-payment of regular holidays falling on a Sunday for monthly paid employee
s. Wellington asserted that it pays its monthly-paid employees a fixed compensat
ion using the 314 factor, which undeniably covers and already includes payment f
or all the working days in a month as well as all the 10 unworked regular holida
ys within a year.
Issue: Whether a monthly-paid employee, receiving a fixed monthly compensation,
is entitled to an additional pay aside from his usual holiday pay, whenever a r
egular holiday falls on a Sunday.
Held: Every worker should, according to the Labor Code, be paid his regular da
ily wage during regular holidays, except in retail and service establishments re
gularly employing less than (10) workers ; this, of course, even if the worker doe
s no work on these holidays. The regular holidays include: New Year s Day, Maundy T
hursday, Good Friday, and the 9th of April, the 1st of May, the 12th of June, th
e 4th of July, the 13th of November, the 25th of December, and the day designate
d by law for holding a general election (or national referendum or plebiscite).
The monthly salary in Wellington, which is, based on the so-called 314 fac
tor accounts for all 365 days of a year; with the exception only of 51 Sundays. T
he respondents theory that there was an increase of three (3) working days resulti
ng from regular holidays falling on Sundays ; hence Wellington should pay for 317 d
ays, instead of 315 days would make each of the year in question (1988, 1989, 199
0), a year of 368 days. Pursuant to this theory, no employer opting to pay his e
mployees by the month would have any basis to determine the number of days in a
year for which compensation should be given to his work force. There is no provi
sion of law requiring any employer to make such adjustments in the monthly salar
y rate set by him to take account of legal holidays falling on Sundays in a give
n year, or contrary, to the legal provisions bearing on the point, otherwise to
reckon a year at more than 365 days.

Building Care Corp. vs. NLRC, 268 SCRA 666


Complainant alleged that his wages, 13th month pay and service incentive leave p
ay were unpaid; that he was not paid for work rendered during legal holidays.
Held: Indeed, if petitioner wanted to prove its payment of holiday pays and sa
lary differentials, it could have easily presented proofs of such monetary benef
its. But it did not. The burden of proof in this regard belongs to the employe
r, not to the employee.
E. WAGES
LABOR CODE
Art. 97. Definition. As used in this Title:
(a) Person means an individual, partnership, association, corporation, busines
s trust, legal representative or any organized group of persons.
(b) Employer includes any person acting directly or indirectly in the interest
of an employer in relation to an employee and shall include the Government and
all its branches, subdivisions and instrumentalities, all government-owned or co
ntrolled corporations and institutions, as well as non-profit private institutio
ns or organizations.
(c) Employee includes any individual employed by an employer.
(d) Agriculture includes farming in all its branches and among other things in
cludes the cultivation and tillage of soil, dairying, the production, cultivatio
n, growing and harvesting of any agricultural and horticultural commodities, the
raising of livestock or poultry, and any practices performed by a farmer on a f
arm as an incident to or in conjunction with such farming operations, but does n
ot include the manufacturing or processing of sugar, coconuts, abaca, tobacco, p
ineapples or other farm products.
(e) Employ includes to suffer or permit to work.
(f) Wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or asce
rtained on a time, task, piece, or commission basis, or other method of calculat
ing the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for services ren
dered or to be rendered and includes the fair and reasonable value, as determine
d by the Secretary of Labor, of board, lodging or other facilities customarily f
urnished by the employer to the employee. Fair and reasonable value shall not incl
ude any profit to the employer or to any person affiliated with the employer.
Art. 98. Application of Title. This Title shall not apply to farm tenancy or le
asehold, domestic service and persons working in their respective homes in needl
ework or in any cottage industry duly registered in accordance with law.
CHAPTER II
Minimum Wage Rates
Art. 99. Regional Minimum Wages. The minimum wage rates for agricultural and n
on-agricultural employees and workers in each and every region of the country sh
all be those prescribed by the Regional Tripartite Wages and Productivity Board
s. [ As amended by RA 6727].
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, o
r other employee benefits being enjoyed at the time of the promulgation of this
Code.
Art. 101. Payment by results. The Secretary of Labor shall regulate the payment
of wages by results, including pakyao, piecework and other non-time work, in or
der to ensure the payment of fair and reasonable wage rates, preferably through
time and motion studies or in consultation with representatives of workers and em
ployers organizations.
CHAPTER III
Payment of Wages
Art. 102. Forms of payment. No employer shall pay the wages of an employee
by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any
object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manne
r of payment is customary on the date of effectivity of this Code or is necessar
y because of special circumstances as specified in appropriate regulations to be
issued by the Secretary of Labor or as stipulated in a collective bargaining ag
reement.
Art. 103. Time of payment. Wages shall be paid at least once every two (2)
weeks or twice a month at intervals not exceeding sixteen (16) days. If on acco
unt of force majeure or circumstances beyond the employer s control, payment of wa
ges on or within the time herein provided cannot be made, the employer shall pay
the wages immediately after such force majeure or circumstances have ceased. No
employer shall make payment with less frequency than once a month.
The payment of wages of employees engaged to perform a task which cannot
be completed in two weeks shall be subject to the following conditions in the ab
sence of a collective bargaining agreement or arbitration award:
(1) That payments are made at intervals not exceeding sixteen days, in propo
rtion to the amount of work completed; and
(2) That final settlement is made upon completion of the work.
Art. 104. Place of payment. Payment of wages shall be made at or near the place
of undertaking, except as otherwise provided by such regulations as the Secreta
ry of Labor may prescribe under conditions to ensure greater protection of wages
.
Art. 105. Direct payment of wages. Wages shall be paid directly to the workers
to whom they are due, except:
(a) In cases of force majeure rendering such payments impossible or under ot
her special circumstances to be determined by the Secretary of Labor in appropri
ate regulations, in which case the worker may be paid through another person und
er written authority given by the worker for the purpose; or
(b) Where the worker has died, in which case the employer may pay the wages
of the deceased worker to the heirs of the latter without the necessity of intes
tate proceedings. The claimant, if they are all of age, shall execute an affidav
it attesting to their relationship to the deceased and the fact that they are hi
s heirs, to the exclusion of all other persons. If any of the heirs is a minor,
the affidavit shall be executed on his behalf by his natural guardian or next of
kin. The affidavit shall be presented to the employer who shall make payment th
rough the Secretary of Labor or his representative. The representative of the Se
cretary of Labor shall act as referee in dividing the amount paid among the hei
rs. The payment of wages under this Article shall absolve the employer of any fu
rther liability with respect to the amount paid.
Art. 106. Contractor or sub-contractor. Whenever an employer enters into a cont
ract with another person for the performance of the former s work, the employees o
f the contractor and of the latter s sub-contractor, if any, shall be paid in acco
rdance with the provisions of this Code.
In the event that the contractor or sub-contractor fails to pay the wages
of his employees in accordance with this Code, the employer shall be jointly an
d severally liable with his contractor or sub-contractor to such employees to th
e extent of the work performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, re
strict or prohibit the contracting out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make appr
opriate distinctions between labor-only contracting and job contracting as well
as differentiations within these types of contracting, and determine who among t
he parties involved shall be considered the employer for purposes of this Code,
to prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an em
ployer does not have substantial capital or investment in the form of tools, equ
ipment, machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related to th
e principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were directly emp
loyed by him.
Art. 107. Indirect employer. The provisions of the immediately preceding Articl
e shall likewise apply to any person, partnership, association or corporation wh
ich, not being an employer, contracts with an independent contractor for the per
formance of any work, task, job or project.
Art. 108. Posting of bond. An employer or indirect employer may require the con
tractor or sub-contractor to furnish a bond equal to the cost of labor under con
tract, on condition that the bond will answer for the wages due the employees sh
ould the contractor or sub-contractor, as the case may be, fail to pay the same.

Art. 109. Solidary liability. The provisions of existing laws to the contrary n
otwithstanding, every employer or indirect employer shall be held responsible wi
th his contractor or subcontractor for any violation of any provision of this Co
de. For purposes of determining the extent of their civil liability under this C
hapter, they shall be considered as direct employers.
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy o
r liquidation of an employer s business, his workers shall enjoy first preference
as regards their wages and other monetary claims, any provision of law to the co
ntrary notwithstanding. Such unpaid wages and monetary claims shall be paid in f
ull before the claims of the Government and other creditors may be paid. (As ame
nded by R. A. 6715)
Art. 111. Attorney s fees.
(a) In cases of unlawful withholding of wages the culpable party may be asse
ssed attorney s fees equivalent to ten percent of the amount of wages recovered.
(b) It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of the wages, attorney s fees whic
h exceed ten percent of the amount of wages recovered.
CHAPTER IV
Prohibitions Regarding Wages
Art. 112. Non-interference in disposal of wages. No employer shall limit o
r otherwise interfere with the freedom of any employee to dispose of his wages.
He shall not in any manner force, compel or oblige his employees to purchase mer
chandise, commodities or other property from the employer or from any other pers
on or otherwise make use of any store or services of such employer or any other
person.
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of a
ny person, shall make any deduction from the wages of his employees except:
(a) In cases where the worker is insured with his consent by the employer, a
nd the deduction is to recompense the employer for the amount paid by him as pre
mium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to c
heck off has been recognized by the employer or authorized in writing by the ind
ividual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued b
y the Secretary of Labor.
Art. 114. Deposits for loss or damage. No employer shall require his worker to
make deposits from which deduction shall be made, for the reimbursement of loss
of or damage to tools, materials or equipment supplied by the employer, except w
hen the employer is engaged in such trades, occupations or business where the pr
actice of making deductions or requiring deposits is a recognized one, or is nec
essary or desirable as determined by the Secretary of Labor in appropriate rules
and regulations.
Art. 115. Limitations. No deduction from the deposits of an employee for the ac
tual amount of the loss or damage shall be made unless the employee has been hea
rd thereon, and his responsibility has been clearly shown.
Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful f
or any person, directly or indirectly, to withhold any amount from the wages of
a worker or induce him to give up any part of his wages by force, stealth, intim
idation, threat or by any other means whatsoever without the worker s consent.
Art. 117. Deduction to ensure employment. It shall be unlawful to make any dedu
ction from the wages of any employee for the benefit of the employer or his repr
esentative or intermediary as consideration of a promise of employment or retent
ion in employment.
Art. 118. Retaliatory measures. It shall be unlawful for an employer to refuse
to pay or reduce the wages and benefits, discharge or in any manner discriminate
against any employee who has filed any complaint or instituted any proceeding u
nder this Title or has testified or is about to testify in such proceedings.
Art. 119. False reporting. It shall be unlawful for any person to make any stat
ement, report or record filed or kept pursuant to the provisions of this Code kn
owing such statement, report or record to be false in any material respect.
CHAPTER V
Wage Studies, Wage Agreements and Wage Determination
Art. 120. Creation of the National Wages and Productivity Commission. There is
hereby created a National Wages and Productivity Commission, hereinafter referre
d to as the Commission, which shall be attached to the Department of Labor and E
mployment (DOLE) for policy and program coordination. (As amended by RA 6727)
Art. 121. Powers and Functions of the Commission. The Commission shall have the
following powers and functions:
(a) To act as the national consultative and advisory body to the President o
f the Philippines and Congress on matters relating to wages, incomes and product
ivity;
(b) To formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels;
(c) To prescribe rules and guidelines for the determination of appropriate m
inimum wage and productivity measures at the regional, provincial or industry le
vels;
(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed guid
elines and national development plans;
(e) To undertake studies, researches and surveys necessary for the attainmen
t of its functions and objectives, and to collect and compile data and periodica
lly disseminate information on wages and productivity and other related informat
ion, including, but not limited to, employment, cost-of-living, labor costs, inv
estments and returns;
(f) To review plans and programs of the regional Tripartite Wages and Produc
tivity Boards to determine whether these are consistent with national developmen
t plans;
(g) To exercise technical and administrative supervision over the Regional T
ripartite Wages and Productivity Boards;
(h) To call, from time to time, a national tripartite conference of represen
tatives of government, workers, and employers for the consideration of measures
to promote wage rationalization and productivity; and
(i) To exercise such powers and functions as may be necessary to implement t
his Act.
The Commission shall be composed of the Secretary of Labor and Employment
as ex-officio chairman, the Director-General of the National Economic and Devel
opment Authority (NEDA) as ex-officio vice-chairman, and two (2) members each fr
om workers and employers sectors who shall be appointed by the President of the
Philippines upon recommendation of the Secretary of Labor and Employment to be m
ade on the basis of the list of nominees submitted by the workers and employers
sectors, respectively, and who shall serve for a term of five (5) years. The Exe
cutive Director of the Commission shall also be a member of the Commission.
The Commission shall be assisted by a Secretariat to be headed by an Exec
utive Director and two (2) Deputy Directors, who shall be appointed by the Presi
dent of the Philippines, upon recommendation of the Secretary of Labor and Emplo
yment.
The Executive Director shall have the same rank, salary, benefits and oth
er emoluments as that of a Department Assistant Secretary, while the Deputy Dire
ctors shall have the same rank, salary, benefits and other emoluments as that of
a Bureau Director. The members of the Commission representing labor and managem
ent shall have the same rank, emoluments, allowances and other benefits as those
prescribed by law for labor and management representatives in the Employees Com
pensation Commission. (As amended by RA 6727)
Art. 122. Creation of Regional Tripartite Wages and Productivity Boards. T
here is hereby created Regional Tripartite Wages and Productivity Boards, herein
after referred to as Regional Boards in all regions, including autonomous region
s as may be established by law. The Commission shall determine the offices/headq
uarters of the respective Regional Boards.
The Regional Boards shall have the following powers and functions in thei
r respective territorial jurisdiction:
(a) To develop plans, programs and projects relative to wages, incomes and p
roductivity improvement for their respective regions;
(b) To determine and fix minimum wage rates applicable in their respective r
egions, provinces or industries therein and to issue the corresponding wage orde
rs, subject to guidelines issued by the Commission;
(c) To undertake studies, researches, and surveys necessary for the attainme
nt of their functions, objectives and programs and to collect and compile data o
n wages, incomes, productivity and other related information and periodically di
sseminate the same;
(d) To coordinate with the other Regional Boards as may be necessary to atta
in the policy and intention of this Code;
(e) To receive, process and act on applications for exemption from prescribe
d wage rates as may be provided by law or any Wage Order; and
(f) To exercise such other powers and functions as may be necessary to carry
out their mandate under this Code.
Implementation of the plans, programs and projects of the Regional Boards
referred to in the second paragraph, letter (a) of this Article, shall be throu
gh the respective regional offices of the Department of Labor and Employment wit
hin their territorial jurisdiction; Provided, however, That the Regional Boards
shall have technical supervision over the regional office of the Department of L
abor and Employment with respect to the implementation of said plans, programs a
nd projects.
Each Regional Board shall be composed of the Regional Director of the Dep
artment of Labor and Employment as chairman, the Regional Directors of the Natio
nal Economic and Development Authority and Department of Trade and Industry as v
ice-chairman and two (2) members each from workers and employers sectors who sha
ll be appointed by the President of the Philippines, upon recommendation of the
Secretary of Labor and Employment, to be made on the basis of the list of nomine
es submitted by the workers and employers sectors, respectively, and who shall s
erve for a term of five (5) years.
Each Regional Board to be headed by its chairman shall be assisted by a S
ecretariat. (As amended by RA 6727)
Art. 123. Wage Order. Whenever conditions in the region so warrant, the Re
gional Board shall investigate and study all pertinent facts; and based on the s
tandards and criteria herein prescribed, shall proceed to determine whether a Wa
ge Order should be issued. Any such Wage Order shall take effect after fifteen (
15) days from its complete publication in at least one (1) newspaper of general
circulation in the region.
In the performance of its wage-determining functions, the Regional Board
shall conduct public hearings/consultations, giving notices to employees and empl
oyers groups, provincial, city and municipal officials and other interested parti
es.
Any party aggrieved by the Wage Order issued by the Regional Board may ap
peal such order to the Commission within ten (10) calendar days from the publica
tion of such order. It shall be mandatory for the Commission to decide such appe
al within sixty (60) calendar days from the filing thereof.
The filing of the appeal does not operate to stay the order unless the pe
rson appealing such order shall file with the Commission, an undertaking with a
surety or sureties satisfactory to the Commission for the payment to the employe
es affected by the order of the corresponding increase, in the event such order
is affirmed. (As amended by RA 6727)
Art. 124. Standards/Criteria for Minimum Wage Fixing. The regional minimum wage
s to be established by the Regional Board shall be as nearly adequate as is econ
omically feasible to maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the employees within the framework
of the national economic and social development program. In the determination of
such regional minimum wages, the Regional Board shall, among other relevant fac
tors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects in employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of
economic and social development.
The wages prescribed in accordance with the provisions of this Title shal
l be the standard prevailing minimum wages in every region. These wages shall in
clude wages varying with industries, provinces or localities if in the judgment
of the Regional Board conditions make such local differentiation proper and nece
ssary to effectuate the purpose of this Title.
Any person, company, corporation, partnership or any other entity engaged
in business shall file and register annually with the appropriate Regional Boar
d, Commission and the National Statistics Office an itemized listing of their la
bor component, specifying the names of their workers and employees below the man
agerial level, including learners, apprentices and disabled/handicapped workers
who were hired under the terms prescribed in the employment contracts, and their
corresponding salaries and wages.
Where the application of any prescribed wage increase by virtue of a law
or Wage Order issued by any Regional Board results in distortions of the wage st
ructure within an establishment, the employer and the union shall negotiate to c
orrect the distortions. Any dispute arising from wage distortions shall be resol
ved through the grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration. Unless otherwise a
greed by the parties in writing, such dispute shall be decided by the voluntary
arbitrator or panel of voluntary arbitrators within ten (10) calendar days from
the time said dispute was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor uni
ons, the employers and workers shall endeavor to correct such distortions. Any d
ispute arising therefrom shall be settled through the National Conciliation and
Mediation Board and, if it remains unresolved after ten (10) calendar days of co
nciliation, shall be referred to the appropriate branch of the National Labor Re
lations Commission (NLRC). It shall be mandatory for the NLRC to conduct continu
ous hearings and decide the dispute within twenty (20) calendar days from the ti
me said dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any
way delay the applicability of any increase in prescribed wage rates pursuant t
o the provisions of law or Wage Order.
As used herein, a wage distortion shall mean a situation where an increas
e in prescribed wage rates results in the elimination or severe contraction of i
ntentional quantitative differences in wage or salary rates between and among em
ployee groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other log
ical bases of differentiation.
All workers paid by result, including those who are paid on piecework, takay, pa
kyaw, or task basis, shall receive not less than the prescribed wage rates per e
ight (8) hours of work a day, or a proportion thereof for working less than eigh
t (8) hours.
All recognized learnership and apprenticeship agreements shall be conside
red automatically modified insofar as their wage clauses are concerned to reflec
t the prescribed wage rates. (As amended by RA 6727)
Art. 125. Freedom to bargain. No Wage Order shall be construed to prevent
workers in particular firms or enterprises of industries from bargaining for hig
her wages with their respective employer.
Art. 126. Prohibition Against Injunction. No preliminary or permanent inju
nction or temporary restraining order may be issued by any court, tribunal or ot
her entity against any proceedings before the Commission or the Regional Boards.
(As amended by RA 6727)
Art. 127. Non-diminution of Benefits. No Wage Order issued by any Regional
Board shall provide for wage rates lower than the statutory minimum wage rates
prescribed by Congress. (As amended by RA 6727)
CASES
Iran v. NLRC, 289 SCRA 433
The statutory definition of wage in Art. 97(f) explicitly includes commissions. Wh
ile commissions are incentives or forms of encouragement to inspire employees to
put a little more industry on the jobs particularly assigned to them, still the
se commissions are direct remuneration for services rendered. In fact, commissio
ns have been defined as the recompense, compensation or reward of an agent, sale
sman, executor, etc., when the same is calculated as a percentage on the amount
of his transactions or on the profit to the principal. The nature of the work of
a salesman and the reason for such type of remuneration for services rendered d
emonstrate clearly that commissions are part of a salesman s wages.
Thus, the commissions earned by private respondents in selling softdrink
s constitute part of the compensation paid to drivers/salesmen and truck helpers
for serving as such and hence must be considered as part of the wages paid them
.
The NLRC asserts that the inclusion of commissions in the computation of
wages would negate the practice of granting commissions only after an employee
has earned the minimum wage or over. While such practice does exist, its prevale
nce is questionable. Judicial notice was taken of the fact that some salesmen do
not receive any basic salary at all but depend entirely on commissions and allo
wances or commissions alone. Such a structure might be established based on the
assumption that the salesmen would thereby be moved to work harder to increase t
heir sales commissions but it does not detract from the character of such commis
sions as part of wages.
Cagayan Sugar Milling Co. v. Secretary, 284 SCRA 150
Wage Order No. RO2-02 provided for an increase in the minimum wage rates for Reg
ion II. More than a year later, the Regional Board passed Wage Order RO2-02-A am
ending the earlier wage order and providing instead for an across-the-board incr
ease in wages of employees in Region II, retroactive to the date of effectivity
of Wage Order RO2-02. Petitioner assails the validity of Wage Order RO2-02-A on
the ground that it was passed without the required public consultation and newsp
aper publication.
Held: Wage Order RO2-02-A is invalid.
In wage-fixing, factors such as fair return of capital invested, the need to ind
uce industries to invest in the countryside and the capacity of employers to pay
are, among others, taken into consideration. Hence, our legislators provide for
the creation of Regional Tripartite Boards composed of representatives from the
government, the workers, and the employers to determine the appropriate wage ra
tes per region. Article 123 of the LC also provides that in the performance of w
age determining functions, the Regional Board shall conduct public hearings and
consultations, giving notices to interested parties. Moreover, it mandates that
the wage order shall take effect only after publication in a newspaper of genera
l circulation in the region. It is a fundamental rule, borne out of a sense of f
airness, that the public is first notified of a law or wage order before it can
be held liable for violation thereof. In the case at bar, it is indisputable tha
t there was no public consultation or hearing conducted prior to the passage of
RO2-02-A. Neither was it published in a newspaper of general circulation as atte
sted in the minutes of the meeting of the Regional Wage Board that the non-publi
cation was by consensus of all the board members.
Samahang Manggagawa sa Top Form v. NLRC, 295 SCRA 171
While the employer granted the increases mandated by the wage order, they refuse
d to grant it across-the-board. Such refusal was aggravated by the fact that pri
or to the issuance of said wage orders, the employer allegedly promised at the C
BA conferences to implement any government-mandated wage increases on an across-
the-board basis. Such promise was contained in the minutes of the negotiation bu
t not in the CBA.
Held: There was no ULP in refusing to grant the increases across the board. The
CBA is the law between the parties and proposals not a part thereof cannot be cl
aimed.
The fact that the company had once upon a time granted an across-the-boar
d increase does not make that single instance an established company practice.
Petitioner s contention on the issue of wage distortion and the resulting a
llegation of discrimination are anchored on its dubious position that the employ
er s promise to grant an across-the-board increase reflected in the minutes is an
enforceable part of the CBA. The issue of whether or not a wage distortion exist
s is a question of fact that is within the jurisdiction of the quasi-judicial tr
ibunals. The LA and the NLRC have found that there was no wage distortion.
Nasipit Lumber Company v. NWPC, 289 SCRA 667
Petitioners contend that the National Wages and Productivity Commission (NWPC) g
ravely abused its discretion in overturning the Regional Tripartite Wages and Pr
oductivity Board s (RTWPB) approval of their application for exemption from a wage
order. They argue that under Article 122 (e) of the LC, the RTWPB has the power
act on applications for exemption from prescribed rates. They also maintain tha
t no law expressly requires the approval of the NWPC for the effectivity of the
RTWPB s Guideline No. 3.
Held: Power to prescribe guidelines lodged in the NWPC, not the RTWPB. The LC, a
s amended by RA 6727 (the Wage Rationalization Act), grants the NWPC the power t
o prescribe rules and guidelines for the determination of appropriate wages in t
he country. Hence, guidelines issued by the RTWPB without the approval, or worse,
contrary to those promulgated by the NWPC are ineffectual, void, and cannot be t
he source of rights and privileges.
While the RTWPB has the power to fix minimum wage rates under Article 122
(b) of the LC, such orders are subject to the guidelines prescribed by the NWPC
. To allow RTWPB Guideline No. 3 to take effect without the approval of the NWPC
is to arrogate unto the RTWPB a power vested in the in the NWPC by Article 121
of the Labor Code, as amended. The law cannot be broadened by a mere administrat
ive issuance. Article 122 (e) of the Labor Code cannot be construed to enable th
e RTWPB to decide applications for exemption on the basis of its own guidelines
which were not reviewed and approved by the NWPC for the simple reason that the
statutory grant of powers should not be extended by implication beyond what may b
e necessary for their just and reasonable execution.
Philippine Air Lines, Inc. v. NLRC, November 9, 1998
STELLAR hired workers to perform janitorial and maintenance services for PAL. Wh
en their agreement expired, PAL called for the bidding of its janitorial require
ments. STELLAR exerted efforts to maintain its contract with PAL which, in the m
eantime, allowed STELLAR s employees to continue working on PAL premises. However,
PAL subsequently informed STELLAR in a formal letter that the service agreement
would no longer be renewed. Alleging that they were illegally dismissed, the in
dividual employees filed a case against PAL and STELLAR for illegal dismissal an
d for payment of separation pay.
Held: There was permissible job contracting and the employees, for the duration
of their employ, were not employees of PAL but of STELLAR. In legitimate job con
tracting, no ER-EE relation exists between the principal and the contractor s empl
oyees. The principal is responsible to the job contractor s employees only for the
proper payment of wages. But in labor-only contracting, an employer-employee re
lation is created by law between the principal and the labor-only contractor s emp
loyees, such that the former is responsible to such employees, as if he or she h
ad directly employed them.
Sentinel Security Agency, Inc. v. NLRC, 295 SCRA 171
Complainants-employees of Sentinel Security Agency, Inc. were previously assigne
d to guard the premises of PhilAm. PhilAm subsequently sent notice that the Agen
cy was again awarded the contract of security services together with a request t
o replace all the security guards in the company s offices in Cebu and other place
s. Upon compliance of the Relief and Transfer Order issued by the Agency (orderi
ng replacement of the complainants as guards of PhilAm and their re-assignment t
o other clients), the complainants reported but were never given new assignments
allegedly because, as the Agency told them, they were already old. This prompted
the complainants to file illegal dismissal cases demanding payment of separation
pay, as well as other labor standard benefits.
Held: Illegal dismissal. Complainants entitled to reinstatement (or separation
pay) and back wages. However, PhilAm cannot be held liable for separation pay a
nd backwages since it is not responsible for the dismissal. It is however solida
rily liable with the Agency for the service incentive leave pay. In Rosewood, th
e Court explained that, notwithstanding the service contract between the client
and the security agency, the two are solidarily liable for the proper wages pres
cribed by the Labor Code, pursuant to Articles 106, 107, and 109 thereof. Under
these provisions, the indirect employer is solidarily liable for the workers wage
s, in the same manner and extent that it is liable to its direct employees. This
liability covers SIL pay of the complainants during the time they were posted a
t the Cebu branch of PhilAm. As service had been rendered, the liability has acc
rued.
Prubankers Assoc. v. Prudential Bank & Trust Company, January 25 1999
The RTWPB of Region V issued W.O. # V-03, which provided for a Cost of Living Al
lowance (COLA) to workers in the private sector. Subsequently, the RTWPB of Regi
on VII issued W.O. # VII-03, which directed the integration of COLA into the bas
ic pay of all workers. Prubankers Association then demanded from Prudential Bank
that it extend the application of the wage orders to its employees outside Regi
ons V and VII, claiming that the regional implementation of the said orders crea
ted a wage distortion in the wage rates.
Held: No wage distortion.
Wage distortion presupposes an increase in the compensation of the lower
ranks in an office hierarchy without a corresponding raise for those higher-tier
ed employees in the same region of the country, resulting in the elimination or
severe diminution of the distinction between the 2 groups. Such distortion does
not arise when a wage order gives employees in 1 branch higher compensation than
that given to their counterpart in other regions occupying the same pay scale,
who are not covered by said wage order.
Where a significant change occurs at the lowest level of positions in ter
ms of basic wage without a corresponding change in the other level in the hierar
chy of positions, negating as a result thereof the distinction between one level
of position from the next higher level, and resulting in a party between the lo
west level and the next higher level or rank, between new entrants and old hires
, there exists a wage distortion.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates;
2. A significant change in the salary rate of a lower pay class without a concom
itant increase in the salary rate of a higher one;
3. The elimination of the distinction between the two levels;
4. The existence of the distortion in the same region of the country.
In the present case, it is clear that no distortion resulted from the imp
lementation of the subject Wage Orders in the covered branches. In the said bran
ches, there was an increase in the salary rates of all pay classes. Furthermore,
the hierarchy of positions based on skills, length of service, and other logica
l bases of differentiation was preserved. In other words, the qualitative differ
ence between different pay classes remained the same in all the branches of the
affected region. Put differently, the distinction between Pay Class 1 and Pay C
lass 2, for example, was not eliminated as a result of the implementation of the
two Wage Orders in the said region.
A wage parity between employees in different rungs is not at issue here,
but wage disparity between employees in the same rung but located in different r
egions of the country. A disparity in wages between employees holding similar po
sition but in different regions does not constitute wage distortion. It is the h
ierarchy of positions and the disparity of their corresponding wages and other e
moluments that are sought to be preserved by the concept of wage distortion. Put
differently, a wage distortion arises when a wage order engenders wage parity b
etween employees in different rungs of the organizational ladder of the same est
ablishment. It bears emphasis that wage distortion involves a parity in the sala
ry rates of different pay classes which, as a result, eliminates the distinction
between the different ranks in the same region.
The difference in wages between employees in the same pay scale in differ
ent regions is not the mischief sought to be banished by the law. The Wage Ratio
nalization Act recognizes existing regional disparities in the cost of living.
Petitioner also avers that the implementation of the Wage Order in only o
ne region violates the equal-pay-for-equal-work principle. This is not correct.
The law mandates that wages in every region must be set by the particular wage b
oard of that region, based on the prevailing situation therein. Necessarily, the
wages in different regions will not be uniform.
13 provides that the minimum wage rates of workers working in branches or a
gencies of establishments in or outside of the NCR shall be those applicable in
the place where they are sanctioned. The last part of the sentence was omitted by
petitioner in its argument. Given the entire phrase, it is clear that the statu
tory provision does not support petitioner s view that the establishment includes al
l branches and offices in different regions.
International School Alliance v. Quisumbing, GR 123619, June 8, 2000
When negotiations for a new CBA were held, International School Alliance of Educ
ators contested the difference in salary rates between the foreign and local hir
es an issue which, along with the issue of whether foreign-hires should be inclu
ded in the appropriate BU, caused a deadlock between the parties.
Held: Practice of according higher salaries to foreign hires illegal.
Discrimination, particularly in terms of wages, is frowned upon by the La
bor Code. Article 135, for example, prohibits and penalizes the payment of lesse
r compensation to a female employee against a male employee for work of equal va
lue. Article 248 declares it unfair labor practice for an employer to discrimina
te in regard to wages in order to encourage or discourage membership in any lab
or organization.
If an employer accords employees the same position and rank, the presumpt
ion is that they perform equal work.
F. THIRTEENTH-MONTH PAY
PRESIDENTIAL DECREE NO. 851
REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A 13TH MONTH PAY
WHEREAS, it is necessary to further protect the level of real wages from
the ravage of world-wide inflation;
WHEREAS, there has been no increase in the legal minimum wage rates since
1970;
WHEREAS, the Christmas season is an opportune time for society to show it
s concern for the plight of the working masses so they may properly celebrate Ch
ristmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the powers vested in
me by the Constitution do hereby decree as follows:
Sec. 1. All employers are hereby required to pay all their employees rec
eiving a basic salary of not more than P1,000 a month, regardless of the nature
of their employment, a 13th-month pay not later than December 24 of every year.

Sec. 2. Employers already paying their employees a 13th-month pay or its


equivalent are not covered by this Decree.
Sec. 3. This Decree shall take effect immediately.
Done in the City of Manila, this 16th day of December 1975.
RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851
By virtue of the powers vested in me by law, the following rules and regu
lations implementing Presidential Decree No. 851 are hereby issued for the guida
nce of all concerned.
Sec. 1. Payment of 13-month Pay - All employers covered by Presidential
Decree No. 851, hereinafter referred to as the Decree , shall pay to all their empl
oyees receiving a basic salary of not more than P1,000 a month a thirteenth-mont
h pay not later than December 24 of every year.
Sec. 2. Definition of certain terms - As used in this issuance.
a) Thirteenth-moth pay shall mean one twelfth (1/12) of the basic salary of a
n employee within a calendar year;
b) Basic salary shall include all remunerations or earnings paid by an employ
er to an employee for services rendered but may not include cost-of-living allow
ances granted pursuant to Presidential Decree No. 525 or Letter of Instructions
No. 174, profit-sharing payments, and all allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary of the
employee at the time of the promulgation of the Decree on December 16, 1975.
Sec. 3. Employers covered - The Decree shall apply to all employers exce
pt to:
a) Distressed employers, such as (1) those which are currently incurring su
bstantial losses or (2) in the case of non-profit institutions and organizations
, where their income, whether from donations, contributions, grants and other ea
rnings from any source, has consistently declined by more than forty (40%) perce
nt of their normal income for the last two (2) years, subject to the provision o
f Section 7 of this issuance;
b) The Government and any of its political subdivisions, including governme
nt-owned and controlled corporations, except those corporations operating essent
ially as private subsidiaries of the Government;
c) Employers already paying their employees 13-month pay or more in a calen
dar year of its equivalent at the time of this issuance;
d) Employers of household helpers and persons in the personal service of an
other in relation to such workers; and
e) Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific work, irr
espective of the time consumed in the performance thereof, except where the work
ers are paid on piece-rate basis in which case the employer shall be covered by
this issuance insofar as such workers are concerned.
As used herein, workers paid on piece-rate basis shall refer to those who
are paid a standard amount for every piece or unit of work produced that is mor
e or less regularly replicated, without regard to the time spent in producing th
e same.
The term its equivalent as used in paragraph c) hereof shall include Christ
mas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amount
ing to not less than 1/12th of the basic salary but shall not include cash and s
tock dividends, cost of living allowances and all other allowances regularly enj
oyed by the employee, as well as non-monetary benefits. Where an employer pays l
ess than 1/12th of the employees basic salary, the employer shall pay the differ
ence.
Sec. 4. Employees covered - Except as provided in Section 3 of this issu
ance, all employees of covered employers shall be entitled to benefit provided u
nder the Decree who are receiving not more than P1,000 a month, regardless of th
eir position, designation or employment status, and irrespective of the method b
y which their wages are paid, provided that they have worked for at least one mo
nth during the calendar year.
Sec. 5. Option of covered employers - A covered employer may pay one-hal
f of the 13th-month pay required by the Decree before the opening of the regular
school year and the other half on or before the 24th day of December of every y
ear.
In any establishment where a union has been recognized or certified as th
e collective bargaining agent of the employees therein, the periodicity or frequ
ency of payment of the 13th month pay may be the subject of agreement.
Nothing herein shall prevent employers from giving the benefits provided
in the Decree to their employees who are receiving more than One Thousand (P1,00
0) Pesos a month or benefits higher than those provided by the Decree.
Sec. 6. Special feature of benefit - The benefits granted under this iss
uance shall not be credited as part of the regular wage of the employees for pur
poses of determining overtime and premium pay, fringe benefits, as well as premi
um contributions to the State Insurance Fund, social security, medicare and priv
ate welfare and retirement plans.
Sec. 7. Exemption of Distressed employers - Distressed employers shall q
ualify for exemption from the requirement of the Decree upon prior authorization
by the Secretary of Labor. Petitions for exemptions may be filed within the nea
rest regional office having jurisdiction over the employer not later than Januar
y 15, 1976. The regional offices shall transmit the petitions to the Secretary o
f Labor within 24 hours from receipt thereof.
Sec. 8. Report of compliance - Every covered employer shall make a repor
t of his compliance with the Decree to the nearest regional labor office not lat
er than January 15 of each year.
The report shall conform substantially with the following form:
REPORT ON COMPLIANCE WITH PD NO. 851
1. Name of establishment
2. Address
3. Principal product or business
4. Total employment
5. Total number of workers benefited
6. Amount granted per employee
7. Total amount of benefits granted
8. Name, position and tel. no. of person giving information

Sec. 9. Adjudication of claims - Non-payment of the thirteenth-month pay


provided by the Decree and these rules shall be treated as money claims cases a
nd shall be processed in accordance with the Rules Implementing the Labor Code o
f the Philippines and the Rules of the National Labor Relations Commission.
Sec. 10. Prohibition against reduction or elimination of benefits - Noth
ing herein shall be construed to authorize any employer to eliminate, or diminis
h in any way, supplements, or other employee benefits or favorable practice bein
g enjoyed by the employee at the time of promulgation of this issuance.
Sec. 11. Transitory Provision - These rules and regulations shall take e
ffect immediately and for purposes of the 13-month pay for 1975, the same shall
apply only to those who are employees as of December 16, 1975.
Manila, Philippines, 22 December 1975.

SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING P.D. NO. 851


To insure uniformity in the interpretation, application and enforcement o
f the provisions of P.D. No. 851 and its implementing regulations, the following
clarifications are hereby made for the information and guidance of all concerne
d:
1. Contractors and Subcontractors, including Security and Watchman Agencies
, are exempt for the year 1975 subject to the following conditions:
a) that the contracts of such enterprises were entered into before December
16, 1975;
b) that such enterprises have complied with all labor standards laws during
the year;
c) that the contract cannot really accommodate 13-month pay or its equivale
nt; and
d) that the contract does not provide for cost escalation clause.
This exemption is without prejudice on the part of the workers to negotia
te with their employers or to seek payment thereof by filing appropriate complai
nts with the Regional Offices of the Department of Labor.
2. Private school teachers, including faculty members of colleges and unive
rsities, are entitled to 1/12 of their annual basic pay regardless of the number
of months they teach or are paid within a year.
3. New establishments operating for less than one year are not covered exce
pt subsidiaries or branches of foreign and domestic corporations.
4. Overtime pay, earnings and other remunerations which are not part of the
basic salary shall not be included in the computation of the 13-month pay.
5. In view of the lack of sufficient time for the dissemination of the prov
isions of P.D. No. 851 and its Rules and the unavailability of adequate cash flo
w due to the long holiday season, compliance and reporting of compliance with th
is Decree are hereby extended up to March 31, 1976 except in private schools whe
re compliance for 1975 may be made not later than 30 June 1976.
6. Nothing herein shall sanction the withdrawal or diminution of any compen
sation, benefits or any supplements being enjoyed by the employees on the effect
ive date of this issuance.
Manila, January 16, 1976
ADMINISTRATIVE ORDER NO. 2 SERIES OF 1976
In the interest of public service and efficiency, more particularly to fa
cilitate the disposition of cases involving petitions for exemption, complaints,
enforcement and implementation of P.D. No. 851 and its implementing rules and r
egulations, the following guidelines shall be followed:
I. Petition for exemption -
1. The Regional Office concerned shall transmit immediately the petition fo
r exemption to the Chairman, Wage Commission with Comments and recommendations,
if any.
The petition shall contain a sworn statement on the inability to implemen
t the Decree and the reasons therefore and shall be accompanied by the following
documents and statements:
a) A certified true copy of the income tax returns for the last two (2) yea
rs;
b) A certified copy of the financial reports for the last two (2) years fil
ed with the Government entities, such as the Securities and Exchange Commission,
Department of Trade, Department of Industries and Board of Investments;
c) A detailed sworn statement of the actual monthly losses not covered by t
he report required under paragraph (b) above and such other proofs or documents
as may be required by the Chairman, Wage Commission to establish such exemption.
casia
2. The Chairman, Wage Commission and the duly designated staff, shall evalu
ate all petitions for exemption and make appropriate recommendations within 20 w
orking days from receipt of the petition to the Secretary of Labor.
3. Whenever a petition for exemption has been filed, and complaint for non-
compliance shall be held in abeyance pending the disposition or resolution of th
e petition for exemption.
II. Complaint, enforcement and/or implementation -
1. All complaints for non-payment of the 13th-month pay shall be filed with
the Field Services Division of the Regional Office concerned. The Regional Dire
ctor shall direct the said Division to conduct an inspection and investigation i
n connection with the complaint filed.
2. The Field Service Division of the Regional Office concerned shall see to
it that all covered employees comply with PD No. 851.
The Regional Director shall submit a monthly progress report of complianc
e with the Decree.
The reports of the Regional Offices shall be submitted to the LSS and BLS
, and shall contain the following:
a) The total number of establishments;
b) Total number of workers benefited; and
c) Total amount of benefits paid.
3. The Regional Office shall compile, analyze and evaluate compliance repor
ts and update the listing of establishments on the basis of the reports submitte
d.
Any prior order, circular, instruction or memorandum or parts thereof, in
consistent herewith are hereby revoked.
This Order shall take effect immediately.
Manila, 9 January 1976.
CASES
PACIWU v. NLRC, 247 SCRA 256
PACIWU instituted a complaint with NLRC for payment of 13th month pay in behalf
of the drivers and conductors of respondent company s Visayan operation. It mainta
ined that although said employees are compensated on a purely commission basis as
described in their CBA, they are automatically entitled to the basic minimum pay
mandated by law including 13th month pay. On the other hand, the employer conte
nds that since they are compensated on commission basis, they are not entitled t
o 13th month pay.
Held: Entitled to 13th month pay.
In 1975, PD 851 (13th Month Pay Law) was promulgated and contained a provision t
hat employers of those who are paid on purely commission, boundary, or task basi
s are not covered. In 1986, Pres. Aquino issued a Memo Order which required all
employers to pay all their rank-and-file employees a 13th month pay. In connecti
on with this, a MOLE Explanatory Bulletin was issued providing that employees wh
o are paid a fixed or guaranteed wage plus commission are also entitled to the m
andated 13th month pay, based on their total earnings during the calendar year,
i.e., on both their fixed and guaranteed wage and commission.
Therefore, every employee receiving a commission in addition to a fixed o
r guaranteed wage or salary, is entitled to a 13th month pay. It is immaterial w
hether the employees concerned are paid a guaranteed wage plus commission or a c
ommission with guaranteed wage inasmuch as the bottom line is that they receive
a guaranteed wage.
In this case, while the bus drivers and conductors are considered by the
company as being compensated on a commission basis, they are not paid purely by
what they receive as commission. The company admitted that they are automaticall
y entitled to the basic minimum pay mandated by law in case the commissions they
earned be less than the basic minimum pay. Evidently therefore, the commissions
form part of their wage or salary. The label is not controlling. It is the natu
re of the renumeration and the purpose for which the 13th month pay was given to
alleviate the plight of the working masses who are receiving low wages that con
trols.
Philippine Duplicators, Inc. v. NLRC, 241 SCRA 380
Philippine Duplicators was ordered by the LA to pay its employees 13th month pay
computed on the basis of their fixed wages plus sales commission. It appealed t
o the SC which dismissed the petition. Meantime, the SC, through another divisio
n, rendered a decision in two cases which had questioned the validity of the pro
vision in the Guidelines implementing MO No. 28 which stated: Employees who are p
aid a fixed or guaranteed wage plus commission are also entitled to the mandated
13th month pay, based on their total earning during the calendar year, i.e., on
both their fixed and guaranteed wage and commission. In these cases, the SC Seco
nd Division declared said section null and void; in other words, commissions sho
uld not be included in determining the 13th month pay. Learning about the ruling
, Philippine Duplicators went up again to the SC.
Held: Still denied.
The sales commissions were an integral part of the basic salary structure of Phi
lippine Duplicators employees-salesmen. These commissions are not overtime paymen
ts, nor profit-sharing payments, nor any other fringe benefit. Thus, the salesme
n s sales commissions, comprising a pre-determined percent of the selling price of
the goods sold by each salesman, were properly included in the term basic salary
for purposes of computing their 13th month pay.
In contrast, the so-called commissions in the other case which were paid
to med. reps. and the rank and file are excluded from the term basic salary becau
se these were paid as productivity bonuses (i.e., additional monetary benefits n
ot properly included in the term basic salary; bonuses generally tied to the prod
uctivity, or capacity for revenue production, of a corporation; such bonuses clo
sely resemble profit-sharing payments and have no clear, direct, or necessary re
lation to the amount of work actually done by each employee).
If an employer cannot be compelled to pay a productivity bonus to his employees,
it should follow that such productivity bonus, when given, should not be deemed
to fall within the basic salary of employees when the time comes to compute their
13th month pay.
Additional payments made to employees, to the extent they partake of the
nature of profit-sharing payments, are properly excluded from the ambit of the
term basic salary for purposes of computing the 13th month pay due to employees.
The Rules implementing PD No. 851 sought to clarify the scope of items e
xcluded in the computation of the 13th month pay; viz.: Overtime pay, earnings an
d other renumerations which are not part of the basic salary shall not be includ
ed in the computation of the 13th month pay.
We observe that the term basic salary is cast in open ended and apparently
circular terms: Other renumerations which are not part of the basic salary. Howev
er, what particular types of earnings and renumeration are or are not properly i
ncluded or integrated in the basic salary are questions to be resolved on a case
to case basis, in the light of the specific and detailed facts of each case. In
principle, where these earnings and renumeration are closely akin to fringe ben
efits, overtime pay, or profit-sharing payments, they are properly excluded in c
omputing the 13th month pay. However, sales commissions, which are effectively a
n integral portion of the basic salary structure of an employee, shall be includ
ed in determining his 13th month pay.
G. BONUS
Cases
Manila Banking Corp. v. NLRC, 279 SCRA 602
Private respondents filed a complaint against Manilabank and its receiver with t
he arbitration branch of the NLRC claiming entitlement to additional benefits al
leged to have accrued from 1984 to their effective dates of termination. Such cl
aim to the entitlement of the foregoing benefits was based on Manilabank s alleged
practice, policy, and tradition of awarding said benefits. They contended that
the policy has ripened into property rights in their favor.
Manilabank argued that the additional benefits sought are without basis s
ince the same are conferred by management only when it deems necessary to do so.
The award of the said benefits is in the nature of a management prerogative which
, it contended, can be withheld by management upon a clear showing that the comp
any is not in a position to grant them either because of financial difficulties
or circumstances which do not warrant conferment of such benefits.
Held: A bonus is a gratuity or act of liberality of the giver of which the recipie
nt has no right to demand as a matter of right. It is something given in additio
n to what is ordinarily received by or strictly due the recipient. The granting
of a bonus is basically a management prerogative.
It is evident that the bank was operating on net losses before its event
ual closure in 1987 and liquidation in 1988. Clearly, there was no success in bu
siness or realization of profits to speak of that would warrant the conferment o
f additional benefits sought by private respondents. No company should be compel
led to act liberally and confer upon its employees additional benefits over and
above those mandated by law when it is plagued by economic difficulties and fina
ncial losses.
Dissent: The general rule is that a bonus is a gratuity or act of liberality of
the giver of which the recipient has no right to demand as a matter of right. A
bonus, however, is demandable and enforceable when it is made part of the wage o
r salary or compensation of the employee. Whether or not a bonus forms part of w
ages depends upon the circumstances or conditions for its payment. If it is an a
dditional compensation which the employer promised and agreed to give without an
y conditions imposed for its payment, such as success of business or greater pro
duction of output, then it is part of the wage. But if it is paid only if profit
s are realized or a certain amount of productivity achieved, it cannot be consid
ered part of the wages.
H. Service Charge and Service Incentive Leave
Labor Code
Art. 95. Right to service incentive leave.
(a) Every employee who has rendered at least one year of service shall be en
titled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the ben
efit herein provided, those enjoying vacation leave with pay at least five days
and those employed in establishments regularly employing less than ten employees
or in establishments exempted from granting this benefit by the Secretary of La
bor after considering the viability or financial condition of such establishment
.
(c) The grant of benefit in excess of that provided herein shall not be made
a subject of arbitration or any court of administrative action.
Art. 96. Service charges. All service charges collected by hotels, restau
rants and similar establishments shall be distributed at the rate of eighty-five
(85%) percent for all covered employees and fifteen (15%) percent for managemen
t. The share of the employees shall be equally distributed among them. In case t
he service charge is abolished, the share of the covered employees shall be cons
idered integrated into their wages.
Omnibus Rules, Book III
RULE V
Service Incentive Leave
SECTION 1. Coverage. This rule shall apply to all employees except:
(a) Those of the government and any of its political subdivisions, including
government-owned and controlled corporations;
(b) Domestic helpers and persons in the personal service of another;
(c) Managerial employees as defined in Book III of this Code;
(d) Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work irres
pective of the time consumed in the performance thereof;
(e) Those who are already enjoying the benefit herein provided;
(f) Those enjoying vacation leave with pay of at least five days; and
(g) Those employed in establishments regularly employing less than ten emplo
yees.
SECTION 2. Right to service incentive leave. Every employee who has render
ed at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay.
SECTION 3. Definition of certain terms. The term "at least one-year servic
e" shall mean service for not less than 12 months, whether continuous or broken
reckoned from the date the employee started working, including authorized absenc
es and paid regular holidays unless the working days in the establishment as a m
atter of practice or policy, or that provided in the employment contract is less
than 12 months, in which case said period shall be considered as one year.
SECTION 4. Accrual of benefit. Entitlement to the benefit provided in thi
s Rule shall start December 16, 1975, the date the amendatory provision of the C
ode took effect.
SECTION 5. Treatment of benefit. The service incentive leave shall be com
mutable to its money equivalent if not used or exhausted at the end of the year.

SECTION 6. Relation to agreements. Nothing in the Rule shall justify an em


ployer from withdrawing or reducing any benefits, supplements or payments as pro
vided in existing individual or collective agreements or employer s practices or p
olicies.
RULE VI
Service Charges
SECTION 1. Coverage. This rule shall apply only to establishments collecti
ng service charges such as hotels, restaurants, lodging houses, night clubs, coc
ktail lounge, massage clinics, bars, casinos and gambling houses, and similar en
terprises, including those entities operating primarily as private subsidiaries
of the Government.
SECTION 2. Employees covered. This rule shall apply to all employees of co
vered employers, regardless of their positions, designations or employment statu
s, and irrespective of the method by which their wages are paid except to manage
rial employees.
As used herein, a "managerial employee" shall mean one who is vested with
powers or prerogatives to lay down and execute management policies and/or to hi
re, transfer, suspend, lay-off, recall, discharge, assign, or discipline employe
es or to effectively recommend such managerial actions. All employees not fallin
g within this definition shall be considered rank-and-file employees.
SECTION 3. Distribution of Service Charges. All service charges collected by co
vered employers shall be distributed at the rate of 85% for the employees and 15
% for the management. The 85% shall be distributed equally among the covered emp
loyees. The 15% shall be for the disposition by management to answer for losses
and breakages and distribution to managerial employees at the discretion of the
management in the latter case.
SECTION 4. Frequency of distribution. The shares referred to herein shall be di
stributed and paid to the employees not less than once every two (2) weeks or tw
ice a month at intervals not exceeding sixteen (16) days.
SECTION 5. Permanency of service charges. In case the service charges is a
bolished, the share of covered employees shall be considered integrated in their
wages. The basis of the amount to be integrated shall be the average monthly sh
are of each employee for the past twelve (12) months immediately preceding the a
bolition of withdrawal of such charges.
SECTION 6. Relation to agreements. Nothing in this Rule shall prevent the emplo
yer and his employees from entering into any agreement with terms more favorable
to the employees than those provided herein, or be used to diminish any benefit
granted to the employees under existing laws, agreement and voluntary employer
practice.
SECTION 7. This rule shall be without prejudice to existing, future collective
bargaining agreements.
Nothing in this rule shall be construed to justify the reduction or dimin
ution of any benefit being enjoyed by any employee at the time of effectivity of
this rule.
CASE
Fernandez v. NLRC, 285 SCRA 149
Petitioners alleged that they demanded from Lhuillier an increase in their salarie
s since business was good and she was evading taxes by making false entries in h
er records of account; that she became angry and threatened them that something
would happen to their employment if they would report her to the BIR; that short
ly thereafter, she suspected them of stealing jewelry from the pawnshop; that sh
e then verbally informed them not to report for work; and that 4 days later, the
y filed the complaint. The LA said they were illegally dismissed and granted var
ying amounts of service incentive leave pay to the petitioners based on the leng
th of their tenure (which varried from 6 to 33 years). While recommending that t
he LA s decision be reinstated substantially, the OSG recommended that the award o
f SIL be limited to 3 years because Article 291 provides that all money claims a
rising from employer-employee relations accruing during the effectivity of this
Code shall be filed within 3 years from the time the cause of action accrued; ot
herwise they shall be forever barred.
Petitioners counter that Article 291 speaks clearly on the prescription of
filing [an] action upon monetary claims within 3 years from the time the cause
of action accrued, but it is not a prescription of a period of time for the comp
utation of monetary claims.
Held: The clear policy of the LC is to grant SIL pay to workers in all establis
hments, subject to a few exceptions. The IRR provides that [e]very employee who h
as rendered at least one year of service shall be entitled to a yearly SIL of fi
ve days with pay. SIL is a right which accrues to every employee who has served wi
thin 12 months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays unless
the working days in the establishment as a matter of practice or policy, or tha
t provided in the employment contracts, is less than 12 months, in which case sa
id period shall be considered as one year. It is also commutable to its money equ
ivalent if not used or exhausted at the end of the year. In other words, an empl
oyee who has served for one year is entitled to it. He may use it as leave days
or he may collect its monetary value.
To limit the award to 3 years is to unduly restrict such right. The law i
ndeed does not prohibit its commutation. Since SIL is clearly demandable after o
ne year of service whether continuous or broken or its equivalent period, and it
is one of the benefits which would have accrued if an employee was not otherwise
illegally dismissed, it is fair and legal that its computation should be up to t
he date of reinstatement as provided under Section 279 of the Labor Code.

I. MATERNITY LEAVE AND PATERNITY LEAVE


LABOR CODE
Art. 133. Maternity leave benefits.
(a) Every employer shall grant to any pregnant woman employee, who has rende
red an aggregate service of at least six (6) months for the last twelve (12) mon
ths, maternity leave of at least two (2) weeks prior to the expected date of del
ivery and another four (4) weeks after normal delivery or abortion, with full pa
y based on her regular or average weekly wages. The employer may require from an
y woman employee applying for maternity leave the production of a medical certif
icate stating that delivery will probably take place within two weeks.
(b) The maternity leave shall be extended without pay on account of illness
medically certified to arise out of the pregnancy, delivery, abortion or miscarr
iage, which renders the woman unfit for work, unless she has earned unused leave
credits from which such extended leave may be charged.
(c) The maternity leave provided in this Article shall be paid by the employ
er only for the first four deliveries by a woman employee after the effectivity
of this Code.

R.A. 1161, AS AMENDED


Sec. 14-A. Maternity Leave Benefit. - A covered female employee who has
paid at least three monthly maternity contributions in the twelve-month period p
receding the semester of her childbirth, abortion or miscarriage and who is curr
ently employed shall be paid a daily maternity benefit equivalent to one hundred
percent (100%) of her present basic salary, allowances and other benefits or th
e cash equivalents of such benefits for sixty (60) days subject to the following
conditions:
(a) That the employees shall have notified her employer of her pregnancy and
the probable date of her childbirth which notice shall be transmitted to the SS
S in accordance with the rules and regulations it may provide;
(b) That the payment shall be advanced by the employer in two equal installm
ents within thirty (30) days from the filing of the maternity leave application;
(c) That in case of caesarian delivery the employee shall be paid the daily
maternity benefit for seventy-eight (78) days.
(d) That payment of daily maternity benefits shall be a bar to the recovery
of sickness benefits provided by this Act for the same compensable period of six
ty (60) days for the same childbirth, abortion, or miscarriage;
(e) That the maternity benefits provided under this Section shall be paid on
ly for the first four deliveries after March 13, 1973;
(f) That the SSS shall immediately reimburse the employer of one hundred per
cent (100%) of the amount of maternity benefits advanced to the employee by the
employer upon receipt of satisfactory proof of such payment and legality thereof
; and
(g) That if an employee should give birth or suffer abortion or miscarriage
without the required contributions having been remitted for her by her employer
to the SSS, or without the latter having been previously notified by the employe
r of the time of the pregnancy, the employer shall pay to the SSS damages equiva
lent to the benefits which said employee would otherwise have been entitled to,
and the SSS shall in turn pay such amount to the employee concerned.
REPUBLIC ACT NO. 8187
AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH FULL PAY TO ALL MARRIED M
ALE EMPLOYEES IN THE PRIVATE AND PUBLIC SECTORS FOR THE FIRST FOUR (4) DELIVERIES
OF THE LEGITIMATE SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in C
ongress assembled:
SECTION 1. Short Title. - This Act shall be known as the Paternity Leave Ac
t of 1996 .
SECTION 2. Notwithstanding any law, rules and regulations to the contrary
, every married male employee in the private and public sectors shall be entitled
to a paternity leave of seven (7) days with full pay for the first four (4) deli
veries of the legitimate spouse with whom he is cohabiting. The male employee appl
ying for paternity leave shall notify his employer of the pregnancy of his legit
imate spouse and the expected date of such delivery.
For purposes, of this Act, delivery shall include childbirthor any miscarr
iage.

SECTION 3. Definition of Term. - For purposes of this Act, Paternity Leave refer
s to the benefits granted to a married male employee allowing him not to report f
or work for seven (7) days but continues to earn the compensation therefor, on t
he condition that his spouse has delivered a child or suffered a miscarriage for p
urposes of enabling him to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.
SECTION 4. The Secretary of Labor and Employment, the Chairman of the Civ
il Service Commission and the Secretary of Health shall, within thirty (30) days
from the effectivity of this Act, issue such rules and regulations necessary for
the proper implementation of the provisions hereof.

SECTION 5. Any person, corporation, trust, firm, partnership, association or en
tity found violating this Act or the rules and regulations promulgated thereunder
shall be punished by a fine not exceeding Twenty-five thousand pesos (P25,000) o
r imprisonment of not less than thirty (30)days nor more than six (6) months.
If the violation is committed by a corporation, trust orfirm, partnership,
association or any other entity, the penaltyof imprisonment shall be imposed on
the entity s responsible officers, including, but not limited to, the president, vi
ce-president, chief executive officer, general manager, managing director or part
ner directly responsible therefor.

SECTION 6. Nondiminution Clause. - Nothing in this Actshall be construed to redu
ce any existing benefits of any formgranted under existing laws, decrees, executi
ve orders, or any contract agreement or policy between employer and employee.
SECTION 7. Repealing Clause. - All laws, ordinances, rules,regulations, iss
s, or parts thereof which are inconsistentwith this Act are hereby repealed or mo
dified accordingly.
SECTION 8. Effectivity. - This Act shall take effect (15)days from its pu
blication in the Official Gazette or in at leasttwo (2) newspapers of national ci
rculation.

Approved: June 11, 1996

J. MISCELLANEOUS
CASES
More Maritime Agencies, Inc. v. NLRC, 307 SCRA 189
Petitioners were ordered by the POEA and the NLRC to pay Homicillada disability
and medical benefits for the injury he sustained when, on board the MV Rhine, he
was directed to open and clean the main engine as well as the first and second
cylinders of the air trunk. Petitioners protested that Homicillada s injury was a
result of a chronic condition (slipped-disc) and, as such, they could not be mad
e accountable for it.
Held: Compensable. Even assuming that the ailment was contracted prior to his e
mployment, this would not exculpate petitioners from liability. Compensability o
f an ailment does not depend on whether the injury or disease was pre-existing a
t the time of the employment but rather if the disease or injury is work-related
or aggravated his condition. It is safe to presume that, at the very least, the
arduous nature of Homicillada s employment had contributed to the aggravation of
his injury, if indeed it was pre-existing at the time of his employment.
Philippine Telegraph and Telephone Company v. NLRC, 272 SCRA 596
PT&T invokes alleged concealment of civil status and defalcation of company fund
s as grounds to fire de Guzman who in turn argues that what motivated PT&T to te
rminate her was her having contracted marriage during her employment, which is p
rohibited in its company policies. She claims that she was discriminated against
and that such a proscription was outlawed by Article 136.
Held: PT&T s policy of not accepting or considering as disqualified from work an
y woman worker who contracts marriage runs afoul of the test of discrimination.
Contrary to its assertion that it dismissed de Guzman on account of dishonesty,
the record shows that it was principally because of the policy that married wome
n are not qualified for employment.
It would be worthwhile to reflect upon the rationalization of Zialcita, et al vs
. Philippine Air Lines, a decision that emanated from the Office of the Presiden
t. There, a policy of Philippine Air Lines requiring that prospective flight att
endants must be single and that they will be automatically separated from the se
rvice once they marry, was declared void, it being violative of the clear mandat
e in Article 136 of the Labor with regard discrimination against marr