LABOR LAW

PRE-WEEK NOTES
FOR THE

By:

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TOPIC NO. 1
FUNDAMENTAL PRINCIPLES AND POLICIES

A.
CONSTITUTIONAL PROVISIONS

What are the important constitutional

principles related to Labor Law? The

following principles should be taken note of:

Under Article II (Declaration of Principles and State Policies):

a. Promotion of full employment, a rising standard of living, and an
improved quality of life for all.
b. Promotion of social justice in all phases of national development.
c. Full respect for human rights.
d. Vital role of the youth in nation-building.
e. Role of women in nation-building, and fundamental equality
before the law of women and men.

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 f. Indispensable role of the private sector,
g. Protection-to-labor clause: Section 18. The State affirms
labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.

NOTE: Article II is merely a statement of principles and state policies.

Its provisions are not self-executing. They do not embody judicially
enforceable constitutional rights but guidelines for legislation. These broad
constitutional principles need legislative enactments to implement them.

Under Article III (Bill of Rights):

a. Due process and equal protection of the law.
b. Freedom of speech, of expression, or of the press, or the right of
the people peaceably to assemble and petition the government
for redress of grievances.
c. Right of the people to information on matters of public concern.
Access to official records, and to documents and papers
pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development,
shall be afforded the citizen, subject to such limitations as may be
provided by law.
d. Right of public and private sector employees to form unions,
associations, or societies for purposes not contrary to law shall
not be abridged.
e. Non-impairment of obligations of contracts.
f. Right to speedy disposition of cases in judicial, quasi-judicial or
administrative bodies.
g. Prohibitions against involuntary servitude.
Under Article XIII (Social Justice and Human Rights):
a. Protection-to-Labor Clause: VERY IMPORTANT
Section 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote

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 full employment and equality of employment opportunities
for all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared

responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and
employers, recognizing the right of labor to its just share in
the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and
growth.
What kinds of due process may be asserted by the employee against his
employer?
While constitutional due process cannot be invoked by the employee
when he is undergoing administrative investigation at the company level,
he can, however, invoke both of the following kinds of due process at the
same time:
a. Statutory due process per Agabon doctrine which refers to the due
process provision in the Labor Code (Article 277[b]); and
b. Contractual due process per Abbott Laboratories doctrine.
The rule since Agabon is that compliance with the statutorily-
prescribed procedural due process under Article 277(b) would suffice. It is
not important whether there is an existing company policy which also

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 enunciates the procedural due process in termination cases in determining
the validity of the termination. However, under the latest doctrinal en banc
ruling in the 2013 case of Abbott Laboratories, Philippines v. Pearlie
Ann F. Alcaraz, it is now required that in addition to compliance with the
statutory due process, the employer should still comply with the due process
procedure prescribed in its own company rules. The employers failure to
observe its own company-prescribed due process will make it liable to pay
an indemnity in the form of nominal damages, the amount of which is
equivalent to the P30,000.00 awarded under the Agabon doctrine.
When can an employee invoke constitutional due process and right to
equal protection of the laws?
As distinguished from company-level investigation conducted by the
employer, a dismissed employee who files an illegal dismissal case may
raise the issue of deprivation of his right to constitutional due process and
right to equal protection of the laws against the Labor Arbiter who hears
and decides his case or the Commission (NLRC), Court of Appeals on Rule
65 certiorari petition. The reason is that, at this stage, the government is now
involved through said labor tribunals.
When can the right to counsel be invoked by an employee?
The right to counsel cannot be invoked in an administrative
proceeding such as the company-level investigation conducted for the
purpose of determining whether the respondent employee should be
dismissed or not. Right to counsel may be asserted only in custodial
interrogation as this term is understood within the context of criminal
procedure.
What is the effect of failure of employer to inform employee of his right to
counsel?
The prevailing rule is the right to counsel is neither indispensable nor
mandatory, as held in the 2011 case of Lopez v. Alturas Group of
Companies, thus:
Parenthetically, the Court finds that it was error for the NLRC to
opine that petitioner should have been afforded counsel or advised of

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 the right to counsel. The right to counsel and the assistance of one in
investigations involving termination cases is neither indispensable
nor mandatory, except when the employee himself requests for one
or that he manifests that he wants a formal hearing on the charges
against him. In petitioners case, there is no showing that he
requested for a formal hearing to be conducted or that he be
assisted by counsel. Verily, since he was furnished a second notice
informing him of his dismissal and the grounds therefor, the twin-
notice requirement had been complied with to call for a deletion of the
appellate courts award of nominal damages to petitioner.
B.
NEW CIVIL CODE
What are examples of labor cases where Article 1700 of the Civil Code
was applied?
Article 1700 of the Civil Code provides:
Art. 1700. The relations between capital and labor are not
merely contractual. They are so 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, working
conditions, hours of labor and similar subjects.
How is Article 1702 of the Civil Code correlated with Article 4 of the Labor
Code?
Both Article 1702 of the Civil Code and Article 4 of the Labor Code
speak of the rule on interpretation and construction provisions of law and
labor contracts.
Article 1702 of the Civil Code provides:
Article 1702. In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living
for the laborer.
Article 4 of the Labor Code states:

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 Article 4. Construction in Favor of Labor. All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved
in favor of labor.
Both articles above may be applied to doubts and ambiguities in
(1)labor contracts such as an employment contract or a CBA;
(2)evidence presented in labor cases.
C.
THE LABOR CODE
What are the distinctions between Labor Relations and Labor Standards?
Labor standards law is that part of labor law which prescribes the
minimum terms and conditions of employment which the employer is
required to grant to its employees.
Labor relations law is that part of labor law (Book V of the Labor
Code) which deals with unionism, collective bargaining, grievance
machinery, voluntary arbitration, strike, picketing and lockout.
Labor relations and labor standards laws are not mutually exclusive.
They are complementary to, and closely interlinked with, each other. For
instance, the laws on collective bargaining, strikes and lockouts which are
covered by labor relations law necessarily relate to the laws on working
conditions found in Book III.
What is exclusive bargaining representative/agent?
Exclusive bargaining representative or exclusive bargaining
agent refers to a legitimate labor organization duly recognized or certified
as the sole and exclusive bargaining representative or agent of all the
employees in a bargaining unit.
Can individual employee or group of employees bring grievable issues
directly to their employer without the participation of the bargaining
union?

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 Yes. The designation of a bargaining agent does not deprive an
individual employee or group of employees to exercise their right at any
time to present grievances to their employer, with or without the
intervention of the bargaining agent.
Can individual employee or group of employees bring grievable issues to
voluntary arbitration without the participation of the bargaining union?
No, as held the 2009 case of Tabigue v. International Copra Export
Corporation, where the Supreme Court clarified that an individual
employee or group of employees cannot be allowed to submit or refer
unsettled grievances for voluntary arbitration without the participation of
the bargaining union. The reason is that it is the bargaining union which is
a party to the CBA which contains the provision on voluntary arbitration.
Being a party thereto, it cannot be disregarded when a grievable issue will
be submitted for voluntary arbitration.
In order to have legal standing, the individual members should be
shown to have been duly authorized to represent the bargaining union.
What is the principle of co-determination?
The principle of co-determination refers to the right given to the
employees to co-determine or share the responsibility of formulating certain
policies that affect their rights, benefits and welfare.
In Philippine Airlines, Inc. (PAL) v. NLRC and Philippine Airlines
Employees Association (PALEA), it was held that the formulation of a
Code of Discipline among employees is a shared responsibility of the
employer and the employees. It affirmed the decision of the NLRC which
ordered that the New Code of Discipline should be reviewed and discussed
with the union, particularly the disputed provisions and that copies thereof
be furnished each employee.
Does the grant of the right of participation mean co-management of
business or intrusion into management prerogatives?
No. This principle does not mean that workers should approve
management policies or decisions.

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What is Labor-Management Council (LMC)?
The establishment of Labor-Management Council (LMC) is mandated
under the said constitutional principle of co-determination.
What is the significance of Article 277 of the Labor Code?
Article 277 of the Labor Code enunciates the so-called statutory
due process (as distinguished from constitutional due process) as
found in its paragraph (b), to wit:
Article 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 and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought
to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires, in accordance
with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment.
Any decision taken by the 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 the Department of Labor
and Employment may suspend the effects of the termination
pending resolution of the dispute in the event of a prima facie
finding by the appropriate official of the Department of Labor
and Employment before whom such dispute is pending that the
termination may cause a serious labor dispute or is in
implementation of a mass lay-off.

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 Additionally, Article 277 likewise recognizes the right of any
employee, whether employed for a definite period or not, to join
and be a member of a labor union beginning on his first day of
service.

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TOPIC NO. 2
RECRUITMENT AND PLACEMENT

A.
RECRUITMENT OF
LOCAL AND MIGRANT WORKERS

I.
RECRUITMENT AND PLACEMENT
FOR LOCAL EMPLOYMENT
What is a Private Recruitment and Placement Agency (PRPA)?
It refers to any individual, partnership, corporation or entity engaged
in the recruitment and placement of persons for local employment.
What are the qualifications of a PRPA for local employment?
An applicant for a license to operate a PRPA must possess the
following:
1. Must be a Filipino citizen, if single proprietorship. In case of a
partnership or a corporation, at least seventy-five percent (75%) of
the authorized capital stock must be owned and controlled by
Filipino citizens;
2. Must have a minimum net worth of P200,000.00 in the case of
single proprietorship and partnership or a minimum paid-up capital
of P500,000.00 in the case of a corporation.

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 3. The owner, partners or the officers of the corporation must be of
good moral character and not otherwise disqualified by law;
4. Must have an office space with a minimum floor area of fifty (50)
square meters.
What is the period of validity of the license?
The license shall be valid all over the Philippines for two (2) years
from the date of issuance, upon submission of proof of publication, unless
sooner suspended, cancelled or revoked by the DOLE Regional Director.
Is the license transferable to other persons or entities?
No license shall be transferred, conveyed or assigned to any other
person or entity.
II.
RECRUITMENT AND PLACEMENT
FOR OVERSEAS EMPLOYMENT
What are the laws relevant to overseas employment?
1. The Labor Code; and
2. Migrant Workers and Overseas Filipinos Act of 1995 [R. A. No.
8042], as amended by R.A. No. 10022 (March 8, 2010).
What are the important terms related to overseas employment?
1. Overseas Filipinos refer to migrant workers, other Filipino
nationals and their dependents abroad.
2. Overseas Filipino Worker or 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 citizen or
on board a vessel navigating the foreign seas other than a
government ship used for military or non-commercial purposes, or
on an installation located offshore or on the high seas. A person to
be engaged in a remunerated activity refers to an applicant
worker who has been promised or assured employment overseas.

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 What are the entities authorized to engage in recruitment and placement of
workers?
The following are authorized to engage in recruitment and placement of
workers:
a. Public employment offices;
b. Philippine Overseas Employment
Administration (POEA); c. Private
recruitment entities; d. Private
employment agencies;
e. Shipping or manning agents or representatives;
f. Such other persons or entities as may be authorized by the DOLE
Secretary; and
g. Construction contractors.
LICENSING AND REGULATION
FOR OVERSEAS RECRUITMENT AND PLACEMENT
What are the qualifications of a recruiter for overseas employment?
Only those who possess the following qualifications may be permitted
to engage in the business of recruitment and placement of overseas Filipino
workers:
1. Filipino citizens, partnerships or corporations at least seventy five
percent (75%) of the authorized capital stock of which is owned
and controlled by Filipino citizens;
A minimum capitalization of Two Million Pesos (P2,000,000.00) in
case of a single proprietorship or partnership and a minimum paid-
up capital of Two Million Pesos (P2,000,000.00) in case of a
corporation; Provided, that those with existing licenses shall, within
four (4) years from effectivity hereof, increase their capitalization or
paid up capital, as the case may be, to Two Million Pesos
(P2,000,000.00) at the rate of Two Hundred Fifty Thousand Pesos
(P250,000.00) every year; and

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 3. Those not otherwise disqualified by law or other government
regulations to engage in the recruitment and placement of workers
for overseas employment.
What are the disqualifications?
The following are not qualified to engage in the business of
recruitment and placement of Filipino workers overseas:
a. Travel agencies and sales agencies of airline companies;
b. Officers or members of the Board of any corporation or members in
a partnership engaged in the business of a travel agency;
c. Corporations and partnerships, when any of its officers, members of
the board or partners, is also an officer, member of the board or
partner of a corporation or partnership engaged in the business of a
travel agency;
d. Persons, partnerships or corporations which have derogatory
records, such as, but not limited to, the following:
1) Those certified to have derogatory record or information by the
NBI or by the Anti-Illegal Recruitment Branch of the POEA;
2) Those against whom probable cause or prima facie finding of guilt
for illegal recruitment or other related cases exists;
3) Those convicted for illegal recruitment or other related cases
and/or crimes involving moral turpitude; and
4) Those agencies whose licenses have been previously revoked or
cancelled by the POEA for violation of R.A. No. 8042, the Labor
Code (PD 442, as amended), and their implementing rules and
regulations.
All applicants for issuance/renewal of license shall be required to
submit clearances from the NBI and Anti-Illegal Recruitment
Branch of the POEA, including clearances for their respective
officers and employees.
e. Any official or employee of the DOLE, POEA, Overseas Workers
Welfare Administration (OWWA), Department of Foreign Affairs
(DFA) and other government agencies directly involved in the

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 implementation of R.A. No. 8042 and/or any of his/her relatives
within the fourth (4th) civil degree of consanguinity or affinity; and
f. Persons or partners, officers and directors of corporations whose
licenses have been previously cancelled or revoked for violation of
recruitment laws.
What is the period of validity of license?
Every license shall be valid for four (4) years from the date of
issuance unless sooner cancelled, revoked or suspended for violation of
applicable Philippine law, the Rules and other pertinent issuances. Such
license shall be valid only at the place/s stated therein and when used by the
licensed person, partnership or corporation.
Can a license be transferred?
No. The license shall not be transferred, conveyed or assigned to any
person, partnership or corporation. It shall not be used directly or indirectly
by any person, partnership or corporation other than the one in whose favor
it was issued.

ILLEGAL RECRUITMENT
(Section 5, R.A. No. 10022)
What is the concept of illegal recruitment?
The scope of the term illegal recruitment, has been broadened under
R.A. No. 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, as amended, and its Implementing Rules.
Consequently, the acts described in the following provision of this law that
may be committed by any person, constitute illegal recruitment,
regardless of whether such person is a non-licensee, non-holder, licensee
or holder of authority:
SEC. 6. Definition. - For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services, promising or

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advertising for employment abroad, whether for profit or not,
when undertaken by 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 shall be deemed so engaged. It shall likewise include
the following acts, whether committed by any person, whether a
non-licensee, non-holder, 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 and Employment, or to make a worker
pay or acknowledge 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 relation to recruitment or employment;
(c) To give any false notice, testimony, information or document
or commit any act of misrepresentation for the purpose of
securing a license or authority under the Labor Code, or for
the purpose of documenting hired workers with the POEA,
which include the act of reprocessing workers through a job
order that pertains to non-existent work, work different from the
actual overseas work, or work with a different employer whether
registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed to
quit his employment in order to offer him another unless the
transfer is designed to liberate 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 or who has formed, joined or supported, or has
contacted or is supported by any union or workers' organization;
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(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 fail to submit 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 and Employment;
(h) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the Department
of Labor and Employment from the time 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 Employment;
(i) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation
engaged in travel agency or to be engaged directly or indirectly
in the management of travel agency;
(j) To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations, or for
any other reasons, other than those authorized under the Labor
Code and its implementing rules and regulations;
(k)Failure to actually deploy a contracted worker without valid
reason as determined by the Department of Labor and
Employment;
(l) 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 recruitment when
committed by a syndicate or in large scale shall be considered
an offense involving economic sabotage; and

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 (m) To allow a non-Filipino citizen to head or manage a licensed
recruitment/manning agency.
LICENSE VS. AUTHORITY
What is a license for overseas recruitment?
License refers to the document issued by the DOLE Secretary
authorizing a person, partnership or corporation to operate a private
recruitment/manning agency.
What is an authority for overseas employment?
Authority refers to the document issued by the DOLE Secretary
authorizing the officers, personnel, agents or representatives of a licensed
recruitment/manning agency to conduct recruitment and placement
activities in a place stated in the license or in a specified place.
ELEMENTS OF ILLEGAL RECRUITMENT
What are the elements of illegal recruitment?
The essential elements of illegal recruitment vary in accordance with
the following classifications:
(1)Simple illegal recruitment;
(2)When committed by a syndicate; or
(3)When committed in large scale.
When illegal recruitment is committed under either Nos. 2 or 3 above
or both, it is considered an offense involving economic sabotage.

SIMPLE ILLEGAL RECRUITMENT

What are the 2 elements of simple illegal recruitment?

According to the 2011 case of Delia D. Romero v. People, the two (2)
elements of the crime of simple illegal recruitment are:
(1)The offender has no valid license or authority required by law to
enable one to lawfully engage in recruitment and placement of
workers; and

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 (2)He undertakes either any activity within the meaning of
recruitment and placement defined under Article 13(b), or any
prohibited practices enumerated under Article 34 of the Labor
Code.
Any person, whether a non-licensee, non-holder, licensee or
holder of authority, may be held liable for illegal recruitment.
Under R.A. No, 8042, as amended by R.A. No. 10022, license or
authority of the illegal recruiter is immaterial.
Can a recruiter be a natural or juridical person?

Yes.
What are some relevant principles on illegal recruitment?
1. Mere impression that a person could deploy workers overseas is
sufficient to constitute illegal recruitment. But if no such impression is
given, the accused should not be convicted for illegal recruitment.
2. Mere promise or offer of employment abroad amounts to recruitment.
3. There is no need to show that accused represented himself as a licensed
recruiter.
4. Referrals may constitute illegal recruitment.
5. It is illegal recruitment to induce applicants to part with their money
upon false misrepresentations and promises in assuring them that after
they paid the placement fee, jobs abroad were waiting for them and that
they would be deployed soon.
6. Recruitment whether done for profit or not is immaterial.
7. The act of receiving money far exceeding the amount as required by law
is not considered as recruitment and placement as this phrase is
contemplated under the law.
8. Actual receipt of fee is not an element of the crime of illegal recruitment.
9. Conduct of interviews amounts to illegal recruitment.
10. Absence of receipt is not essential to hold a person guilty of illegal
recruitment.
11. Conviction for illegal recruitment may be made on the strength of the
testimonies of the complainants.

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 12. Absence of documents evidencing the recruitment activities
strengthens, not weakens, the case for illegal recruitment.
13. Only one person recruited is sufficient to convict one for illegal
recruitment.
14. Non-prosecution of another suspect is immaterial.
15. Execution of affidavit of desistance affects only the civil liability but
has no effect on the criminal liability for illegal recruitment.
16. Defense of denial cannot prevail over positive identification. Positive
identification where categorical and consistent and not attended by any
showing of ill motive on the part of the eyewitnesses on the matter
prevails over alibi and denial. Between the categorical statements of the
prosecution witnesses, on the one hand, and bare denials of the accused,
on the other hand, the former must prevail.
ILLEGAL RECRUITMENT AS A FORM OF ECONOMIC
SABOTAGE
When is illegal recruitment considered a crime involving economic
sabotage?
Illegal recruitment is considered a crime involving economic sabotage
when the commission thereof is attended by the following qualifying
circumstances:
1. when committed by a syndicate; or
2. when committed in large scale.
When is illegal recruitment committed by a syndicate?
Illegal recruitment is deemed committed by a syndicate if it is carried
out by a group of three (3) or more persons conspiring or confederating
with one another.
Elements of illegal recruitment by a syndicate.
The essential elements of the crime of illegal recruitment committed by
a syndicate are as follows:
1. There are at least three (3) persons who, conspiring and/or
confederating with one another, carried out any unlawful or illegal

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 recruitment and placement activities as defined under Article 13(b)
or committed any prohibited activities under Article 34 of the Labor
Code; and
2. Said persons are not licensed or authorized to do so, either locally or
overseas.
The law, it must be noted, does not require that the syndicate should
recruit more than one (1) person in order to constitute the crime of illegal
recruitment by a syndicate. Recruitment of one (1) person would suffice to
qualify the illegal recruitment act as having been committed by a syndicate.
When is illegal recruitment considered in large scale?
Illegal recruitment is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.
Elements of illegal recruitment in large scale.
The elements of illegal recruitment in large scale, as distinguished from
simple illegal recruitment, are as
follows:
1. The accused engages in the recruitment and placement of workers as
defined under Article 13(b) or committed any prohibited activities
under Article 34 of the Labor Code; and
2. The accused commits the same against three (3) or more persons,
individually or as a group.
Distinguished from illegal recruitment by a syndicate.
As distinguished from illegal recruitment committed by a syndicate,
illegal recruitment in large scale may be committed by only one (1) person.
What is important as qualifying element is that there should be at least three
(3) victims of such illegal recruitment, individually or as a group.
What are some relevant principles on illegal recruitment involving
economic sabotage?
1. The number of persons victimized is determinative of the crime. A
conviction for large scale illegal recruitment must be based on a finding

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 in each case of illegal recruitment of three (3) or more persons having
been recruited, whether individually or as a group.
2. Failure to prove at least 3 persons recruited makes the crime a case of
simple illegal recruitment.
3. There is no illegal recruitment in large scale based on several
informations filed by only one complainant.

4. The number of offenders is not material in illegal recruitment in large

scale.
5. Recruitment in large scale or by a syndicate is malum prohibitum and not
malum in se.

ILLEGAL RECRUITMENT VS. ESTAFA

Can a person be charged and convicted separately for illegal
recruitment and estafa involving one and the same act of
recruitment?
Yes. It is clear that conviction under the Labor Code does not preclude
conviction for estafa or other crimes under other laws.
Some relevant principles:
Same evidence to prove illegal recruitment may be used to prove estafa.
Conviction for both illegal recruitment and estafa, not double jeopardy.
NATURE OF LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER
What is the nature of the liability between local recruiter and its foreign
principal?
The nature of their liability is solidary or joint and several for
any and all claims arising out of the implementation of the employment
contract involving Filipino workers for overseas deployment.
Is the solidary liability of corporate officers with the recruitment agency
automatic in character?

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 No. In order to hold the officers of the agency solidarily liable, it is
required that there must be proof of their culpability therefor. Thus, in the
2013 case of Gagui v. Dejero. Thus, while it is true that R.A. 8042 and the
Corporation Code provide for solidary liability, this liability must be so
stated in the decision sought to be implemented. Absent this express
statement, a corporate officer may not be impleaded and made to personally
answer for the liability of the corporation.
What are some relevant principles on the persons liable for illegal
recruitment?
1. Employees of a licensed recruitment agency may be held liable for
illegal recruitment as principal by direct participation, together with his
employer, if it is shown that he actively and consciously participated in
illegal recruitment.
2. Good faith and merely following orders of superiors are not valid
defenses of an employee.
3. A manager of a recruitment/manning agency is not a mere
employee. As such, he receives job applications, interviews
applicants and informs them of the agencys requirement of
payment of performance or cash bond prior to the applicants
deployment. As the crewing manager, he was at the forefront of the
companys recruitment activities.

THEORY OF IMPUTED KNOWLEDGE

What is meant by this theory?
The theory of imputed knowledge is a rule that any information
material to the transaction, either possessed by the agent at the time of the
transaction or acquired by him before its completion, is deemed to be the
knowledge of the principal, at least insofar as the transaction is concerned,
even though the knowledge, in fact, is not communicated to the principal at
all.
Imputed knowledge means the knowledge attributed to a party
because of his position, or his relationship with or responsibility for another

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 party. Such knowledge is attributed for the reason that the facts in issue were
open to discovery and it was that person's duty to apprise him of such facts.
Sunace International Management Services, Inc. v. NLRC, where
the High Court has the opportunity to discuss the application of the theory
of imputed knowledge. Here, the OFW (Divina), a domestic helper in
Taiwan, has extended her 12-month contract, after its expiration, for two (2)
more years after which she returned to the Philippines. It was established by
evidence that the extension was without the knowledge of the local
recruitment agency, petitioner Sunace. The Court of Appeals, however,
affirmed the Labor Arbiters and NLRCs finding that Sunace knew of and
impliedly consented to the extension of Divinas 2-year contract. It went on
to state that It is undisputed that [Sunace] was continually communicating
with [Divinas] foreign employer. It thus concluded that [a]s agent of the
foreign principal, petitioner cannot profess ignorance of such extension as
obviously, the act of the principal extending complainant (sic) employment
contract necessarily bound it.
In finding that the application by the CA of this theory of imputed
knowledge was misplaced, the High Court ruled that this theory ascribes the
knowledge of the agent, Sunace, to the principal, employer Xiong, not the
other way around. The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent, Sunace. There being no substantial proof
that Sunace knew of and consented to be bound under the 2-year
employment contract extension, it cannot be said to be privy thereto. As
such, Sunace and its owner cannot be held solidarily liable for any of
Divinas claims arising from the 2 -year employment extension. As the New
Civil Code provides: Contracts take effect only between the parties, their
assigns, and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or
by provision of law.

PRE-TERMINATION OF CONTRACT OF MIGRANT WORKER

Can an OFW acquire regularity of employment?

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 No. The prevailing rule is that OFWs are contractual (fixed-term only),
not regular, employees. In fact, they can never attain regularity of
employment.
What are some relevant principles?

1. Indefinite period of employment of OFWs is not valid as it

contravenes the explicit provision of the POEA Rules and
Regulations on fixed-period employment.
2. OFWs do not become regular employees by reason of nature of
work, that is, that they are made to perform work that is usually
necessary and desirable in the usual business or trade of the
employer. The exigencies of their work necessitate that they be
employed on a contractual basis. This notwithstanding the fact that
they have rendered more than twenty (20) years of service.
3. Regular employment does not result from the series of re-hiring of
OFWs.
4. The fixed-period employment of OFWs is not discriminatory
against them nor does it favor foreign employers. It is for the mutual
interest of both the seafarer and the employer why the employment
status must be contractual only or for a certain period of time.
Seafarers spend most of their time at sea and understandably, they
cannot stay for a long and an indefinite period of time at sea.
Limited access to shore society during the employment will have an
adverse impact on the seafarer. The national, cultural and lingual
diversity among the crew during the contract of employment is a
reality that necessitates the limitation of its period.
5. The expiration of the employment contracts of OFWs marks its
ending.
What is the effect of hiring a seafarer for overseas employment but
assigning him to local vessel?

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 As held in OSM Shipping Philippines, Inc. v. NLRC, the non-
deployment of the ship overseas did not affect the validity of the perfected
employment contract. After all, the decision to use the vessel for coastwise
shipping was made by petitioner only and did not bear the written
conformity of private respondent. A contract cannot be novated by the will
of only one party. The claim of petitioner that it processed the contract of
private respondent with the POEA only after he had started working is also
without merit. Petitioner cannot use its own misfeasance to defeat his claim.
What is the effect of non-deployment of OFW to overseas employment?
Petitioner-seafarer, in Santiago v. CF Sharp Crew Management,
Inc. was not deployed overseas despite the signing of a POEA-approved
employment contract. One of his contentions is that such failure to deploy
was an act designed to prevent him from attaining the status of a regular
employee. The Supreme Court, however, disagreed and ruled that seafarers
are considered contractual employees and cannot be considered as regular
employees under the Labor Code. Their employment is governed by the
contracts they sign every time they are rehired and their employment is
terminated when the contract expires. The exigencies of their work
necessitate that they be employed on a contractual basis.
What is doctrine of processual presumption?
Presumed-identity approach or processual presumption is an
International Law doctrine which dictates that where a foreign law is not
pleaded or, even if pleaded, is not proved, the presumption is that foreign
law is the same as Philippine law. Thus, under this situation, Philippine
labor laws should apply in determining the issues presented in a case.
Is the due process under Philippine law applicable to termination of
employment of OFWs?
Yes. In the absence of proof of applicable foreign law, OFWs are
entitled to due process in accordance with Philippine laws.
Is the Agabon doctrine applicable to OFWs who are dismissed for cause
but without due process?

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 Yes. The Agabon doctrine of awarding indemnity in the form of
nominal damages in cases of valid termination for just or authorized cause
but without procedural due process also applies to termination of OFWs.
Who has the burden of proof to show that the
dismissal of the OFW is legal? Burden of proof
devolves on both recruitment agency and its foreign
principal.
Are OFWs entitled to the reliefs under Article 279 of the Labor Code?
No. They are not entitled to such reliefs under Article 279 as
reinstatement or separation pay in lieu of reinstatement or full backwages.
They are entitled to the reliefs provided under Section 10 of R.A. No. 8042,
as amended, to wit:
(1)All salaries for the unexpired portion of the contract;
(2)Full reimbursement of placement fees and deductions made with
interest at twelve percent (12%) per annum.
In other words, all the reliefs available to an illegally dismissed OFW
are monetary in nature.
It must be noted that under the 2009 Serrano doctrine, (Antonio M.
Serrano v. Gallant Maritime Services, Inc.,), an illegally dismissed OFW
is now entitled to all the salaries for the entire unexpired portion of their
employment contracts, irrespective of the stipulated term or duration
thereof. The underlined phrase in Section 10 below has been declared
unconstitutional in this case:
In case of termination of overseas employment without
just, valid or authorized cause as defined by law or contract, or
any unauthorized deductions from the migrant worker's salary,
the worker shall be entitled to the full reimbursement of his
placement fee and the deductions made with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired

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 portion of his employment contract or for three (3) months
for every year of the unexpired term, whichever is less.
What are some principles in regard to monetary awards to OFWs?
1. Monetary award to OFW is not in the nature of separation pay or
backwages but a form of indemnity.
2. Only salaries are to be included in the computation of the amount due for
the unexpired portion of the contract. Overtime, holiday and leave pay
and allowances are not included. However, this rule on exclusion of
allowance does not apply in case it is encapsulated in the basic salary
clause.
3. Entitlement to overtime pay of OFWs. - As far as entitlement to
overtime pay is concerned, the correct criterion in determining whether
or not sailors are entitled to overtime pay is not whether they were on
board and cannot leave ship beyond the regular eight (8) working hours
a day, but whether they actually rendered service in excess of said
number of hours. An OFW is not entitled to overtime pay, even if
guaranteed, if he failed to present any evidence to prove that he rendered
service in excess of the regular eight (8) working hours a day.
4. In case of unauthorized deductions from OFWs salary, he shall be
entitled to the full reimbursement of the deductions made with interest at
twelve percent (12%) per annum. This is in addition to the full
reimbursement of his placement fee with the same interest of twelve
percent (12%) per annum plus his salaries for the unexpired portion of
his employment contract if he is terminated without just, valid or
authorized cause as defined by law or contract.
CLAIMS FOR DISABILITY AND DEATH BENEFITS OF OFWs
Which office has jurisdiction over an OFWs claims for disability and
death benefits?
a. Labor Arbiters have jurisdiction over claims for disability, death and
other benefits of OFWs.
b. Labor Arbiters have jurisdiction even if the case is filed by the heirs
of the deceased OFW.

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 Are claims of OFWs for disability, death and burial benefits similar to
claims under the Labor Code?
No. The claims under the Labor Code are cognizable by the Employees
Compensation Commission (ECC).
Is the Labor Codes concept of permanent total disability similar to that of
of OFWs?
Yes. The concept of this kind of disability under Article 192 of the
Labor Code is applicable to them as reiterated lately in the 2013 case of
Kestrel Shipping Co., Inc. v. Munar.
What are the requisites for compensability of injury or illness of seafarers?
1. It should be work-related; and
2. The injury or illness existed during the term of the seafarers
employment contract.
DIRECT HIRING
What is direct hiring?
Direct Hiring refers to the process of directly hiring workers by
employers for overseas employment as authorized by the DOLE Secretary
and processed by the POEA, including:
1. Those hired by international organizations;
2. Those hired by members of the diplomatic corps;
3. Name hires or workers who are able to secure overseas employment
opportunity with an employer without the assistance or participation
of any agency.
Does the POEA Administrator or the DOLE Secretary or DOLE Regional
Director have the power to issue closure order?
Yes. If upon preliminary examination or surveillance, the DOLE
Secretary, the POEA Administrator or DOLE Regional Director is satisfied
that such danger or exploitation exists, a written order may be issued for the
closure of the establishment being used for illegal recruitment activity.

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 Does the DOLE Secretary have the power to issue arrest and search and
seizure orders?
No. It was declared in Salazar v. Achacoso, that the exercise by the
DOLE Secretary of his twin powers to issue arrest and search and seizure
orders provided under Article 38[c] of the Labor Code is unconstitutional.
Only regular courts can issue such orders.
REMITTANCE OF FOREIGN EXCHANGE EARNINGS
Is remittance of foreign exchange earnings by OFWs mandatory?
Yes. It shall be mandatory for all Filipino workers abroad to remit a
portion of their foreign exchange earnings to their families, dependents,
and/or beneficiaries in the country in accordance with rules and regulations
prescribed by the DOLE Secretary. It should be made through the Philippine
banking system.
What is the reason why obligation to remit is mandatory?
It is necessary to protect the welfare of their families, dependents
and beneficiaries and to ensure that their foreign exchange earnings are
remitted through authorized financial institutions of the Philippine
government in line with the countrys economic development program.

PROHIBITED ACTIVITIES
IN RELATION TO ILLEGAL RECRUITMENT

What are the prohibited activities in connection with recruitment for

overseas employment?
Besides illegal recruitment, the law additionally provides that it shall
also be unlawful for any person or entity to commit the following prohibited
acts:
(1)Grant a loan to an overseas Filipino worker with interest
exceeding eight percent (8%) per annum, which will be used for
payment of legal and allowable placement fees and make the

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 migrant worker issue, either personally or through a guarantor or
accommodation party, post-dated checks in relation to the said loan;
(2)Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to avail of a loan only from
specifically designated institutions, entities or persons;
(3)Refuse to condone or renegotiate a loan incurred by an overseas
Filipino worker after the latter's employment contract has been
prematurely terminated through no fault of his or her own;
(4)Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo health
examinations only from specifically designated medical clinics,
institutions, entities or persons, except in the case of a seafarer
whose medical examination cost is shouldered by the
principal/shipowner;
(5)Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo training, seminar,
instruction or schooling of any kind only from specifically
designated institutions, entities or persons, except for
recommendatory trainings mandated by principals/shipowners
where the latter shoulder the cost of such trainings;
(6)For a suspended recruitment/manning agency to engage in any kind
of recruitment activity including the processing of pending workers'
applications; and
(7)For a recruitment/manning agency or a foreign principal/employer to
pass on the overseas Filipino worker or deduct from his or her
salary the payment of the cost of insurance fees, premium or
other insurance related charges, as provided under the compulsory
worker's insurance coverage.

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 TOPIC NO. 3
LABOR STANDARDS
A.
HOURS OF WORK
1.
COVERAGE/EXCLUSIONS
(Article 82, Labor Code)
Who are covered by the labor standards provisions of the Labor Code?
Employees in all establishments, whether operated for profit or not,
are covered by the law on labor standards.
Who are excluded?
The following are excluded from the coverage of the law on labor
standards:
a. Government employees;
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic servants and persons in the personal service of another;
e. Workers paid by results;
f. Non-agricultural field personnel; and
g. Members of the family of the employer.
2.
NORMAL HOURS OF WORK

What are normal hours

of work per day? Eight
(8) hours daily.
What is overtime work?
Any work in excess of eight (8) hours is considered overtime work.

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 May normal working hours be reduced?
Yes, provided that no corresponding reduction is made on the
employees wage or salary equivalent to an 8-hour work day. In instances
where the number of hours required by the nature of work is less than 8
hours, such number of hours should be regarded as the employees full
working day.
What are flexible working hours?
Flexible work arrangements refer to alternative arrangements or
schedules other than the traditional or standard work hours, workdays and
workweek. The effectivity and implementation of any of the flexible work
arrangements should be temporary in nature.
Under R.A. No. 8972, otherwise known as The Solo Parents Welfare
Act of 2000, solo parents are allowed to work on a flexible schedule. The
phrase flexible work schedule is defined in the same law as the right
granted to a solo parent employee to vary his/her arrival and departure time
without affecting the core work hours as defined by the employer.
COMPRESSED WORK WEEK

What is compressed work week?

Compressed Workweek or CWW refers to a situation where the
normal workweek is reduced to less than six (6) days but the total number of
work -hours of 48 hours per week remains. The normal workday is
increased to more than eight (8) hours but not to exceed twelve (12) hours,
without corresponding overtime premium. This concept can be adjusted
accordingly in cases where the normal workweek of the firm is five (5)
days.
What are the conditions for its validity?
The CWW scheme is undertaken as a result of an express and
voluntary agreement of majority of the covered employees or their duly
authorized representatives.
How should compensation be made under a valid CWW?

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 Unless there is a more favorable practice existing in the firm, work
beyond eight (8) hours will not be compensable by overtime premium
provided the total number of hours worked per day shall not exceed
twelve (12) hours. In any case, any work performed beyond twelve (12)
hours a day or forty-eight (48) hours a week shall be subject to overtime
pay.
MEAL BREAK
(Article 85, Labor Code)
What is the rule on time-off for regular meal?
Every employer is required to give his employees, regardless of sex,
not less than one (1) hour (or 60 minutes) time-off for regular meals.

Is meal break compensable?

Being time-off, it is not compensable hours worked. In this case, the
employee is free to do anything he wants, except to work. If he is required,
however, to work while eating, he should be compensated therefor.
WAITING TIME
(Article 84, Labor Code)
What is covered by compensable working hours?
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 employers premises or to be at a prescribed workplace; and
b. All time during which an employee is suffered or permitted to work.

When is waiting time compensable?

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. Time spent waiting for work is
compensable if it is spent primarily for the benefit of the employer and [its]
business.

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 OVERTIME WORK, OVERTIME PAY
(Article 87, Labor Code)
What are some basic principles on overtime work?
1. Work rendered after normal eight (8) hours of work is called
overtime work.
2. In computing overtime work, "regular wage" or "basic salary"
means "cash" wage only without deduction for facilities provided by
the employer.
3. "Premium pay" means the additional compensation required by law
for work performed within eight (8) hours on non-working days,
such as regular holidays, special holidays and rest days.
4. "Overtime pay" means the additional compensation for work
performed beyond eight (8) hours.
5. Illustrations on how overtime is computed:
a. For overtime work performed on an ordinary day, the
overtime pay is plus 25% of the basic hourly rate.
b. For overtime work performed on a rest day or on a special
day, the overtime pay is plus 30% of the basic hourly rate
which includes 30% additional compensation as provided in
Article 93 [a] of the Labor Code.
c. For overtime work performed on a rest day which falls on a
special day, the overtime pay is plus 30% of the basic hourly
rate which includes 50% additional compensation as provided
in Article 93 [c] of the Labor Code.
d. For overtime work performed on a regular holiday, the
overtime pay is plus 30% of the basic hourly rate which
includes 100% additional compensation as provided in Article
94 [b] of the Labor Code.
e. For overtime work performed on a rest day which falls on a
regular holiday, the overtime pay is plus 30% of the basic
hourly rate which includes 160% additional compensation.

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What is the distinction between PREMIUM PAY and OVERTIME PAY?
Premium pay refers to the additional compensation required by law
for work performed within eight (8) hours on non-working days, such as
rest days and regular and special holidays.
Overtime pay refers to the additional compensation for work
performed beyond eight (8) hours a day.
Every employee who is entitled to premium pay is likewise entitled to the
benefit of overtime pay.
What is built-in overtime pay?
In case the employment contract stipulates that the compensation
includes built-in overtime pay and the same is duly approved by the DOLE,
the non-payment by the employer of any overtime pay for overtime work is
justified and valid.
What is emergency overtime work? (ARTICLE 89, LABOR CODE).
a. General rule.
The general rule remains that no employee may be compelled to render
overtime work against his will.
b. Exceptions when employee may be compelled to render overtime
work:
1. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
Chief Executive;
2. 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 disasters or
calamities;
3. When there is urgent work to be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes of similar nature;

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 4. When the work is necessary to prevent loss or damage to perishable
goods;
5. When the completion or continuation of work started before the 8th
hour is necessary to prevent serious obstruction or prejudice to the
business or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
May an employee validly refuse to render overtime work under any of the
afore-said circumstances?
No, When an employee refuses to render emergency overtime work
under any of the foregoing conditions, he may be dismissed on the ground
of insubordination or willful disobedience of the lawful order of the
employer.
Can overtime pay be waived?
NO. The right to claim overtime pay is not subject to a waiver. Such
right is governed by law and not merely by the agreement of the parties.

NIGHT WORK (R.A. NO. 10151),

NIGHT SHIFT DIFFERENTIAL (ARTICLE 86, LABOR CODE)
What is the new law on night work?
R.A. No. 10151 [JUNE 21, 2011].
(NOTE: Because this is a new law, full discussion thereof shall be
made hereunder).
a. Significance of the law.
R.A. No. 10151 has repealed Article 130 [Nightwork Prohibition] and
Article 131 [Exceptions] of the Labor Code and accordingly renumbered the
same articles. Additionally, it has inserted a new Chapter V of Title III of
Book III of the Labor Code entitled Employment of Night Workers which
addresses the issue on nightwork of all employees, including women
workers. Chapter V covers newly renumbered Articles 154 up to 161 of the
Labor Code.

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 b. Coverage of the law.
The law on nightwork applies not only to women but to all persons,
who shall be employed or permitted or suffered to work at night, except
those employed in agriculture, stock raising, fishing, maritime transport and
inland navigation, during a period of not less than seven (7) consecutive
hours, including the interval from midnight to five o'clock in the
morning, to be determined by the DOLE Secretary, after consulting the
workers representatives/labor organizations and employers.
c. Night worker, meaning.
"Night worker" means any employed person whose work covers the
period from 10 o'clock in the evening to 6 o'clock the following morning
provided that the worker performs no less than seven (7) consecutive
hours of work.
NIGHT SHIFT DIFFERENTIAL PAY
How is it reckoned and computed?
Night shift differential is equivalent to 10% of employee's regular
wage for each hour of work performed between 10:00 p.m. and 6:00 a.m. of
the following day.
What is the distinction between night shift differential pay and overtime
pay?
When the work of an employee falls at night time, the receipt of
overtime pay shall not preclude the right to receive night differential pay.
The reason is the payment of the night differential pay is for the work done
during the night; while the payment of the overtime pay is for work in
excess of the regular eight (8) working hours.
How is Night Shift Differential Pay computed?
1. Where night shift (10 p.m. to 6 a.m.) work is regular work.
a. On an ordinary day: Plus 10% of the basic hourly rate or a total
of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of the
regular hourly rate on a rest day, special day or regular holiday or
a total of 110% of the regular hourly rate.
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 2. Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly rate on an
ordinary day or a total of 110% of the overtime hourly rate on an
ordinary day.
b. On a rest day or special day or regular holiday: Plus 10% of
the overtime hourly rate on a rest day or special day or regular
holiday.
3.For overtime work in the night shift. Since overtime work is not
usually eight (8) hours, the compensation for overtime night shift
work is also computed on the basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate or
a total of 110% of 125% of basic hourly rate.
b. On a rest day or special day or regular holiday. Plus 10% of
130% of regular hourly rate on said days or a total of 110% of
130% of the applicable regular hourly rate.
PART-TIME WORK
What is part-time work?
Part-time work is a single, regular or voluntary form of
employment with hours of work substantially shorter than those considered
as normal in the establishment. A part-time worker is an employed
person whose normal hours of work are less than those of comparable full-
time workers.

Part-time work may take different forms depending on the agreed

hours of work in a day, the days of work in a week or other reference
periods. In the Philippines, however, the two most common and
acceptable forms are four (4) hours work per day and weekend work or
two (2) full days per week.
CONTRACT FOR PIECE WORK
(SEE CIVIL CODE)

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What is contract for piece work under the Civil Code?
By the contract for a piece of work, the contractor binds himself to
execute a piece of work for the employer, in consideration of a certain price
or compensation. The contractor may either employ only his labor or skill,
or also furnish the material.
B.
WAGES
WAGE VS. SALARY
What is the basic distinction between wage and salary?
The term wage is used to characterize the compensation paid for
manual skilled or unskilled labor.
Salary, on the other hand, is used to describe the compensation for higher
or superior level of employment.
What is the distinction in respect to execution, attachment or garnishment?
In cases of execution, attachment or garnishment of the
compensation of an employee received from work issued by the court to
satisfy a judicially-determined obligation, a distinction should be made
whether such compensation is considered wage or salary. Under
Article 1708 of the Civil Code, if considered a wage, the employees
compensation shall not be subject to execution or attachment or
garnishment, except for debts incurred for food, shelter, clothing and
medical attendance. If deemed a salary, such compensation is not exempt
from execution or attachment or garnishment. Thus, the salary, commission
and other remuneration received by a managerial employee (as distinguished
from an ordinary worker or laborer) cannot be considered wages. Salary is
understood to relate to a position or office, or the compensation given for
official or other service; while wage is the compensation for labor.
MINIMUM WAGE DEFINED
What are the attributes of wage?
Wage paid to any employee has the following attributes:

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 1. It is the remuneration or earnings, however designated, for work
done or to be done or for services rendered or to be rendered;
2. It is capable of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other
method of calculating the same;
3. It 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 rendered or to be rendered; and
4. It includes the fair and reasonable value, as determined by the
DOLE Secretary, of board, lodging, or other facilities customarily
furnished by the employer to the employee. Fair and reasonable
value shall not include any profit to the employer or to any person
affiliated with the employer.
What is basic wage?
Basic wage means all the remuneration or earnings paid by an
employer to a worker for services rendered on normal working days and
hours but does not include cost-of-living allowances, profit-sharing
payments, premium payments, 13th month pay or other monetary benefits
which are not considered as part of or integrated into the regular salary of
the workers.
Further, as held in Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda, the following should be excluded from the
computation of basic salary, to wit: payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and premiums
for work done on rest days and special holidays.
What is minimum wage?
The minimum wage rates prescribed by law shall be the basic cash
wages without deduction therefrom of whatever benefits, supplements or
allowances which the employees enjoy free of charge aside from the basic
pay.
What is statutory minimum wage?

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 The term statutory minimum wage refers simply to the lowest
basic wage rate fixed by law that an employer can pay his workers.
What is regional minimum wage rate?
The term regional minimum wage rates refers to the lowest basic
wage rates that an employer can pay his workers, as fixed by the Regional
Tripartite Wages and Productivity Boards (RTWPBs), and which shall
not be lower than the applicable statutory minimum wage rates.
What are included/excluded in the term wage rate?
The term "wage rates" includes cost-of-living allowances as fixed
by the RTWPB, but excludes other wage-related benefits such as
overtime pay, bonuses, night shift differential pay, holiday pay,
premium pay, 13th month pay, premium pay, leave benefits, among
others.

Can COLA be integrated into the minimum wage?

Yes. The cost-of -living allowance (COLA) may be ordered integrated
into the minimum wage by the Regional Tripartite Wages and Productivity
Board (RTWPB or Regional Board).
What is COLA?
COLA is not in the nature of an allowance intended to reimburse
expenses incurred by employees in the performance of their official
functions. It is not payment in consideration of the fulfillment of official
duty. As defined, cost of living refers to the level of prices relating to a
range of everyday items or the cost of purchasing the goods and services
which are included in an accepted standard level of consumption. Based on
this premise, COLA is a benefit intended to cover increases in the cost of
living.
What is the NO WORK, NO PAY principle?
The no work, no pay or fair days wage for fair days labor
means that if the worker does not work, he is generally not entitled to any
wage or pay. The exception is when it was the employer who unduly
prevented him from working despite his ableness, willingness and readiness

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to work; or in cases where he is illegally locked out or illegally suspended or
illegally dismissed, or otherwise illegally prevented from working, in which
event, he should be entitled to his wage.
MINIMUM WAGE SETTING
What is a Wage Order?
The term Wage Order refers to the order promulgated by the
Regional Board pursuant to its wage fixing authority.
When is it proper to issue a Wage Order?
Whenever conditions in the region so warrant, the Regional Board
shall investigate and study all pertinent facts and based on the prescribed
standards and criteria, shall proceed to determine whether a Wage 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.
What are the standards/criteria for minimum wage fixing?
In the determination of regional minimum wages, the Regional Board
shall, among other relevant factors, consider the following:
(1)Needs of workers and their families
1) Demand for living wages;
2) Wage adjustment vis--vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2)Capacity to pay
1) Fair return on capital invested and capacity to pay of
employers;
2) Productivity.
(3)Comparable wages and incomes
1) Prevailing wage levels.
(4)Requirements of economic and social development

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 1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the
imperatives of economic and social development.
What are the methods of fixing the minimum wage rates?
There are two (2) methods, to wit:
1. Floor-Wage method which involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage rates.
This was applied in earlier wage orders; and
2. Salary-Cap or Salary-Ceiling method where the wage
adjustment is to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already being
paid more than the existing minimum wage (up to a certain amount
stated in the Wage Order) are also to be given a wage increase.
The Salary-Cap or Salary-Ceiling method is the preferred mode.
The distinction between the two (2) methods is best shown by way of
an illustration. Under the Floor Wage Method, it would be sufficient if the
Wage Order simply set P15.00 as the amount to be added to the prevailing
statutory minimum wage rates; while in the Salary-Ceiling Method, it
would be sufficient if the Wage Order states a specific salary, such as
P250.00, and only those earning below it shall be entitled to the wage
increase.
MINIMUM WAGE OF WORKERS PAID BY RESULTS
What are the minimum wage rates of workers paid by results?
According to Article 124 of the Labor Code:

All workers paid by results, including those who are paid on

piecework, takay, pakyaw or task basis, shall receive not less than
the prescribed wage rates per eight (8) hours of work a day, or a
proportion thereof for working less than eight (8) hours.
Who are workers paid by results?

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 They are workers who are engaged on pakyao, piecework, task and
other non-time work. They are so called because they are paid not on the
basis of the time spent on their work but according to the quantity, quality or
kind of job and the consequent results thereof.
What are the categories of workers paid by results?
Workers paid by results may be classified into:
a. Supervised workers; and
b. Unsupervised workers.
As the term clearly connotes, supervised workers are those whose
manner of work is under the control of the employer; while unsupervised
workers are those whose work is controlled more in the results than in the
manner or method of performing it.
The law does not make any categorical differentiation among the
workers paid by results. Thus, the workers may be on pakyao (sometimes
spelled pakyaw), takay or piece-rate or output basis. All of them are
similar in character in that they are all paid on the basis of the results of their
work. When the law does not distinguish, we should not distinguish.

WAGE RATE OF APPRENTICES AND LEARNERS

What is the wage rate of apprentices and learners?
The wage rate of a learner or an apprentice is set at seventy-five
percent (75%) of the statutory minimum wage.
WAGE RATE OF PERSONS WITH DISABILITY (PWD)
What is the wage rate of PWD?
Under R.A. No. 7277, the wage rate of PWDs had been increased to
and fixed at 100% of the applicable minimum wage.
COMMISSIONS
What is commission?
Commission is the recompense, compensation or reward of an
employee, agent, salesman, executor, trustee, receiver, factor, broker or

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bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit of the principal.
Is commission part of wage?
Commission may or may not be considered part of wage/salary
depending on the peculiar circumstances of a case and on the purpose for
which the determination is being made. For instance, the rule on the
inclusion of commissions for purposes of computing the separation pay may
essentially differ from the inclusionary rule thereof for purposes of
computing the 13th month pay.
Is there a law which mandates the payment of commission?
None. According to Lagatic v. NLRC, there is no law which requires
employers to pay commissions.
Is there a standard formula to compute commission?
None. There is no law which prescribes a method for computing
commission. The determination of the amount of commissions is the result
of collective bargaining negotiations, individual employment contracts or
established employer practice.
DEDUCTIONS FROM WAGES
May employer deduct from wage of employees?
The general rule is that an employer, by himself or through his
representative, is prohibited from making any deductions from the wages
of his employees. The employer is not allowed to make unnecessary
deductions without the knowledge or authorization of the employees.
Are there exceptions to this rule?
Yes.
(a)In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
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 (c) In cases where the employer is authorized by law or regulations
issued by the DOLE Secretary.
(d) Deductions for loss or damage under Article 114 of the Labor
Code;
(e)Deductions made for agency fees from non-union members who
accept the benefits under the CBA negotiated by the bargaining
union. This form of deduction does not require the written
authorization of the non-bargaining union member concerned;
(f) Deductions for value of meal and other facilities;
(g)Deductions for premiums for SSS, PhilHealth, employees
compensation and Pag-IBIG;
(h) Withholding tax mandated under the National Internal Revenue
Code (NIRC);
(i) Withholding of wages because of the employees debt to the
employer which is already due;
(j) Deductions made pursuant to a court judgment against the worker
under circumstances where the wages may be the subject of
attachment or execution but only for debts incurred for food,
clothing, shelter and medical attendance;
(k)When deductions from wages are ordered by the court;
NON-DIMINUTION OF BENEFITS
What is the applicability of the non-diminution rule in Article 100 of the
Labor Code?
Albeit Article 100 is clear that the principle of non-elimination and
non-diminution of benefits apply only to the benefits being enjoyed at the
time of the promulgation of the Labor Code, the Supreme Court has
consistently cited Article 100 as being applicable even to benefits granted
after said promulgation. It has, in fact, been treated as the legal anchor for
the declaration of the invalidity of so many acts of employers deemed to
have eliminated or diminished the benefits of employees.

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 The 2014 case of Wesleyan University-Philippines v. Wesleyan
University-Philippines Faculty and Staff Association, succinctly pointed
out that the Non-Diminution Rule found in Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing the benefits
received by their employees. This rule, however, applies only if the benefit
is based on any of the following:
(1)An express policy;
(2)A written contract; or
(3)A company practice.
COMPANY PRACTICE
What is company practice?
Company practice is a custom or habit shown by an employers
repeated, habitual customary or succession of acts of similar kind by reason
of which, it gains the status of a company policy that can no longer be
disturbed or withdrawn.
To ripen into a company practice that is demandable as a matter of
right, the giving of the benefit should
not be by reason of a strict legal or contractual obligation but by reason
of an act of liberality on the part of the employer.
What are the criteria that may be used to determine existence of company
practice?
Since there is no hard and fast rule which may be used and applied in
determining whether a certain act of the employer may be considered as
having ripened into a practice, the following criteria may be used to
determine whether an act has ripened into a company practice:
(1)The act of the employer has been done for a considerable period of
time;
(2)The act should be done consistently and intentionally; and
(3)The act should not be a product of erroneous interpretation or
construction of a doubtful or difficult question of law or provision
in the CBA.

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 1. The act of the employer has been done for a considerable period
of time.
If done only once as in the case of Philippine Appliance Corporation
(Philacor) v. CA, where the CBA signing bonus was granted only once
during the 1997 CBA negotiation, the same cannot be considered as having
ripened into a company practice.
In the following cases, the act of the employer was declared company
practice because of the considerable period of time it has been practiced:
(a)Davao Fruits Corporation v. Associated Labor Unions. - The act
of the company of freely and continuously including in the
computation of the 13th month pay, items that were expressly
excluded by law has lasted for six (6) years, hence, was considered
indicative of company practice.
(b) Sevilla Trading Company v. A. V. A. Semana, - The act of
including non-basic benefits such as paid leaves for unused sick
leave and vacation leave in the computation of the employees 13th
month pay for at least two (2) years was considered a company
practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central
Azucarera de Tarlac Labor Union-NLU, also ruled as company
practice the act of petitioner of granting for thirty (30) years, its
workers the mandatory 13th month pay computed in accordance
with the following formula: Total Basic Annual Salary divided by
twelve (12) and Including in the computation of the Total Basic
Annual Salary the following: basic monthly salary; first eight (8)
hours overtime pay on Sunday and legal/special holiday; night
premium pay; and vacation and sick leaves for each year.
2. The act should be done consistently
and intentionally. The following cases
may be cited to illustrate this principle:
(a)Tiangco v. Leogardo, Jr., where the employer has consistently
been granting fixed monthly emergency allowance to the employees
from November, 1976 but discontinued this practice effective

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 February, 1980 insofar as non-working days are concerned based on
the principle of no work, no pay. The Supreme Court ruled that
the discontinuance of said benefit contravened Article 100 of the
Labor Code which prohibits the diminution of existing benefits.
3. The act should not be a product of erroneous interpretation or
construction of a doubtful or difficult question of law or
provision in the CBA.
The general rule is that if it is a past error that is being corrected, no
vested right may be said to have arisen therefrom nor any diminution of
benefit may have resulted by virtue of the correction thereof. The error,
however, must be corrected immediately after its discovery; otherwise, the
rule on non-diminution of benefits would still apply.
The following cases would illuminate this principle:
(a)Globe Mackay Cable and Radio Corporation v. NLRC, where
the Supreme Court ruled on the proper computation of the cost-of-
living allowance (COLA) for monthly-paid employees. Petitioner
corporation, pursuant to Wage Order No. 6 (effective October 30,
1984), increased the COLA of its monthly-paid employees by
multiplying the P3.00 daily COLA by 22 days which is the number
of working days in the company. The union disagreed with the
computation, claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days which has been the practice of the company
for several years. The Supreme Court, however, upheld the
contention of the petitioner corporation. It held that the grant by the
employer of benefits through an erroneous application of the law
due to absence of clear administrative guidelines is not considered a
voluntary act which cannot be unilaterally discontinued.
(b) TSPIC Corp. v. TSPIC Employees Union [FFW], where the
Supreme Court reiterated the rule enunciated in Globe-Mackay, that
an erroneously granted benefit may be withdrawn without violating
the prohibition against non-diminution of benefits. No vested right
accrued to individual respondents when TSPIC corrected its error
by crediting the salary increase for the year 2001 against the salary
increase granted under Wage Order No. 8, all in accordance with the
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 CBA. Hence, any amount given to the employees in excess of what
they were entitled to, as computed above, may be legally deducted
by TSPIC from the employees salaries.
But if the error does not proceed from the interpretation or
construction of a law or a provision in the CBA, the same may ripen into a
company practice.
Example:
(a)Hinatuan Mining Corporation and/or the Manager v. NLRC,
where the act of the employer in granting separation pay to
resigning employees, despite the fact that the Labor Code does not
grant it, was considered an established employer practice.
BONUS
What is the rule on its demandability and enforceability?
Bonus, as a general rule, is an amount granted and paid ex gratia to the
employee.
It cannot be forced upon the employer who may not be obliged to
assume the onerous burden of granting bonuses or other benefits aside from
the employees basic salaries or wages. If there is no profit, there should be
no bonus. If profit is reduced, bonus should likewise be reduced, absent any
agreement making such bonus part of the compensation of the employees.
When is bonus demandable and enforceable?
It becomes demandable and enforceable:
(1)If it has ripened into a company practice;
(2)If it is granted as an additional compensation which the employer
agreed to give without any condition such as success of business or
more efficient or more productive operation, hence, it is deemed
part of wage or salary.
(3)When considered as part of the compensation and therefore
demandable and enforceable, the amount is usually fixed. If the
amount thereof is dependent upon the realization of profits, the
bonus is not demandable and enforceable.

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 FACILITIES VS. SUPPLEMENTS
What are facilities?
The term facilities includes articles or services for the benefit of
the employee or his family but does not include tools of the trade or
articles or services primarily for the benefit of the employer or necessary to
the conduct of the employers business. They are items of expense necessary
for the laborers and his familys existence and subsistence which form part
of the wage and when furnished by the employer, are deductible therefrom,
since if they are not so furnished, the laborer would spend and pay for them
just the same.
What are supplements?
The term supplements means extra remuneration or special
privileges or benefits given to or received by the laborers over and above
their ordinary earnings or wages.
What are the distinctions between facilities and supplements?
The benefit or privilege given to the employee which constitutes an
extra remuneration over and above his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is made part of the
laborersbasic wage, it is a facility. The criterion is not so much with the
kind of the benefit or item (food, lodging, bonus or sick leave) given but its
purpose. Thus, free meals supplied by the ship operator to crew members,
out of necessity, cannot be considered as facilities but supplements which
could not be reduced having been given not as part of wages but as a
necessary matter in the maintenance of the health and efficiency of the crew
during the voyage.
What is the rule on deductibility of facilities and supplements?
Facilities are deductible from wage but not supplements.
WAGE DISTORTION/RECTIFICATION
What is wage distortion?

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 Wage distortion contemplates a situation where an increase in
prescribed wage rates results in either of the following:
1. Elimination of the quantitative differences in the rates of wages or
salaries; or
2. Severe contraction of intentional quantitative differences in wage or
salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied
in such wage structure based on the following criteria:
a. Skills;
b. Length of service; or
c. Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking
of these positions at various levels. One visualizes a hierarchy of positions
with corresponding ranks basically in terms of wages and other emoluments.
Where a significant change occurs at the lowest level of positions in terms
of basic wage without a corresponding change in the other level in the
hierarchy of positions, negating as a result thereof the distinction between
one level of position from the next higher level, and resulting in a parity
between the lowest level and the next higher level or rank, between new
entrants and old hires, there exists a wage distortion. xxx. The concept of
wage distortion assumes an existing grouping or classification of employees
which establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for
each of the existing classes of employees.
What are the elements of wage distortion?
The four (4) elements of wage distortion are as follows:
(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
concomitant increase in the salary rate of a higher one;
(3)The elimination of the distinction between the two levels; and
(4)The existence of the distortion in the same region of the country.

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 Normally, a company has a wage structure or method of determining
the wages of its employees. In a problem dealing with wage distortion,
the basic assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on some relevant or
legitimate bases.
Involved in the classification of employees are various factors such as
the degrees of responsibility, the skills and knowledge required, the
complexity of the job, or other logical basis of differentiation. The
differing wage rate for each of the existing classes of employees reflects this
classification.
What is the formula for rectifying or resolving wage distortion?
Following is the formula for the correction of wage distortion in the pay
scale structures:
Minimum Wage = % x Prescribed Increase = Distortion
Adjustment
Actual Salary
The above formula was held to be just and equitable.
DIVISOR TO DETERMINE DAILY RATE
Who is a monthly-paid employee?
A monthly-paid employee is one who is paid his wage or salary for
every day of the month, including unworked rest days, special days or
regular holidays.
Who is a daily-paid employee?
A daily-paid employee is one who is paid his wage or salary only on
the days he actually worked, except in cases of regular holidays wherein he
is paid his wage or salary even if he does not work during those days,
provided that he is present or on leave of absence with pay on the working
day immediately preceding the regular holidays.
What are the factors/divisors in computing benefits and wage deductions?

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 Equivalent daily rate (EDR), the basis for deductions for absences
and for computing overtime pay and other benefits.
Monthly Rate x 12
No. of Days Considered = Equivalent Daily Rate (EDR)
Paid in a Year

REST PERIODS
1.
WEEKLY REST DAY

What is the duration of weekly rest period?

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 (24) consecutive hours after every six (6) consecutive normal work
days.
Is the employers prerogative to determine the rest period of its employees
subject to limitations?

Yes. The employer shall determine and schedule the weekly rest day of
his employees subject to CBA and to such rules and regulations as the
DOLE Secretary may provide. However, the employer shall respect the
preference of employees as to their weekly rest day when such preference is
based on religious grounds.
2.
EMERGENCY REST DAY WORK

When can an employer require work on a rest day?

The employer may require any of its employees to work on their
scheduled rest day for the duration of the following emergency and
exceptional conditions:

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 a. In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity, to prevent loss of life and property, or in case of force
majeure or imminent danger to public safety;
b. In case of urgent work to be performed on machineries, equipment,
or installations, 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 continuously for seven (7) days in a week or more, as in the
case of the crew members 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
environmental conditions where performance or quality of work is
dependent thereon.
HOLIDAY PAY/PREMIUM PAY
1.
COVERAGE, EXCLUSIONS

Who are covered by the law on holiday pay?

Generally, all employees are entitled to and covered by the law on
holiday pay.
Who are excluded from its coverage?
The following are excluded:
a. Those of the government and any of the political subdivisions,
including government-owned and controlled corporations;
b. Those of retail and service establishments regularly employing less
than ten (10) workers;
c. Domestic workers or Kasambahays;

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 d. Persons in the personal service of another;
e. Managerial employees as defined in Book III of the Labor Code;
f. Field personnel and other employees whose time and performance is
unsupervised by the employer;
g. Those who are engaged on task or contract basis or purely
commission basis;
h. Those who are paid a fixed amount for performing work irrespective
of the time consumed in the performance thereof;
i. Other officers and members of the managerial staff;
j. Members of the family of the employer who are dependent on him
for support.
What are the holidays listed for 2014?
Proclamation No. 655, Series of 2013, declared the following regular
holidays, special (non-working) days and special holidays (for all schools)
for the year 2014:
A. Regular Holidays
New Years January
Day - 1 (Wednesday)
Araw ng April
Kagitingan - 9 (Wednesday)
Maundy
Thursday - 17 April
Good Friday - 18 April
May
Labor Day - 1 (Thursday)
Independenc June
e Day - 12 (Thursday)
National August (Last
Heroes Day - 25 Monday of

August)
Bonifacio - 30 November

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Day (Sunday)
Christmas December
Day - 25 (Thursday)
December
Rizal Day - 30 (Tuesday)
B. Special (Non-Working) Days
Chinese New January
Year - 31 (Friday)
Black
Saturday - 19 April
Ninoy August
Aquino Day - 21 (Thursday)
All Saints November
Day - 1 (Saturday)
Additional
special
(non-
working) December
days - 24 (Wednesday)
December
- 26 (Friday)
Last Day of December
the Year - 31 (Wednesday)
C. Special Holiday (for all schools)
EDSA
Revolution
February
Anniversary 25 (Tuesday)
Not included in the enumeration above on regular holidays
are (1) Eidl Fitr and (2) Eidul Adha. The reason is that
proclamations declaring the observance of these national
holidays shall hereafter be issued after the approximate dates of
the Islamic holidays have been determined in accordance with
the Islamic calendar (Hijra) or the lunar calendar, or upon
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 Islamic astronomical calculations, whichever is possible or
convenient. To this end, the National Commission on Muslim
Filipinos (NCMF) shall inform the Office of the President on
which days the holidays shall respectively fall.
What is the total number of regular holidays?
It is important to note that the total number of regular holidays is
twelve (12) days per year. This is important for purposes of reckoning
certain divisors and computation of employee benefits.
What is premium pay for holidays and rest days?
Premium pay refers to the additional compensation required by law
to be paid for work performed within the regular eight (8) hours on non-
working days, such as rest days, regular and special holidays.
How is premium pay for holidays computed?
Labor Advisory No. 06, Series of 2013, on the Payment of Wages for
the Regular Holidays, Special (Non-working) Days, and Special Holiday
(For all Schools) for the Year 2014, specifically promulgated the following
rules that shall apply:
a. Regular Holidays
If the employee did not work, he/she shall be paid 100 percent of
his/her salary for that day. Computation: (Daily rate + Cost of
Living Allowance) x 100%. The COLA is included in the
computation of holiday pay.
If the employee worked, he/she shall be paid 200 percent of his/her
regular salary for that day for the first eight hours. Computation:
(Daily rate + COLA) x 200%. The COLA is also included in
computation of holiday pay.
If the employee worked in excess of eight hours (overtime work),
he/she shall be paid an additional 30 percent of his/her hourly rate
on said day. Computation: Hourly rate of the basic daily wage x
200% x 130% x number of hours worked.

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 If the employee worked during a regular holiday that also falls on
his/her rest day, he/she shall be paid an additional 30 percent of
his/her daily rate of 200 percent. Computation: (Daily rate +
COLA) x 200%] + (30% [Daily rate x 200%)].
If the employee worked in excess of eight hours (overtime work)
during a regular holiday that also falls on his/her rest day, he/she
shall be paid an additional 30 percent of his/her hourly rate on said
day. Computation: (Hourly rate of the basic daily wage x 200% x
130% x 130% x number of hours worked);
b. Special (Non-Working) Days
If the employee did not work, the no work, no pay principle shall
apply, unless there is a favorable company policy, practice, or CBA
granting payment on a special day.
If the employee worked, he/she shall be paid an additional 30
percent of his/her daily rate on the first eight hours of work.
Computation: [(Daily rate x 130%) + COLA).
If the employee worked in excess of eight hours (overtime work),
he/she shall be paid an additional 30 percent of his/her hourly rate
on said day. Computation: (Hourly rate of the basic daily wage x
130% x 130% x number of hours worked).
If the employee worked during a special day that also falls on
his/her rest day, he/she shall be paid an additional fifty percent of
his/her daily rate on the first eight hours of work. Computation:
[(Daily rate x 150%) + COLA].

If the employee worked in excess of eight hours (overtime work)

during a special day that also falls on his/her rest day, he/she shall
be paid an additional 30 percent of his/her hourly rate on said day.
Computation: (Hourly rate of the basic daily wage x 150% x 130%
x number of hours worked).
c. Special Holiday for all schools
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 For private establishments, 25 February 2014 is an ordinary
workday and no premium is required to be paid for work on said
day.
On the other hand, employees in private schools, whether academic
or administrative personnel, shall be paid in accordance with the
rules for pay on special (non-working) days as stated above.
What are the effects of absences on the computation of holiday pay?
1. Employees on leave of absence with pay - entitled to holiday pay
when they are on leave of absence with pay.
2. Employees on leave of absence without pay on the day
immediately preceding the regular holiday - may not be paid the
required holiday pay if they have not worked on such regular
holiday.
3. Employees on leave while on SSS or employees compensation
benefits - Employers should grant the same percentage of the
holiday pay as the benefit granted by competent authority in the
form of employees compensation or social security payment,
whichever is higher, if they are not reporting for work while on
such benefits.
4. When day preceding regular holiday is a non-working day or
scheduled rest day - should not be deemed to be on leave of
absence on that day, in which case, employees are entitled to the
regular holiday pay if they worked on the day immediately
preceding the non-working day or rest day.
2.
HOLIDAY PAY/PREMIUM PAY OF
TEACHERS, PIECE WORKERS, TAKAY,
SEASONAL WORKERS, SEAFARERS

Are private school teachers entitled to holiday pay during semestral

vacations? What about Christmas vacation No, as far as regular
holidays during semestral vacations are concerned.

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 Yes, as far as regular holidays during Christmas vacation are
concerned.
Are hourly-paid teachers entitled to holiday pay?
A school is exempted from paying hourly-paid faculty members their
pay for regular holidays, whether the same be during the regular semesters
of the school year or during semestral, Christmas, or Holy Week vacations.
However, it is liable to pay the faculty members their regular hourly rate on
days declared as special holidays or if, for some reason, classes are called
off or shortened for the hours they are supposed to have taught, whether
extensions of class days be ordered or not; and in case of extensions, said
faculty members shall likewise be paid their hourly rates should they teach
during said extensions.
Are piece-workers, takay and others paid by results entitled to holiday pay?
Yes. Where a covered employee is paid by results or output such as
payment on piece-work, his holiday pay should not be less than his
average daily earnings for the last seven (7) actual working days
preceding the regular holiday. In no case, however, should the holiday pay
be less than the applicable statutory minimum wage rate.
What are the distinctions between supervised and unsupervised
workers paid by results to determine their entitlement to holiday pay?
The principal test to determine entitlement to holiday pay is whether
the employees time and performance of the work are supervised or
unsupervised by their employer. If supervised, the employee is entitled
to
holiday pay. If unsupervised, he is not.
The distinctions between supervised and unsupervised workers paid by
results are as follows:
(1)Those whose time and performance are supervised by the employer.
Here, there is an element of control and supervision over the
manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the
company premises; and

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 (2)Those whose time and performance are unsupervised. Here, the
employers control is over the result of the work. Workers on
pakyao and takay basis belong to this group. Both classes of
workers are paid per unit accomplished. Piece-rate payment is
generally practiced in garment factories where work is done in the
company premises, while payment on pakyao and takay basis is
commonly observed in the agricultural industry, such as in sugar
plantations where the work is performed in bulk or in volumes,
hence, difficult to quantify.
Are seasonal workers entitled to holiday pay?
Yes. Seasonal workers are entitled to holiday pay while working
during the season. They may not be paid the required regular holiday pay
during off-season where they are not at work.
Are seafarers entitled to holiday pay?
Yes. Any hours of work or duty including hours of watchkeeping
performed by the seafarer on designated rest days and holidays shall be paid
rest day or holiday pay.
What are important principles on holiday pay?

In case of two (2) regular holidays falling on the same day, the
worker should be compensated as follows: o If unworked 200%
for the two regular holidays;
o If worked 200% for the two regular holidays plus premium of
100% for work on that day.
Monthly-paid employees are not excluded from the coverage of holiday
pay.
LEAVES
1.
SERVICE INCENTIVE LEAVE
What is service incentive leave?

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 Every covered employee who has rendered at least one (1) year of
service is entitled to a yearly service incentive leave of five (5) days with
pay.
The term at least one year of service should mean service within
twelve (12) months, whether continuous or broken, reckoned from the date
the employee started working, including authorized absences and paid
regular holidays, unless the number of working days in the establishment as
a matter of practice or policy, or that provided in the employment contract, is
less than twelve (12) months, in which case, said period should be
considered as one (1) year for the purpose of determining entitlement to the
service incentive leave benefit.
Who are excluded from its coverage?
All employees are covered by the rule on service incentive leave
except:
a. Those of the government and any of its political subdivisions,
including government-owned and controlled corporations;
b. Domestic workers or kasambahays;
c. Persons in the personal service of another;
d. Managerial employees as defined in Book III of the Labor Code;
e. Field personnel and other employees whose performance is
unsupervised by the employer;
f. Those who are engaged on task or contract basis, purely commission
basis, or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof;
g. Those who are already enjoying the benefit provided in the law;
h. Those enjoying vacation leave with pay of at least five (5) days;
i. Those employed in establishments regularly employing less than ten
(10) employees;
j. Other officers and members of the managerial staff; and
k. Members of the family of the employer who are dependent on him
for support.
Are unavailed service incentive leaves commutable to cash?

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 Yes. The service incentive leave is commutable to its money
equivalent if not used or exhausted at the end of the year.
2.
MATERNITY LEAVE
What is maternity leave?
Maternity leave is the period of time which may be availed of by a
woman employee, married or unmarried, to undergo and recuperate from
childbirth, miscarriage or complete abortion during which she is
permitted to retain her rights and benefits flowing from her employment.
What is the period of leave?
60 days for normal delivery
78 days for caesarian delivery
What is the amount granted?
Daily maternity benefit equivalent to one hundred percent (100%) of
her average daily salary credit for sixty (60) days or seventy-eight (78)
days in case of caesarian delivery/
What is the number of delivery or miscarriage covered?
The maternity benefits shall be paid only for the first four (4)
deliveries or miscarriages/
Is an unmarried woman entitled to maternity leave benefit?
Yes. For as long as a woman is pregnant, she is entitled to maternity
leave benefit regardless of whether she is married or unmarried.
PATERNITY LEAVE
What is paternity leave benefit?
Paternity leave covers a married male employee allowing him not
to report for work for seven (7) calendar days but continues to earn the
compensation therefor, on the condition that his spouse has delivered a child
or suffered miscarriage for purposes of enabling him to effectively lend

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support to his wife in her period of recovery and/or in the nursing of the
newly-born child.
Delivery includes childbirth or any miscarriage.
Spouse refers to the lawful wife. For this purpose, lawful wife
refers to a woman who is legally married to the male employee concerned.
Cohabiting refers to the obligation of the husband and wife to live
together.
What is the covered total number of deliveries?
Every married employee in the private and public sectors is entitled to
a paternity leave of seven (7) calendar days with full pay for the first four
(4) deliveries of the legitimate spouse with whom he is cohabiting.
Paternity leave benefits are granted to the qualified employee after the
delivery by his wife, without prejudice to an employer allowing an
employee to avail of the benefit before or during the delivery, provided that
the total number of days should not exceed seven (7) calendar days for each
delivery.
Is an unavailed paternity leave benefit convertible to cash?
No. In the event that the paternity leave benefit is not availed of, said
leave shall not be convertible to cash.
PARENTAL LEAVE
(R.A. No. 8972)
What is parental leave?
Parental leave is the leave benefit granted to a male or female solo
parent to enable him/her to perform parental duties and responsibilities
where physical presence is required.
How many days may be availed of as parental leave?
The parental leave shall not be more than seven (7) working days
every year to a solo parent who has rendered service of at least one (1)
year, to enable him/her to perform parental duties and responsibilities where
his/her physical presence is required. This leave shall be non-cumulative.

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 It bears noting that this leave privilege is an additional leave benefit
which is separate and distinct from any other leave benefits provided under
existing laws or agreements.
Who is a solo parent?
The term "solo parent" refers to any individual who falls under any of
the following categories:
(1)A woman who gives birth as a result of rape and other crimes
against chastity even without a final conviction of the offender:
Provided, That the mother keeps and raises the child;
(2)Parent left solo or alone with the responsibility of parenthood due to
death of spouse;
(3)Parent left solo or alone with the responsibility of parenthood while
the spouse is detained or is serving sentence for a criminal
conviction for at least one (1) year;
(4)Parent left solo or alone with the responsibility of parenthood due to
physical and/or mental incapacity of spouse as certified by a public
medical practitioner;
(5)Parent left solo or alone with the responsibility of parenthood due to
legal separation or de facto separation from spouse for at least one
(1) year, as long as he/she is entrusted with the custody of the
children;
(6)Parent left solo or alone with the responsibility of parenthood due to
declaration of nullity or annulment of marriage as decreed by a
court or by a church as long as he/she is entrusted with the custody
of the children;
(7)Parent left solo or alone with the responsibility of parenthood due to
abandonment of spouse for at least one (1) year;
(8)Unmarried mother/father who has preferred to keep and rear her/his
child/children instead of having others care for them or give them
up to a welfare institution;
(9)Any other person who solely provides parental care and support to a
child or children;
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 (10) Any family member who assumes the responsibility of head of
family as a result of the death, abandonment, disappearance or
prolonged absence of the parents or solo parent.
What is the effect of change of status of the solo parent?
A change in the status or circumstance of the parent claiming benefits
under this Act, such that he/she is no longer left alone with the responsibility
of parenthood, shall terminate his/her eligibility for these benefits.
Who are considered children under this law?
"Children" refer to those living with and dependent upon the solo
parent for support who are unmarried, unemployed and not more than
eighteen (18) years of age, or even over eighteen (18) years but are
incapable of self-support because of mental and/or physical defect/disability.
Is an unavailed parental leave convertible to cash?
No. In the event that the parental leave is not availed of, said leave
shall not be convertible to cash unless specifically agreed upon previously.
LEAVE FOR VICTIMS OF VIOLENCE
AGAINST WOMEN AND CHILDREN
(R.A. No. 9262)
What is this kind of leave?

This special leave is granted to a woman employee who is a victim

under this law. It is for a total of ten
(10) days of paid leave of absence, in addition to other paid leaves
under the law. It is extendible when the necessity arises as specified in
the protection order. Its purpose is to enable the woman employee to
attend to the medical and legal concerns relative to said law. This
leave is not convertible to cash.
What is the requirement for its entitlement?
At any time during the application of any protection order,
investigation, prosecution and/or trial of the criminal case, a victim of
Violence Against Women and their Children (VAWC) who is employed shall

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be entitled to said paid leave of up to ten (10) days. The Punong
Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be,
shall issue a certification at no cost to the woman that such an action is
pending, and this is all that is
required for the employer to comply with the 10-day paid leave.

SPECIAL LEAVE BENEFIT FOR WOMEN

What is this special leave benefit [GYNECOLOGICAL SURGERY
LEAVE]?
A special leave benefit for women was granted under R.A. No. 9710,
otherwise known as The Magna Carta of Women [August 14, 2009].
Thus, any female employee in the public and private sector regardless of age
and civil status shall be entitled to a special leave of two (2) months with
full pay based on her gross monthly compensation subject to existing
laws, rules and regulations due to surgery caused by gynecological
disorders under the following terms and conditions:
1. She has rendered at least six (6) months continuous aggregate
employment service for the last twelve
(12) months prior to surgery;
2. In the event that an extended leave is necessary, the female employee
may use her earned leave credits; and
3. This special leave shall be non-cumulative and non-convertible to
cash.
Gynecological disorders refer to disorders that would require
surgical procedures such as, but not limited to, dilatation and curettage and
those involving female reproductive organs such as the vagina, cervix,
uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified
by a competent physician. Gynecological surgeries shall also include
hysterectomy, ovariectomy, and mastectomy.
Is this leave similar to maternity leave?

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 No. This leave should be distinguished from maternity leave benefit, a
separate and distinct benefit, which may be availed of in case of childbirth,
miscarriage or complete abortion.
A woman, therefore, may avail of this special leave benefit in case she
undergoes surgery caused by gynecological disorder and at the same time
maternity benefit as these two leaves are not mutually exclusive.
SERVICE CHARGE
What are the kinds of establishment covered by the law on service charge?
The rules on service charge apply only to establishments collecting
service charges, such as hotels, restaurants, lodging houses, night clubs,
cocktail lounges, massage clinics, bars, casinos and gambling houses, and
similar enterprises, including those entities operating primarily as private
subsidiaries of the government.
Who are the employees covered by this law?
The same rules on service charges apply to all employees of covered
employers, regardless of their positions, designations or employment status,
and irrespective of the method by which their wages are paid except those
receiving more than P2,000.00 a month.
Who are not covered?
Specifically excluded from coverage are employees who are receiving
wages of more than P2,000.00 a month. However, it must be pointed out
that the P2,000.00 ceiling is no longer realistic considering the applicable
minimum wages prevailing in the country. Hence, it must be disregarded.
How is the service charge distributed?
a. Percentage of sharing.
All service charges collected by covered employers are required to be
distributed at the following rates:
1. 85% to be distributed equally among the covered employees; and

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 2. 15% to management to answer for losses and breakages and
distribution to employees receiving more than P2,000.00 a month, at
the discretion of the management.
b. Frequency of distribution.
The share of the employees referred to above should be distributed
and paid to them not less often than once every two (2) weeks or twice a
month at intervals not exceeding sixteen (16) days.
Can the service charge be integrated into the wages of covered employees?
Yes. In case the service charge is abolished, the share of covered
employees should be considered integrated in their wages, in accordance
with Article 96 of the Labor Code. The basis of the amount to be integrated
is the average monthly share of each employee for the past twelve (12)
months immediately preceding the abolition or withdrawal of such charges.
What are some principles on service charge?

Tips and services charges are two different things. Tips are given by
customers voluntarily to waiters and other people who serve them out of
recognition of satisfactory or excellent service. There is no compulsion to
give tips under the law. The same may not be said of service charges
which are considered integral part of the cost of the food, goods or
services ordered by the customers.
Service charges are not in the nature of profit share and, therefore,
cannot be deducted from wage.

THIRTEENTH MONTH PAY

Who are covered by the 13th month pay law?
Only rank-and-file employees, regardless of their designation or
employment status and irrespective of the method by which their wages are
paid, are entitled to the 13 month pay benefit. Managerial employees are
th

not
entitled to 13th month pay.
When should 13th month pay be paid?
It must be paid not later than December 24 of every year.

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Who are excluded from its coverage?
The following employers are not covered by the 13th month pay law:
1. The government and any of its political subdivisions, including
government-owned and controlled corporations, except those
corporations operating essentially as private subsidiaries of the
government.
2. Employers already paying their employees 13th month pay or more
in a calendar year or its equivalent at the time of the issuance of the
Revised Guidelines.
3. 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, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-
rate basis, in which case, the employer shall be covered by the
Revised Guidelines insofar as such workers are concerned.
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
more or less regularly replicated without regard to the time spent in
producing the same.
Are domestic workers or Kasambahays covered?
Yes. They are now covered under the Kasambahay Law.
Are extras, casuals and seasonal employees entitled to 13th month pay?
Yes, they are entitled thereto.
Is 13th month pay part of wage?
13th month pay which is in the nature of additional income, is based on
wage but not part of wage.
What is the minimum amount of the 13th month pay?
The minimum 13th month pay should not be less than one-twelfth
(1/12) of the total basic salary earned by an employee within a calendar
year.
What is meant by basic salary or basic wage?
Basic salary or basic wage contemplates work within the normal
eight (8) working hours in a day. This means that the basic salary of an

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employee for purposes of computing the 13th month pay should include all
remunerations or earnings paid by the employer for services rendered during
normal working hours.
For purposes of computing the 13th month pay, basic salary should be
interpreted to mean not the amount actually received by an employee, but
1/12 of their standard monthly wage multiplied by their length of service
within a given calendar year.
What is the minimum period of service required in a calendar year to be
entitled to 13th month pay?
To be entitled to the 13th month pay benefit, it is imposed as a
minimum service requirement that the employee should have worked for
at least one (1) month during a calendar year.

SEPARATION PAY

What are the separation pays expressly provided under the Labor Code?
The Labor Code prescribes the payment of separation pay only in the
following four (4) situations:
(1)When termination is due to authorized causes:
(1)installation of labor-saving devices;
(2)redundancy;
(3)retrenchment; or
(4)closing or cessation of business operations; and
(5)disease
What are separation pays provided in jurisprudence?
In accordance with jurisprudence, the following separation pay may be
cited:
(1) Separation pay in lieu of reinstatement; and

(2)Separation pay as financial assistance in cases where the dismissal

was held valid and legal but the employee is given financial
assistance by reason of long years of service, unblemished record,
substantial justice, etc.

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 What is the prevailing doctrine regarding grant of financial assistance?
The Toyota doctrine.
Under this doctrine, all grounds in Article 282 of the Labor Code,
except analogous causes, would not merit payment of financial assistance.
In the following cases, the Toyota doctrine was applied; hence, no
financial assistance was awarded because the grounds invoked are in
accordance with Article 282:
Reno Foods v. Nagkakaisang Lakas ng Manggagawa (NLM),
where it was maintained that labor adjudicatory officials and the Court of
Appeals must demur the award of separation pay based on social justice
when an employees dismissal is based on serious misconduct or willful
disobedience; gross and habitual neglect of duty; fraud or willful breach of
trust; or commission of a crime against the person of the employer or his
immediate family grounds under Article 282 of the Labor Code that
sanction dismissals of employees.
Equitable PCI Bank v. Dompor, Moya v. First Solid Rubber
Industries, Inc., and Unilever Philippines, Inc. v. Rivera, where the
infractions committed by the respondent constituted serious misconduct or
willful disobedience resulting to loss of trust and confidence.
Central Philippines Bandag Retreaders, Inc. v. Diasnes, and
Quiambao v. Manila Electric Company, involving gross and habitual
neglect of duties due to respondents repeated and continuous absences
without prior leave and frequent tardiness.
Exception to Toyota doctrine: When termination is based on analogous
causes.
Toyota, however, makes a distinction when the grounds cited are the
analogous causes for termination under Article 282(e), like inefficiency,
incompetence, ineptitude, poor performance and others. It declared that in
these cases, the NLRC or the courts may opt to grant separation pay
anchored on social justice in consideration of the length of service of the
employee, the amount involved, whether the act is the first offense, the

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 performance of the employee and the like, using the guideposts enunciated
in PLDT on the propriety of the award of separation pay.
Illustrative cases.
Yrasuegui v. Philippine Airlines, Inc., where the dismissal of
petitioner (an international flight attendant) due to his obesity was held valid
as an analogous cause under Article 282(e) of the Labor Code. The Supreme
Court, however, as an act of social justice and for reason of equity, awarded
him separation pay equivalent to one-half (1/2) months pay for every year
of service, including his regular allowances. The Court observed that his
dismissal occasioned by his failure to meet the weight standards of his
employer was not for serious misconduct and does not reflect on his moral
character.
The Solidbank doctrine.
Under this 2010 doctrine, as distinguished from just cause
termination, employees terminated due to authorized cause are not
entitled to be paid additional separation pay by way of financial assistance.
The reason is that the employer is only required under the law to pay
his employees separation pay in accordance with Article 283 of the Labor
Code. That is all that the law requires. The Court should refrain from adding
more than what the law requires, as the same is within the realm of the
legislature.
RETIREMENT PAY
a.
ELIGIBILITY
Who are covered under the retirement pay law?
The following employees are eligible to avail of retirement benefits
under Article 287 of the Labor Code:
1. All employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their
wages are paid;
2. Part-time employees;

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 3.Employees of service and other job contractors;
4.Domestic helpers or persons in the personal service of another;
3.Underground mine workers;
4.Employees of government-owned and/or controlled corporations
organized under the Corporation Code (without original charters).
Who are excluded?
Article 287, as amended, does not apply to the following employees:
1. Employees of the national government and its political subdivisions,
including government-owned and/or controlled corporations, if they
are covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or
operations regularly employing not more than ten (10) employees.
These terms are defined as follows:
a. Retail establishment is one principally engaged in the sale of
goods to end-users for personal or household use. It shall lose its
retail character qualified for exemption if it is engaged in both
retail and wholesale of goods.
b. Service establishment is one principally engaged in the sale of
service to individuals for their own or household use and is
generally recognized as such.
c. Agricultural establishment/operation refers to an employer
which is engaged in agriculture. This term refers to all farming
activities in all branches and includes, among others, the
cultivation and tillage of soil, production, cultivation, growing
and harvesting of any agricultural or horticultural commodities,
dairying, raising of livestock or poultry, the culture of fish and
other aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as an incident to, or in
conjunction with, such farming operations, but does not include
the manufacture and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products.
What is the optional and compulsory retirement age?

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 a. Under Article 287.
This article provides for two (2) types of retirement:
(1)Optional retirement upon reaching the age of sixty (60) years.
(2)Compulsory retirement upon reaching the age of sixty-five (65)
years.
It is the employee who exercises the option under No. 1 above.
b. Under retirement plan.
The optional and compulsory retirement schemes provided under
Article 287 come into play only in the absence of a retirement plan or
agreement setting forth other forms of optional or compulsory retirement
schemes. Thus, if there is a retirement plan or agreement in an establishment
providing for an earlier or older age of retirement (but not beyond 65 which
has been declared the compulsory retirement age), the same shall be
controlling.
c. Retirement at an earlier age or after rendering certain period of
service.
Based on Article 287 the employers and employees are free to agree
and stipulate on the retirement age, either in a CBA or employment contract.
It is only in the absence of such agreement that the retirement age shall be
fixed by law, that is, in accordance with the optional and compulsory
retirement age prescribed under Article 287.
d. By mutual agreement, employers may be granted the sole
and exclusive prerogative to retire employees at an earlier
age or after rendering a certain period of service.
Cainta Catholic School v. Cainta Catholic School Employees
Union [CCSEU], where the Supreme Court upheld the exercise by the
school of its option to retire employees pursuant to the existing CBA where
it is provided that the school has the option to retire an employee upon
reaching the age limit of sixty (60) or after having rendered at least
twenty (20) years of service to the school, the last three (3) years of
which must be continuous. Hence, the termination of employment of the
employees, arising as it did from an exercise of a management prerogative

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granted by the mutually-negotiated CBA between the school and the union
is valid.
e. To be valid, retirement at an earlier age must be voluntarily
consented to by the employee.
In Jaculbe v. Silliman University, the Supreme Court ruled that in
order for retirement at an earlier age to be valid, it must be shown that the
employees participation in the plan is voluntary. An employer is free to
impose a retirement age of less than 65 for as long as it has the employees
consent. Stated conversely, employees are free to accept the employers offer
to lower the retirement age if they feel they can get a better deal with the
retirement plan presented by the employer.
What is the minimum years of service required for entitlement under the
law?
Five (5) years is the minimum years of service that must be rendered
by the employee before he can avail of the retirement benefits upon
reaching optional or compulsory retirement age under Article 287.
What is the retirement age of underground mine workers?
The optional retirement age of underground mine workers is 50 years
of age; while the compulsory retirement age is 60 years old.
What is the minimum number of years of service required of underground
mine workers?
Minimum years of service is also 5 years.
Are the retirement benefits of underground mine workers similar to
ordinary retirees?
Yes. In fact, other than the retirement age, all other requirements as
well as benefits provided in the law are applicable to underground mine
workers.
AMOUNT OF RETIREMENT PAY

What is retirement pay under the law?

a. One-half () month salary.
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee, upon

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reaching the optional or compulsory retirement age specified in Article 287,
shall be entitled to retirement pay equivalent to at least one-half () month
salary for every year of service, a fraction of at least six (6) months being
considered as one (1) whole year.
b. Components of one-half () month salary.
For purposes of determining the minimum retirement pay due an
employee under Article 287, the term one-half month salary shall
include all of the following:
(1)Fifteen (15) days salary of the employee based on his latest salary
rate.
(2)The cash equivalent of five (5) days of service incentive leave;
(3)One-twelfth (1/12) of the 13th month pay due the employee; and
(4)All other benefits that the employer and employee may agree upon
that should be included in the computation of the employees
retirement pay.
c. One-half () month salary means 22.5 days.
One-half [] month salary is equivalent to 22.5 days arrived at
after adding 15 days plus 2.5 days representing one-twelfth [1/12] of the 13th
month pay plus 5 days of service incentive leave.
What are some principles on retirement benefits?
1/12 of 13th month pay and 5 days of service incentive leave (SIL)
should not be included if the employee was not entitled to 13th month
pay and SIL during his employment.
Example: R & E Transport, Inc. v. Latag, where it was held that
employees who are not entitled to 13th month pay and SIL pay while still
working should not be paid the entire 22.5 days but only the fifteen (15)
days salary. In other words, the additional 2.5 days representing one-twelfth
[1/12] of the 13th month pay and the five (5) days of SIL should not be
included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the
boundary system basis. It was undisputed that he was entitled to
retirement benefits after working for fourteen (14) years with R & E
Transport, Inc. However, he was not entitled to the 13th month pay since
Section 3 of the Rules and Regulations Implementing P.D. No. 851 exempts
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from its coverage employers of those who are paid on purely boundary
basis. He was also not entitled to the 5-day service incentive leave pay
pursuant to the Rules to Implement the Labor Code which expressly excepts
field personnel and other employees whose performance is unsupervised by
the employer.
But in the 2010 case of Serrano v. Severino Santos Transit, which
involves a bus conductor (petitioner) who worked for 14 years for
respondent bus company which did not adopt any retirement scheme. It was
held herein that even if petitioner as bus conductor was paid on commission
basis, he falls within the coverage of R.A. 7641 (Retirement Pay Law, now
Article 287 of Labor Code). This means that his retirement pay should
include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay
for a total of 22.5 days. The affirmance by the Court of Appeals of the
reliance by the NLRC on R & E Transport case was held erroneous. For
purposes of applying the law on SIL as well as on retirement, there is a
difference between drivers paid under the boundary system and
conductors paid on commission basis. This is so because in practice, taxi
drivers do not receive fixed wages. They retain only those sums in excess of
the boundary or fee they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage of the bus
earnings for the day. It bears emphasis that under P.D. No. 851 and the SIL
Law, the exclusion from its coverage of workers who are paid on a purely
commission basis is only with respect to field personnel.
RETIREMENT BENEFITS OF
WORKERS PAID BY RESULTS

What are the retirement benefits of workers paid by results?

For covered workers who are paid by results and do not have a fixed
monthly rate, the basis for the determination of the salary for fifteen (15)
days shall be their average daily salary (ADS). The ADS is the average
salary for the last twelve (12) months reckoned from the date of their
retirement, divided by the number of actual working days in that particular
period.
RETIREMENT BENEFITS OF PART-TIME WORKERS

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What is the retirement benefit of part-time workers?
Applying the principles under Article 287, as amended, the
components of retirement benefits of part-time workers may also be
computed at least in proportion to the salary and related benefits due them.

TAXABILITY OF RETIREMENT BENEFITS

What are the conditions for exemption from tax of retirement benefits?
The retirement benefits of employees of private firms shall not be
subject to any tax provided the following conditions set forth therein are
fully complied with:
(1)The retirement benefits received by officials and employees of
private firms, whether individual or corporate, is in accordance with
a reasonable private benefit plan maintained by the employer;
(2)The retiring official or employee has been in the service of the same
employer for at least ten (10) years;
(3)He/she is not less than fifty (50) years of age at the time of his/her
retirement; and
(4)The benefits shall be availed of by an official or employee only once.
J.
WOMEN WORKERS
a.
PROVISIONS AGAINST DISCRIMINATION
What are acts of discrimination under the Labor Code?
(a)Payment of a lesser compensation, including wage, salary or other
form of remuneration and fringe benefits, to a female employee as
against a male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with
respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes.

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What are acts of discrimination under the Magna Carta of Women?
R.A. No. 9710, otherwise known as The Magna Carta of Women, is
a comprehensive womens human rights law that seeks to eliminate
discrimination against women by recognizing, protecting, fulfilling and
promoting the rights of Filipino women, especially those in marginalized
sector.
Based on the definition of the term Discrimination Against
Women in R.A. No. 9710, the following are considered discriminatory
acts:
1. Any gender-based distinction, exclusion, or restriction which has the
effect or purpose of impairing or nullifying the recognition,
enjoyment, or exercise by women, irrespective of their marital
status, on a basis of equality of men and women, of human rights
and fundamental freedoms in the political, economic, social,
cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative
measure, or practice, that directly or indirectly excludes or restricts
women in the recognition and promotion of their rights and their
access to and enjoyment of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for
mechanisms to offset or address sex or gender-based disadvantages
or limitations of women, as a result of which women are denied or
restricted in the recognition and protection of their rights and in their
access to and enjoyment of opportunities, benefits, or privileges; or
women, more than men, are shown to have suffered the greater
adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds,
status, or condition, such as ethnicity, age, poverty or religion.
Additionally, women are guaranteed their right to decent work. The
State shall progressively realize and ensure decent work standards for

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women that involve the creation of jobs of acceptable quality in conditions
of freedom, equity, security and human dignity.
b.
STIPULATION AGAINST MARRIAGE
Is the prohibition against marriage valid?
Article 136 of the Labor Code considers as an unlawful act of the
employer to require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or tacitly
that upon getting married, a woman employee shall be deemed resigned or
separated.
It is likewise an unlawful act of the employer, to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely
by reason of her marriage.
What are the relevant pieces of jurisprudence on marriage?
1. Philippine Telegraph and Telephone Company v. NLRC. - It was
declared here that the company policy of not accepting or
considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against,
discrimination afforded all women workers by our labor laws and by
no less than the Constitution.
2. Star Paper Corp. v. Simbol, Comia and Estrella. - The following
policies were struck down as invalid for violating the standard of
reasonableness which is being followed in our jurisdiction,
otherwise called the Reasonable Business Necessity Rule:
1. New applicants will not be allowed to be hired if in case
he/she has [a] relative, up to [the] 3rd degree of relationship,
already employed by the company.
2. In case of two of our employees (both singles [sic], one
male and another female) developed a friendly relationship
during the course of their employment and then decided to get

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 married, one of them should resign to preserve the policy
stated above.
3. Duncan Association of Detailman-PTGWO v. Glaxo Welcome
Philippines, Inc. In this case, the prohibition against marriage
embodied in the following stipulation in the employment contract
was held as valid:
10. You agree to disclose to management any existing or
future relationship you may have, either by consanguinity or
affinity with co-employees or employees of competing drug
companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from
the Company as a matter of Company policy.
The Supreme Court ruled that the dismissal based on this stipulation in
the employment contract is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees of
competitor companies upon its employees was held reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, the
employer only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
c.
PROHIBITED ACTS
What are the prohibited acts against women under the Labor Code?
Article 137 of the Labor Code and its implementing rule consider
unlawful the followings acts of the employer:
1. To discharge any woman employed by him for the purpose of
preventing such woman from enjoying maternity leave, facilities
and other benefits provided under the Labor Code;
2. To discharge such woman on account of her pregnancy, or while on
leave or in confinement due to her pregnancy;

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 3. To discharge or refuse the admission of such woman upon returning
to her work for fear that she may again be pregnant;
4. To discharge any woman or any other employee for having filed a
complaint or having testified or being about to testify under the
Labor Code; or
5. To require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely
by reason of marriage.

d.
ANTI-SEXUAL HARASSMENT ACT
(R.A. No. 7877)
What are the 3 situations contemplated under this law?
R.A. No. 7877 declares sexual harassment unlawful only in three (3)
situations, namely:
(1)employment;
(2)education; and
(3)training environment.
Can sexual harassment be committed also against a man?
Yes. Sexual harassment is not the sole domain of women as men may
also be subjected to the same despicable act. Said law does not limit the
victim of sexual harassment to women.
Who are the persons who may be held liable for sexual harassment?
Work, education or training-related sexual harassment is committed by
any employer, employee, manager, supervisor, agent of the employer,
teacher, instructor, professor, coach, trainor, or any other person who,
having authority, influence or moral ascendancy over another in a work or
training or education environment, demands, requests or otherwise requires
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any sexual favor from another, regardless of whether the demand, request or
requirement for submission is accepted by the object of said act.
Further, any person who directs or induces another to commit any act
of sexual harassment as defined in the law, or who cooperates in the
commission thereof by another without which it would not have been
committed, shall also be held liable under the law.
How is sexual harassment committed in a work-related or employment
environment?
In a work-related or employment environment, sexual harassment is
committed when:
1. The sexual favor is made a condition in the hiring or in the
employment, re-employment or continued employment of said
individual or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
employee which in any way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said
employee;
2. The above acts would impair the employees rights or privileges
under existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive
environment for the employee.
What are duties of the employer in regard to sexual harassment
complaints?
It is the duty of the employer to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the resolution or
prosecution of acts of sexual harassment.
The employer or head of office is required to:
1. promulgate appropriate rules and regulations, in consultation with
and jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the
procedure for the investigation of sexual harassment cases and the

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 administrative sanctions therefor. The said rules and regulations
issued shall include, among others, guidelines on proper decorum in
the workplace and educational or training institutions.
2. create a committee on decorum and investigation of cases on sexual
harassment. The committee shall conduct meetings, as the case may
be, with officers and employees, teachers, instructors, professors,
coaches, trainors and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
K.
EMPLOYMENT OF MINORS
(Labor Code and R.A. No. 7678, R.A. No. 9231)
Who is a child or working child?
For legal purposes, the term child refers to any person less than
eighteen (18) years of age.
A working child refers to any child engaged as follows:

i. when the child is below eighteen (18) years of age, in work or

economic activity that is not child labor; and
ii. when the child below fifteen (15) years of age:
(a)in work where he/she is directly under the responsibility of his/her
parents or legal guardian and where only members of the childs
family are employed; or
(b) in public entertainment or information which refers to
artistic, literary, and cultural performances for television show,
radio program, cinema or film, theater, commercial advertisement,
public relations activities or campaigns, print materials, internet,
and other media.
What are the working hours of a child?
The term hours of work includes (1) all time during which a child is
required to be at a prescribed workplace, and (2) all time during which a

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child is suffered or permitted to work. Rest periods of short duration during
working hours shall be counted as hours worked.
The following hours of work shall be observed for any child allowed
to work under R.A. No. 9231 and its
Implementing Rules:
(a)For a child below 15 years of age, the hours of work shall not be
more than twenty (20) hours per week, provided that the work shall
not be more than four (4) hours at any given day;
(b) For a child 15 years of age but below 18, the hours of work
shall not be more than eight (8) hours a day, and in no case beyond
forty (40) hours a week; and
(c) No child below 15 years of age shall be allowed to work between
eight (8) oclock in the evening and six (6) oclock in the morning
of the following day and no child 15 years of age but below 18
shall be allowed to work between ten (10) oclock in the evening
and six (6) oclock in the morning of the following day.
What is the prohibition of employing minors in certain undertakings and
advertisements?
No child below 18 years of age is allowed to be employed as a model
in any advertisement directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its by-products, gambling or any form of
violence or pornography.
L.
HOUSEHELPERS
(Labor Code as amended by R.A. No. 7655,
An Act Increasing the Minimum Wage of Househelpers;
See also Household Service under the Civil Code)
(NOTE: The above provisions of the Labor
Code on Househelpers cited in the 2014
Syllabus have already been repealed by R.A.
No. 10361, otherwise known as Domestic

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 Workers Act or Batas Kasambahay
approved by President Benigno S. Aquino III
on January 18, 2013).
What is the coverage of the Kasambahay Law?
R.A. No. 10361 applies to all domestic workers employed and
working within the country. It shall cover all parties to an employment
contract for the services of the following Kasambahay, whether on a live-in
or live-out arrangement, such as, but not limited to:
(a)General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
(e)Laundry person; or
(f) Any person who regularly performs domestic work in one household
on an occupational basis.
Who are excluded from its coverage?
The following are not covered:
(a)Service providers;
(b) Family drivers;
(c) Children under foster family arrangement; and
(d) Any other person who performs work occasionally or sporadically
and not on an occupational basis.
Who is a domestic worker or kasambahay?
Domestic worker or kasambahay refers to any person engaged
in domestic work within an employment relationship, whether on a live-in or
live-out arrangement, such as, but not limited to, general househelp, "yaya",
cook, gardener, or laundry person, but shall exclude service providers,
family drivers, children who are under foster family arrangement, or any
person who performs domestic work only occasionally or sporadically and
not on an occupational basis.

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 This term shall not include children who are under foster family
arrangement which refers to children who are living with a family or
household of relative/s and are provided access to education and given an
allowance incidental to education, I.e., "baon", transportation, school
projects, and school activities.

Because of these new terminologies prescribed in the law, the use of

the term househelper may no longer be legally correct.
Is the employment contract required to be in writing?
Yes. The employment contract must be in writing and should contain
the conditions set by law.
What are the rights and privileges of a kasambahay?
The rights and privileges of the Kasambahay are as follows:
(a)Minimum wage;
(b) Other mandatory benefits, such as theth daily and weekly rest
periods, service incentive leave, and 13 month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, PhilHealth and Pag-IBIG laws;
(e)Standard of treatment;
(f) Board, lodging and medical attendance;
(g)Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
(j) Right to form, join, or assist labor organization;
(k)Right to be provided a copy of the employment contract;
(I) Right to certificate of employment;
(m) Right to terminate the employment; and
(n) Right to exercise their own religious beliefs and cultural practices.
The foregoing rights and privileges are discussed below.
What is the minimum wage of kasambahay?
Under the Kasambahay Law, the following are the minimum wages of
kasambahays:
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 (a)Two thousand five hundred pesos (P2,500.00) a month for
those employed in the National Capital Region (NCR);
(b) Two thousand pesos (P2,000.00) a month for those employed
in chartered cities and first class municipalities; and
(c)One thousand five hundred pesos (P1,500.00) a month for those
employed in other municipalities.
Are the minimum wages subject to review by the RTWPBs or Regional
Boards?
Yes. After one (1) year from the effectivity of the Kasambahay Law,
and periodically thereafter, the Regional Tripartite and Productivity Wage
Boards (RTPWBs) shall review, and if proper, determine and adjust the
minimum wage rates of domestic workers.
What are some important principles on wage of kasambahay?
Frequency of payment of wages. - The wages of the Kasambahay
shall be paid at least once a month. This is so because the
minimum wage rates are on a monthly basis.
The equivalent minimum daily wage rate of the Kasambahay
shall be determined by dividing the applicable minimum monthly
rate by thirty (30) days.
The amount of the minimum wage depends on the geographical
area where the Kasambahay works.
Payment of wages:
1. To whom paid. - It should be made on time directly to the
Kasambahay to whom they are due in cash at least once a month.
2. Deductions, prohibition; when allowed. - The employer, unless
allowed by the Kasambahay through a written consent, shall
make no deductions from the wages other than that which is
mandated by law such as for SSS, Philhealth or Pag-IBIG
contributions.
3. Mode of payment. - It should be paid in cash and not coupons,
tokens, tickets, chits, or any object other than Act.
by means of promissory notes, vouchers, the cash wage as provided for
under thisPay slip. The employer shall at all times provide the
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Kasambahay with a copy of the pay slip containing the amount paid in cash
every pay day, and indicating all deductions made, if any. The copies of the
pay slip shall be kept by the employer for a period of three (3) years.
4. Prohibition on Interference in the disposal of wages. It shall
be unlawful for the employer to interfere with the freedom of the
Kasambahay in the disposition of his/her wages, such as:
(a)Forcing, compelling, or obliging the Kasambahay to purchase
merchandise, commodities or other properties from the
employer or from any other person; or
(b) Making use of any store or services of such employer or any
other person.
5. Prohibition against withholding of wages. It shall be
unlawful for an employer, directly or indirectly, to withhold the
wages of the Kasambahay. If the Kasambahay leaves without any
justifiable reason, any unpaid salary for a period not exceeding
fifteen (15) days shall be forfeited. Likewise, the employer shall
not induce the Kasambahay to give up any part of the wages by
force, stealth, intimidation, threat or by any other means
whatsoever.
What are important terms and conditions of employment of kasambahay?
The following is a rundown of the basic terms and conditions that should be
observed in the employment of a Kasambahay:

a.Employable age. - Children whose age is below 15 years are

absolutely prohibited to work as Kasambahay.
b. Normal daily hours of work. Because R.A. No. 10361 does not
contain any provision on the number of normal hours of work that a
Kasambahay should render in a day but merely prescribes said daily
rest period of eight (8) hours per day, it may be concluded that the
Kasambahay should work for at least a total of sixteen (16) hours
per day as normal hours of work. However, it must be noted that the
Labor Code does not contain any provision on the normal hours of

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 work of househelpers. Article 1695 of the Civil Code, however,
specifically provides that househelpers shall not be required to work
for more than ten (10) hours a day. Since R.A. No. 10361, a
special law, is the most recent piece of legislation, it should prevail
over the general provision of the Civil Code.
c. Normal daily hours of work for working child-kasambahay is
eight (8) hours per day.
d. 13th month pay. - The Kasambahay who has rendered at least one
(1) month of service is entitled to a 13th month pay which shall not
be less than one-twelfth (1/12) of his/her total basic salary earned in
a calendar year. The 13th month pay shall be paid not later than
December 24 of every year or upon separation from employment.
e. Daily rest period. The Kasambahay shall be entitled to an
aggregate daily rest period of eight (8) hours.
f. Weekly rest period. - The Kasambahay shall be entitled to at least
twenty-four (24) consecutive hours of rest in a week. The
employer and the Kasambahay shall agree in writing on the schedule
of the weekly rest day but the preference of the Kasambahay, when
based on religious grounds, shall be respected.
g. Service incentive leave. - A Kasambahay who has rendered at least
one (1) year of service shall be entitled to an annual service
incentive leave of at least five (5) days with pay. Any unused portion
of said annual leave shall not be cumulative or carried over to the
succeeding years. Unused leaves shall not be convertible to cash.
h. Social security benefits. - A Kasambahay who has rendered at least
one (1) month of service shall be covered by the Social Security
System (SSS), Employees Compensation Commission (ECC),
Philippine Health Insurance Corporation (PhilHealth), and Home
Development Mutual Fund or Pag-IBIG, and shall be entitled to all
the benefits in accordance with their respective policies, laws, rules
and regulations.
i. Obligation of employer to register and enrol with SSS,
PhilHealth, and Pag-IBIG. - As employer of the Kasambahay,
he/she shall register himself/herself with, and enroll the latter as
his/her employee to the SSS, PhilHealth, and Pag-IBIG.
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 j. Deposits for loss or damage. - It shall be unlawful for the employer
or any other person to require a Kasambahay to make deposits from
which deductions shall be made for the reimbursement of loss or
damage to tools, materials, furniture and equipment in the
household.
k. Standard of treatment. - The Kasambahay shall be treated with
respect by the employer or any member of the household. He/she
shall not be subjected to any kind of abuse, including repeated verbal
or psychological, nor be inflicted with any form of physical violence
or harassment or any act tending to degrade his/her dignity, as
defined under the Revised Penal Code, Violence Against Women and
their Children Law (R.A. No. 9262), Special Protection of Children
Against Child Abuse, Exploitation and Discrimination Act (R.A. No.
7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons
Act of 2003 (R.A. No. 9208), and other applicable laws.
l. Board, lodging and medical attendance. - The employer shall
provide for the basic necessities of the Kasambahay, to include the
following:
(1)At least three (3) adequate meals a day, taking into consideration
the Kasambahay's religious beliefs and cultural practices;
(2)Humane sleeping condition that respects the person's privacy for
live-in arrangement; and
(3)Appropriate rest and medical assistance in the form of first-aid
medicines, in case of illnesses and injuries sustained during
service without loss of benefits.
m.Opportunities for education and training. - The Kasambahay shall
be afforded the opportunity to finish basic education, which shall
consist of elementary and secondary education. He/she may be
allowed access to alternative learning systems and, as far as
practicable, higher education or technical vocational education and
training.

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 n. Membership in labor organization. - The Kasambahay shall have the
right to join a labor organization of his/her own choosing for purposes
of mutual aid and collective negotiation.
r. Health and safety. - The employer shall safeguard the safety and
health of the Kasambahay in accordance with the standards which the
DOLE shall develop through the Bureau of Working Conditions (BWC) and
the Occupational Safety and Health Center (OSHC) within six (6) months
from the promulgation of this IRR. The said standards shall take into
account the peculiar nature of domestic work.
s. Prohibition on debt bondage. - It shall be unlawful for the
employer or any person acting on his/her behalf to place the Kasambahay
under debt bondage. Debt bondage refers to the rendering of service by
the Kasambahay as security or payment for a debt where the length and
nature of service is not clearly defined or when the value of the service is
not reasonably applied in the payment of the debt.

t. Assignment to non-household work. - The employer shall not

assign the Kasambahay to work, whether in full or part-time, in a
commercial, industrial or agricultural enterprise at a wage rate lower than
that provided for agricultural or non-agricultural workers.
If so assigned, the Kasambahay will no longer be treated as such
but as a regular employee of the establishment.
What are the rules on termination of Kasambahay?
a. Pre-termination of employment. The following rules shall be
observed:
(1)In case the duration of employment is specified in the contract, the
Kasambahay and the employer may mutually agree upon notice to
terminate the contract of employment before the expiration of its
term.
(2)In case the duration is not determined by stipulation or by nature of
service, the employer or the Kasambahay may give notice to end the

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 employment relationship five (5) days before the intended
termination of employment.
b. Termination of employment initiated by the Kasambahay. - The
Kasambahay may terminate the employment relationship at any time before
the expiration of the contract for any of the following causes:
(1)Verbal or emotional abuse of the Kasambahay by the employer or any
member of the household;
(2)Inhuman treatment including physical abuse of the Kasambahay by
the employer or any member of the household;
(3)Commission of a crime or offense against the Kasambahay by the
employer or any member of the household;
(4)Violation by the employer of the terms and conditions of the
employment contract and other standards set forth in the law;
(5)Any disease prejudicial to the health of the Kasambahay, the
employer, or members of the household; and
(6)Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not
exceeding the equivalent of 15 days work, shall be forfeited. In addition, the
employer may recover from the Kasambahay deployment expenses, if any, if
the services have been terminated within six (6) months from employment.
c. Termination of employment initiated by the employer. - An
employer may terminate the employment of the Kasambahay at any time
before the expiration of the contract for any of the following causes:
(1)Misconduct or willful disobedience by the Kasambahay of the
lawful order of the employer in connection with the former's work;
(2)Gross or habitual neglect or inefficiency by the Kasambahay in the
performance of duties;
(3)Fraud or willful breach of the trust reposed by the employer on the
Kasambahay;

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 (4)Commission of a crime or offense by the Kasambahay against the
person of the employer or any immediate member of the employer's
family;
(5)Violation by the Kasambahay of the terms and conditions of the
employment contract and other standards set forth under the law;
(6)Any disease prejudicial to the health of the Kasambahay, the
employer, or members of the household; and
(7)Other causes analogous to the foregoing.
If the employer dismissed the Kasambahay for reasons other than the
above, he/she shall pay the Kasambahay the earned compensation plus
indemnity in the amount equivalent to fifteen (15) days work.
d. Invalid ground for termination. - Pregnancy and marriage of the
Kasambahay are not valid grounds for termination of employment.
e. Employment Certification. - Upon the termination of employment,
the employer shall issue the Kasambahay, within five (5) days from request,
a certificate of employment indicating the nature, duration of the service and
work description.
M.
EMPLOYMENT OF HOMEWORKERS
IMPORTANT TERMS:
a. Industrial homeworker. It refers to a worker who is engaged in
industrial homework.
b. Industrial homework. It refers to a system of production under
which work for an employer or contractor is carried out by a homeworker at
his/her home. Materials may or may not be furnished by the employer or
contractor. It differs from regular factory production principally in that, it is
a decentralized form of production where there is ordinarily very little
supervision or regulation of methods of work.
c. Home. - It means any nook, house, apartment or other premises
used regularly, in whole or in part, as a dwelling place, except those situated
within the premises or compound of an employer, contractor/subcontractor

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and the work performed therein is under the active or personal supervision
by or for the latter.
d. Field personnel. It refers to a non-agricultural employee who
regularly performs his 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 with reasonable certainty.

e. Employer. It refers to any natural or artificial person who, for

his own account or benefit, or on behalf of any person residing outside the
Philippines, directly or indirectly, or through any employee, agent,
contractor, subcontractor or any other person:
1. delivers or causes to be delivered any goods, articles or materials to
be processed or fabricated in or about a home and thereafter to be
returned or to be disposed of or distributed in accordance with his
direction; or
2. sells any goods, articles or materials for the purpose of having such
goods or articles processed in or about a home and then repurchases
them himself or through another after such processing.
f. Contractor or subcontractor. - It refers to any person who, for
the account or benefit of an employer, delivers or causes to be
delivered to a homeworker, goods or articles to be processed in or
about his home and thereafter to be returned, disposed of or distributed
in accordance with the direction of the employer.
g. Processing. - It refers to manufacturing, fabricating, finishing,
repairing, altering, packing, wrapping or handling in any way
connected with the production or preparation of an article or material.
How is homework paid?
Immediately upon receipt of the finished goods or articles, the
employer is required to pay the homeworker or the contractor or
subcontractor, as the case may be, for the work performed less the
corresponding homeworkers share of SSS, PhilHealth and ECC premium

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contributions which should be remitted by the contractor or subcontractor or
employer to the SSS with the employers share. However, where payment is
made to a contractor or subcontractor, the homeworker should likewise be
paid immediately after the goods or articles have been collected from the
workers.
What are prohibited homeworks?
No homework shall be performed on the following:
1. Explosives, fireworks and articles of like character;
2. Drugs and poisons; and
3. Other articles, the processing of which requires exposure to toxic
substances.
N.
APPRENTICES AND LEARNERS
What are the distinctions between learnership and apprenticeship?

The following are the distinctions:

1. Practical training. Both learnership and apprenticeship involve
practical training on-the-job.
2. Training agreement. Learnership is governed by a learnership
agreement; while apprenticeship is governed by an apprenticeship
agreement.
2. Occupation. Learnership involves learnable occupations consisting
of semi-skilled and other industrial occupations which are non-
apprenticeable; while apprenticeship concerns apprenticeable

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 occupations or any trade, form of employment or occupation
approved for apprenticeship by the DOLE Secretary.
3. Theoretical instructions. Learnership may or may not be
supplemented by related theoretical instructions; while
apprenticeship should always be supplemented by related theoretical
instructions.
4. Ratio of theoretical instructions and on-the-job training. For both
learnership and apprenticeship, the normal ratio is one hundred
(100) hours of theoretical instructions for every two thousand
(2,000) hours of practical or on-the-job training. Theoretical
instruction time for occupations requiring less than two thousand
(2,000) hours for proficiency should be computed on the basis of
such ratio.
5. Competency-based system. Unlike in apprenticeship, it is required in
learnership that it be implemented based on the TESDA-approved
competency-based system.
6. Duration of training. Learnership involves practical training on the
job for a period not exceeding three (3) months; while
apprenticeship requires for proficiency, more than three (3)
months but not over six (6) months of practical training on the job.
7. Qualifications. The law does not expressly mention any
qualifications for learners; while the following qualifications are
required to be met by apprentices under Article 59 of the Labor
Code:
(a)Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for appropriate tests; and
(c)Possess the ability to comprehend and follow oral and written
instructions.
8. Circumstances justifying hiring of trainees. Unlike in
apprenticeship, in learnership, the law, Article 74 of the Labor Code,

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 expressly prescribes the pre-requisites before learners may be
validly employed, to wit:
(a)When no experienced workers are available;
(b) The employment of learners is necessary to prevent
curtailment of employment opportunities; and
(c)The employment does not create unfair competition in terms of
labor costs or impair or lower working standards.
9. Limitation on the number of trainees. In learnership, a participating
enterprise is allowed to take in learners only up to a maximum of
twenty percent (20%) of its total regular workforce. No similar cap
is imposed in the case of apprenticeship.
10. Option to employ. In learnership, the enterprise is obliged to hire
the learner after the lapse of the learnership period; while in
apprenticeship, the enterprise is given only an option to hire the
apprentice as an employee.
11. Wage rate. The wage rate of a learner or an apprentice is set at
seventy-five percent (75%) of the statutory minimum wage.
O.
PERSONS WITH DISABILITY
(R.A. No. 7277, as Amended by R.A. No. 9442)
Who are persons with disability (PWDs)?
Persons with Disability are those suffering from restriction or
different abilities, as a result of a mental, physical or sensory impairment, to
perform an activity in the manner or within the range considered normal for
a human being.
What is impairment?
Impairment refers to any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function.
What is disability?

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 Disability means (1) a physical or mental impairment that
substantially limits one or more psychological, physiological or anatomical
functions of an individual or activities of such individual; (2) a record of
such an impairment; or (3) being regarded as having such an impairment.
What is handicap?
Handicap refers to a disadvantage for a given individual, resulting
from an impairment or a disability that limits or prevents the function or
activity that is considered normal given the age and sex of the individual.
b.
RIGHTS OF PERSONS WITH DISABILITY
What are the rights of PWDs?
Under the law, PWDs are entitled to equal opportunity for
employment. Consequently, no PWD shall be denied access to opportunities
for suitable employment. A qualified employee with disability shall be
subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able-bodied person.
What is the wage rate of PWDs?
The wage rate of PWDs is 100% of the applicable minimum wage.
What is the wage rate of PWD if hired as apprentice or learner?
A PWD hired as an apprentice or learner shall be paid not less than
seventy-five percent (75%) of the applicable minimum wage.
c.
PROHIBITION ON DISCRIMINATION
AGAINST PERSONS WITH DISABILITY
What is the rule on discrimination against employment of PWDs?
No entity, whether public or private, shall discriminate against a
qualified PWD by reason of disability in regard to job application
procedures, the hiring, promotion, or discharge of employees, employee

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compensation, job training, and other terms, conditions and privileges of
employment. The following constitute acts of discrimination:
(a)Limiting, segregating or classifying a job applicant with disability
in such a manner that adversely affects his work opportunities;
(b) Using qualification standards, employment tests or other
selection criteria that screen out or tend to screen out a PWD unless
such standards, tests or other selection criteria are shown to be job-
related for the position in question and are consistent with business
necessity;
(c) Utilizing standards, criteria, or methods of administration that:
(1)have the effect of discrimination on the basis of disability; or
(2)perpetuate the discrimination of others who are subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other forms
of remuneration and fringe benefits, to a qualified employee with
disability, by reason of his disability, than the amount to which a
non-disabled person performing the same work is entitled;
(e)Favoring a non-disabled employee over a qualified employee with
disability with respect to promotion, training opportunities, study
and scholarship grants, solely on account of the latters disability;
(f) Re-assigning or transferring an employee with a disability to a job
or position he cannot perform by reason of his disability;
(g)Dismissing or terminating the services of an employee with
disability by reason of his disability unless the employer can prove
that he impairs the satisfactory performance of the work involved to
the prejudice of the business entity; provided, however, that the
employer first sought to provide reasonable accommodations for
persons with disability;
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude or
other factor of the applicant or employee with disability that such

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 tests purports to measure, rather than the impaired sensory, manual
or speaking skills of such applicant or employee, if any; and
(i) Excluding PWD from membership in labor unions or similar
organizations.

------------oOo------------

TOPIC NO. 4
TERMINATION OF EMPLOYMENT
A.
EMPLOYER-EMPLOYEE RELATIONSHIP
1.
Four-Fold Test
What is the 4-fold test of existence of employer-employee relationship?
1. Selection and engagement of the employee;
2. Payment of wages or salaries;
3. Exercise of the power of dismissal; or
4. Exercise of the power to control the employees conduct.
These tests, however, are not fool-proof as they admit of exceptions.
The control test is the controlling test which means that the
employer controls or has reserved 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 accomplished.
Is it necessary to have a written contract of employment in order to
establish employer-employee relationship?

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 No. It may be an oral or written contract. A written contract is not
necessary for the creation and validity of the relationship.
The only exception is in the case of Kasambahay where it is
required that the contract of employment should be in writing.
2.
KINDS OF EMPLOYMENT
What are the general classifications of employment?
There are five (5) classifications of employment:
(a)Regular employees referring to those who have been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer;
(b) Project employees referring to those whose employment has been
fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the
engagement of the employee;
(c)Seasonal employees referring to those who work or perform
services which are seasonal in nature, and the employment is for the
duration of the season;
(d) Casual employees referring to those who are not regular, project,
or seasonal employees;
(e)Fixed-term employees whose term is freely and voluntarily
determined by the employer and the
employee.

a.
PROBATIONARY EMPLOYMENT

How is probationary period, say, of 6 months computed?

The 6-month probationary period should be reckoned from the date of
appointment up to the same
calendar date of the 6th month following.
May probationary period be extended?
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 Yes, but only upon the mutual agreement by the employer and the
probationary employee.
What is the effect of allowing a probationary employee to work beyond the
probationary period?
He is considered a regular employee.
What is the effect if there is no written contract providing for probationary
employment?
If there is no written contract, the employee is considered a regular
employee from day one of his employment. And even if there is one, he is
deemed regular if there is no stipulation on probationary period.
What are the grounds to terminate probationary employment?
Under Article 281, a probationary employee may be terminated only on
three (3) grounds, to wit:
1. For a just cause; or
2. For authorized cause; or
3. When the probationary employee fails to qualify as a regular
employee in accordance with reasonable standards made known
by the employer to the employee at the start of the employment.
Is procedural due process required in termination of probationary
employment?

Yes, but only in the case of Numbers 1 and 2 above.

No, in the case of No. 3 above.
When should termination of probationary employment be made?
Termination to be valid must be done prior to lapse of probationary
period. Termination a few days after lapse of probationary period cannot be
done without due process as he has already become a regular employee by
that time.
b.
REGULAR EMPLOYMENT

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How does one become a regular employee?
Under the Labor Code, regular employment may be attained in either of
three (3) ways, namely:
1. By nature of work. - The employment is deemed regular when the
employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer.
2. By period of service. - The employment is reckoned as regular
when the employee has rendered at least one (1) year of service,
whether such service is continuous or broken, with respect to the
activity in which he is employed and his employment shall continue
while such activity exists.
3. By probationary employment. - The employment is considered
regular when the employee is allowed to work after a probationary
period.
Is the manner or method of paying wage material in determining regularity
of employment?
No. The manner and method of payment of wage or salary is
immaterial to the issue of whether the employee is regular or not.
c.
PROJECT EMPLOYMENT
What is the litmus test of project employment?
The litmus test of project employment, as distinguished from regular
employment, is whether or not the project employees were assigned to carry
out a specific project or undertaking, the duration and scope of which
were specified at the time the employees were engaged for that project.
A true project employee should be assigned to a project which begins
and ends at determined or determinable times and be informed thereof at the
time of hiring.
What are the indicators of project employment?

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 Either one or more of the following circumstances, among others,
may be considered as indicator/s that an employee is a project employee:
1. The duration of the specific/identified undertaking for which the
worker is engaged is reasonably determinable.
2. Such duration, as well as the specific work/service to be performed,
are defined in an employment agreement and is made clear to the
employee at the time of hiring.
3. The work/service performed by the employee is in connection with
the particular project or undertaking for which he is engaged.
4. The employee, while not employed and awaiting engagement, is
free to offer his services to any other employer.
5. A report of the termination of employment in the particular
project/undertaking is submitted to the DOLE Regional Office
having jurisdiction over the workplace, within thirty (30) days
following the date of his separation from work.
6. An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies.
Is length of service material in determining validity of project employment?
No. Length of service is not a controlling determinant of employment
tenure.
What are some principles on project employment?
1. Project employees should be informed of their status as such at
inception of the employment relationship.
2. There must be a written contract of project employment stating the
duration of the project employment as well as the particular work or
service to be performed. A written project employment contract is an
indispensable requirement.
3. Intervals in employment contracts indicate project employment.
4. Continuous, as opposed to intermittent, rehiring shows that employee
is regular.

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 5. Project-to-project basis of employment is valid.
On termination of project employment.
1. Project employees enjoy security of tenure only during the term of
their project employment.

2. Project employees have presumably become regular employees if

they are allowed to work beyond the completion of the project or any
phase thereof to which they were assigned or after the day certain
which they and their employer have mutually agreed for its
completion. Having become regular employees, they can no longer
be terminated on the basis of the completion of the project or any
phase thereof to which they were deployed.
d.
SEASONAL EMPLOYMENT
Can a seasonal employee become a regular seasonal employee?
Yes, provided the following requisites are complied with:
1. The seasonal employee should perform work or services that are
seasonal in nature; and
2. They must have also been employed for more than one (1) season.
Can a regular seasonal worker file an illegal dismissal case in the event he
is not hired for the next season?
Yes. The reason is, being a regular seasonal employee, the employer
should re-hire him in the next season. During off-season, his employment is
deemed suspended and he is considered as being on leave of absence
without pay.
e.
CASUAL EMPLOYMENT
What is the most important distinguishing feature of casual employment?
The most important distinction is that the work or job for which he
was hired is merely incidental to the principal business of the employer and
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such work or job is for a definite period made known to the employee at
the time of engagement.
When does a casual employee become regular?
Casual employee becomes regular after one year of service by operation
of law. The one (1) year period should be reckoned from the hiring date.
Repeated rehiring of a casual employee makes him a regular employee.
f.
FIXED-TERM EMPLOYMENT
What are the requisites in order for fixed-term employment to be valid?
The two (2) requisites or criteria for the validity of a fixed-term contract
of employment are as follows:
1. The fixed period of employment was knowingly and voluntarily
agreed upon by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance
whatever being exercised by the former on the latter.
Is fixed-term employment valid if the job is directly related to the principal
business of the employer?
Yes. Fixed-term employment is the only exception to the rule that one
becomes regular if he is made to perform activities directly related to the
principal business of the employer (Regularity by virtue of nature of work)
When does a fixed-term employee become regular?
When he is allowed to work beyond the agreed fixed term.
When there are successive renewals of fixed-period contracts.
NOTE: The practice of hiring of employees on a uniformly fixed 5-
month basis and replacing them upon the expiration of their contracts
with other workers with the same employment status circumvents their
right to security of tenure.

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 3.
JOB CONTRACTING
Is job contracting valid if the contractor-supplied employees are
engaged to perform not merely peripheral but core jobs with the
principal?
Yes, per the 2012 case of Digital Telecommunications Philippines,
Inc. v. Digitel Employees Union (DEU), where the Court recognized the
management prerogative to farm out any of its activities, regardless of
whether such activity is peripheral or core in nature.
b.
DEPARTMENT ORDER NO. 18-A (Series of 2011)
What is this issuance?
This is the prevailing implementing rules on job contracting.
c.
DEPARTMENT CIRCULAR NO. 01-12
What is this issuance?

This was issued by the DOLE Secretary to clarify that Department

Order No. 18-A, Series of 2011, is not applicable to Business Processing
Outsourcing (BPO)/Knowledge Process Outsourcing (KPO) and the
Construction Industry because:
(1)BPOs and KPOs since these companies may hire employees in
accordance with applicable laws, and maintain these employees based
on business requirements, which may or may not be for different
clients of the BPOs at different periods of the employees' employment.
(2)the Construction Industry because the licensing and the exercise of
regulatory powers over the construction industry are lodged with the
Philippine Contractors Accreditation Board (PCAB), which is under
the Construction Industry Authority of the Philippines (ClAP), and not
with the DOLE. Thus, the DOLE, through its regional offices, shall

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 not require contractors licensed by PCAB in the Construction Industry
to register under D.O. 18-A, Series of 2011. Moreover, findings of
violation/s on labor standards and occupational health and safety
standards shall be coordinated with PCAB for its appropriate action,
including the possible cancellation/suspension of the contractors
license.

d.
TRILATERAL RELATIONSHIP IN JOB
CONTRACTING
What is meant by trilateral relationship?
As distinguished from employment contract which is bilateral in
nature, involving as it does only two (2) parties, namely: (1) the employer,
and (2) the employee, in legitimate job contracting, there are three (3)
parties involved, to wit:
1. The principal who decides to farm out a job, work or service to a
contractor;
2. The contractor who has the capacity to independently undertake the
performance of the job, work or service; and
3. The contractual workers engaged by the contractor to accomplish
the job, work or service.
e.
EFFECTS OF LABOR-ONLY CONTRACTING
What are the requisites of legitimate job contracting?
(1)The contractor must be duly registered with the DOLE. If not
registered, the contractor is presumed a labor-only contractor.
(2)The contractor carries a distinct and independent business and
undertakes to perform the job, work or service on its own
responsibility, according to its own manner and method, and
free from control and direction of the principal in all matters
connected with the performance of the work except as to the
results thereof;

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 (3)The contractor has substantial capital and/or investment in the
form of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of the business; and
(4)The Service Agreement between principal and contractor should
ensure compliance with all the rights and benefits of workers
under Labor Laws such as labor and occupational safety and health
standards, free exercise of the right to self-organization, security of
tenure, and social and welfare benefits.
Absence of any of the foregoing requisites makes it a labor-
only contracting arrangement. What is the amount of
substantial capital under the new Rules?
1. In the case of corporations, partnerships or cooperatives paid-
up capital stocks/shares of at least P3 Million; or
2. In the case of single proprietorship - a net worth of at least P3
Million.
Substantial capital and investment in tools, etc. are two
separate requirements.
Substantial capital and investment in tools, equipment,
implements, machineries and work premises should be treated as
two (2) distinct and separate requirements in determining whether
there is legitimate job contracting arrangement.
When is there labor-only contracting?
(a)The contractor does not have substantial capital or investments in
the form of tools, equipment, machineries, work premises, among
others, and the employees recruited and placed are performing
activities which are usually necessary or desirable to the
operation of the company, or directly related to the main
business of the principal within a definite or predetermined
period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the
principal; OR

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 (b) The contractor does not exercise the right of control over the
performance of the work of the employee.
NOTE: Even if only one of the two (2) elements above is present, there
is labor-only contracting.

What are the effects of labor-only contracting?

1. The labor-only contractor will be treated as the agent or

intermediary of the principal. Since the act of an agent is the act of
the principal, representations made by the labor-only contractor to
the employees will bind the principal.
2. The principal will become the employer as if it directly employed
the workers supplied by the labor-only contractor to undertake the
subcontracted job or service. It will be responsible to them for all
their entitlements and benefits under labor laws.
3. The principal and the labor-only contractor will be solidarily treated
as the direct employer.
4. The employees will become employees of the principal, subject to
the classifications of employees under Article 280 of the Labor
Code.
What are the distinctions between legitimate job contracting and labor-only
contracting?
The chief distinctions between legitimate job contracting, on the one
hand, and the prohibited labor-only contracting, on the other, may be
summed up as follows:
1. In the former, no employer-employee relationship exists between the
contractual employees of the job contractor and the principal; while
in the latter, an employer-employee relationship is created by law
between the principal and the contractual employees supplied by the
labor-only contractor.

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 2. In the former, the principal is considered only an indirect
employer, as this term is understood under Article 107 of the Labor
Code; while in the latter, the principal is considered the direct
employer of the contractual employees in accordance with the last
paragraph of Article 106 of the Labor Code.
3. In the former, the joint and several obligation of the principal and the
legitimate job contractor is only for a limited purpose, that is, to
ensure that the employees are paid their wages. Other than this
obligation of paying the wages, the principal is not responsible for
any claim made by the contractual employees; while in the latter, the
principal becomes jointly and severally or solidarily liable with the
labor-only contractor to the latters employees in the same manner
and extent that the principal is liable to employees directly hired by
him/her, as provided in Article 106 of the Labor Code, as amended.
4. In the former, the legitimate job contractor undertakes to perform a
specific job for the principal; while in the latter, the labor-only
contractor merely provides, supplies, recruits and places the
personnel to work for the principal.
What are the prohibitions other than labor-only contracting?
Contracting out of jobs, works or services when not done in good
faith and not justified by the exigencies of the business such as the
following:
(1)Contracting out of jobs, works or services when the same results
in the termination or reduction of regular employees and
reduction of work hours or reduction or splitting of the bargaining
unit.
(2)Contracting out of work with a "Cabo." "Cabo" refers to a
person or group of persons or to a labor group which, in the guise
of a labor organization, cooperative or any entity, supplies
workers to an employer, with or without any monetary or other
consideration, whether in the capacity of an agent of the employer
or as an ostensible independent contractor.

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(3)Taking undue advantage of the economic situation or lack of
bargaining strength of the contractor's employees, or undermining
their security of tenure or basic rights, or circumventing the
provisions of regular employment, in any of the following
instances:
(i) Requiring them to perform functions which are currently being
performed by the regular employees of the principal; and
(ii)Requiring them to sign, as a precondition to employment or
continued employment, an antedated resignation letter; a blank
payroll; a waiver of labor standards including minimum wages
and social or welfare benefits; or a quitclaim releasing the
principal, contractor or from any liability as to payment of
future claims.
(4)Contracting out of a job, work or service through an in-house
agency.
(5)Contracting out of a job, work or service that is necessary or
desirable or directly related to the business or operation of the
principal by reason of a strike or lockout whether actual or
imminent.
(6)Contracting out of a job, work or service being performed by
union members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization as
provided in Art. 248 (c) of the Labor Code, as amended.
(7)Repeated hiring of employees under an employment contract of
short duration or under a Service Agreement of short duration
with the same or different contractors, which circumvents the
Labor Code provisions on Security of Tenure.
(8)Requiring employees under a subcontracting arrangement to sign
a contract fixing the period of employment to a term shorter than
the term of the Service Agreement, unless the contract is divisible
into phases for which substantially different skills are required

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 and this is made known to the employee at the time of
engagement.
(9)Refusal to provide a copy of the Service Agreement and the
employment contracts between the contractor and the employees
deployed to work in the bargaining unit of the principal's certified
bargaining agent to the sole and exclusive bargaining agent
(SEBA).
(10) Engaging or maintaining by the principal of subcontracted
employees in excess of those provided for in the applicable
Collective Bargaining Agreement (CBA) or as set by the Industry
Tripartite Council (ITC).

B.
DISMISSAL FROM EMPLOYMENT

What is meant by two-fold due process requirement?

Dismissal of employees requires the observance of the two-fold due
process requisites, namely:
1. Substantive aspect which means that the dismissal must be for any
of the (1) just causes provided under Article 282 of the Labor Code
or the company rules and regulations promulgated by the employer;
or (2) authorized causes under Articles 283 and 284 thereof; and
2. Procedural aspect which means that the employee must be accorded
due process, the elements of which are notice and the opportunity to
be heard and to defend himself.
What is the distinction between JUST CAUSES and AUTHORIZED
CAUSES?
A dismissal based on a just cause means that the employee has
committed a wrongful act or omission; while a dismissal based on an
authorized cause means that there exists a ground which the law itself
allows or authorizes to be invoked to justify the termination of an employee
even if he has not committed any wrongful act or omission such as

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installation of labor-saving devices, redundancy, retrenchment, closure or
cessation of business operations or disease.
1.
JUST CAUSES
What are the just causes under the Labor Code?
The just causes in the Labor Code are found in the following provisions
thereof:
(1)Article 282 - (Termination by the Employer) which provides for the
following grounds:
(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 his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or
his duly authorized representatives; and
(e)Other causes analogous to the foregoing.
(2)Article 264(a) - (Prohibited Activities) which provides for the
termination of the following:
(a)Union officers who knowingly participate in an illegal strike and
therefore deemed to have lost their employment status.
(b) Any employee, union officer or ordinary member who
knowingly participates in the commission of illegal acts during a
strike (irrespective of whether the strike is legal or illegal), is also
deemed to have lost his employment status.
(3)Article 263(g) - (National Interest Cases) where strikers who violate
orders, prohibitions and/or injunctions as are issued by the DOLE

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 Secretary or the NLRC, may be imposed immediate disciplinary
action, including dismissal or loss of employment status.
(4)Article 248(e) - (Union Security Clause) where violation of the
union security agreement in the CBA may result in termination of
employment. Under this clause, the bargaining union can demand
from the employer the dismissal of an employee who commits a
breach of union security arrangement, such as failure to join the
union or to maintain his membership in good standing therein. The
same union can also demand the dismissal of a member who
commits an act of disloyalty against it, such as when the member
organizes a rival union.
What are just causes under jurisprudence?
In addition to the just causes mentioned in the Labor Code, just causes
are also found in prevailing jurisprudence. The following may be cited as
just causes in accordance with prevailing jurisprudence:
1. Violation of company rules and regulations.
2. Theft of property owned by a co-employee as distinguished from
company-owned property which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer.
6. Attitude problem.
Is dismissal based on company Code of Discipline or Company Rules and
Regulations illegal?
No.
In the 2013 case of Sampaguita Auto Transport Corporation v.
NLRC, the Supreme Court pronounced that the Court of Appeals erred in
ruling that the dismissal of private respondent, a bus driver of petitioner, was
illegal because the grounds upon which petitioners based respondents
termination from employment, viz.: hindi lahat ng schedule nailalabas,
[]mababa ang revenue ng bus, laging kasama an[g] asawa sa byahe and

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 maraming naririnig na kwento tungkol sa kanya, nag-uutos ng conductor
para kumita sa hindi magandang paraan[,] xxx are not among those
enumerated under Article 282 of the Labor Code as just causes for
termination of employment. The irregularities or infractions committed by
private respondent in connection with his work as a bus driver constitute
serious misconduct or, at the very least, conduct analogous to serious
misconduct, under the above-cited Article 282 of the Labor Code. The
requirement in the company rules that: 3. to obey traffic rules and
regulations as well as the company policies. 4. to ensure the safety of the
riding public as well as the other vehicles and motorist (sic) is so
fundamental and so universal that any bus driver is expected to satisfy the
requirement whether or not he has been so informed.
I.
SERIOUS MISCONDUCT
1. REQUISITES.
For misconduct or improper behavior to be a just cause for dismissal,
the following requisites must concur:
1. It must be serious; and
2. It must relate to the performance of the employees duties; and
3. It must show that he has become unfit to continue
working for the employer. All the above three (3)
requisites must concur.
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT.
Serious misconduct implies that it must be of such grave and
aggravated character and not merely trivial or unimportant.
Simple or minor misconduct would not justify the termination of the
services of an employee.
Possession or use of shabu or other drugs is a valid ground to
terminate employment.
Immorality, as a general rule, is not a just ground to terminate
employment. The exception is when such immoral conduct is
prejudicial or detrimental to the interest of the employer.

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 Immoral act committed beyond office hours is a valid ground to
terminate employment.
Sexual intercourse inside company premises constitutes serious
misconduct.
The act of a 30-year old lady teacher in falling in love with a 16-year
old student is not immoral.
Fighting is a ground for termination but only the instigator or
aggressor and not the victim who was constrained to defend himself
should be dismissed.
Challenging superiors to a fight is a just cause for termination.
Assaulting another employee is a just cause for termination.
Utterance of obscene, insulting or offensive words constitutes serious
misconduct.
Gambling within company premises is a serious misconduct.
Rendering service to business rival is a just cause to terminate
employment.
Selling products of a competitor is a just cause for termination.
Organizing a credit union by employees in a bank is a serious
misconduct.
Deceiving a customer for personal gain is a just cause for termination.
Contracting work in competition with employer constitutes serious
misconduct.
Intoxication which interferes with the employees work constitutes
serious misconduct.
The act of a teacher in pressuring a colleague to change the failing
grade of a student is serious misconduct.
Sexual harassment is a just ground to dismiss.
Sleeping while on duty is a ground for termination.
Dismissal is too harsh a penalty for eating while at work.
Pilferage or theft of company-owned property is a just cause to
terminate.
Theft of funds or property not owned by employer is not a ground
to terminate.
Act of falsification is a valid ground to terminate employment.
Punching-in of time cards of other employees is a just cause for
termination.

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 II.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable
rules, orders and instructions of the employer. In order to validly invoke this
ground, the following requisites must be complied with, to wit:
1. The employees assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and
perverse attitude; and
2. The order violated must be based on a reasonable and lawful
company rule, regulation or policy and made known to the employee
and must pertain to the duties for which he has been engaged to
discharge.
2. SOME PRINCIPLES ON INSUBORDINATION.
Making false allegations in complaint does not constitute insubordination.
Failure to answer memo to explain constitutes willful disobedience.
Another notice is required in case of termination on the ground of failure
to answer memo to explain.
Refusal to undergo random drug testing constitutes both serious
misconduct and insubordination.
Refusal to render overtime to meet production deadline constitutes
insubordination.
Refusal to comply with a lawful transfer constitutes insubordination.
III.
GROSS AND HABITUAL NEGLECT OF DUTIES

1. REQUISITES.

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 The following are the requisites:
(1)There must be negligence which is gross and/or habitual in character;
and
(2)It must be work-related as would make him unfit to work for his
employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF
DUTIES.
Simple negligence is not sufficient to terminate employment.
The negligence must be gross in character which means absence of that
diligence that an ordinarily prudent man would use in his own affairs.
As a general rule, negligence must be both gross and habitual to be a
valid ground to dismiss.
Habituality may be disregarded if negligence is gross or the damage or
loss is substantial. Habitual negligence implies repeated failure to
perform ones duties for a period of time, depending upon the
circumstances.
Actual damage, loss or injury is not an essential requisite.
Gross negligence may result to loss of trust and confidence.
Absences, if authorized, cannot be cited as a ground to terminate
employment.
Tardiness or absenteeism, if not habitual, cannot be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be cited as a ground to
terminate employment.
Tardiness or absenteeism, if habitual, may be tantamount to serious
misconduct.
Absences or tardiness due to emergency, ailment or fortuitous event are
justified and may not be cited as just cause to terminate employment.
Unsatisfactory or poor performance, inefficiency and incompetence
are considered just causes for dismissal only if they amount to gross and
habitual neglect of duties.
IV.
ABANDONMENT OF WORK

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1. CONCEPT.
Abandonment is a form of neglect of duty; hence, a just cause for
termination of employment under Article 282 [b] of the Labor Code.
2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1. The employee must have failed to report for work or must have been
absent without valid or justifiable reason; and
2. There must have been a clear intention on the part of the employee
to sever the employer-employee relationship manifested by some
overt act.
3. SOME PRINCIPLES ON ABANDONMENT.
Mere absence is not enough to constitute abandonment.
Clear intention to sever employment relationship is necessary.
Due process in abandonment cases consists only of the service of 2
notices to the employee, viz.:
a. First notice directing the employee to explain why he should not be
declared as having abandoned his job; and
b. Second notice to inform him of the employers decision to dismiss him
on the ground of abandonment.
No hearing is required to validly dismiss an employee for abandonment.
Notices in abandonment cases must be sent to employees last known
address per record of the company. The employer need not look for the
employees current whereabouts.
Immediate filing of a complaint for illegal dismissal praying for
reinstatement negates abandonment.
Lapse of time between dismissal and filing of a case is not a material
indication of abandonment. Hence, lapse of 2 years and 5 months or 20
months or 9 months or 8 months before filing the complaint for illegal
dismissal is not an indication of abandonment. Under the law, the
employee has a 4-year prescriptive period within which to institute his
action for illegal dismissal.

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 Filing of a case to pre-empt investigation of the administrative case is
tantamount to abandonment.
When what is prayed for in the complaint is separation pay and not
reinstatement, the filing of complaint does not negate abandonment.
It is abandonment when what is prayed for in the complaint is separation
pay and it was only in the position paper that reinstatement was prayed
for.
Employment in another firm coinciding with the filing of complaint does
not indicate abandonment.
Offer of reinstatement by employer during proceedings before Labor
Arbiter and refusal by employee does not indicate abandonment but more
of a symptom of strained relations between the parties.
An employee may be absolved from the charge of abandonment of work
but adjudged guilty of AWOL. These two grounds are separate and
distinct from each other.
An employee who failed to report for work after the expiration of the
duly approved leave of absence is considered to have abandoned his job.
An employee who failed to comply with the order for his reinstatement is
deemed to have abandoned his work.
An employee who, after being transferred to a new assignment, did not
report for work anymore is deemed to have abandoned his job.

An employee who deliberately absented from work without leave or

permission from his employer for the purpose of looking for a job
elsewhere is deemed to have abandoned his work.
Imprisonment or detention by military does not constitute abandonment.
Absence to evade arrest is not a valid justification. To do so would be to
place an imprimatur on the employees attempt to derail the normal
course of the administration of justice.
V.
FRAUD
1. REQUISITES.
The following are the requisites of this ground:

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 1. The employee has committed an intentional deception and used
dishonest methods for personal gain or to damage the employer; and
2. The fraud is work-related and rendered him unfit to work for his
employer.
2. SOME PRINCIPLES ON FRAUD.
Failure to deposit collection constitutes fraud.
Lack of damage or losses is not necessary in fraud cases. The fact that the
employer did not suffer losses from the dishonesty of the dismissed
employee because of its timely discovery does not excuse the latter from
any culpability.
Lack of misappropriation or shortage is immaterial in case of
unauthorized encashment of personal checks by teller and cashier.
Restitution does not have absolutory effect.
VI.
WILLFUL BREACH OF TRUST AND CONFIDENCE
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following
requisites must be satisfied:
(1)The employee holds a position of trust and confidence;
(2)There exists an act justifying the loss of trust and confidence, which
means that the act that betrays the employers trust must be real,
i.e., founded on clearly established facts;
(3)The employees breach of the trust must be willful, i.e., it was done
intentionally, knowingly and purposely, without justifiable excuse;
and
(4)The act must be in relation to his work which would render him unfit
to perform it.
2. GUIDELINES.
As a safeguard against employers who indiscriminately use loss of
trust and confidence to justify arbitrary dismissal of employees, the
Supreme Court, in addition to the above elements, came up with the
following guidelines for the application of the doctrine:
(1)The loss of confidence must not be simulated;

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 (2)It should not be used as a subterfuge for causes which are illegal,
improper or unjustified;
(3)It may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and
(4)It must be genuine, not a mere afterthought, to justify earlier action
taken in bad faith.
The foregoing guidelines have been prescribed by the Supreme Court
due to the subjective nature of this ground which makes termination based
on loss of trust and confidence prone to abuse.
3. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST
AND CONFIDENCE.
Employees position must be reposed with trust and confidence.
Position of trust and confidence is one where a person is entrusted with
confidence on delicate matters, or with the custody, handling, or care and
protection of the employers property.
Two (2) classes of positions of trust. The first class consists of
managerial employees or those who, by the nature of their position, are
entrusted with confidential and delicate matters and from whom greater
fidelity to duty is correspondingly expected. They refer to those 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 discipline employees or to effectively recommend such managerial
actions. Their primary duty consists of the management of the
establishment in which they are employed or of a department or a
subdivision thereof.
The second class includes cashiers, auditors, property custodians, or
those who, in the normal and routine exercise of their functions, regularly
handle significant amounts of [the employers] money or property. They
are fiduciary rank-and-file employees who, though rank-and-file, are
routinely charged with the custody, handling or care and protection of the
employer's money or property, or entrusted with confidence on delicate
matters, and are thus classified as occupying positions of trust and
confidence.

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 Rules on termination of managerial and supervisory employees
different from those applicable to rank-and-file employees. Thus, with
respect to rank-and-file personnel, loss of trust and confidence as a
ground for valid dismissal requires proof of involvement in the alleged
events in question and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for believing that he
has breached the trust of his employer would suffice for his dismissal.
There must be some basis for the loss of trust and confidence which
means that there is reasonable ground to believe, if not to entertain the
moral conviction, that the concerned employee is responsible for the
misconduct and that the nature of his participation therein rendered him
absolutely unworthy of trust and confidence demanded by his position.
Dismissal due to feng shui mismatch is not a valid ground to lose trust and
confidence.

Command responsibility of managerial employees is a ground to dismiss.

Confidential employee may be dismissed for loss of trust and confidence.
Grant of promotions and bonuses negates loss of trust and confidence.
Long years of service, absence of derogatory record and small amount
involved are deemed inconsequential insofar as loss of trust and
confidence is concerned.
Dropping of criminal charges or acquittal in a criminal case arising from
the same act does not affect the validity of dismissal based on loss of trust
and confidence.
Full restitution does not absolve employee of offense which resulted in the
loss of trust and confidence.
VII.
COMMISSION OF CRIME OR OFFENSE
1. REQUISITES.
The following are the requisites for the valid invocation of this ground:
1. A crime or offense was committed by the employee;

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 2. It was committed against any of the following persons:
(a)His employer;
(b) Any immediate member of his employers family; or
(c) His employers duly authorized representative.
2. SOME PRINCIPLES ON THE COMMISSION OF CRIME OR
OFFENSE.
Because of its gravity, work-relation is not necessary. Neither is it
necessary to show that the commission of the criminal act would render
the employee unfit to perform his work for the employer.
VIII.
OTHER ANALOGOUS CAUSES
1. ANALOGOUS CAUSES UNDER
ESTABLISHED JURISPRUDENCE. The
following may be cited as analogous causes:
1) Violation of company rules and regulations.
2) Theft of property owned by a co-employee, as distinguished from
theft of property owned by the employer.
3) Incompetence, inefficiency or ineptitude.
4) Failure to attain work quota.
5) Failure to comply with weight standards of employer.
6) Attitude problem is analogous to loss of trust and confidence.
IX.
TERMINATION DUE TO ENFORCEMENT OF
UNION SECURITY CLAUSE
What is a union security clause?
The union security clause is a stipulation in a CBA which allows
the parties thereto to enter into an agreement requiring membership in the
exclusive collective bargaining agent which successfully negotiated said
CBA as a condition for continued employment with the exception of

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employees who are already members of another union at the time of the
signing of the CBA.
What are the effects of application of this clause?
The following are the effects:
a. On members of the bargaining union/agent. They are not allowed
to resign or terminate their membership therefrom. Any member of
the bargaining agent who resigns or is expelled therefrom may be
recommended to the employer by the bargaining agent for
termination of his employment.
b. On non-members of the bargaining union/agent but members of
the minority union/s. They are not bound by the union security
clause if they are members of the minority or other unions at the
time of the signing of the CBA. Hence, they cannot be compelled to
resign from their union/s in order to join the bargaining agent.
c. On non-members of the bargaining union/agent or of any
minority union/s. If not a member of the bargaining agent or any
other unions in the bargaining unit at the time of the signing of the
CBA by reason of the fact that he is excepted from the coverage of
the bargaining unit, the employee cannot be compelled to join the
bargaining agent.
d. On new employees hired after the signing of the CBA containing
the union security clause. They can be compelled to join the
bargaining agent. If they refuse, they can be recommended for
termination.
Is there an exception to this rule?
Yes. An employee cannot be compelled to join a union based on
religious ground. For example: members of the Iglesia ni Kristo (INK)
cannot be compelled to join a union; hence, they are not bound by the union
security doctrine.
What are the requisites in order to validly terminate employees based on
this clause?
(1)The union security clause is applicable;

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 (2)The bargaining union is requesting for the termination of
employment due to enforcement of the union security provision in
the CBA; and
(3)There is sufficient evidence to support the unions decision to expel
the employee from the union.

All the foregoing requisites should be complied with to justify the

termination of employment.
2.
AUTHORIZED CAUSES
1. TWO (2) CLASSES.
Under the Labor Code, authorized causes are classified into two (2)
classes, namely:
(1)Business-related causes. Referring to the grounds specifically
mentioned in Article 283, to wit:
a. Installation of labor-saving device;
b. Redundancy;
c. Retrenchment;
d. Closure or cessation of business operations NOT due to serious
business losses or financial reverses; and
e. Closure or cessation of business operations due to serious business
losses and financial reverses.
(2)Health-related causes. Referring to disease covered by Article 284
of the Labor Code.
What are the common requisites applicable to the authorized causes under
Article 283?
The following are the five (5) common requisites applicable to the
grounds under Article 283:
1. There is good faith in effecting the termination;
2. The termination is a matter of last resort, there being no other
option available to the employer after resorting to cost-cutting
measures;

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 3. Two (2) separate written notices are served on both the affected
employees and the DOLE at least one
(1) month prior to the intended date of termination;
4. Separation pay is paid to the affected employees, to wit:
(a)If based on (1) installation of labor-saving device, or (2)
redundancy. - One (1) month pay or at least one (1) month pay
for every year of service, whichever is higher, a fraction of at least
six (6) months shall be considered as one (1) whole year.
(b) If based on (1) retrenchment, or (2) closure NOT due serious
business losses or financial reverses. - One (1) month pay or at
least one-half () month pay for every year of service, whichever
is higher, a fraction of at least six (6) months shall be considered
as one (1) whole year.
(c) If closure is due to serious business losses or financial reverses,
NO separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher
separation pay, the same must be followed instead of the one
provided in Article 283.
5. Fair and reasonable criteria in ascertaining what positions are to
be affected by the termination, such as, but not limited to: nature of
work; status of employment (whether casual, temporary or regular);
experience; efficiency; seniority; dependability; adaptability;
flexibility; trainability; job performance; discipline; and attitude
towards work. Failure to follow fair and reasonable criteria in
selecting who to terminate would render the termination invalid.
I.
INSTALLATION OF LABOR-SAVING DEVICE

What is the additional requisite unique to this ground?

In addition to the five (5) common requisites above, the unique
requisite for this ground is that the purpose for such installation must be
valid, such as to save on cost, enhance efficiency and other justifiable
economic reasons.
II.
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 REDUNDANCY

What is the additional requisite unique to this ground?

The additional requisite is the existence of redundant position.
III.
RETRENCHMENT

What is the additional requisite unique to this ground?

There must be proof of losses or possible imminent losses. This is
the only statutory ground in Article 283 which requires this kind of proof.
The other grounds of closure or cessation of business operations may be
resorted to with or without losses.
What are some relevant principles on retrenchment?
The fact that there has been economic or other crisis besetting a particular
sector or the country as a whole is not sufficient justification for
retrenchment.
The phrase retrenchment to prevent losses means that retrenchment
must be undertaken by the employer before the losses anticipated are
actually sustained or realized. The employer need not keep all his
employees until after his losses shall have materialized. Otherwise, the
law could be vulnerable to attack as undue taking of property for the
benefit of another.
Best evidence of losses - financial statements audited by independent
auditors (not by internal auditors).
Best evidence of losses in a government-controlled corporation -
financial statements audited by COA.
Income tax returns, not valid since they are self-serving documents.

Mere affidavit on alleged losses is not sufficient.

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 Retrenchment effected long after the business losses is not valid.
Profitable operations in the past do not affect the validity of retrenchment.
Retrenchment due to liquidity problem is not valid.
Sharp drop in income is not a ground to justify retrenchment. A mere
decline in gross income cannot in any manner be considered as serious
business losses. It should be substantial, sustained and real.
Litany of woes, in the absence of any solid evidence that they translated
into specific and substantial losses that would necessitate retrenchment,
will not suffice to justify retrenchment.
Rehiring of retrenched employees does not necessarily indicate illegality
of retrenchment.
In an enterprise which has several branches nationwide, profitable
operations in some of them will not affect the validity of the
retrenchment if overall, the financial condition thereof reflects losses.
IV.
CLOSURE OR CESSATION OF BUSINESS OPERATIONS

Can an employer close its business even if it is not suffering from business
losses?
Yes. In fact, closure involves two (2) situations:
(a)When NOT due to serious business losses or financial reverses; or
(b) When due to serious business losses or financial reverses
It is only in the first that payment of separation pay is required. No such
requirement is imposed in the
second.
What are some relevant principles on closure?
Principle of closure under Article 283 applies in cases of both total and
partial closure or cessation of business operations. Management may
choose to close only a branch, a department, a plant, or a shop.
Closure of department or section and hiring of workers supplied by
independent contractor as replacements is valid.
Relocation of business may amount to cessation of operations.
Closure of business to merge or consolidate with another or to sell or
dispose all of its assets, held valid.
Audited financial statements necessary only in closure due to losses.
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 V.
DISEASE
1. REQUISITES.
Disease is one of the authorized causes to terminate employment. The
following requisites must be complied with before termination of
employment due to disease may be justified:
1. The employee is suffering from a disease;
2. His continued employment is either:
a) prohibited by law; or
b) prejudicial to his health; or
c) prejudicial to the health of his co-employees;
3. There is a certification by a competent public health authority that
the disease is of such nature or at such stage that it cannot be cured
within a period of six (6) months even with proper medical
treatment;
4. Notice of termination based on this ground should be separately
served both to the employee and the Department of Labor and
Employment at least one (1) month prior to the effectivity of the
termination; and
5. Separation pay should be paid to the employee in an amount
equivalent to at least one (1) month salary or to one-half () month
salary for every year of service, whichever is greater, a fraction of at
least six
(6) months being considered as one (1) whole year.
What are some salient points to consider under this ground?
If the disease or ailment can be cured within the period of six (6)
months with proper medical treatment, the employer should not
terminate the employee but merely ask him to take a leave of absence.
The employer should reinstate him to his former position immediately
upon the restoration of his normal health.
In case the employee unreasonably refuses to submit to medical
examination or treatment upon being requested to do so, the employer
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 may terminate his services on the ground of insubordination or willful
disobedience of lawful order.
A medical certificate issued by a companys own physician is not an
acceptable certificate for purposes of terminating an employment based
on Article 284, it having been issued not by a competent public health
authority, the person referred to in the law.
A competent public health authority refers to a government doctor
whose medical specialization pertains to the disease being suffered
by the employee. For instance, if the employee suffers from
tuberculosis, the medical certificate should be issued by a government-
employed pulmonologist who is competent to make an opinion thereon.
If the employee has cardiac symptoms, the competent physician in this
case would be a cardiologist.
The medical certificate should be procured by the employer and not
by the employee.

3.
DUE PROCESS

(a)Twin-Notice Requirement
(b) Hearing; Meaning of Opportunity to be Heard
What is the latest rule on due process?
Due process means compliance with both STATUTORY due
process and CONTRACTUAL due process. CONSTITUTIONAL due
process is not applicable (Per Agabon doctrine).
Statutory due process refers to the one prescribed in the Labor Code
(Article 277[b]); while contractual due process refers to the one prescribed
in the Company Rules and Regulations (Per Abbott Laboratories doctrine).
Contractual due process was enunciated in the 2013 en banc ruling
in Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz. Thus, it is
now required that in addition to compliance with the statutory due process,

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the employer should still comply with the due process procedure prescribed
in its own company rules. The employers failure to observe its own
company-prescribed due process will make it liable to pay an indemnity in
the form of nominal damages, the amount of which is equivalent to the
P30,000.00 awarded under the Agabon doctrine.
Are the twin-notice requirement and hearing required in all cases of
termination?
No. The two-notice requirement and hearing are required only in
case of just cause termination in the following order:
1. Service of first written notice;
2. Conduct of hearing; and
3. Service of second written notice.
What is the King of Kings Transport doctrine?
Based on this doctrine which was enunciated in King of Kings
Transport, Inc. v. Mamac, the following requirements should be complied
with in just cause termination:
(1)First written notice.
The first written notice to be served on the employee should:
a) Contain the specific causes or grounds for termination against him;
b) Contain a directive that the employee is given the opportunity to
submit his written explanation within the reasonable period of
FIVE (5) CALENDAR DAYS from receipt of the notice:
1) to enable him to prepare adequately for his defense;
2) to study the accusation against him;
3) to consult a union official or lawyer;
4) to gather data and evidence; and
5) to decide on the defenses he will raise against the complaint.
c) Contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employee. This is

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 required in order to enable him to intelligently prepare his
explanation and defenses. A general description of the charge will
not suffice.
d) Specifically mention which company rules, if any, are violated
and/or which among the grounds under Article 282 is being
charged against the employee.
(2)Hearing required,
After serving the first notice, the employer should schedule and
conduct a hearing or conference wherein the employee will be given the
opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
During the hearing or conference, the employee is given the chance to
defend himself personally, with the assistance of a representative or counsel
of his choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
(3)Second written notice.
After determining that termination of employment is justified, the
employer shall serve the employees a written notice of termination
indicating that:
1) all circumstances involving the charge/s against the employee have
been considered; and
2) grounds have been established to justify the severance of his
employment.
What is the Perez doctrine?
The Perez doctrine enunciates the new guiding principle on the
hearing requirement. It has interpreted the term ample opportunity to be
heard as follows:
(a)Ample opportunity to be heard means any meaningful
opportunity (verbal or written) given to the employee to answer the
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 charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and
reasonable way.
(b) A formal hearing or conference is no longer mandatory. It
becomes mandatory only under any of the following
circumstances:
(1)When requested by the employee in writing; or
(2)When substantial evidentiary disputes exist; or
(3)When a company rule or practice requires it; or
(4)When similar circumstances justify it.
(c) the ample opportunity to be heard standard in the Labor Code
prevails over the hearing or conference requirement in its
Implementing Rules and Regulations. This is how the Supreme
Court resolved the conflict in the following provisions of the Labor
Code and its implementing rules:
The Perez doctrine is now the prevailing rule as shown by a catena of
cases which cited it after its promulgation.
Are the twin-notice requirement and hearing applicable to authorized
cause termination?
No. Due process in authorized cause termination is deemed complied
with upon the separate and simultaneous service of a written notice of the
intended termination to both:
(1)the employee to be terminated; and
(2)the appropriate DOLE Regional Office, at least one (1) month
before the intended date of the termination specifying the ground/s
therefor and the undertaking to pay the separation pay required
under Article 283 of the Labor Code.
For obvious reason, hearing is not required.
Are the twin-notice requirement and hearing applicable to an
abandonment case which is a just cause to terminate employment?

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 No. Although considered as a just cause to terminate employment, the
due process requirement is different. No hearing is required (since the
employee has already abandoned his job) but the following notices should
be complied with:
1) First notice asking the employee to explain why he should not be
declared as having abandoned his job; and
2) Second notice informing him of the employers decision to dismiss
him on the ground of abandonment.
What are some notable principles on the hearing requirement?
If employee does not answer, hearing should still proceed.
Outright termination violates due process.
Investigation still required even if incident was witnessed by many.
Meeting, dialogue, consultation or interview is not the hearing required
by law. It may not be a substitute for the actual holding of a hearing.
Prior consultation with union is not part of the due process requirement.
Cross-examination or confrontation of witnesses is not necessary in
company investigations.
Co-conspirators confession is not sufficient to merit dismissal.
What are the instances where
hearing is not required?
Hearing is not required in the
following cases:
1. Termination of project, seasonal, casual or fixed-term
employment.
2. Termination of probationary employment on the ground of
failure of the probationary employee to qualify as a regular
employee in accordance with reasonable standards made known
to him at the start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 283
(installation of labor-saving device, redundancy, retrenchment or
closure of business or cessation of operations). In such cases, there

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 are no allegations which the employees should refute and defend
themselves from.
5. Termination due to disease under Article 284.
6. Termination by the employee (resignation) under Article 285.
7. Termination after 6 months of bona-fide suspension of operation
under Article 286. For purposes of satisfying due process, what is
required is simply that the notices provided under Article 283 be
served to both the affected employees and the DOLE at least one (1)
month before the termination becomes effective.
8. Termination due to retirement under Article 287.
9. Termination due to closure or stoppage of work by government
authorities when non-compliance with the law or implementing
rules and regulations poses grave and imminent danger to the health
and safety of workers in the workplace.
10. Termination of employee who has admitted his guilt for the
offense charged.
What are the seven (7) standard situations in termination cases?
The rules on termination of employment in the Labor Code and
pertinent jurisprudence are applicable to seven (7) different situations,
namely:
1. The dismissal was for a just cause under Article 282, for an authorized
cause under Article 283, or for health reasons under Article 284, and
due process was observed This termination is LEGAL.
2. The dismissal was without a just or authorized cause but due process
was observed This termination is
ILLEGAL.

3. The dismissal was without a just or authorized cause and due process
was not observed This termination is ILLEGAL.
4. The dismissal was for a just or authorized cause but due process was
not observed This termination is

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 LEGAL.
5. The dismissal was for a non-existent cause This termination is
ILLEGAL.
6. The dismissal was not supported by any evidence of termination
This termination is NEITHER LEGAL NOR ILLEGAL as there is
no dismissal to speak of. Reinstatement is ordered not as a relief for
illegal dismissal but on equitable ground.
7. The dismissal was brought about by the implementation of a law This
termination is LEGAL.
C.
RELIEFS FOR ILLEGAL DISMISSAL
1. RELIEFS UNDER ARTICLE 279 OF THE LABOR CODE.
Under this article, an illegally dismissed employee is entitled to the
following reliefs:
(1)Reinstatement without loss of seniority rights and other privileges;
(2)Full backwages, inclusive of allowances; and
(3)Other benefits or their monetary equivalent.
2. OTHER RELIEFS NOT FOUND IN ARTICLE 279 BUT
AWARDED IN ILLEGAL DISMISSAL CASES. The following
reliefs that are awarded in illegal dismissal cases are missing in Article
279:
(1)Award of separation pay in lieu of reinstatement.
(2)Award of penalty in the form of nominal damages in case of
termination due to just or authorized cause but without observance
of procedural due process.
(3)Reliefs to illegally dismissed employee whose employment is for a
fixed period. The proper relief is only the payment of the
employees salaries corresponding to the unexpired portion of the
employment contract.
(4)Award of damages and attorneys fees.
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 (5)Award of financial assistance in cases where the employees
dismissal is declared legal but because of long years of service, and
other considerations, financial assistance is awarded.
(6)Imposition of legal interest on separation pay, backwages and
other monetary awards.
1.
REINSTATEMENT
a.
REINSTATEMENT PENDING APPEAL
(Article 223, Labor Code)
Is reinstatement pending appeal solely applicable to reinstatement ordered
by the Labor Arbiter?
Yes. Reinstatement is self-executory or immediately executory only if
it is ordered by the Labor Arbiter. This means that the employee ordered
reinstated need not file any motion for the issuance of writ of execution to
enforce reinstatement. The employer, in fact, is required to manifest within
10 days from his receipt of the order of reinstatement which of the two (2)
options he is taking:
(1)To reinstate the employee to his former position or to a substantially
equivalent position; or
(2)To reinstate him in the payroll, which means the employee need not
report for work but only for the purpose of getting his wage.
There is no way the employer can disregard the reinstatement order.
Posting of a bond does not stay the execution of immediate reinstatement.
In contrast, if ordered by the NLRC, on appeal, or the Court of
Appeals, under a Rule 65 certiorari petition, or even by the Supreme
Court, reinstatement is not immediately executory. This means that the
employee reinstated should still file a motion for issuance of writ of
execution to enforce the reinstatement.
Are there instances where writ of execution of Labor Arbiters
reinstatement order is still required?

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 Yes, under the 2011 NLRC Rules of Procedure, there are two (2)
instances when a writ of execution should still be issued immediately by the
Labor Arbiter to implement his order of reinstatement, even pending appeal,
viz.:
(1)When the employer disobeys the Rules-prescribed directive to
submit a report of compliance within ten (10) calendar days from
receipt of the decision; or
(2)When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to
satisfy the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.
The employee need not file a motion for the issuance of the writ of
execution since the Labor Arbiter shall thereafter motu proprio issue the
writ. Employer may be cited for contempt for his refusal to comply with the
order of reinstatement.
Employer is liable to pay the salaries for the period that the employee
was ordered reinstated pending appeal even if his dismissal is later finally
found to be legal on appeal.

What are some relevant principles on reinstatement pending appeal?

The Labor Arbiter cannot exercise option of employer by choosing
payroll reinstatement pending appeal.
If the former position is already filled up, the employee ordered
reinstated under Article 223 should be admitted back to work in a
substantially equivalent position.
Reinstatement to a position lower in rank is not proper.

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 Reinstatement cannot be refused on the basis of the employment
elsewhere of the employee ordered reinstated.
The failure of the illegally dismissed employee who was ordered
reinstated to report back to work does not give the employer the right to
remove him, especially when there is a reasonable explanation for his
failure.
No reinstatement pending appeal should be made when antipathy and
antagonism exist.
If reinstatement is not stated in the Labor Arbiters decision (neither in
the dispositive portion nor in the text thereof), reinstatement is not
warranted.
b.
SEPARATION PAY IN LIEU OF REINSTATEMENT

Is separation pay applicable only to reinstatement as an alternative

remedy?
Yes. Separation pay, as a substitute remedy, is only proper for
reinstatement but not for backwages.
This remedy is not found in the Labor Code but is granted in case
reinstatement is no longer possible or feasible, such as when any of the
following circumstances exists:
(1)Where the continued relationship between the employer and the
employee is no longer viable due to the strained relations and
antagonism between them (Doctrine of Strained Relations).
(2)When reinstatement proves impossible, impracticable, not feasible
or unwarranted for varied reasons and thus hardly in the best interest
of the parties such as:
(a)Where the employee has already been replaced permanently as
when his position has already been taken over by a regular
employee and there is no substantially equivalent position to
which he may be reinstated.
(b) Where the dismissed employees position is no longer available
at the time of reinstatement for reasons not attributable to the fault
of the employer.

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 (c) When there has been long lapse or passage of time that the
employee was out of employers employ from the date of the
dismissal to the final resolution of the case or because of the
realities of the situation.
(d) By reason of the injury suffered by the employee.
(e)The employee has already reached retirement age under a
Retirement Plan.
(f) When the illegally dismissed employees are over-age or beyond
the compulsory retirement age and their reinstatement would
unjustly prejudice their employer.
(3)Where the employee decides not to be reinstated as when he does
not pray for reinstatement in his complaint or position paper but
asked for separation pay instead.
(4)When reinstatement is rendered moot and academic due to
supervening events, such as:
(a)Death of the illegally dismissed employee.
(b) Declaration of insolvency of the employer by the court.
(c) Fire which gutted the employers establishment and resulted in its
total destruction.
(d) In case the establishment where the employee is to be reinstated
has closed or ceased operations.
(5)To prevent further delay in the execution of the decision to the
prejudice of private respondent.
(6)Other circumstances such as (a) when reinstatement is inimical to
the employers interest; (b) reinstatement does not serve the best
interests of the parties involved; (c) the employer is prejudiced by
the workers continued employment; or (d) that it will not serve any
prudent purpose as when supervening facts transpired which made
execution unjust or inequitable.
What is the amount of separation pay in lieu of reinstatement?
Per prevailing jurisprudence, the following are the components of
separation pay in lieu of reinstatement>

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 (1)The amount equivalent to at least one (1) month salary or to one (1)
month salary for every year of service, whichever is higher, a
fraction of at least six (6) months being considered as one (1) whole
year.
(2)Allowances that the employee has been receiving on a regular basis.
What is the period covered?
From start of employment up to the date of finality of decision
except when the employer has ceased its operation earlier, in which
case, the same should be computed up to the date of closure.
What is the salary rate to be used in computing it?
The salary rate prevailing at the end of the period of putative service
should be the basis for computation which refers to the period of imputed
service for which the employee is entitled to backwages.
What are some important principles on separation pay in lieu of
reinstatement?
Award of separation pay and backwages are not inconsistent with each
other. Hence, both may be awarded to an illegally dismissed employee.
The payment of separation pay is in addition to payment of backwages.
Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof.
BACKWAGES
What is the Bustamante doctrine?

In 1996, the Supreme Court changed the rule on the reckoning of

backwages. It announced a new doctrine in the case of Bustamante v.
NLRC, which is now known as the Bustamante doctrine. Under this rule,
the term full backwages should mean exactly that, i.e. , without
deducting from backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal.
What are the components of backwages?

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 The components of backwages are as follows:
1. Salaries or wages computed on the basis of the wage rate level at
the time of the illegal dismissal and not in accordance with the
latest, current wage level of the employees position.
2. Allowances and other benefits regularly granted to and received by
the employee should be made part of backwages.
What are some principles on backwages?
Salary increases during period of unemployment are not included as
component in the computation of backwages.
Dismissed employees ability to earn is irrelevant in the award of
backwages.
In case reinstatement is ordered, full backwages should be reckoned
from the time the compensation was withheld (which, as a rule, is from
the time of illegal dismissal) up to the time of reinstatement, whether
actual or in the payroll.
If separation pay is ordered in lieu of reinstatement, full backwages
should be computed from the time of illegal dismissal until the finality of
the decision. The justification is that along with the finality of the
Supreme Courts decision, the issue on the illegality of the dismissal is
finally laid to rest.
If the illegally dismissed employee has reached the optional retirement
age of 60 years, his backwages should only cover the time when he was
illegally dismissed up to the time when he reached 60 years. Under
Article 287, 60 years is the optional retirement age.
If the employee has reached 65 years of age or beyond, his full
backwages should be computed only up to said age. The contention of the
employer that backwages should be reckoned only up to age 60 cannot be
sustained.
If employer has already ceased operations, full backwages should be
computed only up to the date of the closure. To allow the computation of
the backwages to be based on a period beyond that would be an injustice
to the employer.
Any amount received during payroll reinstatement is deductible from
backwages.

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 LIMITED BACKWAGES
When is the award of backwages limited?
(1)When the dismissal is deemed too harsh a penalty;
(2)When the employer acted in good faith; or
(3)Where there is no evidence that the employer dismissed the
employee.
Thus, the backwages will not be granted in full but limited to 1 year, 2
years or 5 years.
PREVENTIVE SUSPENSION
When is preventive suspension proper to be imposed?
Preventive suspension may be legally imposed against an errant
employee only while he is undergoing an investigation for certain serious
offenses. Consequently, its purpose is to prevent him from causing harm or
injury to the company as well as to his fellow employees. It is justified only
in cases where the employees continued presence in the company
premises during the investigation poses a serious and imminent threat
to the life or property of the employer or of the employees co-workers.
Without this threat, preventive suspension is not proper.
What are some relevant principles in preventive suspension?
Preventive suspension is not a penalty. Preventive suspension, by itself,
does not signify that the company has already adjudged the employee
guilty of the charges for which she was asked to answer and explain.
Preventive suspension is neither equivalent nor tantamount to dismissal.
If the basis of the preventive suspension is the employees absences and
tardiness, the imposition of preventive suspension on him is not justified
as his presence in the company premises does not pose any such serious
or imminent threat to the life or property of the employer or of the
employees co-workers simply by incurring repeated absences and
tardiness.
Preventive suspension does not mean that due process may be disregarded.

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 Preventive suspension should only be for a maximum period of thirty
(30) days. After the lapse of the 30-day period, the employer is required
to reinstate the worker to his former position or to a substantially
equivalent position.
During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a
justifiable reason, to extend the period of preventive suspension beyond
said 30-day period, he is obligated to pay the wages and other benefits
due the worker during said period of extension. In such a case, the worker
is not bound to reimburse the amount paid to him during the extension if
the employer decides to dismiss him after the completion of the
investigation.
Extension of period must be justified. During the 30-day period of
preventive suspension, the employer is expected to conduct and finish the
investigation of the employees administrative case. The period of thirty
(30) days may only be extended if the employer failed to complete the
hearing or investigation within said period

due to justifiable grounds. No extension thereof can be made based on

whimsical, capricious or unreasonable grounds.
Preventive suspension lasting longer than 30 days, without the benefit of
valid extension, amounts to constructive dismissal.
Indefinite preventive suspension amounts to constructive dismissal.

CONSTRUCTIVE DISMISSAL
When is there constructive dismissal?
Constructive dismissal contemplates any of the following situations:
1) An involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely;
2) A demotion in rank and/or a diminution in pay; or
3) A clear discrimination, insensibility or disdain by an employer
which becomes unbearable to the employee that it could foreclose
any choice by him except to forego his continued employment.

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What is the test of constructive dismissal?
The test of constructive dismissal is whether a reasonable person in the
employees position would have felt compelled to give up his position under
the circumstances. It is an act amounting to dismissal but made to appear as
if it were not. In fact, the employee who is constructively dismissed may be
allowed to keep on coming to work. Constructive dismissal is, therefore, a
dismissal in disguise. The law recognizes and resolves this situation in
favor of the employees in order to protect their rights and interests from the
coercive acts of the employer.
What are examples of constructive dismissal or forced resignation?
Denying to the workers entry to their work area and placing them on
shifts not by weeks but almost by month by reducing their workweek
to three days.
Barring the employees from entering the premises whenever they would
report for work in the morning without any justifiable reason, and they
were made to wait for a certain employee who would arrive in the office
at around noon, after they had waited for a long time and had left.
Sending to an employee a notice of indefinite suspension which is
tantamount to dismissal.
Imposing indefinite preventive suspension without actually conducting
any investigation.
Changing the employees status from regular to casual constitutes
constructive dismissal.
Preventing the employee from reporting for work by ordering the guards
not to let her in. This is clear notice of dismissal.
------------oOo------------

TOPIC NO. 5
MANAGEMENT PREROGATIVES

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What are management prerogatives?
Management prerogatives are granted to the employer to regulate every
aspect of their business, generally without restraint in accordance with their
own discretion and judgment. This privilege is inherent in the right of
employers to control and manage their enterprise effectively. Such
aspects of employment include hiring, work assignments, working methods,
time, place and manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees, lay-off
of workers and the discipline, dismissal and recall of workers.
What are the limitations to the exercise of these prerogatives?
1. Limitations imposed by:
a) law;
b) CBA;
c) employment contract;
d) employer policy;
e) employer practice; and
f) general principles of fair play and justice.
2. It is subject to police power.
3. Its exercise should be without abuse of discretion.
4. It should be done in good faith and with due regard to the rights of
labor.
A.
DISCIPLINE

What are the components of the right to discipline?

The right or prerogative to discipline covers the following:
1) Right to discipline;
2) Right to dismiss;
3) Right to determine who to punish;
4) Right to promulgate rules and regulations;
5) Right to impose penalty; proportionality rule;
6) Right to choose which penalty to impose; and

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 7) Right to impose heavier penalty than what the company rules
prescribe.
B.
TRANSFER OF EMPLOYEES
What are the kinds of transfer?
a. Two (2) kinds of transfer. - A transfer means a movement:
1. From one position to another of equivalent rank, level or salary,
without a break in the service; or
2. From one office to another within the same business establishment.
What are salient points to consider in transfer?
The exercise of the prerogative to transfer or assign employees from one
office or area of operation to another is valid provided there is no
demotion in rank or diminution of salary, benefits and other
privileges. The transfer should not be motivated by discrimination or
made in bad faith or effected as a form of punishment or demotion
without sufficient cause.
Commitment made by the employee like a salesman in the
employment contract to be re-assigned anywhere in the Philippines is
binding on him.
Even if the employee is performing well in his present assignment,
management may reassign him to a new post.
The transfer of an employee may constitute constructive dismissal when
1) When the transfer is unreasonable, inconvenient or prejudicial to the
employee;
2) When the transfer involves a demotion in rank or diminution of salaries,
benefits and other privileges; and
3) When the employer performs a clear act of discrimination,
insensibility, or disdain towards the employee, which forecloses any
choice by the latter except to forego his continued employment.
The refusal of an employee to be transferred may be held justified if there
is a showing that the transfer was directed by the employer under
questionable circumstances. For instance, the transfer of employees
during the height of their unions concerted activities in the company
where they were active participants is illegal.
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 An employee who refuses to be transferred, when such transfer is
valid, is guilty of insubordination or willful disobedience of a lawful
order of an employer under Article 282 of the Labor Code.
Refusal to transfer due to parental obligations, additional expenses,
inconvenience, hardship and anguish is not valid. An employee could
not validly refuse lawful orders to transfer based on these grounds.
Refusal to transfer to overseas assignment is valid.
Refusal to transfer consequent to promotion is valid.

Transfer to avoid conflict of interest is valid.

A transfer from one position to another occasioned by the abolition of the
position is valid.

C.
PRODUCTIVITY STANDARD

How may productivity standards be imposed?

The employer has the prerogative to prescribe the standards of
productivity which the employees should comply. The productivity
standards may be used by the employer as:
1. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity
standards or quota are usually given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed
for failure to meet the productivity standards or quota.
Illustrative cases:
In the 2014 case of International School Manila v. International
School Alliance of Educators (ISAE), the teacher was held guilty of gross
inefficiency meriting her dismissal on the basis of the Courts finding that
she failed to measure up to the standards set by the school in teaching
Filipino classes.

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 In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings
Corp., the validity of the dismissal of petitioner who was the Corporate
Human Resources (CHR) Director for Manufacturing of respondent
company, on the ground of inefficiency and ineptitude, was affirmed on the
basis of the Courts finding that petitioner, on two occasions, gave wrong
information regarding issues on leave and holiday pay which generated
confusion among employees in the computation of salaries and wages.
D.
GRANT OF BONUS
See discussion on this under Topic III (Labor Standards) above.
E.
CHANGE OF WORKING HOURS

What is the extent of the exercise of this prerogative?

Employers have the freedom and prerogative, according to their
discretion and best judgment, to regulate and control the time when workers
should report for work and perform their respective functions.
Manila Jockey Club Employees Labor Union PTGWO, v.
Manila Jockey Club, Inc. - The validity of the exercise of the same
prerogative to change the working hours was affirmed in this case. It was
found that while Section 1, Article IV of the CBA provides for a 7-hour
work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00
p.m. from Mondays to Saturdays, Section 2, Article XI thereof expressly
reserves to respondent the prerogative to change existing methods or
facilities and to change the schedules of work. Consequently, the hours of
work of regular monthly-paid employees were changed from the original
9:00 a.m. to 5:00 p.m. schedule to 1:00 p.m. to 8:00 p.m. when horse races
are held, that is, every Tuesday and Thursday. The 9:00 a.m. to 5:00 p.m.
schedule for non-race days was, however, retained. Respondent, as
employer, cited the change in the program of horse races as reason for the
adjustment of the work schedule. It rationalized that when the CBA was
signed, the horse races started at 10:00 a.m. When the races were moved to
2:00 p.m., there was no other choice for management but to change the work

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schedule as there was no work to be done in the morning. Evidently, the
adjustment in the work schedule is justified.
F.
RULES ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYERS

What is the best illustrative case of this prerogative?

Duncan Association of Detailman-PTGWO v. Glaxo Welcome
Philippines, Inc. The contract of employment in this case expressly
prohibited an employee from having a relationship with an employee of a
competitor company. It provides:
10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with
co-employees or employees of competing drug companies. Should
it pose a possible conflict of interest in management discretion, you
agree to resign voluntarily from the Company as a matter of
Company policy.
The Supreme Court ruled that this stipulation is a valid exercise of
management prerogative. The prohibition against personal or marital
relationships with employees of competitor-companies upon its employees
is reasonable under the circumstances because relationships of that nature
might compromise the interests of the company. In laying down the assailed
company policy, the employer only aims to protect its interests against the
possibility that a competitor company will gain access to its trade secrets,
manufacturing formulas, marketing strategies and other confidential
programs and information.
G.
POST-EMPLOYMENT BAN
Is a non-compete clause valid?

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 Yes. The employer and the employee are free to stipulate in an
employment contract prohibiting the employee within a certain period from
and after the termination of his employment, from:
(1)starting a similar business, profession or trade; or
(2)working in an entity that is engaged in a similar business that might
compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that
upon an employees termination or resignation, he might start a business or
work for a competitor with the full competitive advantage of knowing and
exploiting confidential and sensitive information, trade secrets, marketing
plans, customer/client lists, business practices, upcoming products, etc.,
which he acquired and gained from his employment with the former
employer. Contracts which prohibit an employee from engaging in business
in competition with the employer are not necessarily void for being in
restraint of trade.
What are the requisites in order for a non-compete clause to be valid?
A non-compete clause is not necessarily void for being in restraint of
trade as long as there are
reasonable limitations as to time, trade, and place.

Example:
The non-compete clause (called Non-Involvement Provision) in the
2007 case of Daisy B. Tiu v.
Platinum Plans Philippines, Inc., provides as follows:

8. NON-INVOLVEMENT PROVISION The EMPLOYEE

further undertakes that during his/her engagement with
EMPLOYER and in case of separation from the Company, whether
voluntary or for cause, he/she shall not, for the next TWO (2) years
thereafter, engage in or be involved with any corporation,
association or entity, whether directly or indirectly, engaged in the
same business or belonging to the same pre-need industry as the
EMPLOYER. Any breach of the foregoing provision shall render
the EMPLOYEE liable to the EMPLOYER in the amount of One

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 Hundred Thousand Pesos (P100,000.00) for and as liquidated
damages.
Starting on January 1, 1993, petitioner worked for respondent as
Senior Assistant Vice-President and Territorial Operations Head in charge of
its Hongkong and Asean operations under a 5-year contract of employment
containing the afore-quoted clause. On September 16, 1995, petitioner
stopped reporting for work. In November 1995, she became the Vice-
President for Sales of Professional Pension Plans, Inc., a corporation
engaged also in the pre-need industry. Consequently, respondent sued
petitioner for damages before the RTC of Pasig City. Respondent alleged,
among others, that petitioners employment with Professional Pension Plans,
Inc. violated the above-quoted non-involvement clause in her contract of
employment. Respondent thus prayed for P100,000 as compensatory
damages; P200,000 as moral damages; P100,000 as exemplary damages;
and 25% of the total amount due plus P1,000 per counsels court
appearance, as attorneys fees.
Petitioner countered that the non-involvement clause was
unenforceable for being against public order or public policy: First, the
restraint imposed was much greater than what was necessary to afford
respondent a fair and reasonable protection. Petitioner contended that the
transfer to a rival company was an accepted practice in the pre-need
industry. Since the products sold by the companies were more or less the
same, there was nothing peculiar or unique to protect. Second, respondent
did not invest in petitioners training or improvement. At the time petitioner
was recruited, she already possessed the knowledge and expertise required
in the pre-need industry and respondent benefited tremendously from it.
Third, a strict application of the non-involvement clause would amount to a
deprivation of petitioners right to engage in the only work she knew.
In upholding the validity of the non-involvement clause, the trial
court ruled that a contract in restraint of trade is valid provided that
there is a limitation upon either time or place. In the case of the pre-
need industry, the trial court found the two-year restriction to be valid
and reasonable.

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 On appeal, the Court of Appeals affirmed the trial courts ruling. It
reasoned that petitioner entered into the contract on her own will and
volition. Thus, she bound herself to fulfill not only what was expressly
stipulated in the contract, but also all its consequences that were not against
good faith, usage, and law. The appellate court also ruled that the stipulation
prohibiting non-employment for two years was valid and enforceable
considering the nature of respondents business.
In affirming the validity of the Non-Involvement Clause, the Supreme Court
ratiocinated as follows:
xxx a non-involvement clause is not necessarily void for being
in restraint of trade as long as there are reasonable limitations as
to time, trade, and place.
In this case, the non-involvement clause has a time limit: two
years from the time petitioners employment with respondent
ends. It is also limited as to trade, since it only prohibits
petitioner from engaging in any pre-need business akin to
respondents.
More significantly, since petitioner was the Senior Assistant
Vice-President and Territorial Operations Head in charge of
respondents Hongkong and Asean operations, she had been privy to
confidential and highly sensitive marketing strategies of respondents
business. To allow her to engage in a rival business soon after she
leaves would make respondents trade secrets vulnerable especially
in a highly competitive marketing environment. In sum, we find the
non-involvement clause not contrary to public welfare and not
greater than is necessary to afford a fair and reasonable
protection to respondent.
In any event, Article 1306 of the Civil Code provides that parties
to a contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
Article 1159 of the same Code also provides that obligations
arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. Courts cannot

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 stipulate for the parties nor amend their agreement where the same
does not contravene law, morals, good customs, public order or
public policy, for to do so would be to alter the real intent of the
parties, and would run contrary to the function of the courts to give
force and effect thereto. Not being contrary to public policy, the non-
involvement clause, which petitioner and respondent freely agreed
upon, has the force of law between them, and thus, should be
complied with in good faith.

Thus, as held by the trial court and the Court of Appeals,

petitioner is bound to pay respondent P100,000 as liquidated
damages. While we have equitably reduced liquidated damages in
certain cases, we cannot do so in this case, since it appears that even
from the start, petitioner had not shown the least intention to fulfill
the non-involvement clause in good faith.
------------oOo------------
TOPIC NO. 6
SOCIAL WELFARE LEGISLATION
A.
BS LAW
(R.A. No. 8282)
Who are covered employers?
a. An employer or any person who uses the services of another person
in business, trade, industry or any undertaking.
b. A social, civic, professional, charitable and other non-profit
organizations which hire the services of employees are considered
employers.
c. A foreign government, international organization or its wholly-
owned instrumentality such as an embassy in the Philippines, may

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 enter into an administrative agreement with the SSS for the coverage
of its Filipino employees.
Who are compulsorily covered employees?
a. A private employee, whether permanent, temporary or provisional,
who is not over 60 years old.
b. A domestic worker or kasambahay who has rendered at least one (1)
month of service.
c. A Filipino seafarer upon the signing of the standard contract of
employment between the seafarer and the manning agency which,
together with the foreign ship owner, act as employers.
d. An employee of a foreign government, international organization or
their wholly-owned instrumentality based in the Philippines, which
entered into an administrative agreement with the SSS for the
coverage of its Filipino workers.
e. The parent, spouse or child below 21 years old of the owner of a
single proprietorship business.
Are self-employed persons covered?
Yes. A self-employed person, regardless of trade, business or
occupation, with an income of at least P1,000 a month and not over 60 years
old, should register with the SSS. Included, but not limited to, are the
following self-employed persons:
a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
c. Actors, actresses, directors, scriptwriters and news reporters who are
not under an employer-employee relationship;
d. Professional athletes, coaches, trainers and jockeys;
e. Farmers and fisherfolks; and
f. Workers in the informal sector such as cigarette vendors, watch-
your-car boys, hospitality girls, among others.
Unless otherwise specified, all provisions of the law, R.A. No. 8282,
applicable to covered employees shall also be applicable to the covered self-
employed persons.

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 A self-employed person shall be both employee and employer at the
same time.
Who may be covered voluntarily?
1. Separated Members
A member who is separated from employment or ceased to be self-
employed/OFW/non-working spouse and would like to continue
contributing.
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer
for employment abroad or one who legitimately entered a foreign
country (i.e., tourist, student) and is eventually employed.
3. Non-working spouses of SSS members
A person legally married to a currently employed and actively
paying SSS member who devotes full time in the management of
household and family affairs may be covered on a voluntary basis,
provided there is the approval of the working spouse. The person
should never have been a member of the SSS. The contributions will
be based on 50 percent (50%) of the working spouses last posted
monthly salary credit but in no case shall it be lower than P1,000.
What is the effective date of coverage?
For compulsory coverage:
1. For employer - Compulsory coverage of the employer shall take
effect on the first day of his operation or on the first day he hires
employee/s. The employer is given only 30 days from the date of
employment of employee to report the person for coverage to the
SSS.
2. For employee - Compulsory coverage of the employee shall take
effect on the first day of his employment.

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 3. For self-employed - The compulsory coverage of the self-employed
person shall take effect upon his registration with the SSS or upon
payment of the first valid contribution, in case of initial coverage.
For voluntary coverage:
1. For an OFW upon first payment of contribution, in case of initial
coverage.
2. For a non-working spouse upon first payment of contribution.
3. For a separated member on the month he/she resumed payment of
contribution.
Who are excluded employers?
Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government with original charters.
Who are excluded employees?
Workers whose employment or service falls under any of the following
circumstances are not covered:
(1)Employment purely casual and not for the purpose of occupation or
business of the employer;
(2)Service performed on or in connection with an alien vessel by an
employee if he is employed when such vessel is outside the
Philippines;
(3)Service performed in the employ of the Philippine Government or
instrumentality or agency thereof;
(4)Service performed in the employ of a foreign government or
international organization, or their wholly-owned instrumentality:
Provided, however, That this exemption notwithstanding, any
foreign government, international organization or their wholly-
owned instrumentality employing workers in the Philippines or
employing Filipinos outside of the Philippines, may enter into an
agreement with the Philippine Government for the inclusion of such
employees in the SSS except those already covered by their

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 respective civil service retirement systems: Provided, further, That
the terms of such agreement shall conform with the provisions of
R.A. No. 8282 on coverage and amount of payment of contributions
and benefits: Provided, finally, That the provisions of this Act shall
be supplementary to any such agreement; and
(5)Such other services performed by temporary and other employees
which may be excluded by regulation of the Social Security
Commission. Employees of bona-fide independent contractors shall
not be deemed employees of the employer engaging the service of
said contractors.
What are the classifications of benefits?
The SSS benefits may be classified into two (2) as follows:
(a)Social security benefits:
1) Sickness
2) Maternity
3) Retirement
4) Disability
5) Death and funeral.
(b) Employees compensation benefits.
Who are primary beneficiaries?
The following are primary beneficiaries:
1. The dependent spouse until he or she remarries;
2. The dependent legitimate, legitimated or legally adopted, and
illegitimate children who are not yet 21 years of age.
The dependent illegitimate children shall be entitled to 50% of the
share of the legitimate, legitimated or legally adopted children.
However, in the absence of the dependent legitimate, legitimated
children of the member, his/her dependent illegitimate children
shall be entitled to 100% of the benefits
Who are secondary beneficiaries?

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 The following are secondary beneficiaries:
1. The dependent parents, in the absence of the primary beneficiaries.
2. Any other person designated by the member as his/her secondary
beneficiary, in the absence of all the foregoing primary beneficiaries
and dependent parents.
B.
GSIS LAW
(R.A. No. 8291)
Who are compulsorily required to become members of the GSIS?
1. All government personnel, whether elective or appointive, irrespective
of status of appointment, provided they are receiving fixed monthly
compensation and have not reached the mandatory retirement age of
65 years, are compulsorily covered as members of the GSIS and shall
be required to pay contributions.
2. However, employees who have reached the retirement age of 65 or
more shall also be covered, subject to the following rules:

An employee who is already beyond the mandatory retirement age of

65 shall be compulsorily covered and be required to pay both the life and
retirement premiums under the following situations:
a. An elective official who at the time of election to public office is
below 65 years of age and will be 65 years or more at the end of his
term of office, including the period/s of his re-election to public
office thereafter without interruption.
b. Appointive officials who, before reaching the mandatory age of 65,
are appointed to government position by the President of the
Republic of the Philippines and shall remain in government service
at age beyond 65.

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 c. Contractual employees including casuals and other employees
with an employee-government agency relationship are also
compulsorily covered, provided they are receiving fixed monthly
compensation and rendering the required number of working hours
for the month.
What are the classes of membership in the GSIS?
Membership in the GSIS is classified either by type or status of
membership.
As to type of members, there are regular and special members:
(a)Regular Members are those employed by the government of the
Republic of the Philippines, national or local, legislative bodies,
government-owned and controlled corporations (GOCC) with
original charters, government financial institutions (GFIs), except
uniformed personnel of the Armed Forces of the Philippines, the
Philippine National Police, Bureau of Jail Management and
Penology (BJMP) and Bureau of Fire Protection (BFP), who are
required by law to remit regular monthly contributions to the GSIS.
(b)Special Members are constitutional commissioners, members of
the judiciary, including those with equivalent ranks, who are
required by law to remit regular monthly contributions for life
insurance policies to the GSIS in order to answer for their life
insurance benefits defined under RA 8291.
As to status of membership, there are active and inactive members.
(a)Active member refers to a member of the GSIS, whether regular
or special, who is still in the government service and together with
the government agency to which he belongs, is required to pay the
monthly contribution.
(b) Inactive member a member who is separated from the service
either by resignation, retirement, disability, dismissal from the
service, retrenchment or, who is deemed retired from the service
under this Act.

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When does membership become effective?
The effective date of membership shall be the date of the members
assumption to duty on his original appointment or election to public office.
What is the effect of separation from the service?
A member separated from the service shall continue to be a member,
and shall be entitled to whatever benefits he has qualified to in the event of
any contingency compensable under the GSIS Law.
Who are excluded from the compulsory coverage of the GSIS Law?
The following employees are excluded from compulsory coverage:
(a)Uniformed personnel of the Armed Forces of the Philippines
(AFP), Philippine National Police (PNP), Bureau of Fire Protection
(BFP) and Bureau of Jail Management and Penology (BJMP);
(b) Barangay and Sanggunian Officials who are not receiving fixed
monthly compensation;
(c) Contractual Employees who are not receiving fixed monthly
compensation; and
(d) Employees who do not have monthly regular hours of work
and are not receiving fixed monthly compensation.

What are the kinds of benefits under the GSIS Law?

The following are the benefits under the GSIS Law:
(a)Compulsory Life Insurance Benefits under the Life Endowment
Policy (LEP)
(b) Compulsory Life Insurance Benefits under the Enhanced Life
Policy (ELP)
(c) Retirement Benefits
(d) Separation Benefit
(e)Unemployment Benefit
(f) Disability Benefits
(g)Survivorship Benefits
(h) Funeral Benefits
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Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under the GSIS Law as follows:
1. Primary beneficiaries The legal dependent spouse until he/she
remarries and the dependent children.
2. Secondary beneficiaries The dependent parents and, subject to
the restrictions on dependent children, the legitimate descendants.
Who are dependents under
the GSIS Law?
Dependents shall be the
following:
(a)the legitimate spouse dependent for support upon the member or
pensioner;
(b) the legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainfully employed, not
over the age of majority, or is over the age of majority but
incapacitated and incapable of self-support due to a mental or
physical defect acquired prior to age of majority; and
(c) the parents dependent upon the member for support.
Gainful Occupation Any productive activity that provided the
member with income at least equal to the minimum compensation of
government employees.
C.
LIMITED PORTABILITY LAW
(R.A. No. 7699)
What is limited portability scheme?
R.A. No. 7699 was enacted to enable those from the private sector
who transfer to the government service or from the government sector to the
private sector to combine their years of service and contributions which
have been credited with the SSS or GSIS, as the case may be, to satisfy the

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required number of years of service for entitlement to the benefits under the
applicable laws.
What is totalization?
The term totalization refers to the process of adding up the periods
of creditable services or contributions under each of the Systems, SSS or
GSIS, for the purpose of eligibility and computation of benefits.
What is portability?
On the other hand, the term portability refers to the transfer of funds
for the account and benefit of a worker who transfers from one system to the
other.
How are benefits computed?
All services rendered or contributions paid by a member personally
and those that were paid by the employers to either System shall be
considered in the computation of benefits which may be claimed from either
or both Systems. However, the amount of benefits to be paid by one System
shall be in proportion to the services rendered or periods of contributions
made to that System.
Benefits refer to the following:
1.
Old-age benefit;
2.
Disability benefit;
3.
Survivorship benefit;
4.
Sickness benefit;
5.
Medicare benefit, provided that the member shall claim said benefit
from the System where he was last a member; and
6. Such other benefits common to both Systems that may be availed of
through totalization.
When does totalization apply?
a. if a worker is not qualified for any benefits from both Systems; or
b. if a worker in the public sector is not qualified for any benefits from
the GSIS; or

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 c. if a worker in the private sector is not qualified for any benefits from
the SSS.
For purposes of computation of benefits, totalization applies in all
cases so that the contributions made by the worker-member in both Systems
shall provide maximum benefits which otherwise will not be available. In no
case shall the contribution be lost or forfeited.
What is the effect if worker is not qualified after totalization?
If after totalization, the worker-member still does not qualify for any
benefit as listed in the law, the member will then get whatever benefits
correspond to his/her contributions in either or both Systems.
What is the effect if worker qualifies for benefits in both Systems?
If a worker qualifies for benefits in both Systems, totalization shall not
apply.
D.
EMPLOYEES COMPENSATION
COVERAGE AND WHEN COMPENSABLE
What is the State Insurance Fund [SIF]?
The State Insurance Fund (SIF) is built up by the contributions of
employers based on the salaries of their employees as provided under the
Labor Code.
There are two (2) separate and distinct State Insurance Funds: one
established under the SSS for private sector employees; and the other, under
the GSIS for public sector employees. The management and investment of

the Funds are done separately and distinctly by the SSS and the GSIS. It is
used exclusively for payment of the employees compensation benefits and
no amount thereof is authorized to be used for any other purpose.

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What are the agencies involved in the implementation of the Employees
Compensation Program (ECP)?
There are three (3) agencies involved in the implementation of the
Employees Compensation Program (ECP). These are: (1) The Employees
Compensation Commission (ECC) which is mandated to initiate,
rationalize and coordinate policies of the ECP and to review appealed cases
from (2) the Government Service Insurance System (GSIS) and (3) the
Social Security System (SSS), the administering agencies of the ECP.
Who are covered by the ECP?
a. General coverage. The following shall be covered by the
Employees Compensation Program (ECP):
1. All employers;
2. Every employee not over sixty (60) years of age;
3. An employee over 60 years of age who had been paying
contributions to the System (GSIS/SSS) prior to age sixty (60) and
has not been compulsorily retired; and
4. Any employee who is coverable by both the GSIS and SSS and
should be compulsorily covered by both Systems.
b. Sectors of employees covered by the ECP. - The following sectors
are covered under the ECP:
1. All public sector employees including those of government-owned
and/or controlled corporations and local government units covered
by the GSIS;
2. All private sector employees covered by the SSS; and
3. Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers compulsorily covered under the SSS.
b. Land-based contract workers provided that their employer, natural
or juridical, is engaged in any trade, industry or business
undertaking in the Philippines; otherwise, they shall not be
covered by the ECP.
When is the start of coverage of employees under the ECP?

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 The coverage under the ECP of employees in the private and public
sectors starts on the first day of their employment.
What are the benefits under the ECP?
The following are the benefits provided under the Labor Code:
a. Medical Benefits
b. Disability Benefits
1. Temporary total disability
2. Permanent total disability
3. Permanent partial disability
c. Death Benefit
d. Funeral Benefit
------------oOo------------

TOPIC NO. 7
LABOR RELATIONS LAW

A.
RIGHT TO SELF-ORGANIZATION
1.
WHO MAY UNIONIZE
FOR PURPOSES OF COLLECTIVE BARGAINING
Who are eligible to join, form or assist a labor organization for purposes of
collective bargaining?
In the private sector:
1. All persons employed in commercial, industrial and agricultural
enterprises;
2. Employees of government-owned and/or controlled corporations
without original charters established under the Corporation Code;

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 3. Employees of religious, charitable, medical or educational
institutions, whether operating for profit or not;
4. Front-line managers, commonly known as supervisory employees
[See discussion below];
5. Alien employees [See discussion below];
6. Working children [See discussion below];
7. Homeworkers [See discussion below];
8. Employees of cooperatives [See discussion below]; and
9. Employees of legitimate contractors not with the principals but with
the contractors
In the public sector:
All rank-and-file employees of all branches, subdivisions,
instrumentalities, and agencies of government, including
government-owned and/or controlled corporations with original
charters, can form, join or assist employees organizations of their
own choosing.
Are front-line managers or supervisors eligible to join, form or assist a
labor organization?
Yes, but only among themselves. They cannot join a rank-and-file
union.
Is mixed membership of supervisors and rank-and-file union in one union
a ground to cancel its registration?
No. In case there is mixed membership of supervisors and rank-and-
file employees in one union, the new rule enunciated in Article 245-A of the
Labor Code, unlike in the old law, is that it cannot be invoked as a ground
for the cancellation of the registration of the union. The employees so
improperly included are automatically deemed removed from the list of
members of said union. In other words, their removal from the said list is by
operation of law.

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Do alien employees have the right to join a
labor organization? No, except if the
following requisites are complied with:
(1)He should have a valid working permit issued by the DOLE; and
(2)He is a national of a country which grants the same or similar rights
to Filipino workers or which has ratified either ILO Convention No.
87 or ILO Convention No. 98, as certified by the Philippine
Department of Foreign Affairs (DFA).
Do members of cooperatives have the right to join, form or assist a labor
organization?
No, because they are co-owners co-owners of the cooperative.
What about employees of a cooperative?
Yes, because they have employer-employee relationship with the
cooperative.
What about members who are at the same time employees of the
cooperative?
No, because the prohibition covers employees of the cooperative who
are at the same time members
thereof.
But employee-members of a cooperative may withdraw as members of
the cooperative for purposes of joining a labor union.
Can employees of job contractors join, form or assist a labor organization?
Yes, but not for the purpose of collective bargaining with the principal
but with their direct employer the job contractor.

Are self-employed persons allowed to join, form or assist a labor

organization?
Yes, for their mutual aid and protection but not for collective
bargaining purposes since they have no employers but themselves.

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 This rule applies as well to ambulant, intermittent and other workers,
rural workers and those without any definite employers. The reason for this
rule is that these persons have no employers with whom they can
collectively bargain.
(a)
WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR
ORGANIZATIONS.
a. In the private sector.
1. Top and middle level managerial employees; and
2. Confidential employees.
b. In the public sector.
The following are not eligible to form employees organizations:
1. High-level employees whose functions are normally considered as
policy-making or managerial or whose duties are of a highly
confidential nature;
2. Members of the Armed Forces of the Philippines;
3. Police officers;
4. Policemen;
5. Firemen; and
6. Jail guards.
Are managerial employees allowed unionize?
There are 3 types of managerial employees:
1. Top Management
2. Middle Management
3. First-Line Management (also called supervisory level)
The first two above are absolutely prohibited; but the third are allowed
but only among themselves.
Are confidential employees allowed to join, form or assist a labor
organization?

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 No, under the confidential employee rule.
Confidential employees are those who meet the following criteria:
(1)They assist or act in a confidential capacity;
(2)To persons or officers who formulate, determine, and effectuate
management policies specifically in the field of labor relations.
The two (2) criteria are cumulative and both must be met if an
employee is to be considered a confidential employee that would deprive
him of his right to form, join or assist a labor organization.
What are some principles on the right to
self-organization? a. Some
principles on the right to self-
organization.
Any employee, whether employed for a definite period or not, shall,
beginning on the first day of his service, be eligible for membership
in any labor organization.
Right to join a union cannot be made subject of a CBA stipulation.
2.
BARGAINING UNIT
What is a bargaining unit?
A bargaining unit refers to a group of employees sharing mutual
interests 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 occupational
or geographical grouping within such employer unit. It may also refer to the
group or cluster of jobs or positions within the employers establishment that
supports the labor organization which is applying for registration.
(a)
TEST TO DETERMINE THE CONSTITUENCY
OF AN APPROPRIATE BARGAINING UNIT
What are the four tests to determine appropriate bargaining unit?

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 Based on jurisprudence, there are certain tests which may be used in
determining the appropriate collective bargaining unit, to wit:
(1)Community or mutuality of interest doctrine;
(2)Globe doctrine or will of the members;
(3)Collective bargaining history doctrine; and
(4)Employment status doctrine.
1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrine, the employees sought to be represented by the
collective bargaining agent must have community or mutuality of interest in
terms of employment and working conditions as evinced by the type of
work
they perform. It is characterized by similarity of employment status, same
duties and responsibilities and substantially similar compensation and
working conditions.
St. James School of Quezon City v. Samahang Manggagawa sa St.
James School of Quezon City. - Respondent union sought to represent the
rank-and-file employees (consisting of the motor pool, construction and
transportation employees) of petitioner-schools Tandang Sora campus.
Petitioner-school opposed it by contending that the bargaining unit should
not only be composed of said employees but must include administrative,
teaching and office personnel in its five (5) campuses. The Supreme Court
disagreed with said contention. The motor pool, construction and
transportation employees of the Tandang Sora campus had 149 qualified
voters at the time of the certification election, hence, it was ruled that the
149 qualified voters should be used to determine the existence of a quorum
during the election. Since a majority or 84 out of the 149 qualified voters
cast their votes, a quorum existed during the certification election. The
computation of the quorum should be based on the rank-and-file motor pool,
construction and transportation employees of the Tandang Sora campus and
not on all the employees in petitioners five (5) campuses. Moreover, the
administrative, teaching and office personnel are not members of the union.
They do not belong to the bargaining unit that the union seeks to represent.

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2. GLOBE DOCTRINE.
This principle is based on the will of the employees. It is called Globe
doctrine because this principle was first enunciated in the United States case
of Globe Machine and Stamping Co., where it was ruled, in defining the
appropriate bargaining unit, that in a case where the companys production
workers can be considered either as a single bargaining unit appropriate for
purposes of collective bargaining or as three (3) separate and distinct
bargaining units, the determining factor is the desire of the workers
themselves. Consequently, a certification election should be held separately
to choose which representative union will be chosen by the workers.
International School Alliance of Educators [ISAE] v. Quisumbing.
- The Supreme Court ruled here that foreign-hired teachers do not belong to
the bargaining unit of the local-hires because the former have not indicated
their intention to be grouped with the latter for purposes of collective
bargaining. Moreover, the collective bargaining history of the school also
shows that these groups were always treated separately.
3. COLLECTIVE BARGAINING HISTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history
and affinity of the employees in determining the appropriate bargaining unit.
However, the existence of a prior collective bargaining history has been held
as neither decisive nor conclusive in the determination of what constitutes
an appropriate bargaining unit.
National Association of Free Trade Unions v. Mainit Lumber
Development Company Workers Union. - It was ruled here that there is
mutuality of interest among the workers in the sawmill division and logging
division as to justify their formation of a single bargaining unit. This holds
true despite the history of said two divisions being treated as separate units
and notwithstanding their geographical distance from each other.
4. EMPLOYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the
employment status of the employees is considered an acceptable mode. For
instance, casual employees and those employed on a day-to-day basis,
according to the Supreme Court in Philippine Land-Air-Sea Labor Union

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v. CIR, do not have the mutuality or community of interest with regular and
permanent employees. Hence, their inclusion in the bargaining unit
composed of the latter is not justified. Confidential employees, by the very
nature of their functions, assist and act in a confidential capacity to, or have
access to confidential matters of, persons who exercise managerial functions
in the field of labor relations. As such, the rationale behind the ineligibility
of managerial employees to form, assist or join a labor union equally applies
to them. Hence, they cannot be allowed to be included in the rank-and-file
employees bargaining unit. The rationale for this inhibition is that if these
managerial employees would belong to or be affiliated with a union, the
latter might not be assured of their loyalty to the union in view of evident
conflict of interest. The union can also become company-dominated with the
presence of managerial employees in its membership.

3.
BARGAINING AGENT
What is an exclusive bargaining agent?
The term exclusive bargaining representative or exclusive
bargaining agent refers to a legitimate labor union duly recognized or
certified as the sole and exclusive bargaining representative or agent of all
the employees in a bargaining unit.
What are the modes of determining the sole and exclusive bargaining
agent?
The following are the modes:
1. Voluntary recognition;
2. Certification election;
3. Consent election;
4. Run-off election;
5. Re-run election.
(a)
VOLUNTARY RECOGNITION
What is voluntary recognition?
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 Voluntary recognition refers to the process by which a legitimate
labor union is voluntarily recognized by the employer as the exclusive
bargaining representative or agent in a bargaining unit and reported as such
with the Regional Office in accordance with the Rules to Implement the
Labor Code.
When is voluntary recognition proper?
Voluntary recognition is proper only in cases where there is only one
legitimate labor organization existing and operating in a bargaining unit. It
cannot be done in case there are two or more unions in contention.
CERTIFICATION ELECTION
What is certification election?
Certification election refers to the process of determining through
secret ballot the sole and exclusive bargaining agent of the employees in an
appropriate bargaining unit for purposes of collective bargaining or
negotiations.
Who may file a petition for certification election?
The petition may be filed by:
1. A legitimate labor organization which may be:
(a)an independent union; or
(b) a national union or federation which has already issued a
charter certificate to its local chapter participating in the
certification election; or
(c)a local chapter which has been issued a charter certificate by the
national union or federation.
2. An employer, when requested by a labor organization to bargain
collectively and its majority status is in doubt.
What are the rules prohibiting the filing of petition for certification
election (bar rules)?

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 a. General rule.
The general rule is that in the absence of a CBA duly registered in
accordance with Article 231 of the Labor Code, a petition for certification
election may be filed at any time.
b. Bar rules.
No certification election may be held under the following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule.
1. CERTIFICATION YEAR BAR RULE.
Under this rule, a petition for certification election may not be filed
within one (1) year:
1. from the date the fact of voluntary recognition has been entered; or
2. from the date a valid certification, consent, run-off or re-run
election has been conducted within the bargaining unit.
2. NEGOTIATIONS BAR RULE.
Under this rule, no petition for certification election should be
entertained while the sole and exclusive bargaining agent and the employer
have commenced and sustained negotiations in good faith within the period
of one (1) year from the date of a valid certification, consent, run-off or re-
run election or from the date of voluntary recognition.
Once the CBA negotiations have commenced and while the parties are
in the process of negotiating the terms and conditions of the CBA, no
challenging union is allowed to file a petition for certification election that
would disturb the process and unduly forestall the early conclusion of the
agreement.
3. BARGAINING DEADLOCK BAR RULE.
Under this rule, a petition for certification election may not be
entertained when a bargaining deadlock to which an incumbent or certified

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bargaining agent is a party has been submitted to conciliation or arbitration
or has become the subject of a valid notice of strike or lockout.
Kaisahan ng Manggagawang Pilipino [KAMPIL-KATIPUNAN] v.
Trajano. - The bargaining deadlock-bar rule was not applied here because
for more than four (4) years after it was certified as the exclusive bargaining
agent of all the rank- and-file employees, it did not take any action to legally
compel the employer to comply with its duty to bargain collectively, hence,
no CBA was executed. Neither did it file any unfair labor practice suit
against the employer nor did it initiate a strike against the latter. Under the
circumstances, a certification election may be validly ordered and held.
4. CONTRACT BAR RULE.
Under this rule, a petition for certification election may not be filed
when a CBA between the employer and a duly recognized or certified
bargaining agent has been registered with the Bureau of Labor Relations
(BLR) in accordance with the Labor Code. Where the CBA is duly
registered, a petition for certification election may be filed only within the
60-day freedom period prior to its expiry. The purpose of this rule is to
ensure stability in the

relationship of the workers and the employer by preventing frequent

modifications of any CBA earlier entered into by them in good faith and for
the stipulated original period.
When contract bar rule does not apply.
The contract-bar rule does not apply in the following cases:
1. Where there is an automatic renewal provision in the CBA but prior
to the date when such automatic renewal became effective, the
employer seasonably filed a manifestation with the Bureau of Labor
Relations of its intention to terminate the said agreement if and
when it is established that the bargaining agent does not represent
anymore the majority of the workers in the bargaining unit.

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 2. Where the CBA, despite its due registration, is found in appropriate
proceedings that: (a) it contains provisions lower than the standards
fixed by law; or (b) the documents supporting its registration are
falsified, fraudulent or tainted with misrepresentation.
3. Where the CBA does not foster industrial stability, such as contracts
where the identity of the representative is in doubt since the
employer extended direct recognition to the union and concluded a
CBA therewith less than one (1) year from the time a certification
election was conducted where the no union vote won. This
situation obtains in a case where the company entered into a CBA
with the union when its status as exclusive bargaining agent of the
employees has not been established yet.
4. Where the CBA was registered before or during the last sixty (60)
days of a subsisting agreement or during the pendency of a
representation case. It is well-settled that the 60-day freedom period
based on the original CBA should not be affected by any
amendment, extension or renewal of the CBA for purposes of
certification election.
What are the requisites for the validity of the petition for certification
election?
The following requisites should concur:
1. The union should be legitimate which means that it is duly
registered and listed in the registry of legitimate labor unions of the
BLR or that its legal personality has not been revoked or cancelled
with finality.
2. In case of organized establishments, the petition for certification
election is filed during (and not before or after) the 60-day
freedom period of a duly registered CBA.
3. In case of organized establishments, the petition complied with the
25% written support of the members of the bargaining unit.
4. The petition is filed not in violation of any of the four (4) bar rules
[See above discussion thereof].

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What are the two (2) kinds of majorities?
The process of certification election requires two (2) kinds of majority
votes, viz.:
1. Number of votes required for the validity of the process of
certification election itself. In order to have a valid certification
election, at least a majority of all eligible voters in the appropriate
bargaining unit must have cast their votes.
2. Number of votes required to be certified as the collective
bargaining agent. To be certified as the sole and exclusive
bargaining agent, the union should obtain a majority of the valid
votes cast.
What are some pertinent principles on certification election?
The pendency of a petition to cancel the certificate of registration of a
union participating in a certification election does not stay the conduct
thereof.
The pendency of an unfair labor practice case filed against a labor
organization participating in the certification election does not stay the
holding thereof.
Direct certification as a method of selecting the exclusive bargaining
agent of the employees is not allowed. This is because the conduct of a
certification election is still necessary in order to arrive in a manner
definitive and certain concerning the choice of the labor organization to
represent the workers in a collective bargaining unit.
The No Union vote is always one of the choices in a certification
election. Where majority of the valid votes cast results in No Union
obtaining the majority, the Med-Arbiter shall declare such fact in the
order.
Only persons who have direct employment relationship with the
employer may vote in the certification election, regardless of their period
of employment.
CERTIFICATION ELECTION
IN AN UNORGANIZED ESTABLISHMENT

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What is meant by unorganized establishment?
As distinguished from organized establishment, an unorganized
establishment is an employer entity where there is no recognized or
certified collective bargaining union or agent.
A company or an employer-entity, however, may still be considered an
unorganized establishment even if there are unions in existence therein for
as long as not one of them is duly certified as the sole and exclusive
bargaining representative of the employees in the particular bargaining unit
it seeks to operate and represent.
Further, a company remains unorganized even if there is a duly recognized
or certified bargaining agent for rank-and-file employees, for purposes of
the petition for certification election filed by supervisors. The reason is that
the bargaining unit composed of supervisors is separate and distinct from the
unionized bargaining unit of rank-and-file employees. Hence, being
unorganized, the 25% required minimum support of employees within the
bargaining unit of the supervisors need not be complied with.
How should certification election be conducted in an unorganized
establishment?
In case of a petition filed by a legitimate organization involving an
unorganized establishment, the Med-Arbiter is required to immediately
order the conduct of a certification election upon filing of a petition for
certification election by a legitimate labor organization.
CERTIFICATION ELECTION
IN AN ORGANIZED ESTABLISHMENT
What are the requisites for the conduct of a certification election in an
organized establishment?
The Med-Arbiter is required to automatically order the conduct of a
certification election by secret ballot in an organized establishment as soon
as the following requisites are fully met:

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 1. That a petition questioning the majority status of the incumbent
bargaining agent is filed before the DOLE within the 60-day
freedom period;
2. That such petition is verified; and
3. That the petition is supported by the written consent of at least
twenty-five percent (25%) of all the employees in the bargaining
unit.
RUN-OFF ELECTION
What is run-off election?
A run-off election refers to an election between the labor unions
receiving the two (2) highest number of votes in a certification election or
consent election with three (3) or more choices, where such a certification
election or consent election results in none of the three (3) or more choices
receiving the majority of the valid votes cast, provided that the total number
of votes for all contending unions is at least fifty percent (50%) of the
number of votes cast.
RE-RUN ELECTION
When should a re-run election be conducted?
A re-run election may be justified if certain irregularities have been
committed during the conduct of the certification election such as, inter alia,
disenfranchisement of the voters, lack of secrecy in the voting, fraud or
bribery , in which case, the certification election should be invalidated.
Such invalidation would necessitate the conduct of a re-run election among
the contending unions to determine the true will and desire of the employee-
electorates.
CONSENT ELECTION
What is consent election?
A consent election refers to the process of determining through
secret ballot the sole and exclusive representative of the employees in an
appropriate bargaining unit for purposes of collective bargaining and

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 negotiation. It is voluntarily agreed upon by the parties, with or without the
intervention of the DOLE.
What is the distinction between consent election and certification election?
A consent election is one mutually agreed upon by the parties, with or
without the intervention of the DOLE, its purpose being merely to determine
the issue of majority representation of all the workers in an appropriate
collective bargaining unit; while a certification election is one which is
ordered by the DOLE. The purpose for both electoral exercise is the same,
i.e., to determine the sole and exclusive bargaining agent of all the
employees in an appropriate bargaining unit for the purpose of collective
bargaining. From the very nature of consent election, it is a separate and
distinct process from certification election and has nothing to do with the
import and effect of the latter.
Can the parties agree to the conduct of consent election even during the
pendency of certification election?
Yes. In fact, the Med-Arbiter is required to determine if the contending
labor unions are willing to submit themselves to a consent election. And if
they do, the Med-Arbiter should conduct consent election instead of
certification election.

AFFILIATION AND DISAFFILIATION OF THE

LOCAL UNION FROM THE MOTHER UNION
1. AFFILIATION.
a. Mother union.
In relation to an affiliate, the federation or national union is commonly
known as the mother union. This term is not found in law but oftentimes,
the Supreme Court uses this term to describe a federation or a national
union.
b. Affiliate.
An affiliate refers to:
(1)An independent union affiliated with a federation or a national
union; or

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 (2)A local chapter which has been subsequently granted independent
registration but did not disaffiliate from the federation or national
union which created it.

c. A chartered local/local chapter, not an affiliate.

Based on the above definition and description, technically, a local
chapter created through the mode of chartering by a mother union under
Article 234-A of the Labor Code, cannot be properly called an affiliate if
it has not acquired any independent registration of its own.
d. Purpose of affiliation.
The purpose is to further strengthen the collective bargaining leverage
of the affiliate. No doubt, the purpose of affiliation by a local union with a
mother union (federation or national union) is to increase by collective
action its bargaining power in respect of the terms and conditions of labor.
e. Contract of agency.
The mother union, acting for and in behalf of its affiliate, has the status
of an agent while the local union remains the principal the basic unit of
the association free to serve the common interest of all its members subject
only to the restraints imposed by the constitution and by-laws of the
association.
f. Some principles on affiliation.
Independent legal personality of an affiliate union is not affected by
affiliation.
Affiliate union becomes subject of the rules of the federation or
national union.
The appendage of the acronym of the federation or national union
after the name of the affiliate union in the registration with the DOLE
does not change the principal-agent relationship between them. Such
inclusion of the acronym is merely to indicate that the local union is
affiliated with the federation or national union at the time of the

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 registration. It does not mean that the affiliate union cannot
independently stand on its own.
The fact that it was the federation which negotiated the CBA
does not make it the principal and the affiliate or local union
which it represents, the agent.
In case of illegal strike, the local union, not the mother union, is
liable for damages.
2. DISAFFILIATION.
a. Right to disaffiliate.
The right of the affiliate union to disaffiliate from its mother federation
or national union is a constitutionally-guaranteed right which may be
invoked by the former at any time. It is axiomatic that an affiliate union is a
separate and voluntary association free to serve the interest of all its
members - consistent with the freedom of association guaranteed in the
Constitution.
b. Disaffiliation of independently-registered union and local
chapter, distinguished.
The disaffiliation of an independently-registered union does not affect
its legitimate status as a labor organization. However, the same thing may
not be said of a local chapter which has no independent registration since its
creation was effected pursuant to the charter certificate issued to it by the
federation or national union. Once a local chapter disaffiliates from the
federation or national union which created it, it ceases to be entitled to the
rights and privileges granted to a legitimate labor organization. Hence, it
cannot, by itself, file a petition for certification election.
c. Some principles on disaffiliation.
Disaffiliation does not divest an affiliate union of its legal
personality.
Disaffiliation of an affiliate union is not an act of disloyalty.
Disaffiliation for purposes of forming a new union does not
terminate the status of the members thereof as employees of the
company. By said act of disaffiliation, the employees who are
members of the local union did not form a new union but merely

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 exercised their right to register their local union. The local union is
free to disaffiliate from its mother union.
Disaffiliation should be approved by the majority of the union
members.
Disaffiliation terminates the right to check-off federation dues. The
obligation to check-off federation dues is terminated with the valid
disaffiliation of the affiliate union from the federation with which it
was previously affiliated.
Disaffiliation does not affect the CBA. It does not operate to amend
it or change the administration of the contract.
Disaffiliating from the federation and entering into a CBA with the
employer does not constitute an unfair labor practice.
Disaffiliation is not a violation of the union security clause.
(i)
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE
LIFE OF A CBA.
It simply refers to the substitution of the bargaining agent by a newly
certified agent which defeated in in the certification election. As new
bargaining agent, it is duty-bound to respect the existing CBA but it can
renegotiate for new terms and conditions therein.
2. EFFECT OF SUBSTITUTIONARY DOCTRINE ON THE
DEPOSED UNIONS PERSONAL UNDERTAKINGS.
In case of change of bargaining agent under the substitutionary
doctrine, the new bargaining agent is not bound by the personal
undertakings of the deposed union like the no strike, no lockout clause in
a CBA which is the personal undertaking of the bargaining agent which
negotiated it.
3. SOME PRINCIPLES ON SUBSTITUTIONARY DOCTRINE.
The substitutionary doctrine cannot be invoked to subvert an existing
CBA, in derogation of the principle of freedom of contract. The
substitution of a bargaining agent cannot be allowed if the purpose is to
subvert an existing CBA freely entered into by the parties. Such act

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 cannot be sanctioned in law or in equity as it is in derogation of the
principle underlying the freedom of contract and good faith in contractual
relations.
The substitutionary doctrine is applicable also to a situation where the
local union, which was created through the process of chartering by the
mother union, disaffiliates from the latter after it secured an independent
registration. The local union will thus be substituted to that of the
federation which negotiated the CBA as in Elisco-Elirol Labor Union
[NAFLU] v. Noriel, where petitioner union was created through the
mode of chartering by the National Federation of Labor Unions
(NAFLU) and later, it secured its independent registration with the BLR
and disaffiliated with NAFLU by virtue of a resolution by its general
membership.
(b)
UNION DUES AND SPECIAL ASSESSMENTS
1. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL
ASSESSMENTS.
The following requisites must concur in order for union dues and
special assessments for the unions incidental expenses, attorneys fees and
representation expenses to be valid, namely:
(a)Authorization by a written resolution of the majority of all the
members at a general membership meeting duly called for the
purpose;
(b) Secretarys record of the minutes of said meeting; and
(c) Individual written authorizations for check-off duly signed by the
employees concerned.
3. ASSESSMENT FOR ATTORNEYS FEES, NEGOTIATION FEES
AND SIMILAR CHARGES.
The rule is that no such attorneys fees, negotiation fees or similar
charges of any kind arising from the negotiation or conclusion of the CBA
shall be imposed on any individual member of the contracting union. Such

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fees may be charged only against the union funds in an amount to be
agreed upon by the parties. Any contract, agreement or arrangement of
any sort to the contrary is deemed null and void. Clearly, what is
prohibited is the payment of attorneys fees when it is effected through
forced contributions from the workers from their own funds as
distinguished from the union funds.
4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
Check-off means a method of deducting from the employees pay at
prescribed periods, any amount due for fees, fines or assessments. It is a
process or device whereby the employer, on agreement with the union
recognized as the proper bargaining representative, or on prior authorization
from its employees, deducts union dues and assessments from the latters
wages and remits them directly to the union.
5. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
The law strictly prohibits the check-off from any amount due an
employee who is a member of the union, of any union dues, special
assessment, attorneys fees, negotiation fees or any other extraordinary fees
other than for mandatory activities under the Labor Code, without the
individual written authorization duly signed by the employee. Such
authorization must specifically state the amount, purpose and beneficiary of
the deduction. The purpose of the individual written authorization is to
protect the employees from unwarranted practices that diminish their
compensation without their knowledge or consent.
6. INDIVIDUAL WRITTEN
AUTHORIZATION, WHEN NOT
REQUIRED. In the following cases, individual
written authorization is not required:
a. Assessment from non-members of the bargaining agent of agency
fees which should be equivalent to the dues and other fees paid by
members of the recognized bargaining agent, if such non-members
accept the benefits under the CBA.
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 b. Deductions for fees for mandatory activities such as labor
relations seminars and labor education activities.
c. Deductions for withholding tax mandated under the National
Internal Revenue Code.
e. Deductions for withholding of wages because of employees debt to
the employer which is already due.
f. Deductions made pursuant to a judgment against the worker under
circumstances where the wages may be the subject of attachment
or execution but only for debts incurred for food, clothing,
shelter and medical attendance.
g. Deductions from wages ordered by the court.
h. Deductions authorized by law such as for premiums for
PhilHealth, SSS, Pag-IBIG, employees compensation and the
like.
(c)
AGENCY FEES
(i)
REQUISITES FOR ASSESSMENT
1. NATURE OF AGENCY FEE - NEITHER CONTRACTUAL
NOR STATUTORY BUT QUASI-CONTRACTUAL.
The bargaining agent which successfully negotiated the CBA with the
employer is given the right to collect a reasonable fee, called agency fee
from its non- members - who are employees covered by the bargaining unit
being represented by the bargaining agent - in case they accept the benefits
under the CBA. It is called agency fees because by availing of the benefits
of the CBA, they, in effect, recognize and accept the bargaining union as
their agent as well.
2. A NON-BARGAINING UNION MEMBER HAS THE RIGHT TO
ACCEPT OR NOT THE BENEFITS OF THE CBA.
There is no law that compels a non-bargaining union member to accept
the benefits provided in the CBA. He has the freedom to choose between
accepting and rejecting the CBA itself by not accepting any of the benefits
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 flowing therefrom. Consequently, if a non-bargaining union member does
not accept or refuses to avail of the CBA-based benefits, he is not under any
obligation to pay the agency fees since, in effect, he does not give
recognition to the status of the bargaining union as his agent.
3. LIMITATION ON THE AMOUNT OF AGENCY FEE.
The bargaining union cannot capriciously fix the amount of agency
fees it may collect from its non-members. Article 248(e) of the Labor Code
expressly sets forth the limitation in fixing the amount of the agency fees,
thus:
(1)It should be reasonable in amount; and
(2)It should be equivalent to the dues and other fees paid by members
of the recognized collective bargaining agent.
Thus, any agency fee collected in excess of this limitation is a nullity.
4. NON-MEMBERS OF THE CERTIFIED BARGAINING AGENT
NEED NOT BECOME MEMBERS THEREOF.
The employees who are not members of the certified bargaining agent
which successfully concluded the CBA are not required to become members
of the latter. Their acceptance of the benefits flowing from the CBA and
their act of paying the agency fees do not make them members thereof.
5. CHECK-OFF OF AGENCY FEES.
Check-off of agency fees is a process or device whereby the
employer, upon agreement with the bargaining union, deducts agency fees
from the wages of non- bargaining union members who avail of the benefits
from the CBA and remits them directly to the bargaining union.
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND
CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check- off of agency fees
accrues from the moment the non-bargaining union member accepts and
receives the benefits from the CBA. This is the operative fact that would
trigger such liability.

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7. NO INDIVIDUAL WRITTEN AUTHORIZATION BY NON-
BARGAINING UNION MEMBERS REQUIRED.
To effect the check-off of agency fees, no individual written
authorization from the non-bargaining union members who accept the
benefits resulting from the CBA is necessary.
8. EMPLOYERS DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or check-off the sum
equivalent to the amount of agency fees from the non-bargaining union
members' wages for direct remittance to the bargaining union.
10. MINORITY UNION CANNOT DEMAND FROM THE
EMPLOYER TO GRANT IT THE RIGHT TO CHECK-OFF OF
UNION DUES AND ASSESSMENTS FROM THEIR MEMBERS.
The obligation on the part of the employer to undertake the duty to
check-off union dues and special assessments holds and applies only to the
bargaining agent and not to any other union/s (called Minority Union/s).
B.
RIGHT TO COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY
1. MEANING OF DUTY TO BARGAIN COLLECTIVELY.
The duty to bargain collectively 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 work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions
arising under such 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.
The duty does not compel any party to agree blindly to a proposal
nor to make concession. While the law imposes on both the employer and
the bargaining union the mutual duty to bargain collectively, the employer is
not under any legal obligation to initiate collective bargaining negotiations.

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2. TWO (2) SITUATIONS CONTEMPLATED.
The duty to bargain collectively involves two (2) situations, namely:
1. Duty to bargain collectively in the absence of a CBA under Article
251 of the Labor Code.
2. Duty to bargain collectively when there is an existing CBA under
Article 253 of the Labor Code.
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE IS ABSENCE OF A CBA
1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO
CBA YET.

The duty to bargain collectively when there has yet been no CBA in
the bargaining unit where the bargaining agent seeks to operate should be
complied with in the following order:
First, in accordance with any agreement or voluntary arrangement
between the employer and the bargaining agent providing for a more
expeditious manner of collective bargaining; and
Secondly, in its absence, in accordance with the provisions of the
Labor Code, referring to Article 250 thereof which lays down the procedure
in collective bargaining.
DUTY TO BARGAIN COLLECTIVELY
WHEN THERE IS A CBA
1. CONCEPT.
When there is a CBA, the duty to bargain collectively shall mean that
neither party shall terminate nor modify such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify the
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 continue in full force
and effect the terms and conditions of the existing agreement during the 60-
day period and/or until a new agreement is reached by the parties.
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2. FREEDOM PERIOD.
The last sixty (60) days of the 5-year lifetime of a CBA immediately
prior to its expiration is called the freedom period. It is denominated as
such because it is the only time when the law allows the parties to freely
serve a notice to terminate, alter or modify the existing CBA. It is also the
time when the majority status of the bargaining agent may be challenged by
another union by filing the appropriate petition for certification election.
3. AUTOMATIC RENEWAL CLAUSE.
a. Automatic renewal clause deemed incorporated in all CBAs.
Pending the renewal of the CBA, the parties are bound to keep the
status quo and to treat the terms and conditions embodied therein still in full
force and effect during the 60-day freedom period and/or until a new
agreement is negotiated and ultimately concluded and reached by the parties.
This principle is otherwise known as the automatic renewal clause which
is mandated by law and therefore deemed incorporated in all CBAs.
For its part, the employer cannot discontinue the grant of the benefits
embodied in the CBA which just expired as it is duty-bound to maintain the
status quo by continuing to give the same benefits until a renewal thereof is
reached by the parties. On the part of the union, it has to observe and
continue to abide by its undertakings and commitments under the expired
CBA until the same is renewed.
4. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC, where the
petitioner, Sweden Ice Cream Plant, refused to submit any counter-proposal
to the CBA proposed by its employees certified bargaining agent. The High
Court ruled that the employer had thereby lost its right to bargain the terms
and conditions of the CBA. Thus, the CBA proposed by the union was
imposed lock, stock and barrel on the erring company.
The Kiok Loy case epitomizes the classic case of negotiating a CBA in
bad faith consisting of the employers refusal to bargain with the collective
bargaining agent by ignoring all notices for negotiations and requests for

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counter-proposals. Such refusal to send a counter-proposal to the union and
to bargain on the economic terms of the CBA constitutes an unfair labor
practice under Article 248(g) of the Labor Code.
2.
COLLECTIVE BARGAINING AGREEMENT (CBA)
1. CBA.
A Collective Bargaining Agreement or CBA for short, refers to
the negotiated contract between a duly recognized or certified exclusive
bargaining agent of workers and their employer, concerning wages, hours of
work and all other terms and conditions of employment in the appropriate
bargaining unit, including mandatory provisions for grievances and
arbitration machineries. It is executed not only upon the request of the
exclusive bargaining representative but also by the employer.
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.
Prior to any collective bargaining negotiations between the employer
and the bargaining union, the following requisites must first be satisfied:
1. Employer-employee relationship must exist between the employer
and the members of the bargaining unit being represented by the
bargaining agent;
2. The bargaining agent must have the majority support of the
members of the bargaining unit established through the modes
sanctioned by law; and
3. A lawful demand to bargain is made in accordance with law.
3. SOME PRINCIPLES ON CBA.
CBA is the law between the parties during its lifetime and thus must be
complied with in good faith.
Being the law between the parties, any violation thereof can be subject
of redress in court.
Non-impairment of obligations of contract. A contract is the law
between the parties and courts have no choice but to enforce such

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 contract so long as it is not contrary to law, morals, good customs or
public policy. Otherwise, courts would be interfering with the freedom of
contract of the parties.
CBA is not an ordinary contract as it is impressed with public interest.
Automatic Incorporation Clause law is presumed part of the CBA.
The benefits derived from the CBA and the law are separate and distinct
from each other.
Workers are allowed to negotiate wage increases separately and
distinctly from legislated wage increases. The parties may validly
agree in the CBA to reduce wages and benefits of employees provided
such reduction does not go below the minimum standards.
Ratification of the CBA by majority of all the workers in the bargaining
unit makes the same binding on all employees therein.
Employees entitled to CBA benefits. The following are entitled to the
benefits of the CBA:
(1)Members of the bargaining union;
(2)Non-members of the bargaining union but are members of the
bargaining unit;
(3)Members of the minority union/s who paid agency fees to the
bargaining union; and
(4)Employees hired after the expiration of the CBA.
Pendency of a petition for cancellation of union registration is not a
prejudicial question before CBA negotiation may proceed.
CBA should be construed liberally. If the terms of a CBA are clear and
there is no doubt as to the intention of the contracting parties, the literal
meaning of its stipulation shall prevail.
(a)
MANDATORY PROVISIONS OF CBA
1. MANDATORY STIPULATIONS OF THE CBA.
The Syllabus mentions 4 provisions that are mandatorily required to be
stated in the CBA, to wit:
1. Grievance Procedure;
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 2. Voluntary Arbitration;
3. No Strike-No Lockout Clause; and
4. Labor-Management Council (LMC).
If these provisions are not reflected in the CBA, its registration will be
denied by the BLR.

(i)
GRIEVANCE PROCEDURE
1. GRIEVANCE OR GRIEVABLE ISSUE.
A grievance or grievable issue is any question raised by either
the employer or the union regarding any of the following issues or
controversies:
1. The interpretation or implementation of the CBA;
2. The interpretation or enforcement of company personnel policies;
or
3. Any claim by either party that the other party is violating any
provisions of the CBA or company personnel policies.
In order to be grievable, the violations of the CBA should be
ordinary and not gross in character; otherwise, they shall be considered as
unfair labor practice (ULP).
Gross violation of the CBA is defined as flagrant and/or malicious
refusal by a party thereto to comply with the economic provisions
thereof. If what is violated, therefore, is a non-economic or a political
provision of the CBA, the same shall not be considered as unfair labor
practice and may thus be processed as a grievable issue in accordance with
and following the grievance machinery laid down in the CBA.
2. GRIEVANCE MACHINERY.
Grievance machinery refers to the mechanism for the adjustment
and resolution of grievances arising from the interpretation or
implementation of a CBA and those arising from the interpretation or
enforcement of company personnel policies.

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3. GRIEVANCE PROCEDURE.
Grievance procedure refers to the internal rules of procedure
established by the parties in their CBA with voluntary arbitration as the
terminal step, which are intended to resolve all issues arising from the
implementation and interpretation of their collective agreement. It is that
part of the CBA which provides for a peaceful way of settling differences
and misunderstanding between the parties.
The terms grievance procedure and grievance machinery may be
used interchangeably.
(ii)
VOLUNTARY ARBITRATION
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-
management disputes in which the parties select a competent, trained and
impartial third person who is tasked to decide on the merits of the case and
whose decision is final and executory.
2. VOLUNTARY ARBITRATOR.
A Voluntary Arbitrator refers to any person who has been
mutually named or designated by the parties to the CBA the employer and
the bargaining agent - to hear and decide the issues between them.
A Voluntary Arbitrator is not an employee, functionary or part of the
government or of the Department of Labor and Employment, but he is
authorized to render arbitration services provided under labor laws.
(iii)
NO STRIKE, NO LOCKOUT CLAUSE
1. SIGNIFICANCE OF THE CLAUSE.
A No Strike, No Lockout clause in the CBA is an expression of the
firm commitment of the parties thereto that, on the part of the union, it will
not mount a strike during the effectivity of the CBA, and on the part of the
employer, that it will not stage a lockout during the lifetime thereof.

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 This clause may be invoked by an employer only when the strike is
economic in nature or one which is conducted to force wage or other
concessions from the employer that are not mandated to be granted by the
law itself. It does not bar strikes grounded on unfair labor practices. This
is so because it is presumed that all economic issues between the employer
and the bargaining agent are deemed resolved with the signing of the CBA.
The same rule also applies in case of lockout . The said clause may
only be invoked by the union in case the ground for the lockout is economic
in nature but it may not be so cited if the ground is unfair labor practice
committed by the union.
2. EFFECT OF VIOLATION OF THE CLAUSE.
A strike conducted in violation of this clause is illegal.
(iv)
LABOR-MANAGEMENT COUNCIL
1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY
JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated
under the Labor Code, is meant to implement the constitutionally mandated
right of workers to participate in policy and decision-making processes
of the establishment where they are employed insofar as said processes will
directly affect their rights, benefits and welfare. This is the body that
implements the policy of co-determination in the Constitution.
The LMC is mandated to be created in both organized and unorganized
establishments.
2. SELECTION OF REPRESENTATIVES TO LMC.
In organized establishments, the workers representatives to the
committee or council should be nominated by the exclusive bargaining
representative.
In establishments where no legitimate labor organization exists, the
workers representative should be elected directly by the employees at large.

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3. LABOR-MANAGEMENT COUNCIL (LMC) VS. GRIEVANCE
MACHINERY (GM).
To avoid confusion and possible major legal complication, a clear
distinction line should be drawn between
LMC and GM. The following may be cited:
1. Constitutional origin. The creation of the LMC is based on the
constitutional grant to workers of the right to participate in policy and
decision-making processes under the 1st paragraph, Section 3, Article
XIII of the
1987 Constitution, thus:
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting
their rights and benefits as may be provided by law.
The creation of a GM, on the other hand, is based on a different
constitutional provision, the 2nd paragraph, Section 3, Article XIII of the
1987 Constitution, which provides as follows:
The State shall promote the principle of shared
responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual compliance
therewith to foster industrial peace.
2. Legal anchor. - The creation of LMC is provided under Article 255 of
the Labor Code; while the formation of a GM is mandated under
Article 260 of the same Code.
3. Compulsory provision in the CBA. - Both LMC and GM are
compulsorily required to be embodied in the CBA in order for it to be
considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of
affording workers the right to participate in policy and decision-
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 making processes in matters affecting their rights, benefits and
welfare; while that of the GM is to resolve disputes and grievances
arising from such policies or decisions or more specifically, to adjust
and resolve grievances arising from (1) the interpretation or
implementation of the CBA or (2) the interpretation or enforcement of
company personnel policies.
5. Nature of functions. - The LMC is in the nature of a preventive
mechanism meant to prevent and avoid disputes or grievances by co-
determining the proper policies that should be implemented by the
employer in respect of the workers rights, benefits and welfare; while
a GM is an adjudicatory mechanism which is set into motion only
when a dispute or grievance occurs.
6. Nature of cognizable issues. The LMC performs non-adversarial
and non-adjudicatory tasks as it concerns itself only with policy
formulations and decisions affecting the workers rights, benefits and
welfare and not violations or transgressions of any policy, rule or
regulation; while that of the GM is adversarial and adjudicatory in
character since its jurisdiction is confined to resolving and deciding
disputes and grievances between management and the workers arising
from violations or transgressions of existing policies, rules or
regulations. In other words, the LMC does not resolve grievable or
contentious issues; the GM does.
A case illustrative of this principle is the 2011 case of Cirtek
Employees Labor Union-Federation of Free Workers v. Cirtek
Electronics, Inc. The CBA negotiation between petitioner union and
respondent company was deadlocked resulting in the staging of a strike by
the former. The DOLE Secretary assumed jurisdiction over the labor dispute
but before he could rule on the controversy, respondent created a Labor-
Management Council (LMC) through which it concluded with the remaining
officers of petitioner a Memorandum of Agreement (MOA) providing for
daily wage increases of P6.00 per day effective January 1, 2004 and P9.00
per day effective January 1, 2005. Petitioner submitted the MOA to the
DOLE Secretary, alleging that the remaining officers signed the MOA under

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respondents assurance that should the Secretary order a higher award of
wage increase, respondent would comply.
Respecting the MOA, petitioner posits that it was surreptitiously
entered into [in] bad faith, it having been forged without the assistance of
the Federation of Free Workers or counsel, adding that respondent could
have waited for the Secretarys resolution of the pending CBA deadlock or
that the MOA could have been concluded before representatives of the
DOLE Secretary. As found by the DOLE Secretary, the MOA came about as
a result of the constitution, at respondent's behest, of the LMC which, he
reminded the parties, should not be used as an avenue for bargaining but for
the purpose of affording workers to participate in policy and decision-
making. Hence, the agreements embodied in the MOA were not the proper
subject of the LMC deliberation or procedure but of CBA negotiations and,
therefore, deserving little weight.
7. Composition. - The representatives of the workers to the LMC may or
may not be nominated by the recognized or certified bargaining agent,
depending on whether the establishment is organized or unorganized.
Thus, in organized establishments, the workers representatives to the
LMC should be nominated by the exclusive bargaining agent. In
establishments where no legitimate labor organization exists, the
workers representatives should be elected directly by the employees
of the establishment at large; while those in the GM are nominated
solely by the bargaining agent.
(b)
DURATION OF CBA
(i)
FOR ECONOMIC PROVISIONS
(ii)
FOR NON-ECONOMIC PROVISIONS
1. TERMS OF A CBA.
The terms of a CBA are classified into two (2), viz.:
(a)Representation aspect 5 years which is the lifetime of a CBA;

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 (b) All other provisions Subject to renegotiation after first 3 years
of the 5-year lifetime of CBA.
2. REPRESENTATION ASPECT.
The phrase representation aspect in Article 253-A of the Labor Code
refers to the identity and majority status of the bargaining agent that
successfully negotiated the CBA as the exclusive bargaining representative
of the employees in the appropriate bargaining unit concerned.
The 5-year representation status of the incumbent exclusive bargaining
agent should be reckoned from the effectivity of the CBA. This means that
no petition for certification election questioning its majority status may be
entertained during the lifetime of the CBA except within the 60-day freedom
period immediately preceding the expiry date of the 5-year term.
Suspension of CBA for a period longer than 5 years, held valid.
The case of Rivera v. Espiritu, is in point. It was held here that the
suspension of the CBA between PAL and PALEA for ten (10) years in order
to resolve the strike is not violative of the Constitution or the law. This is so
because the right to free collective bargaining includes the right to suspend
it. There is nothing in Article 253-A which prohibits the parties from
waiving or suspending the mandatory timetables and agreeing on the
remedies to enforce the same.
Article 253-A has a two-fold purpose. One is to promote industrial
stability and predictability. Inasmuch as the agreement sought to promote
industrial peace at PAL during its rehabilitation, said agreement satisfies the
first purpose of Article 253-A. The other is to assign specific timetables
wherein negotiations become a matter of right and requirement. Nothing in
Article 253- A prohibits the parties from waiving or suspending the
mandatory timetables and agreeing on the remedies to enforce the same. The
suspension agreement is a valid exercise of the freedom to contract. Under
the principle of inviolability of contracts guaranteed by the Constitution, the
contract must be upheld. The agreement afforded full protection to labor;
promoted the shared responsibility between workers and employers; and
exercised the voluntary modes in settling disputes, including conciliation to
foster industrial peace.

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3. RE-NEGOTIATION OF ALL PROVISIONS OTHER THAN THE
REPRESENTATION ASPECT OF THE CBA SHOULD BE MADE
AFTER FIRST 3 YEARS FROM EFFECTIVITY.

Considering that the five (5) year period is quite long during which the
economic situations of the parties may have already changed, Article 253-A
recognizes the need for the parties to re-assess and re-negotiate all the
provisions of the CBA, except its representation aspect, after the lapse of the
first three (3) years of its 5-year lifetime. Such re-negotiation, however,
should only pertain to the terms and conditions of the parties relationship
for the last remaining two (2) years of the CBAs 5-year term. This re-
negotiation process may be invoked by any of the parties as a matter of
right.
4. ALL OTHER PROVISIONS, REFER TO BOTH ECONOMIC
AND NON-ECONOMIC PROVISIONS.
The phrase all other provisions mentioned in Article 253-A simply
refers to all the provisions of the CBA irrespective of whether they are
economic or non-economic in nature. The only item excepted therefrom is
the representation status of the incumbent exclusive bargaining agent which
may only be questioned during the 60-day freedom period.
5. RETROACTIVITY OF THE CBA.
The application of the rules on retroactivity depends on any of the
following two (2) situations:
(a)When the CBA is voluntarily concluded by the parties; or
(b) When the CBA is concluded through arbitral award.
6. RULE WHEN VOLUNTARILY CONCLUDED BY THE PARTIES IN
THE NEGOTIATING TABLE.
(a)The effectivity of the CBA shall retroact to the day immediately
after the date of expiry of the old CBA in case the new CBA is
concluded and entered into within six (6) months from the said
expiry date.

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 (b) If the new CBA is entered into beyond six (6) months from the
expiry date of the old CBA, the parties are given the right to
negotiate the duration of the retroactivity thereof.
7. RULE ON RETROACTIVITY IN CASE OF CONCLUSION OF CBA
THROUGH ARBITRAL AWARD.
a. No law on retroactivity in case of CBA arbitral awards.
The law is silent as to the retroactivity of a CBA secured through
arbitral award or that granted not by virtue of the mutual agreement of the
parties but by intervention of the government.
b. Variations in the application of the retroactivity rule.
The rule laid down by the Supreme Court in cases involving this
particular issue of retroactivity varies from case to case. Basically, the rule,
based on jurisprudence, may be restated in the following manner:
(1)Prospectivity rule;
(2)Retroactivity rule which makes the CBA retroactively effective
to:
(a)the date of the expiration of the previous CBA; and
(b) the first day after the six-month period following the expiration of
the last day of the CBA.
(iii)
FREEDOM PERIOD
1. 60-DAY FREEDOM PERIOD.
When there is an existing CBA, the parties thereto are bound to
observe the terms and conditions therein set forth until its expiration.
Neither party is allowed to terminate nor modify such agreement during its
lifetime. The only time the parties are allowed to terminate or modify the
agreement is within the so-called freedom period of at least sixty (60)
days prior to its expiration date by serving a notice to that effect.
2. REASON IT IS CALLED FREEDOM PERIOD.
The last 60 days of the 5-year lifetime of a CBA immediately prior to
its expiration is called the freedom period because:
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 (a)it is the only time when the law allows the parties to freely serve a
notice to terminate, alter or modify the existing CBA; and
(b) it is also the time when the majority status of the bargaining
agent may be challenged by another union by filing the appropriate
petition for certification election.
3. RULE ON FILING OF CERTIFICATION ELECTION VIS--VIS
FREEDOM PERIOD.
In a petition involving an organized establishment or enterprise where
the majority status of the incumbent collective bargaining union is
questioned by a legitimate labor organization, the Med-Arbiter shall
immediately order the conduct of a certification election if the petition is
filed during the last sixty (60) days of the CBA. Any
petition filed before or after the 60-day freedom period shall be
dismissed outright.
The 60-day freedom period based on the original collective
bargaining agreement shall not be affected by any amendment,
extension or renewal of the CBA for purposes of certification election.
4. AUTOMATIC RENEWAL CLAUSE.
A petition for certification election challenging the majority status of the
existing bargaining agent should be filed within and not before or after -
said 60-day freedom period. Upon the expiration of the said period and no
petition for certification election is filed by a challenging union, the
employer is duty-bound to continue to recognize the majority status of the
incumbent bargaining agent. Negotiation for a new CBA may even validly
commence between the incumbent bargaining agent and the employer
during the 60-day freedom period if no challenge to the bargaining
agents majority status is posed by another union.
3.
UNION SECURITY
1. NATURE AND PURPOSE OF UNION SECURITY CLAUSE.

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 The union security clause allows the parties thereto to enter into an
agreement requiring compulsory membership in the bargaining agent
which successfully negotiated said CBA as a condition for continued
employment with the exception of employees who are already members of
another union at the time of the signing of the CBA.
Union security is a generic term which is applied to and
comprehends closed shop, union shop, maintenance of membership
or any other form of agreement which imposes upon the employees the
obligation to acquire or retain union membership as a condition to their
continued employment. In other words, the purpose of a union security
arrangement is to guarantee the continued existence of the union
through enforced membership for the benefit of the workers.
Without this clause, the existence of the union is always subject to
uncertainty as its members may resign anytime resulting in the decimation
of its ranks. The union becomes gradually weakened and increasingly
vulnerable to company machinations. In this security clause lies the strength
of the union during the enforcement of the CBA. It is this clause that
provides labor with substantial power in collective bargaining.
2. THE RIGHT NOT TO JOIN A UNION IS NOT ABSOLUTE SINCE
IT MAY BE RESTRICTED.
The right of an employee not to join a union is not absolute and must
give way to the collective good of all members of the bargaining unit. When
certain employees are obliged to join a particular union as a requisite for
continued employment, as in the case of a union security clause, this
condition is a valid restriction on the freedom or right not to join any labor
organization because it is in favor of unionism.
3. UNION SECURITY CLAUSE DOES NOT VIOLATE
CONSTITUTIONAL RIGHT TO FREEDOM OF ASSOCIATION.
A union security clause in a CBA is not a violation or a restriction of
the employees right to freedom of association guaranteed by the
Constitution. Labor, being the weaker in economic power and resources than
capital, deserves protection that is actually substantial and material.

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4. EMPLOYEES EXEMPTED FROM COVERAGE OF UNION
SECURITY CLAUSE.
All employees in the bargaining unit covered by a Union Security
Clause in their CBA with the employer are subject to its terms. However,
under law and established jurisprudence, the following kinds of employees
are exempted from its coverage, namely:
1. Employees who, at the time the union security agreement takes
effect, are bona-fide members of a religious organization which
prohibits its members from joining labor unions on religious
grounds;
2. Employees who are already members of a union other than the
bargaining agent at the time the union security agreement took
effect;
3. Confidential employees who are excluded from the rank-and-file or
supervisory bargaining unit;
4. Supervisory employees who are excluded from becoming members
of the rank-and-file union and vice-versa; and
5. Employees excluded from the union security clause by express
terms of the agreement.
(a)
UNION SECURITY CLAUSES:
CLOSED SHOP, UNION SHOP, MAINTENANCE OF
MEMBERSHIP SHOP, ETC.
1. CLASSIFICATION OF UNION
SECURITY ARRANGEMENTS.
Generally, a union security clause may take
the form of:
1. Closed-shop agreement;
2. Maintenance of membership agreement;

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 3. Union shop agreement;
4. Modified union shop agreement;
5. Exclusive bargaining agreement;
6. Bargaining for members only agreement;
7. Agency shop agreement; or
8. Preferential hiring agreement.
Modification of arrangements.
The above classification admits of certain modified types which the
parties may agree upon in the CBA depending on the peculiar requirements
of the situation.
2. CLOSED-SHOP AGREEMENT.
A closed -shop may be defined as a scheme in which, by agreement
between the employer and its employees through their bargaining
union/agent, no person may be employed unless he or she is, becomes, and,
for the duration of the agreement, remains a member in good standing of the
bargaining union. Basically, this kind of agreement stipulates the
undertaking by the employer not to hire or employ any person who is not a
member of the bargaining union. Once employed, it is required that the said
person should remain a member of the bargaining union in good standing as
a condition for continued employment, at least during the whole duration of
the CBA.

3. MAINTENANCE OF MEMBERSHIP AGREEMENT.

There is maintenance of membership agreement when employees,
who are union members as of the effective date of the agreement, or who
thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred
out of the bargaining unit, or the agreement is terminated. Its role is to
protect the unions current membership. By its express terms, it covers and
renders continued union membership compulsory for: (1) those who were

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already union members at the time the CBA was signed; and (2) the new
employees who will become regular during the life of the CBA.
4. UNION SHOP AGREEMENT.
There is union shop when all new regular employees are required
to join the union within a certain period as a condition for their continued
employment. Its role is to compel the membership of those who are not yet
union members. Under this scheme, the employer is given the freedom to
hire and employ any person who is not a member of the bargaining agent.
Once such person becomes an employee, he is required to become a member
of the bargaining agent and to remain as such member in good standing for
the whole period of the effectivity of the CBA as a condition for his
continued employment.
5. MODIFIED UNION SHOP AGREEMENT.
Employees under this arrangement who are not union members at the
time of the signing or execution of the CBA are not required to join the
bargaining union. However, any and all workers hired or employed after
the signing or execution of the CBA are required to join the bargaining
union.
6. EXCLUSIVE BARGAINING AGENT AGREEMENT.
The union which negotiated and concluded the CBA with management
is considered and recognized as the sole and exclusive bargaining agent of
all the covered employees in the bargaining unit, whether they be members
or not of the said agent.
7. BARGAINING FOR MEMBERS ONLY AGREEMENT.
Under this arrangement, the union which negotiated and concluded the
CBA with management is recognized as the bargaining agent only for its
own members.
8. AGENCY SHOP AGREEMENT.
Under this scheme, there is no requirement for non -members of the
bargaining agent to become its members. However, it is required that such
non-union members should pay to the bargaining agent an agency fee as a
condition for their continued employment.

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9. PREFERENTIAL HIRING AGREEMENT.
It is the principal feature of this arrangement that the employer gives
preference in hiring to the members of the bargaining agent under equal
circumstances and qualifications. Once hired or employed, they are required
to maintain their membership in good standing in the bargaining agent for
the duration of the CBA as a condition for their continued employment.
10. DISMISSAL DUE TO VIOLATION OF
UNION SECURITY CLAUSE. a. Requisites
for valid termination based on union security
clause.
The following are the requisites that the employer should comply prior
to terminating the employment of an employee by virtue of the enforcement
of the union security clause:
(1)The union security clause is applicable;
(2)The union is requesting for the enforcement of the union security
provision in the CBA; and
(3)There is sufficient evidence to support the unions decision to expel
the employee from the union.
The foregoing requisites constitute a just cause for terminating an
employee based on the CBAs union security provision.
b. The due process afforded by the union prior to expulsion
is different from the due process required prior to
termination of employment.
The distinction is not hard to comprehend. The due process afforded
by the union is meant solely and exclusively to address the issue of validity
of the termination of the membership of the employee in the union; while
that required of the employer is aimed at addressing the issue of validity of
the employees termination of employment. Hence, it is complete error on
the part of the employer to adopt as its own due process what has been
earlier afforded by the union to the erring employee without conducting its
own independent and separate due process.
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 Thus, in declaring the illegality of the dismissal of petitioner in Cario
v. NLRC, the Supreme Court noted in regard to the involvement of the
company in his dismissal, that the company, upon being formally advised in
writing of the expulsion of petitioner Cario from the union, in turn simply
issued a termination letter to Cario, the termination being made effective
the very next day. The Company should have given petitioner Cario an
opportunity to explain his side of the controversy with the union.
Notwithstanding the union security clause in the CBA, the company should
have reasonably satisfied itself by its own inquiry that the union had not
been merely acting arbitrarily and capriciously in impeaching and expelling
petitioner Cario. Had the company taken the trouble to investigate the acts
and proceedings of the union, it could have very easily determined that the
union had acted arbitrarily in impeaching and expelling from its ranks
petitioner Cario.
11. SOME PRINCIPLES ON TERMINATION DUE TO VIOLATION
OF UNION SECURITY CLAUSE.
Employer is obligated to act upon being demanded by the union to
terminate the employment of its errant members.

Members of the minority union cannot be compelled to join the

bargaining union. The union security clause therefore does not cover
employees who are members of the union/s other than the bargaining
union. Not being so covered, they cannot be dismissed for violation of
said clause.
The employer has the right to be reimbursed for payment of any claims
arising out of dismissals demanded by the union under the union security
clause. Such right of reimbursement may be invoked:
(1)By express provision in the CBA to that effect; or
(2)By securing it through judicial directive.
(b)
CHECK-OFF; UNION DUES, AGENCY FEES
1. CHECK-OFF OF AGENCY FEE, DIFFERENT FROM
CHECK-OFF OF UNION DUES AND ASSESSMENTS.
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 Check-off of agency fee does not require the execution by the non-
bargaining union members of individual written authorizations; while
such is an indispensable requisite for check-off of union dues and special
assessments from members of the bargaining union.
4.
UNFAIR LABOR PRACTICE
IN COLLECTIVE BARGAINING
(a)
BARGAINING IN BAD FAITH
1. BASIC PRINCIPLES.
It is essential that the employer and the employees should both act in
good faith.
Where an employer did not even bother to submit an answer to the
bargaining proposals of the union, there is a clear evasion of the duty to
bargain collectively.
2. MAKING A PROMISE DURING THE CBA NEGOTIATIONS,
NOT AN INDICATION OF BAD FAITH.
Promises made by management during the CBA negotiations may not
be considered an indication of bad faith or a scheme of feigning to
undertake the negotiation proceedings through empty promises.
3. ADAMANT STANCE RESULTING IN AN IMPASSE, NOT AN
INDICIUM OF BAD FAITH.
The adamant insistence on a bargaining position to the point where the
negotiations reach an impasse does not establish bad faith. Neither can bad
faith be inferred from a partys insistence on the inclusion of a particular
substantive provision unless it concerns trivial matters or is obviously
intolerable.
4. PARTIES HAVE NO OBLIGATION TO PRECIPITATELY AGREE
TO THE PROPOSALS OF EACH OTHER.
While the law makes it an obligation for the employer and the
employees to bargain collectively with each other, such compulsion does not

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 include the commitment to precipitately accept or agree to the proposals of
the other. All it contemplates is that both parties should approach the
negotiation with an open mind and make reasonable effort to reach a
common ground of agreement.
5. ALLEGATIONS OF BAD FAITH WIPED OUT WITH THE
SIGNING OF THE CBA.
With the execution of the CBA, bad faith bargaining can no longer be
imputed upon any of the parties thereto. All provisions in the CBA are
supposed to have been jointly and voluntarily incorporated therein by the
parties. The CBA is proof enough that the company exerted reasonable
effort at good faith bargaining.
(b)
REFUSAL TO BARGAIN
1. FAILURE OR REFUSAL OF MANAGEMENT TO GIVE
COUNTER-PROPOSALS TO THE UNIONS DEMANDS.
The failure of the employer to submit its counter-proposals to the
demands of the bargaining union does not, by itself, constitute refusal to
bargain. However, it is different if the employer refuses to submit an answer
or reply to the written bargaining proposals of the certified bargaining
union. In this case, unfair labor practice is committed.
In General Milling Corporation v. CA, the Supreme Court found the
petitioner guilty of unfair labor practice for refusing to send a counter-
proposal to the union and to bargain anew on the economic terms of the
CBA.
Similarly, in the earlier case of Colegio de San Juan de Letran v.
Association of Employees and Faculty of Letran, the petitioner school
was declared guilty of unfair labor practice when it failed to make a timely
reply to the proposals of the certified bargaining union more than a
month after the same were submitted to it. In explaining its failure to
reply, the school merely offered the feeble excuse that its Board of Trustees
had not yet convened to discuss the matter. Clearly, its actuation showed a

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lack of sincere desire to negotiate the CBA thereby rendering it guilty of
unfair labor practice.
2. REFUSAL OF A PARTY TO SIGN THE CBA.
A party to a fully-concluded CBA may be compelled to sign it,
especially if said refusal to sign is the only remaining hitch to its being
implemented. Such refusal is considered an unfair labor practice.
(c)
INDIVIDUAL BARGAINING

1. EMPLOYERS ACT OF NEGOTIATING WITH UNION MEMBERS

INDIVIDUALLY, A ULP.
To negotiate or attempt to negotiate with individual workers rather
than with the certified bargaining agent is an unfair labor practice.
In Insular Life Assurance Co., Ltd., Employees Association-NATU
v. Insular Life Assurance Co., Ltd., respondent company, through its
president, sent two (2) sets of letters to the individual strikers during the
strike. The first contained promises of benefits to the employees in order to
entice them to return to work; while the second contained threats to obtain
replacements for the striking employees in the event they did not report for
work on June 2, 1958. The respondents contend that the sending of the
letters constituted a legitimate exercise of their freedom of speech. The
Supreme Court, however, disagreed. The said letters were directed to the
striking employees individually - by registered special delivery mail at that -
without being coursed through the unions which were representing the
employees in collective bargaining. Moreover, the sending of these letters is
not protected by the free speech provision of the Constitution. The free
speech protection under the Constitution is inapplicable where the
expression of opinion by the employer or his agent contains a promise of
benefit or threats or reprisal.
2. UNION CANNOT VALIDLY BARGAIN IN BEHALF OF ITS
MEMBERS ONLY.

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 Respondent union in Philippine Diamond Hotel and Resort, Inc.
[Manila Diamond Hotel] v. Manila Diamond Hotel Employees Union,
insists that it could validly bargain in behalf of its members only. The
Supreme Court, however, ruled that the same would only fragment the
employees of petitioner. What respondent union will be achieving is to
divide the employees, more particularly, the rank-and-file employees of
petitioner hotel. The other workers who are not members are at a serious
disadvantage, because if the same shall be allowed, employees who are non-
union members will be economically impaired and will not be able to
negotiate their terms and conditions of work, thus defeating the very essence
and reason of collective bargaining which is an effective safeguard against
the evil schemes of employers in terms and conditions of work. Petitioners
refusal to bargain then with respondent cannot be considered an unfair
labor practice to justify the staging of the strike.
(d)
BLUE-SKY BARGAINING
1. CONCEPT.
Blue-sky bargaining means making exaggerated or unreasonable
proposals. This kind of unfair labor practice act may only be committed by
the bargaining union.
(e)
SURFACE BARGAINING
1. CONCEPT.
Surface bargaining is defined as going through the motions of
negotiating without any legal intent to reach an agreement. This kind of
unfair labor practice may only be committed by the employer.
5.
UNFAIR LABOR PRACTICE
(ULP)
(a)
NATURE OF ULP
1. WHEN AN ACT CONSTITUTES ULP.

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 At the outset, it must be clarified that not all unfair acts constitute
ULPs. While an act or decision of an employer or a union may be unfair,
certainly not every unfair act or decision thereof may constitute ULP as
defined and enumerated under the law.
The act complained of as ULP must have a proximate and causal
connection with any of the following 3
rights:
1. Exercise of the right to self-organization;
2. Exercise of the right to collective bargaining; or
3. Compliance with CBA.
Sans this connection, the unfair acts do not fall within the technical
signification of the term unfair labor practice.
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO
THE EXERCISE OF THE RIGHT TO SELF-ORGANIZATION AND
COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not relate to the
exercise of the right to self-organization and collective bargaining is the act
described under Article 248 [f], i.e., to dismiss, discharge or otherwise
prejudice or discriminate against an employee for having given or being
about to give testimony under the Labor Code.
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to ULP,
to wit:
1. Article 247 which describes the concept of ULPs and prescribes the
procedure for their prosecution;
2. Article 248 which enumerates the ULPs that may be committed by
employers;
3. Article 249 which enumerates the ULPs that may be committed by
labor organizations;

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 4. Article 261 which considers violations of the CBA as no longer
ULPs unless the same are gross in character which means flagrant
and/or malicious refusal to comply with the economic provisions
thereof.
5. Article 263 [c] which refers to union-busting, a form of ULP,
involving the dismissal from employment of union officers duly
elected in accordance with the union constitution and by-laws, where
the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization.
Article 248 describes the ULPs that may be committed by an employer;
while Article 249 enumerates those which may be committed by a labor
organization.
On the part of the employer, only the officers and agents of
corporations, associations or partnerships who have actually participated in
or authorized or ratified ULPs are criminally liable.
On the part of the union, only the officers, members of governing
boards, representatives or agents or members of labor associations or
organizations who have actually participated in or authorized or ratified the
ULPs are criminally liable.
5. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have
committed ULP, the following elements must concur:
1. There should exist an employer-employee relationship between the
offended party and the offender; and
2. The act complained of must be expressly mentioned and defined
in the Labor Code as an unfair labor practice.
Absent one of the elements aforementioned will not make the act an
unfair labor practice.
6. ASPECTS OF ULP.

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 Under Article 247, a ULP has two (2) aspects, namely:
1. Civil aspect; and
2. Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual,
moral and exemplary damages, attorneys fees and other affirmative reliefs.
Generally, these civil claims should be asserted in the labor case before the
Labor Arbiters who have original and exclusive jurisdiction over unfair
labor practices. The criminal aspect, on the other hand, can only be asserted
before the regular court.
(b)
ULP OF EMPLOYERS
I.
INTERFERENCE WITH, RESTRAINT OR COERCION OF
EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. TEST OF INTERFERENCE, RESTRAINT OR COERCION.
The terms interfere, restrain and coerce are very broad that any
act of management that may reasonably tend to have an influence or effect
on the exercise by the employees of their right to self-organize may fall
within their meaning and coverage. According to the Supreme Court in
Insular Life Assurance Co., Ltd., Employees Association-NATU v.
Insular Life Assurance Co., Ltd., the test of whether an employer has
interfered with or restrained or coerced employees within the meaning of the
law is whether the employer has engaged in conduct which may reasonably
tend to interfere with the free exercise of the employees rights. It is not
necessary that there be direct evidence that any employee was in fact
intimidated or coerced by the statements or threats of the employer if there
is a reasonable inference that the anti-union conduct of the employer does
have an adverse effect on the exercise of the right to self-organization and
collective bargaining.
2. TOTALITY OF CONDUCT DOCTRINE.

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 In ascertaining whether the act of the employer constitutes interference
with, restraint or coercion of the employees exercise of their right to self-
organization and collective bargaining, the totality of conduct doctrine
may be applied.
The totality of conduct doctrine means that expressions of opinion by
an employer, though innocent in themselves, may be held to constitute an
unfair labor practice because of the circumstances under which they were
uttered, the history of the particular employers labor relations or anti-union
bias or because of their connection with an established collateral plan of
coercion or interference. An expression which may be permissibly uttered
by one employer, might, in the mouth of a more hostile employer, be
deemed improper and consequently actionable as an unfair labor practice.
The past conduct of the employer and like considerations, coupled with an
intimate connection between the employers action and the union affiliation
or activities of the particular employee or employees taken as a whole, may
raise a suspicion as to the motivation for the employers conduct. The failure
of the employer to ascribe a valid reason therefor may justify an inference
that his unexplained conduct in respect of the particular employee or
employees was inspired by the latters union membership and activities.
3. INTERFERENCE IN THE EMPLOYEES RIGHT TO SELF-
ORGANIZATION.
85

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 a. Interference is always ULP.
The judicial dictum is that any act of interference by the employer in
the exercise by employees of their right to self-organization constitutes an
unfair labor practice. This is the very core of ULP.
In Hacienda Fatima v. National Federation of Sugarcane Workers
Food and General Trade, the Supreme Court upheld the factual findings
of the NLRC and the Court of Appeals that from the employers refusal to
bargain to its acts of economic inducements resulting in the promotion of
those who withdrew from the union, the use of armed guards to prevent the
organizers to come in, and the dismissal of union officials and members, one
cannot but conclude that the employer did not want a union in its hacienda -
a clear interference in the right of the workers to self-organization. Hence,
the employer was held guilty of unfair labor practice.
b. Formation of a union is never a valid ground to dismiss.
c. It is ULP to dismiss a union officer or an employee for his union
activities.
II.
YELLOW DOG CONTRACT
1. WHAT IS A YELLOW DOG CONTRACT?
It is one which exacts from workers as a condition of employment that
they shall not join or belong to a labor organization, or attempt to
organize one during their period of employment or that they shall
withdraw therefrom in case they are already members of a labor
organization.
2. COMMON STIPULATIONS IN A
YELLOW DOG CONTRACT. A typical
 yellow dog contract embodies the following
stipulations:
(1)A representation by the employee that he is not a member of a
labor organization;
(2)A promise by the employee that he will not join a union; and
(3)A promise by the employee that upon joining a labor
organization, he will quit his employment.
The act of the employer in imposing such a condition constitutes
unfair labor practice under Article 248(b) of the Labor Code. Such
stipulation in the contract is null and void.
III.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
As a general rule, the act of an employer in having work or certain
services or functions being performed by union members contracted out is
not per se an unfair labor practice. This is so because contracting-out of a
job, work or service is clearly an exercise by the employer of its business
judgment and its inherent management rights and prerogatives. Hiring of
workers is within the employers inherent freedom to regulate its business
and is a valid exercise of its management prerogative subject only to special
laws and agreements on the matter and the fair standards of justice. The
employer cannot be denied the faculty of promoting efficiency and attaining
economy by a study of what units are essential for its operation. It has the
ultimate right to determine whether services should be performed by its
personnel or contracted to outside agencies.
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service being
performed by union members will interfere with, restrain or coerce
employees in the exercise of their right to self-organization that it shall
constitute an unfair labor practice. Thus, it is not unfair labor practice to
contract out work for reasons of business decline, inadequacy of facilities
and equipment, reduction of cost and similar reasonable grounds.
 IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 248 considers it an unfair labor practice to
initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or
other support to it or its organizers or supporters. Such union is called
company union as its formation, function or administration has been
assisted by any act defined as unfair labor practice under the Labor Code.
V.
DISCRIMINATION
1. COVERAGE OF PROHIBITION.
What is prohibited as unfair labor practice under the law is to
discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership
in any labor organization.
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY
ACT.
In Manila Pencil Co., Inc. v. CIR, it was ruled that even assuming
that business conditions justify the dismissal of employees, it is an unfair
labor practice of employer to dismiss permanently only union members
and not non-unionists.
In Manila Railroad Co. v. Kapisanan ng mga Manggagawa sa
Manila Railroad Co., the non-regularization of long- time employees
because of their affiliation with the union while new employees were
immediately regularized was declared an act of discrimination.
VI.
FILING OF CHARGES OR GIVING OF TESTIMONY
1. CONCEPT.
Under paragraph [f] of Article 248 of the Labor Code, it is an unfair
labor practice for an employer to dismiss, discharge or otherwise prejudice
or discriminate against an employee for having given or being about to give
testimony under the Labor Code.
2. THE ONLY ULP NOT REQUIRED TO BE RELATED TO
EMPLOYEES EXERCISE OF THE RIGHT TO SELF-
ORGANIZATION AND COLLECTIVE BARGAINING.
It must be underscored that Article 248(f) is the only unfair labor
practice that need not be related to the exercise by the employees of their
right to self-organization and collective bargaining.
In Itogon-Suyoc Mines, Inc. v. Baldo, it was declared that an unfair
labor practice was committed by the employer when it dismissed the worker
who had testified in the hearing of a certification election case despite its
prior request for the employee not to testify in the said proceeding
accompanied with a promise of being reinstated if he followed said request.
VII.
CBA-RELATED ULPs
1. THREE (3) CBA-RELATED ULPs.
Article 248 enunciates three (3) CBA-related unfair labor practices, to
wit:
1. To violate the duty to bargain collectively as prescribed in the
Labor Code.
2. To pay negotiation or attorneys fees to the union or its officers
or agents as part of the settlement of any issue in collective
bargaining or any other dispute.
3. To violate a collective bargaining agreement.
VII-A.
PAYMENT OF NEGOTIATION AND ATTORNEYS FEES
1. WHEN PAYMENT CONSIDERED ULP.
Article 248(h) of the Labor Code considers as an unfair labor practice
the act of the employer in paying negotiation fees or attorneys fees to the
union or its officers or agents as part of the settlement of any issue in
collective bargaining or any other dispute.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
 Article 248(i) of the Labor Code should be read in relation to Article
261 thereof. Under Article 261, as amended, violations of a CBA, except
those which are gross in character, shall no longer be treated as an unfair
labor practice and shall be resolved as grievances under the CBA. Gross
violations of CBA shall mean flagrant and/or malicious refusal to comply
with the economic provisions of such agreement.
2. CASE LAW.
The act of the employer in refusing to implement the negotiated wage
increase stipulated in the CBA, which increase is intended to be distinct and
separate from any other benefits or privileges that may be forthcoming to
the employees, is an unfair labor practice.
Refusal for a considerable number of years to give salary adjustments
according to the improved salary scales in the CBA is an unfair labor
practice.

ULP OF LABOR ORGANIZATIONS

I.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR
COERCE EMPLOYEES IN THE EXERCISE OF THEIR RIGHT
TO SELF-ORGANIZE.
Under Article 249(a), it is ULP for a labor organization, its officers,
agents or representatives to restrain or coerce employees in the exercise of
their right to self-organization. Compared to similar provision of Article
248(a) of the Labor Code, notably lacking is the use of the word interfere
in the exercise of the employees right to self-organize. The significance in
the omission of this term lies in the grant of unrestricted license to the labor
organization, its officers, agents or representatives to interfere with the
exercise by the employees of their right to self-organization. Such
interference is not unlawful since without it, no labor organization can be
formed as the act of recruiting and convincing the employees is definitely an
act of interference.
II.
DISCRIMINATION
1. CONCEPT.
Under Article 249(b), it is ULP for a labor organization, its officers,
agents or representatives to cause or attempt to cause an employer to
discriminate against an employee, including discrimination against an
employee with respect to whom membership in such organization has been
denied, or to terminate an employee on any ground other than the usual
terms and conditions under which membership or continuation of
membership is made available to other members.
III.
DUTY OF UNION TO BARGAIN COLLECTIVELY
1. CONCEPT.
Under Article 249(c), it is ULP for a duly certified sole and exclusive
bargaining union, its officers, agents or representatives to refuse or violate
the duty to bargain collectively with the employer. This is the counterpart
provision of Article 248(g) respecting the violation by the employer of its
duty to bargain collectively.
2. PURPOSE.
The obvious purpose of the law is to ensure that the union will
negotiate with management in good faith and for the purpose of concluding
a mutually beneficial agreement regarding the terms and conditions of their
employment relationship.
IV.
ANTI-FEATHERBEDDING DOCTRINE
1. CONCEPT.
Under Article 249(d), it is ULP for a labor organization, its officers,
agents or representatives to cause or attempt to cause an employer to pay or
deliver or agree to pay or 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 for fee for union negotiations.
This practice of the union is commonly known as featherbedding as
it unduly and unnecessarily maintains or increases the number of employees
used or the amount of time consumed to work on a specific job. This is done
by the employees to unduly secure their jobs in the face of technological
advances or as required by minimum health and safety standards, among
other justifications. These featherbedding practices have been found to be
wasteful and without legitimate justifications.
2. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits an unfair labor practice under this provision by
causing or attempting to cause an employer to pay or agree to pay for
standby services. Payments for standing-by, or for the substantial
equivalent of standing-by, are not payments for services performed
within the meaning of the law. When an employer received a bona-fide offer
of competent performance of relevant services, it remains for the employer,
through free and fair negotiation, to determine whether such offer should be
accepted and what compensation should be paid for the work done.
V.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEYS FEES
1. CONCEPT.
Under Article 249(e), it is ULP for a labor organization, its officers,
agents or representatives to ask for or accept negotiation fees or attorneys
fees from employers as part of the settlement of any issue in collective
bargaining or any other dispute.
VI.
VIOLATION OF THE CBA
1. CONCEPT.
Under Article 249(f), it is ULP for a labor organization, its officers,
agents or representatives to violate a
CBA.

2. COUNTERPART PROVISION.
 This is the counterpart provision of Article 248(i) regarding the
employers act of violating a CBA. But it must be noted that under Article
261 of the Labor Code, violation of the CBA is generally considered merely
a grievable issue. It becomes an unfair labor practice only if the violation is
gross in character which means that there is flagrant and/or malicious
refusal to comply with the economic (as distinguished from non-economic)
stipulations in the CBA. This principle applies not only to the employer but
to the labor organization as well.
VII.
CRIMINAL LIABILITY FOR ULPs OF LABOR
ORGANIZATION
1. PERSONS LIABLE.
Article 249 is explicit in its provision on who should be held liable for
ULPs committed by labor organizations. It states that only the officers,
members of governing boards, representatives or agents or members of
labor associations or organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable.

C.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
1.
FORMS OF CONCERTED ACTIVITIES
1. FORMS OF CONCERTED ACTIVITIES.
There are three (3) forms of concerted activities, namely:
1. Strike;
2. Lockout; and
3. Picketing.
2. STRIKE.
Strike means any temporary stoppage of work by the concerted
action of the employees as a result of an industrial or labor dispute.
b. Forms and classification of strikes.
A strike may be classified:
1. As to nature:
a. Legal strike - one called for a valid purpose and conducted through
means allowed by law.
b. Illegal strike - one staged for a purpose not recognized by law or, if
for a valid purpose, it is conducted through means not sanctioned
by law.
c. Economic strike - one declared to demand higher wages, overtime
pay, holiday pay, vacation pay, etc. It is one which is declared for
the purpose of forcing wage or other concessions from the
employer for which he is not required by law to grant.
d. Unfair labor practice (ULP) or political strike - one called to
protest against the employers unfair labor practices enumerated in
Article 248 of the Labor Code, including gross violation of the
CBA under Article 261 and union-busting under Article 263(c) of
the Labor Code.
e. Slowdown strike - one staged without the workers quitting their
work but by merely slackening or reducing their normal work
output. It is also called a strike on the installment plan.
f. Mass leaves - One where the employees simultaneously filed
leaves of absence based on various reasons such as, inter alia,
vacation and sick leaves.
g. Wildcat strike - one declared and staged without the majority
approval of the recognized bargaining agent.
h. Sitdown strike - one where the workers stop working but do not
leave their place of work.
i. Overtime boycott one involving the act of the workers in refusing
to render overtime work in violation of the CBA, resorted to as a
means to coerce the employer to yield to their demands.
j. Boycott of products one which involves the concerted refusal to
patronize an employer's goods or services and to persuade others to
a like refusal.
k. Attempts to damage, destroy or sabotage plant equipment and
facilities and similar activities;
 l. The sporting by the workers of closely cropped hair or cleanly
shaven heads after their union filed a notice of strike as a result
of a CBA deadlock is a form of illegal strike.
2. As to coverage:
a. General strike one which covers and extends over a whole
province or country. In this kind of strike, the employees of various
companies and industries cease to work in sympathy with striking
workers of another company. It is also resorted to for the purpose
of putting pressure on the government to enact certain labor-related
measures such as mandated wage increases or to cease from
implementing a law which workers consider inimical to their
interest. It is also mounted for purposes of paralyzing or crippling
the entire economic dispensation.
b. Particular strike one which covers a particular establishment or
employer or one industry involving one union or federation.
3. As to purpose:
a. Economic strike.
b. Unfair labor practice strike or political strike.
4. As to the nature of the strikers action:
a. Partial strike one which consists of unannounced work stoppages
such as slowdowns, walkouts or unauthorized extension of rest
periods.
b. Sit-down strike.
c. Slowdown strike.
5. As to the extent of the interest of strikers:
a. Primary strike refers to a strike conducted by the workers against
their employer, involving a labor dispute directly affecting them.
b. Secondary strike - refers to a strike staged by the workers of an
employer involving an issue which does not directly concern or
affect their relationship but rather, by some circumstances affecting
the workers such as when the employer persists to deal with a third
person against whom the workers have an existing grievance.
 Workers stage this kind of strike to secure the economic assistance
of their employer to force the third person to yield to the union on
the issues involving it and said third person.

c. Sympathy strike - refers to a strike where the strikers have no

demands or grievances or labor dispute of their own against their
employer but nonetheless stage the strike for the purpose of aiding,
directly or indirectly, other strikers in other establishments or
companies, without necessarily having any direct relation to the
advancement of the strikers interest. This is patently an illegal
strike. An example of a sympathy strike is the welga ng bayan
where workers refuse to render work to join a general strike which
does not involve a labor or industrial dispute between the strikers
and the employer struck against but it is staged in pursuit of certain
ends such as reduction in the electric power rates, increase in the
legislated wages, etc.
3. LOCKOUT.
Lockout means the temporary refusal by an employer to furnish work
as a result of an industrial or labor
dispute.
It consists of the following:
1. Shutdowns;
2. Mass retrenchment and dismissals initiated by the employer.
3. The employers act of excluding employees who are union members.
4. PICKETING.
Picketing is the act of workers in peacefully marching to and fro
before an establishment involved in a labor dispute generally accompanied
by the carrying and display of signs, placards and banners intended to
inform the public about the dispute.
2.
WHO MAY DECLARE A STRIKE OR LOCKOUT?
1. WHO MAY DECLARE A STRIKE?
a. Proper party.
 Only a legitimate labor organization may declare a strike. For obvious
reason, the employer cannot.
b. Basic requirements.
As to the personality of the union, the following requirements should
be shown before a strike may be validly declared and staged:
a. The union should be legitimate. A strike conducted by a union
which has not been shown to be a legitimate labor organization is
illegal.
b. In organized establishment where there is a certified bargaining
agent, only the recognized or certified collective bargaining union
can validly stage a strike. A minority union cannot stage a strike.
A strike conducted by a minority union is patently illegal
because no labor dispute which will justify the conduct of a
strike may exist between the employer and a minority union. To
permit the unions picketing activities would be to flaunt at the will
of the majority.
c. In unorganized establishment where there is no certified
bargaining agent, any legitimate labor organization in the
establishment may declare a strike but only on the ground of
unfair labor practice. The only other ground of bargaining
deadlock cannot be invoked in support of a strike in an unorganized
establishment for the simple reason that no CBA can be negotiated
and concluded absent such recognized or certified collective
bargaining agent. In this situation, the existence of a bargaining
deadlock is an impossibility.
2. WHO MAY DECLARE A LOCKOUT?
a. Proper party.
Only the employer can declare and stage a lockout. For obvious reason,
no union can.
b. Grounds.
The employer may declare a lockout based on any of the two (2)
grounds that may similarly be invoked by the union in staging a strike, i.e.,
(1) bargaining deadlock; and/or (2) unfair labor practice.
3. WHO MAY STAGE A PICKET?
Although not mentioned in the syllabus, it is important to discuss this
point. Distinctively, in case of picketing, the absence of employment
relationship between the employer and the picketers or some of them
does not affect its validity. Picketing, if peacefully carried out, cannot be
prohibited even in the absence of employer-employee relationship.
Example: A picket conducted by the employees with the participation of
militant groups like Bayan, Gabriela, etc. will not make the picket illegal.
3.
REQUISITES FOR A VALID STRIKE
1. REQUISITES FOR A VALID STRIKE.
a. Procedural but mandatory requisites.
In accordance with Article 263 and pertinent prevailing jurisprudence,
a strike, in order to be valid and legal, must conform to the following
procedural requisites:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of strike must be filed with the NCMB-DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking of the strike vote
by secret balloting, informing said office of the decision to
conduct a strike vote, and the date, place, and time thereof;
th
4 requisite - A strike vote must be taken where a majority of the
members of the union obtained by secret ballot in a meeting
called for the purpose, must approve it;
th
5 requisite - A strike vote report should be submitted to the NCMB-
DOLE at least seven (7) days before the intended date of the
strike;
th
6 requisite - Except in cases of union-busting, the cooling-off period
of 15 days, in case of unfair labor practices of the employer,
or 30 days, in case of collective bargaining deadlock, should
be fully observed; and
th
7 requisite - The 7-day waiting period/strike ban reckoned after the
submission of the strike vote report to the NCMB-DOLE
should also be fully observed in all cases.
 All the foregoing requisites, although procedural in nature, are
mandatory and failure of the union to comply with any of them would
render the strike illegal.
I.
FIRST REQUISITE:
EXISTENCE OF VALID AND FACTUAL GROUND/S
1. VALID GROUNDS.
The law recognizes only 2 grounds in support of a valid strike, viz.:
1. Collective bargaining deadlock (Economic Strike); and/or
2. Unfair labor practice (Political Strike).
A strike not based on any of these two grounds is illegal.
2. SOME PRINCIPLES ON THE FIRST REQUISITE.
Violation of CBA, except when gross, is not an unfair labor
practice, hence, may not be cited as ground for a valid strike.
Ordinary violation of a CBA is no longer treated as an unfair labor
practice but as a mere grievance which should be processed through
the grievance machinery and voluntary arbitration.
Inter-union or intra-union dispute is not a valid ground.
Violation of labor standards is not a valid ground.
Wage distortion is not a valid ground.
II.
SECOND REQUISITE:
FILING OF A NOTICE OF STRIKE
1. NOTICE OF STRIKE.
No labor organization shall declare a strike without first having filed a
notice of strike.
III.
THIRD REQUISITE:
SERVICE OF A 24-HOUR PRIOR NOTICE
In the 2005 case of Capitol Medical Center, Inc. v. NLRC, it was
imposed as additional requisite that a 24-hour notice must be served to the
NCMB- DOLE prior to the taking of the strike vote by secret balloting,
 informing it of the unions decision to conduct a strike vote as well as the
date, place, and time thereof.
IV.
FOURTH REQUISITE:
CONDUCT OF A STRIKE VOTE
1. MAJORITY APPROVAL OF THE STRIKE.
No labor organization shall declare a strike without the necessary
strike vote first having been obtained and reported to the NCMB-DOLE.
A decision to declare a strike must be approved by a majority of the
total union membership in the bargaining unit concerned, obtained by
secret ballot in meetings or referenda called for that purpose. This process is
called strike vote balloting.
2. PURPOSE.
The purpose of a strike vote is to ensure that the decision to strike
broadly rests with the majority of the union members in general and not
with a mere minority.
3. DURATION OF THE VALIDITY OF THE MAJORITY APPROVAL
OF A STRIKE.
The majority decision to stage a strike is valid for the duration of the
dispute based on substantially the same grounds considered when the strike
vote was taken.
V.
FIFTH REQUISITE:
SUBMISSION OF THE STRIKE VOTE TO NCMB-DOLE
1. PURPOSE FOR REQUIRING A STRIKE VOTE REPORT.

The evident intention of the law in mandatorily requiring the

submission of the strike vote report is to afford the NCMB of opportunity to
verify the truth and veracity of the majority vote by the union members in
support of the intended strike.
2. WHEN TO SUBMIT THE STRIKE VOTE REPORT.
 The strike vote report should be submitted to the NCMB-DOLE at
least seven (7) days before the actual staging of the intended strike, subject
to the observance of the cooling-off periods provided under the law.
VI.
SIXTH REQUISITE:
OBSERVANCE OF THE COOLING-OFF PERIOD
1. GENERAL RULE.
The cooling-off periods provided under the law before the intended
date of the actual mounting of the strike are as follows:
1. In case of bargaining deadlock, the cooling-off period is thirty (30)
days from the filing of the notice of strike; or
2. In case of unfair labor practice, the cooling-off period is fifteen
(15) days from the filing of the notice of strike.
2. EXCEPTION: IN CASE OF UNION-BUSTING.
In case of dismissal from employment of union officers (not
ordinary members) duly elected in accordance with the union constitution
and by-laws which may constitute union-busting because the existence of
the union is threatened by reason of such dismissal, the 15-day cooling-off
period does not apply and the union may take action immediately after the
strike vote is conducted and the results thereof duly submitted to the
regional branch of the NCMB.
In cases of union-busting, only the 15-day cooling-off period need not
be observed; all the other requisites must be fully complied with.
3. RECKONING OF THE COOLING-OFF PERIODS.
The start of the cooling-off periods should be reckoned from the time
the notice of strike is filed with the NCMB-DOLE, a copy thereof having
been served on the other party concerned.
4. PURPOSE OF THE COOLING-OFF PERIODS.
The purpose of the cooling-off periods is to provide an opportunity for
mediation and conciliation of the dispute by the NCMB-DOLE with the end
in view of amicably settling it.
 VII.
SEVENTH REQUISITE:
7-DAY WAITING PERIOD OR STRIKE BAN
1. PURPOSE OF THE 7-DAY WAITING PERIOD OR STRIKE BAN.
The seven (7) day waiting period is intended to give the NCMB-
DOLE an opportunity to verify whether the projected strike really carries
the approval of the majority of the union members.
2. WAITING PERIOD/STRIKE BAN VS. COOLING-OFF PERIOD.
The 7-day waiting period or strike ban is a distinct and separate
requirement from the cooling-off period prescribed by law. The latter cannot
be substituted for the former and vice-versa.
The cooling -off period is counted from the time of the filing of the
notice of strike. The 7 -day waiting period/strike ban, on the other hand, is
reckoned from the time the strike vote report is submitted to the NCMB-
DOLE.
Consequently, a strike is illegal for failure to comply with the
prescribed mandatory cooling-off period and the 7-day waiting period/strike
ban after the submission of the report on the strike vote.
3. BOTH MUST BE COMPLIED WITH SEPARATELY AND
DISTINCTLY FROM EACH OTHER.
The requirements of cooling-off period and 7- day waiting
period/strike ban must both be complied with. The labor union may take the
strike vote and report the same to the NCMB-DOLE within the statutory
cooling-off period. In this case, the 7-day waiting period/strike ban should
be counted from the day following the expiration of the cooling-off period.
A contrary view would certainly defeat and render nugatory the salutary
purposes behind the distinct requirements of cooling-off period and the
waiting period/strike ban.
Example: In a case where the notice of strike grounded on ULP is
filed on October 1, 2014, and the strike vote is taken within the cooling -off
period, say, on October 5, 2014 and the strike vote report showing majority
support for the intended strike is submitted to the NCMB-DOLE the
 following day, October 6, 2014, the question is when can the union legally
stage the strike?
Following the above principle, the answer obviously is on October 24,
2014 or any day thereafter. This is so because the 15-day cooling-off period
for ULP expires on October 16 and adding the 7 -day strike ban which
should be counted from the day following the expiration of the cooling-off
period, the 7th day would be on October 23, 2014. Obviously, the strike
cannot be conducted on the 7th day but rather after the lapse thereof; hence,
it is only on October 24, 2014 and onwards that the union may lawfully
conduct the strike.
4. SOME PRINCIPLES ON COOLING-OFF PERIOD AND 7-DAY
WAITING PERIOD.
Deficiency of even one (1) day of the cooling-off period and 7-day
strike ban is fatal.
One-day strike without complying with the 7-day strike ban is illegal.
4.
REQUISITES FOR A VALID LOCKOUT
1. SUBSTANTIALLY SIMILAR REQUISITES AS IN STRIKE.
With a slight, insignificant variation, the procedural but mandatory
requisites for a valid strike discussed above are substantially similar to those
applicable for valid lockout. For purposes of ease and clarity, the same are
presented as follows:
1st requisite - It must be based on a valid and factual ground;
2nd requisite - A notice of lockout must be filed with the NCMB-
DOLE;
3rd requisite - A notice must be served to the NCMB-DOLE at least
twenty-four (24) hours prior to the taking of the lockout vote by
secret balloting, informing said office of the decision to conduct a
lockout vote, and the date, place, and time thereof;
4th requisite - A lockout vote must be taken where a majority of the
members of the Board of Directors of the corporation or association
or of the partners in a partnership obtained by secret ballot in a
meeting called for the purpose, must approve it;
5th requisite - A lockout vote report should be submitted to the
NCMB-DOLE at least seven (7) days before the intended date of the
lockout;
 6th requisite - The cooling-off period of 15 days, in case of unfair
labor practices of the labor organization, or 30 days, in case of
collective bargaining deadlock, should be fully observed; and
7th requisite - The 7-day waiting period/lockout ban reckoned after
the submission of the lockout vote report to the NCMB-DOLE
should also be fully observed in all cases.
5.
REQUISITES FOR LAWFUL PICKETING
1. THE REQUISITES FOR A VALID STRIKE ARE NOT
APPLICABLE TO PICKETING. The seven (7)
requisites for a valid strike discussed above do not apply to
picketing.
2. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and legal is that
it should be peacefully conducted.
Based on the foregoing provision, the requisites may be summed up as
follows:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or intimidation attendant
thereto;
3. The ingress to (entrance) or egress from (exit) the company premises
should not be obstructed; and
4. Public thoroughfares should not be impeded.
3. RIGHT TO PICKET IS PROTECTED BY THE CONSTITUTION
AND THE LAW.
Unlike a strike which is guaranteed under the Constitutional provision
on the right of workers to conduct peaceful concerted activities under
Section 3, Article XIII thereof, the right to picket is guaranteed under the
freedom of speech and of expression and to peaceably assemble to air
grievances under Section 4, Article III (Bill of Rights) thereof.
4. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE
CONDUCT OF THE PICKET.
 In the event the picketers employ discourteous and impolite language
in their picket, such may not result in, or give rise to, libel or action for
damages.
5. PICKETING VS. STRIKE.
(a)To strike is to withhold or to stop work by the concerted action of
employees as a result of an industrial or labor dispute. The work
stoppage may be accompanied by picketing by the striking
employees outside of the company compound.
(b) While a strike focuses on stoppage of work, picketing focuses on
publicizing the labor dispute and its incidents to inform the public
of what is happening in the company being picketed.
(c) A picket simply means to march to and fro in front of the
employers premises, usually accompanied by the display of
placards and other signs making known the facts involved in a labor
dispute. It is but one strike activity separate and different from the
actual stoppage of work.
Phimco Industries, Inc. v. Phimco Industries Labor Association
(PILA). - While the right of employees to publicize their dispute falls within
the protection of freedom of expression and the right to peaceably assemble
to air grievances, these rights are by no means absolute. Protected
picketing does not extend to blocking ingress to and egress from the
company premises. That the picket was moving, was peaceful and was
not attended by actual violence may not free it from taints of illegality if
the picket effectively blocked entry to and exit from the company
premises.
6. WHEN PICKET CONSIDERED A STRIKE.
In distinguishing between a picket and a strike, the totality of the
circumstances obtaining in a case should be taken into account.
Santa Rosa Coca-Cola Plant Employees Union v. Coca-Cola
Bottlers Phils., Inc. - Petitioners contend that what they conducted was a
mere picketing and not a strike. In disagreeing to this contention, the High
Court emphasized that it is not an issue in this case that there was a labor
dispute between the parties as petitioners had notified the respondent of
their intention to stage a strike, and not merely to picket. Petitioners
insistence to stage a strike is evident in the fact that an amended notice of
strike was filed even as respondent moved to dismiss the first notice. The
basic elements of a strike are present in this case: 106 members of petitioner
Union, whose respective applications for leave of absence on September 21,
1999 were disapproved, opted not to report for work on said date, and
gathered in front of the company premises to hold a mass protest action.
Petitioners deliberately absented themselves and instead wore red ribbons
and carried placards with slogans such as: YES KAMI SA STRIKE,
PROTESTA KAMI, SAHOD, KARAPATAN NG MANGGAGAWA
IPAGLABAN, CBA-WAG BABOYIN, STOP UNION BUSTING.
They marched to and fro in front of the companys premises during working
hours. Thus, petitioners engaged in a concerted activity which already
affected the companys operations. The mass concerted activity obviously
constitutes a strike. Moreover, the bare fact that petitioners were given a
Mayors permit is not conclusive evidence that their action/activity did not
amount to a strike. The Mayors description of what activities petitioners
were allowed to conduct is inconsequential. To repeat, what is definitive of
whether the action staged by petitioners is a strike and not merely a picket is
the totality of the circumstances surrounding the situation.
6.
ASSUMPTION OF JURISDICTION BY THE DOLE SECRETARY
OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A
LABOR DISPUTE.
Article 263(g) of the Labor Code provides that when in the opinion of
the DOLE Secretary, the labor dispute causes or will likely to cause a
strike or lockout in an industry indispensable to the national interest, he
is empowered to do either of 2 things:
1. He may assume jurisdiction over the labor dispute and decide it
himself; or
 2. He may certify it to the NLRC for compulsory arbitration, in which
case, it will be the NLRC which shall hear and decide it.
This power may be exercised by the DOLE Secretary even before the
actual staging of a strike or lockout since Article 263(g) does not require
the existence of a strike or lockout but only of a labor dispute involving
national interest.
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?
The Labor Code vests in the DOLE Secretary the discretion to
determine what industries are indispensable to the national interest.
Accordingly, upon the determination by the DOLE Secretary that such
industry is indispensable to the national interest, he has authority to assume
jurisdiction over the labor dispute in the said industry or certify it to the
NLRC for compulsory arbitration.
Past issuances of the DOLE Secretary have not made nor attempted to
mention specifically what the industries indispensable to the national
interest are. It was only in Department Order No. 40-H-13, Series of 2013,
that certain industries were specifically named, thus:
Section 16. Industries Indispensable to the National
Interest. For the guidance of the workers and employers in the
filing of petition for assumption of jurisdiction, the following
industries/services are hereby recognized as deemed
indispensable to the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply
services such as bottling and refilling stations;
d. Air traffic control; and
e. Such other industries as may be recommended by the
National Tripartite Industrial Peace Council (TIPC).
Obviously, the above enumerated industries are not exclusive as other
industries may be considered indispensable to the national interest based on
the appreciation and discretion of the DOLE Secretary or as may be
recommended by TIPC.
3. DIFFERENT RULE ON STRIKES AND LOCKOUTS IN
HOSPITALS, CLINICS AND MEDICAL INSTITUTIONS.
As a general rule, strikes and lockouts in hospitals, clinics and similar
medical institutions should be
avoided.
In case a strike or lockout is staged, it shall be the duty of the striking
union or locking-out employer to provide and maintain an effective skeletal
workforce of medical and other health personnel whose movement and
services shall be unhampered and unrestricted as are 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.
The DOLE Secretary may immediately assume, within twenty four
(24) hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the NLRC for compulsory
arbitration.
4. SOME PRINCIPLES ON ASSUMPTION/CERTIFICATION POWER
OF THE DOLE SECRETARY.
Prior notice and hearing are not required in the issuance of the assumption
or certification order.
The DOLE Secretary may seek the assistance of law enforcement
agencies like the Philippine National Police to ensure compliance with
the provision thereof as well as with such orders as he may issue to
enforce the same.
5. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order even if not
expressly stated therein.

The moment the DOLE Secretary assumes jurisdiction over a labor

dispute involving national interest or certifies it to the NLRC for
compulsory arbitration, such assumption or certification has the effect of
automatically enjoining the intended or impending strike or, if one has
already been commenced, of automatically prohibiting its continuation. The
mere issuance of an assumption or certification order automatically carries
with it a return -to-work order, even if the directive to return to work is not
expressly stated therein. It is thus not necessary for the DOLE Secretary to
issue another order directing the strikers to return to work.
It is error therefore for striking workers to continue with their strike
alleging absence of a return-to-work order since Article 263(g) is clear that
once an assumption/certification order is issued, strikes are enjoined or, if
one has already taken place, all strikers should immediately return to work.
b. Nature of return-to-work order.
Return-to-work order is compulsory and immediately executory in
character. It should be strictly complied with by the parties even during the
pendency of any petition questioning its validity in order to maintain the
status quo while the determination is being made. Filing of a motion for
reconsideration does not affect the enforcement of a return-to-work
order which is immediately executory.
c. Some principles on return-to-work order.
The issue of legality of strike is immaterial in enforcing the return-to-
work order.
Upon assumption or certification, the parties should revert to the
status quo ante litem which refers to the state of things as it was
before the labor dispute or the state of affairs existing at the time of
the filing of the case. It is the last actual, peaceful and uncontested
status that preceded the actual controversy.
To implement the return-to-work order, the norm is actual
reinstatement. However, payroll reinstatement in lieu of actual
reinstatement may properly be resorted to when special
circumstances exist that render actual reinstatement impracticable or
otherwise not conducive to attaining the purposes of the law.
Example:
University of Sto. Tomas v. NLRC, where the teachers ordered to
return to work could not be given back their academic assignments
since the return-to-work order of the DOLE Secretary was issued in
the middle of the first semester of the academic year. The Supreme
Court affirmed the validity of the payroll reinstatement order of the
NLRC and ruled that the NLRC did not commit grave abuse of
discretion in providing for the alternative remedy of payroll
 reinstatement. It observed that the NLRC was only trying its best to
work out a satisfactory ad hoc solution to a festering and serious
problem.
7.
NATURE OF ASSUMPTION ORDER
OR CERTIFICATION ORDER
1. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an
extraordinary authority granted to the President and to his alter ego, the
DOLE Secretary, the exercise of which should be strictly limited to national
interest cases. It is in the nature of a police power measure. This is done
for the promotion of the common good considering that a prolonged strike
or lockout can be inimical to the national economy.
8.
EFFECT OF DEFIANCE OF
ASSUMPTION OR CERTIFICATION ORDERS
1. DEFIANCE OF THE ORDER, A VALID GROUND TO DISMISS.
The defiance by the union, its officers and members of the Labor
Secretary's assumption of jurisdiction or certification order constitutes a
valid ground for dismissal.
The following are the justifications:
1. A strike that is undertaken after the issuance by the DOLE Secretary
of an assumption or certification order becomes a prohibited
activity and thus illegal. The defiant striking union officers and
members, as a result, are deemed to have lost their employment
status for having knowingly participated in an illegal strike.
2. From the moment a worker defies a return-to-work order, he is
deemed to have abandoned his job.
3. By so defying, the workers have forfeited their right to be
readmitted to work.
2. ALL DEFIANT STRIKERS, REGARDLESS OF WHETHER THEY
ARE OFFICERS OR ORDINARY MEMBERS, ARE DEEMED
DISMISSED.
 Once the DOLE Secretary assumes jurisdiction over a labor dispute or
certifies it to the NLRC for compulsory arbitration, such jurisdiction should
not be interfered with by the application of the coercive processes of a strike
or lockout. Any defiance thereof is a valid ground for the loss of
employment status.
3. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER,
NOT MATERIAL.
The length of time within which the return-to-work order was defied
by the strikers is not significant in determining their liability for the legal
consequences thereof. The following cases are illustrative of this rule:
a. University of San Agustin Employees Union-FFW v. The CA. -
The period of defiance was less than nine (9) hours from 8:45 a.m.
to 5:25 p.m. on September 19, 2003.
b. Federation of Free Workers v. Inciong. - The period of defiance
was only nine (9) days.
4. SOME PRINCIPLES ON DEFIANCE OF THE
ASSUMPTION/CERTIFICATION ORDER.
The assumption/certification order may be served at any time of the day
or night.
No practice of giving 24 hours to strikers within which to return to
work. There is no law or jurisprudence recognizing this practice.
The defiant strikers could be validly replaced.
The refusal to acknowledge receipt of the assumption/certification
orders and other processes is an apparent attempt to frustrate the ends of
justice, hence, invalid. The union cannot be allowed to thwart the efficacy
of the said orders issued in the national interest through the simple
expediency of refusing to acknowledge receipt thereof.
9.
ILLEGAL STRIKE
1. WHEN IS A STRIKE
CONSIDERED ILLEGAL? A
strike is illegal if it is declared
and staged:
1) Without complying with the procedural but mandatory requisites
(See 7 requisites above).
2) For unlawful purpose such as to compel the dismissal of an
employee or to force recognition of the union or for trivial and
puerile purpose or to circumvent contracts and judicial orders.
3) Based on non-strikeable or invalid grounds such as:
a) Inter-union or intra-union disputes.
b) Simple violation of CBA in contrast to gross violation thereof
which is deemed ULP.
c) Violation of labor standards.
d) Legislated wage orders (wage distortion).
4) Without first having bargained collectively.
5) In violation of the no strike, no lockout clause in the CBA.
6) Without submitting the issues to the grievance machinery or
voluntary arbitration or failing to exhaust the steps provided therein.
7) While conciliation and mediation proceeding is on-going at the
NCMB.
8) Based on issues already brought to voluntary or compulsory
arbitration.
9) During the pendency of a case involving the same ground/s cited in
the notice of strike.
10) In defiance of an assumption or certification or return-to-work
order.
11) In violation of a temporary restraining order or an injunction
order.
12) After the conversion of the notice of strike into a preventive
mediation case.
13) Against the prohibition by law.
14) By a minority union.
15) By an illegitimate union.
16) By dismissed employees.
 17) In violation of the company code of conduct which prohibits
inciting or participating in riots, disorders, alleged strikes or
concerted actions detrimental to [Toyotas] interest, The penalty
for which is dismissal.
18) As protest rallies in front of government offices such as in the
following cases:
Toyota Motor Phils. Corp. Workers Association [TMPCWA] v.
NLRC, where the Supreme Court ruled that the protest rallies
staged by the employees from February 21 to 23, 2001 in front of
the offices of the Bureau of Labor Relations (BLR) and the DOLE
Secretary constitute illegal strike and not legitimate exercise of
their right to peaceably assemble and petition the government for
redress of grievances. It was illegal for having been undertaken
without satisfying the mandatory pre-requisites for a valid strike
under Article 263 of the Labor Code.
The ruling in Toyota was cited in Solidbank Corporation v.
Gamier, as basis in declaring the protest action of the employees
of petitioner Solidbank which was staged in front of the Office of
the DOLE Secretary in Intramuros, Manila, as constitutive of
illegal strike since it paralyzed the operations of the bank. The
protest action in this case was conducted because of the CBA
deadlock.
19) As welga ng bayan which is in the nature of a general strike as
well as an extended sympathy strike.
(a)
LIABILITY OF UNION OFFICERS
(b)
LIABILITY OF ORDINARY WORKERS
These two topics will be discussed jointly because of their
close interrelation.
1. PARTICIPATION IN LAWFUL STRIKE.
An employee who participates in a lawful strike is not deemed to
have abandoned his employment. Such participation should not constitute
 sufficient ground for the termination of his employment even if a
replacement has already been hired by the employer during such lawful
strike.
2. PARTICIPATION IN ILLEGAL STRIKE.
a. Distinction in the liability between union officers and ordinary
union members.
1. Union officers.
The mere finding or declaration of illegality of the strike will result
in the termination of all union officers who knowingly participated in the
illegal strike. Unlike ordinary members, it is not required, for purposes of
termination, that the officers should commit an illegal act during the strike.

However, absent any showing that the employees are union officers,
they cannot be dismissed based solely on the illegality of the strike.
To illustrate how the knowing participation of union officers may
be ascertained and established, the following factors were taken into
account in another 2011 case, Abaria v. NLRC, which led to the declaration
that they knowingly participated in the illegal strike:
(1)Their persistence in holding picketing activities despite the declaration
by the NCMB that their union was not duly registered as a legitimate
labor organization and notwithstanding the letter from the federations
legal counsel informing them that their acts constituted disloyalty to
the national federation; and
(2)Their filing of the notice of strike and conducting a strike vote despite
the fact that their union has no legal personality to negotiate with their
employer for collective bargaining purposes.

2. Ordinary union members.

The mere finding or declaration of illegality of a strike will not result
in termination of ordinary union members. For an ordinary union member to
suffer termination, it must be shown by clear evidence that he has
committed illegal acts during the strike.
b. Reason for the distinction.
 The reason for this distinction is that the union officers have the duty
to guide their members to respect the law. If instead of doing so, the officers
urged the members to violate the law and defy the duly constituted
authorities, their dismissal from the service is a just penalty or sanction for
their unlawful act. Their responsibility as main players in an illegal strike is
greater than that of the ordinary union members and, therefore, limiting the
penalty of dismissal only to the former for their participation in an illegal
strike is in order.
c. Some principles on illegality of a strike.
The fact that the employees are signatories to the CBA does not in
itself sufficiently establish their status as union officers during the
illegal strike. Neither were their active roles during the bargaining
negotiations be considered as evidence of their being union officers.
Only the union officers during the period of illegal strike are
liable. If the employees acted as union officers after the strike,
they may not be held liable and, therefore, could not be terminated
in their capacity as such.
Shop stewards are union officers. Hence, they should be
terminated upon the declaration of the illegality of the strike.
Union officers may be dismissed despite the fact that the illegal
strike was staged only for 1 day or even for less than 10 hours.
This holds true in cases of defiance of the assumption/ certification
order issued in national interest cases.
If the dispositive portion of the decision failed to mention the
names of union officers, resort should be made to the text of the
decision.
No wholesale dismissal of strikers allowed. The employer cannot
just unceremoniously dismiss a hundred of its employees in the
absence of clear and convincing proof that these people were indeed
guilty of the acts charged and then, afterwards, go to court to seek
validation of the dismissal it whimsically executed. That certainly
cannot be allowed.
3. PARTICIPATION IN THE COMMISSION OF
ILLEGAL ACTS DURING A STRIKE. a. Legality or
illegality of strike, immaterial.
 As far as liability for commission of illegal acts during the strike is
concerned, the issue of legality or illegality of the strike is irrelevant. As
long as the union officer or member commits an illegal act in the course
of the strike, be it legal or illegal, his employment can be validly
terminated.
b. Meaning of illegal acts.
The term illegal acts under Article 264(a) may encompass a number
of acts that violate existing labor or criminal laws, such as the following:
(1)Violation of Article 264(e) of the Labor Code which provides that
[n]o person engaged in picketing shall commit any act of violence,
coercion or intimidation or obstruct the free ingress to or egress
from the employers premises for lawful purposes, or obstruct
public thoroughfares.
(2)Commission of crimes and other unlawful acts in carrying out the
strike.
(3)Violation of any order, prohibition, or injunction issued by the
DOLE Secretary or NLRC in connection with the assumption of
jurisdiction or certification order under Article 263(g) of the Labor
Code.
This enumeration is not exclusive as jurisprudence abounds where the
term illegal acts has been interpreted and construed to cover other
breaches of existing laws.
Liability for illegal acts should be determined on an individual
basis. For this purpose, the individual identity of the union members who
participated in the commission of illegal acts may be proved thru affidavits
and photographs. Simply referring to them as strikers, or
complainants in this case is not enough to justify their dismissal.
d. Some principles on commission of illegal acts in the course of the
strike.
Only members who are identified as having participated in the
commission of illegal acts are liable. Those who did not participate
should not be blamed therefor.
 To effectively hold ordinary union members liable, those who
participated in the commission of illegal acts must not only be
identified but the specific illegal acts they each committed
should be described with particularity.
If violence was committed by both employer and employees, the
same cannot be cited as a ground to declare the strike illegal.
(c)
LIABILITY OF EMPLOYER
I.
LIABILITY OF EMPLOYER IN CASE OF STRIKE
1. LIABILITY FOR REINSTATEMENT OF STRIKERS.
a. Reinstatement, when proper.
Reinstatement (without backwages) of ordinary rank-and-file union
members who did not participate in the commission of illegal acts during
the conduct of the illegal strike may be ordered.
b. No reinstatement for strikers who committed illegal acts.
The strikers who committed illegal acts during and in the course of a
strike may be terminated. They are not entitled to be reinstated.
Additionally, they may be held criminally liable therefor.
c. Strikers who failed to return to work forfeit reinstatement.
Strikers who failed to report for work without proper justification and
despite the order reinstating them to their job are deemed to have forfeited
their right to reinstatement.
d. Employer who fails to reinstate strikers who were ordered
reinstated by the Labor Arbiter is liable to pay them backwages
reckoned from Labor Arbiters issuance of the reinstatement
order up to its reversal by the NLRC.
2. SEPARATION PAY IN LIEU OF REINSTATEMENT IN STRIKE
CASES.
a. Separation pay in lieu of reinstatement, when proper.
 In strike cases, the award of separation pay in lieu of reinstatement is
proper only when the strikers did not participate in the commission of illegal
acts in the course thereof.
3. BACKWAGES IN STRIKE CASES.
a. If the strike is illegal, no backwages should be paid.
Thus, in the case of Arellano University Employees and Workers
Union v. CA, where the strike was declared illegal, petitioner-union
members who were found not to have participated in the commission of
illegal acts during the strike were ordered reinstated to their former positions
but without backwages. If reinstatement is no longer possible, they should
receive separation pay of one (1) month for every year of service in
accordance with existing jurisprudence. With respect to the union officers,
their mere participation in the illegal strike warrants their dismissal.
(d)
WAIVER OF ILLEGALITY OF STRIKE
1. VOLUNTARY REINSTATEMENT CONSTITUTES A WAIVER
OF THE ILLEGALITY OF THE STRIKE.
In Citizens Labor Union v. Standard Vacuum Oil Co., the act of the
employer in inviting the workers to return to their posts without making any
reference to the pending case involving the issue of the illegality of the
strike or imposing any condition or alteration of the terms of their
employment was deemed a waiver of its right to consider the strikers as
wrongdoers. More so in this case when such invitation was accepted by the
strikers. By said act, the parties may be said to have both abandoned their
original positions and come to a virtual compromise to resume
unconditionally their former relations.
10.
INJUNCTIONS
I.
INJUNCTION IN PICKETING, STRIKE OR LOCKOUT
CASES
1. PROHIBITION ON INJUNCTION AGAINST THE CONDUCT OF
STRIKES AND LOCKOUTS.
 As a general rule, strikes and lockouts that are validly declared enjoy
the protection of the law and cannot be enjoined unless illegal acts are
committed or threatened to be committed in the course thereof. In the case
of strikes, this policy applies even if the strike appears to be illegal in nature.
The rationale for this policy is the protection extended to the right to strike
under the Constitution and the law. It is basically treated as a weapon that
the law guarantees to employees for the advancement of their interest and
for their protection.
2. EXCEPTIONS WHEN THE STRIKE ITSELF MAY BE ENJOINED.
However, in some cases, injunctions issued to enjoin the conduct of
the strike itself and not only the commission of illegal or prohibited acts in
the course thereof, were held to be valid.
For instance, in San Miguel Corporation v. NLRC, the Supreme
Court ruled that injunction may be issued not only against the commission
of illegal acts in the course of the strike but against the strike itself because
the notice of strike filed by the union has been converted into a preventive
mediation case. Having been so converted, a strike can no longer be staged
based on said notice. Upon such conversion, the legal effect is that there is
no more notice of strike to speak of.
In the earlier case of San Miguel Corporation v. NLRC, the Supreme
Court ruled that the NLRC committed grave abuse of discretion when it
denied the petition for injunction to restrain the union from declaring a
strike based on non-strikeable grounds.
3. REGULAR COURTS ARE PROHIBITED FROM ISSUING
INJUNCTION AGAINST STRIKES OR LOCKOUT.
The cases cited above involve the issuance of restraining order or
injunction by the NLRC pursuant to the exercise of its injunctive power. In
contrast, regular courts are absolutely prohibited to grant any injunctive
relief in cases of strikes or lockouts.
II.
INJUNCTION IN PICKETING CASES
 1. PROHIBITION ON INJUNCTION AGAINST PEACEFUL
PICKETING.
As a general rule, injunction cannot be issued against the conduct of
picketing by the workers. Under our constitutional set up, picketing is
considered part of the freedom of speech duly guaranteed by the
Constitution. However, excepted from this legal proscription are the
situations mentioned below.
2. EXCEPTIONS.
Under the following circumstances, picketing may be enjoined by the
NLRC:
(1)Where picketing is carried out through the use of illegal means;
(2)Where picketing involves the use of violence and other illegal acts;
(3)Where picketing affects the rights of third parties and injunction
becomes necessary to protect such rights.
(b)
INNOCENT BYSTANDER RULE
1. WHEN INJUNCTION ON PICKETING IS ALLOWED
THROUGH THE REGULAR COURTS AND NOT THROUGH
THE NLRC.
In situations where the picket affects not only the employer but also
the business operations of other establishments owned by third parties, an
injunction may be secured by the latter from the regular courts to enjoin the
picket under the Innocent Bystander Rule. Under this rule, the third-
party employers or innocent bystanders who have no employer-employee
relationship with the picketing strikers, may apply for injunction with the
regular courts (not with the NLRC) to enjoin the conduct of the picket.
Because of the absence of such employer-employee relationship, the
NLRC cannot entertain such application for injunction from innocent
bystanders. Only the employer of the picketers can apply for injunctive
relief from the NLRC.

------------oOo------------
 TOPIC NO. 8
PROCEDURE AND JURISDICTION

PRELIMINARY CONSIDERATIONS
ON PROCEDURE AND JURISDICTION

1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.

The existence of employer-employee relationship between the parties-
litigants, or a reasonable causal connection to such relationship is a
jurisdictional pre-requisite for the exercise of jurisdiction over a labor
dispute by the Labor Arbiters or any other labor tribunals.
2. THE CAUSE OF ACTION MUST ARISE FROM THE EMPLOYER-
EMPLOYEE RELATIONSHIP.
Even if there is employer-employee relationship, if the cause of action
did not arise out of or was not incurred in connection with the employer-
employee relationship, Labor Arbiters and other labor tribunals have no
jurisdiction thereover.
Actions between employers and employees where the employer-
employee relationship is merely incidental are within the exclusive original
jurisdiction of the regular courts.
3. REASONABLE CAUSAL CONNECTION RULE THE
RULE IN CASE OF CONFLICT OF JURISDICTION
BETWEEN LABOR COURT AND REGULAR COURT.
Under this rule, if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is within
the jurisdiction of labor courts.
In the absence of such nexus, it is the regular courts that have
jurisdiction.
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT
RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC
who/which are vested with the power to determine the existence of
employer-employee relationship.
 The following have also the power to make similar determination:
(1)The DOLE Secretary and the DOLE Regional Directors, to the
exclusion of the Labor Arbiter and the NLRC;
(2)The Med-Arbiter;
(3)The Social Security Commission (SSC).
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY
EXERCISE JURISDICTION EVEN ABSENT THE
EMPLOYMENT RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc., it was held that a
seafarer who has already signed a POEA-approved employment contract but
was not deployed overseas and, therefore, there is no employer-employee
relationship, may file his monetary claims case with the Labor Arbiter. This
is because the jurisdiction of Labor Arbiters is not limited to claims arising
from employer-employee relationships. Under Section 10 of R. A. No. 8042
(Migrant Workers and Overseas Filipinos Act of 1995), as amended, the
Labor Arbiter may exercise jurisdiction over the claims of OFWs arising out
of an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment, including claims for
actual, moral, exemplary and other forms of damage. (See also the 2012 case
of Bright Maritime Corporation v. Fantonial).
6. LABOR ARBITERS HAVE JURISDICTION EVEN IF THE CASE IS
FILED BY THE HEIRS OF THE OFW.
This was the ruling in Medline Management, Inc. v. Roslinda. As
heirs, the wife and son of Juliano Roslinda, the deceased OFW, have the
personality to file the claim for death compensation, reimbursement of
medical expenses, damages and attorney's fees before the Labor Arbiter of
the NLRC.
7. LABOR DISPUTES, NOT SUBJECT TO BARANGAY
CONCILIATION.
Labor cases are not subject to the conciliation proceedings prescribed
under P.D. No. 1508 requiring the submission of disputes before the
Barangay Lupong Tagapayapa prior to their filing with the court or other
government offices. Instead of simplifying labor proceedings designed at
expeditious settlement or referral to the proper courts or offices to decide
them finally, the conciliation of the issues before the Barangay Lupong
 Tagapayapa would only duplicate the conciliation proceedings and unduly
delay the disposition of labor cases.

A.
LABOR ARBITER
1. THE LABOR ARBITER.
The Labor Arbiter is an official in the Arbitration Branch of the
National Labor Relations Commission (NLRC) who hears and decides cases
falling under his original and exclusive jurisdiction as provided by law.
2. LABOR ARBITERS HAVE NO INJUNCTIVE POWER; ONLY
THE COMMISSION (NLRC) HAS THIS POWER.
Previously, Labor Arbiters are possessed of injunctive power. This
grant of injunctive power, however, was deleted in recent NLRC Rules. The
Labor Arbiter thus has no more injunctive power. Only the Commission
(NLRC) has that power.
1.
JURISDICTION
1. NATURE OF JURISDICTION OF LABOR ARBITERS - ORIGINAL
AND EXCLUSIVE.
The jurisdiction conferred by Article 217 upon the Labor Arbiters is
both original and exclusive, meaning, no other officers or tribunals can take
cognizance of, or hear and decide, any of the cases therein enumerated.
2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE
JURISDICTION OF LABOR ARBITERS.
The following cases are the exceptions when the Labor Arbiters may
not exercise their original and exclusive jurisdiction:
1. In assumed cases. When the DOLE Secretary or the President
exercises his power under Article 263(g) of the Labor Code to
assume jurisdiction over national interest cases and decide them
himself.
 2. In certified cases. When the NLRC exercises its power of
compulsory arbitration over similar national interest cases that are
certified to it by the DOLE Secretary pursuant to the exercise by the
latter of his certification power under the same Article 263(g).
3. In cases arising from CBA. - When cases arise from the
interpretation or implementation of collective bargaining agreements
and from the interpretation or enforcement of company personnel
policies which shall be disposed of by the Labor Arbiter by referring
the same to the grievance machinery and voluntary arbitration, as
may be provided in said agreements.
4. In cases submitted for voluntary arbitration. - When the parties
agree to submit the case to voluntary arbitration before a Voluntary
Arbitrator or panel of Voluntary Arbitrators who, under Articles 261
and 262 of the Labor Code, are also possessed of original and
exclusive jurisdiction to hear and decide cases mutually submitted to
them by the parties for arbitration and adjudication.
3. RUNDOWN OF ALL CASES FALLING UNDER THE
JURISDICTION OF THE LABOR ARBITERS.
More particularly, Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide the following cases involving all workers,
whether agricultural or non-agricultural:
1. Under Article 217 of the Labor Code:
(a)Unfair labor practice cases;
(b) Termination disputes (Illegal dismissal cases);
(c)Money claims exceeding P5,000.00.
(d) Claims for actual, moral, exemplary and other forms of damages
arising from employer-employee relations; and
(e)Cases involving the legality of strikes and lockouts.
NOTE: Claims for employees compensation, SSS, Philhealth
(Medicare) and maternity benefits do not fall under the jurisdiction of the
Labor Arbiter because these fall under the jurisdiction of other government
agencies.
 2. Under Article 124 of the Labor Code, as amended by R.A. No.
6727:
Disputes involving legislated wage increases and wage distortion in
unorganized establishments not voluntarily settled by the parties
pursuant to R.A. No. 6727.
3. Under Article 128(b) of the Labor Code, as amended by R.A. No.
7730:
Contested cases under the exception clause in Article 128(b) of the
Labor Code.
4. Under Article 227 of the Labor Code:
Enforcement of compromise agreements when there is non-
compliance by any of the parties thereto, pursuant to Article 227
of the Labor Code.
5. Under Article 262-A of the Labor Code:
Issuance of writ of execution to enforce decisions of Voluntary
Arbitrators or panel of Voluntary Arbitrators, in case of their
absence or incapacity, for any reason.
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No.
10022:
Money claims of OFWs arising out of employer-employee
relationship or by virtue of any law or contract, including claims
death and disability benefits and for actual, moral, exemplary and
other forms of damages.
7. Other cases as may be provided by law.

I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
1. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
The Labor Arbiter has jurisdiction over all ULPs whether committed by
the employers or the labor organizations.
 The Labor Arbiter has jurisdiction only over the civil aspect of ULP, the
criminal aspect being lodged with the regular courts.
II.
JURISDICTION OVER ILLEGAL DISMISSAL CASES
1. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION
CASES.
The validity of the exercise of jurisdiction by Labor Arbiters over
illegal dismissal cases is not dependent on the kind or nature of
the ground cited in support of the dismissal; hence, whether the
dismissal is for just cause or authorized cause, it is of no
consequence.
In case of conflict of jurisdiction between Labor Arbiter and the
Voluntary Arbitrator over termination cases, the formers
jurisdiction shall prevail for the following reasons:
(1)Termination of employment is not a grievable issue that must be
submitted to the grievance machinery or voluntary arbitration for
adjudication. The jurisdiction thereover remains within the
original and exclusive ambit of the Labor Arbiter and not of the
Voluntary Arbitrator.
(2)Even if the CBA provides that termination disputes are grievable,
the same is merely discretionary on the part of the parties thereto.
(3)Once there is actual termination, jurisdiction is conferred upon
Labor Arbiters by operation of law.
(4)Interpretation of CBA and enforcement of company personnel
policies are merely corollary to an illegal dismissal case.
(5)Article 217 is deemed written into the CBA being an intrinsic part
thereof.
In other words, the Voluntary Arbitrator will only have jurisdiction
over illegal dismissal cases when there is express agreement of the
parties to the CBA, i.e., the employer and the bargaining agent,
to submit the termination case to voluntary arbitration. Absent the
mutual express agreement of the parties, Voluntary Arbitrator cannot
acquire jurisdiction over termination cases.
 The express agreement must be stated in the CBA or there must be
enough evidence on record unmistakably showing that the parties
have agreed to resort to voluntary arbitration.
III.
JURISDICTION OVER MONEY CLAIMS CASES
1. CLASSIFICATION OF MONEY CLAIMS.
Money claims falling within the original and exclusive jurisdiction of
the Labor Arbiters may be classified as follows:
1. Any money claim, regardless of amount, when asserted in an
illegal dismissal case (hence, accompanied with a claim for
reinstatement). Here, the money claim is but an accompanying
remedy subordinated to the principal cause of action, i.e., illegal
dismissal; or
2. Any money claim exceeding the amount of P5,000.00 per claimant.
If the amount does not exceed P5,000.00, it is, under Article 129, the
DOLE Regional Director has jurisdiction to take cognizance thereof.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.
Award of statutory benefits even if not prayed for is valid.
Claim for notarial fees by a lawyer employed by a company is within the
jurisdiction of the Labor Arbiter.
(a)
VERSUS REGIONAL DIRECTOR
1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL
MONEY CLAIMS LODGED UNDER ARTICLE 129.
As earlier emphasized, under Article 129 of the Labor Code, DOLE
Regional Directors have jurisdiction over claims amounting to P5,000 or
below, provided the following requisites concur:
1. The claim must arise from employer-employee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee does not exceed
P5,000.00.
2. IN INSPECTION OF ESTABLISHMENT CASES UNDER ARTICLE
128, DOLE REGIONAL DIRECTORS HAVE JURISDICTION
REGARDLESS OF WHETHER OR NOT THE TOTAL AMOUNT
OF CLAIMS PER EMPLOYEE EXCEEDS P5,000.00.
a. Requisites.

For the valid exercise by the DOLE Secretary or any of his duly
authorized representatives (DOLE Regional Directors) of the visitorial and
enforcement powers provided under Article 128(b), the following requisites
should concur:
(1)The employer-employee relationship should still exist;
(2)The findings in question were made in the course of inspection by
labor inspectors; and
(3)The employees have not yet initiated any claim or complaint with
the DOLE Regional Director under Article 129, or the Labor Arbiter
under Article 217.
3. HOWEVER, JURISDICTION OVER CONTESTED CASES
UNDER THE EXCEPTION CLAUSE IN ARTICLE 128(b) OF
THE LABOR CODE INVOLVING INSPECTION OF
ESTABLISHMENTS BELONGS TO THE LABOR ARBITERS
AND NOT TO DOLE REGIONAL DIRECTORS.
a. Relation of paragraph (b) of Article 128 to the jurisdiction of
Labor Arbiters.
The Labor Arbiters have jurisdiction over contested cases under the
exception clause in Article 128(b). which states: xxx. The Secretary or his
duly authorized representatives shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection.
 In interpreting the afore-quoted provision of the exception clause,
three (3) elements must concur to divest the Regional Directors or their
representatives of jurisdiction thereunder, to wit:
(a)That the employer contests the findings of the labor regulations
officer and raises issues thereon;
(b) That in order to resolve such issues, there is a need to examine
evidentiary matters; and
(c) That such matters are not verifiable in the normal course of
inspection.
The 2009 case of Meteoro v. Creative Creatures, Inc., best illustrates
the application of the exception clause. Here, it was held that the Court of
Appeals aptly applied the exception clause because at the earliest
opportunity, respondent company registered its objection to the findings of
the labor inspector on the ground that there was no employer-employee
relationship between petitioners and respondent company. The labor
inspector, in fact, noted in his report that respondent alleged that petitioners
were contractual workers and/or independent and talent workers without
control or supervision and also supplied with tools and apparatus pertaining
to their job. In its position paper, respondent again insisted that petitioners
were not its employees. It then questioned the Regional Directors
jurisdiction to entertain the matter before it, primarily because of the
absence of an employer-employee relationship. Finally, it raised the same
arguments before the Secretary of Labor and the appellate court. It is,
therefore, clear that respondent contested and continues to contest the
findings and conclusions of the labor inspector. To resolve the issue raised
by respondent, that is, the existence of an employer-employee relationship,
there is a need to examine evidentiary matters.
IV.
JURISDICTION OVER CLAIMS FOR DAMAGES
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR
DAMAGES.
It is now a well-settled rule, according to Primero v. Intermediate
Appellate Court, that claims for damages as well as attorneys fees in labor
cases are cognizable by the Labor Arbiters, to the exclusion of all other
courts. Rulings to the contrary are deemed abandoned or modified
accordingly.
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS
(OFWs).
Claims for actual, moral, exemplary and other forms of damages that
may be lodged by overseas Filipino workers are cognizable by the Labor
Arbiters.
V.
JURISDICTION OVER LEGALITY OF STRIKES AND LOCKOUTS
JURISDICTIONAL INTERPLAY IN STRIKE
OR LOCKOUT CASES 1. A STRIKE OR LOCKOUT IS
CROSS-JURISDICTIONAL IN NATURE.
Based on the pertinent provisions of the Labor Code, below is an
outline of the interplay in jurisdiction among them.
1. Filing of a notice of strike or lockout with NCMB. - A union which
intends to stage a strike or an employer which desires to mount a
lockout should file a notice of strike or notice of lockout, as the case
may be, with the NCMB and not with any other office. It must be
noted, however, that the NCMB, per Tabigue v. International Copra
Export Corporation, is not a quasi-judicial body; hence, the
Conciliators-Mediators of the NCMB do not have any decision-
making power. They cannot issue decisions to resolve the issues
raised in the notice of strike or lockout. Their role is confined solely to
the conciliation and mediation of the said issues, although they can
suggest to the parties that they submit their dispute to voluntary
arbitration through the Voluntary Arbitrators accredited by the NCMB.
2. Filing of a complaint to declare the illegality of the strike or
lockout with the Labor Arbiter or Voluntary Arbitrator or panel of
Voluntary Arbitrator. - In case a party wants to have the strike or
lockout declared illegal, a complaint should be filed either with the
Labor Arbiter under Article 217(a)(5) of the Labor Code or, upon
mutual agreement of the parties, with the Voluntary Arbitrator or panel
 of Voluntary Arbitrators under Article 262 of the same Code. The issue
of illegality of the strike or lockout cannot be resolved by the
Conciliators-Mediators of the NCMB as earlier pointed out and
discussed.

3. Filing of an injunction petition with the Commission (NLRC). - In

case illegal acts violative of Article 264 are committed in the course of
the strike or lockout, a party may file a petition for injunction directly
with the Commission (NLRC) under Article 218(e) of the Labor Code
for purposes of securing a temporary restraining order (TRO) and
injunction. The Labor Arbiters or Voluntary Arbitrators are not
possessed of any injunctive power under the Labor Code. In other
words, the aggrieved party, despite the pendency of the case for the
declaration of the illegality of the strike or lockout with the Labor
Arbiter or Voluntary Arbitrator, as the case may be, may directly go to
the Commission to secure the injunctive relief.
4. Assumption of jurisdiction by the DOLE Secretary. Under Article
263(g) of the Labor Code, the DOLE Secretary has the power to
assume jurisdiction over labor disputes which, in his opinion, may
cause or likely to cause a strike or lockout in industries indispensable
to the national interest (so-called national interest cases). Once he
makes the assumption, he shall decide all the issues related to the labor
dispute himself, to the exclusion of all other labor authorities.
5. Certification of the labor dispute to the NLRC. - Under the same
provision of Article 263(g) of the Labor Code, the DOLE Secretary
has the option of not assuming jurisdiction over the labor dispute in
national interest cases. Instead, he may certify it to the NLRC for
compulsory arbitration, in which case, it will be the NLRC which shall
hear and decide all the issues subject of the certification order.
In case at the time of the said assumption or certification, there is a
pending case before the Labor Arbiter or Voluntary Arbitrator on the issue of
illegality of the strike or lockout, the same shall be deemed subsumed in the
assumed or certified case. Resultantly, it is no longer the Labor Arbiter or
the Voluntary Arbitrator who should decide the said case but the DOLE
Secretary, in the case of assumed cases, or the NLRC, in the case of certified
cases.
6. Assumption of jurisdiction over a national interest case by the
President. - The President of the Philippines is not precluded from
intervening in a national interest case by exercising himself the powers
of his alter ego, the DOLE Secretary, granted under Article 263(g) by
assuming jurisdiction over the same for purposes of settling or
terminating it.
7. Submission of a national interest case to voluntary arbitration. -
Despite the pendency of the assumed or certified national interest case,
the parties are allowed to submit any issues raised therein to voluntary
arbitration at any stage of the proceeding, by virtue of Article 263(h)
which provides that (b)efore or at any stage of the compulsory
arbitration process, the parties may opt to submit their dispute to
voluntary arbitration.
The foregoing interplay explains why Article 263(i) makes specific
reference to the President of the Philippines, the Secretary of Labor and
Employment, the Commission (NLRC) or the Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in Article
263. The only labor official not so mentioned therein but who has a
significant role to play in the interaction of labor officials and tribunals in
strike or lockout cases, is the Labor Arbiter. This is understandable in the
light of the separate express grant of jurisdiction to the Labor Arbiters under
Article 217(a)(5) as above discussed.
VI.
JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED
ESTABLISHMENTS.
Jurisdiction is with the
Voluntary Arbitrator.
2. CASES IN UNORGANIZED
ESTABLISHMENTS.
Jurisdiction is with Labor Arbiter.
 VII.
JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 227 clearly embodies the following provisions on compromise
agreements:
Article 227. Compromise Agreements. - Any compromise
settlement, including those involving labor standard laws,
voluntarily agreed upon by the parties with the assistance of the
Bureau or the regional office of the Department of Labor, shall
be final and binding upon the parties. The National Labor
Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of
non-compliance thereof or if there is prima facie evidence
that the settlement was obtained through fraud,
misrepresentation, or coercion.
Clear from the foregoing provision that, although the compromise
agreement may have been entered into by the parties before the Bureau of
Labor Relations (BLR) or the DOLE Regional Office, it is the Labor Arbiter
who has jurisdiction to take cognizance of the following issues related
thereto, to the exclusion of the BLR and the DOLE Regional Directors:
(1)To enforce the compromise agreement in case of non-compliance
therewith by any of the parties thereto; or
(2)To nullify it if there is prima facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion.
VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.

Article 262-A of the Labor Code prescribes the procedures that

Voluntary Arbitrators or panel of Voluntary Arbitrators should follow in
adjudicating cases filed before them. Once a decision has been rendered in a
 case and subsequently becomes final and executory, it may be enforced
through the writ of execution issued by the same Voluntary Arbitrator or
panel of Voluntary Arbitrators who rendered it, addressed to and requiring
certain public officers to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator or the panel of
Voluntary Arbitrators who rendered the decision is absent or incapacitated
for any reason, Article 262-A grants jurisdiction to any Labor Arbiter in the
region where the winning party resides, to take cognizance of a motion for
the issuance of the writ of execution filed by such party and accordingly
issue such writ addressed to and requiring the public officers mentioned
above to execute the final decision, order or award of the Voluntary
Arbitrator or panel of Voluntary Arbitrators.
IX.
JURISDICTION OVER CASES OF OVERSEAS FILIPINO
WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY
CLAIMS OF OFWs.
All claims of OFWs with a sign of peso are cognizable by the Labor
Arbiters, including claims for disability and death benefits.
2. EXCEPTION: VOLUNTARY ARBITRATORS HAVE
JURISDICTION OVER MONEY CLAIMS IF THERE EXISTS A
CBA.
If there is a CBA between the foreign employer and the bargaining
union of the OFWs, the jurisdiction over monetary claims of OFWs belongs
to the Voluntary Arbitrator and not to the Labor Arbiter.
3. OFW-RELATED CASES OVER WHICH THE POEA, AND
NOT THE LABOR ARBITERS, HAS JURISDICTION.
The Philippine Overseas Employment Administration (POEA) has
original and exclusive jurisdiction to hear and decide:
(a)All cases which are administrative in character, involving or arising
out of violation of rules and regulations relating to licensing and
registration of recruitment and employment agencies or entities,
 including refund of fees collected from workers and violation of the
conditions for the issuance of license to recruit workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals,
contracting partners and Filipino migrant workers.
No. 1 above covers recruitment violations or violations of conditions of
license; while No. 2 above involves
(a)disciplinary action cases against foreign principals or employers, and
(a) disciplinary action cases against land-based OFWs and seafarers.
X.
OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE
JURISDICTION
1. JURISDICTION OVER CERTAIN ISSUES AS PROVIDED IN
JURISPRUDENCE.
In accordance with well-entrenched jurisprudence, the issues, claims
or cases of the following fall under the jurisdiction of the Labor Arbiters:
(a)Employees in government-owned and/or controlled corporations
without original charters;
(b) Domestic workers or kasambahay;
(c) Employees of cooperatives;
(d) Counter-claims of employers against employees.
JURISDICTION OVER CASES OF
DOMESTIC WORKERS OR KASAMBAHAY
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction if the amount of the claim exceeds
P5,000.00; otherwise, the jurisdiction is vested with the DOLE Regional
Director under Article 129 of the Labor Code.
Incidentally, it is no longer legally correct to use the term domestic
servant or househelper in reference to a person who performs domestic
work. Under R.A. No. 10361, domestic servant or househelper should
now be referred to as domestic worker or kasambahay.
JURISDICTION OVER CASES OF
 EMPLOYEES OF COOPERATIVES
1. WHEN LABOR ARBITERS HAVE JURISDICTION.
The Labor Arbiter has jurisdiction only over monetary claims and
illegal dismissal cases involving employees of cooperatives but not the
claims or termination of membership of members thereof. Cooperatives
organized under R.A. No. 6938, are composed of members; hence, issues on
the termination of their membership with the cooperative do not fall within
the jurisdiction of the Labor Arbiters.
Perpetual Help Credit Cooperative, Inc. v. Faburada. - Petitioner
in this case contends that the Labor Arbiter has no jurisdiction to take
cognizance of the complaint of private respondents who are not members
but employees of the cooperative. The Supreme Court ruled that there is no
evidence that private respondents are members of petitioner cooperative and
even if they are, the dispute is about payment of wages, overtime pay, rest
day and termination of employment. Under Article 217 of the Labor Code,
these disputes are within the original and exclusive jurisdiction of the Labor
Arbiters.
In the 2010 case of San Miguel Corp. v. Semillano, petitioner asserts
that the present case is outside the jurisdiction of the labor tribunals because
respondent Vicente Semillano is a member of the Alilgilan Multi-Purpose
Coop (AMPCO), not an employee of petitioner SMC. Petitioner is of the
position that the instant dispute is intra-cooperative in nature falling within
the jurisdiction of the Arbitration Committee of the Cooperative
Development Authority. AMPCO was contracted by petitioner to supply it
with workers to perform the task of segregating bottles, removing dirt
therefrom, filing them in designated places, loading and unloading the
bottles to and from the delivery trucks, and to perform other tasks as may be
ordered by SMCs officers. Semillano, together with the other respondents,
filed the complaint for regularization with petitioner SMC, contending that
AMPCO was a mere labor-only contractor. The High Court declared in this
case that AMPCO was a labor-only contractor and consequently pronounced
that all the respondents, including Semillano, were regular employees of
petitioner. On this issue of jurisdiction, the High Court held that the Labor
Arbiter has jurisdiction because precisely, Semillano has joined the others in
 filing this complaint because it is his position that petitioner SMC is his true
employer and liable for all his claims under the Labor Code.

JURISDICTION OVER COUNTER-CLAIMS OF EMPLOYERS

1. EMPLOYERS MAY ASSERT COUNTER-CLAIMS AGAINST
EMPLOYEES FILED BY THE LATTER BEFORE THE LABOR
ARBITERS.
Almost all labor cases decided by labor courts involve claims asserted
by the workers. The question that may be propounded is whether the
employers can assert counter-claims against their employees before the
Labor Arbiters. The Supreme Court answered this poser in the affirmative.
Baez v. Hon. Valdevilla. - The jurisdiction of Labor Arbiters and the
NLRC is comprehensive enough to include claims for all forms of damages
arising from the employer-employee relations. By this clause, Article 217
should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and should be
entered as a counter-claim in the illegal dismissal case. This is in accord
with paragraph 6 of Article 217(a), which covers all
other claims, arising from employer-employee relations.
But such counter-claim, being a factual issue, must be asserted before
the Labor Arbiter; otherwise, it can no longer be passed upon by a reviewing
court.
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
1. LABOR ARBITERS HAVE NO JURISDICTION OVER
CERTAIN ISSUES AND CASES. The following issues or
cases do not fall under the jurisdiction of Labor Arbiters:
(a)Claims for damages arising from breach of a non-compete clause
and other post-employment prohibitions;
(b) Claims for payment of cash advances, car, appliance and other
loans of employees;
(c) Dismissal of corporate officers and their monetary claims;
 (d) Cases involving entities immune from suit;
(e)Cases falling under the doctrine of forum non conveniens;
(f) Constitutionality of CBA provisions.
XI-A.
CLAIMS FOR DAMAGES ARISING FROM BREACH OF NON-
COMPETE CLAUSE AND OTHER
POST-EMPLOYMENT
PROHIBITIONS 1. JURISDICTION IS LODGED
WITH THE REGULAR COURTS.
In case of violation of the non-compete clause and similar post-
employment bans or prohibitions, the employer can assert his claim for
damages against the erring employee with the regular courts and not with
the labor courts.
XI-B.
EMPLOYERS CLAIMS FOR CASH ADVANCES, CAR,
APPLIANCE
AND OTHER PERSONAL LOANS OF EMPLOYEES
1. LABOR ARBITERS HAVE NO JURISDICTION.
With respect to resolving issues involving loans availed of by
employees from their employers, it has been the consistent ruling of the
Supreme Court that the Labor Arbiters have no jurisdiction thereover but the
regular courts.
Where the claim to the principal relief sought is to be resolved not by
reference to the Labor Code or other labor relations statute or a collective
bargaining agreement but by the general civil law, the jurisdiction over the
dispute belongs to the regular courts of justice and not to the Labor Arbiter
and the NLRC. In such situations, resolutions of the dispute requires
expertise, not in labor management relations nor in wage structures and
other terms and conditions of employment, but rather in the application of
the general civil law. Clearly, such claims fall outside the area of
competence or expertise ordinarily ascribed to Labor Arbiters and the NLRC
and the rationale for granting jurisdiction over such claims to these agencies
disappears.
The following loans may be cited:
 a. Cash loans/advances are in the nature of simple collection of a sum
of money brought by the employer, as creditor, against the
employee, as debtor. The fact that they were employer and employee
at the time of the transaction does not negate the civil jurisdiction of
the trial court. The case does not involve adjudication of a labor
dispute but recovery of a sum of money based on our civil laws on
obligation and contract.
b. Car loans such as those granted to sales or medical representatives
by reason of the nature of their work. The employers demand for
payment of the employees amortizations on their car loans, or, in
the alternative, the return of the cars to the company, is not a labor,
but a civil, dispute. It involves debtor-creditor relations, rather than
employee-employer relations.
c. Appliance loans concern the enforcement of a loan agreement
involving debtor-creditor relations founded on contract and do not in
any way concern employee relations. As such it should be enforced
through a separate civil action in the regular courts and not before
the Labor Arbiter.
d. Loans from retirement fund also involve the same principle as
above; hence, collection therefor may only be made through the
regular courts and not through the Labor Arbiter or any labor
tribunal.
XI-C.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
1. LABOR ARBITERS HAVE NO JURISDICTION.
The dismissal of a director or corporate officer is an intra-corporate
dispute cognizable by the Regional Trial Court and not by the Labor Arbiter.
2. MATLING DOCTRINE.
Under this doctrine, the following rules should be observed:
(1)The dismissal of regular employees falls under the jurisdiction of
Labor Arbiters; while that of corporate officers falls within the
jurisdiction of the regular courts.
(2)The term corporate officers refers only to those expressly
mentioned in the Corporation Code and By-Laws; all other officers
not so mentioned therein are deemed employees.
(3)Corporate officers are elected or appointed by the directors or
stockholders, and those who are given that character either by the
Corporation Code or by the corporations by-laws.
(4)The Corporation Code specifically mentions only the following
corporate officers, to wit: president, secretary and treasurer and
such other officers as may be provided for in the by-laws.
(5)The Board of Directors can no longer create corporate offices
because the power of the Board of Directors to create a
corporate office cannot be delegated. Therefore, the term
corporate officers should only refer to the above and to no other.
A different interpretation can easily leave the way open for the
Board of Directors to circumvent the constitutionally guaranteed
security of tenure of the employee by the expedient inclusion in the
By-Laws of an enabling clause on the creation of just any corporate
officer position.
(6)Distinction between a corporate officer and an employee. - An
office is created by the charter of the corporation and the
corporate officer is elected by the directors or stockholders. On
the other hand, an employee occupies no office and generally is
employed not by the action of the directors or stockholders but by
the managing officer of the corporation who also determines the
compensation to be paid to such employee.
(7)Because of the Matling doctrine, the rulings in Tabang and Nacpil,
are no longer controlling because they are too sweeping and do not
accord with reason, justice, and fair play.
(8)The status of an employee as director and stockholder does not
automatically convert his dismissal into an intra-corporate
dispute.
(9)Two (2) elements to determine whether a dispute is intra-
corporate or not.
(a)The status or relationship of the parties; and
(b) The nature of the question that is the subject of their controversy.
(Nature of controversy test).
 In the absence of any one of these factors, the RTC will not have
jurisdiction.
(10) The criteria do not depend on the services performed but on
the manner of creation of the office. In Matling, respondent
Corros was supposedly at once an employee, a stockholder, and a
Director of Matling. The circumstances surrounding his
appointment to office must be fully considered to determine
whether the dismissal constituted an intra-corporate controversy or
a labor termination dispute. It must also be considered whether his
status as Director and stockholder had any relation at all to his
appointment and subsequent dismissal as Vice President for Finance
and Administration.
Obviously enough, the respondent was not appointed as Vice
President for Finance and Administration because of his being a
stockholder or Director of Matling. He had started working for
Matling on September 8, 1966, and had been employed
continuously for 33 years until his termination on April 17, 2000.
His first work as a bookkeeper and his climb in 1987 to his last
position as Vice President for Finance and Administration had been
gradual but steady. Even though he might have become a
stockholder of Matling in 1992, his promotion to the position of
Vice President for Finance and Administration in 1987 was by
virtue of the length of quality service he had rendered as an
employee of Matling. His subsequent acquisition of the status of
Director/stockholder had no relation to his promotion. Besides, his
status of Director/stockholder was unaffected by his dismissal from
employment as Vice President for Finance and Administration.
3. SIGNIFICANT CASES DECIDED BASED ON
THE MATLING DOCTRINE. a. Cosare v.
Broadcom Asia, Inc.,
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not
the regular courts, has original jurisdiction over the illegal dismissal case
filed by petitioner Cosare who was an incorporator of respondent Broadcom
and was holding the position of Assistant Vice President for Sales (AVP for
Sales) and Head of the Technical Coordination at the time of his
termination. The following justifications were cited in support of this ruling:
(1)The mere fact that a person was a stockholder and an officer of the
company at the time the subject controversy developed does not
necessarily make the case an intra-corporate dispute.
(2)A person, although an officer of the company, is not necessarily a
corporate officer thereof.
(3)General Information Sheet (GIS) submitted to SEC neither governs
nor establishes the nature of office.

(4)The Nature of the Controversy Test: The mere fact that a person was
a stockholder at the time of the filing of the illegal dismissal case
does not make the action an intra-corporate dispute.
b. Other cases:
(1)Barba v. Liceo de Cagayan University (2012);
(2)Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M.
Joson (2011);
(3)Real v. Sangu Philippines, Inc. (2011).

XI-D.
LABOR CASES INVOLVING ENTITIES
IMMUNE FROM SUIT 1. IMMUNE ENTITIES
CANNOT BE SUED FOR LABOR LAW VIOLATIONS.
In this jurisdiction, the generally accepted principles of international
law are recognized and adopted as part of the law of the land. Immunity of a
State and international organizations from suit is one of these universally
recognized principles. It is on this basis that Labor Arbiters or other labor
tribunals have no jurisdiction over immune entities.
2. ILLUSTRATIVE CASE.
In Department of Foreign Affairs v. NLRC, involving an illegal
dismissal case filed against the Asian Development Bank (ADB), it was
ruled that said entity enjoys immunity from legal process of every form and
therefore the suit against it cannot prosper. And this immunity extends to its
officers who also enjoy immunity in respect of all acts performed by them in
their official capacity. The Charter and the Headquarters Agreement granting
these immunities and privileges to the ADB are treaty covenants and
commitments voluntarily assumed by the Philippine government which
must be respected.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by the case
of United States v. Hon. Rodrigo, where it was held that when the function
of the foreign entity otherwise immune from suit partakes of the nature of a
proprietary activity, such as the restaurant services offered at John Hay Air
Station undertaken by the United States Government as a commercial
activity for profit and not in its governmental capacity, the case for illegal
dismissal filed by a Filipino cook working therein is well within the
jurisdiction of Philippine courts. The reason is that by entering into the
employment contract with the cook in the discharge of its proprietary
functions, it impliedly divested itself of its sovereign immunity from suit.
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN
IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such
diplomatic immunity since estoppel does not operate to confer jurisdiction
to a tribunal that has none over a cause of action.
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
This doctrine is an international law principle which has been applied
to labor cases. The following are the requisites for its applicability:
(1)That the Philippine court is one to which the parties may
conveniently resort;
(2)That the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and
 (3)That the Philippine court has or is likely to have power to enforce its
decision.
2. APPLICATION TO LABOR CASES.
a. Case where doctrine was rejected.
Petitioners invocation of this principle was rejected in Pacific
Consultants International Asia, Inc. v. Schonfeld. Petitioners insistence
was based on the fact that respondent is a Canadian citizen and was a
repatriate. In so rejecting petitioners contention, the Supreme Court cited
the following reasons that do not warrant the application of the said
principle: (1) the Labor Code does not include forum non conveniens as
a ground for the dismissal of the complaint; and (2) the propriety of
dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as a defense.
b. Case where doctrine was applied.
This doctrine was applied in the case of The Manila Hotel Corp. and
Manila Hotel International Limited v. NLRC, where private respondent
Marcelo Santos was an overseas worker employed as a printer in a printing
press in the Sultanate of Oman when he was directly hired by the Palace
Hotel, Beijing, Peoples Republic of China to work in its print shop. This
hotel was being managed by the Manila Hotel International Ltd., a foreign
entity registered under the laws of Hong Kong. Later, he was terminated due
to retrenchment occasioned by business reverses brought about by the
political upheaval in China (referring to the Tiananmen Square incident)
which severely affected the hotels operations.
In holding that the NLRC was a seriously inconvenient forum, the
Supreme Court noted that the main aspects of the case transpired in two
foreign jurisdictions and the case involves purely foreign elements. The only
link that the Philippines has with the case is that the private respondent
employee (Marcelo Santos) is a Filipino citizen. The Palace Hotel and
MHICL are foreign corporations. Consequently, not all cases involving
Filipino citizens can be tried here. Respondent employee was hired directly
by the Beijing Palace Hotel, a foreign employer, through correspondence
sent to him while he was working at the Sultanate of Oman. He was hired
without the intervention of the POEA or any authorized recruitment agency
of the government. Hence, the NLRC is an inconvenient forum given that all
the incidents of the case - from the time of recruitment, to employment to
dismissal - occurred outside the Philippines. The inconvenience is
compounded by the fact that the proper defendants, the Palace Hotel and
MHICL, are not nationals of the Philippines. Neither are they doing
business in the Philippines. Likewise, the main witnesses, Mr. Shmidt
(General Manager of the Palace Hotel) and Mr. Henk (Palace Hotels
Manager) are non-residents of the Philippines.
Neither can an intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign soil. This calls to fore
the application of the principle of lex loci contractus (the law of the place
where the contract was made). It must be noted that the employment
contract was not perfected in the Philippines. Private respondent employee
signified his acceptance thereof by writing a letter while he was in the
Sultanate of Oman. This letter was sent to the Palace Hotel in the Peoples
Republic of China. Neither can the NLRC determine the facts surrounding
the alleged illegal dismissal as all acts complained of took place in Beijing,
Peoples Republic of China. The NLRC was not in a position to determine
whether the Tiananmen Square incident truly adversely affected the
operations of the Palace Hotel as to justify respondent employees
retrenchment.
Even assuming that a proper decision could be reached by the NLRC,
such would not have any binding effect against the employer, the Palace
Hotel, which is a corporation incorporated under the laws of China and was
not even served with summons. Jurisdiction over its person was not
acquired. This is not to say that Philippine courts and agencies have no
power to solve controversies involving foreign employers. Neither could it
be said that the Supreme Court does not have power over an employment
contract executed in a foreign country. If the respondent employee were an
overseas contract worker, a Philippine forum, specifically the POEA, not
the NLRC, would protect him. He is not an overseas contract worker, a
fact which he admits with conviction.
XI-F.
CONSTITUTIONALITY OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUEA DOCTRINE.
 In Halaguea v. Philippine Airlines, Inc., it was pronounced that it is
not the Labor Arbiter but the regular court which has jurisdiction to rule on
the constitutionality of labor contracts such as a CBA. Petitioners were
female flight attendants of respondent Philippine Airlines (PAL) and are
members of the Flight Attendants and Stewards Association of the
Philippines (FASAP), the sole and exclusive bargaining representative of the
flight attendants, flight stewards and pursers of respondent. The July 11,
2001 CBA between PAL and FASAP provides that the compulsory
retirement for female flight attendants is fifty-five (55) and sixty (60) for
their male counterpart.
Claiming that said CBA provision is discriminatory against them,
petitioners filed against respondent a Special Civil Action for Declaratory
Relief with Prayer for the Issuance of Temporary Restraining Order and
Writ of Preliminary Injunction with the Regional Trial Court (RTC) of
Makati City.
In ruling that the RTC has jurisdiction, the Supreme Court cited the
following reasons:
(1)The case is an ordinary civil action, hence, beyond the jurisdiction of
labor tribunals.
(2)The said issue cannot be resolved solely by applying the Labor
Code. Rather, it requires the application of the Constitution, labor
statutes, law on contracts and the Convention on the Elimination of
All Forms of Discrimination Against Women (CEDAW). The
power to apply and interpret the constitution and CEDAW is within
the jurisdiction of trial courts, a court of general jurisdiction.
(3)Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the
Labor Arbiter. Actions between employees and employer where the
employer-employee relationship is merely incidental and the cause
of action proceeds from a different source of obligation are within
the exclusive jurisdiction of the regular courts. Here, the employer-
employee relationship between the parties is merely incidental and
the cause of action ultimately arose from different sources of
obligation, i.e., the Constitution and CEDAW.
2.
 REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT
ASPECT OF LABOR ARBITERS DECISION, IMMEDIATELY
EXECUTORY EVEN PENDING APPEAL; NO WRIT OF
EXECUTION REQUIRED.
According to the Pioneer Texturizing doctrine, an order of
reinstatement issued by the Labor Arbiter under Article 223 of the Labor
Code is self-executory or immediately executory even pending appeal. This
means that the perfection of an appeal shall stay the execution of the
decision of the Labor Arbiter except execution of the reinstatement pending
appeal.
2. REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO
THE REINSTATEMENT ORDER ISSUED BY THE LABOR
ARBITER; WRIT OF EXECUTION REQUIRED WHEN
REINSTATEMENT IS ORDERED BY NLRC ON APPEAL, OR
SUBSEQUENTLY BY THE COURT OF APPEALS OR SUPREME
COURT, AS THE CASE MAY BE.
By way of distinction, the rule on reinstatement pending appeal applies
only to the order of reinstatement issued by the Labor Arbiter and to no
other. This means that if the reinstatement order is issued by the NLRC on
appeal, or by the Court of Appeals or by the Supreme Court, there is a need
to secure a writ of execution from the Labor Arbiter of origin to enforce the
reinstatement of the employee whose dismissal is declared illegal.
3. TWO (2) OPTIONS OF EMPLOYER.
To implement the reinstatement aspect of a Labor Arbiters decision,
there are only two (2) options available to the employer, to wit:
1. Actual reinstatement. - The employee should be reinstated to his
position which he occupies prior to his illegal dismissal under the
same terms and conditions prevailing prior to his dismissal or
separation or, if no longer available, to a substantially-equivalent
position; or
2. Payroll reinstatement. The employee should be reinstated in the
payroll of the company without requiring him to report back to his
work.
4. DUTY OF EMPLOYER TO NOTIFY EMPLOYEE ORDERED
REINSTATED.
It is required that in case the decision of the Labor Arbiter includes an
order of reinstatement, it should
contain:
(a)A statement that the reinstatement aspect is immediately executory;
and
(b) A directive for the employer to submit a report of compliance
within ten (10) calendar days from receipt of the said decision.
Disobedience of this directive clearly denotes a refusal to reinstate.
The employee need not file a motion for the issuance of the writ of
execution since the Labor Arbiter is mandated thereafter to motu proprio
issue the writ. With the new rules in place, there is hardly any difficulty in
determining the employers intransigence in immediately complying with
the order.
5. INSTANCES WHEN WRIT OF EXECUTION OF LABOR
ARBITERS REINSTATEMENT ORDER STILL REQUIRED.
Under the 2011 NLRC Rules of Procedure, there are two (2) instances
when a writ of execution should still be issued immediately by the Labor
Arbiter to implement his order of reinstatement, even pending appeal, viz.:
(1)When the employer disobeys the prescribed directive to submit a
report of compliance within ten (10) calendar days from receipt of
the decision; or
(2)When the employer refuses to reinstate the dismissed employee.
The Labor Arbiter shall motu proprio issue a corresponding writ to
satisfy the reinstatement wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.
6. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.
Employer has no way of staying execution of immediate
reinstatement. He cannot post bond to prevent its execution.
Reinstatement pending appeal applies to all kinds of illegal dismissal
cases, regardless of the grounds thereof.
 Reinstatement pending appeal does not apply when the dismissal is
legal but reinstatement is ordered for some reasons like equity and
compassionate justice.
The failure of employee ordered reinstated pending appeal to report back
to work as directed by the employer does not give the employer the right
to remove him, especially when there is a reasonable explanation for his
failure.
When former position is already filled up, the employee ordered
reinstated pending appeal should be reinstated to a substantially
equivalent position.
Reinstatement to a position lower in rank is not proper.
In case of two successive dismissals, the order of reinstatement
pending appeal under Article 223 issued in the first case shall apply
only to the first case and should not affect the second dismissal.
According to Sevilla v. NLRC, the Labor Arbiter was correct in
denying the third motion for reinstatement filed by the petitioner
because what she should have filed was a new complaint based on
the second dismissal. The second dismissal gave rise to a new cause
of action. Inasmuch as no new complaint was filed, the Labor Arbiter
could not have ruled on the legality of the second dismissal.
Reinstatement pending appeal is not affected by the reinstated employees
employment elsewhere.
Effect of grant of achievement award during reinstatement pending
appeal.
In the 2014 case of Garza v. Coca-Cola Bottlers Philippines, Inc., it
was pronounced that the act of respondent CCBPI in giving an award of
a Certificate of Achievement to petitioner for his exemplary sales
performance during his reinstatement ordered by the Labor Arbiter,
while respondents appeal with the NLRC was still pending, constitutes
recognition of petitioners abilities and accomplishments. It indicates
that he is a responsible, trustworthy and hardworking employee of
CCBPI. It constitutes adequate proof weighing in his favor.
3.
REQUIREMENTS TO PERFECT APPEAL TO NLRC
I.
APPEAL IN GENERAL
 1. APPEAL, MEANING AND NATURE.
The term appeal refers to the elevation by an aggrieved party to an
agency vested with appellate authority of any decision, resolution or order
disposing the principal issues of a case rendered by an agency vested with
original jurisdiction, undertaken by filing a memorandum of appeal.
2. SOME PRINCIPLES ON APPEAL.
Appeals under Article 223 apply only to appeals from the Labor Arbiters
decisions, awards or orders to the Commission (NLRC).
There is no appeal from the decisions, orders or awards of the NLRC.
Clearly, therefore, Article 223 of the Labor Code is not the proper basis
for elevating the case to the Court of Appeals or to the Supreme Court.
The proper remedy from the decisions, awards or orders of the NLRC to
the Court of Appeals is a Rule 65 petition for certiorari and from the
Court of Appeals to the Supreme Court, a Rule 45 petition for review on
certiorari.
Appeal from the NLRC to the DOLE Secretary and to the President
had long been abolished.
Appeal is not a constitutional right but a mere statutory privilege. Hence,
parties who seek to avail of it must comply with the statutes or rules
allowing it.
A motion for reconsideration is unavailing as a remedy against a decision
of the Labor Arbiter. The Labor Arbiter should treat the said motion as an
appeal to the NLRC.
A Petition for Relief should be treated as appeal.
Affirmative relief is not available to a party who failed to appeal. A
party who does not appeal from a decision of a court cannot obtain
affirmative relief other than the ones granted in the appealed decision.
3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).
The appeal to the NLRC may be entertained only on any of the
following grounds:
a. If there is a prima facie evidence of abuse of discretion on the part
of the Labor Arbiter;
 b. If the decision, order or award was secured through fraud or
coercion, including graft and corruption; c. If made purely on
questions of law; and/or
d. If serious errors in the findings of fact are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
appellant.
NLRC has certiorari power.
The first ground above regarding prima facie evidence of abuse of
discretion on the part of the Labor Arbiter is actually an exercise of
certiorari power by the NLRC. The case of Triad Security & Allied
Services, Inc. v. Ortega, expressly recognized this certiorari power of the
NLRC. Clearly, according to the 2012 case of Auza, Jr. v. MOL
Philippines, Inc., the NLRC is possessed of the power to rectify any abuse
of discretion committed by the Labor Arbiter.
II.
PERFECTION OF APPEAL
1. EFFECT OF PERFECTION OF APPEAL ON EXECUTION.
To reiterate, the perfection of an appeal shall stay the execution of the
decision of the Labor Arbiter except execution for reinstatement pending
appeal.
2. PERFECTION OF APPEAL, MANDATORY AND
JURISDICTIONAL.
The perfection of appeal within the period and in the manner
prescribed by law is jurisdictional and non-compliance with the legal
requirements is fatal and has the effect of rendering the judgment final and
executory, hence, unappealable.
3. REQUISITES.
The requisites for perfection of appeal to the NLRC are as follows:
(1)Observance of the reglementary period;
(2)Payment of appeal and legal research fee;
(3)Filing of a Memorandum of Appeal;
(4)Proof of service to the other party; and
 (5)Posting of cash, property or surety bond, in case of monetary
awards.
The foregoing are discussed below.
III.
REGLEMENTARY PERIOD
1. TWO (2) KINDS OF REGLEMENTARY PERIOD.
The reglementary period depends on where the appeal comes from, viz.:
1. Ten (10) calendar days in the case of appeals
from decisions of the Labor Arbiters under Article
223 of the Labor Code; and
2. Five (5) calendar days in the case of appeals
from decisions of the DOLE Regional Director
under Article 129 of the Labor Code.
Calendar days and not working days.
The shortened period of ten (10) days fixed by Article 223
contemplates calendar days and not working days. The same holds true in
the case of the 5-day reglementary period under Article 129 of the Labor
Code. Consequently, Saturdays, Sundays and legal holidays are included
in reckoning and computing the reglementary period.
2. EXCEPTIONS TO THE 10-CALENDAR DAY OR 5-CALENDAR
DAY REGLEMENTARY PERIOD RULE.
The following are the specific instances where the rules on the
reckoning of the reglementary period have not been strictly observed:
1) 10th day (or 5th day) falling on a Saturday, Sunday or holiday, in
which case, the appeal may be filed in the next working day.
2) Reliance on erroneous notice of decision as when the notice
expressly states working days and not calendar days.
3) Appeal from decisions of Labor Arbiters in direct contempt cases
five (5) calendar days.
4) Filing of petition for extraordinary remedies from orders or
resolutions of Labor Arbiters or on third party claims ten (10)
calendar days.
 5) When NLRC exercises its power to correct, amend, or waive any
error, defect or irregularity whether in substance or form in the
exercise of its appellate jurisdiction, as provided under Article
218(c) of the Labor Code, in which case, the late filing of the appeal
is excused.
6) When technical rules are disregarded under Article 221.
7) When there are some compelling reasons that justify the allowance
of the appeal despite its late filing such as when it is granted in the
interest of substantial justice.
3. SOME PRINCIPLES ON REGLEMENTARY PERIOD.
The reglementary period is mandatory and not a mere technicality.
The failure to appeal within the reglementary period renders the
judgment appealed from final and executory by operation of law.
Consequently, the prevailing party is entitled, as a matter of right, to a
writ of execution and the issuance thereof becomes a ministerial duty
which may be compelled through the remedy of mandamus.
The date of receipt of decisions, resolutions or orders by the parties is of
no moment. For purposes of appeal, the reglementary period shall be
counted from receipt of such decisions, resolutions, or orders by the
counsel or representative of record.
Miscomputation of the reglementary period will not forestall the finality
of the judgment. It is in the interest of everyone that the date when
judgments become final and executory should remain fixed and
ascertainable.
Date of mailing by registered mail of the appeal memorandum is the
date of its filing.
Motion for extension of time to perfect an appeal is not allowed. This kind
of motion is a prohibited pleading.
Motion for extension of time to file the memorandum of appeal is not
allowed.
Motion for extension of time to file appeal bond is not allowed.
IV.
APPEAL FEE AND LEGAL RESEARCH FEE
1. PAYMENT OF APPEAL FEE AND LEGAL
RESEARCH FEE, MANDATORY AND
JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal
research fee is both mandatory and jurisdictional. An appeal is perfected
only when there is proof of payment of the appeal fee. It is by no means a
mere technicality. If not paid, the running of the reglementary period for
perfecting an appeal will not be tolled.
V.
MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
1. The Memorandum of Appeal should be verified by the appellant
himself in accordance with the Rules of Court, as amended;
2. It should be presented in three (3) legibly typewritten or printed
copies;
3. It shall state the grounds relied upon and the arguments in support
thereof, including the relief prayed for;
4. It shall contain a statement of the date the appellant received the
appealed decision, award or order; and
5. It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research fee;
(ii)posting of a cash or surety bond (in case of monetary awards); and
(iii)proof of service upon the other party.
2. REQUIREMENTS NOT JURISDICTIONAL.
The aforesaid requirements that should be complied with in a
Memorandum of Appeal are merely a rundown of the contents of the
required appeal memorandum to be submitted by the appellant. They are not
jurisdictional requirements.
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
 Mere notice of appeal without complying with the other requisites
aforestated shall not stop the running of the period for perfecting an
appeal.
Memorandum of appeal is not similar to motion for reconsideration.
Lack of verification in a memorandum of appeal is not a fatal defect.
It may easily be corrected by requiring an oath.
An appeal will be dismissed if signed only by an unauthorized
representative.
Only complainants who signed the memorandum of appeal are
deemed to have appealed the Labor Arbiters decision. The prevailing
doctrine in labor cases is that a party who has not appealed cannot obtain
from the appellate court any affirmative relief other than those granted, if
any, in the decision of the lower tribunal.
VI.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.

While it is required that in all cases, the appellant shall furnish a copy
of the Memorandum of Appeal to the other party (appellee), non-compliance
therewith, however, will not be an obstacle to the perfection of the appeal;
nor will it amount to a jurisdictional defect on the NLRCs taking
cognizance thereof.
VII.
POSTING OF BOND
1. WHEN POSTING OF BOND REQUIRED.
Only in case the decision of the Labor Arbiter or the DOLE Regional
Director (under Article 129 of the Labor Code) involves a monetary
award , that an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of (1) cash deposit, (2)
surety bond or (3) property bond, equivalent in amount to the monetary
award, but excluding the amount of damages (moral and exemplary) and
attorneys fees. In other words, only monetary awards (such as unpaid
wages, backwages, separation pay, 13th month pay, etc.) are required to
be covered by the bond. Moral and exemplary damages and attorneys
fees are excluded.
2. SOME PRINCIPLES ON POSTING OF BOND.
Posting of bond is mandatory and jurisdictional.
The cash or surety bond required for the perfection of appeal should
be posted within the reglementary period. If a party failed to perfect
his appeal by the non-payment of the appeal bond within the 10-calendar
day period provided by law, the decision of the Labor Arbiter becomes
final and executory upon the expiration of the said period.
In case the employer failed to post a bond to perfect its appeal, the
remedy of the employee is to file a motion to dismiss the appeal and
not a petition for mandamus for the issuance of a writ of execution.
Surety bond must be issued by a reputable bonding company duly
accredited by the Commission (NLRC) or the Supreme Court.
The bond shall be valid and effective from the date of deposit or posting,
until the case is finally decided, resolved or terminated, or the award
satisfied.
Posting of a bank guarantee or bank certification is not sufficient
compliance with the bond requirement. It is not equivalent to nor can
be considered compliance with the cash, surety or property bond.
Cooperatives are not exempted from posting bond.
Government is exempt from posting of bond; government-owned
and/or controlled corporations, however, are not exempt therefrom.
Bond is not required for the NLRC to entertain a motion for
reconsideration. An appeal bond is required only for the perfection of an
appeal of a Labor Arbiters decision involving a monetary award.
Bond is not required to file a Rule 65 petition for certiorari.
3. JUSTIFICATIONS FOR NON-POSTING OF BOND.
No monetary award, no bond required. The rule is clear that when the
judgment of the Labor Arbiter does not involve any monetary award, no
appeal bond is necessary.
There is no duty to post a bond if the monetary award is not specified
in the decision. The Labor Arbiters decision or order should state the
amount awarded. If the amount of the monetary award is not contained or
fixed in the judgment, the appeal bond is not required to be posted.
In case of conflict between the body and the fallo of the decision, the
latter should prevail.
 VII-A.
RULE ON REDUCTION OF APPEAL BOND
1. REQUISITES WHEN THE AMOUNT OF APPEAL BOND MAY BE
REDUCED.
(1)The motion should be filed within the reglementary period;
(2)The motion to reduce bond should be based on meritorious grounds;
and
(3)The motion should be accompanied by a partial bond, the amount of
which should be reasonable in relation to the monetary awards.
2. SOME PRINCIPLES ON REDUCTION OF BOND.
Bond may be reduced when decision failed to specify the exact amount
of monetary award from which the amount of the appeal bond is to
be based.
Conversely, the reduction of the bond will not be warranted not only
when no meritorious ground is shown to justify the same but when the
appellant absolutely failed to comply with the requirement of posting a
bond, even if partial; or when circumstances show the employers
unwillingness to ensure the satisfaction of its workers valid claims.
Monetary award running into millions is not justification to reduce
bond.
Financial difficulties or financial incapacity is not sufficient grounds
to reduce bond. What appellant has to pay is a moderate and reasonable
sum for the premium for such bond.
The full amount of the monetary award should still be posted within the
reglementary period even if the appellant has filed a motion to reduce
bond.
Alternative remedy is to pay partial appeal bond while motion to reduce
bond is pending with the NLRC. Examples:
(1)Rosewood Processing, Inc. v. NLRC. - The petitioner was declared to
have substantially complied with the rules by posting a partial surety
bond of P50,000.00 while its motion to reduce the appeal bond in the
amount of P789,154.39 was pending before the NLRC.
 (2)Following Rosewood, the filing by petitioners of a motion to reduce
appeal bond to P100,000, enclosing a bond in that amount, from the
total monetary award of P3,132,335.57 was given imprimatur in the
2010 case of Pasig Cylinder Mfg., Corp. v. Rollo.
The partial bond must be posted during the reglementary period. The
late filing of the bond divests the NLRC of its jurisdiction to entertain the
appeal since the decision of the Labor Arbiter has already become final
and executory with the lapse of the reglementary period.
Partial bond posted must not be inadequate. In Sapitan v. JB Line
Bicol Express, Inc., the partial bond of P200,000 was found to be
inadequate for the liability in the sum of P9,097,624.00.
B.
NATIONAL LABOR RELATIONS COMMISSION (NLRC)
1. NATURE.
The NLRC is an administrative quasi-judicial body. It is an agency
attached to the DOLE solely for program and policy coordination only. It is
in charge of deciding labor cases through compulsory arbitration.
2. COMPOSITION OF THE NLRC.
The NLRC is composed of a Chairman and twenty-three (23) members
called Commissioners.
The NLRC has tripartite composition. Eight (8) members thereof
should be chosen only from among the nominees of the workers sector and
another eight (8) from the employers sector. The Chairman and the seven
(7) remaining members shall come from the public sector, with the latter to
be chosen preferably from among the incumbent Labor Arbiters. The
validity of the tripartite composition of the NLRC was recognized by the
Supreme Court in the case of Mayor v. Hon. C. Macaraig.
3. COMMISSION EN BANC.
The Commission sits en banc only for the following purposes:
(1)To promulgate rules and regulations governing the hearing and
disposition of cases before any of its divisions and regional
branches; and
 (2)To formulate policies affecting its administration and operations.
The NLRC does not sit en banc to hear and decide cases. The banc
has no adjudicatory power. The Commission exercises its adjudicatory
and all other powers, functions, and duties through its eight (8)
Divisions.
4. NLRCS EIGHT (8) DIVISIONS.
The NLRC is divided into eight (8) divisions, each one is comprised of
three (3) members. Each Division shall consist of one (1) member from the
public sector who shall act as its Presiding Commissioner and one (1)
member each from the workers and employers sectors, respectively.
The various Divisions of the Commission have exclusive appellate
jurisdiction over cases within their respective territorial jurisdictions.
1.
JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds of jurisdiction:
1. Exclusive original jurisdiction; and
2. Exclusive appellate jurisdiction.
2. EXCLUSIVE ORIGINAL JURISDICTION.
The NLRC exercises exclusive and original jurisdiction over the
following cases:
a. Petition for injunction in ordinary labor disputes to enjoin or
restrain any actual or threatened commission of any or all prohibited
or unlawful acts or to require the performance of a particular act in
any labor dispute which, if not restrained or performed forthwith,
may cause grave or irreparable damage to any party.
b. Petition for injunction in strikes or lockouts under Article 264 of
the Labor Code.
c. Certified cases which refer to labor disputes causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest, certified to it by the Secretary of Labor and Employment for
 compulsory arbitration by virtue of Article 263(g) of the Labor
Code.
d. Petition to annul or modify the order or resolution (including those
issued during execution proceedings) of the Labor Arbiter.
3. EXCLUSIVE APPELLATE JURISDICTION.
The NLRC exercises exclusive appellate jurisdiction over the
following:
a. All cases decided by the Labor Arbiters.
b. Cases decided by the DOLE Regional Directors or hearing officers
involving small money claims under Article 129 of the Labor Code.
c. Contempt cases decided by the Labor Arbiters.
2.
EFFECT OF NLRC REVERSAL OF
LABOR ARBITERS ORDER OF REINSTATEMENT
1. ENTITLEMENT TO REINSTATEMENT WAGES.
From the moment an employee is ordered reinstated by the Labor
Arbiter on the basis of the finding that his dismissal is illegal, up to the time
that an appellate tribunal like the NLRC, Court of Appeals and Supreme
Court, as the case may be, reverses the said finding, the employee is
generally entitled to his so-called reinstatement wages. The issue of
entitlement to this benefit has been the subject of several doctrinal rulings
now known as follows:
(1)Roquero doctrine;
(2)Genuino doctrine; and
(3)Garcia doctrine.
1.1. ROQUERO DOCTRINE.
The Roquero doctrine, enunciates the rule that in cases where an
employee is ordered reinstated by the Labor Arbiter and the employer fails
or refuses to obey the reinstatement order but initiates an appeal, the
employers success in having the decision of the Labor Arbiters decision
reversed on appeal will not exculpate him from the liability to pay the
reinstatement wages of the employee reckoned and computed from the time
the employee was ordered reinstated by the Labor Arbiter until the date of
its reversal on appeal.
In this case of Roquero, the dismissal of petitioners Roquero and
Pabayo was held valid by the Labor Arbiter. On appeal to the NLRC, the
Labor Arbiters decision was reversed and consequently, petitioners were
ordered reinstated. They did not appeal from that decision of the NLRC but
filed a motion for the issuance of a writ of execution of the order of
reinstatement. The Labor Arbiter granted the motion but respondent PAL
refused to comply with the said order on the ground that it has filed a
Petition for Review before the Supreme Court. Subsequently, the CA
reversed the decision of the NLRC and ruled that the dismissal of petitioners
was valid. The Supreme Court later affirmed the CAs decision but it held
that the unjustified refusal by PAL to reinstate Roquero who, unlike Pabayo,
has not amicably settled his case, entitles him to the payment of his
reinstatement wages effective from the time PAL failed to reinstate him
despite the issuance of the writ of execution. Thus, it was mandatory for
PAL to actually reinstate Roquero or reinstate him in the payroll. Having
failed to do so, the former must pay the latter the salaries he is entitled to, as
if he was reinstated, from the time of the decision of the NLRC until the
finality of the decision of the Supreme Court.
Following Roquero, it is now the norm that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on
the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until its reversal by the NLRC, or the
Court of Appeals or the Supreme Court, as the case may be. If the employee
has been reinstated during the appeal period and such reinstatement order is
subsequently reversed on appeal with finality, the employee is not required
to reimburse whatever salaries he has received for he is entitled to such,
more so if he actually rendered services during the said period.
1.2. GENUINO DOCTRINE.
The essence of the Genuino doctrine is that the employee who is
reinstated in the payroll, as distinguished from actual reinstatement, should
refund the salaries he received if his dismissal is finally found legal on
appeal. This doctrine, however, does not apply if the employee was actually
reinstated to his former position or not reinstated at all pending appeal.
 In effect, the Genuino ruling qualified the earlier Roquero doctrine on
the issue of whether the dismissed employee who is reinstated in the payroll
and not actually to his former position has the obligation to refund what he
has received as and by way of salaries during his payroll reinstatement if
and when his dismissal is held valid and legal on appeal. In this case, the
Supreme Court had taken the view that (i)f the decision of the Labor
Arbiter is later reversed on appeal upon the finding that the ground for
dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries he/she received
while the case was pending appeal, or it can be deducted from the accrued
benefits that the dismissed employee was entitled to receive from his/her
employer under existing laws, collective bargaining agreement provisions,
and company practices. However, if the employee was reinstated to work
during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.
1.3. GARCIA DOCTRINE.
a. Modification of the Roquero and Genuino doctrines.
The Roquero and Genuino doctrines have been modified by the
Garcia doctrine. In this case, while respondent Philippine Airlines (PAL)
was undergoing rehabilitation receivership, an illegal dismissal case was
filed by petitioners against respondent PAL which was decided by the Labor
Arbiter in their favor thus ordering PAL to, inter alia, immediately comply
with the reinstatement aspect of the decision. On appeal, the NLRC reversed
the ruling of the Labor Arbiter and held that their dismissal was valid. The
issue of whether petitioners may collect their reinstatement wages during the
period between the Labor Arbiters order of reinstatement pending appeal
and the NLRC decision overturning that of the Labor Arbiter, now that
respondent PAL has terminated and exited from rehabilitation proceedings,
was resolved in the negative by the Supreme Court. The following
ratiocinations were cited:
(1)Re: modification of the Genuino doctrine. - The refund doctrine
in Genuino should no longer be observed because it easily
demonstrates how a favorable decision by the Labor Arbiter could
harm, more than help, a dismissed employee. The employee, to make
both ends meet, would necessarily have to use up the salaries received
 during the pendency of the appeal, only to end up having to refund the
sum in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency. Further, the
Genuino ruling not only disregards the social justice principles behind
the rule, but also institutes a scheme unduly favorable to management.
Under such scheme, the salaries dispensed pendente lite merely serve
as a bond posted in installment by the employer. For in the event of a
reversal of the Labor Arbiters decision ordering reinstatement, the
employer gets back the same amount without having to spend
ordinarily for bond premiums. This circumvents, if not directly
contradicts, the proscription that the posting of a bond [even a cash
bond] by the employer shall not stay the execution for reinstatement.
(2)Re: modification of the Roquero doctrine. The Roquero doctrine
was reaffirmed but with the modification that [a]fter the Labor
Arbiters decision is reversed by a higher tribunal, the employee may
be barred from collecting the accrued wages, if it is shown that the
delay in enforcing the reinstatement pending appeal was without fault
on the part of the employer.
b. Two-fold test under the Garcia doctrine.
Under Garcia, the test to determine the liability of the employer (who
did not reinstate the employee pending appeal) to pay the wages of the
dismissed employee covering the period from the time he was ordered
reinstated by the Labor Arbiter to the reversal of the Labor Arbiters
decision either by the NLRC, the Court of Appeals or the High Court, is
two-fold, to wit:
(1)There must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal;
and
(2)The delay must not be due to the employers unjustified act or
omission. If the delay is due to the employers unjustified refusal,
the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiters decision.
 In Garcia, there was actual delay in reinstating petitioners but
respondent PAL was justified in not complying with the reinstatement order
of the Labor Arbiter because during the pendency of the illegal dismissal
case, the SEC placed respondent PAL under an Interim Rehabilitation
Receiver who, after the Labor Arbiter rendered his decision, was replaced
with a Permanent Rehabilitation Receiver. It is settled that upon
appointment by the SEC of a rehabilitation receiver, all actions for claims
before any court, tribunal or board against the corporation shall ipso jure be
suspended. Resultantly, respondent PALs failure to exercise the
alternative options of actual reinstatement and payroll reinstatement was
thus justified. Such being the case, respondents obligation to pay the
salaries pending appeal, as the normal effect of the non-exercise of the
options, did not attach.
c. Cases decided after the promulgation of the Garcia doctrine.
Subsequent to Garcia, some of the cases decided in accordance with
this doctrine are as follows:
(1)College of the Immaculate Conception v. NLRC;
(2)Islriz Trading v. Capada;
(3)Pfizer, Inc. v. Velasco; and
(4)C. Alcantara & Sons, Inc. v. CA.
2. RECKONING OF THE PERIOD COVERED BY ACCRUED
REINSTATEMENT WAGES.
To clarify, employees ordered reinstated by the Labor Arbiter are
entitled to accrued reinstatement wages only from the time the employer
received a copy of the Labor Arbiters decision declaring the employees
termination illegal and ordering their reinstatement up to the date of the
decision of the appellate tribunal overturning that of the Labor Arbiter.
It is not accurate therefore to state that such entitlement commences from
the moment the reinstatement order was issued up to the date when the same
was reversed by a higher court without fear of refunding what he had
received.
4. SOME PRINCIPLES ON REINSTATEMENT WAGES.
Employer is not liable to pay any reinstatement backwages if
reinstatement is ordered not by the Labor Arbiter but by the NLRC on
 appeal and it was not executed by writ and its finding of illegal dismissal
is later reversed by the Court of Appeals and/or Supreme Court.
Payroll-reinstated employee is entitled not only to reinstatement wages
but also to other benefits during the period of payroll reinstatement
until the illegal dismissal case is reversed by a higher tribunal.
Award of additional backwages and other benefits from the time the
Labor Arbiter ordered reinstatement until actual or payroll reinstatement
is proper and valid.
3.
REMEDIES
1. EXTRAORDINARY REMEDIES.
a. Nature.
The power of the Commission (NLRC) to grant extraordinary
remedies mentioned in No. 3 above is not provided in the Labor Code or in
any other laws. It is a newly created remedy which saw light for the first
time under Rule XII of the 2011 NLRC Rules of Procedure. Past NLRC
Rules did not provide therefor.
Since this is a recent newly minted remedy, there has yet been no
decision by the Supreme Court dwelling on its validity.
What is clear though is that this remedy is not equivalent to nor a
substitute for appeal. It is directed against orders or resolutions issued
by the Labor Arbiter in the course of the proceedings before him where the
remedy of appeal is not available. Notably, the remedy of appeal is available
only against the main decision of a case. But orders or resolutions issued
prior to the rendition of the decision in the main as well as orders or
resolutions issued thereafter, specifically during the execution stage, are
subject of this rule on extraordinary remedies.

b. Grounds.
The petition filed under this Rule may be entertained only on any of the
following grounds:
(a)If there is prima facie evidence of abuse of discretion on the part of
the Labor Arbiter;
 (b) If serious errors in the findings of facts are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
petitioner;
(c) If a party by fraud, accident, mistake or excusable negligence has
been prevented from taking an appeal;
(d) If made purely on questions of law; or
(e)If the order or resolution will cause injustice if not rectified.
c. Initiation through verified petition.
To secure these extraordinary remedies, a party aggrieved by any order
or resolution of the Labor Arbiter including those issued during execution
proceedings may file a verified petition to annul or modify such order or
resolution. The petition may be accompanied by an application for the
issuance of a temporary restraining order and/or writ of preliminary or
permanent injunction to enjoin the Labor Arbiter, or any person acting under
his/her authority, to desist from enforcing said resolution or order.
4.
CERTIFIED CASES
1. CERTIFIED LABOR DISPUTES.
Certified labor disputes are national interest cases certified by the
DOLE Secretary to the Commission (NLRC) for compulsory arbitration
under Article 263(g) of the Labor Code.
2. EFFECTS OF CERTIFICATION OF LABOR DISPUTES.
The certification of a labor dispute to the NLRC has the following
effects:
(1)On intended or impending strike or lockout. - Upon certification,
the intended or impending strike or lockout is automatically enjoined,
notwithstanding the filing of any motion for reconsideration of the
certification order or the non-resolution of any such motion which may
have been duly submitted to the DOLE Secretary.
(2)On actual strike or lockout. - If a work stoppage has already taken
place at the time of the certification, all striking or locked out
employees shall immediately return to work and the employer shall
 immediately resume operations and readmit all workers under the
same terms and conditions prevailing before the strike or lockout.
(3)On cases already filed or may be filed. - All cases between the same
parties, except where the certification order specifies otherwise the
issues submitted for arbitration which are already filed or may be filed,
and are relevant to or are proper incidents of the certified case, shall be
considered subsumed or absorbed by the certified case, and shall be
decided by the appropriate Division of the Commission.
(4)On other pending cases. - The parties to a certified case, under pain
of contempt, shall inform their counsels and the Division concerned of
all cases pending with the Regional Arbitration Branches and the
Voluntary Arbitrators relative or incident to the certified case before it.
(5)On which Division should take cognizance of the certified case in
case entity has several workplaces in different regions. - Whenever
a certified labor dispute involves a business entity with several
workplaces located in different regions, the Division having territorial
jurisdiction over the principal office of the company shall acquire
jurisdiction to decide such labor dispute; unless the certification order
provides otherwise.
Same effect of certification to the NLRC as in cases assumed
directly by DOLE Secretary.
The effects described above are also applicable when the DOLE
Secretary directly assumes jurisdiction over a labor dispute affecting
industries imbued with national interest and decides it himself.
C.
BUREAU OF LABOR RELATIONS
MED-ARBITERS
1. MED-ARBITER OR MEDIATOR-ARBITER.
Med-Arbiter or Mediator-Arbiter refers to an officer in the
Regional Office or in the BLR authorized to hear and decide representation
cases, inter-union or intra-union disputes and other related labor relations
disputes, except cancellation of union registration cases.
 Some principles on Med-Arbiter.
Injunctive power. The Med-Arbiter is possessed of the power to
issue temporary restraining order and the writ of injunction in
appropriate cases.
Contempt power. The Med-Arbiter has contempt power.
Factual findings of Med-Arbiters are accorded great respect. They
are binding if they are supported by substantial evidence and there
exists no capricious exercise of judgment warranting reversal by
certiorari.
Execution of decisions, orders or awards of Med-Arbiters. The
Med-Arbiter may, upon his own initiative or on motion of any
interested party, issue a writ of execution on a judgment within five
(5) years from the date it becomes final and executory, requiring the
Sheriff or a duly deputized officer to execute or enforce the same.
1.
JURISDICTION
(ORIGINAL AND APPELLATE)
I.
CASES FALLING UNDER THE JURISDICTION OF THE MED-
ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR, IN GENERAL
1. INTRODUCTION.
For purposes of clarity in the otherwise labyrinthine issue of
jurisdiction and procedure in the BLR, there is a need to cite first the cases
over which the following officials have their respective jurisdictions:
(1)Mediator-Arbiter (Med-Arbiter);
(2)DOLE Regional Director; and
(3)BLR Director.
The Mediator-Arbiter and the DOLE Regional Director exercise
original and exclusive jurisdiction over specified cases mentioned below.
For his part, the BLR Director exercises not only appellate but original
jurisdiction over some particular cases.
2. CASES COVERED.
 There are three (3) general classifications of the cases covered by
the jurisdiction of said officials, to
wit:
(a)Inter-union disputes;
(b) Intra-union disputes; and
(c) Other related labor relations disputes.
I-A.
INTER-UNION OR INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTES.
An inter-union dispute or representation dispute is one occurring
or carried on between or among unions. It refers to a case involving a
petition for certification election filed by a duly registered labor
organization which is seeking to be recognized as the sole and exclusive
bargaining agent of the rank-and-file employees or supervisory employees,
as the case may be, in the appropriate bargaining unit of a company, firm or
establishment.
Broadly, an inter-union dispute refers to any conflict between and
among legitimate labor unions involving representation questions for
purposes of collective bargaining or to any other conflict or dispute between
legitimate labor unions.
2. INTRA-UNION OR INTERNAL UNION DISPUTES.
An intra-union dispute or internal union dispute refers to a
conflict within or inside a labor union. It is any conflict between and among
union members, including grievances arising from any violation of the rights
and conditions of membership, violation of or disagreement over any
provision of the unions constitution and by-laws or disputes arising from
chartering or affiliation of a union. It refers to a case involving the control,
supervision and management of the internal affairs of a duly registered labor
union such as those relating to specific violations of the unions constitution
and by-laws.
A complaint for any violation of the constitution and by-laws and the
rights and conditions of union membership under Article 241 of the Labor
Code, may be filed in the Regional Office where the union is domiciled.
3. RUNDOWN OF INTER-UNION/INTRA-UNION CASES.
The following is a rundown of all possible inter-union/intra-union
disputes:
1) Inter-union disputes:
(a)Validity/invalidity of voluntary recognition, certification election,
consent election, run-off election or re-run election;
(b) Such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
between and among legitimate labor organizations.
2) Intra-union disputes:
(a)Conduct or nullification of election of officers of unions and
workers' association;
(b) Audit or accounts examination of union or workers'
association funds;
(c) Deregistration of collective bargaining agreements;
(d) Validity/invalidity of union affiliation or disaffiliation;
(e)Validity/invalidity of acceptance/non-acceptance for union
membership;
(f) Opposition to application for union or CBA registration;
(g)Violations of or disagreements over any provision of the
Constitution and By-Laws of a union or workers' association;
(h) Disagreements over chartering or registration of labor
organizations or the registration of collective bargaining
agreements;
(i) Violations of the rights and conditions of membership in a union or
workers' association;
(j) Violations of the rights of legitimate labor organizations, except
interpretation of CBAs;
(k)Validity/Invalidity of impeachment/expulsion/suspension or any
disciplinary action meted against any officer and member,
including those arising from non-compliance with the reportorial
requirement;
 (l) Such other disputes or conflicts involving the rights to self-
organization, union membership and collective bargaining
between and among members of a union or workers association.
1-B.
OTHER RELATED LABOR RELATIONS DISPUTES
1. MEANING OF RELATED LABOR RELATIONS DISPUTES.
Related labor relations dispute refers to any conflict between a
labor union and the employer or any individual, entity or group that is not a
labor union or workers association.
2. COVERAGE OF RELATED LABOR RELATIONS DISPUTES NOT
OTHERWISE COVERED BY ARTICLE 217.
(a)Any conflict between:
(1)a labor union and the employer, or
(2)a labor union and a group that is not a labor organization; or
(3)a labor union and an individual who is not a member of such
union;
(b) Cancellation of registration of unions and workers associations
filed by individuals other than its members, or group that is not a
labor organization; and
(c) A petition for interpleader involving labor relations.
Interpleader refers to a proceeding brought by a party against two
or more parties with conflicting claims, compelling the claimants to litigate
between and among themselves their respective rights to the claim, thereby
relieving the party so filing from suits they may otherwise bring against it.
II.
ORIGINAL AND EXCLUSIVE JURISDICTION OF MED-
ARBITERS,
DOLE DIRECTORS AND BLR DIRECTOR
Having known the various cases afore-described, a discussion of the
respective jurisdictions of the Med-Arbiters, DOLE Directors and BLR
Director over these cases may now be made with greater clarity.
1. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE MED-
ARBITERS.
The cases falling under the original and exclusive jurisdiction of the
Med-Arbiters are as follows:
(a)Inter-union disputes, also known as representation/certification
election conflicts;
(b) Intra-union disputes;
(c) Other related labor relations disputes; and
(d) Contempt cases.
Excepted from their jurisdiction is cancellation of union registration
cases which are cognizable by the DOLE Regional Directors.
2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE
REGIONAL DIRECTORS.
The cases falling under the original and exclusive jurisdiction of the
DOLE Regional Directors are as
follows:
(1)Petitions for cancellation of registration of independent unions,
local chapters and workers associations;
(2)Petitions for deregistration of CBAs;
(3)Request for examination of books of accounts of said labor
organizations under Article 274 of the Labor Code.
On No. 3 [Examination of Books of Accounts] above, there is a need
to point out that although by nature, this is an intra-union dispute, the rules
treat this separately from those applicable to intra-union disputes and vest
jurisdiction thereover in the DOLE Regional Directors and not in the Med-
Arbiters.
The case in point is La Tondena Workers Union vs. Secretary of
Labor. Intra-union conflicts such as examinations of accounts are under the
jurisdiction of the BLR. However, the Rules of Procedure on Mediation-
Arbitration purposely and expressly separated or distinguished examinations
of union accounts from the genus of intra-union conflicts and provided a
different procedure for the resolution of the same. Original jurisdiction over
complaints for examinations of union accounts is vested in the Regional
Director and appellate jurisdiction over decisions of the former is lodged
with the BLR. This is apparent from Sections 3 and 4, Rule II of the Med-
Arbitration Rules. Contrast these two sections from Section 2 and Section 5
of the same Rules. Section 2 expressly vests upon Med-Arbiters original and
exclusive jurisdiction to hear and decide, inter alia, all other inter-union or
internal union disputes. Section 5 states that the decisions of the Med-
Arbiter shall be appealable to the DOLE Secretary. These are the provisions
consistent with Section 5 of Rule VIII of the Implementing Rules of the
Labor Code.
3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR
DIRECTOR.
At the outset, it must be stressed that reference in the law and pertinent
rules to BLR, as far as the issue of jurisdiction is concerned, should
rightfully mean BLR Director.
The BLR Director, therefore, as head of the agency, has the original
and exclusive jurisdiction over the following:
(1)Complaints and petitions involving the registration or cancellation
of registration of federations, national unions, industry unions,
trade union centers and their local chapters, affiliates and member
organizations;
(2)Request for examination of books of accounts of said labor
organizations (federations, national unions, industry unions and
trade union centers) under Article 274 of the Labor Code;
(3)Intra-union disputes involving said labor organizations
(federations, national unions, industry unions and trade union
centers); and
(4) Contempt cases.
As far as No. 3 [Intra -Union Disputes] above is concerned, the 2010
case of Atty. Montao v. Atty. Verceles, is relevant. Petitioner here claimed
that under the Implementing Rules, it is the Regional Director of the DOLE
and not the BLR who has jurisdiction over intra-union disputes involving
federations which, in this case, pertains to the election protests in connection
with the election of officers of the federation (Federation of Free Workers
[FFW]). In finding no merit in petitioners contention, the High Court
pointed out that Article 226 of the Labor Code clearly provides that the BLR
and the Regional Directors of DOLE have concurrent jurisdiction over inter-
union and intra-union disputes. Such disputes include the conduct or
nullification of election of union and workers association officers. There is,
thus, no doubt as to the BLRs jurisdiction over the instant dispute involving
member-unions of a federation arising from disagreement over the
provisions of the federations constitution and by-laws. It agreed with the
following observation of the BLR:
Rule XVI lays down the decentralized intra-union dispute
settlement mechanism. Section 1 states that any complaint in this
regard shall be filed in the Regional Office where the union is
domiciled. The concept of domicile in labor relations regulation is
equivalent to the place where the union seeks to operate or has
established
a geographical presence for purposes of collective bargaining or for
dealing with employers concerning terms and conditions of
employment.
The matter of venue becomes problematic when the intra-union
dispute involves a federation, because the geographical presence of
a federation may encompass more than one administrative region.
Pursuant to its authority under Article 226, this Bureau exercises
original jurisdiction over intra-union disputes involving federations.
It is well-settled that FFW, having local unions all over the country,
operates in more than one administrative region. Therefore, this
Bureau maintains original and exclusive jurisdiction over disputes
arising from any violation of or disagreement over any provision of
its constitution and by-laws.
II.
APPELLATE JURISDICTION OF THE BLR DIRECTOR
1. CASES FALLING UNDER THE APPELLATE
JURISDICTION OF THE BLR DIRECTOR. The BLR
Director exercises exclusive appellate jurisdiction over the
following cases:
(a)All decisions of the Med-Arbiters in (1) intra-union disputes, and
(2) other related labor relations disputes.
 NOTE: Decisions in inter-union disputes or
representation/certification election conflicts, are NOT
appealable to the BLR Director but directly to the DOLE
Secretary. [See discussion below].
(b) All decisions originating from the DOLE Regional Directors in
the cases falling under their original jurisdiction as enumerated
above.
2. APPELLATE JURISDICTION OVER MED-ARBITERS
DECISIONS IN INTER-UNION DISPUTES OR CERTIFICATION
ELECTION CASES IS LODGED WITH THE DOLE SECRETARY
AND NOT WITH THE BLR DIRECTOR.
To reiterate, decisions of Med-Arbiters in certification election cases
or inter-union disputes are appealable not to the BLR Director but directly
to the DOLE Secretary by virtue of Article 259 of the Labor Code.
It must be noted that the rule on appeal in certification election cases
in unorganized establishments is different from that of organized
establishments.
(a)Rule on appeal in unorganized establishments. - The order
granting the conduct of a certification election in an unorganized
establishment is not subject to appeal. Any issue arising from its
conduct or from its results is proper subject of a protest. Appeal
may only be made to the DOLE Secretary in case of denial of the
petition within ten (10) days from receipt of the decision of denial.
(b) Rule on appeal in organized establishments. - The order
granting the conduct of a certification election in an organized
establishment and the decision dismissing or denying the petition
may be appealed to the DOLE Secretary within ten (10) days from
receipt thereof.
3. APPEALS AND REMEDIES FROM
DECISIONS OF THE BLR DIRECTOR. a.
Jurisdictional distinctions.
The distinctions pointed out above between the respective jurisdictions
of the DOLE Regional Directors, Med-Arbiters and the BLR Director find
significance in determining which of the cases may be appealed to the BLR
Director and those that may be appealed to the DOLE Secretary. Thus, the
rule may be stated as follows:
(1)Decisions in cases cognizable by the BLR Director in the exercise
of his original and exclusive jurisdiction are appealable to the
DOLE Secretary;
(2)Decisions in cases cognizable by the Med-Arbiters in their
original and exclusive jurisdiction are appealable to the BLR
Director with the single exception of decisions in certification
election or inter-union disputes which, as earlier emphasized, are
directly appealable to the DOLE Secretary as mandated under
Article 259 of the Labor Code; and
(3)Decisions in cases cognizable by the DOLE Regional Directors in
their original and exclusive jurisdiction are appealable to the BLR
Director.
b. Remedies.
(1)On No. 1 above. The decision rendered by the DOLE Secretary
in his appellate jurisdiction may be elevated to the Court of Appeals
by way of Rule 65 petition for certiorari.
(2)On Nos. 2 and 3 above. - The decisions rendered by the BLR
Director in his appellate jurisdiction may be elevated directly to the
Court of Appeals by way of Rule 65 petition for certiorari. It cannot
be appealed to the DOLE Secretary because they were rendered by
the BLR Director in the exercise of his appellate jurisdiction.
Simply stated, another appeal to the DOLE Secretary is not allowed
under the situations contemplated in Nos. 2 and 3 above, the
decisions being final and executory.
4. EXAMPLES OF SPECIFIC CASES.
a.APPEALS FROM DENIAL OF APPLICATION FOR
REGISTRATION AND CANCELLATION OF
REGISTRATION OF LABOR ORGANIZATIONS.
For purposes of appeal, the issue of union registration involves two (2)
situations, to wit:
 (1)Denial of application for union registration; and
(2)Revocation or cancellation of union registration.
On denial of application for union registration.
(1)If the denial is made by the Regional Office in cases involving
application for registration of independent unions, local
chapters and workers associations, the same may be appealed to
the BLR Director; or
(2)If the denial is made by the BLR Director in cases involving
federations, national unions, industry unions and trade union
centers, the same is appealable to the DOLE Secretary.
On revocation or cancellation of union registration.
(1)If decision is rendered by the Regional Director. - The decision
of the Regional Director in the cases over which he has original
jurisdiction, may be appealed to the BLR Director by any of the
parties within ten (10) days from receipt thereof, copy furnished
the opposing party.
(2)If decision is rendered by the BLR Director. - The decision of
the BLR Director, in the exercise of his original jurisdiction, may
be appealed to the DOLE Secretary by any party within the same
period of ten (10) days, copy furnished the opposing party.
5. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN
APPEAL DIRECTLY FROM THE DOLE REGIONAL
DIRECTORS DECISION WITHOUT PASSING THROUGH THE
BLR DIRECTOR.
The Heritage Hotel Manila v. National Union of Workers in the
Hotel, Restaurant and Allied Industries-Heritage Hotel Manila
Supervisors Chapter (NUWHRAIN-HHMSC). In this 2011 case, the
Supreme Court allowed a deviation from the standing rule on the appellate
jurisdiction of the BLR Director over a decision of the DOLE Regional
Director when the BLR Director inhibited himself from taking cognizance
of the appeal from the decision of the DOLE Regional Director because he
was a former counsel of respondent. The DOLE Secretary may thus legally
assume jurisdiction over an appeal from the decision of the DOLE Regional
Director in the event that the BLR Director inhibits himself from the case.
In the absence of the BLR Director, there is no person more competent
to resolve the appeal than the DOLE Secretary. Thus, jurisdiction
remained with the BLR despite the BLR Directors inhibition. When the
DOLE Secretary resolved the appeal, she merely stepped into the shoes of
the BLR Director and performed a function that the latter could not himself
perform. She did so pursuant to her power of supervision and control over
the BLR.
III.
ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs
In addition to the afore-mentioned controversies over which they have
concurrent original and exclusive jurisdiction, the BLR and the Labor
Relations Divisions (LRDs) in the DOLE Regional Offices likewise have
concurrent jurisdiction over the following administrative functions:
1. Registration of labor unions;
2. Keeping of registry of labor unions;
3. Maintenance and custody of the files of Collective Bargaining
Agreements (CBAs) and other related agreements.
4. Records of settlement of labor disputes; and
5. Copies of orders and decisions of Voluntary Arbitrators.
It must be noted that it is the registration of the labor organization
with the BLR and not with the Securities and Exchange Commission
(SEC) which makes it a legitimate labor organization with rights and
privileges granted under the Labor Code.
D.
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
1.
NATURE OF PROCEEDINGS
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY.
NCMB is not a quasi-judicial agency, according to the 2009 case of
Tabigue v. International
Copra Export Corporation.
 Quasi-judicial function is a term which applies to the action,
discretion, etc. of public administrative officers or bodies, who are required
to investigate facts or ascertain the existence of facts, hold hearings, and
draw conclusions from them as a basis for their official action and to
exercise discretion of a judicial nature.
2. NOT BEING A QUASI-JUDICIAL AGENCY, NCMBS RULINGS
CANNOT BE ELEVATED TO, AND COGNIZABLE BY, THE
COURT OF APPEALS.
Rule 43 of the Rules of Court applies only to awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Hence, NCMBs decision, not having
been rendered by a quasi-judicial body, cannot be elevated to the Court of
Appeals under said rule.
2.
CONCILIATION VS. MEDIATION
1. CONCILIATION AND MEDIATION, MEANING.
Both the terms conciliation and mediation refer to a process
whereby a third person usually called Conciliator (in case of conciliation) or
Mediator (in case of mediation), intervenes in a dispute involving two or
more conflicting parties for the purpose of reconciling their differences or
persuading them into adjusting or settling their dispute. The Conciliator or
Mediator normally does not make or render any decision, his role being
confined to the functions afore-described.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
Generally, there are no marked distinctions between conciliation and
mediation. The reason is that In both cases, a neutral third party (called
Conciliator or Mediator) is tasked to assist two or more opposing parties in
finding appropriate resolution to a dispute.
In the NCMB, the hearing officer is called Conciliator-Mediator.
There is no separate classification between conciliators and mediators.
When the Conciliator-Mediator performs his task, he does not make any
distinction when he is acting as Conciliator or as Mediator.
 In other jurisdictions, the principal distinction between
conciliation and mediation lies on the extent of the power and authority
granted to the neutral third party.
In mediation, the Mediator normally facilitates a deliberation or
discussion of the issues between the parties. He may or may not offer any
opinions on the strength and weaknesses of each party's positions and
arguments. Thus, mediation may be classified into two, namely:
1. Facilitative Mediation where the Mediator does not make or offer
any opinion; or
2. Evaluative Mediation where the Mediator offers an opinion which is
not binding on the parties.
It bears stressing, however, that regardless of which of the 2 methods
above is chosen, the Mediator is not empowered to impose his will on the
parties.
In conciliation, the Conciliator is given more power and authority in
that he may not only offer an opinion on the issues at hand but may actually
make a binding opinion thereon provided the parties stipulate in advance to
this effect. His opinion is based on the facts and the law involved in the
controversy before him.
It may thus be observed that conciliation is more formal than
mediation in the sense that the Conciliators opinion, unlike the Mediators,
may be binding on the parties, although it may be merely temporary in
character.
3.
PREVENTIVE MEDIATION
1. PREVENTIVE MEDIATION AS A REMEDY.
Preventive mediation, as a remedy, is not found in the Labor Code.
But under the law which created the NCMB, it is expressly stated that one
of its functions is to provide preventive mediation to disputing parties.
The term preventive mediation case refers to the potential or
brewing labor dispute which is the subject of a formal or informal request
for conciliation and mediation assistance sought by either or both parties in
 order to remedy, contain or prevent its degeneration into a full blown
dispute through amicable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(1)By filing a notice or request of preventive mediation, as
distinguished from a notice of strike/lockout; or
(2)By conversion of the notice of strike/lockout into a preventive
mediation case.
3. AUTHORITY TO CONVERT A NOTICE OF
STRIKE/LOCKOUT INTO A PREVENTIVE MEDIATION
CASE.
The NCMB has the authority to convert a notice of strike/lockout filed
by the union/employer into a preventive mediation case under any of the
following circumstances:
1. When the issues raised in the notice of strike/lockout are not
strikeable in character.
2. When the party which filed the notice of strike/lockout voluntarily
asks for the conversion.
3. When both parties to a labor dispute mutually agree to have it
subjected to preventive mediation proceeding.
Such authority is in pursuance of the NCMBs duty to exert all efforts
at mediation and conciliation to enable the parties to settle their dispute
amicably and in line with the State policy of favoring voluntary modes of
settling labor disputes.
4. CONVERSION OF A NOTICE OF STRIKE OR NOTICE OF
LOCKOUT INTO A PREVENTIVE MEDIATION CASE RESULTS
IN ITS DISMISSAL.
Once the notice of strike is converted into a preventive mediation case,
the notice is deemed dropped from the dockets as if no notice of strike has
been filed. Since there is no more notice of strike to speak about, any strike
subsequently staged by the union after the conversion is deemed not to have
complied with the requirements of a valid strike and therefore illegal.
 The same rule applies in the case of lockout by an employer.
5. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and
Employment, where the strike was declared illegal for lack of a valid notice
of strike in view of the NCMBs conversion of said notice into a preventive
mediation case.
It is clear, according to San Miguel Corporation v. NLRC, that the
moment the NCMB orders the preventive mediation in a strike case, the
union thereupon loses the notice of strike it had filed. Consequently, if it still
defiantly proceeds with the strike while mediation is on-going, the strike is
illegal.
E.
DOLE REGIONAL DIRECTORS
1.
JURISDICTION
1. JURISDICTION OF THE DOLE REGIONAL DIRECTORS.
The DOLE Regional Directors have original and exclusive jurisdiction
over the following cases:
(a)Labor standards enforcement cases under Article 128;
(b) Small money claims cases arising from labor standards violations
in the amount not exceeding P5,000.00 and not accompanied with a
claim for reinstatement under Article 129;
(c) Occupational safety and health violations;
(d) Registration of unions and cancellation thereof, cases filed
against unions and other labor relations related cases;
(e)Complaints against private recruitment and placement agencies
(PRPAs) for local employment; and
(f) Cases submitted to them for voluntary arbitration in their capacity
as Ex-Officio Voluntary Arbitrators (EVAs) under Department
Order No. 83-07, Series of 2007.
I.
LABOR STANDARDS ENFORCEMENT CASES
1. SUBJECT OF THE VISITORIAL AND ENFORCEMENT
POWERS: THE ESTABLISHMENT AND NOT THE
EMPLOYEES THEREIN.
The subject of the visitorial and enforcement powers granted to the
DOLE Secretary or his duly authorized representatives under Article 128 is
the establishment which is under inspection and not the employees
thereof.
Consequently, any awards granted are not confined to employees who
signed the complaint inspection but are equally applicable to all those who
were employed by the establishment concerned at the time the
complaint was filed, even if they were not signatories thereto. The
reason is that the visitorial and enforcement powers are relevant to, and
may be exercised over, establishments, not over individual employees
thereof, to determine compliance by such establishments with labor
standards laws. Necessarily, in case of an award from such violation by
the establishment, all its existing employees should be benefited thereby.
It must be stressed, however, that such award should not apply to those who
resigned, retired or ceased to be employees at the time the complaint was
filed.
2. ORIGINAL JURISDICTION.
The DOLE Regional Directors exercise original jurisdiction over the
following:
(a)Cases involving inspection of establishments to determine compliance
with labor standards (Visitorial Power); and
(b) Cases involving issuance of compliance orders and writs of
execution (Enforcement Power).
3. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER
ARTICLE 128(a).
Pursuant to their visitorial power under Article 128(a), the DOLE
Regional Directors shall have:
(a)access to employers records and premises at any time of the day or
night, whenever work is being undertaken therein; and
(b) the right:
 (1)to copy from said records;
(2)to question any employee and investigate any fact, condition or
matter which may be necessary to determine violations or which
may aid in the enforcement of the Labor Code and of any labor
law, wage order, or rules and regulations issued pursuant thereto.
4. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER
ARTICLE 128(b).
The statutory basis of the authority of the DOLE Regional Directors to
administer and enforce labor standards is found in Article 128(b) of the
Labor Code, as amended.
Pursuant thereto, the DOLE Regional Director, in cases where the
employer-employee relationship still exists, shall have the power:
a. to issue compliance orders to give effect to the labor standards
provisions of the Labor Code and other labor legislations based on
the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection.
b. to issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which
were not considered in the course of inspection, in which case, the
contested case shall fall under the jurisdiction of the Labor Arbiter
to whom it should be endorsed by the Regional Director.
c. to order stoppage of work or suspension of operations of any unit
or department of an establishment when non-compliance with the
law or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the
workplace. Within 24 hours, a hearing shall be conducted to
determine whether an order for the stoppage of work or suspension
of operations shall be lifted or not. In case the violation is
attributable to the fault of the employer, he shall pay the employees
concerned their salaries or wages during the period of such
stoppage of work or suspension of operation.
 d. to require employers, by appropriate regulations, to keep and
maintain such employment records as may be necessary in aid of
his visitorial and enforcement powers under the Labor Code.
II.
SMALL MONEY CLAIMS CASES
1. JURISDICTION OVER CLAIMS NOT EXCEEDING P5,000.
The DOLE Regional Director has original jurisdiction over small
money claims cases arising from labor standards violations in the amount
not exceeding P5,000.00 and not accompanied with a claim for
reinstatement under Article 129 of the Labor Code.
Article 129 contemplates the recovery of wages and other monetary
claims and benefits, including legal interest, owing to an employee or
domestic worker or kasambahay, arising from employer-employee relations
provided the claim does not exceed P5,000.00.
2. REQUISITES FOR THE VALID EXERCISE OF JURISDICTION
BY DOLE REGIONAL DIRECTORS UNDER ARTICLE 129.
The following requisites must all concur, to wit:
(1)The claim is presented by an employee or domestic worker or
kasambahay;
(2)The claimant, no longer being employed, does not seek
reinstatement; and
(3)The aggregate money claim of the employee or domestic worker or
kasambahay does not exceed P5,000.00.
In the absence of any of the aforesaid three (3) requisites, the Labor
Arbiters have original and exclusive jurisdiction over all claims arising
from employer-employee relations, other than claims for employees
compensation, social security, PhilHealth and maternity benefits.
III.
CASES SUBMITTED TO REGIONAL DIRECTORS AND
ASSISTANT REGIONAL
DIRECTORS FOR VOLUNTARY ARBITRATION IN THEIR
CAPACITY AS EX-OFFICIO
VOLUNTARY ARBITRATORS (EVAs)
1. JURISDICTION.
As EVAs, the DOLE Regional Directors and their Assistants have
jurisdiction over the following cases:
(a)All grievances arising from the interpretation or implementation of
the CBA;
(b) All grievances arising from the interpretation or enforcement of
company personnel policies which remain unresolved after
exhaustion of the grievance procedure;
(c) Cases referred to them by the DOLE Secretary under the DOLEs
Administrative Intervention for Dispute Avoidance (AIDA)
initiative (provided under DOLE Circular No. 1, Series of 2006);
and
(d) Upon agreement of the parties, any other labor dispute may be
submitted to the EVAs for voluntary arbitration.
F.
DOLE SECRETARY
1. POWERS OF THE DOLE SECRETARY.
The DOLE Secretary, being the head of the Department of Labor and
Employment, is possessed of a number of powers, some of which are
mentioned in the syllabus, to wit:
1. Visitorial and enforcement powers;
2. Power to suspend/effects of termination;
3. Assumption of jurisdiction;
4. Appellate jurisdiction; and
5. Voluntary arbitration powers.
1.
VISITORIAL AND ENFORCEMENT POWERS
1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.
Article 128 of the Labor Code, as amended, basically enunciates the
three (3) kinds of power which the DOLE Secretary and/or the Regional
Directors, his duly authorized representatives, may exercise in connection
with the administration and enforcement of the labor standards provisions
of the Labor Code and of any labor law, wage order or rules and regulations
issued pursuant thereto.
 The three (3) kinds of power are as follows:
1) Visitorial power:
2) Enforcement power: and
3) Appellate power or power of review.
2. WHO EXERCISE THE POWERS.

Nos. 1 and 2 above are exercised under the original jurisdiction of the
DOLE Regional Directors.
This has been earlier discussed under the separate topic of
VII. PROCEDURE AND JURISDICTION, E. DOLE
Regional Directors, 1. Jurisdiction, supra. Hence, the same
will no longer be touched under the instant topical discussion.
The appellate power in No. 3 above may only be exercised by the
DOLE Secretary in respect to any decision, order or award issued by the
DOLE Regional Directors.
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.
The visitorial and enforcement powers granted to the DOLE Secretary
and the DOLE Regional Directors who are his duly authorized
representatives, are quasi-judicial in nature.
4. IT IS THE REGIONAL DIRECTORS WHO HAVE ORIGINAL
JURISDICTION TO EXERCISE THE VISITORIAL AND
ENFORCEMENT POWERS UNDER ARTICLES 37, 128 AND 274.
In the instances contemplated under Articles 37, 128 and 274, it is the
DOLE Regional Directors, the DOLE Secretarys duly authorized
representatives commonly referred to in these three (3) articles, who have
the original jurisdiction to exercise the visitorial power granted therein.
8. THE ROLE OF THE DOLE SECRETARY IN THE
EXERCISE OF VISITORIAL AND ENFORCEMENT
POWERS IS APPELLATE IN NATURE.
It is clear from the above disquisition that the original jurisdiction
over the exercise of the visitorial and enforcement powers belongs to the
 DOLE Regional Directors, as the duly authorized representatives of the
DOLE Secretary.
The role of the DOLE Secretary is confined to the exercise of his
appellate jurisdiction over the decisions, orders and awards of the DOLE
Regional Directors in cases brought before them for adjudication under
Articles 128 and 274.
2.
POWER TO SUSPEND EFFECTS OF TERMINATION
1. GROUNDS.
The DOLE Secretary may suspend the effects of termination pending
resolution of the dispute in the event of a prima facie finding by the
appropriate official of the DOLE before whom the dispute is pending that:
1. the termination may cause a serious labor dispute; and/or
2. the termination is in implementation of a mass lay-off.
2. RATIONALE FOR SUSPENDING THE EFFECTS OF
TERMINATION.
The obvious purpose behind this rule is to bring the parties back to the
status quo ante litem, that is, their state of relationship prior to the
termination. In this way, the workers will be litigating the issue of the
validity or legality of their termination on more or less equal footing with
the employer since they will be immediately reinstated and accordingly not
be deprived of their wages while the litigation is on-going.
3. REINSTATEMENT PENDING RESOLUTION OF THE
TERMINATION DISPUTE.
Suspension of the effects of termination will necessarily result in the
immediate reinstatement of the terminated employees. An order of
reinstatement pending resolution of the case may thus be issued by the
DOLE Secretary pursuant to this power.
4. DISTINGUISHED FROM DOLE SECRETARYS POWER OF
ASSUMPTION OR CERTIFICATION IN NATIONAL INTEREST
CASES.
 a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 277(b)
should be distinguished from his power to assume or certify labor disputes
involving industries indispensable to the national interest under Article
263(g). The following distinctions may be cited:
First, the exercise of the power to suspend the effects of termination
involves only the issue of termination of employment which may cause a
serious labor dispute or is in implementation of a mass lay-off; while the
power to assume or certify labor disputes is applicable to all labor disputes,
irrespective of the grounds therefor, provided such labor disputes will cause
or likely to cause strikes or lockouts in industries indispensable to the
national interest.
Second, the former requires the conduct of preliminary determination
of the existence of prima facie evidence that the termination may cause a
serious labor dispute or is in implementation of a mass lay-off to be
conducted by the appropriate official of the DOLE before whom the
termination dispute is pending; while the latter does not require such
preliminary prima facie determination. In fact, prior notice and hearing are
not required before the DOLE Secretary may issue an assumption or
certification order as held in Capitol Medical Center, Inc. v. Trajano.
Third , the serious labor dispute contemplated under the former may
or may not involve a strike or lockout; while the labor dispute referred to in
the latter will cause or likely to cause a strike or lockout.
Fourth, the former may be exercised in cases of termination of
employment for as long as any of the two
(2)grounds mentioned in Article 277(b) exists, irrespective of the nature
of the business of the employer; while the latter may only be exercised
in industries indispensable to the national interest.

Fifth, the remedy under the former is immediate reinstatement

pending resolution of the termination case; while in the latter, the remedy is
the automatic return to work of the strikers or locked-out employees, if the
strike or lock-out is on-going at the time of the issuance of the
assumption/certification order or the enjoining of the strike or lockout, if
one has not taken place, pending the resolution of the issues raised in the
notice of strike or lockout.
3.
ASSUMPTION OF JURISDICTION
The DOLE Secretary is granted under Article 263(g) of the Labor
Code, the extraordinary police power of assuming jurisdiction over a labor
dispute which, in his opinion, will cause or likely to cause a strike or lockout
in an industry indispensable to the national interest, or the so-called
national interest cases. Alternatively, he may certify the labor dispute to
the NLRC for compulsory arbitration.
4.
APPELLATE JURISDICTION
I.
VARIOUS APPEALS TO THE DOLE SECRETARY
UNDER THE LABOR CODE AND APPLICABLE RULES
1. OFFICES FROM WHICH APPEALS MAY ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the
following offices:
(1)DOLE Regional Directors;
(2)Med-Arbiters;
(3)Director of the Bureau of Labor Relations (BLR); and
(4)Philippine Overseas Employment Administration (POEA).
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
The following decisions, awards or orders are not appealable to the
Office of the DOLE Secretary:
(1)Those rendered by Labor Arbiters that are appealable to the
Commission (NLRC) which has exclusive appellate jurisdiction
thereover;
(2)Those rendered by the Commission (NLRC) since they can be
elevated directly to the CA by way of a Rule 65 certiorari petition;
 (3)Those rendered by the BLR Director in the exercise of his appellate
jurisdiction since they can be brought directly to the CA under Rule
65 certiorari petition;
(4)Those rendered by DOLE Regional Directors under Article 129 of
the Labor Code since they are appealable to the NLRC;
(5)Those issued by DOLE Regional Directors in their capacity as Ex-
Officio Voluntary Arbitrators (EVAs) since they can be brought
directly to the CA under Rule 43 of the Rules of Court; and
(6)Those rendered by Voluntary Arbitrators which are appealable
directly to the CA under Rule 43 of the Rules of Court.
II.
APPEALS FROM DOLE REGIONAL DIRECTORS
1. CASES APPEALABLE TO DOLE SECRETARY.
Not all decisions, awards or orders rendered by the DOLE Regional
Directors are appealable to the DOLE Secretary. Only those issued in the
following cases are so appealable:
(a)Labor standards enforcement cases under Article 128;
(b) Occupational safety and health violations; and
(c) Complaints against private recruitment and placement agencies
(PRPAs) for local employment.
2. CASES NOT APPEALABLE TO THE DOLE SECRETARY.
As earlier pointed out, the following cases decided by the DOLE
Regional Directors are not appealable to the DOLE Secretary but to some
other agencies/tribunals indicated below:
(a)Decisions in small money claims cases arising from labor standards
violations in the amount not exceeding P5,000.00 and not
accompanied with a claim for reinstatement under Article 129 are
appealable to the NLRC;
(b) Decisions in cases submitted to DOLE Regional Directors for
voluntary arbitration in their capacity as Ex-Officio Voluntary
Arbitrators (EVAs) under Department Order No. 83-07, Series of
2007 may be elevated directly to the Court of Appeals by way of a
Rule 43 petition. This is so because the DOLE Regional Directors,
in so deciding, are acting as Voluntary Arbitrators; hence, what
 should apply are the rules on appeal applicable to voluntary
arbitration.
III.
APPEALS FROM DECISIONS OF
MEDIATORS-ARBITERS (MED-ARBITERS) AND BLR DIRECTOR
(NOTE: The discussion of this sub-topic is presented alongside the
comments on the topic of VIII. PROCEDURE AND JURISDICTION,
C. Bureau of Labor Relations Med-Arbiters, 1. Jurisdiction (Original
and Appellate), supra)
V.
APPEALS FROM DECISIONS OF POEA
1. CASES APPEALABLE TO THE DOLE SECRETARY.

The decisions in the following cases rendered by the Philippine

Overseas Employment Administration (POEA) in its original jurisdiction
are appealable to the DOLE Secretary:
(a)Recruitment violations and other related cases. - All cases which
are administrative in character, involving or arising out of violation
of rules and regulations relating to licensing and registration of
recruitment and employment agencies or entities, including refund
of fees collected from workers and violation of the conditions for
the issuance of license to recruit workers.
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals,
contracting partners and Filipino migrant workers.
It must be noted that the POEA ceased to have any jurisdiction over
money claims of OFWs, or those arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers
for overseas deployment including claims for actual, moral, exemplary and
other forms of damages. The jurisdiction over these claims was transferred
 to the Labor Arbiters of the NLRC by virtue of Section 10 of R.A. No. 8042,
as amended. Hence, appeals therefrom may be instituted to the Commission
(NLRC).
5.
VOLUNTARY ARBITRATION POWERS
1. AIDA.
a. New rule on voluntary arbitration by the DOLE Secretary.
A new form of dispute settlement by the DOLE Secretary was
introduced by DOLE Circular No. 1, Series of 2006. Called Administrative
Intervention for Dispute Avoidance (AIDA), this is a new administrative
procedure for the voluntary settlement of labor disputes in line with the
objectives of R.A. No. 9285, Executive Order No. 523 and the mandate of
the DOLE to promote industrial peace.
b. Nature of administrative intervention by DOLE Secretary.
This recourse is separate from the established dispute resolution
modes of mediation, conciliation and arbitration under the Labor Code, and
is an alternative to other voluntary modes of dispute resolution such as the
voluntary submission of a dispute to the Regional Director for mediation, to
the NCMB for preventive mediation, or to the intervention of a regional or
local tripartite peace council for the same purpose.
c. Parties who may request for DOLE Secretarys intervention.
Either or both the employer and the certified collective bargaining
agent (or the representative of the employees where there is no certified
bargaining agent) may voluntarily bring to the Office of the DOLE
Secretary, through a Request for Intervention, any potential or ongoing
dispute defined below.
d. Potential or on-going dispute.
A potential or on-going dispute refers to:
(a)a live and active dispute;
(b) that may lead to a strike or lockout or to massive labor unrest; and
(c) is not the subject of any complaint or notice of strike or lockout at
the time a Request for Intervention is made.
 2. VOLUNTARY ARBITRATION BY DOLE SECRETARY.
If the intervention through AIDA fails, either or both parties may avail
themselves of the remedies provided under the Labor Code. Alternatively,
the parties may submit their dispute to the Office of the DOLE Secretary for
voluntary arbitration. Such voluntary arbitration should be limited to the
issues defined in the parties' submission to voluntary arbitration agreement
and should be decided on the basis of the parties' position papers and
submitted evidence. The Office of the DOLE Secretary is mandated to
resolve the dispute within sixty (60) days from the parties' submission of the
dispute for resolution.
3. DOES THE DOLE SECRETARY ASSUME THE ROLE OF
VOLUNTARY ARBITRATOR ONCE HE ASSUMES
JURISDICTION OVER A LABOR DISPUTE?
In the 2014 case of Philtranco Service Enterprises, Inc. v.
Philtranco Workers Union-Association of Genuine Labor Organizations
(PWU -AGLO), this poser was answered in the negative. A notice of strike
was filed by respondent union which, after failure of conciliation and
mediation by the NCMB, was referred by the Conciliator-Mediator to the
Office of the DOLE Secretary who thereby assumed jurisdiction over the
labor dispute. The case was resolved by the Acting DOLE Secretary in favor
of respondent union. A motion for reconsideration was filed by petitioner
company. The DOLE Secretary, however, declined to rule on the motion
citing a DOLE regulation, applicable to voluntary arbitration, which
provided that the Voluntary Arbitrators decisions, orders, resolutions or
awards shall not be the subject of motions for reconsideration. The DOLE
Secretary took the position that when he assumed jurisdiction over the labor
dispute, he was acting as a Voluntary Arbitrator. Petitioner subsequently
filed a Rule 65 certiorari petition with the CA. The CA, however, dismissed
petitioner companys Rule 65 certiorari petition on the ground, among
others, that the decision of the DOLE Secretary, having been rendered by
him in his capacity as Voluntary Arbitrator, is not subject to a Rule 65
certiorari petition but to a Rule 43 petition for review which properly covers
decisions of Voluntary Arbitrators.
Before the Supreme Court, petitioner asserted that, contrary to the
CAs ruling, the case is not a simple voluntary arbitration case. The character
of the case, which involves an impending strike by petitioners employees;
the nature of petitioners business as a public transportation company, which
is imbued with public interest; the merits of its case; and the assumption of
jurisdiction by the DOLE Secretary all these circumstances removed the
case from the coverage of Article 262, and instead placed it under Article
263, of the Labor Code. For its part,

respondent union argued that the DOLE Secretary decided the assumed case
in his capacity as Voluntary Arbitrator; thus, his decision, being that of a
Voluntary Arbitrator, is only assailable via a petition for review under Rule
43.
The Supreme Court, however, pronounced that:
It cannot be said that in taking cognizance of NCMB-NCR
CASE No. NS-02-028-07, the Secretary of Labor did so in a limited
capacity, i.e., as a voluntary arbitrator. The fact is undeniable that by
referring the case to the Secretary of Labor, Conciliator-Mediator
Aglibut conceded that the case fell within the coverage of Article
263 of the Labor Code; the impending strike in Philtranco, a public
transportation company whose business is imbued with public
interest, required that the Secretary of Labor assume jurisdiction
over the case, which he in fact did. By assuming jurisdiction over
the case, the provisions of Article 263 became applicable, any
representation to the contrary or that he is deciding the case in his
capacity as a voluntary arbitrator notwithstanding.
Consequently, the Supreme Court reversed and set aside the CA ruling
and reinstated the case and directed the CA to resolve the same with
deliberate dispatch.
G.
GRIEVANCE MACHINERY
AND VOLUNTARY ARBITRATION
1.
SUBJECT MATTER OF GRIEVANCE
1. GRIEVANCE OR GRIEVABLE ISSUE.
 A grievance or grievable issue is any question raised by either the
employer or the union regarding any of the following issues or
controversies:
1. The interpretation or application of the CBA;
2. The interpretation or enforcement of company personnel policies;
or
3. Violation of any provisions of the CBA or company personnel
policies.
2. VALIDITY AND BINDING EFFECT OF DECISIONS OF
GRIEVANCE COMMITTEE.
A member of the bargaining union who brought his grievable issue for
resolution by the Grievance Committee is bound by whatever disposition the
latter may render thereon.
ELEVATION OF GRIEVANCE TO
VOLUNTARY ARBITRATION 1. UNRESOLVED
GRIEVANCES.
All grievances submitted to the grievance machinery which are not
settled within seven (7) calendar days from the date of their submission for
resolution should automatically be referred to voluntary arbitration
prescribed in the CBA.
The various internal procedural steps or stages of resolving grievances
under the grievance machinery in a CBA should be fully exhausted before
resort to voluntary arbitration may be made. The 7-calendar day period is
usually reckoned from the date of their submission for resolution to the last
step of the internal grievance machinery. Simply stated, only after
exhausting all the internal procedures and only after the lapse of this period
that unsettled or unadjusted grievances should automatically be referred to
voluntary arbitration enunciated in the CBA.
2. A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN
DISREGARD OF VOLUNTARY ARBITRATION AFTER
DECISION IS RENDERED BY GRIEVANCE COMMITTEE.
 Before a party is allowed to seek the intervention of the court, it is a
precondition that he should have availed of all the means of administrative
processes afforded him. Hence, if a remedy within the administrative
machinery can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy should be exhausted first before the courts
judicial power can be sought. The premature invocation of the courts
judicial intervention is fatal to ones cause of action. Indeed, the underlying
principle of the rule on exhaustion of administrative remedies rests on the
presumption that when the administrative body, or grievance machinery, is
afforded a chance to pass upon the matter, it will decide the same correctly.
2.
VOLUNTARY ARBITRATOR
1. VOLUNTARY ARBITRATION.
Voluntary arbitration refers to the mode of settling labor-
management disputes in which the parties select a competent, trained and
impartial third person who is tasked to decide on the merits of the case and
whose decision is final and executory. It is a third-party settlement of a labor
dispute involving the mutual consent by the representatives of the employer
and the labor union involved in a labor dispute to submit their case for
arbitration.
2. VOLUNTARY ARBITRATOR.
a. Who is a Voluntary
Arbitrator? A Voluntary
Arbitrator refers to:
(1)any person who has been accredited by the National Conciliation
and Mediation Board (NCMB or Board) as such; or
(2)any person named or designated in the CBA by the parties as their
Voluntary Arbitrator; or
(3)one chosen by the parties with or without the assistance of the
NCMB, pursuant to a selection procedure agreed upon in the CBA;
or
 (4)one appointed by the NCMB in case either of the parties to the CBA
refuses to submit to voluntary arbitration.

This term includes a panel of Voluntary Arbitrators.

3. VOLUNTARY ARBITRATOR ACTS IN QUASI-JUDICIAL
CAPACITY.
Although not a part of a government unit or a personnel of the
Department of Labor and Employment, a Voluntary Arbitrator, by the nature
of his functions, acts in a quasi-judicial capacity. He is a means by which
government acts, or by which a certain government act or function is
performed. He performs a state function pursuant to a governmental power
delegated to him under the Labor Code. The landmark case of Luzon
Development Bank v. Association of Luzon Development Bank
Employees, clearly declared that a Voluntary Arbitrator, whether acting
solely or in a panel, enjoys in law the status of a quasi-judicial agency.
(a)
JURISDICTION
1. ORIGINAL AND EXCLUSIVE JURISDICTION.
a. In general.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
exclusive and original jurisdiction over the following cases:
(1)Unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement (CBA).
(2)Unresolved grievances arising from the interpretation or enforcement
of company personnel policies.
(3)Violations of the CBA which are not gross in character.
(4)Other labor disputes, including unfair labor practices and bargaining
deadlocks, upon agreement of the parties.
(5)National interest cases.
(6)Wage distortion issues arising from the application of any wage
orders in organized establishments.
 (7)Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under R.A.
No. 6971.
b. Rights disputes.
Nos. 1, 2 and 3 above, which are provided for under Article 261 of the
Labor Code, are commonly known as rights disputes. This kind of
disputes contemplates the existence of a CBA already concluded or, at any
rate, a situation in which no effort is made to bring about a formal change in
its terms or to create a new one. The dispute relates either to the meaning or
proper application of a particular provision therein with reference to a
specific situation or to an omitted case. In the latter event, the claim is
founded upon some incident of the employment relation or asserted one,
independent of those covered by the collective agreement. In either case, the
claim is to rights accrued and not merely to new ones created for the future.
c. Interest disputes.
Bargaining deadlocks are often referred to as interest disputes.
This kind of disputes relates to disputes over the formation of collective
agreements or efforts to secure them. They arise where there is no such
agreement or where it is sought to change the terms of one and therefore the
issue is not whether an existing agreement controls the controversy. They
look to the acquisition of rights for the future, not to assertion of rights
claimed to have vested in the past.
I.
III.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 262 of the Labor Code, upon agreement of the parties,
the Voluntary Arbitrator or panel of Voluntary Arbitrators may also hear and
decide all other labor disputes, including unfair labor practices and
bargaining deadlocks. For this purpose, before or at any stage of the
compulsory arbitration process, parties to a labor dispute may agree to
submit their case to voluntary arbitration.
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
 Article 263(g) of the Labor Code which involves the DOLE
Secretarys power of assumption of jurisdiction or certification to the NLRC
of labor disputes affecting industries indispensable to the national interest,
also provides that [b]efore or at any stage of the compulsory arbitration
process, the parties may opt to submit their dispute to voluntary
arbitration.
This means that even if the case has already been assumed by the
DOLE Secretary or certified to the NLRC for compulsory arbitration, or
even during its pendency therewith, the parties thereto may still withdraw
the case from the DOLE Secretary or NLRC, as the case may be, and submit
it to a Voluntary Arbitrator for voluntary arbitration purposes.
V.
JURISDICTION OVER WAGE DISTORTION CASES
Jurisdiction over wage distortion cases depends on whether the
establishment is organized or unorganized.
In organized establishments, the employer and the union are required
to negotiate to correct the wage distortion. Any dispute arising from such
wage distortion should be resolved through the grievance procedure under
the CBA and if it remains unresolved, through voluntary arbitration.
In unorganized establishments, where there are no CBAs or
recognized or certified collective bargaining unions, the jurisdiction is with
the Labor Arbiter.
VI.
EXERCISE OF JURISDICTION
1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall
exercise jurisdiction over a specific case only under the following:
(1)Upon receipt of a Submission Agreement duly signed by both
parties;
(2)Upon receipt of a Notice to Arbitrate when there is refusal to
arbitrate by one party;
(3)Upon receipt of an appointment or designation as Voluntary
Arbitrator by the NCMB (Board) in either of the following
circumstances:
 (3.1.) In the event that the parties failed to select a Voluntary
Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA
and the party upon whom the Notice to Arbitrate is served does
not favorably reply within seven (7) days from receipt of such
notice.
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either
by way of:
(1)A Submission Agreement; or
(2)A Demand or Notice to Arbitrate invoking the arbitration clause in
the CBA; or
(3)An Appointment from the NCMB.
A Submission Agreement refers to a written agreement by the parties
submitting their case for arbitration, containing a statement of the issues, the
name of their chosen Voluntary Arbitrator and a stipulation and an
undertaking to abide by and comply with the resolution that may be
rendered therein, including the cost of arbitration.
A Notice to Arbitrate refers to a formal demand made by one party
to the other for the arbitration of a particular dispute in the event of refusal
by one party in a CBA to submit the same to arbitration
3. SOME PRINCIPLES.
1) Cases cognizable by Voluntary Arbitrators in their original
jurisdiction but filed with Labor Arbiters, DOLE Regional Offices
or NCMB should be disposed of by referring them to the Voluntary
Arbitrators or panel of Voluntary Arbitrators mutually chosen by the
parties.
2) Cases cognizable by Voluntary Arbitrators but filed with regular
courts should be dismissed.
3) THE WELL-ENTRENCHED RULE IS THAT WHEN A CASE
DOES NOT INVOLVE THE PARTIES TO A CBA THE
EMPLOYER AND THE BARGAINING UNION - IT IS NOT
SUBJECT TO VOLUNTARY ARBITRATION. While individual
 or group of employees, without the participation of the union, are
granted the right to bring grievance directly to the employer, they
cannot submit the same grievance, if unresolved by the employer,
for voluntary arbitration without the unions approval and
participation. The reason is that it is the union which is the party
to the CBA, and not the individual or group of employees. - This
rule was lately affirmed in the 2009 case of Tabigue v. International
Copra Export Corporation. Pursuant to Article 260 of the Labor
Code, the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is
unsettled in that level, it shall automatically be referred to the
voluntary arbitrators designated in advance by parties to a CBA.
Consequently only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary
arbitrators.
(b)
PROCEDURE
EXECUTION PROCEEDINGS
IN VOLUNTARY ARBITRATION CASES
1. PROCEDURAL RULES IN THE ENFORCEMENT OF WRIT OF
EXECUTION.
In the enforcement of a writ of execution, the Sheriff or other
authorized officer should be guided by the Procedural Guidelines in the
Execution of Voluntary Arbitration Awards/Decisions. These Guidelines
should be followed in the execution of the awards or decision of Voluntary
Arbitrators or panel of Voluntary Arbitrators. Other rules that may be
pertinently observed and followed are the following:
(1)2012 NLRC Sheriffs Manual on Execution of Judgment;
(2)Memorandum of Agreement between the NLRC and the NCMB dated
July 26, 1996; and
(3)Revised Rules of Court, as amended, in the absence of applicable
rules.
2. EXECUTION MOTU PROPRIO OR UPON MERE MOTION
WITHIN FIVE (5) YEARS FROM FINALITY OF DECISION.
 The Voluntary Arbitrator or panel of Voluntary Arbitrators may, motu
proprio or on motion of any interested party, issue a writ of execution on a
judgment within five (5) years from the date it becomes final and executory.
3. WHEN LABOR ARBITER MAY ISSUE THE WRIT OF
EXECUTION.
In case the Voluntary Arbitrator or panel of Voluntary Arbitrators who
rendered and issued the decision, order or award is, for any reason, absent or
incapacitated, the Labor Arbiter in the region where the movant resides,
may issue the writ of execution. But unlike the Voluntary Arbitrator or panel
of Voluntary Arbitrators who issued the decision, order or award, the Labor
Arbiter cannot issue such writ motu proprio but only upon motion of any
interested party.
4. PERSONS WHO MAY ENFORCE THE WRIT OF EXECUTION.
Any of the following persons may be required to enforce the writ of
execution:
(1) The Sheriff of the Commission (NLRC);
(2)A duly deputized officer;
(3)A Special Sheriff;
(4)The Sheriff of the regular courts; or
(5)Any public official whom the parties may designate in the
submission agreement to execute the final decision, order or award.
(c)
REMEDIES
1. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY
VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary
Arbitrator or panel of Voluntary Arbitrators may grant the same reliefs and
remedies granted by Labor Arbiters under Article 279 of the Labor Code,
such as:
(1)In illegal dismissal cases:
(a)Actual reinstatement;
(b) Separation pay in lieu of reinstatement, in case
reinstatement becomes impossible, non-feasible or impractical;
(c) Full backwages;
 (d) Moral and exemplary damages; and
(e)Attorneys fees.
(2)Monetary awards in monetary claims cases in which case, the
decision should specify the amount granted and the formula used in
the computation thereof.
H.
COURT OF APPEALS
1.
RULE 65, RULES OF COURT
1. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF
ELEVATING A LABOR CASE TO THE COURT OF APPEALS.
The only mode by which a labor case decided by any of the following
labor authorities/tribunals may reach the Court of Appeals is through a Rule
65 petition for certiorari.
(a)the DOLE Secretary;
(b) the Commission (NLRC); and
(c) the Director of the Bureau of Labor Relations (BLR) in cases
decided by him in his appellate jurisdiction (as distinguished from
those he decides in his original jurisdiction which are appealable to
the DOLE Secretary).
The remedy of ordinary appeal to the Court of Appeals is not
available from their decisions, orders or awards. The reason for this rule is
that their decisions, orders or awards are final and executory and therefore
inappealable.
2. THE ONLY EXCEPTION.
The only exception to the foregoing rule is in the case of decisions,
orders or awards issued by the Voluntary Arbitrator or panel of
Voluntary Arbitrators which may be elevated to the Court of Appeals by
way of an ordinary appeal under a Rule 43 petition for review.
3. FILING OF MOTION FOR RECONSIDERATION OF THE
DECISION OF THE DOLE SECRETARY, THE COMMISSION
(NLRC) OR THE BLR DIRECTOR, A PRE-REQUISITE TO
FILING OF RULE 65 PETITION FOR CERTIORARI.
 The rule on the filing of a Motion for Reconsideration of the decision
of the DOLE Secretary, the NLRC and the BLR Director is mandatory and
jurisdictional. Failure to comply therewith would result in the dismissal of
the Rule 65 certiorari petition. Jurisprudence abounds enunciating the rule
that a motion for reconsideration is a pre-requisite for the filing of a special
civil action for certiorari.
The reason for this rule is that in labor cases, a motion for
reconsideration is the plain and adequate remedy from an adverse
decision of the DOLE Secretary, the NLRC and the BLR Director.
THE PHILTRANCO DOCTRINE: a motion for reconsideration
should be filed even though it is not required or even prohibited by
the concerned government office. This was the rule enunciated in the
2014 case of Philtranco Service Enterprises, Inc. v. Philtranco
Workers Union-Association of Genuine Labor Organizations
(PWU-AGLO). Thus, while a government office may prohibit
altogether the filing of a motion for reconsideration with respect to its
decisions or orders, the fact remains that certiorari inherently requires
the filing of a motion for reconsideration which is the tangible
representation of the opportunity given to the office to correct itself.
Unless it is filed, there could be no occasion to rectify. Worse, the
remedy of certiorari would be unavailing. Simply put, regardless of
the proscription against the filing of a motion for reconsideration, the
same may be filed on the assumption that rectification of the decision
or order must be obtained and before a petition for certiorari may be
instituted.
4. CERTIORARI PETITION MAY BE FILED EVEN IF THE
DECISION OF THE DOLE SECRETARY, THE COMMISSION
(NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME
FINAL AND EXECUTORY.
This rule applies to the decisions rendered by the DOLE Secretary, the
NLRC or the BLR Director (in cases which he decided in his appellate
jurisdiction).
 If the CA grants the petition and nullifies their decisions on the ground
of grave abuse of discretion amounting to excess or lack of jurisdiction,
such decisions are, in contemplation of law, null and void ab initio; hence,
they never became final and executory.
JUDICIAL REVIEW OF DECISIONS
OF VOLUNTARY ARBITRATORS
1. DECISIONS, FINAL AND EXECUTORY.
As a general rule, decisions or awards of Voluntary Arbitrators are
final, inappealable and executory after ten (10) calendar days from receipt of
a copy thereof by the parties.
2. ORDINARY APPEAL UNDER RULE 43 OF THE 1997
RULES OF CIVIL PROCEDURE VOLUNTARY
ARBITRATORS ARE OF THE SAME LEVEL AS RTC
JUDGES.
Being a quasi-judicial agency, the decisions and awards of a Voluntary
Arbitrator are appealable by way of a petition for review to the Court of
Appeals under Revised Administrative Circular No. 1-95 which provides for
a uniform procedure for appellate review of all adjudications of quasi-
judicial entities and which is now embodied in Section 1, Rule 43 of the
1997 Rules of Civil Procedure.
The ruling in Luzon Development Bank v. v. Association of Luzon
Development Bank Employees, in effect, equates the decisions or awards
of the Voluntary Arbitrator to those of the Regional Trial Court (RTC).
Hence, in a petition for certiorari from the awards or decisions of the
Voluntary Arbitrator, the Court of Appeals has concurrent jurisdiction with
the Supreme Court.
In Alcantara, Jr. v. CA, it was held that Luzon Development Bank is
still a good law.
3. PERIOD OF APPEAL 15 DAYS.
Rule 43 of the Rules of Court requires that the petition for review to be
taken to the Court of Appeals should be filed within fifteen (15) days from
notice of the award, judgment or final order or resolution of the Voluntary
Arbitrator.
 I.
SUPREME COURT
1.
RULE 45, RULES OF COURT
1. RULE 45 PETITION FOR REVIEW ON CERTIORARI, THE ONLY
MODE BY WHICH A LABOR CASE MAY REACH THE SUPREME
COURT.
Since the Court of Appeals has jurisdiction over the petition for
certiorari under Rule 65 that may be filed before it from the decisions of the
NLRC or the DOLE Secretary or the BLR Director (in cases decided by him
in his appellate jurisdiction), any alleged errors committed by it in the
exercise of its jurisdiction would be errors of judgment which are
reviewable by means of a timely appeal to the Supreme Court and not by a
special civil action of certiorari.
If the aggrieved party fails to do so within the reglementary period and
the decision accordingly becomes final and executory, he cannot avail
himself of the writ of certiorari, his predicament being the effect of his
deliberate inaction. A petition for certiorari under Rule 65 cannot be a
substitute for a lost appeal under Rule 45; hence, it should be dismissed.
2. MAY RULE 65 CERTIORARI PETITION BE AVAILED OF
FROM CA DECISION TO THE SUPREME COURT?
This poser has been answered both in the affirmative and in the
negative.
In answering this poser in the affirmative, it was held in Tomas
Claudio Memorial College, Inc. v. CA, that a Rule 65 certiorari petition
may be filed if in issuing the assailed decision and resolution, the CA acted
with grave abuse of discretion, amounting to excess or lack of jurisdiction
and there is no plain, speedy and adequate remedy in the ordinary course of
law. A remedy is considered plain, speedy and adequate if it will promptly
relieve the petitioner from the injurious effect of the judgment and the acts
of the lower court.
The aggrieved party is proscribed from filing a petition for certiorari if
appeal is available, for the remedies of appeal and certiorari are mutually
exclusive and not alternative or successive. The aggrieved party is likewise
barred from filing a petition for certiorari if the remedy of appeal is lost
through his negligence. A petition for certiorari is an original action and
does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against
the public respondent from further proceeding.
In the 2011 case of in Cirtek Employees Labor Union-Federation of
Free Workers v. Cirtek Electronics, Inc., it was conceded that respondent
indeed availed of the wrong remedy of certiorari under Rule 65. Due,
however, to the nature of the case, involving workers' wages and benefits,
and the fact that whether the petition was filed under Rule 65 or appeal by
certiorari under Rule 45, it was filed within 15 days (the reglementary
period under Rule 45) from petitioner's receipt of the resolution of the Court
of Appeals' Resolution denying its motion for reconsideration, the Court
resolved to give it due course. As Almelor v. RTC of Las Pias, restates:
Generally, on appeal taken either to the Supreme Court or the CA by
the wrong or inappropriate mode shall be dismissed. This is to prevent
the party from benefiting from one's neglect and mistakes. However, like
most rules, it carries certain exceptions. After all, the ultimate purpose
of all rules of procedures is to achieve substantial justice as
expeditiously as possible.
But in New Ever Marketing, Inc. v. CA, and in the earlier case of
San Miguel Corporation v. The Hon. CA, the Supreme Court answered
the same poser in the negative because the Rule 65 petition was not proper
since an appeal was not only available but also a speedy and adequate
remedy. Hence, for failure of petitioner to file a timely appeal, the
questioned decision of the Court of Appeals had already become final and
executory.

It is thus clear, according to Tirazona v. CA, that in case what is filed

is a petition under Rule 65 instead of Rule 45, before the Supreme Court
may treat the petition erroneously filed under Rule 65 as having been filed
under Rule 45, the same must comply with the reglementary period for
filing an appeal. This requirement is not only mandatory but also
jurisdictional such that failure to do so renders the assailed decision final
 and executory and deprives the Supreme Court of jurisdiction to alter the
final judgment, much less to entertain the appeal.
In the 2013 case of Malayang Manggagawa ng Stayfast Phils, Inc.
v. NLRC, petitioner, instead of filing a Rule 45 petition for review on
certiorari from the decision of the CA, it filed a Rule 65 petition for
certiorari to the Supreme Court after 52 days from its receipt of the CA
decision. Contrary to petitioners claim that there was no appeal or any other
plain, speedy and adequate remedy in the ordinary course of law other than
this petition for certiorari, the right recourse was to appeal to the Court in
the form of a Rule 45 petition for review on certiorari. For purposes of
appeal, the decision of the CA was a final judgment as it denied due course
to, and dismissed, the petition. Thus, the decision disposed of the petition of
petitioner in a manner that left nothing more to be done by the CA in respect
to the said case. Thus, petitioner should have filed an appeal by petition for
review on certiorari under Rule 45, not a petition for certiorari under Rule
65, in this Court. Where the rules prescribe a particular remedy for the
vindication of rights, such remedy should be availed of.
3. THE NEYPES DOCTRINE (FRESH PERIOD RULE) - FRESH
PERIOD FROM DENIAL OF MOTION FOR
RECONSIDERATION.
In the 2013 case of Elizabeth Gagui v. Dejero, petitioner successively
filed two Motions for Reconsideration of the CAs decision but both were
denied. Petitioner elevated the case to the Supreme Court under Rule 45. In
their comment, respondents alleged that the instant petition had been filed
15 days after the prescriptive period of appeal under Section 2, Rule 45 of
the Rules of Court. In her reply, petitioner countered that she has a fresh
period of 15 days from the date she received the Resolution of the CA to file
the instant Rule 45 petition. In affirming the contention of petitioner, the
Supreme Court cited the en banc ruling in the case of Neypes v. CA which
standardized the appeal periods, thus:
To standardize the appeal periods provided in the Rules and to
afford litigants fair opportunity to appeal their cases, the Court
deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from
 receipt of the order dismissing a motion for a new trial or motion
for reconsideration.
Henceforth, this fresh period rule shall also apply to Rule 40
governing appeals from the Municipal Trial Courts to the Regional
Trial Courts; Rule 42 on petitions for review from the Regional
Trial Courts to the Court of Appeals; Rule 43 on appeals from
quasi-judicial agencies to the Court of Appeals and Rule 45
governing appeals by certiorari to the Supreme Court. The new
rule aims to regiment or make the appeal period uniform, to be
counted from receipt of the order denying the motion for new trial,
motion for reconsideration (whether full or partial) or any final
order or resolution.
Consequently, since petitioner in Gagui received the CA Resolution
denying her two Motions for Reconsideration only on 16 March 2011, she
had another 15 days within which to file her Petition, or until 31 March
2011. This Petition, filed on 30 March 2011, fell within the prescribed 15-
day period.
J.
PRESCRIPTION OF ACTIONS
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article 291 of the
Labor Code. - The prescriptive period of all money claims and
benefits arising from employer-employee relations is 3 years from
the time the cause of action accrued; otherwise, they shall be forever
barred.
b. All other money claims of workers prescribe in 3 years. - Article
291 contemplates all money claims arising from employer-employee
relationship, including:
1. Money claims arising from the CBA.
2. Incremental proceeds from tuition increases.
3. Money claims of Overseas Filipino Workers (OFWs).
Note must be made that in the 2010 case of Southeastern Shipping v.
Navarra, Jr., the 1 -year prescriptive period in Section 28 of POEA-SEC
 was declared null and void. The reason is that Article 291 of the Labor
Code is the law governing the prescription of money claims of seafarers, a
class of overseas contract workers. This law prevails over said Section 28.
2. ILLEGAL DISMISSAL CASES.
a. Legal basis is not Article 291 of the Labor Code but Article 1146
of the Civil Code. - The 3-year prescriptive period in Article 291
solely applies to money claims but not to illegal dismissal cases
which are not in the nature of money claims. The prescriptive period
of illegal dismissal cases is 4 years under Article 1146 of the Civil
Code.
3. UNFAIR LABOR PRACTICE (ULP) CASES.
a. Prescriptive period of ULP cases is 1 year (Article 290, Labor
Code). - The prescriptive period for all complaints involving unfair
labor practices is one (1) year from the time the acts complained of
were committed; otherwise, they shall be forever barred.
b. Pre-requisite for prosecution of criminal cases. - Before a
criminal action for ULP may be filed, it is a condition sine qua non
that a final judgment finding that an unfair labor practice act was
committed by the respondent should first be secured or obtained in
the labor case initiated before the Labor Arbiter or the Voluntary
Arbitrator, as the case may be. Final judgment is one that finally
disposes of the action or proceeding. For instance, if the remedy of
appeal is available but no appeal is made, then, the judgment is
deemed final and executory. If an appeal is made, then the final
judgment rendered by the last tribunal, say the Supreme Court, to
which the case was elevated should be the reckoning factor.
c. Interruption of prescriptive period of offenses. - As far as ULP
cases are concerned, the running of the one (1) year prescriptive
period is interrupted during the pendency of the labor proceeding.
d. Evidentiary value of the final judgment in the labor case. - In
ULP cases, the final judgment in the labor case cannot be presented
as evidence of the facts proven therein or as evidence of the guilt of
the respondent therein. Its evidentiary or probative value is confined
merely in proving the fact of compliance with the condition sine qua
 non prescribed by law, i.e., that a final judgment has been secured in
the labor proceeding finding that an unfair labor practice act was in
fact committed by the respondent.
4. OFFENSES PENALIZED UNDER THE LABOR CODE AND ITS
IMPLEMENTING RULES AND REGULATIONS (IRR).
a. Prescriptive period is 3 years (Article 290, Labor Code). - The
prescriptive period of all criminal offenses penalized under the Labor
Code and the Rules to Implement the Labor Code is three (3) years
from the time of commission thereof.
b. Consequence of non-compliance with prescriptive period under
Article 290. - Failure to initiate or file the criminal action or
complaint within the prescriptive period shall forever bar such action.
c. Illegal dismissal is not an offense under Article 290. - The act of
the employer in dismissing an employee without cause, although a
violation of the Labor Code and its implementing rules, does not
amount to an offense as this term is understood and contemplated
under Article 290.
5. ILLEGAL RECRUITMENT CASES.
a. Simple illegal recruitment cases. The prescriptive period is five (5)
years.
b. Illegal recruitment cases involving economic sabotage. The
prescriptive period is twenty (20) years.
6. ACTIONS INVOLVING UNION FUNDS.
A complaint or petition for audit or examination of funds and books of
accounts prescribes within three (3)
years:
(a)from the date of submission of the annual financial report to the
DOLE; or
(b) from the date the same should have been submitted as required by
law, whichever comes earlier.
It should be noted, however, that this provision on the prescriptive
period applies only to a legitimate labor organization which has submitted
the financial report required under the Labor Code.
7. CLAIMS FOR SSS BENEFITS.
 a. Action against employer.
The right to institute the necessary action against the employer for
non-remittance of contributions may be commenced within twenty (20)
years:
(1)from the time the delinquency is known; or
(2)from the time the assessment is made by the SSS; or
(3)from the time the benefit accrues, as the case may be.
b. Action for disability claims.
The prescriptive period in the filing of disability benefit claim is ten
(10) years from the date of occurrence of disability.
8. CLAIMS FOR GSIS BENEFITS.
Claims for benefits, except for life and retirement, prescribe after
four (4) years from the date of contingency.